Date: 20060220
Docket: T-1115-05
Citation: 2006 FC 228
Ottawa, Ontario, February 20, 2006
PRESENT:
THE HONOURABLE MR. JUSTICE MARTINEAU
BETWEEN:
GINAUD
DUPUIS
Applicant
and
CANADA
REVENUE AGENCY
Respondent
REASONS FOR ORDER AND ORDER
MARTINEAU J.
[1]
This is an
application for judicial review aimed at obtaining a writ of mandamus
obliging the respondent to examine the applicant’s adjustment requests on the
basis of the criteria established in Wiebe Door Services Ltd. v. Canada
(Minister of National Revenue), [1986] 3 F.C. 553 (F.C.A.), replicated in
Interpretation Bulletin IT-525R (consolidated).
[2]
From July
2000 to December 2002, the applicant worked as a guest artist for Cirque du
Soleil Inc. (the Cirque) and for some of its subsidiaries, which considered him
an employee. The applicant contested this position and undertook various steps
in 2003 and 2004 with the relevant tax authorities to be recognized as a
self-employed worker for the taxation years in question.
[3]
After
having considered the applicant’s special situation, the Ministère du Revenu du
Québec decided to consider him a self-employed worker. However, the respondent
refused to accept the adjustment requests because they had not been made by the
applicant within the specified time limits and because the prior decisions
concerning insurability under the Employment Insurance Act S.C.
1996, c. 23 (the EIA) are final and binding and cannot be revoked.
[4]
In his
written submissions, the respondent acknowledged that the requests for
adjustment had been dismissed on grounds that were irrelevant or mistaken and
that the impugned decision did not meet the standard of reasonableness set out
in Lanno v. Canada (Canada Revenue Agency) (2005), 334 N.R. 348
(F.C.A.), 2005 FCA 153 and Maloshicky v. Canada (Canada Revenue Agency),
[2005] 4 C.T.C. 12 (F.C.), 2005 FC 978.
[5]
The
applicant, who is representing himself in these proceedings, admits that this
Court cannot oblige the Minister of National Revenue (the Minister) to
recognize his status as a self-employed worker (Apotex Inc. v. Canada,
[1994] 1 F.C. 742 (F.C.A.), 162 N.R. 177, aff’d by [1994] 3 S.C.R. 1100
(S.C.C.)).
[6]
Given the
fact that:
a)
the
Minister agrees to reconsider the adjustment request for the 2002 taxation year
as a valid notice of objection under paragraph 165(1)(a) of the Income
Tax Act, R.S.C., 1985, c. 1 (5th Supp.) (ITA); and that
b)
the
Minister agrees to reconsider the adjustment requests for the 2000 and 2001
taxation years under subsection 152(4.2) of the ITA, taking into account the
expiration of the normal reassessment period;
all that is required is to refer the case back to the
respondent so a decision may be rendered in accordance with the law on the
basis of the applicant’s specific situation and the applicable criteria for
distinguishing a performing artist who is an employee from an artist who is an
independent contractor.
[7]
On this
point, I note that the Federal Court of Appeal conducted a detailed examination
of the relevant case law in Wiebe Door, supra. According to
MacGuigan J.A., the best synthesis of the problem is that of Cooke J. in Market
Investigations, Ltd. v. Minister of Social Security,
[1968] 3 All. E.R. 732 at pages 737-38 (Q.B.D.), followed by the
Privy Council in Lee Ting Sang v. Chung Chi-Keung, [1990] 2 A.C. 374 at page
382 (P.C.), per Lord Griffiths. Although there is no universal test for
determining whether a person is an employee or an independent contractor, in 671122
Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, 204
D.L.R. (4th) 542, the Supreme Court of Canada mentioned that the approach taken
by Cooke J. in Market Investigations, supra, was
“persuasive”. As mentioned by Major J. in Sagaz Industries at paragraph
47, in making this
determination, the level of control the employer has over the worker’s
activities will always be a factor. However, other
factors to consider include whether the worker provides his or her own
equipment, whether the worker hires his or her own helpers, the degree of
financial risk taken by the worker, and the worker’s opportunity for profit in
the performance of his or her tasks. Obviously, the
above factors constitute a non-exhaustive list, and there is no set formula as
to their application.
[8]
Having
said this, I hasten to add that the Federal Court of Appeal recently pointed
out in 9041-6868 Québec Inc. v. Canada (Minister of National Revenue),
[2005] F.C.J. No. 1720
(F.C.A.) (QL), 2005 FCA 334, that, in the province of Quebec, when section 8.1
of the Interpretation Act, R.S.C., c. I-21 came into force on June 1, 2001,
the immediate effect was to
restore the role of the civil law in matters under the jurisdiction of this
Court, to bring to light how the common law might have been borrowed from, over
the years, in cases where Quebec civil law applied or should have applied, and
to caution us against any such borrowing in future. In the present case, the issue is
whether the contract in question was a contract of employment, rather than one
of enterprise, and thus insurable within the meaning of paragraph 5(1)(a)
of the EIA. Endorsing the general approach suggested by Archambault J. of the
Tax Court of Canada in his article entitled “Contract of Employment: Why Wiebe
Door Services Ltd. Does Not Apply in Quebec and What Should Replace It” in The
Harmonization of Federal Legislation With Quebec Civil Law and Canadian Bijuralism:
Second Collection of Studies in Tax Law (2005) Montréal, APFF, 2005, Décary
J.A. concluded that, even if it was probable in most cases that where contracts are similar they
would be characterized similarly whether the civil law or common law rules are
applied, the fact
remains that it is the Civil
Code of Québec (C.C.Q.) that determines what rules apply to a contract
entered into in Quebec. Those rules are found in, inter alia, the
provisions of the Code dealing with contracts in general (article 1377 C.C.Q. et
seq.) and the provisions dealing with the “contract of employment”
(articles 2085 to 2097 C.C.Q.) and the “contract of enterprise or for services”
(articles 2098 to 2129 C.C.Q.).
Thus, in Quebec, a contract of employment is a contract by which the employee
undertakes for a limited period to do work for remuneration according to the
instructions and under the direction or control of an employer (article 2085
C.C.Q.). However, in the case of a contract of enterprise or for services, the
contractor or the provider of services undertakes to carry out physical or
intellectual work for a client or to provide a service for a price which the
client binds himself to pay (article 2098 C.C.Q.). In this case, the
contractor or the service provider is free to choose the means of performing
the contract, and no relationship of subordination exists between the
contractor or the service provider and the client in respect of such
performance (article 2099 C.C.Q.).
[9]
As can be
seen, under civil law, the degree of control that the employer may or may not
have in practice over the worker’s activities is a distinctive determining
factor. To determine whether there is a relationship of subordination, one
looks for, on the one hand, certain indicia of the ability to control, such as
mandatory presence at a workplace, a somewhat regular assessment of work, the
imposition of rules of conduct or behaviour, an obligation to provide activity
reports, and control over the quantity and quality of the services (Robert P.
Gagnon, Le droit du travail du Québec, 5th Ed., Cowansville, Quebec,
Yvon Blais, 2003 at paragraph 92). On the other hand, whether or not the worker
supplies his or her own tools, hires assistants, invests financially and is
responsible for the management, as well as the extent to which he or she would
profit from the performance of the work, are factors that are still relevant to
distinguishing the contract of employment from the contract of enterprise (or
for services), as was recently decided by the Quebec Court of Appeal in 97980
Canada Inc. v. Québec (Deputy Minister of Revenue), [2005] J.Q. No. 995 (Q.C.A.), which applied
the general approach described by the Supreme Court of Canada in Sagaz, supra.
