Nametco Holdings Ltd. v. Canada (Minister of National Revenue)

Nametco Holdings Ltd. v. Canada (Minister of National Revenue) Court (s) Database Federal Court of Appeal Decisions Date 2002-11-27 Neutral citation 2002 FCA 474 File numbers A-729-01 Notes Digest Decision Content Date: 20021127 Docket: A-729-01 A-732-01 Neutral citation: 2002 FCA 474 CORAM: STRAYER J.A. NADON J.A. EVANS J.A. BETWEEN: NAMETCO HOLDINGS LTD. Applicant and MINISTER OF NATIONAL REVENUE Respondent Heard at Vancouver, British Columbia on Wednesday, November 13, 2002 JUDGMENT delivered at Ottawa, Ontario on Wednesday, November 27, 2002 REASONS FOR JUDGMENT BY: STRAYER J.A. CONCURRED IN BY: NADON J.A. EVANS J.A. Date: 20021127 Docket: A-729-01 A-732-01 Neutral citation: 2002 FCA 474 CORAM: STRAYER J.A. NADON J.A. EVANS J.A. BETWEEN: NAMETCO HOLDINGS LTD. Applicant and MINISTER OF NATIONAL REVENUE Respondent REASONS FOR JUDGMENT STRAYER J.A. [1] This is a consolidated application for judicial review of two decisions of the Tax Court of Canada dated November 26, 2001. In each of those decisions, one for the purpose of the Employment Insurance Act and the other for purposes of the Canada Pension Plan, the Tax Court confirmed that Ms. Diane Quock had been in insurable employment of the applicant company. [2] In 1999 Ms. Quock responded to an advertisement of the applicant for a bookkeeper. She was selected for the post but there was some disagreement as to the form of her engagement. She wanted an employer-employee relationship but the applicant wanted an independent contractor arrangement. She worked at the applicant's premises for only a few weeks and then quit. [3] When she applied for employment insurance benefits, Human Resources Development Canada ("HRDC") ruled on September 1, 2000 that she was entitled to benefits as she had left her employment for "just cause" and so advised the applicant. It also had referred to the Canada Customs and Revenue Agency ("CCRA") the question of whether her employment with the applicant was insurable and CCRA advised the applicant on August 17, 2000 that it had found that her employment was insurable. When the applicant was informed of these decisions it appealed both. The ruling by HRDC was appealed to a Board of Referees and the rulings on insurability of employment were appealed to the Tax Court. [4] While the decision of HRDC communicated to the applicant on September 1, 2000 was only to the effect that it had approved Ms. Quock's claim on the grounds that she had "just cause" to leave the applicant's employment, the applicant launched an appeal to a Board of Referees on September 12, 2000, on the grounds that she had not been an employee. This was done in error because that is not an issue that a Board of Referees has jurisdiction to determine. In fact the applicant appears to have been aware of this because it knew it was CCRA that had found the employment to be insurable and on September 12, 2000 it also launched an appeal with CCRA from its decision. [5] The Board of Referees in its decision of October 16, 2000 started off by confirming that the issue before it was whether the applicant had just cause to leave her employment, but proceeded, in response to the applicant's irrelevant submission, to allow the appeal on another basis entirely; namely, that she had not been in insurable employment. The applicant now concedes that the Board had no jurisdiction to so decide. No appeal of this decision was taken by any of the parties. [6] In the meantime CCRA had determined the appeal to it and concluded that the claimant had been engaged in insurable employment. The applicant was so advised on February 9, 2001 The same determination was relevant to both the Employment Insurance Act and the Canada Pension Plan. The applicant appealed these decisions to the Tax Court of Canada. The Tax Court judge considered all the evidence and confirmed that the claimant had been an employee of the applicant. [7] The applicant argues that the respondent was either estopped from asserting before the Tax Court a position contrary to that adopted by the Board of Referees and not appealed; or that the matter is res judicata by virtue of the decision of the Board of Referees to the effect that the claimant was an independent contractor; or that for the Minister of National Revenue to argue a different position before the Tax Court was an abuse of process. [8] With respect to the arguments based on estoppel or res judicata, these doctrines can have no application where the first decision-maker had absolutely no jurisdiction to determine the issue it purported to decide. (See Angle v. MNR [1975] 2 SCR 248-257, Danyluk v. Ainsworth Technologies Inc. [2001] 2 SCR 460 at para. 51). Further, where the initial process was without any validity it cannot form the basis for alleged abuse of process. (See Rowett v. York Region Board of Education et al (1988), 63 OR (2d) 767, where it was held that abuse of process involves raising in a subsequent proceeding an issue that has previously been decided by a tribunal which had the jurisdiction to so decide). See also Lange, The Doctrine of Res Judicata in Canada (Toronto: Butterworths, 2000) at 90, 109, 358. [9] The applicant's arguments in this respect also proceed on the false premise that the various agencies of government involved are part of one monolithic entity all partaking of the same rights, powers, and responsibilities. That is not the case in