3193594 Canada Inc. v. M.N.R., docket 98-427-UI

Date: 20000831

Dockets: 98-427-UI; 98-497-UI; 98-652-UI; 98-654-UI; 98-655-UI; 98-656-UI; 98-658-UI; 98-659-UI

BETWEEN:

3193594 CANADA INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Charron, D.J.T.C.C.

[1] These appeals were heard on common evidence at Montréal, Quebec, on April 27 and 28, 2000 in order to determine whether, within the meaning of the Employment Insurance Act, Christiane Gaudry (worker) held insurable employment from November 4 to 26, 1996, Linda Klamensberg (worker) held insurable employment from January 1, 1996 to September 11, 1997, Nadine Mélanie Boileau-Picard (worker) held insurable employment from January 1 to December 31, 1996, Nathalie Freedman (worker) held insurable employment from January 1, 1996 to September 11, 1997, Heidi Muens Lesnow (worker) held insurable employment from January 1, 1996 to March 4, 1998, Anna Prugar (worker) held insurable employment from January 1 to December 31, 1996, Martha Rud (worker) held insurable employment from January 1, 1996 to March 4, 1998, and, lastly, Tony Soupliotis (worker) held insurable employment from January 1 1996 to March 19, 1998 when they were employed by 3193594 Canada Inc. (the appellant).

[2] By letters dated February 6, February 27 and March 24, 1998, the respondent informed the workers and the appellant that the employment in question was insurable in each case because there was an employer-employee relationship between them.

Statement of Facts

[3] The facts on which the respondent relied in making his decisions are stated in paragraph 5 of each of the Replies to the Notices of Appeal, as follows:

[TRANSLATION]

Christiane Gaudry (worker) – 98-427(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the appellant's work as a person in charge of appointments was to convince people to make an appointment with a consultant with the payer's business; (admitted)

(d) the appellant worked at the payer's office; (denied)

(e) she received training from the payer on her first day; (denied)

(f) she used the payer's equipment and supplies in her work; (denied)

(g) she worked under the direction and supervision of Jay Shapransky; (denied)

(h) she worked on a part-time basis, that is, a maximum of 25 hours a week; (denied)

(i) she was paid $7 an hour. (denied)

Linda Klamensberg (worker). – 98-497(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the appellant's work as a person in charge of appointments was to convince people to make an appointment with a consultant with the payer's business; (admitted)

(d) the appellant worked at the payer's office most of the time; (admitted)

(e) she used the payer's equipment and supplies in her work; (denied)

(f) she worked under the direction and supervision of Jay Shapransky; (denied)

(g) she worked on a part-time basis, that is, 4 to 10 hours a week; (admitted with an explanation)

(h) she was paid $7 an hour; (admitted with an explanation)

(i) her weekly remuneration was less than $150. (admitted)

Nadine Mélanie Boileau-Picard (worker) – 98-652(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the worker worked at the payer's office; (denied)

(d) as a consultant, she performed for the payer various duties related to sales; (admitted)

(e) she used the payer's equipment and supplies in her work; (denied)

(f) she worked under the direction and supervision of Jay Shapransky; (denied)

(g) she was required to work a fixed schedule from 1:00 to 9:00 p.m., five days a week; (denied)

(h) she worked from June 1996 to April 1997; (admitted)

(i) she received weekly remuneration of $200 plus commissions on the memberships she sold. (admitted with an explanation)

Nathalie Freedman (worker) – 98-654(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the worker's work as an office clerk was to enter data in the computer; (admitted with an explanation)

(d) she worked on a part-time basis, that is, 10 hours a week; (admitted with an explanation)

(e) the worker worked at the payer's office for 6 or 7 hours and the rest of the time at her home; (denied)

(f) she used the payer's equipment and supplies in her work but used her own computer when she worked at home; (denied)

(g) she worked under the direction and supervision of Jay Shapransky; (denied)

(h) she was paid $7 an hour; (admitted)

(i) she worked until August 1997. (admitted)

Heidi Muens Lesnow (worker) – 98-655(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the worker worked at the payer's office; (denied with explanations)

(d) she performed various related duties as a consultant, that is, in sales; (admitted)

