Tremplin Des Lecteurs v. M.N.R., docket 1999-3391-EI

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docket 1999-3391-EI

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Date: 20010118

Docket: 1999-3391-EI

BETWEEN:

LE TREMPLIN DES LECTEURS,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Lamarre, J.T.C.C.

[1] The appellant appeals from a decision by the Minister of National Revenue ("Minister") that Paulette Pierre-Louis held insurable employment with the appellant within the meaning of paragraph 3(1)(a) of the Unemployment Insurance Act and paragraph 5(1)(a) of the Employment Insurance Act ("Act") during the periods from April 1 to June 14, 1996 and from October 1 to December 20, 1996.

[2] In making his decision, the respondent relied on the following assumptions of fact:

[TRANSLATION]

(b) the appellant is a non-profit teaching organization;

(d) the worker was hired as a teacher;

(e) the worker's hours of work were determined by the appellant;

(f) the worker was paid $25 an hour;

(g) the worker's salary was determined by the appellant;

(h) the worker was paid for her sick leave;

(i) the worker had to inform the appellant of her absences;

(j) the worker was supervised by the appellant;

(k) in teaching, the worker had to comply with the program of the Ministère de l'Éducation du Québec and the appellant's instructions;

(l) all the equipment and supplies required by the worker were provided by the appellant;

(m) the worker's services were an integral part of the services offered by the appellant;

(n) there was a contract of service between the worker and the appellant . . . .

[3] The appellant is a non-profit organization which, during the periods in issue, received a grant from the Commission scolaire des Draveurs (the "school board") to give courses as part of a literacy program developed by the Ministère de l'Éducation du Québec to assist adults in eventually entering the job market. According to the testimony of Aline Drouin Prud'homme, who was duly authorized by the appellant to represent it, Ms. Pierre-Louis approached the appellant in late 1995 to offer her services. She had six years' experience in the field.

[4] Ms. Drouin Prud'homme initially tried to recruit students with the aid of Ms. Pierre-Louis, who had more experience. The two worked on a volunteer basis.

[5] Ms. Drouin Prud'homme testified that, to qualify for the grant, it was necessary to recruit at least 10 students who would agree to take a certain number of hours of training courses.

[6] According to the testimony of Louis Prud'homme, the appellant's president and Ms. Drouin Prud'homme's brother-in-law, it was not up to the appellant to apply for grants. It was the teacher concerned who had to approach the school board with the required information and complete a questionnaire, which the school board would analyse to determine whether he or she qualified for a grant. Mr. Prud'homme said he never saw one of these questionnaires.

[7] In Ms. Pierre-Louis's case, a grant was apparently awarded in April 1996 for the classes she taught starting in February 1996. The grant awarded by the school board was to cover Ms. Pierre-Louis's salary for the number of classes she taught, based on the information she provided. From what Ms. Drouin Prud'homme said, this was equivalent to a salary of approximately $20 an hour; Ms. Pierre-Louis was paid by the appellant, which received the grant money. However, if the teacher did not teach all the classes to the number of students indicated in the questionnaire submitted in applying for the grant, the grant could be reduced.

[8] In this context, Ms. Pierre-Louis had to obtain the signature of every student at every class, as Ms. Drouin Prud'homme did for the classes she gave herself, and the signatures were provided to the school board along with the number of hours taught.

[9] Ms. Drouin Prud'homme explained that she had agreed on occasion to replace Ms. Pierre-Louis on a volunteer basis so that the latter would not lose her entitlement to her grant. She did so in order to help Ms. Pierre-Louis, who was caring for two children on her own. However, Ms. Drouin Prud'homme clearly said that there had never been any question of paid sick leave for Ms. Pierre-Louis. In any case, the appellant was a non-profit organization which could not afford to hire staff, much less pay sick leave for a teacher receiving a grant from the school board.

[10] Ms. Drouin Prud'homme indicated that she had not supervised Ms. Pierrre-Louis in her work. Ms. Pierre-Louis had to teach her classes in accordance with the program described and at the times chosen by the school board, in a room provided by it. Ms. Drouin Prud'homme testified that she helped Ms. Pierre-Louis and collaborated with her in addition to dealing with the school board. She added that she had done a practicum under Ms. Pierre-Louis's supervision when studying for a post-graduate degree in adult education. Ms. Drouin Prud'homme had also advanced a little more than $1,400 to the appellant in the form of charitable gifts (Exhibit A-3) to enable her to cover the costs of recruiting students (advertisements and notices, required material and distribution).

