Pourvoirie Au Pays de Réal Massé Inc. v. M.N.R.

Pourvoirie Au Pays de Réal Massé Inc. v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2004-08-25
Neutral citation
2004 TCC 582
File numbers
2002-2888(EI)
Judges and Taxing Officers
Lucie Lamarre
Subjects
Employment Insurance Act
Decision Content
Docket: 2002-2888(EI)
BETWEEN:
POURVOIRIE AU PAYS DE RÉAL MASSÉ INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
MARIO ARÈS
FLORENCE CÔTÉ
CLAUDE FOURNIER
FERNANDE FOURNIER
RACHEL JALBERT,
Interveners.
[OFFICIAL ENGLISH TRANSLATION]
____________________________________________________________________
Appeals heard on common evidence with the appeal of Claude Desaulniers (2002‑1698(EI)) on November 19 and 20, 2003, in Montreal, Quebec.
Before: The Honourable Justice Lucie Lamarre
Appearances:
Counsel for the Appellant:
Hans Marotte
Counsel for the Respondent:
Marie-Aimée Cantin
Antonia Paraherakis
For the Interveners:
Florence Côté, Rachel Jalbert,
Fernande Fournier
____________________________________________________________________
JUDGMENT
The appeal pursuant to subsection 103(1) of the Employment Insurance Act (“EIA”) from the decision of the Minister of National Revenue (“Minister”) with respect to Claude Desaulniers is allowed and the said decision is modified in that the taxable benefit amount for housing only is subtracted from the insurable earnings amount. The Minister’s determination with regard to Claude Desaulniers remains unchanged in all other respects.
The appeals pursuant to subsection 103(1) of the EIA and subsection 70(1) of the Unemployment Insurance Act from the Minister’s determinations with respect to all the other workers listed in Appendix A of the Reasons for Judgment are disallowed and the decisions rendered by the Minister are upheld.
Signed at Ottawa, Canada, the 25th day of August 2004.
“Lucie Lamarre”
Lamarre J.
Translation certified true
on this 24 th day of June 2005.
Esther Shlien, Translator
Docket: 2002-1698(EI)
BETWEEN:
CLAUDE DESAULNIERS
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
____________________________________________________________________
Appeal heard on common evidence with the appeals of the Pourvoirie Au Pays de Réal Massé Inc. (2002-2888(EI)) on November 19 and 20, 2003, at Montreal, Quebec.
Before: The Honourable Justice Lucie Lamarre
Appearances:
Counsel for the Appellant:
Denis Le Reste
Counsel for the Respondent:
Marie-Aimée Cantin
Antonia Paraherakis
___________________________________________________________________
JUDGMENT
The appeal pursuant to subsection 103(1) of the Employment Insurance Act is allowed and the decision rendered by the Minister with respect to the Appellant is modified in that the taxable benefit amount for housing only is subtracted from the insurable earnings amount.
The Minister’s determination remains unchanged in all other respects.
Signed at Ottawa, Canada, the 25th day of August 2004.
“Lucie Lamarre”
Lamarre J.
Translation certified true
on this 24 th day of June 2005.
Esther Shlien, Translator
Citation: 2004TCC582
Date: 2004-08-25
Docket: 2002-1698(EI)
BETWEEN:
POURVOIRIE AU PAYS DE RÉAL MASSÉ INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2002-2888(EI)
AND BETWEEN:
CLAUDE DESAULNIERS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
MARIO ARÈS
FLORENCE CÔTÉ
CLAUDE FOURNIER
FERNANDE FOURNIER
RACHEL JALBERT,
Interveners.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1] The Appellant was appealing the determinations the Minister of National Revenue (the “Minister”) made pursuant to the Unemployment Insurance Act (the “UIA”), the Employment Insurance Act (the “EIA”), and the regulations thereunder, concerning 33 of its employees and the first and last day of work, the number of insurable hours and the insurable earnings of each of these 33 employees from 1993 to 2000, based on the table in Appendix A to the “Amended Reply to the Notice of Appeal (the “Reply”), which is appended to these Reasons. Five of these employees are interveners, and only one employee, Mr. Claude Desaulniers, appealed from the Minister’s determination. The latter case will be analyzed as part of these Reasons.
