Tax Court of Canada Judgments

Date: 19971103

Docket: 96-1675-UI

BETWEEN:

CHANTAL LEBRUN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

LES ENTREPRISES DE PÊCHE ERIC-CINDY INC.,

Intervener.

Reasons for Judgment

Cuddihy, D.J.T.C.C.

[1] This appeal was heard at Sept-Îles, Quebec on October 2, 1997.

I - Appeal

[2] The appellant is appealing a decision of the Minister of National Revenue ("the Minister") dated June 11, 1996, according to which the employment held during the periods at issue, from April 9 to July 7, 1990, April 7 to June 15, 1991, April 23 to June 27, 1992, April 20 to July 3, 1993, April 17 to July 16, 1994 and April 16 to July 22, 1995, with the payer Steve Noël and Les Entreprises de Pêche Eric-Cindy Inc. (hereinafter referred to as "Eric-Cindy"), was not insurable within the meaning of the Unemployment Insurance Act ("the Act"), since during those periods the appellant and the payer were not bound by a contract of service within the meaning of s. 3(1)(a) of the Act.

II - Summary of facts

[3] The respondent set out the facts on which he based his decision in his Reply to the Notice of Appeal. Paragraph 6 of his Reply reads as follows:

[TRANSLATION]

(a) Steve Noël, the appellant's de facto spouse, was owner and master of a 45-foot fishing boat used for crab fishing.

(b) Steve Noël operated an independent fishing business until March 1993.

(c) In 1990 and 1991 Mr. Noël sold his crabs to the buyer "Les Fruits de Mer Côte-Nord Inc." (hereinafter referred to as "Côte-Nord").

(d) In 1992 Mr. Noël sold his crabs to the buyer Poséidon Inc.

(e) In March 1993 Mr. Noël decided to create a corporation known as "Les Entreprises de Pêche Eric-Cindy Inc." (hereinafter referred to as "Eric-Cindy").

(f) Eric-Cindy's shareholders were:

- Steve Noël, with 61 percent of the shares

- The appellant, with 39 percent of the shares

(g) Steve Noël then transferred his fishing business to the Eric-Cindy corporation.

(h) In 1993 Eric-Cindy sold its crabs to the buyer Poséidon Inc.

(i) In 1994 and 1995 Eric-Cindy sold its crabs to the buyer Côte-Nord.

(j) Throughout the years at issue the appellant alleges she rendered services to Steve Noël (in 1990, 1991 and 1992) and Eric-Cindy (in 1993, 1994 and 1995).

(k) Throughout the years at issue it was the crab buyer who prepared the appellant's paycheques and issued her records of employment.

(l) During the periods at issue Mr. Noël or Eric-Cindy generally hired three fishermen in addition to the master during the fishing season, and also allegedly hired the appellant.

(m) The appellant allegedly had to be available to receive a call from the master of the vessel, who told her the time he would arrive at the wharf; she had to inform the company which officially weighed the crab catch and be present at the weighing.

(n) The appellant alleges she also cleaned up the boat a bit and ran various errands for Steve Noël or for Eric-Cindy (groceries and visiting the accountant).

(o) The appellant had no work schedule to meet and it was impossible for her to quantify her alleged work.

(p) The appellant was home most of the time while waiting for her spouse's call and alleges she worked 40 hours a week for the employer.

(q) The appellant received a fixed salary varying between $380 and $745 a week during the periods at issue; she was paid by the crab buyer.

(r) The appellant's alleged duties did not amount to very much and Steve Noël or Eric-Cindy did not control either her alleged working hours or the quantity of her alleged work.

(s) During the years at issue the appellant allegedly worked only the minimum number of weeks (between 10 and 14) necessary to qualify for unemployment insurance benefits.

(t) During the periods at issue no true express or implied contract of service or apprenticeship, written or oral, existed between the appellant and her employer, Steve Noël or Eric-Cindy.

[4] Through her counsel the appellant admitted the facts alleged in subparagraphs (a) to (e), (g) to (i), (k) and (q). The facts alleged in subparagraph (f) were admitted with explanations. The facts alleged in subparagraphs (j) and (l) to (p) were denied as written with explanations to be given at the hearing. The facts alleged in subparagraphs (r) to (t) were denied.

