Tax Court of Canada Judgments

Date: 19990511

Docket: 97-230-UI; 97-231-UI; 97-238-UI; 97-232-UI; 97-234-UI; 97-553-UI

BETWEEN:

2741-4150 QUÉBEC INC.

O/A LES GOUTTIÈRES DU ROY ENR.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

YVES MICHAUD,

Intervener,

AND

BETWEEN:

2741-4150 QUÉBEC INC.

O/A LES GOUTTIÈRES DU ROY ENR.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

BETWEEN:

2741-4150 QUÉBEC INC.

O/A LES GOUTTIÈRES DU ROY ENR.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

SÉBASTIEN MOREAU,

Intervener,

AND

BETWEEN:

2741-4150 QUÉBEC INC.

O/A LES GOUTTIÈRES DU ROY ENR.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

CLAUDE ROY,

Intervener,

AND

BETWEEN:

JEANNOT LAMOTHE,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Garon, A.C.J.T.C.C.

[1] In five of the six cases before the Court, the appellant is 2741-4150 Québec Inc. (the payer), which carried on business under the firm name “Les Gouttières du Roy Enr.” Each of those five appeals concerns the insurability of the employment held by one of the five workers referred to below during the period or periods noted below. Those periods fall within the years 1990 to 1995.

[2] The payer’s appeal numbered 97-230(UI) concerns the employment of Yves Michaud, and the periods at issue are as follows:

February 4 to December 22, 1990; and

March 24 to November 3, 1991.

[3] The payer’s appeal numbered 97-231(UI) relates to the employment of the appellant Jeannot Lamothe, and the periods at issue are indicated below:

March 20 to December 27, 1992;

March 28 to December 26, 1993; and

April 10 to August 11, 1995.

[4] The payer’s appeal numbered 97-232(UI) concerns the employment of Sébastien Moreau. The periods in dispute are as follows:

February 4 to December 22, 1990;

March 24 to November 3, 1991;

March 20 to December 26, 1992; and

March 28 to December 26, 1993.

[5] The payer’s appeal numbered 97-234(UI) involves the employment of Claude Roy, and the relevant period is from February 27 to December 10, 1994.

[6] Appeal 97-238(UI) involves the employment of Carl Girard during the following periods:

May 27 to November 8, 1991;

June 1 to October 30, 1992; and

May 30 to November 4, 1994.

[7] In addition to the payer’s five appeals concerning the employment of the above-mentioned workers, one of those workers has availed himself of his right to appeal, namely the appellant Jeannot Lamothe. The periods at issue in his appeal are those referred to above in connection with the payer’s appeal numbered 97-231(UI), which concerns Jeannot Lamothe's employment.

[8] In each of the six appeals, the decision by the Minister of National Revenue (Minister) with respect to each worker’s employment states that the worker did not hold insurable employment because there was no genuine contract of service between the payer and the person whose employment is at issue. In making the said decisions on the above-mentioned five workers, the Minister relied on similar allegations set out in each Reply to the Notice of Appeal. As an example, I will refer to the allegations in paragraph 6 of the Reply to the Notice of Appeal in file No. 97-232(UI), which concerns Sébastien Moreau’s employment:

[TRANSLATION]

(h) on September 28, 1993, the appellant issued a record of employment to the worker stating that he had worked 13 weeks between September 21, 1992, and September 24, 1993, and that his insurable earnings were $6,760.00;

(i) the records of employment are false and inconsistent with reality in terms of the periods worked and the remuneration actually received;

(j) the appellant and the worker entered into an arrangement to enable the latter to obtain unemployment insurance benefits higher than those to which he would normally have been entitled;

(k) during the periods at issue, there was no genuine contract of service between the appellant and the worker.

[9] The six appeals were heard on common evidence with four other appeals, three of which were instituted by the payer and concerned the insurability of the employment of two of its salespersons, Raymond Dallaire and Yvon Gaudreault, and of two other employees, Gilles Gagnon and Richard Bradette. The fourth appeal was instituted by one of those employees, Richard Bradette. In those four appeals, the respondent consented to judgment at the end of argument at the common hearing of the ten appeals, acknowledging the insurability of the employment of each employee involved.

Marcel Tremblay

[10] To begin with, the payer’s president and sole shareholder, Marcel Tremblay, provided general information about the payer and the management of its business. In addition to his financial interest in the payer’s business, Mr. Tremblay owned a few apartment buildings, a restaurant, a bar and a furniture store. He testified that Serge Tremblay was his business partner in a few of those businesses and that they often exchanged services. The payer ran a business installing eavestroughs on commercial and residential buildings. Serge Tremblay often looked after the management of that business and, in particular, processed invoices and handled the employees’ pay. When Marcel Tremblay was unavailable, Serge Tremblay took over and handled employee management. The payer’s business had the benefit of the services of an accountant. Serge Tremblay was the one who prepared the employees’ work schedules.

[11] The payer had between five and eight employees during the relevant period, depending on the workload. The payer’s activities were seasonal. The business employed travelling salespersons who solicited customers. In some cases, Marcel Tremblay and Serge Tremblay went to see customers themselves. During the very busy periods, the salesperson was often the one who called on the customer. The payer also obtained contracts through other contractors, or through contacts and referrals. Marcel Tremblay said that he kept an eye on the construction of new buildings with a view to later approaching the owners about installing eavestroughs. He gave his salespersons the addresses of such buildings. Once the eavestrough installation contracts were signed, Serge Tremblay assigned the work to the workers.

[12] Marcel Tremblay was familiar with the physical work involved in installing eavestroughs. He said that he was capable of installing them himself and that he in fact did so for an average of about ten days a year during the period at issue. Sometimes, if there were not enough employees, he went to help with the eavestrough installation himself. He was not involved in looking after the business’s accounting operations. However, he did sign the cheques issued by the payer. He thus knew each employee and the periods during which they worked.

[13] Marcel Tremblay confirmed that he was not an employee of the payer. He spent his time mainly on sales and occasionally on eavestrough installation. He admitted that, although he trusted Serge Tremblay, he still checked some of the accounting data concerning the business and the level of customer satisfaction. He said that he had no idea what the workers were paid. Until he sold his restaurant in November 1992, he split his time between it and the payer’s business. Day-to-day decisions on the management of the payer’s business were made by either him or Serge Tremblay. A chartered accountant, Alain Drolet, issued the records of employment and did the bookkeeping. Mr. Drolet also kept the restaurant’s books of account while Marcel Tremblay was the owner. Serge Tremblay was the one who gave the accountant the information he needed to prepare the documentation required concerning the installers’ wages.

[14] Eavestrough installation was normally done by a team of two people. In some cases, an installer could work alone. Sometimes, a crew of three installers might be necessary for a large building. After 1993, Marcel and Serge Tremblay did the promotional work for the payer’s business themselves. The payer had only one truck. Since the installers worked in teams of two, there could be just two installers working for the payer at one time. Thus the names of at least two installers had to be on the payroll for a given period. However, Marcel Tremblay stated that, although normally two employees worked together, there could be exceptions. For example, he might replace a worker on sick leave. In such a case, Marcel Tremblay's name would not have been entered on the payroll because he was not one of the payer’s employees, as noted above.

[15] In his statutory declaration to Human Resources Development (Exhibit I-5), Marcel Tremblay said that he could not explain the discrepancies between the weeks for which the employees received unemployment insurance benefits and the weeks in which they worked according to the payroll record kept by the payer. At trial, he said that his statutory declaration was valid.

[16] He added that the periods when the salespersons worked differed from those when the installers worked. Eavestrough installation contracts might well be entered into at a time when the payer had no installers working for it. The payer’s managers waited to have a sufficient number of contracts before hiring installers. In an emergency, Marcel Tremblay installed the eavestroughs himself.

Serge Tremblay

[17] Serge Tremblay’s testimony for the payer provided the most information on how the payer was managed during the periods at issue. Mr. Tremblay described himself as a businessman who managed businesses owned by him or Marcel Tremblay. He said that in particular he took care of managing the payer. He did not own any of the payer’s capital stock. According to him, Marcel Tremblay took over the general management of the payer’s business around September 1989. Serge and Marcel Tremblay simply continued operating that business in 1989.

[18] In 1990, they made some new arrangements. They decided to hire a full-time salesperson, Raymond Dallaire, who had a great deal of experience in eavestrough sales and the operation of an eavestrough installation business. Mr. Dallaire had been working for an eavestrough installation firm since 1978. For the payer, he planned the installers’ work and discussed marketing strategies with Serge Tremblay and Marcel Tremblay. When he joined the payer’s business, he brought some customers with him. Exhibit I-9 includes a number of invoices and eavestrough installation contracts signed by Mr. Dallaire. Many of those contracts are from the first few months of 1990, well before he was working for the payer. The contracts were from Mr. Dallaire’s former employer and were handed over to the payer when he began working there. Mr. Dallaire had to leave his employment with the payer at the end of 1990 because he was ill.

[19] He was replaced as a salesperson by Yvon Gaudreault, who began working for the payer in July 1991. He also worked with the installers. If, for example, there was urgent work to be done and the installers were in the neighbourhood, Mr. Gaudreault asked them to do the necessary work. He left the payer in September 1993 to take employment with an insurance company.