[2] The table drawn up by the Minister primarily shows that the periods of employment, the number of weeks or hours of insurable employment, and the insurable earnings do not match the Records of Employment prepared by the Appellant, which employed all these employees.
[3] The Minister based these conclusions on the facts in paragraph 5 of the Reply, which reads as follows:
a) The Appellant was incorporated on September 19, 1987; (admitted)
b) The Appellant ran an outfitting operation on a 16-kilometre site with 10 lakes for fishing and one main lake across from the inn; (admitted)
c) There were 16 rooms in the inn on the Appellant’s site before 1998 and 24 after; (admitted)
d) There were also 19 cottages on the Appellant’s site, which could accommodate between two and eight people, depending on the cottage; (admitted)
e) There was also a dining room on the Appellant’s site with a 120-person capacity, that is, 30 four-person tables, and an adjacent bar; (admitted)
f) Between 1993 and 2000, the Appellant ran his business year-round as follows:
- during the last week of April: prepared cottages and launches, and did spring cleaning;
- first weekend in May: opened site for an archery tournament attended by 250 to 300 people; (admitted)
- on or about May 15: trout fishing season opened until Labour Day; (admitted)
- during the two weeks after Labour Day: cleaned up site, put launches, fishing and clearing equipment in storage and maintained trails;
- from the third week in September until mid-November: 24 hunters and their wives hunted pheasant on the weekends; (admitted)
- From the Christmas holidays until the snow melts: skidooing on trails. (admitted)
[See Table 2 in Appendix B.]
g) During the period at issue, the Appellant hired varying numbers of people, depending on the period of activity:
Fishing season:
27 to 30 employees
Pheasant hunting season:
3 to 4 kitchen workers (admitted)
10 to 12 in the field
Skidoo season:
4 to 5 kitchen workers
2 in the field
h) Between 1993 and 1996, the Appellant paid its employees fixed weekly wages regardless of the number of hours they actually worked.
i) Starting in 1998, the Appellant paid its employees an hourly remuneration every [sic] two weeks.
j) The Appellant provided most employees with housing without deducting any consideration from their wages.
k) The Appellant fed most employees without deducting any consideration from their wages.
l) The Appellant provided most employees with uniforms for no consideration. (admitted)
m) During the period at issue, the Appellant paid for some employees’ vacation. (admitted)
n) Between 1993 and 1998, the Appellant collected the tips during the fishing and skidoo seasons. At the end of these periods, the tips were divided among the employees in proportion to the hours each worked. (admitted)
o) During the years at issue, the Appellant issued records of employment that did not show [sic] the actual period worked by its employees.
p) Employees continued to work for the Appellant while they were receiving unemployment or employment insurance benefits.
q) Some employees continued to work year-round while others continued to work [sic] for a specific period [see Table 1 in Appendix A].
r) The Appellant then paid them the difference between the benefits they were receiving and their net wages.
s) No source deductions were deducted from the amounts the Appellant paid the employees during their benefit period nor were they indicated in the payroll.
t) Employees received unemployment or employment insurance benefits despite the fact that they continued working for the Appellant, which paid them wages.
u) The Respondent used the following criteria to calculate the insurable earnings of each employee:
Housing: A $50 weekly benefit was added to the insurable earnings of each employee who lived on the site or in a house owned by Réal Massé.
Where applicable, the amount was pro-rated to the number of days worked. The benefit amount is the same for all the years at issue.
Food: Employees have eaten for free on the site since 1995. Consequently, the benefit for meals (board) was assessed at $35 a week, the amount the Appellant charged employees in previous years.
Benefit waiting period: During the benefit waiting period, the Appellant paid the worker the net amount of his or her earnings. This amount was consequently added to the insurable earnings amount.
Tips: Tips were pooled and distributed by the Appellant at the end of the fishing and skidooing seasons in proportion to the hours worked by staff. These amounts were added to insurable earnings based on Table 3 in Appendix C.
[4] The Appellant sets out its own version of the facts in paragraph A (on pages 1 to 4) of its written argument, which I think, is worthwhile including in its entirety:
A) STATEMENT OF FACTS:
Over and above the facts alleged in the Respondent’s amended reply to the notice of appeal which were admitted at the beginning of the hearing, the following facts were demonstrated in testimony:
1. Until 1993, the Appellant paid some of its employees a form of bonus at the beginning of the fishing season.
2. The purpose of this bonus was to encourage employees to come back year after year.
3. In 1993, the Appellant started paying some employees an amount in the off-season that represented 25% of the employment insurance benefits they could receive if they were laid off because of a shortage of work.
