A-688-96

QUÉBEC, QUEBEC, THIS 30th DAY OF APRIL 1997

CORAM:             THE HONOURABLE MR. JUSTICE HUGESSEN

            THE HONOURABLE MR. JUSTICE DÉCARY

            THE HONOURABLE DEPUTY JUSTICE CHEVALIER

BETWEEN:             JOCELYNE JOMPHE,

     Applicant,

            - AND -

            MINISTER OF NATIONAL REVENUE,

     Respondent.

     J U D G M E N T

     The application is dismissed.

     James K. Hugessen

                                    J.A.

Certified true translation

C. Delon, LL.L.

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     A-688-96

CORAM:             THE HONOURABLE MR. JUSTICE HUGESSEN

            THE HONOURABLE MR. JUSTICE DÉCARY

            THE HONOURABLE DEPUTY JUSTICE CHEVALIER

BETWEEN:             JOCELYNE JOMPHE,

     Applicant,

            - AND -

            MINISTER OF NATIONAL REVENUE,

     Respondent.

    

     A-689-96

BETWEEN:             2856-4706 QUÉBEC INC.,

     Applicant,

            - AND -

            MINISTER OF NATIONAL REVENUE,

     Respondent.

     Hearing held at Québec, Quebec, on Wednesday, April 30, 1997.

     Judgment delivered from the bench on April 30, 1997.

REASONS FOR JUDGMENT OF THE COURT BY:      HUGESSEN J.A.

     A-688-96

CORAM:             THE HONOURABLE MR. JUSTICE HUGESSEN

            THE HONOURABLE MR. JUSTICE DÉCARY

            THE HONOURABLE DEPUTY JUSTICE CHEVALIER

BETWEEN:             JOCELYNE JOMPHE,

     Applicant,

            - AND -

            MINISTER OF NATIONAL REVENUE,

     Respondent.

    

     A-689-96

BETWEEN:             2856-4706 QUÉBEC INC.,

     Applicant,

            - AND -

            MINISTER OF NATIONAL REVENUE,

     Respondent.

     REASONS FOR JUDGMENT OF THE COURT

     (Delivered from the bench at Québec

     on April 30, 1997)

HUGESSEN J.A.

     The applicant Jocelyne Jomphe applied to the Minister for a determination that her employment with the other applicant, 2856-4706 Québec Inc., a company controlled by her husband, was nonetheless insurable under paragraph 3(2)(c) of the Act:

Excepted employment is

(c) subject to paragraph (d), employment where the employer and employee are not dealing with each other at arm's length and, for the purposes of this paragraph,

(i) the question of whether persons are not dealing with each other at arm's length shall be determined in accordance with the provisions of the Income Tax Act, and

(ii) where the employer is, within the meaning of that Act, related to the employee, they shall be deemed to deal with each other at arm's length if the Minister of National Revenue is satisfied that, having regard to all the circumstances of the employment, including the remuneration paid, the terms and conditions, the duration and the nature and importance of the work performed, it is reasonable to conclude that they would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length; ...

                        [Respondent's record, p. 65]

     This provision contains an exception to the rule: the person seeking to have the exception applied to him or her has to persuade the Minister that his or her assertions are correct. If the person is not satisfied with the Minister's decision, he or she may appeal to the Tax Court of Canada.

     In both of these cases, the Minister stated that he was not satisfied and the Tax Court of Canada affirmed his decision. While we have some doubt as to the soundness of the reasons stated by the judge, nonetheless he had no evidence before him from which he could have concluded that the Minister exercised his discretion improperly, specifically in determining that the salary paid to the employee was not reasonable. In fact, Ms. Jomphe's husband, the only shareholder of the company, flatly refused even to try to justify the salary paid; moreover, the applicant cannot rely, as evidence that the salary was reasonable, on the judgment in another case involving another employer and another employee.

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     The applications for judicial review will be dismissed.

     James K. Hugessen

                                    J.A.

Certified true translation

C. Delon, LL.L.

     Federal Court of Canada

    

     Court file No. A-688-96

between:

JOCELYNE JOMPHE,

     Applicant,

- AND -

MINISTER OF NATIONAL REVENUE,

     Respondent.

    

     REASONS FOR JUDGMENT OF THE COURT

    

---

     Federal Court of Canada

    

     Court file No. A-689-96

between:

2856-4706 QUÉBEC INC.,

     Applicant,

- AND -

MINISTER OF NATIONAL REVENUE,

     Respondent.

    

     REASONS FOR JUDGMENT OF THE COURT

    

     FEDERAL COURT OF APPEAL

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

COURT FILE NO:      A-688-96

STYLE OF CAUSE:      JOCELYNE JOMPHE,

     Applicant,

         - and -

         MINISTER OF NATIONAL REVENUE,

     Respondent.

PLACE OF HEARING:      Québec

REASONS FOR JUDGMENT

OF THE COURT BY:      The Honourable Mr. Justice Hugessen

         The Honourable Mr. Justice Décary

         The Honourable Deputy Justice Chevalier

DATED:      April 30, 1997

APPEARANCES:

     Pierre St-Onge      For the applicant

     Paul Plourde      For the respondent

SOLICITORS OF RECORD:

     ST-ONGE & ROY

     440 Avenue Bruchu

     Suite 201

     Sept-Îles, Quebec

     G4R 2W8          For the applicant

     DEPARTMENT OF JUSTICE CANADA

     222 Queen St.

     Room 1118

     Ottawa, Ontario

     K1A 0H8          For the respondent

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     FEDERAL COURT OF APPEAL

     NAMES OF COUNSEL AND SOLICITORS OF RECORD

COURT FILE NO:      A-689-96

STYLE OF CAUSE:      2856-4706 QUÉBEC INC.,

     Applicant,

         - and -

         MINISTER OF NATIONAL REVENUE,

     Respondent.

PLACE OF HEARING:      Québec

REASONS FOR JUDGMENT

OF THE COURT BY:      The Honourable Mr. Justice Hugessen

         The Honourable Mr. Justice Décary

         The Honourable Deputy Justice Chevalier

DATED:      April 30, 1997

APPEARANCES:

     Pierre St-Onge      For the applicant

     Paul Plourde      For the respondent

SOLICITORS OF RECORD:

     ST-ONGE & ROY

     440 Avenue Bruchu

     Suite 201

     Sept-Îles, Quebec

     G4R 2W8          For the applicant

     DEPARTMENT OF JUSTICE CANADA

     222 Queen St.

     Room 1118

     Ottawa, Ontario

     K1A 0H8          For the respondent