Primeau Métal inc. c. M.R.N.

Primeau Métal inc. c. M.R.N. Court (s) Database Tax Court of Canada Judgments Date 2005-02-16 Neutral citation 2005 TCC 111 File numbers 2004-415(EI) Judges and Taxing Officers Sylvio J. Savoie Subjects Employment Insurance Act Decision Content Docket: 2004-415(EI) BETWEEN: PRIMEAU MÉTAL INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on common evidence with the appeals of Robert Primeau (2004-425(EI)), Louise Primeau (2004-428(EI)) and Jean Primeau (2004-429(EI)) on December 14, 2004, at Montréal, Quebec Before: The Honourable S.J. Savoie, Deputy Judge Appearances: Agent for the Appellant: Robert Primeau Counsel for the Respondent: Emmanuelle Faulkner ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision rendered by the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005. "S.J. Savoie" Savoie D.J. Translation certified true on this 19h day of September 2005. Daniela Possamai, Translator Docket: 2004-425(EI) BETWEEN: ROBERT PRIMEAU, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on common evidence with the appeals of Primeau Métal Inc. (2004-415(EI)), Louise Primeau (2004-428(EI)) and Jean Primeau (2004-429(EI)) on December 14, 2004, at Montréal, Quebec Before: The Honourable S.J. Savoie, Deputy Judge Appearances: For the Appellant: The Appellant himself Counsel for the Respondent: Emmanuelle Faulkner ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision rendered by the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005. "S.J. Savoie" Savoie D.J. Translation certified true on this 19h day of September 2005. Daniela Possamai, Translator Docket: 2004-428(EI) BETWEEN: LOUISE PRIMEAU, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on common evidence with the appeals of Primeau Métal Inc. (2004-415(EI)), Robert Primeau (2004-425(EI)) and Jean Primeau (2004-429(EI)) on December 14, 2004, at Montréal, Quebec Before: The Honourable S.J. Savoie, Deputy Judge Appearances: Agent for the Appellant: Robert Primeau Counsel for the Respondent: Emmanuelle Faulkner ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision rendered by the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005. "S.J. Savoie" Savoie D.J. Translation certified true on this 19h day of September 2005. Daniela Possamai, Translator Docket: 2004-429(EI) BETWEEN: JEAN PRIMEAU, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on common evidence with the appeals of Primeau Métal Inc. (2004-415(EI)), Robert Primeau (2004-425(EI)) and Louise Primeau (2004-428(EI)) on December 14, 2004, at Montréal, Quebec Before: The Honourable S.J. Savoie, Deputy Judge Appearances: Agent for the Appellant: Robert Primeau Counsel for the Respondent: Emmanuelle Faulkner ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision rendered by the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005. "S.J. Savoie" Savoie D.J. Translation certified true on this 19h day of September 2005. Daniela Possamai, Translator Citation: 2005TCC111 Date: 20050216 Docket: 2004-415(EI) BETWEEN: PRIMEAU MÉTAL INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, AND Docket: 2004-425(EI) ROBERT PRIMEAU, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, AND Docket: 2004-428(EI) LOUISE PRIMEAU, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, AND Docket: 2004-429(EI) JEAN PRIMEAU, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT Savoie D.J. [1] The appeals were heard on evidence at Montréal, Quebec, on December 14, 2004. [2] The issue is whether Robert Primeau, Louise Primeau and Jean Primeau, the workers, held insurable employment, within the meaning of the Employment Insurance Act (the "Act" ), from January 1, 2002, to July 11, 2003, while employed with the Appellant. [3] On December 8, 2003, the Minister of National Revenue (the "Minister) informed the Appellant of his decisions according to which the workers held insurable employment with the Appellant during the period at issue. [4] The Minister determined that the workers held insurable employment with the Appellant in accordance with the contract of service based on the following presumptions of fact: (a) the Appellant was incorporated on November 28, 1962; (admitted) (b) the Appellant operated a business specializing in manufacturing, selling and installing gutters; (admitted) (c) the Appellant hired between 20 and 25 employees of which 8 did administrative work and 12 to 15 worked in service and manufacturing; (admitted) JEAN PRIMEAU (d) the worker Jean Primeau was employed with the Appellant for 20 years; (admitted with additional details) (e) Jean Primeau was a sales representative and director of installations; (denied) (f) Jean Primeau's duties consisted of selling products, hiring and supervising staff, training employees, overseeing purchases and managing accounts payable; (admitted with additional details) (g) Jean