Tax Court of Canada Judgments

Date: 19980306

Dockets: 96-223-UI; 96-627-UI; 96-628-UI; 96-629-UI; 96-630-UI; 96-631-UI; 96-632-UI; 96-634-UI

BETWEEN:

THOMAS D. MACINTYRE, MICHAEL JAMIESON, FREDERICK CHARLES CAMPBELL, CHARLES BOURGEOIS, DERRICK T. BOURGEOIS, CAROL COMER, ROLAND WILLIAM BRESSON, EARL MACDONALD,

Appellants,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Margeson, J.T.C.C.

Evidence

[1] It was agreed at the outset that these cases would be heard on common evidence.

[2]The issue, in each case, was whether or not the Appellant was engaged in insurable employment under the Unemployment Insurance Act, (the Act) during the periods of time set out in their Records of Employment, (R.O.E.s).

[3]The trials commenced in Sydney, Nova Scotia on June 4, 1997 for five days, were continued again on December 8, 1997 and concluded on December 12, 1997.

[4]Between those dates there was a change of solicitor for all Appellants with the exception of Earl MacDonald and Carol Comer.

[5]Earl MacDonald proceeded with the second phase of the trial by acting for himself and Carol Comer neither appeared nor was represented by counsel during this portion of the trial.

[6] An application for an order for change of solicitor was granted by the Court after hearing representations by the original counsel of record, new counsel of record, counsel for the Respondent and any Appellant who wished to make representations to the Court on this issue.

[7]The Court was satisfied that the matters could proceed with new counsel of record, with the Appellant Earl MacDonald acting for himself and that each Appellant would have ample opportunity to present any relevant facts and make any appropriate argument.

Evidence

[8] Charles Bourgeois testified that he worked for the “Payor” at “The Main Event” Beverage Room (The Main Event), during the relevant period. He started on September 27, 1993 and was laid off on December 4, 1993.

[9] He was hired by Kenny Tracey, the owner. The lounge was busier in the summer. There were three employees. The Appellant was hired as a cook. He knew Ken Tracey while he was growing up and through participation in sports in Glace Bay, Nova Scotia. Mr. Tracey was familiar with the work capabilities of this Appellant.

[10]He said that he worked 10:00 a.m. to 7:00 p.m., six days per week, Monday to Friday. These work days were set by Mr. Tracey without any input by the Appellant. The Appellant said: “I was comfortable (with the hours)”.

[11]The Payor hired someone else to work in the kitchen when he was laid off on December 4, 1993, “to get the kitchen going better”. At that time there were only about four to ten customers a day who required the services of the kitchen during the week and about 80 customers during the weekend.

[12]The Appellant still visits the workplace about once a month but does not work there. He said that business is slower now.

[13]No one was interviewed for the job before the Appellant was hired. The employer never complained about his work. They discussed the menu and the employer told him “to try different things (on the menu). He wanted more business”. The Appellant was on duty in the kitchen by himself and Ken Tracey would do the serving at lunch and supper. When Mr. Tracey was not there, Frederick Campbell was his supervisor.

[14]The Appellant was paid $320 per week. This salary was discussed when he was hired and was based upon what the Appellant wanted, about $7 per hour or $320 per week.

[15]He was paid once per week in cash. It was given to him in an envelope. Deductions were made for Unemployment Insurance and Canada Pension from his remuneration. He knew this when he received his separation slip but did not know what the deductions were. His take home pay was about $250 per week. He did not believe that it was strange to receive cash. He worked for others and was paid in cash.

[16]He said that Ken Tracey or Fred Campbell kept a record of his hours of work. The Appellant was there every day from 10:00 a.m. to 7:00 p.m. He did not know if Mr. Tracey hired anyone else after he was discharged but he was the only cook there in 1993.

[17]At first he said that “he would take me back after unemployment insurance was over” and then he said, “he brought me back after my unemployment insurance was over”. The Appellant knew that he was eligible for unemployment insurance.

[18]He disagreed with paragraph 5(aa) in the Reply to Notice of Appeal (Reply), the allegation that he was removed from the payroll once he had gained enough weeks to obtain unemployment insurance benefits and said that Mr. Tracey wanted to try someone else. He also disagreed with the assumptions contained in (bb) and (cc) of the Reply that he worked there after he was removed from the payroll and was in receipt of unemployment insurance benefits.

[19]When he was hired he was not told that it was for a set period of time and the only notice that he received about being laid off was that he was told that if things did not pick up, Mr. Tracey would hire someone else.

[20]The Appellant returned to the same place of employment in 1994, after his unemployment insurance benefits ran out, for a few months and then left again. He went back on unemployment insurance and then went to the University College of Cape Breton until the present time.

[21]During the time that he allegedly worked for the Payor, he provided none of his own tools. If there was a problem he went to Mr. Tracey or to Mr. Campbell. Sometimes he was asked to stay after 7:00 p.m. He felt obligated to put in the hours. He was paid the “regular” rate.

[22]The other workers were bartenders or waiters. He had to take out the garbage and wash the dishes. He did not believe that any special treatment was given to any of the employees.

[23]Mr. Fred Campbell was there all the time that the Appellant was there. He was in a supervisory position.

[24]When the Appellant was not employed by the Payor he would do errands for him as a favour, such as going to the liquor store. There was a possibility that he would be re-hired. He had no role in the decision-making for the bar, only for the kitchen.

[25]In cross-examination he confirmed that he worked at The Main Event and in the kitchen. The upstairs could seat approximately 150 persons and it opened at 11:00 a.m. There was one menu for both places.

[26]The Appellant confirmed that under the Nova Scotia Liquor Laws, the kitchen had to be open for five hours per day. Jiggers Dining Room and Lounge (Jiggers), was upstairs. Sometimes he prepared food for Jiggers and “ran it up”.

[27]The Main Event was open seven days a week, the same hours each day until 2:00 a.m. The weekends were busier and most business was at night. There were two to three waiters on Friday at lunch. Jiggers had only one waiter most of the time at night. On Friday and Saturday when there was a dance, there was a doorman.

[28]Sometimes a doorman was there on Thursday as well if they were busy. He saw some waiters upstairs when it was busy. When it was slow there were only three workers including the upstairs and downstairs, himself and two bartenders. Extra staff was needed for Christmas parties. New Year’s Eve was one of the busiest nights of the year.

[29]He was paid on the basis of $7 per hour, $320 a week. He did not know who was there before he was employed from September 27, 1993 to December 4, 1993 although he knew that food was served. He denied telling the appeals officer that he worked with anyone other than Fred Campbell and Ken Tracey. They could handle the business even at night.

[30]He then said that they never needed two or three waiters. First he had said that he had worked with Derrick Bourgeois and then he said that he had not. He also said that he sometimes stayed late but could not say who would be there.

[31]This evidence was somewhat inconsistent, the witness was uncertain as to his facts and sometimes his answers were hesitant.

[32]The witness confirmed that when he was hired on September 27, 1993 he had just exhausted his unemployment insurance claim and then received exactly ten weeks’ work which was just enough to qualify him for unemployment insurance again. He presumed that he was not hired in the summer because someone else was there.

[33]Sometimes this Appellant worked longer than 54 hours per week. He worked extra hours but was not paid for them. He then said that he was paid approximately $7 per hour. Then he said that he was mostly paid $320 a week and was paid a few hours extra.

[34]He was not aware that when he filed his unemployment insurance claim he had said that he was not paid for extra hours. His Record of Employment, (R.O.E.), Exhibit R-1 was admitted into evidence by consent. There was no indication of overtime on it.

[35]During his work period he lived at home and paid room and board of approximately $50 per week. He paid $80 per month for gas for his car but had no other expenses and could not say exactly how he spent the remainder of his pay.

[36]His application for benefits was admitted by consent as Exhibit R-2. He knew that it was important to tell the truth in it. It indicated that he had worked 40 hours a week for $320. Yet he had said in Court that he had worked 54 hours. His answer was that “that was what he had assumed he was working” (when he filled it out several days after his work ceased). Then he said, “that was approximately what I was working”.

[37]He admitted that when he was hired on September 24, 1994 he had collected all of his unemployment insurance benefits, went back on the payroll immediately and received 10 weeks of work, being the exact number of hours required to qualify again for unemployment insurance benefits.

[38]His evidence about why he was laid off was confusing and contradictory. His reasons included, “he wanted to work, Mr. Tracey wanted to try someone else, just a coincidence and must have been.”

[39]He denied that he worked there when his brother was there. He denied that he worked there between March 29, 1993 and June 1993 even if Carol Comer had said that or between July 3, 1993 and September 4, 1993 even if Earl MacDonald had said that. They were wrong. He denied having indicated to anyone from Employment and Immigration Canada that he worked “under the table” or that “anything was going on up there”.

[40]The Appellant said that he was supervised by Fred Campbell in 1993 but could not say about 1994. He was asked who he worked with in 1994 and out of the 14 names suggested to him, he identified Bill Slade, Bill Bresson and Greg Comer as co-workers.

[41]He did not know who cleaned the bar after he closed. He kept no record of his hours of work. He did not claim all the hours that he worked.

[42]In 1993 the Appellant opened the business and when he left at 7:00 p.m. Mr. Campbell relieved him. Bill Slade or Mr. Tracey were the supervisors but they had no set hours. Mr. Campbell and Mr. Slade were bartenders downstairs but he did not know who was upstairs. In 1993 only Ken Tracey and Fred Campbell worked the same times as he did.

[43]In re-direct he said that he had other expenses such as clothes and support of his two daughters, if he had extra money. He worked extra hours, approximately four times a month for about an hour.

[44] Fred Campbell testified that he was a bartender between August 2, 1993 and December 18, 1993 at The Main Event. He now works 40 hours a week under a new owner but in 1993 he was there only — “off and on”.

[45]Mr. Tracey approached him to work there as a bartender and take over the kitchen. He needed someone he could trust because there had been discrepancies. He was approached in mid-June and took over in August. He had former experience as a waiter. He was paid $10 an hour for 50 hours a week. He did not consider these wages as excessive and they were less than he had received in construction work. He was not working at the time. He had known Mr. Tracey for 25 years.

[46]He disagreed that he was the supervisor for Charles Bourgeois as he was not a cook and only took money for the kitchen. Charles Bourgeois looked after the kitchen and it was to Mr. Tracey that Mr. Campbell answered. Mr. Tracey came in the morning and left at noon and returned at about 7:00 p.m.

[47]This witness worked the day shift but occasionally he worked the night shift as well. He reported to Mr. Tracey daily and both he and Mr. Tracey set a schedule. He received his pay in a brown envelope and at times there were deductions taken from it. He did not keep the envelopes nor did he do so when he worked with “Pembroke”. He disagreed with the negative allegations in the Reply, he was laid off because things were slow but he did know that someone was there after he was laid off.

[48]If he worked extra hours he received time off. No written record was kept of his hours. Mr. Tracey knew that he was there. He admitted that when he worked at “Pembroke”, the foreman kept a record of his hours. Mr. Tracey trusted him.

[49]In 1995 he went back to The Main Event in late January or February. He was paid $250 a week as Mr. Tracey could not afford $10 per hour at that time. He was paid by cheque.

[50]He denied that he and Mr. Tracey created an artificial arrangement. There was a verbal agreement for the work and he was always paid. Mr. Tracey directed him for the first week and after that he knew what to do himself. If his work was not satisfactory he expected that he would be told.

[51]He did not work there in 1994. He was never advised that he would get enough work to qualify for unemployment insurance and then be laid off.

[52]In cross-examination he said that the problem was only with respect to The Main Event. Himself or Ken Tracey looked after the slips. Charles Bourgeois ordered the supplies. Food sales went through the kitchen and liquor sales went through the bar.

[53]This witness said that he knew a Tom MacIntyre who was a janitor at the premises sometime but not while this witness was working there.

[54]This witness worked from 10:00 a.m. to 7:00 p.m. daily, Monday to Saturday. He did not come in every morning at 10:00 a.m. The odd time he stayed later than 7:00 p.m. He said that he was paid $10 per hour based on a 40-hour week. Then the Payor wanted him to work Saturday as well. Therefore it usually amounted to 50 hours per week.

[55]He was unaware of who was up at Jiggers. He never went up there. He did not believe that they were open from 11:00 a.m. to 2:00 p.m. every day. They arranged their own hours. He did go up to Jiggers before he was employed but could not remember who was working there. Mr. Tracey did not give him names of any “problem workers”. The witness was only responsible for money during his shift.

[56]His evidence was that only 85 persons could be seated at The Main Event and not 150. There were 15 to 16 tables. Tavern food was served and he could not remember if the specials were advertised in a newspaper.

[57]One person could handle the liquor sales, “it was not jam packed every day” but Friday and Saturday nights were busy. There were never two to three waiters there. Very seldom did anyone come down from Jiggers to get food orders. He did not know who he replaced.

[58]With respect to the amount of his deductions he simply said that he never gave them much thought. He trusted Mr. Tracey. Sometimes these were indicated on his envelopes.

[59]He worked 20 weeks and then was laid off. He returned to work in January of 1995. At the end of this work period he was told that Mr. Tracey could not afford him.

[60]When he returned to work in January, the duties had changed. He admitted that he needed seven weeks more to qualify for unemployment insurance benefits and that is what he received. He could not say why that was so and he said, “you will have to ask Mr. Tracey, I did not ask him.”

[61]He could not say if there was another cook other than Mr. Charles Bourgeois. Mr. Bourgeois left before he did. He did not know if they were still serving food at that time.

[62]Exhibit R-3, the R.O.E. of this Appellant was admitted into evidence by consent. It indicated that he was an assistant manager. He agreed that he was not. He knew that a cleaner came in every day but he could not say who that cleaner was.

[63]He could not say who worked upstairs. He acknowledged that he told the appeals officer that Derrick was hired “in his place” in spite of the fact that the Appellant was discharged because the employer could not afford him and there was a shortage of work.

[64]He said that throughout the whole year that he was there they could get by with one person. Between August and December 1993 only one person was needed during the day shift and he confirmed that he did not work there in 1994. He further confirmed that Mr. Bourgeois was wrong if he had said that he did. Further, he said that if Earl MacDonald said that they worked there at the same time, he was wrong.

[65]He did not work with Thomas MacIntyre, Michael Jamieson or Carol Comer who were also appellants.

[66]He is presently working there for $5.50 an hour as a bartender because there is no work in Glace Bay. He admitted that a record of his hours is kept now. When he received exactly 20 weeks, that was a coincidence. When he received the seven weeks between December of 1993 and January of 1994, it was also a coincidence. He would not be upset if someone else were hired after he was laid off.

[67]Following questions by the Court he said that he worked and he was paid. There was no plan to work just long enough to receive unemployment insurance and be laid off. He did not know who worked at Jiggers and only he, Mr. Charles Bourgeois and Mr. Tracey were working there when he was there.

[68] He was shown his R.O.E., Exhibit A-4, which showed $280 a week as his pay. He said that it was correct and he worked 40 hours a week for $7 per hour. He did not keep a record of his hours. Mr. Tracey knew his schedule and therefore knew how many hours he worked.

[69] After he was laid off he continued to do errands for Mr. Tracey without pay. Sometimes he might refuse to do an errand for Mr. Tracey, if he, the Appellant, was drinking or had something else to do.

[70] His claim was extended because he took a Stationary Engineer’s course. Then he found that he could not handle it and dropped out in February or March when he received unemployment insurance benefits again. He hung around The Main Event and was hired back on May 23, 1994.

[71] This time he did the same job but received $10 per hour because Mr. Tracey felt that he had done a good job. No other reason was given for this raise. He was laid off in August 1994 and he filed for unemployment insurance. He was disappointed but he had no say in this layoff. He applied for unemployment insurance again and he received benefits.

[72] He said that after he was laid off he applied for a car loan and gave false information saying that he was working at The Main Event when he was not. He expected to be called back to work.

[73] After the interview with Mr. O’Connell his benefits were cancelled. He was told that he was “uninsurable”.

[74] He had no records of his work at The Main Event as that was the responsibility of Ken Tracey. He received payment in cash and still does even though he works for another employer now.

[75] He denied that he had participated in any artificial arrangement for unemployment insurance and denied that he was not dealing with the employer at arm’s length.

[76] In cross-examination he said that he worked all day Sunday from 12:00 p.m. to 2:00 a.m., on Monday from 7:00 p.m. to 1:00 a.m., on Wednesday from 7:00 p.m. to 2:00 a.m. and no other hours. This amounted to 33 hours.

[77] He identified his R.O.E. (Exhibit A-4), and it showed that he worked 13 weeks between November 16, 1992 and February 2, 1993 for $280 a week, which at $7 per hour would be 40 hours per week.

[78] He identified his application for unemployment insurance benefits for the year 1994, Exhibit R-17, which showed that he worked 50 hours, 6 days a week for $400 which would be $8 per hour and not $10 per hour as he had indicated in Court. He also admitted that he did not work regular hours although Exhibit R-17 would so indicate.

[79] He said that it was just a coincidence that in 1992 and 1993 he went back on the payroll a short time after exhausting his benefits and received the minimum number of weeks’ employment or close to it and then went on unemployment insurance benefits again. He did not discuss this with Mr. Tracey.

[80] The kitchen was not open on Sunday, Monday, Tuesday or Wednesday at night. He could not say who worked at Jiggers in 1992, 1993 or 1994 when he worked at The Main Event. He said: “I never went up there”. He could not say who was working there when he worked at The Main Event.

[81] He did not know that Fred Campbell had said that he had worked there when the Appellant was there. He reiterated that he worked alone and it did not matter if Fred Campbell was on the payroll or not. He was paid $5.15 an hour as a bartender for one night a week when Mr. Tracey was tending the bar. It was very busy. He admitted that his duties did not change between 1993 and 1994 but he received $3 more per hour.

[82] He said that when he was laid off in February of 1993 it was due to a shortage of work. He did not know that there were allegedly nine waiters there during that period although he did frequent it and knew that there was others working there. He did not ask Mr. Tracey “why”? It is not my position to put someone else out of work. He said: “He earns $400 per week now although he has a lot more duties than he had when he worked at The Main Event for $400 a week. He admitted that no one in The Main Event is earning $10 per hour now.

[83] He did not have a record of his hours and did not “punch a time clock”. He said, “I would imagine that I was paid for all hours that I worked”.

[84] When it was pointed out to him that his evidence in Court as to his rate of pay was different from what he had said in Exhibit R-17, he said, “I don’t know what I was paid.”

[85] Exhibit R-19 was admitted by consent. It was an application for a loan for the Bank of Nova Scotia. It was identified as that of the Appellant. He did not believe that it was necessary to give correct information in his application. Where he indicated that he was making $2,000 per month, this was false. His clear indication was that the bank representative went along with this false information so that he would not need a co-signer.

[86] In re-direct he said that if he had not received all of his pay he would have taken it up with Mr. Tracey. He believed that it was more standard to work 40 hours per week and that is why he put it in when he did.

[87] He said that the car dealer’s agent knew about the false information in the application and encouraged him to put it in. The R.O.E.s were correct.

[88] Fred Campbell was recalled with the consent of both counsel and his R.O.E. from Glace Bay Picture Inc. was placed into evidence by consent as Exhibit A-6, to confirm this witnesses’ testimony earlier given that he had worked there for five weeks in 1994.

[89] Exhibit A-7 was also admitted into evidence. It was an R.O.E. from the Little Carter Beverage Room but was not relevant to the periods under appeal here.

[90] The witness agreed that he probably said that he had worked with Michael Jamieson but that probably was due to the question that was asked about a particular year. It was pointed out to him that when he was earlier questioned that he had not mentioned that he had Exhibits A-6 and A-7 in his possession and he said that they had been with his girlfriend.

[91] In 1995 he received the minimum number of weeks to qualify for unemployment insurance benefits, 12 weeks but he also took a $200 cut in wages for 1993. In 1995 he was only a bartender and was not looking after the kitchen. He insisted that Charles Bourgeois was there every day that he was in spite of the suggestion that the record showed that Mr. Bourgeois was not on the payroll at that time.

[92] Thomas D. MacIntyre testified that he was employed at The Main Event from May 12, 1993 to July 24, 1993 and from May 2, 1994 to July 30, 1994 as a janitor. He went in to work after 3:00 a.m. and worked until 9:00 a.m., seven days per week. He knew Ken Tracey through sports and approached him for the job. Mr. Tracey set the days and hours of work. He was needed every day. No specific timeframe was set and he was told that he would receive $7.50 per hour. He worked five hours at the beginning of the week and worked six hours for the weekends as well. The Appellant provided only his rubber gloves.

[93] He then said that he was paid for 40 hours. When he went in there was no one there. He had his own key. His instructions were left for him by way of notes left in the utility room by Mr. Tracey. Mr. Tracey “wanted it ship shape and would let me know”. One time he overlooked the ceiling fan and Mr. Tracey brought it to his attention.

[94] He was laid off in 1993. He had unemployment insurance benefits before and after this layoff. He could not say if his claim had run out. He was laid off due to a lack of work. (He then speculated that Mr. Tracey may have started doing the work himself).

[95] He was paid in cash, weekly, in 1993 and by cheque in 1994. He received his pay in an envelope. When he received his pay by cheque the deductions were listed on a “cheque stub”. He received $300 gross or $230 to $250 net. He received the same amount each week.

[96] He received unemployment insurance benefits for a full term in 1993. He looked for other work and could find none, even though he checked with Mr. Tracey periodically. He inquired of Ron May Pontiac Ltd. about work, checked the telephone job line and the bulletin board.

[97] In 1994 he approached Mr. Tracey and said that he would take almost anything. He was hired about a month or two thereafter.

[98] The terms and conditions of his work were the same as before and so was his pay. He was now paid by cheque through “Celtic Charters Bank Account”.

[99] He denied that he had participated in an artificial arrangement to gain unemployment insurance benefits or that he worked without pay after he was laid off. In 1994 he worked enough weeks to gain benefits again.

[100] He worked with the new owner for about five to six months in 1994 and was laid off again.

[101] During the period in question here he worked alone and did not know how the business progressed upstairs. His R.O.E. was in error when it said that he was a waiter. It was given to him by Mr. Tracey. He said that the bar closed at 2:00 a.m.

[102] In cross-examination he said that he could not explain why he wrote in “waiter” when he was actually a maintenance worker. He opined that he was just following what was on the R.O.E.. When questioned whether he had the R.O.E. with him at the time that he completed the application for unemployment insurance benefits, he could not say. This was Exhibit R-4, admitted by consent. When showed Exhibits R-4 and R-5 together he said that he did not have Exhibit R-5 with him when he completed Exhibit R-4.

