Wagner v. M.N.R.

Wagner v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2004-04-27 Neutral citation 2004 TCC 277 File numbers 2003-2683(EI) Judges and Taxing Officers Sylvio J. Savoie Subjects Employment Insurance Act Decision Content Docket: 2003-2683(EI) BETWEEN: THÉRÈSE WAGNER, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and 9112-8702 QUÉBEC INC., Intervenor. [OFFICIAL ENGLISH TRANSLATION] Appeal heard on December 4, 2003, at Trois-Rivières, Quebec Before: The Honourable Deputy Justice S. J. Savoie Appearances: Counsel for the Appellant: Jacques Dessureault Counsel for the Respondent: Claude Lamoureux Agent for the Intervenor: René Cloutier JUDGMENT The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, this 27th day of April 2004. "S. J. Savoie" Savoie D.J. Translation certified true on this 24th day of August 2004. Shulamit Day, Translator Citation: 2004TCC277 Date: 20040427 Docket: 2003-2683(EI) BETWEEN: THÉRÈSE WAGNER, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and 9112-8702 QUÉBEC INC., Intervenor. REASONS FOR JUDGMENT Savoie D.J. [1] This appeal was heard at Trois-Rivières, Quebec, on December 4, 2003. [2] This is an appeal of the insurability, within the meaning of the Employment Insurance Act (the "Act"), of the Appellant's employment when working for 9112-8702 Québec Inc., the Payor, during the period at issue, from May 1 to December 31, 2002. [3] On July 11, 2003, the Minister of National Revenue (the "Minister") informed the Appellant of the decision that she did not hold insurable employment during the period from May 1 to September 18, 2002, because she controlled more than 40% of the Payor's voting shares, but that for the period from September 19 to December 31, 2002, this employment was insurable because it met the requirements of a contract of service; there was, therefore, an employer-employee relationship between the Appellant and the Payor. [4] In making his decision, the Minister relied on the following presumptions of fact outlined at paragraph 5 of the Reply to the Notice of Appeal: [TRANSLATION] (a) The Payor was is incorporated on April 1, 2002; (no knowledge) (b) The Payor operated a bar under the name of "Bar L'Un et L'Autre"; (admitted) (c) At the time the Payor was incorporated, the Appellant held all the Payor's shares; (admitted) (d) On September 18, 2002, under the terms of a share sale agreement, the Appellant ceded to René Cloutier 65% of the Payor's voting shares; (admitted with explanations) (e) Section 8.00 of the sale agreement mentioned that the sale was retroactive to May 1, 2002; (admitted) (f) Section 9.00 of the sale agreement stated that the contract bound the parties and their legal representatives; (admitted) (g) During the period from May 1 to September 18, 2002, the Appellant held and controlled all the Payor's shares; (denied) (h) From May 1 to September 18, 2002, the Appellant was the Payor's only administrator; (no knowledge) (i) On September 18, 2002, the Appellant resigned as an administrator of the Payor; (admitted) (j) On September 18, 2002, René Cloutier became the Payor's only administrator; (no knowledge) (k) The Appellant provided services to the Payor seven days per week; (admitted) (l) The Appellant's duties included bar housekeeping, filling the refrigerators and balancing the cash; (no knowledge) (m) The Appellant was paid $350 per week, or $50 per day, regardless of the number of hours she worked; (admitted) (n) The Payor did not keep any record of the hours actually worked by the Appellant; (no knowledge) (o) The Payor and the Appellant agreed that the Appellant would work 35 hours per week, which represented five hours of work on each day worked; (no knowledge) (p) From September 19 to December 31, 2002, the Appellant worked 104 days; (admitted) (q) From September 19 to December 31, 2002, the Payor paid the Appellant $5,200, or 104 days at $50 each; (admitted) (r) The Appellant laid a complaint with the Commission des normes du travail(hereinafter referred to as the Commission) for unpaid wages; (no knowledge) (s) Acording to the Appellant's complaint to the Commission for the period between September 19, 2002 and December 31, 2002, the following amounts were due to her: (no knowledge) Statutory holiday: Thanksgiving $58.64 Statutory holiday: Christmas 50.00 4% vacation 212.35 Total $320.99 [5] The Appellant admitted the Minister's presumptions outlined in paragraphs (b), (c), (e), (f), (i), (k), (m), (p) and (q); she wanted to clarify paragraph (d); she denied paragraph (g) and declared she had no knowledge of the