Lamontagne v. M.N.R., docket 96-225-UI

Date: 19971024

Docket: 96-225-UI

BETWEEN:

MAURICE LAMONTAGNE,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Prévost, D.J.T.C.C.

[1] This appeal was heard at Roberval, Quebec, on October 8, 1997.

[2] It is an appeal from a determination by the Minister of National Revenue (the "Minister") dated November 29, 1995, that the appellant's employment with Robert Lamontagne et Als, owners of the payer, Les Appartements Revlac (1981) Enr., from August 12, 1991, to August 14, 1992, from October 5, 1992, to August 6, 1993, and from October 4, 1993, to August 12, 1994, was not insurable because it was not held pursuant to a contract of service.

[3]Paragraph 5 of the Reply to the Notice of Appeal reads as follows:

[TRANSLATION]

5. In making his determination, the respondent Minister of National Revenue relied inter alia on the following facts:

(a) during the periods in issue, the partners in the payer were Luc Dumas with a 6.25 per cent interest; Solange Gagnon, 15 per cent; Gestion J.T.B. Inc., 6.25 per cent; Réjeanne Guay, 15 per cent; Françoise Lamontagne, 10.86 per cent; Paul Lamontagne, 10.86 per cent; Robert Lamontagne, 22.5 per cent; Laval J. Pagé, 8.67 per cent; and Jean Tremblay, 4.61 per cent; (A)

(b) the appellant is Robert Lamontagne’s and Françoise Lamontagne’s brother and Paul Lamontagne’s father; (A)

(c) the payer owned and operated four 16-unit apartment buildings; (A)

(d) during the periods in issue, the payer's turnover varied between approximately $215,000 and $250,000 a year; (A)

(e) the appellant lives in one of the buildings belonging to the payer; (ASTA)

(f) he was responsible for repairs and renovations to the units; (ASTA)

(g) he decided when and how he was to do his work; (D)

(h) the appellant claims that from September 1991 to October 1992 he worked one to three weeks per month on a full-time basis (except in September 1992) and that he did not work the rest of the time; (D)

(i) starting in November 1992, the appellant received fixed weekly remuneration for regular maintenance work and $14 an hour for other work; (A)

(j) the weekly remuneration paid to the appellant for his purported weeks of full-time work was $498.70 then $623.70 during the first period in issue, $667 then $702 during the second period in issue and $702 then $744 during the third period in issue; (AEFTWP)

(k) the weekly remuneration paid to the appellant for his purported weeks of part-time work was $152.42 for the first period in issue (August 1991), $90 then $100 during the second period in issue and $100 during the third period in issue; (AEFTWP)

(l) the appellant received his fixed weekly remuneration regardless of the hours worked; (D)

(m) he claims he worked full time for 25 weeks during the first period in issue and 12 weeks during the second and third periods; (D)

(n) the appellant claims he performed renovation work only during his purported weeks of full-time work and none of that kind of work during the other weeks; (AEFTWP)

(o) the appellant provided services to the payer year-round; (ASTA)

(p) the appellant and the payer entered into an arrangement for the purpose of enabling the appellant to receive unemployment insurance benefits at a higher rate; (D)

(q) there was no contract of service between the appellant and the payer during the periods in issue. (D)

[4] In the above passage from the Reply to the Notice of Appeal, the Court has indicated in parentheses, after each subparagraph, the comments made by counsel for the appellant at the start of the hearing, as follows :

(A) = admitted

(ASTA) = admitted subject to amplification

(AEFTWP) = admitted except for the word "purported"

(D) = denied

Hearing

Appellant's Evidence

According to His Testimony

[5] He had occupied one of the payer's units since 1982 or 1983. In 1991, he had paid rent of $450 a month and had been paying $560 a month since March 1993. At first, this rent was withheld from his pay, but, since 1993, he had been paying it directly by cheque each month.

[6]Prior to July 1989, when he was injured in a work accident, he had worked for the payer year-round and also performed caretaker’s duties.

[7] He received CSST benefits and emerged from the incident with a partial physical disability which prevented him from continuing to do caretaking.

[8] The payer then hired the appellant’s spouse full time for the caretaking and supervision and a contract employee for the maintenance and renovation.

[9] He returned to work in November 1990, but only did maintenance and renovation work, being no longer capable of doing work that required him to rotate his body.

[10] The partners in the payer held a few meetings each year and he attended them together with his spouse. It was on those occasions that their duties were set out and that certain programs were established. For example, the decision was made to reinsulate the 32 north-facing apartments, to change the water heaters and to proceed with soundproofing work.

[11] The appellant carried out this work depending on the availability of the apartments: when an apartment was vacated, he also took advantage of the situation to renovate it and freshen it up. The payer's administrator told him to use his judgment and he did so.

[12] The appellant purchased the necessary materials, charging them to the payer's account, except for "anything really special", for which he had to go to his employer. He made minor repairs, that is to say, for example, he changed fuses, and he repaired leaking toilets, damaged doorknobs and fans that did not work properly.

[13] All the tools were supplied to him by the payer. He prepared a list of such tools to February 11, 1996 (Exhibit A-1), but he used more or less the same tools during the periods in issue.

[14]Carpenter's tools were stored in Apartment 102 at 1245 Des Bouleaux, a 4 1/2-room apartment set aside for that purpose. This was in short a repair shop where the parts most often required were also kept.

[15] The photographs (Exhibits A-2a, A-2b, A-2c and A-2d) show the insulation and soundproofing work, as well as other work which he performed for the payer.

[16] He prepared highly detailed reports on his work and submitted them to the payer in order to be paid. He did not track down those for the first period in issue, but did file those for the second and third periods (Exhibits A-3 and A-5) and attached thereto his pay cheques.

[17]Every morning, he went round to the four buildings to see whether there were any problems and, if there were, to solve them.

[18] In 1991, he worked every other week full time and the caretaker, Raynald, did the same.

[19]Using the payer's financial statements, the appellant prepared for 1991, 1992, 1993 and 1994 a summary (Exhibit A-4) of possible gross revenues, of maintenance and repair expenses, of caretaking expenses and of administrative expenses based on certain standards in use in this kind of business.

[20] He was able to do so because it was he who had done the payer's accounting since the end of the last period in issue.

[21] The maintenance and repair expenses were higher in 1991 because the roofs had to be repaired.

[22] He received two types of remuneration: instead of paying him $15 or $16 an hour when he did big jobs, the payer opted to pay him only $14 an hour and to pay him in addition a small lump sum amount each week.

[23] He had always reported this small amount to the unemployment insurance authorities when he was receiving unemployment insurance benefits.

[24]When he was laid off in August 1992, he applied for and received Quebec pension benefits since he was not working. When he resumed working, he continued to receive those benefits since he was only three or four months away from his sixty-fifth birthday.

[25] His records of employment and his applications for unemployment insurance benefits (Exhibit I-1) clearly show the periods in issue.

[26] He was not free to do or not do the jobs requested by the payer because, when the apartments were empty, the work really had to be done.

[27]However, the appellant decided on his own during which week he would proceed with the work so as to disturb the tenants to a lesser degree.

[28] He also determined on his own which small jobs to do, but he did so after consulting his spouse.

[29]When he purchased materials, he generally ordered them in advance so as to have everything when he did the jobs themselves.

[30] He did sign a statutory declaration (Exhibit I-2) at the Canada Employment Centre, on December 19, 1994, before investigation and control officer Lise Coulombe, who had also previously met him at her office. The declaration reads in part (pages 2 and 3) as follows:

[TRANSLATION]

. . . I arranged things so as to have the weeks I needed to qualify, as I controlled my schedule and my hours and in fact, following this investigation, I decided to stop my cards . . .

[31] The following appears on page 2 of this declaration under the heading "Correction":

[TRANSLATION]

It should be noted that my only abuse was to exaggerate my insurable weeks because, ultimately, I controlled my hours. I did so to obtain a higher rate; I worked and planned my work in such a way as to get my insurable weeks.

[32] He did sign the declaration on page 2 before and after this addition.

[33] He did not have his glasses when Lise Coulombe read him the declaration; he was also not in the best physical condition at the time as he had a headache and did not fully have his wits about him.

[34]That is why he sent the following solemn declaration (Exhibit I-3) to the Alma office of Employment and Immigration Canada three days later, on December 22, 1994:

[TRANSLATION]

I the undersigned, Maurice Lamontagne (221-109-218), 1245 Des Bouleaux, Apt. 404, Saint-Félicien, Quebec, G8K 2K6,

Solemnly declare that:

Around 11:45 a.m. on December 19, 1994, in the offices of Employment and Immigration Canada in Roberval, I signed, before Lise Coulombe and Emery Hollands of the Alma office, a declaration which I wish to correct because it does not accurately represent what I said or meant to say.

Starting on line 17 of that declaration, I appear to have stated: "I admit that I have deliberately relied on unemployment insurance over the past two years; I used the system last year, 1993-1994; I did so alone without involving Revlac and I arranged things so as to have the weeks I needed to qualify, as I controlled my schedule and my hours . . ."

