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Citation: 2004TCC447
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Date: 20040716
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Docket: 2002-4465(EI)
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BETWEEN:
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ALEXANDRE SYRIANNIS,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent,
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and
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GEORGES KUGIEL,
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Intervener.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Savoie D.J.
[1] This appeal was heard at
Montréal, Quebec, on March 22, 2004.
[2] This appeal deals with the
insurability of the Appellant's employment while employed by
Georges Kugiel, carrying on business under the company name Enos
Décor, the Payor, during the period beginning March 25,
2001, and ended November 17, 2001, the period at issue within the
meaning of paragraph 5(1)(a) of the Employment
Insurance Act (the "Act").
[3] On April 18, 2002, further to a
request from Human Resources Development Canada, an authorized
officer of the Canada Customs and Revenue Agency determined that
the Appellant was employed in an insurable employment under
paragraph 5(1)(a) of the Act while employed by the Payor
during the period at issue.
[4] Furthermore, the officer
determined that 1,530 insurable hours had been worked during the
entire period and that the insurable remuneration for the last 27
weeks of the period was $25,650.00.
[5] On May 9, 2002, the Payor appealed
from the decision of the Minister of National Revenue (the
"Minister") dated April 18, 2002.
[6] On June 7, 2002, the Appellant
also appealed from the decision of the Minister dated April 18,
2002, but with respect to the number of insurable hours only.
[7] In a letter dated September 26,
2002, the Minister informed the Appellant of his decision whereby
this employment, for the period at issue, was not insurable,
because it did not meet the requirements of a contract of
service; an employee-employer relationship did not exist between
the Appellant and the Payor.
[8] The Minister based his decision on
the following assumptions of fact:
(a) Georges Kugiel
registered the company name "Décorations Enos" on November
16, 1999; (admitted)
(b) Georges Kugiel
was the sole proprietor of the company name; (admitted)
(c) the Payor
operated an Italian furniture import and wholesale business;
(admitted with additional details)
(d) the Appellant
claimed to be the Payor's director of sales; (admitted)
(e) according to the
Appellant, his duties included maintaining contacts with Italian
suppliers and locating clients in Quebec; (admitted with
additional details)
(f) the
Appellant worked at his own discretion on the basis of a variable
work schedule which was not controlled by the Payor; (admitted
with additional details)
(g) the Appellant
rendered services from the Payor's office or from his own home,
according to his own decision; (admitted with additional
details)
(h) the Appellant
used his own tools from his home, namely, a computer, telephone,
and stationery supplies; (admitted with additional details)
(i) during the
period at issue, the Payor issued cheques in the following
amounts to the Appellant:
March 30,
2001
$1,529.08
April 4,
2001
$3,000.00
April 19,
2001
$690.20
August 31,
2001
$2,000.00
(admitted)
(j) on
September 9, 2002, in a statement to an officer of the
Respondent, the Payor stated that the Appellant was not an
employee of the Payor, but that he was a friend of his spouse who
rendered services to the Payor's business from time to time;
(Appellant unaware)
(k) on September 9,
2002, in a statement to an officer of the Respondent, the Payor
stated that the cheques had been issued to the Appellant to pay
suppliers and that no cheque for wages had been issued to the
worker during the period at issue; (Appellant unaware)
(l) on
November 26, 2001, the Appellant made a claim for employment
insurance, filing a record of employment issued on November 19,
2001, and signed by Georges Kugiel, indicating that the first day
of work was March 25, 2001, and the last day of work was November
17, 2001, including 1,836 insurable hours, and total insurable
remuneration of $32,300; it also showed that the employer was
9102-1915 Québec Inc. Enos/Tendances; (admitted)
(m) Georges Kugiel is the
majority shareholder and President of 9102-1915 Québec
Inc.; (admitted)
(n) the record of
employment is faulty with respect to the employer, insurable
hours, and remuneration. (denied)
[9] The Intervener did not appear at
the hearing.
[10] The evidence shows that the Appellant
started working for the Payor in November 2000. The two
individuals had known each other for some time, and in 1999, the
Payor married one of the Appellant's friends. At the
outset, the Appellant's work consisted of starting up the Payor's
business, as the Payor was not well organized. The
Appellant, with some help from Ms. Nicky Patrikios, located
premises for the business on St-Laurent Boulevard, for which the
Payor signed a lease. The Payor operated an import,
wholesale, and retail sales business that specialized in
contemporary Italian furniture.
[11] The Appellant stated that he performed
the following duties for the Payor: managing the business;
purchasing and selling Italian furniture; and handling the daily
bookkeeping, namely, accounts payable, accounts receivable, and
government remittances. He also completed the paperwork for
Customs and transportation, negotiated with suppliers, and
managed staff. The Appellant stated that he was not paid
prior to March 25, 2001. He claimed that during the period
prior to March 25, 2001, he did research for the Payor on a
volunteer basis with the understanding that the Payor would bear
in mind the work performed.