[11] On June 21, 1996, Ms. Pierre-Louis signed a document whereby she agreed to work for the appellant on contract in 1996. She described herself as a self-employed worker and acknowledged that she would be responsible for paying all amounts owed to the government out of her salary (Exhibit A-1).

[12] On November 27, 1996, the appellant signed a [TRANSLATION] "service contract" with Ms. Pierre-Louis in which the latter undertook to teach literacy classes to the group of students registered by the appellant with the Commission scolaire des Draveurs. Under this contract, Ms. Pierre-Louis agreed to teach 20 hours a week over 11.5 weeks from October 1 to December 20, 1996 in accordance with a pre-determined schedule. The contract stipulated that the fees would be paid to Ms. Pierre-Louis in four instalments starting on November 11, 1996. It also stated that either party could terminate the contract by giving advance notice. One of the clauses of the contract stipulated that the appellant undertook to pay for any services rendered before the contract termination date, if the contract were terminated, provided that those services were satisfactory and were rendered in accordance with the contract. The appellant also undertook to pay only for hours worked.

[13] In commenting on the contract, Ms. Drouin Prud'homme stated that Ms. Pierre-Louis had to teach a minimum of 20 hours in order to qualify for the grant, but that the suggested schedule could vary. She indicated that she had prepared the contract in order to satisfy the requirements of the school board, which wanted to ensure that the number of hours of classes had actually been taught.

[14] Louis Prud'homme, who signed the contract, said that the contract had not been submitted to the board of directors. He noted that Ms. Pierre-Louis had demanded a great deal and that he had had her sign the agreement in order to protect himself in case she left saying that she had not been paid.

[15] He testified that the appellant is a "channel" between the teacher and the school board. If a grant is awarded, the volunteer work becomes paid work. He said that the appellant did not have money to hire anyone to supervise a teacher's work. Ms. Drouin Prud'homme herself worked on a volunteer basis except if the grant received also covered the hours of classes she taught. The hiring of Ms. Pierre-Louis on a contract basis had been approved by the board of directors on the condition that the grant application was officially accepted.

[16] Mr. Prud'homme stated that the board of directors was unqualified to evaluate Ms. Pierre-Louis's work. It was the school board that had accepted Ms. Pierre-Louis as being qualified to teach, based on her qualifications.

[17] Nicole Sarrault, an appeals officer with the Canada Customs and Revenue Agency, testified that Ms. Pierre-Louis was on unemployment insurance when she began working for the appellant. In the circumstances, Ms. Pierre-Louis told her that she was interested in signing a contract under which she would be considered a self-employed worker. She did not want employment that was considered to be insurable within the meaning of the Act. Ms. Pierre-Louis subsequently applied for employment insurance and Ms. Sarrault decided the employment was insurable. She stated that Ms. Pierre-Louis told her she had earned $25 an hour, not $20 an hour, that she had been told she would be paid for all the hours of classes she taught, that she had had paid sick leave and that she had been supervised by Ms. Drouin Prud'homme, who kept a record of the hours she taught.

[18] It should be mentioned here that Ms. Pierre-Louis did not attend the hearing in Ottawa. Counsel for the respondent stated that she had decided not to subpoena her even though the respondent had sided with Ms. Pierre-Louis, on the ground that she now lives in Toronto and that doing so would have been too expensive for the respondent.

[19] Counsel for the respondent contends that Ms. Pierre-Louis was an employee of the appellant during the periods in issue based on the following factors:

(1) the existence of a resolution by the appellant's board of directors authorizing the hiring of Ms. Pierre-Louis;

(2) the fact that the appellant's president signed the pay cheques;

(3) it was the appellant that received the grant money from the school board;

(4) the fact that the appellant issued T4 slips to Ms. Pierre-Louis stating the total amounts paid to her (although no source deductions were made); and

(5) the existence of a "service contract" (Exhibit I-1) providing for the payment of fees to Ms. Pierre-Louis if her services were deemed satisfactory.

