Date: 19991029
Dockets: 98-580-UI; 98-582-UI; 98-581-UI; 98-583-UI
BETWEEN :
FONDATION JEAN-GUY ROY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
BETWEEN :
CATHIA LEPAGE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
FONDATION JEAN-GUY ROY,
Intervener,
AND
BETWEEN :
MICHEL BEAULIEU,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
FONDATION JEAN-GUY ROY,
Intervener.
Reasons for Judgment
Cuddihy, D.J.T.C.C.
[1] These appeals were heard on common evidence at Rivière-du-Loup, Quebec, on September 20, 21 and 22, 1999.
I- The Appeals
[2] The appellants are appealing from the two decisions of the Minister of National Revenue (the "Minister") dated April 1, 1998, according to which the employment of Michel Beaulieu ("the appellant Beaulieu") from September 30, 1991 to January 10, 1992, from September 14, 1992 to January 15, 1993, from July 12 to December 31, 1993, from February 28 to December 30, 1994, from August 20, 1995 to February 23, 1996 and from September 22, 1996 to February 7, 1997 and the employment of Cathia Lepage ("the appellant Lepage") from January 4 to March 26, 1993 and from February 7 to May 27, 1994 with Fondation Jean-Guy Roy (the "payer") was not insurable within the meaning of the Unemployment Insurance Act, now the Employment Insurance Act (the "Act"), since there existed between the appellants and the payer during those periods no contract of service within the meaning of paragraph 3(1)(a) of the former Act and 5(1)(a) of the new Act.
II- Summary of Facts
[3] The respondent submitted the facts on which he based his decisions in paragraph 5 of each of his Replies to the Notices of Appeal.
[4] For the purposes of these appeals, it will be necessary to recite only the facts alleged in appeals 98-581(UI) and 98-583(UI), as follows:
Cathia Lepage (98-581(UI))
[TRANSLATION]
(a) The payer, which was incorporated on November 25, 1986, is a non-profit organization registered as a charity.
(b) On May 27, 1994, the corporation was registered under the corporate name "Fondation Jean-Guy Roy (1994)"; it continued the payer's activities.
(c) To finance its activities, the payer organizes two fundraising campaigns a year and obtains various government projects; it also finances the activities of "La Société Généalogique du K.R.T.", which gathers data on deaths, weddings, and so on.
(d) From 1992 to 1995, the payer financed the activities of K.R.T., which had offices in Montmagny, Beauce and Rimouski; since 1995, these three offices have been closed and the payer's activities are now concentrated at the office of the Fondation and the Société Généalogique in Rivière-du-Loup.
(e) Jean-Guy Roy, parish priest of the Parish of St-Épiphane, is the president of the payer, the directors of which are Frank Lemieux, Léopold Robichaud, Régis Bernier, Jean Soucy, Marcel Castonguay and Michel Beaulieu (since 1995), the de facto spouse of the appellant.
(f) The payer is operated year-round with an average of two employees and 12 interns.
(g) The appellant says she worked for the payer during the periods in issue.
(h) She says she worked updating the list of the payer's donors, as did her de facto spouse Michel Beaulieu, and that she occasionally answered calls on the payer's telephone line (a line was apparently brought into her home).
(i) The appellant claims that she worked at home and that Michel Beaulieu controlled her work.
(j) The appellant claims that, during the weeks in issue only, she worked 35 to 40 hours a week for the payer and occasionally provided services without remuneration.
(k) The appellant claims that, during the periods in issue, she did secretarial work for Jean-Guy Roy, handled the fundraising mail and entered wedding information in the parish records.
(l) The appellant says that during the periods in issue, namely 12 weeks in 1993 and 16 weeks in 1996, she received fixed remuneration of $300 a week.
(m) The appellant does not appear on the payer's payroll; she was allegedly paid directly by Jean-Guy Roy.
(n) Although she claims that she worked under the supervision of her spouse, the latter does not appear on the payer's payroll during the same periods.
(o) The periods allegedly worked by the appellant do not coincide with the periods actually worked.
(p) The records of employment submitted by the appellant show virtually the minimum number of weeks required to qualify for unemployment/employment insurance benefits.
(q) On each occasion, the appellant drew the maximum benefits to which she was entitled.
Michel Beaulieu (98-583(UI))
[TRANSLATION]
(a) The payer, which was incorporated on November 25, 1986, is a non-profit organization registered as a charity.
(b) On May 27, 1994, the corporation was registered under the corporate name "Fondation Jean-Guy Roy (1994)"; it continued the payer's activities.
