Nagra v. M.N.R.

Nagra v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2003-07-18
Neutral citation
2003 TCC 497
File numbers
2002-3512(EI)
Judges and Taxing Officers
Dwayne W. Rowe
Subjects
Employment Insurance Act
Decision Content
Docket: 2002-3512(EI)
BETWEEN:
SURJIT SINGH NAGRA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Surjit Singh Nagra (2002‑3513(EI)) and Kulwant Singh Nagra (2002-4251(EI)) on April 7, 2003 at Kelowna, British Columbia,
Before: The Honourable D.W. Rowe, Deputy Judge
Appearances:
Counsel for the Appellant:
The Appellant himself
Counsel for the Respondent:
Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision of the Minister is varied in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 18th day of July 2003.
"D.W. Rowe"
Rowe, D.J.
Citation: 2003TCC497
Date: 20030718
Docket: 2002-3512(EI)
BETWEEN:
SURJIT SINGH NAGRA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
2002-3513(EI)
SURJIT SINGH NAGRA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
MANDEEP KAUR NAGRA,
Intervenor,
AND
2002-4251(EI)
KULWANT SINGH NAGRA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Rowe, D.J.
[1] The appellant, Surjit Singh Nagra (Nagra or payor) appeals from a decision – dated August 27, 2002 - issued by the Minister of National Revenue (the "Minister") wherein it was decided the employment of Kulwant Singh Nagra (Kulwant Nagra or worker) from January 4, 2001 to October 29, 2001, was not insurable pursuant to the relevant provisions of the Employment Insurance Act (the "Act") because Nagra and the worker were not dealing at arm's length. The Minister, after reviewing the circumstances of the employment, was not satisfied the parties would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length.
[2] The Minister also issued a decision – dated August 27, 2002 – wherein it was determined that the employment of Mandeep Kaur Nagra (Mandeep Nagra) from January 4, 2001 to October 29, 2001 was not insurable pursuant to the Act because she and Nagra were not dealing with each other at arm's length and the Minister was not satisfied they would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length. Mandeep Nagra intervened in Nagra's appeal from said decision.
[3] Kulwant Singh Nagra appealed from the decision of the Minister – dated August 27, 2002 – concerning his employment with Nagra during the relevant period.
[4] Counsel for the respondent, both appellants and the intervenor agreed all appeals could be heard on the basis of common evidence.
[5] Surjit Singh Nagra testified he is the owner of a 20-acre apple and pear orchard in Kelowna, British Columbia. Kulwant Nagra is his nephew and Mandeep Nagra – the intervenor - is his nephew's wife and they lived in the same residence as Nagra and his family. Nagra stated Kulwant Nagra and Mandeep Nagra came to Kelowna in 1997 and – subsequently – both have worked for him - either part time or full time - at the orchard. On January 25, 2001, Nagra stated he left Kelowna to spend some time in Vancouver prior to departing for India on a vacation extending to March 25, 2001. Because of the length of his absence, he hired both Kulwant Nagra and Mandeep Nagra to manage the orchard and to undertake whatever work was necessary in order to maintain the property and to prepare it for the forthcoming growing season. Both workers were paid at the rate of $10 per hour. Nagra stated the usual rate of pay within the industry was $8 per hour for the first year but an experienced worker would receive $9 per hour. Between January and March, pruning and raking was required and Nagra stated the workers could choose their own working hours but were instructed to record their time on a sheet which was presented to him following his return. Nagra received rent from another property and Kulwant Nagra and Mandeep Nagra also paid rent to Nagra in respect of their tenancy in his house. Each month, the tenant on the orchard property paid cash rent in the sum of $600 and Kulwant Nagra and Mandeep Nagra used these funds to pay wages to themselves during Nagra's absence. Later, they were paid by cheque and also in cash, and - in acknowledgment - receipts – Exhibit A-1 – were obtained by Nagra. A bundle of cancelled cheques paid to the workers was filed as Exhibit A-2. Various monthly bank statements on Nagra's business account at a Kelowna Scotiabank branch were filed as Exhibit A-3. Nagra stated that during the months of January and February, he performs much of the work on his own but also hires one to three workers, as required. During the relevant period, Nagra stated he had – on occasion - requested his workers to delay cashing their pay cheques until he was able to put enough money into the business account. After Nagra's return to the property at the end of March, the hourly wage paid to Kulwant Nagra and Mandeep Nagra was reduced to $9 because they no longer had to exercise any management functions. Both had been employed by Nagra during each growing season from 1997 through 2002, sometimes only on a part-time basis or, if full time, then only during a certain part of the season. Nagra stated Kulwant Nagra and Mandeep Nagra each preferred to work elsewhere but if no other jobs were available, they would work at his orchard if their services were required. He stated he had not displaced another worker merely to provide one or both of them with a job. The process of thinning was carried out during the months of July and August whereas September and October were devoted to picking 6 or 7 varieties of apples that matured at different times. One type of pear was picked before any of the apples and another variety of pear was harvested in the middle of the apple-picking season. Typically, the end of the season requires approximately one week of cleanup and this work – usually - is carried out by two or three people. Nagra referred to time sheets – Exhibit A-4 and Exhibit A-5 – pertaining to Mandeep Nagra and Kulwant Nagra, respectively. During the months of January and February, 2001, Kulwant Nagra worked for Nagra on a relatively full-time basis because he was working a reduced week at the sawmill operated by Louie Russo Sawmills (1998) Ltd. (Louie Russo Sawmills) During the summer months, Kulwant Nagra worked more hours at the sawmill and was able to work at the orchard – generally – on weekends or during evenings. During the period from April 9 to July 2, 2001, Mandeep Nagra worked for other employers and did not provide Nagra with any services whatsoever. Nagra explained that during a busy picking season, there may be 15‑20 workers on site but some may work only a few hours or a couple of days before requesting their pay and then leaving. Nagra stated he locates workers by posting notes at a local society or by placing an advertisement in a local newspaper. In addition, he receives numerous telephone calls from people looking for work. Nagra stated he was aware the Agricultural Compliance Team (ACT) had visited his orchard but cannot recall whether he and/or Kulwant Nagra had been on the property because the worker may have been operating a tractor on another part of the property. Nagra stated that subsequent to his return to the orchard on March 25, 2001, he was aware of the identity of each worker and their location ‑ every day - until the end of October. Although all other workers had been laid off – earlier - at the end of the picking season, Kulwant Nagra and Mandeep Nagra continued to work until October 29, 2001. Nagra reiterated the only reason he paid Kulwant Nagra and Mandeep Nagra the sum of $10 per hour was that they were experienced workers and had carried additional responsibilities during his extended absence during the winter months. Later, they received the sum of $9 per hour, the same rate as any other non-related experienced worker. Nagra stated the labour force within the orchard industry is extremely mobile and – after two summers - most workers do not choose to continue in that occupation. The two workers involved in the within appeals – and their parents – were the only workers related to Nagra and when labour was required he would consult a list of interested persons and contact them by telephone to determine whether they were still looking for work. On occasion, people were hired on a piecework basis to carry out a specific function during a limited period.
[6] In cross-examination, Surjit Singh Nagra stated Kulwant Nagra and Mandeep Nagra – in 1997 - began living in his house together with his wife and children and his parents. In 2000, Kulwant and Mandeep Nagra moved to a suite in the basement. In 2002, Kulwant Nagra's parents arrived from India and currently live with him. Kulwant and Mandeep Nagra had a child that was cared for by Nagra's wife and/or parents. Nagra stated most workers were paid by cheque but if they had only worked a few hours, they were paid in cash. Nagra identified the payroll record entitled Paystub Detail – Exhibit R-1 – pertaining to the operation of his orchard business during 2001. Following his return from holidays, Nagra stated he paid the balance of wages owing to both workers in order to make up the difference between their actual wage entitlement and the amount retained after collecting rent money from the tenant. According to the payroll record created by a self-employed accountant retained by Nagra, Kulwant Nagra earned the sum of $10,926.50 from his employment with Nagra in 2001. Counsel suggested to Nagra that a calculation of the amounts of the various cheques paid to Kulwant Nagra together with the sums indicated in the receipts signed by him, did not add up to the sum shown on said payroll record. Nagra stated he had no explanation for any discrepancies - if they exist - in relation to either or both workers. The time sheets for the workers pertaining to the months of January, February and March, 2001 were completed by Nagra following his return from India and copies were faxed by him to Canada Customs and Revenue Agency (CCRA) but since these records are not the same as his own daily records, Nagra admitted there may be some discrepancies between the two sets of documents. The workers completed their own applications for employment insurance (EI) benefits. Nagra stated he does not allow any person to work more than 9 or 10 hours per day and no work is carried out at night.
[7] The intervenor did not cross-examine.
[8] Kulwant Nagra testified he is a production worker living in Kelowna, B.C. and had begun working for Nagra on January 4, 2001, at the rate of $10 per hour. He worked at Louie Russo Sawmills between February 20 and August 31, 2001 and referred to his pay stubs from his employment (Exhibit A-6). At the Nagra orchard, he worked at pruning during the early part of the year and then picked fruit as the growing season progressed. He stated his understanding of his pay rate was that he received the sum of $9 per hour for ordinary work and $10 per hour for "heavier" work. His usual hours of work at the sawmill - located within a 5-minute drive from the Nagra orchard - were from 7:00 a.m. to 3:15 p.m., Monday through Friday. His rate of pay was $10 per hour and – usually - he was able to work a full day, although there were a couple of occasions when he was sent home after only part of a regular shift. Kulwant Nagra stated he had worked in previous years for Nagra ‑ Uncle Surjit - and had always maintained his own time records by marking hours on a calendar. Later, this information was transferred to a time sheet. During the relevant period, Kulwant Nagra and Mandeep Nagra were paying Nagra the sum of $500 rent and other renters – living in a separate house on the same property – paid $600 per month rent which Kulwant Nagra collected on Nagra's behalf during the months of February and March, 2001, and applied towards wages owed to himself and his wife. Kulwant Nagra stated he recalled members of ACT visiting one of the three orchards operated by Nagra but he had always worked only at the home orchard. Kulwant Nagra stated he was satisfied Nagra had paid him – by cash and/or cheques – the full amount of wages earned during the relevant period. He referred to the time sheets – Exhibit A-7 – containing entries of hours worked by himself and Mandeep Nagra from January 4 until April 9, 2001, but in the following months, Mandeep no longer worked at the orchard because the raking and pruning had been completed and she could not drive the tractor or move heavy irrigation lines. The time sheets – Exhibit A-4 – indicated Mandeep Nagra did not work at the orchard in May and/or June but was employed by Nagra in July, then laid off for the entire month of August and hired again in September. Nagra also kept track of hours worked by Kulwant Nagra and Mandeep Nagra and met with them in order to ensure his record of hours matched their own prior to paying their wages for a particular period.
[9] In cross-examination, Kulwant Nagra acknowledged the time sheets ‑ Exhibit R-2 – were the originals prepared by Nagra and stated he had provided CCRA with copies of hours worked at the sawmill. He confirmed he had never been paid more than $10 per hour for any work performed for Nagra and when paid in cash had always signed the receipts comprising Exhibit A-1. When he needed funds, Nagra would pay him a certain amount in cash and that payment would be acknowledged by a signed receipt. During February and March, 2001, Kulwant Nagra stated he had collected a total of $1,200 rent from the tenant and the rent owed to Nagra for those two months by himself and Mandeep Nagra amounted to $1,000. As a result, these two sums were taken into account when calculating the balance of money owed for wages following Nagra's return to the farm on March 25, 2001. Kulwant Nagra identified his application – Exhibit R-3 – dated November 15, 2001 for unemployment benefits and agreed his rate of pay stated therein was $9 per hour. He agreed he had – on occasion – earned $10 per hour in the early part of the year or an equivalent amount when paid on a piecework basis but the usual rate was $9 per hour. He stated he had never worked at the orchard and at the sawmill on the same day at any time during the relevant period. He could not recall - for certain - whether he had received cash from Nagra after his return from India but thought he may have received some amount of accumulated wages in that form.
[10] Mandeep Nagra testified she is the wife of Kulwant Nagra and started working - with her husband - for Uncle Surjit in January, 2001. They worked on their own nearly every day in return for an hourly wage of $10. Because they always worked together, her time was recorded by her husband. Following Nagra's return from India, their pay was reduced to $9 per hour. While working for Nagra from January 4 to April 9, 2001, Mandeep Nagra stated she had also worked - from midnight to 4:00 a.m., 4 days per week – as a cleaner for Amco Commercial (Amco), a janitorial service, and had been paid a monthly salary for her services. Her son – born in 1999 – had the benefit of child care during the day and was looked after by her husband during the night. Although her husband handled the bookkeeping and recording of hours worked and wages received, she stated she was satisfied Nagra had paid her in full for all work performed. In 2001, she had done pruning work on the home orchard but the picking had been done on two or three other orchards operated by Nagra. Beginning in 1997, she had worked for Nagra in each of the previous years.
[11] In cross-examination, Mandeep Nagra stated she recalled a visit by ACT to the Scotty Creek orchard during which she had informed a member of the inspection team that it was her first day of work – raking - on that property. She explained that statement was correct but had worked previously – pruning - for Nagra at the home orchard. The task of raking – by hand - is carried out in April and usually occupies about two weeks after the pruning - undertaken in January, February and March - has been completed. She stated she was unaware of the identity of workers who carried out pruning on Nagra's other orchards and does not know whether Kulwant Nagra arranged for workers to carry out that task on those other properties. She agreed she used the $9 per hour pay rate when completing her application for EI benefits even though she had earned $10 per hour in the winter months and had considered the piecework payment was equivalent to $10 per hour. She left her employment with Amco and completed the appropriate form – Exhibit R-4 – when applying for benefits based on voluntary separation. The reason for quitting her job – on August 31, 2001 - was stated therein as "no child care". In the form, she advised she had started doing "farm work", a reference to a job packing vegetables for Sun Valley Foods where she remained for the next year. Mandeep Nagra stated her parents came to Canada in September, 2001 and lived with her and her husband. She stated that while working as a janitor her routine was to sleep for three or four hours after finishing her shift at the cleaning job and then work 8 or 9 hours in the orchard. She stated she was only 27 years old at that time and able to adjust to that onerous working schedule.
[12] Brad Novikoff testified he is an Investigation Control Officer employed by Human Resources Development Canada (HRDC). Kulwant Nagra and Mandeep Nagra applied for EI benefits and the information provided in their respective applications disclosed the payor – Nagra – was the uncle of Kulwant Nagra and Mandeep Nagra was the wife of Kulwant Nagra. As a consequence, their files were referred to Novikoff to carry out an investigation insofar as it concerned a certain aspect of the working relationship between the payor and the workers because they were related and – therefore – not dealing with each other at arm's length. As a result of engaging in correspondence with Nagra, Novikoff obtained cancelled cheques and a payroll record – Exhibit R-1 – indicating the hours worked by Kulwant Nagra and Mandeep Nagra and other workers during the relevant period. In addition, Novikoff stated he requested that Nagra provide daily records and/or some form of time sheet relating specifically to Kulwant Nagra and Mandeep Nagra but none were forthcoming. Novikoff stated ACT had visited the Nagra orchard at 2:45 p.m. on April 2, 2001. The appropriate form ‑ Exhibit R‑5 – was completed by an employee of the provincial Labour Standards Branch - serving as a member of ACT - with respect to the attendance of the inspection team at Nagra's Scotty Creek orchard. The only workers on site were Mandeep Nagra and Surinder Khunkhun. Interviews were conducted by a member of ACT who was fluent in Punjabi and English. During the course of his investigation, Novikoff received receipts for cash received by Kulwant Nagra and Mandeep Nagra and receipts for certain household bills allegedly paid in cash. Novikoff wrote a letter – Exhibit R-6 – to Rosemary Hunt, a Canada Pension Plan/Employment Insurance Rulings Officer wherein he reported that he was unable to link any cash – purportedly from payments received by Kulwant Nagra and Mandeep Nagra from the payor - to any subsequent deposits into their personal bank account. In the letter, Novikoff referred to two cash payments, each in the sum of $1,019.40 received by Kulwant Nagra and Mandeep Nagra from the payor – as evidenced by signed receipts within Exhibit A-1 – for which there was no corresponding deposit of said cash to a bank account nor proof of payment for any other household or related purposes despite their claim that they paid all bills in cash. The only documents provided to support this assertion were two Visa statements indicating two cash payments – in the sum of $200 and $80, respectively – had been made on October 10, 2001. On April 13, 2001, receipts indicated Mandeep Nagra had received the sum of $1,000 cash from Nagra while her husband had been paid cash in the sum of $800. Novikoff did not locate any matching deposits for these amounts nor was he provided with any evidence of expenditures paid for with these funds. A deposit in the sum of $300 was noted by Novikoff following cash payments by the payor to Mandeep Nagra and Kulwant Nagra in the sums of $375.69 and $575.69, respectively. As noted in his letter to the Rulings Officer, Novikoff could not link any other deposits subsequent to receipt of cash - by these workers – from Nagra.
[13] Both appellants and the intervenor declined to cross-examine the witness.
[14] Janet Mah testified she is employed as an Appeals Officer at CCRA. When the rulings issued by the Rulings Officer were appealed, Mah was assigned the files and issued the decisions – on behalf of the Minister – which is the subject of the within appeals. Mah examined a Record of Employment (ROE) – Exhibit R-7 – pertaining to Mandeep Nagra's employment with Nagra as well as other ROEs applicable to her other employment as a janitor with Amco, a packer at Sun Valley Foods, and a labourer for Louie Russo Sawmills from March 17, 2000 to January 3, 2001. Mah also examined two ROEs – Exhibit R-8 – relating to Kulwant Nagra's employment with Nagra and Louie Russo Sawmills. Mah stated she discovered the earnings reported by Kulwant Nagra and Mandeep Nagra did not match the actual payments by Nagra. Mah stated she obtained - from Louie Russo Sawmills - a copy of the time sheet – Exhibit R-9 – setting out hours worked by Kulwant Nagra. She stated she had not verified the accuracy of this record with Kulwant Nagra but used the document for purposes of comparison with his time sheet – Exhibit R-10 – provided earlier by Nagra to the Rulings Officer. Mah prepared a working paper ‑ Exhibit R-11 – in which she noted certain days where Kulwant Nagra had apparently worked for both Louie Russo Sawmills and Nagra. Since Kulwant Nagra had informed CCRA he had never worked at night, Mah stated she found it strange that he had apparently worked 17 hours during some days in February. Mah stated that until it was presented into evidence during the testimony of Nagra, she had never seen the time sheet entered as Exhibit A-5. In the course of her analysis, Mah examined the payroll record – Exhibit R-1 – in order to compare the amount of earnings shown thereon with the amount declared on Kulwant Nagra's ROE. Her analysis of payments received by Kulwant Nagra - Exhibit R-12 - according to Mah's calculations, indicated he had apparently received the sum of $5,178.66 in cash and $2,131.21 in cheques for a total of $7,309.87. Mah stated she undertook an examination of the time sheets for Mandeep Nagra received from Nagra and from Sun Valley Foods, filed as Exhibits R-13 and R-14, respectively. A list of hours worked by Mandeep Nagra at Sun Valley Foods was located in the file of the Rulings Officer and Mah noted the dates thereon referred to the year 2000. Mah stated she telephoned the Sun Valley Foods office and spoke with a person in the accounting office in order to receive confirmation that the dates provided were in fact in relation to Mandeep Nagra's work at Sun Valley Foods during 2001 and that the reference therein to the year 2000 was in error. Mah also reviewed the worker's time sheet – Exhibit R-15 - from Amco and prepared a sheet – Exhibit R-16 – setting out the hours worked by Mandeep Nagra at Amco, Nagra's orchard and Sun Valley Foods. Mah prepared an analysis – Exhibit R-17 – of the earnings of Mandeep Nagra in which payments received from Nagra were compared to the amount recorded on her ROE. According to Mah, this worker received a total of $7,486.99 in cash and cheques from Nagra but her net pay should have been in the sum of $8,841.93, a discrepancy of $1,354.94. Mah stated she examined bank statements on the personal bank account used by Mandeep Nagra and her husband and could not locate any deposits in cash.
[15] Neither appellant nor the intervenor chose to cross-examine.
[16] In response to questions from the Bench, Mah agreed she had assumed Mandeep Nagra had continued to work 4 hours per night - for Amco - from January to July 31, 2001 whereas the evidence of the worker was that in May and June, 2001 she had worked only for Sun Valley Foods because she had been laid off by Amco on April 30, 2001, as indicated in the letter – Exhibit R-15 – prepared by an official of that corporation stating that Mandeep Nagra had worked for Amco between August 1, 2000 and April 30, 2001 and from July 1 to July 31, 2001, at a monthly salary of $1,000. The ROEs – included in Exhibit R-7 – issued by Amco confirm these dates and amounts. Mah stated she had considered it to be somewhat odd that the worker would have worked 4 hours each night for Amco followed by 9‑hour days at the Nagra orchard. Mah agreed that in September and October, 2001, Mandeep Nagra had worked only for Nagra. Mah did not follow up on obtaining a replacement time record from Sun Valley Foods because – after her telephone call to the office – she was confident the records pertained to the year 2001- and not 2000 - as stated therein.
[17] Surjit Nagra testified in rebuttal that he had no explanation for the discrepancy in earnings of the workers and that he had attempted to match receipts to the payroll record.
[18] Counsel for the respondent stated the Minister had conceded that Kulwant Nagra and Mandeep Nagra were engaged in pensionable employment with Nagra pursuant to the provisions of the Canada Pension Plan (the "Plan") because they were providing services under a contract of service. However, the Minister had not been satisfied that these related parties met the test pursuant to paragraph 5(3)(b) of the Act and – therefore – decided their employment with the payor constituted excluded employment. Counsel submitted the parties were not only related to each other but were members of an extended family living in the same house in which they shared meals, household duties and child care. Some payments of wages were delayed and, taken as a whole, their working relationship was not substantially similar to one that would have been entered into between parties who were not related and were dealing with each other at arm's length.
[19] Surjit Nagra submitted the work had been done as related in his testimony and that of the workers, Kulwant Nagra and Mandeep Nagra and that they had been paid in full for their efforts.
[20] The relevant provision of the Act is paragraph 5(3)(b) which reads as follows:
(3) For the purposes of paragraph (2)(i),
...
(b) if the employer is, within the meaning of that Act, related to the employee, they are 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.
[21] The essence of the assumptions of fact relied on by the Minister as set forth within paragraph 4 of the Reply to the Notice of Appeal (Reply) filed in Nagra's appeal – 2002-3512(EI) - are as follows:
e) The Appellant purports that Kulwant worked for him at his orchard during the period of January 4, 2001 to October 29, 2001;
f) The Appellant engaged Kulwant in a contract of employment respecting the orchard at some point during the period;
g) Kulwant worked at Louie Russo Sawmills an average of 8 hours per day from 7:00 a.m, to 3:15 p.m. on Monday through Friday during the Period of February 20, 2001 to August 30, 2001;
h) Kulwant's time sheets prepared by the Appellant respecting the Period purportedly show Kulwant working in the orchard an average of 9 hours per day from 7:00 a.m. to 4:30 p.m. on most if not all days of the week;
i) On April 2, 2001, during an interview of the Appellant conducted by Human Resources Development Canada (HRDC) farm team investigators at the orchard, Kulwant was not on site;
j) Kulwant's time sheet prepared by the Appellant for April 2, 2001 shows Kulwant purportedly working 9 hours at the orchard, including during the time that the HRDC farm team investigators were on site;
k) The Appellant's payroll sheets purportedly show Kulwant's earnings at $10.00 per hour, while in his application for employment insurance benefits Kulwant showed his earnings as $9.00 per hour;
l) The Appellant did not pay Kulwant in cash;
m) Kulwant did not work the number of hours shown on his record of employment issued by the Appellant;
n) The Appellant and Kulwant entered into an arrangement to qualify for employment insurance benefits to which he would otherwise not be entitled;
[22] With respect to Nagra's appeal – 2002-3513(EI) - and the intervention therein by Mandeep Nagra, the Reply sets forth certain assumptions relied on by the Minister as follows:
f) The Appellant engaged Mandeep in a contract of employment respecting the orchard at some point during the Period;
g) Mandeep worked at Amco Commercial Cleaning from midnight to 4:00 a.m. on average 5 to 6 days a week from January 1 to April 30, 2001;
h) Mandeep's time sheets prepared by the Appellant respecting the Period purportedly show her working in the orchard from 7:00 a.m. to 4:30 p.m. most if not all days of the week from January 1 to April 9, 2001;
i) On April 2, 2001, during an interview conducted by Human Resources Development Canada (HRDC) farm team investigators, Mandeep claimed that April 2 was her first day of work with the Appellant in 2001;
j) Mandeep's time sheets prepared by the Appellant show her first day of work as January 4, 2001;
k) The Appellant did not pay Mandeep in cash;
l) The Appellant's payroll sheets purportedly show Mandeep's earnings at $10.00 per hour while her application for employment insurance benefits purportedly show her hourly rate was $9.00 per hour;
m) The Appellant and Mandeep entered into an arrangement to qualify Mandeep for employment insurance benefits to which she would otherwise not be entitled to;
[23] In Légaré v. Canada (Minister of National Revenue – M.N.R.), [1999] F.C.J. No. 878 – a decision of the Federal Court of Appeal – Marceau, J.A. speaking for the Court stated at page 2 of the judgment:
In this matter, the Court has before it two applications for judicial review against two judgments by a judge of the Tax Court of Canada in related cases heard on the basis of common evidence which raise yet again the problems of interpretation and application of the saving provision, subparagraph 3(2)(c)(ii). I say yet again because since its passage in 1990, several decisions of the Tax Court of Canada and several judgments of this Court have already considered what workable meaning could be given to subparagraph 3(2)(c)(ii). In reading the text, the problems it poses beyond its deficient wording are immediately obvious, problems which essentially involve the nature of the role conferred on the Minister, the scope of the Minister's determination and, by extension, the extent of the Tax Court of Canada's general power of review in the context of an appeal under sections 70 et seq. of the Act.
While the applicable principles for resolving these problems have frequently been discussed, judging by the number of disputes raised and opinions expressed, the statement of these principles has apparently not always been completely understood. For the purposes of the applications before us, we wish to restate the guidelines which can be drawn from this long line of authority, in terms which may perhaps make our findings more meaningful.
The Act requires the Minister to make a determination based on his own conviction drawn from a review of the file. The wording used introduces a form of subjective element, and while this has been called a discretionary power of the Minister, this characterization should not obscure the fact that the exercise of this power must clearly be completely and exclusively based on an objective appreciation of known or inferred facts. And the Minister's determination is subject to review. In fact, the Act confers the power of review on the Tax Court of Canada on the basis of what is discovered in an inquiry carried out in the presence of all interested parties. The Court is not mandated to make the same kind of determination as the Minister and thus cannot purely and simply substitute its assessment for that of the Minister: that falls under the Minister's so-called discretionary power. However, the Court must verify whether the facts inferred or relied on by the Minister are real and were correctly assessed having regard to the context in which they occurred, and after doing so, it must decide whether the conclusion with which the Minister was "satisfied" still seems reasonable.
[24] In the case of Elia v. Canada (Minister of National Revenue - M.N.R.), [1998] F.C.J. No. 316, a decision of the Federal Court of Appeal dated March 3, 1998, at page 2 of the certified translation Pratte, J.A. stated:
... Contrary to what the judge thought, it is not necessary, in order for the judge to be able to exercise that power, for it to be established that the Minister's decision was unreasonable or made in bad faith having regard to the evidence before the Minister. What is necessary is that the evidence presented to the judge establish that the Minister acted in bad faith, or capriciously or unlawfully, or based his decision on irrelevant facts or did not have regard to relevant facts. The judge may then substitute his decision for that of the Minister.
[25] First, I will deal with the evidence as it pertains to Kulwant Nagra's working relationship with the payor.
[26] As disclosed in subparagraphs 4(g) and 4(h) of the Reply to Nagra's appeal concerning Kulwant Nagra's employment with him, the effect is to suggest that Kulwant Nagra was doubling up his hours – at some point – between his work at Louie Russo Sawmills and the Nagra orchard. In addition, the Minister relied on the fact the worker was not present at the site of the ACT visit on April 2, 2001. The fact the payroll sheet indicated the worker's hourly wage was $10 - rather than $9 - as reported on his application for unemployment benefits was taken into account by the Minister and assigned a negative connotation. The Minister took the position the worker had received no amount in cash from the payor and concluded Nagra and Kulwant Nagra entered into an arrangement to qualify for employment insurance benefits to which the worker would otherwise not be entitled.
[27] The Minister did not consider that Kulwant Nagra had also worked for the payor in 1997, 1998, 1999 and 2000. An examination of the time sheet ‑ Exhibit R‑9 – pertaining to Kulwant Nagra's employment with Louie Russo Sawmills and the time sheet – Exhibit A-5 – relating to his work at Nagra's orchard discloses the Kulwant Nagra worked at the orchard – between 7 and 9 hours, most days - between January 4 and February 20, 2001. However, during this period, there were 11 days when no work was performed. Kulwant Nagra began work at the sawmill on February 20, 2001 and from that day to February 24, did not work at the orchard. On February 24, 2001 – Saturday – he did not work at either place but worked 9 hours at the orchard on Sunday and then returned to the sawmill on Monday and worked an 8-hour day. From March 19 to March 27, inclusive, Kulwant Nagra worked at the sawmill, except for the 24th ‑ Saturday – when he worked 9 hours at the orchard and then returned to his job at the sawmill for the next 3 days prior to working for the payor at the orchard on March 28 until the end of the month. He did not work at the sawmill on any of those days. On May 10, 2001, the worker put in 2 hours at the sawmill and 10 at the orchard. I cannot find any untoward entries that would lead one to draw the conclusion that the worker was padding his hours at the orchard. It is obvious the pruning and raking work had to be done in the early part of the year in order to prepare for the forthcoming season. Nagra left the orchard on January 25, 2001 and did not return until March 25, 2001. For nearly all of that period, he was in India. During Nagra's absence, Kulwant Nagra – with the assistance of his wife, Mandeep – exercised a supervisory function in relation to the home orchard as well as other orchards operated by Nagra. They collected $600 rent from a tenant for the months of February and March and applied those funds together with two months rent ‑ totalling $1,000 – otherwise payable by them to Nagra in his capacity as their landlord. Upon Nagra's return, the parties took into account the amounts collected and the amount attributable to rent as well as the sum of $991.97 received in cash on January 23, 2001 by Kulwant Nagra, as acknowledged by a signed receipt within Exhibit A-1. A cheque dated January 31, 2001 - in the sum of $500 payable to Mandeep Nagra – was negotiated by her on February 5, 2001 at the Toronto‑Dominion Bank in Kelowna. A sheet – marked with a blue tab – within the spreadsheet - Exhibit R-1 - indicates Kulwant Nagra performed 138 hours piecework at a rate calculated at $15.50 per hour. However, according to his testimony, the majority of the ordinary work subsequent to Nagra's return from India was performed at the usual rate of $9 per hour, although he was aware the piecework payment was higher. The inspection team – ACT – attended at the Scotty Creek orchard site - not the home orchard - and the details of that visit as entered on the relevant form, constitutes classic hearsay as the information therein was recorded by a member of the inspection team who was employed by the provincial government and not by CCRA. At subparagraph 4(e) of the Reply, the Minister assumed:
The Appellant purports that Kulwant worked for him at his orchard during the period of January 4, 2001 to October 29, 2001.
[28] In the following subparagraph, the Minister relied on this assumption of fact:
The Appellant engaged Kulwant in a contract of employment respecting the orchard at some point during the period;
[29] As noted earlier, for purposes of the Plan, the Minister accepted that Kulwant Nagra was engaged in pensionable employment with Nagra.
[30] Nagra testified it is difficult to find and retain farm workers as the tasks are difficult and the heat is often oppressive during the summer. He stated it was rare for any worker to return for another season. During picking season, some individuals worked only a few hours or a few days prior to collecting their pay and moving on. Nagra relied on advertising and word of mouth to recruit workers when needed. In the course of a season, there are periods when fewer workers are required and during other times more experienced people are needed to drive tractor and/or to handle irrigation equipment. In the within appeals, proof of payments for wages – other than those evidenced by cancelled cheques – is based on the willingness of the Court to accept the testimony of the workers and the payor that wages earned were paid in full and that – to the best of their knowledge – said earnings were properly recorded.
[31] Having regard to the evidence as it pertains to Kulwant Nagra's employment with Nagra, I find the Minister ignored important facts including the failure to take into account that the worker had