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Citation: 2003TCC137
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Date: 20030417
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Docket: 2002-2708(EI)
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BETWEEN:
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GIOVANNI GROPPINI,
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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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and
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3477126 CANADA INC.,
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Intervener.
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[OFFICIAL ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
Somers, D.J.T.C.C.
[1] This appeal was heard at
Montréal, Quebec, on February 26, 2003.
[2] The appellant institutes an appeal
from the decision by the Minister of National Revenue (the
"Minister") according to which the employment held with
Assen International, the payer, during the period in issue, from
May 5 to October 4, 2001, was not insurable on the
ground that there was no employer-employee relationship
between him and the payer.
[3] Subsection 5(1) of the Employment
Insurance Act (the "Act") reads in part as
follows:
5.(1) Subject to subsection (2), insurable employment is
(a) employment in Canada by one or more
employers, under any express or implied contract of service or
apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other
person and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or
otherwise;
[...]
[4] The burden of proof is on the
appellant. He has to show on a preponderance of proof that the
Minister's decision is ill-founded in fact and in law. Each
case stands on its own merits.
[5] In making his decision, the
Minister relied on the following assumptions of fact stated in
paragraph 21 of the Reply to the Notice of Appeal, which
were admitted or denied by the appellant:
[TRANSLATION]
(a) The shareholders
of the payer were Johanne Vallée,
France Vallée and Huguette Bastien, with
30 percent of the shares each, and Yves Martel and
Jocelyn Caron, with five percent of the shares each;
(admitted)
(b) The payer
operated an industrial chemical cleaning products distribution
business; (denied)
(c) During the
period in issue, the appellant worked for the payer as a
commission salesman; (denied)
(d) The
appellant's remuneration amounted to 10 percent of sales
made; (denied)
(e) The payer paid
the appellant advances on future commissions; (denied)
(f) The
appellant was reimbursed for expenses incurred as part of his
work; (admitted)
(g) The appellant
was not required to render services solely to the payer and could
promote sales of other products to his clientele; (denied)
(h) During the
period in issue, the appellant received $9,610 from the payer;
(denied)
(i) The
appellant had no work schedule to meet or any established area;
(denied)
(j) The
appellant worked from his residence; he had no office at the
payer's place of business; (denied)
(k) The appellant
was not controlled by the payer in the performance of his work.
(denied)
[6] The payer operated an industrial
chemical cleaning products distribution business. The
shareholders, mainly the members of a single family, were
Johanne Vallée, France Vallée and
Huguette Bastien, each of whom held 30 percent of the
shares, and Yves Martel and Jocelyn Caron, with
five percent of the shares each.
[7] Business relations were
established between the appellant and the payer during the period
in issue. The appellant states that he was an employee, whereas
the payer's witnesses say he was a self-employed
worker.
[8] The appellant's spouse,
Brigitte Cailloux, stated in her testimony that the
appellant had received a salary plus a commission on sales. She
said that the appellant did not work from his residence since it
was located in a residential neighbourhood and, according a
municipal by-law, an owner did not have the right to carry
on a profession or business there.
[9] According to the witness, the
appellant left the family residence every morning and went to
pick up Johanne Vallée to go the payer's place of
business.
[10] Brigitte Cailloux said that she
had telephoned the appellant at the payer's place of business
two or three times a day. She went to deposit cheques at the bank
every week. The signature of the appellant's spouse appears
on the back of some of the cheques filed in evidence as
Exhibit A-1 and dated between May 17 and
September 21, 2001. On those cheques issued by the payer,
the amounts of which vary, appear the notations
"commissions", "advances", "travelling
expenses", "travel advances" and "sales
expenses".
[11] Sixteen of those cheques bearing the
notations "sales expenses" and "advance" are
for $700; the others, the amounts of which vary between $40.25
and $14,000, bear the notations "sales expenses",
"cellular expenses" and "travelling and
entertainment expenses".
[12] The appellant's spouse testified
that Johanne Vallée had told her that the appellant
received a salary of $700 a week, plus a five-percent sales
commission. She added that the appellant had worked solely for
the payer.
[13] In cross-examination, the
appellant's spouse admitted that the appellant had been a
self-employed worker in 2000. The notation "self-employed
worker" appears in the appellant's 2000 return of
income.
