Citation: 2007CCI626
Date: 20071026
Docket: 2006-3182(EI)
BETWEEN:
ANDRÉ LAVERDIÈRE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1] This is an appeal from a decision of the
Minister of National Revenue (the "Minister") on May 15, 2006, concerning the insurability of Mr.
Laverdière's employment with Robert Dumas from April 8, 2002, to August 10, 2002 (the "period in
question").
[2] The Minister concluded that Mr. Laverdière
was not an employee of Robert Dumas during the period in question because the
requirements of a contract of service within the meaning of paragraph 5(1)(a)
of the Employment Insurance Act, S.C. 1996, C-23, as amended (the
"Act"), were not met, and accordingly there was no employer–employee
relationship.
Facts
[3] On December 13, 2001, Mr. Laverdière
registered the corporate name "Bar le Foxy" and began operating the
bar a short time thereafter. The bar, which had been closed for some time,
belonged to Gaston Bonneau, who also held the liquor licence. During his testimony,
Mr. Laverdière stated having contracted a $5,000 loan from Robert Dumas to open
the bar and having instructed Mr. J.-P. Lévesque, a lawyer, to submit an
application for a liquor licence.
[4] As Mr. Laverdière feared not being able to
obtain his liquor licence because of his criminal record, Mr. Dumas
registered the corporate name "Bar le Foxy" on March 1, 2002, and continued operating the
bar. The transfer of the ownership of the bar, if there was any such transfer,
to Mr. Dumas, was not confirmed in any document and was allegedly made in exchange
for the cancellation of the $5,000 loan mentioned in the preceding paragraph.
Mr. Dumas obtained the liquor licence required to operate the bar in March 2002.
[5] During the period in question, Mr. Laverdière
worked at the bar as a manager and was paid $600 per week.
[6] On August 12, 2002, Bar le Foxy/Robert
Dumas issued a record of employment in Mr. Laverdière's name, which showed that
the first day worked was April 8, 2002, and the last day worked was August 10, 2002.
[7] In a statutory declaration dated May 25, 2005, Mr. Laverdière stated that he
continued rendering services for approximately 30 hours per week at Bar le
Foxy from August 11, 2002, to May 10, 2003, and was paid $64 per week, in
addition to receiving room and board.
[8] In October 2003, Mr. Dumas allegedly
re-sold Bar le Foxy to Mr. Laverdière for $10,000, and Mr. Laverdière
obtained his liquor licence during that same month. No document showing this
transfer of ownership was submitted.
[9] According to the unaudited financial
statements of Bar le Foxy for the fiscal years ending December 31, 2001, December 31, 2002, and December 31, 2003,
prepared by the firm of chartered accountants of Raymond Chabot Grant Thornton,
Mr. Laverdière held 100% of the bar in 2001, 17% in 2002 and 25% in 2003,
while Robert Dumas held 0% in 2001, 83% in 2002 and 75% in 2003. The apportioning
of the net operating loss of Bar le Foxy for each of the periods was made on
the basis of the equity interest percentages stated above.
[10] In his income tax returns for 2002 and
2003, Mr. Laverdière reported business income and operating losses from Bar le
Foxy in a proportion of 17% for 2002 and 25% for 2003.
[11] In his income tax returns for 2002 and
2003, Robert Dumas reported business income and operating losses for Bar le
Foxy in a proportion of 83% for 2002 and 75% for 2003.
Respondent's position
[12] The respondent determined that Mr.
Laverdière's employment was excluded from insurable employment under paragraph 5(2)(i)
of the Act during the period in question when he was employed by Robert
Dumas because Mr. Laverdière was operating the bar in partnership with
Robert Dumas.
[13] As a partner of Robert Dumas, Mr.
Laverdière worked for himself, and the services he rendered were not performed
under the direction or control of another person as required under article 2085
of the Civil Code of Québec, which defines the contract of employment.
Therefore, Mr Laverdière was not an employee as defined in subsection 2(1)
of the Act.
Appellant's position
[14] Mr. Laverdière submits that he was not a
partner of Robert Dumas during the period in question and that the bar had been
operated by him and by Mr. Dumas respectively, each one in turn as a 100%
owner.
[15] Guylaine Simard, an accounting technician,
testified and confirmed that she knew Mr. Laverdière and Robert Dumas and that
she had done the bookkeeping at the bar from December 2001.
[16] Ms. Simard confirmed that from December 2001
to February 2002, Mr. Laverdière was the sole owner of the bar, and that
she had obtained tax and source deduction numbers for the bar's operation.
[17] Ms. Simard confirmed that from March 1, 2002, to December 31, 2002, and
from January 1,
2003, to
October 2003, Robert Dumas was 100% owner of the bar. She confirmed having
made source deductions, income tax and tax remittals and having issued T-4
statements to the employee(s) for each of the periods during which Mr. Laverdière
was the owner and for each of the periods during which Robert Dumas was the
owner.
[18] Ms. Simard confirmed that from March 1,
2002, the cheque signing authorities for the bar were Robert Dumas and his
spouse.
[19] Ms. Simard stated that she had given Marc
Lévesque, a chartered accountant at Raymond Chabot Grant Thornton, documents
showing operating results for the periods of December 2001; January 1,
2002, to February 28, 2002; March 1 to December 31, 2002; and
January 1, 2003, to October 2003. The statement of earnings for January 1, 2002, to February 28, 2002, bore the
handwritten note "André" in the upper section. This document was
submitted as Exhibit A-3.
[20] Ms. Simard stated that it was only in 2003
that she realized that the accountant had combined the results of the bar's operations
for all of 2002 and had apportioned the profits and losses between Mr. Laverdière
and Robert Dumas.
[21] Ms. Simard stated that she brought this mistake
to the attention of accountant Marc Lévesque, but he refused to amend the bar's
financial statements because of the cost and the lack of consequences that this
would entail.
Analysis
[22] Article 2186 of the Civil Code of Québec
defines the contract of partnership as follows:
2186. A contract of partnership is a
contract by which the parties, in a spirit of cooperation, agree to carry on an
activity, including the operation of an enterprise, to contribute thereto by
combining property, knowledge or activities and to share any resulting
pecuniary profits.
[23] In my opinion, the essential elements of
the contract of partnership, namely, intention, the combining of property,
knowledge or activities and, finally, the sharing of any resulting pecuniary profits,
are present in this case.
[24] Robert Dumas provided the capital, and
Mr. Laverdière took care of managing the bar. The financial statements of
the bar and the income tax returns of Mr. Laverdière and Robert Dumas
confirm that the losses incurred in operating the bar were apportioned.
[25] I do not believe that the accountant
Lévesque made a mistake in preparing the bar's financial statements for the
year 2002. It should be noted that in spite of Ms. Simard's comments to
the effect that the 2002 financial statements were not accurate and did not reflect
reality, the accountant Lévesque did not have the presentation of the bar's operating
results for the years 2002 and 2003 changed. I conclude that that the bar's financial
statements for the years 2002 and 2003 did indeed reflect the existing relationship
between Mr. Laverdière and Robert Dumas and were in compliance with the parties'
intentions.
[26] Considering the preceding, I conclude that
Mr. Laverdière was not an employee of Robert Dumas and did not hold insurable
employment during the period in question. Accordingly, the appeal is dismissed,
and the Minister's decision is upheld.
Signed at Ottawa, Canada, this 26th day of October 2007.
"Réal Favreau"
Translation certified true
on this 31st day of January 2008
Michael Palles, Reviser
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