Citation: 2007TCC264
Date: 20070503
Docket: 2006-2290(EI)
BETWEEN:
PREMIER CAREER MANAGEMENT GROUP CORP.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
JOE LOPUSHINSKY,
Intervenor.
REASONS FOR JUDGMENT
O'Connor, J.
[1] The issue in this
appeal is whether the Intervenor (“Lopushinsky”) was employed by the Appellant
(“Premier”) under a contract of service during the period from October 31, 2004
to November 14, 2004 (“Period”). A related issue is whether the relationship
was in the nature of a contract for service (independent contractor) during the
Period.
Facts
[2] Some of the facts
are stated in the Reply to the Notice of Appeal either as assertions or
assumptions and the substance of those that were not refuted are mentioned
below. Other facts were established by the evidence and are also mentioned
below.
1. Both Lopushinsky and Minto
Roy (“Roy”) worked for a company named BH Careers International (“BH”) based in
the United
States.
2. BH ceased its business operations
some time in October, 2004.
3. As the Manager of the Vancouver branch of BH at 700 West Georgia
Street, Suite 2920, Roy supervised approximately ten BH employees.
4. With the closing of BH’s Vancouver branch, the employees
of BH lost their jobs.
5. Roy was the 100% shareholder of Premier,
which was incorporated on October 20, 2004 under the name 0706672 B.C. Ltd. It
carried on business under the name of Premier Management Group Corp. or PCMG.
6. Lopushinsky testified that
he received a cheque sometime in November, 2004, from Premier in the
amount of $355.50, and that details on the back of the cheque indicated that
this represented an amount of $450.00 from which tax had been withheld in the
amount of $94.50 thus leaving the face amount of the cheque at $355.50.
Lopushinsky testified further that the $94.50 withholding did not show up on
any tax slips.
7. In response to a request
for a determination from Lopushinsky, the Rulings division of the Canada
Revenue Agency (“CRA”) determined that Lopushinsky was not employed by Premier
in insurable employment during the Period. The Rulings division issued a
decision dated October 28, 2005 that Lopushinsky was not employed by Premier under
a contract of service during the Period within the meaning of paragraph 5(1)(a)
of the Employment Insurance Act, S.C. 1996, c. 23 (the “EI Act”).
8. Lopushinsky filed an
appeal to the Minister of National Revenue (the “Minister”) on November 8, 2005
pursuant to section 91 of the EI Act.
9. By letter dated March 27,
2006, the Minister decided that Premier had employed Lopushinsky under a
contract of service during the Period within the meaning of paragraph 5(1)(a)
of the EI Act.
10. In making his decision the
Minister relied on several assumptions of fact. Those not covered above may be
summarized to the extent relevant as follows:
a) Premier provided career
counseling, career management and business management services to its clients;
b) Premier took over the
office space, equipment and client list of BH on or about October 31, 2004;
c) as of October 31, 2004, some
of the former employees of BH commenced performing duties for Premier;
d) the duties performed by
Lopushinsky and the other workers were to meet with clients and provide career,
management and business counselling (the “Duties”);
e) Lopushinsky was an
employee of BH up to and including October 30, 2004;
f) Lopushinsky commenced
performing the Duties for Premier on October 31, 2004;
g) Premier supplied
Lopushinsky, Roy and others with business cards. These cards showed Minto Roy
as “Managing Director” of Premier and Lopushinsky as “Senior Consultant” of
Premier;
h) Premier provided the
office space, the telephone and fax lines, the supplies and the receptionist
used by Lopushinsky in the performance of the Duties;
i) Premier entered into a
lease agreement with the former landlord and continued to occupy the premises;
and
j) Lopushinsky was fired by Roy on November 24, 2004.
[3] Premier’s Notice of
Appeal reads as follows:
Mr. Lopushinsky was never an employee of
Premier Career Management Group.
Premier Career Management Group began
operations in November of 2004. Prior to this Mr. Lopushinsky and I worked at
the same corporation. A company named BH Careers International.
BH Careers unilaterally, without notice,
closed its Canadian Operation in Oct. of 2004.
As the Manager of the Vancouver Branch of
Bh [sic] Careers Int. I managed approx. 10 employees, Mr. Loposhinsky [sic]
being one of them.
