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Citation: 2003TCC776
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Date: 20031112
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Docket: 2002-4802(EI)
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BETWEEN:
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LABORATOIRE G.M.F. (1983) INC.,
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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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RENÉ COMEAU,
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Intervener.
[OFFICIAL
ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
Tardif J.
[1] This is an appeal from a determination by the
Respondent, dated October 4, 2002, that the work performed by the Intervener,
René Comeau, for and on behalf of Laboratoire G.M.F. (1983) Inc., during the
period from January 1, 2001 to February 1, 2002, was insurable employment.
[2] The Appellant argued, first, that Mr. Comeau
lacked the legal capacity to initiate any proceeding in relation to the
insurability of the work performed since he did not have possession of his
property as a result of the assignment of that property.
[3] The Intervener, in the Appellant's submission,
no longer had legal capacity to bring any proceeding whatsoever that would
affect his estate. Instead, still according to the Appellant, he should have had
the trustee intervene or sought the trustee's permission to file a claim in
relation to the insurability of the work performed.
[4] I will begin by disposing of this preliminary
issue:
·
Subsection 71(2) of the
Bankruptcy and Insolvency Act ("B.I.A.") provides:
On a receiving order being made or an
assignment being filed with an official receiver, a bankrupt ceases to have any
capacity to dispose of or otherwise deal with his property, which shall,
subject to this Act and to the rights of secured creditors, forthwith pass to
and vest in the trustee named in the receiving order or assignment, and in any
case of change of trustee the property shall pass from trustee to trustee
without any conveyance, assignment or transfer.
·
Of course, a bankrupt
loses possession of his property. However, he does not become totally bereft.
He retains his personal rights and the capacity to bring proceedings to retain
or assert his personal rights. Furthermore, the bankrupt retains the possession
of the property that is not vested in the trustee. Under subsection 67(1) of
the B.I.A., the property vested in the trustee comprises:
. . .
(c) all property
wherever situated of the bankrupt at the date of his bankruptcy or that may be
acquired by or devolve on him before his discharge, and
(d) such powers in or
over or in respect of the property as might have been exercised by the bankrupt
for his own benefit.
·
The property exempt
from seizure in Quebec is listed in the Code of Civil
Procedure, primarily in article 553 of that Code.
. . .
7. Benefits payable
under a supplemental pension plan to which an employer contributes on behalf of
his employees, other amounts declared unseizable by an Act governing such plans
and contributions paid or to be paid into such plans;
. . .
11. All gross salaries
and wages to the extent of 70 % of the excess over the following unseizable
portion:
(a) $180 per week,
plus $30 per week for each dependant in excess of two, if the debtor is
supporting his or her spouse, has a dependent child, or is the main support of
a relative; or
(b) $120 per week in
all other cases.
·
Employment insurance
benefits are included in "All gross salaries and wages" referred to
in article 553(11) of the Code of Civil Procedure. Also, under the B.I.A.,
these salaries and wages are not automatically included in the estate
attributed to the bankrupt's creditors. Subsection 68(3) provides:
The trustee shall
(a)
having regard to the
applicable standards established under subsection (1), and to the personal and
family situation of the bankrupt, fix the amount that the bankrupt is required
to pay to the estate of the bankrupt; (b) inform the official receiver in writing
of the amount fixed under paragraph (a); and (c) take reasonable measures to
ensure that the bankrupt complies with the requirement to pay.
·
Finally, it is
important, in my view, to recall the content of subsection 42(1) of the Employment
Insurance Act, which reads as follows:
Non-assignment of Benefits and Liability to
Return Benefits and Pay Penalties
Benefits not assignable
42. (1) Subject to
subsections (2) and (3), benefits are not capable of being assigned, charged,
attached, anticipated or given as security and any transaction appearing to do
so is void.
[5] In the case at bar, not only was the bankrupt
fully entitled to intervene in this appeal, he was also fully justified in
initiating a proceeding to determine the insurability of the work he had
performed. This was a personal right and had nothing to do with the bankruptcy.
[6] As to Mr. Comeau's legal capacity, both in
terms of the proceedings initiated to determine the insurability of the work
performed and in terms of his intervention in this case, I find that Mr. Comeau
was completely justified in taking steps on his own to obtain a determination
as to the insurability of his work; he could also intervene personally in this
appeal.
[7] Did the work performed by the Intervener Mr. Comeau
during the period from January 1, 2001 to February 1, 2002 constitute insurable
employment?
[8] The Appellant argued that the work was not
insurable, since it did not meet the tests laid down by the case law. In its
view, there was no employer-employee relationship since it had no power of
control over the deeds and actions of Mr. Comeau, whom it defined as a
self-employed worker operating his own business.
[9] The Respondent, for his part, argued that
there was indeed an employer-employee relationship in that the major tests —
namely, control, chance of profit, risk of loss, ownership of the tools and
integration — required such a finding.
