Citation: 2008TCC9
Date: 20080107
Docket: 2006-3889(EI)
BETWEEN:
9006-3611 QUÉBEC INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1] From February 19,
2002, to November 23, 2003 (the relevant period), Sylvie Paquin (the
Worker) was employed by the Appellant as a waitress. In late November 2003, the
Appellant dismissed the Worker. Following her dismissal, the Worker
made a claim for employment insurance benefits. On July 8, 2005,
the Canada Customs and Revenue Agency (the Agency) determined that,
under sections 9.1 and 9.2 of the Employment Insurance Regulations (the
Regulations), the Worker accumulated 1392 hours of insurable employment during
her qualifying period, and that, under section 2 of the Insurable Earnings
and Collection of Premiums Regulations, her insurable earnings during her
qualifying period amounted to $10,482.42. The Appellant appealed from this
decision. The outcome of that administrative appeal was that, on
October 5, 2006, the Minister of National Revenue
("the Minister") determined that the Worker had 1333.5 hours in
her qualifying period and that her insurable earnings for that period totalled
$9,067.72. Hence the instant appeal.
[2] In order to explain
his decision, the Minister relied on the following assumptions of fact, set out
in paragraph 10 of the Reply to the Notice of Appeal. The Appellant admitted,
denied or claimed no knowledge of these assumptions, as stated in
parentheses:
[translation]
(a) The Appellant
incorporated on June 13, 1994. (admitted)
(b) The Appellant
carried on business under the name "Restaurant le Centre‑Ville
Souvlaki". (admitted)
(c) The Appellant
operated a restaurant/bar/terrace in Trois‑Rivières. (admitted)
(d) The Worker was
a waitress. (admitted)
(e) The Worker's
duties consisted of waiting and setting tables, and cleaning. (admitted)
(f) The Appellant
was the subject of an investigation by Yvon Côté of Human Resources and
Skills Development Canada (HRSDC) with respect to roughly 15 workers. (admitted)
(g) The Appellant
paid some of its workers in cash. (denied)
(h) These cash
payments were not entered in the Appellant's payroll journal. (denied)
(i) The Worker
entered cheque or cash amounts received from the Appellant in a notebook along
with the number of hours that she worked each day. (omitted)
(j) The Worker
began using such notebooks in 1995, and used them with the various employers
for which she worked. (omitted)
(k) The Appellant
paid the Worker the minimum wage applicable to employees who receive tips. (admitted)
(l) Every Sunday,
the Worker received an envelope containing a paycheque and a cash amount. (denied)
(m) The Appellant
did not provide the Worker, or its other employees, with pay stubs. (denied)
(n) On November 29,
2003, the Worker ceased rendering services to the Appellant following a
disagreement with Ali Ismael, its manager and main shareholder. (admitted)
(o) Following this,
the Worker filed an unpaid wage complaint with the Commission des normes du
travail. (denied as worded)
(p) On February 20,
2004, the Commission des normes du travail told the Worker that a $579.60 claim
had been made on the Worker's behalf and that the Appellant paid that amount. (admitted)
(q) For the period
consisting of the last 53 pay weeks, and ending on November 23, 2003, the
Worker did 1325.5 hours of work for the Appellant, plus eight hours of
statutory holiday pay claimed and obtained by the Commission des normes du
travail, for a total of 1333.5 hours. (denied)
(r) The Worker's
insurable earnings for the last 27 pay periods ending November 23, 2003, was
$9,067.72, which consists of the sum of the following amounts:
|
gross wages from payroll
journal
tips from payroll
journal
4% from payroll journal
cash paid by Appellant
Commission claim
|
$3,276.64
$3,310.00
$253.38
$1,648.10
$579.60
|
(denied)
The Worker's testimony
[3] The Worker's testimony
can be summarized as follows:
(i)
She
worked as a waitress at the Appellant's restaurant during the relevant period.
(ii)
At
the end of the relevant period, she was dismissed by the Appellant. She filed a
complaint with the Commission des normes du travail (the Commission)
because the Appellant dismissed her without giving her two‑weeks' notice.
On February 20, 2004, the Commission sent her a letter (Exhibit I‑5)
stating that a claim in the amount of $579.60 had been made on her behalf and
that the Appellant had paid that amount.
(iii)
Her
work schedule was generally the same in that she worked the dinner shift on
Sundays, the lunch and dinner shifts on Wednesdays, and the dinner shifts on
Fridays and Saturdays. Since the restaurant had more customers during the
summer, she averaged more hours per week during that season.
