Citation: 2006TCC340
Date: 20060614
Docket: 2005-4473(EI)
BETWEEN:
NATHALIE PRÉVOST,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
FRÉDÉRIC DORGEBRAY,
Intervener.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] This is an appeal
from a decision of the Minister of National Revenue
("the Minister") dated December 5, 2005, that the
Appellant was not employed in insurable employment by Frédéric Dorgebray (doing
business as "Les Chiens et Gîte du Grand Nord") from
November 20, 2004, to May 20, 2005.
[2] The Appellant is
Mr. Dorgebray's wife. The facts are set out as follows at paragraphs 5 and
6 of the Reply to the Notice of Appeal ("the Reply"):
[TRANSLATION]
5 . . .
(a) The payor operated his business under the
name "Les chiens et Gîte du Grand Nord".
(b) The payor was the sole proprietor of the
business.
(c) The Appellant is the payor's wife.
(d) The Appellant is related to a person who
controls the payor.
6.
(a) The payor offers packages that feature
accommodations in a cottage and meals in a lodge.
(b) According to the payor, outside the
Appellant's normal periods of employment there are few visitors, and he looks
after everything on his own.
(c) The Appellant's principal duties could be
summarized as follows:
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welcome the
guests
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prepare the
packages
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set the
guides' schedules
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—
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answer the
telephone
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—
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keep the
cottages and lodge in good order
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prepare the
meals
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look after
quality control to ensure that the Bureau de normalisation du Québec's
standards are met
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(d) The Appellant had to report to the payor
daily with respect to her activities and duties.
(e) She needed to have the payor approve certain
packages that she prepared.
(f) Unlike the other workers' hours, the
Appellant's hours were not calculated or recorded by the payor.
(g) The Appellant claims that she worked
40 hours per week during the period in issue; we were unable to determine
a precise work schedule due to the payor’s and the worker's differing accounts.
(h) During the period in issue, the Appellant
was paid a fixed wage of $400 per week (40 hours at $10 per hour) every two
weeks.
(i) The payor specifically stated that during
the three years prior to the period in issue, the Appellant was paid as a
subcontractor for 20 hours per week with the same duties.
(j) The payor claims that the Appellant's
hours increased from 20 to 40 hours per week because the number of guests
increased, yet the number of guests was 160 during the 2003‑2004 season
and 186 during the 2004-2005 season.
(k) From April 5 to May 20, 2005, a period
when there were no longer any guests, the Appellant was the only person in the
payor's payroll journal.
(l) During this period, the Appellant, with
her husband's help, allegedly cleaned two cottages and the restaurant, sorted
and cleaned the clothing and equipment, and updated the pricing information.
(m) The Appellant continued to receive a fixed
wage of $400 per week during this period, and she only cashed her last
paycheque on July 7, 2005, after the business was sold.
(n) The contract for the sale of the payor's
business, dated July 7, 2005, sets forth several obligations toward
the Appellant and makes no reference to the other workers (except the payor).
[3] The second and
third paragraphs of the Notice of Appeal read as follows:
[TRANSLATION]
. . .
Indeed, while I held that job, my
employer, Frédéric Dorgebray, was the owner of "Les Chiens et Gîte du
Grand Nord" and was my husband. He employed me as a secretary and quality
assurance officer from 29/11/2004 to 20/05/2005, 40 hours per week.
Ms. Laberge did not take account of one
fact that I believe to be of paramount importance in this case: Mr. Dorgebray
sold his business in June 2005, and the new owners called upon me,
effective November 14, 2005, to perform the same duties, at the same
salary, for the same number of hours. This clearly shows that even when the
employer and the employee were dealing with each other at arm's length, my
employment contract was renewed, and I therefore submit that the decision of
the Canada Customs and Revenue Agency is unfounded.
[4] The contract for
the sale of the business, dated July 7, 2005, was produced as
Exhibit A‑6. The employer and the Appellant referred to clause 4.4.10
of the contract, in which the purchaser agrees to retain their services. I
quote:
[TRANSLATION]
. . .
For a minimum of three (3) years, the
purchasers shall use the services of the seller and his spouse on a priority
basis before hiring other employees, and shall negotiate determinate employment
contracts in good faith (full-year contracts as employees) . . .
[5] On
November 14, 2005, the new owners signed a certification of
employment, which was produced as Exhibit A‑7. Counsel for the
Respondent objected to the production of the certification because the people who
signed it were not present to testify. The objection was taken under
advisement.
[6] The certification
reads:
[TRANSLATION]
CERTIFICATION OF EMPLOYMENT
We the undersigned, Fabienne Noorts,
President, and Dirk Segers, Vice‑President of Les Chiens et Gîte
du Grand Nord, hereby certify that Nathalie Prévost has been our
employee since November 14, 2005, and shall remain our employee until
late April 2006 as secretary and quality assurance officer with the
following duties:
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quality program coordination
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cleaning of cottages and lodge
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breakfast preparation and service
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office work
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Fabienne Noorts
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Dirk Segers
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President
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Vice‑President
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(signature)
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(signature)
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[7] Ms. Prévost's
Record of Employment, which was issued by the new owners on April 20, 2006,
was produced as Exhibit A‑8. It covers the period from
November 14, 2005, to April 29, 2006. The document describes
her as an office worker. It states that she worked 880 hours for $9,152 in
remuneration, including $352 in vacation pay, which means that she worked 22
forty-hour weeks at a rate of $10 per hour.
