Jean v. M.N.R., docket 98-97-UI

Date: 19990528

Docket: 98-97-UI

BETWEEN:

RAYMONDE JEAN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for judgment

Charron, D.J.T.C.C.

[1] This appeal was heard at Québec, Quebec, on February 19, 1999, to determine whether the appellant held insurable employment within the meaning of the Unemployment Insurance Act (“the Act”) from June 17 to September 20, 1996, and from May 5 to July 18, 1997, when she worked for 9018-7683 Québec inc., which carried on business under the firm name Passion-Krafts International (the payer).

[2] By letter dated January 13, 1998, the respondent informed the appellant that the employment was not insurable because it did not meet the requirements for a contract of service and there was no employer-employee relationship between the payer and her during the periods at issue.

Statement of the facts

[3] The facts on which the respondent relied in making his decision are set out as follows in paragraph 5 of the Reply to the Notice of Appeal:

[TRANSLATION]

(a) The payer, which was incorporated in April 1995, operates a business involved in various fields, including animal repulsion, outside fireplaces, net conversion (golf course) and the catching and relocation of small mammals. (admitted)

(b) The payer’s sole shareholder is Théodore Davidson, the appellant’s former spouse. (admitted)

(c) The appellant was hired to work in the animal repulsion field; she had to make biscuits to be used as bait to catch small mammals (racoons, skunks). (admitted)

(d) The appellant lived in Ste-Flavie (near Rimouski), while the payer’s offices were in Neuville (near Québec). (admitted)

(e) The appellant did her work at home, making biscuits to be used to lure small animals in order to catch them. (admitted)

(f) The payer also hired Jean Nadeau to work on the same project as the appellant; he had to test the biscuits prepared by her. (admitted)

(g) Jean Nadeau, a researcher, was the executive director of the SPCA (Québec); the payer hired him to work eight hours a week for $100 a week until July 1997. (admitted)

(h) The appellant did research on what animals like; she did tests with cooked and uncooked dough and checked the shape, thickness and flavour of the biscuits (beef, fish, peanut butter). (admitted)

(i) The payer had agreed to pay the appellant fixed wages of $320 a week based on 40-hour weeks. (admitted)

(j) The appellant worked alone at home and was completely free to determine her hours of work, which were not recorded by the payer. (denied)

(k) The appellant prepared her recipes and sent her biscuits (about 30 at a time) by mail to the payer, which field-tested them. (admitted)

(l) Although the payer may have reimbursed the appellant for a few expenses (flour, peanut butter, telephone calls), it did not pay her anything for the use of her home, her electricity, her dishes or her equipment. (admitted)

(m) During the periods at issue, the appellant also worked at a golf course two or sometimes three days a week. (denied)

(n) The payer did not exercise any control over the appellant’s work or hours worked; it was concerned only with the final product. (denied)

(o) The appellant provided services to the payer under a contract for services and not a contract of service. (denied).

[4] The appellant admitted all the facts alleged in the subparagraphs of paragraph 5 of the Reply to the Notice of Appeal except those she denied or said she had no knowledge of, as indicated in parentheses at the end of each subparagraph.

Raymonde Jean’s testimony

[5] The appellant, a cook and waitress by trade, worked for the payer from June 17 to September 20, 1996, and from May 5 to July 18, 1997, doing research to find a basic recipe for an edible and natural product, a method for the long-term preservation of the product, essential oils that could attract the animal species targeted by the product, the appropriate cooking time and a packaging concept that would ensure preservation and be appealing for sales purposes; she also made the product and sent it to the Québec distribution centre to be tested (Exhibit A-1). She worked 40 hours a week (8:00 a.m. to noon and 1:00 p.m. to 5:00 p.m.) at $8 an hour. She did her work at home and provided the necessary essential oils and ingredients as well as moulds in the shape of various animals. When asked, she also worked weekends at the snack bar at the La Pointe golf course, where she cooked and waited on customers. The payer called her four or five times a week. When the product was finished, the appellant sent it to the payer by mail or courier. With the exception of a few ingredients, the payer did not reimburse the appellant anything for the use of her home, electricity, equipment and kitchen utensils. Jean Nadeau, a biologist, checked the toxicity of the products used. The appellant was paid by cheque by the payer, which determined the dates on which she started and stopped working. She made an average of 100 biscuits a week using different essential oils, usually seven or eight, in accordance with the instructions of Théodore Davidson, the sole shareholder, who was the payer’s representative. Animals had to like the product, because the payer wanted to make something delicious to eat, not a poison. Since Mr. Davidson had many things to do, he hired Jean Nadeau to act as a link with the appellant: Mr. Nadeau contacted her four or five times a week, or even more often, to give her Mr. Davidson’s instructions.