(c) To finance its activities, the payer organizes two fundraising campaigns a year and obtains various government projects; it also finances the activities of "La Société Généalogique du K.R.T.", which gathers data on deaths, marriages, and so on.
(d) From 1992 to 1995, the payer financed the activities of K.R.T., which had offices in Montmagny, Beauce and Rimouski; since 1995, these three offices have been closed and the payer's activities are now concentrated at the office of the Fondation and the Société Généalogique in Rivière-du-Loup.
(e) Jean-Guy Roy, parish priest of the Parish of St-Épiphane, is the president of the payer, the directors of which are Frank Lemieux, Léopold Robichaud, Régis Bernier, Jean Soucy, Marcel Castonguay and the appellant (since 1995).
(f) The payer is operated year-round with an average of two employees and 12 interns.
(g) The appellant has worked sporadically for the payer since 1989.
(h) The appellant is trained as a computer specialist and devoted virtually all his time to checking the files of addresses of potential donors and updating donors' addresses in the Fondation's files.
(i) The appellant also maintained the payer's 12 computers, which were distributed among the various offices and in the rectory of St-Épiphane, as well as conducting the two annual fundraising drives.
(j) The appellant mainly worked at his residence and travelled frequently, notably as Jean-Guy Roy's chauffeur.
(k) Jean-Guy Roy gave general instructions to the appellant, who was entirely free to perform his duties when and as he pleased.
(l) The payer had no control over the appellant's hours of work.
(m) The appellant received from the payer fixed weekly remuneration, allegedly during the periods in issue, which remuneration varied as follows: $680 in 1992, $710 and $745 in 1993, $780 in 1994, $800 in 1995, 1996 and 1997.
(n) The appellant's remuneration was higher than that of the payer's other workers because he was appreciated for his computer skills and for his availability "when he was unemployed".
(o) The appellant received no compensation for the frequent travel he engaged in using his own car or for the use of his residence as an office or for the use of his personal computer and telephone.
(p) The appellant rendered numerous services to the payer outside his alleged periods of work (periods in issue) and did so without pay.
(q) The appellant incurred numerous risks because he provided his own computer, office and car without compensation and often worked without remuneration.
(r) The appellant's alleged periods of work varied greatly from one year to the next and he worked virtually only the minimum number of weeks required to qualify for unemployment/employment insurance benefits each year.
(s) Each time, except in 1994 and 1997, the appellant drew the maximum benefits to which he was entitled.
[5] Through his counsel, the appellant Michel Beaulieu admitted, with explanations to be provided at the hearing, the facts alleged in subparagraphs (a), (b), (d) to (g) and (m) and denied those alleged in subparagraphs (c), (h) to (l) and (n) to (s).
[6] Through her counsel, the appellant Cathia Lepage admitted, with explanations to be provided at the hearing, the facts alleged in subparagraphs (a), (b), (d) to (g) and (m) and denied those alleged in subparagraphs (c), (h) to (l) and (n) to (q).
III- The Law
[7] Definitions from the Employment Insurance Act
"employment"
"employment" means the act of employing or the state of being employed;
"insurable employment"
"insurable employment" has the meaning assigned by section 5;
5.(1) Subject to subsection (2), insurable employment 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;
. . .
[8] The burden of proof is on the appellants.
[9] In Sylvie Desroches v. M.N.R. (A-1470-92), the Federal Court of Appeal stated the function of a 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.
[10] The taxpayer must be given the benefit of any doubt as to interpretation and there is nothing preventing a taxpayer from benefiting from a social measure if the requirements of the Act are met. In Attorney General of Canada v. Ludger Rousselle, a decision dated October 31, 1990 (124 N.R. 339), Hugessen J.A. wrote as follows at pages 340-41:
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. (My emphasis.)
[11] The tests that must be analyzed have been reiterated by the Federal Court of Appeal. In Attorney General of Canada v. Normand Charbonneau, a decision of September 20, 1996 (A-831-95), Décary J.A. wrote as follows at page 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.
[12] Each case stands on its own merits. The appellants must show on a balance of evidence that the Minister's decisions were incorrect.
[13] Pierre Tremblay, Carole Bourgelas, Hélène Laplante, Michel Rancourt, Pierre Bélanger, Jean-Guy Roy, Martine Dionne and the appellants were heard in support of the appeals. Alain Pelletier, the Commission's investigator, was heard for the respondent.
