[OFFICIAL ENGLISH
TRANSLATION]
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Reference: 2004TCC85
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Date: 20040213
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File: 2003-3093(EI)
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BETWEEN:
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ALMA-ROSE LANDRY,
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Appellant,
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And
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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REASONS FOR JUDGMENT
Angers J.
[1] This
is an appeal of a decision by the Minister of National Revenue (the “Minister”)
that the Appellant’s employment between November 4 and 30, 2002, with Savoie
Export Ltd. (the “Payer”), is not insurable employment within the meaning of
the Employment Insurance Act (the “Act”) since it was not a position
held under an employment contract.
[2] In
making its decision, the Respondent relied on the following assumptions, which
were either admitted or denied by the Appellant as indicated below:
(a) the
Payer purchased Christmas wreaths (“wreaths” made by hand by various people
including the Appellant; (admitted)
(b) the
Payer supplied the Appellant with the labels, wire and rings necessary to make
the wreaths; (admitted)
(c) the
Appellant supplied the branches used to make the wreaths she sold to the Payer;
(admitted)
(d) the
Payer paid the Appellant $27 a dozen for the 10 inch wreaths and $29 a dozen
for the 12 inch wreaths; (admitted)
(e) the
Payer’s invoices show the Appellant’s purchase of wreaths on the following dates
for the amounts shown: (admitted)
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invoice
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date
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Quantity
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total
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28
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November 9, 2002
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18 doz. @ $27
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$486.00
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03
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November 16
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19 doz. @ $29
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$551.00
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30
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November 23
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18 doz. @ $29
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$522.00
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07
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November 30
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19 doz. @ $29
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$551.00
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total
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74 doz.
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$2110.00
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(f) the
Payer paid less per dozen when the workers did not supply the branches;
(admitted)
(g) the
Appellant was responsible for cutting her own branches on land of her choosing
and for transporting them to her home; (admitted)
(h) the
Appellant made the wreaths at her home; (admitted)
(i) the
Payer did not monitor the Appellant’s production volume; (denied)
(j) the
Payer did not monitor the Appellant’s working hours; (denied)
(k) it
took the Appellant 10 to 15 minutes to make a wreath; (admitted)
(l) neither
the Payer nor the Appellant knew how many hours the Appellant worked; (denied)
(m) the
Appellant received a record of employment from the Payer showing 220 hours and
$2110.00;
(n) the
number of hours shown on the Appellant’s record of employment is an estimate of
the number of hours worked by the Appellant; (admitted)
(o) the
Payer did not supervise the Appellant; and (denied)
(p) the
Appellant had the choice to increase her earnings by supplying the branches to
the Payer or not. (denied)
[3] On
November 4, 2002, the Appellant signed an “employment contract” with the Payer
in which she undertook to make Christmas wreaths. “Employment contract” is
marked on the contract itself. The duration of employment is not indicated, but
the contract does stipulate that the Payer reserves the right to terminate the
contract at any time without advance notice. The Appellant undertook to provide
a product of acceptable quality and, under the terms of the contract, she
reported to a supervisor who was to visit her at her home. The Appellant also
agreed to give the supervisor access to her place of work.
[4] The
hours of work are not specified in the contract, but the Appellant agreed to
produce 3 or 4 wreaths for each hour of work indicated by the Payer. The rate of
pay was different if the Appellant did not supply the branches, but this did in
fact not happen. The other terms are indicated in the excerpt from the Response
to the Notice of Appeal reproduced above. It should be noted that the Appellant
used her own scissors to make the wreaths.
[5] A
supervisor, Jeannine LeBreton, visited the Appellant three times per week, for
about thirty minutes each time. Ms. LeBreton counted the wreaths the Appellant
had made and checked the quality of the product. During her visits, she brought
the Appellant the necessary supplies to make the wreaths, except for the
branches. The approximate number of hours worked by the Appellant was estimated
based on the number of wreaths made. The actual hours of work were not recorded
by the Appellant or the Payer.
[6] There
is no evidence of the Appellant’s work schedule but, according to her
testimony, she worked seven days a week. She spent two days gathering branches
and the five remaining days making the wreaths. Her rate of pay for a dozen
wreaths was higher because she supplied the branches herself, but the time she
spent gathering branches was not figured into the number of wreaths made per
hour.
[7] The
Appellant’s spouse and the Payer signed a rental contract for a garage. This is
the garage where the Appellant did her work during the period in dispute. The
Payer allegedly rented the garage in question for $50 for the wreath-making
season. Yet this evidence contradicts the “employment contract,” which notes in
the preamble that the Payer does not have large enough premises for the
Appellant to make wreaths and that the Appellant agrees to do her work at home.
This raises the question why it was necessary for the Payer to rent a garage.