fact or in law. The Employment Insurance Commission which has a measure of independence from other agencies has inter alia the power and responsibility to determine issues of entitlement to benefits for persons who file claims. The Commission's decisions in respect of benefits are subject to review by a Board of Referees and the decisions of Boards in respect of benefits may be appealed by the Commission, a claimant or the claimant's employer to an Umpire. In this case the Commission's decision that the claimant was entitled to benefits was appealed to the Board which allowed the appeal on the ground that the claimant had not been in insurable employment, an issue not properly before the Board. The Minister of National Revenue, who argued before the Tax Court for insurability of the employment, would have had no role or status to appeal the decision of the Board of Referees. The Commission would have had no apparent interest in appealing that decision and did not do so. The claimant would have had a direct interest but she did not appeal. In the meantime the Commission had referred to CCRA the question of whether the employment was insurable and the CCRA had already ruled on August 17, 2000 that it was. This was the agency which had the sole power and duty, subject to an internal appeal and then an appeal to the Tax Court, to decide on insurability. The CCRA would have been remiss in its duty if it did not determine this issue for itself, as would the Tax Court on appeal. [10] There is nothing in this whole situation which demonstrates unfairness so as to attract the strictures against abuse of process - unless it is the action of the applicant in pursuing the same plea, lack of insurability of the employment, simultaneously in two fora. It was aware on August 17, 2000 that the employment had been ruled insurable by the CCRA. Yet on September 12, 2000 it launched an appeal of the same issue to both the Board of Referees and the CCRA. [11] The applicant also contends that the Tax Court judge erred in law by applying the wrong legal test to the evidence. In particular it is said that the judge should have "started" with the written document, signed by the claimant but not the applicant, which stated that she was "self-employed as a private contractor" totally responsible for paying her own deductions. Counsel argued in effect that unless there is some very strong reason for concluding that the relationship is other than as described in a written contract a court should accept it as defining the relationship. [12] I have examined a number of the authorities cited but cannot find in the most authoritative ones such clear jurisprudence as to establish that this is a rule of law which judges ignore at their peril. [13] First, it is long recognized by this Court that how the parties label their relationship is not determinative. (Standing v. Canada (1992) 147 NR 238 (FCA) at 239-240; Wolf v. Canada [2002] FCJ No. 375 paras. 71-72). While the Tax Court judge noted the written document which Ms. Quock signed and which described her as an independent contractor, he did not regard it as a contract because it was not signed on behalf of the applicant company. He did not go so far as to say that there was no contract between the parties but only that this document was not it. In this I believe he was correct. He was entitled to give this statement in the document only limited weight as evidence of the actual agreement, especially since the owner of the business did not attach sufficient importance to it to sign it. On the basis of the jurisprudence he was entitled to look elsewhere to see what was the actual nature of the contractual relationship which did in fact exist. [14] The nature of these determinations has recently been reviewed by the Supreme Court. In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. et al 2001 SCC 59 at paras. [47] and [48], Major J. on behalf of the Court stated: [47] Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A., that a persuasive approach to the issue is that taken by Cooke, J., in Market Investigations, supra. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker's activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks. [48] It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case. I am satisfied that the Tax Court judge canvassed all of these questions that were relevant and made no error of law in the test he applied. There was evidence before him on which he could decide as he did and on judicial review this Court may not reverse on a finding of fact unless it was "made in a perverse or capricious manner or without regard to the material before [the tribunal]". (See Federal Court Act para. 18.1(4)(d)) That is certainly not the case here. [15] The application for judicial review should therefore be dismissed with costs. (s) "B.L. Strayer" J.A. I agree "John M. Evans" I agree "M. Nadon" FEDERAL COURT OF APPEAL NAMES OF COUNSEL AND SOLICITORS OF RECORD DOCKET: A-729-01 A-732-01 STYLE OF CAUSE: Nametco Holdings Ltd. v. MNR PLACE OF HEARING: Vancouver, British Columbia DATE OF HEARING: November 13, 2002 REASONS FOR JUDGMENT BY: STRAYER J.A. CONCURRED IN BY: NADON J.A. EVANS J.A. DATED: November 27, 2002 APPEARANCES: Mr. Joel Nitikman FOR THE APPLICANT Mr. Eric Douglas FOR THE RESPONDENT SOLICITORS OF RECORD: Fraser Milner Casgrain LLP Vancouver, B.C. FOR THE APPLICANT Morris Rosenberg, Deputy Attorney General of Canada FOR THE RESPONDENT