Guimont v. M.N.R., docket 97-766-UI

Date: 19980814

Docket: 97-766-UI

BETWEEN:

RENAUD GUIMONT,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

PRÉVOST, D.J.T.C.C.

[1] This appeal was heard at Québec, Quebec, on July 13, 1998.

[2] It is an appeal from a decision by the Minister of National Revenue ("the Minister"), dated April 23, 1997, determining that the appellant's employment with the payer, D'Amours Métal Inc., from January 1 to December 31, 1993, from January 1 to December 31, 1994 and from January 1 to May 26, 1995 was not insurable because it did not meet the requirements of a contract of service.

[3] Paragraph 5 of the Reply to the Notice of Appeal reads as follows:

[TRANSLATION]

5. In arriving at his decision the respondent Minister of National Revenue relied inter alia on the following facts:

(a) the payer, incorporated on July 7, 1980, operates a business recycling scrap metal and vehicles, renting dumpsters and hauling household waste; (NK)

(b) Michel D'Amours is the payer's sole shareholder; (NK)

(c) during the periods at issue the appellant drove a truck for the payer; (DAW)

(d) on October 22, 1993 the payer issued a record of employment indicating that the appellant had worked for it from May 3 to October 22, 1993; (A)

(e) on October 24, 1994 the payer issued a record of employment indicating that the appellant had worked for it from March 7 to September 2, 1994; (A)

(f) on May 29, 1995 the payer issued a record of employment indicating that the appellant had worked for it from April 10 to May 26, 1995; (A)

(g) these three records of employment were incorrect, as the amounts of earnings and the employment termination dates were wrong; (D)

(h) the earnings indicated were based on 44-hour weeks; (D)

(i) the appellant often worked less than 44 hours a week; (D)

(j) any hours he owed he put in after the alleged layoff dates; (D)

(k) after putting in the hours he owed the payer, the appellant received auto parts and metal by way of payment; (D)

(l) the payer and the appellant entered into an arrangement to enable the appellant to receive unemployment insurance benefits to which he was not entitled; (D)

(m) there was no true contract of service between the payer and the appellant during the periods at issue. (D)

[4] In the preceding passage from the Reply to the Notice of Appeal the Court has indicated in parentheses after each subparagraph the comments made by counsel for the appellant at the start of the hearing, as follows:

(NK) = no knowledge

(A) = admitted

(D) = denied

(DAW) = denied as written

Hearing

Appellant's evidence

According to his testimony:

[5] He has lived with his spouse at the same place for seven years and they have three young children.

[6] He is a truck driver by trade and did indeed work for the payer for three years in scrap iron and salvage.

[7] He held no shares in the payer and did not participate in its profits or its losses.

[8] His boss Michel D'Amours provided him with one of the payer's trucks and he got his orders either from Michel D'Amours himself or his secretary on arriving at the office in the morning.

[9] He lived on the other side of the street from the payer's head office.

[10] His employment was seasonal and he worked from 8:00 a.m. to 5:00 or 6:00 p.m., and even later.

[11] He did maintenance on the payer's truck, in particular greasing it from time to time, but for major repairs the payer dealt with a garage of its choice.

[12] Besides driving the truck, he also worked as a representative in the rental of dumpsters.

[13] His territory extended from La Pocatière in the east to Quebec in the west, and from the St. Lawrence in the north to the United States border in the south.

[14] As a representative he found new customers for the payer, but did not receive any commission on such sales.

[15] After he was laid off he went to work elsewhere, with Daniel Coulombe Construction Inc. from September 18 to October 20, 1995, as indicated by his record of employment (Exhibit A-1).

[16] His 1993 record of employment (Exhibit A-2) indicated he had worked for the payer from May 3 to October 22. His 1994 record of employment (Exhibit A-3) showed that he had worked for the payer from May 7 to September 2. Finally, his 1995 record of employment (Exhibit A-4) indicated he had worked for the payer from April 10 to May 26. In all cases he was paid by cheque.

[17] In 1994 he suffered from neuralgia. He applied for and received benefits from the C.S.S.T., but had to repay them as it was decided that his illness did not result from an industrial accident.

