Citation: 2009 TCC 549
Date: 20091026
Dockets: 2009-984(EI)
2009-985(EI)
BETWEEN:
LYNE GAGNÉ and L'EXPRESS MARCHANDISEUR
INC.,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE
Respondent,
and
PATRICK BÉLAND and FRÉDÉRIC POULIN,
Interveners.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Bédard J.
[1]
The appellants are appealing from the decisions of the
Minister of National Revenue (the Minister) made under
the Employment Insurance Act (the Act). In
file No. 2009-984(EI), the Minister decided that, for the period from
October 31, 2006, to December 2, 2007, Patrick Béland
was employed under a contract of service and that accordingly he held insurable
employment within the meaning of paragraph 5(1)(a) of the Act when he
was working for SOS Garnisseurs, a business operated by Lyne Gagné.
In file No. 2009-985(EI), the Minister decided
that, for the period from January 1, 2007, to
January 5, 2008, Frédéric Poulin was employed under a contract
of service and that accordingly he held insurable employment within the meaning
of paragraph 5(1)(a) of the Act, when he worked for L’Express
Marchandiseur Inc. (L’Express).
[2]
In making
his decision in file No. 2009-984(EI), the Minister relied on the
following assumptions of fact:
[Translation]
(a)
The appellant registered a
sole proprietorship on February 24, 2006. (admitted)
(b)
The appellant registered a
trade name of "SOS Garnisseurs". (admitted)
(c)
The appellant operated a
business specializing in setting up displays and stocking shelves with bread in
supermarkets. (admitted)
(d)
The appellant's clients were
Maxi and Loblaws for the bread supplier Weston and Super C, Métro and IGA for
the bread supplier Multimarques. (admitted)
(e)
The appellant employed
between 10 and 20 people depending on the time of year. (admitted)
(f)
The worker was hired as a
shelf stocker by the appellant. (admitted)
(g)
The worker’s tasks consisted
of stocking the shelves with bread, rotating the bread, checking the bread-tag
codes and taking inventory. (admitted)
(h)
The parties do not agree on
whether the worker provided services as a salaried worker or a self-employed
worker. (admitted)
(i)
According to the appellant,
the worker had signed a self-employment contract; according to the worker,
there was no written contract between the parties. (admitted)
(j)
The worker had three days of
unpaid training for Weston and seven days for Multimarques. (admitted)
(k)
The worker had no experience
as a display artist or shelf stocker before working for the appellant. (admitted)
(l)
After his training, the
appellant assigned the worker to a sector close to his home. (admitted)
(m)
The work schedule was
determined by the appellant. (denied)
(n)
The work hours were mainly
from 2 a.m. to 7 a.m. as well as at stocking time in the afternoon on the busy
days, namely, from Thursday to Sunday. (admitted)
(o)
The worker's schedule was
always the same from one week to the next. (denied)
(p)
If the worker was absent, he
informed the appellant, and she had to find a replacement. (admitted)
(q)
For bread made by Weston,
the appellant paid her workers 7 to 8 cents per loaf. (admitted)
(r)
For bread made by
Multimarques, the appellant paid the worker $12.00 per hour. (admitted)
(s)
The worker had to cover his
own transportation costs for getting to the supermarkets, but, as he travelled
by bicycle, he had almost no expenses in carrying out his functions. (admitted)
(t)
The appellant gave the
worker instructions by telephone or e-mail. (admitted)
(u)
The appellant sometimes
visited the work sites to check the quality of the workers’ stocking. (admitted)
(v)
The worker had to follow the
instructions of the appellant and her clients in carrying out his tasks. (admitted)
(w)
Complaints from the clients
and supermarket managers were addressed to the appellant, who took action
accordingly. (admitted)
(x)
The
clients were clients
of the appellant and not of the worker. (admitted)
[3]
In making
his decision in file No. 2009-985(EI), the Minister relied on the following
assumptions of fact:
[Translation]
(a)
The appellant
incorporated on August 31, 2006. (admitted)
(b)
Lyne Gagné was the
appellant's sole shareholder. (admitted)
(c)
The appellant operated a
business specializing in setting up displays and stocking shelves with bread in
supermarkets. (admitted)
(d)
The appellant's clients were
Maxi and Loblaws for the bread supplier Weston and Super C, Métro and IGA for
the bread supplier Multimarques. (admitted)
(e)
The appellant employed
between 10 and 20 people depending on the time of year. (admitted)
(f)
The worker was hired as a
shelf stocker by the appellant. (admitted)
(g)
The worker’s tasks consisted
of stocking the shelves with bread, rotating the bread, checking the bread-tag
codes and taking inventory. (admitted)
(h)
The parties do not agree on
whether the worker provided services as a salaried worker or a self-employed
worker. (admitted)
(i)
According to the appellant,
the worker had signed a self-employment contract; according to the worker,
there was no written contract between the parties. (admitted)
(j)
The worker had three days of
unpaid training for Weston and seven days for Multimarques. (denied)
(k)
The worker had no experience
as a display artist or shelf stocker before working for the appellant. (denied)
(l)
After his training, the
appellant assigned the worker to a sector close to his home. (denied)
(m)
The work schedule was
determined by the appellant. (admitted)
(n)
The work hours were mainly
from 2 a.m. to 7 a.m. as well as at stocking time in the afternoon on the busy
days, namely, from Thursday to Sunday. (admitted)
(o)
The worker's schedule was
always the same from one week to the next. (denied)
(p)
If the worker was absent, he
informed the appellant, and she had to find a replacement. (admitted)
(q)
For bread made by Weston,
the appellant paid her workers 7 to 8 cents per loaf. (admitted)
(r)
For bread made by
Multimarques, the appellant paid the worker $12.00 per hour. (admitted)
(s)
The worker had to cover his
own transportation costs for getting to the supermarkets, but, as he travelled
by bicycle, he had almost no expenses in carrying out his functions. (admitted)
(t)
The appellant gave the
worker instructions by telephone or e-mail. (admitted)
(u)
Lyne Gagné sometimes visited
the work sites to check the quality of the workers’ stocking. (admitted)
(v)
The worker had to follow the
instructions of the appellant and her clients in carrying out his tasks. (admitted)
(w)
Complaints from the clients
and supermarket managers were addressed to the appellant, who took action
accordingly. (admitted)
(x)
The
clients were clients
of the appellant and not of the worker. (admitted)
Ms. Gagné's
testimony
[4]
Among other
things, the following is apparent from Ms. Gagné's testimony:
(i)
The
appellants had not signed a contract with Mr. Poulin and Mr. Bélard
(the workers). However, Ms. Gagné explained that the parties had still
entered freely and with full knowledge into a verbal contract for services. She added that,
when the two workers had entered into the contract, it was established that the
workers would receive no benefits and that they would have to pay for their
transportation between supermarkets. Ms. Gagné also explained that, a
little after the two workers had been hired, the appellants had put in place a
policy according to which all the workers whose services they retained had to
sign a contract that set out the terms and conditions of the relationship
between the parties and the conditions under which the workers stocked the
bread shelves. In that contract, the workers are described as independent
contractors, not as employees of the appellants. In regard to that, I would immediately point out that the workers
testified that the nature of the contract they had entered into with the
appellants had never really been discussed with Ms. Gagné, as she
basically focused on explaining to them how they would be paid.
(ii)
The workers
were free to stock the shelves of the appellants' clients with other products
than bread, provided that doing so was not unfavourable to the appellants.
(iii)
The workers
could find replacements without the appellants' consent or involvement. However,
Ms. Gagné explained that she had required the workers to inform her right
away if they could not find a replacement and to give her their replacements'
contact information in order that she could send them instructions if
necessary.
(iv)
The
appellants did not train the workers as the workers had the experience
necessary to do that type of work. I note, however, that Ms. Gagné
admitted that, generally, the workers whose services were retained attended
unpaid training.
(v)
The workers
had a great deal of flexibility in organizing their work in that they could
decide at what time they stocked the shelves in the supermarkets and the order
in which the supermarkets were provisioned. However, the evidence
showed that the workers had little flexibility in organizing their work because
the instructions they received from the appellants (imposed on the appellants
by Weston and Multimarques) clearly established the slots of time during which
the shelves had to be stocked and they were usually very short.
(vi)
Each
worker's wages for stocking shelves were agreed on by the parties for each supermarket. Effectively, for
each supermarket, the parties agreed on a maximum number of hours that it could
take to stock the shelves and on the hourly rate, which was $12 during the
relevant periods, so that the more experienced and thus quicker workers earned
more than $12 per hour and the less experienced workers, who generally worked
more slowly, earned less than $12 per hour.
[5]
In addition, the
evidence disclosed the following:
(i)
The
appellants often filled out evaluation forms concerning the workers' performance
and communicated the evaluation results to the workers in writing. I note upon
reading the evaluation forms filed in evidence as Exhibits A‑3 and A‑4
that the language used by the appellants is that of a superior addressing an
employee, not that of a client addressing a subcontractor.
(ii)
The
appellants often phoned or e-mailed the workers to give them instructions on
how to do the work.
(iii)
The workers
did not need any tools to carry out their work, except for hand trucks provided
by Weston and Multimarques.
(iv)
The workers
never behaved like self-employed workers. In fact, the workers never
registered their businesses with the inspecteur général des entreprises
financières. They were not registered with the
tax authorities for GST purposes either.
(v)
Every time
they came in to the supermarket, the workers had to fill out a form attesting
to their work there, which had to be signed by an authorized employee of each
supermarket.
Analysis
The law
[6]
When the courts must
define concepts from Quebec private law for
the purpose of applying federal
legislation such as the Employment Insurance Act, they must follow the
rule of interpretation in section 8.1 of the Interpretation Act. To
determine the nature of a Quebec employment contract and distinguish it
from a contract for services, the relevant provisions of the Civil Code of Québec (the
Civil Code) must be relied on, at least since
June 1, 2001. Those rules are not consistent with the
rules stated in decisions such as 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc., [2001] 2 S.C.R. 983 and Wiebe Door Services Ltd. v. M.N.R.,
[1986] 3 F.C. 553. Contrary to the common law situation, the constituent
elements of a contract of employment have been codified, and, since the coming
into force on January 1, 1994, of articles 2085 and 2099
of the Civil Code, the courts no longer have the same latitude as the common
law courts to define what constitutes an employment contract. If it is
necessary to rely on previous court decisions
to determine whether there was a contract of employment, one must choose
decisions with an approach that conforms to civil law principles.
