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Citation: 2003TCC663
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Date: 20031007
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Docket: 2003-663(EI)
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BETWEEN:
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LOUIS LEHOUX,
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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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3935833 CANADA INC.,
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Intervenor.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Somers, D.J.
[1] This
appeal was heard at Sherbrooke, Quebec, on July 29, 2003.
[2] The
Appellant is appealing the decision of the Minister of National Revenue (the
"Minister") finding that the employment performed over the period at
issue, from January 3 to June 27, 2002 for 3935833 Canada Inc., the
Payor, was not insurable for the reason that it was not employment under a
contract of service in accordance with Paragraph 5(1)(a) of the Employment
Insurance Act (the "Act").
[3] The
burden of proof is on the Appellant, who must establish in accordance with the
preponderance of evidence that the Minister's decision is wrong in fact and in
law. Each case must be examined on its own merit.
[4] In
making his ruling the Minister drew upon the following facts, which were either
admitted or denied by the Appellant:
(a) The Payor has
been operating since the month of August 2001. (no knowledge)
(b) The Payor
does commercial building maintenance. (admitted)
(c) The Payor
makes bids to obtain contracts for commercial building maintenance (the
"clients"), and consequently hires sub-contractors to perform a
portion of the duties that the Payor cannot perform himself. (denied).
(d) The
Appellant's duties were to dust, vacuum and clean the bathrooms for two
restaurants. (admitted)
(e) The Appellant
was remunerated $46.00 per day upon submission of invoices to the Payor. (admitted)
(f) The
Appellant bore the costs of the Commission de la santé et de la sécurité du
travail ("CSST") contributions. (admitted)
(g) The Appellant
bore the expenses for travel, supplies and accessories necessary to perform his
duties. (denied)
(h) The Appellant
could complete his duties according to a timetable that suited him. (denied)
i) The
Appellant's only constraint required by the client who requested that the
housekeeping maintenance be done while the establishment was closed. (admitted)
[5] The
Payor, in operation since the month of August 2001, did commercial
building maintenance.
[6] According
to the Appellant, the Payor made bids in order to obtain contracts. According
to him, the Payor posted a sign at the Human
Resource Centre of Canada asking for a person who was interested in
doing housekeeping maintenance work and he then approached Marcel Lortie,
the Payor's managing director, for this job and they entered into an agreement.
[7] The
Appellant stated that Marcel Lortie described to him the duties to be
done. He added that Marcel Lortie drove him from his home to the work
place, a distance of about 20 kilometres, and took him back to his home
after work.
[8] The
Appellant stated that he was paid $46.00 per day for cleaning a restaurant and
later on, $96.00 since he was looking after a second restaurant for two months.
The Appellant calculated that he was paid $11.50 per hour.
[9] The
Appellant stated that he was working for two hours per day at the first
restaurant but that he was remunerated for four hours and that he submitted
invoices to the Payor (Exhibit I-1). The Payor, for his part, deducted
form these invoices, the price of gas and an amount for the contributions to
the Commission de la santé et de la sécurité du travail. The invoices
were paid by the Payor once per month.
[10] The Appellant's duties were to dust, vacuum and clean the bathrooms of
the two restaurants.
[11] According to the Appellant, all the tools necessary for the work were
provided by himself or by the restaurateur. He added that the Payor set the
hours of work.
[12] The Appellant recognized that on the invoices (Exhibit I-1) he
wrote [translation]
"self-employed person for housekeeping maintenance".
[13] The Appellant stated that he did not always receive $46.00 or $96.00
per day and that the invoice amounts varied depending on the number of hours
worked.
[14] According to this witness, Marcel Lortie was on the premises
during the hours of work except when he had to be away. The Appellant explained
that [translation] "a good
evening of work was about 5 ½ hours" and that occasionally
Mr. Lortie asked him to go work elsewhere.
[15] Marcel Lortie, who has been proprietor of the business for
20 years, stated that he always hired self-employed workers to perform
this housekeeping maintenance work. He stated that he had posted a sign at the Human Resource Centre of Canada for the purpose of recruiting individuals for this
type of work.
[16] This witness stated that the Appellant contacted him and that they had
entered into an agreement. According to this agreement, the Appellant would be
expected to do the housekeeping maintenance at the restaurant La Cage aux
Sports, work that took him from 1 to 1 ½ hours for
remuneration of $46.00 per day.
[17] According to Marcel Lortie, when the agreement was made, the Appellant
asked him how to make out the invoices and he told him to write [translation] "self-employed
person" on them. It should be noted that no deduction at source was made
on the invoices submitted by the Appellant (Exhibit I-1).
[18] The Payor, for his part, deducted from the total amount of the invoice
the CSST contribution, as appears on the invoices filed as Exhibit I-1, as
well as an amount for gasoline since he drove the Appellant to his job and took
him back to his home after the work was completed.
[19] Marcel Lortie stated that he drove the Appellant from his home to his
work place. He added that the work was ordinarily finished at 5:00 in the
morning since the restaurants opened at this time. He moreover stated that he
was not on site while the Appellant performed his work.
[20] According to Marcel Lortie, he replaced the Appellant on occasion
when the latter was absent, but the Appellant was responsible for finding a
replacement. He added that the restaurateurs supplied the work tools.
[21] In order to correctly distinguish the contract of service from the
contract for service, it is necessary to examine all the various components of
the relationship between the parties, including the parties' intentions.
[22] Jurisprudence has recognized that the parties' intention is one
component, among others, which enable determination of whether [a contract] is
a contract of service or a contract for service, but not necessarily a deciding
factor.
[23] It is well established that there are four basic components for
distinguishing a contract of service from a contract for service: a) the degree
or absence of control exercised by the employer; b) ownership of the tools; c)
the opportunity for profit and risk of loss; and d) the degree of integration
of the employee's work in the employer's business (see Wiebe Door Services
Ltd. v. M.N.R., [1986] 3 F.C. 553).
a) Control
[24] The Payor was looking for an individual to do housekeeping maintenance
in commercial buildings where he had obtained a contract. The Payor posted a
sign at the Human Resource Centre of Canada for the purpose of recruiting a
self-employed person. The fact that he posted a sign indicated that he was
merely looking for a worker and not an independent businessperson
(self-employed person), but the Court can only rely on this single indicator.
[25] The Appellant answered this advertisement and contacted the Payor.
Marcel Lortie, proprietor of the Payor, stated that he had offered $46.00 per
day to the Appellant to do housekeeping maintenance in a restaurant and that
later this amount had been increased to $96.00 since the Appellant had to work
in a second restaurant. Marcel Lortie stated that he has proceeded in this
fashion for 20 years.
[26] The Appellant accepted the Payor's offer. There is no evidence showing
that the Appellant was a self-employed businessperson or that he had employees
or that he had previously performed this type of work. The Appellant, who was
unemployed at the time, accepted the Payor's offer without negotiating the
terms and conditions; it must be acknowledged that the Payor was in a position
of power.
[27] According to Marcel Lortie, the Appellant asked him how to write his
invoices, to which he answered to indicate [translation]
"self-employed person" on them; this fact shows a certain control of
the Payor over the Appellant.
[28] Marcel Lortie drove the Appellant from his home to work every evening,
after the restaurants closed, and drove him back home at the end of his work;
he even replaced the Appellant at his job when the latter was absent.
[29] The facts noted above demonstrate that there was a degree of control
over the Appellant and support the conclusion that a contract of service
existed.
b) Ownership of tools
[30] The work tools belonged to the restaurateur and not the Appellant; the
clientele was the Payor's and not the Appellant's. From this component, the
Court can conclude that a contract of service existed.
c) Chance for profit and risk of loss
[31] The Appellant was paid a fixed amount, set by the Payor, regardless of
the number of hours of work. This component could cast doubt on the nature of
the contract but considering the evidence as a whole, one can only conclude
that a contract of service existed.
d) Degree of integration
[32] The business belonged to the Payor and not the Appellant. The
Appellant did not have employees; he was at the service of the Payor's
business. According to this component, a contract of service existed.
[33] The whole of the above components, of which the degree of control of
the Payor over the Appellant is an essential factor for making the distinction
between the two types of contracts, supports the conclusion that a contract of
service existed.
[34] In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.,
[2001] 2 S.C.R. 983, Major J.
of the Supreme Court of Canada stated:
Although there is no universal test
to determine whether a person is an employee or an independent contractor, I
agree with MacGuigan J.A. that a persuasive approach to the issue is that
taken by Cooke 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.
[35] On the basis of this decision, it is reasonable to conclude that a
contract of service existed.
[36] Counsel for the Respondent relied on the decision of the Federal Court
of Appeal in Wolf v. Canada, [2002] F.C.A. No. 96 in
support of her submissions. Noël
J.A. (Concurring in result only) stated as follows at Paragraph 122:
I too would allow the appeal. In my
view, this is a case where the characterization which the parties have placed
on their relationship ought to be given great weight. I acknowledge that the
manner in which parties choose to describe their relationship is not usually
determinative particularly where the applicable legal tests point in the other
direction. But in a close case such as the present one, where the relevant
factors point in both directions with equal force, the parties' contractual
intent, and in particular their mutual understanding of the relationship cannot
be disregarded.
[37] This Federal Court of Appeal judgment placed a great deal of
importance on the parties' intentions but acknowledged that the manner in which
the parties decide to describe their relationship is not usually determinative.
[38] In the case at bar, it is the Payor who offered work to the Appellant
at a set salary. The Appellant, having no choice since he was unemployed,
accepted the Payor's offer without negotiating the terms. The Payor even gave
instructions to the Appellant, upon his request, with regard to the manner in
which to write his invoices, namely, to write [translation] "self-employed worker" on them.
[39] Taking into account the whole of the evidence, the Court finds that a
contract of service existed. Consequently, the Appellant's work for the Payor,
during the period at issue, is insurable under Paragraph 5(1)(a) of
the Act.
[40] The
appeal is allowed and the decision of the Minister is vacated.
Signed at
Ottawa, Canada, this 7th day of October, 2003.
Somers, D.J.
on this 22nd day of
March 2004.
Sharon Moren,
Translator
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