Date: 19990316
Docket: 96-2322-UI; 97-337-UI; 97-840-UI; 97-842-UI; 97-1115-UI; 97-1116-UI
BETWEEN:
LARISSA BÉLOVA, GILLES-LAURENT MARTIN, COOPÉRATIVE DES TRAVAILLEURS DU CAFÉ-THÉÂTRE LA BUTTE DE VAL-DAVID, MONIQUE LANTHIER, ROBERT LANTHIER,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Somers, D.J.T.C.C.
[1] These appeals were heard on common evidence at Montréal, Quebec, on November 18 and 19, 1998. The last written arguments were received by the Court on February 5, 1999. The Court did not receive the written arguments of Régent Laforest, counsel for the appellants Monique Lanthier and Robert Lanthier, despite the granting of an extension of time to January 8, 1999.
[2] The appellants are appealing from decisions by the Minister of National Revenue (“the Minister”) finding that the employment the appellant workers held, during the periods at issue, with the appellant Coopérative des travailleurs du Café-théâtre de la Butte de Val-David, the payer, is excepted from insurable employment within the meaning of the Unemployment Insurance Act because there was no employer-employee relationship between the payer and the workers.
[3] Subsection 3(1) of the Unemployment Insurance Act reads in part as follows:
3.(1) Insurable employment is employment that is not included in excepted employment and is
(a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise.
[4] The burden of proof is on the appellants, who must show on the balance of evidence that the Minister’s decisions are ill-founded in fact and in law. Each case turns on its own facts.
[5] In Monique Lanthier’s appeal, the periods at issue are February 15 to December 19, 1992, July 5 to December 18, 1993, and July 11 to December 17, 1994. The appeal by Coopérative des travailleurs du Café-théâtre la Butte de Val-David concerns the worker Monique Lanthier with respect to the same periods. The facts alleged by the respondent in those two appeals are the same.
[6] As regards Monique Lanthier’s appeal (97-842(UI)), the Minister relied on the following facts in making his decision:
[TRANSLATION]
(a) the payer was established as a co-operative on June 2, 1986; (admitted)
(b) the payer’s business involved running an establishment that offered dinner show packages; (admitted)
(c) the appellant and her spouse initiated the co-operative project; (denied)
(d) from 1977 to 1986, the appellant and her spouse ran the establishment under the name “La Butte à Mathieu”; (admitted)
(e) the land and building used by the payer for its activities have been owned by the appellant since 1977; (admitted)
(f) during the periods at issue, the appellant leased her building to the payer for $1,000.00 a month; (admitted)
(g) the payer never paid the appellant that rent; (denied)
(h) the establishment has a seating capacity of 300; (denied)
(i) in 1992, the payer put on performances every Saturday from February 15 to December 19; (admitted)
(j) in 1993, the payer put on performances every Saturday from January 30 to September 25 and from November 6 to December 18 and on Thursday evenings in October; (admitted)
(k) in 1994, the payer put on performances every Saturday from March 4 to December 17; (admitted)
(l) the payer’s turnover was $160,091 in 1992, $127,609 in 1993 and $114,630 in 1994; (denied)
(m) for the shows, aside from the appellant and her spouse, the payer employed a dozen waiters and actors and two other employees in the establishment’s kitchen; (denied)
(n) the appellant’s work mainly involved preparing meals, looking after the payer’s place of business and keeping the business’s books; (denied)
(o) the appellant claims that she worked 40 hours a week; (denied)
(p) the appellant’s hours of work were not controlled or recorded by the payer; (denied)
(q) the appellant received a fixed salary of $400.00 a week; (denied)
(r) the workload generated by the performances during the periods at issue did not justify the appellant’s full-time employment; (denied)
(s) the periods at issue do not correspond to the payer’s periods of activity; (denied)
(t) the appellant provided services to the payer outside the periods at issue while she was receiving unemployment insurance benefits; (denied)
(u) the payer and the appellant entered into an arrangement for the purpose of qualifying her for unemployment insurance benefits; (denied)
(v) there was no genuine contract of service between the appellant and the payer during the period at issue. (denied)
[7] The payer was established as a co-operative on June 2, 1986. Its business involved running an establishment that offered dinner show packages. From 1977 to 1986, the appellant Monique Lanthier and the appellant Robert Lanthier, her spouse, ran the establishment under the name “La Butte à Mathieu”. The land and building used by the payer have been owned by the appellant Monique Lanthier since 1977. During the periods at issue, Ms. Lanthier leased her property to the payer for $1,000 a month.
