Les Serres de la Pointe Inc. c. M.R.N.

Les Serres de la Pointe Inc. c. M.R.N. Court (s) Database Tax Court of Canada Judgments Date 2005-01-14 Neutral citation 2005 TCC 44 File numbers 2004-2817(EI) Judges and Taxing Officers Alain Tardif Subjects Employment Insurance Act Decision Content Docket: 2004-2817(EI) BETWEEN: LES SERRES DE LA POINTE INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] __________________________________________________________________ Appeal heard on common evidence with the appeal of Paul-Perrot Pelletier (2004-2819(EI)), on December 13, 2004, at Matane, Quebec. Before: The Honourable Justice Alain Tardif Appearances: Agent for the Appellant: Jacinthe Collin Counsel for the Respondent: Agathe Cavanagh _______________________________________________________________ JUDGMENT The appeal under subsection 103(1) of the Employment Insurance Act is dismissed, and the decision rendered by the Minister of National Revenue is confirmed in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 14th day of January 2005. "Alain Tardif" Tardif J. Translation certified true on this 15th day of September 2005. Elizabeth Tan, Translator Docket: 2004-2819(EI) BETWEEN: PAUL-PERROT PELLETIER, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on common evidence with the appeal of Les serres de la Pointe inc. (2004-2817(EI)), on December 13, 2004, at Matane, Quebec. Before: The Honourable Justice Alain Tardif Appearances: Agent for the Appellant: Jacinthe Collin Counsel for the Respondent: Agathe Cavanagh _______________________________________________________________ JUDGMENT The appeal under subsection 103(1) of the Employment Insurance Act is dismissed, and the decision rendered by the Minister of National Revenue is confirmed in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 14th day of January 2005. "Alain Tardif" Tardif J. Translation certified true on this 15th day of September 2005. Elizabeth Tan, Translator Citation: 2005TCC44 Date: 20050114 Dockets: 2004-2817(EI) 2004-2819(EI) BETWEEN: LES SERRES DE LA POINTE INC., and PAUL-PERROT PELLETIER, Appellants, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT Tardif J. [1] In these two appeals, the parties agreed to proceed on common evidence since the Appellants were both involved in the work in question, one as employer and the other as employee. [2] The period in question is from June 30 to September 5, 2003. [3] To explain and support his finding, the Respondent relied on the following assumptions of fact: [translation] Case of Les serres de la Pointe inc. (2004-2817(EI)) 5. ... (A) The Appellant was incorporated on April 25, 2001; (admitted) (B) Jacinthe Collin and Marie-France Pelletier are the Appellant's shareholders, each with 50% of the voting shares; (admitted) (C) Jacinthe Collin is the Worker's spouse;(admitted) (D) Marie-France Pelletier is the Worker's sister; (admitted) (E) the Worker is related to a related group that controls the Appellant. 6. ... (a) The Payer operated a cultivation and sales business in the field of horticulture; (admitted) (b) in 2003, the Appellant's sales totalled $34,888; (c) in 2003, the Appellant was having financial difficulties; (d) the Appellant operated from the end of March to the beginning of October; (admitted) (e) business hours were Monday to Friday, 9:00 a.m. to 5:00 p.m.; (f) the Worker worked at the greenhouses; (admitted) (g) the Worker's duties involved maintaining the greenhouses and ventilation and heating systems, watering, fertilizing, planting, purchasing materials, and serving the clients; (admitted in part) (h) the Worker was the Appellant's only paid employee; (admitted in part) (i) the Worker was paid an hourly rate of $16.00; (admitted) (j) in 2002, according to Emploi Québec, greenhouse and nursery employees were paid less than $10 an hour; (k) the Worker's salary was unreasonable considering the salary of other employees in the same sector of activities; (l) the Appellant did not record the hours the Worker actually worked; (admitted) (m) the Worker was on the Appellant's payroll for 80 hours of work for two weeks, regardless of the number of hours actually worked; (admitted) (n) from April to June 2003, the Worker provided his services to the Appellant without any declared wages; (admitted) (o) the hours allegedly worked by the Worker do not correspond to the hours actually worked; (p) a person working at arm's length would not have worked without pay; (admitted) (q) during the period in question, the Worker provided his services to another employer as a maintenance Worker, at 40 hours per week; (admitted) (r) on September 10, 2003, the Centre Louise-Amelie Inc. gave the Worker a record of employment that indicated the first day worked was July 14, 2003, the last day, August 29, 2003, 200 insurable hours and $2,400.00 in insurable wages; (admitted) (s) on September 10, 2003, the Payer gave the Worker a record of employment that indicated the first day worked was June 30, 2003, the last day, September 5, 2003, 400 insurable hours and $6,656.00 in insurable wages; (admitted) (t) the Worker's record of employment does not reflect reality in terms of the period worked or the hours worked; (u) a person with an arm's length relationship would not have had the wages, a term or working conditions similar to those of the Worker. Case of Paul-Perrot Pelletier(2004-2819(EI)) 5. ... (A) the Payer was incorporated on April 25, 2001; (admitted) (B) Jacinthe Collin and Marie-France Pelletier are they Payer's shareholders, each with 50% of the voting shares; (admitted) (C) Jacinthe Collin is the Appellant's spouse; (admitted) (D) Marie-France Pelletier is the Appellant's sister; (admitted) (E) the Appellant is related to a related group that controls the Payer. 