Citation:
2006TCC351
Date: 20060630
Docket: 2005-2844(EI)
2005-2845(EI)
BETWEEN:
LOUISE DUCHESNE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Deputy Judge Savoie
[1] These appeals were heard on common evidence at Québec,
Quebec, on March 27, 2006.
[2] The insurability of
the Appellant’s employment is not at issue. The issue is to determine the
Appellant’s insurable hours and her insurable earnings.
[3] In his letter of
April 21, 2005, the Minister of National Revenue (the “Minister”) informed
the Appellant of his decision that for the period from January 31 to September
17, 1998, her insurable earnings totalled $5,172.25 during the last 28 weeks of
the period and, that for the period from September 21, 1998, to May 30, 1999,
she accumulated 563 insurable hours and insurable earnings totalling $3,408.75
during the last 28 weeks of the period while employed with the Entreprises
Dysco du Québec Inc. (the “Payor”).
[4] Moreover,
in his letter, of the same date, the Minister informed the Appellant of his
decision that for the period from June 8 to November 11, 1999, she accumulated
795 insurable hours and insurable earnings totalling $7,945.50 and that from
June 20 to November 4, 2000, she accumulated 145 insurable hours and insurable
earnings totalling $1,442.50 while employed with the Restaurant Coeur
de Loup Inc. (the “Payor”).
[5] The
Minister based his decisions regarding the Appellant’s earnings and insurable
hours on the following presumptions of fact:
(Docket 2005-2844(EI))
(a) the Payor was
incorporated on August 13, 1987;
(b) the Payor operated a restaurant;
(c) during the
periods at issue, the allocation of the voting shares in the Payor’s business
read as follows [translation]:
- Donald
Duchesne, the Appellant’s brother, with 67% of the shares;
- the
Appellant with 28% of the shares;
-
Josée
Duchesne, Appellant’s sister, with 5% of the shares;
(d) the Appellant worked at the restaurant
mainly during the summer and occasionally during the winter;
(e) the Appellant helped in the kitchen, waited
tables, ensured floor management and acted as a hostess;
(f) the Payor submitted that the Appellant
punched in, by period, whereas the Appellant stated that she did not keep track
of her working hours and that she did not know whether the Payor did so;
(g) on September
8, 1998, the Payor issued a Record of Employment (ROE) in the Appellant’s name,
for the period from October 27, 1995, to September 6, 1998, detailing 560
insurable hours and insurable earnings totalling $6,580 for the last 28 weeks
of the period at issue;
(h) on June 2,
1999, the Payor issued a ROE in the Appellant’s name, for the period from
October 19, 1998, to May 30, 1999, detailing 285 insurable hours and insurable
earnings totalling $3,646.76.
(i) the ROE
issued by the Payor in 1998 does not accurately reflect the insurable earnings
earned by the Appellant during the period at issue;
(j) the ROE
issued by the Payor in 1999 does not accurately reflect either the insurable
hours accumulated by the Appellant or the insurable earnings earned by the
Appellant during the period at issue;
(k) following a
search of the Payor’s
premises, documents containing time cards in the name of the Payor’s employees,
including the Appellant, were seized;
(l) the time cards in the Appellant’s name are
proof of the hours actually worked by the Appellant and were used as a basis of
calculation in the Minister’s notification;
(m) for the period
from January 31 to September 17, 1998, and more specifically for the period
from March 8 to September 17, 1998, that is, during the last 28 weeks of the
period at issue, the Minister determined that the Appellant’s insurable
earnings totalled $5,172.25;
(n) for the
period from September 21, 1998, to May 30, 1999, the Minister determined that
the Appellant accumulated 563 hours of insurable employment and, from November
15, 1998, to May 30, 1999, that is during the last 28 weeks of the period
at issue, insurable earnings totalling $3,408.75 (127.75 hours at $5.00 and 277
hours at $10.00).