[18] Contrary to what is alleged in subparagraph (l) above, he never entered into an arrangement with the payer to enable him to receive unemployment insurance benefits to which he was not entitled.

[19] A scrap metal business does not operate in winter.

[20] During the three years in question the appellant never worked for the payer after his layoffs.

[21] He ceased working for the payer on May 26, 1995 because there was not much work and also because of a disagreement with his employer.

[22] The payer's peak period was generally from June to September or October of each year.

[23] The appellant did sign a statutory declaration (Exhibit I-1) on July 16, 1996 in which it is stated (at pp. 1 and 2):

[TRANSLATION]

The agreement is that, even if I do not put in the full number of hours each week, hours are banked, so that when things are less busy I continue working each week to make up the hours for which I have been paid but have not worked. When I put in extra hours, I take in exchange things such as auto parts or metal which I take to compensate me for my work. Once I even got an automobile through D'Amours Métal in exchange for my hours of work. My employer was aware of this agreement and it suited both parties. I did this so as not to reduce my unemployment benefits in the winter . . . .

. . . I often did this work without being paid . . . . I also recognize my signature on the delivery orders you have in your possession. I confirm this by initialling certain ones . . . . I know that I have to report my work on my unemployment cards but as I was not receiving paycheques I did not report it . . . . I went in to work every day . . . .

[24] When this statement was taken down the investigators [TRANSLATION] "forced" his replies. They read it over to him, but he did not pay too much attention.

[25] Although the word [TRANSLATION] "cash" appears in the payroll (Exhibit I-2) for four weeks in December 1993 and for several weeks in 1994, he was never paid in cash.

[26] The appellant did sign unloading invoices (Exhibit I-3) in 1993 prior to May 3 — about a hundred of them. He also signed 80 or so after October 22.

[27] However, he did not want to review them one by one at the hearing.

[28] He did the same thing in 1994 and 1995 outside the periods for which he was paid.

[29] As he lived opposite the payer's business he was always on its premises throughout the year because he had nothing else to do.

[30] He accompanied Michel D'Amours on his runs and signed the invoices as it was he who got out of the truck for this purpose.

[31] He also worked outside the periods in question with Dominique D'Amours, Michel's son.

[32] He never received any pay when he was on unemployment insurance.

[33] The investigators did not offer to let him consult an attorney when he was making his statutory declaration, and he himself did not ask to do so either.

[34] He was subjected to this questioning at the Canada Employment Centre, but did not know why he had been called there.

[35] The interview lasted about 15 minutes.

[36] Michel D'Amours found the appellant to be a good employee and when the appellant asked him for some metal it was given to him.

According to Hélène Gagné:

[37] She has been the appellant's spouse for 9 or 10 years and they live together opposite the payer's premises.

[38] The appellant had seasonal work with the payer but in winter he went in anyway to help D'Amours senior or junior. In fact, he showed the son how to do the run.

[39] The appellant completed his unemployment cards, but he did not get any pay when unemployment insurance benefits were coming in.

[40] He did receive a car in exchange for his unpaid extra hours.

[41] Ms. Gagné did not know whether there was an arrangement between the appellant and his employer to get him better unemployment insurance benefits.

Respondent's evidence

According to Michel D'Amours:

[42] Florence Thibault, who signed the records of employment, had done his accounting for at least 15 years.

[43] He did not know what the word [TRANSLATION] "cash" meant in the payrolls, but he had full confidence in Ms. Thibault.

[44] He did sign two statutory declarations (Exhibit I-6), one on May 15 and the other on July 16, 1996.

[45] The first concerned another employee, André Caouette: it indicated that this person appeared on the payroll during busy periods on the basis of 40 hours a week, that he accumulated his hours and when he was no longer working he returned to do haulage for the hours for which he had been paid but had not worked, so as not to reduce his unemployment insurance benefits.