As a result of the closing of BH Careers,
all employees lost their jobs. However, the office had no direction on how to
close, how to service clients, how to deal with suppliers, vendors, what would
happen with payroll etc.. It truly was a confusing time. The company announced
by fax the closing the office. However, the infrastructure within the office
remained open; phone lines remained operational, email servers, office space,
etc…
As a result many employees of Bh [sic]
Careers continued to come into the office using it as a place to conduct their
next career search, contact and meet with clients etc.. I had no authority as a
manager to ditate [sic] any policy or procedure because I was an
employee and now without work.
I decided after a week to open up my own
company. I asked two former employees to join my new Company, but Joe
Lopushinsky was not one of them. I met with the landlord and negoitiated [sic]
a new lease agreement for my new company. After becoming the leaseholder and
forming Premier Career Management Group I asked Mr. Lopushinsky to vacate the
office. He actually refused and I had to have him removed by security. I have
documented notes and statement from the security guards regarding this incedent
[sic].
Mr. Loposhinsky [sic] did recieive
[sic] a check [sic] from me. The check [sic] was not for work
done from PCMG Canada. The check [sic] was for owed commissions on a
client that we both secured during our tenureship with BH Careers. I as a
managers [sic], I often had split commissions with sales consultants.
However, my commissions were paid one payroll before any sales consultant. As
such, I received funds and I simply felt it fair that Mr. Lopushinsky share in
the transaction. I have a copy of the transaction as well as a copy of the
cheque cashed by Mr. Lopushinsky indicating on the memo portion of the cheque
the clients name.
…
Clarifications
[4] Although the Period
was only from October 31, 2004 to November 14, 2004, the evidence
indicated that, if there was an employee relationship between Premier and Lopushinsky,
it lasted until November 24, 2004. I believe however that the
Judgment to be rendered herein must be restricted to the Period as that is the
period covered by the decision of the Minister dated March 27, 2006, which is
the decision against which Premier has appealed.
[5] It should also be
noted that in most cases under employment insurance matters, the issue is
whether a worker was engaged under a contract of service (“employee”) or under
a contract for service (“independent contractor”). In this case, Premier,
through its representative, Roy, indicated that the dispute was mainly as to
whether Lopushinsky was an employee of Premier during the period. I believe,
however, that to completely resolve the matter I must also decide on the
employee versus independent contractor issue.
Submissions
[6] Premier’s manager,
Roy, maintains that he did not supply the business cards, that the cheque referred
to above was for work done for the former company, BH, that there was no
contract of employment between Premier and Lopushinsky and that Lopushinsky was
clearly not an employee of Premier. Lopushinsky submits that he clearly was an
employee, that he continued to occupy the space only leaving the office after
he was fired on November 24, that the cheque referred to above is an indication
that there was an employee relationship between himself and Premier and this
was further confirmed by the issuing of the business cards referred to above.
Lopushinsky also submitted as Exhibit R‑2 a working sheet indicating
that he continued to work from the period November 1, 2004 to Friday,
November 19, 2004.
Analysis
[7] In my opinion the
credibility of Lopushinsky is to be accepted and his evidence was impressive.
The evidence clearly indicates that there was an employee relationship during
the Period. The strongest indications of the employee relationship were (i) the
continuing operations carried on by Premier in the premises; (ii) the
continuing work done by Lopushinsky (Exhibit R-2); (iii) the cheque given,
notwithstanding Roy’s assertions that it represented splitting a commission for
work done for BH; and (iv) the business cards (why prepare and issue these
unless Lopushinsky was an employee of Premier?) One might also question how
Premier’s manager, Roy, can have the authority to “fire” Lopushinsky on
November 24 if indeed Lopushinsky was not an employee. Also questionable is Roy’s indication in his
Notice of Appeal that “after a week” he decided to “open up my own company”, when
he had already, prior to November 1, 2004, incorporated Premier on October 20,
2004. As to the employee versus independent contractor issue, I am satisfied
that applying the four principals thoroughly canvassed by the jurisprudence of
control, ownership of tools, chance of profit – risk of loss, integration and
intention, that all of these point to a contract of service, i.e. an employee
relationship.
[8] In conclusion, there
was an employee contract during the Period, namely October 31, 2004 to November
14, 2004. Consequently the appeal is dismissed. There shall be no costs.
Signed at Ottawa, Canada this 3rd day of May, 2007.
"T. O'Connor"
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