Citation: 2011 TCC 414
Date: 20111202
Docket: 2011-556(EI)
BETWEEN:
RÉJEAN JACQUES,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1]
Réjean Jacques is
appealing from a decision of the Minister of National Revenue (the Minister)
concerning the admissibility of the work of François Quesnel (the worker)
as insurable employment for the purposes of the Employment Insurance Act,
S.C. 1996, c. 23, as amended (the Act). The Minister determined that the
worker held insurable employment with Réjean Jacques (the payer) from
January 1, 2009, to December 31, 2009 (the period). According to the
Minister, the worker was engaged under a contract of employment, but the payer
argues that it was a contract for services.
[2]
The Minister determined
that the worker was employed by the payer under a contract of service relying
on the following presumptions of fact stated at paragraph 5 of the Reply
to the Notice of Appeal:
[Translation]
(a) The appellant has owned a farm rearing livestock
for meat for over 9 years; [admitted]
(b) The farm is located at 774 rang 7 East
Broughton; [admitted]
(c) The owner of the farm, that is, the appellant,
lives in Connecticut, United States, which is 400 miles from East Broughton;
[admitted]
(d) The farm's assets include a barn, 2 houses, 2
garages, 2 tractors with trailers for animals and an all-terrain vehicle;
[admitted]
(e) In 2008, the herd was about 500 heads, and another
400 were added to it for a total of about 900 heads; [admitted]
(f) In 2009, gross sales were $911,646, which
generated a net loss of $882,000; [admitted]
(g) The worker was hired after he responded to an
advertisement published at the l'Union des producteurs agricoles de Beauce;
[admitted]
(h) There was a verbal contract of employment
between the parties; [admitted]
(i) The worker replaced Réal Bolduc; [admitted]
(j) The worker's duties were those of a farm
manager; as such, his responsibilities were to take care of the animals and the
cropland and to maintain the buildings; [admitted]
(k) The worker gained his experience by working in
Western Canada; [admitted]
(l) In the summer, the worker performed his duties
7 days a week from 6 a.m. to 6 p.m., while, in the winter, he worked fewer
hours, between 65 to 70 per week; [denied]
(m) Although both parties decided on the work to be
done, it was the appellant who planned out the worker's work; [denied]
(n) Since the appellant lived far from the farm,
supervision was done through monthly visits to the farm of at least one week per
month and through several phone calls per day; [admitted]
o) The appellant supplied all the equipment and
materials necessary for the performance of the worker's tasks including one of
the houses on the farm the heating and electricity for which were paid by the
appellant as well as a 2007 Silverado truck; [admitted]
(p) The worker was paid $750 per week in 2008 and
$1,000 per week in 2009; [denied]
(q) In order to get paid, the worker had to submit
invoices to the appellant at the appellant's request; [admitted]
(r) Two cheques from the appellant totalling $15,150
were issued to the worker by the appellant as bonuses; [denied]
(s) On October 20, 2009, the appellant signed a
letter addressed to the UPA, in which he referred to the worker as an employee,
while on October 25, 2010, he signed another letter addressed to the UPA
indicating that the worker was a sub-contractor. [admitted]
[3]
Subparagraph 5(l) of
the Reply to the Notice of Appeal was denied by the appellant because,
according to him, the worker worked much fewer hours than indicated because he
had a flexible schedule allowing him to take care of his three children
aged 4, 6 and 10, who did not live with him in the house on the farm. The
worker's children lived in an undisclosed location around 150 kilometres
away, the trip to which took 1.5 hours by car. According to the payer's
testimony, the worker did not have to be present on the farm all day every day
because the manual farm work was done by two other sub-contractors and because
the animals did not need daily care: they were outside all year round and their
food was given to them only every 4 or 5 days. In addition, the payer did not
keep a staff schedule book because the worker was paid a fixed weekly salary, not
based on hours worked.
