Castonguay c. M.R.N.

Castonguay c. M.R.N. Court (s) Database Tax Court of Canada Judgments Date 2005-01-13 Neutral citation 2005 TCC 11 File numbers 2004-115(EI) Judges and Taxing Officers Paul Bédard Subjects Employment Insurance Act Decision Content Docket: 2004-115(EI) BETWEEN: DANY CASTONGUAY, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on December 9, 2004, at Québec, Quebec. Before: The Honourable Justice Paul Bédard Appearances: Counsel for the Appellant: Jérôme Carrier Counsel for the Respondent: Marie-Claude Landry ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision of the Minister is confirmed based on the attached Reasons for Judgment. Signed at Ottawa, Canada, this 13th day of January 2005. "Paul Bédard" Bédard J. Translation certified true on this 12th day of April 2005. Daniela Possamai, Translator Citation: 2005TCC11 Date: 20050113 Docket: 2004-115(EI) BETWEEN: DANY CASTONGUAY, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT Bédard J. [1] The Appellant is appealing from the decision of the Minister of National Revenue (the "Minister") according to which the Appellant did not hold insurable employment during the periods at issue, that is, from February 1 to June 19, 1999, from January 31 to April 17, 2000, from February 5 to June 16, 2001, and from February 4 to May 18, 2002, with 9006-0674 Québec Inc. (the "Payor"), under a genuine contract of service within the meaning of paragraph 5(1)(a) of the Employment Insurance Act (the "Act"). [2] The facts on which the Minister relied are described in paragraph 5 of the Reply to the Notice of Appeal and are as follows: (a) The Payor, incorporated in 1994, has been operating a sugar bush with 18,000 taps since 1999; it has the necessary equipment for the manufacturing of syrup; (b) Since 1999, the Payor's shares have been held equally by the brothers Jocelyn and Claude Lagacé; (c) The Payor only produces syrup, it does not offer meals and is not open to the public; (d) Since 1999, the Appellant has been the owner of a sugar bush with 4,000 taps all connected by tubing; (e) The Appellant's sugar bush is adjacent to the Payor's sugar bush; (f) The Appellant only has one pumping station; (g) From 1999 to 2002, the Appellant had the Payor boil his sap which charged him 55 cents per pound of syrup; (h) Appellant is not related to the Payor; (i) The Appellant argues that he tapped his trees every year towards the end of February, over 2 or 3 days, even though his sugar bush has 4,000 taps; (j) The Payor had a separate meter to calculate the quantity of maple sap obtained from the Appellant's sugar bush and it gave him a percentage of the proceeds from the sale of maple syrup corresponding to his part of the sap gathered; (k) During the periods at issue, the Payor hired the Appellant to work at its maple bush; (l) During the production season, the Appellant's main duties with the Payor were to monitor and repair the tubing and monitor relays in the woods; (m) According to Jocelyn Lagacé, the Appellant spent the rest of his time working at the Payor's sugar shack boiling sap and washing reservoirs; (n) The Appellant had no work schedule to follow and his hours were not accounted for by the Payor; (o) The Appellant began to render services for the Payor at least one month prior to his being on the Payor's payroll with no earnings; (p) The Appellant put in hours of work at the beginning of each season before being on the Payor's payroll; (q) When he was on payroll, the Appellant received a gross weekly salary of $702 regardless of the actual hours worked; (r) According to his records of employment, the Appellant supposedly worked until June 19 in 1999, until June 17 in 2000, until June 16 in 2001 and until May 18 in 2002 while the Appellant remained in his employment for only 1 or 2 weeks at the end of the sugaring season, which usually ended at the end of April, to wash the tubing; (s) On December 27, 1999, the Payor issued a record of employment to the Appellant, for the period from March 29 to June 19, 1999, showing 540 insurable hours and insurable earnings totalling $8,424; (t) On November 25, 2000, the Payor issued a record of employment to the Appellant, for the period from April 3 to June 17, 2000, showing 495 insurable hours and insurable earnings totalling $7,722; (u) On November 1, 2001, the Payor issued a record of employment to the Appellant, for the period from April 2 to June 16, 2001, showing 405 insurable hours and insurable earnings totalling $6,318; (v) On October 18, 2002, the Payor issued a record of employment to the Appellant, for the period from March 31 to May 18, 2002, showing 315 insurable hours and insurable earnings totalling $4 ,914; (w) The records of employment issued by the Payor to the Appellant do not accurately reflect the first day worked, the last day paid, the periods actually worked or the hours actually worked by the Appellant during the periods at issue; (x) The parties came to an arrangement so as to allow the Appellant to qualify for unemployment insurance benefits. [3] All the facts on which the Minister relied were admitted except for the facts described in subparagraphs (n), (o), (p), (q), (w) and (x) of paragraph 5 of the Reply to the Notice of Appeal. Analysis [4] For the Appellant to receive employment insurance, the work must be performed within the framework of a genuine contract of service. In determining whether a contract of