Citation: 2007TCC25
Date: 20070207
Docket: 2006‑366(EI)
BETWEEN :
FORCE & LUMIÈRE ÉLECTRIQUES INC.,
Appellant,
and
MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1] This is an appeal
from a decision dated November 22, 2005, in which the Minister of National
Revenue ("the Minister") decided that the work done by
Nasrat Al‑Bashir from April 13, 2003 to
April 16, 2004, had been performed under a contract of service.
[2] According to the
decision, the work had been done for Force & Lumière Électriques Inc.,
which categorically denies the existence of such a contract of service and
maintains that the work was done by Mr. Al‑Bashir under a
partnership contract in his capacity as an independent contractor.
[3] The facts relied
upon in making and confirming the decision under appeal are set out in
paragraph 7 of the Reply to the Notice of Appeal and read as follows:
[translation]
(a) The Appellant,
incorporated on December 18, 1990, operates a general contracting business
in the construction field. (admitted)
(b) Pierre Tamine
was the Appellant's sole shareholder. (admitted)
(c) The worker is
trained as a civil engineer. (admitted)
(d) The worker
rendered services to the Appellant as a representative and, subsequently, as a
technical project advisor. (denied)
(e) The worker
appears to have begun working for the Appellant in March 2002 under an
oral agreement. (denied)
(f) As a technical
advisor, the worker's duties were to look after the bids, to meet the suppliers
and to ensure that the construction materials were delivered on time. (denied)
(g) The worker
worked only on the "Szeto" construction project as a project manager.
(admitted)
(h) The worker did
not have to respect a specific work schedule, but had to contact clients and
subcontractors of the Appellant during normal business hours. (admitted)
(i) The worker
worked under the direction and supervision of Pierre Tamine. (denied)
(j) The worker
remained under contact with Mr. Tamine and had to report regularly to him
orally and in writing. (denied)
(k) The worker used
his car in connection with his work and personally bore all associated costs. (admitted)
(l) The Appellant
supplied the worker with an office, the equipment and the office supplies, as
well as a cellular telephone. (denied)
(m) According to the
initial agreement, the worker was to receive annual remuneration varying from
$45,000 to $50,000. (denied)
(n) In order for
the worker to receive remuneration, the Appellant demanded that the worker
register his own business. (denied)
(o) On July 22,
2003, the worker registered his business under the name Conseils et Services
Nasrat. (admitted)
(p) During the
period at issue, specifically, between July 23, 2003 and December 1, 2003,
the worker received four cheques from the Appellant, for a total of $19,800,
payable to his business. (admitted)
(q) No salary was
paid to the worker or to his business between December 2003 to
April 2004. (admitted)
(r) The worker filed
a complaint with the Commission des normes du travail to recover unpaid wages
from the Appellant. (admitted)
[4] The Appellant
admitted to the facts set out in subparagraphs (a), (b), (c), (g), (h), (k),
(o), (p), (q) and (r) and denied the others, namely (d), (e), (f), (i), (j),
(l), (m) and (n).
[5] The two parties to
the disputed work contract submitted totally contradictory evidence; the
decision essentially depends on whose version is the most credible and
plausible.
[6] Pierre Tamine,
the sole shareholder and director of the Appellant corporation, began by
explaining that he operated this business, which did electrical work even
though it had permits to do general contracting work.
[7] In late 2001, the
Appellant corporation was operating in this field when Mr. Tamine met
Nasrat Al‑Bashir in a parking lot next to the Appellant's office.
[8] The two both spoke
Arabic and quickly became close; they met more and more frequently until one
day, they discussed business and realized that their training and skills in the
construction field were synergistically complementary.
[9] According to
Pierre Tamine, an oral agreement was entered into under which the two new
friends would do certain construction work together as partners in a joint
venture.
[10] The agreement was
based on 50/50 profit‑sharing. According to Mr. Tamine, it was clear
that the corporation would not reimburse any expenses, would not provide an
office and would not pay a salary and that its sole obligation was to give
Nasrat Al‑Bashir 50% of the profits made on any project, and, the
agreement coincided roughly with the commencement of a project.
[11] Mr. Tamine
produced the Appellant's financial statements and claimed that the Appellant
never agreed to pay Nasrat Al‑Bashir a salary markedly higher than what
Mr. Tamine himself received.