Primeau usually worked between 40 and 50 hours per week; (admitted) (h) Jean Primeau worked on the clients' and Appellant's premises;(admitted) (i) the Appellant had the power to control Jean Primeau's work;(admitted in part) (j) Jean Primeau was paid a base salary of $6.00 per hour for 40 hours per week and on top he received 23% commission on net sales; (admitted in part) (k) Jean Primeau was paid by direct deposit each week;(admitted) (l) in case of absence, Jean Primeau had to notify the Appellant; (admitted in part) (m) Jean Primeau provided his automobile and his expenses were reimbursed by the Appellant; (denied) (n) all the material and equipment Jean Primeau used belonged to the Appellant; (denied) (o) there was no financial risk to Jean Primeau in performing his duties; (denied) (p) Jean Primeau's duties were integrated into the Appellant's activities; (admitted) LOUISE PRIMEAU (q) the worker Louise Primeau was employed with the Appellant for 5 years; (admitted) (r) Louise Primeau was an accounting clerk; (denied) (s) Louise Primeau's duties consisted of providing technical support to the Appellant's internal comptroller, being responsible for recovery, verifying accounts payable and preparing cheques; (admitted in part) (t) Louise Primeau usually worked between 15 and 25 hours per week; (denied) (u) Louise Primeau worked on the Appellant's premises;(admitted) (v) Louise Primeau followed the comptroller's directives in performing her duties; (denied) (w) the Appellant had the power to control Louise Primeau's work; (admitted) (x) Louise Primeau was paid a base salary of $10.00 per hour; (admitted) (y) Louise Primeau was paid by direct deposit each week;(admitted) (z) Louise Primeau received a $1,000 bonus during the period at issue; (admitted in part) (aa) in case of absence, Louise Primeau had to notify the Appellant; (denied) (bb) all the material and equipment Louise Primeau used belonged to the Appellant; (admitted) (cc) there was no financial risk to Louise Primeau in performing her duties; (denied) (dd) Louise Primeau duties were integrated into the Appellant's activities; (admitted) ROBERT PRIMEAU (ee) the worker Robert Primeau was employed with the Appellant for 20 years; (ff) Robert Primeau was a sales representative and responsible for the machinery and a technical advisor; (gg) Robert Primeau's duties consisted of selling products, supervising manufacturing, managing machinery sector employees, overseeing machinery maintenance and repair; (admitted in part) (hh) Robert Primeau usually worked 50 hours per week;(admitted) (ii) Robert Primeau worked on the clients' and Appellant's premises; (jj) the Appellant had the power to control Robert Primeau's work; (kk) Robert Primeau was paid a base salary of $6.00 per hour for 40 hours per week and on top he received 23% commission on net sales; (ll) Robert Primeau was paid by direct deposit each week; (mm) in case of absence, Robert Primeau had to notify the Appellant; (nn) Robert Primeau provided his automobile and his expenses were reimbursed by the Appellant; (oo) all the material and equipment Robert Primeau used belonged to the Appellant; (pp) there was no financial risk to Robert Primeau in performing his duties; (qq) Robert Primeau's duties were integrated into the Appellant's activities; 6. The Appellant and the workers are related persons within the meaning of the Income Tax Act because: (a) the Appellant's shareholders with voting shares were as follows: Rolland Primeau 99% of voting shares Louise Primeau 1% of voting shares (admitted) (b) Rolland Primeau is the father of Jean, Louise and Robert Primeau; (admitted) (c) Rolland Primeau, Jean Primeau, Louise Primeau and Robert Primeau are all connected by blood relationship; (admitted) (d) each of the workers is connected by blood relationship to Rolland Primeau who controls the Appellant. 7. The Minister also determined that the Appellant and the workers were deemed to deal with each other at arm's length where employment was concerned because he was satisfied that it was reasonable to conclude that the Appellant and the workers would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length, having regard to the following circumstances of the employment: 8. JEAN PRIMEAU (a) the worker Jean Primeau was always paid; (admitted) (b) the other two unrelated sales representatives, the one had been working for the Appellant for 5 years and the other since 2002, received commissions at the rate of 18%; (admitted) (c) the discrepancy in the commission rate between the sales representatives was justified by the fact that Jean Primeau had more years of experience and by Jean Primeau's training and management work; (denied) (d) Jean Primeau's base salary was reasonable considering the additional administration and management duties; (denied) (e) the