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Citation: 2004TCC822
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Date: 20041221
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Docket: 2003-3244(EI)
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BETWEEN:
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JEAN-FRANÇOIS GOULET,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent,
and
LYNE DAUPHINAIS,
Intervener.
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[OFFICIAL ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
Deputy Judge Savoie
[1] This appeal was heard at Montreal,
Quebec on November 22, 2004.
[2] This is an appeal regarding the
insurability of the employment of Mélanie Demers for
the period from January 1 to March 31, 2001; of
Sandrine Abaziou for the period from March 28 to September
30, 2001; of Muriel Dejean for the period from January 1,
2001, to November 25, 2002; and of Lyne Dauphinais for the
period from September 1, 2001, to November 25, 2002 (the
Workers), while in the service of the Appellant, within the
meaning of the Employment Insurance Act ( the
"Act").
[3] On June 17, 2003, the Minister of
National Revenue (the "Minister") informed the Appellant of his
decision whereby the Workers held insurable employment given that
an employer-employee relationship existed between the Appellant
and the Workers.
[4] In rendering his decision, the
Minister relied on the following
assumptions of fact contained in paragraphs 14 and 15 of the
Reply to the Notice of Appeal, which were admitted or denied by
the Appellant, or concerning which the Appellant had no
knowledge:
14.a) the Appellant is a lawyer;
(admitted)
b) the
Appellant ran a law firm on Cartier Boulevard at Ville de Laval;
(admitted)
c) the
Appellant did not work with representatives of the Respondent
before the hearing; (denied as written)
d) the Workers
were hired by the Appellant as secretaries; (admitted)
e) the
Workers' duties consisted of managing communications, tracking
files, preparing legal documents, and providing administrative
services; (denied as written)
f)
the Workers worked in the offices of the Appellant; (denied as
written)
g)
the Workers had to follow the work schedule set by the Appellant;
(denied)
h)
the Appellant assigned tasks to be completed to the Workers;
(admitted)
i)
the Appellant assigned priority tasks and deadlines to the
Workers; (admitted)
j)
the Workers had to adhere to the standards set by the Appellant
for the quality, volume, and time for completion of the work;
(denied as written)
k)
the Workers had to submit written and oral reports regularly to
the Appellant; (no knowledge)
l)
the Workers, except for Sandrine Abaziou, had an hourly wage of
$12 to $15 per hour; (no knowledge)
m)
the Worker Sandrine Abaziou was remunerated $100 per day for a
work schedule of 8:30 AM to 5:00 PM; partial days were
remunerated on a pro rata basis; (denied as written)
n)
the Appellant asked the Workers to submit bills for their
remuneration; (admitted)
o)
the Appellant provided the Workers with premises, equipment, and
furniture; (denied)
p)
the clients were the clients of the Appellant; (denied as
written)
q)
the Appellant billed his clients and not the Workers;
(admitted)
r)
the Workers were not at risk for financial loss in their duties
for the Appellant; (no knowledge)
s)
the Workers' duties were fully integrated into the Appellant's
operations. (admitted)
15. The Worker Muriel
Dejean and the Appellant are related persons within the meaning
of the Income Tax Act because:
a) the
Appellant is the spouse of Muriel Dejean. (admitted)
[5] The Workers Lyne Dauphinais,
Sandrine Abaziou, and Mélanie Demers testified, as well as
the Appellant. The Worker Muriel Dejean did not appear at the
hearing.
[6] All three Workers completed tasks
for the Appellant, but their working conditions were not all the
same. In addition, after the parties submitted their evidence,
the Appellant, in his oral submissions, conceded that he accepted
the Minister's decision whereby the employment of
Mélanie Demers, one of the three Workers, was
insurable during the period in question, from January 1 to March
31, 2001.
Lyne Dauphinais
[7] The Worker Lyne Dauphinais denied
that she looked after communications with clients, that she took
messages, and that she managed the Appellant's schedule. In her
testimony at the hearing, she stated that she carried out her
work from home, though she did occasionally work at the
Appellant's office. She estimated that she performed 70% of her
duties from home. When the Appellant needed her services, he
called her at home to assign tasks that she was free to accept or
refuse. To carry out her duties, she used her own equipment in
her office at home: her computer, her fax machine, her telephone
and her legal-size paper, all at her own expense. When she worked
at the Appellant's office, which the Appellant shared with other
lawyers, she used an office and equipment provided by the
Appellant. She occasionally wrote letters and performed other
secretarial tasks, such as an appearance in a new case and
communicating with the clerk in an urgent case.
