Citation: 2013 TCC 180
Date: 20130606
Dockets: 2009-2997(EI)
2009-2998(CPP)
BETWEEN:
AURÈLE ST-PIERRE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Angers J.
[1]
The Minister of
National Revenue (the Minister) determined that, during the period from
September 5 to October 7, 2005 (the period), the appellant did was not employed
under a contract of service within the meaning of paragraph 5(1)(a) of
the Employment Insurance Act (the Act) and, alternatively, that, if
there had been a contract of service between the appellant and the business
619454 NB inc. (the payer), his employment was not insurable because they were
not dealing with each other at arm's length within the meaning of paragraphs
5(2)(i) and 5(3)(b) of the Act and paragraph 251(1)(c)
of the Income Tax Act. Regarding the Canada Pension Plan, the
Minister determined that the appellant had not worked for the payer during the
period and that, accordingly, the appellant did not hold pensionable employment
within the meaning of paragraph 6(1)(a) of the Plan during the period,
given that there was no contract of service between the appellant and the
payer. The appellant is appealing from these two decisions.
[2]
At the beginning of the
hearing, the respondent informed the Court that he wanted to amend his Replies
to the Notices of Appeal by deleting paragraphs 5(f) and (g) in the two appeals
before the Court.
[3]
The payer's corporation
was incorporated on June 8, 2005, under the laws of New Brunswick and was
dissolved on March 28, 2008. Its sole shareholder and director was Donald
Bergeron. The corporation's declared activity was the operation of a forestry
business. It earned income from the cutting of timber from the week of
June 5, 2005, until May 26, 2006, which was the period reviewed by the
respondent's investigators. During that period, the payer allegedly transported
450 loads of timber.
[4]
The payer is part of a
group of corporations subjected to a major investigation by the Employment
Insurance Commission. The investigation showed that these corporations
including the payer took part in schemes consisting in issuing false records of
employment to some people so that they could receive employment insurance
benefits to which they were not entitled.
[5]
The investigation
showed that the payer had not kept a ledger of its income and expenses, that it
had signed no contracts for stumpage rights, that it had never filed any income
tax returns and that it had never remitted source deductions to the Minister.
[6]
From June 5, 2005, to
September 30, 2006, the payer issued records of employment to 16 people. One of
them admitted to the investigators that he had bought his record of employment
from the payer without having worked; another had apparently received a record
of employment after agreeing to give half of his benefits to the payer; and a
third allegedly admitted cutting her own timber and receiving a record of
employment indicating that she had done it as an employee of the payer.
[7]
The Commission's
investigators compiled a list of employees on the payer's payroll and their
work hours. They also obtained a copy of the payer's bank transactions
statement during the period targeted by the investigation as well as copies of
all cheques issued by the payer or cashed or deposited by it. The payer had
issued cheques to only one employee whose name appeared on its payroll.
[8]
The appellant was given
two records of employment in 2005. The first record was insufficient to entitle
the appellant to employment insurance benefits. The second one, which was issued
by the payer, apparently entitled him to benefits even though he had indicated
a lower number of work hours; the hours of work indicated entitled the
appellant to receive higher benefits.
[9]
During the
investigation and the appeal of the Minister's decision, the appellant
completed three questionnaires. The first was completed during the
investigation on October 23, 2007. The second was completed on June 3, 2008,
and was obtained by Annette Melanson of the Department of Human Resources at a
meeting with the appellant. The third was completed on March 18, 2009, and was
obtained by an appeals officer of the Canada Revenue Agency.
[10]
In his testimony, the
appellant stated that he had worked for Kedgwick Lumber for nine weeks in 2005.
At the beginning of September, he met Donald Bergeron because he knew that
he was involved in logging. Mr. Bergeron referred him to a Claude St-Onge.
The appellant stated that he almost never saw Donald Bergeron again. He also
realized that Donald Bergeron was only a figurehead. He therefore negotiated a
salary of $750 per week for a 45-hour work week with Claude St-Onge. According
to the appellant, the hourly rate and the number of hours were not important to
him. What was important to him was his net salary.
[11]
The appellant said that
he had salvaged timber for a week in the Upsalquitch area and at range 10 and
that, after that, Claude St-Onge had asked him to assess some woodlots. He
assessed on average one lot per week and allegedly did this work during the
last four weeks of his employment. He assessed one at range 4, one at range 5,
one at Whites Brook and two in Quebec near Matapédia on a weekend. He said that
he had done this work alone.
[12]
For his first week of
pay, he received a cheque signed by Donald Bergeron. He cashed the cheque
at a grocery store because of financial problems that he was having at the
time. The cheque in question was a non-sufficient-funds cheque. He then
received his pay in cash, which he got at Claude St-Onge's house on Saturday.
[13]
The respondent filed in
evidence a photocopy of four of five remuneration and deductions statements
that the appellant had forwarded to him as well as a photocopy of the payer's
payroll journal. According to the statements, the appellant was paid by cheque
because each statement indicates a cheque number. These numbers do not,
however, match the numbers in the payroll journal. In addition, the number of
hours of work was 50, not 45.
