Citation: 2007TCC244
Date: 20070423
Docket: 2006-331(EI)
BETWEEN:
CHRISTIAN DESJARDINS & NATHALIE ST-AMOUR
O/A CLINIQUE ST-AMOUR,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
ANICK JEAN
Intervener.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Deputy Judge Savoie
[1] This appeal was
heard in Québec, Quebec, on February 6, 2007.
[2] The issue is
whether the employment of Anick Jean ("the Worker") by the
Appellant, from December 16, 2003, to December 22, 2004 ("the period
in issue"), was insurable employment.
[3] On September 27,
2005, the Minister of National Revenue ("the Minister") notified
the Appellant of his decision that the Worker was employed in insurable
employment during the period in issue because the employment was under a
contract of service within the meaning of paragraph 5(1)(a) of the Employment Insurance
Act ("the Act").
[4] In making his
decision, the Minister relied on the following factual assumptions:
[TRANSLATION]
(a) The Appellant registered a
business name on June 9, 1994. (admitted)
(b) The Appellant's
two business associates are Christian Desjardins and Nathalie St‑Amour.
(admitted)
(c) During the
period in issue, the Appellant operated a clinic that treated eating
disorders such as anorexia and bulimia under the business name "Clinique St-Amour".
(admitted)
(d) The Appellant's
clientele came to it as a result of referrals by physicians, CLSCs and
community organizations, or visits to the Appellant's website. (admitted)
(e) During the
period in issue, in addition to the business associates, a receptionist, a psychologist
and a social worker worked at the Appellant's clinic. (admitted)
(f) The Worker completed
her Bachelor's degree in nutrition in December 2003. (admitted)
(g) The Appellant
posted an advertisement at Université Laval seeking the services of a
nutritionist. (clarification requested)
(h) On December 16, 2003, the Appellant hired the Worker. (denied)
(i) On the same
date, the Worker signed a written agreement of indeterminate duration with the Appellant.
(admitted)
(j) The agreement
provided for the Worker's supervision, her place of work, the reimbursement of
her expenses, her hours, her vacations and statutory holidays, and the term
for which she was being hired. (denied)
(k) Upon signing
the Agreement, the Worker did not know the difference between being an employee
and being self-employed. (clarification requested)
(l) The Worker was
under the immediate supervision of Christian Desjardins. (clarification
requested)
(m) The [Worker]'s
task was to hold consultations with clients, and, on occasion, to work with
them as part of an intensive follow-up program. (denied)
(n) The Worker met
with the Appellant's clients at the Appellant's clinic. (denied)
(o) The Appellant
set the times at which the clients had their appointments with the Worker. (denied)
(p) The Worker rendered
services to the Appellant from Monday to Saturday, but the Worker kept one
or two days off for herself. (denied)
(q) The Worker's
hours of work varied from week to week depending on the appointment schedule set
by the Appellant. (denied)
(r) The Worker wrote
a consultation report for each client. (clarification requested)
(s) The Appellant
billed clients $80 per hour and paid the Worker $20 per hour as remuneration. (clarification
requested)
(t) In addition,
the Worker received $10 per hour from the Appellant for time spent working with
clients as part of intensive follow-up programs. (admitted)
(u) The Appellant
had exclusive responsibility over accounts receivable. (denied)
(v) The Worker did
not bill the Appellant. (admitted)
(w) The Appellant
paid the Worker every Friday by cheque based on the hours that she had worked
during the week. (clarification requested)
(x) The Worker could
not get another person to replace her at her job. (clarification requested)
(y) The Worker used
the Appellant's office and equipment to perform her duties. (admitted)
(z) The Appellant
reimbursed the Worker for the client-related meal and taxi expenses that she
incurred. (denied)
(aa) The Worker had
no financial stake in the Appellant. (admitted)
(bb) The Worker ran
no risk of financial loss in the performance of her duties for the Appellant. (denied)
(cc) On September 20,
2005, Christian Desjardins told a representative of the Respondent that the
Worker did not have to seek clients. (clarification requested)
(dd) The clientele
belonged to the Appellant, not the [Worker]. (denied)
(ee) The Worker's
duties corresponded to the Appellant's needs. (clarification requested)
(ff) The Worker
ceased working at the Appellant's place of business by reason of a
maternity leave on December 22, 2004, not December 16, 2004. (admitted)
[5] The evidence
adduced by the Appellant is intended to establish that the Worker joined the
clinic as a business associate ["associé"]. According to the
Appellant, both the advertisement that it posted at Université Laval, and the
contract duly signed by the parties (and produced at the hearing as
Exhibit A‑1), provided for this.
[6] Since the Appellant
denied many of the Minister's factual assumptions, which drew their inspiration
from Exhibit A-1, it is helpful to reproduce the text of that agreement
for the purpose of analysing the relationship between the parties:
[TRANSLATION]
BY HAND
Lévis, 2003-12-16
Clinique St-Amour
1120
Boulevard de la Rive-Sud, Suite 200, P.O. Box 11
Lévis, QC G6W 5M6
SUBJECT: Confirmation of hiring as an associate
_____________________________
Dear Anick Jean,
We are pleased to confirm that you have been hired as an associate of
our business. The terms and conditions of your hiring are as follows:
Position: You will hold the position of dietician
in our business.
Main duties and responsibilities: Your
main duties and responsibilities will be as follows: You will be responsible
for caring for our clients' nutrition.
Immediate supervisor: You will be under
the immediate supervision of Christian Desjardins, the coordinator, or such
other person as we designate.
Place of work: You will work at our
office in St-Romuald or any other place necessary for the efficient operation
of our business.
Remuneration: You will be remunerated on
a fee‑for‑service basis at a rate of $20 per consultation. The
remuneration will be payable each Friday by cheque.
Reimbursement of expenses: You will be
reimbursed for all reasonable expenses incurred in connection with your duties
upon submission of vouchers, provided those expenses were approved in advance.
Hours of work: The normal hours of work will
be 9 a.m. to 6 p.m. from Monday to Friday based on a variable
schedule. However, the hours of work may vary depending on the nature and
scope of your tasks and the needs of our business.
Vacations: You will be entitled, on
prior notice to the coordinator, to take a certain number of weeks of vacation
each year by mutually satisfactory agreement with the clinic. Vacation days shall
be at your expense.
Statutory holidays: In addition, you
shall be entitled to the usual statutory holidays.
Confidentiality Agreement: You are
required to read, understand and sign the attached document entitled
"Confidentiality Agreement", which covers all information and
documents disclosed to you as part of your work with our company.
Client Non-Solicitation Agreement: You
are required to read, understand and sign the attached document entitled "Client
Non-Solicitation Agreement".
Non-Competition Agreement: You are
required to read, understand and sign the attached document entitled "Non‑Competition
Agreement", which will be in force for the duration of your commitment and
for three (3) years thereafter.
Beginning and Duration of Commitment: Your
first day of work will be December 16, 2003, and your commitment is indeterminate and may be terminated by either
party upon lawful notice.
If you agree with the terms and conditions set out herein, kindly
return to us a duly signed copy hereof, along with the attached Confidentiality
Agreement and Non‑Competition Agreement. On behalf of our business, we
wish to express our pleasure that you are joining us. We are confident that you
will enjoy your work and find it continually motivating. Naturally, if you have
any questions, do not hesitate to contact us. In the meantime, please accept
our best wishes.
Sincerely,
Christian Desjardins
___________________________________________________________________
I accept the terms and conditions set out above.
___ 2003-12-16_____ ______Anick
Jean______
(date) (signature
of associate)
[7] Additional related
documents, attached to Exhibit A‑1, will shed light on the true
nature of the agreement between the parties. Here are a few relevant excerpts
from these documents:
[TRANSLATION]
CONFIDENTIALITY
AGREEMENT
BETWEEN: Anick
Jean (hereinafter "the associate")
AND: CLINIQUE ST-AMOUR (hereinafter "the company")
Ownership: The associate acknowledges
that the information and documents supplied by the company (including but not
limited to client lists, price lists, processes, treatments, practices,
methods, contracts, agreements, software, databases and treatment-related
documents) are strictly confidential and privileged and shall remain the
property of the company.
. . .
. . . except in the course of her work, she shall not make or keep
any copies, photocopies, drafts or other reproductions of documents or
information, including, without limiting the generality of the foregoing, treatment-related
information or documents.
No Grant of Licence: All information and
documents are and shall remain the exclusive property of the company. The
associate shall be granted no licence or other interest of any kind in the
information or documents as a result of their disclosure.
CLIENT
NON-SOLICITATION AGREEMENT
BETWEEN: Anick Jean (hereinafter
"the associate")
AND: CLINIQUE
ST-AMOUR (hereinafter "the company")
The associate acknowledges that she has obtained or will obtain
privileged access to information and documents related to the company's
business in the course of her work. The associate also acknowledges that the
company has given or will give her the opportunity to acquire knowledge and
become familiar with the practices, processes and methods used by the company
in the course of its business activities, and, in particular, without limiting
the generality of the foregoing, in the course of its customer relations.
…the associate agrees not to solicit the company's clients directly
or indirectly, except in the performance of her duties for the benefit of the
company. This non‑solicitation agreement applies whether the
associate solicits a client of the company, or the client solicits the
associate. A client of the company means any purchaser or lessee of the
services offered by the company.
[8] The Worker, for her
part, submits that she never knew the difference between employee and
self-employed status. She says that she only learned it at the end of her
employment, when her accountant, who prepared her income tax return, explained
it to her.
[9] In addition, the
Worker, and the Department of Revenue, submitted that the facts are
inconsistent with the status of business associate described in the contract
that the Appellant had the Worker sign.
[10] The evidence disclosed
that the Worker's schedule was set by the Appellant. Naturally, the Worker was
consulted about her availability. However, based on the evidence, the Appellant
most often determined the schedule and the intensive follow-up programs, and
the Worker was consulted in between two clients and felt that she was stuck and
had no choice but to accept this schedule because there were no other
nutritionists. This situation became particularly difficult for the Worker
because she had asked if she could stop providing intensive follow-up services due
to her pregnancy.
[11] It has been shown that
the Worker rendered her services to the Appellant under the direct
supervision of Christian Desjardins, even though she had a certificate
attesting to her training as a nutrition professional. Given her
qualifications, the Appellant did not have to dictate the manner in which the
Worker practiced her occupation. She was a professional. She did not have to be
followed around everywhere. However, based on the evidence, she had to submit
reports and follow the schedule and procedure established by the Appellant.
[12] The Worker offered her
services to the Centre hospitalier de l'Université Laval (CHUL) on weekends,
and was paid by the hour at that hospital. However, it was shown that she would
have left her employment there if it had given rise to any conflicts.
[13] It is true that the contract
describes the Worker as a business associate ("associée").
However, the facts in the case at bar are not consistent with that concept,
because it has been shown, inter alia, that the Worker had no financial
stake in the Appellant's business and did not share in its profits. Moreover,
she had no decision‑making power in the business. The business's losses
were incurred by its two real business associates, that is to say, Christian
Desjardins and Nathalie St‑Amour, the person for whom the business
was named. The business was responsible for keeping track of accounts
receivable. It was also shown that Clinique St‑Amour had access to
the Worker's client records.
[14] Counsel for the
Minister submits that the principle laid down by the Federal Court of
Appeal in 9041-6868 Québec Inc., where Décary J. stated the
following, is applicable to the case at bar:
9 The contract on which the Minister relies, or which a party
seeks to set up against the Minister, is indeed a juridical fact that the
Minister may not ignore, even if the contract does not affect the Minister
(art. 1440 C.C.Q.; Baudouin and Jobin, Les obligations,
Éditions Yvon Blais 1998, 5th edition, p. 377). However, this does not mean that the Minister may not
argue that, on the facts, the contract is not what it seems to be, was not
performed as provided by its terms or does not reflect the true relationship
created between the parties. The Minister, and the Tax Court of Canada in
turn, may, as provided by articles 1425 and 1426 of the Civil Code of Québec,
look for that true relationship in the nature of the contract, the
circumstances in which it was formed, the interpretation which has already been
given to it by the parties or which it may have received, and usage. The circumstances in which the contract was formed include
the legitimate stated intention of the parties, an important factor that has
been cited by this Court in numerous decisions (see Wolf v. Canada (C.A.),
[2002] 4 FC 396, paras. 119 and 122; A.G.
