Citation: 2009 TCC 234
Date: 20090519
Docket: 2009-222(EI)
BETWEEN:
LAURETTE BOUCHARD,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1]
The Appellant is
appealing from a decision of the Minister of National Revenue
("the Minister") under the Employment Insurance Act
("the Act"). The Minister determined that Laurette Bouchard
("the Worker") was not employed in insurable employment from May
4 to September 6, 2008 ("the relevant period"), when working for Norbert
Bouchard ("the Payor"), who was carrying on business as "Restaurant
du Village", because the Minister was not satisfied that a similar
contract of employment would have been entered into if the Worker and the Payor
had been dealing with each other at arm's length.
[2]
In making his decision,
the Minister determined that, at the time that the Worker was working for the
Payor, the two were related within the meaning of the Income Tax Act
based on the following assumptions of fact:
[TRANSLATION]
(a) Norbert Bouchard is the only registered
owner of the sole proprietorship carrying on business as Restaurant du Village.
[admitted]
(b) The Appellant is Norbert Bouchard's wife. [admitted]
(c) The Appellant is related by marriage to Norbert
Bouchard, who controls the Payor. [admitted]
[3]
In making his decision,
the Minister also determined that it was not reasonable to conclude that the
Payor would have entered into "a substantially similar contract of
employment" with the Worker if they had been "dealing with each other
at arm's length", having regard to the following circumstances:
(a) The Payor registered his sole proprietorship
on September 3, 2002. [admitted]
(b) The Payor operated a 60-seat
restaurant in Rivière-au-Tonnerre. [admitted]
(c) The Payor sold the restaurant in 1998
but had to take it back in 2002 because the purchaser went bankrupt and he
wanted to protect his claim. [admitted]
(d) The business was usually operated from
February to December, but sometimes opened during the winter. [admitted]
(e) In 2008, based on the Payor's monthly GST
returns, its sales were as follows: [admitted]
|
January
|
$6,604
|
|
February
|
$6,604
|
|
March
|
$5,195
|
|
April
|
$7,126
|
|
May
|
$11,791
|
|
June
|
$15,823
|
|
July
|
$29,907
|
|
August
|
missing return
|
|
September
|
$14,369
|
(f) The Payor had business losses of $43,164
in 2005, $47,281 in 2006 and $75,250 in 2007. [admitted]
(g) The restaurant was open from 7 a.m.
to 8 or 9 p.m. in the summer and in the winter. [admitted]
(h) The Payor employed seven or eight
employees in addition to the Appellant. [admitted]
(i) The Appellant's daughter Nadia
Bouchard was responsible for managing the restaurant as well as serving the
customers. [admitted]
(j) Starting in June 2008, Nadia Bouchard
operated a bed and breakfast and worked primarily on the restaurant's
accounting. [admitted]
(k) From January to May 2008, the Appellant
worked alone at the restaurant from 70 to 80 hours per week without pay. [denied
as worded]
(l) From January to May 2008, the Payor could
not afford to remunerate the Appellant. [admitted]
(m) The Appellant worked as a cook and
pastry cook. [admitted]
(n) The Appellant's duties were food and
pastry preparation, dishwashing, shopping in Sept-Iles and, occasionally,
waiting tables. [admitted]
(o) The Appellant reported to the
restaurant at 6 a.m. seven days a week to prepare the food. [admitted]
(p) The Appellant worked 70 to 80 hours
a week but was paid for a 60-hour work week. [admitted]
(q)
The Appellant's rate of pay was $10 per
hour. [admitted]
(r)
The Appellant received $600 in gross
remuneration per week. [admitted]
(s)
Except for the first two weeks of the period in
issue, when she received $540 per week, the Appellant's remuneration did not
vary from week to week. [admitted]
(t)
The Appellant's weekly remuneration was
fixed and did not depend on the hours that she worked for the Payor. [admitted]
(u)
The Payor's other employees were paid based on the
hours that they actually worked. [denied as worded]
(v)
The other employees did not work any hours
without pay. [admitted]
(w)
The waitresses kept the tips; the Appellant and
the kitchen staff did not receive tips. [admitted]
(x)
The Appellant was laid off on
September 6 because she had enough hours to collect
EI. [the underlined part is admitted but the rest is denied]
(y)
On September 11, 2008, the Payor gave
the Appellant a Record of Employment (ROE) which reported that the first day of
work was May 4, 2008, the last day of work was
September 6, 2008, the number of insurable hours was 1080, and the
total remuneration was $10,296. [admitted]
(z)
The Appellant's Record of Employment does not
reflect the actual period of employment or the hours actually worked. [denied]
(aa)
The Appellant claims that, following her layoff
on September 6, 2008, an employee named Guylaine Lebrun managed the business. [admitted]
(bb)
In 2008, the restaurant closed in late November.
