Citation: 2010 TCC 517
Date: 20101014
Dockets: 2008-2177(EI)
2008-2198(EI)
BETWEEN:
ALAIN LESSARD,
110319 CANADA LTÉE,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1]
This is an appeal from
a decision concerning the insurability of the work performed by
Alain Lessard from June 4 to November 30, 2007, and from
December 10 to 14, 2007, for 110319 Canada ltée, the sole shareholder of which was his father,
Yvon Lessard.
[2]
Both the employer and
the worker appealed the decision dated April 14, 2008. The employer
also chose to intervene in the worker's appeal.
[3]
The parties proceeded
on common evidence.
[4]
In making and
confirming the decision under appeal, the respondent relied on the following
assumptions of fact:
[Translation]
(7) The appellant company and the worker are
not dealing with each other at arm's length within the meaning of the Income
Tax Act, because
(a)
Yvon Lessard is the sole shareholder of the
appellant; (admitted)
(b)
Yvon Lessard is the worker's father; (admitted)
(c)
The worker is related by blood to a person who
controls the appellant; (admitted)
(8)
The Minister determined that the appellant
company and the worker were not dealing with each other at arm's length for the
purposes of the worker's employment. In fact, the Minister was satisfied that
it was not reasonable to conclude that the appellant company and the worker
would have entered into a substantially similar contract of employment if they
had been dealing with each other at arm's length, in light of the following facts:
(a)
The appellant company was incorporated on
September 8, 1981; (admitted)
(b)
The appellant had a bulk trucking permit; (admitted)
(c)
The appellant company was a member of the
Association des transporteurs en vrac de Baie-Comeau (the Association); (admitted)
(d)
The appellant company could not transport any
goods in bulk without the authorization and control of the Association; (admitted)
(e)
The worker was hired as a truck driver; (admitted)
(f)
The worker drove a 10-wheel truck belonging to
the appellant company; the driver had to have a class‑3 licence to drive
it; (admitted)
(g)
The worker was always entered in the appellant
company's payroll journal for 40 hours per week with $670 pay, regardless of
the number of hours actually worked; (denied)
(h)
On February 12, 2007, the worker told the
respondent's representative that, in 2007, he was the only one who drove the
appellant company's truck; (admitted)
(i)
On February 12, 2007, the worker told the
respondent's representative that, during the winter of 2007, he had transported
snow and that he had accumulated hours in order to get higher pay; (denied)
(j)
In 2007, the appellant company had no entries in
its payroll journal between January 1, 2007 and June 4, 2007; (admitted)
(k)
In 2007, the day-to-day information provided by
the appellant company to the Association did not correspond to the entries in
the appellant company's payroll journal with respect to the hours, days and
weeks worked by the worker; (denied)
(l)
On December 7, 2007, the appellant company gave
the worker a record of employment, which stated that his first day of work was
June 4, 2007, that his last day of work was
November 30, 2007, that the number of insurable hours was 512
and that his insurable earnings totalled $8,576; (admitted)
(m) The record of employment did not reflect the actual number of hours
worked or the actual period worked; (denied)
(n)
From January 9 to June 4, the worker had
worked 167 hours for the appellant company, which were not entered in its
payroll journal; (denied)
(o)
An employee at arm's length would not agree to
work without pay; (denied)
(p)
In August 2007, the worker obtained a medical
certificate stating that he had to stop working; (admitted)
(q)
On February 12, 2007, the worker told the
respondent's representative that, during the summer, he drove the truck even
though he was on sick leave and was not paid; (denied)
(r)
From August 22 to October 12, the appellant
company reported 228.2 hours of transport to the Association without a single
entry in the payroll journal; (denied)
(s)
From December 9 to 14, the appellant company
reported 18 hours of transport to the Association; (admitted)
(t)
On January 15, 2008, the appellant company gave
the worker a record of employment that stated that his first day of work was
December 10, 2007, that his last day of work was
December 14, 2007, that the number of insurable hours was 40 and that
the insurable earnings totalled $670.00; (admitted)
(u)
The worker's pay entered in the appellant
company's payroll journal did not reflect the appellant company's actual
periods of activity; (denied)
(v)
The actual period of the worker's employment did
not correspond to the period at issue; (denied)
(w) The Minister is satisfied that the worker's remuneration and the
duration and terms and conditions of employment could not apply if the parties
were dealing with each other at arm's length; (denied)
[5]
In this case, the
burden of proof is on the appellants. The burden of proof is somewhat unusual,
in the sense that it is necessary to show, on the balance of probabilities,
that the respondent made a palpable and overriding error or that his factual
analysis was unreasonable.
