Lake City Casinos Limited v. M.N.R.

Lake City Casinos Limited v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2006-04-20
Neutral citation
2006 TCC 225
File numbers
2003-4504(EI)
Judges and Taxing Officers
Joe E. Hershfield
Subjects
Employment Insurance Act
Decision Content
Docket: 2003-4504(EI)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4505(CPP)), (2003-4506(EI)), (2003-4507(EI)), (2003-4508(EI)), (2003-4509(CPP)), (2003-4510(CPP)) and (2003-4511(EI)) on December 15, 2005 at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision rendered by the Minister is vacated for the reasons set out in the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Docket: 2003-4505(CPP)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4504(EI)), (2003-4506(EI), (2003-4507(EI)), (2003-4508(EI)), (2003-4509(CPP)), (2003-4510(CPP)) and (2003-4511(EI)) on December 15, 2005 at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision rendered by the Minister is vacated for the reasons set out in the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Docket: 2003-4506(EI)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4504(EI)), (2003-4505(CPP)), (2003-4507(EI)), (2003-4508(EI)), (2003-4509(CPP)), (2003-4510(CPP)) and (2003-4511(EI)) on December 15, 2005 at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision rendered by the Minister is vacated for the reasons set out in the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Docket: 2003-4507(EI)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4504(EI)), (2003-4505(CPP)), (2003-4506(EI)), (2003-4508(EI)), (2003-4509(CPP)), (2003-4510(CPP)) and 2003-4511(EI)) on December 15, 2005 at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision rendered by the Minister is vacated for the reasons set out in the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Docket: 2003-4508(EI)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4504(EI)), (2003-4505(CPP)), (2003-4506(EI)), (2003-4507(EI)), (2003-4509(CPP)), (2003-4510(CPP)) and (2003-4511(EI)) at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision rendered by the Minister is vacated for the reasons set out in the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Docket: 2003-4509(CPP)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4504(EI)), (2003-4505(CPP)), (2003-4506(EI)), (2003-4507(EI)), (2003 4508(EI)), (2003-4510(CPP)) and (2003-4511(EI)) on December 15, 2005 at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision rendered by the Minister is vacated for the reasons set out in the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Docket: 2003-4510(CPP)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4504(EI)), (2003-4505(CPP)), (2003-4506(EI)), (2003-4507(EI)), (2003-4508(EI)), (2003-4509(CPP)) and (2003-4511(EI)) on December 15, 2005 at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Docket: 2003-4511(EI)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of Lake City Casinos Limited (2003-4504(EI)), (2003-4505(CPP)), (2003-4506(EI)), (2003-4507(EI)), (2003-4508(EI)), (2003-4509(CPP)) and (2003-4510(CPP)) on December 15, 2005 at Vancouver, British Columbia
Before: The Honourable Justice J.E. Hershfield
Appearances:
Counsel for the Appellant:
Douglas H. Mathew
Counsel for the Respondent:
Ron D.F. Wilhelm, Raj Grewal
____________________________________________________________________
JUDGMENT
The appeal is allowed and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of April 2006.
"J.E. Hershfield"
Hershfield J.
Citation: 2006TCC225
Date: 20060420
Dockets: 2003-4504(EI), 2003-4505(CPP),
2003-4506(EI), 2003-4507(EI),
2003-4508(EI), 2003-4509(CPP),
2003-4510(CPP), 2003-4511(EI)
BETWEEN:
LAKE CITY CASINOS LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Hershfield J.
[1] Lake City Casinos Limited (the "Casino"), has appealed assessments for unremitted Canada Pension Plan contributions and employment insurance premiums for the 2000 calendar year in respect of gratuities received by certain employees during the course of their employment with the Casino. In separate appeals the Casino has appealed determinations, made by the Minister in regard to particular employees, that the gratuities received by them during certain periods in the course of their employment with the Casino were insurable earnings and, in two such appeals, pensionable earnings, so as to require the Casino to deduct Canada Pension Plan contributions and employment insurance premiums for those periods. The appeals were heard on common evidence. While each appeal is for a different period falling between January 1, 2000 and June 1, 2002 and relates to different employees, and while not all appeals relate to contributions under the Canada Pension Plan, it was suggested that a Judgment with common Reasons would be appropriate.
