[OFFICIAL ENGLISH TRANSLATION]
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Docket: 2004-1070(EI) |
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BETWEEN: |
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SALON DE QUILLES DE MATANE INC., |
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Appellant, |
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And |
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THE MINISTER OF NATIONAL REVENUE, |
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Respondent. |
_______________________________________________________________
Appeal heard on common evidence with the appeal of Claudette Chouinard (2004-1069(EI)) on September 1, 2004, at Matane, Quebec
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Before: The Honourable Judge Alain Tardif |
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Appearances: |
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Counsel for the Appellant: |
Francine Fillion |
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Counsel for the Respondent: |
Marie-Claude Landry |
_______________________________________________________________
JUDGMENT
The appeal under subsection 103(1) of the Employment Insurance Act is dismissed, and the decision by the Minister of National Revenue is confirmed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 13th day of September 2004.
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"Alain Tardif" |
Tardif J.
Certified true translation
Colette Dupuis-Beaulne
[OFFICIAL ENGLISH TRANSLATION]
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Docket: 2004-1069(EI) |
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BETWEEN: |
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CLAUDETTE CHOUINARD, |
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Appellant, |
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And |
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THE MINISTER OF NATIONAL REVENUE, |
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Respondent. |
_______________________________________________________________
Appeal heard on common evidence with the appeal of Salon de Quilles de Matane Inc.(2004-1070(EI)) on September 1, 2004, at Matane, Quebec
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Before: The Honourable Judge Alain Tardif |
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Appearances: |
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Counsel for the Appellant: |
Francine Fillion |
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Counsel for the Respondent: |
Marie-Claude Landry |
_______________________________________________________________
JUDGMENT
The appeal under subsection 103(1) of the Employment Insurance Act is dismissed, and the decision by the Minister of National Revenue is confirmed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 13th day of September 2004.
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"Alain Tardif" |
Tardif J.
Certified true translation
Colette Dupuis-Beaulne
[OFFICIAL ENGLISH TRANSLATION]
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Citation: 2004TCC610 |
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Date: 20040913 |
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Docket: 2004-1070(EI) |
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BETWEEN: |
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SALON DE QUILLES DE MATANE INC., |
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Appellant, |
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And |
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THE MINISTER OF NATIONAL REVENUE, |
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Respondent, |
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AND BETWEEN: |
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Docket: 2004-1069(EI)
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CLAUDETTE CHOUINARD, |
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Appellant, |
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And |
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THE MINISTER OF NATIONAL REVENUE, |
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Respondent. |
REASONS FOR JUDGMENT
Tardif J.
[1] These are two appeals from determinations dated December 23, 2003, under paragraphs 5(1)(a) and 5(2)(i) and subsection 5(3) of the Employment Insurance Act ("Act") concerning the same employment; one appeal was filed by the employer, the other by the person who performed the work.
[2] The parties agreed to proceed on common evidence. The periods concerned by the appeals are as follows:
· from November 8, 1998, to May 28, 1999;
· from February 6 to May 12, 2000;
· from December 31, 2000, to April 28, 2001;
· from January 20 to May 4, 2002;
· from November 3, 2002, to May 3, 2003.
[3] The work the Appellant performed for Salon de Quilles de Matane Inc. during the aforementioned periods was excluded from insurable employment because the Appellants were not dealing with each other at arm's length. The Minister of National Revenue (the "Minister") concluded that it was not reasonable to conclude that the parties would have entered into a substantially similar contract of employment if they had been dealing with each other at arm's length. The work was therefore excluded from insurable employment under paragraph 5(2)(i) of the Act, which reads as follows:
5.(2) Insurable employment does not include
[. . .]
(i) employment if the employer and employee are not dealing with each other at arm's length.
[4] In reaching this conclusion, the Minister relied on the following assumptions of fact in the appeal of Salon de Quilles de Matane Inc.:
[TRANSLATION]
10. [...]
(a) until December 14, 2000, the voting shares of the Appellant were distributed equally between Jeannot Fortin and his brother Jean-Marc Fortin;
(b) since December 15, 2000, Jeannot Fortin has held 66 2/3 percent of the shares and Jean-Marc 33 1/3 percent;
(c) the Worker has been Jeannot Fortin's de facto spouse since 1990;
(d) until December 14, 2000, the Worker was related to Jeannot Fortin, a member of a group that controlled the Appellant;
(e) since December 15, 2000, the Worker has been related to Jeannot Fortin, who controls the Appellant.
11. [...]