[103] He was also asked why he wrote in $300 as his salary instead of $320. He responded that “he had a lot of things going on in his life and he may not have had his pay stub with him”. He could not explain why he wrote in “five days a week” instead of seven days a week as he had testified.

[104] He agreed that he worked the minimum number of weeks in 1992, 1993 and 1994 and then went on unemployment insurance. This was a coincidence. He did not know if he approached Mr. Tracey in 1992 or 1993 about work and when he went back in 1994, after he had approached Mr. Tracey, this was just a coincidence.

[105] He did not know who was doing the cleaning after he was laid off. He did not ask. He was given no notice that he would be laid off. He heard no one cleaning up at Jiggers.

[106] He identified Exhibit R-6 (his application for benefits in 1994) and Exhibit R-7 (his R.O.E. for 1994). It was pointed out to him that Exhibit R-6 indicated that he worked five days per week and not seven. He said: “I don’t know why I wrote that in there”.

[107] He did not know if any others worked without pay but he did not.

[108] In 1995 he returned as a doorman and worked seven days per week. He was paid on an hourly basis. He always worked 40 hours. He did not know if the $300 that he earned during the period in question included vacation pay (but the application for unemployment insurance benefits indicated that he received none). His pay cheques had deductions from it. He had no discussions with Mr. Casey or anyone else in 1993 or 1994 as to how many weeks he needed to qualify for unemployment insurance benefits.

[109] Mr. Earl MacDonald testified that he was employed in 1993 for a while, in 1994 for a while and in 1995 part-time, then full-time. He is now employed full-time by Michael Sparow.

[110] In 1993 Ken Tracey hired him. He was released from his employment in Glace Bay and “went to see Kenny”. There was not much going on. Jiggers was open from 3:00 p.m. to 11:00 p.m. and it took in about $150 on weekends.

[111] He said that he did not bring his paper with him but that he was employed until August of 1993. He was expecting to be laid-off but hoped to “get 10 weeks in”.

[112] Ken Tracey told him that he could not afford to keep him on. The Appellant was glad to have enough weeks to be eligible for unemployment insurance benefits. After he left Jiggers, “Kenny was there”. The hours may have been reduced to five hours. He could see that Kenny did not need him. Kenny said that they would wait and see if they could make a go of it. He thought that they might attract some of the patrons of the “Albion Club”. The Appellant talked to some of them but they found that it was too far away and they did not like the stairs.

[113] He worked daily from 3:00 p.m. to 11:00 p.m., Monday to Friday and no one else worked there with him. Sometimes it was open Saturday and Sunday but he saw no other employees there. He worked June 28, 1993 to September 4, 1993. He reported to Mr. Tracey.

[114] There was nothing for the customers to do. Ken Tracey decided to bring in a pool table but the novelty wore off. Then the Appellant brought in a 25-inch T.V. from home.

[115] The Appellant was paid $7 per hour for 40 hours per week for a total of $280 a week. He received cash in an envelope. The deductions were written on the envelope. He also took advances from the cash and these were deducted from his pay.

[116] It did not work out the way that they contemplated even though the Appellant said that “he started getting people to come in. I told Mr. Tracey not to forget his “buddy” when things got better.”

[117] After he was laid-off he did not work without pay but did pick up liquor for Mr. Tracey quite regularly as a favour. He was paid for gas. He was “hanging around there”.

[118] In 1994 after his unemployment insurance benefits ran out he put more pressure on Ken Tracey and was hired again. Things seemed to be a little better up to Christmas time. He was paid $10 per hour this time after he asked for it.

[119] He never went down to The Main Event and if someone wanted something to eat, Carol Comer would bring it up. He just found out what her name was in Court the day before his testimony commenced.

[120] A few times he stayed late but was not paid. Sometimes he also left early without telling Ken Tracey. He never worked on the bar without pay.

[121] He would not agree that his remuneration was excessive. He said “I was worth it”.

[122] By now business started slowing down. They were hurt by the ball strike and the hockey strike. He kept no record of his hours of work. Sometimes he locked up at 10:00 p.m. He did not always work 40 hours but Ken Tracey thought that he did.

[123] He denied the allegations contained in paragraphs 6(x)(g) and (aa) of the Reply, that he worked without remuneration at the bar, that he worked while on unemployment insurance or that he participated in any artificial arrangement to secure unemployment insurance benefits.

[124] In 1993 he received 10 weeks of work. There was no agreement as to how long he would work. He expected to be on long term. In 1994 he had enough weeks to start another claim.

[125] He had to answer to Ken Tracey and could be discharged by him. He was taken back on at Jiggers, part-time at first and then full-time. “Things are great there now”.

[126] He was paid $5.15 per hour in 1995. He is now on disability but has been told that his job was still there for him.

[127] In cross-examination he said that he visited both Jiggers and The Main Event quite frequently when he was not working there. The lounge took in only $23 to $25 a day for sales, Monday to Wednesday, from 3:00 to 11:00 p.m. On Thursday and Friday it was a little better, probably $130 to $140 for each day. Sometimes Jiggers was open on Sundays and sometimes it was not.

[128] He did not know who worked in The Main Event except Carol Comer who brought food upstairs. He never went downstairs. “The stairs were too tough and it was too noisy”.

[129] He could not say if he was working at the same time as Mr. Campbell. He admitted that Ken Tracey helped him out by giving him work and that he presumed that he was trying to help someone else but it was not a plan.

[130] Everyone knew that 10 weeks were required to obtain unemployment insurance benefits but he could not say if it was a coincidence that he received only 10 weeks.

[131] He admitted that he had exhausted his claim in 1994, did nothing for two months and then went back on the payroll on August 15. He was just hanging around the bar doing errands and asked Ken Tracey to give him a little more “work” to catch up on his bills and he did.

[132] He identified Exhibit R-8 which was a loan application signed by him in 1994. He agreed that the information contained therein was different from his testimony in Court. He lied to get the loan. He was not a manager. He asked Ken Tracey to confirm this information to the bank and as a result he obtained the loan.

[133] He identified Exhibits R-9, R-10 and R-11 which were his R.O.E.s for 1993 and 1994. He did not know what was on Exhibit R-9. He could not explain the changes made in the records regarding the dates of his employment.

[134] He was asked why Exhibits R-13 and R-9 showed his weekly earnings as $300 while his testimony in Court was that he earned $280 a week. His response was that that is what he thought the document showed ($280 a week).

[135] Exhibit R-14 showed that he was paid $7.50 per hour. He said that he completed this document closer to the time that he was working. The rate of pay may have been on his pay envelope.

[136] He admitted that Mr. Tracey did not make good business decisions but he helped everyone he could. He did not know how much money was taken in by the business each day in 1994 when he was being paid $10 per hour but said that it did not take in enough to pay him in 1993, possibly 1994.

[137] Although he admitted that he would have taken $5.15 per hour he still asked for as much as he could get and never said that he would take less, even though he was laid off and someone else was hired in his place.

[138] He believed that Carol Comer was still in the kitchen when he left and she was the only other worker that he could say for certain worked there when he did.

[139] After the claim in question was voided, he was hired on part-time by the new owner and then full-time. He was paid $5.15 per hour part-time and $5.50 per hour when on full-time.

[140] He indicated that the Canadian Legions in the area paid $10 per hour. Mr. Tracey was paying him $5.15 per hour and when he asked for a little more, “he came up with $10 per hour”.

[141] He admitted that when he completed Exhibit R-8 he put in the figure of $1,700 as gross monthly income because that was the amount that he needed to obtain the loan. The $300 expense item was what he paid for room and board when he was working full-time. When he was on unemployment insurance he only paid $75 out of every cheque, every two weeks.

[142] When asked why he would lie to the Bank of Nova Scotia, he said that it was a matter of money but he would not lie in Court. He had no record to prove that he was even paid in 1993 and 1994. He may have been wrong when he earlier testified as to when Carol Comer brought food up to Jiggers but she was working there when he was at Jiggers.

[143] He admitted that he may have been working without pay before he went on the payroll on June 28, 1993. He was getting the bar ready. On occasions, before he went on the payroll, he performed the same tasks as he did when he was working there but he did not do these tasks after he had been on the payroll and was laid-off.

[144] In re-direct he said that he was not receiving unemployment insurance benefits when he was working for nothing.

[145] Derrick Thomas Bourgeois testified that he was employed at The Main Event between December 13, 1993 and April 30, 1994. He had worked at various jobs previously and had occasionally drawn unemployment insurance benefits. He drew unemployment insurance benefits prior to being hired by The Main Event but his claim had not expired by the time he was hired. There were about four weeks remaining on his claim but Mr. Tracey had no knowledge of it.

[146] Ken Tracey was the owner, he decided when the Appellant was to work. He did not work at Jiggers and none of the staff worked at both places. He was paid $5.15 per hour. This was decided by Mr. Tracey as well as when the Appellant worked, when he was laid-off and when he was re-hired. He was a bartender, had no tools of his own, took no part in decision-making and owned no shares in the business. He had no discussions with Mr. Tracey about working and claiming unemployment insurance benefits as well.

[147] He identified his R.O.E., Exhibit A-1 and said that it was completed by Ken Tracey. He was paid $200 per week and worked for 20 weeks. He was let go by Mr. Tracey who told him that it was not busy enough. He identified Exhibits A-1, his R.O.E.; Exhibit A-2, the information sheet completed by him, and Exhibit A-3, the report of his interview with James O’Connell.

[148] The Appellant said that he was nervous when he signed it and was told to sign it by Mr. O’Connell. “He flashed his badge”, according to the Appellant and the Appellant was asked leading questions. The Appellant could not say if he read it before signing it. He did admit having received unemployment insurance benefits while he was working.

[149] He admitted that he did give false information to the Unemployment Insurance Office about when he had worked and that he was trying to conceal the fact that he had improperly received unemployment insurance benefits.

[150] He worked as a bartender and not a bouncer. Ken Tracey was in charge of the bar. The Appellant was paid cash. This is not unusual. He did not suggest that he be laid off after obtaining 20 weeks of work. He had no indication that he was going to be laid off and would have gone back had he been asked.

[151] He now works for another owner at The Main Event for $5.50 per hour. This is what is paid in the industry.

[152] Some times there were extra people working when there were specials. His R.O.E. was accurate. He kept no record of his hours and he assumed that Mr. Tracey did. He may have worked an extra hour or so.

[153] In cross-examination he said that The Main Event and Jiggers were open 11:00 a.m. to 2:00 a.m. all year round, seven days per week in 1994 and there was always someone upstairs. The kitchen was open every day but he could not remember who the cook was, but said that it was a female and she also served the meals. The odd times he would serve the meals. He then said that there were never several other people working there at the same time as he was.

[154] He was shown Exhibit A-3 and reminded that he had said in it that he had worked with his brother, Bill Bresson and Wally Corbett. He said that this was not correct and he did not know why he had given those names.

[155] It was pointed out to him that in the questionnaire he had described himself as a waiter. He then assumed that he was both a waiter and a bartender and to him this meant the same thing. (This evidence was inconsistent with earlier testimony). He then said that he did not work with Bill Bresson but did work with his brother, Charles Bourgeois. It was pointed out that Charles Bourgeois worked up to December 4 and if the Appellant worked there during that time it was while he was on unemployment insurance benefits. He agreed that that was correct.

[156] He said that he was paid cash every Friday but in Exhibit A-3 he had said that he was paid by cheque. His explanation was that he was always used to being paid by cheque and that is why he said what he did.

