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Citation: 2006TCC213
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Date: 20060412
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Docket: 2005-3536(EI)
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BETWEEN:
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GROUPE FINANCIER BOSCO INC.,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
[OFFICIAL
ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
Deputy
Judge Savoie
[1] This
appeal was heard in Montréal, Quebec, on February 28, 2006.
[2] The
issue is whether Anie Belmadi, the worker, was employed in insurable employment
from April 1, 2003, to February 15, 2004, while working for the
Appellant.
[3] On
September 16, 2005, the Minister of National Revenue ("the Minister")
notified the Appellant of his decision that the worker was employed in
insurable employment.
[4] In
making his decision, the Minister relied on the following assumptions of fact:
[TRANSLATION]
5 (a) The Appellant
incorporated on May 1, 2003.
(b) Christiane
Soulard was the Appellant's sole shareholder, and Franck Barbusci was its
president.
(c) The Appellant's
headquarters and offices are at 8129 St‑Denis Street in Montréal.
(d) The Appellant's
fields are business administration and management as well as vehicle insurance
sales.
(e) The Appellant sells
its insurance through dealerships, which offer its insurance products to their
customers.
(f) Upon being
hired, the worker signed an employment contract with the Appellant.
(g) The worker claims
that her primary intention upon signing her contract with the Appellant was to
provide services to the Appellant in exchange for reasonable remuneration.
(h) The worker
rendered services to the Appellant as a regional director for the Abitibi region.
(i) The worker
promoted the Appellant's products on a continuous basis and provided training
sessions to dealership employees who sold the Appellant's products.
(j) At the
beginning of her period of employment with the Appellant, and regularly
thereafter, the worker received training at the Appellant's expense.
(k) The worker went
to the Appellant's office in Montréal every two weeks to do her work and
receive additional training.
(l) The worker's
principal duty was to meet auto dealers in the area to offer them the
opportunity to sell the Appellant's insurance products to their customers.
(m) The Appellant
provided the worker with a list of dealers to visit, and the worker was to try
to add other dealers to that list.
(n) The Appellant
prepared her work from home, and most work was done in the field, that is to
say, on the road and at dealerships.
(o) Out of
necessity, the worker did her work during normal business hours.
(p) The worker
believes that she worked an average of 50 hours per week.
(q) In addition, the
worker had to remain in contact with the Appellant daily by telephone, fax or
e-mail.
(r) The worker had
to prepare written and oral reports for the Appellant on a regular basis.
(s) The worker had
to perform her services personally, and exclusively, for the Appellant.
(t) The worker had
to meet the Appellant's work quality and sales volume standards.
(u) The Appellant
provided the worker with a laptop computer, a printer, a fax machine and a laminator.
(v) The Appellant was
to receive either a $500 base salary or an 8% commission on her sales,
whichever was higher.
(w) The worker was
to be reimbursed by the Appellant for her cell phone account and for the
mileage driven on her car.
(x) During the
period in issue, the worker always received the base salary of $500 per week.
[5] The
Appellant admitted to the Minister's factual assumptions set out in subparagraphs
5(a), (c), (f), (g), (i), (l) through (o), (r), (t) and (u); it admitted to the
assumptions set out in subparagraph 5(b) subject to amplification; it denied
the assumptions in subparagraphs (d), (e), (h), (j), (k), (q), (s) and (v) through
(x); and it claimed to have no knowledge of the assumption set out in
subparagraph (p).
[6] The
evidence disclosed that Christiane Soulard was not the Appellant's sole
shareholder during the period in issue, but is its sole shareholder now.
[7] It
was established at the hearing that the Appellant did not sell auto insurance.
Rather, it sold insurance on vehicle purchase financing. This credit insurance
guarantees that the customer's auto payments are made in the event of death or
disability.
[8] The
Appellant clarified subparagraph 5(e) at the hearing: in order to sell its
insurance, the Appellant works through dealership representatives who offer the
Appellant's insurance product to their customers. The Appellant administered
the credit insurance program and sold its product to the dealerships.
[9] Based
on the evidence adduced, the worker was a regional director for the Appellant,
first in Trois-Rivières, and later in the Abitibi region.
[10] The worker began working for the Appellant after a job with Toyota as
a sales manager. She had already received training, and could give training
courses herself; this was among her duties with the Appellant. Upon beginning
her job with the Appellant, the worker received training on its products, on how
to approach customers, and on sales techniques.
