A-599-96
Attorney General of Canada (Applicant)
v.
Jencan Ltd. (Respondent)
Indexed as: Canada (Attorney General)v. Jencan Ltd. (C.A.)
Court of Appeal, Isaac C.J., Stone and McDonald JJ.A."Fredericton, May 8; Ottawa, June 24, 1997.
Unemployment insurance — Appeal from T.C.C. decision quashing M.N.R.'s determination worker's employment not —insurable employment— under the Act — In earlier case, Minister finding respondent, worker not dealing at arm's length, employment not insurable — Terms, conditions of employment in instant case —basically the same— — Contract of service between worker, respondent required under Act, s. 3(1)(a) — Considering large number of appeals from ministerial determinations under s. 3(2)(c)(ii), Court providing clarification of law — T.C.C. must undertake two-stage inquiry — Discretionary power conferred upon Minister to make determinations under Act, s. 3(2)(c)(ii) — Judicial deference not extending to Minister's findings of fact — T.C.J. failing to consider whether Minister exercised discretionary authority properly.
Administrative law — Judicial review — Certiorari — T.C.C. reversing M.N.R.'s determination worker's employment not insurable under Unemployment Insurance Act, s. 3(1)(a) — Minister said to have improperly relied upon T.C.C.'s previous decision between same parties — Whether T.C.J. erred in interfering with discretionary determination by Minister under Act, s. 3(2)(c)(ii) — Minister granted discretionary power to determine whether employer, worker deemed to deal at arm's length — Tax Court's intervention justified only if Minister exercised discretion in manner contrary to law — Judicial deference not extending to Minister's findings of fact — T.C.J. failing to consider whole evidence — Judicial deference not accorded.
This was an application for judicial review of a decision of the Tax Court of Canada quashing a determination by the Minister of National Revenue that a worker's employment was not "insurable employment" under the Unemployment Insurance Act. The worker in question had worked intermittently for the respondent during three periods, from June 29, 1992 to March 20, 1993, from August 16, 1993 to May 7, 1994 and from July 4, 1994 to January 7, 1995. The Minister ruled that the worker's employment during the first two periods was not insurable employment as the respondent and the worker were not dealing at arm's length, and that such employment was excepted under paragraph 3(2)(c) of the Act. In that earlier case, Jencan No. 1, the Tax Court of Canada held that the Minister had before him sufficient evidence to conclude that the parties were not dealing at arm's length and dismissed the respondent's appeal. Shortly after, the respondent requested that the Minister determine whether the worker's employment for the period from July 4, 1994 to January 7, 1995 was insurable employment. Based on the employer's statement that the terms and conditions of the worker's employment during the period in question were "basically the same" and relying upon a number of assumptions of fact, the Minister again determined that the worker's employment during that period was not insurable employment. The Deputy Tax Court Judge set aside the Minister's determination, finding that there were material differences in the worker's terms and conditions of employment during the period in question and that the Minister improperly exercised his discretion in relying upon allegations which had been disproved by the evidence. The two main issues on this appeal were whether the Deputy Tax Court Judge erred in law 1) in finding that the worker was employed pursuant to a contract of service, and 2) in interfering with the discretionary determination made by the Minister under subparagraph 3(2)(c )(ii) of the Act.
Held, the application should be allowed.
1) The Minister ruled that the worker's employment was not insurable on the grounds that there was no genuine contract of service between the respondent and the worker as required by paragraph 3(1)(a), and that the worker's employment was excepted from insurability under paragraph 3(2)(c). On appeal, the Tax Court must consider whether there is a sufficient factual foundation for the Minister's determination on either or both grounds. It must therefore review each of the grounds separately in light of the evidence. The Minister's determination under paragraph 3(1)(a), that the worker's employment is not pursuant to a contract of service, was a quasi-judicial decision subject, on appeal, to independent review by the Tax Court. It cannot be said that the Deputy Tax Court Judge erred in law in reversing that determination. It was open to him, on an independent review, to find that the evidence supported the existence of a genuine contract of service between the respondent and the worker. In so concluding, however, he stated simply that there did exist between the respondent and the worker "real legal ties". The real issue in paragraph 3(1)(a ) is whether the worker was employed pursuant to a contract of service or a contract for service. Either form of employment can create "real legal ties" between the parties. But, in order to satisfy the requirement of paragraph 3(1)(a ), there must be a genuine contract of service which means that there is a relationship of subordination between the parties. Despite scant reasoning on the part of the Deputy Tax Court Judge, there is no basis in law for interfering with his conclusion on this issue.
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.
2) The Tax Court must undertake a two-stage inquiry when hearing an appeal from a determination by the Minister under subparagraph 3(2)(c)(ii). The first stage is confined to determining the legality of the Minister's decision. Only if there is ground for interference may it consider the merits of that decision. The jurisdiction of the Tax Court to review a determination by the Minister under subparagraph 3(2)(c)(ii) is circumscribed by the discretionary power conferred upon him to make such determination. Therefore, the Tax Court must show judicial deference to the Minister's determination when he exercises that power. But even discretionary powers are subject to review to ensure that they are exercised in a manner consistent with the law. Under the rule of law, all powers granted by Parliament are of an inherently limited nature. The Deputy Tax Court Judge was justified in interfering with the Minister's determination under subparagraph 3(2)(c)(ii) only if the latter exercised his discretion in a manner contrary to law. Although the previous decision in Jencan No. 1 was not by itself an "irrelevant factor", the Minister's representative erred in relying exclusively upon the assumptions of fact from that decision without obtaining reliable confirmation that the facts were indeed the same. While the Tax Court must exhibit judicial deference with respect to a determination by the Minister under subparagraph 3(2)(c )(ii), this judicial deference does not extend to the Minister's findings of fact. In assessing the manner in which the Minister has exercised his statutory discretion, the Tax Court may have regard to the facts that have come to its attention during the hearing of the appeal. The Minister may rely upon the doctrine of estoppel by representation where a claimant induces him to rely on a state of affairs which no longer exists. But, in this case, the preconditions for application of that doctrine have not been made out. The respondent's statement that the worker's terms and conditions of employment were "basically the same as previous years" was too equivocal and ambiguous to support such an application. The Deputy Tax Court Judge erred in law in concluding that, because some of the assumptions of fact relied upon by the Minister had been disproved at trial, he was automatically entitled to review the merits of the determination made by the Minister. He should have asked whether the remaining facts proved at trial were sufficient in law to support the Minister's determination that the parties would not have entered into a substantially similar contract of service if they had been at arm's length. It is only where the Minister's determination lacks a reasonable evidentiary foundation that the Tax Court's intervention is warranted. The Deputy Tax Court Judge erred in law in failing to determine whether the Minister could have legally concluded as he did on the facts as proven before him. In so doing, he failed to exhibit the degree of judicial deference required when reviewing ministerial determinations under subparagraph 3(2)(c )(ii).
statutes and regulations judicially considered
Federal Court Act, R.S.C., 1985, c. F-7, ss. 18.1(3) (as enacted by S.C. 1990, c. 8, s. 5), 28(2) (as am. idem, s. 8).