(e) she used the payer's equipment and supplies in her work; (denied with explanations)

(f) she worked under the direction and supervision of Jay Shapransky; (denied)

(g) she was required to work a fixed schedule from 1:00 to 9:00 p.m., Monday to Friday; (denied)

(h) at the time of the appeals officer's investigation on March 4, 1998, she was still working for the payer; (denied with explanations)

(i) she received weekly remuneration of $300 plus a commission on the memberships she sold. (admitted with explanations)

Anna Prugar (worker) – 98-656(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the worker worked at the payer's office; (admitted with explanations)

(d) she performed for the payer various duties related to sales; (admitted)

(e) she used the payer's equipment and supplies in her work; (denied with explanations)

(f) she worked under the direction and supervision of Jay Shapransky; (denied)

(g) she had to work a fixed schedule from noon until 9:00 p.m., Monday to Friday; (denied)

(h) she worked from February to September 1996; (admitted)

(i) she received weekly remuneration of $225 plus commissions on the memberships she sold. (admitted with explanations)

Martha Rud (worker) – 98-658(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the worker worked at the payer's office; (admitted with explanations)

(d) she performed various duties as an office clerk; (denied)

(e) she used the payer's equipment and supplies in her work; (denied with explanations)

(f) she worked under the direction and supervision of Jay Shapransky or Heidi Muens Lesnow; (denied)

(g) she had to work a fixed schedule from 1:00 to 9:30 p.m., Monday to Friday; (denied)

(h) at the time of the appeals officer's investigation on March 4, 1998, she was still working for the payer; (denied with explanations)

(i) she received hourly remuneration of $7. (admitted with explanations)

Tony Soupliotis (worker) – 98-659(UI)

(a) the appellant operates a dating agency; (admitted)

(b) Jay Shapransky was the president and general manager of the payer; (admitted)

(c) the worker worked at the payer's office; (denied with explanations)

(d) he performed various duties related to the position of consultant, that is, in sales; (admitted)

(e) he used the payer's equipment and supplies in his work; (denied with explanations)

(f) he worked under the direction and supervision of Jay Shapransky; (denied)

(g) he had to work a fixed schedule from 1:00 to 9:00 p.m., Monday to Friday; (denied)

(h) at the time of the appeals officer's investigation on March 19, 1998, he was still working for the payer; (denied with explanations)

(i) he received weekly remuneration of $300 plus a commission on the memberships he sold. (denied with explanations)

[4] The appellant admitted the facts alleged in the subparagraphs of paragraph 5 of the Replies to the Notices of Appeal except those it denied, as indicated in parentheses at the end of each subparagraph.

Nathalie Freedman's Testimony

[5] The witness is a mother and an activist who worked for the appellant as an office clerk from January 1, 1996 to September 11, 1997. She fixed her hours of work herself, days or evenings, even in Jay Shapransky's absence. She put in from 0 to 10 hours a week, sometimes at her home, without any restriction or intervention by Jay Shapransky, the appellant's manager, and received a wage of $7 an hour, recording her time herself. She stopped working in August 1997. Nathalie never submitted any report on her work, which consisted in performing a variety of duties for the appellant including making entries in the computer. She provided her own programs, Daytimer or address book, computer, and diskettes at home and used the appellant's computer and diskettes at the office. Jay Shapransky fixed her salary. Nathalie could have her work done by someone else as there was no supervision and no written contract of employment. She was never dismissed or laid off by the appellant. She left her employment on the death of her father-in-law in order to take care of the family. Nathalie recorded her in and out times when she went to do work for the appellant, and submitted her time card to the general manager (Exhibit I-1). The general manager made no source deductions in respect of her. Nathalie did not charge her transportation, telephone or electrical expenses to the appellant; she was sufficiently independent to grant the appellant's clients discounts without having to request its authorization.

