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Citation: 2003TCC81
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Date 20030331
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Docket: 2001-4494(EI)
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BETWEEN:
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CENTRE DE LANGUES DE TROIS-RIVIÈRES 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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REASONS FOR JUDGMENT
Tardif,
J.T.C.C.
[1] This
appeal is from a September 21, 2001 decision by the respondent that
the work performed by a number of persons as language teachers during the 1998,
1999 and 2000 taxation years constituted insurable employment within the
meaning of the Employment Insurance Act ("the Act").
[2] Jocelyne
Beaulieu represented the appellant corporation in her capacity as the majority
shareholder. She admitted the truth of the following assumptions of fact:
(a) the appellant
was incorporated on October 8, 1997;
(b) the majority
shareholder in the appellant corporation is Jocelyne Beaulieu;
(c) the appellant
corporation's place of business is located at 1385, rue Notre‑Dame
in Trois-Rivières;
(d) during the
taxation years at issue, the appellant corporation operated a business
providing language courses, particularly in English and Spanish, as well as
translation services;
(e) Jocelyne
Beaulieu directed the appellant corporation's operations;
...
(i) the
appellant company controlled and recorded the hours worked;
...
(k) the workers
were usually paid by cheque, every two weeks;
...
(m) during the
taxation years at issue, the appellant corporation did not make any source
deductions for employment insurance contributions from the workers' pay or
remit any such contributions to the respondent.
[3] Ms Beaulieu
explained that the appellant corporation started up a new business, the main
commercial activities of which were teaching English and Spanish and providing
translation services.
[4] From the start of
the business, Ms Beaulieu took steps to obtain all the relevant
information concerning the conditions required for the persons acting as
teachers and translators to work as self-employed workers, not as employees.
After she obtained the information, the business operated on the assumption
that the teachers and translators were self-employed workers.
[5] Some teachers were
recruited through advertisements, but mainly the teachers were recruited by
word of mouth. Ms Beaulieu interviewed the teachers and explained to them
the terms and conditions and her expectations concerning the way in which the
teaching work was to be performed.
[6] It became clear
that Ms Beaulieu showed very great respect for the human resources on
which the appellant corporation had to rely. These feelings of great respect
were also conveyed in a work setting where there was a strong desire for
co-operation on both sides.
[7] The omnipresence of
the concepts of respect and co-operation had the effect of creating an ideal
work setting for all the activities related to the business's purposes.
[8] Ms Beaulieu
explained, as was confirmed by the testimony of Jennifer Carley and Karine
Brière, both of whom were directly involved since they acted as English
teachers during the periods at issue, that the relations between the teachers
and the appellant corporation were excellent.
[9] The rule was that
everyone benefited, in that nothing was imposed and everyone had a contribution
to make. As a result, the teachers' availability, tastes and affinities were
taken into account. The teachers had the possibility of indicating their constraints
and reservations concerning the choice of students whom they wished to teach.
[10] This considerable
latitude and freedom was also shown concerning the locations where private
lessons were given and concerning the required tools of work. The teachers
could use their own equipment or take the equipment made available and provided
by the appellant corporation. As well, in the case of private lessons, the
teachers could come to agreements with their students about where to meet.
[11] A legal relationship
characterized by concepts of co-operation, freedom and considerable latitude
complicates the exercise of determining whether a contract for services or a
contract of service is involved, since these characteristics are usually
associated with a relationship in which the parties deal with each other as
equals.
[12] In this case, all
the testimony was consistent. The only differences had to do with the
interpretation of certain situations. The balance of the evidence is to the
effect that Ms Beaulieu gave priority to harmonious relations with the
persons who acted as teachers or translators.
[13] That said, in order
to determine whether work has been performed under a contract of service or a
contract for services, it is essential to analyse the facts in context so as to
identify the parties' rights and obligations clearly. As well, the courts have
repeatedly ruled that the rights and powers of the entity responsible for
payment of the consideration must be taken into account.
[14] When a contract of
service is involved, the employer need not have exercised its power of control.
It is enough that this power exists and that the employer has not waived it.
The same is true for the relationship of subordination. An employer that
implements a policy of exemplary respect may give the impression that it has
waived its power or abdicated its authority. Conversely, a relationship
characterized by very great respect may give the impression that there is no
relationship of subordination. Assessing a situation may be further complicated
if there is no concrete example of manifestation of this authority.
[15] In this case, the
appellant corporation implemented a policy of respect, co-operation and
teamwork. On the other hand, nothing in the evidence, of which the burden was
on the appellant corporation, has established that the appellant corporation
had no power of control over the persons it paid or had waived that power.
