Citation: 2007TCC212
Date: 20070504
Docket: 2006-1252(EI)
BETWEEN:
BERTRAND CÔTÉ,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Savoie D.J.
[1] This appeal was
heard at Montréal, Quebec, on March 12, 2007.
[2] This is an appeal
from the decision by the Minister of National Revenue (the “Minister”)
dated February 28, 2006. The period at issue (the “period”) started on November
26, 2001, and ended March 8, 2002. The dispute centres on the work executed by
the Appellant for Stratège Soft inc., (the “Payor”). The Minister determined
that the Appellant exercised insurable employment during the period in
question.
[3] In rendering his
decision, the Minister relied on the following presumptions of fact:
(a) the Payor
operated a retail software business; (denied)
(b) the sole
shareholder of the Payor was 9098-2760 Québec inc.; (neither admitted nor
denied)
(c) the sole
shareholder of 9098-2760 Québec inc. was Michel Rathé; (denied)
(d) during the
period at issue, the Appellant provided services to the Payor as business
development manager; (denied)
(e) the Payor hired
the Appellant as a salaried employee, while the Appellant claims to have worked
as an independent consultant; (denied)
(f) the Appellant
provided services to the Payor according to a work schedule from Monday to
Friday; (denied)
(g) the Appellant
met with Mr. Rathé two or three times a week to discuss his work; (denied)
(h) the Appellant had
to provide the Payor with sales reports; (denied)
(i) the Appellant
provided services to the Payor on the road and at home; (denied)
(j) the Appellant
used his automobile for his work and was provided with an expense account by
the Payor; (denied)
(k) the Appellant
received a fixed salary of $1,192.40 per week for 40 hours of work; (denied)
(l) the Appellant
claimed that the amounts he received from the Payor in December 2001 (4 weeks)
and during 2002 were for work done, on contract, in June and July 2001;
(admitted)
(m) the Payor
asserts that the Appellant started his work in November 2001; (denied)
(n) On March 8,
2003, the Payor issued a record of employment in the name of the Appellant
indicating November 26, 2001, as the first day of work and March 8, 2002, as
the last day paid, 600 insurable hours and insurable earnings totalling $
17,886 (15 weeks at $1,192,40); (admitted)
(o) For 2001, the
Payor issued a T4 in the Appellant’s name indicating $4,769 that the Appellant
included in his income tax return in 2001; (admitted)
(p) the Payor made
his deductions at the source on the amounts paid out in accordance with the
amounts appearing on the record of employment and the T4; (admitted)
(q) the facts and
documents support the Payor’s claims to the effect that the Appellant provided
services to the Payor under an employment contract during the period at issue.
(denied)
[4] The evidence
presented at the hearing revealed that the Appellant had been looking for an
accounts and business development manager position. His services were retained
by the Payor following a process undertaken by a head-hunter consulted by the
Payor.
[5] In an exchange of
e-mails between the Appellant and the Payor, the employment conditions were
established. The Payor confirmed the hiring of the Appellant on November 13,
2001, as evidenced by Exhibit I-5 at page 7.
[TRANSLATION]
From: Michel
[mrathe@videotron.ca]
Sent: November
13, 2001 08:54
To: ‘Bertrand
Cote’
Hello Bertrand,
I am pleased to inform you that I have
selected your application for this position.
I believe we will work well together.
I am eager to get this all started.
We’ll call each other this morning about
lunch (unless your condition prevents it).
Goodbye.
Michel Rathé
The Appellant confirmed his
availability starting November 21. His employment started on November 26, 2001.
Previously, the Appellant had specified to the Payor his requirements
concerning employment conditions in an e-mail dated November 7, 2001, of which
here are the main elements:
[TRANSLATION]
From: Bertrand Cote [cotebertrand@videotron.ca]
Sent: November 7, 2001 13:32
. . .
As discussed yesterday, here are my requirements for a position of
manager . . .
Annual base remuneration: 62k / annum
Yearly vacation 4 weeks
. . .
Transportation costs….