(iv)
Every
Sunday evening, she received an envelope from the Appellant containing a cheque
and some cash. The cheque was her net pay for the hours worked the previous
week, as entered in the Appellant's payroll journal. For the hours entered in
the Appellant's payroll journal, the Worker was paid the prescribed minimum
wage for employees who receive tips. The cash was her remuneration for the
hours that she worked the previous week but were not entered in the Appellant's
payroll journal. For the hours not entered in the Appellant's payroll journal,
the Worker was paid less than the prescribed minimum wage for employees who
receive tips. The Worker explained that her hourly pay for hours paid in
cash remained the same for each week during the relevant period.
(v)
Thus,
the Worker was paid by cheque or in cash for all the hours that she worked.
(vi)
Ali
Ismael, the Appellant's president, decided to use this method of payment with
the Appellant's waitresses, who had no choice but to accept this method if they
wanted to keep their jobs.
(vii)
The
Appellant did not give the waitresses any pay stubs or other documents
notifying them of the deductions from their gross wages during the relevant
period.
(viii)
The
tips were not pooled. Thus, the Worker kept the tips that customers paid her in
cash. When a tip was paid to her by credit card, she kept an amount equal to
that tip from her cash sales.
(ix)
Every
day during the relevant period, the Worker used a notebook (Exhibit A-4) to
record the amounts that she received from the Appellant, in cash or by cheque,
along with the hours that she worked and the tips that she received. She began
entering this information in such notebooks in 1995, and did so with each of
her employers.
(x)
She
did not report the cash amounts received from the Appellant in her income tax
returns that she filed for the years in question.
(xi)
She
was on vacation from September 22 to October 7, 2003.
Ali
Ismael's testimony
[4] The testimony of
Ali Ismael, the Appellant's president, can be summarized as follows:
(i)
He
did not dismiss the Appellant. I would note, however, that Mr. Ismael
ended up admitting that when he told the Worker that he did not need a person
like her, this was an indirect dismissal. I would also point out that the
Appellant's Record of Employment (Exhibit A‑1) stated that the
Worker voluntarily left her employment.
(ii)
The
Appellant paid its employees by cheque every week. Mr. Ismael explained
that the waitresses were paid for the work they did in the previous week,
whereas the kitchen employees were paid for the week ending on the preceding
Saturday.
(iii)
The
Appellant's employees were never paid in cash.
(iv)
Until
very recently, the Appellant never gave its employees pay stubs or other
documents notifying them of the deductions from their gross wages. Mr. Ismael
stated that this omission is attributable to the fact that the Appellant's
accountant never told him that it was required to give its employees such
documents. I would immediately point out that, on April 6, 2004,
Mr. Ismael told Nicole Chouinard, the appeals officer in this matter, that
all the Appellant's employees received cheques with stubs setting out the
amounts withheld.
(v)
The
Appellant paid its employees in cash seven or eight years ago. Mr. Ismael
explained that the Appellant nonetheless withheld the prescribed amounts and
remitted all of them to the authorities during this period.
(vi)
The
waitresses' work schedules during the relevant period were posted in the
Appellant's restaurant. However, Mr. Ismael added that the Appellant did
not retain those work schedules.
The
testimony of Nicole Chouinard
[5] My understanding of
Ms. Chouinard's testimony and her appeal report (Exhibit I‑1) is
that she essentially recalculated the Worker's insurable hours and insurable
earnings for the qualifying period based on the Worker's notebook.
She explained that she prepared a table (Exhibit A‑5) that was
based on the Appellant's payroll journal and the Worker's notebook. Among other
things, the table contains the following information for each week during the
relevant period that the Worker was working for the Appellant:
(i)
The
hours worked by the Worker according to the Appellant's payroll journal:
Ms. Chouinard calculated that the Appellant's payroll journal attributes
1434 hours of work to the Worker for the relevant period.
(ii)
The
Worker's gross salary according to the Appellant's payroll journal:
Ms. Chouinard calculated that the Appellant's payroll journal attributes a
gross salary of $10,324.44 to the Worker for the relevant period.
(iii)
The
Worker's net salary according to the Appellant's payroll journal:
Ms. Chouinard calculated that the Appellant's payroll journal attributes a
net salary of $7,423.85 to the Worker for the relevant period.
(iv)
The
Worker's tips according to the Appellant's payroll journal: Ms. Chouinard
calculated that the Appellant's payroll journal attributes $11,085 in tips to
the Worker for the relevant period.
(v)
The
hours worked by the Worker according to the notebook that she kept: Ms. Chouinard
calculated that the notebook says that she worked for 2361.5 hours during the
relevant period. Thus, according to Ms. Chouinard's calculations,
927.5 hours of the Appellant's work during the relevant period were not entered
in the Appellant's payroll journal.
