Date: 19990511
Docket: 97-230-UI; 97-231-UI; 97-238-UI; 97-232-UI; 97-234-UI;
97-553-UI
BETWEEN:
2741-4150 QUÉBEC INC.
O/A LES GOUTTIÈRES DU ROY ENR.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
YVES MICHAUD,
Intervener,
AND
BETWEEN:
2741-4150 QUÉBEC INC.
O/A LES GOUTTIÈRES DU ROY ENR.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
BETWEEN:
2741-4150 QUÉBEC INC.
O/A LES GOUTTIÈRES DU ROY ENR.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SÉBASTIEN MOREAU,
Intervener,
AND
BETWEEN:
2741-4150 QUÉBEC INC.
O/A LES GOUTTIÈRES DU ROY ENR.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
CLAUDE ROY,
Intervener,
AND
BETWEEN:
JEANNOT LAMOTHE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Garon, A.C.J.T.C.C.
[1] In five of the six cases before the Court, the appellant
is 2741-4150 Québec Inc. (the payer), which
carried on business under the firm name “Les
Gouttières du Roy Enr.” Each of those five appeals
concerns the insurability of the employment held by one of the
five workers referred to below during the period or periods noted
below. Those periods fall within the years 1990 to 1995.
[2] The payer’s appeal numbered 97-230(UI) concerns the
employment of Yves Michaud, and the periods at issue are as
follows:
February 4 to December 22, 1990; and
March 24 to November 3, 1991.
[3] The payer’s appeal numbered 97-231(UI) relates to
the employment of the appellant Jeannot Lamothe, and the periods
at issue are indicated below:
March 20 to December 27, 1992;
March 28 to December 26, 1993; and
April 10 to August 11, 1995.
[4] The payer’s appeal numbered 97-232(UI) concerns the
employment of Sébastien Moreau. The periods in dispute are
as follows:
February 4 to December 22, 1990;
March 24 to November 3, 1991;
March 20 to December 26, 1992; and
March 28 to December 26, 1993.
[5] The payer’s appeal numbered 97-234(UI) involves the
employment of Claude Roy, and the relevant period is from
February 27 to December 10, 1994.
[6] Appeal 97-238(UI) involves the employment of Carl Girard
during the following periods:
May 27 to November 8, 1991;
June 1 to October 30, 1992; and
May 30 to November 4, 1994.
[7] In addition to the payer’s five appeals concerning
the employment of the above-mentioned workers, one of those
workers has availed himself of his right to appeal, namely the
appellant Jeannot Lamothe. The periods at issue in his appeal are
those referred to above in connection with the payer’s
appeal numbered 97-231(UI), which concerns Jeannot Lamothe's
employment.
[8] In each of the six appeals, the decision by the Minister
of National Revenue (Minister) with respect to each
worker’s employment states that the worker did not hold
insurable employment because there was no genuine contract of
service between the payer and the person whose employment is at
issue. In making the said decisions on the above-mentioned five
workers, the Minister relied on similar allegations set out in
each Reply to the Notice of Appeal. As an example, I will refer
to the allegations in paragraph 6 of the Reply to the Notice of
Appeal in file No. 97-232(UI), which concerns Sébastien
Moreau’s employment:
[TRANSLATION]
(h) on September 28, 1993, the appellant issued a record of
employment to the worker stating that he had worked 13 weeks
between September 21, 1992, and September 24, 1993, and that his
insurable earnings were $6,760.00;
(i) the records of employment are false and inconsistent with
reality in terms of the periods worked and the remuneration
actually received;
(j) the appellant and the worker entered into an arrangement
to enable the latter to obtain unemployment insurance benefits
higher than those to which he would normally have been
entitled;
(k) during the periods at issue, there was no genuine contract
of service between the appellant and the worker.
[9] The six appeals were heard on common evidence with four
other appeals, three of which were instituted by the payer and
concerned the insurability of the employment of two of its
salespersons, Raymond Dallaire and Yvon Gaudreault, and of
two other employees, Gilles Gagnon and Richard Bradette. The
fourth appeal was instituted by one of those employees, Richard
Bradette. In those four appeals, the respondent consented to
judgment at the end of argument at the common hearing of the ten
appeals, acknowledging the insurability of the employment of each
employee involved.
Marcel Tremblay
[10] To begin with, the payer’s president and sole
shareholder, Marcel Tremblay, provided general information
about the payer and the management of its business. In addition
to his financial interest in the payer’s business, Mr.
Tremblay owned a few apartment buildings, a restaurant, a bar and
a furniture store. He testified that Serge Tremblay was his
business partner in a few of those businesses and that they often
exchanged services. The payer ran a business installing
eavestroughs on commercial and residential buildings.
Serge Tremblay often looked after the management of that
business and, in particular, processed invoices and handled the
employees’ pay. When Marcel Tremblay was unavailable,
Serge Tremblay took over and handled employee management.
