[OFFICIAL ENGLISH TRANSLATION]
Date: 20011122
Docket: 2001-835(EI)
BETWEEN:
BINGO POINTE-AUX-TREMBLES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Somers, D.J.T.C.C.
[1] This appeal was heard at
Montréal, Quebec, on November 9, 2001.
[2] By letter dated November 24,
2000, the Minister of National Revenue (the "Minister")
informed the appellant of his decision that the assessment of
January 7, 2000, for 1998 was varied and that the unpaid
employment insurance premiums were reduced to $2,934.47.
[3] The Minister contends that the
workers held insurable employment with the appellant within the
meaning of the Employment Insurance Act (the
"Act") in 1998 since the appellant and the
workers were bound by a contract of service within the meaning of
paragraph 5(1)(a) of the Act.
[4] Paragraph 5(1)(a) of
the Act reads as follows:
5(1) Subject to subsection (2), insurable employment is
(a)
employment in Canada by one or more employers, under any express
or implied contract of service or apprenticeship, written or
oral, whether the earnings of the employed person are received
from the employer or some other person and whether the earnings
are calculated by time or by the piece, or partly by time and
partly by the piece, or otherwise;
...
[5] The burden of proof is on the
appellant. It has to show on the balance of evidence that the
Minister's decision is unfounded in fact and in law. Each
case stands on its own merits.
[6] In rendering his decision, the
Minister relied on the following assumptions of fact:
[TRANSLATION]
(a) the appellant
was incorporated on October 28, 1996; (admitted)
(b) the shareholders
of the appellant are Jean-François Clément and
Pierre Bougie; (admitted)
(c) during the
period in issue, the business operated a bingo hall and a snack
bar on Sherbrooke Street in Pointe-aux-Trembles;
(admitted)
(d) the appellant
organized bingo games for non-profit organizations; (denied)
(e) the workers'
duties were to sell bingo cards, call out the numbers and check
the winners' cards; (admitted)
(f) while on
duty, the workers who sold the bingo cards had to wear a sweater
identifying them as the appellant's employees; (denied)
(g) the workers'
work schedules were determined by the appellant; (denied)
(h) the workers were
controlled and supervised by the appellant; (denied)
(i) during the
period in issue, the workers were paid cash by the
appellant's representative at the end of each evening;
(denied)
(j) during the
period in issue, the appellant made no source deductions for the
workers in respect of employment insurance premiums or paid such
premiums to the respondent. (admitted)
[7] Pierre Bougie, one of the
appellant's shareholders, testified that the appellant was
incorporated on October 28, 1996, and that
Jean-François Clément and he were its
shareholders.
[8] During the period in issue, the
appellant operated a bingo hall and snack bar located on
Sherbrooke Street in Pointe-aux-Trembles; the appellant in fact
had a number of halls.
[9] This witness testified that the
appellant purchased equipment and accessories for a snack bar in
Pointe-aux-Trembles. With those assets, the appellant leased the
premises and equipment to non-profit organizations.
[10] A sample sublease contract for the
bingo games¾with regard to the premises located at
11980 Sherbrooke East, Montréal, Quebec¾was
filed as Exhibit A-2. Again according to this witness,
the appellant signed 10 leases in 1998.
[11] Paragraph 1.01 of the sublease
reads as follows:
[TRANSLATION]
BINGO P.A.T. hereby leases to the LESSEE the premises located
at 11980 Sherbrooke East in the City of Montreal, Province
of Quebec.
[12] The appellant also leased
equipment.
[13] Paragraph 3.01 of the said
contract reads as follows:
[TRANSLATION]
The LESSOR hereby also leases to the LESSEE the following
equipment:
.
Furniture (tables, chairs)
.
Office equipment
.
Bingo equipment storage
.
Premises (organizations' offices)
.
Bingo equipment: boards, camera, television sets, screens,
drawing machine, checker, etc.
.
Equipment: general sound system, mini-system, internal
communications
.
General insurance
.
Sécur Inc. deposit system and safe
.
Telephones
.
Maintenance and maintenance supplies (container, bags, etc.)
.
Alarm linked to police station
[14] According to that contract, the lessee
(the organization) had to produce its licence from the
Régie des alcools, des courses et des jeux. The lessee
undertook to comply with and operate its licence in accordance
with all laws, regulations and rules imposed by the competent
authorities respecting the holding of bingo events and, in
particular, by the Régie des alcools, des courses et des
jeux.
[15] The workers' duties were to sell
bingo cards, call out the numbers and check the winners'
cards. Pierre Bougie testified that the organization sold
the bingo cards, called out the numbers and checked the
winners' cards. The workers were paid by the organization.
The list of organizations was filed as Exhibit I-1 and
the list of workers as Exhibit A-4.
[16] The Act respecting lotteries and
its rules impose obligations on bingo licence holders.
[17] Section 58 of the rules of that
Act appearing in the October 8, 1997, edition of the
Gazette officielle du Québec
(Exhibit A-1) (129th year, no. 42) reads as
follows:
A holder of an in-hall bingo licence is responsible for
setting up and operating a bingo and, where his licence
authorizes it, for selling instant-win tickets.
