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Citation: 2004TCC266
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Date: 20040419
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Docket: 2003-2446(EI)
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BETWEEN:
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MARIO COUTURE,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
[OFFICIAL ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
Savoie D.J.
[1] This appeal was heard at Trois-Rivières, Quebec, on December 2, 2003.
[2] This is an appeal involving the insurability of the Appellant's work when he worked for the Payor, Ramoneur Bois-Francs Inc., for the period from June 2 to October 25, 2002.
[3] On April 10, 2003, the Minister of National Revenue (the "Minister") informed the Appellant of his decision that the job he held was not insurable because it did not meet the requirements of a contract of service and no employer-employee relationship existed between him and the Payor.
[4] In rendering his decision, the Minister relied upon the following presumptions of fact which the Appellant admitted, denied or claimed to have no knowledge of:
[TRANSLATION]
(a) the Payor was incorporated on June 3, 2002; (no knowledge)
(b) the Payor operated a chimney cleaning business in the Bois-Francs region, including the municipalities of Princeville, St-Christophe and Plessisville; (admitted)
(c) from June 3 to July 18, 2002, the Payor's sole shareholder was Line Boucher; (no knowledge)
(d) Benoît Leclerc was the payor's sole shareholder as of July 18, 2002; (no knowledge)
(e) Benoît Leclerc is the Appellant's uncle; (admitted)
(f) on March 10, 2003, Benoît Leclerc told the Respondent's agent that Line Boucher did not want to look after the company; (no knowledge)
(g) on March 10, 2003, Benoît Leclerc told the Respondent's agent that he had paid nothing to transfer shares between Line Boucher and himself; (no knowledge)
(h) on March 20, 2003, Benoît Leclerc told the Respondent's agent that he had invested nothing in the Payor, nor signed the line of credit; (no knowledge)
(i) during the period at issue, the Payor earned a gross income of about $18,000; (no knowledge)
(j) the Appellant was the Payor's only employee; (admitted)
(k) the Appellant's duties consisted in soliciting clients, cleaning chimneys, invoicing clients and receiving payments, making deposits, doing banking reconciliations, doing his pay and government remittances and providing customer service in the event of complaints; (admitted with explanations)
(l) the Appellant worked from Sunday to Saturday from 8:00 a.m. to 9:00 p.m. depending on appointments and the temperature; (admitted)
(m) the Payor's address was the Appellant's residence; (admitted)
(n) all the Payor's correspondence was addressed to the Appellant's home; (admitted with explanations)
(o) the Appellant alone signed the Payor's cheques; (admitted with explanations)
(p) the Appellant used his own truck to perform his duties; (admitted)
(q) during the period at issue, the Appellant did not claim reimbursement from the Payor for truck expenses; (denied)
(r) the Appellant provided his tools and his cellular telephone to perform his duties; (denied)
(s) the Appellant received remuneration once per month; (admitted)
(t) the Appellant appeared in the payroll register with an hourly wage of $10 in June, November and December and $15 in July, August, September and October; (admitted with explanations)
(u) the Appellant recorded 50 hours of work per week for himself in the payroll register; (admitted)
(v) the Appellant's hours of work declared were consistent with little regard to the Payor's activity; (admitted)
(w) the Appellant had no benefits or paid vacation and did not receive vacation pay; (admitted)
(x) Benoît Leclerc did not supervise the Appellant's work; (denied)
(y) Benoît Leclerc did not record the Appellant's hours of work; (denied)
(z) Benoît Leclerc spoke with the Appellant once or twice per month; (denied)
(aa) on December 2, 2002, Benoît Leclerc told the Respondent's agent that he gave the Appellant carte blanche as he had experience in the field; (no knowledge)
(bb) on December 2, 2002, Benoît Leclerc told the Respondent's agent that he would not have the company if Mario Couture were not his employee; (no knowledge)
(cc) on December 2, 2002, Benoît Leclerc told the Respondent's agent that he did not know the Payor's weekly or monthly sales figures; (no knowledge)
(dd) on November 29, 2002, the Appellant told the Respondent's agent that he had personally paid for liability insurance and that the Payor was in favour of reimbursing him; (no knowledge)
(ee) on October 25, 2002, the Payor issued a Record of Employment to the Appellant for the period beginning June 2, 2002, and ending October 25, 2002, indicating 1,120 insurable hours and total insurable pay of $15,800.00; (admitted)
(ff) the Record of Employment was signed by the Appellant; (admitted with explanations)
(gg) after his lay-off, the Appellant continued to work for the Payor without receiving remuneration;
(hh) on March 31, 2003, the Appellant had expenses of $10,336.21 that had not been reimbursed by the Payor; (admitted)
(ii) on November 29, 2002, the Appellant told the Respondent's agent that he had cleaned a few chimneys since his lay-off on October 25, 2002, without being paid, as he preferred to keep the money in the company to pay expenses; (no knowledge)
(jj) the Appellant made all the Payor's decisions; (denied)
(kk) the Appellant was in charge of the company. (denied)
[5] At the hearing, Mario Couture was the only witness to support his appeal. It should be pointed out that the Payor, Benoît Leclerc, was summoned by the Minister to appear at the hearing, but did not appear despite the fact that he had been duly notified. Therefore, the Payor's version was obtained by the appeals officer and investigator during the investigation conducted by Human Resources and Development Canada (HRDC).
[6] The evidence showed that during the period at issue, the Appellant noted his hours of work on paper to verify that he had indeed worked 50 hours per week. When he received his pay for the hours worked and everything matched, he did not keep his notes.
[7] It was established that Mario Couture, the Appellant, took a three-day training course at the Association professionnelle du chauffage [professional driving association] (APC), in January 2003. The Payor received a provincial subsidy to help with this training. This subsidy paid for half and the Payor paid the other half. Mario Couture had spoken to Benoît Leclerc about his interest in taking this training and Mr. Leclerc decided to send him. The Appellant paid the total amount for the training with his personal credit card and was to have been reimbursed by the Payor, according to the information obtained from the Appellant.
[8] The Appellant disclosed to the appeals officer that the Payor paid his liability insurance expenses for accidents as well as the fees for civil liability coverage in the event of breakage at a client's home. However, during the investigation of the insurability file, the Appellant disclosed that the company had liability insurance but that, for the moment, he, the Appellant, had paid for it but that the company was going to reimburse him. The Payor, Benoît Leclerc, confirmed that the company had liability insurance but that he had never seen the invoice as Mario Couture had looked after it.
[9] Benoît Leclerc explained to the appeals officer that it was Mario Couture who wrote down his hours and gave them to him by telephone. He added that he wrote them down but did not keep anything written since he trusted the Appellant, Mario Couture.
[10] The information obtained from Benoît Leclerc indicates that he and Mario Couture communicated with each other three or four times per week, but during the investigation of the insurability file, he disclosed that he spoke to his nephew once or twice per month.
[11] Benoît Leclerc admitted that the Appellant had worked after the period at issue. He disclosed that the Appellant had worked 20 hours in November 2002 and five hours in December. He disclosed that the Appellant had been paid $10 per hour for this period and that revenues had not been high enough to be able to pay him $15 per hour.
[12] It was established that occasionally the Appellant received complaints from clients. When a client expressed dissatisfaction, the Appellant would discuss it with his uncle, the Payor, and his uncle would decide whether or not the Appellant should re-do the work. The clients paid their accounts directly to the Appellant. Never was a cheque not honoured. The Payor indicated that if that had occurred, the Appellant would have gone back to see the client to request payment of the invoice.
[13] Benoît Leclerc stated that the company did not share the chance for profit or risk of loss with the Appellant but he admitted that the hourly wage paid to the latter could decrease depending on revenue during the period. For example, in June, as there was less work and thus less income, the Appellant's remuneration had been set at $10 rather than $15 per hour.
[14] In his statement in the insurability file, Benoît Leclerc indicated that the Appellant looked after the Payor's incorporation. He does not know much it cost to incorporate, saying, [TRANSLATION] "Mario did not give me an invoice." With regard to the company, the Payor has not had to disburse any money or arranged any line of credit or loan. For the company's work, the Payor leases the Appellant's truck. The Payor stated that he made the important decisions with the Appellant but then admitted to giving the Appellant carte blanche he had experience in the field. In addition, he disclosed that he would not have his company if the Appellant were not his employee. He stated that he did not wish to hire other employees but added that if the Appellant wanted another employee on the road they would need to come to an agreement because in his, the Payor's opinion, one truck was enough.
