Citation: 2006TCC653
Date: 20061214
Docket: 2006-1397(EI)
BETWEEN:
SOCIÉTÉ EN COMMANDITE LE DAUPHIN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Deputy Judge Savoie
[1] This appeal is
about the insurability of the worker André Lefebvre's employment when he was
working for the Appellant, and about his hours of work and insurable earnings
during the period in issue, that is to say, from June 27, 2004, to
July 8, 2005.
[2] On February 21,
2006, the Minister of National Revenue ("the Minister") notified the
Appellant of his decision that the worker was employed in insurable employment.
He also determined that the worker worked for 1512 insurable hours and had
$6,430.88 in insurable earnings.
[3] In rendering his
decision, the Minister relied on the following assumptions of fact:
[TRANSLATION]
(a)
The Appellant operated Le Dauphin, a 48-unit
apartment building which had three floors and a basement. (admitted)
(b)
The Appellant rented out the units without
appliances, and the cost of electricity, heat and other utilities was borne by
the tenants. (admitted subject to clarifications)
(c)
Starting in 2001, the worker worked as a
building superintendent (janitor) for the Appellant. (admitted)
(d)
The work contract, which was signed by the
parties, specified that the worker was responsible for:
-
renting the units
-
collecting the rent
-
maintaining the premises
-
maintaining peace and good order so that each
tenant could fully enjoy his or her apartment (admitted)
(e)
In this regard, the worker had to perform the
following work:
-
prepare the vacant units with a view to renting
them
-
perform designated maintenance work in the units
-
keep the common areas (corridors, entrance,
etc.) very acceptably clean
-
maintain the building exteriors
-
maintain the land around the buildings
-
perform any other job-related duties called for
under the circumstances
-
prepare any reports that the work required
(denied)
(f)
In addition to his janitorial duties, the worker
was entitled to perform certain work specified in the contract in his capacity
as a subcontractor. (denied)
(g)
The worker alleges that he had to be available
24 hours a day, seven days a week, to perform his work. (denied)
(h)
All of the worker's equipment and work tools
were provided by the Appellant. (denied)
(i)
The worker could not get himself replaced
without the Appellant's authorization. (denied)
(j)
Except in emergencies, the worker needed the
Appellant's approval before undertaking repairs. (denied)
(k)
The worker's hours were not compiled by the
Appellant or by the worker. (admitted)
(l)
Neither the written contract nor any oral
agreement provided even approximately for the number of hours that would be
required in order for the worker to perform his regular maintenance and upkeep
work. (admitted)
(m)
The worker alleges that he worked at least 30
hours a week in his capacity as a janitor, whereas the Appellant claims that he
devoted only 16 hours per week to such duties. (denied)
(n)
On July 4, 2005, the Appellant issued a Record
of Employment (ROE) to the worker which stated that the first day of work was July 1, 2001, and that the last day
worked was July 8, 2005, and which reported 621 insurable hours and
$11,137 in insurable earnings. (denied)
(o)
The Appellant made source deductions from the
worker's salary. (admitted)
(p)
During the period in issue, the worker was paid
fixed gross remuneration of $412.50 per week every two weeks. (admitted)
(q)
The Respondent has shown that during his last 14
pay periods, the worker received $6,430.88 in insurable earnings (14 periods at
$412.50 and $655.88 in vacation pay). (admitted)
(r)
The Respondent has shown that during the period
in issue (54 weeks), the worker accumulated 1512 hours of insurable employment,
that is to say, 54 weeks at 28 hours per week. (admitted)
[4] At the hearing, the
Minister produced Exhibit I‑4, the contract between Société en
commandite Le Dauphin and André Lefebvre. The contract, which is binding on the
parties, describes, among other things, the [TRANSLATION] "purpose"
of the agreement, the [TRANSLATION] "services concerned", the
[TRANSLATION] "activities and responsibilities" and the [TRANSLATION]
"remuneration". Appendix 1 contains the list of duties. It is
generally similar to the list set out in the Minister's assumptions of fact in
the Reply to the Notice of Appeal.
