Citation: 2007TCC467
Date: 20070822
Docket: 2006-1654(EI)
BETWEEN:
FERNAND BOUCHER,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE
Respondent,
and
LES CONCIERGERIES DANIEL ENR.,
Intervener.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Savoie, D.J.
[1] This appeal was heard at Bathurst, New Brunswick, on
June 11, 2007.
[2] This is an appeal from a decision by the Minister of
National Revenue (the Minister) to the effect that the employment held by the
Appellant with Daniel Boucher (the payer) during the period from September
11 to December 3, 2005 (the period at issue), was not insurable.
After reviewing the Appellant's file, the Minister decided that the employment
was excluded for employment insurance purposes, pursuant to
paragraphs 5(2)(i) and 5(3)(b) of the Employment
Insurance Act (the Act) and section 251 of the Income Tax Act.
[3] The Minister's decision was based on the following
assumptions of fact:
[TRANSLATION]
a)
The payer was the sole proprietor of the
business Les Conciergeries Daniel Enr. (the business), which he had been operating since March 1996;
(admitted)
b)
The payer's business was located in Edmundston,
New Brunswick, and provided janitorial services to various other businesses in
that region; (admitted)
c)
The business also provided public transportation
services and had a school bus transportation contract with the school district;
(admitted)
d)
The payer operated his business year round,
although the busiest months were during the spring and fall; (admitted)
e)
The payer employed approximately eight people
during the busiest periods; (admitted)
f)
The payer and his spouse controlled the daily
operations of the business; (admitted)
g)
The Appellant is the payer's father; (admitted)
h)
The Appellant was responsible for commercial
building maintenance; his tasks included stripping and waxing floors, cleaning
carpets, washing walls and windows and performing various maintenance and
repair jobs as needed; (admitted)
i)
In addition to the tasks listed in subparagraph
(h), on some occasions the Appellant was called upon to replace the payer in
driving school buses; (admitted)
j)
The Appellant received $13.00 per hour,
including vacation pay; (admitted)
k)
The average hourly wage of all the other
employees of the payer was $8.00; (admitted)
l)
The Appellant had been hired to replace another
employee; (denied)
m)
The employee that the Appellant replaced had
been paid $8.00 per hour and had performed all the same tasks as the Appellant
except for driving school buses; (denied)
n)
The Appellant was the only employee who was paid
in cash; (admitted)
o)
All other employees were paid by cheque;
(admitted)
p)
The Appellant and the other employees were
listed in the payer's payroll; (admitted)
q)
The wages of all the other employees of the
payer were recorded in the payer's cash disbursements journal; (denied)
r)
The Appellant's wages were not recorded in the
payer's cash disbursements journal; (denied) and
s)
Every payday, the Appellant's wages were
credited to the payer's capital account. (denied)
[4] The Appellant was paid $12.48 per hour plus 4%
vacation pay.
[5] It has been established that the Appellant was hired
to replace Carl Lavoie, who had suffered an injury. The latter had been
paid $8.00 per hour to perform approximately the same tasks. It is true that
the Appellant was responsible for additional tasks not performed by his
predecessor, but, according to the evidence, not enough to justify such a large
difference in salary. It also came to light that the payer had reported to the
insurance officer that he was paying such high wages to his father so that the
father [TRANSLATION] "could get bigger stamps".
[6] At the hearing, the payer denied the Minister's
assumptions of fact set out in paragraphs (q), (r) and (s). However, his
testimony on this point was limited to an assertion that he did not recognize
the terms used by the Minister, that he left all that up to his accountant,
Ms. Cosgrove, and that she received her instructions from his spouse,
Annick Boucher. It would have been useful to hear their versions during
the hearing, but both were absent.
[7] The evidence establishes that the Minister reviewed
the documents provided by the payer in depth. These documents include accounts
of the payer that contradict the Appellant's record of employment with respect
to his remuneration. It has been proven that the Appellant reinvested in the
business all the wages he was paid during the period at issue. In other words,
it has been clearly demonstrated, with supporting documents, that the Appellant
essentially bought his hours and wages and that in reality, he had worked for
the payer for free. No evidence was produced by the Appellant to refute these
damning facts, which were submitted by appeals officer Manon McGraw in her
testimony and report, as well as in other pieces of evidence filed at the
hearing, including those documents submitted to the Minister by the payer.
[8] At the end of his analysis, the Minister outlined the
issue in the following terms, in his Report on an appeal, CPT110 :
[TRANSLATION]
To determine whether the worker is employed under a contract of
service, the total relationship between the worker and the payer must be
reviewed. To determine nature of the working relationship, the central question
is whether the person who has been engaged to perform the services is
performing them as a person in business on his own account. A list of factors
has emerged from decided cases to help answer this central question. The
relationship between the worker and payer will be analyzed in light of these
factors.
[9] With this question as a starting point, the appeals
officer performed her analysis of the facts according to the criteria
established in Wiebe Door Services Ltd v. Canada (Minister of National
Revenue - M.N.R.) (F.C.A.), [1986] 3 F.C. 553, in which the Federal Court
of Appeal drew on the following factors as described in Montreal v. Montreal
Locomotive Works Ltd et al, [1947] 1 D.L.R. 161 (P.C.), namely, 1) control,
2) ownership of the tools, 3) chance of profit or risk of loss, and
4) integration. This is the process that has traditionally been used to
determine whether the working relationship between the parties was such as to
suggest the existence of a contract of service within the meaning of the Employment
Insurance Act. Having completed the analysis, the appeals officer concluded
that there did exist a contract of service.
[10] Next, she conducted an analysis to determine whether
the Appellant's employment should be excluded under the Income Tax Act
and paragraphs 5(2)(i) and 5(3)(b) of the Act, on the basis that
the parties were not dealing with each other at arm's length. At the end of the
exercise, the Minister concluded that the Appellant's employment should be
excluded.
[11] I have decided to conduct this analysis differently.
[12] This Court must determine whether the Appellant held
insurable employment for the purposes of the Employment Insurance Act (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;
[Emphasis added.]
[13] The
above-cited paragraph contains the definition of insurable employment. It is
employment under a contract of service, namely, an employment contract.
However, the Act does not spell out the constituent elements of such a
contract.
[14] A contract for services
is a civil law concept found in the Civil Code of Québec (Civil Code).
Consequently, the nature of the contract must be determined in accordance with
the relevant provisions of that Code.
[15] In a publication
entitled,
"Contract of Employment: Why Wiebe Door Services Ltd. Does Not
Apply in Quebec and What Should Replace It", published by the Association de planification
fiscale et financière (APFF)
and the federal Department of Justice in The Harmonization of Federal
Legislation with Quebec Civil Law and Canadian Bijuralism: Second Collection of
Studies in Tax Law, Justice Pierre Archambault of this Court explains
the steps that courts are to take for any period of employment subsequent to
May 30, 2001, since the coming into force, on June 1, 2001, of section 8.1 of
the amended Interpretation Act, R.S.C. 1985, c. I-21, when faced with a
case such as the one at bar. Here is what Parliament has stated in this
provision:
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.
[Emphasis added.]
[16] It will be
helpful to reproduce the relevant provisions of the Civil Code of Québec,
which will serve to determine whether a contract of employment exists in Quebec
and will distinguish such a contract from a contract of enterprise:
Contract of employment
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.
2086 A contract of employment is
for a fixed term or an indeterminate term.
Contract of enterprise or for
services
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.
[Emphasis added.]
[17] The
provisions of the Civil Code reproduced above establish three essential
conditions for the existence of an employment contract:
(1) the
employee's performance of work; (2) remuneration by the employer for that work;
and (3) a relationship of subordination. The significant distinction between a
contract of service and a contract of employment is the existence of a
relationship of subordination—the fact that the employer has a power of
direction or control over the worker.
[18] The Appellant is asking this Court to overturn the
Minister's decision, but according to the analysis of the collected evidence,
in light of the established criteria, such an intervention is not justified.
[19] The onus was on the Appellant to prove, on a balance
of probabilities, that the facts relied on by the Minister were false. In this
case, he has not discharged that onus.
[20] Under the circumstances, it would be appropriate to
cite Justice Pratte in Elia v. Canada (Minister of National Revenue - M.N.R.), [1998] F.C.J. No. 316:
Contrary to what the judge
believed, he therefore could have intervened and should have intervened if, as
he asserted, the evidence established that the Minister's decision was
unreasonable. However, it seems to us that the judge's assertion is also
inaccurate and based on an error of law, since the judge did not take into
account the well-settled rule that the allegations in the reply to the notice
of appeal, in which the Minister states the facts on which he based his
decision, must be assumed to be true as long as the appellant has not proved
them false.
[21] The evidence produced at the hearing points to the
finding that an essential factor is missing for, on the one hand, a contract of
service under paragraph 5(1)(a) of the Act and, on the other hand,
a contract of employment under article 2085 of the Civil Code of Québec.
This essential factor is the remuneration by the payer for the Appellant's
work, since it has been clearly demonstrated that despite having a salary, the
Appellant reimbursed all of his wages to the payer. Accordingly, there is
neither a contract of employment under the Civil Code of Québec nor a
contract of service under the Act, cited above.
[22] This finding is a sad reflection on the conduct of the
persons concerned, which represents little more than an attempt to circumvent
the legitimate application of the objectives of the Act.
[23] Accordingly, this Court must find that the Appellant
did not hold insurable employment with the payer during the period at issue. In
other words, the Appellant and the payer were not in an employment relationship
within the meaning of the Civil Code of Québec.
[24] The appeal is dismissed and the Minister's decision is
confirmed.
Signed at Grand-Barachois, New Brunswick, Canada,
this 22nd day of August 2007.
"S.J. Savoie"
on this 29th day of August 2007.
Francie Gow, Translator
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