[8] The
Federal Court of Appeal in Wiebe Door Services Ltd. v. Minister of National
Revenue, [1986] 3 F.C. 553, set out a useful guide to differentiate an
“employment contract” from a “business contract.” The Supreme Court of Canada,
in decision 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001]
2 R.C.S. 983, endorsed this guide, summarizing the state of the law as follows
in paragraphs 47 and 48:
Although there is no universal test to determine
whether a person is an employee or an independent contractor, I agree with
MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke
J. in Market Investigations, supra. 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. In making this determination, the level
of control the employer has over the worker's activities will always be a
factor. However, other factors to consider include whether the worker provides
his or her own equipment, whether the worker hires his or her own helpers, the
degree of financial risk taken by the worker, the degree of responsibility for
investment and management held by the worker, and the worker's opportunity for
profit in the performance of his or her tasks.
It bears repeating that the above factors constitute a
non-exhaustive list, and there is no set formula as to their application. The
relative weight of each will depend on the particular facts and circumstances
of the case.
[9] In
Charbonneau v. Canada, [1996] F.C.A. no 1337 (Q.L.), Marceau J.A. of the
Federal Court of Appeal reminds us that the factors in question are generally
helpful points of reference but that they should not be used to the extent of
jeopardizing the ultimate purpose of the exercise, which is to ascertain the
overall relationship between the parties.
[10] In this case, the Appellant and Payer obviously went to great lengths
to establish an “employment contract” between them in accordance with the
criteria usually required for such contracts. The “employment contract” filed
as evidence and the rental of the garage are the main factors supporting the
Appellant’s arguments. The Court must nevertheless consider all the facts and
determine the exact nature of the relationship between the Appellant and the
Payer.
[11] The “employment contract” signed by the Appellant and the Payer
stipulates that 3 or 4 wreaths are to be made for each hour of work indicated
by the Payer. The contract does not however indicate the number of hours the
Appellant must work for the Payer per day or per week. The Appellant’s revenues
thus depended on her desire to make 3 or 4 wreaths per hour at a rate of $27
per dozen wreaths, representing an average rate of three hours of work.
[12] As to the rental contract, as I already pointed out, it contradicts
the preamble of the “employment contract.” In a true rental contract, the Payer
would be the owner of the premises where the Appellant works and the
Appellant’s consent to perform the work at home would not be required in the
“employment contract.” The rental contract filed as evidence does not indicate
who was responsible for paying the electrical and heating bills for the space.
This leads us to question the purpose of the rental contract. In any case, even
though the parties choose to present their relationship as being governed by an
“employment contract,” that does not prevent this Court from examining this
relationship in light of criteria established in case law. (See Standing v.
Canada, [1992] F.C.J. no 890 (F.C.A.).)
[13] The supervisor’s visits three times per week for thirty minutes each
time do not in this case create a relationship of subordination. The purpose of
the visits was really to check the quantity and quality of the product, or in
other words to monitor the result and not the Appellant herself. During these
visits, the supervisor also provided supplies to the Appellant and collected
the finished product that was deemed acceptable. Given the frequency and
duration of these visits, they are far from sufficient to constitute
appropriate supervision.
[14] One must also consider who was monitoring the Appellant when she was
gathering branches. The time spent gathering branches was not recorded. In
fact, since the Appellant was paid more for her wreaths made with branches she
supplied herself, she was in a sense paid for the sale of her branches. This
sale was included in the pay the Appellant received such that it was not pay
for services rendered but rather payment for a product sold. This is contrary
to the provisions of the Act, especially paragraph 5(1)a).
[15] In a case similar to the one before us, Tremblay J. of our Court, in Denis
v. Canada, [1994] A.C.I. no 32 (Q.L.) analyzed the criterion of opportunity
for profit and risk of loss as follows:
[TRANSLATION:]
18 This criterion is based on the principle
that, in an employer-employee relationship, the employee does not incur any
expenses in performing his work, does not risk anything financially and does
not have any opportunity to reap a profit. His only financial asset is his
salary.
19 In the instant case, I wonder what would
have happened to the salary, if it is indeed salary, if the Appellant, reported
to his Payer that for one reason or another (accident, theft) his 200 wreaths
had been destroyed or stolen. Would she have been paid nevertheless?
20 If not, I see this as an indication that
this person is not an employee but instead an independent worker. If the answer
is yes, I would conclude the opposite. No evidence in this regard was submitted
however.
21 Moreover, if the Payer does not pay for a
defective wreath, I doubt very much that he would pay for the work done on
wreaths that were destroyed, even if it is not the Appellant’s fault.
[16] In my opinion, Judge Tremblay’s analysis is applicable to this case.
[17] The ownership of tools does not appear to be a decisive factor in this
case. The Appellant’s work was part of the Payer’s business, which sold
wreaths. This criterion supports the Appellant’s position.
[18] It is incumbent on the Appellant to demonstrate on the balance of
probabilities that she was truly bound to the Payer by an employment contract.
Given all of the evidence and for the reasons cited above, I conclude that the
balance of the evidence is not in the Appellant’s favour. She was therefore not
bound to the Payer by a true employment contract.
[19] For these reasons, the appeal is dismissed.
Signed at Ottawa, Canada, this 13th day of
February 2004.
Angers
J.
Certified true
translation
Manon Boucher
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