(a) Jeannot Fortin and his brother Jean-Marc had operated a bowling alley since December 7, 1970; they transferred the business to the Appellant on September 2, 1992;
(b) the Appellant owns a two-storey building housing the bowling alley located in downtown Matane;
(c) the ground floor of the building is occupied by the reception counter, which offers shoe rentals, the sale of chips and soft drinks, six bowling lanes and a 25- to 30-seat bar mainly offering beer;
(d) the second floor houses the other six bowling lanes, and the basement is occupied by a five-table billiard room;
(e) the Appellant operates its bowling alley year-round, with the exception of July, when it closes completely;
(f) the bowling alley is open only on Tuesday evenings from 7:30 p.m. to 9:00 p.m. and Friday evenings from 8:00 p.m. to 9:30 p.m. in July and August, and from 12:30 p.m. to 10:30 p.m. or midnight during the week and from 12:30 p.m. to 1:30 a.m. Fridays and Saturdays from September to the end of May;
(g) the Appellant's busiest period begins in September, when bowling leagues form, and ends in late May with year-end tournaments, seniors' finals and end-of-season parties;
(h) the Worker works at the Appellant's bowling alley as a day worker;
(i) the Worker's main duties were to:
- welcome customers at the counter, assign them their lanes, rent shoes and collect admissions;
- answer the telephone;
- sell chocolate, soft drinks and chips at the counter and drinks at the bar;
- maintain the second floor and do the decoration;
(j) the Worker took a course to learn how to enter the names of the teams and players in the computer and generally performed that duty;
(k) the Worker had no specific work schedule to meet; her hours were neither compiled nor recorded by the Appellant;
(l) according to the various versions obtained from the Appellant and the Worker, it is impossible for us to establish the Worker's actual hours of work (we obtained as many as seven different versions);
(m) when she was entered on the Appellant's payroll, the Worker received fixed remuneration of $300 a week, without regard to the hours actually worked;
(n) the Worker was paid by cheque, which she cashed in the Appellant's till;
(o) the Worker rendered numerous services to the Appellant without remuneration outside the periods when she was entered on the payroll;
(p) the Worker was not entered on the Appellant's payroll in September and October of each year, although that was a very busy period for the Appellant and was when the bowling season began;
(q) the Appellant's periods of work did not coincide with the Appellant's busiest periods;
(r) on June 2, 1999, the Appellant issued a record of employment in the Worker's name for the period from November 8, 1998, to May 28, 1999, showing 1,080 insurable hours and total insurable earnings of $8,100;
(s) on May 16, 2000, the Appellant issued a record of employment in the Worker's name for the period from February 6 to May 12, 2000, showing 560 insurable hours and total insurable earnings of $4,200;
(t) on May 4, 2001, the Appellant issued a record of employment in the Worker's name for the period from December 31, 2000, to April 28, 2001, showing 680 insurable hours and total insurable earnings of $5,100;
(u) on May 9, 2002, the Appellant issued a record of employment in the Worker's name for the period from January 20 to May 4, 2002, showing 600 insurable hours and total insurable earnings of $4,500;
(v) on May 7, 2003, the Appellant issued a record of employment in the Worker's name for the period from November 3, 2002, to May 3, 2003, showing 1,040 insurable hours and total insurable earnings of $7,800;
(w) the records of employment issued by the Appellant in the Worker's name do not reflect the actual situation with respect to the periods actually worked or to the hours actually worked by the Worker;
[5] The facts alleged in subparagraphs 10(a), (b), (c), (d) and (e) and subparagraphs 11(a), (b), (c), (d), (e), (g), (h), (i), (j), (n), (r), (s), (t), (u) and (v) were admitted, and the others were denied, with the exception of subparagraph (l), of which the Appellants knew nothing.
[6] The burden of proof was on the Appellants. The evidence consisted of the testimony of Jean-Marc Fortin, the holder of 33 1/3 percent of the corporation's shares; the remaining 66 2/3 percent was held by Jeannot Fortin, the Appellant's spouse, who did not testify. The Appellant Claudette Chouinard also testified.
[7] The Respondent called the two persons responsible for the cases as witnesses, Claire Fradette and Louise Dessureault, respectively investigator and appeals officer.
[8] Mr. Fortin explained that the corporation's turnover had declined from year to year. After experiencing years in which the annual turnover was approximately $300,000, the company now had turnover of slightly more than $100,000.
[9] The radical drop in turnover resulted from the arrival of two other bowling alleys in Matane. However, I noted that the turnover had nothing to do with profits, since the business had always incurred major losses, even when turnover was at its peak.
