Docket: 2005-113(EI)
BETWEEN:
LOUISE LEMAY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
____________________________________________________________________
Appeal
heard on February 1, 2006, at Trois-Rivières, Quebec
Before: The Honourable
Justice Alain Tardif
Appearances:
|
Counsel for the Appellant:
|
Alexandra
Sirois
|
|
Counsel for the Respondent:
|
Pierre-Paul Trottier
|
____________________________________________________________________
JUDGMENT
The appeal under subsection 103(1) of the Employment
Insurance Act with respect to the Appellant's employment by 3947921 Canada
Inc. from
December 23, 2002, to July 11, 2003, is dismissed, and the decision
of the Minister of National Revenue rendered on January 29, 2004, and bearing
the number CE 0336 3125 2374,
is confirmed, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 20th day of July 2006.
"Alain Tardif"
Translation certified true
on this 29th day of June 2007.
Brian McCordick, Translator
Citation: 2006TCC384
Date: 20060720
Docket: 2005-113(EI)
BETWEEN:
LOUISE LEMAY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1] This is an appeal
from a determination by the Respondent dated December 6, 2004, in which the Respondent
found that the payor and the Appellant entered into an arrangement intended to
make the Appellant eligible for unemployment insurance benefits.
[2] The Respondent
filed an Amended Reply to the Notice of Appeal on the day of the hearing with
the Appellant's consent. It is helpful to reproduce all the facts admitted by
the parties:
[TRANSLATION]
(a) The payor
incorporated on September 21, 2001.
(b) The payor carried
on business for 27 months, beginning in October 2001 and ending in
December 2003.
(c) Throughout this
period of operations, the payor was actually controlled by Maurice Perreault,
the father of Mario Perreault, the Appellant's spouse.
(d) The payor
operated a women's clothing manufacturing business.
. . .
[3] The evidence
disclosed that Maurice Perreault's family has been in the clothing
manufacturing business since the 1970s.
[4] The business ceased
operations on two occasions due to bankruptcy.
[5] In the early 2000s,
Maurice Perreault, having personally made an assignment of his property,
continued to do business making clothing thanks to the involvement of a nominee.
[6] After being
discharged from his bankruptcy, he took control of a new business, which also
manufactured clothing.
[7] Maurice Perreault,
his son Mario Perreault, and Mario's spouse, the Appellant in the
case at bar, provided their simple account of the facts: During the period
in issue — that is to say, from December 23, 2002, to
July 11, 2003 — the Appellant essentially did the
same work, for which she was paid roughly the same remuneration, as the witness
Carmella Maria Di Caprio ("Maria Di Caprio").
[8] In her testimony, Maria
Di Caprio described her work and the circumstances surrounding her hire on
November 1, 1999, and the termination of her employment on
February 17, 2001.
[9] She also stated
that she helped train the Appellant. The Court found Ms. Di Caprio's
description of her own duties to be specific and thorough.
[10] Since the burden of
proof was on the Appellant, it was not sufficient essentially to assert and
repeat: "I did the same work in the same way and was paid the same
amount." She had to explain and describe the nature of the work for which
she received significant remuneration.
[11] The Court noticed
certain unusual elements, including the lengthy period between Ms. Di Caprio's
departure and the Appellant's arrival.
[12] The work in
question, which was described as very important, was allegedly done by the
owner himself during that period.
[13] Up to this stage,
everything was relatively straightforward and coherent, but things took a turn
for the worse when the Respondent sought clarifications and explanations
regarding certain points and facts noted in her file. Those explanations
were incoherent and confused. There were inconsistencies, including
considerable variations with regard to the number of hours accrued, the expense
reimbursements, the reason for the layoff, the job description and so forth.
[14] Clearly, the
information in the Appellant's file differed greatly from the straightforward
version initially submitted to the Court. When asked to provide clarifications
and explanations and, above all, to reconcile several inconsistencies, Maurice Perreault
and the Appellant reacted with frustration and impatience even though the
questions asked by counsel for the Respondent were very legitimate.
[15] They gave all sorts of
frequently vague and imprecise explanations to account for the inconsistencies
that they themselves created. Constantly on the defensive, Maurice Perreault
and the Appellant sometimes let out their frustrations with respect to
questions that were essentially intended to ascertain the facts.
[16] Why was an amount of
39 hours entered on the Record of Employment (ROE) and given again upon
submitting the employment insurance benefit claim? The answer was that the in-house
computer program was set up based on the parity committee by-laws, but the
Appellant was not subject to those by-laws.
[17] Why was the job description
given a title that was different from the one stated at the hearing? The
computer program, the absence of appropriate information, and the fact that she
had already done the work in question were a few of the alternate explanations
provided. Yet the ROE that was prepared after Maria Di Caprio left
contained the following clear and correct statement: [TRANSLATION]
"quality and control." Everything stated on the ROE was completely
consistent with the work that she did for the business.
