Date: 19980213
Docket: 96-2331-UI
BETWEEN:
ROGER NOËL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Cuddihy D.J.T.C.C.
[1] This appeal was heard at Québec, Quebec on January 23, 1998.
I - Appeal
[2] The appellant is appealing from the determination by the Minister of National Revenue ("the Minister") dated November 12, 1996 according to which the employment with the payer René Prévost during the period in question, from August 2 to November 6, 1993, was not insurable within the meaning of the Unemployment Insurance Act ("the Act"), since during that period there was no contract of service between the appellant and the payer within the meaning of s. 3(1)(a) of the Act.
II - Summary of the facts
[3] In his Reply to the Notice of Appeal the respondent submitted the facts on which he based his decision. Paragraphs 5 and 6 of his Reply read as follows:
[TRANSLATION]
5(a) The payer operated a dairy and slaughter animal farm; he owned between 125 and 160 head and milked about 40 cows.
(b) The payer was also a director and manager of forestry businesses and operated a bar as well.
(c) The payer alleged that during the period at issue he hired the appellant as a farm assistant.
(d) The payer alleged that the appellant was not involved with milking the cows but rather worked in the fields doing harvesting.
(e) The payer alleged that the appellant cut wood at his sugarhouse and also worked for Les Concassés de la Rive-Sud Inc., while working on the farm on weekends.
(f) The payer alleged that the appellant received $8 an hour for his services, whereas the appellant alleged he was paid $5 an hour during the period at issue.
(g) The appellant initially alleged that he had never worked for the payer and then alleged that he worked on the payer’s farm 40 hours a week without reporting it.
(h) The appellant alleged that he worked for the payer for five weeks and admitted that the record of employment which he obtained from the payer, dated November 12, 1993, did not reflect the actual beginning and end of the period allegedly worked or the amount actually earned.
(i) A review of the payer's payroll, the cheques issued to the appellant and the period of the payer's activities indicated that nothing corresponded to the periods allegedly worked by the appellant or his alleged pay.
(j) The appellant alleged he rendered services to the payer by working on his farm, whereas the cheques for his alleged pay during the period at issue came from the account of "Les Entreprises René Prévost Inc."
6. At this stage of the proceedings the respondent alleges that there was an arrangement between the parties solely to enable the appellant to qualify to receive unemployment insurance benefits.
[4] Through his counsel, the appellant admitted the facts alleged in subparagraphs (a) to (c). He had no knowledge of the facts alleged in subparagraphs (d), (e) and (j). The facts alleged in subparagraphs (f) to (i) were denied. Paragraph 6 was denied.
[5] III - Law and analysis
(i) Unemployment Insurance Act definitions
"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;
...
[6] The burden of proof is on the appellant.
[7] In Sylvie Desroches and M.N.R. (A-1470-92), the Federal Court of Appeal described 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.
[8] If there is any doubt in the interpretation it should be resolved in favour of the taxpayer and there is nothing to prevent a taxpayer benefiting from social legislation if the requirements of the Act are observed. In Attorney General of Canada and Ludger Rousselle, a judgment dated October 31, 1990 (124 N.R. 339), Hugessen J.A. said the following at 340-341:
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. [Emphasis added.]
[9] The tests which must be analysed have been stated repeatedly by the Federal Court of Appeal. In Attorney General of Canada v. Normand Charbonneau, a judgment dated September 20, 1996 (A-831-95), Décary J.A. said the following, at p. 2 in particular:
The tests laid down by this Court in Wiebe Door Services Ltd. v. M.N.R.1 - on the one hand, the degree of control, the ownership of the tools of work, the chance of profit and risk of loss, and on the other, integration - are not the ingredients of a magic formula. They are guidelines which it will generally be useful to consider, but not to the point of jeopardizing the ultimate objective of the exercise, which is to determine the overall relationship between the parties. The issue is always, once it has been determined that there is a genuine contract, whether there is a relationship of subordination between the parties such that there is a contract of employment (art. 2085 of the Civil Code of Québec) or, whether there is not, rather, such a degree of autonomy that there is a contract of enterprise or for services (art. 2098 of the Code). In other words, we must not pay so much attention to the trees that we lose sight of the forest - a particularly apt image in this case. The parts must give way to the whole.
