Citation: 2008 TCC 660
Date: 20081203
Docket: 2008-1294(EI)
BETWEEN:
DOMINIQUE SAVOIE AND LINDA LÉTOURNEAU,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1]
This is an appeal from
the decision made by the Minister of National Revenue (the “Minister”) that Mr.
Benoit Gauvreau had insurable employment pursuant to paragraph 5(1)(a)
of the Employment Insurance Act (the “Act”) while working for the
Appellants from September 15, 2006, to September 15, 2007.
[2]
In December 2005, the
Appellants bought a building with 69 residential housing units in Brossard, Quebec,
with an occupancy rate of approximately 90 percent.
[3]
At the time of
purchase, there was an agreement between the Vendor and Mr. Gauvreau for
maintenance and superintendent services, signed July 15, 2005 (Exhibit A-1).
According to the Appellants, they verbally agreed to retain this agreement,
offering Mr. Gauvreau a higher fixed salary: $550 net biweekly (instead of $400
biweekly, plus a $10 bonus per new rental and $5 per annual renewal), in
addition to free housing, including electricity and phone. He also got two
weeks paid vacation.
[4]
According to paragraph
2 of this agreement, Mr. Gauvreau was employed as the superintendent and had to
provide the following services:
[TRANSLATION]
2) The owner would like to retain the
services of the superintendent, who agrees to do the following:
−
Clean the premises and common areas;
−
Clean the units;
−
Perform general maintenance of the building and
its grounds;
−
Rent available units;
−
Collect rent;
−
Make repairs when needed, as well as kitchen
counters and washrooms;
−
Ensure the building is clean at all times;
−
Cut the grass and maintain grass edges;
−
Rid grounds and parking lot of all papers and
litter, etc.
[5]
Paragraphs 7-15 of this
agreement outline the obligations of the superintendent as follows:
[TRANSLATION]
OBLIGATIONS OF THE
SUPERINTENDENT
7) The superintendent will clean the
hallways, stairs, laundry room, building entrances and exits, the windows at
the entrance and mailboxes if needed, and will prepare and take out the garbage
twice a week.
8) With each move, the superintendent will
see to the preparation of a clean apartment available to the new tenant
(appliances and the apartment).
9) The superintendent will see to general
building maintenance: carry out minor plumbing, locksmith work, carpentry and
other work.
10) The superintendent will remove snow from
entrances and sidewalks.
11) The superintendent will be responsible for
renting apartments according to the terms and conditions established by the
owner. Once a tenant has given notice, the superintendent will do what is
necessary to rent the vacant apartment as quickly as possible. The
superintendent will collect information about the person(s) who “present an
interest and check them out”.
12) The superintendent will collect rent each
month; rent is due on the FIRST DAY OF EACH MONTH.
13) The superintendent will put tenants’ names
on the mailboxes and will change them when required. The superintendent will
monitor the circulation of keys and where they are stored, when necessary.
14) The superintendent will immediately notify
the owner of all work to be done around the building whether it is his
responsibility or not. And without limiting the generality of the foregoing,
the superintendent will ensure the well being of tenants.
15) The superintendent must ensure the building
and the grounds, including the parking lot, are clean at all times.
[6]
In paragraph 16, the
working conditions are as follows:
[TRANSLATION]
WORKING CONDITION
16) In principle, the superintendent is always
on duty in order to respond to emergencies. If he has to be away, the
superintendent will, where possible, tell the owner and a reliable tenant where
he can be reached by phone.
[7]
The agreement also
specifies the following:
According to the following specifications:
3) The owner hereby retains the superintendent’s
services as an independent general contractor and designates him as his nominee
for cleaning, maintenance, rental, and rent collection purposes for the
above-mentioned building on behalf of the owner for the period of time
designated hereafter and pursuant to the conditions provided for herein.
4) This service agreement will remain in
effect until one of the parties hereto terminates it in the manner described
below. The current agreement is effective:
August 1, 2005.
5) The parties agree that either party may
terminate this agreement by means of a written notice 30 days prior to the
scheduled date of termination.
[8]
The Appellants said
that from the moment they became owners, they did not ask that Mr. Gauvreau be
available evenings and weekends. Mr. Gauvreau testified otherwise.
[9]
The Appellants also
said that Mr. Gauvreau was very good with electrical work and computers. While
Mr. Gauvreau apparently installed a whole security camera system in the
building, the Appellant paid for just the materials; they did not pay any
surplus (just a few hundred dollars and other favours) to Mr. Gauvreau for his
installation services. The Appellants said that Mr. Gauvreau also provided
electrical services to others. Mr. Gauvreau explained that he had done some
work in the neighbouring building before the Appellants became the new owners,
as the former owner for whom he worked owned both buildings. Another time, he
helped the superintendent of that building, who is a friend, during an
emergency. Otherwise, Mr. Gauvreau said he did not work for anyone but the
Appellants.
[10]
With respect to the
work schedule, the Appellants stated that it was hard to say how many hours Mr.
Gauvreau worked. He could work 20 hours as easily as 40 in a given week. If
Mr. Gauvreau wished to be away, he notified the Appellants. Mr. Gauvreau said
he worked Monday through Friday, 8:00 a.m. to 5:00 p.m. He carried out the
tasks assigned by one of the Appellants, Mr. Savoie, who was always on site.
Mr. Gauvreau said he did not have the time for other clients. He was also
available for repairs at tenants’ units during evenings or weekends if tenants
could not be there during weekdays.
[11]
The last part of this
testimony contradicts Mr. Savoie’s. Mr. Savoie insists that Mr. Gauvreau never
worked evenings or weekends. Mr. Savoie also said that he provided computer
services to tenants for money. He also said that Mr. Gauvreau could have
called on other people if he needed assistance. For example, he could have
hired another person to paint the apartments. Mr. Gauvreau denied this. He
said that only his wife helped him. He would never have hired another person
and paid them from his own pocket. The Appeals Officer, Elio Palladini,
confirmed that Mr. Savoie told him over the phone that he did not authorize Mr.
Gauvreau to hire or pay people to help him without obtaining formal permission,
which confirms this version.
[12]
With respect to work
tools, this time everyone said the same thing. Mr. Gauvreau had a small
toolbox; the Appellants provided the bigger tools. Mr. Gauvreau rarely had to
buy anything for the Appellants. He never had any expenses.
[13]
On December 1, 2006,
Mr. Savoie informed Mr. Gauvreau that he would not renew his contract of
employment as of January 1, 2007. However, it seems that Mr. Gauvreau
continued to be in the Appellants’ employ for a longer period of time. Another
letter dated August 18, 2007, again advised Mr. Gauvreau of a cessation of
employment and told him to vacate his apartment as of September 18, 2007. In another
letter on September 10, 2007, Mr. Savoie confirmed the end of Mr. Gauvreau’s
employment as of September 15, 2007 (Exhibit I-1).
Analysis
[14]
Even though Mr.
Gauvreau signed a contract as a self-employed person with the former owner
(Exhibit A-1), which according to the Appellants was verbally renewed, Mr.
Gauvreau claims he was an employee. The Minister accepted Mr. Gauvreau’s
position. Even though the terms of the contract as accepted by both parties
cannot be ignored, this does not in any way prevent the Minister from alleging
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. This is what the Federal Court of Appeal said in 9041‑6868
Québec Inc. v. Canada (Minister of National Revenue), [2005] F.C.J.
No. 1720 (QL):
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 FCA 96 (CanLII), [2002] 4 FC 396,
paras. 119 and 122; A.G. Canada v. Les Productions Bibi et Zoé Inc., 2004 FCA 54 (CanLII), 2004 FCA 54; Le
Livreur Plus Inc. v. M.N.R., 2004 FCA 68 (CanLII), 2004 FCA 68; Poulin
v. Canada (M.N.R.), 2003 FCA 50 (CanLII), 2003 FCA 50; Tremblay
v. Canada (M.N.R.), 2004 FCA 175 (CanLII), 2004 FCA 175).
10 The expression "contract of
service", which has been used in the Employment Insurance Act since
its origin and which was the same as the expression used in article 1667 of the
Civil Code of Lower Canada, is outdated. The Civil Code of Québec
in fact now uses the expression "contract of employment", in article
2085, which it distinguishes from the "contract of enterprise or for
services" provided for in article 2098.