[20] In April of each year, the payer received telephone calls about eavestrough installation work. The busiest period was from May to the end of September. Installation work was sometimes done after that period when there were too many contracts. However, Serge Tremblay testified that he always tried to group together the contracts to be performed in a given area in order to reduce the transportation costs associated with those contracts.

[21] The installers’ work was simple: they just installed the eavestroughs. Serge Tremblay was the one who determined the work they had to do. He planned their day or week based on the workload and the available contracts. He also checked their work. However, the installers decided when they would start their work, based on the weather. At the end of the day, Serge Tremblay checked the state of the work done by the installers so that he could tell them what work to do the following day. In many cases, the salesperson followed up with customers to determine how satisfied they were with the work done. If a customer was dissatisfied, the salesperson discussed this with Serge Tremblay.

[22] The installers generally worked in teams of two. In 1990, there were two installers working for the payer, Yves Michaud and Sébastien Moreau, and one salesperson, Raymond Dallaire, as I have just noted. Serge Tremblay said that both Mr. Michaud and Mr. Moreau began working that year on April 8 and stopped on August 19. At that time, it was Mr. Dallaire who assigned work to the installers, but he consulted Serge Tremblay about the various matters relating to performance of the contracts. In 1992, Jeannot Lamothe and Sébastien Moreau worked together for the payer from April 5 to December 5. In 1993, the same two installers also worked together from April 5 to October 21. Finally, in 1994, Claude Roy and Richard Bradette worked from May 7 to November 24.

[23] In the case of Sébastien Moreau, small amounts were noted in the payroll record for certain weeks in 1991, for example. Serge Tremblay explained that the pays involving low amounts often related to periods in which urgent work had to be done. He therefore undertook to find other short-term contracts to complete the work week, such as eavestrough cleaning or simply the removal of old eavestroughs. The installers were paid for their work by cheque.

[24] Serge Tremblay said that Yves Michaud worked for the payer as an installer in 1990 and 1991, as shown in the records of employment and the extracts from the payroll record (Exhibit A-9). He did the same work as Sébastien Moreau and was paid the same way. According to Serge Tremblay, Jeannot Lamothe worked for the payer as an installer in 1992, 1993 and 1995, as can be seen from Exhibits A-4 and A-10.

[25] Serge Tremblay explained that Carl Girard did various types of work. He said that Mr. Girard was quite talented. In 1994, however, Mr. Girard worked for the payer as an eavestrough installer after another worker was the victim of a work accident. Aside from 1994, when he worked as an installer, Mr. Girard did all sorts of repairs and installed eavestroughs when the payer did not have enough employees or there was extra work.

[26] The content of the payer’s invoices was the same from 1990 on. Serge Tremblay, Marcel Tremblay, Raymond Dallaire, Yves Michaud and Sébastien Moreau had invoices with them so that they could sell contracts. Serge Tremblay said that in fact the invoices were actually “bid contracts”. He explained why the invoice numbers were not consecutive. Only the invoices documenting a sale were kept. On those invoices appeared the customer’s name, address, telephone number and signature, if possible, as well as a description of the work to be done, the choice of eavestrough colours and the price. However, it sometimes happened in the case of minor work that it was not described on the invoice. Aside from the invoices, statements of account were sent every month to customers that had not paid.

[27] The invoices also showed whether the work had been paid for or if there was a balance owing. The work delivery date was indicated as well. It often happened that the work was not done at the time of the sale either because the customer was not ready or because the payer did not have enough work to be done to contact the installers. The invoices might even be prepared after the eavestroughs were installed. They did not state when the installers had done their work. The installers gave the invoices to Serge Tremblay after the work was done.

[28] The installers were paid based on the number of feet of eavestroughs they installed. That number was then multiplied by a given factor. The number of feet of old eavestroughs and the number of hours worked were also taken into account in calculating their wages.

[29] One of the two installers on the team gave Serge Tremblay a report for the week in question showing the number of hours worked and the number of eavestroughs installed. The installers might not have finished by the end of the week all the work assigned to them at the beginning of that week. They could in that case continue their work the following week. Using that information, Serge Tremblay determined their wages and contacted the accountant, Mr. Drolet, to have him prepare the necessary paycheques. The cheques were then given to the installers by either Marcel Tremblay or Serge Tremblay.

