Date: 19980216
Docket: 97-495-UI
BETWEEN:
RÉAL POLICAR,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
F-MATIC OF AMERICA,
Intervener.
Reasons for Judgment
Somers D.J.T.C.C.
[1] The appellant is appealing the determination by the Minister of National Revenue ("the Minister") that the employment with the payer F-Matic of America Division of Elko-Sha Co. Ltd. during the period in question, September 22, 1995 to March 1, 1996, was excepted from insurable employment as the payer had no base of operations in Canada.
[2] The respondent maintained that the appellant’s employment was excepted from insurable employment during the period in question, because the payer had no base of operations in Canada within the meaning of s. 14(f)(i) of the Unemployment Insurance Regulations, and was performing services both in Canada and the U.S.
[3] The burden of proof is on the appellant, who must show on a balance of probabilities that the Minister's decision was wrong in fact and in law. Each case stands on its merits.
[4] In making his determination the Minister relied on the following facts, which the appellant admitted or denied:
[TRANSLATION]
(a) The payer is a U.S. business with headquarters and offices located in Lehi, Utah. (denied as worded)
(b) The payer business specializes in the manufacture and distribution of commercial and industrial deodorants. (admitted)
(c) The payer has no warehouse or office in Canada and most of its customers live in the U.S. (denied)
(d) Mr. Allard is an employee of the payer; he lives in Quebec and his office, from which the powers conferred on him by the payer are exercised, is located in Salt Lake City. (denied)
(e) Mr. Allard is the one who hired the appellant, a graduate of the École des Hautes Études Commerciales, under an agreement specifying the terms of his employment for a six-month probationary period. (denied)
(f) During the period at issue the appellant was employed by the payer under a contract of service. (admitted)
(g) During the period at issue the appellant performed services for the payer both in Canada and the U.S. (denied)
(h) The payer has no base of operations in Canada and the appellant's employment is therefore excepted from insurable employment under the Unemployment Insurance Regulations. (denied)
[5] The payer is a U.S. business with its head office and offices located in the state of Utah in the U.S. The payer business specializes in the manufacture and distribution of commercial and industrial deodorants. The payer has no warehouse in Canada. The payer's representative was Martin Allard, domiciled at Otterburn Park, near Mont St-Hilaire in Quebec.
[6] Mr. Allard hired the appellant, a graduate of the École des Hautes Études Commerciales, under an agreement specifying the terms of employment. By the admission of the appellant and the respondent, therefore, the appellant was employed by the payer under a contract of service. The appellant performed services in Ontario, Quebec, the Maritimes and the [TRANSLATION] "Upper North East of the U.S."
[7] The appellant received two days' training at Mr. Allard's residence. The appellant sent faxes to Mr. Allard's residence. Communications between the appellant and Mr. Allard were really by fax or answering machine as they were both always on the road, for the territories to be covered.
[8] These two individuals only had samples of the products, which they carried with them to show them to customers. Orders were sent to the payer's business office in Utah. All the products sold by the appellant were warehoused in Utah. The appellant sent orders to the secretary in Utah; additionally, Mr. Allard's company’s secretary worked at the business office in Utah.
[9] The appellant was paid every two weeks in U.S. currency and the paycheques were drawn on the payer's U.S. account.
[10] The evidence showed that the appellant was employed by the payer under a contract of service. Additionally, the respondent admitted that there was a contract of service.
[11] However, under s. 14(f)(i) of the Unemployment Insurance Regulations, which reads as follows, this is excepted employment:
14. The following employments are excepted from insurable employment:
. . .
(f) employment of a person if premiums are payable in respect of his employment under
(i) the unemployment insurance law of any state of the United States, the District of Columbia, Puerto Rico or the Virgin Islands, by reason of the agreement between Canada and the United States respecting unemployment insurance, as amended to June 21, 1985, . . .
[12] The Agreement between Canada and the United States respecting Unemployment Insurance was concluded on March 12, 1942 and came into effect on April 12, 1942.
[13] Article IV of that Agreement is relevant to the instant case and reads as follows:
(a) An individual's entire services for an employer in insurable employment as defined in the unemployment insurance law of a jurisdiction will be insured under the unemployment insurance law of such jurisdiction in respect of services performed by him within, or both within and without such jurisdiction if -
(1) his services are localized in such jurisdiction, or
(2) his services are not localized in any jurisdiction but some of his services are performed in such jurisdiction, and
(i) his base of operations, or if he has no base of operations, the place from which his services are directed or controlled, is in such jurisdiction, or
(ii) his base of operations or the place from which his services are directed or controlled is not in any jurisdiction in which some of his services are performed, but his residence is in such jurisdiction.
[14] As mentioned in s. 14(f)(i) of the Unemployment Insurance Regulations, this agreement was amended in 1985. The amendment does not alter the meaning of the 1942 agreement.
[15] Article IV of that amendment in 1985 reads as follows:
(a) An individual's entire services for an employer in insurable employment as defined in the unemployment insurance law of a jurisdiction will be insured under the unemployment insurance law of such jurisdiction in respect of services performed by him within, or both within and without such jurisdiction if
(1) his services are localized in such jurisdiction, or
(2) his services are not localized in any jurisdiction but some of his services are performed in such jurisdiction, and
(i) his base of operations, or if he has no base of operations, the place from which his services are directed or controlled is in such jurisdiction, or
(ii) his base of operations or the place from which his services are directed or controlled is not in any jurisdiction in which some of his services are performed, but his residence is in such jurisdiction.
[16] The evidence showed that the appellant had no base of operations from which his services were performed. His services were not performed in any particular jurisdiction. Under his contract of employment the appellant had to cover a territory for the payer which was localized in Canada and the U.S.; accordingly, it was not limited to any jurisdiction.
[17] In the circumstances, jurisdiction is located where his services were directed. It is quite clear from the evidence that the services performed by the appellant were directed at the payer's centre of operations located in the state of Utah in the U.S. The company's head office is located in the state of Utah; decisions are made in that state; that is where the paycheques came from; the merchandise sold by the appellant is shipped from the state of Utah.
[18] The jurisdiction was therefore the state of Utah in the U.S. For this reason alone s. 14(f)(i) of the Unemployment Insurance Regulations applies in the instant case and under that section the appellant's employment is excepted.
[19] The appeal is therefore dismissed and the determination made by the Minister affirmed.
Signed at Ottawa, Canada, February 16, 1998.
J.F. Somers
D.J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 16th day of November 1998.
Kathryn Barnard, Revisor