Dirk v. M.N.R

Dirk v. M.N.R
Court (s) Database
Tax Court of Canada Judgments
Date
2024-07-08
Neutral citation
2024 TCC 95
File numbers
2022-3029(EI)
Judges and Taxing Officers
Pierre Archambault
Subjects
Employment Insurance Act
Decision Content
Docket: 2022-3029(EI)
BETWEEN:
ROBERT DIRK,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on April 16, 2024 at Calgary, Alberta
Before: The Honourable Justice Pierre Archambault, Deputy Judge
Appearances:
For the Appellant:
The Appellant himself
Counsel for the Respondent:
Kerrin Rodrigues
JUDGMENT
The appeal of Mr. Dirk is allowed and the decision of the Minister is varied such that Mr. Dirk is considered to have held insurable employment during the Relevant Period while working for both the Payer and BV.
Signed at Vancouver, British Columbia, this 8th day of July 2024.
“Pierre Archambault”
Archambault D.J.
Citation: 2024 TCC 95
Date: 20240708
Docket: 2022-3029(EI)
BETWEEN:
ROBERT DIRK,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Archambault D.J.
I. Overview
[1] Mr. Dirk appeals a decision of the Minister of National Revenue (Minister), dated October 12, 2022, under the Employment Insurance Act, S.C. 1996, c. 23 (Act). The Minister decided that Mr. Dirk was not engaged in insurable employment while working for Kaz Minerals Russia, LLC (Payer) from August 24, 2021, to May 31, 2022 (Relevant Period). He concluded that Mr. Dirk was employed outside of Canada and did not meet the conditions outlined in section 5 of the Employment Insurance Regulations, S.O.R./96-332 (Regulations), more particularly that the Payer did not have any place of business in Canada and was not a resident here. There are no issues with respect to the other conditions set out in section 5 of the Regulations.
II. Decision of the Minister
[2] This is what appears in the summary of the appeal officer report:[1]
By regulations made in accordance with subsection 5(4) of the EIA, paragraph 5(1)(d) of the EIA[2] can be used to include an employment that is not insurable under paragraph 5(1)(a).
Section 5 of the EIR[3] states the following:
Paragraph 5(a) of the EIR requires that for the employment to be insurable, it must be held by a person who ordinarily resides in Canada. In this case, although the worker was living and working in the Russian Federation, he maintained significant residential ties with Canada. Therefore, this criteria was met since the worker is considered ordinarily resident of Canada.
Paragraph 5(b) of the EIR states that the employment outside of Canada must be by an employer who is resident of Canada or has a place of business in Canada.
In general, an employer’s place of business is the location where the employer carries on business. The location in Canada that is determined to be the head office of a business would also be considered a place of business of the employer. A place of business may also be any other location owned or leased by the employer or for which the employer has obtained a license and where the employer or one or more of its employees work or report to work, or from which one or more of the employees are paid.[4]
Paragraph 5(c) of the EIR states that the employment must be insurable if it were in Canada. It has already been determined that the worker provided his services to payer under a contract of service. Therefore, this criteria was met since the employment would have been insurable if it occurred in Canada.
Paragraph 5(d) of the EIR states that employment outside of Canada is included in insurable employment if the employment is not insurable under the laws of the country in which it takes place. In this case, although Russia, offered benefits to citizens of the Russian Federation, the worker was Canadian citizen who did not qualify for any social benefits. Therefore, this criteria was met since the worker was not covered under the laws of the Russian Federation.
Conclusion
After impartially reviewing all the information relating to this appeal, it has been determined that this employment was not insurable. The employment services were performed outside of Canada and was not insurable employment because the conditions of section 5 of the Employment Insurance Regulations were not met.
This decision is issued in accordance with subsection 93(3) of the Employment Insurance Act and is based on paragraph 5(1)(a)[5] of the Employment Insurance Act and section 5 of the Employment Insurance Regulations.
Accordingly, the worker’s appeal is dismissed, and the ruling dated July 28, 2022, for the period of August 24, 2021, to May 31, 2022, is confirmed.
[Footnotes added.]