The payer’s business had the benefit of the services of an
accountant. Serge Tremblay was the one who prepared the
employees’ work schedules.
[11] The payer had between five and eight employees during the
relevant period, depending on the workload. The payer’s
activities were seasonal. The business employed travelling
salespersons who solicited customers. In some cases, Marcel
Tremblay and Serge Tremblay went to see customers themselves.
During the very busy periods, the salesperson was often the one
who called on the customer. The payer also obtained contracts
through other contractors, or through contacts and referrals.
Marcel Tremblay said that he kept an eye on the construction of
new buildings with a view to later approaching the owners about
installing eavestroughs. He gave his salespersons the addresses
of such buildings. Once the eavestrough installation contracts
were signed, Serge Tremblay assigned the work to the workers.
[12] Marcel Tremblay was familiar with the physical work
involved in installing eavestroughs. He said that he was capable
of installing them himself and that he in fact did so for an
average of about ten days a year during the period at issue.
Sometimes, if there were not enough employees, he went to help
with the eavestrough installation himself. He was not involved in
looking after the business’s accounting operations.
However, he did sign the cheques issued by the payer. He thus
knew each employee and the periods during which they worked.
[13] Marcel Tremblay confirmed that he was not an employee of
the payer. He spent his time mainly on sales and occasionally on
eavestrough installation. He admitted that, although he trusted
Serge Tremblay, he still checked some of the accounting data
concerning the business and the level of customer satisfaction.
He said that he had no idea what the workers were paid. Until he
sold his restaurant in November 1992, he split his time between
it and the payer’s business. Day-to-day
decisions on the management of the payer’s business were
made by either him or Serge Tremblay. A chartered accountant,
Alain Drolet, issued the records of employment and did the
bookkeeping. Mr. Drolet also kept the restaurant’s books of
account while Marcel Tremblay was the owner. Serge Tremblay
was the one who gave the accountant the information he needed to
prepare the documentation required concerning the
installers’ wages.
[14] Eavestrough installation was normally done by a team of
two people. In some cases, an installer could work alone.
Sometimes, a crew of three installers might be necessary for a
large building. After 1993, Marcel and Serge Tremblay did the
promotional work for the payer’s business themselves. The
payer had only one truck. Since the installers worked in teams of
two, there could be just two installers working for the payer at
one time. Thus the names of at least two installers had to be on
the payroll for a given period. However, Marcel Tremblay
stated that, although normally two employees worked together,
there could be exceptions. For example, he might replace a worker
on sick leave. In such a case, Marcel Tremblay's name would
not have been entered on the payroll because he was not one of
the payer’s employees, as noted above.
[15] In his statutory declaration to Human Resources
Development (Exhibit I-5), Marcel Tremblay said that
he could not explain the discrepancies between the weeks for
which the employees received unemployment insurance benefits and
the weeks in which they worked according to the payroll record
kept by the payer. At trial, he said that his statutory
declaration was valid.
[16] He added that the periods when the salespersons worked
differed from those when the installers worked. Eavestrough
installation contracts might well be entered into at a time when
the payer had no installers working for it. The payer’s
managers waited to have a sufficient number of contracts before
hiring installers. In an emergency, Marcel Tremblay installed the
eavestroughs himself.
Serge Tremblay
[17] Serge Tremblay’s testimony for the payer provided
the most information on how the payer was managed during the
periods at issue. Mr. Tremblay described himself as a
businessman who managed businesses owned by him or Marcel
Tremblay. He said that in particular he took care of managing the
payer. He did not own any of the payer’s capital stock.
According to him, Marcel Tremblay took over the general
management of the payer’s business around
September 1989. Serge and Marcel Tremblay simply
continued operating that business in 1989.
[18] In 1990, they made some new arrangements. They decided to
hire a full-time salesperson, Raymond Dallaire, who had a
great deal of experience in eavestrough sales and the operation
of an eavestrough installation business. Mr. Dallaire had
been working for an eavestrough installation firm since 1978. For
the payer, he planned the installers’ work and discussed
marketing strategies with Serge Tremblay and Marcel Tremblay.
When he joined the payer’s business, he brought some
customers with him. Exhibit I-9 includes a number of invoices and
eavestrough installation contracts signed by Mr. Dallaire.
Many of those contracts are from the first few months of 1990,
well before he was working for the payer. The contracts were from
Mr. Dallaire’s former employer and were handed over to the
payer when he began working there. Mr. Dallaire had to leave
his employment with the payer at the end of 1990 because he was
ill.
[19] He was replaced as a salesperson by Yvon Gaudreault, who
began working for the payer in July 1991. He also worked with the
installers. If, for example, there was urgent work to be done and
the installers were in the neighbourhood, Mr. Gaudreault asked
them to do the necessary work. He left the payer in September
1993 to take employment with an insurance company.
