Date: 20000630
Docket: 1999-3992-EI
BETWEEN:
AU GRAND BAZAR DE GRANBY INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Tardif, J.T.C.C.
[1] The evidence showed that the company Au Grand Bazar de Granby Inc. operated a superstore selling sports clothing and equipment. It was such a large store that it was described as virtually one of a kind in Quebec.
[2] Denise Grondin held 99 percent of the voting shares and her sons Pierre and Mario the remaining one percent. The participating preferred shares were held by the Grondin brothers.
[3] This was a family business established in 1976 by Denise Grondin's husband, the father of Mario and Pierre. The business developed in normal fashion over the years. Mario and Pierre Grondin began working there at a very early age and continued during their studies, which they cut short in order to make their careers in the business.
[4] The Grondin sons' responsibilities increased considerably following their father's death in 1992. The business then experienced very strong growth, largely as a result of the sons' determination and enthusiasm.
[5] Mario and Pierre Grondin, who described themselves as co-owners of the business, explained that it was administered and managed in complete harmony with their mother, who took part in all important decisions.
[6] Admitting that their ideas and plans were generally much more progressive and risky than those of their mother, who was rather conservative, they were generous and respectful in their dealings with their mother, toward whom they clearly had very noble sentiments.
[7] As the result of this privileged relationship, their mother was always closely involved in all major decisions. Mrs. Grondin was no doubt very proud of her two sons and trusted them completely, and the evidence showed that, although rather prudent by nature, she had never blocked or impeded her sons' ardent desire and ambition to expand the business.
[8] I believe that the two sons in fact always had a free hand in implementing their ideas for the store's operation and their various expansion plans.
[9] It was shown on a preponderance of evidence that this was undoubtedly a veritable model of organization for a family business involving a number of members of the same family.
[10] Without question, the soul of this family business was mainly the two Grondin brothers. They managed the business together with tact and respect as regards their father and mother, who allowed the store to become what it in fact became.
[11] The evidence clearly showed that they enjoyed special status within the business despite the very small percentage of voting shares they held. There is no doubt that they held and still hold de facto control of the business.
[12] The determination under appeal resulted from the exercise of discretionary authority. Consequently, this Court may not interfere unless it can first be concluded on a preponderance of evidence that one or more palpable errors have been made.
[13] In this case, the evidence was decisive on this point. The respondent had Ms. Sévigny testify in her capacity as officer responsible for the case. She essentially stated that the Grondin brothers' testimony had been a repetition of the facts brought to her attention during the review of the case.
[14] The evidence showed that the Grondin brothers themselves made the decisions to pay bonuses and determined their number and when they were paid, and above all they determined their amount.
[15] The evidence showed that the Grondin brothers each received more than $80,000 in 1998 and more than $92,000 in 1999 in salary and bonuses.
[16] The evidence established that the Grondin brothers themselves set all the terms and conditions respecting the performance of their work.
[17] The evidence showed that Mrs. Grondin, who held 99 percent of the company's shares, was never contacted to complete the investigation.
[18] The evidence revealed that the respondent had in his possession and consulted statistics on salaries paid to persons working in the retail industry, and according to those statistics salaries paid for the same type of work are very much lower than the incomes the Grondin brothers received.
[19] These are fundamental points to which a number of secondary ones could be added. These facts are amply sufficient to find that the respondent did not exercise his discretionary power in a judicious and irreproachable manner. Indeed, such facts compelled a finding entirely opposite to that which the respondent made.
[20] How can it be reasonably concluded that persons working in retail sales who have an arm's length relationship with their employer set and determine their own conditions of employment?
[21] How can it be claimed that third parties unrelated to their employer could decide on their own compensation based on the performance of the business that employs them? There may of course exist situations in which third parties receive benefits, bonuses, commissions and so on based on performance, but the scales are predetermined by the business and never by the recipients of those performance bonuses.
[22] I therefore find that the respondent did not adequately use his discretion in determining that Pierre and Mario Grondin were employed under a contract of employment similar to that which persons dealing with the employer at arm's length might have had.
[23] It was shown on a preponderance of evidence that Pierre and Mario Grondin enjoyed benefits and privileges that were justified solely by their non-arm's-length relationship with the business. In the absence of that relationship, they could not have hoped for such advantageous conditions of employment. Consequently, the work performed by the Grondin brothers must be excepted from insurable employment under the Act.
[24] For these reasons, the appeal is allowed.
Signed at Ottawa, Canada, this 30th day of June 2000.
"Alain Tardif"
J.T.C.C.
Translation certified true on this 28th day of September 2001.
[OFFICIAL ENGLISH TRANSLATION]
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
1999-3992(EI)
BETWEEN:
AU GRAND BAZAR DE GRANBY INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on June 13, 2000, at Sherbrooke, Quebec, by
the Honourable Judge Alain Tardif
Appearances
Counsel for the Appellant: Richard Généreux
Counsel for the Respondent: Diane Lemery
JUDGMENT
The appeal is allowed and the Minister's decision confirmed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 30th day of June 2000.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 28th day of September 2001.
Erich Klein, Revisor