[10]
In this
case, the parties admit that the distinction between an employee and an
independent contractor in the field of the performing arts is blurred,
especially since in this case the applicant’s performance as a guest artist for
the Cirque was a strongman act, which he says he developed entirely on his own
and claims was unique to him.
[11]
Speaking
of the situation of free-lance technicians working on the production of
television shows, the Federal Court of Appeal noted in Productions Petit
Bonhomme Inc. v. Canada (Minister of National Revenue) (2004), N.R. 356,
2004 F.C.A. 54, that it was dealing with a “hybrid contractual situation”, as
some factors favoured a contract of employment (article 2085 C.C.Q.) and
others a contract of enterprise or of services (article 2098 C.C.Q.). Having
said this, and as noted by Décary J.A., in view inter alia of the Act
respecting the professional status and conditions of engagement of performing,
recording and film artists, R.S.Q., c. S-32.1 and the Status of
the Artist Act (1992, c. 33,) as well as union certification orders made by
the authorities in question, it appears that legislatures, producers and
workers in the performing, recording and film field do not hesitate to regard
workers in those fields as independent contractors (Productions Petit
Bonhomme, supra, at paragraphs 4 to 7).
[12]
However,
the fact must be underlined that in the field of the performing arts, certain
traditional indicia of control do not always allow a distinction to be drawn
between an employee and an independent contractor. For example, decisions
concerning rehearsals, the number of shows given during one season and the
dates, the costumes worn, the choice and replacement of artists for a
collective performance will most probably always be made by the art company,
whether it is ballet, opera or theatre. As underlined by Mr. Justice Campbell
J. Miller of the Tax Court of Canada in Royal Winnipeg Ballet v. Canada
(Minister of National Revenue), 2004 TCC 390 at paragraph 33, 35 C.C.E.L.
(3d) 101, dockets 2003-2569(EI) and 2003-2580 (CPP), on appeal: appeal docket
A-443-04 (judgement reserved):
To rely on those factors
to find an employment arrangement, would effectively preclude any possibility
of an independent contractor arrangement in a performing arts setting. I find
that these type of factors do not assist in drawing a distinction between an
employee and an independent contractor in the performing arts environment. Only
those factors where there is room to manoeuvre to a position of more or less
control should be assessed.
[13]
On this
point, I note that the applicant, as a guest artist, is in a different position
than the in-house artists who participate in the Cirque’s visual shows, and
this must be taken into consideration when an attempt is made at applying the
usual employment criteria. This is definitely a relevant question which will
have to be considered on the merits by the Minister, who will have to examine
the contract concluded between the applicant and the Cirque to see if it
reflects the true relationship that existed in fact between the same parties (9041-6868
Québec Inc., supra, at paragraph 9). In interpreting the contract,
it must be determined what the mutual intent of the parties was, rather than
restricting the analysis to the literal meaning of the terms used. As the case
may be, one must, for example, take into consideration the parties’ stated
intent, the circumstances in which the contract was formed, and the
interpretation which has already been given to it by the parties (articles 1425
and 1426 C.C.Q.). It will eventually be up to this Court, the Tax Court of
Canada or even the Federal Court of Appeal to examine the legality of any
decision made by the Minister or to determine the applicant’s status as an
employee or independent contractor.
[14]
I
will now discuss the matter of costs. The applicant is claiming a total amount
of $13,229.83, detailed as follows:
· Reimbursement
of the cost of supplies for preparing the case: $1,157.75
· Reimbursement
of transportation expenses: $3,104.50
· Reimbursement
of postal fees: $150.00
· Reimbursement
of tax consultant fees for the adjustment requests: $2,217.58
· Reimbursement
of the time spent on research, preparation of the application for judicial
review and the investigation required to discover new facts: $4,800.00
· Reimbursement
of the consultation fees of Vilmont Dupuis, Notary: $1,800.00.