[20] In her argument, counsel for the respondent referred to the tests established in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025, namely control, ownership of the tools, chance of profit and risk of loss, and the "integration" or "organization" test, which relates to whether Ms. Pierre-Louis worked on her own behalf or on behalf of the appellant. These tests must be analysed in light of all the elements constituting the relationship between the parties.

Analysis

[21] It seems to me in the instant case that, if control was exercised by the appellant, it was exercised only over the number of hours taught by Ms. Pierre-Louis. The evidence shows that the school board accepted the qualifications of a candidate to teach what was provided for in the training program established by the Ministère de l'Éducation du Québec. Ms. Drouin Prud'homme was neither qualified nor authorized to check that Ms. Pierre-Louis indeed complied with the requirements of the training program. Moreover, from what I understand of the evidence, it was the candidate herself who had to obtain a grant for the courses she was prepared to give. The candidate had to recruit the required number of students and propose a sufficient number of hours for the school board to award her a grant.

[22] I asked myself the following question: what was the appellant's raison d'être? What interest did it have in receiving these grants?

[23] The evidence revealed nothing on this point. The only information I have comes from the appellant's representatives, who appear to be honest people acting in good faith who believe in a good cause and are trying to contribute in their way to the instruction of people who are less educated. Their testimony did not suggest to me that they stand to gain anything from the grants they receive. It appears that these grants are used solely to pay the teacher who agrees to give courses in accordance with the program provided by the school board. Moreover, the appellant is a non-profit organization which has no money of its own to hire any employees whatever. As Mr. Prud'homme said, volunteer work becomes paid work in so far as the school board agrees to provide grant money. This is not guaranteed.

[24] I believe I understand from the evidence as a whole that it is the school board that exercises control over a candidate through the appellant, which ensures that the required number of students attend the classes and that the number of hours taught by the candidate is consistent with the information given to the school board. To do this, the school board pays the grant money to the appellant, which must then pay the teacher out of it. This is my interpretation of the evidence in the absence of testimony by a witness who could have presented the school board's point of view.

[25] In this context, I do not see how the appellant can be characterized as an employer. Control over hours is performed on behalf of the school board, which from what I understand appears to delegate that power to the appellant under a service agreement, which unfortunately was not filed in evidence.

[26] The school board provides the premises and the few other supplies were purchased out of a charitable gift made to the appellant by Ms. Drouin Prud'homme.

[27] Concerning the chance of profit and risk of loss, it appears to me that this was assumed by Ms. Pierre-Louis. If she did not work all her hours or did not get the signatures of all her students, the amount of the grant might well have been reduced along with her own salary, as it was paid entirely out of that grant. Nothing in the evidence suggests that the appellant had to pay Ms. Pierre-Louis's salary or reimburse the school board if Ms. Pierre-Louis did not work all her hours.

[28] As to the integration test, the minutes of the April 2, 1996 meeting of the appellant's board of directors filed as Exhibit I-4 clearly states that Ms. Pierre-Louis would not be [TRANSLATION] "accepted as a contractual employee [unless] the application made to the Commission scolaire des Draveurs for a grant is officially accepted". In my view, Ms. Pierre-Louis's contract was incidental to the appellant's activities. This was the first time the appellant had faced this type of situation (before then, Ms. Drouin Prud'homme had always given the courses, mainly on a volunteer basis).

[29] As to the service contract filed as Exhibit I-1, on which counsel for the respondent insistently relied, I note that it was signed near the end of the period, on November 27, 1996. Furthermore, from what I understand of the evidence, the terms agreed upon between the parties merely restated the school board's requirements respecting the work schedule. The fees were allocated in accordance with the grant received. Lastly, it was only in the event of termination that the appellant undertook in the contract to pay Ms. Pierre-Louis for services rendered prior to the contract termination date, provided that those services were satisfactory and were rendered in accordance with the contract.

[30] The appellant's witnesses testified that they had drafted this contract in order to protect themselves after experiencing problems with Ms. Pierre-Louis. Ms. Pierre-Louis was not present in court. However, it appears from the evidence that she displayed dubious conduct toward the Prud'hommes. It was she who insisted at the outset that she be described as a self-employed worker. For a certain period (from February to April 1996), she was apparently receiving both employment insurance benefits and grant money from the school board at the same time.

[31] She subsequently claimed to have been paid $25 an hour, which she calculated by applying her total earnings to a shortened period (April to June 1996), whereas they should have been applied to a longer period (February to June 1996), which would in fact have worked out to only $20 an hour.

[32] The respondent nevertheless disregarded this and sided with Ms. Pierre-Louis, relying on Exhibit I-1 (the service contract) and deliberately disregarding the first letter signed by Ms. Pierre-Louis, which described her as a self-employed worker (Exhibit A-1).

[33] Counsel for the respondent referred to the Federal Court of Appeal's decision in Emily Standing v. Canada (Minister of National Revenue - M.N.R.), [1992] F.C.J. No. 890 (QL), to support her contention that the parties may not define a relationship that exists between them "regardless of the surrounding circumstances when weighed in light of the [test from Wiebe Door Services Ltd., supra]". Counsel for the respondent was alluding here to the letter signed by Ms. Pierre-Louis on June 21, 1996 (Exhibit A-1).

[34] I find that the circumstances surrounding the relationship between the parties do not alter the way in which the parties themselves described their agreement from the outset. The service contract on which the respondent relies, stating that it is more like a contract of service, was drafted at the end of the period by Ms. Drouin Prud'homme, without the advice of legal counsel. It was drafted primarily to satisfy the requirements of the school board, which wanted to ensure that the number of hours of classes had actually been taught, but also to avoid being accused by Ms. Pierre-Louis of appropriating the grant money that was intended for her. I do not find that this contract alone changes the relationship that existed between the parties from the outset.

[35] Furthermore, in taking Ms. Pierre-Louis's side even though he knew that she herself had claimed to be a self-employed worker in order to be able to continue drawing employment insurance benefits while receiving a grant in 1996, the respondent had a duty, in my view, to summon her to the hearing, regardless of the cost that would entail. By acting as he did, the respondent gave the impression that he wanted to avoid adducing certain evidence while at the same time suggesting that the documentary evidence should take precedence over the credibility of witnesses. What is more, the documentary evidence is contradictory if one accepts the respondent's view that the service agreement (Exhibit I-1) is a document establishing a contract of service. The first letter signed by Ms. Pierre-Louis (Exhibit A-1) stated that she was being hired as a self-employed worker. In view of this contradiction in the documentary evidence, it is my view that Ms. Pierre-Louis's presence was crucial for the respondent to establish his point. It is not enough in the instant case to contend that the burden of proof was in any event on the appellant. This is a question of principle, which I believe goes beyond the monetary considerations raised by counsel for the respondent.

[36] In view of the absence of this important witness and of a representative of the school board, and having regard to the credibility I attach to the testimony of the Prud'hommes (who I believe are honest people dedicated to a good cause on a mainly volunteer basis), I believe the evidence adduced by the appellant is sufficient to contradict in large part the allegations made by the respondent in the Reply to the Notice of Appeal.

[37] Accordingly, the appellant does not have to discharge a more onerous burden of proof in the instant case. In the circumstances, I find that the evidence shows on a balance of probabilities that Ms. Pierre-Louis was not an employee of the appellant during the periods in issue.

[38] For these reasons, it is my view that I should allow the appeal and vacate the Minister's decision.

Signed at Ottawa, Canada, this 18th day of January 2001.

"Lucie Lamarre"

J.T.C.C.

Translation certified true

on this 30th day of May 2002.

Stephen Balogh, Revisor

[OFFICIAL ENGLISH TRANSLATION]

1999-3391(EI)

BETWEEN:

LE TREMPLIN DES LECTEURS,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on January 12, 2001 at Ottawa, Ontario by

the Honourable Judge Lucie Lamarre

Appearances

Agent for the Appellant: Aline Drouin Prud'homme

Counsel for the Respondent: Cathy Chalifour

JUDGMENT

The appeal under subsection 103(1) of the Employment Insurance Act is allowed and the Minister's decision in the appeal made to him under section 91 of that Act is vacated.