[8] In 1992, the payer put on performances every Saturday from February 15 to December 19. In 1993, the payer put on performances every Saturday from January 30 to September 25 and from November 6 to December 18 and on Thursday evenings in October. In 1994, the payer put on performances every Saturday from March 4 to December 17.
[9] According to Monique Lanthier, the employees put on stage shows and wait on customers. The waiters and waitresses serve as hosts during the evening. There is a show between each sitting. The establishment seats 350, and all the members of the co-operative were present during the periods referred to in the appeals. If there were 350 people, there might have been 20 employees.
[10] Fall is the busiest period. July and August are the months during which the shows and costumes are prepared.
[11] During the periods at issue, Monique Lanthier handled ticket sales, the cooking and purchasing. As treasurer of the co-operative, she prepared the payroll. Only the four members of the co-operative were on the payroll. The other employees were paid in cash every week.
[12] According to the payroll, Monique and Robert Lanthier worked 40 hours a week at $10 an hour from July to December of each year. From February to July, they worked two to six hours a week and were paid based on the hourly rate. Monique Lanthier admitted that she did some work for the payer without pay. She had to perform the work associated with her position, since as a member of the co-operative she was directly concerned. She prepared the meals at home and took them to the theatre, which was a five-minute walk away. The hours she worked were not recorded, and the members exercised control over themselves.
[13] Ms. Lanthier argued that she and the other members worked 40 hours a week during the busy period, that is, in the fall. However, on cross-examination, she admitted that Exhibit I-1 indicates the days on which shows were put on from February to December of each year, which works out to one show a week.
[14] As the owner of the building, Monique Lanthier also sometimes collected rent from the payer. The financial statements prepared by Gaétan Mongrain, an accountant who testified at the hearing, show that she incurred at least $30,103 in rental losses. Moreover, she reported such losses every year on her personal tax return. According to Mr. Mongrain, the losses resulted from the fact that Ms. Lanthier had to make the insurance and mortgage payments and pay for maintenance and repairs in respect of the leased building. She paid to heat the building when the payer could not afford to do so.
[15] In making his decision concerning the appellant Robert Lanthier, the appellant Monique Lanthier’s spouse, the Minister relied on the facts alleged in the Reply to the Notice of Appeal. Very few of those facts were admitted by Mr. Lanthier at the hearing.
[16] Mr. Lanthier testified that his work involved doing repairs and building maintenance. He also had to do promotional work at the conference centre and at flea markets. He handled ticket sales at the reception desk. He worked 40 hours a week from July to December of each year and was paid $10 an hour. On the payroll, he is listed as the manager of the establishment. Exhibit I-9, which is supposed to indicate the hours worked by Mr. Lanthier, shows that he mainly did repairs and building maintenance. The document indicates that he did promotional work at various places. However, it does not say that he handled ticket sales. There is therefore a contradiction between the document and his testimony.
Monique Lanthier’s testimony
[17] With respect to Robert Lanthier’s appeal (97-1115(UI)), Robert Lanthier is alleged to have worked for Village Hanté Inc. from June 3 to December 16, 1995. That company was incorporated in 1991 but began running the theatre in 1995, putting on dinner shows. The payer’s capital stock was held as follows: Robert Lanthier, Monique Lanthier, Pierre Lanthier—Robert’s son—and Mario Vadnais. The land and the building where the theatre was located were owned by Monique Lanthier. In his testimony, Robert Lanthier admitted that his duties were the same when he worked for Coopérative des travailleurs du Café-théâtre de la Butte de Val-David. There was therefore common evidence in these appeals.
