Brown v. M.N.R., docket 95-1257-UI

Date: 19980123

Docket: 95-1257-UI

BETWEEN:

FREDERICK P. BROWN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Léger, D.J.T.C.C.

[1] This is an appeal from the decision of the Respondent dated March 28, 1995 that the Appellant was not employed with Ianetti Investments Canada Ltd., (the "Payor") from October 4 to December 31, 1993 in insurable employment as a contract of service was not in existence between the parties as required by paragraph 3(1)(a) of the Unemployment Insurance Act.

[2] In a form known as CPT 101 "Application for determination of a question regarding insurable employment" dated October 8, 1994 signed by the Appellant, which is attached to a letter found in the Court file signed by Odile Lafontaine, Central Appeals Registry, Revenu Canada, addressed to R.P. Guenette, Registrar of the Tax Court of Canada and dated June 22, 1995 to a question found on the said form "Details of working arrangement", the Appellant replied "Domestic help taking care of building". On the Notice of Appeal filed by the Appellant's previous solicitor paragraph 3 reads as follows:

"That evidence will show that Mr. Brown was employed during the relevant period with Ianneti Investments Limited as a caregiver to Mr. Edward Beck, a blind individual who resides at 38 Harrison Avenue, Sydney, N.S. Mr. Beck required personal care due to his blindness and what appeared to be early signs of senility".

[3] The difference between the above two statements taken in isolation is not significant but coupled with numerous other matters, which I will outline, might lead one to wonder.

[4] The Appellant was receiving social assistance from April 11 to November 10, 1993. During the course of the summer he applied for a student loan and entered into a students' program at the Patrick's Beauty School operated by the Payor on September 27, 1993. The Appellant allegedly became employed with the Payor on October 4, 1993. He was then allegedly receiving $300 per week. He continued however to receive social assistance for a period of 36 days after he allegedly began to work; this is a period of five weeks. The amount received during this period was $340 per week or the sum of $1,700 (see Exhibit I-1 - question number 362). When asked to explain how it was that he received social assistance while he was allegedly earning, he simply stated it was an overlap. Some overlap!

[5] The work which the Appellant was allegedly hired to do was to care for one Edward Beck an infirm individual who was a resident of a property owned by the Payor. The Appellant was required to help the said Mr. Beck in the preparation of his meals and with his bath. The evidence disclosed that the Appellant allegedly attended beauty school class all day and after 4:00 p.m. went to the premises located at 38 Harrison Avenue, Sydney, Nova Scotia to attend to the needs of Mr. Beck. This supposedly took him until midnight. The Appellant and the employer did not keep a record of the hours worked. The employee allegedly received $300 per week from October 4 to November 5, 1993 and $400 per week for the rest of the time he was in the employ of the Payor. Patrick Ianetti, the owner of the Payor company, was asked to explain why a 33 1/3% increase in the salary of the Appellant was given in early November. He gave the Court a rambling explanation that the salaries were set by a Ms. Louise Boyd, a bookkeeper who had the authority to do this. When, on cross-examination, it was placed before him that he only received $4,800 per year to support Mr. Beck and that his firm had allegedly spent around $4,000 to hire the Appellant to look after Mr. Beck for about three months, it was evident to the Court that he was not telling us the truth. He rambled about to answer the questions put to him and when cornered he finally stated only Ms. Boyd could give us the answer and she was deceased. The Appellant could give us no better answer.

[6] The evidence also disclosed that the Appellant was paid in cash and that he signed the payroll sheet every time he received his pay. A photostat copy of the payroll sheet was placed in evidence as Exhibit A-3; this is a copy of the original payroll sheet. When we compare the signatures which appears on Exhibit A-3 with the signatures of the Appellant which appear on Exhibit I-1, I-2 and on Form CPT "Application for determination of a question regarding insurable employment" attached to a letter from Odile Lafontaine to R.P. Guenette dated June 22, 1995, the signature appearing on Exhibit A-3 does not resemble the signatures on the other documents. The Court is not relying on the facts in this paragraph to decide the appeal.

