Citation: 2005TCC570
Date: 20050826
Docket: 2005-961(EI)
BETWEEN:
GILLES HUDON,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1] This is an appeal
from a decision of the Minister of National Revenue
("the Minister") dated January 18, 2005, concerning
work done for payer Gestion J.M.P. Inc. from February 20 to
September 11, 1999.
[2] In making his
decision, the Minister relied on the following assumptions of fact:
[TRANSLATION]
(a) The payer,
incorporated on January 10, 1985, operated a swimming pool sales and
installation business. (admitted)
(b) Jean-Marc
Pelletier was the payer’s sole shareholder. (admitted)
(c) During the
period in issue, the Appellant rendered services to the payer as a salesperson,
and later operated a swimming pool installation business. (admitted)
(d) The Appellant
worked as a salesperson on the payer’s premises (in February, March and
April 1999). (denied)
(e) The Appellant
did not need to adhere to any work schedule during that time. (denied)
(f) He received a
5% commission on the products he sold. (denied)
(g) The Appellant
worked numerous hours during these three months of activity and accrued
commissions with the payer. (denied)
(h) By agreement
with the payer, the Appellant was paid a fixed amount each week until the
commissions he earned were exhausted, namely September 11, 1999. (denied)
(i) From May to
September, the Appellant operated his installation business and went only very
rarely to the payer’s office. (denied)
(j) The Appellant
operated his business while continuing to receive remuneration from the payer.
(denied)
(k) On September
16, 1999, the payer issued a Record of Employment (ROE) to the Appellant
stating that the first day worked was February 22, 1999, that the last day
worked was September 11, 1999, that there were 1218 insurable hours and
that his insurable earnings during the period totalled $15,321. (admitted)
(l) The ROE issued
to the Appellant does not reflect the period or hours actually worked by the
Appellant. (denied)
(m) There was an
arrangement between the parties for the sole purpose of enabling the Appellant
to draw unemployment benefits. (denied)
[3] The assumptions of
fact set out in subparagraphs (a), (b), (c) and (k) were admitted, while the
assumptions set out in subparagraphs (d), (e), (f), (g), (h), (i), (j), (l) and
(m) were denied.
[4] Only the Appellant
testified in support of his appeal. He explained that he was hired as a
swimming pool salesperson for remuneration equal to 5% of sales.
[5] The commission was
paid to him at a rate of $300 per week for the first seven weeks, that is to say,
February 10 to April 21, and $600 per week from April 22 to
September 4.
[6] The Appellant
explained that he operated his own in‑ground pool installation business
in parallel with his work as a commissioned salesperson.
[7] As part of this
business, the Appellant had his own pool installation employees. He claimed
that he installed an average of one pool per week and that his attendance was
required at the installation site for the first four or five hours, which
worked out perfectly, for once the installation was chosen and the excavation
was done, his employees were sufficiently competent to finish the work,
enabling him to attend to his duties as a salesperson.
[8] Apart from the
sales work and the installation work, the Appellant explained that his business
also rendered other services to Gestion J.M.P. Inc.; he looked after calls
from pool owners with various problems or breakages. His business sent
someone to the site to resolve the problem. The evidence on this aspect of the
work was imprecise and even a bit confusing.
[9] In particular, the
Appellant explained that the invoices for work done in connection with these
service calls bore the name Société de Gestion J.M.P. Inc., the company
that sold the products (or materials) needed to solve the problem; his business
was essentially remunerated for the work that was done.
[10] The evidence
disclosed that, from February to September 1999, the Appellant made a
total of $161,609.61 in sales, thereby earning him an $8,080.50 commission
(Exhibit I‑4, page 4):
|
Month
|
Number of sales
|
Amount
|
Commission
|
|
February
March
April
May
June
July
August
September
Total
|
1
5
15
24
1
3
2
2
53
|
$169.90
$20,938.84
$46,413.76
$58,764.53
$2,392.58
$16,935.00
$6,895.00
$9,100.00
$161,609.61
|
$8.50
$1,046.95
$2,320.69
$2,938.23
$119.63
$846.75
$344.75
$455.00
$8,080.50
|
[11] Since the Record of
Employment tendered by the Appellant attests to 1218 hours of work and $15,312
in remuneration (Exhibit A‑1), it appears that the Appellant
received $7,231.50 for work other than pool sales.
[12] The facts of this
case are rather unusual in that the Appellant himself acknowledged that he
operated his own business during the periods in issue; thus, he claimed that he
did work under a genuine contract of service, and parallel work as part of the
operation of his own business. Such a situation is not theoretically
impossible, but the person concerned would have to be very disciplined, and,
above all, would have to be able to establish that there is a clear demarcation
between the two contracts.
[13] The existence of the
Appellant's business is not in issue. However, the existence of a contract of
service is not nearly as clear. It is obvious that the parties intended the
Appellant's work to be performed as part of a contract of service and that they
came to an agreement to this effect, which is, in and of itself, entirely
legitimate.
[14] However, based on
the facts and the way the work was performed, is it possible to conclude that
such a contract of service existed? In order to install the swimming pools, the
Appellant had competent employees who performed the work under his control and
supervision.
[15] Can it be concluded
that all the work that accounts for the $7,231.50 that the Appellant received
in addition to the commissions was for work that the Appellant personally
performed? The preponderance of the evidence does not permit such a finding,
and the Appellant was unable to explain how all of this was entered in the
books.
[16] He relied frequently
and consistently on the explanation that he worked for, earned and was paid the
remuneration in accordance with the details set out in the adduced documents.
[17] The fact that
payment for the salesperson's work is essentially a percentage of sales does
not prevent the work from being performed under a contract of service.
[18] Paragraph 5(1)(a)
of the Employment Insurance Act, which reads as follows, provides that
payment by commission is indeed a possibility:
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;
[19] I believe that each
party entered into an agreement as a businessperson. It was in the
interests of the Appellant, who had his own swimming pool installation
business, to associate with a business that sold the product he installed.
[20] In addition, the
Appellant's experience and knowledge were of interest to the business that sold
these pools, in that it gave the business access to a highly qualified
representative with a keen interest that stemmed from the fact that he was
essentially paid by commission on his sales.
[21] But for the service
call aspect, which earned the Appellant $7,231.50 from ensuing repairs, it
would have been more difficult to reject the possibility that a contract of
service existed. However, this amount completes the reasonableness and
plausibility of an agreement between two businesses with shared interests.
For these reasons, I conclude that the Appellant did the work under a
contract of enterprise.
[22] Consequently, the
appeal is dismissed.
Signed at Ottawa, Canada, this 26th day of August
2005.
"Alain Tardif"
Translation certified true
on this 30th day of November 2006.
Monica F.
Chamberlain, Reviser
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