[12] The Appellant demonstrated that the
Payor did not take care of his business, yet he was quick to
empty the cash register when money came in. The Appellant's
witnesses called the Payor a drug addict and an alcoholic and
claimed that he was never present at the store:
[TRANSLATION] "You had to chase after him to get paid or to
settle business matters for which he was the sole signing
authority." The evidence shows that George Kugiel was, in
fact, the sole signing authority for the Payor.
[13] The Appellant stated that during the
period at issue, he closed a substantial sale for the business,
which earned a commission of approximately $30,000. He
added that the Payor promptly pocketed the money and dismissed
his employees.
[14] In his testimony, the Appellant
recounted a trip he made to Italy to buy merchandise at an annual
exhibition. He stated that most of his expenses had been
paid for by the Ministry of Industry of Italy. He used the
Payor's credit card to cover the balance of his expenses.
[15] The Appellant also added that he
started his work day at around 7 a.m. and, because of the time
difference, he often worked quite late, sometimes until 10 or 11
p.m. to keep in touch with suppliers in Italy. He added
that he often worked from home.
[16] In his testimony, the Appellant stated
that he was paid by cheque. He filed four of these
cheques. He added that he was sometimes paid in cash, but
that he always had to wait to be paid, sometimes for three weeks
and sometimes for as long as a month and a half. He claimed
that he wanted to set up a bookkeeping system for the business,
but he was unable to do so because the Payor was uncooperative to
the extent that he destroyed the data that had been collected and
stored on the computer. According to the Appellant, he had
to make a number of overseas telephone calls to keep in touch
with Italy. In doing so, he incurred expenses. He was
reimbursed for some of these expenses, but a balance of $600.00
is still outstanding.
[17] However, the Appellant did not file a
complaint with the Commission des normes du travail du
Québec regarding his unpaid wages or the outstanding
expenses. In his statement to the Appeals Officer, the
Appellant claimed that he and the Payor had a verbal agreement
that he would be paid $950.00 per week.
[18] The Payor, Georges Kugiel, told the
Appeals Officer that the Appellant had, in fact, provided
services to his business, but he denied the Appellant's claim
regarding his remuneration and his hours of work.
[19] In this statement by the Payor, the
Appellant's duties were limited to those activities required to
start up the business, namely, finding suppliers. The Payor
told the Appeals Officer that wages had not been paid to the
Appellant during the period at issue and that paycheques had not
been issued to him. The Appellant was not listed in the
payroll records like the other two employees, Isabelle
Pépin and Nicky Patrikios.
[20] The Payor explained that he had offered
to assist the Appellant in starting up his business to help him
out, because he was experiencing financial difficulties and
health issues. According to him, the oral understanding
with the Appellant provided for an exchange of services, based on
his availability, and he would compensate him by helping to pay
some of his invoices, such as his rent or the purchase of
household appliances, once the business was in a position to do
so.
[21] The Payor added that he had signed
blank Record of Employment forms for all the employees, because
he would be away, and the Appellant was to complete them.
The Appellant contradicted this statement in his testimony, but,
at the hearing, Ms. Pépin said that, based on her
knowledge, the Appellant had prepared the Records of Employment
and the Payor had signed them.
[22] At the hearing, the Appellant stated
that some information saved in the computer, namely the hours
worked, had been deleted. He added that he was able to
track the data necessary to prepare the Records of Employment and
the hours worked, based on the information contained in the
clients' and decorators' files.
[23] The Appellant is asking this Court to
reverse the Minister's decision and find that his employment was
insurable. Based on a well-known case, Wiebe Door
Services Ltd. v. Canada (Minister of National Revenue -
M.N.R) [1986] 3 F.C. 553, case law sets out a series of
criteria to be used in making a determination in a case like this
one, namely:
1. degree of control over the
work or the worker;
2. ownership of tools;
3. chance of profit or risk
of loss;
4. integration of the
employee's work in the Payor's business.
[24] In Charbonneau v. Canada (Minister
of National Revenue-M.N.R.), [1996] F.C.J. No. 1337,
Décary J. of the Federal Court of Appeal discussed these
criteria as follows:
The tests laid down by this Court in Wiebe Door Services
Ltd. v. M.N.R. 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.
[25] The evidence should, therefore, be
examined in light of the above-noted criteria.
[26] The evidence, examined on the basis of
the first criterion-that of control- showed that the Payor
did not exercise any control over the Appellant. The Payor
did not establish a schedule, work hours, or methods of
work. The Appellant reported to the business's office on
the day and at the time that suited him. Very often, he
worked from home. The Payor had no control over the hours
worked by the Appellant from his home.
[27] With respect to ownership of tools, the
evidence shows that the use of tools was very minimal.
Where the Appellant worked from his home, he used his own work
tools, specifically, his computer, telephone, and
stationery. Copies of e-mails submitted by the Appellant
showed that he used his personal computer and letterhead in
carrying out his duties.
[28] Regarding the chance of profit and risk
of loss, it was shown that no remuneration had been attributed to
services rendered by the Appellant. This is what the Payor
told the Appeals Officer. In their examination of the file,
the Minister's officers determined that the figures provided by
the Appellant could not be considered, because it was not
possible to compare them with other bank documents, as there were
none.
