Date: 20000523
Dockets: 1999-2161-EI; 1999-2165-EI; 1999-2269-EI;
1999-2279-EI; 1999-2277-EI
BETWEEN:
HAMID SHAKIBAIAN, 9017-4772 QUEBEC INC., MAJID SHAKIBAIAN,
AFAGH RAZAVI,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Reasons for Judgment
Cuddihy, D.J.T.C.C.
[1] These appeals were heard on common evidence at Quebec,
(Quebec), on April 11, 2000.
I- The appeals
[2] These are appeals from three decisions by the Minister of
National Revenue (the "Minister") of November 19, 1998,
where it was determined that the employment of Hamid Shakibaian
(the "Worker Hamid") from April 1, 1996 to
January 4, 1997 and the employment of Majid Shakibaian (the
"Worker Majid") from September 2, 1996 to
September 5, 1997 while employed by 9017-4772 Quebec Inc.
(the "Payor") and the employment of Afagh Razavi from
June 24, 1991 to January 18, 1992 while employed by
1034 St-Jean Inc., (the "Payor St-Jean")
were not insurable within the meaning of the Employment
Insurance Act (the "new Act") which was
previously known as the Unemployment Insurance Act (the
"old Act") because, according to the Minister,
the Appellants were not employed by the Payors pursuant to a
contract of service.
II- The Facts
[3] In rendering his decisions the Minister relied on the
facts and reasons outlined in the Respondent’s Replies to
the Notices of Appeal.
[4] For the purpose of these appeals it will only be necessary
to recite the facts as outlined in paragraph 6 of appeals numbers
1999-2161(EI), 1999-2279(EI) and 1999-2277(EI).
No. 1999-2161(EI):
"a) the Payer has been incorporated on March 8, 1995;
b) the shareholder of the Payer with the majority of voting
shares would be Agnieska Chalupa;
c) Agnieska Chalupa was a friend and a business partner of the
Appellant;
d) Majid Shakibaian is the brother of the Appellant;
e) the Payer did not respond to the written request of
documents from the Respondent;
f) the Payer, among other corporations and registered trade
names, was operating, in the mail St-Roch, a restaurant named
"La Palmeraie";
g) on February 12, 1993, the Appellant doing business under
"Marathon Canada" contracted a loan of $400,000 to
operate the restaurant;
h) on March 21, 1994, the Appellant and Agnieska Chalupa
opened a joint account in a branch of Bank of Montreal;
i) during the disputed period, the restaurant was closed;
j) the Payer has never produced any income tax returns;
k) for the year 1996, the Payer did remit a T4 slip to the
Appellant for the amount of $10,080;
l) the Appellant was allegedly working as a cook
m) on January 14, 1997, the Payer issued a record of
employment to the Appellant, for the period of April 1, 1996 to
January 4, 1997 which indicated 40 weeks of work and a salary of
$360 per week;
n) the record of employment is false;
o) the Payer and the Appellant made an arrangement to qualify
the Appellant to receive unemployment benefits."
No. 1999-2279(EI):
"a) the Payer was incorporated on March 8, 1995;
b) the shareholder of the Payer with the majority of voting
shares would be Agnieska Chalupa;
c) in his signed statement of October 20, 1997, the Appellant
declared that he did not know Agnieska Chalupa;
d) Agnieska Chalupa was a friend of Hamid Reza Shakibaian, the
brother of the Appellant;
e) the Payer did not respond to the written request of
documents from the Respondent;
f) the Payer, among other corporations and registered trade
names, was operating, in the mail St-Roch, a restaurant named
"La Palmeraie";
g) during the disputed period, the restaurant was closed;
h) the Payer has never produced any income tax returns;
i) the Payer did not remit any T4 slips to the Appellant;
j) the Appellant has never declared revenues from the
Payer;
k) the Appellant was allegedly the manager and counsellor of
the business;
l) in his declaration of November 2, 1997, to the Respondent,
the Appellant declared that he could not remember if he was paid
all the time by the Payer;
m) on November 3, 1998, Agnieska Chalupa declared to the
Respondent that the Appellant was working as a counsellor, he was
not paid and that she did not sign the record of
unemployment;
n) on September 11, 1997, a record of employment was issued to
the Worker, for the period of September 2, 1996 to September 5,
1997 which indicated 1,890 hours of insurable employment and a
total salary of $18,900;
o) the record of employment is false;
p) the Payer and the Appellant made an arrangement to qualify
the Appellant to receive unemployment benefits."