[15] Benoît Lecler indicated that he did not know the company's weekly or monthly sales figures. He thinks the company is making a profit, but not much. Moreover, he thinks that the Appellant deposits all the company income and that he can trust him. He stated, "I do not know if there is an accountant; it is not a big business, Mario Couture takes care of the paperwork for the time being." He admitted that he had a company in order to get work for his nephew, Mario Couture.
[16] The Minister relied on paragraph 5(l)(a) of the Employment Insurance Act (the "Act") to decide that the Appellant's work was not insurable.
[17] Subsection 5(l) of the Act reads in part:
5.(1) Subject to subsection (2), insurable employment is
(a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise;
. . .
[18] According to the well-known case Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, case law has established a series of tests for determining if a contract constitutes a contract of service or for the provision of services. Although there are others, the four tests below are the most routinely used:
(a) The degree or absence of control, exercised by the alleged employer;
(b) Ownership of tools;
(c) Chance of profit and risk of loss;
(d) Integration of the alleged employees' work into the alleged employer's business.
[19] The evidence must be examined in light of each of these tests.
Control
[20] Mario Couture, the Appellant, took calls from clients, made the appointments and performed chimney cleaning. He took care of government remittances and saw to banking reconciliations and deposits. He was paid directly by the clients for chimney cleaning. The bank statements were sent directly to him. He signed the cheques for the Payor although Benoît Leclerc could also sign; a single signature was needed. In addition, Mario Couture prepared and signed his own paycheque.
[21] It was established that the clients reached the Appellant directly on his cellphone to make appointments. In addition, he received and handled complaints from clients. The Appellant worked Sunday to Saturday, from 8:00 a.m. to 9:00 p.m. His hours were not assigned and he worked an average of 50 hours per week.
[22] Benoît Leclerc stated that he did not supervise Mario Couture and that he looked after things by himself. He stated to the insurability officer that he thought Mario Couture's salary was paid once per week while, in fact, the Appellant prepared his paycheque monthly. The Minister demonstrated that the Appellant took a training course in January 2003 that cost $1,200 but the Payor does not know exactly who gave the course.
[23] The data collected and examined regarding this aspect of working conditions clearly indicate that the degree of control exercised by the Payor over the Appellant's work was minimal.
Ownership of tools
[24] The evidence demonstrated that the only equipment of great value used in the company's business was the truck owned by the Appellant, which he used exclusively for work. It is true that the brushes and ladders were previously the Appellant's property but he indicated that he had sold them to the Payor. However, during careful examination by the investigators, they were unable to discover anything relating to the ownership or the transfer of these brushes and ladders. With regard to the cell phone used by the Appellant in his work, Benoît Leclerc and the Appellant both stated that it was owned by the Payor. However, the investigators found no invoice from a telephone company for use of telephone services.
Chance of profit and risk of loss
[25] At the hearing, evidence demonstrated that the Appellant was paid once per month, by cheque in his name. Benoît Leclerc stated that the Appellant's hourly rate could decrease depending on income for the period. For example, in June, as there was less work, thus less revenue, the Payor only paid the Appellant $10 per hour rather than $15. Moreover, it was established that the Appellant received no benefits, had no paid vacation and received no vacation pay.
[26] After he was laid off, the Appellant had expenses that had not been reimbursed by the Payor. In March 2003, during telephone interviews, he reported that several thousand dollars of expenses owed to him had not been reimbursed. The mileage rate varied depending on the Payor's income and not according to the increase in the price of gasoline. During the period at issue, a portion of the Appellant's mileage was reimbursed at 41 cents per kilometre while the rest was included in the March 17, 2003, claim at the rate of 35 cents per kilometre. After the period at issue, the Appellant took a three-day training course that he paid for himself and he is still awaiting reimbursement from the Payor.
Integration
[27] Evidence showed that the Payor had made no office available to the Appellant; he worked from his home. The company address is that of the Appellant's home. The Appellant himself received payments of invoices from clients. He prepared his pay and signed his cheque himself. The bank statements were sent to his home. He took care of customer complaints; as well, he recruited clients and looked after advertising. He received no vacation pay nor had paid vacations. There was no written contract or agreement between him and the Payor.
[28] The circumstances studied under these tests clearly establish that the Payor was not really in charge of the company.