[20] In April of each year, the payer received telephone calls
about eavestrough installation work. The busiest period was from
May to the end of September. Installation work was sometimes done
after that period when there were too many contracts. However,
Serge Tremblay testified that he always tried to group together
the contracts to be performed in a given area in order to reduce
the transportation costs associated with those contracts.
[21] The installers’ work was simple: they just
installed the eavestroughs. Serge Tremblay was the one who
determined the work they had to do. He planned their day or week
based on the workload and the available contracts. He also
checked their work. However, the installers decided when they
would start their work, based on the weather. At the end of the
day, Serge Tremblay checked the state of the work done by the
installers so that he could tell them what work to do the
following day. In many cases, the salesperson followed up with
customers to determine how satisfied they were with the work
done. If a customer was dissatisfied, the salesperson discussed
this with Serge Tremblay.
[22] The installers generally worked in teams of two. In 1990,
there were two installers working for the payer, Yves Michaud and
Sébastien Moreau, and one salesperson, Raymond Dallaire,
as I have just noted. Serge Tremblay said that both Mr. Michaud
and Mr. Moreau began working that year on April 8 and stopped on
August 19. At that time, it was Mr. Dallaire who assigned work to
the installers, but he consulted Serge Tremblay about the various
matters relating to performance of the contracts. In 1992,
Jeannot Lamothe and Sébastien Moreau worked together for
the payer from April 5 to December 5. In 1993, the same two
installers also worked together from April 5 to October 21.
Finally, in 1994, Claude Roy and Richard Bradette worked
from May 7 to November 24.
[23] In the case of Sébastien Moreau, small amounts
were noted in the payroll record for certain weeks in 1991, for
example. Serge Tremblay explained that the pays involving low
amounts often related to periods in which urgent work had to be
done. He therefore undertook to find other short-term contracts
to complete the work week, such as eavestrough cleaning or simply
the removal of old eavestroughs. The installers were paid for
their work by cheque.
[24] Serge Tremblay said that Yves Michaud worked for the
payer as an installer in 1990 and 1991, as shown in the records
of employment and the extracts from the payroll record (Exhibit
A-9). He did the same work as Sébastien Moreau and
was paid the same way. According to Serge Tremblay, Jeannot
Lamothe worked for the payer as an installer in 1992, 1993 and
1995, as can be seen from Exhibits A-4 and A-10.
[25] Serge Tremblay explained that Carl Girard did various
types of work. He said that Mr. Girard was quite talented. In
1994, however, Mr. Girard worked for the payer as an eavestrough
installer after another worker was the victim of a work accident.
Aside from 1994, when he worked as an installer, Mr. Girard did
all sorts of repairs and installed eavestroughs when the payer
did not have enough employees or there was extra work.
[26] The content of the payer’s invoices was the same
from 1990 on. Serge Tremblay, Marcel Tremblay, Raymond
Dallaire, Yves Michaud and Sébastien Moreau had invoices
with them so that they could sell contracts. Serge Tremblay
said that in fact the invoices were actually “bid
contracts”. He explained why the invoice numbers were not
consecutive. Only the invoices documenting a sale were kept. On
those invoices appeared the customer’s name, address,
telephone number and signature, if possible, as well as a
description of the work to be done, the choice of eavestrough
colours and the price. However, it sometimes happened in the case
of minor work that it was not described on the invoice. Aside
from the invoices, statements of account were sent every month to
customers that had not paid.
[27] The invoices also showed whether the work had been paid
for or if there was a balance owing. The work delivery date was
indicated as well. It often happened that the work was not done
at the time of the sale either because the customer was not ready
or because the payer did not have enough work to be done to
contact the installers. The invoices might even be prepared after
the eavestroughs were installed. They did not state when the
installers had done their work. The installers gave the invoices
to Serge Tremblay after the work was done.
[28] The installers were paid based on the number of feet of
eavestroughs they installed. That number was then multiplied by a
given factor. The number of feet of old eavestroughs and the
number of hours worked were also taken into account in
calculating their wages.
[29] One of the two installers on the team gave Serge Tremblay
a report for the week in question showing the number of hours
worked and the number of eavestroughs installed. The installers
might not have finished by the end of the week all the work
assigned to them at the beginning of that week. They could in
that case continue their work the following week. Using that
information, Serge Tremblay determined their wages and
contacted the accountant, Mr. Drolet, to have him prepare the
necessary paycheques. The cheques were then given to the
installers by either Marcel Tremblay or Serge Tremblay.
[30] Serge Tremblay was the one who decided when the season
began and ended based on the weather and the contracts obtained.