No. 1999-2277(EI):
"a) the Payer has been incorporated on October 17,
1990;
b) the Payer was operating under the name of Gestion
Shakiba;
c) the president of the Payer was Saeid Shakibaian;
d) the Appellant was the mother of Saeid Shakibaian;
e) the Payer, among other corporations and registered trade
names, was operating two businesses in the mail St-Roch: a
restaurant named "La Palmeraie" and a library-video
club named "Best Sellers";
f) the Payer did not remit any T4 slips to the Appellant;
g) the Appellant has never declared revenues from the
Payer;
h) on November 2, 1998, in his declaration to the Respondent,
the Appellant declared that she was working as a security guard
watching for shoplifters in the video store;
i) on January 21, 1992, the Payer issued a record of
employment for the period of June 24, 1991 to January 18, 1992
that indicated 26 weeks of employment with a fixed salary of $313
per week and describing the occupation of the appellant as a
cleaning clerk;
j) the Appellant did not work for the Payer;
k) the record of employment is false;
l) the Payer and the Appellant made an arrangement to qualify
the Appellant to receive unemployment benefits."
[5] The Appellant Hamid Shakibaian, through his counsel in
appeal No. 1999-2161(EI) as to paragraph 6 of the
Reply to the Notice of appeal admitted the allegations in
subparagraphs (b), (d) and (j) to (m). The allegations in
subparagraphs (g), (h) and (i) were admitted with further
explanations to be given at the hearing. The allegation in
subparagraph (a) was ignored. The allegations in subparagraphs
(c), (e), (f), (n) and (o) were denied.
[6] The Appellant Majid Shakibaian, through his counsel in
appeal No. 1999-2279(EI) as to paragraph 6 of the
Reply to the Notice of appeal admitted the allegations in
subparagraphs (a), (b), (e), (j), (k) and (n). The allegations in
subparagraphs (f), (g) and (l) were admitted with further
explanations to be given at the hearing. The allegations in
subparagraphs (c), (d), (i), (o) and (p) were denied. The
allegations in subparagraphs (h) and (m) were ignored.
[7] The Appellant Afagh Razavi, through her agent and son,
Majid Shakibaian, in appeal No. 1999-2277(EI) stated that
she had nothing to say with regards to the allegations written in
the Reply to the Notice of appeal and that she relies on the
Court as to the decision to be rendered.
III- The law and analysis
1. Definitions of the Unemployment Insurance
Act
"employment"
"employment" means the act of employing or the state
of being employed.
"insurable employment"
"3.(1) Insurable employment is employment that is not
included in excepted employment and 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;
..."
[8] The burden of proof is on the appellants.
[9] In Sylvie Desroches v. M.N.R.
(A-1470-92), the Federal Court of Appeal indicated
the function of the Tax Court of Canada judge, and I
quote:
". . . However, in the final analysis, as this Court held
in Attorney-General of Canada v. Jacques Doucet, it
is the Minister's determination which is at issue, namely
that the employment was not insurable because the applicant and
the payer were not bound by a contract of service. The function
of the Tax Court of Canada judge extended to considering the
record and the evidence in its entirety. Accordingly,
Marceau J.A., speaking for the Court, said the following in
Doucet:
The judge had the power and duty to consider any point of fact
or law that had to be decided in order for him to rule on the
validity of that determination. This is assumed by s. 70(2)
of the Act and s. 71(1) of the Act so provides immediately
afterwards. .
The trial judge could go as far as deciding that there was no
contract between the parties..."
