Citation: 2006TCC642
Date: 20061214
Docket: 2006-997(EI)
BETWEEN:
ANIMAGINE INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Savoie D.J.
[1] The appeal was
heard at Montréal, Quebec, on September 19, 2006.
[2] It concerns the
insurability of the employment of Véronique Lusignan Gravel (the “Worker”) when
she worked for the employer from November 20 to December 17, 2004 (the “period
at issue”).
[3] On January 6, 2006,
the Minister of National Revenue (the “Minister”) informed the Appellant of his
decision that the Worker held insurable employment during the period at issue.
[4] The Minister also
informed the Appellant that the Worker had exercised insurable employment for
46.5 hours of work and that her insurable earnings were $511.50 during the
period at issue.
[5] In rendering his
decision, the Minister relied on the following assumptions of fact:
(a) the Appellant, incorporated on February
10, 1993, is a not-for-profit organization aimed at helping artists find
contracts; (admitted with clarifications)
(b) the Appellant’s activities mainly consist
in providing entertainment services in various shopping centres; (admitted)
(c) the Appellant provides the services of
actors, musicians, makeup artists, various personalities, public entertainers,
i.e. all sorts of characters used to create a festive atmosphere; (denied)
(d) the Appellant mainly covers the
back-to-school period, Halloween and Christmas; (admitted)
(e) the Appellant operates its business mostly
during the months from August to December of each year; (admitted)
(f) when it needs a worker, the Appellant
recruits by using advertisements in local newspapers and holding interviews;
(admitted)
(g) in its letter of May 30, 2005, addressed
to the Chief of Appeals, the Appellant stated to have acted, as with all the
other artists, as an intermediary between the Worker and potential clients,
although only one client retained the Worker’s services; (admitted with
clarifications)
(h) the Worker had been hired, under a written
contract, to greet children at Santa’s Kingdom at the Place Rosemère shopping
centre; (admitted)
(i) more specifically, the Worker was to talk
to and entertain the children waiting in line and introduce them to Santa
Claus; (admitted)
(j) the Worker had to dress up as a wooden soldier;
(admitted)
(k) under the employment contract, the Appellant was to come to the shopping centre
dressed in street clothes, and put on her costume on arrival, in order to
preserve the element of surprise for the children; (admitted)
(l) the costume and accessories were supplied
by the Appellant, while the Worker supplied her make-up; (admitted, except for
clarifications to be made)
(m) the Worker was able to get ready in a
dressing room supplied by the shopping centre; (admitted)
(n) despite a variable work schedule, the
Worker had to respect a work schedule prepared based on the shopping centre’s
demands, those of the Appellant and her availability; (admitted)
(o) if she could not go to work, the Worker
had to notify the Payor 24 hours in advance so that it could replace her;
(admitted)
(p) at work, the Worker reported to a certain
Richard, representative of the Appellant; (denied)
(q) the Appellant
received $11.00 per hour and, during the period at issue, she received 3
cheques from the Appellant during the period at issue; (admitted)
(r) during the period at issue, the Worker
accumulated 46.5 hours of work for the Appellant; (admitted)
(s) during the period at issue, the Worker
received earnings totalling $511.50 from the Appellant. (admitted)
[6] The Worker stated
at the hearing that the Appellant had set a work schedule that she had to
follow. She had to go to a designated area in advance for her make-up. She
added that the dinner time was set by the Appellant. However, the Appellant
explained that the work schedule was arranged to facilitate teamwork, but that
the schedule was not fixed and could be modified at the Workers’ request.
[7] The Worker’s
testimony also revealed that the wage of $11.00 per hour was not negotiable. To
this, the Appellant responded that it had offered the Worker a certain salary
and that she had accepted it. The Worker had not wished to negotiate her wage
and did not sign a contract.
[8] It was determined
that the Appellant sometimes supplied the costume to the Workers, but that this
only occurred when the worker was starting out and did not have a costume.
Otherwise, the Appellant demanded that the workers provide their own costumes,
all their equipment and everything necessary for their performances.
