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Citation: 2004TCC582
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Date: 2004-08-25
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Docket: 2002-1698(EI)
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BETWEEN:
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POURVOIRIE AU PAYS DE RÉAL MASSÉ INC.,
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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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Docket: 2002-2888(EI)
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AND BETWEEN:
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CLAUDE DESAULNIERS,
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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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and
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MARIO ARÈS
FLORENCE CÔTÉ
CLAUDE FOURNIER
FERNANDE FOURNIER
RACHEL JALBERT,
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Interveners.
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[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1] The
Appellant was appealing the determinations the Minister of National Revenue
(the “Minister”) made pursuant to the Unemployment Insurance Act (the
“UIA”), the Employment Insurance Act (the “EIA”), and the regulations
thereunder, concerning 33 of its employees and the first and last day of work,
the number of insurable hours and the insurable earnings of each of these 33
employees from 1993 to 2000, based on the table in Appendix A to the “Amended
Reply to the Notice of Appeal (the “Reply”), which is appended to these
Reasons. Five of these employees are interveners, and only one employee,
Mr. Claude Desaulniers, appealed from the Minister’s determination.
The latter case will be analyzed as part of these Reasons.
[2] The
table drawn up by the Minister primarily shows that the periods of employment,
the number of weeks or hours of insurable employment, and the insurable
earnings do not match the Records of Employment prepared by the Appellant,
which employed all these employees.
[3] The
Minister based these conclusions on the facts in paragraph 5 of the Reply,
which reads as follows:
a) The Appellant
was incorporated on September 19, 1987; (admitted)
b) The Appellant
ran an outfitting operation on a 16-kilometre site with 10 lakes for fishing
and one main lake across from the inn; (admitted)
c) There were 16
rooms in the inn on the Appellant’s site before 1998 and 24 after;
(admitted)
d) There were
also 19 cottages on the Appellant’s site, which could accommodate between two
and eight people, depending on the cottage; (admitted)
e) There was
also a dining room on the Appellant’s site with a 120-person capacity, that is,
30 four-person tables, and an adjacent bar; (admitted)
f) Between 1993
and 2000, the Appellant ran his business year-round as follows:
- during the last
week of April: prepared cottages and launches, and did spring cleaning;
- first weekend in
May: opened site for an archery tournament attended by 250 to 300 people;
(admitted)
- on or about May
15: trout fishing season opened until Labour Day; (admitted)
- during the two
weeks after Labour Day: cleaned up site, put launches, fishing and clearing
equipment in storage and maintained trails;
- from the third
week in September until mid-November: 24 hunters and their wives hunted
pheasant on the weekends; (admitted)
- From the
Christmas holidays until the snow melts: skidooing on trails. (admitted)
[See Table 2 in Appendix
B.]
g) During the
period at issue, the Appellant hired varying numbers of people, depending on
the period of activity:
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Fishing season:
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27 to 30 employees
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Pheasant hunting
season:
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3 to 4 kitchen workers (admitted)
10 to 12 in the field
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Skidoo season:
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4 to 5 kitchen workers
2 in the field
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h) Between 1993 and 1996, the Appellant paid
its employees fixed weekly wages regardless of the number of hours they
actually worked.
i) Starting in 1998, the Appellant paid its
employees an hourly remuneration every [sic] two weeks.
j) The Appellant provided most employees
with housing without deducting any consideration from their wages.
k) The Appellant fed most employees without
deducting any consideration from their wages.
l) The Appellant provided most employees
with uniforms for no consideration. (admitted)
m) During the period at issue, the Appellant
paid for some employees’ vacation. (admitted)
n) Between 1993 and 1998, the Appellant
collected the tips during the fishing and skidoo seasons. At the end of these
periods, the tips were divided among the employees in proportion to the hours
each worked. (admitted)
o) During the years at issue, the Appellant
issued records of employment that did not show [sic] the actual period
worked by its employees.
p) Employees continued to work for the
Appellant while they were receiving unemployment or employment insurance
benefits.
q) Some employees continued to work
year-round while others continued to work [sic] for a specific period
[see Table 1 in Appendix A].
r) The Appellant then paid them the
difference between the benefits they were receiving and their net wages.
s) No source deductions were deducted from
the amounts the Appellant paid the employees during their benefit period nor
were they indicated in the payroll.
t) Employees received unemployment or
employment insurance benefits despite the fact that they continued working for
the Appellant, which paid them wages.
u) The Respondent used the following criteria to
calculate the insurable earnings of each employee:
Housing: A $50 weekly benefit was added to the insurable earnings
of each employee who lived on the site or in a house owned by Réal Massé.
Where applicable, the amount was pro-rated
to the number of days worked. The benefit amount is the same for all the years
at issue.
Food: Employees have eaten for free on the site since
1995. Consequently, the benefit for meals (board) was assessed at $35 a week,
the amount the Appellant charged employees in previous years.
Benefit waiting period: During the benefit waiting period, the
Appellant paid the worker the net amount of his or her earnings. This amount
was consequently added to the insurable earnings amount.
Tips: Tips were pooled and distributed by the Appellant at
the end of the fishing and skidooing seasons in proportion to the hours worked
by staff. These amounts were added to insurable earnings based on Table 3
in Appendix C.
[4] The
Appellant sets out its own version of the facts in paragraph A (on pages 1 to
4) of its written argument, which I think, is worthwhile including in its
entirety:
A) STATEMENT OF
FACTS:
Over and above the facts
alleged in the Respondent’s amended reply to the notice of appeal which were
admitted at the beginning of the hearing, the following facts were demonstrated
in testimony:
1. Until 1993,
the Appellant paid some of its employees a form of bonus at the beginning of
the fishing season.
2. The purpose of
this bonus was to encourage employees to come back year after year.
3. In 1993, the
Appellant started paying some employees an amount in the off-season that
represented 25% of the employment insurance benefits they could receive if they
were laid off because of a shortage of work.
4. This amount
was an incentive for workers to return to work at the beginning of the next
fishing season.
5. The Appellant
started paying this supplement after the worker’s waiting period under the Unemployment
Insurance Act (Employment Insurance Act) had [sic] passed.
6. This procedure
was implemented further to meetings with Messrs. Raymond Ratelle and Maurice
Sourdif, employees from the unemployment insurance office in Joliette.
7. Officials
responsible for enforcing the Unemployment Insurance Act (the then
Unemployment Insurance Commission) knew [sic] about this procedure since
1995.
8. Ms. Gisèle
Côté, a former employee of the Appellant, informed the unemployment insurance
office of this procedure in December 1995 (see Exhibit A-3).
9. As a general
rule, the Appellant’s employees were laid off due to a shortage of work at the
end of the fishing season.
10. Between 1994
and 1998, this occurred the week after Labour Day.
11. Starting in
1999, the fishing season ended in late September.
12. After the
fishing season ended, some employees could continue to work part time on
weekends during pheasant hunting season.
13. About 5 or 6
people worked for the Appellant 5 to 10 hours a weekend.
14. The people who
were laid off in the fall were under no obligation to the outfitter.
15. However, a
number of them went on vacation or back to their family until the skidoo season
started, on or about December 26.
16. Recipients of
the 25% bonus continued to receive it even if they left the outfitter site for
a period of time.
17. Some employees
who lived on the outfitter site could help out on their own initiative, but
they were under no obligation to do so.
18. Ms. Gisèle Côté
testified to this effect at the hearing.
19. Some employees
lived in their own homes.
20. Others lived in
houses personally owned by Mr. Massé.
21. Finally, some
employees lived in rentals on the outfitter site.