[8] The evidence revealed that the
Worker had clients other than the Appellant to whom she provided
similar services. When her work was done, she billed the
Appellant.
[9] The Worker stated that the
Appellant sometimes paid her less than the amount on the bill, at
a rate that he decided on, saying that the work completed was not
worth the billed amount. She billed the Appellant at an hourly
rate of $15. She specified that she was paid by the hour and
according to the task assigned, provided that it was completed to
the Appellant's satisfaction. The Appellant began telling her
that the work completed was not worth the number of hours billed,
so she accepted the amount set by the Appellant. It even occurred
that she did not receive any payment for her work, because the
Appellant redid the work himself. She added that when she had
worked full-time, she had always been paid her salary
unconditionally.
[10] The Appellant never paid the Worker for
the expenses involved in her work, nor did he give her any
compensation for travelling. It was proven at the hearing that
the Appellant never set a fixed schedule for the Worker or
supervised her or her work.
[11] The Worker confirmed that she had never
told the insurability officer that she had a fixed work schedule.
She added that she had never had to redo her work because she had
been a legal secretary since 1989 and knew her field very well.
The Worker has two children: a five-year-old who stays at home
with her, and a six-year-old who goes to
school.
Sandrine Abaziou
[12] This Worker carried out her duties for
the Appellant from her office at home, where her computer was set
up. She confirmed that she made her own work schedule. She
sometimes went to the Appellant's office to get work. She gave
the Appellant bills for work completed. Sometimes the Appellant
paid her less than the billed amount, because he thought that the
bills were too high. She confirmed that she was self-employed by
choice. She is a Commerce student and carried out some duties for
the Appellant from home (about 60%) and some at the Appellant's
office (about 40%), where equipment was provided and expenses
were paid by the Appellant. Occasionally, at the request of the
Appellant, she had to make corrections to her work.
[13] The Worker worked for the Appellant for
a period of three months, mostly from her home. She confirmed
that she could accept or refuse offers for work. She gave the
Appellant bills for work completed. She had set her rate at $8.50
per hour, but she elaborated that she was also paid per task. The
Appellant provided some models to follow in the preparation of
documents and she also purchased, at her own expense, a forms
manual for work purposes.
[14] To assign tasks to the Worker, the
Appellant called her and she came to his office, where he set the
deadlines. The Worker never billed the Appellant for expenses
arising from use of her computer. The evidence shows that the
Worker could have offered her services to other clients. However,
she denied that her work schedule was set by the Appellant. She
was paid at a rate of $12 or $12.50 per hour, or $100 per day;
she usually worked from 8:30 AM to 5:00 PM. Partial days were
remunerated on a pro rata basis.
Muriel Dejean
[15] This Worker did not attend the hearing.
She is the ex-spouse of the Appellant. At the hearing, the
Appellant testified that his ex-spouse, a mother of two children,
worked during the period in question, when she could, if not when
she wanted to, because she was never in the office. "She was
completely free," he said. According to his testimony, he had no
control over her. He added that she did not have any secretarial
training and that he would not have given her the same working
conditions if she had not been his spouse.
[16] The Appellant admitted that the Workers
were hired as secretaries, except for Muriel Dejean, his
ex-spouse. With regard to the employment of the latter, he wanted
to elaborate that he had hired her to help out a little, among
other things, to run errands. He added that if she had not been
his spouse, she would never have gotten the same working
conditions. In addition, according to the Appellant, the Worker
was never in the office, being completely free, and he did not
exert any control over her; she was a mother of two children and
she worked when she could.
[17] In his appeals reports (exhibits I-2 to
I-5), the appeals officer reproduced the information that he had
received from the Workers. For the most part, the information
contained in the reports is the same, with a few exceptions. For
example, in Lyne Dauphinais's report, the appeals officer
specified that Ms. Dauphinais worked 15 to 20 hours per week. In
addition, he specified that Sandrine Abaziou was also responsible
for doing research, and that she used her own personal computer
for that purpose. It is also noted that the Appellant did not
provide any training for Muriel Dejean.
[18] The Counsel for the Minister maintains
that the version of the facts as given by the Workers has changed
since the decision was made on the insurability of their
employment. The Workers themselves indicated that the report of
their statements to the investigators is inaccurate. According to
them, the investigators did not express their questions clearly
and did not report their statements exactly.