Canada v. Les Productions Bibi et Zoé Inc., 2004 FCA 54; Le Livreur
Plus Inc. v. M.N.R., 2004 FCA 68; Poulin v. Canada (M.N.R.),
2003 FCA 50; Tremblay v. Canada (M.N.R.), 2004 FCA 175).
[15] Thus, the relationship
between the parties (the Appellant and the Worker) is at the heart of this
dispute, and the issue is whether there was a contract of employment between
them, or, in the words of the Act, whether the Worker held insurable
employment.
[16] In Quebec, a province governed by
civil law principles, the contract of employment is defined in article 2085 of
the Civil Code of Québec, which provides:
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.
[17] A contract of
employment is different from a contract of enterprise or for services, which 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. (article 2098)
Article 2099 C.C.Q. provides:
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.
[18] Hence, subordination,
or the exercise of a power of control, constitutes a more important factor,
even a determinative one, under Quebec law. The Employment Insurance Act, which
applies to the case at bar, is a federal statute. And section 8.1 of the Interpretation
Act, R.S.C. 1985, c. I-21, which has been in force since
June 1, 2001, states that the private law of the province of the
dispute must be applied when private law concepts are in issue. That provision reads:
8.1. Both the
common law and the civil law are equally authoritative and 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.
In Lévesque v. Canada (Minister of National Revenue – M.N.R.), [2005] T.C.J. No. 183,
Dussault J. of our Court wrote:
23 In Sauvageau
Pontiac Buick GMC ltée v. Canada,
T.C.C., No. 95‑1642(UI), October 25, 1996, [1996] T.C.J. No.
1383 (Q.L.), Archambault J., in referring to the decision of the Supreme Court
of Canada in Quebec Asbestos Corp. v. Couture,
[1929] S.C.R. 166, concluded, with regard to these definitions, that
the distinguishing feature was the presence or otherwise of a relationship of
subordination. Furthermore, it retained the definition of this expression
formulated by Pratte J.A. in Gallant. At paragraph 12 of his decision,
Archambault J. explained his reasoning as follows:
12. It is clear
from these provisions of the C.C.Q. that the relationship of subordination is
the primary distinction between a contract of enterprise (or of services) and a
contract of employment. As to this concept of a relationship of subordination,
I feel that the comments of Pratte J.A. in Gallant are still applicable.
The distinguishing feature of a contract of service is not the
control actually exercised by the employer over his employee but the power the
employer has to control the way the employee performs his duties.
[19] Several factors can be
considered in order to ascertain whether or not a relationship of
subordination exists. In her decision in Seitz v. Entraide populaire de
Lanaudière inc., Court of Québec (Civil Division), No. 705-22-002935-003,
November 16, 2001, [2001] J.Q. No. 7635 (QL), Judge Monique Fradette of the
Court of Québec set out a series of indicia on the basis of which one can
determine whether or not subordination exists. This is what she wrote about this
point at paragraphs 60 to 62 of her judgment:
60 The case law requires, in order for there to be a contract
of service, the existence of a right of supervision and immediate direction.
The mere fact that a person gives general instructions about the way in which
the work is to be performed, or that he reserves the right to inspect and
supervise the work, is not sufficient to convert the agreement into a contract
of employment.
61 A series of indicia developed by the case law enables the
Court to determine whether or not a relationship of subordination exists
between the parties.
62 The indicia of control include:
- mandatory presence at a workplace
- compliance with the work schedule
- control over the employee's absences on
vacations
- submission of activity reports
- control over the 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
[20] However, it must be
specified that the existence a few indicia pointing to a relationship of
subordination, or the absence of such a relationship, is no basis for ending
the analysis. The exercise, which is based on the distinction drawn in the Civil
Code of Québec, is to determine the overall relationship between the
parties. Thus, one must establish the extent to which the indicia pointing to a
relationship of subordination predominate over the other indicia.