[15]
The
Federal Courts Rules SOR/98-106 (the Rules) deal specifically with costs
in Part 11 (sections 400 to 422). Subsection 400(1) of the Rules specifies that
the Court has full discretionary power over the amount and allocation of costs
and for determinating by whom they are to be paid. Subsection 400(3) of the
Rules mentions that in exercising its discretion the Court may take into
consideration any of a number of factors set out therein. Paragraph 400(3)(o)
of the Rules is clear: the preceding list is not exhaustive, and the Court may
take other factors into consideration to determine the amount of the costs.
[16]
In
Sherman v. Canada (Minister of National Revenue), [2004] F.C.J. No. 136
at paragraphs 8-11 (F.C.A.) (QL), 2004 FCA 29, the following was noted:
The purpose of
the costs rules is not to reimburse all the expenses and disbursements incurred
by a party in the pursuit of litigation, but to provide partial compensation.
The costs awarded, as a matter of principle, are party-and-party costs. Unless
the Court orders otherwise, Rule 407 requires that they be assessed in
accordance with column III of the table to Tariff B. As the Federal Court
properly said in Apotex Inc. v. Wellcome Foundation Ltd. (1998), 159
F.T.R. 233, Tariff B represents a compromise between compensating the
successful party and burdening the unsuccessful party.
Column III of
the table to Tariff B is intended to address a case of average complexity: Apotex Inc. v. Syntex
Pharmaceuticals International Ltd., 2001 FCA 137. The Tariff includes counsel
fees among the judicial costs. Since it applies uniformly across Canada, it
obviously does not reflect a counsel’s actual fees as lawyers’ hourly rates
vary considerably from province to province, from city to city and between
urban and rural areas.
There is no
doubt that the appellant, who was unrepresented, expended time and effort in
the pursuit of his claims. However, as the Alberta Court of Appeal pointed out
in Dechant v. Law Society of Alberta, 2001 ABCA 81, “represented
litigants also sacrifice a considerable amount of their own time and effort for
which no compensation is paid”. Furthermore, their lawyers’ fees are not fully
reimbursed. I agree that “applying an identical cost schedule to both
represented and unrepresented litigants will work an inequity against the
represented litigant who, even with an award of costs, will be left with some
legal fees to pay and no compensation for a personal investment of time”: ibid,
paragraph 16. It could also promote self-litigation as an occupation: ibid,
paragraph 17; see also Lee v. Anderson Resources Ltd., 2002 ABQB 536,
(2002) 307 A.R. 303 (Alta Q.B.).
In the present
instance, if the appellant had been represented, he would have been awarded
party and party costs according to column III of the table to Tariff B. I
believe that his award of costs as an unrepresented litigant can, at best,
equal, but should not exceed, what would have otherwise been paid to him if he
had been represented by counsel. I should add that the unrepresented litigant
enjoys no automatic right to the full amount contemplated by the tariff. The
amount of the award is in the discretion of the Court. The concept of a
“moderate allowance” is an indication of a partial indemnity although, as
previously mentioned, I accept that, in appropriate but rare cases, the amount
of that indemnity could be equal to what the tariff would grant to a
represented litigant
[17]
However,
in Entreprises A.B. Rimouski Inc. v. Canada, [2000] F.C.J. No. 501 at
paragraph 5 (F.C.A.) (QL), 262 N.R. 276, the Federal Court of Appeal clearly
indicated that, in the exercise of its power to award costs under subsection
400(1) of the Rules, the Court may award a party a certain indemnity for
expenses that are not disbursements within the normal meaning, or legal fees:
According to
the file, the claim for legal fees represents amounts paid to a lawyer who was
advising Mr. Banville “behind the scenes” regarding his appearance before our
Court. As Rouleau J. stated, a person who represents himself cannot, in
principle, be awarded costs for legal fees. In fact, legal fees can only be
reimbursed if awarded on a “solicitor-and-client” basis in accordance with
subparagraph 400(6)(c) of the Federal Court Rules, 1998.