[30] Serge Tremblay was the one who decided when the season began and ended based on the weather and the contracts obtained. He began hiring installers when at least two weeks’ work was scheduled. It was he who assigned the workers their work. As for the day’s schedule, the installers decided on the time they would begin installing the eavestroughs. Serge Tremblay established their objectives for the day. In addition, a week was spent putting the equipment and inventory in order either at the beginning or at the end of the season; any necessary repairs were done at that time. Serge Tremblay also dealt with orders and purchases. From 1994 on, there were no more salespersons working for the payer and Marcel Tremblay and Serge Tremblay looked after the sale of eavestrough installation contracts themselves.

[31] Serge Tremblay said that at some point Mr. Maltais, an investigator for the Department of Human Resources Development, contacted the payer’s employees about the insurability of their employment. A few months later, Mr. Maltais discussed the same matter with him. Serge Tremblay gave Mr. Maltais the requested documents and he subsequently had an interview during which he was questioned. He also made a written declaration. He and Marcel Tremblay went to Sherbrooke to meet with the Revenue Canada officials involved in the investigation and to provide all the necessary explanations. According to Marcel Tremblay, they were unable to persuade the Revenue Canada officials because they were not well enough prepared and did not have a lawyer with them. In short, Serge Tremblay said that the Government of Canada’s officials and investigators responsible for the files at issue here and the related files accused the payer’s managers of fabricating false records of employment and of claiming to have hired employees who had not really worked for the payer.

[32] Serge Tremblay said that the investigator, Mr. Maltais, gave him vague explanations as to why the installers’ employment was not insurable. Mr. Maltais had done calculations and prepared a working document. He told Serge Tremblay that there were some weeks when no work had been done even though paycheques had been issued. According to Serge Tremblay, Mr. Maltais had prepared his document using the invoices and payroll records and it did not reflect the facts.

[33] At the time of the investigation, Serge Tremblay could not explain the dates appearing on the invoices. He testified that, after thinking about it, he considers it likely that the dates were indicated for the purposes of the warranty given to customers. Serge Tremblay prepared a table similar to the one prepared by Mr. Maltais in which he placed the 1992 invoices in two categories. Exhibit A-5 shows the dated invoices, which are for contracts totalling $46,459.48. Exhibit A-6 is a table of the undated invoices, for contracts totalling $36,166.80. Serge Tremblay argued in his testimony that, if he took the same approach as Mr. Maltais, it would mean that the total of $36,166.80 for the undated eavestrough installation invoices did not correspond to anything real and that the eavestroughs had not been installed. He also explained that the tables contain boxes in which the amount is $0.00. These relate to “bids” where the customer has decided not to enter into an eavestrough installation contract. Serge Tremblay chose 1992 for illustration purposes because no dates appeared on the invoices in 1993. Moreover, if we look, for example, at July 1992, which was a very busy time for the payer in terms of eavestrough installation work, the total shown on the dated invoices is $2,800 even though sales of eavestrough installation contracts actually amounted to $9,021 and wages of $4,600 were reported for that month. Thus, according to Serge Tremblay, it would be illogical for the total wages for July 1992 to be so high in comparison with the total amounts shown on the dated invoices. He also said that the payer was not required to cease operating during the construction workers’ holidays.

[34] Serge Tremblay is convinced that Mr. Maltais, the investigator from the Department of Human Resources Development, and Francine Sévigny and Johanne Nicol, the Revenue Canada officials in the town of Sherbrooke, relied on the invoices as evidence in reaching the conclusion that the records of employment were false and that the employment of the payer’s employees was therefore not insurable.

[35] On cross-examination, Serge Tremblay also explained the discrepancies between the records of employment and the table in Exhibit A-4. For example, Sébastien Moreau’s record of employment (Exhibit A-8) shows that his last day of work was August 25, 1991. However, that date does not appear anywhere in the table. According to Serge Tremblay, it is possible that there was no more work around August but that the payer subsequently obtained contracts and the worker was rehired, which had the effect of postponing the date his employment ended. In the meantime, the worker received a record of employment so that he could claim unemployment insurance benefits. Thus, for a given year, if a worker’s actual work period ended after a record of employment was issued, that end date was not shown on the record.

[36] Moreover, the records of employment related only to a period of 20 insurable weeks. Serge Tremblay said that only the 20 insurable weeks were noted on the records of employment. Two calendar years might overlap on a record of employment. In some cases, as with Sébastien Moreau when he did not work 20 insurable weeks in one calendar year, Serge Tremblay included the weeks that had not been included in the previous record of employment.

[37] According to Serge Tremblay, it is quite normal for employees who work part time to receive unemployment insurance benefits during the weeks when they do not work. If they work during a given week, they have simply to report their income for that week on a “card” they receive weekly. A week during which they do not work will thus be taken into account in calculating their unemployment insurance benefits. In short, if the work ended after several consecutive weeks of work, the payer issued a record of employment. The payer could later rehire the same person if necessary. The dates shown in the table in Exhibit A-4 therefore cover the entire period when an employee worked during a calendar year, even if there were interruptions during that period.

