Citation: 2006TCC229
Date: 20060412
Dockets: 2005-3156(EI)
2005-2909(EI)
2005-2916(EI)
BETWEEN:
STÉPHANE CHAMPAGNE,
STÉPHANE LABRECQUE,
9084‑5560 QUÉBEC INC.,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
STÉPHANE CHAMPAGNE,
Intervener.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] These appeals were
heard on common evidence. The period in issue for the Appellant Champagne is
January 1, 2001, to September 29, 2004, and the period in issue for
the Appellant Labrecque is August 1, 2003, to
September 29, 2004. The question to be determined is whether the
Appellants Champagne and Labrecque were self-employed workers (as they and the
Appellant corporation submit) or employees (as the Respondent submits) under
the Employment Insurance Act ("the Act").
[2] The Appellant corporation,
namely 9084‑5660 Québec Inc. ("9084"), owns and manages 20
rental buildings containing roughly 200 commercial and residential units. It
does business under the name Location Lyon.
[3] George Weisz and
Robert Wasserman are the two shareholders of 9084. Mr. Weisz testified.
He explained how the rental business operates from an administrative standpoint.
The two shareholders are the directors. The office staff consists of three
employees. There are three superintendents, each of whom lives in one of the
rental buildings. The superintendents also look after other buildings in their geographic
area. Another person (a woman) supervises the superintendents and takes the
tenants' phone calls. 9084 also uses the services of specialized contractors
who look after plumbing, electrical work, sprinkler systems, heating, snow
removal and cleaning.
[4] Mr. Weisz explained
that rental buildings often need renovation work. He was looking for a
good worker. He got Stéphane Champagne's name from a friend who makes
windows. He gave Mr. Champagne work renovating lofts. He was pleased
with the work and retained Mr. Champagne's services on an ongoing basis,
but always as a contractor or self-employed worker, he said. It appears
that there was no written agreement between 9084 and Mr. Champagne. Their
agreement was to continue the initial arrangement, namely a non-exclusive
contract of enterprise.
[5] Mr. Weisz says that
any mistakes were rectified at Mr. Champagne's expense. He had his own
tools and his own vehicle. 9084 did provide him with a cell phone so that it
could contact him easily. Mr. Weisz claims that he, himself, is knowledgeable
about renovations and could estimate the number of days or hours that a
renovation project would take. He proceeded on this basis with Mr. Champagne.
Both of them estimated the amount of time that a project would take. Mr. Champagne
was paid for that number of hours, even if the work took less time to do. Mr. Weisz
allegedly accepted this situation. What mattered was that the result was
obtained in a reasonable amount of time.
[6] The invoices
tendered in evidence by the Respondent during Mr. Champagne's testimony do
not specify any hours. The price is usually the same, namely $525 per week. The
location of the work, which is stated on the invoices, varies over the course
of the year. It sometimes stays the same for several weeks and then changes to
another location for another period. The work is described on the invoices as [TRANSLATION]
"interior renovation" or [TRANSLATION] "finishing". In his
testimony, Mr. Champagne explained that he was paid a rate of $13.50 per
hour for weeks of roughly 40 hours each.
[7] Mr. Champagne wrote
[TRANSLATION] "vacation" on the invoices of July 17, July 24,
and August 1, 2003. The invoice of July 17 bears the inscription
"Paid 2000". It appears that $2,000 was paid for the three
"vacation" invoices. Based on the series of cheques issued in payment,
one can see that the three weeks in question were not paid in the usual manner.
Rather, they were paid by means of a $2,000 cheque dated
July 11, 2003. Mr. Weisz explained that Mr. Champagne did
not go on vacation but received a type of premium pay during that period. Then,
on August 8, 2003, the cheques returned to the routine, i.e. $525 roughly
every week. There were cheques for different amounts in September 2003
($210 for the week of September 11, and $393.75 for the week of
September 18) and for October 2 ($367), October 9 ($131.25) and
December 4, 2003 ($347).
[8] The variation in
these amounts was not specifically explained. However, during his
testimony, Mr. Weisz stated that Mr. Champagne could work for other
companies, albeit companies related in some manner to 9084, because he and his
partner held shares in other real estate companies and Mr. Champagne did
work for those companies.
[9] As far as the Appellant
Labrecque is concerned, Mr. Weisz explained that his services were retained on
a sporadic basis. Mr. Champagne had introduced him to the directors. Mr. Labrecque
is also a musician, and therefore had his own specific scheduling requirements.
[10] Mr. Labrecque's
invoices are time-based. There are weeks in which he worked 9 hours, 22.5 hours,
37 hours and 7 hours. The location of the work is always stated. His hourly
rate was $12. Based on a quick reading of the invoices, the two individual
Appellants worked in the same locations.