_______________
1 [1986] 3 F.C. 553 (F.C.A.).
[10] Each case stands on its merits. The appellant had to establish on a balance of probabilities that the Minister's decision was wrong. Sections 70(2) and 71(1) of the Unemployment Insurance Act give the Tax Court of Canada broad remedial powers. These powers allow the Court to resolve any issue based on the facts and to reverse, affirm or vary the determination by the Minister.[1]
[11] The appellant, the payer René Prévost, and the respondent's investigator Stéphane Tremblay were heard at the hearing.
[12] The main reason given by the respondent for deciding that there was no contract of service was that there was an arrangement between the payer and the appellant solely to enable the appellant to qualify to receive unemployment insurance benefits.
Brief summary of the oral evidence
[13] René Prévost testified that the appellant is a good worker and that he worked for the weeks indicated in the payroll (Exhibit A-2). The payroll indicated that the appellant worked for the payer in 1993 from August 9 to 14, August 22 to 28, August 29 to September 4 and October 31 to November 6 at a gross weekly salary of $364. The gross salary consisted of a $350 salary and another $14 (four percent), making a total of $364. The payroll indicated that the appellant's net weekly salary was $272.52. The appellant's hourly salary was $7.
[14] René Prévost filed Exhibit A-1. It contained photocopies of four cheques made out to Roger Noël and dated June 27, August 2, August 11 and August 28, 1993, making a total of $1,150. René Prévost explained that these cheques (Exhibit A-1) represented advances he gave the appellant. He also filed the appellant's record of employment (Exhibit A-3), which indicated a weekly salary of $364, and five weeks worked between August 2 and November 6, 1993. René Prévost admitted that the advance cheques issued by Les Entreprises René Prévost Inc. (Exhibit A-1) did not correspond to the payroll (Exhibit A-2) or the record of employment (Exhibit A-3), and he added that for the last week's work the appellant was paid in cash, perhaps $500, but he could not be precise about the amount. He went on to say [TRANSLATION] "I cannot give the other amounts which I gave him in cash; the reason I paid in cash was because I had the cash to do it; because he officially worked the days marked down in the payroll. I did not put that he worked in June because it was not regular work; the other employees were paid by cheque; 95 percent are paid by cheque. I had to say to Roger, give me your hours; it was Roger who kept his hours".
[15] René Prévost also admitted that the appellant might have worked a few days before the beginning of his period of employment and that the appellant's priority was working for another payer, Les Concassés de la Rive-Sud Inc.
[16] The appellant testified. He was for all practical purposes almost illiterate and had a great deal of difficulty explaining the agreement which he had with the payer when he was employed in 1993. It should be noted that the appeal was heard in January 1998, five years after the period at issue.
[17] This witness explained that he worked for the payer. He drove machinery. He also worked for another payer, Les Concassés de la Rive-Sud (Exhibit I-1). When work for this payer ended he went to work [TRANSLATION] "on Prévost's farm". He did not know how many hours he worked. He confirmed that René Prévost gave him advances. He did not receive cheques before working. He did not know whether he began working in August 1993. He did not remember whether he was paid on weekends.
[18] The examination and cross-examination of this witness were extremely difficult. It was accepted that the appellant's statement (Exhibit I-2) could not be of much use to the Court, principally because it was the appellant's spouse who gave the appellant's story to the investigator in 1996, nearly three years after the period at issue. As the appellant cannot read he could not understand the document. Stéphane Tremblay, the respondent's investigator, met twice with the appellant. The appellant's first visit prompted him to suggest that the appellant return with his wife, and this was done on February 14, 1996. The appellant's wife did not testify and there was nothing to indicate whether she was living with the appellant in 1993 and so could be familiar with his work periods. The appellant's evidence was that in 1993 his deceased mother was looking after his affairs and in his presence made up his claimant’s reports, which were filed by the respondent (Exhibit A-4). These exhibits were filled out properly and filed with the employment office at a time contemporaneous with the events.
