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Citation: 2003TCC860
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Date: 20031209
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Docket: 2002-3648(EI)
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BETWEEN:
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MARTIAL TREMBLAY,
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Appellant,
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and
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MINISTER OF NATIONAL REVENUE,
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Respondent.
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[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Savoie,
D.J.
[1] This
appeal was heard at Chicoutimi, Quebec, on August 20, 2003.
[2] This
appeal involves the insurability of Martial Tremblay’s (the “Appellant”)
employment while working for Réserve des Cervidés du Saguenay Inc.(the
“Payor”), during the period at issue from October 13, 1997, to January 2,
1998.
[3] On
June 28, 2002, the Minister of National Revenue (the “Minister”) informed the
Appellant of his decision that this employment was not insurable because it did
not meet the requirements of a contract of service; there was no
employer-employee relationship between the Payor and the Appellant.
[4] In
making that decision, the Minister relied on the following assumptions of fact,
which were admitted, denied or ignored by the Appellant:
(a) The Payor,
incorporated on October 13, 1990, was in the business of breeding and selling
deer for consumption. (admitted)
(b) Initially,
the shares of the Payor were divided equally between the Appellant, Ghislain
Tremblay (Appellant’s brother), Bertrand Tremblay (Appellant’s brother) and
Réal Simard. (admitted)
(c) On an
unspecified date in 1997 or 1998, Réal Simard retired from the company and,
since then, the shares of the Payor have been divided equally between the
Appellant and his two brothers, Ghislain and Bertrand. (admitted)
(d) The Payor
operated the business year round with a more active period in the fall and
winter. (admitted)
(e) Before the
1996 flood, the Payor had 750 heads of deer; in 1999, the Payor only had 70
animals. (admitted)
(f) The
Appellant had been working for the Payor since the beginning of operations.
(admitted)
(g) During the
period at issue, the Appellant worked on the reconstruction of bridges, roads
and fences, he negotiated with the Ministry of the Environment and performed
regular maintenance on the herd and the farm. (admitted)
(h) Before and
after the alleged period at issue, the Appellant performed a number of services
for the Payor without remuneration. (denied)
(i) The
Appellant claimed that he earned $700 per week during the 12-week period at
issue whereas his brother Ghislain thought that he earned $400 per week during
that same period. (denied)
(j) The
Appellant claimed that he earned $700 per week during the period at issue
whereas the Payor did not have the money to compensate him for his work before
and after that period. (denied)
(k) The Appellant
claims that he was paid by cheque but neither he nor the Payor were able to
submit any evidence of the alleged wages paid. (admitted)
(l) The Payor
had no payroll journals, cheques or bank statements to justify the alleged
wages paid to the Appellant. (admitted)
(m) In his 1997
and 1998 income tax returns, the Appellant did not declare any revenue from the
Payor. (admitted)
(n) On January
20, 1998, the Appellant received a Record of Employment from the Payor
indicating that he had worked for 480 hours and accumulated insurable earnings
totalling $8,400 during the 12 week period from October 13, 1997, to January 2,
1998. (admitted)
(o) The Appellant
needed 12 weeks of insurable work to qualify for employment insurance benefits.
(ignored)
(p) There was an
arrangement between the parties for the sole purpose of enabling the Appellant
to qualify for employment insurance benefits. (ignored)
[5] According
to the evidence, the Appellant worked 12 consecutive weeks for the Payor, the
exact number required in order to qualify for employment insurance benefits.
Furthermore, the Appellant admitted to the investigators that he performed
services for the Payor before and after the period at issue without
remuneration. Initially, he indicated that the Payor, wanting to make the
business profitable, could not justify paying him wages. Now, he maintains that
he received wages during the period under appeal, but nothing in the
documentation supports that claim.
[6] In
their statements to the investigators, the Appellant and his brother Ghislain
Tremblay contradicted each other with respect to the wages paid to the
Appellant by the Payor as the Minister alleges in subparagraph 5(i) of his
Reply to Notice of Appeal.