[46] The second read as follows:

[TRANSLATION]

I admit that there was a general agreement with my employees that at busy times they would be entered on the payroll for each week; however, the fact was that the truck drivers put in fewer hours than they were paid for. When they did not appear on the payroll they continued working for me in order to pay back the hours they owed me. When the balance of hours was in the employee's favour we were open to the idea of barter : things such as automobile parts and metal, and his employee Renaud Guimont even got a car from the company in exchange for his extra hours of work. The records of employment issued to the employees reflected the payroll, not the actual hours of work. I therefore acknowledge that the following ROEs: N89489041, dated 24/10/94, and N90028242, dated 29/5/95, issued to Renaud Guimont, and N90803764, dated 6/11/95, issued to André Caouette, do not correspond to the actual dates of work. This agreement allowed employees to receive a fixed salary for a given period, to get a higher unemployment insurance benefit rate and to be able to work without being penalized on their unemployment insurance benefits, and it enabled the company to have manpower available at all times . . . .

[47] Michel D'Amours had to pay a penalty as a result of that inquiry.

[48] In winter the appellant received no pay either in cash or by cheque.

[49] The work was obviously seasonal, as in winter [TRANSLATION] "there was not much going on". The appellant, who was often at the office during the off-season, accompanied Michel D'Amours to landfill sites as he himself was afraid of rats and so avoided getting out of the truck.

[50] In periods when he was not being paid the appellant did not do all the runs, but he did sign the invoices in the name of Michel D'Amours.

[51] The appellant did show the run to his son Dominique.

[52] The appellant had a weekly salary and he was always paid.

[53] There was no secret agreement to get him better benefits.

[54] The investigators came to meet with Michel D'Amours in his office. They examined the books but he himself knew nothing about that sort of thing.

[55] The appellant was a good employee, not at all lazy. He got his instructions at the office in the morning and did the work required: he even found new customers for the business.

[56] Michel D'Amours did not remember any quarrel that might have been the cause of terminating the appellant's employment.

Pleadings

According to counsel for the appellant:

[57] His client was supervised and was fully integrated into the payer's activities: he had no chance of profit or risk of loss, and his tools were supplied to him by the payer.

[58] The tests laid down by the courts for determining whether there is a contract of service were all met.

[59] The appellant was paid by cheque and when he was receiving unemployment insurance benefits he did not receive any pay.

[60] In addition to driving the payer's truck, he went out and got contracts: he was a good employee and put in quite long days.

[61] He was not paid by the hour but by the week, and did not have to punch in.

[62] His salary was reasonable and he did do the work required of him: his records of employment were correct.

[63] In La Réforme du Code civil (Textes réunis par le Barreau du Québec et la Chambre des notaires du Québec), under the heading [TRANSLATION] "obligations and nominate contracts", Marie-France Bich, a Professor at the Faculty of Law at the Université de Montreal, wrote under the subheading [TRANSLATION] "the contract of employment" (at p. 750):

[TRANSLATION]

17. Article 2085 of the Civil Code of Quebec actually gives the following definition:

2085. A contract of employment is a contract by which a person, the employee, undertakes for a limited period to do work for remuneration, according to the instructions and under the direction or control of another person, the employer.

This definition brings out the following points:

(1) a contract of employment is clearly a synallagmatic contract within the meaning of article 1380 C.C.Q.;

(2) a contract of employment is an onerous contract within the meaning of article 1381;

(3) a contract of employment is commutative within the meaning of article 1382 C.C.Q.;

(4) a contract of employment is of course a contract of successive performance within the meaning of article 1383 C.C.Q.

And at pp. 752 and 753 there is the following:

[TRANSLATION]

25. This power to direct and control may take various forms. First, there is what may be called the traditional power of control: the employer regularly gives his employee specific instructions on doing the work and concerning the overall means of performance.

[64] The wording of article 2085 C.C.Q. is very broad and clearly indicates that the appellant had a true contract of employment.

According to counsel for the respondent:

[65] There was an agreement between the appellant and Michel D'Amours that during certain periods the appellant would be paid without putting in all his hours, and would subsequently do work without pay.

[66] The appellant received from the payer scrap metal and also an automobile in exchange for unpaid hours once the accumulated hours had been exhausted.

[67] In 1995 the appellant worked for a shorter period and left even before the peak period.

[68] His record of employment indicated there was a lack of work, but he actually left because of a disagreement.

[69] The many invoices filed clearly indicated that even after his layoffs the appellant continued providing his services regularly to his employer.