4. This amount was an incentive for workers to return to work at the beginning of the next fishing season.
5. The Appellant started paying this supplement after the worker’s waiting period under the Unemployment Insurance Act (Employment Insurance Act) had [sic] passed.
6. This procedure was implemented further to meetings with Messrs. Raymond Ratelle and Maurice Sourdif, employees from the unemployment insurance office in Joliette.
7. Officials responsible for enforcing the Unemployment Insurance Act (the then Unemployment Insurance Commission) knew [sic] about this procedure since 1995.
8. Ms. Gisèle Côté, a former employee of the Appellant, informed the unemployment insurance office of this procedure in December 1995 (see Exhibit A-3).
9. As a general rule, the Appellant’s employees were laid off due to a shortage of work at the end of the fishing season.
10. Between 1994 and 1998, this occurred the week after Labour Day.
11. Starting in 1999, the fishing season ended in late September.
12. After the fishing season ended, some employees could continue to work part time on weekends during pheasant hunting season.
13. About 5 or 6 people worked for the Appellant 5 to 10 hours a weekend.
14. The people who were laid off in the fall were under no obligation to the outfitter.
15. However, a number of them went on vacation or back to their family until the skidoo season started, on or about December 26.
16. Recipients of the 25% bonus continued to receive it even if they left the outfitter site for a period of time.
17. Some employees who lived on the outfitter site could help out on their own initiative, but they were under no obligation to do so.
18. Ms. Gisèle Côté testified to this effect at the hearing.
19. Some employees lived in their own homes.
20. Others lived in houses personally owned by Mr. Massé.
21. Finally, some employees lived in rentals on the outfitter site.
22. Based on the payroll records the Appellant provided the Canada Customs and Revenue Agency, the outfitter deducted the following directly from paycheques in 1993 and 1994: $20 a week for housing and $20 a week for meals.
23. Based on the receipts submitted by the Respondent as Exhibit I-3, employees who lived on the outfitter site paid $200 a month in 1995 for housing.
24. In 1998 and 1999, $20 a week for housing and $20 a week for meals was deducted directly from the paycheques of employees who lived on the outfitter site.
25. The Appellant always obtained information from the Commission des normes du travail [labour standards board] on housing and meal deductions.
26. The Appellant always followed to the letter what it was told by the Commission des normes du travail.
27. The Appellant kept in constant contact with Unemployment Insurance Commission (now Human Resources Development Canada) officials for information on its rights and obligations.
28. During the period at issue, Ms. Ginette Massé’s duty was to fill out records of employment.
29. These records did not show periods of part-time employment that some employees may have had during the pheasant hunting or skidooing periods.
30. The wages the Appellant paid during these periods were, however, indicated in the payroll and the source deductions were made in accordance with the Act.
[5] For its part, the Respondent reiterates as follows the facts in its written argument on pages 2 and 3:
STATEMENT OF FACTS
1. The documentary evidence and testimony provided at the hearing showed, among the facts admitted by the Appellant, the following basic facts:
a) During the entire period at issue, the Appellant’s employees held year-round positions, not seasonal employment, with a view to meeting the Appellant’s operational requirements1.
___________________
[1] Tab 11 – Excerpt from the Pourvoirie au Pays de Réal Massé Inc. Web site.
b) The records of employment the Appellant issued did not show the actual period worked by its employees: fictitious work periods and hours were entered.
c) Employees continued to work for the Appellant while receiving unemployment/employment insurance benefits.
d) The Appellant paid its employees the difference between the unemployment/employment insurance benefits they were receiving and their net wages.
e) As a result of the Appellant’s scheme, the unemployment/employment insurance benefits in large part covered the wages of its employees.
f) The Appellant fed, housed and clothed most of the employees free of charge without any deductions from their wages.
g) No source deductions were made from the amounts the Appellant paid the employees during their benefit periods nor were these amounts entered in the payroll.
h) Although some of the Appellant’s employees were unaware that this practice was illegal, others feared they would lose their job if they refused the conditions imposed by Réal Massé.
i) Mr. Réal Massé’s wife, Ms. Ginette Massé, filled out the employees’ unemployment cards herself or told them the number of hours they should report.
j) Mr. Réal Massé considered a group of workers as being his “core”, which consisted of the following people:
i) Ginette Massé, his wife;
ii) Nancy Massé, his daughter;
iii) Gilles Huet, his son-in-law;
iv) Richard Massé, his son;
v) Claude Desaulniers;
vi) Sylvie Provost;
vii) Normand Guénard;
viii) Mario Arès;
ix) Denis Courcy.
k) All the employees who confirmed the existence of this scheme did not belong to this “core” group.
