Martel c. M.R.N.

Martel c. M.R.N. Court (s) Database Tax Court of Canada Judgments Date 2004-05-10 Neutral citation 2004 TCC 325 File numbers 2001-3666(EI) Judges and Taxing Officers François M. Angers Subjects Employment Insurance Act Decision Content Docket: 2001-3666(EI) BETWEEN: ANDRÉ MARTEL, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on March 22, 2004, at Chicoutimi, Quebec Before: The Honourable Justice François Angers Appearances: For the Appellant: The Appellant himself Counsel for the Respondent: Sylvain Ouimet JUDGMENT The appeal is dismissed and the decision of the Minister of National Revenue is confirmed in accordance with the attached Reasons for Judgment. Signed at Edmundston, New Brunswick, this 10th day of May 2004. "François Angers" Angers J. Translation certified true on this 28th day of September 2004. Shulamit Day, Translator Citation: 2004TCC325 Date: 20040510 Docket: 2001-3666(EI) BETWEEN: ANDRÉ MARTEL, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT Angers J. [1] The Appellant is appealing a decision of the Minister of National Revenue (the Minister) made on September 21, 2001. The Minister informed the Appellant that his employment while in the service of 9070-6169 Québec Inc. ("9070"), during the period from June 4 to September 9, 2000, was not insurable because it did not meet the requirements for a contract of service, since there was no employer-employee relationship between the parties. Furthermore, the Minister also determined that the employment was not insurable because, during the period at issue, the Appellant controlled more than 40% of the voting shares in 9070 within the meaning of paragraphs 5(1)(a) and 5(2)(b) of the Employment Insurance Act (the "Act"). [2] In making his decision, the Minister relied on the following assumptions of fact, which were admitted or denied as indicated. [translation] (a) The Payor, incorporated on November 20, 1998, operated a business providing helicopter rides to tourists. (denied) (b) From November 20, 1998 to May 31, 2000, and from April 1, 2001 to date, the Appellant was the Payor's sole shareholder. (admitted) (c) On June 1, 2000, the Appellant allegedly transferred 75% of his shares and from June 1, 2000 to April 1, 2001, which includes the period at issue, the Payor's shares were allegedly divided between the Appellant, Denis Vincent, Laurent Gaudreau and Pierre Robert. (admitted) (d) The share certificates and the shareholders' resolutions involving these alleged share transfers bore no signature. (admitted) (e) On July 20, 2000, the Appellant mentioned to an HRDC officer that he had been the Payor's sole shareholder since its incorporation. (denied) (f) On May 1, 2001, the Appellant mentioned to an HRDC officer that he had transferred 75% of his shares in the Payor during the summer of 2000, so that he could work as an employee. (denied) (g) Laurent Gaudreau, one of the Payor's pseudo-shareholders, affirmed that he never was a shareholder or a director of the Payor. (admitted) (h) Mr. Gaudreau affirmed that he had never signed documents in the Payor's name, and that he knew nothing of the Payor's activities or of the Appellant's work. (admitted) (i) During the period at issue, the Payor rented a helicopter from "Foxair Héliservice Inc." to provide rides for tourists. (admitted) (j) The Appellant negotiated the rental conditions and signed the rental contract with "Foxair Héliservice Inc." (He signed, but did not negotiate it.) (k) The Appellant flew the helicopter rented by the Payor and was the Payor's sole Worker. (admitted) (l) The Appellant made all decisions on behalf of the Payor; he operated the business as if he were the sole director and assumed the risk of loss and chance of profit. (denied) (m) The Appellant had no work schedule with which to comply and the Payor had no control over his hours of work. (denied) [3] The Payor 9070 was incorporated in November 1998. The Appellant was the sole shareholder and held 100 shares of capital stock. The main activity of 9070 was to provide aviation consulting services. It operated as "Les hélicoptères St-Laurent". The annual return for 1999 made to Quebec's inspector generalof financial institutions (Exhibit A-5) indicates that its primary activity was tourism and helicopter rides. However, it was not until 2000 that the helicopter rides actually began. According to the Appellant's testimony, he entered into an association with Denis Vincent, Pierre Robert and Laurent Gaudreau in order to provide this service. In May 2000, the Appellant, as well as Denis Vincent and Pierre Robert, actually negotiated and reached an agreement with Croisières A.M.L. to provide helicopter rides to the public. These rides began on June 16, 2000, taking off from the Baie Ste. Catherine wharf. They ended on September 9, 2000. [4] The helicopter used by 9070 was rented from Foxair Héliservice Inc. and the Appellant was the pilot. The rental contract was in the name of "Les hélicoptères St-Laurent" and the person responsible was identified as the Appellant. Moreover, he was the only person to fly the helicopter and in fact was 9070's only employee during the period at issue. The Appellant stated that he had no supervisor and that Denis Vincent and Pierre Robert came around fairly regularly on weekends, on Sunday afternoons, calling it a Sunday drive, and a leisure activity. The Appellant flew the helicopter every day of the week, morning to evening, except if there was fog. He was also responsible for maintaining and cleaning the craft, advertising the service and taking care of tickets. He did not keep a