[2] A Statement of Agreed Facts is appended to these Reasons in Appendix A.[1] The following is a general overview which will help define the issue in these appeals.
- The Casino operates four casinos in British Columbia under an Operating Agreement with British Columbia Lotteries Corporation ("BCLC") which is an agent of the British Columbia Government. All operating requirements placed on the Casino by the BCLC are found in the Operating Agreement and the BCLC's standard operating manual (the "Manual").
- The gratuities in question are left for workers by patrons of the Casino. They are pooled and distributed in accordance with rigidly enforced tip policy procedures set out in the Manual. The BCLC tip policy issued in May 1998 effective until the end of May 2001 is reproduced in full in Appendix B to these Reasons (the 1998 Tip Policy). The BCLC tip policy effective thereafter is reproduced in full in Appendix C to these Reasons (the 2001 Tip Policy). Such procedures are imposed under the Operating Agreement to ensure gaming integrity.
- Such procedures involve three stakeholders; namely the Casino, the BCLC and the "tip" committees comprised of volunteer Casino workers eligible to receive gratuities (each being referred to as a "Committee").
- Eligibility to receive gratuities is subject to gaming regulations of the BCLC as are the "tip" collection procedures. Eligible workers fall into three groups: dealers and eligible table workers, slot attendants and servers. Each has its own Committee.
- The actual allocation of gratuities amongst eligible workers is not governed or mandated by the BCLC other than to prescribe that they be distributed equitably. Allocations among eligible workers in a group are decided on by the Committee representing that group. Generally allocations are by hours worked. The Casino discussed allocation formulas with members of the Committees to ensure compliance with the equitable distribution requirement imposed by the BCLC.
[3] It is not in issue that the gratuities are income earned in respect of and in the course of employment for the purposes of the Income Tax Act. The question is whether they are insurable earnings under the Employment Insurance Act and contributory salary and wages under the Canada Pension Plan. The Casino argues that the gratuities are not paid by it and that a strict reading of the relevant statutory provisions precludes them from being either insurable earnings under the Employment Insurance Act or contributory salary and wages under the CanadaPension Plan. That is, the relevant statutory provisions dictate that EI and CPP remittances of deductions and contributions are only required in respect of amounts "paid" by the employer. In construing the statutory language used, the Respondent, amongst other things, relies on social policy considerations and argues for a construction of the relevant provisions that casts a wider net. The Respondent argues that the degree of participation by the employer in the gratuity payment procedures in this case is sufficient to find it the gratuity payer for the purposes of the subject provisions.
[4] The procedure for handling tips is set out in detail in the appended Statement of Agreed Facts. It is a scrupulous procedure under the eye of both the Casino and members of the Committee. From the moment a tip is tendered, a supervisor or surveillance personnel or security officer employed by the Casino would be informed. Under watchful eyes, including surveillance cameras, the tip would be placed into tip boxes. Every step thereafter from counting to converting chips to cash, to placing segregated bills in envelopes, to safekeeping, to delivery to workers was carefully watched and documented. For example tips in the form of chips were taken to a cashier where a cashier prepared a cash transfer slip documenting amounts and denominations. The cashier, Committee representative and supervisor would sign off on the tips cash transfer slips - a copy of which was attached to the Casino's daily cash summary form. As well, the Casino cash record sheet recorded the cash tip transfers along with all its own cash transfers and these record sheets were signed off by senior Casino managers and Casino site administrators. The tip cash was wrapped in forms noting the contents. Each wrapped bundle was signed off by the Committee member and a supervisor, placed in marked envelopes and then taken to the Casino's vault for safekeeping. This was done by a Committee member accompanied by a gaming supervisor and shift manager. Each eligible worker group had its own box in the vault separated from any of the Casino's property. When the cash was retrieved for distribution to workers, a cage supervisor, casino shift manager and security officer had to be present to open the vault and obtain the tip boxes. Tip shares were counted and divided and placed in separate envelopes for each entitled worker. This occurred in a secure counting room under camera surveillance. Again this task was performed by a Committee member. Envelopes with tip shares were then taken to the cashier station for pick-up by the worker who signed a tip record report. The tip record report was also signed off by a Casino site administrator to indicate its approval.
