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Citation: 2003TCC536
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Date: 20030812
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Docket: 2002‑2548(EI)
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BETWEEN:
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CLAUDE POTVIN,
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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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REASONS FOR JUDGMENT
Somers, D. J.
[1] This
appeal was heard at Jonquière, Quebec, on June 19, 2003.
[2] The Appellant appealed of the decision of the
Minister of National Revenue (the "Minister") that the employment
with the Payor, Marc Claveau, from February 5
to May 11, 2001 and from May 14 to 25, 2001, is excluded
from insurable employment because it does not meet the requirements for a
contract of service.
[3] Subsection 5(1)(a) of the Employment
Insurance Act (the "Act") reads, in part, as follows:
5. (1) Subject to
subsection (2), insurable employment is
(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] In
making his decision, the Minister relied on the following assumptions of fact,
which the Appellant admitted, denied or said he had no knowledge of:
[translation]
(a) During the
periods at issue, the Payor owned two apartment buildings in La Baie; that is
six buildings in all. (no knowledge)
(b) During the
period at issue, the Payor was also the sole shareholder in a wood transport
business operating under the corporate name 9066‑2107 Québec Inc.
(no knowledge)
(c) During the
periods at issue, the Appellant provided services to the Payor as a jack‑of‑all‑trades.
He worked at the Payor's two buildings and at
his personal residence. (admitted)
(d) During the
periods at issue, the Appellant carried out interior and exterior maintenance
on the Payor's apartments. He worked
on finishing the basement of the Payor's
residence, mowed the lawn, painted the balconies and replaced the carpets and
linoleum. (admitted)
(e) The Payor
claimed that the Appellant had worked for him for two years, when neither the
Payor nor 9066‑2107 Québec Inc. issued any T‑4 slips to
the Appellant for 2000. (admitted)
(f) The
Appellant set his own hours of work and his pay without taking into
consideration the actual time worked. (denied)
(g) The Appellant
worked alone and was not supervised; he was free to manage his time and to work
the hours that were convenient for him.
h) The Appellant
received his pay in cash each week he worked. There is no proof of the
remuneration paid by the Payor during the periods at issue. (denied)
i) On
November 2, 2001, the Appellant received a first record of employment
from the Payor that indicated he had worked from February 5 to
May 11, 2001, and had accumulated 560 hours of work during this
period. (admitted)
(j) On
November 9, 2001, the Appellant received a letter from Human
Resources Development Canada (HRDC) advising him that he was 67 hours
short of qualifying to receive employment insurance benefits. (admitted)
(k) On
November 16, 2001, the Appellant received a second record of
employment from the Payor indicating that he had worked from May 14 to
25, 2001, and had accumulated 80 hours during that period. (admitted)
(l) On his
application for unemployment benefits, dated October 31, 2001, the
Appellant indicated that he had worked for the Payor from January 8 to
September 30, 2001. (admitted)
(m) The Appellant
provided services to the Payor outside the periods entered on the records of
employment, both on his income properties and on his personal residence. (no
knowledge)
n) There was an
arrangement between the parties for the sole purpose of enabling the Appellant
to receive employment insurance benefits. (denied)
[5] The burden of proof is on the Appellant. The
Appellant must show, on a balance of probabilities, that the Minister's
decision is unfounded in fact and in law. Each case stands on its own merit.
[6] The
witnesses at this hearing were Marc Claveau, the Payor, the Appellant and
Denise Gaudreau, investigator.
[7] The
Payor testified that he was a general contractor who owns three apartment
buildings, with a total of eleven apartments. He stated that he had perhaps
three or four employees in February 2001.
[8] During
the periods at issue, the Payor was also the sole shareholder of a wood
transportation business operating under the corporate name 9066‑2107 Québec Inc.
[9] The
Payor stated that he did business in cash and paid the Appellant this way.
[10] According to the Payor, the Appellant performed general maintenance at
his buildings. From time to time, he went to see the work done by the
Appellant. Given his experience, he could tell how much time is required to do
certain work.
[11] The Payor provided the Appellant with all the tools required to carry
out the work, and when this was not the case, reimbursed the Appellant for all
the expenses he incurred. The work was done on two of the Payor's buildings and
at his personal residence.
[12] More specifically, during the periods at issue, the Appellant
allegedly performed interior and exterior maintenance of the Payor's
apartments. He allegedly worked on finishing the basement of the Payor's
residence, mowed the lawn, painted the balconies and replaced the carpets and
linoleum.
[13] The Payor stated that he gave the Appellant a T4 for 2001. However,
there is no documentary evidence of this.