[6] Before he hired the appellant, Mr. Davidson was paying her monthly support of $350, which he continued to do even during the periods at issue. The appellant also earned $130 a week at the La Pointe golf course. While she was unemployed between the two work periods, she received unemployment insurance benefits. The appellant met Jean Nadeau twice in addition to talking to him on the telephone. Since the appellant lived in Mont-Joli and the payer was in Neuville, they were a three-hour drive apart.

Théodore Ludger Davidson’s testimony

[7] The reason the appellant was hired was to perfect various products that could lure animal pests into cages so that they could be relocated. The ingredients used were sardines, peanut butter, strawberry and raspberry jam, etc. The best time to catch the animals was from May to September. Since he began working as an inventor, Mr. Davidson has been credited with seven inventions. Having had two of his inventions stolen, he needed someone he could trust, which is what he found in the appellant. Because the essential oils used in making the products in question gave off a bad smell, he could not employ the appellant in his factory in Cap Santé. He therefore decided to hire her and allow her to do her research and work at home. She had to work 40 hours a week, from 8:00 a.m. to 4:00 p.m. each day, at an hourly rate of $8. Mr. Davidson knew that the appellant was working part time at the La Pointe golf course, but he did not care. The payer exercised control over its employee by requiring regular reports and samples of the various biscuits prepared. It was in regular contact with her on the telephone to discuss matters related to the project. She sent samples of her biscuits to the payer by courier or by bus. The appellant worked from June 17 to September 20, 1996, and the next year starting on May 5, during the hours of the day that suited her best. The payer ended its experiments because, to market the product, it had to have it approved as regards toxicity and effectiveness. The payer gave the appellant instructions on the preparation of the product and required her to make changes in the recipe. The payer reimbursed her for her telephone expenses and other outlays. The payer also decided which recipes would be tested and when. The dates on which the appellant was laid off were determined on the basis of the temperature, the season and the weather. The appellant provided services to the payer outside the periods at issue (Exhibit I-2). The end of the 1997 season was determined based on the payer’s cash flow. During the periods at issue, Théodore Davidson contacted the appellant three to five times a week.

New testimony by the appellant

[8] The invoices filed as Exhibit I-2 are for the purchase of paraffin and other goods for the next season, that is, from May 5 to July 18, 1997, but the appellant did not work between September 20, 1996, and May 5, 1997.

Sylvie Côté’s testimony

[9] Sylvie Côté, a Revenue Canada auditor, contacted the appellant on December 22, 1997, and Théodore Davidson on December 19, 1997, and January 5, 1998. The appellant told her: [TRANSLATION] “I’m the one who did the research and I’m the one who’s keeping them”, referring to the recipes she had used to make the biscuits. On page 100 of the transcript, at line 69, she said she no longer remembered. The appellant was entitled to 29 weeks of unemployment insurance benefits, and that is what she received. As regards her work schedule, Ms. Jean said that she did not always work 40 hours a week but that this made up for the rental of her equipment and home, etc. She could work in the evening, during the day or on weekends. The appellant was the one who determined her work schedule.

[10] Théodore Davidson also said that the appellant could do her work when she saw fit. The appellant gave him all the recipes. She earned $320 a week for 40 hours of work.

Analysis of the facts in relation to the law

[11] It must now be determined whether the appellant’s activities fall under the concept of insurable employment, that is, whether or not there was a contract of employment.

[12] The courts have established four essential tests for identifying a contract of employment. The leading case in this area is City of Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161. The tests are as follows: (1) control; (2) ownership of the tools; (3) chance of profit; and (4) risk of loss. In Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, the Federal Court of Appeal added the degree of integration test. This list is not exhaustive, however.

[13] The evidence showed that the appellant’s work was done under the payer’s supervision and that there was a relationship of subordination between them. It was the payer that owned the business necessary to its operations. A profit could be made or a loss incurred in operating the business by the payer alone and not by the appellant, who received only fixed wages. Finally, the appellant worked at home because the payer did not have permanent premises available to offer her. The tools were owned by the appellant and the payer paid her for their use. The appellant was very much integrated into the payer’s work.

[14] I therefore conclude that the payer operated a business and that the appellant worked for it during the periods at issue.

[15] Accordingly, the appeal is allowed and the respondent’s decision is vacated.

Signed at Ottawa, Canada, this 28th day of May 1999.

“G. Charron”

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 28th day of February 2000.

Erich Klein, Revisor