Heidi Muens Lesnow's Testimony

[6] This person was a consultant who worked for the appellant from January 1, 1996 to March 4, 1998 for a weekly salary of $300 plus commission. She performed her work at a number of locations even though she had a key to the appellant's office. Her duties were related to the position of consultant and to sales. She used an office, desk and chair anywhere on the appellant's premises to meet with clients. As the manager Jay Shapransky was absent most of the time, Heidi worked alone without any supervision. The interviews could take place anywhere, even in places other than the appellant's office. Heidi had her children help her complete her duties at home, but they were paid nothing. They usually made telephone calls. Heidi had no fixed hours: she performed her work any time of the day and any day of the week, as she pleased. Only the result counted: the more hours she worked, the more money she made. To attract clientele, she advertised under the name of Mélissa Levy (Exhibit A-2), invited her clients to restaurants, and paid her own transportation expenses and telephone bills. She could hire other persons to help her in her duties. No one gave her orders and she was not accountable to anyone. Heidi sent an invoice to the appellant for payment of her fees (Exhibit A-3). By a private writing dated January 3, 1996, the appellant and Heidi entered into an agreement under which the latter leased her services to the appellant for a three-month period for a weekly salary of $300 and other consideration (Exhibit A-4). That contract was renewed and she worked for the appellant for two years.

Jay Shapransky's Testimony

[7] Jay Shapransky, the president of 3193594 Canada Inc., hired all the workers enumerated above to perform work of their choice on the days, at the times, and in the places they chose, without ever exercising any form of control whatever over them. The appellant has no financial statements for the years from 1996 to 1999, has never filed an income tax and benefits return and has never had employees in the strict sense of the word. In 1996, the company issued T4 slips for the first and only time. All these persons who worked for the appellant were paid an hourly wage of $7 plus a bonus. Jay Shapransky knew Ms. Freedman, Ms. Lesnow, Ms. Klamensberg and Mr. Soupliotis before hiring them, but not Ms. Gaudry, Ms. Boileau-Picard, Ms. Prugar and Ms. Rud. Linda Klamensberg signed an employment contract, as did Ms. Lesnow. Ms. Gaudry did not sign such a contract, nor did Ms. Boileau-Picard, Ms. Freedman, Ms. Prugar, Ms. Rud or Mr. Soupliotis. Each worker, regardless of whether he or she had a written contract, agreed verbally with the appellant to work for an hourly wage of $7 or some weekly salary. In addition, they were paid a bonus of $50 per week by Ms. Lesnow. Nathalie Freedman, Martha Rud and all the others, except Nadine Mélanie Boileau-Picard, claimed their pay by submitting an invoice, which made no sense to Jay Shapransky. All the workers were paid weekly by cheque. Workers had to repay a portion of the membership fee to each client cancelling his membership agreement.

[8] The appellant's offices consisted of seven rooms, two large and five small. In the largest room, there were six desks with room for 10. Most of the employees had a key to the offices and there were several telephones in each office. The manager's office was located in a small closed room. Ms. Freedman, like any other employee, could use her own computer or that of the company, as she wished. Ms. Freedman submitted no reports to Jay Shapransky, but produced a time card each week to facilitate preparation of her pay cheque.

Linda Klamensberg's Testimony

[9] Linda worked for the appellant on a part-time basis and the manager was satisfied with this arrangement. She was free to work where and when she wished, except when checking the others' appointments so as to avoid confusion in the interview books. She also did her work at home from time to time. Linda is the single mother of one child and this arrangement enabled her to take care of her daughter. Shapransky asked her to improve her sales technique. Linda requested payment of her salary by submitting an invoice to the appellant. She had no medical or dental plan. Linda worked for the appellant from January 1, 1996 until September 11, 1997. She had previously worked for the Agence Together and, at Jay Shapransky's request, continued to do so for the payer. The appellant and Linda entered into a written contract signed by Shapransky and her at the payer's office. This document explained Linda's duties and stated that she was to claim payment for her hours of work by submitting an invoice. The hourly rate indicated was $7 or $8, which was the wage previously paid by the Agence Together, plus a 4 percent bonus for new members signed up. Linda's duties consisted in recruiting new clients either by telephone or by newspaper advertisements. All her hours of work were claimed by means of a time card, added up, and paid by cheque. Linda used her own telephone and charged the cost to the appellant.