[14] The appellant testified that he had
worked for the payer during the period in issue. He said that,
under the agreement between the payer and him, his remuneration
had been $700 a week, plus a five-percent commission on
sales, but he said he had never received any commission. He
admitted that, under the first agreement entered into by the
payer and him, he had worked as a self-employed worker until
December 2000, which is confirmed by his return of income
prepared by Jocelyn Caron, a shareholder of the payer, in
which he is referred to as a self-employed worker.
[15] In explaining the notation
"advance" on most of the cheques
(Exhibit A-1) and "salary" on certain
others, the appellant stated that he had borrowed $300 from the
payer and that the latter had made a deduction from his $700
salary. He also said that the notation "advance" had
been added by the payer on the cheques when they were returned to
him.
[16] Under a second oral agreement, the
appellant was paid $700 a week. Starting in January 2001, he
received cheques from the payer of varying amounts, that is $200,
$500, $300, $900 and $1,050.
[17] The appellant admitted that the clients
whose names appear at pages 8 and 9 of a letter dated
June 26, 2002, that he had sent to Human Resources
Development Canada were not those of the payer and added that, as
a salesman, he had had a right to contact clients.
[18] The appellant admitted that he went to
Orlando, Florida at the payer's expense from October 15
to 20, 2001, that is after the period in issue.
[19] Richard Blouin, a witness for the
appellant party, said that he had made deliveries to the
payer's place of business during 2001 and that he had seen
the appellant there on at least 13 occasions. He stated that
the appellant had called him to make deliveries and that the
payer had paid for the services. The payer had its place of
business in three different locations: the office was first
located on Rue St-Denis, then moved to
Rue Christophe Colomb and, ultimately, to
Boulevard Tricentenaire in Montréal.
[20] Johanne Vallée testified
that she was the vice-president of the payer. She said that she
was an employee of the payer, with her mother and her sister.
[21] The witness said that the payer had
contacted the appellant as a salesman; the latter had his own
clients.
[22] The appellant purportedly requested
advances under the agreement because, according to the witness,
the appellant was paid on commission. The payer had no control
over the appellant. The appellant did not have a fixed schedule
and was not supervised.
[23] The appellant was granted advances at
his request because he had financial problems.
[24] The appellant was considered a
manufacturing agent, and Johanne Vallée said that he
had set the prices of the products himself.
[25] In cross-examination,
Johanne Vallée admitted that cheques for $700 had
been issued in the appellant's name at his request. She
admitted that the notation "advance" had been written
on the cheques after they were returned to the payer for
accounting reasons.
[26] She stated that there were no other
employees besides the shareholders. This witness said that, in
August 2000, the payer entered into an agreement with the
appellant that he would be paid on commission. She added that
there were no subsequent agreements.
[27] France Vallée, a
shareholder of the company, did the accounting of the business.
She said that the agreement entered into by the payer and the
appellant when the latter was hired was that he would receive
10 percent of sales made. She added that that agreement had
been reached at the appellant's suggestion.
France Vallée admitted that advances had been made to
the appellant and that the sales did not cover the amount of the
advances.
[28] In cross-examination,
France Vallée mentioned that the products were in
stock in April 2000, but that they were put on the market in June
2001, after the company had received subsidies.
[29] France Vallée knew that the
appellant was the president of his own company and that he was a
manufacturing agent. The payer made advances to the appellant
based on trust; those advances, according to
France Vallée, were made at the appellant's
request.
[30] France Vallée acknowledged
the business's draft business plan, which was filed in
evidence as Exhibit A-9. At page 3 of that
document, under the heading "Interveners' Presentation
of the Draft", appear the names of the appellant,
Giovanni Groppini, and France Vallée,
Johanne Vallée, Huguette Bastien,
Yves Martel and Jocelyn Caron. At page 4 of that
same document, under the heading "Allocation of
Duties", the appellant is shown as a "major accounts
representative". At pages 14 and 15, it is stated that
the payer set the selling prices of the "single dose"
products. Despite what is stated in that document with respect to
prices, France Vallée said that the appellant had set
the prices with the clients, which was denied by the
appellant.