[157] He did not know that two others were hired to do his work after he was laid off. He said that Mr. Tracey ran it after he (the Appellant) was laid off and then said that he did not know who ran it. Mr. Tracey was in “pretty well every day and he ordered the stock”.

[158] This Appellant did not recall who was the bartender before him, even though the Appellant was there. He never went upstairs, he never knew what the people were doing there who came down from upstairs nor who was up there even though he worked at The Main Event for 20 weeks. He did not even know who took over from him at night and said that none of the Appellants did.

[159] He did not believe that it was ever busy enough to call in anyone else during the day even though the Reply indicated that in 1993 and 1994 there were one to six employees on the payroll for the whole year.

[160] He said that a male person took over from him but when advised that there was no male on the payroll while he was there, he had no explanation. He admitted that he collected unemployment insurance benefits while he was working. He did not work with his brother during this period and he did not work while he was collecting unemployment insurance, except the period that he had indicated. This was so even though he had indicated in his statement that he had worked with Bill Bresson and his brother who were on the payroll at different times than he was.

[161] He thought that the $5.15 per hour was the going rate although more than that might not be excessive. He believed that Mr. Tracey was unaware of the Appellant receiving unemployment insurance while he was working. He had hoped that Mr. Tracey would keep “track” of his hours and “pay him right”. He trusted him. He would come in during the day and at closing time. He could not say if he reported his income from employment while he was drawing unemployment benefits.

[162] He identified his T1 Return for 1993 and it did not show any income from The Main Event, only unemployment insurance benefits. He received no vacation pay and no overtime pay.

[163] Michael Jamieson said that he worked at The Main Event from November 16, 1992 to February 12, 1993 and from May 23, 1994 to August 13, 1994. Before that he had been working at the Nova Scotia liquor commission store as a casual employee. He worked about 4 to 8 hours a week, except during the Christmas period and during the summer. These hours were reported as he had a claim open.

[164] He asked Mr. Tracey to give him a chance to work at The Main Event. It is only a 10 minute walk from his place. Mr. Tracey was an acquaintance of his through sports. He hired him as a bartender for $7 per hour. Mr. Tracey decided the wage and the time that he was to work. He worked all day Sunday and Monday and on Tuesday nights.

[165] He supplied no tools of his own. He waited on customers, kept the bar tidy and locked up evenings. Mr. Tracey instructed him after he came in. He had to be there all the time. There was no one else there. The Appellant had no input in to who was to be hired or fired. His hours of work were 12:00 p.m. to 1:00 a.m. Sunday; 7:00 p.m. to 1:00 a.m. Monday; and 7:00 p.m. to 1:00 a.m. on Tuesday. He was laid off after 13 to 14 weeks and “imagined” that he needed 10 weeks. He was told that there was a shortage of work but Mr. Tracey told him that he hoped to have more work for him in the future.

[166] There seemed to be a high turnover of staff.

[167] He was shown an R.O.E., Exhibit A-4, which indicated $280 a week as his pay. He said that it was correct and he worked for 40 hours a week at $7 per hour. He did not keep a record of his hours. Mr. Tracey knew his schedule and therefore knew how many hours he worked.

[168] After he was laid off he continued to do errands for Mr. Tracey without pay. Sometimes he might refuse to do an errand, if he (the Appellant) was drinking or had something else to do.

[169] He received most of his claim which was extended because he took a stationary engineer’s course. Then he found that he could not handle it and dropped out in February or March when he received unemployment insurance again. He hung around The Main Event and was hired back on May 23, 1994.

[170] This time he did the same job but received $10 per hour because Mr. Tracey felt that he had done a good job. No other reason was given for this raise. He was laid off in August 1994 and filed for unemployment insurance benefits. He was disappointed about being laid off but had no say in it. He applied for unemployment insurance again and received benefits.

[171] He said that after he was laid off he applied for a car loan and gave false information saying that he was working at The Main Event when he was not. He expected to be called back to work.

[172] After the interview with Mr. O’Connell, his benefits were cancelled. He was told that he was “uninsurable”.

[173] He had no records of his work at The Main Event. “That was the responsibility of Mr. Tracey”, he said. He received payment in cash and still does even though he works for another employer now.

[174] He denied that he had participated in any artificial arrangement for unemployment insurance benefits and denied that he was not dealing with the employer at arm’s length.

[175] In cross-examination he said that he worked all day Sunday from 12:00 p.m. to 2:00 a.m.; on Monday from 7:00 p.m. to 1:00 a.m.; on Tuesday from 7:00 p.m. to 1:00 a.m. and on Wednesday from 7:00 p.m. to 2:00 a.m., and no other hours. This amounted to 33 hours per week.

[176] He identified his R.O.E., Exhibit A-4 and it showed that he worked 13 weeks between November 16, 1992 and February 2, 1993 for $280 a week which, at $7 per hour would be 40 hours per week.

[177] He identified his application for unemployment insurance benefits, for the year 1994, Exhibit R-17, which showed that he worked 50 hours, six days a week for $400 which would be $8 per hour and not $10 per hour as he indicated in Court. He also admitted that he did not work regular hours although Exhibit R-17 would so indicate.

[178] He said that it was just a coincidence that in 1992 and 1993 he went back on the payroll a short time after exhausting his benefits and received the minimum number of weeks’ employment or close to it and then went on unemployment insurance benefits again. He did not discuss this with Mr. Tracey.

[179] The kitchen was not open on Sunday, Monday, Tuesday or Wednesday at night. He could not say who worked at Jiggers in 1992, 1993 or 1994 when he worked at The Main Event. He said: “I never went up there”. He could not say who worked at The Main Event when he did.

[180] He did not know that Fred Campbell had said that he had worked there when the Appellant was there. He reiterated that he worked alone and it did not matter if Fred Campbell was on the payroll or not.

[181] He was paid $5.15 an hour as a bartender for one night a week when Mr. Tracey was tending to the bar. He was not very busy. He admitted that his duties did not change between 1993 and 1994 but he received $3 more per hour. He said that when he was laid off in February 1993 it was due to a shortage of work. He did not know that there were allegedly nine waiters there during that period of time although he did frequent it and knew that there were others working there. He did not ask Mr. Tracey why he was laid off. He said: “It is not my position to put someone else out of work”.

[182] He earns $400 per week now although he has a lot more duties than he had when he worked at The Main Event for $400 a week. He admitted that no one at The Main Event is earning $10 per hour now.

[183] He did not have a record of his hours and did not “punch a time clock”. “I would imagine that I was paid for all hours that I worked,” he said.

[184] When it was pointed out to him that his evidence in Court as to his rate of pay was different from what he said in Exhibit R-17, he said, “I know what I was paid”.

[185] Exhibit R-19 was admitted by consent. It was an application for a loan from the Bank of Nova Scotia. It was identified as that of the Appellant. He did not believe that it was necessary to give correct information in his application where he indicated that he was making $2,000 per month, which was false. His clear indication was that the bank representative went along with this false information so that he would not need a co-signer.

[186] In re-direct he said that if he had not received all of his pay, he would have taken it up with Mr. Tracey.

[187] He believed that it was more standard to work 40 hours per week and that is why he put it in when he did.

[188] He said that the car dealer’s agent knew about the false information in the application and encouraged him to put it in. He said that his R.O.E. was correct.

[189] Fred Campbell was recalled with the consent of both counsel and his R.O.E. from Glace Bay Picture Incorporation was placed into evidence by consent, as Exhibit A-6, to confirm this witnesses’ testimony earlier given that he had worked there for five weeks in 1994.

[190] Exhibit A-7 was also admitted into evidence. It was an R.O.E. from The Little Carter Beverage Room but was not relevant to the periods under appeal here.

[191] This witness agreed that he had probably said that he had worked with Michael Jamieson but that probably was due to the question that was asked about a particular year.

[192] It was pointed out to him that when he was earlier questioned that he had not mentioned that he had Exhibits A-6 and A-7 and he said that they had been with his girlfriend.

[193] In 1995 he received the minimum number of weeks to qualify for unemployment insurance benefits, 12 weeks, but he also took a $200 cut in wages for 1993 and he was only a bartender in 1995. He was not looking after the kitchen.

[194] He insisted that Charles Bourgeois was there every day that he was in spite of the suggestion that the records showed that Mr. Bourgeois was not on the payroll at that time, (the suggestion being that Mr. Bourgeois was working when he was not on the payroll).

[195] Roland William Bresson testified that he last worked at The Main Event in 1993. He worked at other places as a bartender, waiter and bouncer. He was hired by Ken Tracey through a grant with a government agency who was to pay one half of the salary. He was to be bartender and waiter although the “grant” was for a food and beverage manager.

[196] He was trained by Ken Tracey. He worked 40 hours per week although there was no set schedule. He was told by Mr. Tracey when to come in. His rate of pay was $10 per hour and this was set by Ken Tracey. He was unrelated to Mr. Tracey and had no financial interest in the business. He was paid cash.

[197] His R.O.E., Exhibit A-8, showed that he had worked for 14 weeks between March 15, 1993 and June 18, 1993. The grant started on March 15, 1993 and ran for ten weeks. He was kept on for an additional four weeks by Mr. Tracey. He never worked without pay according to him.

[198] He could not remember who he worked with. When asked why, he said: “It was five years ago and with my shift I couldn’t have been working with any person”. He spoke to Jim O’Connell at the Unemployment Insurance Office and was quite surprised by his belligerent, antagonistic manner and by his rapid fire questions. “He more or less told me that I was a liar”. He was not sure as to what his answers were and “he (the Appellant) fired answers back”.

[199] The Appellant said that he was always paid and he always declared his earnings. He signed the summary of notes taken by Mr. O’Connell. The meeting took 25 to 30 minutes and was ended by the Appellant himself.

[200] There was a second meeting, a few weeks later in Mr. O’Connell’s office. “Mr. O’Connell was angry, belligerent and intimidating”. Mr. Thompson from Revenue Canada was also there. The Appellant did not see the notes and he got up and left because the atmosphere was tense. He had no idea what was going on. He had no records of the meeting but believed that he had cooperated as best he could.

[201] He said that his pay “worked out to $480 per week”. He kept track of his hours in his head, more or less. “Sometimes I work 35 to 36 hours and sometimes I work 42 to 43 hours. It averaged out to 40 hours per week”, he said. He was visited occasionally by someone from Manpower.

[202] He indicated that Mr. Tracey left it up to him to work the hours that were required. Mr. Tracey never spoke to him about working more hours or fewer hours. There was no artificial arrangement according to him. It was all set up through the Canada Employment Commission. He did not work for Mr. Tracey when he was drawing unemployment insurance benefits and Canada Employment Commission agreed with the salary and terms.

[203] In cross-examination he was asked about the training that he received and he said that Mr. Tracey “gave him things to do such as how to mix drinks, how to approach people and how to serve drinks.”

[204] According to him the shifts varied. Sometimes they were all day shifts and sometimes they were all night shifts, half of each. He worked six days per week, Monday to Saturday. He worked 7:00 p.m. to 2:00 a.m. for seven hours or 11:00 p.m. to 7:00 p.m. for eight hours. He always worked the full shift. He never left early.

[205] He identified his application for benefits, Exhibit R-20, which showed that he worked six days per week for 40 hours per week. When asked how that could be if he worked a full shift every day, he could not explain except to say that some nights the bar closed early. He reiterated that he never worked without pay. Then he said, “It averaged out to 40 hours”.