[8] Mr. Dorgebray explained
that he started up an adventure tourism business in the French Alps. In 1994,
he began operating the same type of business in Saint‑David‑de‑Falardeau,
Quebec. The business focuses
on winter activities such as dogsledding, snowmobiling and snowshoeing. In
addition to winter activities, it offers lodging and food. The season begins in
late November and ends in mid‑April. Eighty per cent of the clientele is European.
[9] In 2001 and 2002, the
business became more profitable. On February 4, 2004, it obtained a
certificate of compliance from the Bureau de normalisation du Québec [the
Quebec standards bureau] for nature and adventure tourism.
[10] According to Mr. Dorgebray,
standardization required greater effort because of the rules that needed to be respected.
A summary of these rules was produced as Exhibit A‑3. The increase
in customers and the additional efforts required by standardization were the
main factors that allegedly led Mr. Dorgebray to decide that Ms. Prévost
should devote more hours to the business and that it would be preferable for
her to be an employee instead of an independent contractor. This, it is
claimed, is when he drafted the determinate employment contract produced as
Exhibit A‑2. The duties set out in article 4 are as follows:
[TRANSLATION]
SECTION 4: DUTIES
Nathalie PREVOST shall
have the following duties:
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coordinate the
quality program
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welcome the
guests
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—
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clean the
cottages and lodge
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—
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prepare and
serve the breakfasts
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—
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prepare the
guides' lunches
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—
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prepare the
suppers
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—
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office work
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[11] The term of the
contract is from November 29, 2004, to May 20, 2005.
[12] Mr. Dorgebray stated
that the other employees are guides. Their pay rate is $11.25 per hour in the
first year and $13.00 per hour in the second year.
[13] Ms. Prévost is
from Nancy, France, where she obtained a management secretary diploma. Mr.
Dorgebray and Ms. Prévost got married on June 14, 2003. They have
known each other since 2001. There are no children of the marriage. Mr. Dorgebray
had three children from a previous marriage who range from 13 to 20 years of
age. He had shared custody of those children.
Analysis and conclusion
[14] The objection made
by counsel for the Respondent to the production of the certification of
Ms. Prévost's employment is valid. However, in my opinion, since the new
owners produced the Appellant's Record of Employment, I must admit the
certification. Otherwise, I would have to deny everything. The Respondent
did not object to the Record of Employment. Both documents could have been
accompanied by paycheques issued to Ms. Prévost. This would have provided
more solid proof of employment. In any event, in the absence of evidence to the
contrary, I believe that the people who signed the certification were in good
faith.
[15] One of the
Respondent's main points is that the last customer departed on
April 5, 2005. Paragraph (k) states that the Appellant was the
only person in the payor's payroll journal from April 5 to
May 20, 2005. The employer and the employee testified that the
cottages and lodge needed to be cleaned, the equipment needed to be maintained,
and things had to be organized and stored. This description is repeated at
paragraph (l), with the added task of updating the pricing information.
[16] Another point is
that the Appellant only worked 20 hours per week when she was an independent
contractor for her husband's business during the three prior years. This is stated
in paragraph (i) of the Reply. Both the employer and the employee respond that
the work duties increased, as described in paragraph (j) of the Reply. There
were more customers, more packages to submit to agencies, and more reports to
submit to the government.
[17] I shall go over a
few other facts on which the Minister also based his decision to continue to consider
the employment excluded.
[18] Paragraph 6(f)
states: [TRANSLATION] "Unlike the other workers' hours, the Appellant's hours
were not calculated or recorded by the payor." My understanding of the facts is that the
Appellant's job was different from that of the guides. Hers was a full‑time job.
This explains why the hours were not recorded.
[19] Paragraph (m) states:
[TRANSLATION] "The Appellant continued to receive
a fixed wage of $400 per week during this period, and she only cashed her last
paycheque on July 7, 2005, after the business was sold." In my
view, this statement actually proves that this was a genuine employment
contract.
[20] Paragraph (n)
states: [TRANSLATION] "The contract for the sale of the payor's
business, dated July 7, 2005, sets forth several obligations toward the
Appellant and makes no reference to the other workers (except the payor)."
I do not understand what negative impact this could have on the
Appellant's employment. The employer and the Appellant did not deny that they
were related. I do not think that it is out of the ordinary for the seller
to wish to protect or guarantee himself two jobs and two incomes.
[21] In my opinion, the
evidence discloses that this was a situation in which the business genuinely
paid the Appellant while she was an independent contractor and while she was an
employee. This is not a case in which the business did not have the means to
pay an employee's salary, or in which the employee was paid, but put all the
money back into the business. In fact, the allegation in paragraph (m) of the
Reply confirms this.
[22] In her Notice of
Appeal, the Appellant stated that she worked for the new owners for the same
salary and for the same period. There was no evidence to the contrary. The new
owners did not testify, but they signed the certification and the Record of
Employment.
[23] I can only find that
the remuneration was very reasonable. As far as the duration is concerned, the
Appellant continued to work for about a month after the last guest left. The
employment contract specified the duration from the outset. In addition,
the business was to be sold. Thus, it was normal to make a special effort to show
it in a good light. I must also note that the accounts of the facts did not
change, and that they made sense given the nature of the business.
[24] In conclusion, I am
of the opinion that the employer would have entered into a substantially
similar contract with another person under the circumstances described in the
instant case.
[25] Consequently, the
appeal is allowed and the decision of the Minister is vacated.
Signed at Ottawa, Canada, this 14th day of June 2006.
"Louise Lamarre Proulx"
Translation
certified true
on this 27th day
of June, 2007.
Brian McCordick,
Translator
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