CUB 20431
ISSUE:Weeks of unemployment - Self-employed
engaged in the operation of a business on his own account
Section 43(1)(a)Act
APPELLANT: Claimant
DECISION: Dismissed
CLAIMANT: Maurice H. Bourque
DECISION
REED UMPIRE:
The claimant appeals a decision of the Board of Referees which disentitled him from receiving benefits because he had not proven he was unemployed as that term is defined for unemployment insurance benefit purposes.
Section 10(1) of the Unemployment Insurance Act provides that a week of unemployment for a claimant is "a week in which he does not work a full-working week", Subsections 44(b) and (c) of the Act authorize the Commission to make regulations defining what is a working week and prescribing the conditions and circumstances under which a claimant, while self-employed or employed in employment that is not insurable, has or has not worked a full working week. Unemployment Insurance Regulation 43(1)(a) provides that a person who is "self-employed or engaged in the operation of a business on his own account or in partnership or co-adventure" will be treated as having worked full working weeks. Regulation 43(2) provides for an exception when the activity in question is "so minor in extent that a person would not normally follow it as a principal means of livelihood".
The claimant's main argument is that the activity in which he was engaged was not on his own account but on behalf of a corporation, Bourque Sheet Metal Ltd. This corporation was one in which the claimant, his wife and his son were shareholders. It is argued that Regulation 43(1)(a) does not cover the situation where activity is carried on through, or on behalf of a corporation. Jurisprudence was cited to demonstrate: the legal principle that corporations and shareholders are separate legal entities; that the act of a shareholder is not necessarily the act of the company; the legal requirements for determining when a contract of service (employment relationship) is said to exist; the legal requirements for determining when a partnership is said to exist. It is argued that if it had been intended, by Regulation 43(1)(a), to encompass activity in which an individual acts on behalf of a corporation, as opposed to on his own behalf or as a partner, the text of Regulation 43(1)(a) would have expressly so stated. It is noted that section 3(2)(d) of the Unemployment Insurance Act expressly sets out in what circumstances an individual will not be considered to be engaged in insurable employment as a result of a relationship to a corporation. Similarly, it is said that if Regulation 43 had been intended to encompass activity on behalf of, or through a corporation, the wording would have been express.
The claimant was laid off from Aztec Metals Ltd. on June 30, 1990. That company was at the time near bankruptcy. The claimant, his wife and son incorporated Bourque Sheet Metal Ltd. on May 24, 1990. There seems little doubt that the claimant was aware of his employer's financial difficulties and in anticipation decided to take steps to try to create employment for himself. The claimant is the president of Bourque Sheet Metal Ltd. He owns 39% of its shares. His wife owns another 39% and their son owns 22%.
On October 15, 1990 the claimant was interviewed by a Commission officer who recorded part of the interview as follows:
... Mr. Bourque states that he checked or sought work with Northern Erectors and that is all. He has gone to approx. 20 different contractors seeking work for his business. He has done four jobs since July 2, 1990, when he started on his own; George Dumont (4 weeks), Pères Trapist, Rogersville (1 week), D.S.S., Colishaw St. (1 week) and St. Joseph, Memramcook (1 week).
Mr. Bourque states that he had three employees working for him but anticipates in November to have between 6 to 9 employees depending on jobs. Company value presently in tools, materials and one half ton truck 1987 Chev. would be approx. from $20,000 to $25,000 in value. His garage built in 1990 size 16' X 24' valued at approx. $5,000. Mr. Bourque states that if all goes well that this will be his livelihood. He states that he has a job with Dept. of National Defense [sic] starting in November 12, 1990 and possibly three to four more (N.B. Power in Chatham, Atlantic Wholesalers in Moncton, Credit Bureau St. George SP.). Mr. Bourque states that his wife Denise is presently his bookkeeper and will be working one week per month to do all of the bookkeeping and to submit all premiums etc. to R.C.T. (Revenue Canada Taxation) and similar duties and will also be answering telephone calls. Mrs. Denise Bourque (wife) has four years of University. Mr. Bourque states that he does not advertise through newspaper but has business cards only (see attached). Mr. Bourque states that he would work for someone else when not self-employed.
The claimant signed this report. The Commission officer added a summary of the interview which was not signed by Mr. Bourque:
Mr. Maurice Bourque states that he has contacted only one place of employment, other than for his own business for work and that is Northern Erectors according to him since the end of June!
He also built a garage 16' x 24' to store his materials in 1990 in which he claims that he worked on for the two first weeks of July with one Sylvio M. Bourque. See attached payroll records.
He claims that although he had a few jobs that he personally did not work as he had sent his foreman Émile Doiron (see payroll) to do the work.
He states that he did estimate the jobs which was normally done over the telephone.
He also states that he wishes to make this his livelihood and is constantly in contact trying to obtain jobs by telephone and sometimes goes to the potential job prospective to bid.
He stated that he would accept work from another employer when not self employed and if he was working his own self-employment would consider priority.
The claimant's counsel complains about the quality of this evidence. A letter was written to the Commission on behalf of the claimant, on November 21, 1990:
Durant les mois de juillet et d'août 1990, Bourque Sheet Metal n'a eu que de travaux mineurs pour lesquels deux employés ont été embauchés, soit Sylvio Bourque (5 semaines) et Émile Doiron (2 semaines). Maurice Bourque n'a commencé à travailler pour Bourque Sheet Metal que le 24 septembre 1990. Il y a travaillé une semaine en septembre, une semaine en octobre et depuis le 5 novembre 1990.
Entre le 30 juin et le 5 novembre 1990, Maurice Bourque a fait plusieurs tentatives de trouver du travail pour des compagnies dans le métier. Nous attachons une liste des employeurs qu'il a rencontrés durant cette période.
En résumé, nous vous soumettons les informations suivantes:
a) M. Bourque était un employé de Aztec Metals Ltd. qui a été mis-à-pied pour "manque de travail" le 30 juin 1990;
b) il a été sans travail du 30 juin au 5 novembre 1990, sauf pour une semaine en septembre et une semaine en octobre;
c) il a fait des efforts afin de trouver du travail;
d) durant cette même période, il était actionnaire à 39% de la compagnie Bourque Sheet Metal Ltd.;
e) il a été un employé de Bourque Sheet Metal Ltd. du 24 au 28 septembre 1990, du 8 au 12 octobre 1990 et depuis le 5 novembre 1990;
f) rien n'empêche un actionnaire d'une compagnie de retirer des prestations d'assurance-chômage s'il est en chômage et s'il est disponible à travailler.
À notre avis, M. Bourque semble avoir rencontré toutes les exigences des Règlements de l'assurance-chômage. Nous vous demandons de prendre ces nouvelles informations en considération et de modifier votre décision originale.
Si cela n'est pas possible, M. Bourque dépose par la présente un avis de son désire de faire appel à votre décision pour les motifs qui sont contenus dans la présente lettre.
. . .
Listes des employeurs rencontrés par M. Bourque:
1) Northern Erectors, Cap-Pelé, N.-B.
2) Unisteel Ltd., Cap-Pelé, N.-B.
3) MyView Construction, Moncton, N.-B.
4) Structo Construction, Moncton, N.-B.
5) Camille Léger Ltd., Cormier Village, N.-B.
6) Melanson Enterprise, Scoudouc, N.-B.
7) Synton Construction, Moncton, N.-B.
8) Northrup Properties, Saint John, N.-B.
9) Robinson, Halifax, N.-B.
10) Schurman Construction, Charlottetown, I.-P.-E.
The Board of Referees after hearing the claimant and his representative decided as follows:
FINDING OF THE BOARD AND BAIS (SIC) FOR DECISION:
After reviewing all the facts presented the Board finds that week commencing 1 July 1990 up to week commencing 7 October 1990 claimant worked or could have worked 9 weeks with only 6 weeks for which his company had no work.
