|
Citation: 2003TCC320
|
|
Date:20030610
|
|
Docket: 2002-4023(EI)
|
|
BETWEEN:
|
|
AXIOS INC.,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent,
|
|
and
|
|
|
|
JUDITH BÉLANGER,
|
|
Intervenor.
|
REASONS FOR JUDGMENT
Somers, D.J.T.C.C.
[1] This appeal was heard on April
1st, 2003 at Montreal, Quebec.
[2] The Appellant is appealing from a
decision by the Minister of National Revenue (the
"Minister") that the employment of Judith
Bélanger, the Worker, with the Appellant during the period
at issue, from May 14 to October 26, 2001, was insurable because
she was working under a contract of service. Furthermore, the
Worker's insurable hours were established at 442 and the
insurable earnings at $11,690.
[3] Paragraph 5(1)(a) of the
Employment Insurance Act (the "Act")
reads as follows:
(a) employment in Canada by one or more
employers, under any express or implied contract of service or
apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other
person and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or
otherwise;
[4] The burden of proof is on the
Appellant. It must show on the balance of probabilities that the
Minister erred in fact and in law in his decision. Each case
stands on its own merits.
[5] In reaching his decision, the
Minister relied on the following assumptions of fact which were
admitted or denied:
7.a) the Appellant was
incorporated on May 24, 2000; (admitted)
b) the
shareholders of the Appellant during the disputed period were:
(admitted)
Marc
Lacombe
20% of voting shares
Guy
Crasnier
20$
Philippe
Sebag
20%
Joseph
Marra
20%
Roland
Schultz
20%
c) the
Appellant was engaged in the production and marketing of computer
software products; (denied)
d) the Worker
was engaged on May 14, 2001 by the Appellant; (denied)
e) the Worker
was engaged for software development and the marketing and the
sales of computer software products; (denied)
f) the
Worker was obliged to be present every day at the Appellant's
office; (denied)
g) the Worker
was paid every two weeks on an hourly basis of $25 decided by the
Appellant; (denied)
h) the
Appellant refused to put the Worker in the employees' payroll
register; (denied)
i) the
Worker had to present an invoice to the Appellant to get paid;
(denied)
j) the
Worker was working in the office of the Appellant; (denied)
k) the Worker
used the office equipment of the Appellant; (denied)
l) the
Worker was reimbursed for her expenses by the Appellant;
(denied)
m) the Worker had no
risk of loss or chance of profit; (denied)
n) the
Worker's tasks were integrated in the Appellant's
business; (denied)
o) during the
disputed period, the Worker worked during 442 hours;
(denied)
p) during the
disputed period, the Appellant paid to the Worker $7,025.00 on an
hourly basis and $640.00 of commissions; (denied)
q) the Worker
filed a complaint to the "Commission des normes du
travail" for an amount of $4,025.00 for unpaid salary.
(admitted)
[6] The Appellant was incorporated on
May 24, 2000 and, according to Philippe Sebag, one of the
shareholders and agent for the Appellant at this hearing, was a
holding company of Axios Software Inc. involved in the production
and marketing of computer software products.
[7] Philippe Sebag testified that the
Worker was a shareholder of 45% of the shares held by her father,
on her behalf, in Axios Software Inc. Philippe Sebag was part of
Axios Software Inc.
[8] The shareholders of the Appellant
during the period at issue were Marc Lacombe, Guy Crasnier,
Philippe Sebag, Joseph Marra and Roland Schultz with 20%
each of the voting shares.
[9] Philippe Sebag stated that the
Worker was an employee of Axios Software Inc. and her duties
involved the development and pre-marketing of software products;
no sales were made because the development of the software was
not finalized. He explained that the Worker did not have to be at
the office every day; she had the privilege of coming and going
as she pleased. He further stated that the Worker was paid
sporadically advances of different amounts on future earnings.
The Appellant did not consider the Worker as an employee and,
therefore, the usual deductions at source were not made. The
Worker was asked to remit invoices to the Appellant for the
company records.
[10] As to subparagraph 7(j) above, Philippe
Sebag stated that the Worker was provided office space at the
premises of the Appellant but that she worked mostly from her
home. According to this witness, the Worker, when working at the
Appellant's place of business, brought in her own computer
and that the only company equipment she used, apart from the
office space, was a desk.
[11] Some of the Worker's expenses, such
as client entertainment, were reimbursed by the Appellant. The
Worker's contribution to the Appellant was her expertise and
resources in developing software products.
[12] During his testimony, Philippe Sebag
could not give an account of the Workers' hours as they were
not compiled. He admitted that the Appellant paid the Worker the
amount of $7,025 plus $640 based on salary or commissions.
[13] The foregoing is a summary of Philippe
Sebag's testimony, the only witness called on behalf of the
Appellant.
[14] Judith Bélanger, the Worker and
Intervenor, gave her version of the relationship that existed
between her and the Appellant. She testified that she worked for
the Appellant and not Axios Software Inc. which was incorporated
in August 2001. She stated that she had been hired by the
Appellant in April 2001 to develop software for future sales.