(Docket 2005-2845(EI))
(a) the Payor was
incorporated on December 9, 1997;
(b) the Payor operated a restaurant;
(c) during the periods at issue, the allocation of the
voting shares in the Payor’s business read as follows [translation:
-
Donald Duchesne, the Appellant’s brother,
with 67% of the shares;
-
Josée Duchesne, Appellant’s sister, with
33 % of the shares;
(d) the Appellant worked at the restaurant
mainly during the summer and occasionally during the winter;
(e) the Appellant helped in the kitchen, waited
tables, ensured floor management and acted as a hostess;
(f) the Payor submitted that the Appellant
punched in and out, by period, whereas the Appellant stated that she did not
keep track of her working hours and that she did not know whether the Payor did
so;
(g) on November
16, 1999, the Payor issued a Record of Employment (ROE) in the Appellant’s
name, for the period from June 1 to November 13, 1999, detailing 998 insurable
hours and insurable earnings totalling $13,243.86;
(h) On September
20, 2000, the Payor issued a ROE in the Appellant’s name, for the period from June 26 to September 7, 2000, detailing
424 insurable hours and insurable earnings totalling $6,857.93;
(i) the Records
of Employment issued by the Payor do not accurately reflect either the
insurable hours accumulated by the Appellant nor the insurable earnings earned
by the Appellant during the periods at issue;
(j) following a search of the Payor’s premises, documents containing time
cards in the name of the Payor’s employees, including the Appellant, were
seized;
(k) the time cards in the
Appellant’s name are proof of the hours actually worked by the Appellant and
were used as a basis of calculation in the Minister’s notification;
(l) for the period from June 8 to
November 11, 1999, the Minister determined that the Appellant accumulated 795
insurable hours and insurable earnings totalling $7,945.50 (794.50 hours at
$10.00/hour);
(m) for the period from June 20,
2000, to September 4, 2000, the Minister determined that the Appellant
accumulated 145 insurable hours and insurable earnings totalling $1,442.50 $
(144.25 hours at $10.00/hour).
[6] The Appellant admitted to all of the Minister’s
factual assumptions, except those involving the fact that the Records of
Employment issued by the Payors in the Appellant’s name do not accurately
reflect her insurable earnings and hours.
[7] Moreover, the Appellant denied the Minister’s
claim that the time cards in the Appellant’s name, seized during the search of
the Payors’ office, represented the hours she actually worked.
[8] The dockets under review are part of a group
that was the subject of an investigation led by a senior investigator with HRDC
in Quebec. Upon completion of the investigation, a search was conducted on the
premises of the Restaurant Coeur de Loup. During the search,
investigators seized employee records and their time cards, as well as various
documents possibly containing evidence of offences committed between 1998 and
2002. Following this search, the records of eight workers, employed with the
Payors, were submitted to the Quebec Tax Services Office insurability sector
for decision on the determination of the workers’ employment periods, hours and
insurable earnings between 1998 and 2003. Once that was determined, only three
workers, including the Appellant, exercised their right of appeal.
[9] The documents relevant to the dockets under
review were used by the Minister in determining the Appellant’s insurable
hours and earnings. In fact, upon completion of his review of the Appellant’s
dockets, the Minister concluded that the Records of Employment prepared by the
Payors were inaccurate as they contradicted the information gathered during the
search which revealed, according to the Minister, specific information he
needed to render his decision.
[10] That is also a matter for this Court in making
its decision owing to the evidence adduced at the hearing when the Appellant
attempted to explain the probative value and relevance of the documents in the
review of the dockets.
[11] During the search of the Payors’ office,
investigators seized documents attesting that there was a system under which
hours were banked. At the hearing, Donald Duchesne, the Payors’ majority
shareholder, adamantly denied that he engaged in such activity with his
employees, but did not manage to provide a convincing explanation for the
discovery of those documents among those seized during the search.
[12] The Appellant told the investigators that she
did not agree to participate with the Payors’ in a system under which hours
were banked and payments were made, in cash, of a portion of her salary. In her
statutory declaration, she indicated that she was paid weekly and that she did
not need to punch in and out. At the time of her statutory declaration, time
cards bearing her name were shown to her and she stated that she had never seen
the documents before.
[13] The Appellant also indicated to the
investigators that she did not keep track of the actual hours worked and that she did not know whether the Payor did so. She said that she did not recall whether she used
a time clock. When the investigators pointed out to her that there were
numerous time cards in her file, she said she was not sure, that may be she
punched in and out for a certain time to verify how many hours she actually
worked. She was unable to explain why the investigators had in their possession
so many time cards in her name and reiterated that she did not recall whether
she punched in and out. She added that she was paid weekly, always the same
amount, but did not recall the amount.
[14] However, as for Donald Duchesne, he stated that
the Appellant punched in and out, by period, and that there was no system under
which hours were banked in his company. Contrary to that statement,
investigators traced, for example, written sheets to the payroll register for
the year 2000 showing that the Payors had a system under which hours were
banked in 1999 and 2000.
[15] At the
hearing, the Appellant stated and repeated that she was always paid weekly.