[11] At the hearing, the Appellant's president stated that the Appellant
did not require the worker to come to the office regularly. Specifically, the
Appellant stated that the worker visited the Montréal office occasionally, but
the worker contradicted this, saying that she went to the Appellant's office
twice a month for meetings and training courses. She also said that she phoned
in to the office three to four times a day.
[12] The Court heard the testimony of Franck Barbusci (the Appellant's
president) and the worker. They are contradictory in several respects. For
example, Mr. Barbusci said that if the worker phoned the office
frequently, it was to request money, in which case she was asked for details
regarding sales prospects in order to justify advances on her commissions.
[13] The Appellant claims that the worker was under no obligation to provide
it with services on an exclusive basis. In addition, the Appellant asserts that
Ms. Belmadi is self‑employed, which is why she works 60 hours
per week. Under such conditions, one can legitimately doubt that the
worker could offer her services to another employer.
[14] The Appellant denied that the worker's pay was the higher of a $500
base salary or an 8% commission on her sales: according to Mr. Barbusci,
her sole remuneration was an 8% commission on her sales. Mr. Barbusci explained
that the worker received advances, and that this is what accounted for the $500 per
week. He added that these advances were repayable to the Appellant out of
future commissions. In addition, the Appellant denied the allegation that it
had to reimburse the worker for her cell phone bills and car expenses. On the
contrary, the Appellant claimed that because the worker was penniless, she was
advanced funds so that she could keep her cell phone and pay for her fuel. It
was established that the Appellant paid the costs that the worker incurred to
move from Trois‑Rivières to the Abitibi region.
[15] The Appellant consistently claimed that it paid the worker no salary,
but merely advances on sales commissions. At the hearing, the Appellant claimed
that since the worker made practically no sales, she owed the Appellant
$25,000.
[16] The evidence discloses that the parties signed a contract when the worker
began her job with the Appellant. The Appellant claims that the contract it
signed with the worker supports its position that the worker was hired as an
independent contractor and that there was no employer-employee relationship
between them. However, the contract was not produced at the hearing, and the
Appellant never provided it to the appeals officer who requested it. In
addition, it was shown that the contract signed by the parties was prepared by
the Appellant and that the worker could not alter it.
[17] The worker's job ended when the Appellant stopped paying her.
The Appellant then requested that the advances be repaid, but it abandoned
its efforts, purportedly because the worker did not have the means to repay. It
is claimed that the same thing happened with the equipment and materials that
belonged to the Appellant but were kept by the worker.
[18] The evidence adduced with respect to the parties' intentions is
contradictory. The worker claims that she was a salaried employee, as she demanded
from the moment she was hired. Further, she says that she was also supposed to
receive a commission on the Appellant's products that she sold. In contrast,
the Appellant submits that the worker was an independent contractor because it
retained her services on that basis. The Appellant relies on a contract which
was signed with the worker, but which was not produced at the hearing. Given
the circumstances, this Court will not take that contract into account. Thus, we
will need to analyze the evidence adduced before the Court in order to
ascertain the parties' intentions.
[19] It was established that the worker performed work for the Appellant.
She worked for the Appellant in Trois-Rivières and the Abitibi region. She presented
herself as the Appellant's regional director on a business card that she handed
out to new customers.
[20] The evidence discloses that the worker received training from the
Appellant upon being hired and regularly thereafter. Upon being hired, the
Appellant promised to help her with customers, and such help was given on
certain occasions when Mr. Barbusci visited the worker in the Abitibi
region. She also received training on sales techniques, including the way to
approach customers and present the Appellant's products.
[21] The Appellant gave the worker a manual on its various products, a
laptop computer, a fax machine and a cell phone. The Appellant paid the
worker's expenses, including her telephone, stationery and other miscellaneous
expenses, and gave her $150 per month to cover these expenses.
[22] The evidence discloses that the worker provided services to the Appellant
on an exclusive basis. Mr. Barbusci denied this at the hearing, but he did
state that the worker worked 60 hours per week for the company.
[23] The worker had to notify the Appellant of her absences. She gave
written reports to the Appellant on a regular basis after obtaining all the
information from the dealerships about the sales of the Appellant's products.