[14] According to the Payor, the Appellant was paid $8/hour. The Appellant
was free to manage his time. The Payor had the experience to know how much time
the Appellant required to carry out his work. The Appellant's hours of work
were not counted, the Payor trusted him.
[15] There is no evidence of the remuneration paid or the hours worked by
the Appellant. The Payor stated that he had indicated this information in his
books but he did not produce them.
[16] On November 2, 2001, the Appellant received a first record
of employment indicating that he had worked from February 5 to
May 11, 2001 and accumulated 560 hours of work during this
period.
[17] On November 9, 2001, the Appellant received a letter from
Human Resources Development Canada (HRDC) advising him that he was
67 hours short of qualifying for employment insurance benefits.
[18] On November 16, 2001, the Appellant received a second record
of employment from the Payor indicating that he had worked from May 14 to
25, 2001, and had accumulated 80 hours during that period.
[19] On his application for unemployment benefits, dated
October 31, 2001, the Appellant indicated that he worked for the
Payor from January 8 to September 30, 2001.
[20] With respect to the second record of employment, the Payor stated that
he had lost his notes.
[21] The Payor admitted that he had met Denise Gaudreau, investigator,
on three different occasions. He admitted that he had signed a statutory
declaration dated January 24, 2002, submitted as Exhibit I‑1.
[22] The Payor admitted that the following facts related in this
declaration are true:
[translation]
Mr. Potvin's work:
Mr. Potvin was hired
approximately two years ago. He performs general interior and exterior
maintenance for apartment buildings. He did roofing, finished my personal
basement, mowed the grass for three buildings, painted balconies, did some
plastering, replaced carpets, linoleum, taps, etc. … .He did not do large
plumbing jobs. Claude Potvin has been working for me for about two years.
In 2001, the beginning of his
employment, he gave me (Marc Claveau) an estimate in hours and money how
much it would cost to make certain major repairs to apartment building number
1322 4th Avenue, and to finish my personal basement at 5155.
Mr. Potvin obtained the verbal contract and completed the work.
Claude Potvin was free to manage his time and to work his hours whenever
he wished. He had estimated the number of hours to carry out the work and would
not have received more money if it took longer. He was paid by the hour; he
handed in his time sheet to me and I paid him each week. Initially, I did not
pay any more hours than planned. That was our agreement, even if he worked more
hours than initially planned. He was paid with the money received from the rent
or with my personal money.
Mr. Potvin worked alone; he
wanted to work this way and did not want anyone watching over him. I did not control
his schedule (I was already working externally as a heavy machinery operator so
it was impossible to monitor his schedule). I could observe his work once it
was done. With an estimate of the costs versus his time, he was almost at
minimum wage, but that was his business. He estimated the costs so he agreed to
do it for the amount allocated.
When he had to make purchases, he
used his personal money and submitted the bill(s) to me and I reimbursed him. I
have trade accounts in several locations but he preferred that and so did I. It
meant less paper for me (accounts payable…) He also did the basement at my
private residence (at 5155) on contract in the spring, summer and fall of 2001.
There are still things to be done. He even worked after that to finish the
things he had begun. $20 and under
I had already hired a person whose
name I do not recall through a newspaper ad. I also had a great deal of help
with my basement. Mr. Potvin stopped working because I did not have any
more work for him. This does not mean he did not work after that. He had to
finish or resume the work.
With respect to the first working
day, I do not understand why Mr. Potvin indicated on his application that
his first day was January 8, 2001, and on the record of employment it
is February 5, 2001. It is probably because he started some work on
January 8, 2001, without pay; he had to do a day or two of work. The
same for the last day of work. Mr. Potvin indicated
September 30, 2001, and on the record of employment it is
May 11, 2001. He had to redo work I did not like. I had another
termination done for the period from May 14 to May 25
because he had worked. That is all.
The tools belong to me,
Marc Claveau
The last day on the record of
employment is May 25, 2001. In the detail on 'Employee', the last week of
work entered is the week from April 20 to 26, 2001, with the entry
"final". The reason is: final for contract #2.
The only accounting documents I
have (for Mr. Claude Potvin) are the two sheets enclosed.
[23] The Appellant describes himself as a jack‑of‑all‑trades.
He explained that he worked for the Payor during the periods at issue.
[24] He explained that he had negotiated with the Payor in order to
determine the time required to perform the work. The hourly rate was set at $8.
He managed his own time and kept track of the hours worked and reported to the
Payor when they met two or three times per day.