[5] III - Law and analysis

(i) Unemployment Insurance Act definitions

"employment"

"employment" means the act of employing or the state of being employed . . . .

"insurable employment"

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 . . . .

[6] The burden of proof is on the appellant.

[7] In Sylvie Desroches v. M.N.R. (A-1470-92), the Federal Court of Appeal discussed the function of a Tax Court of Canada judge, and I quote:

However, in the final analysis, as this Court held in Attorney General of Canada v. Jacques Doucet, it is the Minister's determination which is at issue, namely that the employment was not insurable because the applicant and the payer were not bound by a contract of service. The function of the Tax Court of Canada judge extended to considering the record and the evidence in its entirety. Accordingly Marceau J.A., speaking for the Court, said the following in Doucet:

The judge had the power and duty to consider any point of fact or law that had to be decided in order for him to rule on the validity of that determination. This is assumed by s. 70(2) of the Act and s. 71(1) of the Act so provides immediately afterwards. . .

The trial judge could go as far as deciding that there was no contract between the parties.

[8] If there is any doubt in the interpretation it must be resolved in favour of the taxpayer, and there is nothing to prevent a taxpayer benefiting from social legislation if the requirements of the Act are observed. In Attorney General of Canada v. Ludger Rousselle, a judgment of October 31, 1990 (124 N.R. 339), Hugessen J.A. said the following at 340-341:

I do not think it is an exaggeration to say, in light of these facts, that if the respondents did hold employment this was clearly "convenience" employment, the sole purpose of which was to enable them to qualify for unemployment insurance benefits. These circumstances certainly do not necessarily prevent the employment from being insurable, but they imposed on the Tax Court of Canada a duty to look at the contracts in question with particular care; it is apparent that the motivation of the respondents was the desire to take advantage of the provisions of social legislation rather than to participate in the ordinary operation of the economic forces of the market place. [Emphasis added.]

[9] The tests which must be analysed have been restated by the Federal Court of Appeal. In Attorney General of Canada v. Normand Charbonneau, a judgment of September 20, 1996 (A-831-95), Décary J.A. said the following, at p. 2 in particular:

The tests laid down by this Court in Wiebe Door Services Ltd. v. M.N.R.[1] — on the one hand, the degree of control, the ownership of the tools of work, the chance of profit and risk of loss, and on the other, integration — are not the ingredients of a magic formula. They are guidelines which it will generally be useful to consider, but not to the point of jeopardizing the ultimate objective of the exercise, which is to determine the overall relationship between the parties. The issue is always, once it has been determined that there is a genuine contract, whether there is a relationship of subordination between the parties such that there is a contract of employment (art. 2085 of the Civil Code of Québec) or, whether there is not, rather, such a degree of autonomy that there is a contract of enterprise or for services (art. 2098 of the Code). In other words, we must not pay so much attention to the trees that we lose sight of the forest — a particularly apt image in this case. The parts must give way to the whole.

[10] Each case is sui generis. The appellant had to establish on a balance of probabilities that the Minister's decision was wrong. Sections 70(2) and 71(1) of the Unemployment Insurance Act give the Tax Court of Canada broad remedial powers. These powers enable the Court to resolve any dispute of a factual nature and to reverse, affirm or vary the Minister’s determination.[2]

[11] Further, the Act provides insurance for true employment. That is what Judge Dussault of this Court stated in Sylvie Desroches v. Minister of National Revenue, a decision of November 9, 1994 (92-277(UI)), at p. 5 in particular:

As Judge Lamarre Proulx of this Court emphasized in Gauthier, “The object of the Act is to ensure true employment”[3]. It seems to me important on this point to examine the circumstances as a whole, including the work performed and the remuneration agreed upon for the purposes of determining whether there is a true contract of service between the parties. I will add that the onus is on the appellant to show on a balance of probabilities that such a contract exists where it is disputed by the respondent.[4]

[12] The appellant, her spouse Steve Noël, Eddy Boulay and Martial Lévesque, the investigating officer, testified at the hearing of the appeal.