Martha Rud's Testimony

[10] Ms. Rud, a primary and preschool teacher, saw an advertisement in the newspaper Voir and went to the appellant's office as a client because she wanted to find a husband. She met Gerry, an employee of the appellant, and after waiting four or five hours, was hired by Jay Shapransky to work for the company. She started on January 1, 1996 and worked until March 4, 1998, typing letters, entering data, doing bookkeeping and advertising, calling newspapers, doing advertising drawings and even washing dishes. Ms. Rud was hired under an oral contract to work every day, that is to say five days a week, from 1:00 to 9:30 p.m. at an hourly wage of $6 to $6.50. Ms. Rud used the company's computer, software, stationery, pencils, appointment book, fax and telephone. All the employees had to complete a time card so that their pay cheques could be prepared every two weeks (Exhibits I-3 and I-4). Christiane Gaudry was a friend of Ms. Rud's and had to fill out the same time cards, as did Ms. Klamensberg, Ms. Boileau-Picard, Ms. Freedman, Ms. Lesnow, Ms. Prugar and Mr. Soupliotis. Jay Shapransky and Ms. Lesnow were good friends and were going out together. The other employees' work schedule was quite flexible and most of them worked evenings. Heidi Lesnow, alias Mélissa Levy, was constantly present because she acted as forewoman when Jay Shapransky was absent. She was Mr. Shapransky's right-hand woman.

Jean-Pierre Houle's Testimony

[11] Mr. Houle, an officer with Revenue Canada's litigation office, had been an objections officer in the cases herein since 1995. In a telephone conversation on March 4, 1998, Ms. Freedman told Mr. Houle that Mr. Shapransky had hired her to enter data in the computer. She worked 10 hours a week Monday, Wednesday and Friday mornings. She had a key to the payer's office and her work was performed under the direction and supervision of Jay Shapransky, who determined her work schedule one week in advance based on her availability. Ms. Freedman submitted a time sheet to the payer each week and was paid by cheque and without source deductions at the rate of $6.50 to $7 a hour.

[12] On March 4, 1998, Mr. Houle spoke with Ms. Lesnow, who described what her duties and employee status were under Jay Shapransky. Unlike the other workers, she considered herself a self-employed worker because she had no work schedule, could work when she wanted, putting in 35 to 45 hours a week, 65 percent of that time being spent at the payer's office and the rest on the road meeting clients. Mr. Houle determined that her work was insurable because:

(l) the payer contended that the business had no employees;

(2) based on the information obtained, Ms. Lesnow was Jay Shapransky's mistress.

[13] Mr. Houle had a telephone conversation with Ms. Klamensberg on February 18 and with Martha Rud on March 4, 1998.

[14] The appellant neglected to have Christiane Gaudry, Nadine Mélanie Boileau-Picard, Anna Prugar and Tony Soupliotis testify.

Analysis of the Facts in Relation to the Law

[15] It must now be determined whether the workers' activity is included in the notion of insurable employment, that is to say, whether there was a contract of employment between them and the appellant.

[16] The case law has laid down four essential tests for determining whether there is a contract of employment. The decisive case in this regard is City of Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161. Those tests are: (1) control, (2) ownership of the tools, (3) chance of profit and (4) risk of loss. The Federal Court of Appeal added the degree of integration in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553. This list is not exhaustive however.

[17] The evidence showed that the work performed by the workers was done under the direction of Jay Shapransky or Heidi Muens Lesnow and that there was a relationship of subordination between them and the appellant. Moreover, the testimony of Shapransky and certain witnesses contained numerous contradictions and Gaudry, Boileau-Picard, Prugar and Soupliotis did not testify at all.

[18] In The Law of Evidence in Civil Cases (Toronto: Butterworths, 1974), by Sopinka and Lederman, the authors comment on the effect of failure to call a witness and quote:

"In Blatch v. Archer (1774), 1 Cowp. 63, at p. 65, Lord Mansfield stated:

It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted.

The application of this maxim has led to a well-recognized rule that the failure of a party or a witness to give evidence, which it was in the power of the party or witness to give and by which the facts might have been elucidated, justifies the court in drawing the inference that the evidence of the party or witness would have been unfavourable to the party to whom the failure was attributed."

[19] The appeals are accordingly dismissed and the Minister's decisions confirmed.

Signed at Ottawa, Canada, this 31st day of August 2000.

G. Charron

D.J.T.C.C.