remuneration paid to Jean Primeau was reasonable considering the duties performed; (to be completed) (f) Jean Primeau's working hours were regular and not exaggerated; (admitted) (g) Jean Primeau did not receive benefits from the Appellant, other than those provided to all of the Appellant's employees; (denied) (h) Jean Primeau's employment terms were reasonable;(admitted) (i) Jean Primeau worked for the Appellant without stoppage of work for 20 years; (admitted-30 years) (j) Jean Primeau's work coincided with the Appellant's needs;(admitted) (k) the duration of employment of the worker Jean Primeau was reasonable; (admitted) (l) Jean Primeau's work was essential to the successful operation of the Appellant's company; (admitted) (m) the work performed by Jean Primeau was important for the Appellant's company; (admitted) (n) the nature and importance of Jean Primeau's work were reasonable; (admitted) LOUISE PRIMEAU (o) the worker Louise Primeau was always paid;(admitted) (p) the remuneration paid to Louise Primeau was reasonable considering the duties performed; (admitted) (q) Louise Primeau's working hours were regular and not exaggerated; (admitted) (r) Louise Primeau did not receive benefits from the Appellant, other than those provided to all of the Appellant's employees; (denied) (s) Louise Primeau's employment terms were reasonable;(admitted) (t) Louise Primeau worked for the Appellant without stoppage of work for 5 years; (admitted) (u) Louise Primeau's work coincided with the Appellant's needs; (to be completed) (v) Louise Primeau's duration of employment was reasonable;(admitted) (w) Jean Primeau's work was essential to the successful operation of the Appellant's company; (to be completed) (x) the work performed by Louise Primeau was important for the Appellant's company; (to be completed) (y) the nature and importance of Louise Primeau's work were reasonable; (admitted) ROBERT PRIMEAU (z) the worker Robert Primeau was always paid; (aa) the other two unrelated sales representatives, the one had been working for the Appellant for 5 years and the other since 2002, received commissions at the rate of 18% (bb) the discrepancy in the commission rate between the sales representatives was justified by the fact that Robert Primeau had more years of experience and by Robert Primeau's training and management work; (cc) Robert Primeau's base salary was reasonable considering the additional administration and management duties; (dd) the remuneration paid to Robert Primeau was reasonable considering the duties performed; (ee) working hours were regular and not exaggerated; (ff) Robert Primeau did not receive benefits from the Appellant, other than those provided to all of the Appellant's employees; (gg) Robert Primeau's employment terms were reasonable (hh) Robert Primeau worked for the Appellant without stoppage of work for 20 years; (ii) Robert Primeau's work coincided with the Appellant's needs; (jj) Robert Primeau's duration of employment was reasonable; (kk) Robert Primeau's work was essential to the successful operation of the Appellant's company; (ll) the work performed by Robert Primeau was important for the Appellant's company; (mm) the nature and importance of Robert Primeau's work were reasonable. [5] It should be noted that at the hearing, the representative and spokesperson for all the Appellants, Robert Primeau, argued that, considering the numerous similarities in the circumstances involving the employment of the workers Jean and Robert Primeau, the response of one to the Minister's presumptions with respect to his employment is also applicable in the case of the other. [6] The evidence revealed that Jean and Robert Primeau were employed with the Appellant for more than 20 years. As for Louise Primeau, she was with the company for 5 years. [7] The Appellants noted that beyond the duties the Minister attributed to them, the workers Jean Primeau and Robert Primeau both participate in the Appellant's decision-making while on the board of directors of the Appellant's corporation. Both are directors of corporations associated with the Appellant and make decisions affecting the company's operations, often without consultation. As for the worker Jean Primeau, he is in charge of advertising, whereas Robert Primeau is in charge of insurance, research and development and operational problems. [8] As for the worker Louise Primeau, she is a biochemist by training; she is a mother and was asked by the Appellants to join them. She was provided training aimed at gradually integrating her into the company's operations and ensure her a full position within the company like her brothers, as is the case for her and her brothers in the eventual succession of their father who still holds 99% of the Appellant's voting shares. [9] It was established that control, if any, was exercised by three