[16] The appellant
corporation operated a business, the success of which was closely related to
the performance and talent of the persons teaching the various language
courses. In achieving the business's objective and ensuring its development,
the appellant corporation relied on the satisfaction of the teachers and
clients and on the quality of the services provided.
[17] In practice,
however, the evidence has established that the business exercised tight control
and ongoing follow-up over the activities of the teachers it paid. Granted,
these teachers had a great deal of latitude concerning the locations where the
courses were provided, but they were required to prepare reports and to submit
them to the appellant corporation. It was clear from the testimony of
Jennifer Carley and Karine Brière that Ms Beaulieu was indeed the
boss, even though they demonstrated a great deal of esteem, appreciation and
respect for the virtues that certainly made her an ideal employer.
[18] In fact, this
organization was very flexible in meeting the clients' needs and responding to
their expectations. However, that flexibility did not release the teachers from
the obligation to provide the services or, otherwise, to notify the appellant
corporation so that it could authorize a replacement.
[19] In theory, the
teachers could have reached an agreement among themselves, but any arrangement
was subject to the agreement or consent of the appellant corporation, which was
responsible for co-ordinating the activities.
[20] Jennifer Carley
and Karine Brière also acknowledged that the business was not their own, but
that they introduced and represented themselves as working for the appellant
corporation. Even though both these witnesses had excellent relations with the
clients entrusted to them, they both acknowledged that these clients were not
their own, but the clients of Centre de langues de Trois-Rivières inc. As
well, all the clients were required to pay the cost of the courses to Centre de
langues de Trois-Rivières inc. The teachers were paid a fixed, definite amount,
on the basis of a periodic activity report they were required to complete.
[21] The appellant
corporation also required a report in order to issue the pay cheques, which was
usually done every two weeks. Even though the situation apparently never
arose, there is no doubt that a teacher who failed to meet the appellant
corporation's standards regarding quality, assiduousness and evaluation would
have been reprimanded and even dismissed.
[22] Overall, there is no
doubt that the appellant corporation exercised control over the planning and
development of the business. Although the teachers were closely associated with
the smooth operation of the business, they were not a vital link in it.
[23] The teachers were
fully integrated into the business and were required to follow the practices
established by the appellant corporation, including completing the reports set
out in specific clauses of certain contracts requiring the teachers to check
the students' attendance at the courses they taught.
[24] The teachers were
paid at an hourly rate: $10 per hour for private lessons, and $15 per
hour for group classes. Although certain factors might vary, the appellant
corporation always had the last word. Generally speaking, the teachers all had
essentially the same conditions of employment.
[25] Travel costs were
also reimbursed, depending on the locations where the courses were provided.
[26] Concerning the
ownership of the tools of work, another test required to identify a contract of
service, these tools were provided by the appellant corporation. Granted, the
appellant corporation agreed that the teachers could use their own equipment,
but it made the required tools available.
[27] That said, at this
point it is important to note that the work required special skills; thus it
was essential that the teachers be given latitude, since they were in the best
position to assess the students' various levels of learning and development.
[28] In this regard, it
appears from the evidence that the appellant corporation did not require the
teachers whose services it retained to provide any equipment whatsoever.
Elsewhere, this Court has repeatedly ruled that, in the case of work requiring
special skills, the power of control is usually exercised more over the results
of the work performed than over the means to that end.
[29] Lastly, concerning
the test of the chance of profit and the risk of loss, the evidence is
decisive; the persons affected by the decision being appealed from had no
chance of profit or risk of loss in performing their work. They taught and were
paid at an hourly rate established when they were hired, with known variables
depending on whether they gave private lessons or taught group classes. Their
travel costs were also reimbursed.
[30] In conclusion,
Ms Beaulieu started up a business in which the working relationships were
clearly very good.
[31] The Court also noted
that Ms Beaulieu cared very much about the teachers' status. She obtained
information and wished to ensure that the work to be performed was done by
persons working as self-employed workers.
[32] Although the
employer wished and desired that to be the case, that desire clearly had no
effect on the nature of the legal relationship between the parties. As well,
this concept appeared to be much more present and of much greater concern to
Ms Beaulieu than to the teachers, at least according to the teachers who
testified. Only the facts adduced from the performance of the work were
significant in determining the nature of the contract.
[33] In this case,
certain factors might suggest that the teachers had a degree of latitude and
freedom enjoyed by self-employed persons, but the balance of the evidence is to
the effect that the work performed was done under a contract of service, since
all the tests required to identify a contract of service are present and have
been met.
[34] For these reasons,
the appeal is dismissed.
Signed at Ottawa,
Canada, this 31st day of March 2003.
J.T.C.C.
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