Pit Supervisor Dispute
[5] The Respondent's position relies heavily on certain facts set out in paragraphs 90 - 127 of the Statement of Agreed Facts. These paragraphs set out the particulars of a dispute that the Respondent suggests illustrates the Casino's control over the tip process.
[6] The 1998 Tip Policy provided the Committees the discretion to exclude pit supervisors from the tip pool subject to BCLC approval. Pit supervisors were included in the 2000 tip pools without the BCLC's approval.[2] In June 2000, the Casino sought to stop a movement by dealers to exclude pit supervisors. Casino site administrators were told it would be considered contrary to the 1998 Tip Policy. A letter was sent to workers stating that pit supervisors were to be included in the tip pool and a notice was posted stating that any worker withholding tips from pit supervisors would be disciplined. One entire dealer Committee was suspended for threatening to exclude pit supervisors. The suspensions were for breach of company policy.
[7] Eventually the dealers exercising their discretion and considering it inequitable to include them, voted to exclude pit supervisors. Still, nothing changed and the worker who asked for the vote was reprimanded for insubordination.
[8] A union was organized in June 2001 and again the issue of including pit supervisors came to a vote the result of which was to exclude them again. By this time the 2001 Tip Policy was in place which was said to give Committees more flexibility in distributing tips[3] but on its terms it neither excludes pit supervisors from the tip pool nor provides a procedure for determining tip eligibility.[4] Still, the Casino disciplined workers who took any action to exclude pit supervisors from the tip pool. Two were suspended for a short period and one of the two was later fired. An arbitrator upheld the suspensions but found the firing excessive. The B.C. Labour Relations Board upheld the arbitrator's decision.[5]
[9] I note here that in the labour dispute negotiations, cashiers who had been included in one of the tip pools in 2000 were to be given a raise if they were specifically excluded from the tip pool. The 1998 Tip Policy specifically excluded them but the 2001 Tip Policy did not. There is no disputing that the Casino had a vested pecuniary interest in seeing pit supervisors and cashiers share tips as otherwise its own payroll costs would be materially increased.
Statutory Provisions & Related Regulations
[10] The relevant statutory provisions under the Employment Insurance Act are as follows:
2. (1) ...
"insurable earnings" means the total amount of the earnings, as determined in accordance with Part IV, that an insured person has from insurable employment.
67. Subject to section 70, a person employed in insurable employment shall pay, by deduction as provided in subjection 82(1), a premium equal to their insurable earnings multiplied by the premium rate set by the Commission.
68. Subject to sections 69 and 70, an employer shall pay a premium equal to 1.4 times the employees' premiums that the employer is required to deduct under subsection 82(1).
82. (1) Every employer paying remuneration to a person they employ in insurable employment shall
(a) deduct the prescribed amount from the remuneration as or on account of the employee's premium payable by that insured person under section 67 for any period for which the remuneration is paid; and
(b) remit the amount, together with the employer's premium payable by the employer under section 68 for that period, to the Receiver General at the prescribed time and in the prescribed manner.
[11] The relevant regulations under the Insurable Earnings & Collection of Premiums Regulations ("IECPR") are as follows:
2. (1) For the purposes of the definition "insurable earnings" in subsection 2(1) of the Act and for the purposes of these Regulations, the total amount of earnings that an insured person has from insurable employment is
(a) the total of all amounts, whether wholly or partly pecuniary, received or enjoyed by the insured person that are paid to the person by the person's employer in respect of that employment, and
(b) the amount of any gratuities that the insured person is required to declare to the person's employer under provincial legislation.
4. (1) Subject to subsections (2), (3), (3.1) and (5), every employer shall remit the employee's premiums and the employer's premiums payable under the Act and these Regulations to the Receiver General on or before the 25th day of the month following the month in which the employer paid to the insured person insurable earnings in respect of which those premiums were required to be deducted or paid under the Act and these Regulations.
[12] The relevant statutory provisions under the Canada Pension Plan are as follows:
8. (1) Every employee who is employed by an employer in pensionable employment shall, by deduction as provided in this Act from the remuneration for the pensionable employment paid to the employee by the employer, make an employee's contribution for the year in which the remuneration is paid to the employee of an amount equal to the product obtained when the contribution rate for employees for the year is multiplied by the lesser of ...
9. Every employer shall, in respect of each employee employed by the employer in pensionable employment, make an employer's contribution for the year in which remuneration for the pensionable employment is paid to the employee of an amount equal to the product obtained when the contribution rate for employers for the year is multiplied by the lesser of
(a) the contributory salary and wages of the employee for the year paid by the employer, minus such amount as or on account of the employee's basic exemption for the year as is prescribed, and
(b) the maximum contributory earnings of the employee for the year, minus such amount, if any, as is determined in prescribed manner to be the salary and wages of the employee on which a contribution has been made for the year by the employer with respect to the employee under a provincial pension plan.
12. (1) The amount of the contributory salary and wages of a person for a year is the person's income for the year from pensionable employment, computed in accordance with the Income Tax Act (read without reference to subsection 7(8) of that Act), plus any deductions for the year made in computing that income otherwise than under paragraph 8(1)(c) of that Act, but does not include (2001, c. 17, s. 254(1).)
21. (1) Every employer paying remuneration to an employee employed by the employer at any time in pensionable employment shall deduct from that remuneration as or on account of the employee's contribution for the year in which the remuneration for the pensionable employment is paid to the employee such amount as is determined in accordance with prescribed rules and shall remit that amount, together with such amount as is prescribed with respect to the contribution required to be made by the employer under this Act, to the Receiver General at such time as is prescribed and where at that prescribed time the employer is the prescribed person, the remittance shall be made to the account of the Receiver General at a financial institution within the meaning that would be assigned by the definition "financial institution" in subsection 190(1) of the Income Tax Act if that definition were read without reference to paragraphs (d) and (e). (R.S.C. 1985, c. 6 (1st Supp.), s. 1(1); 1993, c. 24, s. 143(1).)
[13] The Respondent also relies on section 12 of the Interpretation Act which provides as follows:
12. Every enactment is deemed remedial, and shall be given such fair, large and liberal construction and interpretation as best ensures the attainment of its objects.
[14] It is not in dispute that the employee deduction requirements and the employer premium requirements imposed on an employer are only in respect of amounts paid by an employer to an employee. In the case of CPP contributions, sections 8 and 9 make it clear that the applicable contribution rate for both employees' and employers' contributions is a function of the amounts paid by the employer. In the case of EI deductions (and premiums which are a function of the deduction amount), this is made clear in IECPR 2(1) where "insurable earnings" are defined as amounts paid to the employee by that person's employer.
Respondent's Argument
[15] The Respondent acknowledged in a written submission that tips constitute insurable earnings and contributory salaries and wages for EI premium and CPP contribution purposes only if they are "paid" by the Casino to its employees. However, considering the purpose of the legislation and its social assistance objectives, the argument advances a construction that would achieve its purpose wherever possible. Unlike other cases, in the case at bar the Casino is so involved in the distribution of tips that there are no impediments to including an employee's whole remuneration from employment in insurable earnings and contributory salaries and wages. The Respondent's argument emphasizes that: the Casino knows how much goes to each employee and when it is paid; it maintains records and is actively involved in the distribution of tips; and, it has exercised authority to dictate who is in a particular tip pool or group so as to impact the tip amounts received by employees.
[16] The Respondent relies on the following to advance its arguments that the Casino ought to be treated as the payer of tip amounts to the workers:
- The Casino supplied the workers all the facilities (such as the counting room and vault) and personnel required by the Committees to handle the tips (such as cashiers and security personnel). It supplied all necessary forms, related administrative services and computers and, where required by a Committee, related software to calculate tip allocations. It supplied the employee work records to enable the calculation of tip allocations.