people, between the workers or by four people, in consultation with the majority shareholder Rolland Primeau. Decisions of importance for the company were made by the board on which they all served. The workers admitted that they received a base salary. The salary was set by them and could be changed, if they so decided, taking into account the Appellant's liquidity and the Appellant's best interests, which they all had at heart. The female worker occasionally received bonuses. [10] The workers could take time off without notice or permission, on a daily basis, but where vacation was concerned, it stands to reason that they notified the others so as not to affect operations and out of common courtesy. They could all come and go as they pleased and did not have a start and end time or a fixed schedule. The worker Louise Primeau usually took Tuesdays off and, generally speaking, had a flexible schedule and did as she pleased. [11] It was demonstrated that the workers Jean and Robert Primeau used their automobile on behalf of the Appellant. However, they bore all the expenses. [12] The evidence revealed that the workers Jean and Robert Primeau worked from home a lot, in the evenings, using their personal computer and their material to advertise for the Appellant. [13] The workers believe that in exercising their duties, they ran the risk of losing a lot if the Appellant were to suffer losses, as may occur in any company. They decide their salary based on the company's financial means and that should be adjusted, based on the Appellant's successes and failures. The workers are the legatees of their father, who, according to his will and the trust he created, bequeathes to them his shares in the company he founded. [14] According to them, unlike salaried workers, their wages must undergo fluctuations attributable to commercial conditions affecting the Appellant's business. [15] The workers questioned the Minister's conclusion, set out in paragraph 7 of his Reply to Notice of Appeal, as well as the circumstances he relied on to determine, in the case at bar, that unrelated workers concluded contracts of employment with the Appellant that were very similar to those of the workers. [16] The Appellant argued that no sales representative employed with it was paid commission at a rate greater than 18 per cent. According to it, no unrelated worker was entitled to a commission of 23 per cent. The Appellant stated that the workers Jean and Robert Primeau were entitled to commissions at that rate because they are family members operating the business. It was noted that if the Appellant were to experience a reduction in projects, the rate of these two workers' commissions would have to be reduced. [17] According to the Appellant, the same goes for their base salary, which is adjustable, left open, and subject to fluctuations in profits. [18] The Appellant also submitted that the worker Louise Primeau received benefits which the other unrelated employees were not entitled to. [19] Therefore, unlike the others, she has a flexible schedule which she herself establishes. The Appellant stated that she is still in training and will, along with her brothers, become a full participant in the company's decisions. She is already on the board of directors. Like her brothers, she is the heir of the Appellant's founder, her father, Rolland Primeau. [20] The evidence revealed that the workers have been involved in the company since they were young, especially Robert and Jean Primeau. They have been trained to run the company and ensure succession. [21] The company's founder stated at the hearing that he is no longer as present, on a daily basis, as he used to be. He leaves this to the succession, the workers, who, he said, are responsible for important things and keep him abreast of what goes on. Rolland Primeau stated at the hearing that he disagrees with the Minister's decision that the workers would have received the same benefits, had they not been related to him or had ties to the company: [translation] "With strangers," he said, "I would have been concerned; within the same family, you think the same way." He argued that strangers would not be his heirs and added that in the absence of his children in the company, the latter would have been sold; the business would no longer exist. [22] It was established that the major decisions, such as the expansion project, are made by the family, that is, Rolland Primeau, his wife and the workers. Rolland Primeau stated that the worker's participation in major decisions is risky for the latter because their inheritance is at stake. [23] Rolland Primeau is on pre-retirement leave. The evidence established that the Appellant's major decisions are made by five people; that is by him, his wife and the workers. Rolland Primeau never disposed of his majority