Date: 19980213
Docket: 96-2331-UI
BETWEEN:
ROGER NOËL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Cuddihy D.J.T.C.C.
[1] This appeal was heard at Québec, Quebec on
January 23, 1998.
I - Appeal
[2] The appellant is appealing from the determination by the
Minister of National Revenue ("the Minister") dated
November 12, 1996 according to which the employment with the
payer René Prévost during the period in
question, from August 2 to November 6, 1993, was not
insurable within the meaning of the Unemployment Insurance
Act ("the Act"), since during that period there was
no contract of service between the appellant and the payer within
the meaning of s. 3(1)(a) of the Act.
II - Summary of the facts
[3] In his Reply to the Notice of Appeal the respondent
submitted the facts on which he based his decision.
Paragraphs 5 and 6 of his Reply read as follows:
[TRANSLATION]
5(a) The payer operated a dairy and slaughter animal farm; he
owned between 125 and 160 head and milked about
40 cows.
(b) The payer was also a director and manager of forestry
businesses and operated a bar as well.
(c) The payer alleged that during the period at issue he hired
the appellant as a farm assistant.
(d) The payer alleged that the appellant was not involved with
milking the cows but rather worked in the fields doing
harvesting.
(e) The payer alleged that the appellant cut wood at his
sugarhouse and also worked for Les Concassés de la
Rive-Sud Inc., while working on the farm on weekends.
(f) The payer alleged that the appellant received $8 an hour
for his services, whereas the appellant alleged he was paid $5 an
hour during the period at issue.
(g) The appellant initially alleged that he had never worked
for the payer and then alleged that he worked on the
payer’s farm 40 hours a week without reporting it.
(h) The appellant alleged that he worked for the payer for
five weeks and admitted that the record of employment which
he obtained from the payer, dated November 12, 1993, did not
reflect the actual beginning and end of the period allegedly
worked or the amount actually earned.
(i) A review of the payer's payroll, the cheques issued to
the appellant and the period of the payer's activities
indicated that nothing corresponded to the periods allegedly
worked by the appellant or his alleged pay.
(j) The appellant alleged he rendered services to the payer by
working on his farm, whereas the cheques for his alleged pay
during the period at issue came from the account of "Les
Entreprises René Prévost Inc."
6. At this stage of the proceedings the respondent alleges
that there was an arrangement between the parties solely to
enable the appellant to qualify to receive unemployment insurance
benefits.
[4] Through his counsel, the appellant admitted the facts
alleged in subparagraphs (a) to (c). He had no knowledge of
the facts alleged in subparagraphs (d), (e) and (j). The
facts alleged in subparagraphs (f) to (i) were denied.
Paragraph 6 was denied.
[5] III - Law and analysis
(i) Unemployment Insurance Act definitions
"employment"
"employment" means the act of employing or the state
of being employed;
...
"insurable employment"
3. (1) Insurable employment is employment that is not
included in excepted employment and is
(a) employment in Canada by one or more employers,
under any express or implied contract of service or
apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other
person and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or
otherwise;
...
[6] The burden of proof is on the appellant.
[7] In Sylvie Desroches and M.N.R.
(A-1470-92), the Federal Court of Appeal described
the function of the Tax Court of Canada judge, and I
quote:
However, in the final analysis, as this Court held in
Attorney-General of Canada v. Jacques Doucet, it is
the Minister's determination which is at issue, namely that
the employment was not insurable because the applicant and the
payer were not bound by a contract of service. The function of
the Tax Court of Canada judge extended to considering the record
and the evidence in its entirety. Accordingly Marceau J.A.,
speaking for the Court, said the following in Doucet:
The judge had the power and duty to consider any point of fact
or law that had to be decided in order for him to rule on the
validity of that determination. This is assumed by s. 70(2)
of the Act and s. 71(1) of the Act so provides immediately
afterwards . . .
The trial judge could go as far as deciding that there was no
contract between the parties.
[8] If there is any doubt in the interpretation it should be
resolved in favour of the taxpayer and there is nothing to
prevent a taxpayer benefiting from social legislation if the
requirements of the Act are observed. In Attorney General of
Canada and Ludger Rousselle, a judgment dated
October 31, 1990 (124 N.R. 339), Hugessen J.A.
said the following at 340-341:
I do not think it is an exaggeration to say, in light of these
facts, that if the respondents did hold employment this was
clearly "convenience" employment, the sole purpose of
which was to enable them to qualify for unemployment insurance
benefits. These circumstances certainly do not necessarily
prevent the employment from being insurable, but they imposed on
the Tax Court of Canada a duty to look at the contracts in
question with particular care; it is apparent that the
motivation of the respondents was the desire to take advantage of
the provisions of social legislation rather than to participate
in the ordinary operation of the economic forces of the market
place. [Emphasis added.]