[19] Stéphane Tremblay greatly assisted the Court in assessing the appellant. He explained the difficulties he encountered in his investigation. He gave his point of view as follows: [TRANSLATION] "In my opinion, he [the appellant] worked and went there in his spare time, but the hours done were compressed for payment, and so were not calculated by Prévost (the payer). Although he [the appellant] did not have enough weeks there was an agreement [between the payer and the appellant] so that the weeks would be insurable".
Analysis
[20] The payer's obligation is to keep payrolls which contain the information required by the respondent. The payer's payroll contained no hours worked for the employees listed in it. It seems to the Court, especially in a case such as that of the appellant, that the payer should have ensured that there was no dispute as to the appellant's pay. The question is why he paid advances to the appellant. Why was he paid in cash? Did the appellant sometimes work for the payer without pay? That was not the testimony of René Prévost and his documents (Exhibits A-1, A-2 and A-3), from which it may be concluded that the appellant worked for the salaries indicated and on the dates shown in the record of employment. The cheques for advances are a source of confusion.
[21] The Court must decide whether there was a genuine contract of service between the appellant and the payer. Plainly, the appellant performed work and received payment for it, and there was some kind of relationship of subordination between the payer and the appellant.
[22] The appellant is a very hard-working person who is not very able to defend himself. The appellant's claimant’s reports (Exhibit A-4) are the only documents that can be used to determine what happened in 1993 regarding the work done by the appellant. These documents were prepared by the appellant's deceased mother in his presence. They are documents contemporaneous with the periods of employment, prepared in the ordinary course of business, and so, because of the appellant's particular situation, carry special weight in the instant case.
[23] These documents (A-4) indicate that the appellant worked for several payers between May and November 1993. In particular, the appellant gave his weeks of work for the payer as follows: the week of August 1 to 7, worked 50 hours with total gross pay of $350; the week of August 8 to 14, worked 50 hours, with no mention of his gross pay; for two weeks from August 22 to September 4, worked 55 hours each week, no mention of gross pay; the week of October 31 to November 6, 1993, worked 40 hours with total gross pay of $364. It should be noted that the card for the last week worked is dated November 12, 1993. That date is the same as the date on the payer's record of employment, 12/11/93 (Exhibit A-3). This is thus the first and only time that the appellant gave the gross weekly pay of $364 on a claimant's card. It is the first time he had an opportunity to do so because the document was not prepared before that. The employment office also regarded these as fully worked weeks. Accordingly, it must be accepted that the appellant worked.
[24] The respondent admitted that work was done, but argued that the appellant failed to establish the salary he received for the work done. It is true that the evidence adduced by the payer is difficult to accept; however, it would be a pity for a person as disadvantaged as the appellant to be in any way penalized on account of a payer who did not perform his duties as he should. The only acceptable evidence introduced by the appellant as to his salary were the claimant’s reports dated August 6, 1993, where he gave his total gross pay as $350. This was a statement made at the time of his first week of work, which was not influenced by other circumstances that may have arisen later. The respondent was right to question the cheques for advances that did not appear to have been endorsed by the appellant, the payroll which was not properly prepared and the record of employment dated November 12, 1993, stating a weekly salary of $364 as shown on the appellant's card for November 12, 1993. How could the payer state a weekly salary of $364 and in the same breath say that he paid the appellant on one occasion in cash but did not know the amount paid? All these documents did not originate with the appellant. However, if we disregard the evidence submitted by the payer, which the respondent did not accept, at the same time we should accept the evidence of the appellant, who on the first occasion gave his work, hours and gross salary on his report dated August 6, 1993 (Exhibit A-4).
[25] The appellant was not required to present evidence beyond a reasonable doubt, but had to persuade the Court on a balance of probabilities.
[26] In all fairness, I am persuaded on a balance of probabilities, disregarding the suspect evidence, that the appellant worked for the five weeks at issue at a gross weekly salary of $350.
[27] This decision applies only to the period at issue and must not be used for others of the appellant’s work periods, which could be disputed by the respondent.
IV - Decision
[28] The appeal is allowed and the determination made by the Minister is vacated.
Signed at Dorval, Quebec, February 13, 1998.
S. Cuddihy
D.J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 16th day of November 1998.
Kathryn Barnard, Revisor