[11] There do not appear
to have been any controls with respect to the number of hours that either
worker actually worked. Mr. Weisz explained that he did not monitor Mr. Champagne's
hours closely. He considered it economically advantageous and mutually
beneficial to retain his services. Mr. Weisz was Mr. Champagne's only
customer and had enough buildings to keep Mr. Champagne busy. Both of
them had a good idea of the amount of time that the work would take.
As for Mr. Labrecque, Mr. Weisz says that he relied on what was
stated in his invoices as well.
[12] The company paid for
the supplies.
[13] Mr. Champagne testified
that he could enter into contracts with people other than the company, and he
cited a recent event as an example. He has excellent tools. He said that
he could build a house with those tools. He said that he once bought a
scaffold. It was not profitable immediately, but became profitable later.
[14] Mr. Champagne
claims his expenses on his income tax return. He describes himself as a small renovation
contractor. He confirmed Mr. Weisz's testimony that he did not go on
vacation in July and August 2003 but that he was paid the $2,000 for the three
weeks in question because he agreed to be on call during that period. On some
jobs, he gets help from his teenage nephew, and shows him how to do the work. He
decides whether his nephew is involved in a given job. Mr. Champagne received a $1,000 bonus
at the end of 2003. Mr. Weisz explained that it is normal to give
gifts at the end of the year to regular contractors who have done satisfactory
work.
[15] During his
testimony, Mr. Labrecque described himself as a self-employed renovator.
At the material time, he charged $12 per hour. He now charges $20. He has
his own truck, pays for gas, is responsible for his mistakes and gets no
vacation pay. He considers himself a business owner. He continues to be a
singer and instrumentalist in addition to working in the renovation field.
Arguments
[16] Counsel for the
Appellants referred to the following paragraphs from the Federal Court of
Appeal's decision in Livreur Plus Inc. v. Canada (Minister of National
Revenue), [2004] F.C.J. No. 267 (QL):
17 What the parties stipulate as
to the nature of their contractual relations is not necessarily conclusive, and
the Court may arrive at a different conclusion based on the evidence before it:
D & J Driveway Inc. v. The Minister of National Revenue, 2003 FCA
453. However, if there is no unambiguous evidence to the contrary, the Court
should duly take the parties' stated intention into account: Mayne Nickless
Transport Inc. v. The Minister of National Revenue, 97-1416-UI, February
26, 1999 (T.C.C.). Essentially, the question is as to the true nature of the
relations between the parties. Thus, their sincerely expressed intention is
still an important point to consider in determining the actual overall
relationship the parties have had between themselves in a constantly changing
working world: see Wolf v. Canada, [2002] 4 F.C. 396 (F.C.A.); Attorney
General of Canada v. Les Productions Bibi et Zoé Inc., 2004 FCA 54.
18 In these circumstances, the tests mentioned 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 finally
integration, are only points of reference: Charbonneau v. Canada (Minister
of National Revenue - M.N.R.) (1996), 207 N.R. 299, paragraph 3. Where a
real contract exists, the Court must determine whether there is between the
parties a relationship of subordination which is characteristic of a contract
of employment, or whether there is instead a degree of independence which
indicates a contract of enterprise: ibid.
19 Having said that, in terms of control the Court
should not confuse control over the result or quality of the work with control
over its performance by the worker responsible for doing it: Vulcain Alarme
Inc. v. The Minister of National Revenue, A-376-98, May 11, 1999, paragraph 10, (F.C.A.); D & J Driveway Inc. v. The Minister of National Revenue,
supra, at paragraph 9. As our colleague Décary J.A. said in Charbonneau
v. Canada (Minister of National Revenue - M.N.R.), supra, followed
in Jaillet v. Canada (Minister of National Revenue - M.N.R.), 2002 FCA
394, "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."
[17] Counsel also
referred to the decision in Wolf v. Canada, [2002] 4 F.C. 396, and,
in particular, the comments made by Décary J.A. in the following paragraphs:
117 The test, therefore, is whether, looking at the
total relationship of the parties, there is control on the one hand and
subordination on the other. I say, with great respect, that the courts,
in their propensity to create artificial legal categories, have sometimes
overlooked the very factor which is the essence of a contractual relationship,
i.e the intention of the parties. Article 1425 of the Civil Code of
Quebec establishes the principle that "[t]he common intention of the
parties rather than the adherence to the literal meaning of the words shall be
sought in interpreting a contract". Article 1426 C.C.Q. goes on to
say that "[i]n interpreting a contract, the nature of the contract, the circumstances
in which it was formed, the interpretation which has already been given to it
by the parties or which it may have received, and usage, are all taken into
account."
. . .
119 Taxpayers may arrange their affairs in such a lawful
way as they wish. . . .