However, only three sales were made in advance of the completion
of the software.
[15] According to the Worker, she presented
herself at the place of business of the Appellant, where she was
provided office space, Monday through Friday and was working from
9:00 a.m. to 6:00 p.m. She stated that she was paid by cheque
every two weeks at a salary of $550-$600 per week drawn on the
Appellant's bank account. She denied that she had refused to
be put on the payroll; in fact she had requested it and, instead,
she was presented with a type of invoice (Exhibit I-1) that she
was asked to fill in and remit to the Appellant.
[16] The Worker mentioned that she used an
office at the Appellant's place of business and that the
latter provided her with a desk, a telephone and a computer. She
produced in evidence electronic mail messages (Int-2) she had
sent to clients. It is to be noted that the e-mails were sent in
October 2001 and the sender's address is identified as
"axioscorporation.com".
[17] The Worker stated that her expenses,
such as travel and entertainment, were paid by the Appellant. She
denied investing money in the purchase of the 45% of the shares
bought by her father in the Axios software company.
[18] The Worker stated her only employment
during the period at issue was with the Appellant during which
she has accumulated 1,283 hours (Exhibit Int-4). She further
stated that during her employment with the Appellant she had to
report on her work to Philippe Sebag, Roland Schultz and Marc
Lalonde.
[19] Roland Schultz, who is no longer a
shareholder of the Appellant since January 2002, was called as a
witness at the request of the Worker. He stated that the Worker
was at the Appellant's office regularly during office hours.
He also stated that the Appellant supplied the Worker with the
necessary facilities to perform her function properly and that it
was impossible for her to work elsewhere during her employment.
The number of hours worked, as indicated in Exhibit Int-4, seems
reasonable. Her employment was terminated due to lack of funds
without the software being completed.
[20] Roland Schultz added that the Worker
held shares in Axios Software Inc. but that they were in her
father's name. Neither Philippe Sebag nor Roland Schultz
produced in evidence any document (i.e. Letters Patent)
constituting the two companies, Axios Inc. and Axios Software
Inc. The Worker, in her testimony, denied she owned shares in
Axios Software Inc.
[21] Françoise Bienvenue, Appeals
Officer at Canada Customs and Revenue Agency, summarized, in her
report on an appeal (Exhibit I-2), the telephone conversations
she had with the Worker on February 20, 2002 and with
Philippe Sebag on April 3, 2002.
[22] During her telephone conversation with
Philippe Sebag, he mentioned that the Appellant was a holding
company having different entities and different shareholders.
Françoise Bienvenue, in calculating the hours worked
by the Worker, took into account the sum of $11,690 paid to the
latter as well as the invoices submitted by her to the Appellant
during the period at issue. He admitted that cheques had been
issued to the Worker by the Appellant during the period at issue
and explained that the purpose for the Appellant to issue the
cheques instead of Axios Software Inc. was to simplify the
process.
[23] In her report, Françoise
Bienvenue noted that the Worker had provided her with a copy of
her agenda showing that she had started to work for the Appellant
on May 21, 2001. Any further information given to the Appeals
Officer does not add to the evidence at this hearing.
[24] In the case of Wiebe Door Services
Ltd. v. M.N.R., 87 DTC 5025, the Federal Court of Appeal
enumerated a series of tests to determine whether a contract is
one of service or for the provision of services: (a) the degree
or absence of control exercised by the alleged employer; (b)
ownership of tools; (c) chance of profit and risk of loss;
and (d) integration of the alleged employee's work into the
alleged employer's business.
(a) The degree or absence of
control
[25] The Worker performed her duties mainly
at the office of the Appellant. She was under the supervision of
two of the shareholders. According to Roland Schultz, the
Worker was in the office working several hours a day,
five days a week. Invoices were submitted to the Appellant
accounting for her time worked at the office.
(b) Ownership of tools
[26] The evidence has shown that all
equipment in the office belonged to the Appellant except for the
Worker's briefcase.
(c) Chance of profit and risk of
loss
[27] The Worker was paid regularly by the
Appellant for the work performed. There was no chance of profit
and no risk of loss for the Worker who was paid for services
rendered as well as for her expenses.
(d) Integration
[28] The Worker was integrated in the
operations of the Appellant. She worked exclusively for the
Appellant in an office provided and equipped by the latter.
[29] Considering all of the evidence and
applying the four tests above, the Worker was working for the
Appellant under a contract of service. The Appellant did not
prove, by documentation or otherwise, that the Worker controlled
more than 40% of its voting shares or of Axios Software Inc. if
and when it existed.
[30] Philippe Sebag did not appear to
contest the amounts paid to the Worker as they appear in the
report of the Appeals Officer (Exhibit I-2) nor the process by
which the said hours were calculated.
[31] Consequently, the Court finds that
during the period at issue the Worker was engaged in insurable
employment with the Appellant pursuant to
paragraph 5(1)(a) of the Act and that her
insurable hours are established at 442 and her insurable earnings
at $11,690.
[32] The appeal is dismissed.
Signed at Ottawa, Canada, this 10th day of June 2003.
D.J.T.C.C.
Email this Content