The issue
[6] The Respondent sets out the issue as follows on pages 3 and 4 of its written argument:
2. The Court must determine whether the Minister of National Revenue (hereinafter the “Minister”) was justified in re-establishing the periods of employment of the Appellant’s employees pursuant to Appendix A of the Reply to the Notice of Appeal.
3. The Court must determine whether the Minister was justified in adding the following amounts to the insurable earnings of the employees:
· $50 [a week] as a housing benefit;
· $30[sic][1] [a week] for meals;
· The Appellant paid the difference between the net wages and the unemployment/employment insurance benefits the employees received.
4. The Court must determine whether the Minister erred in deeming earnings less than [sic] 20% of the maximum insurable as being insurable amounts under the Act.
[7] The Respondent argued the following in connection with the issues under appeal:
5. Firstly, the Minister’s position is that the Pourvoirie had to hire year-round employees to meet its operational requirements. However, the records of employment issued by the Appellant were not a true reflection of reality: the Minister argues that the employees were falsely laid off and they continued to work at the Pourvoirie, which paid them the difference between their net wages and their unemployment/employment insurance benefits.
6. Therefore, there was an employer-employee relationship during the periods at issue in accordance with paragraph 3(1)(a) of the Unemployment Insurance Act and paragraph 5(1)(a) of the Employment Insurance Act. Further, pursuant to section 9.1 of the Employment Insurance Regulations, a person is considered to have worked in insurable employment for the number of hours that the person actually worked and for which the person was remunerated.
7. Secondly, the Minister argues that the benefits (housing and meals) the employees received [sic] during the period at issue must be included in the calculation of insurable earnings, pursuant to subsection 2(3) of the Insurable Earnings and Collection of Premiums Regulations.
8. Finally, the Minister argues that no error was made in insuring earnings amounts under the maximum. Provision is in fact made in subsection 13(1) of the Unemployment Insurance Regulations that the employment with an employer in any week of a person whose cash earnings are less than 20 per cent of the maximum weekly insurable earnings and who is employed for less than 15 hours is excepted from insurable employment. We argue that the employees worked more than 15 hours a week and are therefore insurable pursuant to the Act.
[8] For its part, the Appellant stated that the Respondent’s position is based primarily on statutory declarations made by certain employees which it argued had been obtained using methods incompatible with the principles of natural justice. The employees in question were allegedly not informed that they had the right not to answer the Human Resources Development Canada (“HRDC”) investigator’s questions without their lawyer present. The Appellant alleged that the investigator took advantage of the fact that the employees in question had little education and obtained incriminating evidence from them about their employer which the Appellant felt was biased by the investigator’s very words.
[9] The Appellant therefore argued that little weight should be given to the reports prepared by the appeals officers which partially reiterate these statutory declarations and constitute evidence.
[10] The Appellant questioned the credibility of some of the Respondent’s witnesses, who are employees involved in the issues under appeal here; these witnesses substantiated the Respondent’s version of events. The Appellant questioned their credibility because the testimony was confusing, erratic, invented or quite simply vengeful against their employer. In the latter case, the Appellant specifically referred to Julie Boulianne and Sylvain Therrien, two former employees, husband and wife, who reported that their employer was using dubious practices under the UIA and the EIA. The Appellant pointed out that these two witnesses contradicted each other in their declarations to HRDC and the Commission des normes du travail. The Appellant also argued that the number of hours of work reported by these two employees was clearly overstated and completely unreasonable given the number of hours reported by the other workers. The Appellant therefore asked that these witnesses be discredited.
[11] The Appellant further argued that Mr. Réal Massé, the payer’s owner, and his wife, Ginette Massé, testified frankly and demonstrated a thorough knowledge of the application of the legislation concerned.