[admitted]
(cc)
The Appellant's alleged employment period does
not coincide with the Payor's period of economic activity. [denied]
(dd)
Having regard to the importance of the
Appellant's work, it is not reasonable to believe that she did not remain
employed by the Payor until the restaurant closed. [denied]
(ee)
The duration of the Appellant's work was based
on what she needed to qualify for EI benefits, not on the Payor's needs. [denied]
[4]
The Worker testified in
the case at bar, and her position was supported by the testimony of her
daughter Nadia Bouchard and of the Payor. Lyne Courcy, the appeals
officer who rendered the impugned decision, was the only witness to testify in
support of the Minister's position.
The Payor's testimony
[5]
Essentially, the
Payor's testimony discloses as follows:
(i)
The Worker performed
unpaid work at the Payor's restaurant ("the restaurant") prior
to May 2008 (specifically, in 2004, 2005, 2006 and 2007 and from January
to May 2008) because the Payor could not afford to pay her.
(ii)
From January to May
2008, the only people who worked at the restaurant were the Worker and her
daughter Nadia Bouchard.
The testimony of Nadia Bouchard
[6]
Essentially, the
testimony of Nadia Bouchard discloses as follows:
(i)
From January to May
2008, the restaurant was operated roughly 15 days per month.
(ii)
The restaurant's activities
during this period consisted in serving customers who were almost all from
outside the Rivière‑au‑Tonnerre area, namely, Hydro‑Québec employees
who worked on sites nearby.
(iii)
The Worker and Nadia
Bouchard were the only people who worked at the restaurant as employees. Nadia
Bouchard explained that she and the Worker each worked 16-20 hours per month at
the Payor's restaurant during that period. Their tasks consisted in
(1)
preparing and serving
breakfast and supper to Hydro-Québec employees, and
(2)
making sandwiches that Hydro-Québec
employees brought to their work sites.
(iv)
The Worker worked on a
volunteer basis for the Payor from January to May 2008 because the Payor
could not afford to pay her.
(v)
During the relevant
period, the Worker and Gisèle Lapierre (who was also on the
restaurant's kitchen staff) were the only people not paid by the hour.
Ms. Bouchard explained that these two employees of the Payor received
fixed weekly remuneration during this period, regardless of the hours that they
worked for the Payor.
(vi)
The Worker did not work
at the restaurant following her layoff on September 6, 2008. Ms. Bouchard
explained that tourists (the restaurant's main customers) essentially
stopped coming to the restaurant after Labour Day, so there was not enough work
at the restaurant for the Payor to keep the Worker employed.
The Worker's testimony
[7]
The Worker essentially
gave the same testimony as Nadia Bouchard.
Lyne Courcy's testimony
[8]
Ms. Courcy essentially
went over the statements that the Worker and Nadia Bouchard made to her during
her telephone interviews with them. Most of those statements are in her appeal
report (Exhibit I-2). The following excerpts from that report are worth
quoting because of their relevance:
[TRANSLATION]
Information obtained from the Appellant Laurette Bouchard
during the telephone interview of December 4, 2008:
. . .
9.
Prior to the period in issue, that is to say,
before May 4, 2008, the Appellant performed the same duties for the
Payor as she did in the course of the period in issue, except that she was not
paid, because the Payor had too many debts to afford to pay her. She
worked roughly 80 hours a week during this time.
10.
For the part of the year 2008 that preceded May
4, the Appellant worked at the restaurant starting on its annual reopening
day, but was not remunerated.
11.
During the period in issue, the Appellant performed
the full range of tasks at the restaurant, including food preparation, making desserts,
dishwashing and, occasionally, waiting tables. The Appellant mainly worked
in the kitchen. Employees are hard to come by in the region, which is why she
had to perform all these tasks.