[14] Exhibits A-1 to A-8, A-11 to A-15, A-21, A-23, A-24, A-26, A-29 to A-48 and I-1 to I-12 were entered in the record for the appeals.
Brief Summary of the Evidence
[15] The Fondation Jean-Guy Roy is a non-profit organization which has been working in the community for a number of years. There is not enough room here to describe all the work done by this organization. It is guided in its operations by its president, Father Jean-Guy Roy, of the Parish of St-Épiphane.
[16] The payer, which is especially concerned with the problems of young people in particular, has sponsored a number of work projects for several years in collaboration with various government departments in order to help people enter the job market.
[17] The local Employment Centre worked together with the payer in implementing these programs, which were coordinated by manpower counsellors or program officers from the departments concerned.
[18] For example, the payer ran a crisis line project known as "S.O.S. Jeunesse". Through the local Employment Centre, the payer trained and assigned individuals to answer calls to this line.
[19] Another example was an agreement which the payer had with the Société Généalogique du Québec, to which it transmitted data from marriage registers, and so on. These data were to be gathered from the civil registers of various parishes in order to be computerized.
[20] The payer also financed some of its operations by conducting fundraising drives twice a year. All the payer's projects gave people the opportunity to acquire work habits to enable them to enter the workplace.
[21] The appellants' employment contracts must be analyzed in that context.
[22] The respondent's main argument is that the appellants' records of employment do not reflect the true situation with respect to the periods actually worked, that there was an arrangement between the parties for the sole purpose of enabling the appellants to receive unemployment/employment insurance benefits from year to year and that there was no genuine employer-employee relationship between the appellants and the payer.
Michel Beaulieu's Contract of Employment
[23] This person started with the payer around 1989.
[24] He first agreed to take part in programs of the local Employment Centre which were supposed to enable recipients of benefits from the Ministère de la Sécurité et du Revenu to acquire work habits.
[25] The appellant liked computers. He had ability and had acquired considerable knowledge in that field.
[26] The payer hired the appellant in the early 1990s. He took part in starting up the payer's office and was hired mainly as a computer technician.
[27] As described by Jean-Guy Roy at the hearing, the appellant's role during the years in issue was also to control the work of persons sent to the payer by the local Employment Centre. The appellant could thus receive and interview these persons and recommend one of them to Jean-Guy Roy if he or she was capable of performing the work to be done.
[28] The appellant also had to ensure that the workers were on the job and to act as a kind of liaison officer between the local Employment Centre and the payer's president, Jean-Guy Roy.
[29] The appellant's duties were to take part in conducting the fundraising drives, to ensure the computers were working properly and, accordingly, to assist the other workers in using the computers.
[30] It therefore appears that the allegations in subparagraphs 5(h) and (i) of the Reply to the Notice of Appeal do not completely reflect the appellant's role with the payer.
[31] As to the allegation in subparagraph 5(j) of the Reply to the Notice of Appeal, the appellant did not work at his residence. The appellant's declaration (Exhibit I-4) refers to his work at home. On reading as a whole this declaration dated September 20, 1994, and particularly the last page, it cannot readily be concluded that the appellant always worked at his home between 1992 and 1994, and no conclusion may be drawn for the years following September 20, 1994, that is, 1995, 1996 and 1997.
[32] The evidence revealed that, on certain occasions, the appellant chauffeured and ran errands for Jean-Guy Roy during the periods in issue. However, one must accept the fact that a person in the appellant's situation could not refuse to drive Jean-Guy Roy to any activity requiring the presence of the appellant and Jean-Guy Roy. I did not find the fact that the appellant chauffeured Jean-Guy Roy while unemployed to be of significance given the situation prevailing in that community.
[33] As to the respondent's allegations in subparagraphs 5(k) and (i) of the Reply to the Notice of Appeal, the evidence showed that the appellant had a work schedule to meet (Exhibit A-29). Jean-Guy Roy's testimony revealed how the appellant was subject to the payer's instructions. The appellant definitely had more computer experience than Jean-Guy Roy, but the payer had the power to control the appellant in the work he performed for it. The appellant worked at the office. Jean-Guy Roy was not always present, but the appellant could not be absent from work whenever he wished.
[34] As to the respondent's allegations in subparagraphs 5(m) and (n), it appears that the salary paid to the appellant was not excessive in the payer's view (Exhibit A-43). The respondent contended that the appellant's salary should have been less than that actually paid (Exhibit I-11). However, it seems difficult to conclude that the appellant was simply acting as a programmer as the respondent contends. It cannot be forgotten that the appellant had been with the payer for approximately 10 years and, although his salary might at first blush seem higher than that of other employees, it would seem that the payer deemed the salary acceptable in the appellant's particular circumstances.
[35] The appellant's progress over the years was surely a factor on which the payer relied as regards the appellant's remuneration. The appellant's varied duties could lead one to conclude that his salary was not out of line with what might have been paid in the industry. It cannot readily be concluded that the payer fixed an excessively high salary over the years.
[36] As to the allegations in subparagraphs 5(o), (p) and (q), the evidence showed that the appellant alone was responsible for his travelling and other expenses (Exhibit A-43). Jean-Guy Roy stated that the appellant was sent to Rimouski once. The evidence at the hearing did not show that the appellant made numerous trips as the respondent contends.
[37] The appellant undeniably rendered services without pay during his periods of unemployment. However, it is hard to criticize a person, even one drawing unemployment insurance benefits, for doing volunteer work for the organization that helped him enter the work force. According to Jean-Guy Roy, the appellant was laid off because the payer [TRANSLATION] "could not afford to keep on a specialist like him". The appellant had thus become an important person for the payer's organization over the years. As the payer hired him every year, however, it cannot be concluded that the appellant was employed only for the minimum number of weeks required to qualify for unemployment insurance benefits (Exhibit A-48). The hiring of the appellant must also have depended on the payer's ability to pay. A non-profit corporation is always in a delicate situation when it comes to hiring, and/or terminating the employment of, an employee such as the appellant.
[38] I found the appellant to be a credible witness, even though certain contradictions were pointed out in relation to his declarations (Exhibits I-4 and I-5), which declarations had, however, not been adopted by him.
[39] Ultimately, the appellant appears to have successfully entered the job market since he now holds employment with a different payer.
[40] I am satisfied that the appellant showed on a balance of evidence that there was a contract of service between the payer and him during the periods in issue.
Cathia Lepage's Contract of Employment
[41] The appellant Lepage explained that, in 1992, she first took part in a youth volunteer project intended to enable her to enter the workplace. She had taken a basic computer course.
[42] She explained the work she did for the payer. She worked on the payer's S.O.S. Jeunesse crisis line project (Exhibit A-15).
[43] The payer prepared a work schedule for the appellant (Exhibit A-30). She completed a statistics sheet (Exhibit A-47) when telephone calls were received. This enabled the payer to determine the number of calls and the type of problems described by the callers. These documents were submitted to the payer at the end of the week.
[44] When working on the crisis line, during less busy periods she entered data on weddings and so on in the computers.
[45] She said that she had worked at the crisis line office, which was located at the Rivière-du-Loup Hospital. She also worked occasionally at home, where she had crisis line calls forwarded. She could not say how much time she worked at the office or at home from January to March 1993.
[46] She admitted that she had given her declaration to the Commission's investigator (Exhibit I-1) and she adopted it in its entirety.
[47] She admitted in that declaration that she had done work without pay. As in Michel Beaulieu's case, it is hard to criticize a person for doing volunteer work for a non-profit foundation which has helped that person enter the job market.
[48] I found this person to be honest and she answered the questions asked to the best of her knowledge and ability. Her credibility was not questioned. It is true that the appellant does not appear on the payroll. Jean-Guy Roy testified that he paid her directly and that he considered this payment as a donation to the foundation which he directed. This is not a very common way to pay an employee's salary. However, I do not believe this employee can be held responsible for the payer's method of payment. The employee was not responsible for bookkeeping and I did not detect any complicity between the appellant and the payer.
Final Conclusion
[49] This case concerns two appellants who had not previously had a great deal of success in the labour market.
[50] The payer undoubtedly carried out its mission as best it could.
[51] The appellants appear to have successfully entered the workplace and the local Employment Centre's programs definitely helped them over the long term.
[52] During the hearings, I did not sense that there was an arrangement between the parties for the sole purpose of enabling the appellants to receive unemployment/employment insurance benefits.
[53] This Court did not accept the appellants' other arguments respecting res judicata, the Kienapple decision and abuse of process.
[54] The decision herein applies solely to the appellants and only for the periods in issue and shall not apply to other periods of employment of the appellants or of other persons hired by the payer, as the respondent retains the right to investigate all periods of employment which it disputes.
V- Decision
[55] The appeals are allowed and the Minister's decisions are vacated.
Signed at Dorval, Quebec, on this 29th day of October 1999.
"S. Cuddihy"
D.J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 31st day of August 2000.
Erich Klein, Revisor