shares. [24] The workers have a free reign in managing the company. Their father regularly receives the company's balance sheets and there is consultation between the workers and their father. Rolland Primeau stated that the workers intend to take over and assume full management of the company as well as the majority of shares, but it was admitted that in the event of serious financial problems or mismanagement, Rolland Primeau would have to intervene to make the necessary corrections and changes to satisfy the suppliers and banking institutions. [25] From the perspective of the majority shareholder Rolland Primeau, he left the company's management to the workers. He never intervened to impose his wishes against their will. However, he admitted that certain circumstances could and should induce him to intervene. [26] The determination of this matter rests, in the case at bar, on the interpretation of the role of the person or persons who exercise control and power over the company. The Minister's decision was made based on that criterion. Therefore, the Minister ruled that Rolland Primeau retained de facto control of the company. In that capacity, according to the Minister, he can intervene at any time. The fact that he never exercised that power is of no importance. The important thing is that he still retains that power. [27] Tardif J. of this Court had to rule on a similar matter in Industries J.S.P. Inc. v.Canada(Minister of National Revenue - M.N.R.), [1999] T.C.J. No. 423. He stated as follows: When a person occupies a strategic, executive position in a business, it is customary and normal for the job description to be very difficult to define. A partner or an individual taking part in the management of a business can hardly hope for a clearly defined, specific, limited job description. Contributing to and being a partner in the management, administration or development of a business, particularly a small business, means that a person's job description is strongly marked by responsibilities characteristic of those often fulfilled by actual business owners or persons holding more than 40 per cent of the voting shares in the company employing them. In other words, in assessing remuneration, at this level of responsibility, caution must be exercised when a comparison is made with the salaries of third parties; often there are advantages that offset the lower salaries. In this case, the work performed by Marie-Claude Perreault and her brothers was in many respects comparable to the work performed by business owners. That fact alone is not decisive or sufficient to exclude their work from insurable employment, particularly since the company employing them never waived its power to exercise control over their work. It is possible and common for individuals, particularly in executive positions, to dedicate themselves totally to the business of the company employing them. Motivation, the desire to develop the business, and pride in contributing to the business's prosperity are all reasons for some individuals' fervour and enthusiasm for their work. One often encounters situations in which persons invest themselves totally in the business and pay is not based essentially on the hours worked. Dedication and enthusiasm are often recognized and compensated when a business is successful. It is always very difficult to draw comparisons among the advantages and disadvantages relating to a strategic position in a business. In addition to this difficulty, there is the further interest resulting from the ownership of participating shares. The tests set out in the case law become very helpful in identifying the nature of the employment contract. In this case, the evidence has established that the appellant company never waived its power to exercise control over the work performed by the Perreault family members. Nor did these persons have any chance of profit or risk of loss. They worked with equipment provided to them by the company. Lastly, their work was fully integrated into the company's activities. [28] Moreover, another decision by Tardif J. in Roxboro Excavation Inc. v. Canada (Minister of National Revenue - M.N.R., [1999] T.C.J. No. 32, which was appealed, was upheld by the Federal Court of Appeal. The following paragraphs are particularly relevant in the case at bar: The Minister of National Revenue ("the Minister") argued that the Théorêt brothers performed their work and exercised their respective responsibilities for and on behalf of Roxboro pursuant to a contract of service. To support the soundness of his determination, the respondent referred to the various tests set out in the case law, inter alia in Montreal v. Montreal Locomotive Works Ltd. et al., [1947] 1 D.L.R. 161, at pp. 169-70, and Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553. [...] The key issue in this case