[10] Mr. Fortin described the work of the Appellant Claudette Chouinard, his own and that of his brother, who held 66 2/3 percent of the shares issued. The operations of the business were conducted on three separate floors: the basement, where a billiard room was operated, and the other two floors, two bowling alleys, with one six-lane alley per floor. Apart from these activities, the corporation operated on the first floor, where there was a reception counter, a small restaurant, a bar, and a service desk where lanes and shoes were rented.
[11] Peak season was from September to late May, when leagues and teams competed, and included the various parties that were normally held before and during the Christmas holidays.
[12] The bowling alley was completely closed for one month each year, in July, while business hours and days were at their shortest in June and August.
[13] Mr. Fortin's testimony showed that he mainly did the accounting, whereas his brother handled everything. As to the Appellant Chouinard, her duties consisted in welcoming customers, providing service, renting the lanes and shoes, answering the telephone, doing counter sales, and maintaining the second floor and the decoration. The Appellant had also taken a course to learn how to input the names of bowlers and results in a computer system; she also did the cleaning. She was clearly qualified to do everything. For her work, she received a weekly salary of $300.
[14] The company's representative explained that the start and end dates of the periods of employment were determined by the business's ability to pay, water damage, and a furnace breakdown. However, the link between the start and end dates of the periods of employment and those three events was not clear; the explanations were implausible and often confused, unclear and incoherent.
[15] Mr. Fortin also stated that the company had previously hired two women to do appreciably the same work for the same wage. Both were informed in 1998 that their services were definitely no longer required as a result of the financial situation, which, according to the two signatories of the notice, Jean-Marc and Jeannot Fortin, had become precarious.
[16] One important detail is that the two women did not testify; the period and duration of employment were not established.
[17] As to Mesdames Fradette and Dessureault, their testimony was precise and, in particular, substantiated by highly relevant documents and tables.
[18] One of those tables (Exhibit I-3) showed convincingly that the Appellant's work had nothing to do with the level of operations. In September and October, months described as very busy, the Appellant was always unemployed from 1998 to 2003.
[19] The other table (Exhibit I-1) shows long periods during which the Appellant and Jean-Marc Fortin did not work, or rather did not receive remuneration, but nevertheless received employment insurance benefits. Need it be recalled that the company's business operations were conducted simultaneously on three separate floors?
[20] The Appellant Chouinard admitted that she had done the same work, but without being remunerated, during the slow periods, the duration of which could however not be determined as a result of the many contradictory versions.
[21] One question of decisive importance is whether the business could do without the Appellant Chouinard's services during the period from October to December of each year. The answer is a categorical no.
[22] Ms. Fradette also compiled highly revealing data, which moreover corroborate the picture that emerges from all the other elements and aspects of the case.
[23] She audited the dates of the claims for employment insurance benefits, the number of weeks of benefits available and, lastly, the number of weeks claimed by the Appellant Chouinard. The result was eloquent, and is as follows:
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Year |
Date of claim |
Number of available weeks
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Number of weeks claimed or used |
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1999
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May 30 |
33 |
33 |
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2000
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May 14 |
30 |
28 |
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2001
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April 29 |
35 |
35 |
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2002 |
May 5 |
32 |
24 weeks used at the time of the audit, at which time the Appellant was still not working |
[24] The Respondent also filed the report (Exhibit I-2) prepared by Louise Dessureault. I think it useful to cite certain passages therefrom:
[TRANSLATION]
[...]
Facts taken from the statutory declaration of Jeannot Fortin, a shareholder of the Payer, Salon de Quilles de Matane Inc., made to Claire Fradette, investigation and control officer with HRDC in Rimouski, on July 4, 2003. (Tab A)
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7. She rendered service starting in October.
[...]
10. Claudette Chouinard served at the counter, did cleaning, entered the names of the players in the computer for each of the leagues. She worked 30 to 40 hours a week.
[...]
Facts taken from the statutory declaration of Claudette Chouinard, the Worker, made to Claire Fradette, investigation and control officer with HRDC in Rimouski, on July 4, 2003. (Tab B)
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16. She did not know exactly how many hours she had worked per week. She never recorded her hours.
[...]
18. From September to October, she helped him on Monday mornings and went there every two days, seven or eight hours a week, without pay, to help her friend.
[...]
Facts taken from insurability report CE0319 7102 3352, prepared by Alain Landry, coverage officer from the Québec Tax Services Office (Tab C)
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• She generally worked 70 hours a week;
[...]