Income Tax Act, R.S.C., 1985 (5th Supp.), c. 1, s. 251(1),(2).
Unemployment Insurance Act, R.S.C., 1985, c. U-1, ss. 3(1)(a), 3(2)(c) (as am. by S.C. 1990, c. 40, s. 2), 4(1),(2), 61(3) (as am. idem, s. 37), 70(1),(2) (as am. by R.S.C., 1985 (4th Supp.), c. 51, s. 23), 71(1).
cases judicially considered
applied:
Tignish Auto Parts Inc. v. Minister of National Revenue (1994), 25 Admin. L.R. (2d) 1; 185 N.R. 73 (F.C.A.); Canada v. Schnurer Estate, [1997] 2 F.C. 545; (1997), 208 N.R. 339 (C.A.); Ferme Émile Richard et Fils Inc. v. Minister of National Revenue et al. (1994), 178 N.R. 361 (F.C.A.); D. R. Fraser and Co., Ld. v. Minister of National Revenue, [1949] A.C. 24 (P.C.); Desroches v. Minister of National Revenue (1994), 167 N.R. 316 (F.C.A.); Canada (Minister of Employment and Immigration) v. Lidder, [1992] 2 F.C. 621; (1992), 6 Admin. L.R. (2d) 62; 16 Imm. L.R. (2d) 241; 136 N.R. 254 (C.A.).
considered:
Jencan Ltd. v. Canada (Minister of National Revenue — M.N.R.), [1995] T.C.J. No. 1142 (QL); Xie v. Minister of Employment and Immigration (1994), 75 F.T.R. 125 (F.C.T.D.).
referred to:
Canada (Attorney General) v. Charbonneau (1996), 41 C.C.L.I. (2d) 297; 207 N.R. 299 (F.C.A.); Hébert v. Canada (Minister of National Revenue—M.N.R.), [1997] F.C.J. No. 512 (C.A.) (QL); Boulis v. Minister of Manpower and Immigration, [1974] S.C.R. 875; (1972), 26 D.L.R. (3d) 216; Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3; (1992), 88 D.L.R. (4th) 1; [1992] 2 W.W.R. 193; 84 Alta. L.R. (2d) 129; 3 Admin. L.R. (2d) 1; 7 C.E.L.R. (N.S.) 1; 132 N.R. 321; Canada (Attorney General) v. Purcell, [1996] 1 F.C. 644; (1995), 40 Admin. L.R. (2d) 40; 96 CLLC 141,075; 192 N.R. 148 (C.A.); Aubut v. Minister of National Revenue (1990), 126 N.R. 381 (F.C.A.); Borsellino and Salvo v. Minister of National Revenue (1990), 120 N.R. 77 (F.C.A.); Canada (Attorney General) v. Dunham, [1997] 1 F.C. 462; (1996), 205 N.R. 289 (C.A.); Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748; (1997), 144 D.L.R. (4th) 1; 71 C.P.R. (3d) 417; 209 N.R. 20; Nuttall v. Canada (Minister of National Revenue—M.N.R.), [1997] F.C.J. No. 640 (C.A.) (QL); Thibaudeau v. M.N.R., [1994] 2 F.C. 189; (1994), 114 D.L.R. (4th) 261; 21 C.R.R. (2d) 35; [1994] 2 C.T.C. 4; 94 DTC 6230; 167 N.R. 161; 3 R.F.L. (4th) 153 (C.A.); Chan v. Minister of Employment and Immigration (1994), 79 F.T.R. 263; 24 Imm. L.R. (2d) 305 (F.C.T.D.); Ali v. Canada (Minister of Employment and Immigration), [1994] 3 F.C. 73; (1994), 27 Admin. L.R. (2d) 110; 76 F.T.R. 182; 24 Imm. L.R. (2d) 289 (T.D.) .
authors cited
Halsbury's Laws of England, Vol. 16, 4th ed. London: Butterworths, 1976.
Revenue Canada. Information Circular 73-29R2. Ottawa: Revenue Canada, October 16, 1995.
APPLICATION for judicial review of a decision of the Tax Court of Canada ([1996] T.C.J. No. 663 (QL)) quashing the determination by the Minister of National Revenue that a worker's employment was not "insurable employment" under the Unemployment Insurance Act . Application allowed.
counsel:
Paul Plourde for applicant.
Michael F. G. Noel for respondent.
solicitors:
Deputy Attorney General of Canada for applicant.
Noel, O'Neill & Urquhart, Chatham, New Brunswick, for respondent.
The following are the reasons for judgment rendered in English by
Isaac C.J.: This is an application for judicial review of a judgment of the Tax Court of Canada, pronounced on 21 June 1996 [Jencan Ltd. v. Canada (Minister of National Revenue—M.N.R.), [1996] T.C.J. No. 663 (QL)], which allowed the respondent's appeal and reversed the determination by the Minister of National Revenue (the Minister) that the respondent's employment of James S. Jenkins (the worker) from 4 July 1994 to 7 January 1995 was not "insurable employment" for the purposes of the Unemployment Insurance Act .1
FACTS
The respondent company, incorporated on 27 February 1976, operates on a year-round basis as a general building contractor. The shares of the respondent are owned entirely by the worker's parents. Blaine Jenkins, the worker's father, owns 90% of the shares, and Lillian Jenkins, the worker's mother, owns the remaining 10%. Blaine Jenkins also owns and operates two other businesses: "All Air", which provides refrigeration and air conditioning services; and "Universal Rentals and Sales", an equipment rental business. The trio of businesses, known collectively as the "Jenkins Group", employs close to thirty people.
During the relevant period, the respondent company earned an average gross income of approximately $115,000 per month, most of which was generated from the installation of windows, doors and ventilation systems. The worker had worked intermittently for the respondent for in excess of ten years. He started off as a general labourer but, during the relevant period, he was generally regarded as a skilled labourer. His employment duties were to install windows, doors and ventilation systems.
