Citation: 2005TCC703
Date: 20051104
Docket: 2005-816(EI)
BETWEEN:
DONALD DOYON,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL
ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
(Decision rendered orally from the bench on August 29,
2005 at Québec, Quebec, and revised on November 4, 2005 at Ottawa, Ontario.)
Dussault J.
[1] This is an appeal
by the Respondent for a decision by which Mr. Donald Doyon was engaged in
insurable employment for Fonderie St-Romuald Inc. (“Fonderie”) during the
period from Janurary 1 to December 31, 2003.
[2] I shall attempt to
summarize the most important elements. I will
start by telling you that I decided to allow the appeal, mainly for the reasons
highlighted by Mr. Poulin, counsel for the Appellant. I shall give you the
most important elements that I retained, although I am in complete agreement
with his arguments.
[3] We are dealing with
a very particular situation in which the Appellant, Mr. Doyon, has been a
consultant for the client, Fonderie, for several years. His testimony indicates
that his business relationship was longstanding. A business relationship which
he had decided to establish with Fonderie in the capacity of consultant.
[4] The situation gets
complicated when we get into decisions made within Fonderie due to the fact
that Mr. Doyon is also a 40% shareholder, thus an important shareholder.
Moreover, he is also one of the two directors of this company.
[5] It is acknowledged
that Mr. Doyon was a consultant in business turnaround and development for the
company and that his relations with Fonderie are longstanding and that the
agreement dates from the year 2000 – which is uncontested, in this respect,
according to his testimony – when it was agreed that he would bill on an hourly
basis, but within certain parameters, i.e. up to a maximum of $8,000 per
month and $90,000 yearly. The billing included taxes and was done through
his own company.
[6] The evidence
established that he had a free work schedule. That he could work at the client’s
establishment, i.e. at Fonderie, at home or in the field. And that he also had
other clients for whom he could work on site or at home.
[7] What is striking is
that the relationship is acknowledged by the Respondent up until 2002, and that
a sudden change is observed in 2003.
[8] Mr. Doyon has
testified that he had had use of a car up until that point. That his clients
reimbursed his expenses, whether it be Fonderie or his other clients. But
specifically with regard to Fonderie, he had use of a car and a corporate
credit card. This could be for a number of reasons, and, in my opinion, the
issuance of a T-4 concerning a benefit in 2003 is not a determining factor with
regard to his status. In other words, it cannot be deduced, simply from that,
that he is automatically an employee.
[9] Moreover, it is
known that Mr. Doyon receives no benefits, unlike the other employees, at least
the office employees, concerning which documentation has been presented as
evidence.
[10] In 2003, particular
circumstances arise, to wit, the illness and departure of the production
manager. Mr. Doyon says (and I have no reason to doubt his testimony) that he
accepted to devote more time to his business – without being compensated for
this work in any special or specific way – which he indeed indicated as being
solely that of planning and production. The Appellant says that he acted as
shareholder, since the company was in a difficult financial situation. He did
it as a shareholder, but also as a consultant, since he did not want to lose
this client. As he says himself, he also did it for reasons of credibility,
vis-à-vis his other clients of course.
[11] I would like to
refer to a certain number of decisions to which I have previously referred
regarding certain elements that appear to be important. For example, in Pellerin
v. Canada, [2005] T.C.J. No. 281 (QL), which presented particular
circumstances, I said at paragraph 28, page 6 after having cited
articles 2085, 2098 and 2099 of the Civil Code of Québec:
¶ 28 As
may be seen, the decisive element of a contract of employment or of service is
a relationship of subordination, which is non-existent in the case of a
contract of enterprise or for services. The Federal Court of Appeal recalled in
Gallant v. M.N.R., F.C.A., No. A-1421-84, May 22, 1986,
[1986] F.C.J. No. 330 (Q.L.), that "the distinguishing feature of a
contract of service is not the control actually exercised by the employer over
his employee but the power the employer has to control the way the employee
performs his duties."
[12] What follows also
seems important, since the business relationship between Mr. Doyon and Fonderie
has existed for several years. At paragraph 29, I said:
¶ 29 The importance that
should be attached to the parties' intentions must also be emphasized. In Wolf v.
Canada, [2002] 4 F.C. 396, [2002] F.C.J. No. 375 (Q.L.),
Décary J.A. wrote as follows at paragraphs 119 and 120 of his
decision:
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[119]
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Taxpayers may arrange their affairs in such a lawful way
as they wish. No one has suggested that Mr. Wolf or Canadair or
Kirk-Mayer are not what they say they are or have arranged their affairs in
such a way as to deceive the taxing authorities or anybody
else. When a contract is genuinely entered into as a contract for
services and is performed as such, the common intention of the parties is
clear and that should be the end of the search. …
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[120]
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¶ 120
In our day and age, when a worker decides to keep his freedom to come in and
out of a contract almost at will, when the hiring person wants to have no
liability towards a worker other than the price of work and when the terms of
the contract and its performance reflect those intentions, the contract
should generally be characterised as a contract for services. If specific
factors have to be identified, I would name lack of job security, disregard
for employee-type benefits, freedom of choice and mobility concerns.
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[13] I continue at
paragraph 30 of the same decision in, Pellerin:
¶ 30 However, in D & J
Driveway Inc. v. Canada, F.C.A., No. A-512-02, November 27,
2003, 322 N.R. 381, [2003] F.C.J. No. 1784 (Q.L.),
Létourneau J.A. of the Federal Court of Appeal held that it is not because
a work provider can monitor the result of the work that there necessarily
exists an employer-employee relationship. On this point, he wrote as follows at
paragraph 9 of the judgment:
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9
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contract of employment requires the existence of a
relationship of subordination between the payer and the employees. The
concept of control is the key test used in measuring the extent of the
relationship. However, as our brother Décary J.A. said in Charbonneau v.
Canada (Minister of National Revenue - M.N.R.), [1996] F.C.J.
No. 1337, [1996] 207 N.R. 299,
followed in Jaillet v. Canada (Minister of National Revenue - M.N.R.),
2002 FCA
394, control of the result and control of the worker should not be
confused. At paragraph 10 of the decision, he wrote:
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It is indeed rare for a
person to give out work and not to ensure that the work is performed in
accordance with his or her requirements and at the locations agreed upon.
Monitoring the result must not be confused with controlling the worker.
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[14] I find that in this
case, there is no serious indication that there was a control on the
worker. That there was a control on the result in the case of Mr. Doyon, who
has been consultant for the company for years, I have no doubts. This control
was exercised by the board of directors on which he sits.
[15] As far as I am
concerned, it all stops there, and this most important criterion is absent, in
my opinion. Mr. Doyon was not controlled in the performance of his duties,
which was the mandate that he had given himself for the company.
[16] The Respondent
acknowledges that for the previous years, it was a relationship based on a
contract of enterprise or for services. I see no significant difference arising
in 2003, whereby the relationship is alleged to have been modified to become
one of employer-employee.
[17] That is, broadly
speaking, the way I see things. One could cite other decisions as did
Mr. Poulin, in Vulcain Alarme Inc. v. Minister of National Revenue,
[2000] 1 C.T.C. 48, among others. I believe, however that I’ve given you
my essential thoughts. In my opinion, the situation is straightforward.
[18] The appeal under
subsection 103(1) of the Employment Insurance Act is allowed and the
decision of December 10, 2004 by the Minister of National Revenue is vacated.
Signed at Ottawa,
Canada, this 4th day of November 2005.
“P. R. Dussault”
on this 16th day
of August 2006.
Gibson Boyd, Translator
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