[38] Serge Tremblay also said that, in many cases, an employee may have worked mainly for the payer but may also have worked for the other businesses owned by Serge Tremblay or Marcel Tremblay. When work was done by the payer’s workers for businesses owned by one of those two men, those employees were paid by the business concerned if it had an employer number. He said that Immeubles S.M.T. did not have an employer number. On this point, Serge Tremblay also noted that it was expensive to take the steps required to obtain an employer number for businesses like Immeubles S.M.T. that do not often need employees’ services. In addition, firms with such a number have to submit a declaration each month, which in his opinion is a tiresome requirement.

[39] Serge Tremblay also told the Court that the Bar Une Pierre Deux Coups, which was owned by Marcel Tremblay, had an employer number. If one of the payer’s employees worked for that bar, he was almost always paid by the bar, since it had such a number. For example, Carl Girard worked for both the payer and the bar at the same time.

[40] Serge Tremblay added that he himself completed the eavestrough installation contract documents only very rarely, and he explained this by his physical inability to perform that function. The invoices were completed by the salesperson, by the installer, sometimes by the person who accompanied Serge Tremblay when he sold eavestrough installation contracts or even by the customer. He also said that Raymond Dallaire regularly accompanied him to help him measure the length of the eavestroughs needed, even after Mr. Dallaire had stopped working for the payer.

[41] The payer’s income for each month corresponded to the total of the amounts shown on the eavestrough installation invoices for the month in question, even if the price shown on the invoices had not been paid.

[42] Finally, Serge Tremblay admitted that he had discussed the investigation with all the employees who were on the payroll. It was not until penalties were imposed on the employees that he and Marcel Tremblay decided to appeal the decisions in question.

[43] I will now look at the testimony of four of the five workers the insurability of whose employment is at issue in these proceedings. They are Yves Michaud, Jeannot Lamothe, Sébastien Moreau and Carl Girard. The fifth worker, Claude Roy, was unable to testify since he was out of the country when the appeals were heard.

Yves Michaud

[44] Yves Michaud testified that he worked for the payer as an eavestrough installer in 1990 and 1991 with Sébastien Moreau. However, as a result of a work accident, he received workers’ compensation benefits from the CSST for one month in 1991 and Carl Girard replaced him as an eavestrough installer during that time. Mr. Michaud said that he did not see Mr. Girard in 1990 or during the rest of 1991. He did not know whether other installers worked for the payer in 1990 and 1991. However, he said in the statutory declaration he made during an interview with Mr. Maltais that the payer had only one truck and one team of installers in 1990 and 1991.

[45] Mr. Michaud said that he went to pick up the invoices in the morning, installed the eavestroughs and then generally gave those documents to Serge Tremblay or Marcel Tremblay at the end of the day. The date on the contract could be either the installation date or the date the contract was entered into; it could have been written in by the accountant or by Serge Tremblay.

[46] Mr. Michaud was laid off in 1990 and 1991 because of a shortage of work. According to him, [TRANSLATION] “work was accumulated” but there was no [TRANSLATION] “banking of hours”. In some cases, he discussed with Serge Tremblay whether it was appropriate or cost-effective to travel to install eavestroughs. He was paid to install eavestroughs and not to do advertising using the payer’s truck. He said that, for example, he would not have travelled 60 kilometres for a job that would take two hours. On the other hand, he could do a single installation job at a given place for an entire day.

[47] Employees were paid according to the number of feet of eavestrough installed. On this point, he added that a team of installers could install 2,000 feet of eavestroughs in one week of work. On a good day of work, 500 or 600 feet of eavestroughs could be installed. Mr. Michaud said that he was paid by the hour if he had to remove eavestroughs, do stocktaking at the warehouse or repair the truck. He was paid by cheque the week after the week he worked.

[48] According to Yves Michaud, Serge Tremblay was his boss. The vehicles and tools used to install the eavestroughs were owned by the payer.

[49] Mr. Michaud said that, at the time, he did not know the number of weeks needed to be entitled to unemployment insurance benefits.

Jeannot Lamothe

[50] Jeannot Lamothe testified that he worked for the payer in 1992, 1993 and 1995 and that he worked with Sébastien Moreau in 1992 and 1993. He recalled working with a Jackie Paul in 1995. He did not remember whether there were other installers in 1995. He did not think that he worked with Carl Girard.

