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Citation: 2004TCC309
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Date: 20040420
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Docket: 2003-1914(EI)
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BETWEEN:
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LE CHAT RAYÉ 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.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Lamarre Proulx J.
[1] This is an appeal from a decision
of the Minister of National Revenue (the "Minister")
that for the period from August 26, 2001 to
August 27, 2002, Benjamin Beauregard performed
insurable work for the Appellant as defined by the Employment
Insurance Act (the "Act").
[2] The Minister relied on the facts
described at paragraph 6 of the Reply to the Notice of
Appeal (the "Reply"), which read:
[TRANSLATION]
(a) The Appellant
operated a visual design business.
(b) The Appellant
offered its clients a turnkey service, from the visual design to
the delivery of the set.
(c) The Appellant
obtained contracts and hired, from a personal repertoire, the
workers required to carry out the contracts obtained.
(d) Jean Petit
was the Appellant's only shareholder.
(e) During the
period at issue, the Appellant hired the Worker to transport,
assemble and remove sets.
(f) The
Appellant communicated to the Worker the address of the workshop
where he was to go and the Worker followed the Appellant's
directions in the following order:
- He
went to the rental firm chosen by the Appellant to pick up the
truck.
- He
went to the place where the set was located.
- He
loaded the set into the truck with the help of
Mr. Jean Petit or another of the Appellant's
workers.
- He
delivered the set to the place indicated by the Appellant.
- He
emptied the truck of its contents.
- He set
up the set if requested by the Appellant.
- He
returned the truck to the rental company.
(g) The Worker was
paid by the hour, $15 at the beginning and $18 at the end of the
period, according to hours actually worked at the end of each
contract or mandate.
(h) During the
period at issue, the Worker accumulated 260 insurable hours
and insurable earnings totalling $4,093 from the Appellant.
[3] At the beginning of the hearing,
the Appellant's Agent informed the Court that
paragraphs 6(a), 6(b), 6(d), 6(e) and 6(g) were admitted,
that paragraphs 6(c) and 6(f) were denied as
written.
[4] Jean Petit, the
Appellant's president, testified. Regarding the statement at
paragraph 6(d) of the Reply, he specified that he held all voting
shares in the company but that his two sons also held shares, but
not voting shares.
[5] Mr. Petit explained that the
Appellant has been an artistic director since 1995, the year in
which Mr. Petit lost his job as a set designer with
Télé-Québec. The Appellant offers set design
services. The Appellant can have it built and set up. Set removal
is also part of its services.
[6] The company has no permanent
employees. Mr. Petit says that this is a world of
freelancers. Based on contract needs for a set, Mr. Petit
forms teams. This is rather seasonal work, with the summer,
autumn and January being the busiest times.
[7] The company's main clients are
Videotron and Canal Vox. The company also has a few small
production companies.
[8] Generally, Mr. Petit does the
design and supervision of the various steps that lead to
installation of a set.
[9] He filed as Exhibit A-1 an
invoice from the Appellant to Canal Vox for the production
"Les Fêtes Enchantées". In it are costs
related to the purchase of set materials, the services of
individuals assisting, doing research, construction and labour
for installation.
[10] Mr. Petit explained that to obtain
a contract it is first necessary to do a drawing or model and set
out a budget. When the contract is awarded, it is important to
ensure that people are available. It is necessary to purchase the
set materials or to request a studio to prepare some components
of the set. When these components are finished, they must be
picked up, transported and assembled on site.
[11] On the whole, these are
short-term contracts.
[12] The Worker in question in the case at
bar, Benjamin Beauregard, worked in transportation,
installation and occasionally removal. The truck was rented by
the Appellant. Mr. Beauregard drove the truck. He was
normally accompanied by an assistant. The installer had to find
an assistant. He gave the name to Mr. Petit who could reject
it if he was not satisfied with the assistant's services in
other circumstances. The Appellant paid the assistant.
[13] Benjamin Beauregard's father
was a set builder. His job was eliminated at the same time as
Mr. Petit's. He had three sons. At the beginning, they
all worked for the Appellant. In the long term, Benjamin became
the most available.