[5] It was shown at the
hearing that the Appellant made source withholdings in respect of the Québec
Pension Plan, federal and provincial income tax and employment insurance.
[6] In support of her
argument that the worker was governed by a contract of employment, counsel for
the Minister relied on the decision in Commission des normes du travail c.
9002-8515 Québec inc., No. 500-05-020995-963, April 6, 2000
(Que. S.C.) where Justice Claudette Picard wrote as follows:
[TRANSLATION]
[5] The Court must decide the following issues.
1. Is Mr. Vaillancourt
an employee of Québec within the meaning of the Act?
. . .
[7] In order to determine whether Mr. Vaillancourt is an employee
within the meaning of the Act, three elements must be considered: the
prestation of work; remuneration; and a relationship of subordination.
. . .
[10] The courts have relaxed the concept of a relationship of
subordination. They have done so because workers are increasingly
autonomous in their work and enjoy freedom in the performance of their duties
even through they are still subordinate to their employers. What of Mr.
Vaillancourt's situation?
[11] The Agreement contains indicia of supervision and
subordination, as well as indicia of autonomy.
[12] The indicia of supervision and subordination are as follows.
Québec is designated as the "builder" and Mr. Vaillancourt is
designated as the "advisor" and/or "sales director" and:
1. The Québec units must be sold
during the period, for the prices and subject to the considerations and
conditions stipulated in writing by the builder.
2. The advisor must perform the
duties entrusted to him, including the duties described in great detail in
paragraph 19 of the Agreement.
3. The compensation for the work
is clearly stated; the Agreement refers to a percentage of the value of the
real estate transaction, not including tax. The evidence shows that there were
various agreements which changed the terms of payment of the commission. In roughly
half the cases, the agreements executed concurrently with the offers of
purchase or after the acceptance of those offers did not include tax.
4. Paragraph 4.4 of the
Agreement refers to source deductions.
5. The mandate given to
the advisor is personal and exclusive.
6. Paragraph 13 of the
Agreement refers to termination of employment.
. . .
[15] In order for a contract of enterprise to exist, there must be
no relationship of subordination, and the Agreement contains several elements
demonstrating such a relationship. In the case at bar, there are sufficient
indicia of a relationship of authority.
[7] The issue for
determination is whether the worker was employed in insurable employment for
the purposes of the Employment Insurance Act ("the Act").
The relevant provision is paragraph 5(1)(a) of the Act, which states:
5. (1) 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;
[8] The section quoted
above defines the term "insurable employment". The term means
employment under a contract of service, i.e. a contract of employment. However,
the Act does not define what constitutes such a contract. In the case at
bar, there is a written agreement. It is reproduced below and it expresses the
parties' intent.
[9] A contract of
service is a civil law concept found in the Civil Code of Québec. The
nature of the contract in issue must therefore be ascertained by reference to
the relevant provisions of the Code.
[10] In a publication
entitled [TRANSLATION] "Contract of Employment: Why Wiebe Door
Services Ltd. Does Not Apply in Quebec and What Should Replace It",
published in the fourth quarter of 2005 by the Association de planification
fiscale et financière (APFF) and the Department of Justice Canada in the Second
Collection of Studies in Tax Law as part of a series called The Harmonization
of Federal Legislation with Quebec Civil Law and Canadian Bijuralism,
Justice Pierre Archambault of this Court, referring to all periods
subsequent to May 30, 2001, describes the steps that courts must go
through, since the coming into force on June 1, 2001, of section 8.1 of the Interpretation
Act, R.S.C. 1985, c. I-21, as amended, when confronted with
a dispute such as the one before us. Here is what Parliament declared in this
provision:
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.]
[11] It is useful to
reproduce the relevant provisions of the Civil Code, which will serve to
determine whether an employment contract, as distinguished from a contract of
enterprise, exists:
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.]
[12] The provisions of
the Civil Code of Québec reproduced above establish three essential
conditions for the existence of an employment contract:
(1) the worker's prestation in the form of work; (2) remuneration by
the employer for this work; and (3) a relationship of subordination. The
significant distinction between a contract for service and a contract of
employment is the existence of a relationship of subordination, meaning the
employer has the power of direction or control over the worker.