[10] If there is any doubt in the interpretation, it must
favour the taxpayer and there is nothing preventing a taxpayer
from taking advantage of a social measure if the requirements of
the Unemployment Insurance Act are met. In
Attorney General of Canada v. Ludger Rousselle, a decision
dated October 31, 1990 124 N.R.
(A-1244-88), Hugessen, J.A. wrote as follows, at
page 2:
“I do not think it is an exaggeration to say, in light
of these facts, that if the respondents did hold employment this
was clearly "convenience" employment, the sole purpose
of which was to enable them to qualify for unemployment insurance
benefits. These circumstances certainly do not necessarily
prevent the employment from being insurable, but they imposed on
the Tax Court of Canada a duty to look at the contracts in
question with particular care; it is apparent that the
motivation of the respondents was the desire to take advantage of
the provisions of social legislation rather than to participate
in the ordinary operation of the economic forces of the market
place.” (The emphasis is mine.)"
[11] Each case stands on its own merits. The Appellants had to
show on the balance of evidence that the Minister's decisions
were incorrect. Subsections 70(2) and 71(1) of the
Unemployment Insurance Act confer extensive remedial
powers on the Tax Court of Canada. These powers enable the Court
to settle any matter on the basis of the
facts and to reverse, affirm or vary the determination by the
Minister[1].
[12] It is also important to remember, "The object of the
Act is to insure true employment."[2] "One of the fundamental elements
to establish a real contract of service is the fixing of a salary
according to the services rendered"[3].
[13] Hamid and Majid Shakibaian were heard in support of the
appeals. The Appellant Afagh Razavi did not testify in her
appeal.
[14] Exhibits A-1 and I-1 to I-12 were filed
in the Court record.
[15] The Payor was incorporated on March 8, 1995.
[16] The majority shareholder of the Payor was Agnieska
Chalupa. This person did not testify at the hearing.
Testimony of Hamid Shakibaian
[17] He filed exhibit A-1. This document was used
to describe the food court service where the "worker
Hamid" allegedly worked during the period under review. This
food court was in a building at Complex Jean Lesage at
890 Boulevard Charest in Quebec city.
[18] This food court was previously owned by the "worker
Hamid" for some years previous to 1996 and it was known as
"La Palmeraie".
[19] He said that his brother Majid looked after the
administration of La Palmeraie and that he (Hamid) did the
cooking.
[20] He and his brother ran the business La Palmeraie for a
couple of years.
[21] He explained that the administration of this complex
changed hands on several occasions and led to much confusion as
to the validity of leases and the operation of all the food
service counters in the food court (Exhibit A-1).
[22] Agnieska Chalupa whom he had known for six or seven years
worked at La Palmeraie for him. She worked at that time at the
coffee doughnut counter.
[23] He said that Agnieska Chalupa would have incorporated a
company in 1996, the Payor, in order to operate the coffee
doughnut and pizza counters in the food court referred to
earlier, in 1996.
[24] Agnieska Chalupa with the help of the "worker
Majid" rented the two service counters in April of
1996.
[25] He said that he began working at these counters for
Agnieska Chalupa in April or May until the end of the year
1996.
[26] The "worker Hamid" said he and his brother
Majid began working for Agnieska Chalupa.
[27] He worked from 6:30 a.m. to 7:00 p.m., on
Thursdays and Fridays.
[28] He was paid by Agnieska Chalupa. Mr. Saïd Sad would
make out the cheques.
[29] He was paid $350.00 a week.
[30] He said that on January 21, 1997, the new manager of
the Jean Lesage Complex, a Mr. Morency, locked the premises
and put the furniture on the sidewalk.
[31] He said he received his pay cheques, which were issued by
Agnieska Chalupa.
[32] He said, he also received his T4 slips and declared his
income.
[33] When the group of food service counters closed he applied
for unemployment insurance benefits.
[34] He said he does not agree that he should pay back the
money he received for being unemployed.
[35] In cross-examination, he said that in 1994, 1995 and
1996, the administrator of La Palmeraie, was his brother, the
"worker Majid".
[36] His brother administered the group of service counters
under the name of a company, which he did not identify.