[21] Let us examine the
evidence in light of the indicia articulated by Judge Fradette in order to
ascertain the overall relationship between the parties and determine whether or
not there was a relationship of subordination.
Mandatory presence at a workplace
[22] The Worker's job
required her to hold consultations with clients, and, on occasion, to work with
them as part of an intensive follow-up. She did these things at the Appellant's
clinic, or, as specified in Exhibit A‑1, the contract,
[TRANSLATION]
any other place necessary for the
efficient operation of our business.
[23] When the evidence is
examined from the perspective of this indicia, it favours the existence of a
relationship of subordination.
Compliance with work
schedule
[24] Exhibit A‑1
states the following in this regard:
[TRANSLATION]
Hours of Work: The
normal hours of work shall be from 9 a.m. to 6 p.m. from Monday to Friday based on a variable
schedule. However, the hours of work may vary depending on the nature and
scope of your tasks and the needs of our business.
In addition, the Appellant
set clients' appointment times with the Worker. When the evidence is examined
from this perspective, it favours the existence of a relationship of subordination.
Control over the Worker's absences on vacation
[25] The Worker got no paid
vacations. However, she had to ask for permission to be absent. The Appellant
did not withhold such permission. After she got pregnant, the Worker took days
off with the Appellant's permission and she asked the Appellant no longer to
assign her intensive follow-up programs, largely without success.
[26] Here again, the
evidence points to the existence of a relationship of subordination.
Submission of activity reports
[27] It has been shown that
the Worker had to prepare a consultation report in respect of each client for
the Appellant, and that the Appellant had access to her client records. When
the facts are considered from this perspective, they support the existence of a
relationship of subordination.
Control over the quantity and
quality of work
[28] It has been proven that
the Appellant was responsible for finding clients who would book
consultations with the Worker. The Appellant did not intervene in the
Worker's work; it respected her professional competency in the field of
nutrition. However, the Worker carried out her duties within a framework
established and directed by the Appellant. In addition, she was under the
immediate direction and supervision of Mr. Desjardins. The facts showed
that, from this perspective, a relationship of subordination existed.
The imposition of the methods for performing the work
[29] When the evidence is
considered from this perspective, it supports the existence of a relationship
of subordination, as set out in the preceding paragraph. As for the indicia
related to the power to sanction the employee's performance, and to source
deductions and benefits, the evidence that has been obtained tends to support
the absence of a relationship of subordination more than the existence of such
a relationship. The evidence did not disclose how the Worker described the
status of her job in her income tax return.
Exclusivity of services for
employer
[30] It has been shown that
the Worker could not have someone perform her duties in her place. It is true
that she worked at the hospital on weekends, but that work was for a different clientele.
In addition, the evidence showed that she would have quit her hospital job in
the event of a conflict, even though that job was authorized because the
Appellant apparently never argued that the Worker was violating her non‑competition
agreement, which she signed on the same date as her contract. In my view,
the evidence, when analysed from this perspective, appears to show the
existence of a relationship of subordination.
[31] Having regard to the
indicia set out above, I must find that the degree of control in the
relationship between the Appellant and the Worker was such that there was
enough of a relationship of subordination to determine that a contract of
employment, not a contract of enterprise, existed.
[32] The examination of the
facts in light of the Civil Code of Québec and the recent jurisprudence
concerning insurability, and, in particular, the concept of the contract
of employment, did not support the Appellant's submission that a contract of
enterprise existed. Consequently, the Court must conclude that the Worker was
employed by the Appellant in insurable employment under a contract of service
within the meaning of paragraph 5(1)(a) of the Act and, thus, that she
held insurable employment during the period in issue. In addition, the evidence
pertaining to the relationship between the Appellant and the Worker supports
the conclusion that there was a contract of employment between the parties
according to the provisions of the Civil Code of Québec.
[33] Consequently, the
appeal is dismissed and the decision made by the Minister is confirmed.
Signed at Grand-Barachois, New
Brunswick, this 23rd day of
April 2007.
"Sylvio Savoie"
Translation
certified true
on this 4th day of
October 2007.
Brian McCordick,
Translator
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