Pai v. M.N.R.

Pai v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2008-08-12
Neutral citation
2008 TCC 456
File numbers
2007-2655(EI)
Judges and Taxing Officers
Dwayne W. Rowe
Subjects
Employment Insurance Act
Decision Content
Docket: 2007-2655(EI)
BETWEEN:
SHERRY PAI,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeal of
Sherry Pai (2007‑2656(CPP))
on June 16, 17, 18, 19 and 20, 2008 at Vancouver, British Columbia
Before: The Honourable D.W. Rowe, Deputy Judge
Appearances:
Counsel for the Appellant:
Gregory P. Bruce
Counsel for the Respondent:
Bruce Senkpiel and Carl Januszczak
____________________________________________________________________
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 12th day of August 2008.
"D.W. Rowe"
Rowe D.J.
Docket: 2007-2656(CPP)
BETWEEN:
SHERRY PAI,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeal of
Sherry Pai (2007‑2655(EI))
on June 16, 17, 18, 19 and 20, 2008 at Vancouver, British Columbia
Before: The Honourable D.W. Rowe, Deputy Judge
Appearances:
Counsel for the Appellant:
Gregory P. Bruce
Counsel for the Respondent:
Bruce Senkpiel and Carl Januszczak
____________________________________________________________________
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 12th day of August 2008.
"D.W. Rowe"
Rowe D.J.
Citation: 2008 TCC 456
Date: 20080812
Dockets: 2007-2655(EI)
2007-2656(CPP)
BETWEEN:
SHERRY PAI,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Rowe D.J.
[1] The Appellant appealed from two decisions, both dated March 12, 2007, issued by the Minister of National Revenue (the “Minister”) pursuant to the Employment Insurance Act (the “Act”) and the Canada Pension Plan (the “Plan”) wherein the Minister decided the Appellant, Sherry Pai (“Pai”), was not engaged in insurable or pensionable employment with Regions Group of Companies International Trading Ltd. (“Regions”) from May 6 to October 18, 2002.
[2] Counsel for the parties agreed both appeals could be heard together.
[3] On consent of counsel for the Respondent, counsel for the Appellant filed (Exhibit A-1) a binder with documents at Tabs 1 to 27, inclusive.
[4] On consent of counsel for the Appellant, counsel for the Respondent filed (Exhibit R-1) a binder with documents at Tabs 1 to 62, inclusive.
[5] Soraya Motameni was called to the stand by Gregory Bruce, counsel for Pai. Motameni testified she works as a store manager in Burnaby but was employed by Regions as the Managing Director (“Director”) of an English as a Second Language (ESL) school that operated at 900 West Hastings Street, Vancouver, British Columbia. She was aware Samir Fawaz (“Fawaz”) was the owner and in control of Regions which also operated the language school under the name Regions Training Institute (“RTI”). She started working at RTI early in 2001, at which point there were about 18 classrooms and more than 100 students. As Director, Motameni was in charge of hiring and firing language teachers, scheduling morning and afternoon classes and generally assuring the operation ran smoothly. There were about 20 teachers and the students were mainly from Japan, South Korea, Taiwan and China. Motameni stated the Appellant, Pai, worked as her assistant and performed administrative duties such as scheduling teachers and allocating classrooms. Counsel referred Motameni to an information sheet (Exhibit A-1, Tab 1) in which answers were provided to certain questions concerning RTI, and to several sheets (Exhibit A-1, Tab 2) one of which contained a message of welcome to incoming students and to other pages which pertained to program information, enrolment applications and contracts, and the last one which identified Motameni as Managing Director and Sherry Pai as Director’s Assistant. Motameni stated these documents were typical as part of the operation of the school but had no current specific recollection of them. Although Motameni did not participate in the establishment of a website, she was certain the documents (Exhibit A-1, Tab 3) related to it and was aware an attractive brochure had been produced for the purpose of supplying them to prospective students. Although Motameni was not involved in the production of other documents, such as the Notice to Students (Exhibit A-1, Tab 4), nor the document in Chinese characters (Exhibit A‑1, Tab 5), nor the documents relating to Home Stay (Exhibit A‑1, Tab 6), nor the Dismissal Policy and Procedures (Exhibit A‑1, Tab 7), she was aware they were part of the set of documents provided to students. Motameni recalled that Regions had issued her several pay cheques which were returned NSF, but made good later, and on other occasions her pay was late, particularly during the period commencing about six months after the attack on the World Trade Center on September 11, 2001 because foreign student enrolment dropped sharply. Motameni recalled that Pai also worked from 8:00 a.m. to 5:00 p.m. during the week.