6. ... (a) the Payer operated a horticultural business; (admitted) (b) in 2003, the Payer's sales totalled $34,888; (c) in 2003, the Payer was having financial difficulties; (d) the Payer operated from the end of March to the beginning of October; (admitted) (e) business hours were Monday to Friday, 9:00 a.m. to 5:00 p.m.; (f) the Appellant worked at the greenhouses; (admitted) (g) the Appellant's duties involved maintaining the greenhouses and ventilation and heating systems, watering, fertilizing, planting, purchasing materials, and serving the clients; (admitted in part) (h) the Appellant was the Payer's only paid employee; (admitted in part) (i) the Appellant was paid an hourly rate of $16.00; (admitted) (j) in 2002, according to Emploi Québec, greenhouse and nursery employees were paid less than $10 an hour; (k) the Appellant's salary was unreasonable considering the salary of other employees in the same sector of activities; (l) the Payer did not record the hours the Appellant actually worked; (admitted) (m) the Appellant was on the Payer's payroll for 80 hours of work for two weeks, regardless of the number of hours actually worked; (admitted) (n) from April to June 2003, the Appellant provided his services to the Payer without any declared wages; (admitted) (o) the hours allegedly worked by the Appellant do not correspond to the hours actually worked; (p) a person working at arm's length would not have worked without pay; (admitted) (q) during the period in question, the Appellant provided his services to another employer as a maintenance Worker, at 40 hours per week; (admitted) (r) on September 10, 2003, the Centre Louise-Amelie Inc. gave the Appellant a record of employment that indicated the first day worked was July 14, 2003, the last day, August 29, 2003, 200 insurable hours and $2,400.00 in insurable wages; (admitted) (s) on September 10, 2003, the Payer gave the Appellant a record of employment that indicated the first day worked was June 30, 2003, the last day, September 5, 2003, 400 insurable hours and $6,656.00 in insurable wages; (admitted) (t) the Appellant's record of employment does not reflect reality in terms of the period worked or the hours worked; (u) a person with an arm's length relationship would not have had wages, a term or working conditions similar to those of the Appellant. [4] The Appellant admitted the presumptions of fact 5(A), (B), (C), (D) and 6 (a), (d), (f), in part (g), (h), (i), (l), (m), (n), (p), (q), (r) and (s). The company Les Serres de la Pointe inc. admitted the presumptions of fact 5(A), (B), (C), (D) and 6 (a), (b), (d), (f), in part (g), (h), (i), in part (j), (m), (n), (p), (q), (r) and (s). [5] The Appellants were very well prepared and represented themselves. [6] Surely basing themselves on the premise that they had to prove the quality and quantity of work and the appropriate compensation in order to be successful, they stressed the description of duties, the justification of salary and the particular abilities required to carry out the work. [7] The Appellants also put much emphasis on the fact that only the Appellant's spouse and sister were involved in the management and administration of the company. The Appellant Paul-Perrot Pelletier had nothing to do with the work planning; his role was simply to execute that which was asked of him. He had no financial stake in the company. [8] For some of the work, he was the only one who knew how to carry out the tasks; therefore, the directors had confidence in him and relied on his expertise because he was the best placed to perform some of the work while carrying out his duties. [9] The Appellant's spouse, Jacinthe Collin, clearly explained in great detail the various duties the Appellant carried out. She had also prepared a written document of all the duties (exhibit A-1); the contents are reproduced here: [translation] List of duties to carry out: Clean and disinfect the greenhouses Prepare annual and perennial seeds according to germination time Divide perennials Work at the vaporization table Prepare floral arrangements Label products Repot plants Mix and equalize soil Water, calibrate the dosomatic appropriately to apply fertilizer in the greenhouse Water, insecticide, fungicide (permit required) Sales, service and assistance to clients Carry out landscaping according to