Lupien v. M.N.R., docket 97-1624-UI

Date: 19991210

Docket: 97-1624-UI

BETWEEN:

FERNANDE LUPIEN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

CLUB PARADISE ENR.,

Intervener.

Reasons for Judgment

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

[1] This appeal was heard at Trois-Rivières, Quebec, on October 18, 1999 to determine whether the appellant held insurable employment within the meaning of the Unemployment Insurance Act (the "Act") from March 1 to August 1, 1993 when she was employed by Club Paradise Enr., the payer.

[2] By letter dated May 29, 1997, the respondent informed the appellant that this employment was not insurable because there was no employer-employee relationship between her and the payer.

Statement of Facts

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

[TRANSLATION]

(a) the appellant and André Leblanc operated a bar under the firm name Club Paradise Enr.; (admitted)

(b) the business began operating around December 20, 1991; (admitted)

(c) the equipment and liquor licence were owned by the two partners, but they rented the building; (admitted)

(d) both partners could sign the payer's cheques and only one signature was required; (admitted)

(e) the payer's business had one full-time and three part-time employees; (denied)

(f) the administrative decisions were made jointly by the two partners; (admitted)

(g) André Leblanc was a partner in another business which occupied him full time; (admitted)

(h) the appellant managed the payer's business on a part-time basis before and after the period in issue; (admitted)

(i) during the period in issue, the appellant worked full time at the bar in addition to managing the business; (admitted)

(j) during the period in issue, the appellant worked seven days a week and determined her hours of work herself; (denied)

(k) during the period in issue, the appellant drew $378 from the business each week; (denied)

(l) before and after the period in issue, the appellant drew no weekly amounts from the business; (admitted)

(m) from 1992 to 1996, the appellant reported 50 percent of the business's losses and profits to the tax authorities. (admitted)

[4] The appellant admitted that all the subparagraphs of paragraph 5 of the Reply to the Notice of Appeal were true except those which she denied, as indicated in parentheses at the end of each subparagraph.

André Leblanc's Testimony

[5] At the time of the facts alleged above, the witness was doing business as a chartered appraiser under the firm name Évaluation André Leblanc et Associés. He and the appellant had also been partners in the Club Paradise bar since 1991. The bar was open from 4:00 p.m. until midnight during the week and until 3:00 a.m. on weekends. The appellant had been a partner with him since the end of 1991, having invested $10,000. Leblanc for his part had previously contributed the sum of $50,000. Leblanc testified that the payer had employed [TRANSLATION] "Ms. Lupien, who worked full time, and two part-time employees" (page 9, note 19). The appellant was both manager and waitress and received weekly remuneration of $378. Prior to March 1, 1993, the appellant worked without pay, as did Leblanc. Leblanc attended to the accounting and administration. Club Paradise was sold in April 1997. The appellant and Leblanc made decisions together. He was his own boss and often went to the bar around 4:00 p.m. to meet with customers and check the cash. The appellant received a notice of termination of employment on August 1, 1993 because summer was over. The appellant worked 42 hours a week at $9 an hour, as agreed upon with Leblanc.

Fernande Lupien's Testimony

[6] Ms. Lupien filed income tax returns for 1992, 1993 and 1994 and admitted that she had signed them. In her returns, she acknowledged that she had shared the profits and losses equally with her partner Leblanc (Exhibit I-1).

Analysis of the Facts in Relation to the Law

[7] The question I must determine is whether the appellant was employed under a contract of service by the payer business at the time of the facts alleged above, that is, from March 1 until August 1, 1993. It is important to note that this period was prior to the Civil Code of Quebec being passed (January 1, 1994).

[8] If I must apply the tests stated by the Privy Council in City of Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161, to determine whether there was a contract of service as opposed to a contract for services, those tests being control, ownership of tools, chance of profit and risk of loss, I have no other choice but to conclude that there was no contract of service. Fernande Lupien was a partner in Club Paradise Enr. The partnership contract was entered into in the province of Quebec and the legal consequences of that contract must be analyzed in light of the law applicable in Quebec.

[9] Partnership is not defined in the Civil Code of Lower Canada, but article 1830 establishes its nature as follows:

It is essential to the contract of partnership that it should be for the common profit of the partners, each of whom must contribute to it property, credit, skill, or industry.

[10] Having regard to the characteristics of a contract of partnership under the Civil Code of Lower Canada, it seems obvious that a partner cannot be an employee of his own partnership. As a partner, he takes part in the partnership's decision making, shares in its profits and losses, is in control of the partnership and cannot simultaneously act as his own employee.

[11] This in essence is what Judge Lamarre of this Court states in Carpentier v. M.N.R., [1996] T.C.J. No. 502.

[12] Similarly, Judge Archambault affirmed that:

. . . 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. (François Parent v. M.N.R., 97-1560(UI))

[13] For these reasons, the appeal is dismissed and the decision of the Minister of National Revenue is confirmed.

Signed at Ottawa, Canada, this 10th day of December 1999.

"G. Charron"

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 26th day of January 2001.

Erich Klein, Revisor