The appeals officer confirmed at the hearing that Mr. Barbusci had told
him that the worker regularly submitted reports to the Appellant and that this
was mandatory.
[24] The evidence discloses that the worker described herself as an
employee on her income tax return.
[25] Thus, the issue for determination is the relationship between the
parties, namely the Appellant and the worker. Specifically, was there an
employment contract between them, or, to use the wording contained in the Employment Insurance
Act, was the worker employed in insurable employment?
[26] In Quebec, a province governed by civil law principles, the employment
contract is defined in article 2085 of the Civil Code of Québec, S.Q.
1991, c. 64, which 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."
[27] An employment contract differs from a contract of enterprise or for
services (article 2098) ". . . 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." Article
2099 provides that "[t]he contractor or 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."
[28] Thus, subordination, or the exercise of a power of control, is a more
important, if not determinative, factor in Quebec law. The Employment Insurance Act,
which applies to the present dispute, is a federal statute. As of June 1, 2001,
if concepts of private law are involved, section 8.1 of the Interpretation
Act, R.S.C. 1985, c. I-21, has required the application of the private
law of the province in which the dispute arose:
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.
[29] Dussault J. of this
Court wrote as follows in Lévesque v. Canada (M.N.R.), [2005] T.C.J.
No. 183:
[23] In Sauvageau Pontiac Buick GMC Ltée v.
Canada, T.C.C., No. 95-1642(UI), October 25, 1996, [1996] T.C.J. No. 1383 (QL),
Archambault T.C.J., citing the Supreme Court of Canada's decision in Quebec
Asbestos Corp. v. Couture, [1929] S.C.R. 166, considered these definitions and
held that the determinative element was whether or not a relationship of
subordination existed. He also accepted Pratte J.A.'s definition of this term
in Gallant, supra. At paragraph 12 of his decision, Judge Archambault stated:
12 It is clear from these provisions
of the C.C.Q. that the relationship of subordination is the primary distinction
between a contract of enterprise (or of services) and a contract of employment.
As to this concept of a relationship of subordination, I feel that the comments
of Pratte J.A. in Gallant are still applicable:
The distinguishing feature of a contract of
service is not the control actually exercised by the employer over his employee
but the power the employer has to control the way the employee performs his
duties.
[30] Furthermore, in D & J Driveway Inc. v. Canada (M.N.R.),
[2003] F.C.J. No. 1784 (QL), Létourneau J.A. of the Federal
Court of Appeal stated that an employer-employee relationship does not
necessarily exist simply because a person who gives out work can control its
result. He put the matter as follows at paragraph 9 of the judgment:
9 A contract of
employment requires the existence of a relationship of subordination between
the payer and the employees. The concept of control is the key test used in
measuring the extent of the relationship. However, as our brother Décary J.A.
said in Charbonneau v. Canada (Minister of National Revenue - M.N.R.), [1996]
F.C.J. No. 1337, [1996] 207 N.R. 299, followed in Jaillet v. Canada (Minister of
National Revenue - M.N.R.), 2002 FCA 394, control of the result and control of
the worker should not be confused. At paragraph 10 of the decision, he wrote:
It is indeed rare for a
person to give out work and not to ensure that the work is performed in accordance
with his or her requirements and at the locations agreed upon. Monitoring the
result must not be confused with controlling the worker.
[31] Several indicia can be taken into consideration in order to determine
whether or not a relationship of subordination exists. In Seitz v. Entraide
populaire de Lanaudière inc., Court of Québec (Civil Division), No.
705-22-002935-003, November 16, 2001, [2001] Q.J. No. 7635 (QL), Judge Monique
Fradette provided a series of indicia that can help determine whether or not
subordination exists. She discussed this as follows at paragraphs 60-62 of
the judgment:
[60] In
order for there to be an employment contract, the jurisprudence requires the
existence of a right of supervision and immediate direction. The mere fact that
a person provides general instructions about the way in which the work is
performed, or reserves the right to supervise or inspect the work, is not
sufficient to convert the agreement into an employment contract.
[61] A
series of indicia developed by the jurisprudence enables courts to determine
whether there is a relationship of subordination between the parties.