When questioned about the time cards, she admitted that they were prepared not
sporadically but on a continuous basis. However, she stated that the time cards
had no bearing on her working hours. She also claimed that the cards were
prepared to establish the relevance of a position.
[16] Speaking
on behalf of the Payors, Donald Duchesne testified that the Appellant had to
punch in and out and that it was standard practice for some employees, even
those who were paid weekly. That practice, he said, allowed him to gather
practical information needed to develop a database that would be of use to him
in the future. He said it was an internal document that allowed him to plan. He
indicated that the documents were prepared by someone in his office, but did
not know who exactly.
[17] The
evidence revealed that for one of the periods of employment, that of 2000, the
Appellant was short 420 hours in order to be eligible for employment insurance
benefits. One of the Appellant’s time sheets, produced together as Exhibit I-1,
contains a handwritten note which states as follows [translation]: “If
short of 420 hours call.” Donald Duchesne stated at the hearing that he
did not develop that document, without further explanation. This is the same
witness who said that he did not recognize Exhibit I-4 entitled [translation]
“Banked Hours, 1999.” This document indicates the number of hours worked, hours
paid, hours banked and hours accumulated for the following employees: Sylvianne
Audet, Stéphane Bouchard, Nicolas Lavoie, Magali Gilbert, Enrico Simard,
Germain Tremblay, Alain Jacob, Martin Veilleux, Gaëtan Tremblay, Luc
Beaudry, Julie Gilbert and Claudine Tremblay. At the hearing,
Donald Duchesne stated that he did not recognize this document. However,
it is one of the documents that were on the premises of his businesses.
[18] The
Appellant and Donald Duchesne stated that the Appellant always worked 40 hours
per week and that she was always paid for 40 hours of work per week at
$10.00 an hour, but then how does one explain the reference in Exhibit I-3 to a
total of 67.5 hours paid at $5.00 an hour for the period from September 21
to October 4, 1998? No satisfactory explanation was provided to the
Court at the hearing.
[19] Given
these circumstances, the Minister concluded that he could not accept the
Appellant’s version or that of Donald Duchesne. He therefore established that
the documents in the dockets were evidence of the exact number of hours worked
by the Appellant. Such information was supplied to him through the Appellant’s
regular time cards. He therefore determined the number of hours and the
insurable earnings for each of the periods at issue based on those documents.
[20] In my
opinion, the Minister could not have done otherwise in these circumstances. The
Appellant is asking this Court to reverse the Minister’s decisions, but neither
the Payor nor the Appellant succeeded in demonstrating that the Minister had
misconstrued the scope of the documents seized during the search or that he
erred in using them to carry out the job entrusted to him.
[21] All
this suggests that the Appellant and the Payors are asking this Court to
resolve these issues by determining the Appellant’s hours and insurable
earnings based on the Records of Employment issued by the Payors in spite of
the fact that they are contradicted by the documents seized during the search
of the Payors’ premises.
[22] However,
the Payors did not provide investigators, as they were asked, with the
documents seized during the search, and now that these documents have been
produced to the Cour after having been seized, they are asking the Court not to
take them into account. The Appellant is doing the same.
[23] Reference
should be made to an excerpt from the Employment
Insurance Regulations, particularly sections 9.1 and 10 and section 2 of
the Insurable
Earnings and Collection of Premiums Regulations:
Employment
Insurance Regulations
9.1
Where a person's
earnings are paid on an hourly basis, the person is considered to have worked
in insurable employment for the number of hours that the person actually worked
and for which the person was remunerated.
10. (1) Where
a person's earnings are not paid on an hourly basis but the employer provides
evidence of the number of hours that the person actually worked in the period
of employment and for which the person was remunerated, the person is deemed to
have worked that number of hours in insurable employment.
(2) Except where subsection (1) and section 9.1 apply, if the employer
cannot establish with certainty the actual number of hours of work performed by
a worker or by a group of workers and for which they were remunerated, the
employer and the worker or group of workers may, subject to subsection (3) and
as is reasonable in the circumstances, agree on the number of hours of work
that would normally be required to gain the earnings referred to in subsection (1),
and, where they do so, each worker is deemed to have worked that number of
hours in insurable employment.
(3) Where the number of hours agreed to by the employer and the worker or
group of workers under subsection (2) is not reasonable or no agreement can be
reached, each worker is deemed to have worked the number of hours in insurable
employment established by the Minister of National Revenue, based on an
examination of the terms and conditions of the employment and a comparison with
the number of hours normally worked by workers performing similar tasks or
functions in similar occupations and industries.