[51] He performed five or six contracts a day at Serge Tremblay’s request and reported to him at the end of the day. In general, Sébastien Moreau was the one who met with Serge Tremblay in 1992 and 1993. According to Mr. Lamothe, the work method changed in 1995; follow-up became more strict. He also said that, in some cases, he installed eavestroughs and the contract was prepared later. Eavestroughs were not installed during the winter. Moreover, he did not work on days when it was raining or there were strong winds. On average, he installed between 1,500 and 2,000 feet of eavestroughs a week. He said that he agreed with Yves Michaud’s testimony that a crew could install up to 2,000 feet of eavestroughs in a good week of work.

[52] Mr. Lamothe asked Serge Tremblay if he could [TRANSLATION] “consolidate his pays to make big weeks”; his request was denied the next day. He takes issue to some extent with the account of a telephone conversation he had with an employee of the Department, according to whom he [TRANSLATION] “consolidated his pays”.

[53] He was paid by cheque the week after the week he worked. He said that the dates on the invoices were not written by him. With regard to his statutory declaration in which he stated that the eavestrough installation dates were indicated on the invoices, he argued that that did not mean the dates had been written by him.

[54] He was laid off because of a shortage of work.

[55] The tools and the vehicle were owned by the payer.

[56] Mr. Lamothe said that he did not know how many weeks were needed to be eligible for unemployment insurance benefits.

Sébastien Moreau

[57] Sébastien Moreau testified that he worked for the payer as an eavestrough installer in 1990, 1991, 1992 and 1993. His co-workers were Yves Michaud in 1990 and 1991 and Jeannot Lamothe in 1992 and 1993. He did not know whether there were other people installing eavestroughs for the payer during those years.

[58] Mr. Moreau recalled that Carl Girard came to help him, but he did not remember when. To the best of his knowledge, he installed eavestroughs with another person during each of 1990, 1991, 1992 and 1993 because the work required a team of two people. Each week, the eavestrough installation contracts were given to Serge Tremblay as a work report. When he had contracts to be performed, he may have worked more hours in a given week to increase his pay. The date on an invoice could be the scheduled installation date, the sale date or the date when the warranty began. He explained that the warranty date could have been determined so as to enable a customer to actually have a longer warranty period.

[59] Mr. Moreau admitted in particular that, during the period from April 8 to October 27, 1990, there were weeks when he did not work because of a shortage of work, such as during the hunting season or the construction workers’ holidays. Thus, if he worked a day or a half-day, he received wages corresponding to the hours he worked.

[60] The tools he used were not owned by him.

[61] Mr. Moreau stated that he was paid by the hour and according to the number of feet of eavestroughs installed. The installers were paid the week after the week they did their work.

[62] Mr. Moreau left his job with the payer in 1994 because of a shortage of work and subsequently moved to another area. He returned to Roberval on August 5, 1996, and is now running an eavestrough business of his own in which he is both the salesperson and installer.

Carl Girard

[63] Carl Girard testified that he worked for Marcel Tremblay from 1990 to 1994, including one year for a business other than the payer’s. He dealt only with Marcel Tremblay and Serge Tremblay and did not know whether there were salespersons working for the payer during the years in question.

[64] In 1992, he worked for the payer and the Bar Une Pierre Deux Coups, [TRANSLATION] “six weeks at one place, four at the other; six weeks as an installer, four weeks as a maintenance man”. That total corresponded to the minimum number of weeks needed to be eligible for unemployment insurance benefits.

[65] Mr. Girard testified that the employer [TRANSLATION] “accumulated his work” and did no [TRANSLATION] “banking of hours” during the periods concerned. Mr. Girard received unemployment insurance benefits when he did not work full weeks. He often worked alone, and sometimes with Marcel Tremblay, at an hourly rate of $8.00. He used the payer’s tools. He was given a separation certificate when there was no more work.

[66] He said that, during his periods of employment in 1991, 1992 and 1994, he knew the number of weeks needed to be eligible for unemployment insurance benefits.

[67] I will now refer briefly to the testimony of three employees who worked for the payer during the years in question. That testimony is part of the common evidence received at the hearing of the instant appeals and of four other appeals concerning those employees. The insurability of their employment was admitted by the respondent after all those appeals were heard, as I noted at the beginning of these reasons.

Raymond Dallaire

[68] According to Raymond Dallaire, who sold eavestrough installation contracts for the payer in 1990, the eavestrough installers were probably not short of work during the summer of 1990.

[69] Mr. Dallaire also testified that the salesperson, the installer, Serge Tremblay and the accountant could all enter information on the invoices. According to him, the invoices had to contain all necessary information. He said that the installer probably wrote down the date the eavestroughs were installed.