[206] He could not say who worked with him or who worked upstairs or downstairs in 1994 or even if it was the same person working in both places. He might see them at “switchover, it might be anyone”.

[207] He was asked why he was kept on after the program expired and he said that there was enough work there for four extra weeks.

[208] He went to the workplace after he had been laid off but was not concerned that others were hired on after he was laid off. He would not say if there was a shortage of work but that was the reason for his lay-off according to his R.O.E..

[209] He denied that he worked there with Derrick Bourgeois in 1994 and he indicated that Mr. Bourgeois was wrong in saying that. He thought that vacation pay was included in his wages but in completing Exhibit R-20 he had indicated that he had received no vacation pay.

[210] He was asked if he reported his “tips” in his 1993 income and he said that he did not know. When shown his T-1 return for that year he admitted that he had declared no “tips”.

[211] It was pointed out to him that in Exhibit R-20 he had indicated that he was a food and beverage manager but in Exhibit R-20 it was a bartender. In Exhibit R-20 he was looking for work as a bartender with 10 years experience and was seeking $7 to $8 per hour. Yet he insisted that $10 was not excessive when he worked for Mr. Tracey, without any further explanation.

[212] In response to a question asked by the Court he said that he could not remember the names of any bartenders, waiters or cleaners who worked at the same time as he did, upstairs or downstairs. He did not think it strange that others were hired instead of him after his lay-off.

[213] His answers in respect to these questions were very tentative to say the least.

[214] Following these questions, in response to a question from his own counsel, he did identify one person as working there when he was there. This person was not an Appellant. He also added that women worked there as well but he could not say who they were.

Argument of the Appellant

[215] Mr. McPhee presented argument on behalf of the Appellants with the exception of Carol Comer and Earl MacDonald.

[216] He opined that this was not a typical case. With respect to the ruling case of Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025, he did not believe that the factors of profit and loss, tools of the trade or integration were important. To him, control was the most important factor as well as the terms and conditions of employment. The Court should look to the “totality test”.

[217] The cases at bar involve the issue of “factual, non-arm’s length”. With respect to the appeal of Michael Jamieson the presumptions contained in paragraphs 6(a) to 6(c) inclusive support the Appellant’s position that he was engaged in insurable employment.

[218] Paragraphs 6(d), (e) and (f) showed that there was a real business in existence.

[219] The evidence showed that three bartenders were not required all the time. Sometimes there were none. Mr. Tracey looked after the business by himself at times. At best, paragraph 6(f) was neutral in effect.

[220] Likewise, paragraphs 6(g) and 6(h) were neutral in effect. These presumptions showed that the workers varied from none to six.

[221] The payroll records were not introduced into evidence and the R.O.E.’s do not show the number of hours of work and thus paragraph 6(i) was essentially refuted.

[222] Paragraph 6(j) supports the Appellant’s position. Paragraphs 6(k) to 6(n) inclusive are not relevant to these appeals.

[223] The presumptions contained in paragraph 6(o) “that the Payor refused to discuss the employment or supply the records have nothing to do with the Appellants. The employers actions were beyond their control.” Paragraphs 6(p) to 6(r) support the Appellant’s position.

[224] Paragraph 6(s) was at best neutral, that the Appellant was paid in cash but in any event it is not determinative of anything. There was nothing wrong with paying someone in cash.

[225] With respect to the non-recording of hours of work by the Appellants or the Payor, they knew roughly how long they had worked by the end of the week. If they were over their hours they would not go in as early. If they were short, they would make up for the hours. Mr. Tracey knew this and if they were short he would not have paid them. Keeping a record of hours is not that significant.

[226] In this case the deviation from the norm was minuscule because the Appellants kept track of their hours and there was never any dispute about it.

[227] The allegations in paragraph 6(u), that the Appellants did not have a set work schedule was refuted by all of the Appellants. It was not unusual to have an irregular work schedule under the circumstances.

[228] It is true that each worker worked long enough to qualify for unemployment insurance benefits but not all of them worked the minimum number of weeks only. In 1993, Michael Jamieson had 13 weeks but needed only 10. In 1994 he had 12 weeks and needed only 10.

[229] These factors should not be important here in deciding the issues.

[230] The Appellant, Michael Jamieson was not on the payroll between February 12, 1993 and May 23, 1994 because he was going to school.

[231] Therefore, paragraph 6(w) is not relevant and paragraph 6(x) was explained. Mr. Tracey took over after Michael Jamieson was laid off.

[232] It may be suspicious that Mr. Jamieson went on the payroll just two weeks after his unemployment insurance expired but he explained that he had gone to school, could not handle it and it was reasonable to go back to work at his former employment.

[233] Even though the Appellant was not on the payroll after August 30, 1994, this is not irregular since he had “more time than he needed and there was no work.”

[234] He had explained that his rate was reduced to $5.15 per hour because he had reduced responsibilities. There was evidence given that this remuneration was not excessive.

[235] When he worked while on unemployment insurance he reported these earnings. There was no evidence that he worked and was not paid. He performed errands without pay but that was because he socialized there. This was not unreasonable under the circumstances.

[236] There was no evidence of an artificial arrangement and indeed the evidence refuted this presumption.

[237] There was no evidence that the relationship was non-arm’s length. Suspicions do not make it “non-insurable employment”. Minor mistakes made in an application for employment benefits are not significant in the overall scheme. There was no intent there to mislead. There was an explanation. The hours of work given in the application were estimates only. The hours worked were the normal hours for this type of operation.

[238] The appeal of this Appellant should be allowed.

[239] Roland William Bresson had sufficient weeks to qualify for unemployment insurance benefits. He worked under an agreement with Canada Employment Commission.

[240] The presumptions set out in the Reply, paragraph 6(a) to (e) all support the Appellant’s position.

[241] Paragraph 6(f) was wrong as the Appellant had testified that he had worked by himself. Paragraphs 6(g) and (h) were neutral. Paragraph 6(f) was wrong. There were no payroll records. The R.O.E. did not show the hours.

[242] Paragraph 6(j) supports the Appellant’s position. Paragraphs 6(k) to 6(n) are irrelevant to this appeal. The Payor’s records were not the Appellant’s responsibility. Therefore paragraph 6(o) is not fatal.

[243] Paragraphs 6(p) to (r) support the Appellant’s position.

[244] The Appellant rebutted paragraph 6(s) as he said that he kept track of his hours. Paragraph 6(t) supports the Appellant’s position that he was under Mr. Tracey’s control.

[245] Paragraph 6(u) was denied and Mr. Bresson disapproved that position by testifying that he was kept on an additional four weeks.

[246] If the Appellant did any work for the Payor without pay it was insignificant. He did not work when he was on unemployment insurance benefits. The conclusion in paragraph 6(x) that the Appellant and Payor acted to create an artificial arrangement has been rebutted.

[247] If the Appellant did not do the work while he was under the grant, Canada Employment Commission would have terminated it.

[248] There were many people who worked there and socialized there. The Appellant gave names of those who worked there. It was not strange that he could not remember the names of anyone who worked there when he was not there. It was three years ago.

[249] The appeal of this Appellant should be allowed.

[250] With respect to Charles Bourgeois, paragraphs 6(a) to (e) of the Reply supported his position; 6(f) was wrong; 6(g) and (h) were neutral; 6(i) was proven incorrect by the evidence. The facts presumed in paragraph 6(o) were beyond the control of the Appellant and paragraphs 6(p) to 6(s) offer support to his position.

[251] It was not significant that he was paid in cash. He kept track of his hours of work. There was a real question as to whether he set his own hours of work but he did not set his own schedule.

[252] Paragraph 6(w) was a neutral factor. Paragraph 6(x) supports the position of the Appellant. It was not proven that the Appellant was the only cook on the payroll in 1993 but if he was, what does that prove?

[253] Paragraph 6(z) is contrary to the allegations in paragraph 6(v). Because the Appellant was removed from the payroll after obtaining 10 weeks of work is not sufficient to find that his earnings were “uninsurable”. Paragraphs 6(bb); (cc) and (dd) were not supported by the evidence.

[254] The appeal of this Appellant should be allowed.

[255] With respect to the appeal of Thomas D. MacIntyre, paragraphs 6(a) to (g) support the Appellant’s position. With respect to paragraph 6(h), he worked 13 weeks in 1994 and 10 weeks in 1993 according to his evidence. Paragraph 6(i) is supportive of his position as well.

[256] There was no evidence to support the allegation of “topping up the Appellant’s benefits” as alleged in paragraph 6(j). Likewise, there was no evidence to support the allegations in paragraphs 6(k), (l), (m) or (n), nor the conclusion reached in paragraph 6(o), even if the conditions referred to therein should be a factor to be considered in the contract of service argument. It was not unreasonable for him not to know who was there after or before him due to the nature of his work.

[257] He made a mistake in Exhibit R-4 when he put in the word “waiter”. Was that an attempt to defraud?

[258] The appeal of this Appellant should be allowed.

[259] With respect to Derrick Bourgeois, paragraphs 6(a) to (e); (j), (p), (q), (r) and (t) of the Reply support his position. Paragraphs 6(f) and (i) are wrong. Paragraphs 6(g) and (h) are neutral; paragraph (i) is wrong and paragraphs (k) to (n) are irrelevant. Paragraph (o) cannot bind the Appellant because he had nothing to do with the Payor’s records.

[260] With respect to the lack of record keeping as alleged in paragraph (s) the Appellant kept a record in his head and knew when he had work. It was not necessary to write it down.

[261] Paragraph 6(u) was unimportant as there is nothing wrong with being paid in cash and he said that he was given a T4, upon which he relied.

[262] Paragraph 6(v) was wrong since the Appellant had 20 weeks and needed only 10 weeks to qualify for unemployment insurance benefits.

[263] It is true that the Appellant admitted to working while he was on unemployment insurance benefits but does that mean that he is disqualified for the rest of the period? This evidence was credible otherwise.

[264] He absolutely denied that there was any artificial arrangement with Mr. Tracey and he was acting at arm’s length with the Payor.

[265] The appeal of this Appellant should be allowed.

[266] In regard to Frederick Charles Campbell, paragraphs 6(a) to (d); (j); (p) to (r); (v) and (bb) were supportive of his position. Paragraphs 6(f); (i); (t); (aa); (cc) and (dd) were wrong.

[267] The Appellant said that he was supervised by Mr. Tracey, considering the nature of the employment. He was the assistant manager. He needed less supervision. He knew his job. He said that he reported regularly to Mr. Tracey. Therefore he rebutted paragraph 6(t).

[268] He kept his hours in his head although he had no written record of them. It was not significant that he was paid in cash, sometimes he was paid by cheque and received a pay stub.

[269] Paragraphs 6(x) and (y) were correct but these facts do not mean that the earnings were uninsurable.

[270] The Appellant’s salary was not excessive given the level of trust and considering the circumstances of the employment.

[271] Even though the worker that was hired on after Mr. Bourgeois was laid off may have received less by way of remuneration, his duties were not as great as those of the Appellant and he did not replace Mr. Bourgeois.

[272] The Appellant introduced his R.O.E. from Glace Bay Pictures to establish that he was not working for the Payor during the two weeks that Michael Jamieson was there.

[273] Considering the case of Wiebe Door, supra, the Court should consider whether this was a legitimate employment situation. Control is the most important factor. The facts set out in the Reply support the position that control was in the employer’s hands. The suspicions referred to in the Reply are not well founded.

[274] Counsel argued that an adverse inference should not be drawn because the Payor was not called, because there was other evidence presented on the essential facts.

