[OFFICIAL ENGLISH TRANSLATION]
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Citation: 2004TCC601
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Date: 20040913
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Docket: 2004‑782(EI)
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BETWEEN:
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RÉMY DUBÉ,
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Appellant,
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And
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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REASONS FOR JUDGMENT
Tardif J.
[1] This
is an appeal from a determination dated January 27, 2004, covering the
period from October 1, 2001, to April 30, 2003. The Respondent
determined that the work performed by the Appellant did not constitute work
done under a genuine contract of service.
[2] To
explain and justify the merits of the determination, the Respondent made the
following assumptions of fact:
[TRANSLATION]
(a) 9109‑0522
Québec Inc. was incorporated on October 11, 2001;
(b) Simon Blais
and Alexandre Harvey are the Payer's directors;
(c) the Payer
wished to acquire income properties in whole or in part;
(d) prior to June
2001, the Appellant was a real estate agent specializing in commercial
properties;
(e) during the
period in issue, the Appellant received a mandate from the Payer to find
properties to acquire;
(f) he also
cooperated with the Payer's shareholders in the activities, studies and
analyses conducted in the context of the project to purchase a shopping centre
in Chicoutimi;
(g) he was to
receive one percent of the price of the properties purchased by the Payer;
(h) the Payer did
not provide an office to the Appellant, who worked from his residence or his
hotel room;
(i) the
Appellant had no work schedule to meet; he determined his own hours of work;
(j) the
Appellant resides in Sainte‑Luce;
(k) the Appellant
made various trips, to Chicoutimi, Montréal and Québec, as part of his mandate;
(l) when the
Appellant was travelling, Mr. Harvey reimbursed him for his accommodation
expenses and meals;
(m) from
October 1, 2001, to the end of May 2002, the Appellant travelled the
equivalent of three months;
(n) from June
2002 to January 2003, the Appellant spent two to three weeks in Montréal and
the equivalent of one week a month in Chicoutimi;
(o) during the
period in issue, the Payer purchased no properties;
(p) during the
period in issue, the Payer paid the Appellant no remuneration;
(q) the Appellant
subsequently filed a complaint for unpaid wages against the Payer with the
Commission des normes du travail.
[3] The
Appellant admitted most of the facts assumed to be true, in particular
paragraphs (a), (b), (c), (e), (f), (j), (k), (o), (p) and (q) and denied
subparagraphs (d), (g), (h), (l), (m) and (n). The Appellant explained
that he had not renewed his licence enabling him to work as a real estate
agent. At one point, he met Alexandre Harvey and Simon Blais, who
wanted to start up a real estate business and retained the Appellant's services
as an expert or as a person with considerable real estate experience.
[4] The
work performed is not in issue. The Appellant in fact worked very actively for
Alexandre Harvey and Simon Blais and the corporation they controlled
in order to carry out a real estate project.
[5] The
work he performed in that connection consisted in meeting all the potential
stakeholders in the implementation of an eventual project and discussing the
matter with them. In particular, these included salespersons, financiers,
contractors and municipalities. The Appellant identified owner-vendors and
organized various meetings for the purpose of enabling the corporation directed
by Messrs. Harvey and Blais subsequently to acquire properties.
[6] All
his travelling expenses were reimbursed. The trips were generally authorized by
Alexandre Harvey and Simon Blais.
[7] Despite
all his efforts, none of the projects on which the Appellant worked was carried
out, for various reasons for which he was not considered responsible.
[8] The
issue essentially concerns the nature of the contract between the Appellant and
9109‑0522 Québec Inc., which was directed and controlled at the time by
Messrs. Harvey and Blais.
[9] The
Appellant contended that the contract was a contract of service, even though he
had never received any remuneration, which he claims was established at the
start of the period at $700 net per week.
[10] The Respondent claims that there was no such contract and that the
only agreement that existed essentially provided for the payment of $700 a
week, plus a percentage, one percent, of the acquisition price of a
property, solely in the event that the project was started.
[11] The Appellant claims that the amount of $700 net was agreed upon at
the outset. According to Alexandre Harvey, that was not mentioned until
the stage of the last file concerning the acquisition of the Place du Royaume
Shopping Centre in Chicoutimi.