[29] The evidence showed that the Appellant
did not initiate any action with the Commission des normes du
travail du Québec to recover unpaid wages.
[30] However, it was established that the
duties carried out by the Appellant were an integral part of the
Payor's business.
[31] In 671122 Ontario Ltd. v. Sagaz
Industries Canada Inc., [2001] 2 S.C.R. 983, Major
J.C.S. accepted the opinion of MacGuigan J. whereby he states the
following in Wiebe Door Services Ltd., supra:
[...]The most that can profitably be done is to examine all
the possible factors which have been referred to in these cases
as bearing on the nature of the relationship between the parties
concerned. Clearly not all of these factors will be relevant in
all cases, or have the same weight in all cases. Equally clearly
no magic formula can be propounded for determining which factors
should, in any given case, be treated as the determining
ones.
[32] What is the nature of the relationship
between the parties in this case? Firstly, no written
contract of employment existed between the parties. The
Payor admits that the Appellant rendered services to his
business, but in his statement to the Appeals Officer, he denied
the amount of remuneration and the number of hours reported by
the Appellant. He signed the Record of Employment that
supports the Appellant's claim regarding his remuneration and
hours worked.
[33] The Record of Employment was prepared
by the Appellant. The Payor admitted that he had signed a
blank form, but the Appellant denied this. The Payor's
testimony would have been useful, but the Payor did not appear at
the hearing.
[34] The evidence showed that control of the
Appellant and of his work did not exist. In carrying out
his duties, the Appellant, who often worked from home, used his
own tools. Although the Appellant's work was integrated in
the Payor's business, the evidence showed that the terms and
conditions of employment supported the conclusion that he worked
mostly without remuneration, and his risk of loss was
genuine. He financial losses were established at the
hearing. His Record of Employment indicates $32,300 in
insurable earnings, whereas he received a total of only $7,219.28
during the period at issue, which the Payor claims was paid to
him to cover the cost of renovations.
[35] It was shown that, unlike the other
employees, the Appellant did not appear anywhere in the payroll
record. The evidence showed that the cheques issued to the
employee Nicky Patrikios were clearly identified as payment of
wages.
[36] At the hearing, the Appellant stated
that he had conducted research for the Payor in 2000 and 2001 and
that he had not been paid. He added that the Payor was to
take this into consideration. This suggests that the
amounts paid to the Appellant were, in part, compensation for the
Appellant's research work prior to the period at issue, but this
contradicts the information contained in his Record of
Employment, which the Appellant himself prepared. Based on
the evidence presented, the Appellant prepared his own Record of
Employment, and that of the other employees, but to prepare these
documents, he had to piece together the data using copies, client
files, and documents in support of the sums paid in cash by
clients and decorators. The Appellant claimed that this was
necessary because the Payor had deleted the information that was
stored in the computer.
[37] Given that the Appellant worked at
reconstructing the data with a view to preparing Records of
Employment, why would he not have done the same to prepare the
employer's T4 slips so that he could file his income tax
returns? The evidence showed that the Appellant had not
filed an income tax return since 1985. He explained that he
had not done so because he did not have any T4 slips.
[38] This Court must take into account the
fact that the Appellant, trained as an accountant, was unable to
explain, in a credible manner, why he did not file his income tax
returns. He simply stated that he had not received a T4
slip from the employer.
[39] The evidence as a whole supports the
conclusion that preparing this document was one of his duties, as
was preparing the Records of Employment.
[40] In support of his claims, the Appellant
filed incomplete, disjointed, fragmented, and often contradictory
evidence. This evidence did not discharge his burden.
[41] A number of facts presented raise
questions rather than provide answers. The Appellant
prepared and filed some documents to support his claims, but he
failed to prepare other documents that would have been useful to
him, such as his income tax return.
[42] The Appellant is asking this Court to
reverse the Minister's decision, but an analysis of the evidence
gathered, in light of the criteria that have been established,
does not justify the Court's intervention.
[43] In these circumstances, I quote Pratte
J. in Elia v. Canada (Minister of National Revenue -
M.N.R.), [1998] F.C.J. No. 316, who said the following:
Contrary to what the judge believed, he therefore could have
intervened and should have intervened if, as he asserted, the
evidence established that the Minister's decision was
unreasonable. However, it seems to us that the judge's
assertion is also inaccurate and based on an error of law, since
the judge did not take into account the well-settled rule that
the allegations in the reply to the notice of appeal, in which
the Minister states the facts on which he based his decision,
must be assumed to be true as long as the appellant has not
proved them false.
[44] The cases cited by counsel for the
Appellant were read, but I must conclude that the case at bar is
a leading case, and the principles set out in the cases cited do
not change the conclusion in this case.
[45] This Court must conclude that the
Minister's decision in this appeal is well founded.
[46] For these reasons, the appeal is
dismissed and the Minister's decision is confirmed.
Signed at Grand-Barachois, New Brunswick, this 16th
day of July 2004.
Savoie D.J.
Translation certified true
on this 5th day of January 2005.
Colette Dupuis-Beaulne, Translator
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