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Citation: 2003TCC654
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Date: 20030911
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Docket: 2002-3982(EI)
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BETWEEN:
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MARTIN GOUPIL,
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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
Somers, D.J.
[1] This
appeal was heard at Sherbrooke, Quebec, on July 28, 2003.
[2] The
Appellant is appealing from the decision of the Minister of National Revenue
(the "Minister"), that the employment held over the course of the
periods at issue, June 1 to September 1, 2000, and from
October 23, 2000, to January 11, 2002, when in the service
of Martin Coutu, Pierrette L'Heureux and Martin Goupil operating
Les Installations M.P. Coutu Enr., the Payor, was not
insurable because it did not meet the requirements of a contract of service.
[3] Subsection 5(1)
of the Act reads in part as follows:
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, who must establish by the preponderance of
evidence that the Minister's decision is unfounded in fact and in law. Each
case must be examined on its own merit.
[5] In
making his ruling, the Minister drew upon the following assumptions of fact
that were either admitted or denied by the Appellant:
[translation]
(a) Martin Coutu
and Pierrette L'Heureux were partners. (denied)
(b) They were the
owners of a resilient flooring installation company. (denied)
(c) They did
business under the company name Les Installations M.P. Coutu Enr.
(denied)
(d) The Appellant
began working for the business in 1994 as a flooring installer. (denied)
(e) On
June 1, 2000, the Appellant formed a partnership with
Martin Coutu and Pierrette L'Heureux. (admitted)
(f) The three
partners continued to operate the soft flooring installation business under the
same company name. (denied)
g) During the
periods at issue, the Appellant rendered services to the business as a flooring
installer. (denied)
[6] In
his testimony, the Appellant declared that he was a flooring installer and that
he started working for Martin Coutu and Pierrette L'Heureux's company
in 1994.
[7] According
to this witness, Martin Coutu and Pierrette L'Heureux were the owners of the
business operating as Les Installations M.P. Coutu Enr.
He denied having worked for this company before the start of the periods at
issue, June 1, 2000. He claimed that the Payor was never in operation
and reiterated that he worked for Installations M.P. Coutu.
[8] He
acknowledged that he went into partnership with Martin Coutu and
Pierrette L'Heureux, as evidenced by the partnership agreement document
entitled "Convention entre associé" dated June 2000
(Exhibit I-1). This agreement, signed by Martin Coutu,
Pierrette L'Heureux and the Appellant, reads as follows:
[TRANSLATION]
For and on behalf of - Installation
M.P. Coutu Enr.
406 Principale Street
Box 42
Stoke, Quebec
J0B 3G0
TEL 819 878-3955
The following is agreed between the
partners -
- Martin Coutu is the
director, manager and operations coordinator.
- Piettette L'Heureux,
clerical, administrator.
- Martin Goupil salaried
employee, resource person, advertising.
- Share of profits and losses:
- 50% Martin Coutu
-
50% Pierrette L'Heureux
-
value added Martin Goupil, salary,
- Martin Coutu and
Pierrette L'Heureux continue to benefit from the current and future assets
and debts of the company.
- The partnership is of a
professional nature.
- In the event of death, Mr. Martin
Goupil is excluded from all rights to the business and the testamentary
dispositions between Martin Coutu and Pierrette L'Heureux take
priority.
- This agreement may be modified at
any time.
- Additional agreements:
[9] The
Appellant also acknowledged that on June 1, 2000, he signed a
partnership declaration with Martin Coutu and Pierrette L'Heureux
(Exhibit I-2). This document stipulates, among other things, that the
company Les Installations M.P. Coutu Enr [TRANSLATION] "from this point forward will be
composed of the following partners: Martin Coutu, Pierrette L'Heureux
and Martin Goupil". At the end of this document, beside their
signatures, the following percentages appear: 45% Martin Coutu,
45% Pierrette L'Heureux and 10% Martin Goupil.
[10] The Appellant declared that the only distinction between the
partnership agreement (Exhibit I-1) and the partnership declaration
(Exhibit I-2) is the word "Les" added to the company name on the
latter document. He contended that his role in this company was purely
symbolic.
[11] In his notice of appeal filed as Exhibit I-3, the Appellant
specifies that during the periods at issue he worked for the company M.P. Coutu Enr.
[12] As for his working conditions, the Appellant declared that he worked
for this company 40 hours per week and was paid every two weeks at an
hourly rate of $23.00.
[13] The only other witness at the hearing of this appeal was Martin Coutu.
This witness stated that he made the employer's payment
of the deductions and dues
to Revenu Québec for the periods from January 1 to
March 31, 2003, and from June 1 to June 30, 2003,
(Exhibits A-1 and A-2). On these documents the name and address of
the employer are recorded; for the period from January 1 to March 31, 2003,
it is Talbot Réal Compt (Martin Coutu) and for the period from June 1 to
June 30, 2003, Les Installations M.P. Enr. is
indicated while the address is the same for both.