[37] He (Hamid) looked after the cooking.
[38] He was shown Exhibit I-1, a notarial deed
dated February 12, 1993.
[39] He said that he never borrowed any money on the
12th of February 1993.
[40] He signed the document (Exhibit I-1) at the
request of his brother Majid.
[41] He said, that his brother Majid never said to him for
what purpose he was signing the deed
(Exhibit I-1).
[42] He admitted having opened a joint account with Agnieska
Chalupa on March 21, 1994, in a branch of the Bank of Montreal
(Exhibit I-2).
[43] He explained that he asked Agnieska Chalupa, who at the
time was his employee, to open the account because this bank
branch was near his business premises. The account was used to
deposit tips, lottery gains and to exchange money for the service
counters. The account was opened for two or
three months.
[44] He said that in 1994, 1995 and 1996, his brother Majid
had an office upstairs on the 3rd floor of Complex
Jean Lesage while he (Hamid) worked downstairs as the
manager.
[45] In 1994, 1995 and 1996, his pay consisted of having his
mortgage paid for the house he owned at 1315 Fitzgerald Street in
Sillery, Quebec.
[46] He worked for Agnieska Chalupa from April 1996 until
January 17, 1997.
[47] He said the food complex La Palmeraie closed in July or
August of 1995. He was out of work from August 1995 till April of
1996.
[48] He said he stopped working for Agnieska Chalupa on
January 17 or 19, 1997.
[49] He was paid $350.00 per week. He worked 5 days a week. He
worked once in a while on Saturdays and never worked on Sundays.
He is positive he was paid $350.00 a week.
[50] He was then shown a record of employment
(Exhibit I-3), which he acknowledged. He said that the
name of the company was changed at the end of the year 1996. He
said he worked 40 weeks.
[51] He was then shown his application for benefits dated
January 16, 1997 (Exhibit I-4). He identified his
signature and stated that January 16, 1997 was the last day
of work when he left the work premises.
[52] He was asked why he had indicated on his application
(Exhibit I-4) that his pay was $360.00 gross a week
and that he worked 36 hours a week, while he had just told the
Court that he earned $350.00 weekly for close to 63 hours of work
a week.
[53] He replied, that his answers were approximate, that when
he filled out the form he did not think that it would make a
difference. The answer he gave in French was: "J’ai
marqué à peu près; quand j’ai rempli
le formulaire j’ai pas pensé que ça
changerait grand chose là-dedans".
[54] Then he was asked why if he worked 40 weeks at $360.00 a
week, the total of his earnings should have been $14,400.00 but
that his T4 slip indicated $10,080.00.
[55] His answer was to ask the accountant.
[56] He said that he was not an administrator and he wants no
part in paperwork of that nature. The answer he gave in French
was: "demandez au comptable; je suis pas bon dans
l’administration et je veux rien savoir dans les papiers
comme ça".
[57] He said he had never met with Stéphane Tremblay,
an investigator with Human Resources Development Canada (HRDC).
He saw this man for the first time in Court today.
[58] The Court questioned the witness in relation to the deed
dated February 12, 1993.
[59] In the document (Exhibit I-1), there is a
reference that he was doing business under the name
"Marathon Canada".
[60] He replied that Marathon Canada was another company. He
knew nothing about that and his brother never told him why he was
signing the deed. In French his reply was: "c’est une
autre compagnie. Je ne sais pas rien de ça et mon
frère m’a jamais dit pourquoi il mettait mon nom au
lieu du sien".
The evidence of Majid Shakibaian
[61] In 1991, he rented the food court La Palmeraie from a
friend Laurent Gagnon.
[62] The purpose for renting these premises was to provide
work for his brothers and family.
[63] The premises were rented by a company known as Marathon
Canada. This last company was under the name of the "worker
Hamid" for whom the "worker Majid" was acting.
[64] Marathon Canada would have owned the equipment of La
Palmeraie in 1991 or 1992.