[12] Alexandre Harvey, the Respondent's only witness, whose version of
the facts clearly constituted the basis of the determination under appeal,
admitted the following facts:
·
that there was an oral agreement;
·
that it was known that the Appellant did not
hold a real estate agent's licence;
·
that the Appellant's expertise and competence
were recognized;
·
that the Appellant performed work;
·
that the expenses incurred were authorized and
reimbursed;
·
that the desire had
been expressed to secure exclusivity and confidentiality with respect to the
Appellant's work, which would be guaranteed by a contractual agreement proposed
in August 2002 (Exhibit I‑1).
[13] Alexandre Harvey testified in a halting and somewhat confused
manner on certain facts, in particular the following:
·
the start and end
dates of the period in which the $700 a week was to be paid;
·
the original reason
for the exclusivity requirement regarding the Appellant's work.
[14] The burden of proof is on the Appellant. To discharge it, he stated a
number of facts which the Respondent's witness, Alexandre Harvey,
confirmed as true. I refer in particular to the $700 net amount of remuneration
per week and the fact that the work was clearly done.
[15] The only points at issue are the moment when the amount was payable
and whether or not there was a power of control. At the outset, I found it hard
to understand, indeed even farfetched, that the Appellant could have been so
tolerant and patient before taking steps to demand and obtain what was owed
him.
[16] Imprudent and naive, the Appellant undoubtedly assumed that
Messrs. Harvey and Blais could rely on very significant financial support
in the order of several millions of dollars from the Harvey family, which was
active in the real estate market.
[17] Despite Alexandre Harvey's youth (the evidence did not reveal
Mr. Blais' age), they became interested in projects of a considerable size
relative to their lack of experience, status and young age (at least as regards
Alexandre Harvey). The context was a very particular one, which could
explain and justify the Appellant's tolerance and patience with regard to
payment of the remuneration agreed upon.
[18] Since he was going from one project to another and, most of the time,
the business promised substantial benefits for him, it may have been
appropriate – and this is at least an understandable explanation – for him to
show so much patience; the apparent solvency of Messrs. Harvey and Blais
was also an explanation; the two moreover go together.
[19] In August 2002, roughly in the middle of the period in issue, the
corporation controlled and directed by Alexandre Harvey and
Simon Blais may have feared that it would have to share the Appellant's
services with someone else. To avoid competition, they decided to propose a
written agreement, which the Appellant never agreed to sign.
[20] That agreement provided as follows (Exhibit I‑1):
[TRANSLATION]
SERVICE, EXCLUSIVITY AND CONFIDENTIALITY AGREEMENT
Between: Rémy
Dubé, Real Estate Coordinator
And: 9109‑0522
Québec Inc., duly represented by Alexandre Harvey, President, and
Simon Blais, Vice‑President;
WHEREAS Rémy Dubé
is coordinator of all operations for 9109‑0522 Québec Inc.;
WHEREAS Rémy Dubé
has worked together with the shareholders of 9109‑0522 Québec Inc. on the
conduct of activities, studies and analyses in the matter of the Place du
Royaume project in Chicoutimi;
WHEREAS Rémy Dubé
has entered into the strictest confidentiality and exclusivity with 9109‑0522
Québec Inc.;
WHEREAS Rémy Dubé
has undertaken to work exclusively with the shareholders of 9109‑0522
Québec Inc. and always to further the corporation's interests in the matter of
the Place du Royaume;
WHEREAS Rémy Dubé
undertakes to disclose no information directly or indirectly related to the
Place du Royaume acquisition project to anyone or any company whatever without
the written authorization duly signed by the two shareholders of 9109‑0522
Québec Inc., Alexandre Harvey and Simon Blais;
THE PARTIES HEREBY AGREE:
THAT all the above
recitals shall form an integral part of the agreement;
THAT Rémy Dubé
has been fully reimbursed for his expenses and costs in all matters in which he
has worked with 9109‑0522 Québec Inc. prior to the signing of this
contract; all expenses and costs related to Rémy Dubé's work following the
signing of this agreement shall be substantiated and approved by 9109‑0522
Québec Inc.; he shall be reimbursed for all approved expenses and costs by 9109‑0522
Québec Inc. for two years following the signing of the said agreement;
THAT, in the event
of, and conditional on, the conduct of a transaction (sale in whole or in part)
between 9109‑0522 Québec Inc. and the owners of Place du Royaume, Rémy
Dubé may receive, in respect of salary for all work performed by him,
remuneration calculated as follows:
40 weeks
at CDN $700 net per week;
A salary of
CDN $960,000 shall be paid to him upon signing of the deed of sale between 9109‑0522
Québec Inc. and the owners of Place du Royaume;
A gross
salary of CDN $100,000 for the first two years following the signing of the
deed of sale between 9109‑0522 Québec Inc. and the owners of Place du
Royaume.