[9] The tests which must be analysed have been stated
repeatedly by the Federal Court of Appeal. In Attorney General
of Canada v. Normand Charbonneau, a judgment dated
September 20, 1996 (A-831-95),
Décary J.A. said the following, at p. 2 in
particular:
The tests laid down by this Court in Wiebe Door Services
Ltd. v. M.N.R.1 - on the one hand, the degree
of control, the ownership of the tools of work, the chance of
profit and risk of loss, and on the other, integration - are not
the ingredients of a magic formula. They are guidelines which it
will generally be useful to consider, but not to the point of
jeopardizing the ultimate objective of the exercise, which is to
determine the overall relationship between the parties. The issue
is always, once it has been determined that there is a genuine
contract, whether there is a relationship of subordination
between the parties such that there is a contract of employment
(art. 2085 of the Civil Code of Québec) or,
whether there is not, rather, such a degree of autonomy that
there is a contract of enterprise or for services (art. 2098
of the Code). In other words, we must not pay so much attention
to the trees that we lose sight of the forest - a
particularly apt image in this case. The parts must give way to
the whole.
_______________
1 [1986] 3 F.C. 553 (F.C.A.).
[10] Each case stands on its merits. The appellant had to
establish on a balance of probabilities that the Minister's
decision was wrong. Sections 70(2) and 71(1) of the
Unemployment Insurance Act give the Tax Court of Canada
broad remedial powers. These powers allow the Court to resolve
any issue based on the facts and to reverse, affirm or vary the
determination by the Minister.[1]
[11] The appellant, the payer René Prévost,
and the respondent's investigator
Stéphane Tremblay were heard at the hearing.
[12] The main reason given by the respondent for deciding that
there was no contract of service was that there was an
arrangement between the payer and the appellant solely to enable
the appellant to qualify to receive unemployment insurance
benefits.
Brief summary of the oral evidence
[13] René Prévost testified that the
appellant is a good worker and that he worked for the weeks
indicated in the payroll (Exhibit A-2). The payroll
indicated that the appellant worked for the payer in 1993 from
August 9 to 14, August 22 to 28, August 29 to
September 4 and October 31 to November 6 at a
gross weekly salary of $364. The gross salary consisted of a $350
salary and another $14 (four percent), making a total of
$364. The payroll indicated that the appellant's net weekly
salary was $272.52. The appellant's hourly salary was $7.
[14] René Prévost filed
Exhibit A-1. It contained photocopies of four cheques
made out to Roger Noël and dated June 27,
August 2, August 11 and August 28, 1993, making a
total of $1,150. René Prévost explained that
these cheques (Exhibit A-1) represented advances he
gave the appellant. He also filed the appellant's record of
employment (Exhibit A-3), which indicated a weekly
salary of $364, and five weeks worked between August 2
and November 6, 1993. René Prévost
admitted that the advance cheques issued by Les Entreprises
René Prévost Inc. (Exhibit A-1) did
not correspond to the payroll (Exhibit A-2) or the
record of employment (Exhibit A-3), and he added that
for the last week's work the appellant was paid in cash,
perhaps $500, but he could not be precise about the amount. He
went on to say [TRANSLATION] "I cannot give the other
amounts which I gave him in cash; the reason I paid in cash was
because I had the cash to do it; because he officially worked the
days marked down in the payroll. I did not put that he worked in
June because it was not regular work; the other employees were
paid by cheque; 95 percent are paid by cheque. I had to say
to Roger, give me your hours; it was Roger who kept his
hours".
[15] René Prévost also admitted that the
appellant might have worked a few days before the beginning of
his period of employment and that the appellant's priority
was working for another payer, Les Concassés de la
Rive-Sud Inc.
[16] The appellant testified. He was for all practical
purposes almost illiterate and had a great deal of difficulty
explaining the agreement which he had with the payer when he was
employed in 1993. It should be noted that the appeal was heard in
January 1998, five years after the period at issue.
[17] This witness explained that he worked for the payer. He
drove machinery. He also worked for another payer, Les
Concassés de la Rive-Sud (Exhibit I-1).
When work for this payer ended he went to work [TRANSLATION]
"on Prévost's farm". He did not know how
many hours he worked. He confirmed that
René Prévost gave him advances. He did not
receive cheques before working. He did not know whether he began
working in August 1993. He did not remember whether he was
paid on weekends.
[18] The examination and cross-examination of this witness
were extremely difficult. It was accepted that the
appellant's statement (Exhibit I-2) could not be
of much use to the Court, principally because it was the
appellant's spouse who gave the appellant's story to the
investigator in 1996, nearly three years after the period at
issue. As the appellant cannot read he could not understand the
document. Stéphane Tremblay, the respondent's
investigator, met twice with the appellant. The appellant's
first visit prompted him to suggest that the appellant return
with his wife, and this was done on February 14, 1996. The
appellant's wife did not testify and there was nothing to
indicate whether she was living with the appellant in 1993 and so
could be familiar with his work periods. The appellant's
evidence was that in 1993 his deceased mother was looking after
his affairs and in his presence made up his claimant’s
reports, which were filed by the respondent
(Exhibit A-4). These exhibits were filled out properly
and filed with the employment office at a time contemporaneous
with the events.
[19] Stéphane Tremblay greatly assisted the
Court in assessing the appellant. He explained the difficulties
he encountered in his investigation. He gave his point of view as
follows: [TRANSLATION] "In my opinion, he [the appellant]
worked and went there in his spare time, but the hours done were
compressed for payment, and so were not calculated by
Prévost (the payer). Although he [the appellant] did not
have enough weeks there was an agreement [between the payer and
the appellant] so that the weeks would be insurable".
Analysis
[20] The payer's obligation is to keep payrolls which
contain the information required by the respondent. The
payer's payroll contained no hours worked for the employees
listed in it. It seems to the Court, especially in a case such as
that of the appellant, that the payer should have ensured that
there was no dispute as to the appellant's pay. The question
is why he paid advances to the appellant. Why was he paid in
cash? Did the appellant sometimes work for the payer without pay?
That was not the testimony of René Prévost and
his documents (Exhibits A-1, A-2 and A-3),
from which it may be concluded that the appellant worked for the
salaries indicated and on the dates shown in the record of
employment. The cheques for advances are a source of
confusion.
[21] The Court must decide whether there was a genuine
contract of service between the appellant and the payer. Plainly,
the appellant performed work and received payment for it, and
there was some kind of relationship of subordination between the
payer and the appellant.
[22] The appellant is a very hard-working person who is not
very able to defend himself. The appellant's claimant’s
reports (Exhibit A-4) are the only documents that can
be used to determine what happened in 1993 regarding the work
done by the appellant. These documents were prepared by the
appellant's deceased mother in his presence. They are
documents contemporaneous with the periods of employment,
prepared in the ordinary course of business, and so, because of
the appellant's particular situation, carry special weight in
the instant case.
[23] These documents (A-4) indicate that the appellant
worked for several payers between May and November 1993. In
particular, the appellant gave his weeks of work for the payer as
follows: the week of August 1 to 7, worked 50 hours
with total gross pay of $350; the week of August 8 to 14,
worked 50 hours, with no mention of his gross pay; for
two weeks from August 22 to September 4, worked
55 hours each week, no mention of gross pay; the week of
October 31 to November 6, 1993, worked 40 hours
with total gross pay of $364. It should be noted that the card
for the last week worked is dated November 12, 1993. That
date is the same as the date on the payer's record of
employment, 12/11/93 (Exhibit A-3). This is thus the
first and only time that the appellant gave the gross weekly pay
of $364 on a claimant's card. It is the first time he had an
opportunity to do so because the document was not prepared before
that. The employment office also regarded these as fully worked
weeks. Accordingly, it must be accepted that the appellant
worked.
[24] The respondent admitted that work was done, but argued
that the appellant failed to establish the salary he received for
the work done. It is true that the evidence adduced by the payer
is difficult to accept; however, it would be a pity for a person
as disadvantaged as the appellant to be in any way penalized on
account of a payer who did not perform his duties as he should.
The only acceptable evidence introduced by the appellant as to
his salary were the claimant’s reports dated August 6,
1993, where he gave his total gross pay as $350. This was a
statement made at the time of his first week of work, which was
not influenced by other circumstances that may have arisen later.
The respondent was right to question the cheques for advances
that did not appear to have been endorsed by the appellant, the
payroll which was not properly prepared and the record of
employment dated November 12, 1993, stating a weekly salary
of $364 as shown on the appellant's card for
November 12, 1993. How could the payer state a weekly salary
of $364 and in the same breath say that he paid the appellant on
one occasion in cash but did not know the amount paid? All these
documents did not originate with the appellant. However, if we
disregard the evidence submitted by the payer, which the
respondent did not accept, at the same time we should accept the
evidence of the appellant, who on the first occasion gave his
work, hours and gross salary on his report dated August 6,
1993 (Exhibit A-4).
[25] The appellant was not required to present evidence beyond
a reasonable doubt, but had to persuade the Court on a balance of
probabilities.
[26] In all fairness, I am persuaded on a balance of
probabilities, disregarding the suspect evidence, that the
appellant worked for the five weeks at issue at a gross
weekly salary of $350.
[27] This decision applies only to the period at issue and
must not be used for others of the appellant’s work
periods, which could be disputed by the respondent.
IV - Decision
[28] The appeal is allowed and the determination made by the
Minister is vacated.
Signed at Dorval, Quebec, February 13, 1998.
S. Cuddihy
D.J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 16th day of November
1998.
Kathryn Barnard, Revisor
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