. . .
14. The restaurant was open from
7 a.m. to 8 or 9 p.m., summer and winter alike.
. . .
18. The Payor began by paying her a gross
salary of $468 per week. This was increased to $624 ($10/hr + 4%) after she
asked for the same hourly wage ($10) as most of the employees.
19. The Payor's other employees were paid $10
per hour, with the exception of one employee, who was paid $11 per hour, and
they were paid for the number of hours that they actually worked each week.
. . .
23. The Appellant was laid off on
September 6, 2008, because business was slower at the restaurant and
there was less preparation to do. When questioned about who looked after
the business at that time (since her daughter was looking after her B&B)
the Appellant said it was Guylaine Lebrun, an employee, who did so.
24. The Appellant says that she has not
been performing any services for the Payor, even on a volunteer basis, since
September 6, 2008.
Additional information obtained from Nadia Bouchard, an employee in
charge at the Payor's place of business, during the telephone interview of
December 4, 2008:
. . .
30. From January 2008 to May 4 of that year,
the Appellant was alone at the restaurant because there were no other
employees. At that time, she arranged her schedule so that she would work split
shifts that coincided with mealtimes. However, she was not compensated for those
hours because the Payor could not afford to pay her. When there was too
much work, the Appellant asked him to come help her.
31. In the winter, the restaurant closed after
supper, at around 7 p.m.
32. Ever since the restaurant was taken back in
2002, the Appellant prepared the sauces (spaghetti sauce, seafood sauce, hot
chicken sandwich gravy, etc.) the pastry, major preparation —
essentially, everything the two other cooks and the assistant cook did not do.
33. The Appellant's duties prior to the period
in issue were the same as during the period in issue, except that she was not
remunerated by the Payor.
34. The Payor paid $11 per hour to the
most senior employee, who had been with the restaurant for six years.
35. The Appellant's
hours of work were based on the volume of business. The Appellant opened
up in the morning, worked until 2 p.m. and came back during the day if an
employee phoned her about a work overload. She received fixed pay based on
a 60‑hour week because she worked 50 to 70 hours per week. She was
paid weekly.
. . .
40. There was another cook who was also paid a
weekly salary as opposed to an hourly wage.
41. After September 6, 2008, when the Appellant
was laid off, only one employee stayed at work, namely Guylaine Lebrun. When
questioned about why she was the only worker prior to the period in issue, and
yet did not stay on after that, the Appellant answered that she had already
done her weeks, whereas Ms. Lebrun had not. It was Nadia Bouchard who
looked after closing the restaurant.
. . .
[9]
The evidence also
disclosed that the Payor's monthly sales varied from $5,195 to $7,126 from
January to April 2008, were $11,791 in May, $15,823 in June, $29,907 in
July and $14,365 in September. Since the revenues up to
October 31, 2008, were $138,697, it can be inferred that the sales in
August and October totalled $41,818. However, I would note that the evidence
does not enable us to break down these August and October 2008 results by
month.
Analysis and conclusion
[10]
As we have seen, the
Minister determined that the employment was not insurable in view of
paragraph 5(2)(i) and subsection 5(3) of the Act, because the Minister
was not satisfied that it was reasonable to believe, having regard to all the
circumstances, that the Worker and the Payor would have entered into a
substantially similar contract of employment if they had been dealing with each
other at arm's length.
[11]
The Federal Court of
Appeal has on several occasions defined the role conferred by the Act on judges
of the Tax Court of Canada. That role does not allow a judge to simply
substitute his or her opinion for that of the Minister of National Revenue.
Rather, it requires that the Court "verify whether the facts inferred
or relied on by the Minister are real and were correctly assessed having regard
to the context in which they occurred, and after doing so . . . decide whether
the conclusion with which the Minister was 'satisfied' still seems
reasonable."
[12]
In other words, before
deciding whether the conclusion with which the Minister was satisfied still seems
reasonable to me, I must, in light of the evidence before me, verify whether
the Minister's conclusions were well-founded considering the factors referred
to in paragraph 5(3)(b) of the Act. At issue, then, is whether the Payor
and the Worker would have entered into a substantially similar contract of
employment if they had been dealing with each other at arm's length.