(4) Except where subsection (1) and section 9.1 apply, where a person's
actual hours of insurable employment in the period of employment are not known
or ascertainable by the employer, the person, subject to subsection (5), is
deemed to have worked, during the period of employment, the number of hours in
insurable employment obtained by dividing the total earnings for the period of
employment by the minimum wage applicable, on January 1 of the year in which
the earnings were payable, in the province where the work was performed.
(5) In the absence of evidence indicating that overtime or excess hours
were worked, the maximum number of hours of insurable employment which a person
is deemed to have worked where the number of hours is calculated in accordance
with subsection (4) is seven hours per day up to an overall maximum of 35 hours
per week.
Insurable Earnings and Collection of Premiums
Regulations
2. (1) For
the purposes of the definition “insurable earnings” in subsection 2(1) of the
Act and for the purposes of these Regulations, the total amount of earnings
that an insured person has from insurable employment is
(a) the total of all
amounts, whether wholly or partly pecuniary, received or enjoyed by the insured
person that are paid to the person by the person’s employer in respect of that
employment, and
(b)
the amount of any gratuities that the insured person is required to declare to
the person’s employer under provincial legislation.
(2) For
the purposes of this Part, the total amount of earnings that an insured person
has from insurable employment includes the portion of any amount of such
earnings that remains unpaid because of the employer’s bankruptcy,
receivership, impending receivership or non-payment of remuneration for which
the person has filed a complaint with the federal or provincial labour
authorities, except for any unpaid amount that is in respect of overtime or
that would have been paid by reason of termination of the employment.
(3) For the purposes of subsections (1) and (2),
“earnings” does not include:
(a) any non-cash benefit, other than
the value of either or both of any board or lodging enjoyed by a person in a
pay period in respect of their employment if cash remuneration is paid to the
person by their employer in respect of the pay period;
(a.1) any amount excluded as income under paragraph 6(1)(a)
or (b) or subsection 6(6) or (16) of the Income Tax Act;
(b) a retiring allowance;
(c)
a supplement paid to a person
by the person’s employer to increase worker’s compensation paid to the
person by a provincial authority;
(d) a supplement paid to a person
by the person’s employer to increase a wage loss indemnity
payment made to the person by a party other than the employer under a wage loss
indemnity plan;
(e) a
supplemental unemployment benefit payment made under a supplemental
unemployment benefit plan as described in subsection 37(2) of the Employment
Insurance Regulations; and
(f) a payment made to a person by the person's employer
(i)
to cover the waiting period referred to in section 13 of the Act,
(ii)
to increase the pregnancy, parental or compassionate care benefits payable to
the person under section 22, 23 or 23.1 of the Act, to the extent that the
payment meets the criteria set out in section 38 of the Employment Insurance
Regulations.
[24] The Minister determined the number of insurable hours of
the Appellant in accordance with the Regulations cited above as follows:
- for the period from January 31 to
September 17, 1998, and more specifically for the period from March 8 to
September 17, 1998, that is, during the last 23 weeks of the period at issue,
the Minister determined that the Appellant’s insurable earnings totalled
$5,172.25;
- for the period from September 21,
1998, to May 30, 1999, the Minister determined that the Appellant accumulated
563 hours of insurable employment and, from November 15, 1998, to May 30, 1999,
that is during the last 28 weeks of the period at issue, insurable
earnings totalling $3,408.75 (127.75 hours at $5.00 and 277 hours at $10.00);
- for the period from June 8 to
November 11, 1999, the Minister determined that the Appellant accumulated 795
insurable hours and insurable earnings totalling $7,945.50 (794.50 hours at
$10.00/hour).
The burden of proof lay with the Appellant. She did not discharge
that burden.
[25] Furthermore, this Court must note the lack of
transparency of the testimonies of the Appellant and Donald Duchesne, the
Payors’ representative.
[26] This Court is of the opinion that the Minister
properly fulfilled his legislative mandate and that he fulfilled his mandate in
accordance with the aforementioned Act and Regulations.
[27] Consequently, this Court sees no basis for interfering in the
decision rendered by the Minister.
[28] Accordingly, the appeals are dismissed and the
Minister’s decisions are confirmed.
Signed at
Grand-Barachois, New -Brunswick, this 30th day of June 2006.
Savoie
D.J.
Translation certified true
on this 30th day of
November.
Daniela Possamai, Translator
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