Citation: 2008TCC54
Date: 20080207
Docket: 2007-2258(EI)
BETWEEN:
HÉLÈNE LACROIX,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1] This appeal
pertains to the insurability of the work done by the Appellant from April 30, 2001, to
July 25, 2003, for the benefit of Can‑Am Immigration Service 2000 Inc.
[2] In making his
decision, the Respondent relied on the following assumptions of fact:
[TRANSLATION]
(a) The Payor was
incorporated on May 19, 1999 following the bankruptcy of Can‑Am
Immigration Services Inc., and then went bankrupt itself on
August 1, 2003. (admitted)
(b) The Payor's
activities were resumed by another business of the same type. (admitted)
(c) The Payor took
over the services of the predecessor company, which consisted in selling work
permits to Canadian construction workers who wished to work in the United States. (admitted)
(d) The Payor also
sold the services of these workers to U.S. businesses. (admitted)
(e) The Appellant
rendered services to the Payor and to businesses owned by the Parenteau family
for several years. (admitted)
(f) The Appellant
was the wife of Richard Parenteau, Sr. The couple divorced on December 4, 2000. (admitted)
(g) Richard
Parenteau, Sr. was the person who first hired the Appellant to work for the
family business. (admitted)
(h) Although he was
officially no longer a shareholder of the Payor, Richard Parenteau, Sr.
was the person who managed the Payor's day‑to‑day activities. (admitted)
(i) Richard
Parenteau, Sr., was the person who gave us the information concerning the
employment held by the Appellant, who refused to cooperate with the coverage
officer or the appeals
officer. (denied)
(j) During the
period in issue, the Appellant worked for the Payor as a customer service
clerk. (admitted)
(k) The Appellant's
main task was to communicate with the Payor's clients to ensure that they were
satisfied. (admitted)
(l) The Appellant
worked from home and could contact 10-15 clients a day. (denied)
(m) In addition, the
Appellant occasionally picked up clients at the Magog airport and brought them
back there after they met with the Payor's management. (denied)
(n) The Payor has
no documents substantiating the number of times that the Appellant drove clients.
(denied)
(o) The Appellant noted
that when she did not have enough work, Richard Parenteau, Sr., gave her some
accounting work in the form of a few additions to do. (denied)
(p) The Appellant
claims that the calculations that she did could take her four to five hours a
day to complete. (denied)
(q) The Appellant
claims that she worked 40 hours a week but her hours were not tabulated by the
Payor and the few tasks assigned to her were not quantifiable. (denied)
(r) The Appellant initially
declared that she used her personal automobile to travel, but the Payor provided
her with a vehicle for her travel. (denied)
(s) The Appellant
received fixed gross remuneration of $726 per week regardless of the hours
actually worked. (denied)
(t) Based on the
Appellant's account that she worked 40 hours per week, her hourly rate was
$18.15, which is patently unjustified having regard to the duties assigned to
her. (denied)
(u) According to
the Emploi-Québec occupational wage guide, the average hourly wage for a person
who works full-time in this field is $14.78. (denied)
(v) In addition to
her remuneration, the Appellant had use of a car supplied by the Payor, and the
Payor paid for insurance on the Appellant's life. (denied)
(w) The few tasks entrusted
to the Appellant cannot justify the remuneration that she received from the
Payor. (denied)
(x) It is not
reasonable to believe that the Payor would have paid such a salary to a
customer service clerk who did work similar to that done by the Appellant. (denied)
[3] The Respondent
determined that the Appellant's employment was not insurable because the
Appellant, and the company that paid her salary, were not dealing with each
other at arm's length.
[4] After analysing the
file, the Respondent determined that the employment relationship was shaped or
influenced by the non-arm's-length dealings. In other words, the
Appellant's employment was not insurable employment under paragraph 5(2)(i)
and subsection 5(3) of the Employment Insurance Act ("the
Act") because the Minister of National Revenue ("the Minister")
decided, after analysing all the relevant facts, that it was reasonable to
believe, having regard to all the circumstances, that the Appellant and the
Payor would not have entered into a substantially similar contract of
employment if they had been dealing with each other at arm's length.