[6] Motameni was cross-examined by Bruce Senkpiel, co-counsel for the Respondent. Motameni stated her memory was not good with respect to dates but believed she started working for RTI in 2000. Motameni recalled a telephone interview with Susan Lazic (“Lazic”), an investigator, in May 2005 who asked her questions about her employment at RTI. Counsel pointed out that when asked to provide names of co-workers, she mentioned Maria, a receptionist, and Cyrus Zahedi but did not mention Pai. Motameni explained she is forgetful but asserted Pai did work for RTI. Counsel informed Motameni that when speaking later to Carin Amber (“Amber”), Appeals Officer, she told Amber that Pai was already working at RTI before she was hired as Director. Counsel also advised Motameni that Amber’s notes of the interview indicated Motameni stated she did not interact with Pai in the course of her work. Motameni responded by saying that “seven or eight years have passed and my Regions Training School experience was the worst experience of my life. I try to forget everything that went on in there and I moved on. I may have said something that’s contradicting what I’m saying today but Sherry Pai was working at Regions Training Institute. Whether as my assistant or as someone else’s, she was working and she was reporting to me”. Motameni stated she assigned tasks to Pai and supervised her work but could not recall many aspects of the RTI business operation until shown certain documents in the course of her testimony. Motameni stated she had not hired Pai and did not interview her as that task was undertaken by Fawaz.
[7] During re-examination by counsel for the Appellant, Motameni stated she could not recall any government official having requested a complete list of every person who worked at the office occupied by the group of companies operating as Regions.
[8] Hassan Yazdani testified he is a certified machinist and is the husband of Sherry Pai. They were married in 2000 but had known each other since 1993. Although Yazdani has worked for the same employer for 15 years, Monday to Friday, in February 2003, he incorporated RHS Services Ltd. (“RHS”) to carry on a machining business and built a workshop in their family home. Pai did the necessary paperwork in connection with the services provided by RHS to its customers and this sideline business currently provides about one-third of Yazdani’s annual revenue. Starting about 1994, Yazdani hired Fawaz as his accountant to do bookkeeping and to file personal income tax returns and visited him three or four times a year. Yazdani was referred to a Report of Interview (Exhibit A-1, Tab 27) prepared by Susan Lazic in relation to a telephone interview on May 3, 2005 concerning a Record of Employment (“ROE”) that had been issued by RHS to Lilian Liu (“Liu”) purporting that she had worked 267 hours and had insurable earnings in the sum of $4,980.00. Yazdani recalled the interview and that he informed Lazic that RHS had no employees and that he did not know Lilian Liu. He explained to Lazic that when contacted about the matter, he called Fawaz who assured him it was a mistake and that Liu had worked on RHS files for accounting and income tax purposes but she had worked 26.7 hours instead of 267, the number stated in the ROE by mistake. Yazdani stated he was assured by Fawaz the matter would be corrected. Yazdani stated that after that event, he did not want Fawaz working on his tax returns in the future. Yazdani stated Pai had worked at different translation jobs from time-to-time but had been looking for steady work when she showed him a newspaper advertisement placed by a language school located at 900 West Hastings Street in Vancouver. Yazdani stated he recognized the name Regions as that of the accounting business he visited when taking his tax and accounting material to Fawaz. During those visits, he had observed several people on the premises. After Pai was hired by RTI to work at the school, he understood her role was to coordinate schedules and to work with students regarding administration. Because he also speaks Farsi, he carried on some conversations with Motameni who worked at the school. He was aware that Kathleen Owens, the wife of Fawaz, also worked there in some capacity. At some point in 2002, Pai mentioned there was a lack of students and a resulting reduced cash flow to the school because of travel restrictions imposed following September 11, 2001. Yazdani stated he was concerned because they had purchased a house in 2002 and were undertaking an expensive renovation and two incomes were required to make the payments on the credit card which had been used to pay certified trades people. In November 2002, their son was born and Yazdani’s mother came to Canada to help care for the child while Pai searched for work following the expiration of maternity leave.