He began hiring installers when at least two weeks’ work
was scheduled. It was he who assigned the workers their work. As
for the day’s schedule, the installers decided on the time
they would begin installing the eavestroughs. Serge Tremblay
established their objectives for the day. In addition, a week was
spent putting the equipment and inventory in order either at the
beginning or at the end of the season; any necessary repairs were
done at that time. Serge Tremblay also dealt with orders and
purchases. From 1994 on, there were no more salespersons working
for the payer and Marcel Tremblay and Serge Tremblay
looked after the sale of eavestrough installation contracts
themselves.
[31] Serge Tremblay said that at some point Mr. Maltais, an
investigator for the Department of Human Resources Development,
contacted the payer’s employees about the insurability of
their employment. A few months later, Mr. Maltais discussed
the same matter with him. Serge Tremblay gave Mr. Maltais
the requested documents and he subsequently had an interview
during which he was questioned. He also made a written
declaration. He and Marcel Tremblay went to Sherbrooke to meet
with the Revenue Canada officials involved in the investigation
and to provide all the necessary explanations. According to
Marcel Tremblay, they were unable to persuade the Revenue Canada
officials because they were not well enough prepared and did not
have a lawyer with them. In short, Serge Tremblay said that the
Government of Canada’s officials and investigators
responsible for the files at issue here and the related files
accused the payer’s managers of fabricating false records
of employment and of claiming to have hired employees who had not
really worked for the payer.
[32] Serge Tremblay said that the investigator,
Mr. Maltais, gave him vague explanations as to why the
installers’ employment was not insurable. Mr. Maltais
had done calculations and prepared a working document. He told
Serge Tremblay that there were some weeks when no work had
been done even though paycheques had been issued. According to
Serge Tremblay, Mr. Maltais had prepared his document
using the invoices and payroll records and it did not reflect the
facts.
[33] At the time of the investigation, Serge Tremblay
could not explain the dates appearing on the invoices. He
testified that, after thinking about it, he considers it likely
that the dates were indicated for the purposes of the warranty
given to customers. Serge Tremblay prepared a table similar
to the one prepared by Mr. Maltais in which he placed the
1992 invoices in two categories. Exhibit A-5 shows the
dated invoices, which are for contracts totalling $46,459.48.
Exhibit A-6 is a table of the undated invoices, for
contracts totalling $36,166.80. Serge Tremblay argued in his
testimony that, if he took the same approach as Mr. Maltais, it
would mean that the total of $36,166.80 for the undated
eavestrough installation invoices did not correspond to anything
real and that the eavestroughs had not been installed. He also
explained that the tables contain boxes in which the amount is
$0.00. These relate to “bids” where the customer has
decided not to enter into an eavestrough installation contract.
Serge Tremblay chose 1992 for illustration purposes because
no dates appeared on the invoices in 1993. Moreover, if we look,
for example, at July 1992, which was a very busy time for
the payer in terms of eavestrough installation work, the total
shown on the dated invoices is $2,800 even though sales of
eavestrough installation contracts actually amounted to $9,021
and wages of $4,600 were reported for that month. Thus, according
to Serge Tremblay, it would be illogical for the total wages
for July 1992 to be so high in comparison with the total amounts
shown on the dated invoices. He also said that the payer was not
required to cease operating during the construction
workers’ holidays.
[34] Serge Tremblay is convinced that Mr. Maltais, the
investigator from the Department of Human Resources Development,
and Francine Sévigny and Johanne Nicol, the
Revenue Canada officials in the town of Sherbrooke, relied on the
invoices as evidence in reaching the conclusion that the records
of employment were false and that the employment of the
payer’s employees was therefore not insurable.
[35] On cross-examination, Serge Tremblay also explained the
discrepancies between the records of employment and the table in
Exhibit A-4. For example, Sébastien Moreau’s
record of employment (Exhibit A-8) shows that his last day of
work was August 25, 1991. However, that date does not appear
anywhere in the table. According to Serge Tremblay, it is
possible that there was no more work around August but that the
payer subsequently obtained contracts and the worker was rehired,
which had the effect of postponing the date his employment ended.
In the meantime, the worker received a record of employment so
that he could claim unemployment insurance benefits. Thus, for a
given year, if a worker’s actual work period ended after a
record of employment was issued, that end date was not shown on
the record.
[36] Moreover, the records of employment related only to a
period of 20 insurable weeks. Serge Tremblay said that only
the 20 insurable weeks were noted on the records of employment.
Two calendar years might overlap on a record of employment. In
some cases, as with Sébastien Moreau when he did not work
20 insurable weeks in one calendar year, Serge Tremblay
included the weeks that had not been included in the previous
record of employment.
[37] According to Serge Tremblay, it is quite normal for
employees who work part time to receive unemployment insurance
benefits during the weeks when they do not work. If they work
during a given week, they have simply to report their income for
that week on a “card” they receive weekly. A week
during which they do not work will thus be taken into account in
calculating their unemployment insurance benefits. In short, if
the work ended after several consecutive weeks of work, the payer
issued a record of employment. The payer could later rehire the
same person if necessary. The dates shown in the table in Exhibit
A-4 therefore cover the entire period when an employee worked
during a calendar year, even if there were interruptions during
that period.