[13] Throughout the years at issue the appellant allegedly rendered services to Steve Noël (in 1990, 1991 and 1992) and Eric-Cindy (in 1993, 1994 and 1995).

[14] Throughout the years at issue it was the crab buyer who prepared the appellant's paycheques and issued her records of employment (Exhibit I-12).

[15] On the records of employment the appellant's occupation was identified as secretary in 1990, clerk in 1991, 1992, 1993 and 1995 and labourer in 1994.

[16] The appellant's duties and salary were described in Steve Noël's statement of February 23, 1995 (Exhibit I-2) as follows:

[TRANSLATION]

Chantal Lebrun's function is to run errands, come to the wharf to check the res-mar [sic] weighing, then listen to the VHS [sic] radio and, most importantly, be available at all times in case I need anything. From 1990 to 1994 I increased her salary, that is, the salary of Chantal Lebrun, from $380 to $745 because she had better unemployment as a result, and also because I had the means to pay her.

[17] In a second statement supplied to the respondent (Exhibit I-3) on September 19, 1995 Steve Noël explained the change in the appellant's salary as follows:

[TRANSLATION]

In this year, 1995, my spouse Chantal Lebrun also worked for me and as a result of information I received from the unemployment investigator in the winter of 1995 I decided to reduce Chantal Lebrun's salary from $745 to $500 a week so as to meet the insurability criteria of Revenue Canada, Taxation.

[18] The appellant described her duties in the statement she gave to a representative of the respondent on February 23, 1995 (Exhibit I-16). I quote certain passages:

[TRANSLATION]

I have worked for Steve Noël since 1990. I do not fish. I work as a clerk, namely checking unloading, cleaning the boat, running errands at the master's request when there are breakdowns or parts to pick up in Sept-Îles or elsewhere, and telephoning Resmar to tell them the time the boat is returning. This has been the case every year since 1990. I am paid a fixed salary. I have two children, a girl aged eight and a boy aged 12. When I am away it is my mother (Angéla Lebrun) who looks after them. My work is generally done at home since I have to be there when Steve calls. I have not done any paperwork since 1990. . . .

In 1990, 1992 and 1993 the crew consisted of Steve Noël, Julien Bisson, Eddy Boulay and myself. The fishermen are paid a percentage and I am paid a fixed salary.

In 1991 the crew members were Steve Noël, Julien Bisson, Eddy Boulay, Gisèle Lapierre, Darcy Noël and me. Gisèle tried fishing but was seasick. . . .

In 1994 the crew members were Steve, Eddy Boulay, Julien Bisson, Steve's brother Jean-Yves Noël, and myself. I do not know why he hired an additional person. When we were unable to get all our unemployment stamps Steve arranged to have us do a big job like painting the boat inside and outside. The boat is made of fibreglass, 45 feet long, and it is not the entire crew . . . it depends on each person's weeks. In my case also, when I do not have all of them I paint, wire pots and so on. . . .

For about two years — I do not know the exact date — it has not been Eric-Cindy but Les Entreprises Eric-Cindy, and from that point on I became a shareholder with 39 percent of the shares and Steve Noël had 61 percent; that is also when I became Steve Noël's de facto spouse. I therefore have powers to sign and do business at the Caisse.

I had a salary increase of $120/week between the 90 and 91 seasons because I was paying my mother to look after my children. . . . In 1992 I had an increase of $50/week and in 1993 and 1994 I was at $745/week because I had discussed this with Steve; as I had shares I paid myself this salary.

I work about 40 hours a week as I have to be available at the house for calls. The fishing is solely for crab and this has been the case since 1990. . . .

[19] At the hearing Steve Noël explained that the appellant was hired as a clerk, prepared food for the crew, had to be at home to take calls from the boat in emergencies, had to go to the wharf for the weighing of the catches, had to wash the dishes and do the cleaning after each trip, had to clean the boat's hold every weekend, had to take documents to the accountant if necessary, had to telephone the fuel supplier for an appointment at the wharf to refuel, had to drive one of the fisherman's helpers home several kilometres from the wharf after work, had to go to Sept-Îles once a week and had to pay the bills and shop for groceries each week.

[20] In cross-examination Steve Noël said that he adjusted the appellant's salary because [TRANSLATION] "the fishermen's salaries increased". He stated that in 1993 and 1994 the appellant received a salary increase [TRANSLATION] "because she had been on the job for several years, income from fishing was good and everyone benefited". He also stated that the appellant's salary had been determined [TRANSLATION] "in accordance with our circumstances". In short, he stated that the appellant worked [TRANSLATION] "as many hours as a fisherman's helper, or more, and they work nearly 12 hours a day".

[21] The appellant explained her duties. Briefly, she said that she was generally at the wharf from noon to 3:00 p.m., had to go to the accountant's at the end of the month, went to Sept-Îles once or twice a week, prepared food for the fishermen, drove the fisherman's helper Eddy Boulay home after his day's fishing, cleaned the boat every day, cleaned and disinfected the hold of the boat once a week, arranged an appointment with the fuel supplier to refuel the boat, bought groceries, she went to the bank once a week and went to the Le Marin shop once a week.

[22] The respondent assessed the appellant's duties and salary based on the statements made by the persons concerned. At the hearing the appellant added that her duties included preparing the fishermen's meals, driving one of the fisherman's helpers home, arranging fuel deliveries and running other errands.

[23] With these additional facts, was it proven on a balance of probabilities that an insurable contract of service existed?

[24] The salary must be determined based on with the services rendered. It must also generally correspond to what is paid for comparable duties in the marketplace.

[25] The appellant's duties were related primarily to the boat’s activities. It can be seen from the documents from Fisheries and Oceans Canada (Exhibits I-4 to I-12) in particular that the boat made 25 trips in 1992, 31 in 1993, 44 in 1994 and 41 in 1995. According to the record of employment (Exhibit I-12) and a claim for benefit by the appellant (Exhibit I-17), she worked six days a week for a total of 40 to 50 hours and did so for all the consecutive weeks indicated in the record of employment (Exhibit I-12). According to these documents the appellant performed her duties for 78 days in 1990, 60 days in 1991 and 1992, 66 days in 1993, 78 days in 1994 and 84 days in 1995. However, if the boat did 41 trips in 1995 was the appellant's presence necessary on the other 43 days when fishing did not take place? If the fishermen and the boat did not go out, there would not seem to have been any need to prepare meals, listen to the radio, arrange refuelling appointments, weigh the catch or drive the fisherman's helper home. That would be true for all the years from 1990 to 1995. Though we did not have the information on trips for 1990 and 1991 the appellant did not show for those two years that the boat went to sea every day. Further, for 1991 Steve Noël worked from April 13 to May 5, after which he was in hospital for 10 days and convalesced at home for a month, or until the season was over. Did he take calls at home? How many fishing trips were made in 1990 and 1991? This was not shown by the appellant, but the average proven for the other years would support a conclusion that fishing did not take place six days a week in 1990 or 1991.

[26] Quantifying a person's work is always a difficult and delicate matter. It is necessary to consider the kind of employment, the tools used, the environment in which the work is done, the volume of business, the description of duties, the number of employees and so on: in short, an attempt must be made to estimate the volume of work required so as to determine the time necessary to do it in relation to the salary paid.

[27] The estimated volume of work done by the appellant does not support a conclusion that she could have spent 40 to 50 hours or more on it in a six-day week.

[28] Nor was the salary determined in accordance with comparable duties in the marketplace. In his statement to the insurer (the respondent), Steve Noël mentioned that he increased the appellant's salary so that she would have better unemployment. In court he gave another explanation that seemed to indicate he also wanted the appellant to share in the profits in good years. He did not really justify the differences in salary from one year to another.

[29] The Minister was right to conclude that a genuine, insurable contract of service did not exist.

IV - Decision

[30] The appeal is dismissed and the Minister's decision affirmed.

"S. Cuddihy"

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 13th day of August 1998.

Stephen Balogh, Revisor

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