the landscaping plans Perform maintenance of landscaping Purchase construction materials, equipment or supplies for the greenhouse Construct a greenhouse and outbuilding Carry out maintenance of the heating and ventilation systems Water as needed during contracts with complete landscape management (insecticide spraying, disease control, etc.) Field cultivation: Planting Soil analysis Equalize soil according to the analysis Ridging up plants Maintenance of equipment used, tractor, harrow, planter, etc. Able to work alone with minimal supervision, reliable, hard working, honest, and able to take initiative. Mr. Pelletier carried out all these duties and earned the right to receive a salary assessed at $16.00 an hour, tied to the quality of his work. Annual plants - Repot cuttings ordered * - Perform seeding and planting of annuals according to germination time * under supervision - Apply fungicide to seedlings according to variety * - Balance soil used according to variety of seedling * - Regularly mist the seedlings (sometimes every half hour) * - Repot seedlings * - Repot cuttings for a second time - Preventive watering once a week. Insecticide using alternating products * responsible - Water and measure fertilizer * - Repot seedlings for a second time * - Arrange hanging baskets, canisters, etc. * - Put arrangements together: pots, balcony planters, canisters brought in by clients * - Regular disease and insect control in the plants * - Cut all plants for ramification * - Label plants and display prices * under supervision Perennial plants - Perform seeding and planting of perennials according to germination time * under supervision - Repot and split adult perennial plants * - Repot seedlings or cuttings * - Balance soil for seeds and to repot perennials * - Regular misting of seedlings or cuttings * - Cuttings from perennials according to their growth period * under supervision - Water and measure fertilizer * - Regular disease and insect control in the plants * - Preventive watering once a week. Insecticide using alternating products * responsible - Cutting certain plants according to variety, for ramification * - Label plants and display prices * under supervision - Prepare production (cutting-splitting-repotting) for the following and future years * under supervision * all duties with a * were carried out by Mr. Pelletier sometimes under supervision, sometimes as the person responsible Client service - Sales * - Various information on annual or perennial plants, shrubs, biological control * - Take orders and make floral arrangements as required - Delivery of orders as required * - Help planning landscaping: Visit to client's home * with employer Plan developed from the layout with detailed description of the plants. - Carry out landscaping or re-structuring according to the plan * under supervision or with the employer - Maintain landscaping: weeding, dividing, biological spraying as needed, according to our observations or at the clients' request. * Outdoor work Perennial plants: 3 platforms of 24 feet X 100 feet - Clean plants * - Repot * - Automatic or manual watering, alternating water-fertilizer * - Cut all the plants according to variety * under supervision - Take inventory of the plants * with employer - Winterize (is qualified) Shrubs - Spring dormant oil and sulphur spraying (is qualified) - Cut according to variety and flowering time * - Repot * - Disease and insect control * - Automatic or manual watering, alternating water-fertilizer * - Take cuttings at different times depending on the variety * under supervision - Take inventory of shrubs and shrub cuttings * with employer - Winterize (is qualified) Field production * (responsible with supervision) - Soil analysis - Balance soil according to the analysis (apply fertilizer, minerals, etc...) - Plow - Harrow - "Disking" - Plant perennials - Seed field to prepare it as a future field to cultivate perennials - Hoe plants - Ridge up plants - Spray pesticide - Pull up and divide plants - Send out plants ordered - Inventory of plants Various work Clean and disinfect the greenhouses once a year * Sweep up the greenhouses every day * Ensure maintenance and repairs of heating systems: oil and combined oil and wood * responsible under supervision Ensure maintenance and repairs of ventilation systems * responsible under supervision Ensure maintenance and repairs of equipment including tractors, harrow, and planter * responsible under supervision Cut and pile firewood * responsible under supervision Collect seeds * Ensure maintenance of existing buildings: greenhouses and outbuildings * responsible under supervision Construction: greenhouses, annexes, etc. * responsible under supervision Inventory of greenhouse supplies (would be qualified) Office work Accounting - secretarial Place orders: greenhouse supplies office supplies, cuttings, seeds, heating oil (material for construction, building maintenance and equipment) * can make purchases under supervision Make purchases and payments Inventory of office supplies Advertising [10] To