Representation costs
Expenses
Parking
Mobile phone and long distance
. . .
Date of availability – November 21, 2001
[6] The Appellant’s
schedule, while being fairly flexible, had to meet the Payor’s needs. The
Appellant therefore had to work from Monday to Friday, from his office or on
the road, depending on the Payor’s requirements.
[7] It was established
that the Appellant met with Mr. Rathé, the Payor, every week and prepared
reports that the Payor would consult. The evidence also revealed that the
Appellant used his vehicle for work. Under the agreement reached with the
Payor, it was the Payor who paid the expenses.
[8] As for the
Appellant’s salary, the records of employment prepared by the Payor were filed
at the hearing and support the Minister’s claim as to the Appellant’s period of
employment and his remuneration.
[9] The Appellant
asserted that he made an error when he admitted in his Notice of Appeal of
April 24, 2006, that he had held insurable employment with the company D.I.A.
(Décision et Intelligence d’affaires), from January 13 to August 22, 2002.
In other words, in his testimony, the Appellant contradicted the contents of
his Notice of Appeal. His testimony to this effect is not trustworthy when all
of the evidence, oral and documentary, is taken into consideration. It suffices
to consider the Payor’s testimony, the records of employment, Exhibit I-2 and
the letter of Daniel Lalonde, CPP/EI eligibility officer, dated February 19,
2003, Exhibit I-4, informing the Appellant of his decision to the effect that
he considered the Appellant’s employment insurable for period in question
solely based on the information provided by the Appellant. Yet, the Appellant
testified that he was employed by D.I.A. from January 14, 2002. However, the
Appellant could not explain convincingly why he had received a salary payment
from this company on December 14, 2001. He claimed in cross-examination that it
was his salary for the work he had done for the Payor in the summer of 2001.
[10] This assertion was
denied in a convincing manner by the Payor, who was not cross-examined on this
important aspect of his testimony. Moreover, the T4 prepared by the Payor
supports its position and also refutes the Appellant’s claim that he had worked
for the Payor in the summer of 2001. It has moreover been proved that Mr. Rathé
did not even know the Appellant at that time, only having met him in the autumn
of 2001.
[11] The evidence
revealed that, during the period in question, the Appellant’s salary was paid
by Stratège Soft inc. or by a pay service provided by société Desjardins on
behalf of the Payor, since the new company D.I.A. had not yet been formed and
structured so as to provide the service.
[12] The Appellant had
the burden of proof. The onus was on him to prove the falseness of the
Minister’s claims. He did not do so. Indeed, the evidence that he presented
supports the Minister’s presumptions and conclusion with regard to the
insurability of his employment. At the hearing, the debate dealt with the
period of employment rather than its insurability.
[13] The Appellant denied
having worked from November 26, 2001, to January 14, 2002. He admitted having
worked for the rest of the period. It must be noted however, that the Appellant
admitted having applied for employment insurance benefits on July 5, 2001. This
is Exhibit I-3. The Appellant also admitted having received employment
insurance benefits until mid-January 2002. This perhaps explains why he denied
having been employed by the Payor during this period. With respect to this, the
Court must conclude that the Appellant lacked candour and sincerity. On this
point, he was contradicted by the rest of the oral and documentary evidence.
Due to the foregoing, it became evident at the hearing that the subject of
debate was the Appellant’s period of employment rather than insurability.
[14] The period of
employment was proved by the Payor in its evidence, but also in part by the
Appellant himself, as indicated above. The period of employment was also
established in the e-mails exchanged by the parties. Moreover, the Appellant’s
assertion that he was employed during the summer of 2001 was refuted by
abundant evidence. This has already been referred to by the Court. This also
had the effect of casting doubt on the Appellant’s credibility.
[15] The Court must now
determine whether the Appellant held insurable employment for the purposes of
the Employment Insurance Act (the “Act”). The relevant provision is set
out at paragraph 5(1)(a) of the Act and reads as follows:
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]
[16] The paragraph quoted
above defines the term “insurable employment”. It is employment under a
contract of service, i.e. a contract or employment. However, the Act does not
define what constitutes such a contract. In the case at bar, there is a written
contract. It has been reproduced above. The intention of the parties is
expressed in this contract.