[38] Serge Tremblay also said that, in many cases, an employee
may have worked mainly for the payer but may also have worked for
the other businesses owned by Serge Tremblay or
Marcel Tremblay. When work was done by the payer’s
workers for businesses owned by one of those two men, those
employees were paid by the business concerned if it had an
employer number. He said that Immeubles S.M.T. did not have an
employer number. On this point, Serge Tremblay also noted
that it was expensive to take the steps required to obtain an
employer number for businesses like Immeubles S.M.T. that do not
often need employees’ services. In addition, firms with
such a number have to submit a declaration each month, which in
his opinion is a tiresome requirement.
[39] Serge Tremblay also told the Court that the Bar Une
Pierre Deux Coups, which was owned by Marcel Tremblay, had an
employer number. If one of the payer’s employees worked for
that bar, he was almost always paid by the bar, since it had such
a number. For example, Carl Girard worked for both the payer and
the bar at the same time.
[40] Serge Tremblay added that he himself completed the
eavestrough installation contract documents only very rarely, and
he explained this by his physical inability to perform that
function. The invoices were completed by the salesperson, by the
installer, sometimes by the person who accompanied
Serge Tremblay when he sold eavestrough installation
contracts or even by the customer. He also said that Raymond
Dallaire regularly accompanied him to help him measure the length
of the eavestroughs needed, even after Mr. Dallaire had stopped
working for the payer.
[41] The payer’s income for each month corresponded to
the total of the amounts shown on the eavestrough installation
invoices for the month in question, even if the price shown on
the invoices had not been paid.
[42] Finally, Serge Tremblay admitted that he had discussed
the investigation with all the employees who were on the payroll.
It was not until penalties were imposed on the employees that he
and Marcel Tremblay decided to appeal the decisions in
question.
[43] I will now look at the testimony of four of the five
workers the insurability of whose employment is at issue in these
proceedings. They are Yves Michaud, Jeannot Lamothe,
Sébastien Moreau and Carl Girard. The fifth
worker, Claude Roy, was unable to testify since he was out
of the country when the appeals were heard.
Yves Michaud
[44] Yves Michaud testified that he worked for the payer as an
eavestrough installer in 1990 and 1991 with Sébastien
Moreau. However, as a result of a work accident, he received
workers’ compensation benefits from the CSST for one month
in 1991 and Carl Girard replaced him as an eavestrough
installer during that time. Mr. Michaud said that he did not
see Mr. Girard in 1990 or during the rest of 1991. He did not
know whether other installers worked for the payer in 1990 and
1991. However, he said in the statutory declaration he made
during an interview with Mr. Maltais that the payer had only
one truck and one team of installers in 1990 and 1991.
[45] Mr. Michaud said that he went to pick up the invoices in
the morning, installed the eavestroughs and then generally gave
those documents to Serge Tremblay or Marcel Tremblay at the
end of the day. The date on the contract could be either the
installation date or the date the contract was entered into; it
could have been written in by the accountant or by Serge
Tremblay.
[46] Mr. Michaud was laid off in 1990 and 1991 because of a
shortage of work. According to him, [TRANSLATION] “work was
accumulated” but there was no [TRANSLATION] “banking
of hours”. In some cases, he discussed with
Serge Tremblay whether it was appropriate or cost-effective
to travel to install eavestroughs. He was paid to install
eavestroughs and not to do advertising using the payer’s
truck. He said that, for example, he would not have travelled
60 kilometres for a job that would take two hours. On the
other hand, he could do a single installation job at a given
place for an entire day.
[47] Employees were paid according to the number of feet of
eavestrough installed. On this point, he added that a team of
installers could install 2,000 feet of eavestroughs in one week
of work. On a good day of work, 500 or 600 feet of eavestroughs
could be installed. Mr. Michaud said that he was paid by the hour
if he had to remove eavestroughs, do stocktaking at the warehouse
or repair the truck. He was paid by cheque the week after the
week he worked.
[48] According to Yves Michaud, Serge Tremblay was his boss.
The vehicles and tools used to install the eavestroughs were
owned by the payer.
[49] Mr. Michaud said that, at the time, he did not know the
number of weeks needed to be entitled to unemployment insurance
benefits.
Jeannot Lamothe
[50] Jeannot Lamothe testified that he worked for the payer in
1992, 1993 and 1995 and that he worked with Sébastien
Moreau in 1992 and 1993. He recalled working with a Jackie Paul
in 1995. He did not remember whether there were other installers
in 1995. He did not think that he worked with Carl Girard.
[51] He performed five or six contracts a day at Serge
Tremblay’s request and reported to him at the end of the
day. In general, Sébastien Moreau was the one who met with
Serge Tremblay in 1992 and 1993. According to Mr. Lamothe, the
work method changed in 1995; follow-up became more strict. He
also said that, in some cases, he installed eavestroughs and the
contract was prepared later. Eavestroughs were not installed
during the winter. Moreover, he did not work on days when it was
raining or there were strong winds. On average, he installed
between 1,500 and 2,000 feet of eavestroughs a week. He said that
he agreed with Yves Michaud’s testimony that a crew
could install up to 2,000 feet of eavestroughs in a good week of
work.
[52] Mr. Lamothe asked Serge Tremblay if he could
[TRANSLATION] “consolidate his pays to make big
weeks”; his request was denied the next day. He takes issue
to some extent with the account of a telephone conversation he
had with an employee of the Department, according to whom he
[TRANSLATION] “consolidated his pays”.
[53] He was paid by cheque the week after the week he worked.
He said that the dates on the invoices were not written by him.
With regard to his statutory declaration in which he stated that
the eavestrough installation dates were indicated on the
invoices, he argued that that did not mean the dates had been
written by him.
[54] He was laid off because of a shortage of work.
[55] The tools and the vehicle were owned by the payer.
[56] Mr. Lamothe said that he did not know how many weeks were
needed to be eligible for unemployment insurance benefits.
Sébastien Moreau
[57] Sébastien Moreau testified that he worked for the
payer as an eavestrough installer in 1990, 1991, 1992 and 1993.
His co-workers were Yves Michaud in 1990 and 1991 and Jeannot
Lamothe in 1992 and 1993. He did not know whether there were
other people installing eavestroughs for the payer during those
years.
[58] Mr. Moreau recalled that Carl Girard came to help him,
but he did not remember when. To the best of his knowledge, he
installed eavestroughs with another person during each of 1990,
1991, 1992 and 1993 because the work required a team of two
people. Each week, the eavestrough installation contracts were
given to Serge Tremblay as a work report. When he had contracts
to be performed, he may have worked more hours in a given week to
increase his pay. The date on an invoice could be the scheduled
installation date, the sale date or the date when the warranty
began. He explained that the warranty date could have been
determined so as to enable a customer to actually have a longer
warranty period.
[59] Mr. Moreau admitted in particular that, during the period
from April 8 to October 27, 1990, there were weeks when he
did not work because of a shortage of work, such as during the
hunting season or the construction workers’ holidays. Thus,
if he worked a day or a half-day, he received wages corresponding
to the hours he worked.
[60] The tools he used were not owned by him.
[61] Mr. Moreau stated that he was paid by the hour and
according to the number of feet of eavestroughs installed. The
installers were paid the week after the week they did their
work.
[62] Mr. Moreau left his job with the payer in 1994 because of
a shortage of work and subsequently moved to another area. He
returned to Roberval on August 5, 1996, and is now
running an eavestrough business of his own in which he is both
the salesperson and installer.
Carl Girard
[63] Carl Girard testified that he worked for Marcel Tremblay
from 1990 to 1994, including one year for a business other than
the payer’s. He dealt only with Marcel Tremblay and Serge
Tremblay and did not know whether there were salespersons working
for the payer during the years in question.
[64] In 1992, he worked for the payer and the Bar Une Pierre
Deux Coups, [TRANSLATION] “six weeks at one place, four at
the other; six weeks as an installer, four weeks as a maintenance
man”. That total corresponded to the minimum number of
weeks needed to be eligible for unemployment insurance
benefits.
[65] Mr. Girard testified that the employer [TRANSLATION]
“accumulated his work” and did no [TRANSLATION]
“banking of hours” during the periods concerned. Mr.
Girard received unemployment insurance benefits when he did not
work full weeks. He often worked alone, and sometimes with
Marcel Tremblay, at an hourly rate of $8.00. He used the
payer’s tools. He was given a separation certificate when
there was no more work.
[66] He said that, during his periods of employment in 1991,
1992 and 1994, he knew the number of weeks needed to be eligible
for unemployment insurance benefits.
[67] I will now refer briefly to the testimony of three
employees who worked for the payer during the years in question.
That testimony is part of the common evidence received at the
hearing of the instant appeals and of four other appeals
concerning those employees. The insurability of their employment
was admitted by the respondent after all those appeals were
heard, as I noted at the beginning of these reasons.
Raymond Dallaire
[68] According to Raymond Dallaire, who sold eavestrough
installation contracts for the payer in 1990, the eavestrough
installers were probably not short of work during the summer of
1990.
[69] Mr. Dallaire also testified that the salesperson, the
installer, Serge Tremblay and the accountant could all enter
information on the invoices. According to him, the invoices had
to contain all necessary information. He said that the installer
probably wrote down the date the eavestroughs were installed.
Yvon Gaudreault
[70] Yvon Gaudreault, who sold eavestrough installation
contracts for the payer in 1991, 1992 and 1993, said that there
were times during those years when he did not work, because of
rain for example. He handled sales, the collection of accounts
and the supervision of eavestrough installation.
[71] Mr. Gaudreault said that in the fall, and especially in
September of each year, less work was done because of frost on
the roofs. Moreover, the volume of eavestrough installation
contracts declined after the construction workers’
holidays, since potential customers had fewer financial
resources.
[72] This salesman also said that he supervised the work done
by Sébastien Moreau and Jeannot Lamothe, the
latter having replaced Yves Michaud for a while. He said as
well that he never encountered Gilles Gagnon, Carl Girard or
Émilien Guay. He added that he would have seen Carl
Girard if he had been an installer during the years he worked for
the payer. He also explained that a single invoice could come
into the possession of the salesperson, the installers,
Serge Tremblay or Marcel Tremblay and the accountant.
[73] Mr. Gaudreault left the payer in 1993 to take a job that
would enable him to work 12 months a year. According to him, the
payer’s busiest period during the three years he worked for
it was from May to September.
Richard Bradette
[74] Richard Bradette stated that he worked with Claude Roy in
1994 and perhaps with Carl Girard. He did not think that there
were other installers that year.
Johanne Nicol
[75] Johanne Nicol, a Revenue Canada official, dealt mainly
with the files of five individuals working for the payer: Raymond
Dallaire, Yvon Gaudreault, Gilles Gagnon, Claude Roy and
Richard Bradette. The appeals concerning four of those five
workers were the subject of a consent to judgment by the
respondent. The insurability of the employment of the fifth
worker, Claude Roy, is one of the points at issue in these
proceedings. Another official, Francine Sévigny, dealt
with the other files. However, it should be noted that the
reports on an application or an appeal which were prepared by
Ms. Sévigny and concern Jeannot Lamothe,
Yves Michaud and Sébastien Moreau are for all
practical purposes the same as the reports on the persons
referred to above.
[76] According to Johanne Nicol’s analysis, the records
of employment are inconsistent with the facts. That analysis was
based largely on the table prepared by Mr. Maltais, the
Department of Human Resources Development investigator. Her
analysis was also based on the income reported each month, the
statutory declarations and the fact that some workers had said
that they had not seen a given worker during certain periods. The
income earned by the employees represented only a few weeks of
work even though the business operated 10 months a year. She
dealt with all the payer’s employees the same way,
including the four employees—Raymond Dallaire, Yvon
Gaudreault, Richard Bradette and
Gilles Gagnon—the insurability of whose employment is
no longer at issue, as she believed that there was an arrangement
between the employees and the payer. She relied, inter
alia, on the fact that some invoices were marked
[TRANSLATION] “installed on such and such a date” and
the fact that the installers’ services were not entered in
the payroll record for the corresponding weeks.
[77] According to Ms. Nicol, the employment was found to be
uninsurable based mainly on the contradictory statutory
declarations, the GST and QST reports and the dates marked on
some of the invoices. With regard to the contradictions she noted
in the statutory declarations, Ms. Nicol said that some workers
were unaware of the existence of certain other people supposedly
working for the payer even though there was just one team of
installers and one truck. As an example of the contradictions,
she referred to Yvon Gaudreault’s declaration that he
had not seen Gilles Gagnon, Carl Girard or
Émilien Guay in 1990 or 1991, and
Jeannot Lamothe’s declaration that he had not seen
Carl Girard.
[78] Ms. Nicol asserted that the accountant, Mr. Drolet, told
her on the telephone that the income corresponded to the
installation work that was done even though there were months for
which income was reported without there being any eavestrough
installers working for the payer.
[79] On cross-examination, she admitted that the periods of
employment of two installers working for the payer, Yves Michaud
and Sébastien Moreau, were the same in 1990 and 1991; as
regards 1990, she added that the start and end dates of their
employment were the same but that they did not necessarily always
work the same weeks. She also admitted that Jeannot Lamothe and
Sébastien Moreau worked for the payer during the same
periods in 1993.[1]
Analysis
[80] The respondent’s main argument as regards the facts
justifying his conclusion that the employment of the
above-mentioned five workers was not insurable relates to the
allegation in the Replies to the Notices of Appeal that the
records of employment issued by the payer for each of those
workers were false and inconsistent with reality in terms of the
periods worked and the remuneration received. In the Replies to
the Notices of Appeal, the respondent also relied on the general
assumption that the payer had entered into an arrangement to
enable each worker to obtain unemployment insurance benefits
higher than those to which he would normally have been entitled.
Based on all the evidence and the argument of counsel for the
respondent, it seems clear that that general assumption would not
have been made if the respondent had not concluded that the
records of employment were false.
[81] For the purposes of assessing the evidence as a whole, it
is worth noting that there was an arm's-length
relationship between the payer’s representatives,
Marcel Tremblay and Serge Tremblay,[2] and the installers the
insurability of whose employment is at issue in these
proceedings.
[82] The allegation that the records of employment were false
is itself based on the fact that some of the invoices[3] have dates on them.
[83] It would be appropriate to examine the evidence on this
point.
[84] The evidence shows that words such as [TRANSLATION]
“installed” on a certain date were written on a
number of invoices. Those invoices came into the possession of
the salesperson, an installer, Serge Tremblay and the outside
accountant. The words in question could have been written by any
of those four individuals. There is uncontradicted testimony
that, in some cases, the date referred to on an invoice could be
the starting date for the warranty period. It is also in evidence
that a large number of invoices had no date on them.
[85] Some of the workers testified that the dates on the
invoices did not mean anything to them. Serge Tremblay confirmed
that the dates were of no importance, at least, it seems, in the
majority of cases.
[86] On this issue of the meaning and importance of the dates
appearing on the invoices, it seems to me that the weight of the
evidence clearly favours the appellants. The workers, and
especially Sébastien Moreau, struck me as honest, reliable
witnesses. I also accept the testimony of Serge Tremblay, who
seemed truthful to me.
[87] That the dates appearing on the invoices are not
significant is confirmed in a way, as counsel for the payer
noted, by the fact that nearly half of the invoices were undated.
If those dates were so important, how can the existence of a
large number of undated invoices be explained? The respondent did
not argue that the eavestrough installation work described in the
undated invoices was not done. On the contrary, he seems to have
taken it for granted that that work was actually performed.
[88] Moreover, the respondent did not offer any explanation
for the fact that a large number of invoices were undated. If an
explanation had been given, it might have made implausible the
assertion by a number of the payer’s witnesses that the
dates written on the invoices did not have any particular
significance. It is implicit from the testimony of Serge Tremblay
and of some of the workers that the fact that invoices had no
date on them did not have any significance either.
[89] In her testimony, Johanne Nicol relied on the analysis
carried out by Mr. Maltais from the Department of Human
Resources Development. I note that Mr. Maltais did not testify.
During her testimony, Ms. Nicol seemed to me to be trying to
justify the respondent’s position at all costs. Her
testimony on the falseness of the records of employment is not
credible.
[90] Moreover, Ms. Nicol was not able to provide much
information on four of the above-mentioned five workers the
insurability of whose employment is at issue here, since the
portion of the reports (on an application or an appeal) dealing
specifically with those four individuals was written by Francine
Sévigny.
[91] No direct evidence was adduced by the respondent to show
the inaccuracy of the payroll records. For example, it was not
shown that the paycheques given to the five workers in question
were not cashed within a reasonable time after they were issued
or that they were not issued about a week after the end of the
work week to which the wages related.
[92] The statutory declarations of the workers whose
employment is at issue, as well as those of Marcel Tremblay
and Serge Tremblay, do not on any essential points
contradict their testimony given at the hearing.
[93] Some of the workers, such as Yves Michaud and Jeannot
Lamothe, testified that they did not recall working with some of
the payer’s other employees during the periods concerned. I
believe that it would be unrealistic to attach too much
importance to this lack of precision given the fact that these
statements by the workers were made a considerable time after the
events themselves. It is no doubt a real possibility in the
circumstances that these workers have confused the periods of
time involved.
[94] In assessing the credibility of the testimony of
Marcel Tremblay and Serge Tremblay, I have taken
account of the fact that they co-operated fully with the
Government’s representatives during their investigation.
That co-operation was acknowledged by the respondent. They
provided all the documentation needed by the government
authorities and, for example, travelled a fairly great distance
to go to Sherbrooke to provide explanations to the Revenue Canada
officials.
[95] The Revenue Canada officials in particular relied mainly
on one factor, the invoices, and did not take account of some
other important information in the files. For example, the
statement by the workers and the payer’s representatives
that the workers were paid by cheque has not been refuted. That
is not how things are usually done where there exists between the
payer and a given worker a special arrangement to get around the
Unemployment Insurance Act, as the respondent claimed was
the case here.
[96] It was not argued for the respondent that the employment
would not be insurable if I concluded that the workers in
question actually worked for the payer during the periods
referred to in the records of employment.
[97] I therefore conclude that, on the balance of evidence,
the workers in question worked during the weeks at issue and
received the remuneration shown in the records of employment.
[98] The employment of each of the above-mentioned employees
was insurable during the periods relating to each of them, that
is, the periods referred to at the beginning of these
reasons.
[99] Accordingly, the payer’s five appeals are allowed
and the employment of the five workers was insurable during the
periods referred to above. Jeannot Lamothe’s appeal is
also allowed. His employment was insurable during the three
periods mentioned at the beginning of these Reasons for
Judgment.
Signed at Ottawa, Canada, this 11th day of May 1999.
“Alban Garon”
A.C.J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 31st day of March
2000.
Erich Klein, Revisor
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