Yvon Gaudreault

[70] Yvon Gaudreault, who sold eavestrough installation contracts for the payer in 1991, 1992 and 1993, said that there were times during those years when he did not work, because of rain for example. He handled sales, the collection of accounts and the supervision of eavestrough installation.

[71] Mr. Gaudreault said that in the fall, and especially in September of each year, less work was done because of frost on the roofs. Moreover, the volume of eavestrough installation contracts declined after the construction workers’ holidays, since potential customers had fewer financial resources.

[72] This salesman also said that he supervised the work done by Sébastien Moreau and Jeannot Lamothe, the latter having replaced Yves Michaud for a while. He said as well that he never encountered Gilles Gagnon, Carl Girard or Émilien Guay. He added that he would have seen Carl Girard if he had been an installer during the years he worked for the payer. He also explained that a single invoice could come into the possession of the salesperson, the installers, Serge Tremblay or Marcel Tremblay and the accountant.

[73] Mr. Gaudreault left the payer in 1993 to take a job that would enable him to work 12 months a year. According to him, the payer’s busiest period during the three years he worked for it was from May to September.

Richard Bradette

[74] Richard Bradette stated that he worked with Claude Roy in 1994 and perhaps with Carl Girard. He did not think that there were other installers that year.

Johanne Nicol

[75] Johanne Nicol, a Revenue Canada official, dealt mainly with the files of five individuals working for the payer: Raymond Dallaire, Yvon Gaudreault, Gilles Gagnon, Claude Roy and Richard Bradette. The appeals concerning four of those five workers were the subject of a consent to judgment by the respondent. The insurability of the employment of the fifth worker, Claude Roy, is one of the points at issue in these proceedings. Another official, Francine Sévigny, dealt with the other files. However, it should be noted that the reports on an application or an appeal which were prepared by Ms. Sévigny and concern Jeannot Lamothe, Yves Michaud and Sébastien Moreau are for all practical purposes the same as the reports on the persons referred to above.

[76] According to Johanne Nicol’s analysis, the records of employment are inconsistent with the facts. That analysis was based largely on the table prepared by Mr. Maltais, the Department of Human Resources Development investigator. Her analysis was also based on the income reported each month, the statutory declarations and the fact that some workers had said that they had not seen a given worker during certain periods. The income earned by the employees represented only a few weeks of work even though the business operated 10 months a year. She dealt with all the payer’s employees the same way, including the four employees—Raymond Dallaire, Yvon Gaudreault, Richard Bradette and Gilles Gagnon—the insurability of whose employment is no longer at issue, as she believed that there was an arrangement between the employees and the payer. She relied, inter alia, on the fact that some invoices were marked [TRANSLATION] “installed on such and such a date” and the fact that the installers’ services were not entered in the payroll record for the corresponding weeks.

[77] According to Ms. Nicol, the employment was found to be uninsurable based mainly on the contradictory statutory declarations, the GST and QST reports and the dates marked on some of the invoices. With regard to the contradictions she noted in the statutory declarations, Ms. Nicol said that some workers were unaware of the existence of certain other people supposedly working for the payer even though there was just one team of installers and one truck. As an example of the contradictions, she referred to Yvon Gaudreault’s declaration that he had not seen Gilles Gagnon, Carl Girard or Émilien Guay in 1990 or 1991, and Jeannot Lamothe’s declaration that he had not seen Carl Girard.

[78] Ms. Nicol asserted that the accountant, Mr. Drolet, told her on the telephone that the income corresponded to the installation work that was done even though there were months for which income was reported without there being any eavestrough installers working for the payer.

[79] On cross-examination, she admitted that the periods of employment of two installers working for the payer, Yves Michaud and Sébastien Moreau, were the same in 1990 and 1991; as regards 1990, she added that the start and end dates of their employment were the same but that they did not necessarily always work the same weeks. She also admitted that Jeannot Lamothe and Sébastien Moreau worked for the payer during the same periods in 1993.[1]

Analysis

[80] The respondent’s main argument as regards the facts justifying his conclusion that the employment of the above-mentioned five workers was not insurable relates to the allegation in the Replies to the Notices of Appeal that the records of employment issued by the payer for each of those workers were false and inconsistent with reality in terms of the periods worked and the remuneration received. In the Replies to the Notices of Appeal, the respondent also relied on the general assumption that the payer had entered into an arrangement to enable each worker to obtain unemployment insurance benefits higher than those to which he would normally have been entitled. Based on all the evidence and the argument of counsel for the respondent, it seems clear that that general assumption would not have been made if the respondent had not concluded that the records of employment were false.

[81] For the purposes of assessing the evidence as a whole, it is worth noting that there was an arm's-length relationship between the payer’s representatives, Marcel Tremblay and Serge Tremblay,[2] and the installers the insurability of whose employment is at issue in these proceedings.