[5] In support of her
case, which the burden was on her to prove, the Appellant testified personally,
and called Richard Parenteau, Sr., the company's majority shareholder, as
a witness.
[6] The evidence, which
consisted primarily of Richard Parenteau's testimony, can be summarized as
follows. He began by stating that he was the president and CEO of the business.
He described the business as a major one in its field. Mr. Parenteau, the
directing mind, described it as an expanding business, and referred to the
number of employees, the places of business and the possibility of a franchise
network in the future. He said that the immigration consultancy business that
he managed obtained all kinds of visas for individuals, or, for its corporate
clients, groups of workers. The business made more than a million dollars in
consulting fees.
[7] Claiming to be very
busy due to the scope of his business's activities, he alleged, several
times, that his heavy responsibilities prevented him from answering precisely
fundamental questions about the Appellant's job description, the terms and
conditions governing the performance of her work, and various facts related to
the manner in which job-related instructions were given to her.
[8] It is important to
note that the Appellant never went to the employer's place of business, and
that most of the work was done from her private residence.
[9] Demonstrating great
concern about marketing issues, Mr. Parenteau stated that there were three
components to the Appellant's duties. The first was customer service. Starting in
1999, the Appellant had to call the clients whose contact information she was
given; she phoned them, identified herself as a member of Mr. Parenteau's
family, and asked them if they were satisfied with the services rendered. The
results of her inquiry were not recorded, and were essentially repeated orally
to Mr. Parenteau himself. Mr. Parenteau said that only a few
questions were asked, not the dozen or more questions that some agencies
specialized in this field ask. He was unable to quantify the number of calls or
their content. Apparently, no record was kept of the outcome of these calls.
The evidence on this subject was general, and might even be described as
somewhat confusing.
[10] The second component
was to drive certain clients to or from the airport, such as Dorval or Burlington. The Appellant
received instructions from her spouse about this as well.
[11] The evidence
regarding the frequency of those trips was not clear. This duty was described
as sporadic; the only specific information provided about this aspect of the
job description was the duration of the trips, which was estimated to be four hours
for Montréal and two and a half hours for Burlington. In this regard, the Appellant
asserted that she made as many as three trips on the same day.
[12] The third component
that was discussed was the filing of invoices. According to the witness, the various
invoices were delivered to the Appellant's house by Mr. Parenteau. He
emphasized that he needed someone he could trust; hence his reliance on the
Appellant. Every time that an attempt was made to obtain clarifications from
the witness, the same answer, namely that everything depended on the needs of
the business, was given. When asked to acknowledge that the company paid the
premiums for an insurance policy on the Appellant's life, Mr. Parenteau admitted
to the fact, hastening to add that the same benefit was granted to another
employee whose services were essential.
[13] According to Mr.
Parenteau, this was neither accounting nor management work, but essentially
filing work, without further specification. The Appellant added that she
verified whether the goods received matched the goods invoiced. The Court was
left to wonder what goods she was talking about.
[14] The Appellant also
stated that her job was the subject of an audit and analysis that led to the
determination that it constituted insurable employment. Following this determination,
the employer paid the premiums based on the belief that it had to. Mr. Parenteau
said, and repeated, that this was the same type of work, performed in the same
manner, and that he was stunned that he had to testify in a matter similar to
one in which it was determined that the employment was insurable.
[15] Lastly, Mr. Parenteau
submitted that the salary was reasonable having regard to the experience and
expertise of the Appellant, who had worked for many years as an executive
secretary in the hospital sector.
[16] The Respondent, for
his part, called an RCMP officer as a witness. The officer had been
assigned to an investigation into the Appellant's employer. His testimony
was not very helpful because the Respondent wanted to adduce information
through the witness from third parties who were not present, and the Court did
not admit that evidence.
[17] Marcelle Gagné
and Lyne Courcy also testified for the Respondent. Their testimony
shed light on the numerous denied facts and on the differences regarding the
circumstances surrounding the Appellant's refusal to go to the investigators'
office.
[18] The facts that were
relied upon are taken, inter alia, from an interview in which counsel
for the Appellant was involved. Quite clearly, the explanations that the Court
was given were not entirely consistent with the explanations obtained in the course
of the investigation. The following facts were denied:
[TRANSLATION]
(i) Richard
Parenteau, Sr., was the person who gave us the information concerning the
employment held by the Appellant, who refused to cooperate with the coverage
officer or the appeals
officer. (denied)
(l) The Appellant
worked from home and could contact 10-15 clients a day. (denied)
(m) In addition, the
Appellant occasionally picked up clients at the Magog airport and brought them
back there after they met with the Payor's management. (denied)
(n) The Payor has
no document substantiating the number of times that the Appellant drove clients.
(denied)
(o) The Appellant
noted that when she did not have enough work, Richard Parenteau, Sr., gave
her some accounting work in the form of a few additions to do. (denied)
(p) The Appellant
claims that the calculations that she did could take her four to five hours a
day to complete. (denied)
(q) The Appellant
claims that she worked 40 hours a week but her hours were not tabulated by the
Payor and the few tasks assigned to her were not quantifiable. (denied)
(r) The Appellant
had initially declared that she used her personal automobile to travel, but the
Payor provided her with a vehicle for her travel. (denied)
(s) The Appellant
received fixed gross remuneration of $726 per week regardless of the hours
actually worked. (denied)
(t) Based on the Appellant's
account that she worked 40 hours per week, her hourly rate was $18.15, which is
patently unjustified having regard to the duties assigned to her. (denied)
(u) According to
the Emploi Québec occupational wage guide, the average hourly wage for a person
who works full-time in this field is $14.78. (denied)
(v) In addition to
her remuneration, the Appellant had use of a car supplied by the Payor, and the
Payor paid for insurance on the Appellant's life. (denied)
(w) The few tasks
entrusted to the Appellant cannot justify the remuneration that she received from
the Payor. (denied)
(x) It is not
reasonable to believe that the Payor would have paid such a salary to a
customer service clerk who did work similar to that done by the Appellant.
(denied)
[19] Ms. Courcy's
testimony disclosed that the facts set out in the Reply to the Notice of Appeal
were correctly stated; the testimony of Mr. Parenteau and the Appellant was
more evasive, less precise and more confusing than the testimony provided
during the investigation.
[20] Among other things,
the Respondent's evidence validated the following allegations:
[TRANSLATION]
(i) Richard
Parenteau, Sr., was the person who gave us the information concerning the
employment held by the Appellant, who refused to cooperate with the coverage
officer or the appeals
officer. (denied)
(m) In addition, the
Appellant occasionally picked up clients at the Magog airport and brought them
back there after they met with the Payor's management. (denied)
(n) The Payor has
no document substantiating the number of times that the Appellant drove
clients. (denied)
(o) The Appellant
noted that when she did not have enough work, Richard Parenteau, Sr., gave
her some accounting work in
the form of a few additions to do. (denied)
(q) The Appellant
claims that she worked 40 hours a week but her hours were not tabulated by the
Payor and the few tasks assigned to her were not quantifiable. (denied)
(v) In addition to
her remuneration, the Appellant had use of a car supplied by the Payor, and the
Payor paid for insurance on the Appellant's life. (denied)
Analysis
[21] The Appellant perfectly
understood all the reasons for the decision from the outset. The decision
followed an investigation that was unusual to say the least, in that several
players were involved.
[22] In addition, this is
a case in which the burden of proof is on the Appellant.