[18] Section 61 reads as follows:
The net revenues derived from a bingo event set up and operated
under an in-hall bingo licence shall be established by
deducting from the amount of the total sales of bingo paper the
value of the prizes offered, the cost of hall services, the cost
of bingo paper and the cost of the salaries of the personnel
directly involved in the setting up and operation of the bingo,
as well as the cost of the bingo equipment if they are paid by
the holder of the bingo licence.
[19] According to Pierre Bougie, the
organization operated the event in the evening under a bingo
licence. That organization had to comply with the rules
established under the Act respecting lotteries.
[20] According to the sublease contract
(Exhibit A-2), the rent was determined as follows:
[TRANSLATION]
4.01 This contract to sublease the
premises and equipment leased is made in consideration of a
maximum weekly rent of FOURTEEN PERCENT (14%) of total sales,
taxes included, to a maximum of $1,000.00 per event, taxes
included, for the rental of the premises and equipment, as
prescribed by section 62 of the R.A.C.J.
The weekly rent is determined accurately in accordance with a
tariff schedule expressed in percentage of sales.
[21] According to this witness, the
appellant's employees who operated the snack bar were
identified by means of a sweater bearing the inscription
"Bingo Pointe-aux-Trembles".
[22] The appellant gave the organizations
different sweaters with the inscription "Bingo
Pointe-aux-Trembles". Benoit Bougie, an employee of the
appellant, testified that the appellant supplied a sweater to the
organizations' employees in 1999 only, not in 1998.
[23] According to Pierre Bougie, the
appellant made available to the organizations a manager who was
paid by them.
[24] That manager managed the hall and
ensured that the event operated smoothly. The organization
determined the schedules. The manager found a salesman from the
list provided by the organization to replace the person who was
unable to report on any particular evening.
[25] Benoît Bougie stated that
the appellant did not have the authority to dismiss a salesman or
a host.
[26] Pierre Bougie and
Benoît Bougie gave approximately the same
testimony.
[27] Elaine Ruet, administrative
director with 900-227 Québec Inc., did the
appellant's accounting in 1998. She said there was no pay for
the sellers and hosts who conducted the bingo games.
[28] Michelle Douville, whose name
appears on the list of workers (Exhibit A-4), stated
that she had been hired by the organization in 1998 and that her
work had consisted in selling bingo cards.
[29] She declared that the manager,
André Mercier, gave her her work schedule and that
she spoke with him if there was a problem. She also said that the
manager had found her a replacement when she was absent and added
that the organization's representative and the manager
managed the event.
[30] The evidence showed that the workers
whose names appeared on the list of workers were employees within
the meaning of the Act. The point for determination is who
was the employer.
[31] The Minister alleges that the appellant
was the employer, whereas the appellant's witnesses asserted
that it was the organization at each event.
[32] While the evidence of the parties could
have been more complete, the Court will rule on the facts as
stated.
[33] The burden of proof was on the
appellant. The facts on which the Minister based his decision
must be considered true until proven false by the appellant.
[34] The appellant's witnesses were
credible. There is no reason to doubt the truth of the facts. The
testimony of the appellant's main witnesses, Pierre and
Benoît Bougie, were more or less the same.
[35] Those two witnesses testified that
André Mercier, manager and employee of the appellant,
was placed at the organizations' disposal in order to ensure
that the event ran well. According to Benoît Bougie,
the manager did not have the authority to dismiss the workers and
did not determine their schedule. The manager could assist by
finding a replacement for a worker who was absent. It cannot be
concluded from this fact that, by doing the organization a
service, the appellant had control over the workers. The manager
was only the appellant's representative, was at the
organizations' service and was the one who had to ensure that
the event ran smoothly.
[36] Elaine Ruet, who did the
accounting, asserted that there was no pay for the sales people
or hosts.
[37] Michelle Douville, the
Minister's only witness, said that she had worked as a bingo
card seller and that she had been hired by the organization. She
said that she spoke to the appellant's manager if there was a
problem, but it cannot be concluded from her explanation that the
manager had control over the quality of that seller's
work.
[38] In 1998, the appellant did not supply
sweaters to the workers.
[39] The organization leased the room and
the equipment from the appellant. The rental price was determined
by a percentage less expenses.
[40] The organization holding the bingo
licence, which conducted and administered the event in rented
commercial premises must not in any way make the lessor
responsible.
[41] Section 58 of the rules made under
the Act respecting lotteries stipulates: "A holder of
an in-hall bingo licence is responsible for setting up and
operating a bingo and, where his licence authorizes it, for
selling instant-win tickets."
[42] If the organization operates the bingo,
it is normal for the sellers and administrators to be hired by
it.
[43] Section 61 of those same rules
determines the net income derived from a bingo event set up and
operated under a bingo licence by deducting expenses including
the salaries of the personnel directly involved in the setting up
and operation of the bingo.
[44] The licence holder operates the bingo
event. Workers must be hired for the operation of that event.
This fact was corroborated by the Minister's witness,
Michelle Douville, who stated that she had been hired by the
organization.
[45] It was shown on the balance of evidence
that the organization operating the bingo event was the
workers' actual employer.
[46] Having regard to all the circumstances,
the appellant and the workers were not bound by a contract of
service within the meaning of paragraph 5(1)(a) of
the Act.
[47] The appeal is allowed and the
Minister's assessment is vacated.
Signed at Ottawa, Canada, this 22nd day of November 2001.
D.J.T.C.C.
Translation certified true
on this 3rd day of March 2003.
Sophie Debbané, Revisor
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