Before signing, I asked that the declaration cited above be corrected, and that correction was made at the end of the document as follows: "It should be noted that my only abuse was to exaggerate my insurable weeks because, ultimately, I controlled my hours. I did so to obtain a higher rate; I worked and planned my work in such a way as to get my insurable weeks."

That correction was not explicit enough and that is why I wish to clarify certain points:

1. I did not deliberately rely on unemployment insurance. Part of my work with Revlac, namely renovating apartments, is seasonal work which is done between September and April and is subject to such things as the availability of apartments for renovation, because not all vacant apartments have to be renovated, and Revlac's financial situation.

2. I declared and now state again that my first unemployment insurance claim in August 1992 was not planned and that, during my qualifying weeks from August 1991 until at least June 1992, I never thought of, or considered in any way whatever, eventually making an application for unemployment insurance benefits.

3. As regards the other periods, namely that from August 1992 to August 1993, which enabled me to receive benefits, and that from August 1993 to August 1994, following which no benefits were paid, the declaration suggests that I took certain actions to obtain the required number of insurable weeks. This is not true because the work I had to do required the number of weeks actually worked without my having to change anything at all. The work was there and I did it in roughly the time that someone else would have taken to do it.

4. With respect to the same periods, namely from August 1992 to August 1993 and from August 1993 to August 1994, the declaration suggests that I systematically arranged things so as to inflate my number of insurable weeks. Once again this is not entirely correct. I admit that I controlled and still do control my schedule and my hours of work. I admit that, if I had wanted to, I could have worked 30- or 35-hour weeks, but it is not clear that that would have been to Revlac's advantage. I alone decided I would work weeks of 43 hours. What I meant to say on this point in my declaration is that, in certain weeks, because of potential unemployment insurance benefits, I had to motivate myself to work 43 hours, whereas I had every incentive to take time off.

5. Even though this question has not been put to me directly, I formally declare that I have never banked hours for unemployment insurance purposes. I have always been paid for time worked.

And I make this solemn declaration conscientiously believing it to be true, and with the knowledge that under the Canada Evidence Act it is of the same force and effect as if made under oath.

[35]When he left the Employment Centre on December 19, 1994, the appellant did not have a copy of his declaration and, having requested one, he did not receive it until the next day or the day after by mail.

[36]After filing his last application for unemployment insurance benefits, he did not receive the cheques he had hoped for and stopped sending "the cards" because he had been told he was not eligible.

[37] He had always tried to act for the greatest benefit of his employer.

[38] He decided on the number of hours he would work per week and he always did so in his employer's interests.

[39]During the first period in issue, he worked 28 weeks and knew he needed more than 20 weeks to be eligible for benefits.

[40]During the other two periods, he worked 12 weeks, and he needed 10 for the second period and 12 for the third.

[41] He is quite involved in his community; he is active in the St-Félicien zoological society and also in other organizations.

[42] He has always been honest with the payer and has always been paid only for work he has done.

[43] The system under which he worked full time every other week, alternating with the caretaker, did not produce good results because there were periods when there were not enough repairs to do.

[44]That moreover is why that system was abandoned.

[45] If he had not had his work accident, "all these problems would certainly not have occurred".

Respondent's Evidence

According to Lise Coulombe

[46]Ms. Coulombe has been an investigation and control officer since 1993 and was previously, from 1986, an investigation clerk. The appellant's file was assigned to her and she took his statutory declaration (Exhibit I-2) in a conference room at the Employment Centre in the presence of Emery Hollands, another investigator from the same office as Ms. Coulombe.

[47] She had previously met the appellant in her office. Before taking his declaration at the Centre, she explained the process to him and asked him questions, which he answered. She then drafted the text and read it to him. He wanted to make one correction, hence the rectification at the bottom of page 2 of the declaration.

[48] She submitted the case to Revenue Canada, Taxation, on December 22, 1994, and received the solemn declaration (Exhibit I-3) the next day. She immediately forwarded it to Revenue Canada, Taxation.

[49] The appellant needed 20 weeks to qualify for benefits in the first period in issue, 10 weeks in the second and 12 weeks in the third.

[50] It was normal for the appellant's small lump sum amounts of remuneration not to appear in his records of employment because only the amount of the last pay in excess of 25 per cent is deducted from benefits.

[51] She did not remember whether her interview with the appellant at the Employment Centre had taken place in the morning or in the afternoon because she had not noted the fact, nor had she noted the meeting's duration.

[52]Lise Coulombe’s and Emery Hollands’ supervisor had told them to work together to learn from one another and that is why both were at the interview. As investigators, however, they were checking the same thing. Both asked questions, but it was she who drafted the text and read it to the appellant.

[53]However, she did not remember whether the appellant had reread it himself.

[54] She did not give him a copy, but mailed one to him immediately after the interview.

[55] She rarely receives a solemn declaration following an interview of this kind, but parties frequently send her other documents.

[56] She mailed the solemn declaration (Exhibit I-3) to Revenue Canada, Taxation, without attaching an addendum to her report.

[57] At the interview on December 19, 1994, she introduced herself to the appellant as an investigation and control officer, but did not caution him.

[58] As an investigation and control officer, it was not for her to make a decision; she merely submitted her investigation file.

According to Claude Soulard, Appeals Officer

[59] He filed his report (Exhibit I-4) on November 22, 1995 and at that time he had in hand the documents he needed in order to proceed.

[60] He could not say, however, whether he had the solemn declaration (Exhibit I-3) in his file at that time.

[61] He had conducted his investigation by telephone.

Appellant's Evidence in Rebuttal

According to the Appellant

[62]There was an error in fact 69 of the report (Exhibit I-4) because the trailer which he used to pick up the material he needed for repairs did not belong to him, but was in fact the payer's property.

[63] He had always received an allowance for the use of his personal vehicle for his employer's benefit and it was currently $38 a week for trips related to the buildings in question because he made many such trips.

[64]However, if he had to make a trip to Chicoutimi, for example, he was entitled to a supplement.

Argument

According to Counsel for the Appellant

[65] All the elements of a genuine contract of employment are present. Had it not been for his client's unfortunate accident, he would undoubtedly still be working full time for the payer and the instant appeal would not have been necessary.

[66]After his client returned to work, there was an attempt at work sharing by the appellant and the caretaker, but that did not work out and they came up with the system involving a small weekly lump sum remuneration and further remuneration, by the hour, for big maintenance and renovation jobs.

[67]With regard to control, it must be understood that the payer consisted of a group of partners who managed their properties from a distance and who necessarily had to assign responsibilities to the appellant.

[68] His client thus had to adhere to the major programs established by his employers, but was still obliged to obtain specific permission from the payer for disproportionately large contracts.

[69] The appellant produced well-documented weekly reports in order to be paid for the hours he had worked and, for the work for which he was paid by the hour, he was dependent on apartments becoming vacant.

[70]During the first and second periods in issue, he worked by the hour for more weeks than he needed to qualify for unemployment insurance benefits.

[71] The tools belonged to the payer. The list (Exhibit A-1) is very detailed and even the trailer belonged to the payer, contrary to what appeals officer Claude Soulard believed.

[72] The appellant had no hope of profits nor risk of losses even though, in a certain context and always in the payer's interests, he could determine his hours of work.

[73] It is strange that two investigators were needed to orchestrate things at the interview on December 19, 1994.

[74] At that time, the appellant had a headache and did not feel well. He immediately wanted to clarify his answers by means of his solemn declaration (Exhibit I-3).

[75] He concentrated his work for reasons of efficiency in the payer's interests and not to defraud the unemployment insurance authorities.

[76]Lise Coulombe did not call his client back after receiving the latter’s solemn declaration and she did not even see fit to attach to her report an addendum either confirming or amending that report.

[77] The appellant was well integrated into the payer; he reported to it on his activities; he attended the meetings of its partners and his services were essential.

According to Counsel for the Respondent

[78] In subparagraph (p) of the Reply to the Notice of Appeal, his client writes that the appellant and the payer entered into an arrangement for the purpose of enabling the appellant to receive unemployment insurance benefits at a higher rate, and that is in fact what happened.

[79] The four generally recognized tests may have been met, but that is not sufficient because, for employment to be insurable, no such arrangement can have existed.

[80] The appellant obviously worked for the payer, but that is not sufficient to make his employment insurable.

[81] In his declaration (Exhibit I-1), he admitted that he had deliberately relied on unemployment insurance in the last two years and that he had used the system in 1993 and 1994 in such a way as to obtain the number of weeks necessary to qualify for benefits.

[82] It is true that the appellant subsequently made a solemn declaration.

[83]However, he gains nothing from this declaration because it says : "I admit that I controlled and still do control my schedule and my hours of work."

[84] He enjoyed considerable independence in organizing his work and purchasing the materials necessary for it.

[85]This independence was excessive and no one may arrange things in this way so as to receive large unemployment insurance benefits.

[86] The Minister is moreover responsible for keeping an eye on the situation in each case.

[87] The appellant was paid a small lump sum amount each week and was also paid by the hour for certain big jobs, which raises doubts as to the insurability of his employment.

[88]Lise Coulombe's investigation was conducted in a perfectly legal manner and the appellant could moreover have refused to take part in it.

[89] In addition, Lise Coulombe did her work properly by sending the appellant’s solemn declaration to Revenue Canada, Taxation, when she received it.

[90]Lise Coulombe made no decision; she merely conducted an investigation and, following that investigation, there came Claude Soulard's report and the decision by the Minister appealed from herein.

Analysis and Conclusion

[91] The respondent did not consider that the appellant's work had changed as a result of his work accident, and that explains why he had trouble understanding the situation.

[92] He thought that the appellant started out working one week in three whereas, according to the uncontradicted evidence, he worked one week in two.

[93] The respondent did not understand that the small lump sum amount paid to the appellant every week was paid in order to keep his remuneration for big maintenance and renovation jobs at $14 an hour.

[94] It is true that the appellant provided services to the payer year-round in exchange for this small weekly lump sum amount, but, for his other, more important services, he was paid only by the hour when he worked.

[95] The arrangement alleged in subparagraph (p) above was denied and the whole of the evidence suggests that there was a two-part contract of service between the appellant and the payer.

[96]After he returned to work, the appellant did what his physical condition permitted.

[97] His instructions were given to him at the meetings of the partners and the Court is satisfied that there was a genuine power of control.

[98] All the tools belonged to the payer, even though the appeals officer wrote at fact 69 of his report (Exhibit I-4) that the trailer belonged to the appellant.

[99] The photographs (Exhibits A-2a to A-2d) clearly show the work performed by the appellant, who moreover provided the payer with highly detailed reports (Exhibits A-3 and A-4).

[100]The summary (Exhibit A-4) clearly shows that the appellant did excellent work.

[101]The wages paid to him seem very reasonable in view of all his responsibilities.

[102]The fact that the appellant collected his Quebec pension is not relevant in deciding the instant case.

[103] It is true that the appellant had a certain freedom of action, but this was quite normal in the circumstances.

[104] It was prudent on his part to order the required materials in advance so as not to waste time in performing the work.

[105]The uncontradicted evidence suggests that the appellant did not have his glasses, that he was not in his best physical condition, that he had a headache and that he did not fully have his wits about him when he signed the declaration (Exhibit I-2).

[106] He subsequently made his solemn declaration (Exhibit I-3) and, having previously practised the profession of notary, he was well aware of the importance of an oath.

[107]The Court will therefore consider this solemn declaration in concluding below and the appeals officer should have done so as well.

[108]The explanations that the appellant gave therein are logical and credible and should be accepted.

[109]Subparagraph (m) above speaks only of 25 weeks in the first period in issue, whereas the record of employment (Exhibit I-1) indicates 28 weeks.

[110]During two of the three periods in question, the appellant worked more than the minimum number of weeks he needed to qualify.

[111] It is entirely to his credit that he is involved in his community, but the Court cannot use that as a basis in ruling below.

[112] If the work accident had not occurred, the situation might have been different, but that is not what the Court has to decide.

[113] In view of Lise Coulombe's testimony, there is no need to comment on the fact that the appellant's small lump sum amounts of remuneration were not reported on his records of employment.

[114] No inference may be drawn from the fact that this officer no longer remembered how long the interview had lasted or from the fact that two investigators took part in it.

[115]The appellant said that he did not have his glasses and it is therefore more than likely that he did not reread the declaration (Exhibit I-2) at the unemployment insurance office.

[116] It is true that it was not for Lise Coulombe to make a decision.

[117]The allowance received by the appellant for the use of his vehicle in performing his duties is of no importance for the conclusion below.

[118]The Court need not express an opinion as to what Lise Coulombe should have done upon receiving the solemn declaration, particularly since it was not she who could decide.

[119]There is no doubt that the appellant was well integrated into the payer.

[120]The appellant had a certain amount of freedom to spread out his work, but he always had to exercise that freedom in his employer's interests.

[121] In construction and renovation, working 43 hours a week is not excessive.

[122]With all due respect for the opposite view, the appellant's double remuneration was not prohibited, as the parties were entitled to enter into whatever agreements they wished, and this raises no doubts as to the insurability of the employment.

[123]The appeal is therefore allowed and the decision appealed from is reversed.

"A. Prévost"

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 7th day of July 1998.

Erich Klein, Revisor