[65] A few years later the "worker Majid" helped to
rent a place for Agnieska Chalupa. He helped her to rent two
food service counters at the food complex mentioned earlier. He
helped her set up the business and was paid $400.00 to $500.00 a
week. He received his T4 slip.
[66] His brother Hamid worked for Agnieska Chalupa doing
different things. She operated for 6 months to a year. The
"worker Majid" had an office on the third floor of the
same building. He had a separate lease, separate name, separate
phone number. This lease was a verbal lease. He was paying
$300.00 a month for 2 rooms.
[67] He was being paid by Agnieska Chalupa to help her out and
to install and operate her business. He was the manager. He was
just trying to help her out. He would receive $300.00 or $400.00
which represented money received to compensate for time he worked
for her.
[68] In cross-examination, he said that he worked for the
Payor on and off between September 1996 and September 1997.
[69] He was shown his record of employment
(Exhibit I-5), which indicates a work period between
September 2, 1996 to September 5, 1997 with insurable
earnings of $18,900.00 for 1,890 hours of work.
[70] It was suggested to him that he did not work all the
hours indicated on his record of employment. He replied that
"I might have been there for 2 days, I may have gone for the
week".
[71] He admitted that during the work period described in his
record of employment, he was in prison for several weeks for
unpaid taxes.
[72] He said that he worked 10 hours some weeks and 50 hours
other weeks. During some weeks he was not present at all at the
work place. He added, "I would decide myself the number
of hours". Some weeks, he worked one day, other weeks, he
worked five days.
[73] He said that Agnieska Chalupa or his brother Hamid would
call him if his services were required.
[74] He identified his application for unemployment insurance
benefits (Exhibit I-6).
[75] He said he was operating in the premises of La
Palmeraie.
[76] He admitted that he indicated on his application that he
was working 35 hours a week for a 5-day workweek.
[77] He said that he was available full time.
[78] He was asked what he did when he was not working for the
Payor during the period under review. He replied that he was
"searching to open up a retail business".
[79] He was asked why he answered "no" to question
38 F), on his application since he had admitted having been in
jail. He replied: "perhaps I made a mistake".
[80] He was asked if he had a copy of the T4 slips from his
employer. He replied: "not really".
[81] He was asked if he tried to find his T4 slips. He
replied: "not really".
[82] He was asked whether he was paid for his services between
September 2, 1996 to September 5, 1997. He replied:
"they usually paid me".
[83] He was shown his income tax returns for 1994 and 1995
(Exhibits I-8 and I-9). He admitted having
declared no income from employment for the years 1994 and
1995.
[84] He was shown statements of remuneration for 1997
(Exhibit I-12). These documents show revenues from
employment for the Appellant in the amount of $74,680.00 from a
Payor 9045-9959 Quebec Inc. He said that he did not know that
company. He also said that the address of that Payor at 48
St-Joseph Street, East, Quebec, did not mean anything to him.
[85] He admitted living at 5 Cedar, Shannon, Quebec, from 1988
to 1997. In 1998, he went to stay at 1315 Fitzpatrick in Sillery,
Quebec, with his parents.
[86] He said that his brother Hamid and Agnieska Chalupa
started in April 1996 to operate the two food counter outlets.
They operated under the numbered company 9017-4772 Quebec Inc.,
which is the Payor.
[87] Majid Shakibaian said that he helped them set up the
company and helped them out. Although he helped out in April 1996
when the company was set up, his record of employment indicates
that he started working for the Payor in September of 1996. He
was asked whether he worked from April to September 1996 without
pay. He replied: "I don’t know".
Final analysis as to the employment of Hamid and Majid
Shakibaian
[88] The Appellants were required to establish on a balance of
probabilities that the Minister was wrong when he decided that
there was no employer/employee relationship between them and the
Payor.
[89] The "worker Hamid" filed his record of
employment (Exhibit I-3) and his application for
benefits (Exhibit I-4).
[90] The record of employment of the "worker Hamid"
states he worked as a cook for the employer 9017-4772 Quebec
Inc., for 40 weeks, at a salary of $720.00 bi-weekly for a total
of $7,632.00. The last day of work was the January 4,
1997.