[. . .]
This 25th day of August
2003
Rémy Dubé (no signature)
AND
FOR 9109‑0522
Québec Inc.
Alexandre Harvey,
President (signature)
Simon Blais, Vice‑President
(signature)
[21] Not all the circumstances in which the written proposal was prepared
were established, but Alexandre Harvey and Simon Blais believed that
the Appellant would sell his services to other promoters. Were they not
themselves responsible for that possibility if they did not pay the Appellant?
All that is clear is that the Appellant did not sign, even though its content
was consistent with what he himself mentioned.
[22] I noted that the copy in the Respondent's possession was missing one
section, the copy filed being that of the Appellant.
[23] In the complete copy, express reference is made to the net amount of
$700. As to the period of time elapsed from the moment the oral agreement began
to apply, the proposed agreement provides for a kind of ambiguous release. The
draft agreement prepared by Alexandre Harvey and Simon Blais and
presented to the Appellant emphasizes the following elements:
·
an amount of salary
of $700 net;
·
an exclusive service
and confidentiality agreement;
·
the deletion of a
part of the text from the version submitted to the Respondent by
Messrs. Harvey and Blais;
·
the Appellant's
refusal to sign;
·
the moment when the draft
agreement was presented to the Appellant: August 2002;
·
a quite peculiar lack
of transparency;
·
the existence of a
genuine contractual relationship between the corporation and the Appellant.
[24] Unfortunately, since no definite conclusions may be drawn from these
elements, the Court must rely on the evidence as a whole, consisting of the
testimony of the Appellant and Alexandre Harvey. Mr. Harvey's
testimony was scarcely convincing. First, his testimony, which was just as
interested as that of the Appellant, did not convincingly demonstrate his basic
claim, which is that the Appellant had never been their employee.
[25] In addition to the admissions referred to above in paragraph 12,
Mr. Harvey stated that the company that he had incorporated with Simon Blais
had sought the Appellant's assistance, advice, and ongoing and continuing
participation to enable them to carry out a real estate project, knowing full
well that the Appellant had no licence to act as a real estate agent in a
context in which it is normally required that there be a mandate, generally a
written mandate, and where the rule regarding payment is generally that a pre‑established
percentage be paid, all related expenses and costs being the mandatary's
responsibility.
[26] According to Mr. Harvey, the Appellant was there to
"support" them, to tell and show them how to do things. The witness
admitted that that "had gone on long enough". The Appellant's
schedule was flexible; he had considerable latitude and freedom of action.
Whenever there were new developments, the Appellant informed
Messrs. Harvey and Blais of them. Mr. Harvey admitted that the
Appellant had made numerous efforts, had acted in their interests and had had
to take many pre-authorized trips for which expenses had been reimbursed.
[27] The fact that the corporation, through Messrs. Harvey and Blais,
was unable to tell the Appellant what he had to do, when to do it and how to do
it has nothing to do with the power of intervention and control. The Appellant
knew his job, knew what to do and how and when to do it; the corporation always
had the right and power to intervene and could terminate the oral agreement at
any time by, for example, refusing to reimburse the Appellant for the expenses
he had incurred.
[28] Alexandre Harvey stated that his family was engaged in the real
estate field. Although he was young and inexperienced, that was a field in
which he was not a complete neophyte. He had some ideas and knowledge and was
able to assess the quality of the Appellant's work.
[29] Furthermore, didn't the corporation of which he owned half the capital
stock want to define, settle and clarify the terms of the hitherto oral
agreement? Although the Appellant refused to sign, the evidence shows that he
continued to do what he had previously done before the proposal in writing.
[30] Although no certain conclusion may be drawn from the available
evidence, the weight of that evidence tends to demonstrate the merits of the
appeal, particularly since, in case of doubt, the Appellant party should be
favoured.
[31] For all these reasons, I allow the appeal and determine that the work
performed by the Appellant for 9109‑0522 Québec Inc. during the
period from October 1, 2001, to April 30, 2003, met all the
requirements for it to be determined that it was work performed under a genuine
contract of service.
Signed at Ottawa, Canada, this 13th day of September 2004.
Tardif J.
Certified true translation
Colette Dupuis-Beaulne
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