- The Casino had official records of tips making it possible to comply with the relevant deduction and remittance requirements imposed under the subject legislative regimes.
- The Casino dictated who was in the tip pool as evidenced by the inclusion of pit supervisors and cashiers so as to effectively control the allocation and distribution of tips paid to its employees.
- Tips were promised to workers as a part of their remuneration package and formed a large percentage of their total compensation. Controlling the allocation and distribution of tips paid to its employees reduced the Casino's wage obligations. This affected the Casino's profitability and demonstrates that its interjections and actions were part of its business which was being facilitated by its employees as its agents.
- The various management approvals on the various forms required in handling cash in the tip distribution procedure shows that the Casino was the principal in charge of the tip distribution system.
- The control over the tip cash during the pit supervisor dispute demonstrates that the Casino had more than mere custodial possession of the funds.
[17] The Respondent argues that legislation that intends to meet social welfare objectives and advance a benevolent purpose must be interpreted liberally and purposively. Where it is possible by a fair and large construction of a statutory provision to attain its object, then such fair and large interpretation must be given. Since the intention of the subject legislation is clearly to include the whole of an employee's remuneration in respect of their employment, I must read the requirement that the remuneration be "paid by the employer" other than in a literal sense. Even a limited ability to direct or influence payment of tips coupled with mutual reliance on tips being included as part of the compensation for the work done and with the employer being informed of such payments by its own documentary records made in the regular course of its business, bolsters the argument that the employer be regarded as the person paying the tips.
[18] Given that tips formed from 40-60% of some employees' income, excluding them from insurable and pensionable employment would result in a large decrease in their entitled benefits. The Court's primary concern should be to ensure that this does not occur. If it does, the intended benefits will not be received.
[19] As well, the Respondent argues that it is open for me to find that the Casino is in fact the person actually paying the tips to its employees. The Casino had the power and responsibility to control the tip procedures and exercised and enforced that power. Under the Operating Agreement imposed by BCLC, the Casino had a legal obligation to collect, pool, monitor and distribute the tips to the employees according to policies it was responsible to enforce. To the extent the employees made their own distribution of funds paid to them directly by customers, they did so in their role of servants of the Casino acting on its behalf in collecting and distributing tips. The Committees when pooling and distributing tips acted inside the terms of their employment. They no more paid the tips than the payroll clerks paid wages on distributing payroll checks. Employees complied with BCLC policies because their employer required it. The Casino would suffer the consequences of a breach of those policies.
[20] Further, the Casino was responsible for determining whether tip formulas and classes of recipient were equitable and was the conduit for the tips regardless of the degree to which it chose to defer to its employees the whole distribution process.
[21] Lastly, I note that the Respondent raised a question in oral argument as to whether there is a deemed employer in this case. Subsections 10(1) of the IECPR and 8.1(1) of the CPPR provide that where a third person pays the employee, that third person is deemed to be an employer of that employee in addition to the actual employer. While the focus of this question was, at the hearing, and remains now, unclear to me,[6] it is unnecessary for me to consider it as I find nothing on the facts of this case that invoke the deemed employer provisions.
[22] Turning then to their remaining arguments, Respondent's counsel relies on the following cases:
Canadian Pacific Ltd. v. Canada, [1986] 1 S.C.R. 678
In this case the employer agreed under a collective agreement to receive tips paid by its customers at banquets held in its establishment and then to distribute them to employees. In a four/three decision, the Supreme Court found that the tips were to be taken into account in calculating the premiums payable by the employer.
In the majority decision delivered by La Forest J., it was found that "earnings", "insurable earnings" and "remuneration" included tips. At paragraph 20 he observed that:
... As to the word "paid", which can equally well mean mere distribution by the employer or payment of a debt owing by him, I would simply observe that if one gives the word "remuneration" a broad meaning, one must also give a broad meaning to the word "paid".