[4]
Subparagraph 5(n) of
the Reply to the Notice of Appeal was denied because the payer did not plan out
the worker's work. In his testimony, the payer explained that the worker had
over 30 years of experience and much more knowledge than he about raising
livestock for meat, the care it needed and the diseases that could afflict it. The
worker was the farm's general manager and it was he who planned out his work. The
payer also explained that, during the period, he operated a construction
business in Connecticut, United States, which employed about 15 people. The
payer dedicated a great deal of time to his construction business so he had
very little time to spend on the farm's activities. His presence on the farm
was limited to only one week per month when he visited his 102 year-old mother
and to daily phone calls.
[5]
Subparagraph 5(p) of
the Reply to the Notice of Appeal was denied because the worker's pay in 2008
was $600 per week plus tax, and his pay for 2009 was $800 per week plus tax.
[6]
Subparagraph 5(r) of
the Reply to the Notice of Appeal was denied because the two cheques dated
March 22, 2009, totalling $15,150 were not paid as bonuses but were a rebate
obtained by the worker when he bought hay. Instead of paying $20 per bale, the
worker managed to get the price reduced by $3 to $4 per bale; the appellant
therefore paid the worker an amount equivalent to the discount received.
[7]
In addition to the
facts described above, the evidence showed the following:
(a) The worker's invoices were generally
for custom work and indicated the period during which the work was done, the
amount billed and the amount of goods and services tax and Quebec sales tax. The
worker's tax numbers were not on the invoices.
(b) One invoice, dated January 16,
2009, referred to a sale of hay bales and to the sale price for the bales; in
that case, the goods and services tax and the Quebec sales tax were not added
to the invoice amount.
(c) According to the payer's testimony, it
was the worker who asked for a flexible schedule in order to be able to take
care of his children and to be considered self-employed. According to the
payer, if the worker wanted to be considered an employee, he would still have
hired him because he did not object to this.
(d) The payer also explained that, in
September 2009, he made the decision to sell the farm and that he offered to
pay the worker four months' salary if the farm was sold before the end of
2009. Even though the farm was not sold before the end of 2009, the payer still
paid the worker for the last three months of 2009 because he continued cleaning
the farm until December 2009.
Analysis
[8]
The issue is whether
François Quesnel held insurable employment for the purposes of the Act. The
relevant provision is paragraph 5(1)(a) of the Act, which reads as follows:
5. (1) Subject to subsection (2), insurable employment is
(a) employment in Canada by one or more employers, under any
express or implied contract of service or apprenticeship, written or oral,
whether the earnings of the employed person are received from the employer or
some other person and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or otherwise;
[9]
That provision defines
insurable employment as employment under a contract of service. The Act does
not define what constitutes such a contract. However, section 8.1 of the Interpretation
Act, R.S.C. (1985), c. I-21 (enacted by S.C. 2001, c. 4, s. 8) states the following concerning the
application of a federal act in a province with regard to property and civil
rights:
Property and Civil Rights
8.1 Both the common law and the civil law are equally authoritative
and recognized sources of the law of property and civil rights in Canada and,
unless otherwise provided by law, if in interpreting an enactment it is
necessary to refer to a province’s rules, principles or concepts forming part
of the law of property and civil rights, reference must be made to the rules,
principles and concepts in force in the province at the time the enactment is
being applied.
[10]
The provisions of the Civil
Code of Québec (Civil Code or C.C.Q.) used to determine the existence of a
contract of employment in Quebec and to distinguish it from a contract of
enterprise or for services are articles 2085, 2098 and 2099:
2085. A contract of employment is a contract by which a person, the
employee, undertakes for a limited period to do work for remuneration,
according to the instructions and under the direction or control of another
person, the employer.
2098. A contract of enterprise or for services is a contract by
which a person, the contractor or the provider of services, as the case may be,
undertakes to carry out physical or intellectual work for another person, the
client or to provide a service, for a price which the client binds himself to
pay.
