2425-1530 Québec Inc. v. M.N.R., docket 96-2428-UI

Date: 19980205

Docket: 96-2428-UI

BETWEEN:

2425-1530 QUÉBEC INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

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

[1]            This appeal was heard at Montréal, Quebec, on December 1, 1997, to determine whether the employment of Ghazi Khord Salim, the worker, from May 12, 1995, to May 12, 1996, while he was working for the appellant, 2425-1530 Québec Inc, was insurable within the meaning of the Unemployment Insurance Act ("the Act").

[2]            By letter dated November 4, 1996, the respondent informed the appellant that the worker's employment was insurable because there was an employer-employee relationship between it and the worker.

Statement of facts

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

[TRANSLATION]

(a)            the appellant has been in existence for about 10 years; (admitted)

(b)            Francine Brouillet is the appellant's sole shareholder; (admitted)

(c)            the appellant is a franchisee that operates a Mikes restaurant; (admitted)

(d)            Ms. Brouillet was responsible, inter alia, for accounts receivable and payable and for hiring and laying off employees; (denied)

(e)            the worker managed the restaurant; (denied)

(f)             when necessary, he also made deliveries for the appellant; (admitted)

(g)            the worker's managerial duties included being responsible for the inventory and for the staff's work schedules; (denied)

(h)            the appellant controlled the work done by the worker; (denied)

(i)             the appellant required the worker to do the work himself; (denied)

(j)             the worker had a fixed work schedule; (denied)

(k)            the appellant paid the cost of the worker's pager; (admitted)

(l)             the worker had a fixed annual salary; (denied)

(m)           he was paid every two weeks; (denied)

(n)            the worker's work was integrated into the appellant's business; (denied)

(o)            during the period at issue, there was a contract of service between the appellant and the worker. (denied)

[4]            The appellant admitted the truth of all the subparagraphs of paragraph 5 of the Reply to the Notice of Appeal except those it denied, as can be seen from the notation in parentheses at the end of each subparagraph.

Testimony of Francine Brouillet

[5]            Ms. Brouillet was the appellant's president during the period at issue. The worker was employed by the appellant from March 1992 until December 1993, when he resigned. He resumed working on March 26, 1994, and stopped again in September 1994 (Exhibit A-1). Ms. Brouillet assured the Court that the worker is an accountant, management consultant and the owner of his own management company. By private writing dated October 31, 1994 (Exhibit A-3), she hired the worker as a consultant for the appellant at a salary of $22,000 a year, divided over 12 months. As a self-employed worker, he was not to be entitled to any severance pay or unemployment insurance benefits if he left, and he was to invoice the appellant monthly for the payment of his salary. In return, he was not subject to any control and he determined his own work schedule. He carried on business under the firm name Salim Consultation, as set out in the certificate from the Inspector General of Financial Institutions (Exhibit A-4). The worker regularly sent the appellant invoices to obtain payment of his fees (Exhibit A-5) for [TRANSLATION] "consulting and delivery". Mr. Salim filed a "declaration and undertaking by an owner of a sole proprietorship" with the Royal Bank (Exhibit A-6) on October 8, 1994. The worker filed a tax return in 1994 and 1995 under the firm name Consultation Salim Enr. (Exhibits A-8 and A-9). Cheques for his fees were given to him irregularly, as set out in the list of payments by cheque (Exhibit A-10). Ms. Brouillet said that Mr. Salim's work involved making the delivery service functional, reducing the inventory and stabilizing the total payroll. Mr. Salim was able to reduce the inventory after three months of work. By private writing dated December 23, 1986, Mikes Restaurants undertook to provide [TRANSLATION] "reasonable assistance to the franchisee in starting up its restaurant" (Exhibit I-1). Ms. Brouillet managed the restaurant and made deposits. Ms. Kattar and Mr. Salim also made deposits on occasion. Ms. Brouillet provided Mr. Salim with a pager to help him perform his work and to increase his availability. Mr. Salim succeeded in stabilizing the total payroll and reducing the inventory, but he continued to work for the appellant until May 12, 1996. In addition to stabilizing the total payroll, reducing the inventory and reorganizing the delivery service, Mr. Salim also hired staff.

Testimony of Daniel Normand

[6]            Daniel Normand, a driver by trade, has worked for the appellant for two years and was hired by Mr. Salim to make deliveries. Mr. Salim also made deliveries sometimes. Daniel Normand was under Mr. Salim's authority and sometimes had to report to him. It was Mr. Salim who assigned him his working hours and who checked the accuracy of the money received during the day.

Testimony of Ghazi Khord Salim

[7]            Mr. Salim is currently unemployed, but he worked for the appellant as a delivery driver from March or February to December 1993. Ms. Brouillet hired him as manager on condition that he register himself under a firm name: "you won't have to pay your taxes", she told him. Mr. Salim was subject to control from all sides. He immigrated to Canada in 1990. He never attended McGill University, but he did take an English course at Concordia and a management course at H.E.C. in 1992. He earned an accounting degree in his country that is not valid in Canada. Mr. Salim was never entitled to hire or dismiss staff except one time when Ms. Brouillet was on vacation in Florida and an employee who had quit had to be replaced urgently. When Ms. Brouillet returned, she hastened to dismiss the person. In Daniel Normand's case, Mr. Salim acted only as a go-between: he gave the appellant Mr. Normand's employment application and told Mr. Normand her answer. Generally speaking, Ms. Brouillet was at the restaurant in the mornings but not the afternoons; Mr. Salim thus replaced her six and sometimes seven days a week.

[8]            He also replaced her when she went to her cottage or to Florida on vacation. On these occasions, he acted as manager; he made deposits and supervised the employees. If there was a problem, he called her wherever she was, whether in Florida or up north. He explained the situation to her and carried out her decision. He made deliveries when he had free time. If something was needed, he purchased it, paid for it himself and was reimbursed by the appellant.

[9]            Mr. Salim received his paycheque every two weeks. At the appellant's request, he received his cheques in the opposite weeks to the weeks when the other employees received theirs. His salary was $35,000 a year, payable in 52 equal instalments. In September 1995, the appellant reduced his salary to $29,500 because the restaurant's income was down. The appellant decided that Mr. Salim had to do 40 hours of deliveries over six days of work every week. He had Tuesday off, but he always had to show up at the restaurant when Ms. Brouillet called him on his pager.

[10]          As well, he often made the appellant's bank deposits at the National Bank at 9000 rue de l'Acadie.

Analysis of the facts in relation to the law

[11]          It must now be determined whether Mr. Salim's activity falls within the concept of insurable employment, that is, whether or not there was a contract of employment. Was Mr. Salim the appellant's manager, or was he a consultant under a contract for services?

[12]          The courts have developed 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., the Federal Court of Appeal added the degree of integration. This list is not exhaustive, however.

[13]          The evidence showed that the worker's work was performed under the appellant's supervision and that there was a relationship of subordination between them. It was the appellant that owned the business required for its operation. A profit could be made or a loss incurred in operating the business only by the appellant, and not by the worker, who received only a fixed salary. Finally, the worker did his work on the appellant's premises and was very much integrated into its business.

[14]          Ms. Brouillet's testimony was confused and riddled with contradictions. I find that the worker was employed by the appellant during the period at issue under a contract of service.

[15]          Accordingly, the appeal is dismissed and the Minister's determination is affirmed.

Signed at Ottawa, Canada, this 5th day of February 1998.

"G. CHARRON"

D.J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]

Translation certified true on this 16th day of November 1998.

Kathryn Barnard, Revisor