[19] It is relevant to consider why the
duties of the Workers were all described in the same way by the
appeals officer, painted with the same brush, without nuance or
distinction, while, as emphasized by the Appellant, "the
subcontractors all worked in different ways."
[20] As has been noted, the evidence
submitted at the hearing proved the falsity of the Minister's
assumptions as stated in paragraphs e), f), g), j), k), l), m),
o), and r).
[21] It has been shown that the
circumstances surrounding the hiring of the Workers confirm an
agreement between the Appellant and each of the Workers under
which the Workers did not become employees as defined in the
Act, which recognizes a relationship of subordination
between employer and employee.
[22] Furthermore, the facts submitted at the
hearing and analyzed using the tests set out in Wiebe Door
Services Ltd. v. M.R.N., [1986] 3 F.C. 553, lead to the
conclusion that there existed between the parties a degree of
autonomy that characterizes a contract for services.
[23] In Charbonneau v.
Canada(Minister of National Revenue - M.N.R.)
(1996), 207 N.R. 299, the Federal Court of Appeal ruled that the
tests set out in Wiebe Door, supra, be used only as
points of reference. It should also be noted that the facts, in
this case, apply the principle established in Vulcain Alarme
Inc. v. The Minister of National Revenue
(A-376-98, F.C.A.), according to which, in terms of
control, control over the result or quality of the work should
not be confused with control over its performance by the Worker
responsible for doing it.
[24] Abundant and preponderant evidence has
shown that the Workers had ownership of the tools that they used
in carrying out the majority of their duties for the Appellant,
and that they used their own offices in their personal residences
as well as the necessary equipment, at their own expense. The
duties that they performed for the Appellant from his office
were, according to the evidence, minimal.
[25] The Workers stated that the Appellant
often paid them less than their billed amount, based on his
appraisal of their work. This situation does not arise when the
parties have an employee-employer relationship where the employee
receives his/her salary, as agreed on, even if the employer is
not completely satisfied. In addition, in the present case, the
Workers sometimes found themselves in a situation where they had
a risk of loss.
[26] Analysis of the evidence under the
integration test, envisioned from the point of view of the
Workers, could tilt the balance one way or the other. It is true
that the Workers worked for the Appellant's business, but under
an agreement that considered them to be self-employed. The
Appellant and the Workers all described the relationship as such,
and the facts support the conclusion in this case.
[27] The Appellant maintains that the
employment of the Worker Muriel Dejean, his ex-spouse, is not
insurable. He is relying on the letter that he received from
Francine Saucier, Coverage Officer for the Canada Customs and
Revenue Agency, on December 2, 2002 (exhibit A-2), informing him
that Muriel Dejean's employment was not insurable "given that
there is a non-arm's-length relationship between yourself and
Muriel Dejean," even though the appeals officer states the
opposite in his report.
[28] Regardless, in the cases of Muriel
Dejean, Sandrine Abaziou, and Lyne Dauphinais, the Appellant
succeeded in proving that the Minister's assumptions are
false.
[29] Furthermore, the evidence submitted by
the Appellant concerning the working conditions of his ex-spouse
was not disputed at the hearing. This evidence leads to the
conclusion that substantially similar working conditions would
not have existed between the Appellant and the Worker if the
parties had been dealing with each other at arm's length.
[30] Following analysis, this Court must
conclude the following:
1.
The Worker Mélanie Demers, for the period from January 1
to March 31, 2001, held insurable employment under the
Act. Therefore the decision made by the Minister with
regard to this Worker, given the Appellant's acquiescence at the
hearing, is confirmed and the appeal is dismissed in this
respect.
2.
The Workers Lyne Dauphinais, for the period from September 1,
2001, to November 25, 2002, and Sandrine Abaziou, for the period
from March 28 to September 30, 2001, did not hold insurable
employment under the Act. Therefore the Minister's
decision with regard to these two Workers is vacated and the
appeal is allowed in this respect.
3. The Worker Muriel
Dejean, for the period from January 1, 2001, to November 25,
2002, did not hold insurable employment. Therefore the decision
made by the Minister is vacated and the appeal is allowed in this
respect.
Signed at Grand-Barachois, New Brunswick, this 21st
day of December 2004.
Savoie D.J.
Translation certified true
on this 29th day of March 2005.
Colette Dupuis-Beaulne, Translator
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