[25] He affirmed that the Payor provided the tools but that he owned some,
although he did not give any details. He added that the Payor reimbursed him
for all expenses related to performing the work.
[26] The Appellant affirmed that he was paid in cash and denied that there
was an arrangement between the Payor and him.
[27] Under cross‑examination, the Appellant stated that he had
carried out work at locations other than the Payor's home in 2001, that he gave
estimates of the time necessary to carry out the work and that there was no
supervision during the work, either at the Payor's or elsewhere.
[28] On his application for employment insurance benefits (Exhibit I‑2),
the Appellant indicated that he had worked for Thérèse Landry from
June 30 to October 16, 2001 and at the Payor's from
January 8 to September 30, 2001.
[29] The Appellant's records of employment, submitted as Exhibit I‑3,
indicated that he worked for the Payor from February 5 to May 11,
2001, and from May 14 to 25, 2001.
[30] Human Resources Development Canada sent a letter to the Appellant
dated November 9, 2001, indicating that he needed 910 hours of
insurable employment between October 22, 2000, and
October 20, 2001, in order to qualify for employment insurance
benefits and that he had only accumulated 843.
[31] The Appellant affirmed that he did not remember receiving that letter,
but that then he presented a record of employment dated
November 2, 2001 demonstrating that he had worked for the Payor
between February 5 and May 11, 2001.
[32] When confronted with these inaccuracies, the Appellant stated that he
had forgotten some hours and that he told the Payor about it.
[33] In Laverdière v. Canada (Minister of National Revenue –
M.N.R.), [1999] T.C.J. No. 124, Tardif J. of this Court
said the following:
45 I
nonetheless believe that the work done by Mr. Laverdière during the said
period in 1992 was not performed under a genuine contract of service, inter
alia for the following reasons. First of all, only a genuine contract of
employment can meet the requirements for being characterized as a contract of
service; a genuine contract of service must have certain essential components,
including the performance of work; that performance must come under the
authority of the person paying the remuneration, which remuneration must be
based on the quantity and quality of the work done.
46
Any agreement or arrangement setting out terms for the payment of remuneration
based not on the time or the period during which the paid work is performed but
on other objectives, such as taking advantage of the Act's provisions, is not
in the nature of a contract of service.
47
This assessment applies to all the periods at issue involving the two
appellants. The terms and conditions of a genuine contract of service must
centre on the work to be performed, on the existence of a mechanism for controlling
the performance of the work and, finally, on the payment of remuneration that
basically corresponds to the quality and quantity of the work done.
…
50
This is the case with any agreement or arrangement whose purpose and object is
to spread out or accumulate the remuneration owed or that will be owed so as to
take advantage of the Act's provisions. There can be no contract of service
where there is any planning or agreement that disguises or distorts the facts
concerning remuneration in order to derive the greatest possible benefit from
the Act.
51
The Act insures only genuine contracts of service; a contract of employment
under which remuneration is not based on the period during which work is
performed cannot be defined as a genuine contract of service. It is an
agreement or arrangement that is inconsistent with the existence of a genuine
contract of service since it includes elements foreign to the contractual
reality required by the Act.
[34] The Payor's statutory declaration indicates that he was only
interested in the final result and that he had control of this result.
[35] The Payor stated that he estimated certain repairs in hours and in
money, that he and the Appellant negotiated an agreement and that the Appellant
did not claim any more hours than estimated; therefore a price had been agreed
upon.
[36] The Appellant stated, without giving much detail, that he owned a few
tools, such as a screwdriver and paint brush, and that the Payor provided him
with what he needed to perform the work.
[37] The Appellant, through both his witnesses, lacks credibility. There is
no proof of the hours actually worked nor of payment for the hours because he
was paid cash.
[38] When the Appellant learned that he was missing hours to qualify for
employment insurance benefits, he advised the Payor and another record of
employment was issued. The explanation given by the Appellant that certain
hours were forgotten is not credible.
[39] The Payor affirmed that he asked for bids before arriving at an
agreement, which indicates that there was a contract for services between the
Appellant and the Payor. The Payor added that the Appellant had to re‑do
work that he did not like.
[40] There was an agreement between the parties for the sole purpose of
enabling the Appellant to qualify for employment insurance benefits.
[41] Since there was no real contract of service between the Appellant and
the Payor, the employment was not insurable.
[42] The Appeal is dismissed and the decision of the
Minister is upheld.
Signed at Ottawa, Canada, this 12th day of August 2003.
Somers D.J.
on this 15th day
of March 2004.
Shulamit Day‑Savage, Translator
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