23. The officer also communicated with Jeannot Fortin, a shareholder of the Payer, by telephone on August 5, 2003, and gathered the following facts:
[...]
• During the periods when she was not employed, she could render the same services as when she was not employed;
• She accompanied him to the bowling alley so as not to stay at home;
• She did so without pay as a favour to him;
• He would not hire a stranger paid by the week because it would cost him too much. He would pay him by the hour and control his hours.
Facts obtained from Jeannot Fortin, shareholder of the Payer, by telephone on December 9, 2003.
[...]
40. His companion, Claudette Chouinard, did a bit of everything: cleaning, decoration, counter work. She welcomed people at the counter (collected their admissions) and entered players' names in the computer, since each lane was linked to the computer, and answered the telephone.
41. The computer entries were made by Claudette; Jean-Marc could do a little, but, since he had had Claudette take courses for that, it was she who operated the computer, which was located at the reception counter.
[...]
43. Claudette Chouinard worked five to seven days a week, depending on how busy it was and the time of year, and he paid her for 40 hours of work a week, even if she worked more than 40 hours.
[...]
46. Jeannot Fortin added that two persons were necessary when people bowled, in view of the fact that there were three floors, the bar, 12 bowling lanes and the reception counter, which also offered soft drinks and chips, or else they would be robbed, and that one person alone could not see to everything, enter the players in the computer and the rest.
[...]
Facts taken from the documents in insurability file CE0319 7102 3352 of the Worker, Claudette Chouinard.
[...]
69. In 1998-1999, the Worker was paid by the Payer from November 8, 1998, to May 28, 1999, that is, over 29 weeks. From 1999 to 2002, September and October sales show that the business resumed full operation and the Worker's paid period of employment does not cover those months.
70. In 2000, the Worker resumed work on February 6, after 36 unpaid weeks, whereas monthly sales varied from $9,352 in September 1999 to more than $18,000 in November and December 1999 and $16,000 in January 2000. She stopped on May 13, 2000, after 14 paid weeks.
71. In 2001, the Worker resumed work on December 31, 2000, after 33 unpaid weeks, whereas monthly sales varied from $8,737 in September 2000 to more than $15,000 in October and November and nearly $18,000 in December 2002. She stopped on April 28, 2001, after 17 paid weeks.
72. In 2002, the Worker resumed work on January 20, after 38 unpaid weeks, whereas monthly sales were more than $8,000 in September and October 2001 and more than $13,000 in November and December 2001 and in January 2002. She stopped on May 4, 2002, after 15 paid weeks.
73. In 2002-2003, the Worker resumed work on November 3, after 26 unpaid weeks, whereas monthly sales were more than $7,000 in May, June and September and more than $12,000 in October. She stopped on May 3, 2003, after 26 paid weeks, whereas sales in May 2003 were $10,906.
[25] The employment insurance program is a social program put in place to help those who actually lose their jobs and to meet their financial needs. It is not in any way a program to assist businesses by enabling them to pass on a portion of their payroll to the government.
[26] In the instant case, not only was the determination reasonable and judicious, it resulted from impeccable work that took into account all the relevant facts.
[27] Having regard to the evidence, it would even have been appropriate to conclude that the periods of work were essentially determined by the requirements for obtaining employment insurance benefits. One thing is certain: a third party would not have enjoyed such flexibility. However, that party would never have agreed to be as generous in providing services free of charge.
[28] The appeals are dismissed, and the determinations at the origin of the appeals are confirmed as well founded in fact and in law.
Signed at Ottawa, Canada, this 13th day of September 2004.
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"Alain Tardif" |
Tardif J.
Certified true translation
Colette Dupuis-Beaulne
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CITATION: |
2004TCC610 |
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COURT FILE NUMBER: |
2004-1070(EI); 2004-1069(EI) |
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STYLE OF CAUSE: |
Salon de Quilles de Matane Inc. and Claudette Chouinard and the Minister of National Revenue |
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PLACE OF HEARING: |
Matane, Quebec |
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DATE OF HEARING: |
September 1, 2004 |
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REASONS FOR JUDGMENT BY: |
The Honourable Judge Alain Tardif |
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DATE OF JUDGMENT: |
September 13, 2004 |
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APPEARANCES: |
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For the Appellant: |
Francine Fillion |
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For the Respondent: |
Marie-Claude Landry |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
Francine Fillion, Counsel |
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City: |
Matane, Quebec |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |