Simms v. M.N.R.

Simms v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-06-09 Neutral citation 2005 TCC 378 File numbers 2004-3272(EI) Judges and Taxing Officers Campbell J. Miller Subjects Employment Insurance Act Decision Content Docket: 2004-3272(EI) BETWEEN: MARTHA SIMMS, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. ____________________________________________________________________ Appeal heard on June 2, 2005, at Corner Brook, Newfoundland, by The Honourable Justice Campbell J. Miller Appearances: For the Appellant: The Appellant herself Counsel for the Respondent: Edward Sawa ____________________________________________________________________ JUDGMENT The appeal pursuant to subsection 103(1) of the Employment Insurance Act is dismissed and the decision of the Minister of National Revenue, on the appeal made to him under section 91 of that Act, is confirmed. Signed at Ottawa, Ontario, this 9th day of June 2005. "Campbell J. Miller" Miller J. Citation: 2005TCC378 Date: 20050609 Docket: 2004-3272(EI) BETWEEN: MARTHA SIMMS, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. REASONS FOR JUDGMENT Miller J. [1] For a period in 2003, Ms. Martha Simms worked for Coastal Glass Inc. (Coastal), a company owned by her husband Gary and her son Scott. The Minister of National Revenue (the Minister) determined that Ms. Simms' employment was not insurable pursuant to the Employment Insurance Act, as the Minister was not satisfied the contract of employment would have been substantially similar if Coastal and Ms. Simms had been dealing with each other at arm's length. [2] In April 2003, Ms. Simms completed a two-year course in Community Studies. She studied a wide variety of subjects from bookkeeping and advertising to psychology and first aid. In early May, she was hired by her husband Gary to work for Coastal to, as Ms. Simms put it, get experience. She was paid at $7 an hour, "like a trainee". [3] Coastal had premises in Stephensville, which it shared with Hyundai. It had a reception area, two offices, one for Garyand one for Scott, and a working area where Gary and Scott would work on the glass products. Coastal handled glass repairs and installation, made sealed units and conducted sales, including selling mirrors, safety glass, glass with wire mesh, all car windows and laminated glass. Gary and Scott did most of the glass work, which was skilled work. Garywould occasionally hire the former owner of the business, Michael Gouga, to help. [4] In 2003, apart from Gary and Scott, and occasionally Mr. Gouga, Coastal also employed a secretary/receptionist, Ms. Lutetia Jessoe, and Ms. Simms. Ms. Simms described her work as helping her husband on the road and in the shop, cleaning, and learning the secretarial work from Ms. Jessoe. She expanded on these duties by describing her work on the road with her husband as helping with measurements and with installation. She cleaned and maintained the work area at the shop, including vacuuming out those vehicles requiring glass work. She also made up some promotional flyers and distributed them in communities that she and her husband went to. She summed up her responsibilities by saying that if she saw work needed doing, she would simply do it. She acknowledged that even when she was not on payroll she would help her husband at work, as it was an opportunity to be together. [5] From June 9 to August 15, 2003, Ms. Simms was off work as she had some emergency surgery. No one was hired to replace her during this period. She was laid off on October 10, 2003, as business had slowed down. She referred to the summer as the busy period. [6] She was hired again for the period January to June 2004 as business had picked up. She was also hired again in the spring of 2005 to take over the office work, as Ms. Jessoe was leaving. Ms. Jessoe spent a couple of weeks providing more training to Ms. Simms for this takeover. [7] Following the approach set forth by the Federal Court of Appeal in the cases of Légaré v. M.N.R.[1] and Pérusse v. M.N.R.,[2] the issue is whether, having now heard all the evidence as to the arrangement between Ms. Simms and Coastal, I consider the Minister's conclusion reasonable that Coastal and a person acting at arm's length would not have entered into a substantially similar contract of employment. Justice Bowie in Birkland v. M.N.R.[3] suggested the parties in these cases may adduce evidence as to the terms upon which a person at arm's length doing similar work were employed by the same employer, as well as evidence relevant to conditions of employment prevailing in the industry for the same kind of work at the same time and place. Not surprisingly, evidence of this nature was not presented at trial: the reason, firstly, is because there was no other similar work being done by arm's length persons (all other workers had skilled positions); and, secondly, because industry norms for such work would simply not be available. Ms. Simms was, to use the vernacular, a jack of all trades. More than that, she was also a trainee, a family member having educated herself, now learning the family business should a future need arise for her full-time help. And, indeed, that full-time need just recently arose with the departure of Ms. Jessoe. Ms. Simms has now stepped into the breach, after a brief training period, to provide the office work for Coastal. [8] I do not doubt Ms. Simms' assertion that she worked hard at Coastal in 2003. She could not understand why, having done so, she is not entitled to claim employment insurance benefits. She is not entitled to because paragraph 5(2)(i) of the Employment Insurance Act stipulates insurable employment does not include employment where employer and employee are not dealing with each other at arm's length. Coastal and Ms. Simms were not dealing at arm's length. Paragraph 5(3)(b) however goes on to state that: (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. [9] The Minister was not satisfied that it was reasonable to conclude Coastal and Ms. Simms would have entered a substantially similar contract had they been dealing at arm's length. From the evidence I heard from both Ms. Simms and the Coverage Officer (formerly Appeals Officer), I find the Minister relied on the same facts as were presented to me; that is, there were no new facts or significantly different facts at trial. To her credit, Ms. Simms' story has remained consistent. [10] Unfortunately for Ms. Simms, I conclude that based on those facts, the Minister's decision remains reasonable. The facts specifically that support this conclusion are: (i) Ms. Simms had no definite job description; she simply helped out where needed; (ii) the nature of her work was such that it was not as important as that of the skilled workers; (iii) Ms. Simms was there to learn the family business for a possible future role; (iv) Ms. Simms was not replaced during her time off for medical reasons, during the busy season; indeed, at no time was anyone else ever hired to do what Ms. Simms did; (v) although accompanying her husband on business trips and providing some assistance, Ms. Simms acknowledged simply being with her husband was a motivating factor. While this is understandable, it does clearly illustrate the true non-arm's length nature of the arrangement; and (vi) Ms. Simms provided similar work, that is helping out when needed, when not on the payroll. [11] For these reasons, I dismiss the appeal. Signed at Ottawa, Ontario, this 9th day of June 2005. "Campbell J. Miller" Miller J. CITATION: 2005TCC378 COURT FILE NO.: 2004-3272(EI) STYLE OF CAUSE: Martha Simms and the Minister of National Revenue PLACE OF HEARING: Corner Brook, Newfoundland DATE OF HEARING: June 2, 2005 REASONS FOR JUDGEMENT BY: The Honourable Justice Campbell J. Miller DATE OF JUDGMENT: June 9, 2005 APPEARANCES: For the Appellant: The Appellant herself Counsel for the Respondent: Edward Sawa COUNSEL OF RECORD: For the Appellant: Name: N/A Firm: N/A For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Ontario [1] 1999 CanLII 8105 (F.C.A.). [2] [2000] F.C.J. No. 310. [3] 2005 TCC 291.