[7] During cross-examination of the Appellant he was questioned about the answers he made on Exhibit I-2 which is a form required by the student loan agency entitled "Student Contribution Review Form 1993-1994". This form was filled out and signed by the Appellant on November 19, 1993. At this time he had been allegedly working for the Payor for 45 days or over six weeks. Under the title "Resources During Current Academic Year" question number 601 "Gross earnings" (weekly amount earned during school year only) the answer is "Nil". It is obvious that the answers contained in the form are either false or he had not yet entered into an agreement with his alleged employer to receive stamps. While the Appellant was being questioned on this exhibit it was obvious to the Court he was not being truthful. He tried to tell us others filled out this form in a similar manner. He also tried to tell us he did not understand the straightforward questions which appeared on the form. Here we are not dealing with an illiterate person but rather a high school graduate. He appeared to me to be a cunning intelligent person. He stumbled and hesitated during his cross-examination to such an extent that it was apparent he was not worthy of belief. Seldom does a transcript of evidence disclose such stumbling but in this case I would like to reproduce a part of the transcript when he was being questioned about the solemn declaration which appeared immediately over his signature on Exhibit I-2. Here I am setting the re-direct examination by his own counsel which appears on page 161 of the transcript of the evidence which reads as follows on line 3:

"Q. --- were you aware of that Declaration at the time that you signed the form?

A. Yes.

Q. Okay. What do you say about whether you complied with that Declaration or not as you understood the information that was being solicited from you?

A. As I understood it, I was well within -- I've obviously signed it. I've had no problem with it. I mean, I thought -- if somebody was to check it out if I was right or wrong -- I mean, it's without say that, you know, I would agree to their terms if -- you know, I had no objections. I had to send it in. It was required from me. And to my knowledge of the knowledge of the application, I had no problems with at all."

[8] Other parts of the transcript reveal similar conduct.

[9] In order for the unemployment insurance system to work properly the law requires certain conduct on the part of the applicant and his employer. The system is such that fictitious or fraudulent transactions are easily concocted. Therefore in the case of an application for unemployment insurance the law requires that the parties conduct themselves by the exercise of uberrima fides the utmost good faith. In the case at bar I find that there was an entire absence of good faith on the part of the Appellant and his alleged employer.

[10] The issue to be decided is whether the Appellant was employed in insurable employment while engaged by the Payor for the period of October 4 to December 31, 1993 within the meaning of paragraph 3(1)(a) of the Unemployment Insurance Act. The Respondent relies on the case of Wiebe Door Services v. M.N.R. (1986) 87 DTC 5025 which holds that it is important to examine the entire relationship of the parties involved in order to determine whether a contract of services existed. Some of the factors set out in this case to be considered are as follows:

- the supervision and control which the Payor exercized over the Worker;

- the ownership of the tools;

- the chance of making a profit;

- the risk of incurring a loss;

- the integration of the Worker into the business of the enterprise.

[11] The Respondent further submits that the period of employment was exactly 12 weeks which was the minimum period of employment needed to qualify the Appellant for benefits under the Unemployment Insurance Act. The firm was engaged in an operation of part of an enterprise which suffered a loss which had to be subsidized by other profitable parts of the business. In spite of the above fact the salary of the Appellant, for no explained reason, was during his employment increased by 33 1/3%.

[12] After having considered all of the evidence and the submissions of counsel, the Court has not been satisfied that the Appellant was supervised. He could come and go to his alleged employment as he pleased. The Court does not accept the evidence which states that it took eight hours per day to do the task allegedly assigned to the Appellant. If there was a contract of employment, it was a contract for services and not a contract of service. The Appellant was not integrated into the enterprise of the Payor.

[13] The Court hereby declares after having considered all of the evidence that it has not been satisfied by a preponderance of credible evidence that there was during the period in question a contract of insurable employment as required by paragraph 3(1)(a) of the Unemployment Insurance Act.

[14] The appeal is therefore dismissed and the determination of the question in issue affirmed.

Signed at Shenstone, New Brunswick, this 23rd day of January 1998.

"C.I.L. Léger"

D.J.T.C.C.