[9] Hassan Yazdani was cross-examined by Carl Januszczak, co-counsel for the Respondent. Yazdani agreed he is the sole director and shareholder of RHS and stated Fawaz handled all documents and required filings for the corporation. Yazdani was referred to an ROE (Exhibit R-1, Tab 53) apparently issued by RHS Services Ltd., Coquitlam, B.C., from the same address as the one registered with the British Columbia Ministry of Finance, Corporate and Personal Property Registries. The ROE purported Lilian Liu had been employed by RHS from December 15, 2003 to April 16, 2004. A payroll number for RHS was included in the ROE which Yazdani stated was filled out and signed by someone other than him. He had not requested any blank ROE forms from Human Resources Development Canada (“HRDC”), as it then was, nor did he request Fawaz to obtain a payroll number and recalled he had obtained a form which he completed and returned to Canada Revenue Agency (“CRA”) for the purpose of advising that RHS did not have any employees. When interviewed by Lazic at the HRDC office in Burnaby, he produced various documents to prove the signature on the ROE was not his own. He recalled advising someone during an interview that he had been upset with Fawaz and had attempted to contact him repeatedly and left messages to that effect and had been assured later by Fawaz that this mistake concerning Lilian Liu’s ROE would be corrected. Counsel advised Yazdani that Nazrin Yazdani (“Nazrin”) had allegedly worked for Aberdeen Financial Services (“Aberdeen”) one of the entities operating within Regions. Yazdani confirmed that Nazrin was his sister and had lived in the same house with him and Pai. Yazdani stated that when Pai showed him the Regions newspaper advertisement, he recognized the name and when he telephoned the number therein and heard the receptionist’s voice, knew it was Maria with whom he set up an appointment for an interview with his wife. He told Pai the language school was operated by the same group of companies, Regions, that did his accounting. Yazdani recalled there was much less activity at the Regions premises when he attended there at the end of February 2002 in connection with the preparation of his income tax return for the 2001 taxation year. Yazdani agreed that Fawaz also prepared the T-1 tax return for Pai (Exhibit R-1, Tab 47) for the 2004 taxation year which Pai signed and was received by the CRA on June 1, 2005. The preparer was shown as Aberdeen Financial Services Inc. which Yazdani understood to be one of the companies associated with Regions that Fawaz used to perform accounting work for clients and that Fawaz had not worked personally on those returns. Yazdani stated he was aware that HRDC was seeking repayment of about $20,000.00 in UI maternity leave benefits because of the decision by the Minister that she was not employed by Regions during the period claimed.
[10] Sherry Shih-Wei Pai testified she is currently a homemaker looking after three young children, all under age six, and lives with her husband, Hassan Yazdani, in Coquitlam, British Columbia. She was born in Taiwan but immigrated to Canada in 1991 and became a citizen in 1997. She obtained a Bachelor of Arts from the University of British Columbia with a double major in psychology and Chinese studies. She returned to Taiwan for three years where she worked for an international consulting firm and also taught English. She took human resources classes at National Sun Yat-Sen University in Taiwan which has exchange programs with the University of Victoria. Her work history is included in her resumé (Exhibit A-1, Tab 9) and after her marriage to Yazdani in 2000 she remained in Canada and worked as an independent contractor doing translations for a property management firm. She looked for work by reading newspapers and searching the Internet. She saw the advertisement placed by Regions and recognized the name but only in connection with the accounting business that prepared her husband’s tax returns. Pai stated she was interviewed by Motameni who telephoned later to inform her that she was hired. Pai stated she started working for RTI on May 6, 2002, at the 4th floor premises in the building at 900 West Hastings Street. On that floor, there were several small rooms each capable of holding six to eight people. There was a central office area with computers and other equipment. Later, the language school moved to another premises at 889 West Pender Street and she helped to move certain items and worked in the new location for a while prior to the end of her employment. Pai stated the 900 West Hastings Street location had businesses other than the language school operating out of it. Her office was at the rear and she worked as an assistant to Motameni. The language classes changed every two weeks and this transition involved discussions with the teachers who assessed proficiency of each student prior to permitting that student to progress to another level of training. There were between 20 and 25 teachers who worked either in the morning or afternoon. Pai stated she also worked on the RTI website and did translations and prepared a brochure and other promotional material. She handled inquiries from local agencies who were searching for language schools in Vancouver and delivered brochures so they could be distributed to potential clients in Asia. She prepared the material in Exhibit A-1, Tab 1, undertook revisions to the information sheets (Exhibit A-1, Tab 2) and to the website content (Exhibit A-1, Tab 3), prepared the Notice to Students (Exhibit A-1, Tab 4) and prepared other documents at subsequent Tabs 5 to 8 (Exhibit A-1), inclusive. Pai stated there was administrative work required as it related to the students. She reported to Motameni and was assigned duties by her. Pai recalled Fawaz was in the building and knew he was the owner of Regions which included RTI, the language school. Pai stated she worked at RTI until her pregnancy was nearing completion and received an ROE (Exhibit A-1, Tab 10) on October 18, 2002. Although her pay cheques were late from time‑to‑time and some were returned NSF, Pai confirmed she received the amount of $19,494.40 as stated in her ROE and that she worked 964.8 insurable hours. Her pay stubs (Exhibit A-1, Tab 11) were based on an hourly rate of $20.20 and of the two photocopies of four pay cheques, three cheques bear the notation “advance” on the memorandum line. Pai was referred by her counsel to statements (Exhibit A-1, Tab 13) issued by her financial institution, President’s Choice Financial, a member of the CIBC group of companies. On August 28, 2002, she deposited a cheque (Exhibit A-1, Tab 12) issued by Regions Group of Certified Accountants W.L.L. Samir Fawaz in the sum of $540.00. Sometimes, she used the automated banking machine (“ABM”) to make deposits into the account and other times obtained cash which was used to pay contractors working on their house renovation or for other household expenses including purchases for their infant. Pai stated that because of her Asian upbringing, it was not an extraordinary event to negotiate a pay cheque, as in Exhibit A-1, Tab 12, in the sum of $3,402.24, dated August 7, 2002, by taking away cash. Pai explained that paying bills in cash was not unusual in Taiwanese culture and even though she tried to adjust to commercial customs after moving to Canada, in some respects she was not “completely Canadian” and often used cash to pay bills or make purchases. The account was in the name of Shih S. Pai and Pai stated transfers in and out may have been to a joint account she had with her husband, Hassan Yazdani. Another account statement (Exhibit A-1, Tab 14) pertained to a savings account at the same financial institution and covers the period from March 28, 2002 to March 31, 2003. Another statement (Exhibit A-1, Tab 15) is in relation to an account at President’s Choice, apparently in the sole name of Hassan Yazdani. Pai stated this account is actually a joint account and that her husband had his own account and also a commercial account he used for his business, RHS. Pai identified a letter (Exhibit A-1, Tab 16) she sent to Susan Lazic at HRDC on February 23, 2005 because she was not satisfied with the interview that took place on December 9, 2004 and disputed the accuracy of Lazic’s notes (Exhibit R-1, Tab 6) because she was upset at the time and had two young children with her. In Pai’s opinion, she had provided a more complete explanation than was noted about her relationship with Fawaz in that she indicated although she did not know him personally, she was aware Regions was owned by him and that he had an accounting business. Pai stated she also worked for Aberdeen Financial Services (“Aberdeen”) from February 2 to August 31, 2004, but only dealt with Pierre Lopez and did not find out until later that Fawaz was involved with that entity. She was aware Lopez had a full-time job selling medical equipment and supplies. Pai stated she worked at home and reported to Lopez from time to time at an office located in a building at 666 Burrard Street, Vancouver. Pai stated she never saw Fawaz at that office and worked eight hours a day at home including sometimes late in the evening when she made telephone calls to countries in Asia in order to conform with business hours there due to the time difference. Pai stated she received a letter from Lazic at HRDC dated February 9, 2005 (Exhibit R-1, Tab 8) pertaining to her claim for UI benefits following the termination of her employment with Aberdeen. Pai replied by letter dated February 23, 2005 (Exhibit A-1, Tab 16) and enclosed all her pay slips and bank deposit statements for the period ending August 2004. On September 1, 2006, Pai was interviewed by Beverly Smith, Appeals Officer, whose notes are in Exhibit R-1, Tabs 21 and 22. Pai also responded to an inquiry from Carin Amber, Appeals Officer, in the form of a letter dated January 22, 2007 (Exhibit A-1, Tab 17) pertaining to her claim arising from her employment with Aberdeen. Pai stated she was paid a monthly salary of $3,650.00 to provide her services to Aberdeen. Pai stated the Minister decided she was not engaged in insurable employment with Aberdeen and she appealed from that decision but withdrew her appeal shortly before trial on the advice of counsel because her working relationship with Aberdeen had a substantial number of indicia that pointed towards independent contractor status rather than that of employee.
[11] Sherry Pai was cross-examined by Bruce Senkpiel. Pai stated she thought she had informed Motameni during the interview at the RTI premises that she was pregnant as it would not have been obvious until much later. Nazrin Yazdani, Pai’s sister-in-law, lived with Pai and her husband while also providing services to Aberdeen in relation to some e-commerce projects. Pai stated she did not communicate with Nazrin about work matters as their relationship was not friendly. Pai stated she was aware at the outset that the head teacher at RTI was Kathleen Owens who was married to Fawaz at that time. The school changed locations at the end of August 2002 and Pai assisted in that process although she moved only text books and other light material in view of her advancing pregnancy. Concerning the Aberdeen office in 2004, Pai stated it was on the 34th floor of the building and some stairs led to another level where she worked on occasion in a small office. Pai stated that when interviewed by Lazic about the Aberdeen employment situation, she stated that Lopez was the person who provided her with instructions and that she did not know Fawaz was involved and had she known that, she would not have accepted the position. At some point in the working relationship, she was aware that Lopez reported to an owner. Pai was referred to her T-1 General tax return for the 2002 taxation year and to the Statement of Employment Expenses contained therein in which a total of $1,609.50 was claimed as expenses against income. Pai stated that although she had provided her husband with some receipts, she had no specific recollection of having claimed those expenses including parking: $360.00; postage: $362.00 and work-place-in-the-home expense of $887.50. Pai acknowledged she signed that tax return on June 3, 2003 and by so doing had certified that the information contained therein was correct. Although there was no T-4 slip from Regions included in the return, Pai reported employment income in the sum of $19,494.80, based on the amount of insurable earnings stated in her ROE. Pai identified her tax return for the 2004 taxation year (Exhibit R-1, Tab 47) which she signed and was received by the CRA on June 1, 2005. In that return, a Statement of Employment Expenses detailed various expenses totalling $10,145.25 which sum was claimed against income of $23,459.02 and resulted in a refund in the sum of $3,579.88 based on information in said return. Included in those expenses were the following: accounting and legal: $1,800.00; advertising and promotion: $2,726.59; travel: $717.00; cell phone: $1,928.62 and parking: $183.13. Pai stated she used supplies at the Aberdeen office or at home for which she was reimbursed. She did not claim any amount for a home office in 2004. Pai identified her signature on the Questionnaire dated November 13, 2006 (Exhibit R-1, Tab 31) pertaining to her 2002 employment at RTI in which she stated at page 7 that everything required to perform her tasks was provided by her employer, Regions, and that she had not incurred any expenses. When completing the Questionnaire (Exhibit R-1, Tab 32) pertaining to her employment situation with Aberdeen, Pai stated she worked primarily from her home but also worked in the Aberdeen office and that everything was provided by the payor so no expenses were incurred by her for automobile use or travel and any work-related expense was reimbursed. Pai stated the office located at Suite #3509, 666 Burrard Street had one desk, one credenza and three chairs. Pai stated Lopez told her Aberdeen had other offices elsewhere and left the office when she needed to use the desk. The office had about 100 square feet but was equipped with a computer, printer, filing cabinets and telephone. Pai confirmed that her 2003 tax return (Exhibit R-1, Tab 46) was prepared by Aberdeen Financial, an entity located at Suite #3400, 666 Burrard Street. Pai agreed she signed this tax return on March 8, 2004 and started working for Aberdeen on February 2. The tax return did not contain any reference to Fawaz but the ROE (Exhibit A-1, Tab 10) received by mail from Regions was signed by Fawaz. Pai was referred to the account statement (Exhibit A-1, Tab 15) and to an entry dated May 8, 2002 that recorded an ABM deposit in the sum of $2,000.00 and another ABM deposit of $3,000.00 on May 14, 2002, followed by a transfer on May 15 in the sum of $2,000.00 out of the account to Regions and a transfer in from an unidentified source on May 17, 2002. Pai stated she started working at RTI on May 6, 2002, so is not aware why she would receive any cheque from Regions five days later. Pai stated she did not know why the notation “advance” had been written on the memorandum line of some of her cheques. Pai also stated that the Regions Group of Certified Accountants W.L.L. Samir Fawaz cheque in the sum of $540.00 (Exhibit A-1, Tab 12) with the notation “In Acc” had no connection with any services provided by her to any accounting business operated by Fawaz. Pai was referred to her pay stubs (Exhibit A-1, Tab 11) which showed Pai’s address on French Street in Vancouver until after the May 24, 2002 pay period when it was changed to the Linton Street address in Coquitlam. Pai stated Motameni provided her with a pay stub for a particular pay period even when it was not accompanied by a pay cheque. Counsel pointed out that the pay stubs produced by Pai and contained in Exhibit A-1, Tab 11 for the period following May 2002, show RTI was located at 800-889 West Pender Street even though that location had not been used until August. Pai stated she may have requested Motameni print out all her pay stubs after the relocation had taken place and the new RTI address was used as a result. Pai stated she did not receive any pay stubs after June 28, 2002. According to the notes taken by Lazic (Exhibit R-1, Tab 6), Pai did not mention working at the new West Pender location of RTI and claimed to have worked out of the 900 West Hastings office until her final day on October 18, 2002. Lazic recorded Pai’s responses that she could name only two employees other than Motameni and that she deposited her pay cheques regularly. Pai stated she was not asked by Lazic to name any of the teachers at RTI and did not review the notes taken by Lazic following termination of the interview. Pai stated she knew the names of the teachers at RTI, their countries of origin and their family situations. Pai stated that when questioned about the Aberdeen employment in 2004, she doubts she told Lazic she was hired by “a friend of a friend” and does not know a person named Queena and to the best of her recollection did not tell Lazic that Queena was her friend. Pai stated she had not intended to convey the impression she did not know Fawaz and has no recollection of that portion of the interview. Pai stated it may have been that Fawaz told Lopez what instructions to pass along to her but she did not have any contact with Fawaz when working for the Aberdeen entity. Pai stated she relieved Maria Malabanan on occasion by taking over receptionist duties so Maria could have lunch or at other times as required. The receptionist answered the telephones of various tenants in the small offices located in the Regions premises, including those numbers assigned to RTI, the language school, and other companies within the group called Regions. Pai stated Lopez informed her that Aberdeen wanted to import products from China including electronics and that there were people in Canada who were interested in investing in such a venture. Pai stated she researched the markets relating to cellular telephones, small home appliances, medical supplies and visited various websites and made telephone calls to certain contact numbers in China to inquire about prices and availability of models, colours, function and quality of cellular telephones. Pai stated she understood it was the intent of Aberdeen to import quantities of between 1000 and 4000 units and to make a profit by purchasing them at a reduced price directly from the Chinese manufacturing source. Pai stated that as a Mandarin-speaking person familiar with international business, she could obtain a better price. Pai agreed she may have told Beverly Smith, Appeals Officer, that she was pregnant when hired by Lopez to work for Aberdeen and that he was aware of her condition. Pai agreed she told Smith she did not have any contact with Fawaz in respect of the Aberdeen China project. Pai stated she produced banking records to the best of her ability but the statements did not provide sufficient detail in many instances as to the source of a deposit or transfer in or out of the account. Pai denied the suggestion of counsel that her ROE pertaining to her work at RTI for Regions was incorrect in that it inflated her insurable hours and insurable earnings. She denied that she worked part-time only and asserted she worked on a full-time basis for the period stated in the ROE. With respect to the ROE issued for her work for Aberdeen in 2004, Pai stated it was accurate and that she had received payment for the money shown on the pay stubs produced in Exhibit A-1, Tab 21.
