IN THE MATTER OF the UNEMPLOYMENT INSURANCE ACT, 1971
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IN THE MATTER OF a claim for benefit by
LAURIE PULZONI
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IN THE MATTER OF an appeal to an Umpire by the claimant
from a decision of the Board of Referees given at
London, Ontario on February 25, 1986
DECISION
REED, J.
The claimant appeals a decision of the Board of Referees disentitling her to benefits because she was working in an employment in which she controlled her own working hours. Payment of benefits was suspended from December 1, 1983.
The Board's decision reads:
From the evidence at hand it is quite apparent that the appellant did have full time employment with the "Taco Stop" restaurant from December 10, 1983. There are no records that she was paid for her services prior to April 1984 nor do any records exist indicating her hours worked. This being a family operated business working hours were agreed to verbally among the various family members. No one expected to be paid for their services until such time as the business began to pay its way. However, the fact remains that all the evidence clearly indicates that the appellant did work at the restaurant on a daily basis and was in control of her own working hours.
The Commission's investigation into the claimant's eligibility for benefits was triggered by a letter it received from her then recently estranged husband. The letter charged that his wife was defrauding the Unemployment Insurance Commission by receiving benefits even though she was employed. He also charged that his sister Maria Bacci was improperly receiving Workman's Compensation benefits while she was employed. He subsequently signed an affidavit which reads in part:
My wife Laurie Pulzoni worked full time to our mutual benefit, for Romaligi Inc., a family business, from 1 December 1983 until I signed over my interest in the business to her name on or about 1 April 1984.
I was aware she was in receipt of Unemployment Insurance Benefit from the start of the business. Every officer in the company knew this and I told them it was illegal and they ignored me.
This situation, in part, lead to our marital breakdown. I am making this statement to clear my conscience and my good name.
The claimant's brother-in-law also signed an affidavit stating that he had worked at the Taco Stop from Monday the 5th of December 1983 until October 1984. He stated that the claimant had worked with him every day until he was forced out of the business. He states that she worked 11:00 a.m. to 5:30 p.m. Monday to Thursday and 11:00 a.m. to 6:30 p.m. Friday and Saturday and received no wages.
There was no cross-examination on these affidavits. The individuals who signed them did not appear before the Board. They were not called by the Board to give personal testimony. The claimant states that the allegations made by her husband were motivated by a personal vendetta: that their marriage was breaking up and she refused to be reconciled with him. His anger also stemmed from the fact that he was involved in a dispute with his family over the operation of the restaurant, the outcome of which was that he lost control of his shares in that business. From the portion of the brother-in-law's affidavit quoted above it is clear that he also was angered by a dispute with his family over the operation of the restaurant.
The claimant appeared in person before the Board, gave oral testimony which had previously been summarized in a letter, on file, dated January 24, 1986. She appeared personally before me, accompanied by her sister-in-law Maria Bacci. Her version of the events is quite different from that painted by her husband and brother-in-law. She states that she was not employed to work at the restaurant; there was no schedule of hours when he was expected to work there; she did go in at odd times to help the family business get off the ground; there were approximately twelve people involved helping out; she was not paid for the time thus spent and did not expect to be; no records were kept either by her or by anyone else of the hours she spent at the restaurant. I quote in part from her letter:
1) I was not scheduled to work in the restaurant but just went in the odd time, late afternoon, evening or on a Saturday, to help a family business get off the ground. I was available for work.
2) I was not paid for any of this time I helped out. And did not expect to be.
3) I volunteered my spare time as I was assured a full-time job if the business went well. I was actively looking for work in the clerical field ...
. . .
6) There is no records of hours kept by the restaurant as I was not on the payroll or an employee, but just helping the family.
In a case such as this where there is reason to doubt the credibility of written evidence, a Board should not rely on that evidence in the face of oral testimony contradicting the written statements. The individuals (in this case the husband and the brother-in-law) should have been called and questioned on their written statements, in order to assess the credibility of their evidence if that evidence was going to be relied on. Other members involved in the business who also had personal knowledge of the events in question might also be heard. I note for example that the brother-in-law was very precise in his affidavit as to the hours and days of the week worked by the claimant. In response to that affidavit, Maria Bacci, in an affidavit signed by her, stated with respect to the claimant's involvement that "She worked some evenings and some days. I often babysat Laurie's child. She had no set schedule". When confronted with this explanation the claimant's brother-in-law revised what he had said earlier in his affidavit. He indicated that the schedule of hours worked was arrived at by mutual consent between the members of the family working at the restaurant and he acknowledged Maria Bacci's statement that there was no mandatory schedule. On the face of the documents on the file, then, there is reason to question the credibility of his evidence.