is basically whether there was in 1996 a relationship of subordination between the company paying the remuneration and the interveners. In other words, did the company have the power to control and influence the work done by the Théorêt brothers? In this regard, I consider it important to point out that the courts have often said that it is not mandatory or necessary that the power to control actually be exercised; in other words, the fact that an employer does not exercise its right to control does not mean that it loses that power, which is absolutely essential to the existence of a contract of service. The power to control or the right to influence the performance of work is the main component of the relationship of subordination that lies behind a genuine contract of service. Assessing whether or not a relationship of subordination exists is difficult when the individuals who hold authority by virtue of their status as shareholders and/or directors are the same individuals who are subject to a power to control or to the exercise of authority in respect of specific work. Put differently, it is difficult to draw a clear line when a person is an employee and in part an employer all at the same time. [...] The evidence showed that each of the Théorêt brothers had authority and independence and even had carte blanche in performing the work for which he was responsible. The evidence also showed that decisions were made informally, collegially and by consensus. [...] In the case at bar, the fact that authority did not seem to be exercisable against the Théorêt brothers and that decisions concerning the company were made by consensus and collegially does not mean that the company was deprived of its authority over the work done by the interveners. The evidence did not show that the company had waived its power to influence their work or that its right to do so was reduced, limited or revoked. [29] Nothing in the evidence indicates that Rolland Primeau did anything to transfer his majority shares to anyone, or his control of the company, or his voting shares. [30] Based on the analysis of facts presented under the Act, particularly under paragraphs 5(1)(a) and 5(2)(i), and under the criteria contained in case law, particularly in Montreal v. Montreal Locomotive Works Ltd. et al. and WiebeDoor Services Ltd., supra, the Court finds that it was proven that the workers held insurable employment within the meaning of the Act during the period at issue because, during that period, the Appellant and the workers were bound by a contract of service. [31] The workers are the children of the company's majority shareholder, Rolland Primeau. The workers and the Appellant are therefore related within the meaning of section 251 of the Income Tax Act. Consequently, their employment is not insurable employment under paragraph 5(2)(i) of the Act. However, the Act prescribes in paragraph 5(3)(b) that if the employer is related to the employee, having regard to 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. Consequently, the parties are deemed to deal with each other at arm's length. Therefore, their employment is not part of employment that is not insurable under paragraph 5(2)(i) of the Act. REMUNERATION PAID [32] The remuneration paid is reasonable having regard to the nature and importance of the work performedby the workers. The discrepancy in the rate of commission between the workers (23 per cent) and the other unrelated sales representatives (18 per cent) can be justified by the workers' experience within the company. [33] The base salary granted to the workers seems reasonable considering their additional administration and management duties. TERMS AND CONDITIONS [34] The workers did not receive any fringe benefits from the company other than those granted to the other unrelated employees. The workers must be available to perform all the duties required by the company. DURATION OF THE WORK [35] The workers have been performing services for the Appellant for many years, especially Robert Primeau and Jean Primeau, that is to say, for more than 20 years, on a full-time basis and without interruption. As for the worker Louise Primeau, she has been employed with the Appellant for over five years, on a full-time basis and without interruption. NATURE AND IMPORTANCE OF THE WORK [36] The management, administration, selling and accounting work performed by the workers are indispensable for the smooth operation of the company. [37] The Minister therefore concluded this exercise by noting that the Appellant and the workers would have entered into such a contract of employment if they had been dealing with each other at arm's length and that their employment was not insurable employment under paragraph 5(2)(i) of the Act. [38] In Légaré v. Canada(Minister of National Revenue - M.N.R.), [1999] F.C.A. No. 