Citation: 2007TCC602
Date: 20071126
Docket: 2006-3644(EI)
BETWEEN:
PLUS
QUE NOËL INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1] The Appellant
specializes in the design, manufacturing and installation of Christmas
decorations generally found in public places such as Place Ville‑Marie. The
Christmas decoration manufacturing and installation activities mainly take
place during a roughly six‑week period in the fall. Consequently, every
fall, in order to meet its customers' seasonal needs, the Appellant hires the
services of several workers, who generally stay on only for the period during
which the Christmas decorations are made and installed. This is the context in
which Véronique Dufour ("the Worker") worked for the
Appellant from October 24 to December 5, 2005
("the relevant period"). The issue for determination in the
instant case is whether the work done by the Worker for the Appellant meets the
requirements of a contract of service under paragraph 5(1)(a) of
the Employment Insurance Act ("the Act").
[2] In making his
decision, the Minister of National Revenue ("the Minister")
relied on the following assumptions of fact set out in paragraph 10 of the
Reply to the Notice of Appeal. As stated in parentheses, the Appellant
admitted, denied, or claimed to have no knowledge of these assumptions.
[TRANSLATION]
(a) The Appellant
incorporated on November 20, 2001. (admitted)
(b) The Appellant
specialized in the manufacture and installation of Christmas decorations. (admitted)
(c) The Appellant
hired five year-long regular employees, and several casual workers during the
holiday period at the end of each year. (denied)
(d) The Worker is a
student. (no knowledge)
(e) The Worker responded to an advertisement
in the Voir newspaper for part-time or full-time freelance decoration
installers at a rate of $8 per hour. (no knowledge)
(f) On October 24, 2005, the Worker signed a
contract drawn up by the Appellant. (admitted)
(g) On August 2, 2006, the Worker told a
representative of the Respondent that she was not concerned about her status as
a worker and that she just wanted to make a little money. (no knowledge)
(h) The Worker had no experience with Christmas
decoration. (no
knowledge)
(i) The first work that the Appellant did was
to prepare decorations at the Appellant's warehouse. Later, she installed
decorations on the premises of businesses that were customers of the Appellant's
(Place Ville‑Marie and Domtar). (admitted)
(j) The Worker received her instructions from
the Appellant. (denied)
(k) In the performance of her duties, the
Worker followed the instructions of one of the Appellant's supervisors at the
warehouse and on the installation sites. (denied)
(l) The Worker worked for the Appellant three
days a week, and took courses on the other two days. (no knowledge)
(m) The Worker's work day schedule at the Appellant's
warehouse was 8:30 a.m. to 5 p.m. (denied)
(n) For the decoration installation work, the
Appellant reported to the place and at the time designated by the Appellant. (denied)
(o) The Worker had a 15‑minute break in
the morning and a 30‑minute meal break; both were paid by the Appellant. (denied)
(p) The Worker did
not negotiate her salary; she received $8 an hour in remuneration, determined
by the Appellant. (no knowledge)
(q) Every week, the
supervisor had the Worker sign a time sheet setting out the hours that she had
worked. (admitted)
(r) The Worker had
to issue an invoice to the Appellant stating the same number of hours in order
to receive her remuneration. (admitted)
(s) The Worker
received a cheque the following week. (no knowledge)
(t) All the
supplies and equipment that the Worker needed in the performance of her duties,
except for her boots and gloves, were provided by the Appellant. (admitted)
Preliminary remarks
[3] Paul‑André
Fortin, an eligibility officer with the Canada Customs and Revenue Agency, was
the Respondent's sole witness. The Appellant's witnesses were the Worker,
Yves Guilbeault and Karine‑Ève Crochetière.
[4] The parties
provided the Court with certain decisions, including Landry v. Canada
(Minister of National Revenue), [2004] T.C.J. No. 86, Lacroix v. Canada
(Minister of National Revenue), [2007] T.C.J. No. 87, Dynamex Canada
Inc. v. Mamona, 2003 FCA 248, Le Livreur Plus Inc.
v. Canada (Minister of National Revenue), 2004 FCA 68, D & J Driveway
Inc. v. Canada (Minister of National Revenue), 2003 CarswellNat 3785,
2003 FCA 453, 322 N.R. 381, and Canada (Attorney General)
v. Les Productions Bibi et Zoé Inc. (Federal Court of Appeal, 2004‑02‑04),
2004 FCA 54.
Analysis
The law
[5] When the courts must
define concepts from Quebec private law to apply federal legislation such as the Employment
Insurance Act, they must follow the rule of interpretation set out in
section 8.1 of the Interpretation Act. To determine the nature
of a Quebec employment contract and
distinguish it from a contract for services, one must apply the relevant rules of the Civil
Code of Québec (the "Civil Code"), at least since June 1, 2001. These
rules are not consistent with the rules stated in decisions such as 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc., [2001] S.C.R. 983 and Wiebe Door Services
Ltd. v. M.N.R., [1986] 3 F.C. 553. In Quebec, contrary to
the situation in the common law provinces, the constituent elements of a
contract of employment have been codified, and, since the coming into force of
articles 2085 and 2099 of the Civil Code on January 1, 1994, the
courts no longer have the same latitude as the common law provinces to define
what constitutes an employment contract. If it is necessary to rely on previous
court decisions to determine whether there was a contract of employment, one
must choose decisions with an approach that conforms to civil law principles.
[6] The Civil Code
contains distinct chapters governing the "contract of employment" (articles 2085 to 2097) and the "contract of
enterprise or for services" (articles 2098 to 2129).
[7] Article 2085 states that 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.
[8] Article 2098 states that a contract of enterprise
. . . 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.
[9] Article 2099 follows, and states:
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.
[10] It can be said that the
fundamental distinction between a contract for services and a contract of
employment is the absence, in the former case, of a relationship of
subordination between the provider of services and the client, and the
presence, in the latter case, of the right of the employer to direct and
control the employee. Thus, it must be
determined whether there was a relationship of subordination between the
Appellant and the Worker in the case at bar.
[11] The Appellant has
the burden of proving, on a balance of probabilities, that the
facts in issue establish its right to have the Minister's decision vacated. It must
demonstrate the contract entered into by the parties and establish their common
intention with respect to its nature. If there is no direct evidence of that
intention, the Appellant may turn to indicia from the contract and the Civil
Code provisions that govern it. In the case at bar, if the Appellant wishes to
show that the parties did not enter into an employment contract, it will have
to demolish the Minister's argument that there was a relationship of
subordination. In order to do so, it may, if necessary, prove the existence of indicia
of independence such as those stated in Wiebe Door, supra, namely
the ownership of tools, the risk of loss and the chance of profit. However, in
my opinion, contrary to the common law approach, once a judge is satisfied that
there was no relationship of subordination, that is the end of the judge's
analysis of whether a contract for services existed. It is unnecessary, in such
a case, to consider the relevance of the ownership of tools or the risk of loss
or chance of profit, since, under the Civil Code, the absence of a relationship
of subordination is the only essential element of a contract for services that
distinguishes it from a contract of employment. Elements such as the ownership
of tools, the risk of loss or the chance of profit are not essential elements
of a contract for services. However, the absence of a relationship of
subordination is an essential element. For both types of contract, one must
decide whether or not a relationship of subordination exists. Obviously, the
fact that the Worker behaved like a contractor could be an indication that
there was no relationship of subordination.
[12] Ultimately, courts
should usually make a decision based on the facts shown by the evidence regarding
the performance of the contract, even if the intention expressed by the parties
suggests the contrary. If the evidence regarding the
performance of the contract is not conclusive, the Court can still make a
decision based on the parties' intention and their description of the contract,
provided the evidence concerning those questions is probative. If that evidence
is not conclusive either, the appeal will be dismissed on the basis that there
is insufficient evidence.
Relationship of subordination
[13] Was the Worker
working under the Appellant's control or direction? Did the Appellant
direct or control the Worker, or have the right to do so?
[14] It is clear that the
work agreement (Exhibit A‑2) between the Appellant and the Worker stated
that the Worker's services were being retained as those of an independent
contractor. But even though the parties clearly expressed their intention in
their written contract, this does not mean that I must consider that
intention probative. The contract also needs to have been performed in
accordance with its provisions. Just because the parties stipulated that the
work would be performed by an independent contractor does not mean that there
was no employer-employee relationship. In my view, it is essential to verify
this, because it is all too often in the parties' interest to conceal the true
nature of a contract. Indeed, too frequently, employers who wish to reduce the
tax and benefit burdens associated with salaries decide to treat their
employees like self-employed workers. Often, employees do not negotiate their
contracts on an equal basis; I would describe most of their contracts as contracts
of adhesion. In the case at bar, the very credible testimony given by the
Worker, who was a student during the relevant period, showed very clearly that
she urgently needed to work, and that she signed the contract, as submitted by
the Appellant, without the slightest negotiation. In fact, the Worker did
not even understand what she had signed. In short, the Worker was prepared
to sign anything in order to work. In cases such as this, one must carefully
verify whether the contractual stipulation is consistent with reality.
[15] I feel it important
to note that if this Appellant wishes to show that there was no employment
contract, it must rebut, on a balance of probabilities, the Minister's
argument that there was a relationship of subordination. I also feel it
important to note that if the evidence discloses indicia of both independence
and subordination, the Court must find that an employment contract existed,
because there can be no relationship of subordination in the performance of a
contract for services. That is what Picard J. decided in Commission des
normes du travail c. 9002‑8515 Québec Inc., REJB 2000‑18725, para.
15(5e) (Que. S.C.), where it is
stated:
[TRANSLATION]
15. In
order for a contract of enterprise to exist, there must be no relationship of
subordination. In the case at bar, there is a sufficient number of indicia of a
relationship of authority.
[16] Was the Worker free
to choose the conditions under which the work assigned to her was performed
(where, what, when and how)? The principal facts with respect to these
conditions, set out in the Reply to the Notice of Appeal and relied upon by the
Respondent in determining that the Worker was employed in insurable employment
under a contract of employment, are as follows:
[TRANSLATION]
. . .
(h) The Worker had no experience with
Christmas decoration.
(i) The first work that the Appellant did was
to prepare decorations at the Appellant's warehouse. Later, she installed
decorations on the premises of businesses that were customers of the
Appellant's (Place Ville Marie and Domtar).
(j) The Worker received her instructions from
the Appellant.
(k) In the performance of her duties, the
Worker followed the instructions of one of the Appellant's supervisors at the
warehouse and on the installation sites.
(l) The Worker worked for the Appellant three
days a week, and took courses on the other two days.
(m) The Worker's work day schedule at the
Appellant's warehouse was 8:30 a.m. to 5 p.m.
(n) For the decoration installation work, the
Appellant reported to the place and at the time designated by the Appellant.
(o) The Worker had a 15‑minute break in
the morning and a 30‑minute meal break; both were paid by the
Appellant.
. . .
(q) Every week, the
supervisor had the Worker sign a time sheet setting out the hours that she had
worked.
. . .
(t) All the
supplies and equipment that the Worker needed in the performance of her duties,
except for her boots and gloves, were provided by the Appellant.
[17] The Appellant needed
to show, on a balance of probabilities, that these facts were inaccurate. The
Appellant's evidence in this regard essentially depended on the testimony of
its president Mr. Guilbeault, and on that of Ms. Crochetière, who
corroborated Mr. Guilbeault's testimony on these facts. It should be noted
that Ms. Crochetière was previously a freelancer and then a team leader
with the Appellant. I would also note that Ms. Crochetière now
operates a marketing business and that she receives marketing mandates from the
Appellant.
[18] Mr. Guilbeault's
testimony can be summarized as follows:
(i) The
freelancers, including the Worker, had to do their Christmas decoration
manufacturing and assembly work (e.g. making wreaths, vines and garlands, decorating
Christmas trees, etc.) at the Appellant's warehouse, and then install and set up
these elements on the Appellant's customers' premises.
(ii) No
work schedule was imposed on the Appellant's freelancers. They were free to
work on the days and hours that suited them.
(iii) Like
most freelancers whose services had been retained, the Worker had no experience
making, assembling, installing and setting up Christmas decorations. The
workers were given a day of training before starting their work.
(iv) All
the equipment and supplies (such as pliers, platforms, tinsel, tape, Christmas
trees, pine branches, sewing machines, etc.) that these workers needed was
supplied by the Appellant, with the exception of boots and gloves.
(v) The workers had two
paid 15‑minute breaks per work day. They could take these breaks
when it suited them. In addition, they could take a 15‑60 minute meal
break when they wished.
(vi) The freelancers
were totally free to accept or decline a work assignment. When they
reported to the work sites, the Appellant's supervisor offered them various
tasks to choose from. They could then accept or turn down the tasks thereby offered.
Generally, the workers chose the tasks that suited their skills and personal
preferences. Once their tasks were completed, the workers could stop
working. If they wanted to keep working, the Appellant generally offered them
other tasks, which they could either accept or decline.
vii) The supervisor or
team leader's role included the assignment of work to the freelancers. Mr. Guilbeault's
testimony in this regard is worth quoting:
[TRANSLATION]
Q. ... bearing in mind what work the
freelancers do, and, later, we will look at what work the employees, the shop
forepersons, did as well?
A. So my job is to meet the team leaders/supervisors,
and we determine... we say what the game plan is, and they ensure that the
job is assigned to the freelancers who report in the morning... We have certain
specific things to do, and each of the freelancers will take one of those
jobs so that we can achieve our goals by the end of the day, because time is
always short and we have targets to meet.
Q. So, in the mornings, at the workshop, there
was work to get done...
A. Yes.
Q. ... could you explain to us how this goes,
what the supervisor does in the workshop?
A. The people arrive.
The person who is in charge – the team leader – is there. Once the people have
arrived, we say, "OK. Today, we will be working on Place Ville‑Marie,
on 1250 or 1100 René-Lévesque Boulevard, where we have garlands, wreaths, and Christmas trees to do. We
have vines, various pine branches, so who is doing what? We make the offers to the
people, and they gravitate toward what they like to do most.
(viii) The role of the supervisor
or team leader also included motivating the freelancers, supervising them, and
coordinating their work so that the deadlines were met and the quality of the finished
product was commensurate with the Appellant's reputation. Mr. Guilbeault's
testimony with respect to the need for team leaders to monitor the freelancers'
work is also worth quoting:
[TRANSLATION]
The supervisor will be there to look, because ... let me give you a
specific example. We have two people who work on sections of a wreath, such as
the Domtar wreath, which is a 32‑foot wreath. If one of them works one
way, and the other works another way, the lighting intensity and patterns don't
make sense when the two sections are joined together, hence the need to
monitor. The team leader controls the quality of the product per se
and sees to the dispatching when they are finished... and offers something
else: do you want to go do "X"? Do you want to go do "Y"? And
this is how we work all day.
[19] I found Mr. Guilbeault
and Ms. Crochetière's testimony implausible. In addition, Ms. Crochetière did
not appear to be an independent witness. If one is to believe these two
witnesses, the Appellant's workplaces were anarchic. The witnesses claimed
that there was no direction or control over the freelancers' terms and
conditions of employment. Essentially, they said that the freelancers,
including the Worker, could work when they wanted and accumulate the number of
hours that they wanted. They were totally free to accept or decline a work
assignment. In a sense, they determined what work they were willing to do.
The role of the team leaders was essentially to motivate the freelancers,
offer them tasks, and control the quality of the finished product. In my
opinion, the Appellant's control over the place where the work was to be
performed was clear. The freelancers were not free to do their work anywhere
other than the warehouse or the Appellant's customers' premises. In my
opinion, the Appellant's control over the schedule and the nature of the
freelancers' work was indirect and subtle, if not insidious. The Worker needed
to work. She also knew that she had to work a certain number of hours during the
periods of availability that she had told the Appellant about, and that she had
to perform the tasks assigned to her. She knew that if she did not comply with
the Appellant's demands, she would be fired. As Ms. Crochetière so aptly
put it: [TRANSLATION] "If the work ... if, once the work is
explained, the person does not manage to produce it as we showed it, or there
is someone who never wants to do anything proposed to them, we will simply not
call them back, and we will get someone else." I understand that the Appellant had to
be flexible with respect to the freelancers' schedules and the nature of their
work in view of the seasonal nature of the work and the minimal remuneration
paid for it, but to try to get me to believe that there were no directives
concerning the work schedule or the nature of the work, that is going too far.
Indeed, based on the particular facts of the instant case, the Court does
not believe the Appellant's allegations that the Worker was totally free to choose
when she worked and to do the work that she saw fit to select. If the
Appellant's two witnesses are to be believed, the Worker got no instructions
from the team leaders with respect to the work to be performed, and was subject
to no supervision by the team leaders. If the two witnesses are to be believed,
the team leaders' role was solely to motivate the workers, offer them work, and
verify the quality of the finished products. This seems implausible to me
in light of the Worker's lack of experience. Doesn't the example of the 32‑foot
Domtar wreath show that the team leaders gave precise instructions concerning
the way in which the wreath was to be made? I do not see how a worker as
inexperienced as the Appellant could have done the final setup of the Christmas
decorations on the Appellant's customers' premises without precise instructions
from the team leaders.
[20] I would add that the
Worker was reimbursed for certain expenses, that she had two paid 15‑minute
breaks each work day, that she was paid for her training time, and that the Appellant
provided her with all the equipment and supplies that she needed to perform her
duties. All these facts are indicia of a relationship of subordination and a
lack of independence.
[21] For these reasons,
the appeal is dismissed.
Signed at Ottawa, Canada, this
26th day of November 2007.
"Paul Bédard"
Translation certified true
on this 9th day of January 2008.
Brian McCordick, Translator
Email this Content