On 30 August 1995, the Tax Court of Canada rendered an oral judgment in the matter of Jencan Ltd. v. Canada (Minister of National Revenue—M.N.R.), [1995] T.C.J. No. 1142 (QL), file No. 95-829(UI). That case involved an appeal from a previous determination by the Minister that the worker's employment by the respondent during the periods from 29 June 1992 to 20 March 1993 and from 16 August 1993 to 7 May 1994 was not insurable employment. The Minister's main reason for this determination was that the respondent and the worker were not dealing with each other at arm's length, and hence the worker's employment was excepted pursuant to paragraph 3(2)(c) [as am. by S.C. 1990, c. 40, s. 2] of the UI Act. For ease of reference, I will refer to this previous decision of the Tax Court as Jencan No. 1.
In reaching his conclusion in Jencan No. 1, the Minister had relied upon the information provided by a Revenue Canada appeals officer, who had undertaken a detailed review of the worker's employment by the respondent. The appeals officer had contacted the respondent's management approximately 8 to 10 times and had obtained from them detailed sales and payroll information.2 During the course of the investigation, the respondent's management and the worker had ample opportunities to make submissions to the appeals officer prior to the Minister's determination that the worker's employment was not insurable.
On appeal to the Tax Court of Canada in Jencan No. 1, Léger D.J.T.C.C. dismissed the respondent's appeal from the bench, holding that:
. . . the Minister had before him sufficient evidence to conclude that the parties were not dealing with each other at arm's length and that they would not have concluded a similar contract of employment had they not been related to each other. And based upon that finding and where there is no evidence before me to show that there was improper use of his discretionary authority, I have no other alternative but to dismiss the appeal.3
On 20 September 1995, less than one month after that decision was rendered, the respondent requested, in accordance with subsection 61(3) [as am. idem, s. 37] of the UI Act, that the Minister determine whether the worker's employment for the period from 4 July 1994 to 7 January 1995 was insurable employment.4 There is no dispute that the worker's primary employment duties"installing windows, doors and ventilation systems"were the same during the period in question as during the periods of employment which were the subject of Léger D.J.T.C.C.'s decision in Jencan No. 1 .
In accordance with Revenue Canada's procedures when in receipt of an application for determination, an appeals officer was designated to examine the facts submitted by the interested parties.5 The appeals officer contacted the respondent company for more information. One of the questions that the appeals officer asked Blaine Jenkins, the respondent's main shareholder, was whether the terms and conditions of the worker's employment had changed since previous years. Mr. Jenkins' response to the appeals officer was that the terms and conditions of the worker's employment during the period in question were "basically the same".6
Having received what the appeals officer appears to have perceived as a confirmation that the terms and conditions of the worker's employment had not changed, the appeals officer prepared a recommendation to the Minister on the basis of the same assumptions of fact as had been relied upon by the Minister in Jencan No. 1 to determine that the worker's employment was not insurable. For ease of reference, I reproduce here the assumptions of fact relied upon by the Minister in his reply to the notice of appeal to the Tax Court:
a) Tax Court of Canada Judgment # 95-829(UI) dismissed the Appellant's [the respondent in this application] appeal for the periods from June 29, 1992 to March 20, 1993 and from August 16, 1993 to May 7, 1994 on the basis that the Appellant and the Worker were not dealing at arm's length within the meaning of paragraph 3(2)(c) of the Act;
b) during the period in question, the Appellant engaged the Worker under the same terms and conditions as the periods mentioned in paragraph 4(a) above;
c) the Appellant was incorporated on February 27, 1976 and operates year round as a general building and renovating contractor;
d) the share structure of the Appellant is as follows:
Shareholder Percentage of Shares
Blaine Jenkins 90%
Lillian Jenkins 10%
e) the Worker is the son of Blaine and Lillian Jenkins;
f) the Worker's primary duties were installing windows, doors and ventilation systems;
g) the Worker's rate of pay during the periods in question was $12.00 and $13.00 an hour, respectively, paid weekly by cheque;
h) the Worker's hours of work were said to be 8:30 a.m. to 4:30 p.m.;
i) the Worker consistently received the same number of overtime hours to guarantee a static paycheque;
j) the Worker was engaged for the minimum number of weeks required to qualify for unemployment insurance benefits;
k) the Worker was not supervised while performing duties;
l) the Worker was said to be laid off due to shortage of work;
m) the monthly gross revenue of the Appellant does not illustrate a significant decrease or increase throughout the year;
n) the Worker is related to the Appellant within the meaning of the Income Tax Act;
o) the Worker was not dealing with the Appellant at arm's length;
p) 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 not reasonable to conclude that the Worker and the Appellant would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length.7 [Emphasis added.]
During the proceedings before the Tax Court of Canada, the respondent disputed a number of the Minister's key assumptions of fact regarding the terms and conditions of the worker's employment. Specifically, the respondent denied the allegations in subparagraphs b), g) to k), o) and p). These denials came despite Mr. Jenkins' earlier statement to the appeals officer that the terms and conditions of the worker's employment during the relevant period were basically the same as in previous years.
Relying upon these assumptions of fact, on 16 November 1995, the Minister again determined that the worker's employment during the period in question was not insurable employment. This time around, the Minister provided two reasons for the determination. Firstly, that the worker was not employed pursuant to a contract of service as required by paragraph 3(1)(a) of the UI Act. Secondly, that the worker's employment was excepted from insurability pursuant to paragraph 3(2)(c) because the worker and the respondent were not dealing with each other at arm's length, and the Minister was of the view that they would not have entered into a substantially similar contract of service if they had been at arm's length. Paragraphs 3(1)(a) and 3(2)(c) of the UI Act read:
3. (1) Insurable employment is employment that is not included in excepted employment and 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 piece, or partly by time and partly by piece, or otherwise;
. . .
(2) Excepted employment is
. . .
(c) subject to paragraph (d), employment where the employer and employee are not dealing with each other at arm's length and, for the purposes of this paragraph,
(i) the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the provisions of the Income Tax Act, and
(ii) where the employer is, within the meaning of that Act, related to the employee, they shall be 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;
Section 251 of the Income Tax Act8 sets out the test for an arm's length relationship which is to be used for the purposes of paragraph 3(2)(c) of the UI Act. It reads in part:
251. (1) For the purposes of this Act,
(a) related persons shall be deemed not to deal with each other at arm's length; and
. . .
(2) For the purpose of this Act, "related persons", or persons related to each other, are
(a) individuals connected by blood relationship, marriage or adoption;
(b) a corporation and
(i) a person who controls the corporation if it is controlled by one person,
(ii) a person who is a member of a related group that controls the corporation, or
(iii) any person related to a person described by subparagraph (i) or (ii); and
JUDGMENT OF THE TAX COURT
By judgment rendered on 21 June 1996, the Deputy Tax Court Judge allowed the respondent's appeal and reversed the Minister's determination that the worker's employment was not insurable during the period in question.