[14]
It falls to the
appellant to show, on the balance of probabilities, that he had worked for the
payer during the period at issue, that he had worked the hours in question and
that he had received the remuneration indicated on the record of employment
that he had received by mail from the payer.
[15]
Only the appellant
testified. He filed in evidence only photocopies of entries in the payroll
journal concerning him and four out of five remuneration and deductions
statements. These photocopies immediately contradict his version of the facts
because they show 50-hour work weeks instead of 45-hour ones, and that the
appellant was paid by cheque, not in cash, for the five weeks that he had
worked. In addition, the numbers of the cheques written on the statements and
on the payroll journal do not match.
[16]
There is no doubt that
the payer's business activities are questionable and that it may be difficult for
the appellant to demolish the assumptions of fact on which the Minister relied
in making the decisions in this case, more specifically, the assumptions
concerning the payer's activities. This burden may seem heavier to shoulder at
first glance, but it is not impossible to overcome.
[17]
The appellant was the
only witness to testify in support of his case. He produced no documents in
support of his statements. Indeed, the only two documents that he forwarded to
the investigators contradict him. The remuneration and deductions statements
and the payer's payroll journal clearly indicate that the appellant was paid by
cheque, not in cash as he claims, except for his first pay. Even more troubling
is the fact that the paycheque numbers on the remuneration and deductions
statements do not match those in the payer's payroll journal. I also cannot
ignore the fact that, based on the payer's bank statements, it did not issue
any cheques to the appellant. Indeed, it issued cheques to only one of the 16
employees on the payroll.
[18]
Some aspects of the
appellant's testimony at the trial also contradict some of the answers he gave
to the respondent's investigators. In the three questionnaires that he
answered, the appellant always said that his tasks had consisted in salvaging
timber, that is, picking up the wood that the logging machine had not cut and
cutting it in eight-foot pieces. Yet, at the trial, he stated that he had done
this work for only one week and that during the next four weeks, he had
assessed woodlots in places that were quite different from those indicated in
his answers to the questionnaires. I realize that these events go back several
years, but this is a significant change of his tasks for the payer. In addition,
in the questionnaire dated October 23, 2007, the appellant stated that he
had worked at range 10, Quatre-Milles and Upsalquitch. In the questionnaire
dated June 3, 2008, he stated that it was range 10 and Upsalquitch, and
those were the only two places. In the questionnaire dated March 18, 2009,
he stated that he had worked at Upsalquitch and Main Siding, and at ranges 10
and 9. At the trial, he spoke of salvaging at range 10 and Upsalquitch and of
four weeks of assessing woodlots at ranges 4 and 5, Whites Brook and Matapédia
in Quebec.
[19]
In the questionnaire
dated March 18, 2009, the appellant stated that he had negotiated a salary of
$750 per week for 45 hours of work with Donald Bergeron. At the trial, he
stated that he had negotiated a salary of $750 per week for 45 hours of work with
Claude St-Onge and that he had not discussed his salary with Donald Bergeron.
In the questionnaire dated June 3, 2008, he spoke of an hourly rate of $16 or
$17 per hour.
[20]
There are also
anomalies in the appellant's answers about his work schedule. In the
questionnaire dated October 23, 2007, he stated that he had worked from 6 a.m.
to 4 p.m. In that dated June 3, 2008, he stated that he had started at 5 or 7
a.m., and in the questionnaire dated March 18, 2009, he stated that he was free
to start when he wanted and said that he had started at 6 or 7 a.m. for five
days. At the trial, he admitted that he had not counted his hours and that, as
soon as he had gathered the information needed, he finished the assessment work
at home.
[21]
With regard to who
supervised his work, in the questionnaire dated October 23, 2007, the
appellant answered that Donald Bergeron did not come to see him often, and he did
not mention Claude St-Onge. In that dated June 3, 2008, he stated that he saw
him every day. In the questionnaire dated March 18, 2009, he said that he
almost never saw Mr. Bergeron and that he saw Mr. St-Onge every day. At the
trial, he stated that he did not see Claude St-Onge every day.
[22]
In the questionnaire
dated March 18, 2009, he stated that Donald Bergeron gave him his record
of employment. In the questionnaire dated October 23, 2007, and at the trial,
he said that he had received it in the mail. In the questionnaire dated
June 3, 2008, he said that he had never worked on a Saturday, while at the
trial, he acknowledged that he had worked on a weekend.
[23]
In this situation, it
is difficult, if not impossible, to attribute any credibility to the appellant.
Sometimes a witness may make a mistake, but when the errors deal with the very
basis of the dispute, it becomes impossible to attribute any weight to that
evidence.
[24]
The appellant did not
satisfy me on the balance of probabilities that he had really worked for the
payer. The appellant has failed to discharge his burden of proof.
[25]
The appeals are
therefore dismissed.
Signed at Ottawa, Canada, on this 6th day
of June 2013.
"François Angers"
Margarita Gorbounova, Translator
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