describe the company, Ms. Collin submitted 20 pictures that clearly show the scale of the company, and also its development over the years, starting at the end of the 1998 season. [11] From this portion of evidence, it became clear that in the beginning it was a small company that took off quickly and grew significantly. [12] During the period in question, the company had three greenhouses of 20 by 100 feet, many fields and various platforms where all the horticultural products were prepared, as well as buildings for sales and service. [13] Ms. Collin also explained the work schedule; she submitted a document on this subject (exhibit A-4), which contained the following: [translation] WORK SCHEDULE From June 30, 2003, to July 12, 2003 Sunday: holiday Monday: 7:00 a.m. to 11:00 a.m. Tuesday: 7:00 a.m. to 11:00 a.m. Wednesday: 7:00 a.m. to 11:00 a.m. Thursday: 2:00 p.m. to 5:00 p.m. Friday: holiday Saturday: 12:00 p.m. to 4:00 p.m. 12:00 a.m. [sic] to 4:00 p.m. 12:00 a.m. [sic] to 4:00 p.m. 12:00 a.m. [sic] to 4:00 p.m. 6:00 p.m. to 11:00 p.m. 5:00 p.m. to 9:00 p.m. From July 13, 2003, to September 5, 2003 Sunday: holiday Monday: holiday Tuesday: 7:00 a.m. to 11:00 a.m. Wednesday: 7:00 a.m. to 11:00 a.m. Thursday: 12:00 p.m. to 4:00 p.m. Friday: 12:00 p.m. to 4:00 p.m. Saturday: 12:00 p.m. to 4:00 p.m. 12:00 a.m. [sic] to 4:00 p.m. 12:00 a.m. [sic] to 4:00 p.m. 5:00 p.m. to 9:00 p.m. 5:00 p.m. to 9:00 p.m. 5:00 p.m. to 9:00 p.m. * Flexible schedule that was modified many times according to the required duties to be carried out, with an agreement between employee and employer. The employee was to be available at night in case of major malfunction. [14] She also described part of the equipment used, thus showing that it was a structured and relatively independent company. [15] She explained that she and the Appellant's sister, also a 50% shareholder of the company, did not take any wages for their work; they wanted to let the company expand and grow on a solid financial foundation. [16] She stated that the Appellant was flexible and generous with his time. She stated that during the period preceding the period in question, from April to the end of June-a strategic period to prepare for the season-the Appellant worked from 25 to 30 hours a week without pay, as a volunteer. [17] She added that it was not something the company required, and was not part of the employment contract; according to Ms. Collin, her spouse was a very generous person with his time and, more particularly, when it was something he liked. She also made reference to various causes for which her spouse volunteered. [18] Aside from the volunteer work performed outside the period in question, Ms. Collin also stated that her spouse generally performed more than 40 hours of work per week but even then, this was not part of the employment contract, which was for 40 hours of work. The Appellant's spouse insisted that it was non-required volunteer work and therefore unpaid, adding that the company did not pay overtime. [19] The Appellant's testimony essentially confirmed his spouse's. He confirmed all the facts stated by her; however, he strongly insisted on the fact that he was always very generous with his time. [20] He gave some examples and had Monic Caron testify; she stated that the Appellant performed paid work for the Centre Louis-Amélie inc., which she ran. [21] She also testified that the Appellant generally participated as a volunteer in the Centre's funding activities; she did state, however, that he was generally paid for his work at the Centre but this did not prevent him from not being paid at times for some small jobs. [22] The Appellant's sister also testified to the wages she received for carrying out work in a horticultural centre and to show that she did not hesitate to carry out non-paid work on occasion because she liked her work and did it to learn. [23] Before continuing with the evidence submitted by the Respondent, I would like to point out an important admission. I am referring to subparagraph 6(p), where the Appellant admitted the following as being true: (p) a person working at arm's length would not have worked without pay; [admitted] [24] Ms. Collin, the Appellant's spouse, made the same admission to the same subparagraph 6(p) in the Reply to the Notice of Appeal in the case of the company Les Serres de la Pointe inc. [25] As for Nathalie Bédard, who is responsible for the case, she explained why and how she came to recommend the following conclusion (Exhibit I-1, page 11): [translation] (VIII) RECOMMENDATION We recommend that the notices by the Minster be issued indicating that Paul Perrot Pelletier, while working for Les Serres de la Pointe inc. during the period of June 30, 2003, to September 5, 2003, performed employment excluded from insurable employment under subparagraph 5(2)(i) of the Employment Insurance Act because it was employment within an arm's length relationship. [26] All the facts analyzed and taken into consideration were consistent with those submitted by the