[12] Pai was re-examined by her counsel, Gregory Bruce. Pai stated her sister‑in‑law, Nazrin Yazdani, lived with her and her husband until 2004 and that Nazrin was unmarried and had a Master degree from a foreign university. At the Regions premises, Pai distributed mail to the various tenants by placing it in the appropriate box. Pai stated her life was stressful due to the financial strains associated with the house renovation and caring for two infants but she provided Lazic with the appropriate material and attempted to persuade her that HRDC was “going after the wrong person”, referring to herself. Pai stated she met Lopez to submit reports and described him as tall, about 40-45 years old with a strong build and dark complexion and that she also met his father at the office. Pai stated her salary at Aberdeen was based on a 40-hour week and when she prepared reports for Lopez she used software such as Microsoft Word or Excel and provided commentary, observations and conclusions based on her analysis but only made recommendations and was not involved in any negotiations with foreign suppliers.
[13] Samir Fawaz testified he has lived in Vancouver since 1988 and is a businessman. He stated he obtained a Bachelor and Master of Business Administration from the University of Hamburg where he studied after leaving his native Syria. He started an accounting business in Vancouver in 1993 and utilized Regions as a shipping agent for cargo lines. In 1996, Regions began operating a business centre at 900 West Hastings and occupied the entire fourth floor. In 1998, Regions also operated a tour business dealing mainly with business people from Germany and Japan. On February 1, 2001, Regions opened the language school, RTI, at 789 West Pender Street. In 2004, Regions used Aberdeen as an operating name to search for trade opportunities, including importation of dental supplies, in China, Dubai and Ireland. When RTI began operations, his wife at that time, Kathleen Owens, handled day-to-day operations until Motameni was hired to assume that role and Owens then worked as a language teacher. Fawaz stated Motameni contacted him from time-to-time about matters pertaining to the school and he attended every business day at the same premises whether at the initial location or later at 900 West Hastings and finally at 889 West Hastings after the end of August 2002. Fawaz was referred to the school brochure (Exhibit A-2) and the Registration Certificate (Exhibit A-3) issued by the Private Post-Secondary Education Commission of British Columbia and to other material within the Exhibit including a 2001 business licence issued by the City of Vancouver. Fawaz stated Regions invested approximately $400,000.00 to start the language school. Fawaz identified Pai as one of the RTI staff present during a student field trip to Harrison Hot Springs as reproduced by printing pages from the school website (Exhibit A-1, Tab 3). Fawaz stated that a spreadsheet (Exhibit A-4) was prepared by someone versed in that skill and was used by Motameni and others under her direction. According to the Regions Income Statement (Exhibit A-5) for the period 01/01/2001 to 31/12/2001, RTI had total revenue of $661,096.45 after deducting promotional discounts in the sum of $244,836.54 and incurred expenses in the sum of $961,804.37 resulting in an operating loss of $300,707.92. The total payroll was $379,764.81 which was paid mainly to the 20 or 25 language teachers and to Motameni, $3,500.00 per month, and to her assistant, Pai. Fawaz stated he did not recall hiring Pai and that this task fell within the area of responsibility assigned to Motameni. He was aware Pai spoke Mandarin and worked to liaise between students, teachers and agents who were interested in recruiting foreign students, mostly Asian, to come to Vancouver to study English. Fawaz identified Pai in a bundle of photocopied pictures (Exhibit A-6) taken of either teachers or teachers and students during activity trips in 2002. Fawaz was referred to an Agency Phone List (Exhibit A-1, Tab 8), which he identified as a spreadsheet Pai had prepared in connection with a project designed to find agents willing to enter a contract, Independent Agent Agreement, with RTI to recruit students who would enrol in the school. Fawaz stated Pai worked at RTI Monday to Friday, 9:00 a.m. to 5:00 p.m., and had worked the number of hours stated in her ROE (Exhibit A-1, Tab 10). The ROE was prepared by Cyrus Zahedi, an employee of Regions, and the corporate address provided in the ROE was 14 floor, 400 Burrard Street, Vancouver. Fawaz stated that two computers were used by Regions and the information in one of them may have been different but when the ROE was issued, the language school was operating from 889 West Hastings. Some students were being taught at that address in May 2002 but by the end of August the entire school had been relocated there from the 900 West Hastings premises. Fawaz