[10] The evidence disclosed that Mr. Comeau and the
Appellant went through a period of considerable strain as a result of the break-up
of the economic relationship that had existed between them for several years.
[11] The Intervener Mr. Comeau sold the products
marketed by the Appellant beginning in 1997. At some point, it seems, the Appellant
initiated certain changes in the way in which a salesperson's work was to be
performed, for the purpose of making the salaried salesperson a self-employed
worker.
[12] The Appellant argued that the Intervener
himself decided to cut any link with the sales operations of the products it
distributed, during most of the period in issue.
[13] It argued as well that the Intervener was an
independent salesperson for most of the period in issue, while admitting that
the Intervener received a salary for about three weeks, toward the end of that
year, in the context of a telemarketing position created entirely for him. The
position was abolished after three weeks, it said, as the Intervener refused to
work for an hourly wage of 14.
[14] During most of the time covered by the period
in issue, the Intervener was collecting health insurance benefits which he
remitted to the Appellant, in return for which it paid him an amount comparable
to what he received as commission prior to the sick leave.
[15] This period was strewn with problems and difficulties.
The parties accused each other of various unsubstantiated grievances depending
on the particular version.
[16] Mr. Cléroux, a representative of the Appellant,
stressed the fact that in his assessment, Mr. Comeau operated his own business
during the period in issue, which ended, he said, at the request of the Intervener
at the very beginning of the period in issue as a result of a work stoppage
dictated by illness.
[17] Some time before the beginning of the period
in issue, the Appellant stood surety for the Intervener Mr. Comeau in the
amount of $23,088. For medical reasons, the Intervener ceased his activities as
a salesperson in late January or early February 2001.
[18] Why did the Appellant agree to act as a
guarantor for the Intervener shortly before what it characterized as a
definitive break?
[19] Why did the Appellant agree to substantially
increase the health insurance benefits the Intervener was receiving after the
break?
[20] Why did the Appellant agree to create a new
position within the company in order to assist someone who had cut off all
relations with it and who had moreover acted, in its own assessment, improperly
and unreasonably?
[21] The Appellant's
response is [TRANSLATION]"For humanitarian reasons". This
explanation is quite unconvincing, especially since these were not isolated,
spontaneous acts. They were decisions make by businessmen in full control of
the situation.
[22] The Appellant was insistent that its conduct was
motivated and guided by generous humanitarian considerations. These are fairly
audacious claims in view of the number of written documents and especially the
unambiguous content regarding the nature of the relationship that existed.
[23] The managers of the Appellant were experienced
businessmen whose aim was and should have been to achieve maximum
profitability. They were accommodating because they wanted to keep the Intervener
– no doubt an asset to the business – in their employ.
[24] The Appellant would like to keep from the
record the content of a number of written documents, the thrust of which is
decisive as to the insurability of the work performed by Mr. Comeau. I am
referring in particular to Exhibits A-3, A-4, I-1, I-4 and A-8, among others.
It is appropriate to reproduce the content of these supporting documents:
(Exhibit A-3)
[Translation]
Further to
the meeting held on August 4, 2000, we observe that certain directives issued have
not been complied with.
Consequently,
we must ensure that these directives are followed.
1. You are required to provide GMF every week with a road report
indicating: time, date, and name of customer.
2. You must provide 28 hours of work per week, from 8:00 a.m. (1st
customer) to 4:00 p.m.
e.g. 28
hours = 100% salary
14 hours = 50% salary
3. Telephone calls to your customers must be recorded on the back
of the report.
4. If you do not work on a day, please indicate this and give the
reason, and notify the office.
The
consequences of non-profitability will entail a change in compensation.
N.B. No road report = no commission.
(signature): René Comeau
31-01-01
(Exhibit A-4)
[Translation]
Further to your request for wage insurance benefit, Laboratoire GMF agrees
to grant you a loan of $563 per week effective March 8, 2001, this amount being
based on your income as it appears on your T-4 for the year 2000.
However, it is clearly understood that all the cheques that will be
paid to you through the insurance shall be returned in full and without
exception to Laboratoire GMF Inc. Failure to comply with this condition will
automatically result in cancellation of this agreement.
The difference between the sum paid by the insurance, about 2/3 of $563,
and the sum paid by Laboratoire GMF Inc. will be absorbed by Laboratoire GMF
Inc.
This agreement is for a maximum period of 26 weeks effective March 8, 2001
and may be reassessed without any commitment by Laboratoire GMF.
You acknowledge that you have read and understood the terms stipulated in
this agreement.
In witness whereof, you have signed on this 8th day of March 2001.
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(signature)
Claude Cléroux
For: Laboratoire
GMF Inc.
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(signature)
René
Comeau
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[Emphasis added]
(Exhibit I-1)
[Translation]
St-Hyacinthe, August 4,
2000.
TO ALL REPRESENTATIVES
LABORATOIRE G.M.F.
Beginning August 11, 2000, you must remit a road report and a work
schedule every week to Laboratoire G.M.F.
The purpose of this directive is to avoid paying commissions to
representatives when the Clinic's customers have not been visited.
Beginning September 11, 2000, if a customer of the Clinic is on your
report and has not been visited, there will be no commission paid to the
representative.
REPORT: name
of customer or firm
City
or Town
Date
of visit
If you have not worked on a day (e.g. Monday), please record this on your
report. If you are on vacation, please record this as well.
Please note that these directives will be applied commencing September 11,
2000.
For any further information, do not hesitate to contact me.
Mr. André Sauvageau
cc. All representatives
(Exhibit I-4)
[Translation]
26-10-01
Reminder
at the place
of work, in order to maintain harmony in the office
I, René
Comeau, undertake
1.
No more bad-mouthing about anyone or negative remarks
2.
I will keep to myself any family or personal problems
3.
I will not do anything non-competitive or disclose information about the
company.
If for some
reason or other I am unable to fulfil one of these three conditions to keep
harmony in the office, I will no longer be allowed to work in the office of
Laboratoire G.M.F.
Signed at
St-Hyacinthe, 7485 Duplessis
GAETAN SARRAZIN
Director General
_______________________
René Comeau
Employee
26/10/01
René refused to sign
(Exhibit A-8)
[Translation]
7485
Duplessis St.
Saint-Hyacinthe,
Quebec J2S 8B1
. . .
St-Hyacinthe,
January 31, 2002
Mr. René
Comeau
1125
Casavant Boulevard, Apt. 6
St-Hyacinthe QC
J2S 7J4
Sir,
This is to inform you that effective this day your services are no longer
required within our company.
Due to a new orientation, GMF has decided to adopt this decision.
We are informing our insurer and asking it to remove your name from the
list of insured eligible for our group insurance plan to which you may continue
to belong if you so wish but at your personal expense.
Claude Cléroux
for
Laboratoire GMF
[25] Not only did
the Appellant have the power to control, it did indeed effectively exercise its
power of reprimand while noting its ultimate power of dismissal. In this
regard, I take the liberty of reproducing the content of paragraphs 11 and 12
of the Notice of Appeal:
[Translation]
11.
On January 31, 2001, the Appellant, exasperated by some repeated
demands of Mr. Comeau and especially by the sluggishness of his responses as a
debtor, got him to sign an undertaking that will be cited in support hereof
that he begin to make the efforts in his business and thereby return a bit of
consideration for the benefits granted to him; this document was intended
to spur Mr. Comeau, who had many fine words but nothing more, and it is alleged
that this document was signed by Mr. Comeau without any real intention of
honouring it, judging from the facts disclosed hereinafter; it is alleged that
the Appellant, as a creditor, was justified in acting thus and that the Respondent
did not even wish to raise the question of Mr. Comeau's bankruptcy on the
ground that this did not appear to fit within its analysis, hence its action in
simply disregarding it.
12.
Some weeks later, Mr. Comeau approached the Appellant to inform it that he
was suffering from a serious psychological illness that, among other things,
prevented him from concentrating and driving an automobile and he informed the Appellant
that he had definitively terminated his business and he implored the Appellant
to help him once again and it agreed by consenting to an agreement dated March
8, 2001, which will be cited herein, in the belief that it should assist
Mr. Comeau once again given the alleged illness; the Appellant was about to
experience cruelly the adage that generosity breeds ingratitude.
[Emphasis added]
[26] The legal relationship
between the Intervener Mr. Comeau and the Appellant was indeed an
employer-employee relationship fully meeting the requirements and tests for
determining insurability laid down by the courts.
[27] The
employer-employee relationship is completely consistent with the following
facts, moreover:
·
the Intervener's business cards were paid for by the Appellant's business;
·
the Intervener had a mailbox in his name on the Appellant's premises;
·
he was able to use an office in the Appellant's headquarters and make
long-distance calls from there at the Appellant's expense;
·
he had to submit reports in order to be paid and he obtained weekly
reports prepared by the Appellant;
·
he was required to work a minimum number of hours per week;
·
he could and did take training courses organized by the Appellant;
·
the Appellant provided the advertising material;
·
the Appellant paid a generous bonus to the Intervener; and
·
the Intervener was accompanied by a representative of the Appellant on
visits to and solicitations of certain customers.
[28] All of these
facts are consistent with the Respondent's logic in concluding that the work in
issue was insurable. The fact that the Appellant defines the Intervener as a
self-employed worker is of no relevance. The courts have often held that the
intention or desire of a party in respect of the definition of an economic
relationship is not determinative in deciding whether work is insurable or not.
[29] Only the facts
and the way in which the work was performed are relevant in determining the
insurability of work. The evidence in this case shows, on a balance of
probabilities, that the Intervener Mr. Comeau was subject to the authority and
control of the Appellant. The work performed was done in a context such that it
was indeed insurable work.
[30] For these
reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this 12th
day of November 2003.
Tardif
J.
Translation certified
true
on this 6th day of
March 2009.
Brian McCordick, Translator
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