Citation: 2007TCCI463
Date: 20070907
Docket: 2007-851(EI)
BETWEEN:
GAËTAN THERRIEN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1] This is an appeal from a decision in which it was held
that the work performed by the Appellant, during the period from May 20, to
December 22, 2001, for the payor company Développements Beaurivage Inc.,
was not insurable employment.
[2] According to the Respondent, during the period in
question, the Appellant was operating his own business by exercising de facto
control over all the company’s shares.
[3] In making his decision, the Respondent relied on the
following assumptions of fact:
[TRANSLATION]
(a) the payor was incorporated on March 26, 1996;
(b) the Appellant incorporated the not-for-profit
company for a tourist project that never materialized;
(c) the Appellant sold his shares in the company
first to Basile Bona and then, according to the enterprise registrar, Cidreq
personnel number 1149076946, the majority shareholder of the payor was Gonzague
Boily and the second largest shareholder was Nicole Gauthier;
(d) Nicole Gauthier was the Appellant’s common-law spouse;
(e) Gonzague Boily, retired engineer, passed away on February 11,
2003;
(f) according to Nicole Legendre, widow of Gonzague
Boily, he answered an ad placed by the payor for a civil engineer;
(g) according to the enterprise registrar, Cidreq
personnel number 1145639226, the payor’s directors were the Appellant and his
two sons Rémy Therrien and Daniel Therrien;
(h) the Appellant told a representative of the
Respondent that his sons had no involvement in the payor;
(i) during the period in issue, the payor operated
a road maintenance and repair business;
(j) the payor submitted 17 T-4 slips for 2001;
(k) the Appellant was a driver and operator of heavy machinery;
(l) the Appellant operated an excavation company,
Dan-My Inc., which went bankrupt;
(m) on November 10, 1998, the Appellant filed
personal bankruptcy and no longer had the right to operate a business until
2003;
(n) in order to operate, the payor’s business
needed a reference to obtain a licence to operate;
(o) Gonzague Boily, engineer, qualified the Appellant for the
licence to operate;
(p) on September 27, 2006, Nicole Legendre told a
representative of the Respondent that the work her husband performed for the
payor was not regular work, he did not go to job sites and that the Appellant
was the owner of the business;
(q) according to the Appellant, he worked as a foreman for the
payor;
(r) according to the Appellant, his duties consisted
in providing levels, laser alignments and managing the job sites;
(s) the Appellant made all the decisions for the payor;
(t) the Appellant signed the payor’s cheques;
(u) the Appellant signed a surety for the company
which guaranteed the payor;
(v) a mere employee would not have guaranteed the payor;
(w) the payor’s offices were located at the Appellant’s residence;
(x) the Appellant did not require any rent or
financial compensation for the premises put at the payor’s disposal;
(y) the Appellant put at the payor’s disposal a
truck worth about $15,000 and a compactor worth about $10,000;
(z) the Appellant did not require any rent or
financial compensation for the equipment put at the payor’s disposal;
(aa) a mere employee would not have provided premises
and equipment without consideration;
(bb) Marie-Pier Gagnon was hired by the
payor as a secretary from August to December 2001;
(cc) on September 27, 2006, Marie-Pier Gagnon told a
representative of the Respondent that she was hired by the Appellant, that the
Appellant gave her instructions, that the Appellant signed the payor’s cheques
and that the Appellant was the business owner;
(dd) there is nothing in the case to establish a
relationship of subordination between the Appellant and the payor;
(ee) the Appellant was the directing mind of the
payor and his influence on the payor is such that the sort of dependent
relationship necessary for the creation of a true relationship of subordination
between the parties could not have existed.
[4] Among those facts, the Appellant admitted paragraphs
(b), (d), (e), (g), (h), (k), (l), (m), (n), (q), (r), (t), (u), (w), (x), (y)
and (z). He neither admitted nor denied paragraphs (f), (j), (p), (v), (aa) and
(bb), and he denied paragraphs (a), (i), (s), (cc), (dd) and (ee).
[5] Only the Appellant testified in support of his case.
Sharp, articulate and clearly well-prepared, the Appellant filed significant
documentary evidence.
[6] To avoid listening to useless and irrelevant
explanations, I explained to the Appellant that the evidence essentially had to
be on the period in question and involve the manner in which the work was
performed so as to ensure that that very evidence contained all the necessary
evidence to assist the Court in deciding whether or not the work was performed
under a contract of service.
[7] The Appellant argued that he applied for and received
Employment Insurance benefits only once and that the benefits were received by
virtue of the employment in question, adding that this demonstrated not only
his good faith, but also his eligibility for such benefits.
[8] The Appellant clearly understood the explanations I
gave him with respect to the requirements for establishing the existence of a
contract of service.
[9] In the case at bar, the main issue is to determine
whether there was a relationship of subordination between the Appellant and the
company who was responsible for remuneration.