[13] Legal scholars have
reflected on the concept of "power of direction or control" and, from
the reverse perspective, a relationship of subordination. Here is what Robert
P. Gagnon wrote in Le droit du travail du Québec, 5th ed. (Cowansville,
Que.: Yvon Blais, 2003):
(c) Subordination
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.
[Emphasis added.]
[14] A series of indicia
developed by the jurisprudence enables courts to determine whether there is a
relationship of subordination between the parties.
The indicia of control include:
1-
mandatory presence at a
workplace
2-
compliance with the
work schedule
3-
control over the
employee's absences on vacations
4-
submission of activity
reports
5-
control over the
quality and quantity of work
6-
imposition of the
methods for performing the work
7-
power to sanction the
employee's performance
8-
source deductions
9-
benefits
10-
employee status on
income tax returns
11-
exclusivity of services
for the employer
[15] I conclude, as did
Picard J. in Commission des normes du travail c. 9002‑8515 Québec Inc.,
supra, that there are sufficient indicia that the worker carried out his
duties under a contract of employment.
[16] In the case at bar,
the relationship of subordination between the Appellant and the worker can, in
my opinion, be established by indicia 1, 2, 5, 6, 8, 10 and 11. Further
support for this conclusion can be found in the work contract, written and
signed by the parties, in which the worker agrees to carry out his duties as
described by the Appellant. The agreement that was performed provides that the
worker is to provide his services personally and describes how each party can
terminate the employment.
[17] In addition, the
Court has analysed the overall relationship between the parties and finds that
the worker was employed in insurable employment within the meaning of paragraph
5(1)(a) of the Act and under a contract of employment within the meaning
of article 2085 of the Civil Code of Québec.
[18] Having determined
that the worker's employment was insurable, the Minister proceeded, in the
absence of precise data, to determine the hours of work and insurable earnings
of the worker based on the Record of Employment issued by the Appellant and in
accordance with subsections 10(4) and 10(5) of the Employment Insurance
Regulations and paragraph 2(3)(a) of the Insurable Earnings
and Collection of Premiums Regulations. I shall reproduce below the excerpts in
question.
10.
(4) Except where subsection (1) and section 9.1
apply, where a person's actual hours of insurable employment in the period of
employment are not known or ascertainable by the employer, the person, subject
to subsection (5), is deemed to have worked, during the period of employment,
the number of hours in insurable employment obtained by dividing the total
earnings for the period of employment by the minimum wage applicable, on January
1 of the year in which the earnings were payable, in the province where the
work was performed.
(5) In the absence of evidence indicating that
overtime or excess hours were worked, the maximum number of hours of insurable
employment which a person is deemed to have worked where the number of hours is
calculated in accordance with subsection (4) is seven hours per day up to an
overall maximum of 35 hours per week.
2. (3) For the
purposes of subsections (1) and (2), "earnings" does not include
(a) any non-cash
benefit, other than the value of either or both of any board or lodging enjoyed
by a person in a pay period in respect of their employment if cash remuneration
is paid to the person by their employer in respect of the pay period;
. . .
[19] After completing the calculations specified by
Parliament in the provisions reproduced above, the Minister deemed that during
the 54-week period in issue, the worker was employed in insurable employment
for the Appellant for 1512 hours in accordance with subsections 10(4) and
10(5) of the Employment Insurance Regulations. In addition, he found that
the worker's insurable earnings for the last fourteen pay periods within the
period in issue amounted to $6,430.88 according to section 2 of the Insurable
Earnings and Collection of Premiums Regulations.
[20] The onus was on the
Appellant to prove that the Minister's allegations were false. The Appellant
did not discharge this onus. Under these circumstances, the Court does not
believe that its intervention is warranted because it must be found that the
Minister properly carried out the mandate given to him by Parliament.
[21] Consequently, the
appeal is dismissed and the Minister's decision is confirmed.
Signed at Grand-Barachois, New
Brunswick, this 14th day of
December 2006.
"J.S. Savoie"
Translation
certified true
on this 27th day
of February 2008.
Brian McCordick,
Translator
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