11 There are three characteristic
constituent elements of a "contract of employment" in Quebec law: the performance of work,
remuneration and a relationship of subordination. That last element is the
source of the most litigation. For a comprehensive definition of it, I would
refer to what was said by Robert P. Gagnon in Le droit du travail du Québec,
Éditions Yvon Blais, 2003, 5th edition, at pages 66 and 67:
[TRANSLATION]
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.
91 - Factual assessment -
Subordination is ascertained from the facts. In this respect, the courts have
always refused to accept the characterization of the contract by the parties. .
. .
92 - Concept - Historically,
the civil law initially developed a "strict" or "classical"
concept of legal subordination that was used for the purpose of applying the
principle that a master is civilly liable for damage caused by his servant in
the performance of his duties (article 1054 C.C.L.C.; article 1463 C.C.Q.).
This classical legal subordination was characterized by the employer's direct
control over the employee's performance of the work, in terms of the work and
the way it was performed. This concept was gradually relaxed, giving rise to
the concept of legal subordination in the broad sense. The reason for this is
that the diversification and specialization of occupations and work methods
often made it unrealistic for an employer to be able to dictate or even
directly supervise the performance of the work. Consequently, subordination
came to include the ability of the person who became recognized as the employer
to determine the work to be performed, and to control and monitor the
performance. Viewed from the reverse perspective, an employee is a person
who agrees to integrate into the operational structure of a business so that
the business can benefit from the employee's work. In practice, one looks
for a certain number of indicia of the ability to control (and these indicia
can vary depending on the context): mandatory presence at a workplace; a
somewhat regular assignment of work; the imposition of rules of conduct or
behaviour; an obligation to provide activity reports; control over the quantity
or quality of the services, etc. The fact that a person works at home does
not mean that he or she cannot be integrated into a business in this way.
(Emphasis added.)
[15]
In the present case,
the evidence shows that despite the contractions there, Mr. Gauvreau did not
have much latitude and had to carry out his tasks under Mr. Savoie’s control
and supervision. Mr. Savoie was always on the premises and, according to his
testimony, he paid particular attention to everything being done in his
building. He did not let Mr. Gauvreau carry out tasks he was less competent
in. He showed him how to do certain things and trusted him to some extent in
the tasks he was better at. Both Mr. Palladini, who noted Mr. Savoie’s
statements as taken over the phone, and Mr. Gauvreau mentioned that Mr.
Gauvreau was not authorized to hire or pay anyone without Mr. Savoie’s formal
approval. Even if Mr. Gauvreau was not busy all the time, he still had to be
available in the event there was work to be done. Mr. Gauvreau said Mr. Savoie
met with him daily and assigned him various tasks. Mr. Savoie did a lot
himself, which shows to what point he was meticulous about the maintenance of his
building. That is to his credit. But it is questionable to say that he did
not control Mr. Gauvreau’s work. The dismissal letters sent also indicate that
Mr. Savoie considered Mr. Gauvreau an employee (Exhibit I-1). The fact raised
by Mr. Savoie, that Mr. Gauvreau’s income was not high enough for employee
contributions, does not change the true legal relationship between the
parties.
[16]
From the evidence, I
find that Mr. Gauvreau was an employee of the Appellants in that Mr. Savoie
controlled the work carried out and required his presence on the premises
unless his absence was justifiable. He did as he was told to do as
superintendent. Moreover, as outlined in the case law cited, it is not because
the contract states that Mr. Gauvreau was a self-employed individual that he
was indeed such. It is the true relationship between the parties that must be
analyzed. According to the evidence, in this relationship, Mr. Gauvreau did
the work assigned by Mr. Savoie and was sufficiently supervised in doing so as
to be considered an employee.
[17]
For these reasons, I
would dismiss the appeal and confirm the Minister’s decision.
Signed at Montréal, Quebec, this 3rd day of December 2008.
“Lucie Lamarre”
Translation certified true
on this 22nd day of January 2009.
Bella Lewkowicz, Translator
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