[12] In actuality,
Nasrat Al‑Bashir was asked to work on a single, very specific
project: the "Szeto" construction project, in which Mr. Al‑Bashir
clearly played a very important role; this was firmly established by the
numerous documents tendered in a bundle as Exhibit I‑5. Moreover, the
fact that Nasrat Al‑Bashir worked was not disputed by the Appellant,
who admitted to Mr. Al‑Bashir's involvement.
[13] During the entire
period at issue, the only payments made to Nasrat Al‑Bashir were four
cheques bearing the following dates and amounts:
|
Date
|
Cheque Number
|
Amount
|
|
(1) July 23, 2003
(2) July 23, 2003
(3) October 28, 2003
(4) December 1, 2003
|
0592
0598
0680
0740
TOTAL
|
$10,000
$2,200
$1,600
$6,000
$19,800
|
[14] According to
Mr. Tamine's version, these amounts were advances. However, I found it
quite surprising that nearly $20,000 worth of advances were made at a time when
it was neither clear nor certain that the project would generate profits of
more than $40,000, that is to say, at least double the amounts advanced.
[15] On November 15,
2004, Nasrat Al‑Bashir commenced legal proceedings (Exhibit A‑2)
before the Commission des normes du travail to recover the sum of
$55,854.24, plus the amounts received and described in paragraph 13
of this judgment, on the basis that he had never been paid for most of his
work.
[16] Following those
legal proceedings, a settlement was reached under which the Appellant
corporation agreed to pay $4,000 to buy peace and avoid a long and costly
trial.
[17] For his part,
testifying at the Respondent's request, Nasrat Al‑Bashir spoke in
different terms altogether. He stated that he worked as a salaried employee for
Pierre Tamine and that his salary was to be between $40,000 and $50,000
per year.
[18] In actuality,
several months went by before he received the advances or amounts set out in
paragraph 13 of this judgment. Given his absolute trust in
Mr. Tamine, he maintained that he had a little personal money at the
beginning of the project and so was patient in the sense that he agreed to work
without pay during the days and weeks following the performance of the work. He
also stated that he was never reimbursed for any of his expenses.
[19] He stated that the
corporation, which had been registered on July 22, 2003, and to which
the four cheques in paragraph 13 hereof were made payable, was
incorporated at the express request of Pierre Tamine. This was, according
to him, a condition to his receiving the money—a seemingly plausible
explanation, because the two biggest cheques were dated July 23, the day
after the incorporation.
[20] As for the business
name declaration (Exhibit A‑4), he stated that it was made at
Pierre Tamine's request, because he did not want to have to make any
source deductions. He also explained that he had an office in the house of
Nasrat Al‑Bashir.
[21] In my opinion, I
would not be exaggerating by stating that Messrs. Tamine and Al‑Bashir
made profoundly different, even contradictory statements.
[22] The evidence
established that Nasrat Al‑Bashir had made efforts to obtain an official
identity document of his, namely a citizenship certificate, replaced.
His explanation for the loss was that he had to travel abroad regularly.
[23] On cross‑examination,
he stated that he worked continuously for the Appellant, except for the
duration of his statutory vacations.
[24] When asked to
explain the difference between the two versions, he stated that his lawyer had
made up the explanation for his absences from Canada.
[25] As for
Mr. Tamine, he maintained that the famous form had been filled out by an
intern at his office and that he had essentially reproduced in French
Mr. Al‑Bashir's explanations.
[26] As for the questions
regarding the manner in which he treated the income, or advances, he was unable
to answer them, except to state that he had not yet filed his income tax return
for the year 2003.
[27] This is not a case
in which the testimony of one witness is totally credible and the testimony of
the other witness is not at all credible; this is a case in which one must
take several elements and facets into consideration in order to be able to
determine that the balance of evidence adduced favours one version over the
other.
[28] From the outset,
this approach makes the Appellant's case harder to prove, because the Appellant
bears the burden of proof. However, the evidence adduced by the parties points
to certain objective facts that are clearly important in assessing whether one
version is more credible and plausible than the other.
[29] I noted the
following facts:
·
The
fact that Nasrat Al‑Bashir worked for months without receiving
a cent is very unusual;
·
The
fact that he commenced legal proceedings to recover a colossal amount of unpaid
salary and later signed an agreement under which he received a frankly minimal
amount of less than 10% of the claim, namely $4,000, is also very unusual;
·
Nasrat Al‑Bashir,
through the Commission des normes du travail, claimed more than $50,000, even
though he had already received $19,800, which totals nearly $70,000 in salary,
whereas he stated that the agreement called for a salary ranging from $40,000
to $50,000 per year, already a considerable amount given the Appellant's
ability to pay;
·
He
incurred automobile expenses that he neither claimed nor obtained from the
Appellant;
·
He
did not file an income tax return for the years 2002 and 2003;
·
He
signed a declaration in support of an application for a copy of a citizenship
certificate, an application whose contents completely contradict his version of
the facts, which is that he worked continuously without leaving Canada, whereas
his claim alleges that he is often outside Canada;
·
He
stated that the application was filled out by his lawyer, whereas
Mr. Tamine claimed that this was done by an intern;
·
If
one accepted Nasrat Al‑Bashir's allegations, it would mean that
Mr. Tamine agreed to pay him a salary that is higher than what he himself
was paid by the corporation.
[30] In addition, it is
also important to take certain elements other than these facts into
consideration. Mr. Al‑Bashir, a well‑educated man who clearly
knew the consequences of self‑employment as opposed to salaried
employment, agreed to register a business name even though this was, according
to him, the idea, or even the requirement, of Mr. Tamine.
[31] For the same reasons
as those set out in the preceding paragraph, he agreed that all the cheques
that he received would be payable to the corporation that he agreed to create.
[32] In support of his
case, the Respondent made three main arguments.
[33] First of all, a
voluminous document (Exhibit I‑5) was produced. The document is
certainly a source of interesting information, specifically, that
Nasrat Al‑Bashir had clearly played a very important role, but also
an ongoing one. This fact is not, however, irreconcilable with the position of
the Appellant, who acknowledges the contribution of and genuine work done by
Nasrat Al‑Bashir for the "Szeto" construction project.
[34] Secondly, the fact
that Nasrat Al‑Bashir signed and received several documents
certainly shows that he did significant work. However, it does not validate his
argument that this was a contract of service.
[35] The meaning of
Exhibit I‑1, the draft, and Exhibit I‑2, the final version,
both of which were considered to be determinative elements by Nasrat Al‑Bashir,
given that he agreed to settle his claim of over $50,000 for $4,000, could be
that he wanted to protect his rights in connection with a future employment
insurance benefit claim.
[36] Lastly, the stakes
are considerably higher for Mr. Al‑Bashir than for the Appellant.
[37] Indeed, the
Respondent stands to obtain a substantial amount of employment insurance
benefits as a result of these proceedings, whereas the Appellant would
essentially have to repay the employment insurance premiums, which are
undoubtedly much lower than the benefits ultimately payable.
[38] Both Mr. Tamine
and Mr. Al‑Bashir are highly educated people with experience and
expertise in the construction field.
[39] Considering this,
one should not underestimate the value and the legal meaning of certain acts,
the name of the payee of the cheques, and the creation of a business by
Mr. Al‑Bashir. These elements alone, while important in ascertaining
the intent of the parties, might not be determinative, but do paint a portrait
of this case that other facets confirm.
[40] I am referring in
particular to the fact that expenses were not reimbursed, that Mr. Al‑Bashir
used his car for several months without receiving a thing, that he accepted an
insignificant sum in settlement of a claim of more than $50,000, that he worked
for months without receiving anything, etc.
[41] For all these
reasons, I find that the evidence, on a balance of probabilities, favours the
Appellant, in the sense that the version of the facts of the sole shareholder,
Pierre Tamine, is more plausible and, above all, more reasonable and credible.
[42] Consequently, I
allow the appeal on the basis that the work done by Nasrat Al‑Bashir
from April 13, 2003 to April 16, 2004, was performed pursuant to a
contract of enterprise as a partner, not as an employee.
Signed at Ottawa,
Canada, this 7th day of February 2007.
"Alain Tardif"
Translation
certified true
on this 25th day of October 2007.
Mavis Cavanaugh, Reviser
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