[3] It should be stated at the outset of these reasons that the appeal officer considered that Mr. Dirk only had one employer during the Relevant Period. The evidence has disclosed that in fact he had two different employers at different times in the Relevant Period. First, he was employed with the Payer from August 24, 2021, to February 14, 2022 (the Second Period) (for close to 6 months). Second, he was employed with Kaz Minerals Projects B.V. (BV) from February l5, 2022, to May 31, 2022 (the Third Period) (for 2.5 months). With the consent of counsel for the respondent, this appeal covers these two employments for the Relevant Period. Prior to this period, Mr. Dirk had worked in Vancouver for BV from October 1, 2018, to August 23, 2021 (the First Period) (for close to 3 years), which period is outside the Relevant Period and is not the object of this appeal. However, the facts relating to the First Period are relevant for disposing of this appeal.
[4] The appeal officer justified her conclusion that the conditions in paragraphs 5(a), (c) and (d) of the Regulations were satisfied by referring to the relevant facts supporting her conclusion, but did not do so with respect to her conclusion that the condition in paragraph 5(b) was not met. It seems, on the basis of the testimony of Mr. Dirk, that the appeal officer felt bound by an interpretation of the Minister:
A Well, and the agent told me … for the director when she called to see if it was a case or not, she said that … there is no legal definition of place of business so this must be heard from the courts … because need to make a ruling on it. … She … said, I can’t overturn the CRA because … there is no legal definition. … So she didn’t have a basis to overturn it. She said only you could overturn it.[6]
[5] There is no issue that the Payer and BV were not residents of Canada as the evidence did not disclose that their management and control were in Canada and Mr. Dirk did not claim otherwise. Therefore, the only issue in this appeal is whether the Payer and BV had a place of business in Canada during the Relevant Period.
III. FACTS
(a) Admissions [6] At the outset of the hearing, Mr. Dirk admitted all the facts outlined in section 9 of the Reply to the Notice of Appeal (Reply), except the facts in paragraph 9 x. During the hearing, counsel for the respondent informed the Court that she was withdrawing paragraph 9 x. Here is that section:
9. In making the Decision, the Minister relied on the following assumptions of fact:
a. the Payer[7] was a Russian corporation that designed and operated mineral mines in several international locations;[8]
b. the Payer was a subsidiary of Kaz Minerals that had offices in the United Kingdom, Kazakhstan, Russia, and Kyrgyzstan;
c. the Appellant was an employee of the Payer;
d. the Appellant was hired by the Payer under a written contract;
e. the Appellant’s employment contract with the Payer stated the Payer’s business address and the Appellant’s work location was in Russia;[9]
f. the terms of the Appellant’s employment contract with the Payer were governed by the laws and Labour code of the Russian Federation;
g. the Appellant left Canada to begin work in Russia on August 23, 2021;
h. the Appellant performed services as a mining director during the Period;[10]
i. the Appellant was responsible for the design and geological exploration of a mining project located in Peschanka (Russia);
j. the Appellant’s subordinates were located in Russia;
k. the Appellant resided in an apartment while in Russia;
l. the Appellant was provided with a living allowance from the Payer for the Russian residence;
m. the Appellant was paid a salary of approximately $525,000, paid in U.S. dollars and Russian rubles;
n. the Appellant was paid twice per month in accordance with Russian law;
o. the Payer withheld tax from the Appellant’s pay;
p. the Payer did not withhold EI premiums from the Appellant’s pay;
q. the Worker’s employment was not insurable in Russia;
r. the Appellant maintained his Canadian residency;
s. the Appellant returned to his residence in Calgary, Alberta for his time off from work;
t. Kaz minerals was a party of a contract with Fluor for engineering, procurement, construction and management services;[11]
u. the office of Fluor was located in Vancouver, British Columbia;
v. the Appellant attended the office of Fluor on one occasion during the Period;
w. the Appellant ceased employment with the Payer on May 31,[12] 2022 because Canadian sanctions prohibited Canadians from working as consultants or employees in the oil, gas, petroleum, construction or mining sectors in the Russian Federation;
x. Alina Abushakhmanova, head of Human Resources for the Payer, confirmed that the Payer’s office was in Moscow and that no office was located in Canada; and
y. there was no record of the Payer in the Canada Revenue Agency database during the Period.
[7] It is useful to reproduce some of the facts outlined in the Notice of Appeal documents that were admitted[13] or acknowledged or that were characterized as not an issue[14] by the respondent. They are set out in three sections:
Section 1: Ref. #: WEB828299
Reason for the Appeal
See attached. The appeal indicated the employment was not insurable, because the employer did not have a Place of Business in Canada. I do not believe this assessment aligns with the CRA#s published definition for Place of Business. I had three different classifications of employment with Kaz Minerals. I would like to further request the CRA evaluate each period separately, to determine whether each period of employment was insurable. Place of Business Reconsideration As per the attached and published Canada Revenue Agency definitions, a Place of Business[15] is defined as #Means any premises, facility, or installation used to carry on business, whether or not it is used exclusively for that purpose. Premises, facilities, or installations may be considered to be a place of business whether they are owned or rented, or, in some cases, where they are simply available to the business#.
Section 2: Notice of Appeal – CASE GB222240833490[16]
Service Canada requested that the CRA complete a determination if my employment from August 24, 2021 to May 31, 2022 was insurable. The CRA made a negative determination on July 28,2022, which I subsequently appealed. The appeal was denied in a letter dated October 12 2022.
The letter of October 12th noted it was denied for the following reason:
‘Paragraph 5(b) of the EIR states that the employment outside of Canada must be by an employer who is a resident of Canada or has a place of business in Canada.
The appeal indicated the employment was not insurable, because the employer did not have a Place of Business in Canada. I do not believe this assessment aligns with the CRA’s published definition for Place of Business.[17]
I had three different classifications of employment with Kaz Minerals. I would like to further request the CRA evaluate each period separately, to determine whether each period of employment was insurable.
Place of Business Reconsideration
As per the attached and published Canada Revenue Agency definitions, a Place of Business is defined as “Means any premises, facility, or installation used to carry on business, whether or not it is used exclusively for that” purpose.Premises, facilities, or installations may be considered to be a place of business whether they are owned or rented, or, in some cases, where they are simply available to the business”.
Kaz Minerals KPBV was employed by Kaz Minerals Russia, to manage the engineering design company in Canada. As part of Kaz Minerals KPBV agreement with Fluor Canada (to perform engineering and design of facilities), Kaz Minerals KPBV had 14 office spaces and 2 meeting rooms in Fluor Canada’s 1185 W Georgia St, Vancouver Canada office. Kaz Minerals KPB[V] had between 10 and 14 employees permanently based in these offices. On a regular basis Kaz Minerals Russia also utilized these offices and meeting rooms for; engineering reviews, procurement meetings with vendors, one on one meetings with Kaz Minerals KPBV employees, and client reviews. These meetings were detailed in my previous appeal and subsequent interviews.
Periods of Review
My employment with Kaz Minerals KPBV was terminated on May 31, 2022. My employment with Kaz Minerals was for two different entities in different locations at various periods, so I would like to request the assessment be broken in to three periods:
i) October 1, 2018 – August 23, 2021 – Kaz Minerals KPBV in Vancouver Canada
ii) August 24, 2021 – February 28, 2022 – Kaz Minerals Russia in Moscow, Russian Federation
iii) February 28, 2022 – May 31, 2022 – Kaz Minerals KPBV in Moscow, Russian Federation
For period (i) – this employment was in Canada
For period (ii) – the employment was in Moscow, Russian Federation with Kaz Minerals Russia. However, as detailed above, Kaz Minerals Russia had a Place of Business ‘simply available’ to the business in Canada in accordance with the CRA place of business definition.
For period (iii) – the employment was in Moscow, Russian Federation with Kaz Minerals KPBV. KPBV had between 10 to 14 employees working in Russia from February 2018 to June 14, 2022, and had office spaces and conference rooms provided to them in 1185 W Georgia St, Vancouver, Canada. Kaz Minerals KPBV had a Place of Business ‘rented’ in Canada in accordance with the CRA Place of Business definition.
Section 3: Employment Insurance Ruling letter, August 9, 2022
Ruling Number CE2219 9164 6235[18]
I received a letter on July 28, 2022 indicating a decision was made on the insurability of my employment with Kaz Minerals Russia LLC from August 24, 2021 to May 31, 2022.
I understand the ruling was that the employment was not insurable. My understanding the ruling was made due to Section 5, paragraph b which requires a foreign company to have a place of business in Canada. I would like to formally request an appeal of the ruling, as I believe further clarification on the ‘Place of Business’ for Kaz Minerals Russia LLC is required.
I would like to clarify, that Kaz Minerals Russia LLC did have a place of business in Canada.
Kaz Minerals Ltd has several entities registered for tax purposes while operating in different countries. Both Kaz Minerals KPBV and Kaz Minerals Russia LLC worked on the Kaz Minerals Peschanka Copper Project, which is a projection the Russian Federation. Kaz Minerals KPBV had approximately 9 to 14 employees working full time in the Fluor Canada office spaces from February 2018 until May 2022. Kaz Minerals Russia LLC also used these offices as their place of business in Canada. The office spaces were located on the 3rd, 4th and 14th floors of 1185 W Georgia, Vancouver, BC.
I myself worked full time in these office from October 2018 to August 2021 as an employee of Kaz Minerals KPBV, and they were available to me if required while in Canada. My supervisor, Mian Khalil, the General Director of Kaz Minerals Russia LLC, would work periodically in these offices as well when work in Canada was required. I understand Mian last used these office in March 2022 while meeting with some of his reports as well as completing work reviews with Fluor Canada. The Deputy Director for Kaz Minerals Russia LLC, Andrew Batteson would periodically meet with his reports working for Kaz Minerals KPBV in this office, as well as perform engineering reviews with Fluor Canada. The Director of HR for Kaz Minerals Russia LLC, Sergey Starostinskiy, worked in these offices in March of 2020 and the Director of Engineering for Kaz Minerals Russia, Anton Shabunin worked in these offices in December of 2018.[19]
[Emphasis added.]
(b) Testimony and documentary evidence [8] Only Mr. Dirk testified at the hearing. I found him to be a credible witness who for the most part repeated what he wrote in his various communications with the Minister when he appealed the initial ruling.
[9] As mentioned above in paragraph [4], the appeal officer did not explain in her report why she concluded that neither the Payer nor BV had any place of business in Canada: is it because she did not find the information credible or because she misinterpreted the scope of that expression in paragraph 5(b) of the Regulations? She also did not testify to clarify this question. What is odd is that the respondent “does not put in issue the different classifications of employment” but states that Mr. Dirk ceased employment with the Payer on May 31, 2022, when that employment had ceased on February 14, 2022 because he began employment with BV on February 15, 2022. It was his employment with BV that ceased on May 31, 2022.
[10] Mr. Dirk’s testimony and his documentary evidence provided more details about his relationship, including his work, with the Payer, BV and Kaz Holding. The Payer was incorporated in Russia in the spring of 2019 and its registered office is in Moscow. It is an 80% subsidiary of Kaz Holding, whose head office is located in London, England. The two main controlling shareholders of this company are two brothers from Kazakhstan. BV is a sister corporation of the Payer and has its registered office in Amsterdam, the Netherlands.
[11] It is my understanding that the Payer was incorporated for the purpose of operating a mining project situated northeast of Moscow, known as the Peschanka Project (Project). BV’s mission is to develop this Project, whose operations of the mine were expected to start in 2025 and are now expected to start in 2027.
[12] To carry out this development, BV entered a $500 million contract with Fluor, a large engineering company based in Vancouver, British Columbia.[20] Pursuant to this contract, Fluor was to provide consulting services for designing the mining process facilities, including procuring parts to build a concentrator and supervising its construction at the Project’s site. Originally, Fluor also was to carry out the construction, but this service was removed from the contract.
[13] Fluor had, during the Relevant Period, between 100 and 140 employees involved in the Project. BV had the right[21] to use 14 office spaces (Vancouver Kaz offices) on the Vancouver premises of Fluor, including three closed offices, eight cubicles and two meeting rooms. As seen above, Mr. Dirk stated to the Minister on several occasions that BV had 9 to 14 employees working full time in the Vancouver Kaz offices from February 2018 to May 2022 (see paragraph [7] above).
(2) First Period [14] Mr. Dirk holds a mining engineering degree from a Canadian university and resided in Calgary, Alberta when he was first hired in 2018 by BV. At this time, he was hired as a Mining Director of the Project at a base salary of $300K (to be reviewed annually) and was entitled to a country allowance of $222K while being based in Vancouver. (See the first contract of employment (Exhibit A-3) governed by the laws of England and Wales and the assignment letter of October 2018 (Exhibit A-5). Pursuant to the first paragraph of the assignment letter, Mr. Dirk was to work at “BV’s … Branch in Canada” (emphasis added))
[15] While keeping his residence in Calgary, he started to work in the Vancouver Kaz offices on October 1, 2018, and this work lasted until August 23, 2021 (the First Period). He had rented housing facilities for himself while working in Vancouver. He would usually return to his home in Calgary every weekend to be with his family. The assignment letter, dated October 1, 2018, states at article 1 that he was to report to the “Project Director of Peschanka Project”, Mian Khalil, a BV employee,[22] who was an American citizen residing in Texas, but who came regularly to the Vancouver Kaz offices. Mr. Dirk described his boss as the chief executive officer of the Project.
[16] Mr. Dirk’s duties were the “exploration, mining designs, mining permits, and getting all of the equipment procurement and pre-construction of the mine and also ready for operations for all of the facilities on the Peschanka property”.[23] For instance, during the First Period, Mr. Dirk worked on requests for procurement proposals with companies such as Caterpillar and Hitachi. He worked in the Vancouver Kaz offices with some Russian employees:
A … when I was based in Vancouver, I would travel to Moscow periodically. And employees of mine would travel from Moscow to Vancouver to see me periodically in the office.
JUSTICE: That’s in the period number 1.
A And they were KAZ Minerals Russia employees.[24]
…
JUSTICE: -- you had employees … of Russia[n] coming to see you?
A Yes, … to do work. So when I was in KAZ Mineral’s K.P.B.V. based in Vancouver, we did a request for proposals for mining equipment with Caterpillar, Komatsu, Hitachi. And the team that worked on that were myself and a number of KAZ Mineral’s Russia employees: Mark Fullenwider, an American, but he was based in Moscow and was an employee of KAZ Minerals. … --
JUSTICE: So that would be Russia, right?
A Yes, KAZ Minerals Russia employee.[25]
[Emphasis added.]
[17] Two such employees of the Payer spent four weeks in Vancouver:
JUSTICE: … so in summary, two came for four weeks and two others came for two weeks, right?
A Yeah. At another period too in the summer, different periods --
JUSTICE: So this is all during that first period.
A Yeah, that was in November and December 2019.
JUSTICE: Okay.
A They also came as well in June of 2019 as I onboarded them, but they were KAZ Minerals employees, so they came to work in Vancouver in the offices for a month.
JUSTICE: So they were employees of B.V. or Russia?
A Russia.[26]
…
A There was also an engineering director and my boss would come over. My boss would, as I mentioned before, he would come to the offices of Fluor as a KAZ Minerals Russia employee and work there one week every two months. And less frequent --
JUSTICE: During that first period, correct.
A Correct.
JUSTICE: He was not your boss at that time, correct?
A No, no, he was. He was always my boss. Even though we would work for different entities -—
…
JUSTICE: Okay. But he was technically an employee of Russia, but he was your boss while you were an employee of B.V.
A Correct.
JUSTICE: Correct? … So he came at least one week every two months during that first period. What about --
A Oh, first period, second period --
JUSTICE: And third?
A -- and even third period.
JUSTICE: Third. So that would be true for the 3 period[s].
A Yes, yes. He continued throughout the project.[27]
[Emphasis added.]
[18] A Human Resources Director came in March 2019. A Russian economist also visited the Vancouver Kaz offices in October 2018. They were also the Payer’s employees.[28] The COVID-19 pandemic started in March 2020, so it is not surprising that there were fewer visits of Russian employees of the Payer after that time because of travel restrictions.
[19] In the record of employment (ROE) of Mr. Dirk for the First Period, the name of the employer is shown as BV and its branch office is shown as Almaty, Kazakhstan. His total insurable earnings are shown in box 15B as $462,671.58 (see Exhibit A‑6, box 4). Box 5 also provides the CRA payroll account number for BV. (See also Exhibit A-5, article 7, which states that Mr. Dirk was required to participate in the unemployment insurance plan.)
(3) Second Period [20] After August 23, 2021, Mr. Dirk continued to work on the Project as its Mining Director, but as an employee of the Payer. This lasted until February 14, 2022 (Second Period).[29] A new contract of employment, the second employment contract, was signed on September 7, 2021, which is shown as addendum number 1 to an employment contract dated March 1, 2021. This March 1 contract filed in court is not signed and bears many handwritten modifications and therefore looks like a draft contract. The signed and final version was not filed as an exhibit (both the March 1 document and addendum number 1 were filed as Exhibit A-1). The person who signed the addendum on behalf of the Payer was a Russian human resources person. This contract was governed by the laws and Labour code of the Russian Federation. Mr. Dirk received his remuneration in a Russian bank both in U.S. dollars ($525K), which was then transferred to his Canadian account, and in Russian rubles.
[21] A second addendum (addendum number 2) was entered into on September 17, 2021, in Moscow between the Payer and Mr. Dirk, a citizen of Canada, to increase, it appears, his remuneration. It came into force on September 17, 2021. This addendum was signed by a Russian human resources person.
[22] Pursuant to the draft March 1 employment contract, Mr. Dirk was expected to start to work on March 31, 2021, but not earlier than the date that the employee obtained a work permit to be issued by Russia. In paragraph 1.1 of addendum number 1, it is stated that a work permit was issued on April 14, 2021, valid from April 30, 2021, until April 29, 2024. However, Mr. Dirk stated that he started to work in Russia on August 27, 2021. In paragraph 9 g of the Reply, he admitted that he “left Canada to begin work in Russia on August 23, 2021”.
[23] According to Mr. Dirk’s testimony, he continued to work on the Project as before, with the same duties, that is, to assist with the development of the Project, but mainly in Russia, and he continued to report to the same superior, the American Project Director, who was also an employee of the Payer:
JUSTICE: Okay. And what changed when you signed the contract with Russia.
A Just that instead of being based primarily in Vancouver, I was based primarily in Moscow, Russia.[30]
…
A Otherwise, no changes.
…
JUSTICE: Okay. So during that whole period, you stated in your Notice of Appeal that you went on one occasion to the Vancouver office, flew out. When was that and for how long were you there?
A Just a day. My … boss, who was an employee of KAZ Minerals Russia but the American, he would be similar to me. He worked six weeks in Russia and then he would work three weeks from home in Dallas. Sometimes he would change that if his wife would travel to meet him in Russia or not. She didn’t really care for it there, so -- and whenever he went back, he would always go to the Fluor offices to do business meetings with them, get an update. I happened to meet him for one day, I believe.
JUSTICE: So your boss … -- what was his title?
A Mian Khalil, he was the project director.[31]
…
A He would either stop at Canada on his way home or on his back to Russia.[32]
[Emphasis added.]
[24] In his letter dated August 9, 2022, Mr. Dirk described the Project Director, his supervisor, Mr. Mian Khalil, as the General Director of the Payer (see also Exhibit A-2, article 2.1). Mr. Dirk also stated that his General Director would regularly go to the Vancouver Kaz offices not only during the time that he was an employee of the Payer, but also throughout the three periods. He estimated one week every two months. In his communications with the Minister, Mr. Dirk also stated that the Deputy Director of the Payer worked periodically in the Vancouver Kaz offices. The Payer’s Human Resource Director also worked in these offices in March 2020. But Mr. Dirk acknowledged that he did not visit the Vancouver Kaz offices during the Second Period. However, as it is stated in paragraph 9 v of the Reply that Mr. Dirk visited the Vancouver Kaz offices on one occasion during the “Period” (that is, the Relevant Period). He testified that it happened during the Third Period. According to his testimony, Mr. Dirk would normally work six weeks in Russia and come back to Canada for two weeks. He estimated that he spent two weeks in Canada in December 2021 and January 2022 and 15 weeks in Russia.
[25] He also stated that the Payer’s employees continued to visit and work at the Vancouver Kaz offices:
JUSTICE: And basically, you’re saying that during period 2 and 3.
A Those [Vancouver Kaz offices] were available to[o] --
JUSTICE: It was the same scenario that existed? For example, your boss --
A Yes.
JUSTICE: -- was an employee of Mineral -- of Russia?
A Of Russia.
JUSTICE: And he was going there over those -- for three periods, as you describe[d] it --
A Yes, and had a meeting in the third meeting, … as I described it.
JUSTICE: Are you aware if there were other employees of Russia that might have gone during period number 2 and 3?
A Yes, Andrew Batteson. He was an engineering manager and an engineering director. He was promoted. [H]e came over in period 2 and period 3.
JUSTICE: An employee of Russia, right?
A Yes, sir.
JUSTICE: So and he came in period 2 and period 3.
A Oh, sorry, he came in period 2. In period 3, … actually -- they needed him to go to Kazakhstan and finish the project there, so he was an employee of K.P.B.V., but in Kazakhstan, so he only came in period 2. He came about three or four occasions –[33]
[26] He provided the following details for his work done when he returned from Moscow to his home in Calgary:
JUSTICE: Okay. Period 2.
A There was two times in period 2 where I worked from my residence in Calgary. It would have been in the last two weeks of October and the last week of December, first week of January.[34]
(4) Third Period [27] After the end of the Second Period, Mr. Dirk continued to work on the Project, but as an employee of BV again. A new contract of employment, his third employment contract, was signed on February 15, 2022,[35] which is nine days before President Putin announced on February 24, 2022, the Russian invasion of Ukraine, described as a “special military operation”.[36] Mr. Khalil, his managing director, signed this contract on behalf of BV. He also signed an addendum to the contract of employment on April 1, 2022. Article 4.1 of the February 15, 2022 contract stipulates that his “contractual work location” was his residence in Calgary. Mr. Dirk recognized that he worked there, but most of the work was carried out in Moscow.[37] He provided the following details:
… And then in period 3, there was two times when I worked from my residence in Calgary, from when I went home on the 24th of February when Russia crossed the border into the Ukraine.
…
A I -- I worked from home for a month, except for one day I travelled to Vancouver to meet with my boss. And then in the last three weeks of May, I worked from home as well.
JUSTICE: How long were you in Vancouver?
A Just one day.[38]
[28] He then described how long he worked in Russia:
JUSTICE: -- … in period 3. And I’m asking you how many days did you work, or weeks did you work, in Russia --
A … about seven and a half weeks in total in period 3 I worked in Russia.[39]
[29] From the statements made by Mr. Dirk in his testimony, it appears that the reason for the change of employer was driven by foreign exchange control considerations. Thereafter, his remuneration in U.S. dollars was paid directly from London to his Canadian account while his Russian rubles were paid to his Russian bank account. After the invasion of Ukraine, he stayed home to see how things would develop. When the situation settled down, he went back for one more rotation mid-March. He went on vacation in Italy on April 29, 2022, to clear his head and decided to return on May 9, 2022, to Canada.[40]
[30] This third contract of employment was terminated by Mr. Dirk while in Canada, effective May 31, 2022, after the adoption of the Canadian economic sanctions imposed on Russia following its invasion of Ukraine in February 2022.
[31] Mr. Dirk stated in his testimony that he paid premiums under the Act during the three periods described above.[41] There is evidence that appears to support that BV paid the employer’s premium under the Act during the First Period. There are no ROEs for the Second Period and the Third Period. Mr. Dirk admitted the fact outlined in paragraph 9 p of the Reply, which states that the Payer did not withhold EI premiums from Mr. Dirk’s pay. Furthermore, the second employment contract (Exhibit A-1) does not contain a similar provision to paragraph 7 of the assignment letter (Exhibit A-5) with respect to the requirement to contribute premiums to the EI program under the Act. Mr. Dirk suggested that it was because the Payer had employees in different jurisdictions. He also acknowledged that in respect of the First Period, he received a T4 for his remuneration paid by BV and that he did not receive any T4 for his remuneration paid by the Payer or BV with respect to the Second Period and the Third Period.
[32] There was no change of Russian apartment after he became employed by BV in the Third Period.[42] The situation remained the same throughout the three periods for his meetings with subordinates:
A In periods 1, 2, and 3, I had subordinates in Moscow and Pechenga. I had some in -- but throughout Russia.[43]
[33] At one point, after the BV branch office in Kazakhstan was closed, the Payer’s human resources group took care of the employees working in the Vancouver Kaz offices:
… they used that HR group to support us, but later on, they used KAZ Minerals Russia to support the employees in Vancouver. Long story …[44]
[34] During this period, as seen above, he also worked from his residence in Calgary.
IV. Positions of the parties
A. Mr. Dirk [35] Mr. Dirk contends that the Payer had a place of business at the Vancouver Kaz offices during the Second Period and that, during the Third Period, BV was his employer and it also had such a place of business in the same location. Given that neither the Regulations nor the Act provides a definition of a place of business, he is using the CRA Website Definition found on the Government of Canada website, Canada.ca.