[9] Despite the
contract signed with the Appellant, the Worker does not consider herself an
independent worker. She indicated that she could not choose her replacement
when she could not be present. The Appellant indicated that
the workers were free to work elsewhere. This was confirmed by another worker,
Stéphanie Bacon, who stated at the hearing that she worked for several
businesses as a public entertainer and that she provided her own accessories.
Moreover, in this field, workers are always looking for future jobs; this work
has become a lifestyle.
[10] The Appellant
challenged the assertion of the Worker that Richard Dufresne acted as supervisor
and specified that he acted rather as a contact person to whom the workers
could speak if they had any problems or difficulties.
[11] The Appellant also
indicated that it provided no training to the workers. The only measures taken
with regard to the workers was to indicate the place where they were to give
their performance and explain to them the basis of their mandate, but the
Appellant allowed them to entertain in their own way. The Appellant demanded a
satisfactory result from the workers’ performances.
[12] The issue is whether
the Worker held insurable employment for the purposes of the Employment
Insurance Act (the “Act”). The relevant provision is paragraph 5(1)(a)
of the Act, which states the following:
Subject to subsection (2), insurable employment 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;
[Emphasis added.]
[13] The section cited
above defines the term “insurable employment.” It is employment under a
personal service contract, i.e. under a work contract. However, the Act does
not define what constitutes such a contract. In this case, there is a written
contract. It is reproduced hereafter. The intentions of the parties are
expressed in this contract.
[14] The personal service
contract is a civil law concept described in the Civil Code. The relevant
provisions of the Civil Code will determine the nature of this contract.
[15] In an article
entitled “Contract of employment: Why Wiebe Door Services Ltd. Does not
Apply in Quebec and What Should Replace It,” published in the fourth quarter of
2005 by the Association de planification fiscale et financière (APFF) and the
federal Department of Justice in The Harmonization of Federal Legislation with Quebec Civil Law and Canadian
Bijuralism: Second Collection of Studies in Tax Law, Pierre Archambault J. of this Court describes, in respect
of any period of employment after May 30, 2001, the procedure that the courts
must follow since the coming into force, on June 1, 2001, of section 8.1 of the
Interpretation Act, R.S.C. (1985), c. 1-21, as amended, when they are
confronted with cases like this one. Here is what is set out by Parliament in
this section:
Property and civil law
8.1 Both the common law and the civil law are
equally authoritative and are recognized sources of the law of property and
civil rights in Canada and, unless otherwise provided by law, if in
interpreting an enactment it is necessary to refer to a province’s rules,
principles or concepts forming part of the law of property and civil
rights, reference must be made to the rules, principles and concepts in
force in the province at the time the enactment is being applied.
[Emphasis added.]
[16] It is appropriate to
reproduce the relevant provisions of the Civil Code, which will be used to
determine the existence of an employment contract in Quebec to distinguish it
from a contract of enterprise:
Employment contract
2085. A contract of employment is a contract by which a
person, the employee, undertakes for a limited period to do work for
remuneration, according to the instructions and under the direction or
control of another person, the employer.
2086. A contract of employment is for a fixed term or an indeterminate
term.
. . .
Contract of enterprise or for services
2098. A contract of enterprise or for services is a
contract by which a person, the contractor or the provider of services, as the
case may be, undertakes to carry out physical or intellectual work for another
person, the client or to provide a service, for a price which the client
binds himself to pay.
2099. The contractor or the provider of services is free to choose the means
of performing the contract and no relationship of subordination exists
between the contractor or the provider of services and the client in respect of
such performance.
[Emphasis added.]
[17] The Civil Code
provisions reproduced above establish three conditions essential to the
existence of an employment contract:
(1) the worker’s prestation in the form of work; (2) remuneration by
the employer for this work; (3) a relationship of subordination. The
significant distinction between a contract for service and a contract of
employment is the existence of a relationship of subordination, meaning that
the employer has a power of direction or control over the worker.
[18] Legal scholars have reflected on the concept
of "power of direction or control" and, from the reverse perspective,
a relationship of subordination. Here is what Robert P. Gagnon wrote in Le
droit du travail du Québec, 5th ed. (Cowansville: Yvon Blais, 2003) at pages
66-67:
[TRANSLATION]
(c) Subordination
90 - A distinguishing
factor - The most significant characteristic of an employment
contract is the employee's subordination to the person for whom he or
she works. This is the element that distinguishes a contract of employment
from other onerous contracts in which work is performed for the benefit of
another for a price, e.g. a contract of enterprise or for services
governed by articles 2098 et seq. C.C.Q. Thus, while article 2099
C.C.Q provides that the contractor or provider of services remains
"free to choose the means of performing the contract" and that
"no relationship of subordination exists between the contractor or
the provider of services and the client in respect of such performance,"
it is a characteristic of an employment contract, subject to its terms, that
the employee personally perform the agreed upon work under the direction of
the employer and within the framework established by the employer.
. . .
[Emphasis added.]
[19] In order to explain
the nature of its business, its product, its objectives and its relationship
with the recruited workers, the Appellant filed Exhibit A-1, which is
reproduced here in its entirety:
[TRANSLATION]
GENERAL INFORMATION ON ANIMAGINE
Definition of the company (See also
attached letter patents)
Creation of concepts
Incorporated as a not-for-profit for profit business in 1993,
Animagine has the mission of promoting recreative entertainment and related
activities such as circus arts, recreation, theatre, holiday activities.
Organize entertainment activities and promote excellence in the field. In
essence, we design special events, thematic concepts (days or evenings), we
create games, dramatic arts for children, parades, etc., which we sell to
fulfill these contracts. We hire people from various fields for a fixed term.
Internal team
Animagine is a micro-business managed by a board of directors
comprised of volunteers. Of the Board of Directors, only Nicole Côté (chair) is
employed by Animagine, as she is also responsible for the business’s
book-keeping on a full-time basis. Animagine also employs Manon Hébert
full-time as representative and idea manager and Mariève Bourget, part-time
recruiter and representative. Christiane Côté is also employed part-time as a
production assistant.
The internal team creates the concepts and responds to specific
requests by submission, does the advertising, recruits new contributors and
clients, drafts the contracts (clients and contributors), looks after the
logistics of large events, makes sure the entertainment is properly carried out
on the sites of the contracts and obtains adequate third-party liability
insurance every year.
Number of contractors
All of the artists and contributors who perform for Animagine are
fixed-term contract workers. Animagine’s activities and contracts generate
occasional work for roughly one hundred different artists and contributors
annually (actors, musicians, entertainers, sound technicians, singers, public
entertainers, etc.) in order to meet its commitments.
All independent workers
No artist or contributor is exclusive to Animagine. All of them work
or can also work for other companies simultaneously.
Duration of the assignments given to contributors
Each contract offered is for a short duration (minimum 4 hours and
maximum 9 hours per day (very rare) for one to 15 days (very rare)). No
contract is automatically renewable; each year brings a certain number of
various requests depending on the clients’ needs or on their reactions to
concepts suggested by Animagine. An artist can work 10 times in one year and
not at all in the following year. Animagine does not offer any guarantee of
work.
Contracts
In order to facilitate their comprehension of their condition of
independent worker, Animagine prefers to draw up a contract for each worker.
Apart from the description, the date/duration and the place of the assignment
offered, our contracts only consist in reminders of the releases pertaining to
their condition of independent worker.
While being bound to follow instructions on the nature of the work
to be done, the artist has the choice of the method to use; he or she is fully
responsible for the quality of the work; he or she has been chosen for his or
her skills and performs the work as he or she decides. No training is provided
by Animagine.
Schedule of payment of talent fees
In the field of entertainment, the contributors are often required
to join a team. In these cases, schedules are devised based on each person’s
availability. They can be modified during the contract; we are always
understanding of this and the schedule planning is always done in collaboration
with the artists.
When a schedule is imposed, we may include in our contracts talent
fees in the form of an hourly rate. However, this does not differ in any way
from contracts providing for so-called “piecework” payments.
Clients
Animagine’s clientele consists of 70% shopping centres and public
places, 20% corporations and 10% municipalities, schools and festivals. None of
these purchasers of entertainment services guarantees contract renewal or
long-term contracts; each year brings with it its lot of various small
contracts (always short-term) from clients with fluctuating needs.
Equipment supplied and benefits for independent
workers
Each contributor provides his or her own equipment and vehicle (if
necessary), can be called upon to attend the meeting with the client, is
responsible for his or her product and its quality, collaborates in setting his
or her schedules based on his or her other commitments and does his or her own
administration (therefore agrees to report earnings to tax authorities at the
end of the year).
To make sure this is clear, Animagine provides an artist’s booking
contract to each contributor.
However, when a theme is imposed by Animagine (or the client), we
may supply certain accessories such as the costume so that the artist does not
need to acquire equipment for an isolated event.
Also, we provide third-party liability insurance for $3,000,000.00
to cover any incident that may occur at the contract locations; most artists
cannot afford to purchase such insurance.
MATTER AT ISSUE
Duties of Véronique Lusignan Gravel
Ms. Lusignan Gravel, like all the other
starting contractual entertainers came to meet us in autumn 2004, wishing to
obtain work in this field. We found her apt to perform this type of work.
She was offered an assignment of 62 hours spaced over 15 days (which
seldom occurs at Animagine).
Ms. Lusignan Gravel was chosen to perform at Santa’s Kingdom at
Place Rosemère. In performing her duties, she had to follow a work schedule
(which she had accepted after being consulted). A schedule is inevitable in a
team work setting. She had to entertain the people in line and entertain the
children meeting Santa Claus. She did the work her way, based on her experience
and her ability; she was totally free to choose how she would play her
character and what interactions she would have with the children. Animagine
provided her costume because a Christmas character was required and Ms.
Lusignan Gravel did not have such a costume and was starting out in the trade.
However, it was her responsibility to provide any complementary accessory
necessary for the performance of her work. She was also responsible for
maintaining the costume that was loaned to her.
Ms. Lusignan Gravel was free to refuse the so-called “contracting
artist” contract for any reason. Had she not been interested in the contract,
Animagine would have offered it to another qualified entertainer.
Ms. Lusignan Gravel never expressed a desire for employee status.
She signed a contracting artist contract with full knowledge of the facts. She
ended up interrupting her contract prior to completion of her assignment,
working a total of 46.5 hours rather than 62 hours. She received a total fee of
$539.00 rather than $682.00.
[20] The Appellant also
filed a booking contract entered into with the Worker. This is Exhibit A-4,
reproduced hereafter:
[TRANSLATION]
BOOKING CONTRACT
FOR CONTRACTING ARTIST
BETWEEN: ANIMAGINE INC.
7782 d’Outremont
Avenue
Montréal, Quebec
H3N 2L9
TEL.: (514) 278-6780
Fax.: (514) 495-3198
EMAIL:
animagine@sympatico.ca
AND VÉRONIQUE LUSIGNAN GRAVEL
6195-2 Rouge-Gorge
Street
Laval, Quebec
H7L 4X5
Tel.: (450) 624-0107
SIN: XXX-XXX-XXX
ROLE: Entertainer
in wooden soldier costume #2
DATE(S) AND SCHEDULE: From
November 20 to December 24, 2004
(see
attached schedule)
EVENT: Holiday
programming
PLACE: Place
Rosemère
WITHDRAWAL:
If for whatever reason you wish to terminate your contract before
the end of the assignment that is given to you, you must notify us two weeks in
advance so that we have reasonable time to replace you.
DISMISSAL:
The company Animagine may also relieve you of your assignment
without notice if you go against the instructions given in the document “La
parfaite accompagnatrice” [“The Perfect Companion”] of which you have a copy.
THE COSTUME:
All accessories you need to perform effectively (costumes,
accessories, make up, etc.) are your responsibility. Your costume must always
be clean. You must maintain your shirts and tights and make sure that
nothing is ever wrinkled.
You must notify Animagine if your wooden soldier costume requires a
cleaning. This must be done prior to a leave of 24 hours or 48 hours, so that
we have time to clean it.