[31] The witness admitted that the business
card filed in evidence as Exhibit A-10 had been issued
by the payer and that the names of Johnny Groppini and Assen
International, Montréal, Quebec, appeared thereon, but
added that it had been printed at the appellant's
request.
[32] She acknowledged her signature on the
letter dated November 12, 2001, addressed to all clients of
Assen International (Exhibit A-6), informing them of
the following: "Please be advised that, as of
October 22 last, Johnny Groppini is no longer an
employee of our company...".
[33] In 671122 Ontario Ltd. v. Sagaz
Industries Canada Inc., [2001] S.C.J. No. 61,
2001 SCC 59, Major J. of the Supreme Court of Canada writes
as follows at paragraphs 46, 47 and 48 of his decision:
46 In my opinion,
there is no one conclusive test which can be universally applied
to determine whether a person is an employee or an independent
contractor ... Further, I agree with MacGuigan J.A. in
Wiebe Door, at p. 563, citing Atiyah, supra,
at p. 38, that what must always occur is a search for the
total relationship of the parties:
[I]t is exceedingly doubtful whether the search for a formula in
the nature of a single test for identifying a contract of service
any longer serves a useful purpose.....The most that can
profitably be done is to examine all the possible factors which
have been referred to in these cases as bearing on the nature of
the relationship between the parties concerned. Clearly not all
of these factors will be relevant in all cases, or have the same
weight in all cases. Equally clearly no magic formula can be
propounded for determining which factors should, in any given
case, be treated as the determining ones.
47 Although there is
no universal test to determine whether a person is an employee or
an independent contractor, I agree with MacGuigan J. in
Market Investigations, supra. The central question
is whether the person who has been engaged to perform the
services is performing them as a person in business on his own
account. In making this determination, the level of control the
employer has over the worker's activities will always be a
factor. However, other factors to consider include whether the
worker provides his or her own equipment, whether the worker
hires his or her own helpers, the degree of financial risk taken
by the worker, the degree of responsibility for investment and
management held by the worker, and the worker's opportunity for
profit in the performance of his or her tasks.
48. It bears repeating
that the above factors constitute a non-exhaustive list,
and there is no set formula as to their application. The relative
weight of each will depend on the particular facts and
circumstances of the case.
[34] In the case under consideration, the
evidence clearly shows that there was a contractual relationship
between the appellant and the payer.
[35] It must therefore be determined whether
the appellant was a self-employed worker or an employee of the
payer during the period in issue.
[36] The appellant and his spouse quite
openly admitted that the appellant was a self-employed worker
when he provided services on the payer's premises in 2000 and
added that he had previously been in business for himself.
[37] The parties were bound by an oral
contract. The appellant stated that he had been an employee in
2001, whereas the payer asserts that he was a self-employed
worker; the evidence is therefore contradictory.
[38] The burden of proof was on the
appellant; he had to show on a preponderance of proof that the
Minister's decision was ill-founded in fact and in law.
[39] Since there was a binding oral
agreement between the parties, it is harder to establish the
nature of the relations between the appellant and the payer.
[40] The appellant denied all allegations
appearing in the Reply to the Notice of Appeal, except
subparagraphs 21(a) and (f).
[41] The evidence was not brought in a very
consistent or complete manner; however, it was possible to
determine the positions of the parties, even though they were
contradictory.
[42] The appellant and his spouse asserted
that the appellant had not worked at home, but rather at the
payer's place of business.
[43] According to the appellant's
submission, he drove Johanne Vallée to the office
every morning, which the latter denied, stating instead that the
appellant had driven her to the office on only two occasions.
[44] Richard Blouin, the
appellant's witness, asserted that he had made deliveries to
the payer's place of business on a number of occasions and
that he had seen the appellant in an office at the payer's
place of business at least 13 times. His testimony on this
aspect of the evidence corroborates that of the appellant and his
spouse.
[45] The payer's witnesses did not
corroborate the statement that the appellant had worked from his
residence.
[46] Since there is contradictory evidence
as to the nature of the agreement, the documentary evidence must
be relied upon.
[47] Cheques for $700 each were regularly
issued in the appellant's name during the period in issue.
France Vallée, who did the accounting, admitted that
fact, but said that they were for advances.
