Jaillet v. M.N.R., docket 2000-2476-EI

Date: 20001101

Dockets: 2000-2476-EI; 2000-2477-EI

BETWEEN:

ANDRÉ JAILLET, JACQUES JAILLET,

Appellants,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

Reasons for Judgment

Somers, D.J.T.C.C.

[1] These appeals were heard on common evidence at Moncton, New Brunswick, on October 4, 2000.

[2] The appellants have instituted appeals from the decisions by the Minister of National Revenue (the "Minister") according to which the employment held with J & S Lumber Co. Ltd., the payor, during the periods in issue, that is, from May 30 to November 4, 1994 and from June 19 to September 8, 1995 in André Jaillet's case, and from May 30 to October 14, 1994 and July 17 to August 13, 1995 in Jacques Jaillet's case, are excepted from insurable employment within the meaning of the Unemployment Insurance Act, now the Employment Insurance Act, on the ground that the employment was not held under a contract of service.

[3] Subsection 5(1) of the Employment Insurance 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] The burden of proof is on the appellants. They have to show on a balance of evidence that the Minister's decisions are incorrect in fact and in law. Each case stands on its own merits.

[5] In making his decision in André Jaillet's appeal, the Minister relied on the following facts, stated in paragraph 5 of the Reply to the Notice of Appeal, which were either admitted or denied:

a) the Payor is a corporation duly registered in the Province of New Brunswick engaged in a logging operation; (admitted)

b) the Appellant was a woodcutter; (admitted)

c) in 1994 and 1995 the cutter number assigned to the Appellant was shared by his son, Jacques; (admitted)

d) the Payor's production reports in the Appellant's name included the wood cut by his son; (admitted)

e) the Payor did not have any method of separating the production of each of the workers who used the same number; (denied)

f) as shown in Schedules A and B, the amounts of insurable earnings reported by the Payor on the Appellant's Records of Employment and on his T4s do not reflect the actual amounts paid to the Appellant; (denied)

g) the earnings reported in the Payor's payroll do not reflect the amount of wood cut by the Appellant; (denied)

h) the earnings reported by the Payor do not reflect the amount received by the Appellant; (denied)

i) the Appellant decided when he wanted to be included on the Payor's payroll; (denied)

j) the Appellant decided how much the Payor would report in the payroll as the Appellant's weekly earnings; (denied)

k) the Payor did not know when, or if, the Appellant was working at any given time; (denied)

l) the Payor did not know whether the Appellant was working alone or with others at any given time; (denied)

m) the Appellant was a wood cutter working under a contract for service; (denied)

n) there was no contract of service between the Appellant and the Payor. (denied)

[6] The facts alleged in the Reply to the Notice of Appeal in Jacques Jaillet's appeal are essentially the same as those in André Jaillet's appeal and were admitted or denied in the same way.

[7] The payor is a company operating a logging business in New Brunswick. During the years in issue, the payor employed approximately 30 woodcutters, including the two appellants.

[8] Carl Barnes, a woodcutting supervisor who has been employed by the payor for 17 years, determined where the woodcutters were to cut. The appellants were assigned to a certain location. This witness testified that he visited the sites two or three times a week and reported to the administration office. The appellants had to supply their own chainsaws and comply with safety rules. The witness explained his general responsibilities, but did not specifically state the degree of control he exercised over the woodcutters.

[9] The appellant André Jaillet explained that he had worked for the payor as a woodcutter for approximately 12 years under the same working conditions from one year to the next.

[10] He also explained that he had worked with his son Jacques Jaillet during the periods in issue, cutting and piling wood at the locations indicated to him. André Jaillet and Jacques Jaillet shared the number 25 for identifying the cords of wood they cut. The cords of cut wood were measured visually on the work sites. Exact measurements were made once the cut wood was delivered to the mill. The appellants accepted without checking them the measurements determined by the payor.

[11] The appellants were paid by cheque. Every week, they received an advance from the payor from which the usual deductions had been made. Cheques for equal amounts, which were filed in evidence, were issued to the appellants during the periods in issue. Pay cheques were issued to the appellants a few weeks after their work terminated; not all these cheques were for equal amounts. The amounts represented the difference between the advances received and the additional amounts paid once the wood had been measured at the mill. Jacques Jaillet admitted that the cut wood could remain on the sites for a long time; the wood was transported to the mill according to sales made. He admitted that, on one occasion, he had been paid three years after cutting the wood.

[12] In cross-examination, André Jaillet admitted that he might have had a cut wood shortfall in early 1994. According to this witness, the two appellants cut wood side by side. They were paid by the cord and relied on the payor for the accuracy of the records of employment and of the measurement of the cut wood. André Jaillet also admitted that the quantity of wood cut could vary from week to week depending on the weather.

[13] Jacques Jaillet essentially corroborated the testimony of his father André Jaillet. He stated that he did not record his hours and days worked, relying instead on the records of employment prepared by the payor. That was the evidence produced by the appellants.

[14] Charles Albert, an investigator with the Department of Human Resources, made a request respecting this matter for 1994 and 1995. He obtained from the payor the records of employment, pay lists, pay cheques issued and woodcutting reports. These documents were filed in evidence.