[62] The
indicia of control include:
–
mandatory
presence at a workplace
–
compliance
with work schedule
–
control
over employee's vacations
–
submission
of activity reports
–
control
over the quantity and quality of work
–
imposition
of the means of performing the work
–
power
of sanction with respect to the employee's performance
–
source
deductions
–
fringe
benefits
–
employee
status on income tax returns
–
exclusivity
of services for employer
[32] However, it should be specified that the fact that some indicia point
to a relationship of subordination does not warrant an end to the analysis. The process
consists in determining the overall relationship between the parties based on
the distinction drawn in the Civil Code of Québec. Thus, the extent to
which the indicia of subordination predominate in relation to the others must
be established.
[33] Let us examine the evidence in light of the indicia established by
Judge Fradette in order to ascertain the overall relationship between the
parties and determine whether or not a relationship of subordination exists.
[34] Mandatory presence at a workplace: the worker's task was to represent
the Appellant in her dealings with the dealerships in the designated
territories, first in the Trois‑Rivières area, and later in the Abitibi
region. She worked at the various dealerships or from home. The evidence showed
that she also went assiduously to the Appellant's office in Montréal. It must
be acknowledged that the nature of the worker's job did not require her to be
in a single place. In my opinion, when the evidence with respect to this
indicia is examined, it tends to favour the existence of a relationship of
subordination.
[35] Compliance with work schedule: No evidence was truly adduced with
respect to the worker's schedule. However, Mr. Barbusci acknowledged that
the worker put in 60 hours per week. Given the type of work, and the number of
hours that she devoted to it, the worker had to comply with some kind of
schedule, even though it was not fixed by the Appellant. In my view, when the
evidence with respect to this indicia is examined, it tends to favour the
existence of a relationship of subordination.
[36] Control over employee's vacations: It has been shown that the worker
had to notify the Appellant of her absences, but this obligation was more
onerous because of the distance between her work in outlying areas and the
Appellant's place of business.
[37] Here again, I am of the opinion that the evidence favours the
existence of a relationship of subordination.
[38] Submission of activity reports: There is abundant evidence documenting
the fact that the worker was required to provide, and did provide, written and
oral reports to the Appellant. This leads me to the conclusion that the
evidence concerning this indicia warrants a determination that a relationship
of subordination exists.
[39] Control over the quantity and quality of work: Based on my analysis of
the evidence on this point, that evidence is neutral.
[40] Imposition of the means of performing work: The evidence shows that
the worker received a manual from the Appellant in order to guide her work; she
also received a product list as well as training on sales techniques, and she
benefited from Mr. Barbusci's presence on site in Abitibi to help her with
her work. The evidence regarding this point supports the existence of a
relationship of subordination.
[41] The evidence concerning source deductions, fringe benefits, and the
power of sanction with respect to the employee's performance, points to the
absence of a relationship of subordination.
[42] It has been established that the worker declared that she was paid as
an employee on her income tax return. The evidence obtained on this question
suggests the existence of a relationship of subordination.
[43] Exclusivity of services for employer: There is a divergence between
the worker's evidence and the Appellant's evidence on this point. However, Mr. Barbusci
acknowledged that the worker worked 60 hours per week. It is difficult to
reconcile this fact with the notion that she worked elsewhere or could have
done so. Thus, in my opinion, the evidence regarding this aspect also favours
the existence of a relationship of subordination.
[44] In light of the indicia listed above, I must conclude that the degree
of control in the relationship between the Appellant and the worker was such
that there was, indeed, a sufficient relationship of subordination to determine
that a contract of employment, not a contract of enterprise, existed.
[45] The examination of the facts in light of the Civil Code of Québec
and of the new jurisprudence on insurability, and, in particular, the concept
of an employment contract, did not support the Appellant's argument that a
contract of enterprise existed.
[46] Consequently, this Court must find that the worker was employed by the
Appellant in insurable employment under a contract of service within the
meaning of paragraph 5(1)(a) of the Act, and that she therefore
held insurable employment during the period in issue.
[47] In addition, the evidence pertaining to the relationship between the
Appellant and the worker supports the finding that they had a contract of
employment under the provisions of the Civil Code of Québec.
[48] Consequently, the appeal is dismissed and the decision of the Minister
is confirmed.
Signed at Grand Barachois, New Brunswick, this 12th day of April 2006.
Deputy
Judge Savoie
Translation
certified true
on this 29th day of
February 2008.
Brian McCordick,
Translator
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