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Citation: 2003TCC763
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Date: 20031118
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Docket: 2003-1104(EI)
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BETWEEN:
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DANIEL FORTIER,
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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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[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Savoie,
D.J.
[1] This
appeal was heard at Québec City, Quebec, on July 31, 2003.
[2] This
is an appeal regarding the insurability of the work of the Appellant, Daniel
Fortier while working for Service Ménager Victor Inc., the Payor, from October
5, 1998 to April 25, 2001, the period at issue, as understood in the Employment
Insurance Act (the "Act").
[3] On
December 17, 2002, the Minister of National Revenue (the "Minister")
informed the Appellant of his decision that this work for the period at issue
was not insurable because it did not meet the requirements of a contract of
service and that there was not an employer-employee relationship between
himself and the Payor.
[4] In making his decision, the Minister relied on
the following assumptions of fact that were admitted or denied by the Appellant
or of which the Appellant had no knowledge:
[translation]
(a) the Payor was incorporated on April 11, 1995; (admitted)
(b) the Payor
operated a maintenance company that cleaned government buildings; (admitted)
(c) the Payor’s
only shareholder was Dyane Maltais; (admitted)
(d) on October
22, 2002, Yves de Varennes, husband of Dyane Maltais, stated to an Agent for
the Respondent that he alone made all of the Payor’s decisions, and that he
controlled and managed the business's operations; (no knowledge)
(e) the Payor
hired from 20 to 40 employees; (admitted with explanations)
(f) the
Appellant had training as an administrative specialist; (admitted)
(g) the Appellant
had been hired as a controller by the Payor; (admitted)
(h) the
Appellant's duties were to take care of the accounting, keep the computerized
accounting books, the banking reconciliations, government reports and the
payroll; (admitted)
(i) the
Appellant always worked at the Payor’s office; (admitted)
(j) the
Appellant set his own work schedule; (admitted)
(k) the Appellant
was not required to work a specific number of hours per week for the Payor;
(denied as written)
(l) the
Appellant's hours of work were not recorded by the Payor; (admitted)
(m) the Appellant
did not have the benefit of the group insurance of the Payor’s employees;
(admitted)
(n) in 1998, the
Appellant stopped working following an injury and received no remuneration from
the Payor for three weeks; (denied)
(o) the Appellant
worked from 10 to 15 hours per week for the Payor; (denied as written)
(p) the Appellant
could leave when he had finished his work; (admitted)
(q) during the
entire period at issue, the Appellant's wage was $12 per hour; (denied as
written)
(r) on October
22, 2002, Yves de Varennes stated to the Agent for the Respondent that the
Appellant worked two to three days per week and did not work full days; (no
knowledge)
(s) on October
22, 2002, Yves de Varennes stated to an Agent for the Respondent that he did
not know the hours actually worked by the Appellant; (no knowledge)
(t) on April 26,
2001, the Payor declared bankruptcy; (admitted)
(u) on April 23,
2001, the Payor issued a record of employment to the Appellant that indicated
his first day of work as October 5, 1998 and his last day of work as
April 25, 2001, 1,320 insurable hours and $13,440.00 insurable
remuneration; (admitted)
(v) on
May 4, 2001, the Appellant stated in his application for employment
insurance benefits at Human Resources and Development Canada that he worked 40 hours
per week and received remuneration of $960 every two weeks when he was
working only 10 to 15 hours per week at $12 per hour;
(denied as written)
(w) the Payor and
the Appellant were unable to provide evidence of payment of the Appellant's
remuneration to the Agent for the Respondent; (denied)
(x) the
Appellant's record of employment does not match the hours worked and the
Appellant's remuneration; (denied)
(y) the Payor and
the Appellant made an arrangement in order to qualify the Appellant to receive
higher employment insurance benefits. (denied)
[5] In
his testimony, the Appellant maintained that when he stopped working in 1998
following an injury, he was remunerated in the same fashion by the Payor, who
had received an employment support grant.
[6] He
added that he worked 40 hours per week during the first six months of his
employment and then 12 to 15 hours per week for a year or a year and
a half and, then for the last seven or eight months, he worked more hours, full
time, 40 hours per week.
[7] Evidence
brought by the Appellant did not successfully show the falsity of the
Minister's assumption stated in paragraph (w) above.
[8] At
the hearing, the Appellant testified that he had remitted the records
establishing the remuneration received from the Payor to the union and that the
union had lost them. This statement was contrary to his statement made to the
Appeals Officer, namely that he had lost these records in moving.
[9] In
his testimony, the Appellant maintained that his work was supervised, but that
he worked alone most of the time. Yves de Varennes occasionally came to the
premises, but gave the Appellant no directives; what he cared about was the
results. Moreover, it was shown that the Appellant decided his own timetable,
organization of time and his work. No one gave him his schedule in writing. The
evidence revealed that the Appellant had no set timetable; he decided his work
days himself; he came to the workplace occasionally five days, occasionally
four days and occasionally three days per week, as he pleased. When he was
hired, the Appellant received no training and, in performing his duties,
received no instruction on the procedures to be used.
[10] The Minister acknowledged that in performing his work, the Appellant
used the Payor's tools and equipment. The Minister admitted in addition that
the Appellant incurred no risk of loss and had no opportunity to profit as he
received a set wage. Furthermore, it was established that the Appellant's work
was integrated into the Payor's business, but the Appellant did not have the
benefit of any group insurance or pension fund, unlike the other employees. It
must be added that the Appellant was not covered by the Commission de la santé
et de la sécurité du travail (CSST).
[11] The Minister's investigation gathered contradictory evidence with
regard to the Appellant's pay; the source of this information is the
Appellant's record of employment dated April 23, 2001
(Exhibit I-1), his application for employment insurance benefits dated
May 4, 2001 (Exhibit I-2) and the information given by the
Appellant and by Yves de Varennes, who are named in the appeal report
(Exhibit I-3).
[12] Moreover, the Minister was unable to obtain the Payor's payroll
journal or evidence of payment to the Appellant who, complaining about not
receiving his last weeks of pay, made no complaint to the union when the Payor
went bankrupt.
[13] The evidence provided by the Minister revealed that the Appellant had
attributed a large increase in his wages to a National Defence contract
transferred from one company to another at the right time, but the
investigation revealed a flaw in this explanation when it was confirmed that
the dates did not support the Appellant's explanations; this demonstrated the
falsity of the Appellant's allegations and led the Minister to doubt all of the
Appellant's claims. Therefore, the Minister found that there had been an
arrangement between the Payor and the Appellant, two individuals who had known
each other well for a long time, in order to enable the Appellant to receive
higher employment insurance benefits.
[14] It was shown that the information provided to the Minister's
investigators was often contradictory. Thus, according to the Appellant's
record of employment dated April 23, 2001, he allegedly received $960
salary every two weeks for 49 hours of work. On the other hand, in his
May 4, 2001 application for benefits, he declared a wage of $960, but
for 80 hours of work.
[15] Furthermore, it was revealed that in a conversation with the Agent for
the Payor that Yves de Varennes declared that the Appellant received a salary
of $400 or $500 per week, regardless of the number of hours worked. Neither
version was accepted by the Minister due to the impossibility of determining
with certainty if either were true, as the Minister had been unable to obtain
the Payor's payroll journals.
[16] The Minister concluded that, due to the contradictions in the
statements and the documentary evidence, it was impossible to find the parties’
statements credible and that their only purpose was to favour the Appellant.
[17] In Laverdière v.
Canada (Minister of National Revenue – M.N.R.),
[1999] T.C.J. No. 124, this court looked into a similar situation to
the one currently being studied. In rendering his judgment, Tardif J. wrote:
I nonetheless believe that
the work done by Mr. Laverdière during the said period in 1992 was not
performed under a genuine contract of service, inter alia for the
following reasons. First of all, only a genuine contract of employment can meet
the requirements for being characterized as a contract of service; a genuine
contract of service must have certain essential components, including the
performance of work; that performance must come under the authority of the
person paying the remuneration, which remuneration must be based on the
quantity and quality of the work done.
Any agreement or arrangement
setting out terms for the payment of remuneration based not on the time or the
period during which the paid work is performed but on other objectives, such as
taking advantage of the Act's provisions, is not in the nature of a contract of
service.
[18] In a similar file,
Tardif, J. recapitulated nearly the same comments in Duplin v.
Canada (Minister of National Revenue – M.N.R.),
[2001] T.C.J. No. 136 when he wrote:
. . . A genuine contract of
service exists where a person performs work that is defined in time and
generally described in a payroll journal, in return for which that person
receives fair and reasonable remuneration from the payer, which must at all
times have the power to control the actions of the person it is paying. The
remuneration must correspond to the work performed for a defined period of
time.
. . .
Only the real facts are to be taken into
account in determining whether or not a genuine contract of service existed.
Often, the facts have been falsified, disguised or even hidden, which is why
the Court must rely on the whole of the available tendered evidence. The only
relevant facts and information are those relating to the performance of work,
to the remuneration paid and to the existence or non-existence of a
relationship of subordination.
. . .
The fundamental components of a contract of
service are essentially economic in nature. The records kept, such as payroll
journals and records concerning the mode of remuneration, must be genuine and
must also correspond to reality. For example, the payroll journal must record
hours worked corresponding with the wages paid. Where a payroll journal records
hours that were not worked or fails to record hours that were worked during the
period shown, that is a serious indication of falsification. Such is the case
where pay does not correspond with the hours worked. Both situations create a
very strong presumption that the parties have agreed on a false scenario in
order to derive various benefits therefrom, including benefits with respect to
taxes and employment insurance.
It is possible for an arrangement to be more
profitable for one party than the other, but this is a secondary effect that is
not relevant in characterizing a contract of service, since as soon as a
contract of employment is shaped by false or inaccurate information, it no
longer meets the essential conditions for being characterized as a contract of
service. Thus, when the evidence shows that the records containing the
information essential to the existence of a genuine contract of employment are
false and incomplete, it becomes essential to prove conclusively that the real
facts support the existence of a genuine contract of service....
[19] The facts in the present case were analysed according
to the criteria established in Wiebe Door Services Ltd. v. M.N.R.,
[1986] 3 F.C. 553, that is, the control of the work and the
worker, ownership of tools, chance for profit or risk of loss and the worker's
integration into the Payor's business.
[20] After this analysis, this Court must conclude that the Appellant's
employment during the period at issue was not insurable because it did not meet
the requirements of a contract of service in accordance with paragraph 5(1) of
the Act.
[21] This Court furthermore finds that there was an arrangement between the
Payor and the Appellant so that the Appellant would qualify for higher
employment insurance benefits.
[22] Consequently, the appeal is dismissed and the
Minister's decision is confirmed.
Signed at
Grand-Barachois, New Brunswick, this 18th day of November 2003.
Savoie, D.J.
Translation
certified true
on this 26th
day of April 2004.
Sharon
Moren, Translator
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