Nevertheless, Rouleau J. allowed $2,500 for legal fees as well as most of the
disbursements incurred by the lawyer, recognizing that Mr. Banville was
representing himself and that the lawyer's advice may have facilitated his
submissions before this Court. Mr. Banville is in no position to complain.
[18]
Moreover,
in
Desloges v. Canada (Attorney General), [2001] F.C.J. No. 1627 at
paragraph 6 (F.C.T.D.) (QL), 2001 FCT 1142, assessment officer Stinson dealt
specifically with travelling expenses as follows:
A
disbursement is a payment by either side in litigation to a disinterested third
person for a service, not falling within the professional expertise of a
solicitor (except in limited circumstances: see Reasons dated July 29, 1999, in
T-1941-93, James L. Ferguson v. Arctic Transportation Ltd. et al.) which
is reasonable and necessary to advance the litigation. Disbursements are
usually paid through a party's solicitor, but they are sometimes paid directly
by the client under the supervision of the solicitor having conduct. Tariff B
authorizes disbursements, but does not prohibit categories of disbursements.
Here, the Applicant had to perform the tasks advancing the litigation and pay
the associated disbursements directly. There is no reason to preclude his
travel expenses, if reasonable and necessary to advance the litigation, as they
would not have been incurred but for this litigation. His proof for the travel
expenses is less than absolute. For example, the details of what was served or
filed on each trip are not there. Some trips were to educate himself on
procedure by obtaining precedents. In matters such as Canadian Olympic
Association v. USA Hockey Inc. et al. , A-472-97, February 22, 2001, 2001 FCA 32, I have
allowed computer-assisted research, but for conservative amounts. Here, the
evidence is unclear whether a lesser number of trips might have been possible.
Process service firms and couriers are common tools used by law firms and the
charges for those services are generally allowed as disbursements in costs.
There are two rates for travel reimbursement used in the public service:
currently, in Ontario, $0.42.5 per kilometre for the employer requested rate,
and $0.13.0 per kilometre for the employee requested rate. I apply my
conclusions in Carlile v. The Queen, 97 D.T.C. 5284 and allow a total of
$110.00 for parking and transportation. The Applicant's Bill of Costs,
presented at $490.53, is assessed and allowed at $344.79.
[19]
In the
case at bar, I am of the opinion that a lump-sum instead of assessed costs
should be awarded to the applicant: see Barzelex Inc. v. EBN Al Waleed,
[1999] F.C.J. No. 2002
at paragraph 11 (F.C.T.D.) (QL). In the present case, if the applicant had been
represented, he would have obtained party-and-party costs under Column III of
Tariff B. This is not a case in which faulty conduct by one of the parties or
complex legal issues warrant an increased indemnity. I also take into
consideration that the disbursements claimed, for example, the purchase of
books and the tax consultant’s fees for the adjustment requests, cannot be
claimed by the applicant. Other disbursements, even if actually incurred and
which to me seem useful at first sight, cannot be awarded for the full amount,
considering that they would not have been so high or would not normally have
been reimbursed if the applicant had been represented by counsel. Accordingly,
in the exercise of my discretion, I have decided to award the applicant a total
amount of $3,500 in costs. This seems reasonable to me, considering the
evidence on record and all the circumstances of the matter, including the fact
the respondent agreed before the hearing that this application for judicial
review be allowed in part by the Court.
ORDER
THE COURT ORDERS:
1.
The
application for judicial review is allowed in part;
2.
The
adjustment requests for the taxation years 2000, 2001 and 2002 are referred
back to the Minister of National Revenue for decision in accordance with the
law on the basis of the applicant’s special situation and the applicable
criteria for distinguishing a performing artist who is an employee from an
artist who is an independent contractor;
3.
Costs in
an amount of $3,500 are awarded to the applicant.
“Luc Martineau”
Certified
true translation
Michael
Palles
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