Claimant Maurice Bourque had the controlling ownership of Bourque Sheet Metal; therefore, it was his personal decision not to work during the 9 weeks his company had work available.
The 9 weeks of work available to claimant is not considered minor in extent; therefore, claimant is not entitled to benefits according to the UI Act and Regulations.
If the claimant's counsel is correct and Regulation 43(1)(a) does not pertain when a claimant engages on behalf of a corporation then the claimant's appeal must succeed. There is no doubt that being a shareholder in a corporation does not, by itself, disentitle one to unemployment insurance benefits. At the same time, if a person essentially controls a corporation or is its directing mind as that concept is used in income tax jurisprudence, it is reasonable to conclude that that individual is engaged in a business on his own account. One must look behind the corporate nature of the enterprise and consider the reality of the situation.
Not only does the wording of Regulation 43(1)(a) not require the interpretation which the claimant's counsel seeks to have put upon it but such interpretation would lead to strange results. It would not be an equitable law which provided that a person who engaged in a business without incorporating was denied benefits while a person who engaged in the same activity but through the vehicle of a corporation was not. I would note as well that literally the phrase "on his own account" does not require that the activity has to be undertaken only for the claimant's benefit. Also, if counsel's interpretation were correct, and the claimant was not engaged in the operation of a business on his own account because he was working for the corporation, the claimant would still fall within Regulation 43(1)(a). He would be engaged in a co-adventure composed of the legal person of the claimant and the legal person of the corporation.
Counsel argues that in any event there is not sufficient evidence in this case to prove that the claimant was the directing mind and controlling force behind the business. The Board knew: that the claimant, his wife and son were shareholders in the corporation; the business of the corporation was to do sheet metal work; sheet metal work was the claimant's occupation; the claimant's wife worked for the corporation as a bookkeeper (approximately one week a month); there was no indication in the evidence that the claimant's son had any involvement in the business; the claimant was the president of the corporation; the claimant sought customers for the business and gave estimates to potential customers; the claimant told the Commission officer at the time of the October 15, 1990 interview that he had three employees working for him, and that he soon hoped to have more; he told the officer that he would work for someone else when he was not self-employed.
Board of Referees are entitled to draw inferences from facts which are put before them. They also are not required to apply the strict rules of evidence that would pertain in a court of law; a much more informal and flexible approach is allowed. The Board's conclusion, from the evidence which was before it in this case, is credible. Its conclusion that the claimant controlled the corporation and that his activity associated therewith was not minor in extent is not a capricious or perverse decision. The evidence may be sparse but the evidence which exists supports the Board's conclusion. As is true in many cases, the absence of evidence conflicting with the conclusion that Mr. Bourque was the controlling mind of the corporation, adds to the strength of that conclusion. Mr. Bourque has not demonstrated that anyone other than he operated the business. Had this been the case, evidence of that fact would have been easy to produce.
Counsel for the claimant is concerned that the Board did not accept the claimant's assertions respecting his job search. He gave evidence that he was seeking employment for himself at the same time that he was seeking jobs for his company and that in any event, there was simple little employment available, at that time, in sheet metal work. After listening to the tape of the hearing before the Board and considering its decision, I could not conclude that the Board ignored the evidence.
There is no doubt that Mr. Bourque acted in an entirely reasonable fashion. He saw unemployment coming and he tried to create employment for himself. He appears to have been quite successful in this endeavour. But the provisions of the Act and Regulations, as they existed in May to November 5, 1990, state that an individual in the claimant's position is not entitled to receive unemployment insurance benefits unless the activity is "minor in extent". The Board found it was not. A hearing before the Umpire is not a trial de nova. I can only review the evidence which was before the Board to ensure that its decision was based on the evidence before it. The decision in this case was so based. For the reasons given the claimant's appeal must be denied.
UMPIRE
September 9, 1991