[18] The appellant Gilles-Laurent Martin allegedly worked for the payer during the following periods: September 8 to December 19, 1992, July 12 to December 18, 1993, and August 22 to December 17, 1994. He was on the board of directors, which was composed of four members, including Pierre David, Robert Lanthier and Monique Lanthier. His work involved promotion and telemarketing. According to Mr. Martin, he worked at home in Montréal during the week and in Val-David on weekends. His hours of work in Montréal were 9:00 a.m. to 9:00 p.m., but they were not recorded. There was no control over the hours he worked when he was in Montréal; the good faith of the worker was relied upon. Robert Lanthier said that he assumed Mr. Martin worked 20 to 25 hours a week. That assumption was based on the results achieved by Mr. Martin; no evidence was adduced to prove those results. On Saturday evenings, Mr. Martin served as host and did shows at the Café-théâtre de la Butte. The next day, he cleaned the rooms.
[19] During the periods at issue, Mr. Martin did 27 cruises, mostly between August and November. The cruises took him to Boston, St. Pierre and Miquelon or the Saguenay. He did three cruises a week, which translates into a dozen a year. During that entire time, he was on the payer’s payroll from August to December of each year and was paid $300 a week.
[20] With regard to the appellant Larissa Bélova, the Minister relied on the following facts in making his decision:
[TRANSLATION]
(a) the payer is a workers’ co-operative; (admitted)
(b) at the beginning of the period at issue, the payer’s board of directors was made up of Robert Lanthier, Monique Lanthier, Pierre David and Gilles-Laurent Martin; (admitted)
(c) the appellant became a member of the board of directors on July 6, 1994, replacing Pierre David; (admitted)
(d) on July 15, 1994, the appellant subscribed for 250 shares worth $10 each; (admitted)
(e) the appellant never provided any consideration for her shares in the payer; (denied)
(f) during the period at issue, the appellant received 100 more shares in exchange for costumes, equipment and choreography and 30 additional shares for spending time at the flea market; (admitted)
(g) on December 18, 1994, the appellant resigned from the payer’s board of directors and gave up all of her shares; (admitted)
(h) during the period at issue, the payer ran a dinner theatre in the municipality of Val-David; (admitted)
(i) the appellant served as the payer’s artistic director during the period at issue; (admitted)
(j) the appellant also took part in the shows as a dancer; (admitted)
(k) during that period, the payer put on one show a week, on Saturday evenings; (admitted)
(l) seven or eight performers took part in the variety show (music, dance, singing); (admitted)
(m) the appellant and her spouse ran their own theatre business under the firm name “The Moscow Show”; (admitted)
(n) the appellant was paid $400.00 a week in cash; (admitted)
(o) the payer also paid The Moscow Show $450.00 per show; (denied)
(p) the business of the appellant and her spouse bore the cost of part of the costumes, music, props and performers’ fees; (denied)
(q) the business of the appellant and her spouse paid for and retained ownership of part of the costumes; (denied)
(r) during the period at issue, there was no contract of service between the appellant and the payer. (denied)
[21] On July 6, 1994, Larissa Bélova became a member of the board of directors, replacing Pierre David. On July 15, 1994, she subscribed for 250 shares worth $10 each. According to Ms. Bélova, she provided as consideration for the shares costumes she had made. On December 18, 1994, she resigned from the board of directors and gave up all of her shares.
[22] During the period at issue, that is, from July 19 to December 6, 1994, Ms. Bélova served as artistic director. She took part in the Saturday evening show as a dancer. According to Ms. Bélova, she prepared the show and did the setup, which could take up two or three days of her time. In addition, she did promotional work in Montréal and Longueuil, Quebec. She said that she worked with Pierre David and Robert Lanthier, but especially the latter. It should be noted that Robert Lanthier’s responsibilities were actually limited to doing repairs and building maintenance.
[23] Monique Lanthier stated that Larissa Bélova worked 40 hours a week for a salary of $400. She rehearsed her shows. She also worked in Montréal doing research. Ms. Lanthier added that she trusted Ms. Bélova, since she did not have regular working hours but worked five or six days a week for a total of 40 hours.
[24] The appellant Larissa Bélova and Dimitri Mourkerss established a corporation under the name “The Moscow Show”. In 1994, that corporation’s income was $11,450 and its expenses were $13,434, so that it incurred a $1,984 loss. Monique Lanthier said that she did not deal with The Moscow Show. However, Larissa Bélova declared that her husband helped her with shows and did shows himself and that he had prepared a mask for the shows.
[25] These are the salient facts revealed during the hearing of these appeals. To properly distinguish a contract of service from a contract for services, it is necessary to examine the whole of the various elements which constitute the relationship between the parties.