[7]
The Civil Code contains
distinct chapters governing the "contract of employment"
(articles 2085 to 2097) and the "contract of enterprise or
for services" (articles 2098 to 2129).
[8]
Article
2085 states that 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.
[9]
Article 2098 states
that a contract of enterprise
. . . 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.
[10]
Article 2099 follows
and states the following:
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 can be said that the
fundamental distinction between a contract for services and a contract of
employment is the absence, in the former case, of a relationship of
subordination between the provider of services and the client, and the
presence, in the latter case, of the right of the employer to direct and
control the employee. Thus, what must be determined in the case at bar is
whether there was a relationship of subordination between the appellants and the
workers.
[12]
The appellants had the burden of proving, on a balance of
probabilities, the facts at issue that
establish their right to have the Minister's
decisions set aside. They had to demonstrate the contract entered into by the
parties and establish their common intention with respect to its nature. If they had no direct evidence of that intention, the
appellants could turn to indicia as evidence of the contract that was entered
into and rely on the Civil Code provisions that govern it. The appellants in this case had to demonstrate that there
was no relationship of subordination in order to establish that they had not
entered into a contract of employment. To do so, they could, if necessary,
prove the existence of indicia of independence such as those stated in Wiebe
Door, supra, namely, the ownership of tools amd the risk of loss and
the chance of profit.
[13]
However,
in my opinion, contrary to the common law approach, once a judge is satisfied
that there was no relationship of subordination, that is the end of the judge's
analysis of whether a contract for services existed. It is then unnecessary to
consider the relevance of the ownership of tools or the risk of loss or chance
of profit, since, under the Civil Code, the absence of a relationship of
subordination is the only essential element of a contract for services that
distinguishes it from a contract of employment. Elements such as the ownership
of tools, the risk of loss or the chance of profit are not essential elements
of a contract for services. However, the absence of a relationship of
subordination is an essential element. For both types of contract, one must
decide whether or not a relationship of subordination exists. Obviously, the
fact that a worker behaved like a contractor could be an indication that there
was no relationship of subordination.
[14]
Ultimately, the Court must usually make a decision based on the facts
shown by the evidence regarding the performance of the contract, even if the
intention expressed by the parties suggests the contrary. If the evidence
regarding the performance of the contract is not conclusive, the Court will rely on the parties' intention and their
description of the contract, provided the evidence is probative with respect to
these questions. If that evidence is not conclusive either, the appellants' appeal will be dismissed on the basis
that there is insufficient evidence.
[15]
Thus, the
question is whether the workers in the case at bar worked under the appellants'
control or direction, or whether the appellants could or were entitled to
control or direct the workers.
[16]
In this
case, the evidence does not enable me to clearly determine the parties'
intention. In fact, the appellants maintained that they had wanted to
enter into contracts of enterprise, while the workers maintained that the
nature of the contracts had never been the subject of any such discussions and
that, in any case, at the time, they could not have stated their intention to
that effect clearly, freely and in a fully informed manner since they would not
have been able to distinguish between a contract of enterprise and a contract
of employment. As a result, only a review of
the facts in light of the evidence provided will make it possible in this case
to determine the nature of the contractual relationship.
[17]
In my
opinion, the contract between the workers and the appellants was a contract of
employment because there was a relationship of subordination. In fact, the evidence
showed that the appellants exercised over the workers the most traditional type
of control: the appellants gave the workers frequent and precise instructions
on how to carry out their work. That constitutes direct control. The workers in this
case were not free to choose the means of execution. At best, they had very little flexibility with regard to
organizing their work. The appellants' faculty
of control over the workers is also apparent in the supervision of their work.
In fact, not only did Ms. Gagné sometimes visit
the workers' work sites to check the quality of their work, she also often
filled out evaluation forms for the workers and sent the evaluation results to
them in writing. The appellants also required
the workers to fill out attendance sheets. In
view of all of the evidence, it cannot be found otherwise than that there was a
relationship of subordination between the workers and the appellants. It is therefore not necessary to review and weigh the other
facts put in evidence that may prove or disprove the existence of relationships
of subordination. Although there is no need to
do so, I note that most of the other facts in evidence (for example, the fact
that the workers never behaved like contractors, that the workers worked only
for the appellants during the relevant period and that the clients they served
were the appellants' clients) lead me to conclude that a relationship of
subordination existed.
[18]
For these reasons, the
appeal is dismissed.
Signed at Ottawa, Canada, this 26th day of
October 2009.
"Paul Bédard"
on this 9th day of
December 2009
Margarita
Gorbounova, Translator
Email this Content