Appellants. However, Ms. Bédard brought out certain highly relevant elements. In particular, she prepared the following table (exhibit I-1, page 9, No.95): 2002 Income 2002 Expenses 2003 Income 2003 Expenses January February March April May June July August September October November December 21 272 1,036 103 3,697 8,603 5,342 2,156 4,261 n/a 4,620 1,242 1,258 3,292 6,673 4,052 2,663 7,973 7,206 4,866 7,236 2,269 2,532 6,028 - 1,000 2,374 2,812 2,916 21,559 7,503 6,345 192 141 - - 318 1,539 2,536 2,331 1,756 9,159 6,095 13,756 3,653 9,205 - - [27] The table shows, in a distinctive way, the key importance of the June 2003 activities; in fact, during this month, income reached $21,559. However, the Appellant did not receive any wages during this month; his period of paid employment only began at the end of June 2003. [28] It is very difficult, if not impossible, to reconcile the description of the Appellant's numerous and important duties with the fact that he did not perform any paid work during this period. The Appellant did not receive any wages for his work during the month of June, which alone made up almost half the company's annual total sales. [29] Income in July was $7,503 and in August, $6,345; these two months, second and third in terms of income generated, are also the period during which the Appellant performed 200 hours of work for wages of $2,400 for the Centre Louise-Amélie inc., from July 14, 2003, to August 29, 2003. [30] In general, the facts taken into consideration are the same as those submitted by the Appellants, which were presented in a detailed, complete and honest way; they did not attempt to hide or conceal anything. [31] As for the Respondent's analysis, it was done professionally and seriously where nothing was presumed without justification. For example, the assessment that the $16 an hour rate was not appropriate was accepted based on a statistical guide (Exhibit I-2) prepared by Emploi Québec, which states that a nursery and greenhouse Worker earns a salary of $10 an hour. [32] In this case, the Appellant's work was excluded from insurable employment solely because of the Act, and more specifically, paragraph 5(2)(i) and subsection 5(3) of the Act, which state: (2) Insurable employment does not include ... (i) employment if the employer and employee are not dealing with each other at arm's length. 5(3) For the purposes of paragraph (2)(i), (a) the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the Income Tax Act; and (b) if the employer is, within the meaning of that Act, related to the employee, they are deemed to deal with each other at arm's length if the Minister of National Revenue is satisfied that, having regard to all the circumstances of the employment, including the remuneration paid, the terms and conditions, the duration and the nature and importance of the work performed, it is reasonable to conclude that they would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length. [33] Excluded from insurable employment is employment where the employer and employee are not dealing with each other at arm's length. However, when an employer and employee are related within the meaning of the Income Tax Act, they may be deemed to be dealing with each other at arm's length for the purposes of the Act, notwithstanding the provisions of the Income Tax Act, if the Minister of National Revenue (the "Minister") is convinced that it is reasonable to conclude that they would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length. [34] The Minister's representative must then exercise discretionary power to analyze all the relevant facts in accordance with the criteria set forth by the legislator to determine whether the work assessed is subject to an exception or not. [35] In other words, would a person dealing at arm's length with his or her employer have performed the same work, under the same conditions, for the same wages and for a similar period? [36] This is an exercise of comparisons; to carry it out, the legislator provided certain criteria, including wages, employment conditions, length of work, type and importance. [37] When there is an appeal of an assessment resulting from this process, the role of this court is to proceed with a two-step analysis. The first is to ensure that the Minister exercised his power appropriately. [38] As found in Jencan, [1998] 1 F.C. 187, to which Malone J. referred in Quigley Electric, 2003 FCA 461, the decision resulting from the Minister's exercise of his discretionary power can only be amended if the Minister acted in bad faith, neglected to consider all the relevant circumstances, or considered an irrelevant factor.[1] If such a situation exists, the Court must decide whether the conclusion with which the Minister was "satisfied" still seems reasonable.