[48] Cheques for various amounts bearing the
notation "travelling expenses" or "sales
expenses" were also issued. On August 16, 2001, a
cheque for $700 was issued in the appellant's name bearing
the notation "salary advance" and the cheque of
August 31, 2001, for the same amount bore the notation
"salary/commission advance".
[49] Those notations on the cheques
corroborate the testimony of the appellant and his spouse that
the appellant's income was based on salary and
commission.
[50] The payer's witnesses denied the
appellant's claims regarding the basis of his income. The
payer filed no accounting or other documents to establish the
sources of income or expenses of the business. Those witnesses
stated that the shareholders were the only employees. The pay
list was not filed in evidence.
[51] The business plan prepared by the payer
and filed in evidence as Exhibit A-9 reads as follows
under the heading "Interveners' Presentation":
[TRANSLATION]
The Assen team is represented by the following interveners:
France Vallée, Johanne Vallée,
Huguette Bastien, Yves Martel, Jocelyn Caron and
[Johnny] Giovanni Groppini.
(It should be noted that the name Johnny in this document is
struck out and replaced by Giovanni.)
[52] Under the heading "Allocation of
Duties" on page 4 of that same draft, the name
Johnny Groppini appears as the major accounts
representative. The duties of the shareholders are also described
there.
[53] The payer sent all its clients a notice
dated November 19, 2001, (Exhibit A-6) which
reads in part as follows:
[TRANSLATION]
PLEASE BE ADVISED THAT, AS OF OCTOBER 22 LAST,
JOHNNY GROPPINI IS NO LONGER AN EMPLOYEE OF OUR COMPANY AND
HAS NO AUTHORIZATION TO PRESENT HIMSELF AS SUCH...
It should be noted that that notice is addressed to the
payer's clients, not those of the appellant.
[54] Business cards prepared by the payer
identifying the appellant with the payer's operations were
filed in evidence as Exhibits A-7 and A-10.
[55] It is possible that the appellant had
had his clients since he had been in business prior to 2001, but
the payer had its own, as witnessed by the letter sent to them
(Exhibit A-6). There is no evidence that the appellant
worked for any employer other than the payer during the period in
issue.
[56] The tools belonged to the payer, not
the appellant. It was established by the testimony of an
independent witness that the appellant was present at the
payer's place of business. There is no evidence that the
appellant worked from his residence. Johanne Vallée
admitted that the appellant had driven her to the payer's
place of business on at least two occasions.
[57] There is no evidence that the appellant
had a schedule to meet or area to cover, which could explain why
the appellant, as a salesman, had to travel. Travelling expenses
were moreover paid by the payer.
[58] The Court cannot find on the evidence
that the appellant had a chance of profit or risk of loss; he
regularly received cheques for $700 in respect of advances or
salary.
[59] The appellant was integrated into the
payer's operations; it was the payer's business, not that
of the appellant. The appellant, who was recognized for his
abilities as a salesman, had clients, but the payer admitted that
it also had its own clients, as witnessed by the notice sent to
its clients announcing that the appellant was no longer employed
by it.
[60] The evidence showed that the payer had
some control over the appellant's activities. It was normal
for the appellant, as a salesman, to be frequently absent from
the office and for him not to have a fixed schedule. The payer
determined the prices of the products, as indicated at
pages 14 and 15 of the draft (Exhibit A- ).
In determining the product prices, the payer exercised a certain
control over the appellant. The appellant's duties were
established in the said draft prepared by the payer
(Exhibit A-9).
[61] To distinguish a contract of service
from a contract for services, it is necessary to consider the
whole of the various elements that constitute the relationship
between the parties, that is (a) the degree of control,
(b) ownership of the tools, (c) chance of profit or
risk of loss and (d) the degree of integration (Wiebe
Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553).
[62] We may conclude on the whole of the
evidence, including the elements it comprises, that there was an
employer-employee relationship between the parties.
[63] Having regard to all the circumstances,
the Court finds that the appellant's employment was insurable
within the meaning of the Act during this period, since
the appellant was bound to the payer by a contract of service
under paragraph 5(1)(a) of the Act.
[64] The appeal is allowed, and the
Minister's decision is vacated.
Signed at Ottawa, Canada, this 17th day of April 2003.
D.J.T.C.C.
Translation certified true
on this 3rd day of February 2004.
John March, Translator
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