presumptions in paragraphs (a), (h), (j), (l), (n), (o), (r) and (s). [6] The Appellant did not attend the hearing. Counsel for the Respondent informed the Court that the Respondent had sent a notice to the Appellant by registered mail but the Appellant had not claimed this mailing. No explanation was provided for the Appellant's action. [7] At the hearing, Counsel for the Appellant explained his client was not present due to a lack of transportation. However, the Representative for the Intervenor, the Appellant's brother-in-law, told the Court that the previous evening he had offered to bring the Appellant to the hearing with him. [8] Furthermore, Counsel for the Appellant stated that he had met with his client at the end of October 2003, and that his office had received an envelope concerning this case but, as the result of an error by his office, it had not been given to her until the night before the hearing, on December 3, 2003. Counsel for the Appellant therefore requested that the hearing be postponed, explaining that he felt unable to adequately represent his client. This request was refused by the Court because the Appellant did not provide a valid reason for her absence from the hearing nor for having neglected to claim the notice of hearing that had been sent to her by registered mail. [9] The evidence revealed that the hours worked by the Appellant were not counted. The Court heard the testimony of the Payor's representative, René Cloutier. He testified that he did not control the Payor during the summer season, as the Appellant had asserted based on the contract he had signed with the Appellant, ceding the shares. He asserted that he was present and had supervised the Payor's operations but he did not control them. He explained the number of hours worked by the Appellant appearing on her Record of Employment (Exhibit I-1) by stating that since it was impossible for him to give the number of hours, the Board of Referees advised him to enter 35 hours per week as stated in the Employment Insurance Regulations (Unemployment Benefits), section 10.2. [10] It has to be determined whether the Appellant's employment during the period from May 1 to September 18, 2002, was insurable. Counsel for the Appellant claimed that during this period his client did not hold more than 40% of the Payor's voting shares since she had signed a contract with the Payor to cede the shares (Exhibit A-4) in which she gave the Payor the number of shares required for him to control the corporation, 65% of the voting shares. [11] Subsection 5(2) of the Act reads, in part, as follows: (2) Insurable employment does not include . . . (b) the employment of a person by a corporation if the person controls more than 40% of the voting shares of the corporation; . . . [12] Counsel for the Appellant maintained that his client re-established her insurability under the said contract. This contract ceding the shares was dated September 18, 2002, but the parties, at paragraph 8, wanted to make it retroactive to May 1, 2002. [13] However, the evidence revealed that before September 18, 2002, the Appellant still held the shares because, although ceded by the Appellant to the Payor, they were not transferred to the corporation's books until that date. [14] In the opinion of this Court, the insurability of the Appellant's employment did not change before September 18, 2002, because, notwithstanding the retroactivity enacted by the two shareholders at paragraph 8 of the contract to cede the shares, her status as shareholder had not changed. [15] The Appellant is asking this Court to intervene and set aside the Minister's decision. [16] It is clear, given the foregoing, that the Appellant did not succeed in discharging the burden of proof that was upon her. In addition, it must be added that the majority of the Minister's allegations relied upon in making the decision were admitted. In this respect, it is appropriate to recall the rule outlined by the Federal Court of Appeal in Elia v. Canada (Minister of National Revenue - M.N.R.), [1998] F.C.J. No. 316, in which Pratte, J. said: . . . the allegations in the reply to the notice of appeal, in which the Minister states the facts on which he based his decision, must be assumed to be true as long as the appellant has not proved them false. [17] As a result, the appeal is dismissed and the decision of the Minister is confirmed. Signed at Grand-Barachois, New Brunswick, this 27th day of April 2004. "S. J. Savoie" Savoie D.J. Translation certified true on this 24th day of August 2004. Shulamit Day, Translator