2099. The contractor or the provider of services is free to choose
the means of performing the contract and no relationship of subordination
exists between the contractor or the provider of services and the client in
respect of such performance.
[11]
It is clear from these
provisions of the Civil Code that the three essential conditions for the
existence of a contract of employment are (i) performance of work by the
worker; (ii) remuneration for that work paid by the employer; (iii) the employer's
power of direction or control over the worker. The existence of a relationship
of subordination with regard to the work performed clearly distinguishes a
contract of enterprise or for services from a contract of employment.
[12]
As Justice Archambault
of this Court so aptly stated in Beaucaire v. M.N.R., 2009 TCC 142
(CanLII):
[24] In Québec, unlike in the common law, the main issue is
whether there is a relationship of subordination, or a power of control or
direction. . . .
[13]
In the common law, the
applicable distinguishing criteria are those stated in Wiebe Door Services
Ltd. v. M.N.R., 87 D.T.C. 5025, namely the degree of control, ownership of
the work tools, the chance of profit and risk of loss, and the degree of
integration of workers into the business.
[14]
The determination of
the issue of insurability of employment implies the determination of the nature
of the relationship between the parties. In the absence of a genuine written
contract between the parties, the Court may consider the parties' statements
with regard to the nature of their contractual relationship even though these
statements are not necessarily conclusive.
[15]
In this case, it has
been demonstrated that the payer had published with the U.P.A. an offer of
permanent employment with lodging and electricity provided. According to the
payer, the worker had asked to be considered as an independent contractor to be
able to work at his own pace and to benefit from a flexible schedule. The
worker submitted invoices for custom work to the payer charging him taxes. The
payer did not produce T-4's for the remuneration paid to the worker. In a
letter dated October 20, 2009, addressed to the U.P.A. (Exhibit A-2),
the payer indicated that, since May 1, 2008, the worker has demonstrated many
qualities as an employee and that he would not hesitate to recommend the worker
for any job within the agricultural sector. In a subsequent letter dated
October 25, 2010 (Exhibit A-3), also to the U.P.A., the payer indicated
that the worker acted as an sub-contractor and not as an employee, that he did
business under the name "Service Agricole François Quesnel" and that
he provided invoices to him under that name. The worker did not act as an
intervener in the proceedings and did not testify at the hearing.
[16]
The statements and
behaviour of the parties with regard to the nature of their contractual
relationship therefore contain contradictions and discrepancies.
[17]
However, the worker's
and payer's versions are more or less similar with regard to the performance of
work carried out by the worker for the payer and to the remuneration paid by
the payer to the worker, except concerning the nature of the payments of
$15,000 in March 2009, and $1,400 in January 2009, for the sale of hay bales.
[18]
Based on the evidence,
the worker managed the payer's farm and had to supervise the payer's cattle
herd. The worker had some flexibility in his work but had to constantly and
regularly report to the payer on the services rendered or to be rendered by the
worker during two to three telephone calls per day or during the payer's visits
of at least one week per month. The exercise of the payer's power of control or
direction over the worker shows the existence of a relationship of
subordination and that the services provided by the worker were performed
within an employee-employer relationship. It was not demonstrated at the
hearing that the worker was free to choose the means of performing the services
to be rendered.
[19]
Among the other factors
considered, it should be noted that all equipment and material was supplied by
the payer and that the payer assumed all the financial risk from the operation
of the farm. The worker had the opportunity to make a profit from the sale of
hay bales, but this factor is not determinative in itself given the nature of
the entire relationship between the worker and the payer.
[20]
For these reasons, the
appeal of the Minister's decision relative to the admissibility of the work of
François Quesnel as insurable employment for the purposes of the Act is
dismissed and the Minister's decision is confirmed.
Signed at Ottawa, Canada, this 2nd day of December
2011.
"Réal Favreau"
on this 17th day
of January 2012
Margarita
Gorbounova, Translator
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