employment is eligible, the following criteria have been identified in the case law: the relationship of subordination giving the payor a power of control over the work performed for wages paid, the chance of profit and risk of loss, ownership of the tools and integration. [5] The application of these criteria to the facts available obviously supports the conclusion that the contract of employment is eligible. However, it is just as important that there be a genuine contract of employment, without which the exercise of applying the criteria is completely useless. The first issue to be resolved here is whether the contract binding the Appellant constituted a genuine contract of employment. Was the employment in the case at bar a façade? Work performance [6] What work did the Appellant perform during the period from February 1 to June 19, 1999, from January 31 to April 17, 2000, from February 5 to June 16, 2001, and from February 4 to May 18, 2002? [7] It should be noted that at the hearing the Appellant admitted that he remained in his employment with the Payor for only 1 or 2 weeks[1] at the end of the sugaring season, which usually ended at the end of April, and that he washed the tubing during that period. [8] I note as follows: (i) On December 27, 1999, the Payor issued a record of employment to the Appellant, for the period from March 29 to June 19, 1999, showing 540 insurable hours. According to the records of employment (Exhibit A-2), the Appellant would have therefore worked 315 hours in May and June 1999, while he admitted to only working about 68 hours[2] during those two months. It can therefore be concluded that in May and June 1999, the Appellant did not perform any work during the 247 hours indicated for this period of two months. (ii) On November 25, 2000, the Payor issued a record of employment to the Appellant, for the period from April 3 to June 17, 2000, showing 495 insurable hours. According to the records of employment (Exhibit A-2), the Appellant would have therefore worked 315 hours in May and June 2000, while he admitted to only having worked about 68 hours during those two months. It can therefore be concluded that the Appellant did not perform any work during the 247 hours indicated for this period of two months. (iii) On November 1, 2001, the Payor issued a record of employment to the Appellant, for the period from April 2 to June 16, 2001, showing 405 insurable hours. According to the records of employment (Exhibit A-2), the Appellant would have therefore worked 306 hours in May and June 2001, while he admitted to only having worked about 68 hours during those two months. It can therefore be concluded that the Appellant did not perform any work during the 238 hours indicated for this period of two months. (iv) On October18, 2002, the Payor issued a record of employment to the Appellant, for the period from March 31 to May 18, 2002, showing 315 insurable hours. According to the records of employment (Exhibit A-2), the Appellant would have therefore worked 117 hours in May and June 2002, while he admitted to only having worked about 68 hours during those two months. It can therefore be concluded that the Appellant did not perform any work during the 49 hours indicated for this period of two months. [9] The relevant parts of the statutory declarations (Exhibit I-1 and I-2) of the Appellant and Jocelyn Lagacé (one of the Payor's shareholders) pertaining to the nature of the Appellant's work are worthy of note: [Translation] . . . Concerning my periods of employment with Jocelyn Lagacé, my records of employment do not accurately reflect the first day of work. We agreed on banking the first days of work because at the beginning of the season, owing to the length of the day and the cold, it was impossible to work a full-time week. Year after year, I would begin in mid-January cutting fallen branches, performing repairs to continue through the tapping in mid-February, covering leaks in March, April and finish with the washing in mid-May. There were also years where I would continue to fell for a few weeks. His sugar bush has 18,000 taps. Therefore, the first days of work indicated on all my records of employment from the sugar bush of Jocelyn and Claude Lagacé (9006-0674 Québec Inc.) are incorrect, they should be in mid-January. As for the last days of work, the total number of insurable hours and [error in the original] total insurable amounts, they are correct. . . . We agreed that he would put in hours at the beginning of the season to compensate for the hours he would be spending in his sugar bush tapping and covering leaks for example. He is the one who kept track of his hours. I did not want to begin monitoring all that. He could, in my opinion, work about a hundred hours before being on the payroll. Over the years on a few occasions, hours were accumulated because he only worked a day and a half in his week for example. For the rest, he would be ahead with the hours he would have to work in his own sugar bush. Normally, I do my own repairs before the tapping period so that tapping activities can start later and the process goes faster. Once the repairs are made, it takes us up to 10 days to tap. I normally finish the last week of March. The records of employment issued to Dany Castonguay in 1999, 2000, 2001 and 2002 do not therefore accurately reflect the first days of work, which should be at the beginning of February (not