[70] Although he said that the investigators "forced" his replies, he did admit certain things in his statutory declaration and also in court.

[71] He knew he had to report his work on his cards, but did not do so as he was not receiving a paycheque.

[72] The notation [TRANSLATION] "cash" in the payroll for the first two years is very strange and the appellant, on whom rested the burden of proof, did not call Florence Thibault who might have explained it.

[73] It must be concluded that this income paid in cash was not declared.

[74] Michel D'Amours was afraid of rats, and that was why the appellant always had to go with him to the landfill sites, even in winter.

[75] The appellant's pay was inflated to enable him to get better unemployment insurance benefits.

[76] In La Réforme du Code civil, supra, it is also stated (at p. 749):

While it is true that the Civil Code of Quebec did not adopt article 2157 as it appeared in the draft, one should still take into account the preamble of the said Code, paragraph two of which states that:

The Civil Code comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the jus commune, expressly or by implication. In these matters, the Code is the foundation of all other laws, although other laws may complement the Code or make exceptions to it.

It would appear that the Quebec legislature is here confirming a rule of superimposition, the Civil Code provisions being a master plan which other legislation and other legal instruments may add to or derogate from. In the case of any contractual addition or derogation, the concept of public order applies in accordance with the standard set out in article 9 C.C.Q.:

9. In the exercise of civil rights, derogations may be made from those rules of this Code which supplement intention, but not from those of public order.

[77] The Civil Code is supplemental and here the Minister is relying on s. 3(1)(a) of the Unemployment Insurance Act.

[78] Article 2085 C.C.Q. indicates that a contract of employment is an onerous contract, and here such was not the case for a long period during the winter.

[79] The appellant received unemployment insurance benefits while continually providing services to the payer free of charge.

[80] There was no true contract of service.

According to counsel for the appellant in reply:

[81] The appellant lives in St-Eugène, a [TRANSLATION] "small place", where employment is scarce, and so allowances should be made.

[82] In 1993 and 1994 he was paid for the periods shown in the records of employment, namely the payer's busiest periods, in the summer.

[83] The Unemployment Insurance Act is social legislation and its purpose is to allow the payment of benefits in such cases.

[84] There was a true contract of employment and it was not convenience employment.

[85] The appellant and Michel D'Amours both told the Court that there was no agreement to enable the appellant to get unemployment insurance benefits to which he was not entitled.

[86] Even if there was a disagreement, it can clearly be seen that there was a synallagmatic contract.

[87] The Minister did not establish the value of the car given to the appellant by the payer in exchange for unpaid work.

Analysis

[88] Although it was stated that nothing was known of subparagraphs (a) and (b) cited above, the evidence as a whole indicated that they were correct.

[89] The evidence was that the appellant also did some sales work for the payer, but this is not significant with respect to the conclusion set out below.

[90] It was clear from the evidence that the records of employment were incorrect, as the amounts of pay and employment termination dates shown therein were wrong.

[91] It is clear that the appellant did not generally work the 44 hours a week for which he was paid and that he repaid hours after his alleged layoff dates.

[92] It is also clear that after paying back the hours owed to the payer the appellant received auto parts, metal and even an automobile by way of payment.

[93] Although the appellant and Michel D'Amours denied its existence at the hearing, the arrangement alleged by the Minister was amply established: they may not have understood this, but the facts are there.

[94] The appellant certainly worked for the payer; he was undoubtedly a good employee; and he did not participate in profits or losses, except that at various points he received gifts in exchange for his services. The truck was supplied to him by the payer and he received his instructions from Michel D'Amours or his secretary, but on the facts and in view of the arguments put forward by the Minister that is not really what the Court has to decide in order to resolve this case.

[95] The appellant's problems with the C.S.S.T. are not relevant to the outcome of this case, except that they show that he applied for and received benefits to which he was not entitled, with the result that he had to repay them.

[96] The appellant may say that this type of business does not operate in the winter, but the very large number of invoices filed indicates that there was nonetheless activity several times a week.

[97] Taking into account the payer's peak period, it is not reasonable that he should have been laid off for lack of work in May 1995. It is much more likely that it was because of a disagreement with his employer. His other explanation does not stand up to serious scrutiny. Moreover, in his reply his counsel argued that the payer was busiest in the summer.

[98] The appellant’s statutory declaration is overwhelming: it clearly establishes the arrangement alleged by the Minister. The appellant may say that the investigators [TRANSLATION] "forced" his replies, but Michel D'Amours made no such complaint and, in his statutory declaration, he confirmed the existence of the arrangement.

[99] In his declaration the appellant also said he knew he should have reported his work on his unemployment cards, but did not do so because he was not receiving a paycheque. He clearly stated in that declaration [TRANSLATION] "I went in to work every day".

[100] The word [TRANSLATION] "cash" in the 1993 and 1994 payrolls was not explained and it was the appellant who had the burden of proof. In view of all the other considerations, however, the Court need not rule on this matter in reaching its conclusion below.

[101] Well might the appellant say he did not wish to examine one by one all the invoices pertaining to periods outside those at issue that were filed at the hearing in this case, as they constituted overwhelming evidence against his appeal.

[102] He was always on the payer's premises and Michel D'Amours gave him work throughout the year as part of the arrangement alleged by the Minister.

[103] He may not have actually received a salary when he was collecting benefits, but it had been paid to him previously as part of the arrangement. Moreover, he subsequently received scrap metal and even an automobile as well.

[104] He could have asked for the assistance of counsel when making his statutory declaration but opted not do so. Furthermore, at that stage the investigators were not required to suggest on their own initiative that he seek legal counsel.

[105] When he was invited by them to go to the Employment Centre he knew or ought to have known that he was to be questioned about the insurability of his employment, as he was receiving unemployment insurance benefits. He should, moreover, have paid attention to the declaration he was being asked to sign, but he did not pay attention.

[106] Hélène Gagné confirmed that during the winter the appellant went over to the payer's premises to help D'Amours senior or D'Amours junior, and even showed the latter the run.

[107] The first statutory declaration of Michel D'Amours confirmed the above-mentioned arrangement made in the case of another employee so as not to [TRANSLATION] "reduce his unemployment insurance benefits".

[108] In the second he acknowledged in addition that the records of employment for the appellant did not correspond to the actual dates of work. He further acknowledged therein that this system allowed the employee to have a fixed salary for a certain period, to get a better unemployment insurance benefit rate and to be able to work without being penalized, and that for the company the agreement meant that it could have manpower available at all times.

[109] Michel D'Amours admitted at the hearing that he had had to pay a penalty as a result of that inquiry.

[110] It is strange, if the appellant was not doing the runs, that it was still he who was signing the invoices.

[111] Michel D'Amours may not have recalled the quarrel resulting in the appellant's layoff in May 1995, but the appellant acknowledged that there was indeed a quarrel.

[112] If all the hours allegedly worked during the summer months had actually been worked the salary might have been reasonable, but that was not the case.

[113] The above-cited text on the Civil Code reform is very interesting, but it makes it quite clear that a contract of employment is an onerous contract, which characteristic, in this case, was absent in the winter so long as there were accumulated hours.

[114] The appellant's pay was clearly inflated so as to give him better unemployment insurance benefits.

[115] It is true that the Civil Code of Quebec comprises a body of rules which, in all matters within the letter, spirit or object of its provisions, lays down the jus commune, expressly or by implication, and that in these matters the Code is the foundation of all other laws, although other laws may complement the Code or make exceptions to it.

[116] It is also true that the Code is supplemental and s. 3(1)(a) of the Unemployment Insurance Act establishes that, to be insurable, employment must be held under a genuine contract of service.

[117] Such was not the case here.

[118] While it is true that the appellant lived in St-Eugène, that could not explain the arrangement discussed above.

[119] Although the Unemployment Insurance Act is social legislation, its purpose is to insure real employment, which the employment here was not.

[120] There may have been a synallagmatic contract of employment, but it was not insurable.

[121] The appellant had the burden of proof and it was up to him to establish, if he considered it to be in his interest, the value of the car he was given by payer.

[122] The appeal must therefore be dismissed and the decision appealed from affirmed.

Signed at Laval, Quebec, this 14th day of August 1998.

"A. Prévost"

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 26th day of February 1999.

Erich Klein, Revisor