[2] This is what the Federal Court of Appeal stated in Jencan: 31 The decision of this Court in Tignish, supra, requires that the Tax Court undertake a two-stage inquiry when hearing an appeal from a determination by the Minister under subparagraph 3(2)(c)(ii). At the first stage, the Tax Court must confine the analysis to a determination of the legality of the Minister's decision. If, and only if, the Tax Court finds that one of the grounds for interference are established can it then consider the merits of the Minister's decision. As will be more fully developed below, it is by restricting the threshold inquiry that the Minister is granted judicial deference by the Tax Court when his discretionary determinations under subparagraph 3(2)(c)(ii) are reviewed on appeal. Desjardins J.A., speaking for this Court in Tignish, supra, described the Tax Court's circumscribed jurisdiction at the first stage of the inquiry as follows: Subsection 71(1) of the Act provides that the Tax Court has authority to decide questions of fact and law. The applicant, who is the party appealing the determination of the Minister, has the burden of proving its case and is entitled to bring new evidence to contradict the facts relied on by the Minister. The respondent submits, however, that since the present determination is a discretionary one, the jurisdiction of the Tax Court is strictly circumscribed. The Minister is the only one who can satisfy himself, having regard to all the circumstances of the employment, including the remuneration paid, the terms and conditions and importance of the work performed, that the applicant and its employee are to be deemed to deal with each other at arm's length. Under the authority of Minister of National Revenue v. Wrights' Canadian Ropes Ltd., contends the respondent, unless the Minister has not had regard to all the circumstances of the employment (as required by subparagraph 3(2)(c)(ii) of the Act), has considered irrelevant factors, or has acted in contravention of some principle of law, the court may not interfere. Moreover, the court is entitled to examine the facts which are shown by evidence to have been before the Minister when he reached his conclusion so as to determine if these facts are proven. But if there is sufficient material to support the Minister's conclusion, the court is not at liberty to overrule it merely because it would have come to a different conclusion. If, however, those facts are, in the opinion of the court, insufficient in law to support the conclusion arrived at by the Minister, his determination cannot stand and the court is justified in intervening. (Emphasis added) [39] In this case, there is no doubt as to the nature and importance of the work; it is genuine work, important and essential to the company. As for the wages, the Appellants stated that Workers as qualified and skilled were very rare in the region, which led the company to decide to pay him a higher salary than the one established by statistics. [40] Would this have been the case for a person who was not related to the two shareholders, namely his sister and his spouse? The answer to this is no, in accordance with the admissions of both the Appellant and his spouse (subparagraph 6(p) of the Reply to the Notice of Appeal). [41] Moreover, it must be noted that neither of the co-shareholders, who each held 50% of the capital stock, received a salary although they worked many many hours. [42] The fact that the Appellant did very important work for 25 to 30 hours per week, from April to the end of June, before the start of the period in question is a determining factor. The Appellant also admitted that during the period in question, he sometimes worked many more than the 40 hours for which he was paid. [43] To explain this unpaid work, the Appellant's spouse stated that the Appellant was not required to perform it, that it was not an obligation, and that it was the Appellant's choice and he was completely free to volunteer for what he wanted. [44] As for the Appellant, he pointed out that he likes to give his time to things and causes he likes. [45] It is important to note that the volunteer hours were significant. Moreover, it was not work that had nothing to do with the company's business; in fact, it was essential work, not only for a very short period of time but for the entire period of preparing for the season. In addition, the Appellant is not even listed on the payroll during the most active and intense season in terms of income. [46] How can the description of the Appellant's duties be compatible with the very long and significant period where he did not receive any pay? It is impossible, which leads, without a doubt, to the basis of the admission that no one with an arm's length relationship would have worked this way without pay. [47] The examples provided by the Appellants of the volunteer work carried out by Mr. Pelletier were for humanitarian causes. As for his professional work, he was generally paid, except for certain circumstances involving minor work, according to the witness Monic Caron; a situation that is absolutely not comparable to the situation at the heart of the case at bar. [48] As for the work addressed by the appeal, it was performed without pay and it was important work performed over a long period and, even more