The Deputy Tax Court Judge found that, in making his determination under subparagraph 3(2)(c)(ii) of the UI Act, the Minister improperly relied upon the Tax Court's previous decision in Jencan No. 1. Specifically, the Deputy Tax Court Judge was of the view that the Minister erred in relying upon the allegation that the worker was engaged under the same terms and conditions of employment during the period in question as he was during the periods which were the subject of the Tax Court's decision in Jencan No. 1. See allegation (b) reproduced above.
Although the appellant (the respondent in this application) had the burden of proving his case, the Deputy Tax Court Judge emphasized that the appeal had to be decided based on the facts as particularly established before him. In his view, the Minister's wholesale reliance upon the assumptions of fact as originally established in the previous determination was improper because, upon examination of the evidence in the present appeal, the Deputy Tax Court Judge found that there were material differences in the worker's terms and conditions of employment during the period in question. In his words, "[t]he facts in the appeal at hand are different from those outlined in the Jencan case, supra."9 Some of the Minister's allegations of fact, in other words, had been disproved in the context of the present appeal.
Having found that the Minister improperly exercised his discretion in relying upon allegations which had been disproved by the evidence, the Deputy Tax Court Judge held that it was open for him, in accordance with this Court's decision in Tignish Auto Parts Inc. v. Minister of National Revenue,10 to engage in a de novo review of the issues in this appeal.
He held that the preponderance of evidence established by the respondent supported the existence of a genuine contract of service between the worker and the respondent. He was satisfied that there existed "real legal ties" between the respondent and the worker.
Contrary to the Minister's determination, the Deputy Tax Court Judge then held that the worker's employment was not "excepted employment" within the meaning of subsection 3(2) of the UI Act. Although the worker and the respondent company were "related persons" within the meaning of section 251 of the Income Tax Act , the Deputy Tax Court Judge reached the conclusion stated in the following paragraph of his reasons:
The discretion of the Minister was exercised on the basis that no contract of service existed. It was also exercised on the erroneous basis that the facts were exactly similar to another appeal. This, no doubt, led to the inappropriate use of the Minister's discretion which led to the determination that the Appellant [the respondent in this application] and the Worker were not dealing with each other at arm's length.
This Court in reviewing the evidence is satisfied that the Appellant and the Worker were at arm's length during the period from July 4, 1994 to January 7, 1995 only.11
Having found that the worker and the respondent "were at arm's length", the Deputy Tax Court Judge allowed the respondent's appeal and reversed the Minister's determination that the worker's employment was not insurable during the period in question.
The Attorney General of Canada brings this application for judicial review of that decision.
STATUTORY FRAMEWORK
The extent of the jurisdiction and powers of the Tax Court on an appeal from a determination by the Minister pursuant to section 61 of the UI Act are set out in section 70 [as am. by R.S.C., 1985 (4th Supp.), c. 51, s. 23] and subsection 71(1). These provisions read:
70. (1) The Commission or a person affected by a determination by, or a decision on an appeal to, the Minister under section 61 may, within ninety days after the determination or decision is communicated to him, or within such longer time as the Tax Court of Canada on application made to it within those ninety days may allow, appeal from the determination or decision to that Court in the manner prescribed.
(2) On an appeal under this section, the Tax Court of Canada may reverse, affirm or vary the determination, may vacate, confirm or vary the assessment or may refer the matter back to the Minister for reconsideration and reassessment, and shall thereupon in writing notify the parties to the appeal of its decision and the reasons therefor.
71. (1) The Minister and the Tax Court of Canada have authority to decide any question of fact or law necessary to be decided in determining any question or reconsidering any assessment required to be determined or reconsidered under section 61 or 70 and to decide whether a person may be or is affected thereby, and, except as provided in this Act, the decision of the Minister, or the decision of the Tax Court of Canada, as the case may be, is final and binding for all purposes of this Act.
ANALYSIS
In this case, the Minister advanced two grounds for his determination that the respondent's employment was not insurable. First, there was no genuine contract of service between the respondent and the worker as required by paragraph 3(1)(a), and, second, the worker's employment was excepted from insurability pursuant to paragraph 3(2)(c) because the worker and the respondent were not at arm's length and they would not have entered into a substantially similar contract of service if they had been at arm's length.
The Deputy Tax Court Judge's reasons for judgment indicate that he directed his mind to both grounds advanced in support of the Minister's determination that the worker's employment was not insurable. However, in my respectful view, the clarity of the reasons would have been enhanced had he analyzed the two grounds separately. Either one of the Minister's two grounds, if established by the evidence, was sufficient to support the Minister's determination that the worker's employment during the relevant period was not insurable. Each ground, therefore, ought to have been considered separately in light of the evidence. A separate review is particularly important in cases such as this one where the applicable standard of review is different for each of the stated grounds.
The Minister's determination under paragraph 3(1)(a) that the worker's employment is not pursuant to a contract of service is a quasi-judicial decision subject, on appeal, to independent review by the Tax Court. In contrast, this Court established in Tignish, supra, that the Tax Court must exhibit a higher degree of judicial deference in reviewing a determination by the Minister under subparagraph 3(2)(c)(ii). As will be seen, it is only where the Tax Court concludes that the Minister exercised his discretion in a manner contrary to law that the Tax Court should pass to a review of the merits of the Minister's determination under this latter provision.
In Canada v. Schnurer Estate,12 this Court made it clear that, on appeal, the Tax Court must consider whether there is a sufficient factual foundation for the Minister's determination on either or both of the grounds advanced by the Minister. The Tax Court must, therefore, review each of the grounds separately in the light of the evidence. Firstly, was the employment pursuant to an express or implied contract of service? If not, the employment is not insurable unless it falls within one of the exceptions to paragraph 3(1)(a) in subsection 4(1) or in a regulation enacted pursuant to subsection 4(2). Secondly, if it is employment under a contract of service or if it is otherwise insurable under section 4, is it "excepted employment" within the meaning of subsection 3(2)?
Dealing first with paragraph 3(1)(a), it cannot be said that the Deputy Tax Court Judge erred in law in reversing the Minister's determination that the worker was not employed pursuant to a contract of service. It was open to the Deputy Tax Court Judge, on an independent review, to find that the preponderance of evidence supported the existence of a genuine contract of service between the respondent and the worker. I would note, however, that the Deputy Tax Court Judge provided little in the way of written reasons on this issue and, of the reasons that he did provide, his choice of words was not the most fortunate. In concluding that the preponderance of evidence established the existence of a genuine contract of service, he stated simply that he was satisfied that there did exist between the respondent and the worker "real legal ties".13
The real issue in paragraph 3(1)(a) is whether the worker was employed pursuant to a contract of service or a contract for service. Either form of employment can create "real legal ties" between the parties. But, only employment in the former category qualifies, subject to the exceptions in subsection 3(2), as "insurable employment" within the meaning of paragraph 3(1)(a ). It is not enough to find that there is a genuine contract, or real legal ties, between the parties. In order to satisfy the requirement of paragraph 3(1)(a), there must be a genuine contract of service; which means, in essence, that there is a relationship of subordination between the parties.14 The worker, in other words, must be a true employee of the respondent, and not merely a contractor working for the respondent pursuant to a contract of enterprise.
Despite scant reasoning, however, the Deputy Tax Court Judge specified that on his view of the evidence, the respondent had established a genuine contract of service between the worker and the respondent. Since it was open to the Deputy Tax Court Judge to make such a finding, since he was in a privileged position to review the Minister's assumptions of fact in light of the viva voce evidence presented at trial,15 and since the applicant has not challenged this aspect of his reasons for judgment, there is no basis in law for interfering with the conclusion of the Deputy Tax Court Judge on this issue. I will, therefore, pass to a consideration of the reasons of the Deputy Tax Court Judge in relation to the issues arising under paragraph 3(2)(c).
I note at the outset that the language used by the Deputy Tax Court Judge in reversing the Minister's determination under subparagraph 3(2)(c)(ii) may be cause for some confusion. He concludes, on the basis of the evidence, that the worker and the respondent "were at arm's length during the period from July 4, 1994 to January 7, 1995 only".16 This is not entirely accurate. Subparagraph 3(2)(c)(i) states expressly that the question of whether or not persons are dealing at arm's length "shall be determined in accordance with the provisions of the Income Tax Act". There is no dispute in this case that the worker and the respondent are "related persons" within the meaning of section 251 of the Income Tax Act . The respondent conceded this point during the proceedings in the Tax Court. The critical issue in this application for judicial review is whether the Deputy Tax Court Judge erred in law in interfering with the discretionary determination made by the Minister under subparagraph 3(2)(c)(ii). This provision gives the Minister the discretionary authority to deem "related persons" to be at arm's length for the purposes of the UI Act where the Minister is of the view that the related persons would have entered into a substantially similar contract of service if they had been at arm's length. In this case, the applicant submits that the Deputy Tax Court Judge erred in reversing the Minister's discretionary determination that the worker and the respondent should not be deemed to be at arm's length for the purposes of the UI Act.
The sheer number of appeals from ministerial determinations made pursuant to subparagraph 3(2)(c)(ii) since the Tignish decision suggests that the law requires further clarification. For this reason, I set out below the principles which may fairly be derived from the authorities in this Court with respect to subparagraph 3(2)(c)(ii).
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.
In my view, the respondent's position is correct in law . . . .17
In Ferme Émile Richard et Fils Inc. v. Minister of National Revenue et al., this Court confirmed its position. In obiter dictum, Décary J.A. stated the following:
As this court recently noted in Tignish Auto Parts Inc. v. Minister of National Revenue, July 25, 1994, A-555-93, F.C.A., not reported, an appeal to the Tax Court of Canada in a case involving the application of s. 3(2)(c)(ii) is not an appeal in the strict sense of the word and more closely resembles an application for judicial review. In other words, the court does not have to consider whether the Minister's decision was correct: what it must consider is whether the Minister's decision resulted from the proper exercise of his discretionary authority. It is only where the court concludes that the Minister made an improper use of his discretion that the discussion before it is transformed into an appeal de novo and the court is empowered to decide whether, taking all the circumstances into account, such a contract of employment would have been concluded between the employer and employee if they had been dealing at arm's length.18
Section 70 provides a statutory right of appeal to the Tax Court from any determination made by the Minister under section 61, including a determination made under subparagraph 3(2)(c)(ii). The jurisdiction of the Tax Court to review a determination by the Minister under subparagraph 3(2)(c)(ii) is circumscribed because Parliament, by the language of this provision, clearly intended to confer upon the Minister a discretionary power to make these determinations. The words "if the Minister of National Revenue is satisfied" contained in subparagraph 3(2)(c )(ii) confer upon the Minister the authority to exercise an administrative discretion to make the type of decision contemplated by the subparagraph. Because it is a decision made pursuant to a discretionary power, as opposed to a quasi-judicial decision, it follows that the Tax Court must show judicial deference to the Minister's determination when he exercises that power. Thus, when Décary J.A. stated in Ferme Émile, supra, that such an appeal to the Tax Court "more closely resembles an application for judicial review", he merely intended, in my respectful view, to emphasize that judicial deference must be accorded to a determination by the Minister under this provision unless and until the Tax Court finds that the Minister has exercised his discretion in a manner contrary to law.
If the Minister's power to deem "related persons" to be at arm's length for the purposes of the UI Act is discretionary, why, one might ask, does the right of appeal to the Tax Court under section 70 apply to subparagraph 3(2)(c )(ii) at all? The answer is that even discretionary powers are subject to review to ensure that they are exercised in a judicial manner or, in other words, in a manner consistent with the law. It is a necessary incident of the rule of law that all powers granted by Parliament are of an inherently limited nature. In D. R. Fraser and Co., Ld. v. Minister of National Revenue, Lord Macmillan summarized the legal principles which ought to govern such review. He stated:
The criteria by which the exercise of a statutory discretion must be judged have been defined in many authoritative cases, and it is well settled that if the discretion has been exercised bona fide, uninfluenced by irrelevant considerations and not arbitrarily or illegally, no court is entitled to interfere even if the court, had the discretion been theirs, might have exercised it otherwise.19
Lord Macmillan's comments were quoted with approval by Abbott J. of the Supreme Court in Boulis v. Minister of Manpower and Immigration.20 See also Friends of the Oldman River Society v. Canada (Minister of Transport)21 and Canada (Attorney General) v. Purcell.22
Thus, by limiting the first stage of the Tax Court's inquiry to a review of the legality of ministerial determinations under subparagraph 3(2)(c)(ii), this Court has merely applied accepted judicial principles in order to strike the proper balance between the claimant's statutory right to have a determination by the Minister reviewed and the need for judicial deference in recognition of the fact that Parliament has entrusted a discretionary authority under this provision to the Minister.