In addition, he referred
to the comments made by Noël J.A. in the following paragraph:
124 This is not a case where the parties labelled their
relationship in a certain way with a view of achieving a tax benefit. No sham
or window dressing of any sort is suggested. It follows that the manner in
which the parties viewed their agreement must prevail unless they can be shown
to have been mistaken as to the true nature of their relationship. In this
respect, the evidence when assessed in the light of the relevant legal tests is
at best neutral. As the parties considered that they were engaged in an
independent contractor relationship and as they acted in a manner that was
consistent with this relationship, I do not believe that it was open to the Tax
Court Judge to disregard their understanding (Compare Montreal v. Montreal
Locomotive Works Ltd., [1947] 1 D.L.R. 161 at 170).
[18] Counsel for the Respondent referred
to Robert P. Gagnon, Le droit du travail du Québec, pratiques et théories,
4th ed. (Cowansville:
Yvon Blais) at pages 44-55. I will quote from page 53:
[TRANSLATION]
THE CONTRACT OF EMPLOYMENT
. . .
Judgments of the Tribunal du travail, a specialized
court, have been receptive to the idea that economic dependence is an indicia
of an employer-employee relationship. In Pétroles Inc., the fact
that the business wanted to change the status of its delivery drivers from
employees to independent contractors while continuing to impose certain
obligations or constraints on them (general guidelines, uniforms,
exclusivity of service and availability) was certainly taken into account. In addition,
economic dependence has been held to be a factor in determining that sufficient
subordination exists to warrant a finding of employee status:
[TRANSLATION]
It is based on economic criteria, and not, primarily, on a purely
legal definition or a contract, that a person is considered self‑employed.
The "entrepreneurial" status ascribed to the self-employed stems from
their desire for independence and profit. Self-employment is an economic question.
In a free-enterprise economy, the self-employed are those who, through their
originality, approach, personal initiative, and dynamism, marshal various
productive elements in order to make a profit. In order to do so, they must take
risks and compete with others.
Clearly, this is not the case here. The distributors did not marshal
various productive elements. Basically, they do Irving's bidding by delivering
its products. Marginal exceptions aside, they do not hire labour. They do not have
places of business, and, as I have already noted, they do not possess means of
production. They compete with no one. They essentially depend on the
existence of a contract with Irving. If the contract were cancelled, these so-called
contractors (if they ever truly were contractors) would disappear from the
scene.
Analysis and conclusion
[19] Here, unlike the
case discussed above, the workers do not essentially depend on the existence
of a contract with 9084. They would not disappear from the scene as
"contractors" if their agreement with 9084 were cancelled. They were
self‑employed or independent contractors in the renovation field before
9084 sought out their services, and will remain so afterward. It is in this capacity
that 9084 requested their services. 9084 was Mr. Champagne's main
customer. However, under his agreement with 9084, he could do work for other
customers. The instructions that he receives pertain to the work to be done. He
decides how to go about performing it. The company does not monitor his hours
of work. He records those hours, just as a contractor to whom renovation
work has been assigned records the number of hours that he takes to do the work
if the parties have selected this basis of payment. He owns his tools. The
context of Mr. Labrecque's work is the same, except that his services are
not required on a continuous basis.
[20] The workers intended
to be self-employed and to remain so. They had no desire to obtain employee
status. The intention of 9084 was the same. The agreements were entered into
freely and were not imposed on the workers. They were not calculated to
unlawfully circumvent the provisions of the Act. Every person has the right to
structure his affairs as he wishes provided the Act is complied with. See Inland
Revenue Comrs v. Duke of Westminster, [1936] A.C. 1, [1935] All E. Rep.
259; Massey v. Crown Life Insurance, [1978] 2 All E.R. 576; Wolf
v. Canada, [2002] 4 F.C. 396; and Royal Winnipeg Ballet v.
Canada (Minister of National Revenue), 2006 FCA 87.
[21] The common intention
of the parties is an important factor in cases where the indicia do not point
clearly toward a contract of enterprise or a contract of employment. However, I
am of the opinion that the circumstances of the work done by the Appellants
Champagne and Labrecque, as described above, are those of a contract of
enterprise, as defined in articles 2098 et seq. of the Civil
Code of Québec (C.C.Q.) and not those of a contract of employment,
as defined in articles 2085 et seq. C.C.Q. The Appellants Champagne
and Labrecque were free to choose how to perform the work, and 9084 did not
direct or control them within the meaning of these provisions.
[22] The appeals are
allowed.
Signed at Ottawa, Canada, this
12th day of April 2006.
"Louise Lamarre Proulx"
Translation
certified true
on this 29th day
of February 2008.
Brian McCordick,
Translator
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