[15] This witness observed that the records of employment did not reflect the true situation as regards the estimated figures and the wood actually cut. The payor did not take into account the hours or weeks worked by the appellants. However, the documents show that the appellants worked 40 hours a week. The fact of the matter is that the appellants were paid on the basis of volume.

[16] The only cut wood measurements kept by the payor were those made at the mill. The relevant reports show that the wood was measured outside the periods in issue, even in the months of January, February, November and December. It cannot be determined from these reports when the wood was cut by the appellants.

[17] Pay cheques were issued after the dates appearing on the records of employment. There were differences between the amounts of the cheques issued and the amounts shown on the records of employment. The appellants received pay cheques after the dates appearing on those records. They also received less than the amounts indicated on the records of employment.

[18] The investigator observed that the appellants had needed to accumulate 12 weeks of employment each in order to qualify for unemployment insurance benefits. The records of employment in fact show that they each worked 12 weeks in 1994 and 1995.

[19] James Ferguson has been the company's sole shareholder since 1991. He testified that the payor relied on the appellants' production capacity to determine pay advances. Pay was adjusted once the cut wood had been measured at the mill.

[20] He admitted that weather and topography were factors affecting the dates on which wood was cut and the quantity of wood cut. The wood sometimes remained in the forest for a certain period of time depending on sales or the weather. If there were no sales, the wood stayed in the forest even over the winter. The wood was transported to the mill based on demand.

[21] James Ferguson testified that the workers had regular hours for cutting wood, but those hours were not recorded. The woodcutters sometimes had helpers for cutting the wood. Number 25 was issued to the appellant André Jaillet, but he did not know whether a number had been assigned to the appellant Jacques Jaillet. The cut wood was divided between the two appellants without distinction as to the quantity cut by each.

[22] He said that the supervisor's responsibility was to inform each woodcutter of the designated locations for cutting wood, to do a visual check of the amount of wood cut and to ensure that safety rules were observed.

[23] Joanne Robichaud, an appeals officer, contacted James Ferguson on January 5, 2000. In that telephone conversation, Mr. Ferguson apparently told her that the payor had had no control over the woodcutters, who went into the woods without its knowledge. The woodcutters cut enough wood to qualify for unemployment insurance benefits. He added that it was hard to keep the woodcutters once they had enough stamps to qualify under the Act. Unemployment insurance stamps were granted to the woodcutters based on the volume of wood cut, even when the payor purchased wood from the woodcutters. These comments made to the appeals officer referred to woodcutters in general. The appeals officer admitted that James Ferguson did not say that the appellants only cut wood in order to receive unemployment insurance stamps.

[24] To distinguish clearly between a contract of service and a contract for services, one must consider the whole of the various elements which constitute the relationship between the parties.

[25] In Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, the Federal Court of Appeal recognized four basic tests for distinguishing a contract of service from a contract for services:

the degree of control exercised by the employer;

ownership of tools;

chance of profit and risks of loss;

the degree of integration.

Control

[26] This is perhaps the most important element in making the necessary distinction in this case. The supervisor gave no details as to the degree of control he had over the appellants. The fact that he indicated where the wood was to be cut, did a visual check of the amount of wood cut and ensured that safety rules were observed does not provide a basis for concluding that control was exercised over the appellants. The hours and weeks worked were not recorded. The payor did not know when the appellants worked and could only rely on the amount of wood cut. The records of employment did not reflect the true situation. The payor was more interested in the result than in accurate recording of the hours and weeks worked. In Charbonneau v. M.N.R., [1996] F.C.J. No. 1337, Décary J.A. of the Federal Court of Appeal wrote: "Monitoring the result must not be confused with controlling the worker." From the above facts, we can conclude that there was no control over the appellants. The contract was thus a contract for services.

Ownership of tools

[27] According to the case law, using his own chainsaw does not prevent a worker from being considered an employee. The evidence herein is thus not conclusive for the purpose of distinguishing between a contract of service and a contract for services.

Chance of profit and risks of loss

[28] The appellants were paid by volume, not by the hour. They could earn more or less income depending on the amount of wood cut. The appellants cannot be characterized as employees on the basis of this type of arrangement.

Degree of integration

[29] The woodcutters' comings and goings and their hours and even weeks of work were in no way integrated into or coordinated with the company's operations. The woodcutters could cut wood in the forest as they wished. The payor removed the cut wood from the forest when there was a chance of a sale and the weather was favourable.

[30] Control is the most decisive test in this case. Giving instructions as to the kind of wood to cut and visually checking the amount of wood cut do not in themselves create a relationship of subordination such as that between an employer and an employee.

[31] Having regard to all the circumstances, the appellants were not hired by the payor under a contract of service. The appellants did not hold insurable employment within the meaning of paragraph 5(1)(a) of the Employment Insurance Act.

[32] The appeal is dismissed.

Signed at Ottawa, Canada, this 1st day of November 2000.

"J.F. Somers"

D.J.T.C.C.

Cases considered:

Canada (Attorney General) v. Rousselle, [1990] F.C.J. No. 990

Charbonneau v. M.N.R., [1996] F.C.J. No. 1337

Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 8th day of December 2000.

Erich Klein, Revisor