On the basis of the foregoing, the Deputy Tax Court Judge was justified in interfering with the Minister's determination under subparagraph 3(2)(c)(ii) only if it was established that the Minister exercised his discretion in a manner that was contrary to law. And, as I already said, there are specific grounds for interference implied by the requirement to exercise a discretion judicially. The Tax Court is justified in interfering with the Minister's determination under subparagraph 3(2)(c)(ii)"by proceeding to review the merits of the Minister's determination"where it is established that the Minister: (i) acted in bad faith or for an improper purpose or motive; (ii) failed to take into account all of the relevant circumstances, as expressly required by paragraph 3(2)(c )(ii); or (iii) took into account an irrelevant factor.
In this case, the Deputy Tax Court Judge's stated ground for interference was that the Minister improperly relied upon the assumptions of fact in Jencan No. 1; a previous decision of the Tax Court with respect to the worker's employment by the respondent company.
In my respectful view, the previous decision in Jencan No. 1 was not by itself an "irrelevant factor", as contended for by the respondent. It is necessary to consider how the previous decision was used. The Minister did not attempt to rely on the decision in Jencan No. 1 as a "binding precedent" to dispense with the respondent's application for a determination. Relying upon what he thought was a confirmation by the respondent that nothing had changed in the terms and conditions of the worker's employment since the previous determination upheld by the Tax Court in Jencan No. 1 , the Minister simply adopted the assumptions of fact from the previous determination. It was not unreasonable for the Minister's representative, when dealing with another request for a determination with respect to the same worker and payor corporation, to rely upon the assumptions of fact from the previous determination as the starting point for his examination of the facts.
If the Minister's representative erred in this case, it was in relying exclusively upon the assumptions of fact from Jencan No. 1 without obtaining reliable confirmation that the facts were indeed the same. When the Minister's representative contacted Blaine Jenkins and asked him about the terms and conditions of the worker's employment, Mr. Jenkins responded that they were "basically the same as previous years". Having received such an equivocal and ambiguous response, the Minister's representative ought to have questioned Mr. Jenkins further to determine whether the worker's terms and conditions of employment were, in fact, the same as in the periods which were the subject of the previous determination and, if not, how and to what extent they had changed. I agree with the Deputy Tax Court Judge that, when a determination is appealed pursuant to section 70, the Tax Court judge must review the legality of the Minister's determination based upon the facts as particularly established before him or her at trial. Subsection 71(1) of the UI Act makes this clear by providing that the Tax Court has the authority to decide any question of fact or law necessary to dispose of the appeal. As stated by Desjardins J.A. in Desroches v. Minister of National Revenue :
. . . in the final analysis, as this Court held in Attorney General of Canada v. Jacques Doucet (June 21, 1993, A-1487-92 (F.C.A.), at p. 6), it is the Minister's determination which is at issue, namely that the employment was not insurable because the applicant and the payor were not bound by a contract of service. The function of the Tax Court of Canada judge extended to considering the record and the evidence in its entirety. Accordingly Marceau, J.A., speaking for the court, said the following in Doucet:
"The judge had the power and duty to consider any point of fact or law that had to be decided in order for him to rule on the validity of that determination. This is assumed by s. 70(2) of the Act and s. 71(1) of the Act so provides immediately afterwards . . ." [Emphasis added.]23
An important point needs to be made here. While all interested parties, including the worker and the respondent, are given the opportunity to make submissions to a Revenue Canada appeals officer prior to a determination by the Minister under subsection 61(3) of the UI Act, there is no opportunity to respond to the evidence collected by the appeals officer or to make submissions directly to the Minister prior to his determination. It was, presumably, in recognition of this fact that Parliament provided claimants with an appeal as of right from a determination by the Minister under section 70. On appeal, the facts relied upon by the Minister in making his determination are treated as assumptions, or allegations, of fact. Although the claimant, who is the party appealing the Minister's determination, has the burden of proving its case,24 this Court has held unequivocally that the claimant is entitled to bring new evidence at the Tax Court hearing to challenge the assumptions of fact relied upon by the Minister.25
Thus, while the Tax Court must exhibit judicial deference with respect to a determination by the Minister under subparagraph 3(2)(c)(ii)"by restricting the threshold inquiry to a review of the legality of the Minister's determination"this judicial deference does not extend to the Minister's findings of fact. To say that the Deputy Tax Court Judge is not limited to the facts as relied upon by the Minister in making his determination is not to betray the intention of Parliament in vesting a discretionary power in the Minister.26 In assessing the manner in which the Minister has exercised his statutory discretion, the Tax Court may have regard to the facts that have come to its attention during the hearing of the appeal. As Desjardins J.A. stated in Tignish:
. . . 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.27
Subparagraph 3(2)(c)(ii) specifies that, in determining whether the worker and the respondent would have entered into a substantially similar contract of service if they had been at arm's length, the Minister must consider "all the circumstances of the employment", including: the remuneration paid to the worker; the terms and conditions of the employment; the duration of the employment; and the nature and importance of the work performed. In this case, the Deputy Tax Court Judge found that the respondent had disproved at least two of the assumptions of fact relied upon by the Minister with respect to the worker's terms and conditions of employment.
The Deputy Tax Court Judge found that the evidence at trial disproved the Minister's allegation that the worker consistently received the same number of overtime hours in order to guarantee a static pay cheque. See allegation i) above. During the periods of employment that were the subject of review in Jencan No. 1, this assumption was found to be true.28 But, in the present appeal, the evidence established that the worker's overtime hours during the period in question ranged from a weekly low of four hours to a weekly high of 10.67 hours.
The Deputy Tax Court Judge also rejected the Minister's assumption that the worker had only worked the minimum number of weeks required in order to qualify for UI benefits. See allegation j) above. Again, in Jencan No. 1, this assumption was true. For the relevant period, however, the evidence left no question that this assumption was false. The worker had worked a total of 19 weeks during the period in question; well in excess of the minimum of 10 weeks required at that time in order to qualify for UI benefits in New Brunswick.
The applicant, however, contends that the Minister relied upon the assumptions of fact from Jencan No. 1 because of the representation by Blaine Jenkins, the respondent's main shareholder, that the worker's terms and conditions of employment were "basically the same" as in previous years. Because of this representation, the applicant submits that the respondent should not have been allowed to challenge the assumptions of fact at trial.
The applicant's argument, although he does not frame it as such, is one of estoppel. The doctrine of estoppel has been adopted by this Court as: "a disability whereby a party is precluded from alleging or proving in legal proceedings that a fact is otherwise than it has been made to appear by the matter giving rise to that disability."29 The specific type of estoppel at issue in this case is "estoppel by representation", which has been defined in the following terms:
Where a person has by words or conduct made to another a clear and unequivocal representation of fact, either with knowledge of its falsehood or with the intention that it should be acted upon, or has so conducted himself that another would, as a reasonable man, understand that a certain representation of fact was intended to be acted on, and that the other has acted on the representation and thereby altered his position to his prejudice, an estoppel arises against the party who made the representation, and he is not allowed to aver that the fact is otherwise than he represented it to be.30
As this Court has noted in Canada (Minister of Employment and Immigration) v. Lidder,31 according to the above definition, the following elements must be present before the doctrine of estoppel by representation can be applied:
" a representation of fact made with the intention that it be acted upon or that a reasonable person would assume that it was intended to be acted upon;
" that the representee acted upon the representation;
" that the representee altered his position in reliance upon the representation and thereby suffered a prejudice.
I am of the view that, in an appropriate case, the Minister may rely upon the doctrine of estoppel by representation where a claimant induces the Minister to rely on a state of affairs which no longer exists, thereby causing the Minister to make a determination based on inaccurate information. But, in this case, the preconditions for application of the doctrine of estoppel by representation have not been made out. The evidence does not support a finding that the respondent, by the representations of its managers, intended to induce the Minister to adopt the assumptions of fact from Jencan No. 1 as the basis for his determination for the period in question. Given that the Minister's determination in Jencan No. 1 was unfavourable to the respondent and the worker, it would make little sense for them to have attempted to induce the Minister to rely upon the assumptions of fact which grounded that determination. Moreover, Blaine Jenkins' statement that the worker's terms and conditions of employment were "basically the same as previous years" is too equivocal and ambiguous to support such an inference.
The Deputy Tax Court Judge, however, erred in law in concluding that, because some of the assumptions of fact relied upon by the Minister had been disproved at trial, he was automatically entitled to review the merits of the determination made by the Minister. Having found that certain assumptions relied upon by the Minister were disproved at trial, the Deputy Tax Court Judge should have then asked whether the remaining facts which were proved at trial were sufficient in law to support the Minister's determination that the parties would not have entered into a substantially similar contract of service if they had been at arm's length. If there is sufficient material to support the Minister's determination, the Deputy Tax Court Judge is not at liberty to overrule the Minister merely because one or more of the Minister's assumptions were disproved at trial and the judge would have come to a different conclusion on the balance of probabilities. In other words, it is only where the Minister's determination lacks a reasonable evidentiary foundation that the Tax Court's intervention is warranted.32 An assumption of fact that is disproved at trial may, but does not necessarily, constitute a defect which renders a determination by the Minister contrary to law. It will depend on the strength or weakness of the remaining evidence. The Tax Court must, therefore, go one step further and ask itself whether, without the assumptions of fact which have been disproved, there is sufficient evidence remaining to support the determination made by the Minister. If that question is answered in the affirmative, the inquiry ends. But, if answered in the negative, the determination is contrary to law, and only then is the Tax Court justified in engaging in its own assessment of the balance of probabilities. Hugessen J.A. made this point most recently in Hébert, supra. At paragraph 5 of his reasons for judgment, he stated:
In every appeal under section 70 the Minister's findings of fact, or "assumptions", will be set out in detail in the reply to the Notice of Appeal. If the Tax Court judge, who, unlike the Minister, is in a privileged position to assess the credibility of the witnesses she has seen and heard, comes to the conclusion that some or all of those assumptions of fact were wrong, she will then be required to determine whether the Minister could legally have concluded as he did on the facts that have been proven. That is clearly what happened here and we are quite unable to say that either the judge's findings of fact or the conclusion that the Minister's determination was not supportable, were wrong. [Emphasis added.]
The Deputy Tax Court Judge erred in law in failing to determine whether the Minister could have legally concluded as he did on the facts as proved before him. Consequently, he was not in a position at law to come to his own conclusion on the balance of probabilities. In short, by reviewing the merits of the determination without first concluding that the Minister exercised his discretion in a manner that was contrary to law, the Deputy Tax Court Judge failed to exhibit the degree of judicial deference required when reviewing ministerial determinations under subparagraph 3(2)(c)(ii).
In reaching this conclusion, I am not unmindful of the fact that the Deputy Tax Court Judge found two of the assumptions which supported the Minister's determination to have been disproved at trial. However, having found that the Deputy Tax Court Judge failed to determine whether or not there remained sufficient evidence to support the Minister's determination, it is not for us to decide this question on an application for judicial review since we do not have the authority, statutory or otherwise, to substitute our own assessment of the evidence for that of the Deputy Tax Court Judge.
This Court's powers on an application for judicial review are set out in subsection 18.1(3) of the Federal Court Act,33 which applies to this Court by virtue of subsection 28(2).34 Subsection 18.1(3) states that, on an application for judicial review, the Court may:
18.1 (3) . . .
(a) order a federal board, commission or other tribunal to do any act or thing it has unlawfully failed or refused to do or has unreasonably delayed in doing; or
(b) declare invalid or unlawful, or quash, set aside or set aside and refer back for determination in accordance with such directions as it considers to be appropriate, prohibit or restrain, a decision, order, act or proceeding of a federal board, commission or other tribunal.
Subsection 18.1(3) does not vest this Court with the jurisdiction to make the decision that the Deputy Tax Court Judge ought to have made. Rather, the matter must be referred back for redetermination. See Nuttall v. Canada (Minister of National Revenue— M.N.R.);35 Thibaudeau v. M.N.R.;36 and Chan v. Minister of Employment and Immigration.37 While this Court may refer the matter back with specific directions as to disposition, this approach must be limited to the most straightforward of cases. In Xie v. Minister of Employment and Immigration, Rothstein J. stated:
While the court does have jurisdiction to refer a matter back for redetermination in accordance with such directions as it considers appropriate, it seems to me that the court should only issue directions to a tribunal in the nature of a directed verdict, where the case is straightforward and the decision of the court on the judicial review would be dispositive of the matter before the tribunal. While such cases undoubtedly will arise, as a general rule, the court should leave to tribunals, with their expertise in the matters over which they have jurisdiction, the right to make decisions on the merits based on the evidence before them.38
This is not a case where the evidence on record is so clear that the only possible conclusion is that the worker and the respondent should be deemed to be at arm's length, or where the sole issue to be decided is a pure question of law which will be dispositive of the case. Sitting in judicial review, I am unable to say that the Minister's determination under subparagraph 3(2)(c)(ii) that the worker and the respondent would not have entered into a substantially similar contract of service was, or was not, supportable on the evidence before the Deputy Tax Court Judge. This is a question that the Deputy Tax Court Judge ought to have answered when he found that some of the Minister's assumptions of fact had been disproved by the evidence. Accordingly, I would allow the application for judicial review, set aside the decision of the Deputy Tax Court Judge, and I would refer the matter back to the Tax Court of Canada for a new hearing before a different judge in a manner consistent with these reasons.
Stone J.A.: I agree.
McDonald J.A.: I agree.
1 R.S.C., 1985, c. U-1, as amended the (UI Act).
2 See examination-in-chief of Blaine Jenkins, transcript of proceedings before Cuddihy D.J.T.C.C., dated 24 May 1996, at pp. 22-23.
3 [1995] T.C.J. No. 1142 (QL), 30 August 1995 (T.C.C.), at para. 8.
4 S. 61(3) of the UI Act reads:
61. . . .
(3) Where there arises in relation to a claim for benefit under this Act any question concerning
(a) whether a person is or was employed in insurable employment,
(b) whether a person is the employer of an insured person,
(c) the length of a person's insurable employment, or
(d) the amount of a person's insurable earnings from employment,
an application to the Minister for determination of the question may be made by the Commission at any time and by that person or the employer or purported employer of that person within ninety days after being notified of the decision of the Commission.
5 See Revenue Canada. Information Circular 73-29R2, dated 16 October 1995, entitled "Appeal Procedures: Canada Pension Plan and Unemployment Insurance Act".
6 See cross-examination of Blaine Jenkins, transcript of proceedings before Cuddihy D.J.T.C.C., dated 24 May 1996, at pp. 67-68:
Q: You testified earlier about speaking with Revenue Canada about this period, the period of . . . July '94 to January '95. And do you recall if the Revenue Canada official asked you whether or not the terms and conditions of Mr. Jenkins' employment were the same?
A: I believe they did ask, yes.
Q: What was your answer?
A: I think it was . . . my reply was I believe basically the same as previous years.
7 [1996] T.C.J. No. 663 (QL), at para. 3.
8 R.S.C., 1985 (5th Supp.), c. 1, as amended.
9 Supra, note 7, at para. 20.
10 (1994), 25 Admin. L.R. (2d) 1 (F.C.A.) (Tignish).
11 Supra, note 7, at paras. 28-29.
12 [1997] 2 F.C. 545 (C.A.).
13 Supra, note 7, at para. 23.
14 See e.g., Canada (Attorney General) v. Charbonneau (1996), 41 C.C.L.I. (2d) 297 (F.C.A.).
15 See Hébert v. Canada (Minister of National Revenue—M.N.R.), [1997] F.C.J. No. 512 (C.A.) (QL).
16 Supra, note 7, at para. 29.
17 Tignish, supra, note 10, at pp. 8-9.
18 (1994), 178 N.R. 361 (F.C.A.), at pp. 362-363.
19 [1949] A.C. 24 (P.C.), at p. 36.
20 [1974] S.C.R. 875, at p. 877.
21 [1992] 1 S.C.R. 3, at pp. 76-77.
22 [1996] 1 F.C. 644 (C.A.), at p. 653, per Robertson J.A.
23 (1994), 167 N.R. 316 (F.C.A.), at pp. 319-320.
24 See Aubut v. Minister of National Revenue (1990), 126 N.R. 381 (F.C.A.); Borsellino and Salvo v. Minister of National Revenue (1990), 120 N.R. 77 (F.C.A.).
25 Tignish, supra, note 10, at p. 9.
26 See Canada (Attorney General) v. Dunham, [1997] 1 F.C. 462 (C.A.), at pp. 468-469, per Marceau J.A. (in the context of the right of appeal to the Board of Referees from a decision of the Unemployment Insurance Commission).
27 Tignish, supra, note 10, at p. 9. See also, Hébert, supra, note 15, para. 3.
28 By way of observation, I note that in Jencan No. 1, the fact that the worker was paid a consistent amount of overtime in order to guarantee him a stable pay cheque was the single most important piece of evidence relied upon by Léger D.J.T.C.C. in upholding the Minister's previous determination. Léger D.J.T.C.C. stated, at paras. 4-5 of his reasons for judgment:
There has been put in evidence certain things which lead the Court to see that the Minister was justified in arriving at his conclusion; and it's not me that has to be satisfied, it is the Minister of National Revenue who must be satisfied. And in Exhibit R-1, the last page, I find ten (10) entries for the year nineteen ninety-four (1994) . . . seven hundred and twenty dollars and one cent ($720.01) per week for a period of ten (10) weeks, exactly the same thing, and it's made up of forty-four (44) hours of regular time and five point five (5.5.) hours of overtime consistently exactly what it was needed to give him exactly seven hundred and twenty dollars and one cent ($720.01) in wages. That to me is a silent indication that there is something abnormal in this employment.
In this type of employment, I agree that there is overtime but that it should be consistent and exactly the same thing points to an abnormality, which is not normal in a normally conducted business. And it is ground upon which the Minister could say that he is not satisfied that they were dealing with each other at arm's length.
29 ;Canada (Minister of Employment and Immigration) v. Lidder, [1992] 2 F.C. 621 (C.A.), at p. 630.
30 Halsbury's Laws of England, 4th ed., Vol. 16 (London: Butterworths, 1976), at p. 1010.
31 [1992] 2 F.C. 621 (C.A.), at p. 631.
32 See Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R. 748, at pp. 776-777, per Iacobucci J.
33 R.S.C., 1985, c. F-7, s. 18.1(3) (as enacted by S.C. 1990, c. 8, s. 5).
34 Subsection 28(2) (as am. idem, s. 8) states:
28. . . .
(2) Sections 18 to 18.5, except subsection 18.4(2), apply, with such modifications as the circumstances require, in respect of any matter within the jurisdiction of the Court of Appeal under subsection (1) and, where they so apply, a reference to the Trial Division shall be read as a reference to the Court of Appeal.
35 [1997] F.C.J. No. 640 (C.A.) (QL).
36 [1994] 2 F.C. 189 (C.A.), at p. 224.
37 (1994), 79 F.T.R. 263 (F.C.T.D.), at p. 270.
38 (1994), 75 F.T.R. 125 (F.C.T.D.), at p. 130, per Rothstein J. See also, Ali v. Canada (Minister of Employment and Immigration), [1994] 3 F.C. 73 (T.D.), per Reed J.