What is more there is no evidence on the file of any arrangement of a contractual nature which might be said to constitute a contract of employment, except for the claimant's estranged husband's claim that she was an "employee" (exhibit 4-2).
The claimant's assertion that she was not employed at the restaurant but merely helping out in her spare time is entirely consistent with the fact that no record of hours worked were kept, no remuneration was paid and there was no mandatory work schedule for her. This is different from the manner in which Livio (the brother-in-law mentioned above) was dealt with. Time sheets were kept for him, and when the business made a profit he was paid for the time he had worked. I note that Exhibit 12 refers to time sheets respecting Livio Pulzoni; time sheets for no other individual are referred to.
The Commission disentitled the claimant on the ground that she was working in an employment in which she controlled her own working hours (sections 19 and 21(1) of the Unemployment Insurance Act, 1971, and regulation 43(1)(b) of the Unemployment Insurance Regulations 1971.
I underline the fact that the Commission did not disentitle the claimant to benefits on the basis of regulation 43(1)(a): because she was self-employed or engaged in the operation of a business on her own account or in partnership or a co-adventure. Nor did it disentitle her to benefits on the basis of section 36 of the Act: because she had not proven she was available for work.
Mr. Justice Strayer in the Cummins appeal, CUB 11084, dealt with the case of an unemployed son who worked at his father's service station and fast food outlet, on an average of 50 hours per week. The claimant received no remuneration for that work but stated that he occupied himself in his father's business because he had nothing else to do and did not want to remain idle. There being no evidence that the son was working under a contract of service for remuneration the disentitlement to benefits imposed by the Commission was overturned. This decision was upheld by, the Federal Court of Appeal on April 30, 1986 (Court file No. A-802-85).
If the Commission relies on subsection 43(1)(b) as the ground of disentitlement then it must be prepared to prove employment and this involves proving an arrangement of a contractual nature between the employer and the employee.
The Commission should choose with care the grounds upon which it disentitles claimants and be prepared to substantiate those grounds should the claimant appeal to a Board of Referees. (CUB 11076)
A contract of service or employment involves an agreement under which services are provided in return for remuneration. A volunteer is not usually operating under a contract of service. Refer: Christie, Employment Law in Canada, page 13.
In addition I would make reference to numerous CUB decisions which have held that helping out a family member does not constitute employment: CUB 3938, CUB 3964; CUB 5484; CUB 5521; CUB 5583; CUB 5689.
The claimant states that she was helping out at the restaurant; that she was volunteering her spare time to help the business get off the ground; that she knew that if the business was successful there would be a job for her at some future date. This did occur and she was hired on April 1, 1984.
The promise of a job in the future if the restaurant business becomes successful is not a present contract of service or employment; Refer: Christie, Employment Law in Canada, page 113. The arrangement is far too speculative and uncertain to constitute a relationship of employment. However, if the terms of her work at the restaurant had been that she would eventually be paid for the work performed during the months of December through March should the restaurant earn enough profits to do so, then there would have been a contract of service, even if no wages were in fact paid. But this was not the case with respect to this claimant.
One last comment should be made. The Board of Referees referred to the fact that "while the appellant stated she was available for other work and had in fact, actively looked for other work, her records regarding her job search had been destroyed". Yet the explanation the claimant gives for this is very credible. The Commission's investigation into the claimant's status commenced with the letter written by her estranged husband in February, 1985. Affidavits were taken from family members and others and interviews were held with them in March and April. In August, 1984 as a consequence of the break up of her marriage she moved residences. She had not at that time heard anything from the Unemployment Insurance Commission. She had not been receiving benefits since April 1, 1984, since she was as of that date, employed. She threw out all her records relating to the matter when she moved in August 1984. In November, 1985 she received the notice of disentitlement. Under those circumstances neither the Commission nor the Board can rely on the non-existence of the documents as having any evidenciary value.
In my view the Board of Referees based its decision on a finding of fact made in a perverse and capricious manner when it found the claimant was employed. The only evidence on file leading to that conclusion (and I emphasize that working at the restaurant alone is not proof of a contract of employment) are the allegations of her embittered brother-in-law and her estranged husband; these were not tested by cross-examination. (refer also CUB 10720)
Consequently, the decision of the Commission and the Board to disentitle the claimant on the basis that she was employed in employment is struck out. On the basis of my assessment of the evidence a decision pursuant to section 96 of the Act is substituted therefore declaring the claimant was not disentitled to benefits during the time in question by reason of working in an employment in which she controlled her own working hours.
B. REED
Umpire
OTTAWA, Ontario
November 4, 1986