B. Respondent [36] Counsel for the respondent stated that the Minister was not bound by the CRA Website Definition, which was only informative, although she did not provide any specific definition of a “place of business” and stated that she had not found one in the case law either. However, she relied on the following two decisions, which in her view supported the Minister’s position that neither the Payer nor BV had a place of business in Canada: Rizzo v. M.N.R., 2015 TCC 103, 2015 CarswellNat 1285 [“Rizzo”], and Guan v. M.N.R., 2009 TCC 561, 2009 CarswellNat 3639 [“Guan”].
V. Analysis
[37] It is useful to reproduce again the relevant provision of the Regulations that is at issue:
5. Employment outside Canada, other than employment on a ship described in section 4, is included in insurable employment if
(a) the person so employed ordinarily resides in Canada;
(b) that employment is outside Canada or partly outside Canada by an employer who is resident or has a place of business in Canada;
(c) the employment would be insurable employment if it were in Canada; and
(d) the employment is not insurable employment under the laws of the country in which it takes place.
[Emphasis added.]
[38] As mentioned above, the appeal officer concluded that all of these conditions in section 5 had been satisfied, except paragraph (b). Given that neither the Payer nor BV resided in Canada because there is no evidence that their management and control were exercised in Canada, the remaining issue is whether they had a “place of business” in Canada. I am referring to both BV and the Payer because Mr. Dirk had two different payers during the Relevant Period, a situation that the appeal officer does not seem to have considered. The evidence clearly supports the position of Mr. Dirk that during the three different periods, there were three written employment contracts. During the First Period, which immediately precedes the Relevant Period, he was employed in Canada by BV (see Exhibit A‑3). During the Second Period, he was employed by the Payer outside of Canada (see Exhibit A-1). Finally, during the Third Period, he was employed by BV outside of Canada (see Exhibit A‑2). The last two periods correspond to the Relevant Period.
A. Meaning of “place of business” [39] The expressions “place of business” and “place of business in Canada” are used both in the Act and the Regulations,[45] but are not defined in either one. In this situation, it is customary to determine what the ordinary meaning of an expression is. To do so, dictionaries are very often consulted.
[40] The expression “place of business” is defined in Black’s Law Dictionary[46] as “[a] location at which one carries on a business”. A “principal place of business” is defined as “[t]he place of a corporation’s chief executive offices, which is typically viewed as the ‘nerve center.’”
[41] It is defined similarly as follows on the online version of the Oxford English Dictionary [47]: “A place where business is conducted, spec. a shop, office, or other commercial establishment.”
[42] It is also useful to review the case law dealing with this expression. For instance, the expression “place of business” (which is not defined in the Income Tax Act[48] (ITA) either) is used in paragraph 20(1)(ee) of the ITA, which authorizes a deduction of the connection costs of public utilities at a place of business. In R. v. Guaranteed Homes Ltd.,[49] Smith D.J. was called upon to determine the scope of the expression “place of business” for the purposes of this paragraph 20(1)(ee). He held that a display house in which there was a field office was a place of business for a construction company. This is how he defined a place of business:
21 I have quoted the opinion of St-Onge QC in the Canadian Utilities case that “a place of business is where business is being done”.[50] It has also been described as “a place where business is carried on”. This clearly applies to simple cases such as a single retail store or wholesaling or manufacturing establishment. But a person, firm or corporation may have several, or many places of business, in the sense of places where business is carried on, eg: a supermarket chain store corporation. The words “a place of business” have a wider meaning than “Head Office”, though some aspects, at least, of a company’s business are normally carried on at its Head Office. The same is true of a company’s “Principal Establishment”. A person, firm or corporation may also have branch offices which are places of business in the same sense. Some businesses, eg: engineering and construction businesses, may have what is often called a “field office”, which conducts some or all of the firm’s business in the locality in and for which it has been set up, and which is properly described as “a place of business”. Other examples of a company having more than one place of business could easily be cited.
[Emphasis added.]
[43] The Federal Court of Appeal in Queen v. William A. Dudney[51] provides an analysis that is enlightening for resolving the issue of this appeal. In that case, the issue was to determine whether the taxpayer had a “fixed base regularly available to him” under the Canada–United States tax treaty. This is how the issue and the method to resolve it are described:
[7] The term “fixed base regularly available to him” is not defined in the Convention or in the Income Tax Act. The application of Article XIV must therefore be determined on a case by case basis, giving effect to the intention of the contracting states. A literal or legalistic interpretation that might defeat their intention is to be avoid