[82] The allegation that the records of employment were false is itself based on the fact that some of the invoices[3] have dates on them.

[83] It would be appropriate to examine the evidence on this point.

[84] The evidence shows that words such as [TRANSLATION] “installed” on a certain date were written on a number of invoices. Those invoices came into the possession of the salesperson, an installer, Serge Tremblay and the outside accountant. The words in question could have been written by any of those four individuals. There is uncontradicted testimony that, in some cases, the date referred to on an invoice could be the starting date for the warranty period. It is also in evidence that a large number of invoices had no date on them.

[85] Some of the workers testified that the dates on the invoices did not mean anything to them. Serge Tremblay confirmed that the dates were of no importance, at least, it seems, in the majority of cases.

[86] On this issue of the meaning and importance of the dates appearing on the invoices, it seems to me that the weight of the evidence clearly favours the appellants. The workers, and especially Sébastien Moreau, struck me as honest, reliable witnesses. I also accept the testimony of Serge Tremblay, who seemed truthful to me.

[87] That the dates appearing on the invoices are not significant is confirmed in a way, as counsel for the payer noted, by the fact that nearly half of the invoices were undated. If those dates were so important, how can the existence of a large number of undated invoices be explained? The respondent did not argue that the eavestrough installation work described in the undated invoices was not done. On the contrary, he seems to have taken it for granted that that work was actually performed.

[88] Moreover, the respondent did not offer any explanation for the fact that a large number of invoices were undated. If an explanation had been given, it might have made implausible the assertion by a number of the payer’s witnesses that the dates written on the invoices did not have any particular significance. It is implicit from the testimony of Serge Tremblay and of some of the workers that the fact that invoices had no date on them did not have any significance either.

[89] In her testimony, Johanne Nicol relied on the analysis carried out by Mr. Maltais from the Department of Human Resources Development. I note that Mr. Maltais did not testify. During her testimony, Ms. Nicol seemed to me to be trying to justify the respondent’s position at all costs. Her testimony on the falseness of the records of employment is not credible.

[90] Moreover, Ms. Nicol was not able to provide much information on four of the above-mentioned five workers the insurability of whose employment is at issue here, since the portion of the reports (on an application or an appeal) dealing specifically with those four individuals was written by Francine Sévigny.

[91] No direct evidence was adduced by the respondent to show the inaccuracy of the payroll records. For example, it was not shown that the paycheques given to the five workers in question were not cashed within a reasonable time after they were issued or that they were not issued about a week after the end of the work week to which the wages related.

[92] The statutory declarations of the workers whose employment is at issue, as well as those of Marcel Tremblay and Serge Tremblay, do not on any essential points contradict their testimony given at the hearing.

[93] Some of the workers, such as Yves Michaud and Jeannot Lamothe, testified that they did not recall working with some of the payer’s other employees during the periods concerned. I believe that it would be unrealistic to attach too much importance to this lack of precision given the fact that these statements by the workers were made a considerable time after the events themselves. It is no doubt a real possibility in the circumstances that these workers have confused the periods of time involved.

[94] In assessing the credibility of the testimony of Marcel Tremblay and Serge Tremblay, I have taken account of the fact that they co-operated fully with the Government’s representatives during their investigation. That co-operation was acknowledged by the respondent. They provided all the documentation needed by the government authorities and, for example, travelled a fairly great distance to go to Sherbrooke to provide explanations to the Revenue Canada officials.

[95] The Revenue Canada officials in particular relied mainly on one factor, the invoices, and did not take account of some other important information in the files. For example, the statement by the workers and the payer’s representatives that the workers were paid by cheque has not been refuted. That is not how things are usually done where there exists between the payer and a given worker a special arrangement to get around the Unemployment Insurance Act, as the respondent claimed was the case here.

[96] It was not argued for the respondent that the employment would not be insurable if I concluded that the workers in question actually worked for the payer during the periods referred to in the records of employment.

[97] I therefore conclude that, on the balance of evidence, the workers in question worked during the weeks at issue and received the remuneration shown in the records of employment.

[98] The employment of each of the above-mentioned employees was insurable during the periods relating to each of them, that is, the periods referred to at the beginning of these reasons.

[99] Accordingly, the payer’s five appeals are allowed and the employment of the five workers was insurable during the periods referred to above. Jeannot Lamothe’s appeal is also allowed. His employment was insurable during the three periods mentioned at the beginning of these Reasons for Judgment.

Signed at Ottawa, Canada, this 11th day of May 1999.

“Alban Garon”

A.C.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 31st day of March 2000.

Erich Klein, Revisor

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