[13]
In the instant case,
the onus was on the Worker to prove, on a balance of probabilities, that the
facts inferred or relied on by the Minister were not real or were incorrectly
assessed having regard to the context in which they occurred, or that the
Minister failed to consider certain relevant facts. In the instant case, the
Worker had to satisfy me, inter alia, that the work done outside the
relevant period was not important and that her tasks and responsibilities
outside the relevant period were not basically the same as they were during
that period. It should be recalled that the more the tasks performed on a
volunteer basis resemble the tasks contemplated by the remunerated employment
contract, the more numerous they are and the more often they are repeated, the
less possible and reasonable it is to conclude that the employer and employee
"would have entered into a substantially similar contract of employment if
they had been dealing with each other at arm's length." If, in addition,
there was continuity in the provision of services, the conclusion that the
employment must be excluded becomes unavoidable.
[14]
The evidence in the
case at bar has disclosed that the work done by the Worker from January to
May 2008 was important, and that her tasks and responsibilities during
that period were basically the same as during the relevant period. Indeed, at
best, her working hours were substantially reduced in comparison with the
relevant period. The cooking done by the Worker was essential to the
Payor's restaurant's operations from January to May 2008. I would note
that the Worker testified that
(i)
the tasks that she
performed and the responsibilities that she had during the period from January
to May 2008 were basically the same as during the relevant period;
(ii)
she performed these
tasks and assumed these responsibilities on a volunteer basis during this
period; and
(iii)
she worked no more than
80 hours at the Payor's restaurant during this period.
I should immediately note that the testimony of the
Worker and of Nadia Bouchard with respect to the Worker's hours during
this period was not credible. This is because the prior statements made to
Ms. Courcy (whose credibility there is no reason to doubt) clearly
contradict their testimony about the Worker's hours and the restaurant's hours during
this period. I should add that their testimony to the effect that each of
them worked 15-20 hours per month during this period strikes me as completely
implausible having regard to their testimony about the restaurant's hours of
operation during this period and about their alleged tasks. As we have seen,
they testified that the Payor's restaurant was operated an average of 15 days
per month from January to May 2008. As a result, each of them would
have worked approximately one hour per day during this period. It is difficult
to imagine that two hours on one day during this period would have been
sufficient to
(i)
prepare and serve
breakfast and supper for the Hydro‑Québec employees;
(ii)
make sandwiches for the
employees' lunches;
(iii)
purchase the necessary
food;
(iv)
wash the dishes; and
(v)
clean the kitchen and
dining room.
In other words, the Appellant has not satisfied me
that she worked no more than 80 hours during the period from January to
May 2008. In my opinion, the Worker's volunteer hours during this period,
though less numerous than during the relevant period, considerably exceeded the
80 hours that she supposedly worked from January to May 2008. In any
event, even if the Worker had satisfied me that she worked no more than 80 unpaid
hours from January to May 2008, I would have found that the performance of work
of such importance on a voluntary basis causes the exclusion in paragraph 5(2)(i)
of the Act to apply.
[15]
I would add that the
Worker did not satisfy me that she stopped working on
September 6, 2008. Indeed, given the restaurant's sales for the
months of September, October and November 2008, and given how few employees the
Payor had in order to make those sales during those months, it appears more
likely than not that her tasks and responsibilities between September 6,
2008, and the closing of the restaurant were basically the same as they were
during the relevant period. Moreover, I am convinced that the job of cook was
necessary for the restaurant's activities after September 6, 2008. In
my view, the very purpose of the remunerated contract of employment continued
in every respect, though there were probably fewer hours than during the
relevant period. There was no true stoppage of work during the time that the
Worker's remuneration was taken over, so to speak, by EI. It should
be reiterated that it is not the intent of the employment insurance system to assume
the cost of the services provided free of charge to the Payor.
[16]
In light of my findings
on the question of volunteer work, it is not necessary to deal with the other
terms and conditions of the Worker's employment.
[17]
For these reasons, the
appeal is dismissed.
Signed at Ottawa,
Canada, this 19th day of May 2009.
"Paul Bédard"
Translation
certified true
on this 29th day
of June 2009.
Brian McCordick,
Translator
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