Kirstein v. M.N.R.

Kirstein v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2004-05-20 Neutral citation 2004 TCC 358 File numbers 2003-2737(EI) Judges and Taxing Officers Sylvio J. Savoie Subjects Employment Insurance Act Decision Content Docket: 2003-2737(EI) BETWEEN: LESLIE KIRSTEIN, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. ____________________________________________________________________ Appeal heard on February 27, 2004 at Montreal, Quebec Before: The Honourable S.J. Savoie, Deputy Judge Appearances: Agent for the Appellant: Steven Rawas Counsel for the Respondent: Alain Gareau ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision rendered by the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, this 20th day of May 2004. "S.J. Savoie" Savoie, D.J. Citation: 2004TCC358 Date: 20040520 Docket: 2003-2737(EI) BETWEEN: LESLIE KIRSTEIN, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. REASONS FOR JUDGMENT Savoie, D.J. [1] This appeal was heard in Montreal, Quebec on February 27, 2004. [2] This is an appeal from a decision made by the Minister of National Revenue (the "Minister"), wherein he informed the Appellant that her employment with 177701 Canada Inc., the Payer, during the period from June 26, 2000 to January 12, 2001, the disputed period, was not insurable, because she was not engaged under a contract of service and consequently not an employee of the Payer. [3] In making his decision, the Minister relied on the following assumptions of fact: a) the Payer was formerly known as Dakota Home Fashion Textiles Inc. and also as 145025 Canada Inc.; (admitted) b) the Payer made pet products such as beds for cats and dogs; (admitted with modifications) c) the shareholders of the Payer were: (admitted) Hedi Rawas 70 % of shares Steven Rawas 30 % of shares d) the Appellant is the spouse of Steven Rawas and Steven Rawas is the son of Hedi Rawas; (admitted) e) the Appellant claimed she carried out marketing researches and developed new products for the Payer during the said period while, in fact, she did not work for the Payer; (denied) f) on January 16, 2001, the Payer under the name of Dakota Home Fashion Textiles Inc. issued a record of employment to the Appellant, for the period beginning on June 26, 2000 and ending on January 12, 2001, with an alleged earnings of $13,668.75 and a total of alleged insurable hours of 1,087.50; (admitted) g) the record of employment does not reflect the reality concerning the period of work, the hours worked and the salary earned by the Appellant. (denied) [4] The Appellant was not present at the hearing. Her husband and representative advised the Court that she was working. The evidence disclosed that the Payer is the manufacturer of home fashion products, such as bedding for domestic animals, dogs in particular. The Appellant performed services for the Payer. She was hired to develop new pet products. She worked mainly on the road, visiting suppliers and retailers. [5] According to Steven Rawas, her husband and shareholder of the Payer, she was an expert in fashion trends. During the disputed period, she developed a complete line of products which was placed on the market. One such product was a dog bed, one of which was sold by Costco and one by Sears Canada. The Payer would put this product on the market as a value added item. She was paid $506.25 per week initially, and then she was paid in cash, when the Payer experienced financial difficulties. [6] The Minister takes the position that the Appellant was not working under a contract of service and therefore there was no employer/employee relationship between her and the Payer, as contemplated by paragraph 5(12)(a) of the Employment Insurance Act (the "Act"). [7] In order to determine whether the employment of the Appellant with the Payer can be labelled insurable employment, it is advisable to consider it under the criteria established in the leading case of Wiebe Door Services Ltd. v. M.N.R. [1986] 3 F.C. 553. The criteria are as follows: 1. The degree of control over the work performed by the worker; 2. The ownership of the tools; 3. The chance of profit and risk of loss; 4. The integration of the worker's labour in the undertaking of the Payer. CONTROL [8] The control criteria has been held to be amongst all of the others the most important of all. The evidence shows that over the period in dispute, the Appellant visited the premises of the Payer no more than three to four times. She performed her duties out of her residence and on the road, visiting plants and suppliers. There was no control over her working hours and the Payer was unable to establish her work schedule. She determined herself how her work was to be carried out, where she went and who she visited. Requests were made by the agents and investigators for Human Resources Development Canada (HRDC) and the Minister to the Payer for work related records of employment of the Appellant. However, none were produced. [9] The evidence gathered produced conflicting reports on the Appellant's weekly hours of work. To the appeals officer, the Appellant reported working 30 hours per week. To HRDC, she declared 60 hours per week while the Payer claimed that she worked 37.5 hours per week. No records were produced to show her average weekly hours of work. It is also significant to note that the Appellant, in her declaration, stated that she was working for the Payer as a secretary. Under the control criteria, the evidence has demonstrated that the facts support the position taken by the Minister very strongly. OWNERSHIP OF THE TOOLS [10] Under this criteria, there is a great deal of contradiction making it difficult to arrive at a logical conclusion. The Appellant, in her declaration, stated that she owned the tools of her trade, i.e. her vehicle, her computer and her camera. On the other hand, her husband, a shareholder of the Payer, stated that the vehicle she used was leased by his mother and that the lease agreement provided for payments thereunder by the Payer. He also stated that the computer and the camera were both owned by the Payer. The evidence heard under this criteria is inconclusive. Therefore, a determination becomes a matter of conjecture. CHANCE OF PROFIT AND RISK OF LOSS [11] Under this criteria, the evidence is rather sparse and could be considered neutral insofar as it is relied upon by either the Minister or the Appellant. INTEGRATION [12] The analysis of the employment of the Appellant under this criteria would support the contention of the Appellant. It is important to note, however, that the principle laid down in the Wiebe Door case, supra, expressed by MacGuigan, J. in terms of an "...overarching test, which involves examining the whole of the various elements which constitute the relationship between the parties" has been found to be particularly useful in solving the issue at stake here. The proper application of the test was expressed succinctly in the head note of the Wiebe Door case, supra, as follows: The entrepreneur test, involving control, ownership of tools, change of profit and risk of loss, is not a fourfold test but, rather a four-in-one test with emphasis on the combined force of the whole scheme of the operations. [13] Counsel for the Minister pointed out that the Appellant, for no valid reason, failed to attend the hearing. Indeed, the testimony of the Appellant would have been useful in clarifying some of the contradictions set out above. [14] There is a well-established rule of jurisprudence which permits the Court to draw an adverse inference from the absence of the Appellant. In other words, the Court is entitled to infer that any evidence from the Appellant, had she submitted any, would have been unfavorable to her position (see Blatch v. Archer (1774), 1 Cowp. 63, page 65, per Lord Mansfield). [15] After reviewing all the facts and circumstances in the case at bar, and assessing the same in terms of the criteria established in the case law, particularly in the case of Wiebe Door Services, supra, this Court must conclude that the Appellant was not engaged by the Payer in insurable employment within the meaning of paragraph 5(1)(a) of the Act, for the period in question, since there was not contract of service between the Appellant and the Payer. [16] Consequently, the appeal is dismissed and the decision of the Minister is hereby confirmed. Signed at Grand-Barachois, New Brunswick, this 20th day of May 2004. "S.J. Savoie" Savoie, D.J. CITATION: 2004TCC358 COURT FILE NO.: 2003-2737(EI) STYLE OF CAUSE: LESLIE KIRSTEIN AND M.N.R. PLACE OF HEARING: Montreal, Quebec DATE OF HEARING: February 27, 2004 REASONS FOR JUDGMENT BY: The Honourable S.J. Savoie, Deputy Judge DATE OF JUDGMENT: May 20, 2004 APPEARANCES: Agent for the Appellant: Steven Rawas Counsel for the Respondent: Alain Gareau COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada