Citation: 2007TCC459
Date: 20070815
Docket: 2006-2488(EI)
BETWEEN:
DESROBEC INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
JACQUES TURBIDE,
Intervener.
REASONS FOR JUDGMENT
Favreau J.
[1] This is an appeal from a decision rendered by the
Minister of National Revenue (the Minister) on June 6, 2006 concerning the
insurability of the employment held by Mr. Jacques Turbide with the
Appellant for the periods June 1 to December 31, 2004 and from January 1 to
October 18, 2005 (the periods at issue).
[2] The Minister determined that, during the periods at
issue, Mr. Turbide held insurable employment with the Appellant within the
meaning of paragraph 5(1)(a) of the Employment Insurance Act, S.C.
1996, c. 23, as amended (the Act).
The Facts
[3] The Appellant
was incorporated on November 30, 1982, and operated a business selling security
systems.
[4] During the periods at
issue, Jean-Jacques Desrochers held shares in the Appellant. He also held a
securities license.
[5] The Appellant hired Mr.
Turbide in November 2003 to supervise telemarketing staff.
[6] In December 2003, the
Appellant restructured its operations and dismissed all its telemarketing
staff.
[7] On January 4, 2004, Mr.
Turbide was rehired by the Appellant to scout prospective clients through phone
solicitation and set up appointments with them for Mr. Desrochers. Mr.
Turbide could not sell financial products himself because he did not hold a
valid license for that purpose.
[8] Up until June 2004, Mr.
Turbide was considered to be an employee of the Appellant, earning $400 per
week; he was paid by cheque every two weeks.
[9] In June 2004, the
Appellant and Mr. Desrochers decided to change Mr. Turbide’s status from
salaried worker to self-employed worker, and in September 2004 a contract was
signed to that effect, dated June 7, 2004. The contract was prepared by Mr.
Desrochers without any prior negotiation among the parties concerning its
content. Mr. Desrochers did, however, provide Mr. Turbide with certain
explanations regarding the scope of the contract. Apparently, the contract was
intended to encourage Mr. Turbide to become a career representative in an
agency of a life insurance company. In order to do this, Mr. Turbide would have
to obtain a pardon for a prior criminal offence, pass academic equivalency
tests, and take the appropriate courses to obtain a license to work as a life insurance
representative and sell financial products. According to Mr. Desrochers, Mr.
Turbide would have been dismissed had he not signed the contract.
[10] There were no changes
to Mr. Turbide's duties subsequent to the signing of the contract.
[11] Mr. Turbide performed
his duties in the Appellant's office based on a schedule coinciding with the
Appellant's business hours, which were Mondays to Fridays 9 a.m. to 4
p.m., with the exception of the busy RRSP period, during which the hours were
variable.
[12] Mr. Desrochers called
Mr. Turbide on a daily basis for updates and to give him lists of people to
contact (e.g., electoral lists). Mr. Turbide used the tools provided to him by
the Appellant. He did not incur any expenses in the performance of his duties,
nor did he assume any financial risk.
[13] In carrying out his
duties, Mr. Turbide personally rendered services to the Appellant and had to
represent Mr. Desrochers exclusively in the search for new clients, including
his telemarketing work.
[14] Mr. Turbide did not
have his own clients; his clients were Mr.Desrochers’ clients. Upon termination
of the contract on February 24, 2006, Mr. Turbide had to turn over to the
Appellant all documents related to his client base.
[15] Apart from the
organizational aspect of Mr. Turbide's work, his duties were not integrated
with the Appellant’s business.
[16] As of June 2004, Mr. Turbide signed invoices for his
services prepared by Mr. Desrochers or by his accountant and received
non-accountable advances by numbered cheques that he endorsed and gave to Mr.
Desrochers to be cashed for a fee of $5 per cheque.
[17] As of August 30, 2004, Mr. Turbide received
non-accountable advances of $500 per week. Mr. Turbide was also
eligible for bonuses if he achieved targets set by Mr. Desrochers.
[18] Mr. Turbide does not recognize the validity of
the contract with the Appellant designating him as a self-employed worker,
alleging that it is an adhesion contract prepared unilaterally by Mr.
Desrochers to his advantage.
Relevant Legislation
[19] Paragraph 5(1)(a) of the Act defines the phrase
“insurable employment” as follows:
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5.(1) Subject to subsection (2),
insurable employment is
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5.(1) Sous réserve du paragraphe (2), est un
emploi assurable :
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(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;
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a) l’emploi exercé au Canada pour un ou
plusieurs employeurs, aux termes d’un contrat de louage de services ou
d’apprentissage exprès ou facile, écrit ou verbal, que l’employé reçoive sa
rémunération de l’employeur ou d’une autre personne et que la rémunération
soit calculée soit au temps aux pièces, soit en partie au temps et en partie
aux pièces, soit de toute autre manière.
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[20] The phrase “contract of service” used in paragraph
5(1)(a) of the Act is obsolete; the Civil Code of Québec,
S.Q. 1991, c. 64 now uses the phrases “contract of employment” at
article 2085 or “contract of enterprise or for services” at article 2098. The
aforementioned articles read as follows:
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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.
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2085. Le contrat de travail est celui par
lequel une personne, le salarié, s’oblige, pour un temps limité et moyennant
rémunération, à effectuer un travail sous la direction ou le contrôle d’une
autre personne, l’employeur.
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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 provide a service, for a
price which the client binds himself to pay.
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2098. Le contrat d’entreprise ou de service
est celui par lequel une personne, selon le cas l’entrepreneur ou le
prestataire de services, s’engage envers une autre personne, le client, à
réaliser un ouvrage matériel ou intellectuel ou à fournir un service
moyennant un prix que le client s’oblige à lui payer.
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[21] Article 2099 of the Civil Code of Québec is
also relevant in that it sets out the essential characteristics of the
contractor or provider of services. This article reads as follows:
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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.
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2099.
L’entrepreneur ou le prestataire de services a le libre choix des moyens
d’exécution du contrat et il n’existe entre lui et le client aucun lien de
subordination quant à son exécution.
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[22] In Quebec civil law, the three constituent elements of
an employment contract are performance of work, remuneration and a relationship
of subordination.
Analysis
[23] For the following reasons, I find that
Mr. Turbide held insurable employment with the Appellant and,
consequently, was not a self-employed worker.
[24] After the aforementioned contract was signed, Mr.
Turbide did not acquire any more indepdence than he had when he was the
Appellant’s employee. It was adduced in evidence that Mr. Turbide’s duties did
not change after he entered into the contract.
[25] On its face, the contract contains numerous elements
confirming the existence of relationship of subordination and control
characterizing a contract of employment. The main provisions to that effect are
as follows:
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3.1: exclusivity
of services;
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4: one-year
automatically renewable contract;
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7.1: only products
or services authorized by Mr. Desrochers can be advertised on the phone;
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7.2: activities to
be carried out full-time;
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7.3: immediate
access to all locations where Mr. Turbide carries out his activities or keeps
information in written or electronic form;
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7.4: obligation to
adhere to standards of integrity and conduct set forth from time to time
verbally or in writing;
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7.5: commitment
not to communicate information or documentation to anyone without first
speaking to Mr. Desrochers;
-
7.6: legal
incapacity to incur the liability of Mr. Desrochers;
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7.7: any activity
or source of remuneration that might contravene the contract to be submitted
first to Mr. Desrochers for approval;
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7.8: Mr. Turbide’s
duties, obligations and responsibilities always to be carried out under the
supervision of Mr. Desrochers;
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8.1: in accordance
with applicable legislation, Mr. Desrochers responsible for the conduct of Mr.
Turbide and oversees such conduct in the context of Mr. Desrochers’
business activities;
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10.1: Mr.
Desrochers has right of review over rate of remuneration and may exercise it
whenever he sees fit.
[26] The bonus scheme was not provided for in
the contract, although reference is made to it therein.
[27] Curiously, the contract dealt with the provision of
administrative services for the sale of financial products by Mr. Desrochers,
even though the Appellant’s company strictly sold alarm systems.
[28] Mr. Turbide contends that the contract does not
apply to him because he had no choice but to sign it in order to keep his job.
[29] The test in Wiebe Door Services Ltd v. M.N.R. (1986)
3 F.C. 553, namely, ownership of tools, chance of profits, risk of
loss, and integration, also confirms that Mr. Turbide held insurable employment
with the Appellant.
[30] The evidence suggests that Mr. Turbide did not have
ownership of the tools necessary for the performance of his work.
[31] The chance for profit was minimal—unlikely, in
fact—given that he had never been granted a pardon and had not done the two
years of full-time courses required to obtain his equivalency.
[32] The risk of loss was inexistent, and the integration
factor is difficult to apply in this case since Mr. Turbide’s activities were
not related to the Appellant’s business.
[33] The degree of control exercised by Mr. Desrochers over
the activities of Mr. Turbide was such that, for all practical purposes,
Mr. Turbide could not have been operating as a self-employed worker.
[34] For these reasons, the appeal is dismissed.
Signed at Montréal, Quebec, this 15th day of August
2007.
“Réal Favreau”
Translation certified
true
on this 10th day
of October 2007
Stefan Winfield,
Translator
CITATION: 2007TCC459
COURT FILE NO.: 2006-2488(EI)
STYLE OF CAUSE : DESROBEC INC. and M.N.R. and JACQUES TURBIDE
PLACE OF HEARING: Montréal, Quebec
DATE OF HEARING: March 19, 2007
REASONS FOR
JUDGMENT BY: The Honourable Justice Réal Favreau
DATE OF JUDGMENT : August 15, 2007
APPEARANCES:
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Appellant’s Representative:
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Jean-Jacques
Desrochers
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Counsel for the Respondent:
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For the Intervener:
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COUNSEL OF RECORD:
For the
Appellant:
Name:
For the
Respondent: John H. Sims, Q.C.
Deputy
Attorney General of Canada
Ottawa,
Canada
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