878, the Federal Court of Appeal defined the role of the Court when called upon to review the merits of the Minister's decision. Marceau J., speaking on behalf of the Court, stated as follows: [...]The Court is not mandated to make the same kind of determination as the Minister and thus cannot purely and simply substitute its assessment for that of the Minister: that falls under the Minister's so-called discretionary power. However, the Court must verify whether the facts inferred or relied on by the Minister are real and were correctly assessed having regard to the context in which they occurred, and after doing so, it must decide whether the conclusion with which the Minister was "satisfied" still seems reasonable. [39] After reviewing and analyzing the facts in the case at bar, the Court is of the opinion that the Minister's conclusion still seems reasonable. [40] The issue to be determined now is whether the employment in question meets the criteria used to decide whether it is in accordance with a contract of service. Subsection 5(1)(a) of the Act defines insurable employment as follows: 5. (1) Subject to subsection (2), insurable employment is a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise; . . . [41] In Wiebe Door Services Ltd. v. M.N.R., supra, the Federal Court of Canada established a series of tests to determine whether a contract is one of service or for the provision of services. While not exhaustive the following are four tests most commonly referred to: (a) The degree or absence of control, exercised by the alleged employer. (b) Ownership of tools. (c) Chance of profit and risks of loss. (d) Integration of the alleged employees' work into the alleged employer's business. CONTROL [42] The little control over the workers' daily operations is justified by the nature of the duties and by the workers' extensive work experience. Moreover, it was demonstrated that the company's majority shareholder never disposed of his control although exercised only sparingly. As the Federal Court of Appeal held in Gallant v. M.N.R. (F.C.A.), [1986] F.C.A. No. 330: [...] In the Court's view, the first ground is based on the mistaken idea that there cannot be a contract of service unless the employer actually exercises close control over the way the employee does his work. The distinguishing feature of a contract of service is not the control actually exercised by the employer over his employee but the power the employer has to control the way the employee performs his duties. [...] OWNERSHIP OF TOOLS [43] All tools used by the workers as part of their duties were the property of the Appellant, except for their personal computer. The workers provided their personal vehicle at their own expense, but they participated in the company's profits. RISK OF FINANCIAL LOSSES/POSSIBILITY OF FINANCIAL GAINS [44] The workers did not run the risk of financial loss and were not subject to the possibility of financial gains because they were paid a fixed salary on a regular basis. INTEGRATION [45] The duties performed by the workers were an integral part of the Appellant's activities. Therefore, the answer to the question "who does the company belong to" would have to be "the Appellant". [46] As a result, there was a contract of service between the workers and the Appellant during the period at issue. [47] The Court must therefore conclude that the workers held insurable employment during the period at issue because their employment was performed under a contract of service, within the meaning of paragraph 5(1)(a) of the Act. [48] In addition, their employment was insurable because they were not subject to paragraph 5(2)(i) of the Act. In fact, the Appellant and the workers are deemed to deal with each other at arm's length where employment is concerned because it is reasonable to conclude, having regard to all the circumstances of the employment, that the Appellant and the workers would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length. [49] Consequently, the appeals are dismissed and the Minister's decisions are confirmed. Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005. "S.J. Savoie" Savoie D.J. Translation certified true on this 19h day of September 2005. Daniela Possamai, Translator CITATION: 2005TCC111 COURT FILE NUMBERS: 2004-415(EI), 2004-425(EI), 2004-428(EI) and 2004-429(EI) STYLE OF CAUSE: Primeau Métal Inc. and M.N.R., Robert Primeau and M.N.R., Louise Primeau and M.N.R. and Jean Primeau and M.N.R. PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: December 14, 2004 REASONS FOR JUDGMENT BY: The Honourable S.J. Savoie, Deputy Judge DATE OF JUDGMENT: February 16, 2005 APPEARANCES: For the Appellants: Robert Primeau For the Respondent: Emmanuelle Faulkner COUNSEL OF RECORD: For the Appellants: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada