Tax Court of Canada Judgments

Date: 19980811

Dockets : 96-2381-UI; 96-2421-UI; 96-2460-UI

BETWEEN:

NANCY ITALIANO, FILIPPO ITALIANO, GIOVANNA ITALIANO,

Appellants,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Christie, A.C.J.T.C.

[1] At the request of the parties these appeals were heard together. They are governed by the Informal Procedure provided for under paragraph 18.29(1)(b) of the Tax Court of Canada Act.

[2] The hearing of these appeals commenced before Deputy Tax Court Judge Léger at Toronto on January 27, 1998. The matter was adjourned on that date after receiving the evidence of Jane Moras, a rulings officer with Revenue Canada. Before dealing with these appeals further, Judge Léger retired. They were heard de novo at Toronto commencing on June 10, 1998. The parties agreed that the transcript of the proceedings on January 27 would form part of the record of the hearing before me.

[3] The basic issues to be determined on these appeals are as follows:

(i) Was Nancy Italiano engaged in insurable employment as defined in section 3 of the Unemployment Insurance Act (“the Act”) with London Paving Brothers Inc. (“London”) during the period October 28, 1991 to May 29, 1992?

(ii) The same question arises in relation to Giovanna Italiano.

(ii) With respect to Filippo Italiano the question is whether he was engaged in insurable employment with Torontario Paving Inc. during the period August 23, 1993 to January 14, 1994.

[4] The legislative scheme applicable to these appeals is embodied in these provisions of the Unemployment Insurance Act (“the Act”):[1] the opening words of subsection 3(1), paragraphs 3(2)(c), (d), section 39, subsections 41(1), (2), paragraph 61(3)(a), subsections 61(4), (5), (6), (9), section 70, subsection 71(1) and section 72.

“3. (1) Insurable employment is employment that is not included in excepted employment and is ...

(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[2], 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;

(d) the employment of a person by a corporation if the person controls more than forty per cent of the voting shares of that corporation.

39. (1) No benefit period shall be established for any person under this Act unless he makes an initial claim for benefit in accordance with section 41 and the regulations and proves that he is qualified to receive benefit.

(2) No benefit period shall be established under this Act unless the claimant supplies information in the form and manner directed by the Commission[3], giving the claimant’s employment circumstances and the circumstances pertaining to any interruption of earnings, and such other information as the Commission may require.

(3) On receiving an initial claim for benefit, the Commission shall decide whether or not the claimant is qualified to receive benefit and notify him of its decision.

41. (2) A claim for benefit shall be made in the manner directed at the office of the Commission that serves the area in which the claimant is residing, or at such other place as is prescribed or directed by the Commission.

(3) A claim for benefit shall be made by completing a form supplied or approved by the Commission, in the manner set out in instructions of the Commission.

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,

...

an application to the Minister[4] 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.

(4) Where a question ... referred to in subsection ... (3) is to be determined by the Minister, the Minister shall notify the employer or purported employer and any person who may be affected by the application and, in the case of an application under subsection (3), the Commission of his intention to determine the question ... and shall afford the employer, purported employer, Commission and any person who may be affected by the application, or any of them, as the circumstances require, an opportunity to furnish information and to make representations to protect their interests.

(5) An application for the determination of a question ... by the Minister shall be addressed to the Chief of Appeals in a District Office of the Department of National Revenue and delivered or mailed to that office.

(6) On an application or an appeal under this section, the Minister shall, with all due despatch, determine the question raised by the application ... and he shall thereupon notify any person affected.

...

(9) Where the Minister is required to notify a person who may be or is affected by a determination under this section, he may cause that person to be notified, in such manner as he deems adequate, of his intention to make the determination or of that determination, as the case may be.

70. (1) The Commission or a person affected by a determination by ... the Minister under section 61 may, within ninety days after the determination ... 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 ... 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, ... 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 ... required to be determined ... 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.

72. The decision of the Tax Court of Canada under section 70 is final and, except for judicial review under the Federal Court Act, is not subject to appeal to or review by any court.”

[5] Perhaps the best manner in which to cope with the evidentiary maze before the Court is to trace each step taken and to identify the source.

[6] On May 30, 1992 a Department of Employment and Immigration form[5] was completed pertaining to the employment record of Giovanna and Nancy during the period October 28, 1991 to May 29, 1992 with London. It is signed on behalf of Rome Accounting Inc. (“Rome”), a corporation which then acted for Nancy and Giovanna. (Ex. R-1 tab 1, Ex. R-2 tab 1)

[7] On June 5, 1992 an application form for unemployment insurance benefits for Giovanna was completed relating to the benefit period just mentioned. It is signed by her. (Ex. R-1 tab 1) On April 27, 1993 a similar form for unemployment insurance benefits for Nancy was completed. It is signed by her. (Ex. R-2 tab 1)

[8] On January 19, 1994 a Department of Employment and Immigration form pertaining to Filippo’s record of employment during the period August 23, 1993 to January 14, 1994 with Torontario was completed. It is signed on behalf of Rome, which also acted for Filippo. On the same date an application form for unemployment insurance benefits for him was completed relating to that period. It is signed by him. (Both documents are in Ex. R-3 tab 1.)

[9] I infer that these claims for insurance benefits are the initial claims contemplated by subsection 39(1) of the Act.

[10] Each of the appellants was interviewed by Phil Turturici and Linda Kersis. Both are investigators with “Human Resources Canada”.[6] Their reports regarding Giovanna and Filippo are dated March 16, 1995. (Ex. A-1 p. 30, Ex. A-3 p. 54) Their report pertaining to Nancy is dated March 15, 1995. (Ex. A-2 p. 28)

[11] There is a “Request for Insurability Ruling” in respect of each appellant. They are all on Employment and Immigration Canada forms. One is signed by Phil Turturici (Ex. A-1 p. 8) and the other two by Linda Kersis. (Ex. A-2 p. 23, Ex. A-3 p. 47) The requests were sent to Revenue Canada, Taxation on May 11, 1995.[7] The forms have space for a “Ruling” at the foot thereof. The rulings in respect of Giovanna and Filippo are dated June 15, 1995 and regarding Nancy the date is June 16, 1995.[8] The ruling regarding Nancy reads: “No contract of service and employment is not at arm’s length, therefore the period of October 28/91 to May 29/92 is not insurable per 3(1)(a) & 3(2)(c) of the UI Act”. The ruling applicable to Filippo states that the employment during the period August 23/93 to January 14/94 was not at arm’s length. Reference is made to paragraph 3(2)(c) of the Act. The ruling then goes on to inexplicably make reference to a period from November 1, 1993 to some indecipherable date (because of the quality of the photostats) in 1994 and in this regard it is said that there was no contract of service. Reference is made to paragraph 3(1)(c) of the Act. Each ruling is signed by J. Nash.[9] Again the inference to be drawn is that these rulings are intended to be decisions on an initial claim referred to in subsection 39(3) of the Act.

[12] Prior to the rulings made by Nash on June 15 and 16, 1995 a “NON-ARM’S LENGTH EMPLOYMENT QUESTIONNAIRE” had been completed by the payor in respect of each appellant. These forms pertaining to Giovanna and Filippo are dated June 5, 1995. (Ex. A-1 p. 34,[10] Ex. A-3 p. 59) The form concerning Nancy is dated June 7, 1995. (Ex. A-2 p. 32) On June 5, 1995 a “CORPORATE SHARE ARRANGEMENT” form was completed in respect of Torontario. (Ex. A-1 p. 33[11], Ex. A-3 p. 53) A similar form was completed regarding London on June 7, 1995. (Ex. A-2 p. 36)

[13] On January 24, 1996 Mr. Stronach of Human Resources Development Canada wrote Nancy as follows: (Ex. R-2 tab 2)

“We have reviewed your Unemployment Insurance claim and have determined that you gave 13 false or misleading statement(s). Contrary to what you told us, we have learned that you, on YOUR APPLICATION DATED 27 APRIL, 1993, WERE RELATED TO YOUR EMPLOYER BY BLOOD OR MARRIAGE. ALSO, WE HAVE CONCLUDED THAT YOU DID NOT WORK FOR LONDON BROS. PAVING INC. FROM 28 OCTOBER, 1991 TO 29 MAY, 1992, AS YOUR RECORD OF EMPLOYMENT AND APPLICATIONS OF 5 JUNE, 1992[12] AND 27 APRIL, 1993 INDICATE AND YOU MADE FALSE STATEMENTS ON EACH REPORT CARD SUBMITTED IN SUPPORT OF THESE APPLICATIONS.

This means you will have to pay back any benefits that you should not have received, along with a $4,290.00 penalty. This penalty is being imposed because we are of the opinion that you knowingly made false or misleading statement(s). You must pay this amount immediately.

Have you given us other false or misleading information? If you have, telling us now will avoid another penalty or a prosecution, unless we are already investigating that particular offence. Please note that if we discover any further false statements on our own, this will generally result in heavier penalties or prosecution.

If you have new or additional information which could change this decision, or would like more details, please contact us. For faster service, please always give us your Social Insurance Number.

If you disagree with our decision, which is based on Section 33[13] of the Unemployment Insurance Act, you can appeal it within 30 days of receiving this letter. If you wish to appeal, please follow the enclosed instructions.”[14]

On the same date Mr. Stronach sent Nancy a second letter. (Ex. R-2 tab 3) It reads:

“We regret to inform you that we have cancelled your claim for Unemployment Insurance benefits, which had started on May 31, 1992.

This is because Revenue Canada ruled that your job was not insurable.

If you have new or additional information which could change this decision, or would like more details, please contact us. For faster service, please always give us your Social Insurance Number.

If you disagree with our decision, which is based on Sections 6 and 9[15] of the Unemployment Insurance Act, you can appeal it within 30 days of receiving this letter. If you wish to appeal, please follow the enclosed instructions.

You will have to pay back the benefits you should not have received. If this causes you financial hardship, please contact the Collections Office shown on your overpayment notice.”

On June 6, 1996 Mr. Stronach wrote Nancy a third time as follows: (Ex. R-2 tab 4)

“We are writing to inform you that Revenue Canada decided that your employment with LONDON PAVING BROTHERS INC., from October 28, 1991 to May 29, 1992 was not insurable.

This is because in that job you did not have an employee-employer relationship.

If you would like more details about this decision, please contact J. NASH at (416) 218-4762.

If you disagree with the decision, which is based on the fact that your job did not meet the requirements to be included in insurable employment as required by paragraph 3(1)(a) of the Unemployment Insurance Act, you can appeal it within 90 days of the date of this letter.

If you decide to appeal, complete Form CPT 101,[16] ‘Application for Determination of a Question Regarding Insurable Employment’, which you can obtain at any Revenue Canada District Office. If you don’t want to complete a form, you can also file your appeal by sending a letter, giving the following information:

- your name, address and phone number;

- your social insurance number;

- your employer’s name, address and phone number;

- why you disagree with the decision;

- the address of your Canada Employment Centre;

- a copy of this letter.

Send the completed form or letter to the Chief of Appeals in the Revenue Canada district taxation office nearest you.

For faster service, please always give us your Social Insurance Number.”

[14] On January 24, 1996 Mr. Stronach sent this letter to Giovanna: (Ex. R-1 tab 2)

“We regret to inform you that we have cancelled your claim for Unemployment Insurance benefits, which had started on May 31, 1992.

This is because Revenue Canada ruled that your job was not insurable.

If you have new or additional information which could change this decision, or would like more details, please contact us. For faster service, please always give us your Social Insurance Number.

If you disagree with our decision, which is based on Sections 6 and 9 of the Unemployment Insurance Act, you can appeal it within 30 days of receiving this letter. If you wish to appeal, please follow the enclosed instructions.”

On the same date he sent this letter to Giovanna: (Ex. R-1 tab 3)

“We are writing to inform you that Revenue Canada decided that your employment with LONDON PAVING INC., from October 28, 1991 to May 29, 1992 was not insurable.

This is because you were related to the employer and the working conditions would not be similar if you were unrelated.

If you would like more details about this decision, please contact J. NASH at [phone number].

If you disagree with the decision, which is based on paragraph 3(2)(c) of the Unemployment Insurance Act, you can appeal it within 90 days of the date of this letter.

If you decide to appeal, complete Form CPT 101, ‘Application for Determination of a Question Regarding Insurable Employment’, which you can obtain at any Revenue Canada District office. If you don’t want to complete a form, you can also file your appeal by sending a letter, giving the following information:

- your name, address and phone number;

- your social insurance number;

- your employer’s name, address and phone number;

- why you disagree with the decision;

- the address of your Canada Employment Centre;

- a copy of this letter.

Send the completed form or letter to the Chief of Appeals in the Revenue Canada district taxation office nearest you.

For faster service, please always give us your Social Insurance Number.”

[15] On January 17, 1996 Mr. Stronach sent two letters to Filippo. One reads: (Ex. R-3 tab 2)

“We have reviewed your Unemployment Insurance claim and have determined that you have 11 false or misleading statement(s). Contrary to what you told us, we have learned that you DID NOT WORK AS YOUR APPLICATION AND RECORD OF EMPLOYMENT SUBMITTED 20 JANUARY, 1994 INDICATED AND MADE FALSE STATEMENTS FOR EACH REPORT CARD SUBMITTED IN SUPPORT OF THAT CLAIM.

This means you will have to pay back any benefits that you should not have received, along with a $4,675.00 penalty. This penalty is being imposed because we are of the opinion that you knowingly made false or misleading statement(s). You must pay this amount immediately.

Have you given us other false or misleading information? If you have, telling us now will avoid another penalty or a prosecution, unless we are already investigating that particular offence. Please note that if we discover any further false statements on our own, this will generally result in heavier penalties or prosecution.

If you have new or additional information which could change this decision, or would like more details, please contact us. For faster service, please always give us your Social Insurance Number.

If you disagree with our decision, which is based on Section 33 of the Unemployment Insurance Act, you can appeal it within 30 days of receiving this letter. If you wish to appeal, please follow the enclosed instructions.”

The other reads: (Ex. R-3 tab 3)

“We regret to inform you that we have cancelled your claim for Unemployment Insurance benefits, which had started on January 16, 1994.

This is because Revenue Canada ruled that your job was not insurable.

If you have new or additional information which could change this decision, or would like more details, please contact us. For faster service, please always give us your Social Insurance Number.

If you disagree with our decision, which is based on Sections 6 and 9 of the Unemployment Insurance Act, you can appeal it within 30 days of receiving this letter. If you wish to appeal, please follow the enclosed instructions.

You will have to pay back the benefits you should not have received. If this causes you financial hardship, please contact the Collections Office shown on your overpayment notice.”

A third letter was sent to Filippo on May 15, 1996. It reads: (Ex. R-3 tab 4)

“We are writing to inform you that Revenue Canada decided that your employment with TORONTARIO PAVING INC., from August 23, 1993 to January 14, 1994 was not insurable.

This is because in that job you did not have an employee-employer relationship.

If you would like more details about this decision, please contact J. NASH at [phone number].

If you disagree with the decision, which is based on the fact that your job did not meet the requirements to be included in insurable employment as required by paragraph 3(1)(a) of the Unemployment Insurance Act, you can appeal it within 90 days of the date of this letter.

If you decide to appeal, complete Form CPT 101, ‘Application for Determination of a Question Regarding Insurable Employment’, which you can obtain at any Revenue Canada District Office. If you don’t want to complete a form, you can also file your appeal by sending a letter, giving the following information:

- your name, address and phone number;

- your social insurance number;

- your employer’s name, address and phone number;

- why you disagree with the decision;

- the address of your Canada Employment Centre;

- a copy of this letter.

Send the completed form or letter to the Chief of Appeals in the Revenue Canada district taxation office nearest you.

For faster service, please always give us your Social Insurance Number.”

[16] A lengthy questionnaire sent by the Appeals Division, London District Office, Revenue Canada, Taxation was completed. (Ex. R-1 tab 7, Ex. R-2 tab 8, Ex. R-3 tab 6) It covers a range of matters that include the shareholders of London and Torontario, the family relationships (blood, marital, common-law) of the workers to the shareholders, signing authority, involvement of shareholders in day-to-day operations, gross monthly business sales, workers’ rates of pay, hours of work, supervision of workers, terms and conditions of employment of other workers, right to terminate employment. Each of the appellants signed one of the questionnaires. Giovanna signed on April 24, 1996 along with Tony Bancheri, President of London. He signed on April 26, 1996. Nancy signed along with Bancheri on June 6, 1996. Filippo also signed on June 6, 1996 and he also signed as President of Torontario. The questionnaires were received by the Chief of Appeals on May 7, June 14 and July 2, 1996. The signatures are preceded by this statement:

“PLEASE CERTIFY THAT THE ANSWERS GIVEN IN THIS QUESTIONNAIRE ARE TRUE IN EVERY RESPECT TO THE BEST OF YOUR KNOWLEDGE, BY SIGNING AND FORWARDING THE QUESTIONNAIRE TO THE WRITER. PLEASE INCLUDE ANY REQUESTED INFORMATION AS WELL AS ANY ADDITIONAL SUBMISSION YOU WISH TO MAKE.”

[17] What follows is the second page of a standard letter sent to the appellants by the Chief of Appeals with the questionnaire: (Ex. R-1 tab 15, Ex. R-2 tab 14, Ex. R-3 tab 15)

“Paragraph 3(2)(c) deals with non-arm’s length employment as determined in accordance with subsections 251(1) and 251(2) of the Income Tax Act, which deals primarily with related persons. Paragraph 3(2)(c) of the Unemployment Insurance Act states that non-arm’s length employment is excepted from insurable employment (not insurable). This employment can be deemed to be at arm’s length pursuant to subparagraph 3(2)(c)(ii) of the Unemployment Insurance Act, if sufficient information is submitted to satisfy the Minister of National Revenue that all circumstances of the employment, including remuneration paid, terms and conditions, duration, nature and importance of the work, are substantially the same as they would be if the two parties were, in fact, dealing with each other at arm’s length (i.e. if they were unrelated).

We are enclosing a copy of paragraphs 3(1)(a) and 3(2)(c) of the Unemployment Insurance Act for your information.

To ensure the Minister has the full details and facts surrounding the employment, we are also enclosing a questionnaire to aid us in determining the relationship between the payor and the worker. Please complete the questionnaire and forward it to the writer’s attention, along with any further information and submissions you wish to provide, within thirty (30) days of the date of this letter. You will note that you may have answered similar types of questions during the rulings process, but to ensure that an impartial decision may be rendered, please provide full details as to the nature of the services performed and include any supporting documentation you feel is relevant. A questionnaire can not be all-inclusive and it may be necessary to go into more depth or request clarification.

If, after reviewing the above information and the attached questionnaire, you conclude that you were not employed under a contract of service (i.e. no employer-employee relationship), or that the employment was excepted (i.e. not insurable because the payor and worker were not dealing at arm’s length), whoever filed the determination or appeal may withdraw the determination or appeal by signing the enclosed withdrawal letter and forwarding it to the writer’s attention in the envelope provided.

If you have any questions concerning these matters, please contact the writer.”

[18] In respect of each appellant there is also in evidence a Revenue Canada form entitled “REPORT ON A DETERMINATION OR APPEAL”. (Ex. R-1 tab 11, Ex. R-2 tab 11, Ex. R-3 tab 10) It contains eight headings as follows: (i) Parties to the Determination or Appeal; (ii) Parties Contacted; (iii) Nature of the Question; (iv) Legislative/Regulatory Provisions; (v) Facts; (vi) Summary; (vii) Precedent, Legal Advice, etc.; (viii) Recommendation.

[19] The recommendation in the case of Nancy was this:

“It is recommended that the Minister issue notifications that the applicant Nancy Italiano was not engaged in insurable employment during the period under review as she was not employed under a contract of service, and alternatively, if she were considered to have been employed under a contract of service, she was not dealing at arm’s length nor was she deemed to be dealing at arm’s length with London Paving Bros. Inc. The employment for the period under review was thus not insurable pursuant to paragraphs 3(1)(a) and 3(2)(c) of the UI Act.”

The same recommendation was made regarding Giovanna and Filippo. The report is signed by Appeals Officer J. Rozek, Group Head D. Brochu and Chief of Appeals Cleaver on October 25, 1996, November 6, 1996 and November 8, 1996 respectively.

[20] On November 12, 1996 this letter was sent to Giovanna and Nancy: (Ex. R-1 tab 9, Ex. R-2 tab 7)

“This letter concerns your request for a determination on the insurability, for unemployment insurance purposes, of your employment with London Paving Bros. Inc., from October 28, 1991 to May 29, 1992.

It has been decided that this employment was not insurable for the following reasons: you were not employed under a contract of service; alternatively, if you were considered to have been employed under a contract of service, your employment was excepted from insurable employment because you were not dealing at arm’s length nor were you deemed to have been dealing at arm’s length with London Paving Bros. Inc.

If you disagree with this decision, you may appeal to the Tax Court of Canada within 90 days of the mailing date of this letter. Details on how to initiate an appeal can be found on the enclosed form entitled ‘How to Appeal to the Tax Court of Canada’.

The decision in this letter is issued pursuant to paragraph 61(3)(a) of the Unemployment Insurance Act and is based on subsection 3(1) of the Unemployment Insurance Act.”

It is signed by J.M. Cleaver, Chief, Appeals Division, for the Minister of National Revenue. The same letter was sent to Filippo on November 12, 1996 except that the period of employment is stated to be August 23, 1993 to January 24, 1994. (Ex. R-3 tab 14) The appeals to this Court followed.

[21] The principles applicable to review by the Tax Court of ministerial determinations under subparagraph 3(2)(c)(ii) of the Act have been considered by the Federal Court of Appeal on more than one occasion. It is a two-stage inquiry. The first stage is sometimes referred to as the threshold issue which is limited to a finding by this Court about whether the Minister has exercised his discretion in a lawful manner on the application to him for a determination under paragraph 61(3)(a) of the Act. If the answer is yes, that is the end of the matter. If the answer is in the negative, this Court may then go on and decide whether, on a balance of probability, it has been established that the employer and employee would have entered into a substantially similar contract of employment if they had been dealing with each other at arm’s length. In Minister of National Revenue v. Bayside Drive-In Ltd. (1998), 218 N.R. 150 the judgment of the Federal Court of Appeal was delivered by Chief Justice Isaac. After considering Minister of National Revenue v. Jencan Ltd., (1997) 215 N.R. 352 (F.C.A.) and Tignish Auto Parts Inc. v. Minister of National Revenue, (1994) 185 N.R. 73 (F.C.A.) His Lordship said at page 155:

“The specific grounds which justify interfering with the exercise of a statutory discretion, including the discretion given to the Minister by s. 3(2)(c)(ii) of the Act, are well known.* The Tax Court judge was justified in interfering with the determination made by the Minister under s. 3(2)(c)(ii) only if he was satisfied that the Minister made one or more of the following reviewable errors: (i) the Minister acted in bad faith or for an improper purpose or motive; (ii) the Minister failed to take into account all of the relevant circumstances, as expressly required by s. 3(2)(c)(ii); or (iii) the Minister took into account an irrelevant factor. 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 hence that 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.

*See Lord Macmillan’s comments in Fraser (D.R.) and Co. v. Minister of National Revenue, [1949] A.C. 24, at 36 (P.C.), quoted with approval by the Supreme Court of Canada in Boulis v. Minister of Manpower and Immigration, [1974] S.C.R. 875, at 877. See also, Friends of the Oldman River Society v. Canada (Minister of Transport and Minister of Fisheries and Oceans), [1992] 1 S.C.R. 3; 132 N.R. 321, at 76-77; and Canada (Attorney General) v. Purcell, [1996] 1 F.C. 644; 192 N.R. 148 (C.A.), per Robertson, J.A.”

[22] It is the position of the agent for the appellants that there is a fourth reviewable error to be considered. It is this: has the Minister denied natural justice in exercising his discretion under subparagraph 3(2)(c)(ii) of the Act? I think it can be fairly said that while specific reference is not made to natural justice in the passage cited from Bayside, it is there by implication. For example, if it were established that the Minister acted in bad faith, that would be a denial of natural justice. Regardless, I am prepared for the purposes of these appeals, to deal with the alleged denial of natural justice as an additional issue.

[23] The concept of natural justice embodies flexibility and adjustment to particular circumstances related to the making of a decision that is subject to judicial review. The phrase “fair play” has been equated to natural justice. In cases like those at hand whether there is entitlement to benefits depends upon what existed between the alleged employer and employee pertaining to the services rendered. And who is better placed to know about that than they?

[24] In Re Tandy Electronics and United Steel Workers of America et al. (1980), 26 O.R. (2d) 68 Mr. Justice Cory, who delivered the judgment of the Divisional Court of the High Court of Justice, said at page 74:

“The concept of natural justice is an elastic one, that can and should defy precise definition. The application of the principle must vary with the circumstances. How much or how little is encompassed by the term will depend on many factors; to name a few, the nature of the hearing, the nature of the tribunal presiding, the scope and effect of the ruling made.

In some instances the denial of a right to cross-examine may well, in itself, constitute a denial of natural justice. In other situations a restricting or limiting of cross-examination on some aspect or topic could never offend the innate considerations of fairness which comprise the ‘natural justice’ concept.”

[25] What has already been related establishes that each appellant made an initial claim for insurance benefits as contemplated under subsection 39(1) of the Act. On receiving an initial claim for benefit the Commission is required under subsection 39(3) to decide whether the claimant is qualified to receive benefit and to notify him or her of its decision. But it appears that the decision was made elsewhere, namely, by Nash at Revenue Canada on June 15, 1995 in respect of Giovanna and Filippo and on June 16, 1995 regarding Nancy. Stronach informed Nancy and Giovanna in writing that:

“We regret to inform you that we have cancelled your claim for Unemployment Insurance benefits, which had started on May 31, 1992.

This is because Revenue Canada ruled that your job was not insurable.”

The same message was sent to Filippo except that his claim for benefits started on January 16, 1994.

[26] Let it be assumed on the basis of what is before the Court that there was non-compliance with the Act because Revenue Canada rather than the Commission ruled on insurability in relation to the initial claims for benefit. Nevertheless, that would not determine the outcome of these appeals. After these rulings were made there were still questions outstanding concerning whether the appellants were employed in insurable employment that were subject to determination by the Minister in accordance with the previously cited subsections of section 61 of the Act. It is from this Ministerial determination - not from a ruling pertaining to an initial claim for benefit - that an appeal lies to the Tax Court under subsection 70(1) of the Act. The same applies if it could properly be said that error was involved in making the rulings regarding the initial claims because of non-disclosure by Nash.

[27] In a separate and somewhat duplicative letter Stronach informed each appellant that if they wished more details about the decision made by Ms. Nash she could be contacted at by telephone and gave a phone number. They were also told that they did not meet the requirements to be included in insurable employment under paragraph 3(1)(a) of the Act. Further, they were informed that they could apply for the determination of a question regarding insurable employment and where a copy of Form 101 could be obtained for this purpose. An alternative procedure to Form 101 was specified in the letter.

[28] The letters from the Appeals Division at Revenue Canada forwarding the questionnaires to the appellants make reference to these provisions of the Act: paragraphs 3(1)(a), 3(2)(c), subparagraph 3(2)(c)(ii). Mention is also made of subsections 251(1) and (2) of the Income Tax Act. Copies of paragraphs 3(1)(c) and 3(2)(c) are enclosed with the letters. The last sentence of the letter reads: “If you have any questions concerning these matters please contact the writer”.

[29] The questionnaires request in bold print above the signatures of the appellants that they include “ANY ADDITIONAL SUBMISSION YOU WISH TO MAKE”.

[30] The reports on the determination of the questions signed by Rozek, Brochu and Cleaver carefully canvassed in detail the issues to be determined and matters relevant thereto.[17] The appellants were informed in writing of the determination of the question of their insurability and those letters advise them about their right to appeal to the Tax Court.

[31] This appears in each Notice of Appeal:

“The grounds for this Appeal are that Revenue Canada erred both in facts and in law in arriving at their decision in that they disregarded all of the evidence provided both by the employee and the employer and relied upon written statements of their investigators. The Appellant states that the Investigators both harassed and threatened the Appellant in their attempts to obtain evidence and did not set out in their written report the true nature of the answers to their questions as given by the Appellant to them.

The Appellant will provide evidence of such harassment both of the Appellant and of other persons in similar cases and circumstances who were harassed and threatened by the same Investigators.”

Filippo did not allude to this in his evidence. Giovanna said that when she was interviewed by Turturici he frightened her. He was very rude and was “throwing papers around”. Nancy testified she was pregnant. He accused her of fraud and was disrespectful. He was “throwing his books all over the place in front of my face”. He threatened her. She was treated “like garbage”. At trial I did not find this evidence by these witnesses persuasive. On reviewing the transcript that is still my conclusion.

[32] Turturici was called as a witness by counsel for the Minister. He acknowledged meeting with each of the appellants. He described the meetings thus:

“The Crown: Q. Do you recall when exactly you met with ---

A. I believe it was in the winter or March of 1995.

Q. And when you met with them, what did you initially tell them at the initial portion of the meeting?

A. Initially we invited them into an interview area. When I say ‘we’, it’s my partner as well, Linda Kersis. That’s spelled K-E-R-S-I-S. And we invited them into, at the time, the unemployment insurance office in Richmond Hill and we asked the individuals to come in at designated times.

We interviewed them in an interviewing room. We asked them to sit. We also read their caution out to them stating that they had the right to obtain a solicitor, a lawyer or anyone else present. If they chose to be represented, fine. If not, they could get up and leave any time they wanted to Your Honour. They weren’t under any arrest or anything of that nature. They could have just got up and left. For that matter they didn’t have to answer any of my questions.

His Honour: Is that standard procedure?

The witness: Yes sir it is. And then we proceeded from there.”

This evidence was not challenged by the agent for the appellants in cross-examination.

[33] In my opinion the evidence does not establish that in determining the question whether each appellant was employed in insurable employment during the relevant time the Minister made any of the reviewable errors enumerated by Chief Justice Isaac in Bayside. Nor can it be said the appellants were denied natural justice. They knew the nature of the case that they had to meet and were given full opportunity to make representations in that regard. Even if the appellants did not have that information this can only be by reason of their own neglect for they had every reasonable opportunity to acquire it. This is sufficient to dispose of the appeals.

[34] The appeals are dismissed.

Signed at Ottawa, Canada, this 11th day of August, 1998.

“D.H. Christie”

A.C.J.T.C.C.

---