Date: 20000217
Docket: A-710-98
MONTRÉAL, QUEBEC, THE 17TH DAY OF FEBRUARY, 2000
| CORAM: THE CHIEF JUSTICE |
| THE HONOURABLE MR. JUSTICE LÉTOURNEAU |
| THE HONOURABLE MR. JUSTICE NOËL |
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
- and -
THÉRÈSE HUARD
Respondent
J U D G M E N T
The application for judicial review is allowed with costs, the decision of the Tax Court of Canada is set aside and the matter is sent back to it for redetermination on the assumption that the determination by the Minister of National Revenue that the respondent did not hold an insurable employment during her deferred pay leave was justified.
| J. Richard |
| C.J. |
Certified true translation
Bernard Olivier
Date: 20000217
Docket: A-710-98
| CORAM: THE CHIEF JUSTICE |
| LÉTOURNEAU |
| NOËL, JJ.A. |
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
AND:
THÉRÈSE HUARD
Respondent
Hearing held in Montréal, Quebec, Thursday, February 17, 2000
Judgment pronounced at the hearing in Montréal, Quebec, Thursday, February 17, 2000
REASONS FOR JUDGMENT OF THE COURT BY: LÉTOURNEAU J.A.
Date: 20000217
Docket: A-710-98
| CORAM: THE CHIEF JUSTICE |
| LÉTOURNEAU |
| NOËL, JJ.A. |
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
AND:
THÉRÈSE HUARD
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Pronounced at the hearing in Montréal, Quebec
Thursday, February 17, 2000)
LÉTOURNEAU, J.A.
Issue
[1] This is an application for judicial review of a decision of a Tax Court of Canada judge (the judge) allowing the appeal of Ms. Thérèse Huard (the respondent) and finding that the earnings paid to her during the period in dispute were insurable earnings. The applicant submits to us that the judge erred since the respondent held a job during this period that was excepted from insurable employment by subsection 13(1) of the Unemployment Insurance Regulations (the Regulations).1 This subsection reads:
| Employments Excepted from Insurable Employment 13. (4(3)(h)) (1) Subject to subsection (2), the employment with an employer in any week of a person whose cash earnings are less than 20 per cent of the maximum weekly insurable earnings and who is employed for less than 15 hours is excepted from insurable employment. |
Emplois exclus des emplois assurables 13. (4(3)h)) (1) Sous réserve du paragraphe (2), est exclu des emplois assurables un emploi exercé pour le compte d"un employeur, qui comporte moins de 15 heures de travail par semaine et dont la rémunération hebdomadaire, en espèces est inférieure à 20 pour cent du maximum de la rémunération hebdomadaire assurable. |
We must determine whether the judge was right to conclude as he did.
Facts
[2] The following are the facts that gave rise to this litigation.
[3] The respondent had been working as director of nursing at the Amqui Hospital since September 4, 1990. In October 1990, she signed an agreement with her employer providing a deferred pay leave averaged over five years.
[4] Under this agreement, the respondent provided four years of services for which she agreed that her employer would hold back 20% of her annual compensation for each of these years, to be returned to her in the fifth year. In the fifth year, which is the disputed period in this case, the respondent took a leave without pay and her employer then paid her the money she had earned and that it had kept for her on her behalf and with her authorization. During the period in question the respondent provided no services to her employer, of course.
Decision of the Tax Court of Canada
[5] After establishing the major characteristics of an insurable employment (i.e. remuneration by the beneficiary of the work provided, subordinate relationship to the employer, supervision of the quality and efficiency of the performance of the work, appropriateness of the remuneration to the work performed, etc.), the judge found that all of these characteristics are temporarily suspended during an employee"s vacation period, that the employee is remunerated during vacations even if he does not work and that being on vacation, for no matter how long, does not undermine or jeopardize the insurability of the employment. He then went on to conclude that the agreement between the respondent and her employer simply granted some extended vacations and that this conclusion he had reached was all the more reasonable in that the duration of the vacation period is very often nothing but a typical agreement between the parties.
[6] He also distinguished this Court"s decision in Attorney General of Canada and Céline Therrien-Beaupré2 on the ground that that case involved an advance leave and not a leave subsequent to a period of work, as in the case at bar. In his opinion, the benefit received by the respondent during the disputed period, unlike the situation in Therrien-Beaupré, was an accumulated benefit from remuneration accrued for work performed and this benefit had the same attributes as vacation pay.
Analysis of the decision
[7] With respect, we think the judge was mistaken about the nature and effect of the agreement signed by the respondent, and that he overlooked the provisions of subsection 13(1) of the Regulations.
[8] The agreement provides a deferred leave plan for directors general, senior management and middle managers in Quebec"s health and social services sector. Under the agreement, an employee"s leave period may be taken at the beginning of the agreement, as in Therrien-Beaupré , during the agreement or in the final year of the agreement as in the case at bar. This is clear from the definition of "congé à traitement différé" [deferred leave] in article 1, which states that it is "[Translation ] leave of a definite duration taken within a period of deferment of compensation". Furthermore, and this is decisive, the definition clearly establishes that it is leave without pay or without compensation.
[9] In our opinion, the judge committed an initial error by comparing the respondent"s leave without pay to a remunerated vacation period. As it happens, clause 4(c ) of the agreement establishes a clear distinction between annual vacations, i.e. the paid leave provided for by law, and deferred leave. This is the same distinction that was made by Madam Justice Desjardins in the Therrien-Beaupré case.
[10] It is also incorrect to conclude, as the judge did, that the reward or benefit received by the respondent had the same attributes as vacation pay. What the respondent received during the period in question was not vacation pay or compensation for work performed during that period. Rather, it was an amount that, as the agreement states, is salary earned for periods of work prior to the period in dispute, but the payment of which to the respondent has been deferred in part. The postponement of a part of the salary thus earned by the respondent during the first four years of the agreement, during which work was provided, did not have the effect of transforming the leave without pay in the fifth year into a year of remunerated work or, as the judge seemed to think, a paid leave.
[11] Finally, the judge made a further error, in our opinion, in not adhering to the principle laid down by this Court in Therrien-Beaupré. In fact, it would be absurd if the year in which the deferred leave was taken was not a year of insurable employment if such leave was taken at the commencement of the period of deferral of remuneration but was a year of insurable employment if the leave was taken at the end of that period, since in either case it is a leave without pay for which no work is provided and consequently no compensation is paid by the employer during the year in which it is taken.
[12] Subsection 13(1) of the Regulations states that an employment is excepted from the category of insurable employment if either of the following conditions is satisfied: the service provided totals less than 15 hours of work per week and the weekly cash earnings are less than 20% of the maximum weekly insurable earnings. That is precisely the situation in this case, since the respondent was on a leave without pay and provided no work. The amount that the respondent received during the period in question was nothing but a sum she had earned prior to that period and which, at her request, had been withheld as deferred payment.
[13] For these reasons, we are of the opinion that the application for judicial review should be allowed, the decision of the Tax Court of Canada should be set aside and the matter be sent back to it for redetermination on the assumption that the determination by the Minister of National Revenue that the respondent did not hold an insurable employment during her deferred pay leave was justified.
Gilles Létourneau
J.A.
Certified true translation
Bernard Olivier
FEDERAL COURT OF CANADA
APPEAL DIVISION
Date: 20000217
Docket: A-710-98
BETWEEN:
HER MAJESTY THE QUEEN
Applicant
AND
THÉRÈSE HUARD
Respondent
REASONS FOR JUDGMENT
FEDERAL COURT OF CANADA
APPEAL DIVISION
NAMES OF COUNSEL AND SOLICITORS OF RECORD
| FILE NO: A-710-98 |
| STYLE: HER MAJESTY THE QUEEN |
Applicant
AND
THÉRÈSE HUARD
Respondent
| PLACE OF HEARING: Montréal, Quebec |
| DATE OF HEARING: February 17, 2000 |
REASONS FOR JUDGMENT OF THE HONOURABLE MR. JUSTICE LÉTOURNEAU
DATED: February 17, 2000
APPEARANCES:
Valérie Tardif
Mounes Ayadi for the Applicant
Gilbert Nadon for the Respondent
SOLICITORS OF RECORD:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Ontario for the Applicant
CAMPEAU, OUELLET & ASSOCIÉS
Montréal, Quebec for the Respondent
__________________1 C.R.C. vol. XVIII, c. 1576.
2 A-414-92, May 19, 1994 (F.C.A.).