timesheet but he submitted the cash receipts to Julie Robert, daughter of Pierre Robert. The Appellant was paid $175 per day and was supposed to receive 25% of the profits. However, the project did not turn a profit and the Appellant admitted that Denis Vincent and Pierre Robert alone paid the debts. [5] I now want to return to what the Appellant called an association with Denis Vincent, Pierre Robert and Laurent Gaudreau. In order to set up the helicopter rides project, the Appellant testified that in June 2000, he sold to each of his associates 25 of the shares he held in 9070, for the nominal sum of $1 per share. The Appellant submitted as evidence documents regarding the transfer of these shares he held in 9070. Among these documents, we find: 1 - The 9070 annual return for 1999, dated August 1, 2000, indicating that the Appellant, Pierre Robert and Denis Vincent are shareholders. These three, in addition to Laurent Gaudreau, are named as directors. 2 - The 9070 annual return for 2000 submitted to Quebec's inspector general of financial institutions indicating that the shareholders are the Appellant, Denis Vincent and Pierre Robert. The same names and that of Laurent Gaudreau are found on the list of directors. The document is dated October 13, 2000. 3 - The 9070 amended return dated April 1, 2001, indicating that the Appellant is now the sole shareholder and director and that Denis Vincent, Laurent Gaudreau and Pierre Robert are no longer directors. 4 - A letter from a paralegal to the Appellant, dated August 23, 2002, asking him to sign the 9070 resolutions with respect to the operations that took place in 2000 and the transfer of shares, in accordance with his testimony. The sale took place on June 1, 2000, and on April 1, 2001, he once again became owner of all the shares. 5 - An unsigned resolution by 9070's sole shareholder and administrator describing the transfers of 25 of the Appellant's shares each to Denis Vincent, Pierre Robert and Laurent Gaudreau for the price of $1 per share. The effective date was June 1, 2000. 6 - Four 9070 share certificates dated June 1, 2000, indicating that the Appellant, Denis Vincent, Pierre Robert and Laurent Gaudreau each held 25 shares in 9070; each certificate indicated a transfer of shares it represented to the Appellant on April 1, 2001. 7 - An unsigned shareholder resolution indicating that the four shareholders in question elect the four shareholders as directors for 9070, beginning on June 1, 2000. 8 - Another unsigned shareholder and director resolution, indicating that the shares of Denis Vincent, Pierre Robert and Laurent Gaudreau are transferred to the Appellant for $1 each, dated April 1, 2001. [6] According to the Appellant, the three shareholders invested $15,000 in 9070 on May 23, 2000, and on September 20, 2000, 9070 repaid that amount. He submitted as evidence the cheque that was used to repay the money, but the cheque was made out to Groupe R.F.M. Inc. This last statement of the Appellant therefore strikes me as erroneous. [7] In cross-examination, and at the beginning of the hearing, the Appellant admitted the assumptions of fact found above, which are totally contrary to his testimony and documentary evidence. He acknowledges that Laurent Gaudreau stated he was never a shareholder, and I assume here that he affirmed it to an officer of the Respondent, and furthermore, that he never signed any documents in the name of 9070 and that he knew nothing about the activities of 9070 nor of the Appellant's work. Laurent Gaudreau did not testify, nor did Pierre Robert or Denis Vincent. These statements by the Appellant are completely contradictory to the testimony he gave. Furthermore, he admitted the assumptions of fact found in subparagraphs 5 (c) and (d) according to which he allegedly transferred shares and these alleged transfers bear no signature. [8] The testimony of the alleged shareholders would perhaps have provided some explanation with respect to what is, at the very least, a strange situation. The fact that they were not asked to testify leads me to conclude that their testimony would not have been favourable to the Appellant. [9] It is the Appellant's responsibility to demonstrate, on the balance of probabilities, that his employment is insurable and that the decision of the Minister is incorrect in fact and in law. Here, the Appellant was incapable of demonstrating satisfactorily that, during the period at issue, he held a number of shares such that he was entitled to employment insurance benefits. The scenario that he attempted to establish with respect to the transfer of his shares on June 1, 2000, has proved to be totally false. He did not transfer shares to Laurent Gaudreau and the whole story of his association with him has turned out to be untrue. The Appellant is now unable to demonstrate the genuine operations and interest of each individual. If Laurent Gaudreau did not receive any shares, the Appellant therefore possessed 50% of the capital stock in 9070. [10] Considering the contradictions in the evidence and the erroneous testimony of the Appellant, it is impossible to believe his words. The Minister was therefore correct in determining that his employment was not insurable because the Appellant controlled more than 40% of the voting shares in 9070. Since this is my conclusion, I will not address the second reason advanced by the Respondent. The appeal is therefore dismissed. Signed at Edmundston, New Brunswick, this 10th day of May 2004. "François Angers" Angers J. Translation certified true on this 28th day of September 2004. Shulamit Day, Translator