22. Based on the
payroll records the Appellant provided the Canada Customs and Revenue Agency,
the outfitter deducted the following directly from paycheques in 1993 and 1994:
$20 a week for housing and $20 a week for meals.
23. Based on the
receipts submitted by the Respondent as Exhibit I-3, employees who lived on the
outfitter site paid $200 a month in 1995 for housing.
24. In 1998 and
1999, $20 a week for housing and $20 a week for meals was deducted directly
from the paycheques of employees who lived on the outfitter site.
25. The Appellant
always obtained information from the Commission des normes du travail [labour
standards board] on housing and meal deductions.
26. The Appellant
always followed to the letter what it was told by the Commission des normes du
travail.
27. The Appellant
kept in constant contact with Unemployment Insurance Commission (now Human
Resources Development Canada) officials for information on its rights and
obligations.
28. During the
period at issue, Ms. Ginette Massé’s duty was to fill out records of
employment.
29. These records
did not show periods of part-time employment that some employees may have had
during the pheasant hunting or skidooing periods.
30. The wages the
Appellant paid during these periods were, however, indicated in the payroll and
the source deductions were made in accordance with the Act.
[5] For
its part, the Respondent reiterates as follows the facts in its written
argument on pages 2 and 3:
STATEMENT OF FACTS
1. The
documentary evidence and testimony provided at the hearing showed, among the
facts admitted by the Appellant, the following basic facts:
a) During the
entire period at issue, the Appellant’s employees held year-round positions,
not seasonal employment, with a view to meeting the Appellant’s operational
requirements1.
___________________
Tab 11 – Excerpt from the
Pourvoirie au Pays de Réal Massé Inc. Web site.
b) The records of
employment the Appellant issued did not show the actual period worked by its
employees: fictitious work periods and hours were entered.
c) Employees
continued to work for the Appellant while receiving unemployment/employment
insurance benefits.
d) The Appellant
paid its employees the difference between the unemployment/employment insurance
benefits they were receiving and their net wages.
e) As a result of
the Appellant’s scheme, the unemployment/employment insurance benefits in large
part covered the wages of its employees.
f) The Appellant
fed, housed and clothed most of the employees free of charge without any
deductions from their wages.
g) No source
deductions were made from the amounts the Appellant paid the employees during
their benefit periods nor were these amounts entered in the payroll.
h) Although some
of the Appellant’s employees were unaware that this practice was illegal,
others feared they would lose their job if they refused the conditions imposed
by Réal Massé.
i) Mr. Réal
Massé’s wife, Ms. Ginette Massé, filled out the employees’ unemployment cards
herself or told them the number of hours they should report.
j) Mr. Réal Massé
considered a group of workers as being his “core”, which consisted of the
following people:
i) Ginette Massé, his wife;
ii) Nancy Massé, his
daughter;
iii) Gilles Huet, his
son-in-law;
iv) Richard Massé, his son;
v) Claude Desaulniers;
vi) Sylvie Provost;
vii) Normand Guénard;
viii) Mario Arès;
ix) Denis Courcy.
k) All the
employees who confirmed the existence of this scheme did not belong to this
“core” group.
The issue
[6] The
Respondent sets out the issue as follows on pages 3 and 4 of its written
argument:
2. The Court must
determine whether the Minister of National Revenue (hereinafter the “Minister”)
was justified in re-establishing the periods of employment of the Appellant’s
employees pursuant to Appendix A of the Reply to the Notice of Appeal.
3. The Court must
determine whether the Minister was justified in adding the following amounts to
the insurable earnings of the employees:
·
$50
[a week] as a housing benefit;
·
$30[sic] [a week] for meals;
·
The
Appellant paid the difference between the net wages and the
unemployment/employment insurance benefits the employees received.
4. The Court must
determine whether the Minister erred in deeming earnings less than [sic]
20% of the maximum insurable as being insurable amounts under the Act.
[7] The
Respondent argued the following in connection with the issues under appeal:
5. Firstly, the
Minister’s position is that the Pourvoirie had to hire year-round employees to
meet its operational requirements. However, the records of employment issued
by the Appellant were not a true reflection of reality: the Minister argues
that the employees were falsely laid off and they continued to work at the
Pourvoirie, which paid them the difference between their net wages and their
unemployment/employment insurance benefits.
6. Therefore,
there was an employer-employee relationship during the periods at issue in
accordance with paragraph 3(1)(a) of the Unemployment Insurance Act and
paragraph 5(1)(a) of the Employment Insurance Act. Further,
pursuant to section 9.1 of the Employment Insurance Regulations, a person is
considered to have worked in insurable employment for the number of hours that
the person actually worked and for which the person was remunerated.
7. Secondly, the
Minister argues that the benefits (housing and meals) the employees received [sic]
during the period at issue must be included in the calculation of insurable
earnings, pursuant to subsection 2(3) of the Insurable Earnings and
Collection of Premiums Regulations.
8. Finally, the
Minister argues that no error was made in insuring earnings amounts under the
maximum. Provision is in fact made in subsection 13(1) of the
Unemployment Insurance Regulations that the employment with an employer in any
week of a person whose cash earnings are less than 20 per cent of the maximum
weekly insurable earnings and who is employed for less than 15 hours is
excepted from insurable employment. We argue that the employees worked more
than 15 hours a week and are therefore insurable pursuant to the Act.
[8] For
its part, the Appellant stated that the Respondent’s position is based
primarily on statutory declarations made by certain employees which it argued
had been obtained using methods incompatible with the principles of natural
justice. The employees in question were allegedly not informed that they had
the right not to answer the Human Resources Development Canada (“HRDC”)
investigator’s questions without their lawyer present. The Appellant alleged
that the investigator took advantage of the fact that the employees in question
had little education and obtained incriminating evidence from them about their
employer which the Appellant felt was biased by the investigator’s very words.
[9] The
Appellant therefore argued that little weight should be given to the reports
prepared by the appeals officers which partially reiterate these statutory
declarations and constitute evidence.
[10] The Appellant questioned the credibility of some of the Respondent’s
witnesses, who are employees involved in the issues under appeal here; these
witnesses substantiated the Respondent’s version of events. The Appellant
questioned their credibility because the testimony was confusing, erratic,
invented or quite simply vengeful against their employer. In the latter case,
the Appellant specifically referred to Julie Boulianne and Sylvain Therrien,
two former employees, husband and wife, who reported that their employer was
using dubious practices under the UIA and the EIA. The Appellant pointed out
that these two witnesses contradicted each other in their declarations to HRDC
and the Commission des normes du travail. The Appellant also argued that the
number of hours of work reported by these two employees was clearly overstated
and completely unreasonable given the number of hours reported by the other
workers. The Appellant therefore asked that these witnesses be discredited.
[11] The Appellant further argued that Mr. Réal Massé, the payer’s owner,
and his wife, Ginette Massé, testified frankly and demonstrated a thorough
knowledge of the application of the legislation concerned.
[12] Mr. Desaulniers’ counsel argued that all the evidence is based on a
credibility issue. Like his employer, he alleged that the Respondent’s
testimonial evidence is contradictory and that Mr. Desaulniers’ testimony,
which he felt reiterates all the information in the statutory declaration he
made during the investigation, and confirmed by Mr. Massé’s testimony, should
be considered with a view to his appeal being allowed.
Facts
[13] I personally heard the testimony of Réal and Ginette Massé, and of
nine employees (including Claude Desaulniers) involved in this case. I also
heard the testimony of: Raymond Ratelle, the employment insurance investigator
and monitoring officer from HRDC; Chantale Fortin, a Royal Canadian Mounted
Police (“RCMP”) officer, who served the Appellant with a search warrant in the
fall of 1998; Gaston Lachance, a HRDC major investigation specialist who
was present during the search of the Appellant and who met with the workers
being investigated; and Louise Dessureault, the appeals officer from the Canada
Customs and Revenue Agency (“CCRA”) tax services office who prepared the table
showing the periods of work and insurable earnings for each of the workers
under investigation and involved in this case. The Appellant also called to
testify Anne-Marie Cadieux, an administrative technician the Appellant hired in
2001 to look after its accounting. The latter started working for the Appellant
after the periods at issue in this case which were from 1993 to 2000. However,
between 1996 and 2001, she prepared the Appellant’s financial statements while
she worked for a separate accounting firm. Ms. Cadieux testified, among other
things, that before she started working for the Appellant, the Appellant used
to normally indicate only the periods of full-time employment on workers’
records of employment.
Ginette Massé prepared these records of employment, and although in theory
she was supposed to enter the hours of work of employees who continued to work
part time in the payroll, she did not indicate them on the records of
employment. Starting in 2001, Ms. Cadieux prepared the records of employment
and indicated all the workers’ hours, be they full or part time. That was
about all Ms. Cadieux revealed when she testified at the hearing.
[14] Mr. Réal Massé explained how he ran his outfitting operation, which
was started in 1987. In the summer, the fishing season starts in late April and
ends on the first Sunday in September after Labour Day. This is peak season
and he said that between 1991 and 1998, he hired between 10 and 12 employees,
that is, five or six in the kitchen, four or five to serve tables and four or
five as fishing guides (I would like to point out here that the numbers do not
add up; the minimum staff would be 13, not 10 and maximum, 16, not 12). I would
also like to point out that Mr. Massé told the appeals officer in an interview
that he hired between 27 and 30 employees during the fishing seasons between
1993 and 2000 (see report on appeal, Exhibit I-2, Volume I, Tab 6 in the case
of Mario Arès, [TRANSLATION] facts obtained from Mr. Réal Massé [...]
in interview [...] on February 5, 2002, in his counsel’s presence). In the
fall of 1997, he expanded the inn (it now has 24 rooms, eight more than before)
and he had six new cottages built. The outfitting operation owns 84 launches,
which, according to Mr. Massé, are cleaned and put into storage on the last
weekend of the fishing season. The site itself is also apparently cleaned up
and trails cleared at the same time.
[15] Pheasant hunting season opens on the second weekend in September and
is open for 10 consecutive weekends until mid-November. Mr. Massé said that he
hires four or five kitchen staff and one or two servers during this period, and
friends stay on the site who help him with outside work and are not paid
(during the interview with the appeals officer, he said that he hired three or
four kitchen staff and 10 to 12 field workers during this period).
[16] The skidoo season begins on Boxing Day and runs until mid-March,
depending on the season and, obviously, the weather. He said he hires staff
during this period: four or five to work in the kitchen and serving tables, but
does not guarantee them hours. Others are hired to shovel snow and dispense
gas.
[17] The outfitting operation then closes and re-opens the last week in
April, when staff return to organize the archery event during the first week in
May. In a statutory declaration made in his counsel’s presence, Mr. Massé
stated that the clean-up was done “[TRANSLATION] before the end of the
fishing season” (see Exhibit I-2, Volume IX, Tab 1, Page 3). Mr. Massé admitted
at the hearing that staff also return at the end of April to do another
clean-up of the site (pages 46-47 of the stenographer’s notes from November 19,
2003). The Appellant denied this latter fact at the beginning of the hearing
(see allegation in the first subparagraph of paragraph 5 (f) of the
Reply). The Appellant stated that the employees were usually laid off at the
end of the fishing season (based on the records of employment entered as
evidence) and Mr. Massé said that he started paying his staff during the first
week in May (page 47 of the stenographer’s notes from November 19, 2003).
[18] Please note that during his testimony, Mr. Massé admitted that he had
pleaded guilty to 32 charges (he had formally been charged with 385 counts) of
preparing false records of employment (see pages 147-150 of the stenographer’s
notes from November 19, 2003; Gaston Lachance, the HRDC investigator, said
that Mr. Massé had pleaded guilty to 14 charges, not 32: see page 158 of the
stenographer’s notes from November 20, 2003). Mr. Massé said that he had done
so and agreed to pay a $25,000 fine simply to close the case and avoid further
costs.
[19] Mr. Massé said that his staff worked an average of 47 hours a
week during the peak season. They were paid by the hour or week. Mr. Massé
guaranteed them a net salary between $250 and $300 a week, and provided them
with room and board regardless of the number of hours worked (see the appeals
officer’s interview with Mr. Massé in the presence of his counsel on February
5, 2002, reproduced in the report on an appeal, Exhibit I-2, Volume I, Tab 6,
Page 4 in Mario Arès’ case). Some staff was in fact provided with housing and
meals. If staff lived elsewhere, they simply ate their meals at the outfitter
when they were at work. In this regard, Mr. Massé said at the hearing that he
deducted a total of between $35 and $40 a week from staff paycheques or simply
added this amount to their earnings as a taxable benefit in the payroll, based
on the instructions received from the Commission des normes du travail
(pages 68‑69 of the stenographer’s notes from November 19, 2003).
However, in his above-mentioned statement to the appeals officer on February 5,
2002, Mr. Massé said that no taxable benefits were deducted until 1999, which
was when the Appellant allegedly started adding a taxable benefit ($20 a week
for housing and $20 a week for meals) to the earnings of workers who received
these benefits. Based on the report of the eligibility officer, an analysis of
the payroll did not show any regularity or consistency in the room and board
[staff] paid (see Exhibit I-2, Volume IX, Tab 1, Page 13, paragraph entitled
“Logement et pension [room and board]”).
[20] Mr. Massé said that up until 1991, he had told staff when he hired
them that he would pay them a bonus varying from $1,200 to $2,300 at the end of
the fishing season if they guaranteed they would return for the next season. I
believe that these employees did not report this bonus on their unemployment
insurance report cards. This practice was allegedly changed in 1991 after a
meeting among Messrs. Massé and Raymond Ratelle, and the investigations
and employment insurance monitoring officers. Mr. Massé said that Mr. Ratelle
allegedly told him that instead of paying his staff an unreported bonus, he
could pay them an amount representing 25 percent of unemployment/employment
insurance benefits
without there being an impact on their benefits, whether they were working or
not. According to Mr. Massé, by doing this, the workers were given the
incentive required to return to work at the beginning of the next fishing
season. He said that he started paying this supplement after the worker’s
waiting period under the UIA and the EIA had passed. Mr. Massé maintained that
Mr. Ratelle had in fact told him that workers could receive this 25 percent
without necessarily working and without having to report it to the proper
authorities. This is allegedly how Mr. Massé told certain employees that their
net salaries were guaranteed year-round even if they did not work during the
off-season. The following is a quote from Mr. Massé on pages 105-106 of the
stenographer’s notes from November 19, 2003:
[TRANSLATION] Because when I hired
my people and I actually had meetings with Mr. Ratelle, and I was convinced I
was on the right track, when I hired them I told them that I had an agreement,
had met conditions with unemployment. If you come work for us, you work the
whole season and come back the next year, in September, October, November. You
are going to get full pay for six months and you don’t work your hours. I
don't know anyone who isn’t interested in that. That was my agreement; that
was how I was able to keep good employees.
[21] Paradoxically, when asked by the appeals officer who was investigating
for the employment insurance office, Mr. Massé had denied the foregoing. When
confronted with the fact that almost all his staff had said that they had been
paid the difference between the net salary and net unemployment benefits in
cash, Mr. Massé’s alleged response was simply that they had all lied. He
also had to deny that he guaranteed a net salary year round and that
unemployment made up the difference (see the UI and CPP opinion report, Exhibit
I‑2, Volume IX, Tab 1, Page 12).
[22] I think I understand Mr. Massé’s rationale at the hearing, that he
exercised his right to pay his employees 25 percent of unemployment benefits to
justify paying them the difference between their guaranteed net salary and the
unemployment insurance benefits they received without them reporting anything
on their unemployment insurance cards in this regard.
The following is Mr. Massé’s reasoning on pages 101-103 of the
stenographer’s notes from November 19, 2003:
Q. You say that the staff
who received the twenty-five percent (25%) did not normally work?
A. No. When there was no
work, when there is no work in the off-season, no.
Q. Then when there was
work during the off-season, what happened with this twenty-five percent (25%)?
A. The five workers, when
they worked and when they completed their desired hours, well, they continued
receiving their unemployment because they were still entitled to earn
twenty-five percent (25%). If they had worked seven hours, ten hours or fifteen
(15) hours a week...
Q. Therefore, regardless,
they received their twenty-five percent (25%), but they could work or not work?
A. Exactly, Madam.
HANS MAROTTE:
Q. Therefore, let us look
at an example. A worker, she is in one of the dwellings; let us say she works
in the kitchen. She is going to work in the kitchen let’s say...
A. Yes, let’s say she
works ten hours.
Q. Is she paid for those
ten hours on top of the twenty-five percent (25%)?
A. No, no. The employee
is paid, is paid as long as, I, the employee always gets his or her pay.
Q. Okay.
A. That is the important
thing.
MADAM JUSTICE:
Q. No, but you do not pay
a supplement on top of the twenty-five percent (25%)?
A. Ah no, no. If you, you
earn $300 a week, when you work, you get $300; when you go on unemployment
insurance, you get $225. Therefore, I pay my twenty-five percent (25%) to bring
you up to $300. If you work five hours, you get $40. Therefore, you start with
$300 and you get $340; it costs $60. I top up their workweek.
Q. You did not therefore
owe more than twenty-five percent (25%)...
A. Ah, well, no.
Q. ... you owed less.
A. Well, no, it is much
less, yes, it is less because he or she had worked twelve (12) hours or seven
hours or worked fifteen (15) hours. I do not give it to him or her in that
case.
Q. Were these hours
entered in your books?
A. Yes, Madam. Those
hours were compiled for those who worked them.
HANS MAROTTE:
Q. Those hours were
entered in the payroll...
A. Absolutely.
Q. ... premiums were
deducted and all that.
A. Yes because when you
were hired, if I had guaranteed someone $325, there is going to be $325. If
there is one who is $300, it is $300 because I topped up what they earned.
[23] In this way, Mr. Massé said that if staff worked during periods of
unemployment, they entered what they had been paid in the payroll. Despite the
somewhat confusing explanations above provided in Mr. Massé’s testimony, I
think he said he paid and entered in the payroll for these employees the
difference between their net salary and unemployment benefits, which according
to him was 25 percent of benefits.
[24] However, some workers said their employer paid them the amounts
entered in the payroll in addition to 25 percent of unemployment benefits (see
the appeals officer’s report for Gilles Huet, Nancy Massé, and Sylvie Provost,
whose counsel was present when they made these statements. These reports are
in Exhibit I-2, Volume V, Gilles Huet, Tab 6, Page 7; Volume VI,
Nancy Massé, Tab 5, Page 7; Volume VII, Sylvie Provost, Tab 6, Page 7).
[25] Mr. Raymond Ratelle said that he met with Mr. Massé in the fall of
1995 or 1996 with his supervisor. He had explained to Mr. Massé what was
“allowable” for an employee on unemployment. It is legal for a recipient to
earn a certain amount of money without their unemployment benefits being affected.
He provided the following explanations on pages 179-180 and pages 188-189 of
the stenographer’s notes from November 19, 2003:
A. If an
individual’s unemployment rate is $200 a week, the allowable is twenty-five
percent (25%), a minimum of $50. If an individual earned $50, his or her
employment insurance would not be cut off, but he or she must nonetheless
report the number of hours. We ask: “Did you work during the period of this
report?” “Yes.” “How many hours?” and the gross amount earned.
[...]
A. [...] Then
we even explained to Mr. Massé that if someone earns $51 for six hours of work,
well, all that is deducted from employment insurance is what exceeds the
allowable amount.
[...]
Q. And they
absolutely must report that they worked?
A. Yes. That
was made very clear to Mr. Massé; even if it is below the allowable amount, it
must be put on the unemployment report in response to “Did you work during the
period of this report?”, yes. How many hours and how much was earned because
people often report that they worked, but were not paid. That is not normal
and at that point an investigation is conducted.
[26] Thus, based on Mr. Ratelle’s testimony, Mr. Massé was in fact told
that all claimants had to report the hours they worked and their earnings on
unemployment report cards.
[27] Mr. Massé said that almost everyone who received the equivalent of
their full salary and who did not work during the unemployment period probably
did not report the earnings received from the employer on their report cards
(see page 105 of the stenographer’s notes from November 19, 2003).
[28] At the hearing, Mr. Massé admitted that he paid the 25 per cent of
benefits to 10 employees only, that is to: Julie Boulianne, Sylvain Therrien,
Normand Guénard, Robert Poisson, Gaston Deschenaux, Richard Massé,
Gilles Huet, Nancy Massé, Sylvie Provost and Denis Courcy (see pages
214-215 of the stenographer’s notes from November 20, 2003).
[29] Other workers stated that they worked for the outfitter during
periods not indicated on records of employment while they were receiving
unemployment benefits. The payer paid the difference between their net salary
and the unemployment benefits. They confirmed that none of this was reported.
These workers said that they worked long hours, more than 15 hours a week (see
Bernard Geoffroy’s statutory declaration in Exhibit I-2, Volume V, Tab 5,
Page 1 and his testimony on pages 81-83 and pages 101-102 of the
stenographer’s notes from November 20, 2003). Mr. Geoffroy is one of the people
who stated in his above-mentioned statutory declaration that the big clean-up
was done over a three-week period after the fishing season closed, as opposed
to what Mr. Massé said (he said that it was done over the last weekend of the
fishing season).
[30] Other workers say they worked year-round, between 50 and 70 hours,
six days a week during peak periods (see Clémence Bélanger’s testimony on pages
315-316 of the stenographer’s notes from November 19, 2003). It would seem that
the employees claimed unemployment insurance benefits at the request of their
employer, even when there was no actual work stoppage (see Clémence Bélanger’s
testimony on pages 309-310 of the stenographer’s notes from November 19, 2003).
The employer continued to pay them their regular salary during the two-week
waiting period and the employer filled out the report cards (see Clémence
Bélanger’s testimony in Exhibit I-2, Volume I, Tab 4, Page 10 and Tab 5,
pages 8 and 11, as well as her testimony on page 315 of the stenographer’s
notes from November 19, 2003; see also Bernard Geoffroy’s testimony on
pages 82-83 of the stenographer’s notes from November 20, 2003). Please
note that Ms. Ginette Massé denied in rebuttal that she had filled out report
cards for the workers. She said she simply assisted them in filling them out
(pages 182-183 of the stenographer’s notes from November 20, 2003).
[31] Other workers say they were simply paid for the hours worked not
included in the periods of employment while they were receiving unemployment
insurance benefits (see Lisette Montmagny’s testimony on page 126 of
the stenographer’s notes from November 20, 2003). Their employer asked them not
to report the total number of hours actually worked during these periods (see
Lisette Montmagny’s statutory declaration in Exhibit I‑2, Volume VII, Tab
5, pages 4 and 12).
[32] Sylvain Therrien, one of the two witnesses who reported the Appellant
(the other was his spouse Julie Boulianne), stated in his statutory declaration
(see Exhibit I-2, Volume VIII, in Tab 5) that he worked as a fishing guide and
handyman the rest of the year. He and his spouse say they were hired by
Mr Massé to work year-round, not simply during the periods indicated on
the record of employment. They were given room and board and their employer
guaranteed them $300 net a week, regardless of the number of hours of work.
They also received their full salary while on vacation. The employer asked
them to fill out an unemployment insurance claim form although they had never
in fact stopped working for the employer until they were dismissed by the
latter in June 1998. Mr. Therrien says that he continued to work a minimum of
60 hours a week after the fishing season ended. The employer then paid him
the difference between his full salary and his unemployment benefits. He says
he therefore initially received $178 net a week in unemployment benefits and
the employer paid him $122 in cash a week for a total of $300 net a week. He
later received $195 a week in unemployment insurance benefits and his employer
paid him $105 a week. This allegedly continued until May 2, 1998, when he was
allegedly put back on the payroll (see Sylvain Therrien’s statement to the
appeals officer, Exhibit I-2, Volume VIII; Tab 7, Page 6). During the two-week
waiting period, he and his spouse received their full salary from the
employer. Mr. Therrien also mentioned that for a certain period, Ms. Ginette
Massé was responsible for filling out the report cards. Mr. Therrien told the
investigator that the same strategy was used for most employees, among others,
that they received room and board at the outfitter. In other words, the
records of employment did not show what actually happened.
[33] Mr. Therrien confirmed the foregoing at the hearing. He added,
however, that he worked over 60 hours a week. He said he worked 15 hours
a day, six days a week. He also mentioned that in the fall of 1997, he
generally worked on the construction worksite between 10 and 12 hours a
day until mid-December 1997. Mr. Massé denied this and said that the
construction workers did not work that many hours a day and that the
construction was finished on December 1, 1997. During the winter, Mr. Therrien
said that he worked between 9 and 11 hours a day. He said that the icestorm in
the winter of 1998 did not affect the outfitter. He had to clear snow off
roofs that year because there were customers. Mr. Therrien said that he kept
track of his hours of work as he wanted to protect himself because he found the
workload was very heavy for the salary paid (see summary of his hours of work,
Exhibit I-2, Volume VIII, Sylvain Therrien, Tab 4). I also understand
that he filed a complaint with the Commission des normes du travail based on
the latter document. Mr. Massé’s response was to the effect that it was
impossible that Mr. Therrien had worked the number of hours he had
accounted for. In fact, based on the above-mentioned document cited as
evidence in Tab 4, Mr. Therrien said that he worked up to 14 to 15 hours a day
for 28 days in a row, which Mr. Massé said was unthinkable.
[34] Julie Boulianne stated in her statutory declaration (see Exhibit I-2,
Volume II, Tab 7) that she worked about 40 hours a week while she received
unemployment insurance benefits, that is, between September 1997 and the end of
April 1998. Several restaurant bills on which her initials appear were
submitted as evidence to illustrate this point (see Exhibit I-2, Volume II,
Julie Boulianne, Tab 4). There are, however, no dates on these bills, and it is
virtually impossible to determine to which periods they refer. As with her
spouse, the employer paid her the difference between her full salary and her
benefit amount. She therefore received $162 net a week in benefits and the
employer paid her $88 cash a week for a total of $250 net a week. Then, in
February 1998, the employer allegedly started paying her $138 a week to
increase her pay to $300 net a week, with the balance being covered by the
unemployment benefits. She said she worked full time until mid-December 1997.
She told the investigator that she had allegedly worked only three days between
mid-December 1997 and the end of January 1998, that is, 12 hours on
December 25, 1997, and a total of 20 hours on December 31, 1997 and January 1,
1998. She allegedly started working full weeks in February and March 1998
(between 40 and 45 hours a week). She confirmed this at the hearing. However,
based on the record of her hours of work she compiled for the complaint to the
Commission des normes du travail (Exhibit A-6), it would seem that she had
worked virtually every day between Thursday, December 25, 1997, and Sunday,
January 11, 1998, and not just three days as indicated above. She says on page
6 of this document that between January 11, 1998 and February 15, 1998, she
allegedly did not work because Mr. Massé did not want her to work anymore
because she had been “asked to be reported”.
[35] When asked about this document at the hearing, she simply said that
she had confused the period of work stoppage. She remembered that she had been
off work at some point, but thought it had started in mid-December 1997, when
it had in fact been from mid-January to mid-February 1998. However, she pointed
out that she was not mistaken when she said she had worked on December 25 and
31, 1997 and January 1, 1998 (see pages 60, 68 and 69 of the stenographer’s
notes from November 20, 2003).
[36] She also testified that she had been unlawfully dismissed because she
was pregnant. She had apparently asked her employer to report all her hours of
work because she realized that she was penalizing herself by agreeing to go
along with the employer’s strategy. She said that Mr. Massé dismissed her
husband two weeks after she gave her notice.
[37] Mr. Massé responded by saying that Julie Boulianne had told the
Commission de la santé et de la sécurité au travail (CSST) that she worked 55
hours a week when she actually only worked between 25 and 30 hours a week. She
asked for a raise and he decided to pay her by the hour instead of giving her
$300 net a week. This resulted in a salary decrease for Ms. Boulianne. He also
said that he added an $80 weekly taxable benefit to her salary for the room and
board. She then allegedly quit because she was very angry. He allegedly
subsequently dismissed Mr. Therrien when he asked for more vacation leave.
Mr. Massé said that he had agreed to settle the proceedings instituted by
the couple with the Commission des normes du travail by paying them each
$4,000 so they could refund the employment insurance overcontribution.
[38] For his part, Richard Massé, the son of Réal Massé, testified in
court that he had not worked during periods he received unemployment insurance
benefits. This contradicts the first statutory declaration he made in the
presence of Mr. Gaston Lachance. Several other workers allegedly mentioned
during the investigation that Richard Massé worked year-round (see
Exhibit I‑2, Volume VI, Richard Massé, Tab 4, page 3 of 9 and
Tab 6, page 3). Richard allegedly had a falling out with his father and left
the outfitter in August 1998.
[39] Richard Massé testified that he worked at the outfitter from 1994 to
1998 and that he had received room and board from the outfitter during that
period. He said he never paid for his room or board (see page 106 of the
stenographer’s notes from November 20, 2003). This completely contradicts
Exhibit I-3, which shows $200 monthly receipts signed by Réal Massé for rent
between January 1 and July 1, 1995. This simple statement casts serious
doubt on the authenticity of the receipts submitted as Exhibit I-3, which show
that Richard Aubé, Normand Guénard, Nancy Massé, Gilles Huet and
Sylvie Provost also allegedly paid the employer $200 a month in 1995 for the
lodgings provided by the employer. Most of the workers told the investigator
that they had not paid any rent (see UI and CPP opinion report, Exhibit I-2,
Volume IX, Tab 1, pages 7-8). Further, none of this type of deduction is shown
on any of these workers’ cheque stubs in 1995. Based on the appeals officer’s
report, none of these workers allegedly paid the board indicated (see Exhibit
I-2, Volume I, Richard Aubé Jr., Tab 1 and Tab 7 page 6; Volume V,
Normand Guénard, Tab 1 and Tab 6, page 6; Volume VI, Nancy Massé, Tab 1
and Tab 5, page 13; Volume V, Gilles Huet, Tab 1 and Tab 5, pages 6 and
13; Volume VII, Sylvie Provost, Tab 1 and Tab 6, pages 6 and 14). Based
also on the appeals officer’s report, if there is an indication in the payroll
for the other years at issue that an amount was actually deducted from the pay
of these employees or any other employee for room, the Minister took it into
account and decreased the taxable benefit amount to be added into the
calculation of insurable earnings. In other words, based on what is indicated
in the payroll, the source deduction amount deducted from the employees’ pay
was subtracted from the benefit amount.
[40] Claude Desaulniers said he started working full time as a cook at the
outfitter in May 1998. He said that he had not been living in the area before
that. He worked from 5:00 a.m. to 2:30 p.m., five days a week. He said that in
1998 and 1999, he stopped working in early September and started working again
at the end of April or early May of the following year for the fishing season.
In the fall of 1999, after the head cook (Denis Courcy) quit, Mr. Massé
allegedly asked him to work during the skidoo season. He became head cook in
May 2000 and is still working at the outfitter. In 2000, he worked until the
end of October as part of “Volet 2” (a program funded in part by the federal
government) in which his employer participated. At the hearing, he said that
he did not work during the pheasant hunting season in 1998 and 1999. He said he
never lived on the outfitter site nor in any housing provided by Mr. Massé. He
purchased a house near the outfitter in October 1999. Before that, he said he
lived in a trailer 10 km from the outfitter when he was working for the
outfitter and when he was not, he stayed in a small cottage in St-Paul de
Joliette (45 minutes from the outfitter site). He ate at the outfitter when he
was working.
[41] Mr. Desaulniers said that he was paid by and worked for the employer
only during the periods of employment on his record of employment. Based on the
appeals officer’s report (see Exhibit I-2, Volume III, Claude Desaulniers, Tab
6, page 7), other workers said they worked with Claude Desaulniers other
than during the periods reported. For example, Lisette Montmagny, who admitted
she worked in housekeeping for the Appellant from January 1998 to March 7, 1999,
stated during the investigation that she always worked at the same time as
Claude Desaulniers. Although at the hearing she had trouble remembering what
she had said in her statement, she did not deny what was in it. Further, she
remembered at the hearing that she and “Claude” worked at the same time. No
doubt was cast on this in the cross-examination.
[42] Sylvain Therrien allegedly stated that Claude Desaulniers had
replaced the cook, Normand Guénard, who had resigned his position in October
1997. He prepared food with Denis Courcy for the people working on the
outfitter expansion worksite in the fall of 1997. Both Mr. Therrien and
his spouse Julie Boulianne said that Claude Desaulniers also worked during the
skidoo season (which means the winter of 1998 because Mr. Therrien and Ms.
Boulianne worked only one winter at the outfitter, the winter of 1998, because
they were hired in April 1997 and dismissed in June 1998). No doubt was cast on
this statement when Mr. Therrien and Ms. Boulianne were cross-examined.
[43] However, other workers not called as witnesses (Léo and Lisette
Perreault) stated that Claude Desaulniers had started working at the outfitter
a few weeks after Normand Guénard left in October 1997 (see the appeals
officer’s report, Exhibit I-2, Volume III, Claude Desaulniers, Tab 6, page
7).
[44] Two workers, Lisette Montmagny and Ginette St-Jules mentioned in
their statutory declarations that Mr. Desaulniers lived on the outfitter site,
but not during the summer (see the appeals officer’s report, Exhibit I-2,
Volume III, Claude Desaulniers, Tab 6, page 9). However, these two workers
also seemed to insinuate that Mr. Desaulniers had not worked during the 1998
skidoo season (see Exhibit I-2, Volume III, Claude Desaulniers, Tab 6, page 7
and Exhibit I-2, Volume VII, Lisette Montmagny, Tab 5, page 12), which
contradicts the statements of Sylvain Therrien and Julie Boulianne. Mr.
Desaulniers refused to meet with the appeals officer to clarify the situation
(see report on appeal, Exhibit I-2, Volume III, Claude Desaulniers, Tab 6,
page 8). Based on the latter, therefore, Mr. Desaulniers worked other than
during the periods at issue indicated in the appended table and added an amount
for room and board to the calculation of insurable earnings until he purchased
his new residence on October 1, 1999.
[45] Ms. Louise Dessureault, one of the appeals officers who worked on
these cases, explained in court that the periods of work and the insurable
earnings of each of the workers was calculated based on the employer’s periods
of activities and on what each worker had told them. In fact, HRDC conducted
an investigation further to a tip. The case was referred to the RCMP, which
obtained a search warrant in the fall of 1998. Mr. Gaston Lachance, a major investigation
specialist at HRDC, stated in court that he met with about thirty of the
workers, and about twenty of them allegedly stated that they had received the
difference between their net salary and unemployment insurance benefits while
they worked at the outfitter. Mr. Lachance told each of the workers met with
that he was taking note of information from their unemployment insurance claims
and the records of employment provided by their employer and they, the workers,
could be required to eventually refund any overpayments made. Mr. Lachance
explained in court that when statutory declarations are taken as was the case
here, no cautionary statements are made. An individual is cautioned that he or
she is entitled to consult a lawyer before answering questions.
Mr. Lachance explained that this is done when the investigator plans to
take the individual to court. In the case at hand, it seems that the decision
had not yet been made as to whether each worker would be charged individually.
This is why Mr. Lachance took statutory declarations and explained to the
workers that if they had received an overpayment and had penalties to pay they
had the right to appeal.
[46] Based on all the documentation gathered, including the statutory
declarations of workers that were, generally speaking, confirmed by them during
a telephone interview with the appeals officer, it was found that the workers
continued to work after they were laid off and that their layoffs were
fictitious. The case of each worker was analyzed individually and each worker’s
insurable earnings were redistributed based on his or her specific case.
[47] Consequently, it was found that the difference between the net salary
and the unemployment insurance benefits was included in insurable earnings.
During the two-week waiting period when unemployed workers do not normally
receive any salary or unemployment insurance benefits, it was shown that the
worker received his or her full salary and that this was added to insurable
earnings. The tips pooled and redistributed by the payer at the end of each
season were also added to the insurable earnings of workers who received these
tips. A weekly benefit worth $50 a week per employee was also added for
housing and $35 a week per employee for board ($5 a day). These amounts were
added to the workers’ insurable earnings based on the number of days they
earned these benefits.
[48] Based on Louise Dessureault’s testimony and the insurability
officer’s report (see Exhibit I-2, Volume IX, Tab 1, page 15) the then section
13 of the Unemployment Insurance Regulations was used from 1993 to 1996 to
determine the workers’ weeks of insurable employment.
[49] Provision is made in subsection 13(1) of the Unemployment
Insurance Regulations as follows:
13 (1) Subject to subsection (2),
the employment with an employer in any week of a person whose cash earnings are
less than 20 per cent of the maximum weekly insurable earnings and who is
employed for less than 15 hours is excepted from insurable employment.
[50] Therefore, pursuant to subsection 13(1), only employment of less
than 15 hours a week and for which weekly earnings are less than 20 per cent of
the maximum weekly insurable earnings will be considered non-insurable
employment. A contrario, when the investigation showed that a worker
worked more than 15 hours week, his or her employment was considered insurable
during those weeks although he or she received less than 20 per cent of the
maximum weekly insurable earnings from his or her employer.
[51] In 1997 and subsequent years, the number of insurable hours was based
on the new legislation introduced by the EIA and its regulations in June 1996.
The insurability officer decided that section 9.1 and subsections 10(1) to
10(3) of the Employment Insurance Regulations could apply because the workers
received a fixed salary, regardless of the number of hours of work.
Subsections 10(4) and 10(5) of the Employment Insurance Regulations were
therefore applied and the weekly maximum hours of insurable employment was 35.
In several cases, it was decided that there had not been a work stoppage and
that the employer-employee relationship had not been severed.
[52] The following provisions are made in section 9.1 and subsections
10(1) to 10(5) of the Employment Insurance Regulations:
9.1 Where a person's
earnings are paid on an hourly basis, the person is considered to have worked
in insurable employment for the number of hours that the person actually worked
and for which the person was remunerated.
10. (1) Where a person's
earnings are not paid on an hourly basis but the employer provides evidence of
the number of hours that the person actually worked in the period of employment
and for which the person was remunerated, the person is deemed to have worked
that number of hours in insurable employment.
(2) Except where
subsection (1) and section 9.1 apply, if the employer cannot establish
with certainty the actual number of hours of work performed by a worker or by a
group of workers and for which they were remunerated, the employer and the
worker or group of workers may, subject to subsection (3) and as is
reasonable in the circumstances, agree on the number of hours of work that
would normally be required to gain the earnings referred to in
subsection (1), and, where they do so, each worker is deemed to have
worked that number of hours in insurable employment.
(3) Where the number of
hours agreed to by the employer and the worker or group of workers under
subsection (2) is not reasonable or no agreement can be reached, each
worker is deemed to have worked the number of hours in insurable employment
established by the Minister of National Revenue, based on an examination of the
terms and conditions of the employment and a comparison with the number of
hours normally worked by workers performing similar tasks or functions in
similar occupations and industries.
(4) Except where
subsection (1) and section 9.1 apply, where a person's actual hours of
insurable employment in the period of employment are not known or ascertainable
by the employer, the person, subject to subsection (5), is deemed to have
worked, during the period of employment, the number of hours in insurable
employment obtained by dividing the total earnings for the period of employment
by the minimum wage applicable, on January 1 of the year in which the earnings
were payable, in the province where the work was performed.
(5) In the absence of
evidence indicating that overtime or excess hours were worked, the maximum
number of hours of insurable employment which a person is deemed to have worked
where the number of hours is calculated in accordance with subsection (4)
is seven hours per day up to an overall maximum of 35 hours per week.
Analysis
[53] All the parties agreed that the dispute centred on the credibility of
the individuals involved. I also agree, but given that there are contradictions
on both sides, the more credible version on the balance of probabilities will
be used to resolve the dispute.
[54] To this end, I tried to reiterate the evidence submitted to me as
objectively as possible and to point out in passing the most striking
contradictions. I also tried insofar as possible to provide my view of the
facts based on the testimony I heard and the statutory declarations provided by
these witnesses. Although they were all not called to testify, I also analysed
the appeals officer’s report on each worker. I understood the explanations
provided by the Respondent’s counsel to the effect that she did not call each
and every worker to testify in court to save the court time and, more
importantly, because she did not feel that they would contribute anything
further than the evidence already provided and the appeals officer’s report on
each worker. I also understand that these workers were available to testify if
the Appellants had decided they should be heard.
[55] With regard to the validity of the method Mr. Gaston Lachance used to
gather information during his investigation, I disagree with the Appellant’s
counsel that the method was not in keeping with the principles of natural
justice and that the appeals officers’ reports, which reiterate the statutory
declarations, should not be included as evidence. The Appellant’s counsel does
not base his position on any specific legal authority. However, I will simply
say that an investigation conducted by HRDC to determine whether an overpayment
had been made or whether employment insurance contributions must be deducted
from compensation an employer pays his or her employees is a civil or
administrative issue. The investigative procedures that must be followed in
civil matters differ from those involving criminal matters.
[56] In Houle v. Mascouche
(Ville), [1999] R.J.Q.
no 2652, the Quebec Court of Appeal ruled the following in paragraphs 172 and
173:
172 [TRANSLATION] In short,
although the goal of criminal and civil proceedings is to uncover the truth,
the fundamental differences in the conduct of both makes rendering evidence
admissible much easier in civil matters. This specifically stems from
adjudicative fairness, a standard according to which the accused person is
entitled to silence, can decide not to testify and cannot act against him or
herself in during the trial through to the investigation conducted by Crown
representatives; this does not apply to civil proceedings, where the standard
is the opposite: parties testify and can be forced to during interrogations
before the trial as well as in court, cannot refuse to answer any relevant
question and must provide a copy to the opposite party, and, later, provide the
court with any useful exhibits.
173 The judge in civil
proceedings must weigh two values: respect of fundamental rights and search for
the truth. The following question must be answered: given the nature, objective,
motivation and the legal interest of the perpetrator of the offence, as well as
the method used, would the seriousness of the violation of fundamental rights
be such that it would be unacceptable for a court of law to authorize the party
that infringed them to use them to advance his or her private interests? A very
difficult exercise and one that must be based on the facts in the matter. Each
case must therefore be considered individually. In the final analysis,
however, if the judge is convinced that the evidence obtained by infringing
basic rights is an abuse of the legal system because there is no real and
sufficient legal justification, he or she must reject the evidence.
[57] The right to legal representation is not an absolute right. Within
the context of the case at hand, I feel that the words of P. Garant, author of Droit
administratif 4e ed., Cowansville (Qc.), Yvon Blais, 1996, on
page 295 are appropriate:
[TRANSLATION]
Generally speaking,
provision is made in section 7 of the Charter (Canadian Charter of Rights and
Freedoms) for the right to retain legal counsel as part of a quasi-legal
process. This right is not, however, absolute and still depends here on the
circumstances:
“I
am of the opinion that the enactment of section 7 has not created any absolute
right to counsel in all such proceedings. It is undoubtedly of the greatest
importance to a person whose life, liberty or security of the person are at
stake to have the opportunity to present his case as fully and adequately as
possible. The advantages of having the assistance of counsel for that purpose
are not in doubt. But what is required is an opportunity to present the case
adequately and I do not think it can be affirmed that in no case can such an
opportunity be afforded without also as part of it affording the right to
representation by counsel at the hearing.” 390
No provision is made in
section 7 concerning the right to representation by counsel in administrative
matters391.
___________________
390. Howard v.
Stoney Mountain Institution, [1984] 2 F.C. 642, p. 662‑663. See also
what MacGuigan, J. wrote on p 684; McInnis v. Canada (A.G.), [1995] 2
F.C. 215.
391. Delghani v. Canada (E.I.), [1993] 1 S.C.R. 1053.
[58] I have not been convinced that fundamental rights were infringed here
to obtain evidence or that there was an abuse of justice. Most of the workers
concerned reiterated the content of their statutory declarations in a telephone
conversation with the appeals officer. As I mentioned earlier, this is a civil
matter and, as the Quebec court of appeal indicated, the parties
cannot refuse to answer questions and can even be forced to in an examination
before proceedings begin. I therefore disagree with the Appellant’s counsel’s
claim that the evidence should not include the appeals officers’ reports which
reiterate the statutory declarations of workers who were not represented by
counsel.
[59] With regard to the analysis of the evidence as such, each party
attacks the credibility of the other party’s witnesses by emphasizing the
credibility, honesty and objectivity of its own witnesses.
[60] For my part, I accept that almost everyone in general, the employer
and the employees alike, seem to recognize that the Appellant paid its
employees the difference between their net salary guaranteed by the employer
and unemployment insurance benefits during periods when the employees were
receiving unemployment insurance benefits. I also accept that, either out of
ignorance, misunderstanding or for other reasons, the employees did not report
the amounts paid by the employer to HRDC on their unemployment insurance report
cards. I feel that the evidence clearly shows that the employer paid its
employees more than 25 percent of unemployment insurance benefits (the
“allowable”). If we look at the example provided by Sylvain Therrien, he said
that if he received $178 in unemployment insurance benefits a week, the
employer paid him $122 a week so that his net salary would be $300 a week. Here
already, we can see that the amount the employer paid is more than 25 per cent
of unemployment insurance benefits (25% x $178 = $44.50). Mr. Massé himself
seems to recognize this de facto situation because many times he said he
guaranteed the net salary of his employees even if they were not working. That
is what the employees also seem to say. They received the difference between
the guaranteed net salary and unemployment insurance benefits.
[61] Consequently, the employer paid his employees more than 25 per cent of
unemployment insurance benefits and this amount was supposed to be reported so
that the benefits of each employee with this type of agreement with the
employer could be adjusted which was not done.
[62] Further, the appeals officer felt that the records of employment were
not a true reflection of reality. In my opinion, there is ample evidence to
conclude that the employees continued to work during periods of employment not
indicated on the records of employment. Although there were some
contradictions in this regard in the evidence, the main thread in the events
described to me, and the documentary evidence submitted, clearly show that Mr.
Massé asked his employees to work for the Appellant during periods when they
were unemployed and guaranteed to pay them the difference between their net
salary and their unemployment insurance benefits. I am not at all convinced
that any of the other workers involved in this case were treated differently.
At any rate, I do not feel that the Appellant demonstrated otherwise.
[63] I disagree with the Appellant’s counsel who said that the employees
worked during periods of unemployment out of goodwill and that the employer did
not have any control over them. He provided the testimony of Gisèle Côté and
Clémence Bélanger as examples. Instead, I accept Gisèle Côté’s testimony to the
effect that she was already on unemployment when Mr. Massé hired her on a
trial basis during the winter of 1995. She said she worked long hours during
these periods and that she had to be there to show the employer that she was
able to do the work (see page 229 of the stenographer’s notes from November 19,
2003). Similarly, Ms. Clémence Bélanger said in fact that she continued to work
for Mr. Massé while she was unemployed because she did not have a choice
since she was given room and board (see page 313 of the stenographer’s notes
from November 19, 2003).
[64] Mr. Desaulniers said that the evidence showed that he did not work during
periods not indicated on the record of employment and that he never received
any compensation from his employer during these periods. Mr. Massé testified to
the same thing. However, given the evidence provided for the other employees,
I feel that Mr. Massé’s testimony alone is clearly insufficient in and of
itself to support Mr. Desaulniers’ position. Further, other workers testified
and stated that the latter was present at the outfitter during unreported
periods. Sylvain Therrien and Julie Boulianne said they saw him
during the skidoo season (which cannot be anything other than the winter of
1998 because it was the only winter they worked). Sylvain Therrien said that
Mr. Desaulniers worked during the construction season in 1997. Lisette
Montmagny and Ginette St-Jules said that Claude Desaulniers worked one
winter, but not the winter of 1998.
[65] I agree that the evidence is rather contradictory here as well, but
it is the Appellant’s responsibility to demonstrate on a balance of
probabilities that the Minister’s determination is erroneous. However, I have
one doubt as to the truthfulness of Mr. Desaulniers’s statement. I
disagree with his counsel when he says that Mr. Therrien’s versions were
contradictory. He said that Mr. Desaulniers had replaced Mr. Normand
Guénard in the fall of 1997, which is in keeping with what the other workers
said. Further, he said that Mr. Desaulniers worked with Denis Courcy.
Mr. Desaulniers was the morning cook. It is extremely plausible that Mr.
Courcy worked in the afternoon and evening. Further, the appeals officer noted
that Mr. Desaulniers received the same amount of tips as Mr. Courcy (see
Exhibit I-2, Volume III, Claude Desaulniers, Tab 6, page 9). This is why
she concluded that both of them had worked the same number of weeks. Given all
the evidence in the docket, I find it difficult to believe that Mr. Desaulniers
was the only employee involved who did not benefit from the employer’s
compensation system.
[66] The Respondent’s evidence is not as strong concerning the fact that
Mr. Desaulniers lived on the outfitter site before he bought his new home
in 1999. The Respondent’s position is based solely on the statements of Ginette
St-Jules and Lisette Montmagny. Ms. St-Jules did not testify and Ms. Montmagny
was not asked any questions in this regard at the hearing. The evidence shows
that not all employees lived on the outfitter site. I feel that Mr.
Desaulniers’ version of the facts in this regard is satisfactory. I therefore
conclude that Mr. Desaulniers’ insurable earnings should not include a taxable
benefit for housing.
[67] With regard to the insurable earnings of the other employees, the
Appellant said that the employer paid the workers less than 20 per cent of the
maximum weekly insurable earnings from 1993 to 1996, and that the employment
should be excepted from insurable employment during these periods pursuant to
subsection 13(1) of the Unemployment Insurance Regulations. I agree with
the Respondent on this point. Two conditions must be met in order for
employment to be excepted from insurable employment: the worker must not only
have been paid less than 20 per cent of the maximum weekly insurable earnings,
but also have worked less than 15 hours a week. The evidence shows on a
balance of probabilities that the workers involved worked more than 15 hours a
week aside from the periods of employment reported. I would like to point out
in passing that in the appeals officer’s report, the periods during which the
employees did not work were not deemed insurable under this provision of the
Regulations.
[68] I feel that the benefit amount deducted from insurable earnings for
room and board was completely reasonable. The employer itself failed to prove
that certain workers paid $200 a month for rent in 1995 (Exhibit I-3). Although
the evidence showed on a balance of probabilities that these employees did not
pay any such rent in 1995, the insurability and appeals officers used this to
establish the value of the housing at $50 a week per worker. Further, based on
their reports, they calculated this benefit only for employees who were housed
at the employer’s expense during periods they worked at the outfitter. The
fact that some lived in homes Mr. Massé personally owned has no bearing on the
value of the taxable benefit. In fact, it was an employment-related benefit
the worker received during a period the employer paid him or her in cash. This
benefit is therefore a taxable benefit for employees who received it and must
be added to their insurable earnings pursuant to paragraph 2(3)(a) of
the Insurable Earnings and Collection of Premiums Regulations, which read as
follows:
INSURABLE EARNINGS
Earnings from Insurable
Employment
2(3) For the purposes of
subsections (1) and (2), "earnings" does not include
(a) any non-cash benefit,
other than the value of either or both of any board or lodging enjoyed by a
person in a pay period in respect of their employment if cash remuneration is
paid to the person by their employer in respect of the pay period;
[69] I feel that the amount deducted for board ($5 a day) is more than
reasonable.
[70] Given the evidence in the docket, I conclude that the Appellants did
not demonstrate on a balance of probabilities that the Minister’s
determinations being appealed are erroneous and should be modified in terms of
the periods of employment or number of insurable weeks or hours, as indicated
in Appendix A to the Reply, which is appended to these reasons.
[71] With the exception of Mr. Desaulniers, I uphold the Minister’s
determinations for all the workers regarding the calculation of insurable
earnings. The taxable benefit amount that was added for housing should be
subtracted from Mr. Desaulniers’ insurable earnings. In all other respects,
the Minister’s determinations, as indicated in Appendix A to the Reply, remain
unchanged.
[72] For these reasons, the appeals are allowed solely with regard to the
determination made concerning the insurable earnings of Claude Desaulniers,
which should be reduced by the amount of the taxable benefit for housing. In
all other respects, the Minister’s determinations remain unchanged.
Signed at Ottawa,
Canada, this 25th day of August 2004.
Lamarre
J.
Translation
certified true
on this 24 th
day of June 2005.
Esther Shlien,
Translator
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