(vi)
The
cash received from the Appellant in envelopes on Sunday evenings based on the
notebook that the Worker kept for the hours that she worked but were not
entered in the Appellant's payroll journal: Ms. Chouinard calculated that,
during the relevant period, the Worker received $5,292.10 from the
Appellant for the 927.5 hours of work that were not entered in the
Appellant's payroll journal.
(vii)
The
Worker's tips according to the notebook that she kept: Ms. Chouinard
calculated that the worker received $28,995.71 in tips, $17,901.71 of which
were not reported in the income tax returns that she filed for the years
involved.
Analysis
and determination
[6] It should be borne
in mind that the standard of proof in the case at bar is proof on a balance of
probabilities. It should also be borne in mind that the Minister relies on
assumptions to make his decisions, and that the Appellant bears the initial
onus of demolishing the assumptions underpinning the Minister's decision. To
meet this initial onus, the Appellant need only demolish the Minister's exact
assumptions. In this regard, it is sufficient for the Appellant to make a prima facie
case. As a general rule, a prima facie case means enough evidence
to establish a fact unless the contrary is proved. Once the Appellant has
demolished the Minister's assumptions, the onus shifts to the Minister, who
must rebut the prima facie case.
[7] In the case at bar,
the Appellant met its initial onus of demolishing the essential tenor of the
factual assumptions underpinning the Minister's decision.
[8] I would note that
the Minister's decision that the worker accumulated 1334 hours of
insurable employment according to sections 9.1 and 9.2 of the Employment
Insurance Regulations, and that the worker's insurable earnings amounted to
$9,067.72 according to section 2 of the Insurable Earnings and
Collection of Premiums Regulations, essentially relied on the truth and
accuracy of the notebooks in which the Worker allegedly entered the hours that
she actually worked and the remuneration that she actually received from the
Appellant in connection with her employment.
[9] As we have seen,
the Worker testified as follows upon being cross-examined about her notebooks:
Every day during the relevant period, she recorded, in a notebook
(Exhibit A‑4), the amounts received from the Appellant by cheque or
in cash, the hours that she actually worked, and the tips that she
received. Every Sunday evening, she received an envelope from the
Appellant, containing a cheque and some cash. The cheque was her net salary for
the hours worked the previous week, as entered in the Appellant's payroll
journal. The wage paid for the hours of work entered in the Appellant's payroll
journal was the minimum prescribed wage for employees who receive tips. The
cash was her remuneration for hours that she worked during the previous week
but which were not entered in the Appellant's payroll journal. For the hours of
work not entered in the Appellant's payroll journal, the Worker testified that
she was paid less than the prescribed hourly wage for employees who receive
tips, though she was unable to specify that hourly wage. I would also note
that, during her cross-examination, the Worker explained several times
that her hourly wage for hours paid in cash every Sunday evening remained the
same throughout the relevant period, and that this cash remuneration was never
a source of conflict between the Appellant and her.
[10] However, counsel for
the Appellant clearly showed that the table (Exhibit A‑5), which Ms.
Chouinard prepared based on the information from the Worker's notebook
concerning the undeclared hours for which she was paid in cash, was not at all
consistent with the Worker's testimony that her hourly wage for undeclared
hours paid in cash was the same for each week during the relevant period.
[11] Counsel for the
Appellant showed, among other things, that, with respect to week 1344 and week
1346, both of which are referred to in Exhibit A‑5, the Worker's
hours that were not entered in the Appellant's payroll journal, and for which
she was paid in cash, totalled 13 hours. Further, it appears that the Worker
received $63 in undeclared cash for her 13 hours during week 1344, and $47
in remuneration for her 13 hours during week 1346. Thus, according to the
Worker's notebook, the Worker received $4.84 per hour for her 13 undeclared
hours of work during week 1344, and $3.61 per hour for her 13 undeclared hours
during week 1346. A careful examination of Exhibit A-5, which, as I stated,
accurately reflects the Worker's notebook, clearly shows that, contrary to the
Worker's testimony, the hourly wage for undeclared hours varied
considerably from week to week. For example, the hourly wage was
apparently $41.66, $12.25, and $0.47 for weeks 1287, 1288 and 1289,
respectively.
[12] I am of the opinion
that the Appellant in the case at bar has shown, on a balance of probabilities,
that the Worker's notebook was unreliable in that the entries therein were
questionable at best, considering the Worker's testimony on the subject. In my
view, the Appellant has adduced sufficient prima facie evidence to
demolish the factual assumption on which the Minister relied in making his
decision — an assumption that essentially depended on the truth and
accuracy of the information entered in the Worker's notebook.
[13] For
these reasons, the appeal is allowed.
Signed at Ottawa, Canada,
this 7th day of January 2008.
on this 19th day of February 2008.
Monica F. Chamberlain,
Reviser
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