stated RTI suffered cash flow problems due to declining enrolment and that it was not possible to meet payroll demands on a timely basis. Some pay cheques bounced and the lines of credit were utilized to the maximum in an effort to permit the school to continue. Enrolment declined by more than 50% in a short period due to several factors including the impact of travel restrictions following September 11, 2001, and RTI closed down the school at the end of 2002. Fawaz stated he prepared the income tax returns of Hassan Yazdani since the 1990s and saw him two or three times a year in connection with accounting matters but had no social contact. With respect to the business operation known as Aberdeen, it rented a small office and work station in a building located at 666 Burrard. Aberdeen was involved in e‑commerce and research was undertaken to source medical supplies. Fawaz asked Pierre Lopez to look after this business operation and believes Lopez obtained the services of Pai who was suited to the task since she was a hard worker and spoke Mandarin and English. Fawaz stated he and Lopez were looking at importing several products, including cement and medical supplies such as gloves, known commonly as rubber gloves, used in medical and dental offices, hospitals and by others concerned with hygiene and protection. Fawaz stated Lopez had a full-time job as a medical supply salesman and asked him to pass on instructions to Pai. Fawaz stated he received information gathered by Pai in the form of an e-mail and read reports that contained contact names, prices and related details which he forwarded to certain overseas clients. Fawaz explained that neither Aberdeen Financial Services nor Aberdeen Financial Group was incorporated as a company because the name Aberdeen was not available. As a result, Aberdeen was used as a name to signify a division within Regions. However, a limited company called Abardeen, with an a, Financial Group Inc. was formed and its head office was at Suite 3400, 666 Burrard, the same address used by the accounting business known as Aberdeen Financial. Fawaz stated Pai was paid by Regions and a copy of the payroll journal was sent by Regions’ solicitor by letter dated September 14, 2005 (Exhibit A-1, Tab 26) to Susan Lazic at Human Resources and Skills Development Canada (“HRSDC”) previously known as HRDC. Fawaz stated the Aberdeen division conducted some business in 2003 and 2004 including the export of some motor vehicles to Syria but a potentially profitable crude oil deal fell apart at the last moment and the Aberdeen venture ended up losing several hundred thousand dollars.
[14] Samir Fawaz was cross-examined by Carl Januszczak. Fawaz stated his marriage to Kathleen Owens broke down in 2002. He was acquainted with an individual named Qin Han, also known as Queena, but was not living with her at an address on Russet Way in West Vancouver in 2004 when Han issued a personal cheque to Lilian Liu in the sum of $800.00, a copy of which is located in Exhibit R-1, Tab 61. Fawaz stated some of Regions records and documents were left behind at the 900 West Hastings office when the entire operation moved at the end of August 2002. There had been an arrangement made with a moving company to move additional items during September. Fawaz stated the lack of a complete set of documents and records was attributable to the following sequence of events: Regions had a 10-year lease on its premises but became involved in a dispute with the new owner of the building when the classification of the building was raised from “C” to “B”, a higher level, due to certain renovations. As a result, new space in the building was rented out at $22.00 per square foot instead of the much lower rate payable pursuant to the lease held by Regions. A dispute arose with the new landlord and the landlord decided the school was not permitted to continue its operation in that space although the other businesses operated by Regions could remain. Fawaz stated he surrendered the lease on the expectation a buyer would take over the operation of the school but that did not take place and the landlord gave notice the premises used by RTI for the language school would be locked at the end of August 2002. Some of the individual businesses that rented space from Regions on the 4th floor or 5th floor at 900 West Hastings moved out rather than be caught in the middle of a dispute between Regions and the new landlord. Fawaz stated the complete telephone system installed by Regions was left behind but some computers were moved to the new address at 889 West Hastings. At that point, Regions also carried on business from offices in Kelowna and elsewhere in British Columbia and these were supervised by Fawaz from his office at 900 West Hastings. During the fullest part of the RTI school operation, there were 10 to 12 classes operating daily with five or six students in each class. Fawaz stated he saw Pai around the of