significantly, it was the same type of work for which the Worker was paid. So during some periods, he worked without pay, during the period in question, he was paid for 40 hours even when he performed many more hours of work. [49] The importance of the work performed without pay was considerable and it was the same type of work as the work for which he was paid during part of the period in question. It is obvious that a person with an arm's length relationship would not have agreed to be as generous as the Appellant; moreover, did he and his spouse not admit this fact of their own accord? [50] Additionally, the work performed by the Appellant was, in many ways, important or even essential work for the proper operation of the company. He was an absolutely essential employee (see description of duties). So how can one explain that this same employee was not paid during strategic periods when the total sales were at their maximum? [51] When the same type of work is not compensated on some occasions or during certain periods and is during others, it has the effect of skewing the data on the employment contract; even more importantly, it is a significant if not determining factor that shows the extent to which the lack of an arm's length relationship influenced the employment contract. [52] To give an example of this, imagine a case where the Appellant allegedly worked around 25 hours per week during the period of April to the end of June, or for 17 weeks, and 10 hours of unpaid work per week during the period in question. According to this example, 525 working hours would have been carried out without pay, for 17 weeks, at 25 hours per week and for the 10 weeks of the period in question for 10 hours per week. [53] As a result, the total pay of $6,656 he received should not be distributed over 400 hours, as indicated on the record of employment, but rather over 925 hours. The hourly rate would no longer be $16 but closer to $7. Moreover, this would also reduce the period of benefits by more than 17 weeks, and would also have a significant effect on the amount of the benefits because the higher the insurable salary, the higher the employment insurance benefits. [54] After considering all the relevant facts and correctly analyzing them, Nathalie Bédard concluded her work as follows, in Exhibit I-1: [translation] Salary The Worker's salary was $16 an hour for 40 hours of work per week, although he could work more hours because it was his spouse and his sister's company and he wanted to help them. He was paid every two weeks by a check made out in his name and drawn from the payer's company account. The checks were cashed without delay. According to Emploi Québec, in 2002, the hourly salary for Workers in nurseries and greenhouses was less that $10. No other Workers are paid by the Payer's company. The two shareholders work there full time during the company's activity period, but do not pay themselves any wages because the company is not viable enough. The Worker started receiving a salary when the company had enough income. The Payer's company was having financial difficulties during this fiscal period when the administrators had to give the Payer a $10,000 advance. A stranger would have received a lower salary that the Worker's for similar work. Terms of employment The Payer's company was open to the public from Monday to Friday, 9:00 a.m. to 5:00 p.m., and weekday evenings at the beginning of the season, from early May to mid-July. Paul-Perrôt [sic] Pelletier usually worked from 8:00 a.m. to 5:00 p.m., five days a week from Monday to Saturday. If a rainy day prevented him from working, he made up the time another day. The Worker wrote his hours of work on a table installed at the greenhouse entrance. In 2001, he took a course on insecticides and fungicides; this course was given by the Chandler UPA. The Worker's spouse taught him the basics of horticultural work. Each morning, the shareholders gave Paul-Perrôt Pelletier work directives. He carried out his duties at the Payer's place of business, either in the greenhouses or in the fields. The Payer confirmed that the Worker sometimes worked up to 28 volunteer hours per week before the period in question. From mid-July to the end of August 2003, in addition to his work for the Payer's company, he had a job on call as the maintenance Worker at a shelter for women victims of violence. The documents provided showed that he worked 40 hours per week for this second Payer. The Worker stated that he could combine the duties because the maintenance work could be carried out in the evenings and at night, whereas the work in the greenhouses was performed during the day. Duration The activities of the Payer's company run from the end of March to the beginning of October. The Worker was only paid for the period in question, from June 30 to September 5, 2003, a period during which he worked full time. From April to June 2003, the Worker only "helped out" during the evenings because he had a job elsewhere. He spent an average of four hours an evening on