Citation: 2007TCC589
Date: 20071009
Docket: 2006-3151(EI)
BETWEEN:
KAVIAR INTERNATIONAL INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
ÉDITH GAGNÉ,
Intervener.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Favreau J.
[1] This is an appeal
from a decision made by the Minister of National Revenue
("the Minister") on September 11, 2006, concerning the
insurability of Edith Gagné's employment with the Appellant from
September 11, 2004, to August 2, 2005 ("the period in issue").
[2] Specifically, the
Minister determined that, during the period in issue, Ms. Gagné was
employed by the Appellant in insurable employment within the meaning of
paragraph 5(1)(a) of the Employment Insurance Act,
S.C. 1996, c. 23, as amended ("the Act").
The facts
[3] The Appellant,
which incorporated on September 27, 1995, operated a cat and dog food
sales and distribution business, and, for three years, a grooming service.
[4] Manon Davis
Bourgeois was the Appellant's sole shareholder from the moment of its
incorporation.
[5] From
December 2003 to April 2004, prior to being hired by the Appellant,
Ms. Gagné successfully completed a grooming course given by the Appellant.
This $2,500 course included a clipping and grooming kit, which she
obtained on January 8, 2004.
[6] The Appellant hired
Ms. Gagné under an oral contract to do the dog and cat grooming, and,
occasionally, to give grooming classes. The exact hire date was not specified.
[7] During the period
in issue, Ms. Gagné also operated a pet grooming business called Salon de
toilettage Beauté Animal. The business's registration number with the Registraire
des entreprises was No. 2262483383. Ms. Gagné rendered her services from her
home in Sainte-Sabine.
[8] Ms. Gagné also
rendered her services at the Appellant's place of business, which was located
at 110 Route 104, in Saint-Jean-sur-Richelieu.
[9] Ms. Gagné generally
worked Tuesday to Saturday from 10 a.m. to 5:00 or 5:30 p.m., and
sometimes stayed at work until 7 p.m. on Thursdays. Her hours of work depended on the
appointments set by the Appellant. She told the Appellant when she was
available, and the Appellant scheduled the appointments with her customers.
[10] Ms. Gagné had to report
for the appointments set up by the Appellant even if there was only one
customer to see. She had to notify the Appellant if she was unable to show up
for an appointment, in which case the appointment had to be rescheduled or
taken care of by someone else. She had to personally perform the services for
the Appellant and could not choose someone to replace her.
[11] Occasionally, and
this happened mostly on weekends, Ms. Gagné could enlist the help of her spouse
in the performance of her work, but he was not paid by the Appellant.
[12] When Ms. Gagné reported
for work, the Appellant gave her a card or file with the name of the pet and
the instructions concerning the cut or the services to be rendered.
[13] The customers' names
were generally not disclosed to Ms. Gagné because the customers were the
Appellant's, not Ms. Gagné's.
[14] Ms. Gagné reported
orally to the Appellant regarding the behaviour of the pet that she had
groomed, but this was apparently not mandatory.
[15] If she made a
mistake, Ms. Gagné had to redo the work at her expense, but the Appellant
was liable to its customers for mistakes. In fact, on a few occasions, the
Appellant had to obtain veterinary care for injuries that Ms. Gagné had
caused to a pet. The veterinary bills were paid by the Appellant and were not
deducted from the remuneration paid to Ms. Gagné because she was unable to
bear those costs.
[16] The Appellant
supplied the work premises, table, shampoo and wraps to Ms. Gagné, and Ms. Gagné
supplied her personal kit containing her razor, scissors, combs and brush.
Occasionally, she used the Appellant's razor, dryer and blades.
[17] Ms. Gagné's
remuneration was based on her production; she received 50% of the price that
the Appellant billed its customers.
[18] Ms. Gagné was also
entitled to $1,000 per student in respect of the grooming courses that she
taught on the Appellant's behalf.
[19] The evidence is that
Ms. Gagné received fixed remuneration of $400 per week regardless of how much
she actually earned by virtue of her production, and this amount even continued
to be paid if she was sick for a week. The Appellant kept a computerized record
of the cumulative amounts earned by Ms. Gagné.
[20] Ms. Gagné's
work was supervised and the quality of her work was controlled by the Appellant
in problematic cases in order to safeguard the Appellant's reputation and its
customers.
The relevant legislation
[21] Paragraph 5(1)(a) of the Act
defines the term "insurable employment" 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;
[22] The term "contract of service"
used in paragraph 5(1)(a) of the Act is outdated because the Civil Code
of Québec, S.Q. 1991, c. 64 (C.C.Q.) now uses the term "contract of employment"
in article 2085 C.C.Q. and "contract of enterprise or for
services" in article 2098 C.C.Q. Those provisions read:
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.
[23] Article 2099 C.C.Q. is also relevant
because it sets out the characteristics of a contractor or provider of
services. The article reads:
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.
[24] In Quebec civil law, the three constituent elements
of a contract of employment are the prestation of work, remuneration, and a
relationship of subordination.
Analysis
[25] Marie-Josée Bourgeois, the Appellant's
director of marketing, testified, raising the following points to show that
Ms. Gagné was not employed by the Appellant:
(a) the Appellant did not supervise
Ms. Gagné's work;
(b) Ms. Gagné operated a
similar business from her home and covered her own cell phone, travel and
advertising costs;
(c) Ms. Gagné used her
clipping equipment to carry out her work;
(d) Ms. Gagné worked
irregular hours. She notified the Appellant of her availability in advance and
the Appellant set up the appointments with its customers;
(e) Ms. Gagné could turn
down work if she was too tired. The Appellant had other people to call upon for
pet grooming, including Chantale Florent, who worked part-time, especially
weekdays, and Chantal Grimard, a full‑time employee who mostly looked
after large dogs;
(f) Ms. Gagné sometimes
enlisted the help of her spouse; and
(g) no source deductions
were made, and Ms. Gagné was entitled to no benefits whatsoever.
[26] A transaction log, tendered as
Exhibit A‑1, refers to certain agreements with Ms. Gagné. The
terms of these agreements are succinctly described in handwritten notes at the
beginning of a set of weekly accounting sheets for the period of January 1
to August 2, 2005, countersigned by Ms. Gagné.
[27] Ms. Gagné testified as well. She says that
she worked at the Appellant's place of business almost every day and groomed
several dogs in a day, as the Appellant's time log confirms. Ms. Gagné says
that she worked very little from her home during the period in issue because
she had little time, and she says that she registered her business in order to
be able to purchase pet grooming products.
[28] Ms. Gagné says that she never refused to
groom a pet and that she had to report to work even if there was just one dog
to groom.
[29] Ms. Gagné confirms that she had very
little contact with the dog owners. The Appellant handed her a work sheet
for each dog to be groomed, and, when the job was finished, a representative of
the Appellant came to get the dog in order to show him to the owner. If the
work was not satisfactory, Ms. Gagné had to make the necessary
corrections.
[30] Ms. Gagné claims that the Appellant
pressured her to work more quickly.
[31] She says that she was dismissed because
she claimed $4,800 from the Appellant for unpaid hours of work. She noted
significant discrepancies in the Appellant's time log, making reference to
Exhibits I‑1 and I‑2.
[32] With respect to the documents tendered as
Exhibit A-1, Ms. Gagné said that there were no handwritten notes on them when
she signed them. She confirmed that she never saw them and that she never
discussed them with the Appellant's representatives.
[33] Counsel for the Respondent submits that
there was a relationship of subordination between the Appellant and
Ms. Gagné, which is the hallmark of a contract of employment. She also
refers to the decision of Dussault J. in Lévesque v. Canada (Minister of National
Revenue), [2005] T.C.J. No. 183, 2005TCC248, in which the indicia pointing to the
existence of a relationship of subordination were examined. Among other things,
she relied on the following indicia in support of her submission that there was
a relationship of subordination between the Appellant and Ms. Gagné:
(a) Ms. Gagné's
hours of work were determined by the Appellant based on the appointments that
it set up with its customers. She did not have control over her hours and had
to report for work even if there was just one dog to groom.
(b) The
Appellant exercised control over Ms. Gagné by pressuring her to work faster and
getting her students to work faster; giving her sheets with cutting
instructions; checking over her work; showing the customers the results of her
work; and sanctioning unsatisfactory work by having her make the necessary
corrections.
(c) Ms. Gagné
incurred no financial risk because she received fixed remuneration and she was
not financially responsible for the mistakes made in her work. The Appellant
covered the veterinary bills for the dogs who suffered cuts while being groomed
by Ms. Gagné.
[34] In light of the foregoing, I find that
there are more indicia or criteria pointing to the existence of a relationship
of subordination between the Appellant and Ms. Gagné, and that there was a
contract of employment between them.
[35] The fact that the Appellant had to adjust
based on Ms. Gagné's availability, the fact that she supplied her own work
instruments and the fact that the Appellant did not demand her services on an
exclusive basis are not determinative factors based on which it can be
concluded that there was not relationship of subordination.
[36] The application of the criteria in Wiebe
Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, that is to
say, the ownership of tools, chance of profit, risk of loss and integration
into the activities of the business, also confirms that Ms. Gagné held
insurable employment with the Appellant. Only the ownership of tools test
points to the existence of a contract of enterprise or for services.
[37] In my opinion, Ms. Gagné was not free to
choose the method for performing her work. The Appellant determined the time of
performance, the workplace was the Appellant's place of business, the Appellant
provided the instructions for performing the work, the Appellant controlled the
quality and quantity of the work, and it could sanction Ms. Gagné's
performance.
[38] As for the parties' intention, the
Appellant's conduct suggests that she considered Ms. Gagné self-employed.
The absence of source deductions from the remuneration paid to Ms. Gagné
and the fact that she did not receive benefits point to that intention.
However, I attribute no probative value to the handwritten notes on the first
page of the log appended to Exhibit A‑1 because the original of the
document was not tendered in evidence and because, according to
Ms. Gagné's testimony, the notes were added after she signed the document.
[39] In light of the foregoing, I find that
Ms. Gagné was employed by the Appellant in insurable employment during the
period in issue and that she and the Appellant were bound by a contract of
employment, not a contract for services. Consequently, the appeal is dismissed
and the Minister's decision is confirmed.
Signed at Montréal, Quebec,
this 9th day of October 2007.
"Réal Favreau"
Translation certified
true
on this 1st day of
November 2007.
Brian McCordick,
Translator
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