[91] In his application for benefits the "worker
Hamid" states the employer was "Restaurant La
Palmeraie" and that he worked 6 days a week for 36 hours a
week at $360.00 a week.
[92] In his evidence, the "worker Hamid" said he
worked for a company that belonged to Agnieska Chalupa who was a
former employee. He would have worked close to 63 hours a week at
$360.00 a week and worked for 40 weeks.
[93] If the worker earned $360.00 a week for 40 weeks, his
earnings should have been $14,400.00 and not what was indicated
on his T4 slips, an allegation admitted by the worker Hamid in
subparagraph 6(k) of the Reply.
[94] Furthermore, the "worker Hamid" filed a record
of employment indicating the Payor as 9017-4772 Quebec Inc. In
his application for benefits he identifies the Payor
as"Restaurant La Palmeraie" which, according to the
evidence, was formerly owned by him and was allegedly out of
business during the period under review.
[95] The "worker Majid" filed a record of employment
(Exhibit I-5) indicating his occupation as
"Directeur Général" of the Payor. His
work period began on September 2, 1996 and would have
terminated on September 5, 1997. His insurable earnings were
$18,900.00 for a total of 1,890 hours of work.
[96] In his application for unemployment benefits he indicated
the employer as "La Palmeraie". He would have worked 35
hours a week, five days a week and was paid $1,350.00 every two
weeks or $675.00 a week. Why in his evidence, did he state
earning $400.00 to $500.00 a week?
[97] The worker failed to indicate to the Respondent in his
application for benefits (Exhibit I-6) that he was in
jail for several weeks during the period under review.
[98] He also revealed to the Court that he decided himself the
hours he would work. He said that some weeks he worked one day
and other weeks five days.
[99] He said that Agnieska Chalupa or his brother would call
him when his services were required.
[100] This evidence could certainly indicate to the Minister
that if he was the "Directeur Général" of
the Payor and paid a much higher salary than his brother the
"worker Hamid", how is it that it would be his brother
or Agnieska Chalupa that would call him if his services were
required?
[101] Furthermore, the "worker Majid" said that he
helped Agnieska Chalupa to open the business of the Payor in
April 1996. If he was the "Directeur
Général" why would he only start work in
September 2, 1996, some five months later?
[102] It was also revealed by the "worker Hamid"
that he was hired as a cook and was laid off on January 4,
1997 because of lack of work and the Payor was closed down.
[103] If the "worker Hamid" was laid off and the
Payor closed, how was it that the "worker Majid" was
still on the payroll until September 9, 1997, some
eight months later? If the Payor was not closed in January
1997 who replaced the "worker Hamid" as a cook?
[104] It was admitted by the "worker Majid" that the
Payor did not respond to the written request of documents from
the Respondent and never produced any income tax returns.
[105] The contradictions revealed by the evidence could not
escape the attention of the Minister.
[106] The evidence of both workers must be viewed with
caution.
[107] The workers have not succeeded in dispelling the serious
allegations of the Respondent that led him to conclude that their
employments were not insurable.
[108] I must adopt the arguments of Me
Crépin as if recited at length herein.
[109] The Appellants Hamid and Majid Shakibaian cannot succeed
in their appeals.
Final analysis as to the employment of Afagh
Razavi
[110] This Appellant was present at the hearing on
April 11, 2000.
[111] The son of the Appellant, Majid Shakibaian, after
conferring with his mother stated to the Court that she had
nothing to say with regards to the allegations contained in the
Reply to the Notice of appeal.
[112] He further stated that she relied on the Court as to the
decision to be rendered.
[113] None of the allegations of the Minister were dispelled
and no evidence was put forward to challenge in any way the
assumptions of fact alleged by the Minister.
[114] This appeal under such circumstances must be
dismissed.
IV- Decision
[115] The appeals are dismissed for the reasons stated herein
and the decisions of the Minister are confirmed.
Signed at Dorval, Quebec, this 23rd day of May 2000.
"S. Cuddihy"
D.J.T.C.C.
Email this Content