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Citation: 2004TCC358
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Date: 20040520
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Docket: 2003-2737(EI)
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BETWEEN:
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LESLIE KIRSTEIN,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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REASONS FOR JUDGMENT
Savoie, D.J.
[1] This appeal was heard in Montreal,
Quebec on February 27, 2004.
[2] This is an appeal from a decision
made by the Minister of National Revenue (the
"Minister"), wherein he informed the Appellant that her
employment with 177701 Canada Inc., the Payer, during the period
from June 26, 2000 to January 12, 2001, the disputed period,
was not insurable, because she was not engaged under a contract
of service and consequently not an employee of the Payer.
[3] In making his decision, the
Minister relied on the following assumptions of fact:
a) the Payer
was formerly known as Dakota Home Fashion Textiles Inc. and also
as 145025 Canada Inc.; (admitted)
b) the Payer
made pet products such as beds for cats and dogs; (admitted
with modifications)
c) the
shareholders of the Payer were: (admitted)
Hedi
Rawas
70 % of shares
Steven
Rawas
30 % of shares
d) the
Appellant is the spouse of Steven Rawas and Steven Rawas is the
son of Hedi Rawas; (admitted)
e) the
Appellant claimed she carried out marketing researches and
developed new products for the Payer during the said period
while, in fact, she did not work for the Payer;
(denied)
f) on
January 16, 2001, the Payer under the name of Dakota Home Fashion
Textiles Inc. issued a record of employment to the Appellant, for
the period beginning on June 26, 2000 and ending on January 12,
2001, with an alleged earnings of $13,668.75 and a total of
alleged insurable hours of 1,087.50; (admitted)
g) the record
of employment does not reflect the reality concerning the period
of work, the hours worked and the salary earned by the
Appellant. (denied)
[4] The Appellant was not present at
the hearing. Her husband and representative advised the Court
that she was working. The evidence disclosed that the Payer is
the manufacturer of home fashion products, such as bedding for
domestic animals, dogs in particular. The Appellant performed
services for the Payer. She was hired to develop new pet
products. She worked mainly on the road, visiting suppliers and
retailers.
[5] According to Steven Rawas, her
husband and shareholder of the Payer, she was an expert in
fashion trends. During the disputed period, she developed a
complete line of products which was placed on the market. One
such product was a dog bed, one of which was sold by Costco and
one by Sears Canada. The Payer would put this product on the
market as a value added item. She was paid $506.25 per week
initially, and then she was paid in cash, when the Payer
experienced financial difficulties.
[6] The Minister takes the position
that the Appellant was not working under a contract of service
and therefore there was no employer/employee relationship between
her and the Payer, as contemplated by paragraph 5(12)(a)
of the Employment Insurance Act (the
"Act").
[7] In order to determine whether the
employment of the Appellant with the Payer can be labelled
insurable employment, it is advisable to consider it under the
criteria established in the leading case of Wiebe Door
Services Ltd. v. M.N.R. [1986] 3 F.C. 553. The criteria are
as follows:
1. The degree of control
over the work performed by the worker;
2. The ownership of the
tools;
3. The chance of profit
and risk of loss;
4. The integration of the
worker's labour in the undertaking of the Payer.
CONTROL
[8] The control criteria has been held
to be amongst all of the others the most important of all. The
evidence shows that over the period in dispute, the Appellant
visited the premises of the Payer no more than three to four
times. She performed her duties out of her residence and on the
road, visiting plants and suppliers. There was no control over
her working hours and the Payer was unable to establish her work
schedule. She determined herself how her work was to be carried
out, where she went and who she visited. Requests were made by
the agents and investigators for Human Resources Development
Canada (HRDC) and the Minister to the Payer for work related
records of employment of the Appellant. However, none were
produced.
[9] The evidence gathered produced
conflicting reports on the Appellant's weekly hours of work.
To the appeals officer, the Appellant reported working
30 hours per week. To HRDC, she declared 60 hours per week
while the Payer claimed that she worked 37.5 hours per week. No
records were produced to show her average weekly hours of work.
It is also significant to note that the Appellant, in her
declaration, stated that she was working for the Payer as a
secretary. Under the control criteria, the evidence has
demonstrated that the facts support the position taken by the
Minister very strongly.
OWNERSHIP OF THE TOOLS
[10] Under this criteria, there is a great
deal of contradiction making it difficult to arrive at a logical
conclusion. The Appellant, in her declaration, stated that she
owned the tools of her trade, i.e. her vehicle, her computer and
her camera. On the other hand, her husband, a shareholder of the
Payer, stated that the vehicle she used was leased by his mother
and that the lease agreement provided for payments thereunder by
the Payer. He also stated that the computer and the camera were
both owned by the Payer. The evidence heard under this criteria
is inconclusive. Therefore, a determination becomes a matter of
conjecture.
CHANCE OF PROFIT AND RISK OF LOSS
[11] Under this criteria, the evidence is
rather sparse and could be considered neutral insofar as it is
relied upon by either the Minister or the Appellant.
INTEGRATION
[12] The analysis of the employment of the
Appellant under this criteria would support the contention of the
Appellant. It is important to note, however, that the principle
laid down in the Wiebe Door case, supra, expressed
by MacGuigan, J. in terms of an "...overarching test, which
involves examining the whole of the various elements which
constitute the relationship between the parties" has been
found to be particularly useful in solving the issue at stake
here. The proper application of the test was expressed succinctly
in the head note of the Wiebe Door case, supra, as
follows:
The entrepreneur test, involving control, ownership of tools,
change of profit and risk of loss, is not a fourfold test but,
rather a four-in-one test with emphasis on the combined force of
the whole scheme of the operations.
[13] Counsel for the Minister pointed out
that the Appellant, for no valid reason, failed to attend the
hearing. Indeed, the testimony of the Appellant would have been
useful in clarifying some of the contradictions set out
above.
[14] There is a well-established rule of
jurisprudence which permits the Court to draw an adverse
inference from the absence of the Appellant. In other words, the
Court is entitled to infer that any evidence from the Appellant,
had she submitted any, would have been unfavorable to her
position (see Blatch v. Archer (1774), 1 Cowp. 63,
page 65, per Lord Mansfield).
[15] After reviewing all the facts and
circumstances in the case at bar, and assessing the same in terms
of the criteria established in the case law, particularly in the
case of Wiebe Door Services, supra, this Court must
conclude that the Appellant was not engaged by the Payer in
insurable employment within the meaning of paragraph
5(1)(a) of the Act, for the period in question,
since there was not contract of service between the Appellant and
the Payer.
[16] Consequently, the appeal is dismissed
and the decision of the Minister is hereby confirmed.
Signed at Grand-Barachois, New Brunswick, this 20th day of May
2004.
Savoie, D.J.
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