As well, at paragraphs 25, 26 and 27 he observed as follows:
25. The interpretation I have given to "insurable earnings" is consistent with the purpose of the Act, which is to pay, to persons who have lost their employment, benefits calculated in terms of a percentage of their insurable earnings. Otherwise, an employee who received a good part of his earnings as tips would not benefit to the same degree as his colleagues who receive the whole of their earnings directly from the pocket of their employer. By adding to the definition of remuneration a whole series of benefits an employee receives by reason of his employment, the regulations clearly indicate that the expression should be given a broad interpretation. Moreover, as noted, a law dealing with social security should be interpreted in a manner consistent with its purpose. We are not concerned with a taxation statute. The cases of Penn v. Spiers & Pond Ltd. and Great Western Railway Co. v. Helps, supra, are merely examples of the principle that I have just stated.
26. I would add that if the appellant is obliged to pay premiums solely in relation to the part of the earnings of his employee that comes out of his pocket, then it is in a better situation than other employers who pay these premiums in relation to all the earnings accruing to the employee from his work. The employer obviously benefits from the fact that some of his employees are in a position where they can obtain tips. He is able to retain their services at a better price. It, therefore, appears unjust that he should also be able to divest himself of a part of the obligation that all other employers must carry, or to restrict the amount of [page 690] benefits of his employees whose earnings come in good part from tips.
27. It is true that these arguments are in a measure applicable equally to employees who personally receive tips, even though s. 3(1) of the Regulations does not mention these. However, those who drafted the Regulations no doubt concluded that it was necessary to proceed in this way for administrative reasons. See on this issue the case of Association des employés civils v. Minister of National Revenue, supra. It is almost impossible to levy premiums on tips obtained in this manner and it is for that reason that the Regulation does not take them into account. It goes without saying that insurable earnings include many tips collected in ways other than the ones collected in this case. For example, those added when paying a bill by credit card.
S & F Phillip Holdings Ltd. (c.o.b. Sooke Harbour) v. M.N.R., 2003 T.C.J. No. 344
In this case, the Appellant operated a resort hotel where dining room staff had established a system that all tips were pooled for distribution in accordance with a certain proportionate formula for all persons who were part of the food service team regardless of whether the tip was directed to a particular worker. The tip pool consisted of cash turned over to the employer (and recorded as part of the tip pool) and tips noted on credit card receipts. The workers agreed that the employer would retain 10% of the tip pool to cover credit card expenses. All tips including cash were recorded on a daily tip sheet so that cheques could be issued by the employer to the workers in accordance with their entitlements as determined by the workers themselves. There was evidence in the case that the employer was not amenable to employees working outside the agreed system although theoretically that was possible. Rowe D.J. relying on Canadian Pacific found that the employer paid the tip pool funds to the employees and was therefore liable for EI premiums on the tip amounts received by workers. In respect of CPP contributions, Rowe D.J. found that section 12 of the Canada Pension Plan was a factor in finding that tips formed part of contributory salary and wages since the employer issued T-4 slips including the tips for the purposes of the Income Tax Act.
Insurance Corp. of British Columbiav. M.N.R., [2002] F.C.A. 104
The judgment of the Court in this case ("ICBC") was delivered by Strayer J.A. It dealt with section 10 of the Employment Insurance Regulations which deems a person paying an employee to be an employer so as to be responsible for EI premiums. ICBC paid a worker who was employed by an insured person to provide assistance required as a result of injuries sustained. The Tax Court found that ICBC had no specific legal obligation to the payee worker and could not therefore be said to have paid the worker in a strict legal sense. Its obligation was to the insured and, in a legal sense, the payment was to the insured not to the worker. In considering the meaning of the word "paid" in this context, Strayer J.A. found that the Tax Court applied too narrow a meaning to it. He observed at paragraph 8 that the proposition is simple enough and its purpose clear:
"...... premiums are to be deducted at sources where salary and wages are calculated and administered and where cheques or payment packets are issued. The term "paid" ought to be interpreted in context and it is not necessary to examine technical sources in order to attribute to it a meaning that would defeat the clear purpose of the section".
Adopting this view he found ICBC to have "paid" the worker.
Mangat v. Canada, [2000] F.C.J. No. 1464 (Q.L.) (F.C.A.)
In this case McDonald J. delivered the judgment of the Court. Taxicab drivers who leased their vehicles from the dispatcher were paid by customers. The drivers delivered funds to the lessor/dispatcher keeping back a certain portion representing the drivers' earnings. It was held that even though the lessor/dispatcher made no payment in a literal sense, the express provision in the Employment Insurance Regulations that taxicab drivers were engaged in insurable employment made it necessary to ignore the direction of the payment. Otherwise the purpose of the Regulation would be entirely defeated.
Union of SaskatchewanGaming Employees, Local 4005 v. M.N.R., [2004] T.C.J. No. 608 (Q.L.) (T.C.C.)
In this case employees working for a casino had tips distributed by its union. The employer collected the tips and paid the union. Lamarre J. of this Court found that the union was a deemed employer pursuant to subsection 10(1) of the Employment Insurance Regulations so as to satisfy the requirement for tips to be included in insurable earnings - namely that they were amounts paid by an employer to an employee in the course of employment.
Bell ExpressVu Limited Partnership v. Rex et al., [2002] 2 S.C.R. 559
In this case the judgment of the Court was delivered by Iacobucci J. His analysis includes a discussion of the principles of statutory interpretation wherein he notes at page 580 that Driedger's modern approach has been repeatedly cited by the Supreme Court of Canada as the preferred approach in a wide variety of interpretive settings. It is an approach that recognizes the importance of context and harmony with the scheme and object of the legislation and the intention of Parliament. In the case of the subject legislation, the Respondent relies on its objective to provide benefits in respect of the whole of an employee's remuneration from employment. To give effect to such objective, the word "paid" should be given the widest possible meaning where the employer has played a role in the payment that would enable it to readily comply with the prescriptions imposed by such legislation.
The Casino's Argument
[23] The Casino, relying on certain cases and the plain meaning of the relevant provisions of the legislation and regulations, argues that it cannot be found to have paid the tip amounts to its employees. To have "paid" such amounts, the Casino needed possession of the tip money which it never had for its own account and in any event it lacked the authority over the funds as would enable it to effect a transfer to the employees. Possession of the money with authority to effect an actual transfer of it has to be a pre-requisite to withholding as one cannot withhold from what one does not have.
[24] To support its argument it relies on the agreed facts set out in paragraphs 84 to 89 which read as follows:
84. The tip money at all times belonged to the employees, not the Appellant.
85. The tip money was never commingled with the Appellant's own revenue.
86. The tip money was never reflected in the books of account or accounting records of the Appellant.
87. Tip distribution was not integrated with the regular payroll of the Appellant.
88. The Committees physically distributed the tips to the recipients.
89. The Committee, not the Appellant's management, counted the tips, converted the tips to cash, put the cash in the vault, and distributed it to its members.
[25] As well, the Casino's submission makes particular reference to a number of other agreed facts which tend to support its overall position that the tips were collected, counted, allocated and distributed (paid) through a tip pooling and distribution system conducted entirely by the employees outside the scope of their employment and that the Casino's involvement in the process cannot constitute "payment". See for example, agreed facts, paragraphs 52-56 which highlight that the Committees, comprised of volunteer members, paid their own expenses. The tip allocation and distribution procedures were done by and for the benefit of workers and not on behalf of the Casino. The economic benefit to the Casino of the tip system and its efforts to take advantage of it do not change the fact that the tips are the property of the workers from beginning to end and that the Casino makes no payments in respect of them.
[26] The Casino's counsel argues that the personnel and facilities provided by the Casino are irrelevant to the question of who paid the tip amount to the workers. That the regulatory regime, imposed to maintain integrity in this cash exposed, gaming environment, requires, or effectively requires, the Casino's involvement in the process, cannot diminish the underlying reality that the employees distributed the tips amongst themselves and that there was no payment by the Casino. Agreed facts at paragraphs 17 and 35 confirm that tips are provided by customers at their discretion and are received by the employees as a result of customer satisfaction. Once received, the handling of the tip money is governed by BCLC prescribed policies. Same dictate tip eligibility and afford the Committees some discretion as to who may participate in the pool. While Committees discussed distribution formulas with the Casino, different Committees could and did use