this volunteer work. In May 2003, he helped out again because one of the shareholders had an operation and was away from work. During this period, family members came and worked voluntarily. The Worker always helped out and had done so from the beginnings of the Payer's company in 2001. The Worker had a job with another payer so he helped out when he had spare time. A stranger would not have provided these services without being paid. Type and importance The Worker's duties were directly related to the activities of the Payer's company. He carried out the duties of a greenhouse Worker. He performed maintenance of the greenhouses, ventilation and heating systems, did soil analyses, took care of seeds, field work, fertilizing, planting, purchased construction material, carried out installations and provided client services. Conclusion Considering these criteria, we conclude that the work performed by Paul-Perrôt [sic] Pelletier filled an economic need; the duration of work is inexact and the pay is unreasonable. The above facts lead us to conclude that a substantially similar job would not have existed if the Worker and Payer had an arm's length relationship. The Payer would not have given such working conditions to a person with whom it had an arm's length relationship. The employment is therefore excluded under paragraph 5(2)(i) of the Employment Insurance Act. [55] The evidence submitted by the Appellants was consistent with all the elements available and taken into consideration during the exercise of the discretionary power. [56] In Pérusse, No. A-722-97, March 10, 2000 (F.C.A.), Desjardins J., at paragraph 12, and Décary J., at paragraph 11, had similar comments: 12 The Act assumes that persons so related by blood, marriage or adoption are more likely to be able, and to want, to abuse the Unemployment Insurance Act. Parliament therefore authorized the Minister to scrutinize contracts of employment signed by such persons, something which he does not do for other claimants, unless of course there are reasons to think that there has been a fraud against the Act. It is this additional burden of proof to which the appellant objects. ... 11 I do not think that persons connected by family ties, and so subject to natural and legal obligations to each other, could reasonably be surprised or upset that Parliament felt the need to determine, where a contract of service is concerned, whether such ties, perhaps even without their knowledge, could have influenced the working conditions laid down... [Emphasis added.] [57] In Légaré, supra, Marceau J. stated the following at paragraph 12: Under the Unemployment Insurance Act, excepted employment between related persons is clearly based on the idea that it is difficult to rely on the statements of interested parties and that the possibility that jobs may be invented or established with unreal conditions of employment is too great between people who can so easily act together. And the purpose of the 1990 exception was simply to reduce the impact of the presumption of fact by permitting an exception from the penalty (which is only just) in cases in which the fear of abuse is no longer justified... [Emphasis added.] [58] Considering all the Federal Court of Appeal teachings, as found in Tignish, Ferme Émile Richard, Jencan, Légaré, Pérusse, Valente, Massignani and Quigley Electric, I find that the Minister's decision, after assessing the facts submitted as evidence before me, is very reasonable. [59] The facts were correctly assessed and the determination that followed was completely reasonable. This assessment is even more appropriate considering both the Appellant and his spouse admitted the truth of the determining element: A person working at arm's length would not have worked without pay. [60] For these reasons, the appeals are dismissed. Signed at Ottawa, Canada, this 14th day of January 2005 "Alain Tardif" Tardif J. Translation certified true on this 15th day of September 2005. Elizabeth Tan, Translator CITATION: 2005TCC44 COURT FILE Nos.: 2004-2817(EI) and 2004-2819(EI), STYLES OF CAUSE: Les serres de la Pointe Inc. and Paul-Perrot Pelletier and the Minister of National Revenue PLACE OF HEARING: Matane, Quebec DATE OF HEARING: December 13, 2004 REASONS FOR JUDGMENT BY: The Honourable Justice Alain Tardif DATE OF JUDGMENT: January 14, 2005 APPEARANCES: For the Appellant: Jacinthe Collin For the Appellant: The Appellant himself Counsel for the Respondent: Agathe Cavanagh COUNSEL OF RECORD: For the Appellants: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada [1] It is interesting to note the comments of Isaac, C.J., at paragraph 30, where he states, "The large number of appeals from ministerial determinations under subparagraph 3(2)(c)(ii) since this Court's decision in Tignish Auto Parts suggests that further clarification of the law is required." (Emphasis added.) These statements are similar to those of Marceau J. in Légaré, No. A-392-98, May 28, 1999, [1999] F.C.J. No. 878 (F.C.A.). [2] To use the words from Légaré, supra, at para. 4.