The parties agree that all clauses set out in this agreement or its
schedules are integral parts of the agreement and agree to respect them.
TALENT FEE AND TERMS OF PAYMENT:
Total of fee: 62 hours X $11.00/hour = $682.00
49 x 11.00
PAYMENTS
1st payment of November 20 to December 3, 2004 $154.00 +27.50=181.50
2nd payment of December 4 to December 10, 2004 $148.50
3rd payment of December 11 to December 24, 2004 $379.50
$209.00
Withdrawal on 12-18-2004
Paid 4841
Paid 4867
Paid 4933
LONG-TERM AGREEMENT FOR ALL 2004 CONTRACTS
ASSIGNED TO INDEPENDENT WORKERS OR ENTERTAINMENT SERVICE PROVIDERS REPRSENTING
THEMSELVES UNDER THE NAME OF A PRODUCTION COMPANY OR AS AN “AUTHORIZED
REPRESENTATIVE” OF AN ARTISTIC (OR OTHER) GROUP INCLUDING SEVERAL CONTRIBUTORS
FORCE MAJEURE
All signed contracts can be cancelled without prejudice or notice
for any reason of force majeure such as death, serious illness, accident,
destruction of premises (Animagine and entertainment locations), strike, sale
of the establishment (work places) or other uncontrollable reasons of the same
nature.
Animagine may terminate the contracts of an independent worker
without any penalty in any case where the Worker is no longer apt to complete
his or her assignment or for violation of any instruction in the document
(schedule of the contract) pertaining to your employment.
CIVIL LIABILITY
Animagine has a civil liability insurance policy for $2,000,000
covering clients and their clientele, in case of incident in a place of work.
For the following clause, the term independent worker refers to you and also applies to any supplier of entertainment services
represented under the name of a production, or other, company.
The term manadataries designates any physical or moral person for
whom the mentioned party is legally responsible.
The independent worker and his or her manadataries cannot file any
claim or formal demand against Animagine, its manadataries or the owners of its
place of work, in the case of injuries, death, loss of property (including
vehicles) or material damage incurred by the independent worker or his or her
manadataries bound under this contract or any action or omission under the
terms hereof or stemming herefrom, and the independent worker hereby abandons
any such claim or formal demand against Animagine, its manadataries and owners
of its places of work.
Animagine declines all liability for cases of bodily injury,
accidents, theft of personal property or any other incidents causing damages by
or to the independent worker and his or her manadataries.
The independent worker hereby certifies that he/she has no criminal
record.
The parties agree that all clauses set out in this agreement or its
schedules are integral parts of the agreement and agree to respect them.
The Animagine corporation is not required to issue a Relevé 1 or a
T4 slip at the end of the taxation year. It is the independent worker’s
responsibility to report his/her income.
In witness whereof the parties have signed on this November
10, 2004
_____________________ ______________________________
ANIMAGINE INC. INDEPENDENT WORKER
[21] This contract was
signed by the parties on November 10, 2004.
[22] A series of indicators developed by the
case law allows the Court to determine whether or not a relationship of
subordination exists between the parties.
[translation]
The indicia of control include:
-mandatory presence at a workplace
-compliance with work schedule
-control of the employee’s absences on vacations
- submission of activity reports
-control over quantity and quality of work
- imposition of the methods for performing the work
- power to sanction the employee's performance
-source deductions
-benefits
- employee status on income tax returns
-exclusivity of services for employer
[23] It must be
specified, however, that the analysis must not stop because certain indicia
support the conclusion that there is a relationship of subordination. The
exercise used to determine the overall relationship between the parties must be
pursued. In this case, the relationship of subordination could perhaps be
established based on the following elements: mandatory presence at a place of
work, compliance with the work schedule and control of the employee’s absences.
However, given the explanations provided by the Appellant, this conclusion is
less convincing. The schedule, explained the Appellant, was designed to
facilitate the work of an entire team and, in its opinion, could be modified.
As for the place of work, it cannot be considered in the traditional way
because the work must be performed where the clients are. This is not a fixed
place. It changes constantly based on the client’s needs. As for the other
indicia, they mostly support the conclusion that the Worker was an independent
worker.