in mid-January as you were told by Dany Castonguay because it is too early). Although I was aware that my first days of work were not accurately reflected, the total wages paid and the total number of hours were accurately reflected. . . . In 1998, I hired Dany Castonguay because his 5,000 or so taps were supposed to be ready but they were not. Seeing that he needed to finish collecting his unemployment stamps, I hired him anyway and had him fell so that he could finish collecting his stamps. . . . [10] In his testimony, the Appellant essentially reiterated the statements made in his statutory declaration. In fact, he testified that he accumulated hours, that is to say that he worked a hundred or so hours for the Payor for each of the years at issue, before being on the Payor's payroll. He added that the hours so accumulated compensated for the hours he did not work in May and June and that therefore the total hours worked for each of the years at issue was accurate. He also testified that he worked 45 hours per week, Monday through Friday, from 7 a.m. to 7 p.m. Finally, he added that during those working hours, he did not work in his own sugar bush: his spouse and his father were therefore attending to his sugar bush. [11] The burden of proof lay with the Appellant. First, he was to convince me that he worked 540 hours, 495 hours, 405 hours and 315 hours for the Payor for the periods from February 1 to June 19, 1999, from January 31 to April 17, 2000, from February 5 to June 16, 2001, and from February 4 to May 18, 2002, respectively. It was not by making general, inaccurate, false statements, often implausible and contradicted by the statements of Mr. Lagacé that he could convince me, for the following reasons: (i) The Appellant submitted that he began to work for the Payor as of mid-January. This statement was simply contradicted by Mr. Lagacé's statement that the Appellant's employment began at the beginning of February. (ii) The Appellant submitted that he worked a hundred or so hours for the Payor for each of the years at issue before being on the Payor's payroll. I note that he testified that the hours so accumulated compensated for hours he did not work in May and June and that therefore the total hours worked for each of the years at issue was accurate. However, the evidence shows that in May and June 1999, the Appellant only worked about 68 hours of the hours recorded on the Payor's payroll. The number of hours he did not work during those two months was therefore 247. Therefore, how can the Appellant claim that the total hours worked for 1999 was accurate? It is just as difficult, if not impossible, to conclude that for the others years at issue, the total hours the Appellant worked was accurate. In fact, the accumulation of a hundred or so hours did not in any way compensate for the hours he did not work in May and June of 2000 and 2001. (iii) The Appellant testified that it was one of the Payor's shareholders that kept track of his working hours. Mr. Lagacé's statement in that respect was as follows: He is the one who kept track of his hours. I did not want to begin monitoring all that. (iv) It should also be noted that Mr. Lagacé stated that the agreement binding him to the Appellant was that the latter would put in hours of work at the beginning of the season to compensate for the hours he would spend in his own sugar bush tapping and repairing leaks. However, the Appellant stated that during the weeks he was working, his father and his wife would repair tubing leaks and that he would tap his maples on weekends. [12] I conclude that this employment was merely a façade and that the Appellant and the Payor came to an arrangement in order to allow the Appellant to receive employment insurance benefits. I am of the opinion that the contract binding the Appellant and the Payor did not constitute a genuine contract of employment. In fact, the Appellant had to prove that the contract of employment binding him to the Payor met all the conditions set out in the Civil Code of Québec. He therefore also had to prove that services were in fact performed, one of the elements essential to the existence of his contract of employment. The Appellant simply did not discharge his obligation to prove on a balance of probabilities that the contract binding him to the Payor was a genuine contract of employment. In light of the foregoing, I do not think there is any need to consider the other conditions set out in the Civil Code of Quebec. [13] For these reasons, the appeal is dismissed. Signed at Ottawa, Canada, this 13th day of January 2005. "Paul Bédard" Bédard J. Translation certified true on this 12th day of April 2005. Daniela Possamai, Translator CITATION: 2005TCC11 COURT FILE NUMBER: 2004-115(EI) STYLE OF CAUSE: Dany Castonguay and M.N.R. PLACE OF HEARING: Québec, Quebec DATE OF HEARING: December 9, 2004 REASONS FOR JUDGMENT BY: The Honourable Justice Paul Bédard DATE OF JUDGMENT: January 13, 2005 APPEARANCES: For the Appellant: Jérôme Carrier For the Respondent: Marie-Claude Landry COUNSEL OF RECORD: For the Appellant: Name: Jérôme Carrier Firm: Rochon, Belzile, Carrier, Auger Québec, Quebec For the Respondent: John H. Sims Deputy Attorney General of Canada Ottawa, Canada [1] Which represents on average about 68 hours of work for this period, considering that the Appellant admitted that he worked 45 hours per week. [2] See analysis of paragraph 7.