[6]
In other words, it must
be proven that facts were omitted, overlooked or withheld, or that certain
evidence was given too much weight, thus demonstrating that the analysis was
not sound and reasonable in order to show that the Court's intervention is
warranted.
[7]
To determine whether
the employment contract was influenced by the parties' non-arm's-length
relationship, Parliament provided various criteria to be considered, such as
the duration and the terms and conditions of employment.
[8]
Based
on these criteria or other evidence that could prove relevant, if the analysis
was done soundly, the Court must essentially confirm the decision, even if the
Court could have concluded differently based on the same facts.
[9]
In
this case, the worker, his brother Yvan Lessard and his father,
Yvon Lessard, the sole shareholder of the appellant company, testified for
the appellants.
[10]
Stated
briefly, they testified that Alain Lessard's hours of work were consistent in
all respects with the wages paid, that he did not perform any unpaid work and
that the remuneration and terms and conditions of employment were entirely
comparable to those that existed when he had performed similar work for another
employer for about ten years.
[11]
To
explain certain inconsistencies and ambiguities uncovered during the
investigation and stated in a document entitled [Translation] "CPT 110 Report on an Appeal"
(Exhibit I-1), the appellants stated that the hours that seemed to have been
worked by the appellant were actually worked by his brother, even though his
brother did not have the licence required to perform the work in question.
[12]
In
cross-examination, the appellants argued that the work in question had been
done on private land, off public roads, and that it was not necessary to have a
special licence to drive in such places.
[13]
For his part, the
respondent called as witness the appeals officer, who explained the work done
during his analysis described in Exhibit I‑1. Other documents
consulted included the business's log book with the bulk trucking association,
which ensures that work is distributed fairly within the area it controls.
[14]
That evidence confirmed
some ambiguities and inconsistencies, particularly, with respect to the
explanations given by Alain Lessard and his father at the time of the
first-level analysis.
[15]
That evidence also
established that the appeals officer had taken into account everything that the
appellants had told him on the telephone during his investigation, even though
some facts had been presented differently during the first-level investigation.
[16]
According to those
documents, the appellant company performed about 325 hours of transport
while it had only one driver with the appropriate licences, namely,
Alain Lessard. Yet, those hours were not in Alain Lessard's various
log books.
[17]
In other words, those
hours of work do not coincide with those attributed to Alain Lessard, even
though, based on the evidence, he was the only qualified driver.
[18]
To disprove the
assumptions, the appellants stated that they were based on interpretation and
speculation. In other words, they argued that the respondent's evidence was
incomplete and deficient.
[19]
The appellants maintain
that the number of hours is speculative because the evidence did not make it
possible to distinguish between the hours worked on public roads and those
worked on private land. The appellants also stated that the reports prepared by
the Association were incomplete and unreliable.
[20]
In addition, the
appellants admitted that some of the hours worked were not worked by the
appellant, but rather by his brother Yvan, who, although he had no licence,
agreed to work as a truck driver mainly on private roads, where, according to
the appellants, it was not necessary to have a special licence.
[21]
The explanations were
essentially speculative. No one testified, and no documents were filed in
support of the unpaid hours of work, the hours attributed during which no work
was done, the lack of a licence requirement for work done on private land or
the number of hours possibly worked on private land.
[22]
The evidence that was
before the tribunal does not allow the Court to identify any critical errors in
the processing of the file leading to the decision; on the contrary, the
balance of the evidence shows that the conclusion was reasonable.
[23]
It would have been
appropriate to submit evidence that was not based solely on the appellants'
essentially verbal explanations that were speculative and biased, especially
since the respondent's evidence is based on reasonable and very credible
documents.
[24]
I repeat that, in this
case, the burden of proof is on the appellants, not the respondent. In
addition, when the case contains contradictions, or at least, varying versions
between the first investigation and that conducted by the review officer, it
becomes particularly important that the version filed with the Court is
reasonable with a serious basis, not, as in this case, essentially speculative
and based on the pretext that the respondent's investigation was incomplete.
Neither the appellant, nor the intervener discharged their burden of proof.
[25]
For these reasons, the
appeal is dismissed.
Signed at Ottawa, Canada, this 14th
day of October 2009.
“Alain Tardif”
on this 8th day of
December 2010
Margarita
Gorbounova, Translator
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