[18] Maurice Perreault
emphasized that he was involved in all aspects of the business; he said that
this was a very unusual field in which competition is ferocious. He also
discussed certain high points and low points, involving both customers and
subcontractors, at the core of his organization.
[19] He did not once refer
to a document in support of his allegations, and his only explanation with
regard to when the periods of work commenced and ended was that he had fewer customers
and subcontractors. He was visibly flustered at having to provide explanations
even though such explanations were essential to the analysis required to decide
the merits of the appeal.
[20] The Appellant and
her spouse listed and described the numerous functions she had carried out in
the clothing manufacturing business over the course of the many years devoted
to Maurice Perreault's businesses. The description of the duties during
the period in issue was modelled closely on the explanation provided by Maria Di Caprio.
[21] The duties were
described as absolutely essential to the business and were said to warrant 60
to 70 hours of work every week, but they raised certain questions: Why was Maria Di Caprio
not replaced when she left, and why was the Appellant herself not replaced upon
leaving?
[22] Here was the witnesses'
unconvincing reply: Maurice Perreault performed the work from February 17,
2001, which is when Maria Di Caprio left, to
December 23, 2002, which is when the Appellant arrived. The Appellant
was not replaced after she left on July 11, 2003, because practically
all the subcontractors had disappeared by then.
[23] The
cross-examination of the Appellant and her witnesses brought out several
inconsistencies, and the Appellant's allegations were discredited in several
respects. Things deteriorated even more when the people responsible for the
investigation and analysis leading up to the determination came forward to
testify.
[24] The first such
witness was the investigator at the lowest level. He said that he selected the
Appellant's file because some of the information in it raised questions.
The first of several elements that he noticed was that the salary paid to
the Appellant was, in his assessment, much higher than the salary generally paid
by businesses of this kind. The second element that attracted his attention was
the fact that, each year, or at least in 2001, 2002, and 2003, the Appellant
received significant benefits and generally used up all the benefits that she
could.
[25] The file was then
transferred to Francine Pouliot for a more thorough investigation and
analysis. Ms. Pouliot contacted the Appellant. She testified about the
telephone conversation.
[26] The answers that
were provided with respect to a fundamental aspect of the matter, namely the
job description, were utterly inconsistent with the explanations given to the
Court.
[27] After providing
relatively detailed responses regarding the work performed, the Appellant told
Ms. Pouliot that she sometimes travelled. In light of the ambiguities in
the Appellant's evidence, Ms. Pouliot requested copies of certain
documents that would enable her to verify the information in order to validate
certain information provided by the Appellant.
[28] In response, she
received Exhibit I‑5, a letter from lawyer William Noonan dated
January 28, 2004, which stated:
[TRANSLATION]
. . .
We represent the interests of 3947921 Canada
Inc., which has retained us for the purposes of this matter.
Under the terms of a letter dated
January 26, 2004, you requested, from a representative of our client,
a statement of monthly gross income for the years 2002 and 2003 from 3947921 Canada
Inc. The request is being made under the terms of your investigation of Louise Lemay,
who has apparently made a claim for employment insurance benefits.
Our client finds it difficult to
understand the relationship between the company's gross revenues and the
insurability of one of its employees.
The fact is that Louise Lemay is an
employee who reports to the management of the business, works on the road as a
representative and supplies her own car without being reimbursed for any
expenses whatsoever in consideration of her weekly gross income of $1,150.
Our client finds that your request goes
beyond what can reasonably be required in a case such as this, because there is
no relationship between the information requested and the subject that you are
investigating.
Our client is available to cooperate with
you on any written request that you submit, subject only to the requirement
that you not get involved in the administrative and financial affairs of the
company as part of your investigation into the insurability of Louise Lemay's
employment.
Please feel free to contact me for any
additional information.
. . .
[29] Based on this, Ms.
Pouliot concluded that the Appellant's employment was not insurable. A review
of her decision was requested, and the file was transferred to Denis Hamel.
Once again, Mr. Hamel contacted the Appellant, her spouse and Maurice Perreault.
[30] Mr. Hamel asked for
several documents that were very relevant and absolutely essential to an
adequate analysis. Once again, the information obtained was incoherent,
confused, and often implausible. This prompted Mr. Hamel to make a renewed
attempt to obtain certain documents, only to be met with a firm refusal from
the company's lawyer.
[31] Neither Ms. Pouliot,
nor Mr. Hamel, nor the Court was able to examine a single document.