[24] Because of the
existence of a booking contract, I find it appropriate in this analysis to
consider the words of the Federal Court of Appeal in Le Livreur Plus Inc.,
2004 FCA 68, in which Létourneau J.A. stated the following:
[16] I do not think
there is any need to restate some of the legal rules which apply to the
question of insurability of employment. A decision on that question involves a
decision on the nature of the contractual relationship between the parties.
[17] What the
parties stipulate as to the nature of their contractual relations is not
necessarily conclusive, and the Court may arrive at a different conclusion
based on the evidence before it: D & J Driveway Inc. v. The Minister of
National Revenue, 2003 FCA 453. However, if there is no unambiguous
evidence to the contrary, the Court should duly take the parties' stated intention
into account: Mayne Nickless Transport Inc. v. The Minister of National
Revenue, 97-1416-UI, February 26, 1999 (T.C.C.). Essentially, the question
is as to the true nature of the relations between the parties. Thus, their
sincerely expressed intention is still an important point to consider in
determining the actual overall relationship the parties have had between
themselves in a constantly changing working world: see Wolf v. Canada,
2002 FCA 96, [2002] 4 F.C. 396 (F.C.A.); Attorney General of Canada v. Les
Productions Bibi et Zoé Inc., 2004 FCA 54.
[18] In these
circumstances, the tests mentioned in Wiebe Door Services Ltd. v. M.N.R.,
87 D.T.C. 5025, namely the degree of control, ownership of the work tools, the
chance of profit and risk of loss, and finally integration, are only points of
reference: Charbonneau v. Canada (Minister of National Revenue - M.N.R.)
(1996), 207 N.R. 299, paragraph 3. Where a real contract exists, the Court must
determine whether there is between the parties a relationship of subordination
which is characteristic of a contract of employment, or whether there is
instead a degree of independence which indicates a contract of enterprise: ibid.
[25] The oral evidence
clearly revealed that the appreciation of the Worker’s work came from the
clients, i.e. the children, spectators of the performance; it was therefore a
control of the result.
[26] There is consistent
case law according to which the clear intention expressed by the parties on the
nature of their contractual agreement should be determining in the analysis.
[27] Due to this rule,
the contract signed by the parties represents an irrefutable argument in favour
of the Appellant and goes to show that the Appellant successfully proved the
facts presented at the hearing met its burden of proof.
[28] The Federal Court of
Appeal, in Légaré v. the Minister of National Revenue, [1999] F.C.J. No.
878, stated the following on the role and power of this Court in an analysis of
the Minister’s decision:
[4] The Act requires the Minister to make a
determination based on his own conviction drawn from a review of the file. The
wording used introduces a form of subjective element, and while this has been
called a discretionary power of the Minister, this characterization should not
obscure the fact that the exercise of this power must clearly be completely and
exclusively based on an objective appreciation of known or inferred facts. And
the Minister’s determination is subject to review. In fact, the Act confers the
power of review on the Tax Court of Canada on the basis of what is discovered
in an inquiry carried out in the presence of all interested parties. The Court
is not mandated to make the same kind of determination as the Minister and thus
cannot purely and simply substitute its assessment for that of the Minister:
that falls under the Minister’s so-called discretionary power. However, the
Court must verify whether the facts inferred or relied on by the Minister are
real and were correctly assessed having regard to the context in which they
occurred, and after doing so, it must decide whether the conclusion with which
the Minister was "satisfied" still seems reasonable.
[29] According to this
analysis, the Court must conclude that the facts relied on by the Minister were
not correctly assessed. The Minister did not give any importance to the
intention expressed by the parties in the booking contract filed at the
hearing. Therefore, the conclusion with which the Minister was “satisfied” no
longer seems reasonable.
[30] Accordingly, the
appeal is allowed and the decision of the Minister is vacated.
Signed at Grand-Barachois, New Brunswick, this 14th
day of December 2006.
S.J. Savoie
on this 22nd day of February 2008.
Gibson Boyd, Translator
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