[12] Mr. Desaulniers’ counsel argued that all the evidence is based on a credibility issue. Like his employer, he alleged that the Respondent’s testimonial evidence is contradictory and that Mr. Desaulniers’ testimony, which he felt reiterates all the information in the statutory declaration he made during the investigation, and confirmed by Mr. Massé’s testimony, should be considered with a view to his appeal being allowed.
Facts
[13] I personally heard the testimony of Réal and Ginette Massé, and of nine employees (including Claude Desaulniers) involved in this case. I also heard the testimony of: Raymond Ratelle, the employment insurance investigator and monitoring officer from HRDC; Chantale Fortin, a Royal Canadian Mounted Police (“RCMP”) officer, who served the Appellant with a search warrant in the fall of 1998; Gaston Lachance, a HRDC major investigation specialist who was present during the search of the Appellant and who met with the workers being investigated; and Louise Dessureault, the appeals officer from the Canada Customs and Revenue Agency (“CCRA”) tax services office who prepared the table showing the periods of work and insurable earnings for each of the workers under investigation and involved in this case. The Appellant also called to testify Anne-Marie Cadieux, an administrative technician the Appellant hired in 2001 to look after its accounting. The latter started working for the Appellant after the periods at issue in this case which were from 1993 to 2000. However, between 1996 and 2001, she prepared the Appellant’s financial statements while she worked for a separate accounting firm. Ms. Cadieux testified, among other things, that before she started working for the Appellant, the Appellant used to normally indicate only the periods of full-time employment on workers’ records of employment.
Ginette Massé prepared these records of employment, and although in theory she was supposed to enter the hours of work of employees who continued to work part time in the payroll, she did not indicate them on the records of employment. Starting in 2001, Ms. Cadieux prepared the records of employment and indicated all the workers’ hours, be they full or part time. That was about all Ms. Cadieux revealed when she testified at the hearing.
[14] Mr. Réal Massé explained how he ran his outfitting operation, which was started in 1987. In the summer, the fishing season starts in late April and ends on the first Sunday in September after Labour Day. This is peak season and he said that between 1991 and 1998, he hired between 10 and 12 employees, that is, five or six in the kitchen, four or five to serve tables and four or five as fishing guides (I would like to point out here that the numbers do not add up; the minimum staff would be 13, not 10 and maximum, 16, not 12). I would also like to point out that Mr. Massé told the appeals officer in an interview that he hired between 27 and 30 employees during the fishing seasons between 1993 and 2000 (see report on appeal, Exhibit I-2, Volume I, Tab 6 in the case of Mario Arès, [TRANSLATION] facts obtained from Mr. Réal Massé [...] in interview [...] on February 5, 2002, in his counsel’s presence). In the fall of 1997, he expanded the inn (it now has 24 rooms, eight more than before) and he had six new cottages built. The outfitting operation owns 84 launches, which, according to Mr. Massé, are cleaned and put into storage on the last weekend of the fishing season. The site itself is also apparently cleaned up and trails cleared at the same time.
[15] Pheasant hunting season opens on the second weekend in September and is open for 10 consecutive weekends until mid-November. Mr. Massé said that he hires four or five kitchen staff and one or two servers during this period, and friends stay on the site who help him with outside work and are not paid (during the interview with the appeals officer, he said that he hired three or four kitchen staff and 10 to 12 field workers during this period).
[16] The skidoo season begins on Boxing Day and runs until mid-March, depending on the season and, obviously, the weather. He said he hires staff during this period: four or five to work in the kitchen and serving tables, but does not guarantee them hours. Others are hired to shovel snow and dispense gas.
[17] The outfitting operation then closes and re-opens the last week in April, when staff return to organize the archery event during the first week in May. In a statutory declaration made in his counsel’s presence, Mr. Massé stated that the clean-up was done “[TRANSLATION] before the end of the fishing season” (see Exhibit I-2, Volume IX, Tab 1, Page 3). Mr. Massé admitted at the hearing that staff also return at the end of April to do another clean-up of the site (pages 46-47 of the stenographer’s notes from November 19, 2003). The Appellant denied this latter fact at the beginning of the hearing (see allegation in the first subparagraph of paragraph 5 (f) of the Reply). The Appellant stated that the employees were usually laid off at the end of the fishing season (based on the records of employment entered as evidence) and Mr. Massé said that he started paying his staff during the first week in May (page 47 of the stenographer’s notes from November 19, 2003).
[18] Please note that during his testimony, Mr. Massé admitted that he had pleaded guilty to 32 charges (he had formally been charged with 385 counts) of preparing false records of employment (see pages 147-150 of the stenographer’s notes from November 19, 2003; Gaston Lachance, the HRDC investigator, said that Mr. Massé had pleaded guilty to 14 charges, not 32: see page 158 of the stenographer’s notes from November 20, 2003). Mr. Massé said that he had done so and agreed to pay a $25,000 fine simply to close the case and avoid further costs.
[19] Mr. Massé said that his staff worked an average of 47 hours a week during the peak season. They were paid by the hour or week. Mr. Massé guaranteed them a net salary between $250 and $300 a week, and provided them with room and board regardless of the number of hours worked (see the appeals officer’s interview with Mr. Massé in the presence of his counsel on February 5, 2002, reproduced in the report on an appeal, Exhibit I-2, Volume I, Tab 6, Page 4 in Mario Arès’ case). Some staff was in fact provided with housing and meals. If staff lived elsewhere, they simply ate their meals at the outfitter when they were at work. In this regard, Mr. Massé said at the hearing that he deducted a total of between $35 and $40 a week from staff paycheques or simply added this amount to their earnings as a taxable benefit in the payroll, based on the instructions received from the Commission des normes du travail (pages 68‑69 of the stenographer’s notes from November 19, 2003). However, in his above-mentioned statement to the appeals officer on February 5, 2002, Mr. Massé said that no taxable benefits were deducted until 1999, which was when the Appellant allegedly started adding a taxable benefit ($20 a week for housing and $20 a week for meals) to the earnings of workers who received these benefits. Based on the report of the eligibility officer, an analysis of the payroll did not show any regularity or consistency in the room and board [staff] paid (see Exhibit I-2, Volume IX, Tab 1, Page 13, paragraph entitled “Logement et pension [room and board]”).
[20] Mr. Massé said that up until 1991, he had told staff when he hired them that he would pay them a bonus varying from $1,200 to $2,300 at the end of the fishing season if they guaranteed they would return for the next season. I believe that these employees did not report this bonus on their unemployment insurance report cards. This practice was allegedly changed in 1991 after a meeting among Messrs. Massé and Raymond Ratelle, and the investigations and employment insurance monitoring officers. Mr. Massé said that Mr. Ratelle allegedly told him that instead of paying his staff an unreported bonus, he could pay them an amount representing 25 percent of unemployment/employment insurance benefits[2] without there being an impact on their benefits, whether they were working or not. According to Mr. Massé, by doing this, the workers were given the incentive required to return to work at the beginning of the next fishing season. He said that he started paying this supplement after the worker’s waiting period under the UIA and the EIA had passed. Mr. Massé maintained that Mr. Ratelle had in fact told him that workers could receive this 25 percent without necessarily working and without having to report it to the proper authorities. This is allegedly how Mr. Massé told certain employees that their net salaries were guaranteed year-round even if they did not work during the off-season. The following is a quote from Mr. Massé on pages 105-106 of the stenographer’s notes from November 19, 2003:
[TRANSLATION] Because when I hired my people and I actually had meetings with Mr. Ratelle, and I was convinced I was on the right track, when I hired them I told them that I had an agreement, had met conditions with unemployment. If you come work for us, you work the whole season and come back the next year, in September, October, November. You are going to get full pay for six months and you don’t work your hours. I don't know anyone who isn’t interested in that. That was my agreement; that was how I was able to keep good employees.
[21] Paradoxically, when asked by the appeals officer who was investigating for the employment insurance office, Mr. Massé had denied the foregoing. When confronted with the fact that almost all his staff had said that they had been paid the difference between the net salary and net unemployment benefits in cash, Mr. Massé’s alleged response was simply that they had all lied. He also had to deny that he guaranteed a net salary year round and that unemployment made up the difference (see the UI and CPP opinion report, Exhibit I‑2, Volume IX, Tab 1, Page 12).
[22] I think I understand Mr. Massé’s rationale at the hearing, that he exercised his right to pay his employees 25 percent of unemployment benefits to justify paying them the difference between their guaranteed net salary and the unemployment insurance benefits they received without them reporting anything on their unemployment insurance cards in this regard.
The following is Mr. Massé’s reasoning on pages 101-103 of the stenographer’s notes from November 19, 2003:
Q. You say that the staff who received the twenty-five percent (25%) did not normally work?
A. No. When there was no work, when there is no work in the off-season, no.
Q. Then when there was work during the off-season, what happened with this twenty-five percent (25%)?
A. The five workers, when they worked and when they completed their desired hours, well, they continued receiving their unemployment because they were still entitled to earn twenty-five percent (25%). If they had worked seven hours, ten hours or fifteen (15) hours a week...
Q. Therefore, regardless, they received their twenty-five percent (25%), but they could work or not work?
A. Exactly, Madam.
HANS MAROTTE:
Q. Therefore, let us look at an example. A worker, she is in one of the dwellings; let us say she works in the kitchen. She is going to work in the kitchen let’s say...
A. Yes, let’s say she works ten hours.
Q. Is she paid for those ten hours on top of the twenty-five percent (25%)?
A. No, no. The employee is paid, is paid as long as, I, the employee always gets his or her pay.
Q. Okay.
A. That is the important thing.
MADAM JUSTICE:
Q. No, but you do not pay a supplement on top of the twenty-five percent (25%)?
A. Ah no, no. If you, you earn $300 a week, when you work, you get $300; when you go on unemployment insurance, you get $225. Therefore, I pay my twenty-five percent (25%) to bring you up to $300. If you work five hours, you get $40. Therefore, you start with $300 and you get $340; it costs $60. I top up their workweek.
Q. You did not therefore owe more than twenty-five percent (25%)...
A. Ah, well, no.
Q. ... you owed less.
A. Well, no, it is much less, yes, it is less because he or she had worked twelve (12) hours or seven hours or worked fifteen (15) hours. I do not give it to him or her in that case.
Q. Were these hours entered in your books?
A. Yes, Madam. Those hours were compiled for those who worked them.
HANS MAROTTE:
Q. Those hours were entered in the payroll...
A. Absolutely.
Q. ... premiums were deducted and all that.
A. Yes because when you were hired, if I had guaranteed someone $325, there is going to be $325. If there is one who is $300, it is $300 because I topped up what they earned.
[23] In this way, Mr. Massé said that if staff worked during periods of unemployment, they entered what they had been paid in the payroll. Despite the somewhat confusing explanations above provided in Mr. Massé’s testimony, I think he said he paid and entered in the payroll for these employees the difference between their net salary and unemployment benefits, which according to him was 25 percent of benefits.
[24] However, some workers said their employer paid them the amounts entered in the payroll in addition to 25 percent of unemployment benefits (see the appeals officer’s report for Gilles Huet, Nancy Massé, and Sylvie Provost, whose counsel was present when they made these statements. These reports are in Exhibit I-2, Volume V, Gilles Huet, Tab 6, Page 7; Volume VI, Nancy Massé, Tab 5, Page 7; Volume VII, Sylvie Provost, Tab 6, Page 7).
[25] Mr. Raymond Ratelle said that he met with Mr. Massé in the fall of 1995 or 1996 with his supervisor. He had explained to Mr. Massé what was “allowable” for an employee on unemployment. It is legal for a recipient to earn a certain amount of money without their unemployment benefits being affected. He provided the following explanations on pages 179-180 and pages 188-189 of the stenographer’s notes from November 19, 2003:
A. If an individual’s unemployment rate is $200 a week, the allowable is twenty-five percent (25%), a minimum of $50. If an individual earned $50, his or her employment insurance would not be cut off, but he or she must nonetheless report the number of hours. We ask: “Did you work during the period of this report?” “Yes.” “How many hours?” and the gross amount earned.
[...]
A. [...] Then we even explained to Mr. Massé that if someone earns $51 for six hours of work, well, all that is deducted from employment insurance is what exceeds the allowable amount.
[...]
Q. And they absolutely must report that they worked?
A. Yes. That was made very clear to Mr. Massé; even if it is below the allowable amount, it must be put on the unemployment report in response to “Did you work during the period of this report?”, yes. How many hours and how much was earned because people often report that they worked, but were not paid. That is not normal and at that point an investigation is conducted.
[26] Thus, based on Mr. Ratelle’s testimony, Mr. Massé was in fact told that all claimants had to report the hours they worked and their earnings on unemployment report cards.