[275] The Appellant has tipped the scale in his favour on the basis of the other evidence, therefore he need not call the employer.

[276] If a “negative inference” is drawn it should be minimal and it is insufficient to tip the balance. There is no evidence of a scheme. The Minister should have called evidence to support his position and he did not.

[277] The records may have been sloppy but that does not mean that there was no insurable earnings.

[278] The control test has been met. There was sufficient evidence of a contract of service to meet the burden on the Appellant.

[279] The employment of everyone of the Appellants is not necessarily uninsurable, even if the employment of one of them might be so found.

[280] This appeal should be allowed.

Argument of the Respondent

[281] Counsel for the Respondent indicated that he was relying upon the “factual non-arm’s length” argument under section 3(2)(c) of the Act. He referred to the following cases in support of his argument: Tanguay et al v. Unemployment Insurance Commission, (Unrep., October 2, 1995) (FCA); Parrill et al v. M.N.R., (Unrep., December 16, 1996), (TCC); Special Risks Holdings Inc. et al v. H.M.Q., 84 DTC 6505 (FCTD); Lindsay et al v. M.N.R., 90 DTC 1085 (TCC).

[282] His position was that these cases dictate that parties should not act in such a way as to defeat the purposes of the legislation, which makes uninsurable, work performed at “non-arm’s length”.

[283] These cases also stand for the proposition that the employee should not act to increase the risk of unemployment. Likewise the dealings between the parties should not be such as to frustrate the purpose of the legislation.

[284] In Parrill et al., supra, which was a case of factual non-arm’s length, at page 9, the Court referred to a factual situation which is a “deviation” from the norm.

[285] In the case at bar the question is, did the parties act to frustrate the purposes of the Act?

[286] Counsel referred to the failure of every one of the Appellants to call the employer as a witness. The burden of proof is on the Appellants. It is not sufficient for the Appellants to merely argue, that there are no books and records to support the Respondent’s position as set out in the Reply, that this was non-insurable employment. The employer could have provided such evidence. That evidence could have adversely affected the Appellants’ position and the employer should have been called by them. See Lévesque v. Comeau et al., (1970) S.C.R. 1010 at page 1011.[1]

[287] In the case of Enns v. M.N.R., 87 DTC 208 at page 3, it was pointed out that where a party bears the burden of proof, that party must lead the evidence or suffer the adverse inference being drawn.

[288] See also Mastronardi v. M.N.R., 91 DTC 341 at page 5.

[289] In the case at bar there are numerous gaps in the evidence that the alleged

employer could fill in. He was a pivotal witness. He was the owner of the business. He did the hiring and the firing. He was the only person who could speak to every aspect of the assumptions contained in the Reply. The payroll records were a necessary part of the evidence. They could have showed who was on the payroll at any time, why one was hired to replace another, if another was needed, what hours were worked and what the Appellants were paid.

[290] Mr. Tracey could have supplied the records of sales to allow the Court to determine if one or more workers were required at any time. The bank statements and financial statements could have shown if the business could have afforded the Appellants who claimed that they were employees and if they were paid the wages set out in the Records of Employment.

[291] The Minister has not admitted as a fact that the workers were paid. There is a real question as to whether they worked legitimately, whether they were discharged legitimately and whether they were paid legitimately, in spite of the presumptions referred to in paragraphs (e) and (f) of the Reply.

[292] Counsel argued that the Appellant, Charles Bourgeois, was the first witness to testify. He allegedly was a bartender, waiter and sometimes a doorman. He said that each day between 11:00 a.m. and 2:00 p.m. at The Main Event and each day from 3:00 p.m. to 11:00 p.m. at Jiggers there was a bartender, a cook and two to three waiters. Then he named people whom he said worked there with him. Subsequent evidence revealed that those persons were not working there at those times. After that, none of the Appellants could remember who worked there when they did. This is very suspicious.

[293] One has to ask, who was the cook when Mr. Bourgeois was not there? The kitchen was open all year round. Who did the work when he was not on the payroll?

[294] The Appellant Fred Campbell purportedly was hired to keep an eye on the workers, yet he did not know who he was hired to keep an eye on. He did not know who was working there or who replaced him. This is difficult to believe. Later he said that he was mainly a bartender because it was pointed out to him that in his application for benefits he had said that he was a bartender.

[295] Charles Bourgeois said to the appeals officer, “Look what is going on on the other side”. (An indication that there was some scheme involving unemployment insurance benefits). When confronted with this statement in Court, he gave no answer. This was typical of his evidence.

[296] The Appellant Derek Bourgeois said that he had worked with Charles Bourgeois, but he was not on the payroll at the same time. There are three possible explanations for this discrepancy. One, he did not work; two, he worked but was not paid; three, he was drawing unemployment insurance benefits while working.

[297] Counsel referred to paragraphs 6(g) and (h) of the Reply where the Respondent set out the number of weeks for which the business allegedly employed the various numbers of workers for 1993 and 1994. He asked, how could the Payor operate the business of the beverage room for 104 hours a week and the lounge for 56 hours a week with this number of staff? He suggested that Mr. Tracey should have been called to explain this apparent discrepancy and he was not. An adverse inference should be drawn against the Appellants.

[298] Likewise, Mr. Tracey should have been called to rebut the presumption in paragraph 6(i) of the Reply that the Records of Employment and the number of workers employed at any time as reflected in paragraphs 6(g) and (h) did not reflect the hours worked by or the wages paid to the employees. Mr. Tracey should have been called to explain these discrepancies.

[299] If Charles Bourgeois was a cook, why was he laid off for a shortage of work? He was there only for 10 weeks, yet the business allegedly remained open. Who performed his duties and why?

[300] Payments were made in cash. This is not normal. No pay stubs or records were produced to show the pay or the deductions. There were no records of hours kept. Charles Bourgeois stated in Court that he worked 54 hours some weeks but in Exhibit R-2, he said that he worked 40 hours a week. This is not just general information, it is important information. He had said that he was not paid for extra hours and received no vacation pay. There was no record kept of his hours.

[301] He was the only cook on the payroll in 1993 and received 10 weeks work only. Why?

[302] In 1993 he needed 10 weeks work to qualify for unemployment insurance benefits and received 10 weeks. In 1994 he needed 12 weeks and he received 12 weeks. These circumstances were suspicious in light of the fact that a cook was needed all of the time.

[303] With respect to Thomas MacIntyre, in his application for benefits, Exhibit R-4, he said that he was a waiter. In Court he said that he was a cleaner. His Record of Employment, Exhibit R-5, showed that his pay was $300 a week while his application for benefits showed $320 a week. These inconsistencies cannot be explained merely by claiming that he made a mistake.

[304] He received just enough weeks to qualify for unemployment insurance benefits and was laid off. Why? He could not say. He could not say who replaced him. He suggested that Mr. Tracey took over but obviously Mr. Tracey could not do it all by himself. Mr. Tracey should have been brought in to provide the answers to these questions.

[305] In 1993, Mr. MacIntyre had the exact number of weeks needed to qualify for unemployment insurance benefits. In 1994 he had one extra week. In 1993 he received 39 weeks of benefits and as soon as the benefits ran out he went back on the payroll. Why?

[306] He had no record of hours worked. He received no vacation pay. Why was it indicated in his Record of Employment that he was a waiter/bartender when he was a cleaner? Mr. Tracey possibly could have explained this.

[307] The Appellant Earl MacDonald provided conflicting and incorrect information in Exhibit R-8, his loan application. Exhibit R-10, his Record of Employment, regarding his position, his income and the length of his employment, was contradictory. The date of issue of his Record of Employment in 1994 was changed without explanation. Perhaps Mr. Tracey could have explained it.

[308] Mr. MacDonald could not explain why Mr. Jamieson was laid off and Mr. MacDonald was hired to do the same work that Mr. Jamieson had been doing, shortly after Mr. Jamieson had been laid off. In Exhibit R-13, the application for benefits, the salary was set out at $7.50 per hour whereas he had said in Court that he was paid $7.00 per hour. His Record of Employment for 1993, Exhibit R-9, was signed by him and not by his employer.

[309] He did not know why he was laid off and who replaced him. His rates of pay could have been $7.00, $5.15 and $10.00. Some of these rates were excessive as alleged in the Reply.

[310] There was a pattern of working 10 weeks, being laid off, receiving 39 weeks of benefits and then returning to work to qualify again.

[311] Mr. MacDonald testified that Jiggers was open on the weekends but that he only worked Monday to Friday. He was asked who worked the weekends and he could not say.

[312] He said that Carol Comer brought food up to Jiggers but he did not suggest that she was on the payroll.

[313] He performed functions for the alleged Payor without remuneration. Sometimes he started early and sometimes he stayed late. He was not paid for extra work.

[314] He could not explain why his salary increased from $7.50 in 1993 to $10.00 an hour in 1994. Perhaps Mr. Tracey could have explained this.

[315] He could not say who replaced him but again he suggested that it might have been Mr. Tracey. He said at one time that he had earned $7.00 per hour for 40 hours a week but his R.O.E. showed that he was paid $300 a week.

[316] Roland William Bresson testified in direct-examination that he worked for the Payor on a training program through the Canada Employment Commission. He always worked six days per week, never less. He always worked the full shift.

[317] In cross-examination he agreed that if that was the case he must have worked 40 hours a week. He then said that perhaps he worked a shorter shift. It was pointed out to him that in Exhibit R-20, the Application for Employment, he had indicated that he worked 40 hours per week for $400 and worked six days a week.

[318] This information is important. He did not say 32 to 40 hours per week at an hourly wage, but gave the exact figures. He gave a flat amount in the week for his remuneration and yet he said in Court that he was paid hourly. This is not normal. His evidence was not consistent with the records.

[319] He was not a manager. Why did he say that in his application for benefits unless it was an attempted justification for the higher wages that he allegedly received.

[320] He could not say who worked with him, who replaced him or who relieved him. Surely he would remember some names.

[321] Charles Bourgeois mentioned some names of those he worked with and they were incorrect. He did not work with Mr. Bresson yet he said that Mr. Bresson came in to relieve him.

[322] He said that he was laid off because there was a shortage of work, but yet Earl MacDonald worked there afterwards and Fred Campbell worked there afterwards for $500 a week.

[323] Mr. Tracey could have shed some light on these discrepancies. He was not called. An adverse inference should be drawn against Mr. Bresson.

[324] He knew that he should have reported his tips on his T1 return and did not do so. He was not paid for overtime, he was not paid vacation pay. Such treatment was a deviation from the norm.

[325] It was no answer to say that his overtime pay was included in his wages. He was looking for $7 to $8 per hour when he was looking for work, according to Exhibit R-20, not $10 per hour that he supposedly received.

[326] Derek Bourgeois admitted that he had worked while receiving unemployment insurance benefits. He said at first that Mr. Tracey was not aware of it and then said that he did not know. Why was Mr. Tracey not called to answer the quaere? He was outside the courtroom.

[327] Mr. Bourgeois received no T4 for the period set out in his R.O.E. Why not? Mr. Tracey could have answered that. An adverse inference should be drawn against him.

[328] This Appellant had called Canada Employment Commission to tell them that he had given the wrong starting date for his work because he was still drawing unemployment insurance benefits. He said that he was paid in cash in Court but in a statement he admitted that he had said that he was paid by cheque. His evidence was inconsistent.

[329] He named certain persons as having worked there when he did but the record showed that this information was incorrect.

[330] There were gaps in his evidence and it is not reasonable to ask the Court to fill in these gaps by inference. He was not paid vacation pay, for overtime and did not know who worked upstairs or who relieved him.

[331] Michael Jamieson was alleged to have worked in 1992 and 1993 for $280 per week. He need 10 weeks to qualify for unemployment insurance benefits and received 12 weeks.

[332] In his evidence, for 1992, he said that he was certain that he had worked the same shift every day, four days per week. But in Exhibit R-16, he said that he worked five days per week, forty hours per week. He went in to the Unemployment Insurance office three days after he was laid off. Why would he not remember his work schedule?

[333] He said that he worked 33 hours per week and that would mean that he earned $8.48 per hour and not $7 per hour as he indicated. This remuneration was obviously not based upon any hourly wage.

[334] He said that he worked under the same conditions for 1993. Yet, in Exhibit-20, his application for unemployment insurance benefits, he said that he worked 40 hours per week, for $400, for six days. This does not correlate.

[335] If he had been engaged under a legitimate contract of service, he would have known how long he worked and for how much.

[336] After he was hired in 1992 he had just exhausted his unemployment insurance benefits. His explanation was that he did not go to work again because he was on a course. But the evidence showed that he discontinued the course in February or March but he did not go back on to the payroll, he went back on unemployment insurance.

[337] Later on in the summer Mr. Bresson did not go back to the payroll but Earl MacDonald went on before Mr. Bresson started his course. Mr. Bresson collected all of his benefits and then returned to the payroll. Was it normal? Was it coincidental that someone else was hired back on to do the job when he was laid off?

[338] Mr. Jamieson completed the loan application, Exhibit R-19. He admitted that it contained false information. His explanation was that he did not think that the information had to be correct. This was not credible. In the application he indicated that he was earning $2,000 per month and had been employed for seven years. This information was not true.

[339] He contradicted himself in Exhibits R-17 and R-18 regarding his wages. In one he said that he was making $10 per hour and in the other it would work out to about $8 per hour. He did not appear to know what he was earning, the number of hours he worked or the number of days that he worked. This was not reasonable.

[340] In the summer of 1994, the week that he goes off the payroll, Earl MacDonald goes on the payroll. Michael Jamieson qualifies for unemployment insurance benefits. Mr. MacDonald goes back on to the payroll just long enough to qualify for unemployment insurance benefits.

[341] Counsel argued that the allegations in paragraphs 6(a) and (b) do not support the Appellant but paragraphs 6(c) and (d) support the Minister’s position.

[342] If this business was open all year-round as indicated, a larger staff would have been required all year-round. As many as three would have been required but there were not three full-time waiters on the payroll at all times. How could the beverage room and lounge operate with the staff that were shown to have been on the payroll in accordance with the allegations contained in paragraph 6(g) and (h) of the Reply?

[343] The evidence showed that the real situation was other than that as portrayed by the Appellants.

[344] In summary, counsel argued that no evidence was led on behalf of Carol Comer and that appeal should be dismissed outright.

[345] With respect to the other Appellants, counsel argued that a contract of service cannot be created by an artificial arrangement as was the case here. On the “non-arm’s length in fact” argument, counsel submitted that the Payor and the Appellants acted in concert to defeat the purposes of the Act. As in the Tanguay case, supra, the parties acted to create the risk of unemployment.

[346] There was no explanation as to why these Appellants were placed on the payroll and then taken off when others were hired back on to take the place of the same people who were laid off.

[347] Why did the Appellants wait until their benefits were exhausted or shortly thereafter to go back on the payroll?

[348] Mr. Tracey was a pivotal witness who could have given evidence on every issue raised by the Minister. He was not called. That is enough to dismiss all of the appeals.

[349] If that is not enough to dismiss the appeals then at the very least an unfavourable inference must be drawn against each Appellant on every single disputed issue of significance i.e.:

1) contract of service

2) the facts on the non-arm’s length argument

3) the existence of a scheme to obtain unemployment insurance benefits.

[350] The wages that the Appellants claim they received were excessive; some worked while receiving unemployment insurance benefits; there were numerous errors in the applications for benefits; there was no satisfactory evidence of any clear terms of engagement.

[351] If one were to view only the records of employment, the situation has the appearance of normalcy, but viewed in light of the other documentary and viva voce evidence, it is clear that the alleged employment was anything but normal and indeed was artificial.

[352] If the arrangements were not artificial it would have been a simple matter to provide the correct information about the essential elements of a contract of service. All of the Appellants alleged that they obtained a wage per week, not a wage per hour and that was because they received cash and they had no pay stubs to verify their position.

[353] The burden is on the Appellants to establish, on the balance of probabilities, that this was insurable employment. Their evidence was challenged on every important issue and must be rejected entirely. Mr. Tracey’s evidence was crucial. There was no evidence to tip the balance in favour of the Appellants.

[354] The nature of the Appellants evidence; their hesitancy; their failure to explain discrepancies and the incorrect information provided in the documents made it clear that the burden was not discharged.

[355] The questions asked of the Appellants were not difficult. They should have been able to provide the answers. They did not.

[356] The appeals should be dismissed and the Minister’s determination confirmed in every case.

Argument on behalf of Earl MacDonald

[357] In argument, the Appellant Earl MacDonald said that there was no scheme with Mr. Tracey. There was no artificial relationship. He said that he earned $7 in 1993 in a statement that he gave to Mr. O’Connell and in Court he said that he earned $7.50 per hour. But he told Mr. O’Connell the same thing as he put in his R.O.E. and his application for benefits.

[358] It is not unusual to receive cash. He received cash from two other places where he worked.

[359] He approached Mr. Tracey in 1993 and the bar was not open at Jiggers. The dining room was open. He suggested to Mr. Tracey that he try to obtain an older crowd. The Appellant tried to obtain customers from the Albion Club. He helped out so that he might obtain full-time employment.

[360] He did not know who worked downstairs because he did not go down stairs. He had no reason to go down.

[361] He did favours for Mr. Tracey without pay and took 30 cases of beer in the car for him, but he was hired in 1993 and he believed that he would have full-time employment. He was laid off due to bad business. He did not ask to be hired on just to qualify for unemployment insurance benefits.

[362] He did go in daily to tend bar when he was not on the payroll because it gave him something to do and he believed that he would be the first to be hired back on.

[363] His position was that the loan application had no bearing on his unemployment insurance entitlement. He knew that if he told the bank that he was not working that he would not receive a loan. He did not try to hide anything from Mr. O’Connell.

[364] He said that he received $300 gross earnings and the figure of $260 was just an estimate because he always owed Mr. Tracey money. Sometimes he stayed open evenings and was not paid but that was because he did not want to lose any customers. He never worked when he was drawing unemployment insurance benefits.

[365] In 1994 when he was re-hired, he asked for more money because of his financial situation.

[366] He wished that he had called Mr. Tracey as a witness. He believed that Mr. Tracey could have explained the facts. He could not say why Mr. Tracey laid him off except to suggest that he may have wanted to give someone else a chance to earn income.

[367] He paid unemployment insurance premiums and filed income tax returns. He had no problems in that regard.

[368] The first time that he saw the Reply to the Notice of Appeal was in Court. His lawyer had told him that it would never get this far.

[369] In response to the allegations contained in the Reply he said that his R.O.E. was consistent with what he had worked. His evidence was consistent with paragraph 6(r) of the Reply. He received $7.50 per hour. His salary was not excessive for a bartender.

[370] The reduction to $5.50 per hour was reasonable because there was no pressure on him at that time and he did less work in 1995.

[371] Mr. Tracey knew that he worked 40 hours per week. The Appellant assumed that Mr. Tracey knew when he was there. He had no control of how Mr. Tracey kept track of his hours.

[372] It was not abnormal to do favours for Mr. Tracey.

[373] The Appellant denied that he had any control over when he was to be laid off.

[374] He referred to Exhibit R-10, his R.O.E. for 1994 and appeared to agree that it suggested that he was to be laid off after six weeks and it was changed to twelve.

[375] He said that he signed his own R.O.E. in 1993 in the Unemployment Insurance Office. If he was trying to cheat he would not have signed his own name. However, Mr. Tracey completed it.

[376] He believed that Mr. Tracey’s evidence was not important since two lawyers had not called him as a witness.

[377] There was no scheme. He worked the hours that he said that he did. He was paid and he followed all the rules. The appeal should be allowed and the Minister’s determination reversed.

Rebuttal

[378] In rebuttal, counsel for the Appellants, other than Earl MacDonald, said that the thrust of the Minister’s case was that there was a scheme, therefore there was no contract of service, therefore it was a factual non-arm’s length situation.

[379] The real question should be, what makes it non-insurable? The minor mistakes referred to could have been made by anyone.

Analysis and Decision

[380] In rebuttal, counsel for the Appellants, other than Earl MacDonald, argued that the real question that should be asked in these cases is: “What makes the alleged employment non-insurable?” But that question pre-supposes that the alleged employment was insurable and that the Minister has the burden of establishing that the alleged employment was non-insurable.

[381] The Court does not accept that position. The burden of establishing that the employment in question here was insurable and that the Minister’s determination was wrong, rests upon each of the Appellants throughout.

[382] Counsel further concluded that the Respondent’s position, at the end of the day, was that there was a scheme, therefore there was no contract of service, therefore it was a factual non-arm’s length situation, at least that is what the Court concluded was his position.

[383] However, the Court is satisfied that the Respondent was merely arguing that there was a factual non-arm’s length situation on the evidence and therefore the employment in question was not insurable because it was excepted employment.

[384] Alternatively, there was no contract of service, on the facts, taking into account the presumptions in the Reply and the failure of the Appellants, in the Minister’s view of the evidence, to rebut the presumptions and satisfy the Court on a balance of probabilities that this was insurable employment.

[385] Alternatively, this was not employment under a contract of service at the end of the day on the basis of the evidence before the Court because the Court should be satisfied that the Appellants and the Payor participated in a “scheme” to enable the Appellants to qualify for unemployment insurance benefits and defeated the purposes of the legislation.

[386] The Court is satisfied that if there was such a “scheme” in existence, each of the Appellants who participated in it, were not engaged in insurable employment, because such employment is not employment under a contract of service. Whether or not there was such a scheme in existence, must be decided on the basis of all the evidence, on the balance of probabilities, in light of the Minister’s allegations in the Reply and in light of the evidence given by the Appellants that they did not participate in such a “scheme”.

[387] The burden of establishing the scheme is on the Respondent, but the failure to establish the scheme does not mean that this was insurable employment. It merely means that it was not non-insurable employment on the basis of the “scheme”.

[388] Nonetheless, the general burden of establishing insurable employment is on the Appellants, that burden is on the balance of probabilities.

[389] Likewise, the burden of establishing factual non-arm’s length is on the Respondent, on a balance of probabilities, after a consideration of all the evidence and any unrebutted facts set out in the Reply. If factual non-arm’s length is made out, then it is excepted employment under section 3(2)(c)(i) of the Act and cannot be insurable employment.

[390] In these cases, only by a consideration of all of the evidence given and by a consideration of the unrebutted facts set out in the Reply, if there be any, can the Court decide whether factual non-arm’s length has been made out.

[391] These cases were all heard on common evidence, but that does not mean that the Court must find that each and every Appellant was engaged in insurable employment or that each and every Appellant was not engaged in insurable employment. The Court must make an independent finding with respect to each Appellant.