[10] Prior to the period in question, the Appellant faced
serious financial problems to the point where he had to sell his assets. The
fact that he had the status of bankrupt prevented him from having every
authorization, licence and certificate allowing him to operate a business
involving infrastructure, such as roads, waterworks etc., even though he had
the necessary expertise and experience to operate such a business.
[11] The Appellant thus explained that he met with
Basile Bona who had what he lacked to operate the type of business he had
been in all his life, even though he had the experience and expertise.
[12] Seeing as Mr. Bona did not testify, it was not
possible to obtain his version of the facts. It would have been interesting to
hear his version of the facts, even more so since the investigator responsible
for the case stated, in his testimony, that Mr. Bona received Records of
Employment issued by companies controlled by the Appellant, thus contradicting
the Appellant’s explanations as to the circumstances leading to their meeting
and the relationship between them. He would have been a very helpful witness.
[13] As for the absence of Gonzague Boily, another key
witness who could have shed light on the facts and circumstances surrounding
the employment, it cannot be imputed to the Appellant as Mr. Boily is
deceased. However, the evidence revealed a number of facts that are very
pertinent in determining the nature of the contract of employment in issue; I
refer particularly to the following:
·
The claims and
submissions made by the Appellant to third parties as to his status of general
contractor.
·
The Appellant’s
authority to sign cheques.
·
The fact that he put at
his employer’s disposal administrative premises without charging fees or rent.
·
The fact that he also
used without compensation a truck whose value was relatively high.
·
The fact that he used a
compactor without compensation.
·
The explanations,
comments and observations offered by Ms. Gagnon that the Appellant
operated his own business.
·
The unexplained
circumstances of the forged signature of Ms. Gagnon on a Record of
Employment.
·
The major discrepancies
in the versions of the testimonies as to the nature of the relationship between
the Appellant and Mr. Bona. The Appellant stated that he met with Mr. Bona
by chance, since he had what he was lacking to operate a business. The person
responsible for the case indicated rather that the Appellant and Mr. Bona
knew each other very well and that, furthermore, Mr. Bona received Records
of Employment from one or more companies controlled by the Appellant.
[14] The wife of Gonzague Boily, Nicole Legendre, stated
that her deceased husband met with the Appellant following an ad in the paper
when he was trying to find work as a part-time consultant after retiring from
the Public Service.
[15] Married to Gonzague
Boily for over 40 years, she stated that she knew nothing about his involvement
in the company. She is firmly convinced that the Appellant had sole control of
the business. According to her, her husband was not the principal person
concerned in the company which was rather the business of the Appellant.
[16] Even though the evidence
is incomplete, I believe it is more reasonable to retain the version of the
facts of Nicole Legendre than that of the Appellant; in fact, how can one
believe that a retired person seeking part-time employment suddenly becomes the
principal shareholder of a company?
[17] Moreover, that interpretation of the facts is
completely consistent with the circumstances surrounding the departure of
Gonzague Boily. In fact, the Appellant himself stated that Mr. Boily
woke up one morning and decided to withdraw from the company. To that end, he
simply sent a letter in which he expressed his intention to leave the company.
The letter does not mention anything about the sale of the shares, any protocol
or condition to settle the issue of financial commitments, securities, work
underway and, an engineer by training, a retired civil servant, the facts and
circumstances of his departure, described by the Appellant himself, are totally
inconsistent with the Appellant’s claims that this same person was the
principal shareholder, the sole director and the sole owner where his deeds and
actions were concerned.
[18] It is reasonable to conclude that Mr. Boily was a
dummy shareholder discovered by the Appellant who clearly persuaded him to
embark on his adventure.
[19] Finally, there is absolutely nothing in the evidence
which makes it possible to conclude that there was any relationship of
subordination between the Appellant and the company who paid him remuneration.
[20] Furthermore, I do not believe the arrangement was
concocted, elaborated and implemented to allow the Appellant to become eligible
for Employment Insurance benefits.
[21] His intentions were rather to organize his affairs in
order to continue his activities as a general contractor at a time when his
status as a bankrupt prevented him from doing so.
[22] Knowing what the documents contained, he soon realized
that he could receive Employment Insurance benefits and therefore seized the
opportunity, seeing as all the documents essentially indicated his status as a
salaried foreman.
[23] The fact that the issue of insurability is secondary
does not in any way change the fact that he was not a true employee, except as
indicated in documents which did not at all reflect the true situation.
[24] The characterization of the nature
of a contract of employment is based not on documents that may have been part
of a deception, but rather on the facts and circumstances of the employment.
[25] In the case at bar, there is no doubt that the
Appellant operated his own business under the cover of a ghost company he
controlled as he had an obvious influence on those who accepted to act as dummy
shareholders.
[26] For all these reasons, the appeal is dismissed and the
Minister’s decision, that the Appellant’s employment with Développements
Beaurivage Inc., during the period from May 20 to December 22, 2001, was not
employment under a contract of service, is confirmed.
Signed at Ottawa, Canada, this 27th day of
September 2007.
“Alain Tardif”
Translation certified true
on this 16th day of October 2007.
Daniela Possamai,
Translator
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