[27] Mr. Massé said that almost everyone who received the equivalent of their full salary and who did not work during the unemployment period probably did not report the earnings received from the employer on their report cards (see page 105 of the stenographer’s notes from November 19, 2003).
[28] At the hearing, Mr. Massé admitted that he paid the 25 per cent of benefits to 10 employees only, that is to: Julie Boulianne, Sylvain Therrien, Normand Guénard, Robert Poisson, Gaston Deschenaux, Richard Massé, Gilles Huet, Nancy Massé, Sylvie Provost and Denis Courcy (see pages 214-215 of the stenographer’s notes from November 20, 2003).
[29] Other workers stated that they worked for the outfitter during periods not indicated on records of employment while they were receiving unemployment benefits. The payer paid the difference between their net salary and the unemployment benefits. They confirmed that none of this was reported. These workers said that they worked long hours, more than 15 hours a week (see Bernard Geoffroy’s statutory declaration in Exhibit I-2, Volume V, Tab 5, Page 1 and his testimony on pages 81-83 and pages 101-102 of the stenographer’s notes from November 20, 2003). Mr. Geoffroy is one of the people who stated in his above-mentioned statutory declaration that the big clean-up was done over a three-week period after the fishing season closed, as opposed to what Mr. Massé said (he said that it was done over the last weekend of the fishing season).
[30] Other workers say they worked year-round, between 50 and 70 hours, six days a week during peak periods (see Clémence Bélanger’s testimony on pages 315-316 of the stenographer’s notes from November 19, 2003). It would seem that the employees claimed unemployment insurance benefits at the request of their employer, even when there was no actual work stoppage (see Clémence Bélanger’s testimony on pages 309-310 of the stenographer’s notes from November 19, 2003). The employer continued to pay them their regular salary during the two-week waiting period and the employer filled out the report cards (see Clémence Bélanger’s testimony in Exhibit I-2, Volume I, Tab 4, Page 10 and Tab 5, pages 8 and 11, as well as her testimony on page 315 of the stenographer’s notes from November 19, 2003; see also Bernard Geoffroy’s testimony on pages 82-83 of the stenographer’s notes from November 20, 2003). Please note that Ms. Ginette Massé denied in rebuttal that she had filled out report cards for the workers. She said she simply assisted them in filling them out (pages 182-183 of the stenographer’s notes from November 20, 2003).
[31] Other workers say they were simply paid for the hours worked not included in the periods of employment while they were receiving unemployment insurance benefits (see Lisette Montmagny’s testimony on page 126 of the stenographer’s notes from November 20, 2003). Their employer asked them not to report the total number of hours actually worked during these periods (see Lisette Montmagny’s statutory declaration in Exhibit I‑2, Volume VII, Tab 5, pages 4 and 12).
[32] Sylvain Therrien, one of the two witnesses who reported the Appellant (the other was his spouse Julie Boulianne), stated in his statutory declaration (see Exhibit I-2, Volume VIII, in Tab 5) that he worked as a fishing guide and handyman the rest of the year. He and his spouse say they were hired by Mr Massé to work year-round, not simply during the periods indicated on the record of employment. They were given room and board and their employer guaranteed them $300 net a week, regardless of the number of hours of work. They also received their full salary while on vacation. The employer asked them to fill out an unemployment insurance claim form although they had never in fact stopped working for the employer until they were dismissed by the latter in June 1998. Mr. Therrien says that he continued to work a minimum of 60 hours a week after the fishing season ended. The employer then paid him the difference between his full salary and his unemployment benefits. He says he therefore initially received $178 net a week in unemployment benefits and the employer paid him $122 in cash a week for a total of $300 net a week. He later received $195 a week in unemployment insurance benefits and his employer paid him $105 a week. This allegedly continued until May 2, 1998, when he was allegedly put back on the payroll (see Sylvain Therrien’s statement to the appeals officer, Exhibit I-2, Volume VIII; Tab 7, Page 6). During the two-week waiting period, he and his spouse received their full salary from the employer. Mr. Therrien also mentioned that for a certain period, Ms. Ginette Massé was responsible for filling out the report cards. Mr. Therrien told the investigator that the same strategy was used for most employees, among others, that they received room and board at the outfitter. In other words, the records of employment did not show what actually happened.
[33] Mr. Therrien confirmed the forego