Date : 20010309
Docket:
2000-2638-EI
BETWEEN:
MICHEL
DUPLIN,
Appellant,
and
THE MINISTER OF
NATIONAL REVENUE,
Respondent.
Reasonsfor
Judgment
Tardif,
J.T.C.C.
[1]
This is an appeal from a determination dated March 24, 2000,
concerning the work done by the appellant for Les Constructions
Léo Barolet Inc. (hereinafter "the payer")
during the following periods: 17-01-93 to 11-12-93,
02-01-94 to 24-12-94, 29-01-95 to 16-12-95,
04-02-96 to 05-10-96 and 06-01-97 to
03-01-98.
[2]
The appeal is one of a group of cases relating to employment with
any of three companies that were all run and controlled by
Léo Barolet.
[3]
To avoid repetition, most of the appellants, including the
appellant in the instant case, agreed that the respondent could
begin by adducing evidence that was common to all the
cases.
[4]
That evidence, which was made up of the testimony of Serge
Marseille and Marc Tremblay, showed that a major
investigation of the companies run by Léo Barolet had
been launched.
[5]
After irregularities were found during a visit to the
companies' place of business in Weedon, Léo
Bartolet's spouse authorized and allowed the investigators to
take with them for analysis and for examination in detail at
their Sherbrooke offices several boxes of documents concerning
employees.
[6]
During the in-depth audit and analysis of the documents,
the investigators observed that the employer had set up an hour
bank for each employee. Indeed, they noted that the employees
were generally always paid for approximately the same number of
hours, namely about 43. When there was less work, the missing
hours were made up by drawing hours from the bank, thus ensuring
a normal pay week.
[7]
Conversely, during very busy periods, if an employee worked more
hours than the normal week, the extra hours worked were recorded
in or credited to that employee's hour bank. Each employee
had an hour bank that was updated weekly. Depending on the period
concerned, the bank had either a positive or a negative
balance.
[8]
There was no doubt about the hour bank's existence, since the
documentary evidence was very convincing and a number of workers
admitted that it existed.
[9]
The analysis of the documents also revealed that a number of
workers regularly provided services to Mr. Barolet's
companies without pay outside their work period shown in the
payroll journal. That finding was made on the basis of a great
number of invoices signed by employees who were not listed in the
payroll journal on the dates of the invoices. With respect to
some weeks, the payroll journal indicated fewer hours than the
number actually worked considering the nature of the services
provided as established by the invoices. According to the
respondent, this is the main evidence common to all of the
cases.
[10]
The appellant, Michel Duplin, agreed to that evidence being part
of the record in his case. He described himself as a construction
worker and jack of all trades. He detailed his varied work
experience and referred to the many occupational and family
problems he has had to face over the years.
[11]
Describing himself as an honest worker who is very concerned
about the many injustices that exist, he testified that he had
been obliged to accept the hour bank, which had been unilaterally
imposed by the employer. He said that he had never worked for the
employer without pay.
[12]
Regarding these two important questions, I pointed out to the
appellant that he had himself made certain written statements
during the proceedings he had initiated with a view to being
heard by the Tax Court of Canada.
[13]
It would be appropriate to reproduce here some extracts from the
appellant's correspondence:
Letter dated July 3,
1999:
[TRANSLATION]
.
. .
I admit that I agreed to have an hour bank set up during
the so-called insurable period in order to keep my
job and stabilize my paycheque for the weeks I worked and
reported.
I admit that my wife's state of health and the lack of income
security at my former employer's led me not to insist
on time and a half after 43 hours and to have those hours
put, at straight time, into an hour bank used to stabilize my
meagre wages when I was away accompanying my wife when she
received medical care.
. . .
Sorry, Ms. Lemire, I am really the one who had a hard time at my
former employer's because of my refusal to jump in for easy
gains. Several of my fellow workers feared that I was the one who
revealed the existence of their nice fat pay
envelopes.
Letter dated April
2, 2000:
[TRANSLATION]
.
. .
That I am the type to never refuse to help out free of
charge?
.
. .
[14]
Since he was unable to deny the above extracts, the appellant
fell back on the argument that too much importance should not be
given to the words he had used or was using.
[15]
As I said at the hearing, even though the case may inspire
sympathy, I must render a decision on the basis of the evidence
adduced.
[16]
Moreover, I think that it is important to point out that the Tax
Court of Canada's decisions are rendered on the balance of
evidence, with the burden of proof always being on the appellant
when it comes to insurability. In other words, the Court reviews
and assesses all of the evidence. When there is any doubt, the
Court generally favours the appellant. That said, I cannot render
a decision by assuming or considering all sorts of facts or
factors that have nothing to do with the appeal.
[17]
In the case at bar, the appellant seemed to judge very harshly
certain practices that existed at the companies run by Léo
Barolet. At the same time, he also admitted that he had indeed
contributed to and participated in those same practices, some of
which required a minimum amount of work without pay; I am
referring, inter alia, to the various errands that
the employees ran for the companies.
[18]
When services are provided or errands are run for an employer, I
do not think that this automatically means there is no contract
of service, where this is done from time to time or in special
circumstances. However, if the services or errands are recurring,
frequent and performed or run by a majority of an employer's
employees, this raises questions; even where those providing such
services or running such errands characterize what they are doing
as free and voluntary, as mutual aid volunteer work, as support
or as an expression of solidarity with their co-workers, the fact
remains that such conditions, circumstances and facts are hard to
reconcile with a genuine contract of service, under which all
work must be paid work.
[19]
Although the evidence did not show any connection between the
hour bank and the work done without pay outside the periods
referred to in the records of employment, there is good reason to
be sceptical, since it is fairly unusual for employees to agree
to work for their employer without pay, especially if that
employer never pays overtime.
[20]
The appellant admitted that he had received envelopes containing
cash, adding that the cash was payment for work and expenditures
that had nothing to do with his employment. Rather, he said, it
was for computer graphics work, which he even claimed to have
done at below cost. This is quite surprising for someone who
speaks very harshly of his former employer.
[21]
The appellant did not submit any objective information or facts
or any documentary evidence to back up his claims. He would have
liked the Court to rule in his favour based solely on his
assertions that he is an honest man and a worker who has had his
share of misfortune in life. I do not question the
appellant's honesty; I have no doubt that life has been hard
on him, but I repeat that this Court must render its decisions
essentially on the basis of the evidence adduced and the
applicable law.
[22]
In the instant case, the evidence showed a possibly unscrupulous
employer that had set up a real system which enabled it to get
workers who were no doubt highly qualified without ever having to
pay overtime.
[23]
A minimum level of protection for employees is often related to
and dependent on union certification; without such certification,
employees may tend to be docile, co-operative and agreeable
in order to keep their jobs. Some people may be afraid of losing
their jobs if they do not go along with all of their
employer's requirements and whims.
[24]
In the case at bar, there was no evidence that the employer
forced, induced or encouraged work without pay on pain of
dismissal or even some indirect penalty, such as not being
recalled when operations resumed. Such evidence would have been
important and above all very relevant.
[25]
Moreover, I did not understand why the employer, about whom some
harshly critical remarks or comments were made, was not summoned
to testify. Is this an indication that the various systems put in
place were rather to the advantage of all concerned? Without
evidence, I cannot draw any definite conclusions. However, given
the extent and scope of the scheme, I can assume that not all the
workers employed by Barolet were opposed to, offended by and
dissatisfied with it.
[26]
His mere assertion that he did not agree with his employer's
scheme is not enough to allow one to conclude that the
appellant's position is well-founded, especially since
he expressly admitted that he was involved in it.
[27]
It is not up to this Court to punish possible abuses of power by
an employer. On the matter of insurability, I must basically
decide whether the facts brought out in the evidence show that
there was a genuine contract of service during the period or
periods at issue. 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.
[28]
The parties may agree on whatever they wish between themselves,
but the respondent has no obligation to respect or accept what
they choose. The insurability of work depends on certain
fundamental conditions being met. In some cases, even where the
parties have agreed on or imposed certain conditions or features,
these are in no way enforceable against third parties, including
the respondent.
[29]
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.
[30]
In other words, the intention of the parties to a work agreement
is in no way conclusive for the purpose of characterizing that
agreement as a contract of service. It is basically one factor
among many.
[31]
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.
[32]
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.
[33]
In the case at bar, the respondent concluded that the work
performed outside the periods referred to in the various records
of employment was so performed under a genuine contract of
service. This is a determination that is rather surprising and
totally unjustified given the available facts as revealed by the
investigation; I am referring, inter alia, to the hour
banks and the work done outside the work periods shown in the
records of employment. The purpose of an hour bank is often to
make a week insurable when the number of hours worked for that
week would require a finding of uninsurability. Evidence also
adduced by the respondent showed that several employees,
including the appellant, provided services outside the periods
referred to in the records of employment.
[34]
The effect of such facts was to invalidate any contract of
service that may have existed. The respondent takes no account of
this and moreover concludes that, for the weeks at issue in this
case, the appellant has not submitted any concrete, tangible
information that could demonstrate the soundness of his arguments
on the balance of evidence.
[35]
The facts in no way support the determination made by the
respondent, who concluded for no reason and quite bewilderingly
that the periods referred to in the records of employment were
periods during which there was a genuine contract of service.
Neither the facts available at the time of the respondent's
analysis nor the evidence adduced in this Court support a finding
that periods other than those indicated in the records of
employment were insurable weeks. The determination gives the
impression that the respondent wanted to profit as much as
possible from the premiums payable for insurable weeks, all at
the expense of a serious, logical and appropriate analysis based
on the available evidence.
[36]
In the circumstances, and in view of the weight of evidence and
the fact that I am not at all bound by any assessment or
determination concerning the facts to which the appeal relates, I
conclude that it cannot be found on the balance of evidence that
the work performed by the appellant was performed under a
contract of service. The periods during which that work was done
were never really established, since the payroll journal did not
reflect reality. Accordingly, it can in no way be concluded from
the evidence that there was a contract of service between the
appellant and Les Constructions Léo Barolet
Inc.
[37]
The appeal is allowed, as the work performed by the appellant was
not done under a genuine contract of service, and this was the
case throughout the periods at issue.
Signed at Ottawa, Canada, this 9th day of
March 2001.
"Alain Tardif"
J.T.C.C.
Translation certified
true on this 4th day of July 2002.
[OFFICIAL ENGLISH
TRANSLATION]
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2000-2638(EI)
BETWEEN:
MICHEL DUPLIN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on January 30, 2001, at Thetford
Mines, Quebec, by
the Honourable Judge Alain Tardif
Appearances
For the Appellant:
The Appellant himself
Counsel for the
Respondent: Stéphanie
Côté
JUDGMENT
The appeal is allowed in accordance with the
attached Reasons for Judgment.
Signed at Ottawa, Canada,
this 9th day of March 2001.
J.T.C.C.
Translation certified
true
on this 4th day of July
2002.
Erich Klein, Revisor
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