[17] The contract of
employment is a civil law notion found in the Civil Code of Québec. The
nature of this contract therefore must be determined under the relevant
provisions of the Civil Code.
[18] In a publication entitled "Contract of Employment: Why Wiebe
Door Services Ltd. Does Not Apply in Quebec and What Should Replace
It." (The Harmonization of Federal Legislation with Quebec Civil Law
and Canadian Bijuralism: Second Collection of Studies in Tax Law. Montreal:
APFF, 2005),
Justice Pierre Archambault of this Court describes, with regard to any
period of employment after May 30, 2001, the method to be used by the courts
since the coming into force, on June 1, 2001, of section 8.1 of the Interpretation
Act, S.R.C. (1985), c. 1-21, amended, when dealing with a dispute like this
one. Here is what was set forth by Parliament in this section:
Property and Civil Rights
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.
[Emphasis added.]
[19] It is appropriate to
cite the relevant provisions of the Civil Code, which will be used to determine
the existence of a contract of employment in Quebec, to distinguish it from a
contract for services:
Contract of employment
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.]
[20] The provisions of
the Civil Code cited above establish three conditions essential to the
existence of a contract of employment:
(1) the employee's prestation in the form of work; (2) remuneration by the
employer for that work; and (3) a relationship of subordination. The
significant distinction between a contract of service and a contract of
employment is the existence of a relationship of subordination - the fact that
the employer has a power of direction or control over the worker.
[21] As pointed out at
the hearing by counsel for the Respondent, Mr. Ayadi, the evidence presented
supports the Minister’s conclusion that the Appellant held insurable employment
with the Payor. Indeed, this fact is admitted by the Appellant except for the
period from November 26, 2001 to January 14, 2002. However, the weight of the
evidence establishes the contrary, including Exhibit A‑1 filed at
the hearing and that the Appellant was unable to explain in a credible manner.
A series of indicia developed by the case
law enables the Court to determine whether there is a relationship of
subordination between the parties.
The indicia of supervision include:
- mandatory presence at a workplace
- compliance with work schedule
- control over the employee’s absences on vacations
- submission of activity reports
- control over quantity and the quality of the 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
[22] It should be
specified, however that the presence of indicia supporting one conclusion or
another, i.e. whether there is a relationship of subordination or not, does not
put an end to the analysis. The exercise consists, according to the distinction
established in the Civil Code of Québec, in determining the overall
relationship between the parties. It is a matter of establishing in what
proportion the indicia potentially leading to the conclusion that there is a
relationship of subordination are predominant compared to the others.
[23] Most of the
above-mentioned indicia are present in this case, specifically the source
deductions, benefits, employee status in income tax returns and exclusivity of
services to the employer.
[24] The testimonial and
documentary evidence also supports the existence of a relationship of
subordination when the facts presented are examined in light of the indicia
concerning the respect of a work schedule, the control of the employee’s
vacation absences and submission of activity reports. However, the Appellant
was not required to be present at a designated workplace. The parties had
agreed that, due to the nature of the work, the Appellant could perform his
duties on the road or at home. It must be acknowledged that this indicium is
rather neutral in the analysis of its bearing on the determination of a
relationship of subordination.
[25] Based on this
analysis, the Court must find that the evidence describing the relationship
between the Appellant and the Payor supports the conclusion that there was a
contract of employment between them according to the provisions of the Civil
Code of Québec and, as a result, according to paragraph 5(1)(a) of
the Act.
[26] Accordingly, the
Minister’s decision on the duration of the period of employment in question,
i.e. from November 26, 2001, to March 8, 2002, and on the insurability of this
employment is confirmed.
[27] The appeal is therefore
dismissed.
Signed at Grand-Barachois, New Brunswick, this 4th day
of May 2007.
“S. J. Savoie”
Translation
certified true
on this 29th day
of August 2007
Gibson Boyd,
Translator
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