[7] The
investigators twice asked the Payor to file some evidence of the wages paid to
the Appellant and the Payor was unable to do so. During his testimony at the
hearing, the Appellant admitted to not having agreed to the investigators’
request while also specifying that he remembered having found copies of cheque
deposits. On his request, the Court granted him one month to file those
documents and, on that date, they had not been filed.
[8] The
Appellant testified at the hearing of this case, but his testimony was
hesitant, ambiguous and lacked conviction. He contradicted the statements that
he made to the investigators. The testimony of Ghislain Tremblay could have,
possibly, provided some answers but he did not appear at the hearing even
though he was summoned to appear by the Minister. Ghislain Tremblay and the
Appellant both admitted to the investigators that the Appellant had worked for
the Payor without remuneration.
[9] The
Payor’s financial statements, filed as Exhibits I-1 and I-2, which cover the
entire period at issue do not report, under operating expenses, any wages paid
to the Appellant.
[10] The analysis of both the oral and documentary evidence does not
support the conclusion that there was a contract of service between the
Appellant and the Payor. The tests developed in case law, such as control,
ownership of tools, chances of profit and risks of loss, that were applied to
the facts in the case at bar lead us to the inevitable conclusion that there
was not a true contract of service, nor an employer-employee relationship
between the Payor and the Appellant.
[11] Thus, it was established there was no control over the Appellant.
Furthermore, the Appellant provided his car and some land for the Payor’s
operations. Without that contribution from the Appellant, the Payor would not
have been able to operate its business.
[12] In Duplin v. Canada (Minister of National Revenue - M.N.R.), [2001] T.C.J. No. 136, Tardif, J. of
this Court described the essential components of a contract of service in the
following manner:
...A genuine contract of service exists where a person
performs work that is defined in time and generally described in a payroll
journal, in return for which that person receives fair and reasonable
remuneration from the Payor, which must at all times have the power to control
the actions of the person it is paying. The remuneration must correspond to the
work performed for a defined period of time.
[...]
The fundamental components of a contract of
service are essentially economic in nature. The records kept, such as payroll
journals and records concerning the mode of remuneration, must be genuine and
must also correspond to reality. For example, the payroll journal must record
hours worked corresponding with the wages paid. Where a payroll journal records
hours that were not worked or fails to record hours that were worked during the
period shown, that is a serious indication of falsification...
[13] In Acériculture Rémi Lachance et Fils Inc. v. Canada (Minister of National Revenue - M.N.R.), [1997] T.C.J. No. 1171, a case similar
to that under consideration, Tardif, J. made similar remarks:
Unemployment insurance is not a small
business support program; it is essentially a social program designed to assist
people who have lost their jobs; specific conditions must be met for such
assistance to be provided. There must be genuine employment
necessitated by the economic reality of the business creating that
employment. In other words, the employment periods must be
determined essentially by the needs of the business.
[...]
To exclude these facts from the analysis,
it is not sufficient to claim that this was not work or to play down the
importance of this work done outside the periods at issue.
[...]
In the case at bar, the evidence clearly
showed that there was no contract of service within the meaning of the Act;
rather, the Appellant did her work in the context of a joint, shared
business. The two statutory declarations speak volumes about the
lack of control over the Appellant's work. Moreover, I do not accept
the explanations provided by the Appellant and her spouse with regard to the
existence of a relationship of subordination; I believe that they have
distorted reality.
Unemployment insurance is a social program
established to help those who really lose their jobs, whether temporarily or
permanently; there must be genuine employment and a genuine layoff, since
unemployment insurance is not a financial support program to help small
businesses develop.
[14] The Appellant had the burden of proving the falseness of the
Minister’s assumptions and he did not do so.
[15] The preponderance of evidence established that the Appellant did not
hold insurable employment within the meaning of the Employment Insurance Act
during the period at issue because, during that period, the Appellant and the
Payor were not bound by a contract of service within the meaning of paragraph
5(1)(a) of the Employment Insurance Act. This Court must conclude
that there was an agreement between the parties for the sole purpose of
enabling the Appellant to qualify for employment insurance benefits.
[16] Consequently, the appeal is dismissed and the Minister’s decision is
confirmed.
Signed at Grand-Barachois,
New Brunswick, this 9th day of
December, 2003.
Savoie,
D.J.
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