Nuclear Waste Management Organization v MNR, 2012 TCC 217

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When is an Advisory Board Member an Officer?

Nuclear Waste Management Organization v MNR, 2012 TCC 217

The Court was required to determine whether members of the advisory council for the NWMO were in the tenure of an office and therefore were in pensionable employment pursuant to the Canada Pension Plan, paragraph 6(1)(a).

The members of the advisory council were paid $10,000 per year on a quarterly basis, and a per diem amount of $850 for each day the member attended a meeting. They had no decision-making authority and only provided non-binding recommendations.

The Court decided that the definition of “office”, containing the words “means” and “includes” should be interpreted exhaustively with the inclusion added for greater certainty, so that the only class of offices excluded from the wide-ranging exhaustive definition are those that are related to public service or are obtained in unique ways and are officers with authority but are not mentioned in the enumerated list (eg. the Governor General).

The Minister relied on the   definition of “office” in the Act, which is the same as the one in   the ITA which reads:

“office”   means the position of an individual entitling him to a fixed or ascertainable   stipend or remuneration and includes a judicial office, the office of a   minister of the Crown, the office of a lieutenant governor, the office of a   member of the Senate or House of Commons, a member of a legislative assembly   or a member of a legislative or executive council and any other office the   incumbent of which is elected by popular vote or is elected or appointed in a   representative capacity, and also includes the position of a corporation   director, and “officer” means a person holding such an office;

The MNR stated that since the   members were entitled to a fixed and ascertainable stipend or remuneration,   they held an office pursuant to the definition, and thus fell within the   definition of employment.

The taxpayers argued that   since the number of meetings were not fixed, and not all members attended all   meetings, and since the remuneration has a per diem component, the   remuneration is neither fixed nor ascertainable.

The Court noted that this   argument is contrary to M.N.R. v. The   Queen in Right of Ontario and   M.N.R. v. Real Estate Council of Alberta, where the Federal Court of   Appeal unequivocally ruled that remuneration which is fixed in hourly or per   diem amounts is “fixed or ascertainable”, even if the number of hours or days   for which the office holder will be paid is uncertain. In light of these   cases, the decisions relied on by the Appellant are no longer authoritative”.

The taxpayers also argued that   the advisory council members were volunteers that received an   honorarium.The definition in question is   both exhaustive (“means”) and inclusive (“includes”), and   the taxpayer relied on both the ejusdem   generis rule and the expressio   unius est exlusio alterius rule.   Ejusdem generis is known as a “canon of construction”, it states that when a limited list of specific things also includes a more general class, that the scope of that more general class shall be limited to other items more like the specific items in the list.   The expressio   unius est exlusio alterius rule states that when items are listed, anything not explicitly stated is assumed to not be included.

The   court agreed that the provision used a less than precise drafting style.   However, it begins with the word “means”, and this generally makes   the definition exhaustive, and if it begins with “includes”, it is   simply an illustration of examples and is open ended.

The definition of   “office” uses both “means” and “includes” and   has two components to its definition.    The first portion is wide reaching but exhaustive and captures the   advisory members as office holders.    The problem arises with the inclusion of a more specific group of   individuals in the second portion of the definition.  The inclusion of this second specific   enumerated list appears to be redundant as those persons would fall within   the first definition.  Thus, the   presumption against tautology dictates that the second inclusion cannot be   redundant.  This second list is of   enumerate public service group members so that those note listed are not   meant to be included in the group.

The court referred to the noscitur a sociis rule  which states that An ambiguous word or term can be clarified by considering the whole context in which it is used, without having to define the term itself.

In relying on the rule, the Court stated that   there was “something about the “colour” of the enumerated list   that strikes [him] as narrowing the broader definition of “office”   in respect to a particular category of persons without undermining the broadness   of the broader definition in respect of person not in that particular   category”.  The court held that   the specific public service group is simply added for greater certainty to   include specific person who due to their public service or somewhat unique   way of attaining their position may be seen as falling outside of the broad   definition of “office”.  The   position of the advisory council was not in the same category as the   enumerated person, and the failure to enumerate them does not indicate the   intention to exclude them.  The enumerate   group reflects the officer as an officer with authority.

The court stated that the   members had a role to perform and received remuneration for that role, and in   their appointed position they had tenure of office.  The court also stated that:

In coming   to this conclusion, I also find comfort in another implicit aspect of an   “office”, namely, that it imports a position of continuity and permanence   that is independent of the person who holds it. In this sense, it is the   nature of the position, not the period it is held by a particular person,   which enables a finding that the occupant of the position has the tenure of   an office.

Thus it is the office that   must have a permanent nature, not the occupants of the office at any   particular time, for there to be tenure of office.  Even if the term of the individual was   relevant, and even if the term was for a fixed period, the person tenure of   each member has in fact enjoyed is sufficient for them to be said to have held   the position in a meaningful way.

– Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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Minhas v MNR, 2012 TCC 221

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Is an Employee Whose Spouse is a Shareholder of the Employer-Corporation Engaged in Insurable Employment?

Minhas v MNR, 2012 TCC 221

The question here was whether the employee and the employer were dealing at arm’s length, given that the spouse of the employee was a shareholder of the employer.

The employee worked for a corporation whose shares were equally owned by two holding corporations.  Her husband and her husband’s brother owned the shares of one of the holding companies, while the other holding company’s shares were owned by two cousins of the employee.

The court reviewed the ITA’s   sections dealing with related persons, and notes that the appellant’s husband   is not related to his cousins, and neither is his brother, for purposes of   the ITA, and thus the corporation was not controlled by a related group, and   the appellant is not related to the company for purposes of the act.Thus, it is a question of fact   whether the appellant and the corporation were dealing with each other at   arm’s length.  The court then referred   to Parrill v. The Minister of National   Revenue, [1996] T.C.J. No. 1680, affd [1998] F.C.J. No. 836, where  Cuddihy J stated:

20        From these cases parties are not dealing   at arm’s length when the predominant consideration or the overall interest or   the method used amount to a process that is not typical of what might be   expected of parties that are dealing with each other at arm’s length.

21        Parties will not be dealing with each   other at arm’s length if there is the existence of a common mind which   directs the bargaining for both parties to a transaction or that the parties   to a transaction are acting in concert without separate interests or that   either party to a transaction did or had the power to influence or exert   control over the other and that the dealings of the parties are not   consistent with the object and spirit of the provisions of the law and they   do not demonstrate a fair participation in the ordinary operation of the   economic forces of the market place*.

22        Therefore the existence of a   combination of one or several of these initiatives that would be inconsistent   or interfere, in due process negotiating between employer and employee and   with the object and intent of the legislation, will not survive the arm’s   length test.

The court referred to the   evidence to hold that the appellant was not hired because her husband was a   shareholder. Although she was paid more than the previous manager, she had   different duties and hours that justified the additional pay and did not  indicate a non-arm’s length relationship.The court noted that the fact   that the appellant was available on short notice to cover the work of other   employees does not indicate a non-arms-length relationship. She was a   diligent worker.  She was also terminated   because of a downturn in business and provided no services until she was   rehired by the company.


Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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