[392] There was evidence given which applied to each and every Appellant but there was also evidence given by all of the Appellants, with the exception of Carol Comer, which was only applicable to the Appellant who gave the testimony or completed the documents which were used in evidence. Whether or not there was a “scheme” in effect between any one or more of the Appellants and the Payor must be decided on the basis of the relationship of each Appellant to the Payor as dictated by the evidence. There was no evidence that any one or more of these Appellants acted in concert with any other Appellant to create a “scheme” to obtain unemployment insurance benefits.

[393] Likewise, whether or not factual non-arm’s length had been made out vis-à-vis any Appellant and the Payor must be decided on the basis of the relationship between the individual Appellants and the Payor and not on the basis of the relationship of any other Appellants with the Payor.

[394] In light of the general burden of proof existent upon each Appellant to establish insurable employment on the balance of probabilities, the Court will firstly consider the case of Carol Comer.

[395] Carol Comer was in attendance in Court at some point in time during the first week of the hearings but did not attend at any time during the second week of hearings. She did not testify nor did she call any evidence on her own behalf.

[396] In light of the presumptions contained in the Reply, in light of some of the evidence given in Court which detrimentally affects the issue of her insurable employment and in light of her failure to testify or call any other evidence to rebut the presumptions or the other evidence detrimentally affecting her position, the Court is satisfied that the Appellant has failed to establish, on the balance of probabilities that her employment during the period in issue was insurable. The Court will dismiss the appeal and confirm the Minister’s determination.

[397] The Court will deal firstly with the facts disclosed by the evidence which affect each and every Appellant.

[398] If there was a contract of service in effect with respect to any of the Appellants, it was between each Appellant and the alleged employer who in this case was Ken Tracey. For all intents and purposes he was operating “The Main Event” and “Jiggers”, whatever appropriate name might be given to the actual business entity.

[399] It was the duty of each Appellant to establish the basis for that contract of service and to do that the evidence of Mr. Tracey was essential.

[400] Ken Tracey was the person who allegedly set the wages, determined the work schedules, provided any training that was needed, decided when a person was to be hired, when he was to be laid off or discharged and when he was to be re-hired.

[401] Even in a case where there was no issue raised about when the Appellants worked; how long they worked; when they were laid off; why they were laid off; why they were paid the way that they were paid; what was the basis of the remuneration; whether they worked for him at times without remuneration; whether the given number of workers at any time was required; whether the business could afford the workers during the times when they were allegedly working; whether there was any degree of control exercised over the workers by the purported employer; whether they were actually paid; why they were paid in cash; why there were no records of their hours kept by anyone and whether or not their alleged hiring, layoff and dismissal was part of a “scheme”, one would have to question the failure of any Appellant to call the Payor.

[402] But where each and everyone of these factors was brought into issue by the allegations contained in the Reply and by the nature of the cross-examination in Court, it would seem essential that the Payor be called to address these issues.

[403] There were issues put into contention with respect to each and every Appellant here.

[404] The Court finds no merit in the argument of counsel for the Appellants, that there was no need to call the Payor because it was his position that other evidence had been presented on the essential facts.

[405] Indeed, some evidence had been introduced on these facts but at the end of the day their existence, their credibility and their accuracy rested upon the uncorroborated testimony of the Appellants alone. In the case of every Appellant, their evidence was questionable on some essential particular and in respect to each Appellant the question of the nature of their evidence arose because of the contradictions in their own viva voce evidence in Court or because of the irreconcilability of their viva voce evidence with statements that they had given earlier, forms that they had completed, signed, relied upon, applications that they had completed for loans or in respect to their claims for unemployment insurance benefits.

[406] In Lévesque v. Comeau et al., supra, the Court held that the failure of the plaintiff to bring forth as a witness the doctor who treated her after the accident, which evidence the plaintiff alone could have brought before the Court, dictated that an inference should be drawn that the evidence would adversely affect her.

[407] Likewise, in the case of Marriott, supra, when the Tax Court of Canada was without the benefit of evidence of a “pivotal and key player”, where the evidence of those individuals would be the best evidence and was not forthcoming, the Court concluded that “the circumstances of the entire matter justify the overwhelming inference to be drawn therefrom that such evidence would have been adverse and harmful to the Appellant’s case.”

[408] Similarly in Enns, supra, the learned trial judge relied upon several authorities including Lévesque, supra, when it repeated the following:

In the case of a plaintiff who has the evidentiary burden of establishing an issue, the effect of such an inference may be that the evidence led will be insufficient to discharge the burden.

[409] As a result of the cross-examination of the Appellants and in considering the presumptions in the Reply as well as the effect of the documentary evidence adduced, many gaps were left in the evidence that could have been filled in by the Payor. He was a “pivotal” witness as were the Payor’s records, which were not provided and upon which the Payor could have been questioned.

[410] Of further significance would have been the financial statements of the Payor so that the Court could have known whether or not the Payor had the means to retain these workers during the periods alleged, what they were paid, how they were paid and the basis of their pay.

[411] The gaps in the evidence went to the very essence of the contract of service and the constituent elements which are of significance here such as control and the terms and conditions of the employment. The Minister raised the issues, whether the workers were paid, whether they worked legitimately, whether they were discharged legitimately. Those gaps could only have been filled in by the Payor who was a pivotal witness to each and every Appellant.

[412] The Court agrees with counsel for the Appellants that not all of the presumptions of fact contained in the Reply were of significance here. Some of the presumptions may have been rebutted and some may even have been supportive of the Appellants’ position but the ultimate result is that the significant allegations detrimental to the Appellants’ positions have not been rebutted and indeed could not have been rebutted without the evidence of the “Payor”.

[413] Taken in isolation, the payment of wages in cash may not be significant, but when considered in light of the allegations of the Respondent in the Reply and in light of the failure of the Appellants to produce any corroborative evidence of payment, that fact is of significance. On the very important issue of the failure of anyone on behalf of the Payor to record the hours of work, it is no answer for the Appellants to say that the Payor knew when they worked, we trusted him, he trusted us, he would not have paid us if we had not worked.

[414] Employers normally are specific about the number of hours required to be worked and want to be sure that these hours are worked. That is the norm and any deviation from that must be regarded with a high degree of scepticism and suspicion.

[415] Likewise, the fact that a number of employees worked only the requisite number of hours to qualify for unemployment insurance benefits, then were laid off, in some cases re-hired again after benefits were exhausted, is not conclusive but raises serious suspicions.

[416] The Court is also in agreement with counsel for the Appellants that minor mistakes in application forms may not be conclusive of anything in the overall scheme of things, but where the mistakes are significant as here and where in some cases the information was false and misleading, the discrepancies call out for an explanation. Here such explanations were not forthcoming.

[417] Likewise, the actions of the Appellants in providing services free of charge to the Payor after their employment was terminated, need not be significant, but in light of the evidence given here of a possible scheme, in light of the nature and duration of the alleged employment and in light of the evidence that some Appellants were hired on to replace others who had been laid off due to a lack of work, such actions take on new significance.

[418] The Court draws an unfavourable inference against each and every one of the Appellants here because of their failure to call the Payor. He was available, he sat outside the Court room for several days. There was no explanation offered for his failure to testify except that his evidence would have been unfavourable to each of the Appellants.

[419] This inference that is drawn is not insignificant or minimal as counsel for the Appellants suggested that it should be. Indeed it is sufficient here, as it was in Lévesque, supra, for the Court to conclude that the other evidence led is insufficient to discharge the burden on the Appellants to establish that there was a valid contract of service in existence.

[420] The Court adds, that in light of the unsatisfactory nature of the Appellants’ evidence and the weight that the Court attaches to it, it would conclude, apart from the adverse inference, that the Appellants, represented by Mr. McPhee, have failed to meet the burden upon them.

[421] With respect to Earl MacDonald, the same adverse inference must be drawn. This adverse inference is of the same weight as that drawn against the other Appellants. It is sufficient for the Court to conclude, that the other evidence led by him was insufficient to discharge the burden upon him, of establishing that his alleged employment was under a contract of service.

[422] His failure to know the names of anyone who worked with him, the receipt of his wages in cash without any records of such receipt under the circumstances here, was suspicious. His provision of free services to Mr. Tracey, given the circumstances that existed here, such as the timely nature of his retention and re-hiring, the lack of any reasonable basis for his salary, the lack of any evidence of proper supervision, the lack of any proper record of hours worked and the provision of false information in documents completed by him throughout the period in issue are factors that the Court considers in this decision.

[423] These findings are sufficient to dispose of these appeals but the Court will also consider the issue of factual non-arm’s length and “scheme”.

[424] The Court rejects the argument of counsel for the Appellants and that of Mr. Earl MacDonald that the Appellants and the Payor were dealing with each other at “arm’s length”. It is true that the Appellants are not related to the Payor under the Income Tax Act, but the evidence makes it clear that in fact they were not dealing at arm’s length with the Payor.

[425] The evidence is more than suspicious as suggested by counsel for the Appellants and Mr. Earl MacDonald.

[426] The cases cited by counsel for the Respondent make it clear that parties should not act in such a way as to defeat the purpose of the legislation. The purpose of the Unemployment Insurance Legislation is to provide benefits to persons who have been engaged under a contract of service. If parties act to make insurable, work that is not intended to be insurable, they are acting at non-arm’s length and it is excepted employment.

[427] Counsel referred to Tanguay, supra. In that case, the Court quoted with approval statements of Donaldson L.J. that:

In my judgment it is crucial to reaching a decision on this appeal to remember that this is an insurance scheme, however, it may be funded, and that it is an insurance against unemployment. It is of the essence of insurance that the assured shall not deliberately create or increase the risk. Prima facie an employee has not done so if he loses his employment involuntarily, that is to say by the action of the employer in terminating the contract of employment.

[428] This case obviously pre-supposes that the basis for the employer terminating the contract of employment was for a valid cause and not for the purposes of enabling the employee to qualify for unemployment insurance benefits.

[429] In Parrill, supra, it was held that the parties were not dealing with each other at arm’s length when the predominant consideration or the overall interest or the method used amounted to a process that is not typical of what might be expected of parties that are dealing with each other at arm’s length.

[430] In these cases the Appellants failed to call the Payor to explain the nature of the relationship between the parties. They failed to explain to any degree of satisfaction why they were hired when they were, why they were laid off when they were. They failed to explain why others were hired to replace them when they were laid off.

[431] In many cases the Appellants received exactly the number of weeks needed to qualify for unemployment insurance benefits and then were laid off and were re-hired when their benefits ran out. They failed to explain with any degree of satisfaction why no records were kept of their hours of work, their pay, their overtime.

[432] There was little or no supervision of the workers by the Payor. There was insufficient evidence of the receipt of payment. There was insufficient explanation of the basis for their remuneration.

[433] They worked without pay on many occasions and their pay varied from one period of employment to another without any reasonable basis having been established for that variation.

[434] The Court concludes that the parties were dealing with each other at “non arm’s length” and that in each case it was excepted employment under section 3(2)(c)(i) of the Act.

[435] The Court further concludes, in the absence of any credible evidence to the contrary, that there was no basis for the Appellants and the Payor acting towards each other as they did in this relationship, but that they were acting in concert, to allow as many of them as possible to obtain unemployment insurance benefits. Any denials to the contrary are not accepted.

[436] Therefore, this was not employment under a contract of service.

[437] On all of these grounds the appeals are dismissed and the Minister’s determinations are confirmed.

Signed at Ottawa, Canada, this 9th day of March 1998.

"T.E. Margeson"

J.T.C.C.

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