Tax Court of Canada Judgments

Date: 19991208

Dockets: 1999-364-EI; 1999-366-EI

BETWEEN:

GONNI HOLDINGS LTD.(FORMERLY KNOWN AS BILGA TRUCKING LTD.), PARMJIT SANGHERA,

Appellants,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Porter, D.J.T.C.C.

[1] These appeals were heard together on common evidence with the consent of the parties, on July 21 and 22, 1999 at Edmonton, Alberta. A Punjabi interpreter was present throughout the hearing.

February 3, 1996 – January 28, 1997

[3] The reasons given for the decisions with respect to the periods in 1992 were that:

"... he was not engaged under a contract of service and therefore, he was not then an employee."

[4] This decision was said to be issued pursuant to paragraph 93 of the EI Act and was based on paragraph 3(1)(a) of the UI Act.

[5] The reasons given for the decisions with respect to the remaining periods were:

"You were employed under a contract of service but the Minister is not satisfied that having regards to all the circumstances, that a similar contract of employment would have been entered into if the parties had been dealing at arm's length and therefore, you were engaged in excepted employment."

[6] The decisions in these instances were said to be issued pursuant to section 93 of the EI Act and to be based upon paragraph 3(2)(c) of the UI Act up to June 29, 1996 and thereafter on paragraph 5(2)(i) of the EI Act.

[7] During the course of the hearing, the Appellants abandoned their appeals with respect to both periods of time in the 1992 year.

[9] In the scheme established under the UI Act and the EI Act, Parliament has made provision for certain employment to be insurable, leading to the payment of benefits upon termination, and other employment which is not insurable, thus carrying no benefits upon termination. Employment arrangements made between persons, who are not dealing with each other at arm's length, are categorized as not being insurable. Brothers are deemed not to be dealing with each other at arm's length pursuant to subsection 251(1) of the Income Tax Act, which governs the situation. Quite clearly the purpose of this legislation is to safeguard the system from having to pay out a multitude of benefits based on artificial or fictitious employment arrangements.

[10] The harshness of this situation has however been tempered by subparagraph 3(2)(c)(i) of the UI Act and paragraph 5(3)(b) of the EI Act, which provides for such employment between related persons deemed to be at arm’s length and thus in turn to be treated as insurable employment, if it meets all the other provisions, where the Minister is satisfied 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, that it is reasonable to conclude that they would have entered into a substantially similar contract if they had (in fact) been dealing with each other at arm's length. It may be helpful to reframe my understanding of this section. For people related to each other the gate is closed by the UI Act and EI Act to any claim for insurance benefits unless the Minister can be satisfied that in effect the employment arrangement is the same as that which unrelated persons, that is persons who are clearly at arm's length, would have made. If it is a substantially similar contract of employment, Parliament has deemed it to be only fair that it should be included in the scheme. However, the Minister is the gatekeeper. Unless he is so satisfied the gate remains closed, the employment remains excepted and the employee is not eligible for benefits.

"The Minister shall decide the appeal within a reasonable time after receiving it and shall notify the affected persons of the decision."

[12] Thus, the Minister has no discretion whether or not to decide the appeal. He is required by law to do so. If he is not satisfied, the gate remains closed and the employee is not eligible. If however, he is satisfied, without more ado or any action on the part of the Minister (other than notification of the decision) the employee becomes eligible for benefits provided he is otherwise qualified. It is not a discretionary power in the sense that if the Minister is satisfied he may then deem the employment to be insurable. He must decide the question and depending on that determination the law deems the employment to be either at arm's length or not at arm's length. In this sense the Minister has no discretion to exercise in the true sense of the word, for in making his decision he must act quasi-judicially and is not free to choose as he pleases. The various decisions of the Federal Court of Appeal on this issue reveal that the same test applies as to a myriad of other officials making quasi-judicial decisions in many different fields. See Tignish Auto Parts Inc. v. M.N.R., 185 N.R. 73, Ferme Émile Richard et Fils Inc. v. M.N.R., 178 N.R. 361, Attorney General of Canada and Jencan Ltd. (1997) 215 N.R. 352 and Her Majesty the Queen and Bayside Drive-in Ltd. (1997) 218 N.R. 150.

"... It is only if the Minister made one or more of these reviewable errors that it can be said that his discretion was exercised in a manner contrary to law, and ... the Tax Court judge would be justified in conducting his own assessment of the balance of probabilities as to whether the respondents would have entered into substantially similar contracts of service, if they had been at arm’s length."

[15] I remind myself, when reviewing this case, that it is not for the Court to substitute its opinion of the evidence for that of the Minister. However, if his or her manner of arriving at the decision was unlawful in the context of the judgments set out above, those affected parts of the stated facts may be disregarded and I must then consider whether that which is left affords justifiable grounds for the decision. If those grounds, standing alone, are sufficient for the Minister to form a decision, albeit that the Court may not agree with it, the decision must stand. If on the other hand there is no basis left upon which the Minister might lawfully make such a decision, from an objective and reasonable point of view, then such decision may be struck down and the Court can consider the evidence before it on appeal and make its own decision.

[16] In summary then, if there are sufficient facts before the Minister for his decision, it is his or her determination to make and if he or she is "not satisfied" it is not for this Court to substitute its view of those facts and say he or she should have been satisfied. Similarly, if he or she was satisfied it is not for this Court to substitute its view that he or she should not have been satisfied (an unlikely scenario in any event). Only if the decision is reached in an improper manner and it is unreasonable, from an objective point of view, on the basis of the facts which were properly before the Minister, may the Court interfere.

[17] I am fortified in this approach by a number of decisions of various Courts of Appeal across the country and the Supreme Court of Canada in related decisions concerning the issue of various processes under the Criminal Code, which subsequently came to be reviewed by the Courts and are in my view analogous to the present situation. The standard of review of the validity of a search warrant was set out by Cory, J.A. (as he then was) in Times Square Book Store, Re (1985) 21 C.C.C. (3d) 503 (C.A.), where he said that it was not the role of the reviewing judge to look at or consider the authorization of a search warrant de novo and it was not open to the reviewing judge to substitute his or her own opinion for that of the issuing judge. Rather, on review, the first issue to be decided was whether or not there was evidence upon which a justice of the peace, acting judicially, could determine that a search warrant should be issued.

"Obviously if there is not such evidence to provide a basis for such a belief (that a criminal offence had been committed) it cannot be said that in those circumstances the justice should be satisfied. There will, however, be cases where such evidence (showing reasonable grounds) does exist and the justice could be satisfied but where he or she is not satisfied and does not exercise his or her discretion in favour of issuing a search warrant. In these circumstances, the reviewing judge must not say that the justice should have been satisfied and should have issued the warrant. Similarly, if the justice in such circumstances says that he or she is satisfied and issues the warrant, the reviewing judge must not say that the justice should not have been so satisfied".

The reviewing judge does not substitute his or her view for that of the authorizing judge. If, based on the record which was before the authorizing judge as amplified on the review, the reviewing judge concludes that the authorizing judge could have granted the authorization, then he or she should not interfere. In this process, the existence of fraud, non-disclosure, misleading evidence and new evidence are all relevant, but, rather than being a prerequisite to review, their sole impact is to determine whether there continues to be any basis for the decision of the authorizing judge."

Stage 1 - Analysis of the Minister's decision

[21] In the Reply to the Notice of Appeal of Parmjit Sanghera (1999-366(EI)) filed by the Deputy Attorney General of Canada, the Minister was said to have relied upon the following assumptions of fact, which were the same in each case:

"(a) the facts admitted in subparagraph 2(a) above;

(b) prior to July 1994, the Corporation was known as Bilga Trucking Ltd.;

(c) the Worker and the Corporation do not deal with each other at arm's length;

(d) the Corporation and the Worker are related to each other within the meaning of section 251 of the Income Tax Act;

(e) the Worker performed duties as a gravel truck driver;

(f) the truck driven by the Worker was owned by the Corporation;

(g) the Worker stated that he was paid the following amounts by the Corporation:

1993 $2,425.00 per month;

1994 $2,425.00 per month to October 31, then $2,600.00

1995 $2,600.00 per month to August 31, then $3,000.00;

1996 $3,000 per month to September 30, then $3,500.00

1997 $3,500.00 per month;

(h) the Worker generally worked for 8 to 10 hours per day;

(i) Tarlochan Sanghera stated that the Worker's salary was set at what he believed was the industry standard;

(j) the Worker was paid monthly by cheque;

(k) the Worker had no signing authority on the Corporation's bank accounts;

(l) the Worker was not paid bonuses or advances and he was not paid late;

(m) the Worker's hours were not recorded by the Corporation or the Worker;

(n) the Worker's hours were controlled at each particular job site by the job site supervisor;

(o) the Worker maintained trip or load sheets for each delivery or pick-up of a load;

(p) Tarlochan Sanghera stated that the Worker's wages would not be affected by the Corporation's revenues;

(q) the Worker did not receive any sick pay, paid vacation or overtime pay;

(r) Tarlochan Sanghera stated that the Worker would be replaced if he was unable to work;

(s) the hours worked by the Worker each day depended on the job site, but generally he worked 45 to 50 hours per week;

(t) at times no services were provided by the Worker due to inclement weather or if a job site was not ready;

(u) the Corporation's work is seasonal, being from spring to fall;

(v) the Worker stated that he has not missed any work in any of the periods in question;

(w) the Workers was supervised or directed by a gravel pit boss or job site supervisor;

(x) the Worker was reimbursed by the Corporation for any expenses he personally incurred in the performance of his duties;

(y) according to Records of Employment filed with the Commission, the Worker was hired and laid-off on the following dates:

Hired Laid-Off

May 1. 1993 October 30, 1993

May 23, 1994 November 30, 1994

April 25, 1996 November 9, 1996

(z) the Records of Employment filed with the Commission stated that the Worker was laid-off on October 30, 1993, November 30, 1994, November 9, 1996 due to a shortage of work;

(aa) the Worker performed duties for the Corporation during periods when he was allegedly laid off due to a shortage of work;

(bb) Tarlochan Sanghera stated that the Worker worked during periods when he was laid off, however, this was to make up for rainy days off and job start delays that he was paid for but did not work;"

[22] The Appellants, in the course of evidence, agreed with items (a), (b), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) (not disputed), (p), (q), (r), (s) (not disputed), (t), (u), (v), (w), (x), (y), (z), (aa), (bb).

[23] The Appellants disputed item (c) which was really the issue in the case, although they accepted that the law deems them not to be at arm's length.

[24] Evidence was given by Tarlochan, the owner of the company, Parmjit the worker, Angelina Chrestenson the Rulings Officer at Revenue Canada who made the original ruling out of the Edmonton Tax Services Office upon a referral from Human Resources and Development Canada ("HRDC"), Martin Whittaker the investigator and Control Officer at HRDC who conducted the initial investigations, and Philip Hart the Appeals Officer at Revenue Canada who made the final recommendation to the Minister.

[25] If I might categorize the evidence, it revolved around two different aspects of the case. The first was the investigation done by Mr. Whittaker. Counsel for the Appellants argue that the concerns raised about this investigation are of such a nature that they taint the whole process and lead to a conclusion of bad faith on the part of the Minister. Secondly, the evidence revolved around the nature of the work or services which was carried out by Parmjit outside the periods of time set out in the Records of Employment ("ROE's"). Mr. Hart was quite candid in saying that absent the work activity performed outside the ROE periods, he would have ruled that the arrangement was substantially similar to that which would have been entered into by persons dealing with each other at arm's length. These two aspects of the evidence are to some extent interconnected. In considering whether or not the Minister took into account irrelevant or mistaken facts or failed to take into account relevant facts, it is necessary for me to review the evidence in these two aspects as there are certain issues of credibility to be determined to see what those facts are. I am not talking here of the weight to be given to the established facts, which is clearly a question for the Minister at this stage, but rather what other facts are established by the evidence which either cast doubt upon the accuracy or relevancy of the facts before the Minister, or which were of such relevance that they should have been taken into account by him.

[26] I will deal with the question of the investigations first.

[27] Mr. Whittaker first looked at this file in 1993. According to Tarlochan he was at his premises for about 2 ½ hours, looked at his records and a decision was made that the employment for the summer of 1992 was insurable. That decision was never appealed and withstood the test of time. Sometime after that, Mr. Whittaker had another meeting with Tarlochan at which time he raised the question of Tarlochan letting him know the names of any people who might be cheating the unemployment insurance system. The witness said he told Mr. Whittaker that he did not put his nose into other people's business and the matter was left there. At this time, he was commended by Mr. Whittaker for the manner in which he kept his records.

[28] The page then turns to 1997 when Mr. Whittaker undertook a further investigation as a result of a tip he got in similar circumstances when he was doing another investigation. He asked the Sangheras' for all of their records, which were provided and left at the bookkeeper's place. Two months or so later, Mr. Whittaker requested a meeting with the two brothers, which was held in December 1997. Mr. Whittaker said he was unable to recall the exact nature of the conversation and clearly from his body language on the stand, he was extremely uncomfortable when the topic was raised. On the other hand, Tarlochan was able to recall the conversation quite clearly, as it was of great concern to him. My note to myself when he was on the stand, was that he appeared to be an "honest and straightforward witness", "honest". Quite frankly, I have no hesitation in accepting his evidence in total. He did, indeed, strike me as a man of integrity, honest and hard working. He recalled that the first thing Mr. Whittaker said to them, was that they were in big trouble. Secondly, Mr. Whittaker told them, that they were going to be taken to court where they would have to have a lawyer and it would cost them, whereas it would not cost him anything. Thirdly, he told them to provide him with the names of people who were cheating the system and they would be "off the hook". Tarlochan said that he told Mr. Whittaker the same as he had told him before that he did not put his nose into other people's business. He subsequently received the rulings leading up to the decisions which are now under appeal.

[29] Mr. Whittaker said in evidence that he often asked people whom he was investigating, whether they could give him leads on others cheating the system, but vigorously maintained that he never allowed the results of that request to affect his investigation. I have no doubt in my mind, that a conversation to this effect took place in the case at hand. I recognize that Mr. Whittaker denied using as strong a language as Tarlochan has claimed. However, as I say, I found Tarlochan to be a very honest witness and in the absence of Mr. Whittaker being able to clearly recall the conversation, I accept the conversation proceeded in the manner outlined by Tarlochan. The difficulty with this type of practice is that it leaves very clearly in the minds of the people under present investigation, that if they do not co-operate things will go against them and that the process is not a fair one. I have also no doubt Mr. Whittaker has a very tough job and has to carry out his investigations in a somewhat murky world, in a not very easy climate. Nonetheless, the implications of this practice are enormous and quite frankly, are such that they do taint his investigation, however much he may choose to disclaim any inherent unfairness. It is hardly a practice that should be encouraged by this Court, as it casts a certain degree of unreliability on the evidence adduced on behalf of the Minister, to say the very least.

[30] It is in that context then, that I must turn to consider the facts put before the Minister as they relate to the work and services performed by Parmjit outside of the ROE periods, for absent that, Mr. Hart conceded the decision would have been different.

[31] The facts collected by Angelina Chrestenson were set out in her ruling report entered into evidence as Exhibit A-1. She took most of her findings of fact from the HRDC file (prepared by Mr. Whittaker) and quite frankly, to be fair to her, the Appellants were not overly co-operative in providing very much additional information. Tarlochan, however, stressed at that time that the work carried out outside the ROE periods was simply to make up for lost days in the working period and that it was not extensive.

1996 April 25 to November 9 Mar 2 96 to January 21 97"

"...In fact, given that the worker was supposed to perform services from 40 to 50 hours per week to earn the remuneration allocated to him, neither is the fact that he worked beyond the payroll cycle necessarily of itself a precluding factor. However, the fact that the period of time stretched months (93 – about 2 weeks, 94 – about 2 months, 96 – about 5 months) and that the ROEs were admittedly (by the payor) incorrect and further covered "coincidentally" slightly above minimum benefit requirement times, give the nature of the duration highly suspect status." (emphasis added)

[34] Given the evidence of Mr. Hart that absent the work activity outside the ROE periods, he would have come to a contrary conclusion, it is necessary to look at how these fairly wide time periods "93 - about 2 weeks", "94 - about 2 months", "96 - about 5 months" came to be and whether they are supported by the evidence.

[35] They came into being, of course, from the file of Mr. Whittaker and were passed on to Ms. Chrestenson. They bear looking at far more closely.

[36] 1992 is no longer in issue.

[37] In 1993, the discrepancy between the ROE and the established work cycle is nine days at the end of April (April 22 to April 30), and six days at the beginning of November (October 31 to November 5).

[38] The information disclosed in Ms. Chrestenson's report was that the truck started hauling for the City of Edmonton on April 22, 1993. That is borne out by the documents filed as Exhibit R-13. The evidence of Tarlochan was that Parmjit was paid $110 per day for two days driving between April 22 and 23. It is apparent that there were four other loads driven, one on April 29 and one on April 30. The evidence thus reveals, and I accept this, that a total of six loads were driven over these nine days. Regular use was not being made of the truck and the suggestion that the Appellant Parmjit was working during this period other than on a very casual basis is totally erroneous. That may have been something which should have been taken into account in calculating these benefits, but it is clear that he was not regularly on the payroll for these isolated runs.

[39] I turn now to November 1993. Parmjit's lay-off day was said in the ROE to be October 30. He apparently signed for some repairs to the truck on November 1. Tarlochan says that he simply asked his brother to drive the truck to the repair shop as a favour. He was not employed at that time and he was not obliged to do it, but it was done as a simple request from brother to brother. Parmjit generally did not become involved in either the maintenance of or repairs to the truck. Tarlochan attended to those things himself. This was not part of any regular work duties that Parmjit carried out.

[40] Similarly on November 5, Tarlochan said that he asked his brother, who again was not working, if he could pick up some parts for him as he, Tarlochan, was changing the box on the truck. The truck was not running or being used at that time.

[41] That was the sum total of any activity and quite frankly is a far cry from a week of further working activity for which no remuneration was being paid, as suggested in the reports. The facts presented to Mr. Hart and through him to the Minister were distorted. That activity, such as it was, and distorted as it was, lead to Ms. Chrestenson asserting that the ROE was "false" indicating some deliberate deception or fabrication. That was clearly erroneous.

[42] I turn now to 1994. The assertion in the report is that Parmjit started working on March 24 whereas the ROE specifies that the first day worked was May 23, leading in turn to the assumption of fact in Mr. Hart's report of two months work activity for which he was not paid. Again, the evidence, which I have no hesitation in accepting, shows this assumption to be erroneous. In fact, the evidence revealed that Parmjit simply picked up parts for the truck on March 24. There was no evidence that he was doing anything else other than pick up some parts for his brother. That is not evidence of working in the course of employment of driving the truck.

[43] On April 9, he was said to be in British Columbia buying parts. In fact the evidence revealed that the brothers have family in British Columbia. Parmjit was visiting his family at that time. The trailer for the truck had been made in British Columbia. Whilst he was there, Tarlochan asked his brother to pick up some parts and bring them back with him. There was no question of him making a special trip to British Columbia for these parts as was suggested. Again, that is a far cry from the suggestion that he was going to British Columbia to get parts as surmised in the report.

[44] On April 16, 1994, Parmjit attended to renewing the license plates for the truck for which Tarlochan paid. Insurance was put into effect on April 18 and fuel purchases were made on that day. Tarlochan's evidence was to the effect that Parmjit owed him for a couple of days work for down-time during the previous year and that he drove the truck on April 18 and on May 5 for which latter trip he had picked up an outside of 50 km radius permit on May 4. Thus the sum total of the evidence when analyzed shows two days of driving without pay to make up for down-days the previous year, attending to getting the license plates and picking up some parts. That is, again, a far cry from the suggestion of working for two months prior to the start-up date, which I take to be for regular employment, in the ROE. The two-day period is not beyond the contemplation of what was normal in Mr. Hart's own summary. It was, as he said, the fact that it "stretched months" that affected his recommendation. In fact, it did not stretch months, but was only two days. The suggestion put on this in the report carried through to Mr. Hart was totally erroneous.

[45] There was no discrepancy at the end of 1994.

[46] There is reference made in Ms. Chrestenson's report to 1995. However, that period is not the subject to appeal to this Court for some unknown reason, and although references were also made to some of the situations in 1995, I have no need to deal with the situation in that year.

[47] Ms. Chrestenson says in her report that Parmjit returned to work on April 25, 1996 after a bout of Workers' Compensation for a back injury. There is documentary evidence that he picked up some parts on March 24. Between March 7 and March 24, the truck was working at Niton Junction and Parmjit was the driver. The evidence of Tarlochan was that he was paid for two weeks for this work. The pay was to be 25% of the earnings and Parmjit received a cheque for $3,000 on May 1. That was a single contract and no doubt is something to be taken into account in calculating benefits. It was not, however, regular work. Again, it is a far cry from the suggestion that he was working without pay for part of five months before and after the ROE period in 1996-1997.

[48] At the end of the 1996 season, Ms. Chrestenson's report shows the last day worked according to the ROE as being November 9, 1996.

[49] Documents show that he was picking up parts in 1996 as she says. They also showed a load being hauled on November 15. The assumption was made that the driver was Parmjit. In fact the evidence, which I accept, revealed that it was Hardip Sanghera, another brother, who drove the truck that day and was paid by Tarlochan. The assumption made was thus erroneous.

[50] Tarlochan agrees with Ms. Chrestenson's assertion that parts were picked up by Parmjit on November 21, 25 and 26. He, Tarlochan, was attending to repairs to the truck and asked Parmjit to pick up some parts which he did.

[51] Ms. Chrestenson's report shows purchases on November 27 and 28, 1996, the suggestion being that Parmjit was driving the truck at that time. In fact, the evidence revealed and again I accept this, that is was another brother, Mansit Sanghera, that drove the truck on these days. The assumption made was again erroneous.

[52] Repairs were signed for by Parmjit on December 13, 1996 and the truck was washed on that day. The evidence revealed that Tarlochan asked Parmjit to drive the truck to the repair shop in his behalf. Nothing more than a short drive was involved.

[53] On December 17, there was a fuel purchase. Tarlochan gave evidence that there was a call from one contractor. Parmjit fuelled the truck on December 17 and then drove it between December 19 and 22, for which he was paid $324.85. He did not wash the truck at the end of that period when he brought it back, but simply parked it. Tarlochan asked him to wash it as he should have done upon his return, which Parmjit did in early January. He also picked up some more parts. Again, this paid activity may well have been something which should have been taken into account in calculating the benefits, but it is not all consistent with the suggestion that he worked over a period of five months before and after the 1996 ROE period, without pay.

[54] Finally, Tarlochan agreed that Parmjit did work on January 6 and 21, 1997 driving the truck on those days to replace down-days the previous season.

[55] The sum total of all this, as pointed out by counsel for the Appellants, is not at all the scenario which Mr. Hart and in turn the Minister thought it to be. There were some extra days and in one or two cases, two to three weeks of additional casual employment for which Parmjit was paid. Aside from that, there was simply a matter of two days in 1993, two days in 1994 and two days in 1997, when Parmjit made up for down-days during the season and for which he was not paid. In addition over all those years there were ten occasions when he picked up some parts (8) and drove the truck to the repair shop (2) for which he was not paid. This was not at all the situation presented to Mr. Hart of seven months and two weeks work done without pay, upon which he based his decision and without which factor he indicated his decision would have been different.

[56] I hesitate to find in any way at all that the misconception as to the time worked beyond the ROE periods which percolated up to Mr. Hart from the file of Mr. Whittaker through Ms. Chrestenson's report was deliberate or had anything to do with the approach made to the Appellants in the course of Mr. Whittaker's investigation about disclosing names of others. However, the implication is there and cannot be ruled out. It is certainly a perception held by the Appellants and it is not without foundation in the evidence.

[57] I cannot, in the face of the evidence, come to any conclusion other but that, if the full and correct information had been before the Minister as outlined above and he had taken into account these factors, which are highly relevant and which he did not have the opportunity to consider and if the suggestions that were erroneous relating to the extent of the work done outside the ROE periods had not been before him, he could not have from an objective and reasonable point of view, have lawfully come to the conclusion that he did. Thus in law his decision is not sustainable and I must now advance to the second stage of the appeal process and decide whether, on all the evidence, the parties, had they been at arm's length, would have entered into a substantially similar contract of employment, taking into account all of the circumstances including those specifically set out in paragraph 5(3)(b) of the EI Act.

Stage II – Review of the Evidence

[58] I now turn to the second stage of my decision. I have no need to repeat the evidence. It is perfectly clear to me that without the erroneous information before him, the Minister would have concluded differently. He was satisfied in effect, as am I, that the duration of the employment, absent the erroneous information about the work outside the ROE periods, was something that was substantially similar to an arm's length relationship. He was also satisfied that was so when considering the nature and importance of the work, the remuneration paid, the hours worked and the methods of pay, and the question of overtime and vacation pay. Something was made by counsel for the Minister of the fact that Parmjit used Tarlochan's personal credit card, but as Mr. Hart pointed out in his report to the Minister, "substantially similar does not mean identical". The leaving of a credit card with a trusted employee does not seem to be totally out of line in these circumstances. There were, in any event, bound to be some minor differences by way of the very factor of human nature.

[59] The evidence such as it is, of work undertaken outside the periods of the ROE's has in my view far more to do with the calculation of benefits than whether or not the working arrangements between Parmjit and the Company were substantially similar to one that would have been entered into if they had been dealing with each other at arm's length. There is no doubt that the work was genuinely performed, at a salary which represented the industry norm. The hours of work and the manner of work were all generally within the ambit of what one would expect between arm's length employers and employees. Even the question of the credit card is not outside the ambit of a trusted employee in the circumstances. The fact that the odd hand was lent by Parmjit to his brother outside the working periods does not, in my view, detract from the working arrangement during the periods of question. It is always a matter of degree, I suppose, but it would be sad for Canada indeed if the system prevented family members from helping each other out simply because they had a regular working arrangement through part of the year, which would thereby be put in jeopardy. If the work was of an ongoing nature so that in effect the termination was effectively a sham, to enable the related party to collect employment insurance benefits, that would be a different matter. The situation at hand was not of that nature. Both Tarlochan and Parmjit were highly credible witnesses. Their arrangements were, in my view, quite genuine.

Conclusion

[60] After considering all of the evidence, I am well satisfied on the balance of probabilities that indeed the arrangement was genuine, that it was a contract of service and one which, 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, the parties would have entered into had they been at arm's length, or at least a substantially similar one.

[61] In the event, the appeal is allowed and the decision of the Minister is vacated.

Signed at Calgary, Alberta, this 8th day of December 1999.

"Michael H. Porter"

D.J.T.C.C.