[14] This witness explained that the company Martin Coutu has been in
existence since 1987 and that, in 1999, the company was operated
under the name "Installations M.P. Coutu Enr." He stated that
during the periods at issue, the Appellant worked for the company Installations M.P. Coutu Enr.
[15] According to this witness, the Appellant went into partnership with
the company Les Installations M.P. Coutu Enr., of which
he and Pierrette L'Heureux were owners, which was never in operation. He
claims that this arrangement was only to satisfy the requirements of another
provincial law.
[16] A decision must be made as to whether the Appellant is a partner in
the business originally formed by Martin Coutu and
Pierrette L'Heureux.
[17] Martin Coutu and the Appellant have acknowledged that the latter
became a partner of the company Les
Installations M.P. Coutu Enr. on June 1, 2000
(Exhibit I-2).
[18] In Parent v. Canada (Minister of National Revenue -
M.N.R.), [1999] T.C.J. No. 83, Archambault, J.T.C.C.,
reviewed the jurisprudence and the Act with regard to the material
aspects and legal responsibilities of a partner in a business in these terms:
The fact that Mr. Parent did not
participate in the partnership's decisions does not necessarily mean that he
was not a partner. Article 2216 of the C.C.Q. provides that every partner is
entitled to participate in collective decisions and may not be prevented from
exercising that right by the contract of partnership. There is nothing in the
evidence to show that François Parent could not
participate in the partnership's decisions. The fact that he did not does not
necessarily mean that he was not entitled to do so. A distinction must be drawn
between the right to participate in decisions and the failure to exercise that
right. Moreover, a partner may delegate management of the partnership to one of
the other partners. . .
. . .
Given the conclusion that François Parent was a member of the DN partnership when he provided services
during the relevant period, could he have been an employee of that partnership
at the same time? In other words, can a contract of employment exist between a
partner and his or her partnership? The Civil Code of Québec defines
"contract of employment" as follows:
ART. 2085. A
contract of employment is a contract by which a person, the employee,
undertakes for a limited period to do work for remuneration, according to the instructions
and under the direction or control of another person, the employer.
. . .
In addition, he did not work
according to the instructions and under the direction or control of
"another person". Unlike a joint-stock company, a partnership is not considered
to be a person separate from its partners. The partnership's business is that
of the partners. The partnership's assets belong to the partners. François Parent was thus working for himself. His work was therefore not done
according to the instructions and under the direction or control of another
person as required by article 2085 of the C.C.Q. Accordingly, there was no
contract of employment between Mr. Parent and the DN partnership.
[19] In Carpentier v. Canada (Minister of National Revenue - M.N.R.),
[1996] T.C.J. No. 502, the findings of Lamarre J. were similar:
In view of the features associated
with a contract of partnership both under the C.C.L.C. and under the C.C.Q. and
the tests used by the courts to determine whether a contract of service exists,
it seems clear to me that a partner cannot be an employee in his own
partnership. Since as partner he participates in the decision-making of the
partnership in pursuit of the common goal of the partnership and shares in
profits and losses, he is automatically in control and therefore cannot at the
same time act as a subordinate to himself, even if there are several partners.
[20] Martin Coutu and the Appellant have stated that the only purpose
of this company under the name Les Installations M.P. Coutu Enr.
was to satisfy the requirements of a provincial law, namely, that a partner
must be on the job site.
[21] The last paragraph of the partnership declaration (Exhibit I-2)
reads as follows:
[translation]
Moreover, the partners agree to sign
shortly a detailed partnership agreement stating the terms and conditions of
their partnership in the company "Les
Installations M.P. Coutu Enr.".
[22] No document was entered in evidence regarding the terms and conditions
of this partnership; it must therefore be concluded that the Appellant was a
partner in the business.
[23] The evidence has shown that the Appellant worked for the company
formed by Martin Coutu and Pierrette L'Heureux by whatever name it is called.
Moreover, there is only one company in which the Appellant held 10% of the
shares. The fact that the Appellant did not participate in the management of
the business changes nothing in his role as a partner.
[24] Jurisprudence has established that a partner cannot be an employee of
his own company, whatever the percentage of shares he holds.
[25] Consequently, the Appellant did not have insurable employment in
accordance with the Act during the periods at issue since he was
operating his own company.
[26] The appeal is dismissed.
Signed at
Ottawa, Canada, this 11th day of September 2003.
Somers,
D.J.T.C.C.
on this 22nd day
of March 2004.
Sharon Moren,
Translator
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