[26] In its decision in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, the Federal Court of Appeal recognized that there are four basic criteria for distinguishing a contract of service from a contract for services. They are as follows:
(a) the degree or absence of control exercised by the employer;
(b) the degree of integration of the work;
(c) ownership of the tools;
(d) the chance of profit and the risk of loss.
[27] It must be acknowledged that a shareholder in a company can be employed by that company. However, that employment must be pursuant to a genuine contract of service.
[28] The evidence showed that here the terms and conditions of employment were not such as would be found in a genuine contract of service. The four appellant workers were company shareholders who had not paid for their shares. They worked irregular hours in Val-David, Montréal and other places without being subject to any control. According to Monique Lanthier, [TRANSLATION] “we trusted one another”. The evidence did not show that the appellant workers worked 40 hours a week if one considers the fact that shows were put on one evening a week during the periods at issue. According to the appellants, the payer’s activities required that they put in 40 hours of work a week from July to December of each year but only four hours per week the rest of the year.
[29] The appellant Monique Lanthier said that she purchased vegetables during the week and prepared the meals at home on Thursdays. She indicated that she worked without pay and took telephone calls at home. Robert Lanthier had to go to the theatre whenever suppliers delivered goods.
[30] The appellant Gilles-Laurent Martin stated that he did promotional work for the payer in Montréal and that his hours were not recorded, but Exhibit I-6 shows that he did just three days of promotion in September 1992 and three in August 1993. While Mr. Martin was providing the payer with 40 hours of services a week, he was doing cruises for another company.
[31] The appellant Larissa Bélova said that she did promotional work for the payer. However, Exhibit I-7 indicates that she did such work for only four days in September 1994 and two days in October 1994. Monique Lanthier declared that she did not deal with The Moscow Show, which was owned by Ms. Bélova and her husband. However, Ms. Bélova said that her husband helped her and took part in shows. Her husband’s name was not on the employees’ payroll. This casts doubt on the contractual relationship that Ms. Bélova and her husband had with the payer.
[32] Services were provided by the appellant workers, but it cannot be concluded that they were so provided under a contract of service. In the ordinary course of business, it is inconceivable for employees to have so much freedom to act without any supervision or control. Of all the payer’s employees, only the appellant workers were on the payroll. The appellants have not discharged their burden of proof. None of the other tests that must be met for there to be a contract of service need be examined.
[33] In the circumstances, it is clear that the reason for the contractual relationship between the appellant workers and the payer was to enable those workers to receive benefits under the Unemployment Insurance Act.
[34] In light of all these facts, it is reasonable to conclude that there existed between the appellant workers and the payer no genuine contracts of service within the meaning of paragraph 3(1)(a) of the Act.
[35] The appeals are dismissed and the Minister’s decisions are confirmed.
Signed at Ottawa, Canada, this 16th day of March 1999.
“J.F. Somers”
D.J.T.C.C.
Cases cited by D. Rainville
Raymond-Guy Gallant v. M.N.R., A-1421-84, Mr. Justice L. Pratte, F.C.A., May 22, 1986
Ephrem Pellerin v. M.N.R., A-609-86, Mr. Justice L. Pratte, F.C.A., October 1, 1987
Ranjit Darbhanga v. M.N.R., A-259-94, Mr. Justice L. Pratte, F.C.A., March 21, 1995
Aline Dion v. M.N.R., 90-149(UI) and 90-170(UI), Judge A. Garon, T.C.C., April 24, 1991
Yvano Gosselin v. M.N.R., 92-1005(UI), Judge L. Lamarre Proulx, T.C.C., September 14, 1993
Jean Croteau v. M.N.R., 95-609(UI), Judge A. Tardif, T.C.C., April 16, 1996
Cases cited by S. Morin
Andrée Carpentier and M.N.R. and Les Cimentiers R.G. Inc., 94-1387(UI), Judge P.R. Dussault, T.C.C., March 31, 1995
Brigitte Gauthier v. M.N.R., 92-3(UI), Judge L. Lamarre Proulx, T.C.C., April 2, 1993
Françoise Bellehumeur v. M.N.R., A-525-94, Mr. Justice R. Décary, F.C.A., May 19, 1995
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 15th day of March 2000.
Erich Klein, Revisor