[23] Despite these two
facts, the Appellant did not consider it important to call an employee of the
business, preferably a third party, as a witness in order to validate or
corroborate certain very important if not determinative elements.
·
Why
did the people whom the Appellant drove not testify?
·
Why
did no employee of the business come to confirm that the Appellant did invoice verification
as part of her job?
·
Why
did this invoice verification duty not yield any evidence substantiating the
number of invoices checked, the precise nature of the work done, and the useful
purposes it served?
·
Why
were no telephone bills adduced, indicating the number of long‑distance
calls, the places called and the dates of those calls?
·
Why
did the company supply a car for this kind of work?
·
Why
did the company pay the premiums for a life insurance policy in her name?
These are rather unusual benefits
for work of this nature.
[24] All of these
questions undoubtedly lead to the same answer: it was not possible to adduce
such evidence. The explanations given by Mr. Parenteau are quite simply
implausible.
[25] Mr. Parenteau
described himself as a major executive and sought, from the very outset, to
show how uncomfortable he was having to stoop to providing details regarding
the Appellant's matter.
[26] It is quite possible
that Mr. Parenteau was uncomfortable for the reasons invoked, but if his responsibilities
were so important and burdensome that he was unable to testify in a way that
shed light on the various relevant aspects, it was up to the Appellant to call
upon one or more people who could provide explanations that supported her
claims.
[27] The witness
Parenteau stated, on a few occasions, that the Appellant's relationship with
the business was based on trust and family ties and that there cannot be one
without the other.
[28] The Appellant and Richard Parenteau
were completely familiar with all the facts underlying the decision that they
were contesting. They should have made a special effort to mount a reasonable
rebuttal of the relevant elements relied upon by the Minister.
[29] They chose not to do
so, and provided vague and general explanations while citing a past decision
declaring that a job apparently identical to the one in the instant case was
insurable.
[30] Based on vague,
often confusing and very imprecise explanations, I do not see how a
professional business can offer such flexible working conditions to an employee
without exercising any control over her work.
[31] The only plausible
explanation is that this was clearly an employment of convenience, and that it
was in Mr. Parenteau's interest to provide such employment because it
enabled him to pay what was likely a support obligation in the form of a salary.
All the facts of the instant matter point to such a conclusion.
[32] I do not doubt that
the Appellant was called upon to contribute certain services such as transportation;
however, the explanations regarding the calls that were made in order to ensure
that clients were satisfied, and regarding the invoice filing or verification
work, struck me essentially as a description of phony employment aimed at
proving that there was work justifying the salary paid. In fact, the use
of a vehicle during part of the work period is very significant for someone who
gets paid an amount much closer to the minimum wage than the Appellant's
salary.
[33] Certainly the
fundamental question that I must answer is whether a person at arm's length
could have obtained the salary and conditions described by Richard Parenteau
and generally confirmed by the Appellant.
[34] As for the previous
court decision, which was adduced in support of the Appellant's position that
the work was insurable, it is obviously not binding on this Court. Moreover, it
was based on a very cursory analysis that led to findings which are open to
debate for the same reasons as those applying to the case at bar.
[35] I would add, though,
that I have unfortunately seen several cases where the consequences of a
decision weighed more heavily in the balance than the relevant elements;
indeed, it is sometimes decided that employment is insurable when this would
result in the collection of premiums, and that it is not insurable when the
dispute is over whether benefits are to be paid. Conflicting decisions in the
same file cause those concerned, in this case the Appellant, to be confused and
highly sceptical.
[36] In the case at bar,
the work was clearly not done as part of a genuine contract of service because
the working relationship was very much influenced by the fact that the parties
were not dealing with each other at arm's length. Consequently, the appeal must
be dismissed.
Signed at Ottawa, Canada, this 7th day of February 2008.
"Alain Tardif"
Translation
certified true
on this 19th day
of March 2008.
Brian McCordick,
Translator
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