[32] What evidence does
the Court have in order to assess the merits of the appeal? It has the accounts
given by the Appellant, her spouse and his father, the true owner and/or
manager of the business — versions that differ totally from
those given to Ms. Pouliot and Mr. Hamel on an aspect as fundamental as
the job description.
[33] According to the
latest version of the facts submitted to the Court, the Appellant's work was
comparable to that of Ms. Di Caprio, and the Appellant's very high salary
was clearly higher than the salaries prevalent in the field, but similar to
that paid to Ms. Di Caprio. However, these allegations raised several
questions that were never answered. I have in mind the following elements,
among others:
·
If
things were as simple as they are claimed to be, why was cooperation completely
withheld during the investigation?
·
Why
were no documents, such as income and expense statements, submitted?
·
Why
were the investigators not given the same clear and simple version of the facts
that was submitted to the Court?
·
The
work described in the most recent description of the facts was important, and
perhaps even absolutely essential. Why was the Appellant not replaced? The
answer, an oral explanation that was not validated by any documentary evidence,
was that this was due to the lack of subcontractors.
·
Who
did the work during the period between Maria Di Caprio's departure on February 16, 2001,
and the Appellant's arrival?
·
Maurice
Perreault, the manager of the business, testified that he was generally on the
premises of the business and that he carried out the duties that fell outside
business hours.
·
Yet Maria Di Caprio
and the Appellant asserted that the work took 60 to 70 hours per week to
perform.
[34] For the years 2001,
2002 and 2003, the Appellant received almost all the employment insurance
benefits to which she was entitled.
[35] The Appellant claims
that she had the skills to perform all the existing duties, from cleaning to
secretarial work, from materials distribution to quality control, and so forth.
If so, why was she laid off? The payroll, sales and monthly revenue journals,
and the number of suppliers, could have accounted for these layoffs.
[36] The numerous
inconsistencies (with respect to the hours of work, the job description, and
the title of the position), the contradictions (the gas was paid for but the
gas was not paid for), the ambiguities (the vast majority of the subcontractors
had apparently disappeared when the Appellant was laid off in July), the total
absence of documentary evidence that could easily have validated or confirmed
certain allegations, the refusal to cooperate during the investigation and upon
the review of the initial decision, and the reactions of Maurice Perreault
and the Appellant on cross-examination, all cause me to accord no credibility
to the Appellant's submissions.
[37] I do not doubt that the
Appellant worked for the family business, nor do I doubt her experience. However,
I am convinced that she did indeed enter into an arrangement with Maurice
Perreault for the purpose of receiving employment insurance benefits — not
just some benefits, but the highest amount available under the EI system.
[38] In order to have
found in favour of the Appellant, I would have had to accept evidence which was
essentially testimonial, did not hold up to scrutiny, was marred by
inconsistencies, and was completely incompatible with the account of the facts
that they themselves gave during Ms. Pouliot and Mr. Hamel's investigations.
[39] I would also have
had to accept, and perhaps even approve, the refusal to provide the customary
documents that would have proven that the Appellant was employed in insurable
employment.
[40] A contract of
employment consists of three essential elements: work, remuneration, and
control by the payor over the person performing the work. While it might
initially seem very easy to prove these elements, there must actually be
genuine work and genuine remuneration as part of a relationship in which one
party has the power to control the other.
[41] Two people can agree
on work to be performed for remuneration. In a normal context, a genuine
employment contract can exist even though the remuneration is considerably
lower or higher than the usual salary for similar work. The important, perhaps
even essential, element is the informed intention of the parties to the
employment contract.
[42] In addition, the
work must be genuine, especially if the contract of employment is subject to
the provisions of the Employment Insurance Act
("the Act").
[43] Indeed, the parties
to an agreement governing the performance of work for remuneration must honour
that agreement to the letter. However, upon examining the contract's compliance
with the provisions of the Act, the Court may conclude that it is, in essence,
merely an arrangement between the parties to render the purported employee
eligible to receive employment insurance benefits.
[44] A burden of proof
can only be met through plausible evidence, and such plausibility generally depends
on reliable, coherent explanations. The evidence may leave some doubts due to
the passage of time. Hence, the requisite level of proof is proof on a balance
of probabilities, not certainty beyond any doubt.
[45] In the case at bar,
the Appellant has not made her case on a balance of probabilities. Rather, the
evidence adduced contained numerous inconsistencies. On balance, the evidence
tends to show that during the periods in issue, the Appellant and her employer
made an arrangement one of the fundamental objectives of which was to secure
the maximum amount of employment insurance benefits for the Appellant, as
opposed to paying the Appellant fair value for her work.
[46] For all these reasons, the appeal is
dismissed.
Signed at Ottawa, Canada, this
20th day of July 2006.
"Alain Tardif"
Translation certified true
on this 29th day of June 2007.
Brian McCordick, Translator
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