[29] Examination of this file by the Minister's agents revealed a number of contradictions depending upon whether the statements were made to the insurability officer or to the appeals officer. Thus the Appellant disclosed to the appeals officer that no books were really kept while to the insurability officer, he disclosed that he looked after the bookkeeping (invoicing, accounts receivable, payroll register, at source deductions, etc.), using Lotus. He also allegedly indicated that he had not invested any money in the company while, according to available information, the investigating officers discovered that he had deposited his own funds in the company account in June 2002.
[30] Benoît Leclerc told the insurability officer that he communicated with Mario Couture once or twice per month, while he put his meetings with the Appellant at three or four times per week with the appeals officer. The Appellant told the insurability agent that he met with Benoît Leclerc once per month to talk about the company's business, while he told the appeals officer that he called or met with the Appellant four or five times per week. The investigators discovered another contradiction in the statements of the Appellant and Benoît Leclerc with regard to the liability insurance. The various versions were described above.
[31] Analysis of the evidence in accordance with the tests established in Wiebe Door, supra, leads us to the conclusion that:
1. Examination of the Appellant's duties and the evidence gathered clearly indicate that the Appellant did virtually everything. Benoît Leclerc denied the existence of bank statements, while the records obtained proved the opposite.
2. The contradictions discovered in the various statements indicated that Benoît Leclerc knew little of what was going on in the business.
3. Evidence established that when business was going well, the Appellant was paid $15 per hour and at other times, his hourly wage was set at $10.
4. In addition, evidence showed that the Appellant had paid for his own training and that he was still waiting for the Payor to pay, in addition to other expenses.
5. The Appellant was unable to explain why an advance was made from his personal account to the business account in June 2002.
6. The preponderance of evidence seems to indicate that the Appellant is in fact the directing mind of the company.
[32] The Appellant is asking this Court to overturn the Minister's decision. But upon analysis of the evidence gathered, in light of the established tests, intervention on the part of this Court is not warranted.
[33] In similar circumstances, the Federal Court of Appeal dismissed the application to intervene. Marceau, J.A. in Scalia v. Canada(Minister of National Revenue - M.N.R.) (F.C.A.),[1994] F.C.J. No. 798 explained the Court's reasoning in these terms:
On analysing the evidence, however, we find that the applicant had such ascendancy over the company, its activities and the decisions of its board of directors, which was composed of himself, his nephew and his sister-in-law, that there could not have been the independent relationship between himself and the company that is necessary to the creation of a true subordinate relationship. . . .
[34] This Court examined similar facts in Therrien v. Canada(Minister of National Revenue - M.N.R.), [1994] T.C.J. No. 859, and Robichaud, J. determined the following at paragraph 10:
The Appellant had such ascendancy over the activities of the Club and the decisions made that it precluded any relationship of dependency such as is necessary to the creation of a true relationship of subordination. On this point, see the reasons of Louis Marceau J.A. in Scalia and M.N.R., May 19, 1994, No. A-222-93, Federal Court of Appeal.
[35] This case was appealed in Therrien v. Canada (Minister of National Revenue - M.N.R), [1995] F.C.J. No. 1206, and Hugessen, J.A. of the Federal Court of Appeal stated:
The Tax Court of Canada judge, relying on the evidence in the record, found the applicant was the "final authority and prime mover" in his Club and had an ascendancy over the latter which excluded any possibility of a relationship of subordination. These are findings of fact which this Court, whose powers of judicial review are limited to determining the legality of impugned decisions, cannot vary.
The application for judicial review will be dismissed.
[36] It is clear, taking the above into account, that the Appellant has not discharged the onus of proof. It must furthermore be added that the Appellant admitted most of the Minister's allegations on which he relied in rendering his decision. In this regard, it is appropriate to recall the rule stated by the Federal Court of Appeal in Elia v. Canada (Minister of National Revenue - M.N.R.), [1998] F.C.J. No. 316, in which Pratte, J.A. ruled that:
. . . the allegations in the reply to the notice of appeal, in which the Minister states the facts on which he based his decision, must be assumed to be true as long as the appellant has not proved them false.
[37] As a result, the appeal is dismissed and the Minister's decision is confirmed.
Signed at Grand-Barachois, New Brunswick, this 19th day of April 2004.
Savoie D.J.
Translation certified true
on this 23rd day of August 2004.
Sharon Winkler Moren, Translator
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