[14] Mr. Petit's son,
Guillaume Petit, also worked as a set builder. If he worked
with Mr. Beauregard, Guillaume had precedence, although he
did not drive the truck.
[15] Exhibit A-2 is an invoice from an
individual who built some set components in his workshop. This
individual was paid at an hourly rate.
[16] Exhibits A-3 to A-7
are invoices from installers other than Mr. Beauregard. They
were produced to demonstrate that this is how business is done in
this kind of enterprise, by service contracts paid at hourly
rates or by fee. Exhibit A-7 was also filed to show that,
occasionally, Mr. Petit does not know the assistant.
[17] Normally, the regular installers or
assistants are requested first. But when they are not available,
others are reserved and hired. The contracts are verbal and short
term. Payment is made the last day of the contract, by
cheque.
[18] Mr. Petit informed the assembler
of the hours in which the various pick-up jobs of sets and
installation were to be done. He could suggest what route to
take.
[19] Mr. Petit was often present during
the installation, especially when there was no installation plan
for the set. Once the set was installed, he came by to check
whether everything was correct.
[20] The installer had his own cell phone as
well as his own tools for assembly, including a drill.
[21] Installers paid for tickets they
received during transport.
[22] The installers have no office on the
business's premises. They are communicated with by telephone.
None of them worked exclusively for the Appellant.
[23] For the period at issue, the Worker
obtained $4,000 in a few months in which he worked nearly seven
days per week. Before, it was amounts of approximately $1,000 per
year.
[24] In August 2002, Benjamin asked him
to change his status from self-employed worker to employee.
He wished to return to his studies. He was also working for
another installation company and when he worked for this company
he had employee status. This enabled him to accumulate the
necessary hours for entitlement to employment insurance
benefits.
[25] Objections Officer Robert Leprohon
testified. His testimony did not introduce any facts different
from those of Mr. Petit. His report was filed as
Exhibit I-1. Exhibit I-2 is the total of
invoices from the Worker for the work performed.
[26] The Worker did not come to testify
although he had been summoned by the Respondent.
[27] The Appellant's agent referred to a
decision that I rendered in Skylink Aviation Inc. v. Canada
(Minister of National Revenue), [2001] T.C.J. No 223
(Q.L.) and a Federal Court of Appeal decision in Vulcain
Alarme Inc. v. Canada (Minister of National Revenue),
[1999] F.C.J. No 749 (Q.L.). From the latter, he
quoted paragraph 18 in particular:
18 With respect, we
do not feel that these facts are conclusive as to the analysis of
risk of loss or expectation of profit by Mr. Blouin and his
company. Although Mr. Blouin's income was calculated on
an hourly basis, the number of hours of work were determined by
the number of service sheets he received from the plaintiff.
Mr. Blouin and his company thus had no guaranteed income.
Unlike the technicians working as employees within the
plaintiff's business, whose weekly salary was constant,
Mr. Blouin's income fluctuated with the service calls.
In fact, towards the end of his contract with the plaintiff
Mr. Blouin was no longer doing the equivalent of forty hours
a month as he was receiving few service sheets.
[28] Counsel for the Respondent pointed out
that control does not have to be exercised. What is
important in the employer-employee relationship is the power to
control.
[29] I refer to the Federal Court of Appeal
decision in D & J Driveway Inc. v. Canada,
[2003] F.C.J. No. 1784 (Q.L.). This relates to
delivery truck drivers. I refer to paragraphs 7, 9 and
15 of this decision:
7 The
drivers have no facilities at the applicant's premises.
Their services are retained and provided on call. They are
entirely free to refuse the offer made to them to drive a truck,
for example, to Halifax, Québec or Montréal.
Deliveries are made from Saint-Jacques in
New Brunswick. The drivers receive a fixed amount which
is determined in accordance with the distance to be
travelled.
. . .
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.
. . .
15 We feel it is
legally incorrect to conclude that a relationship of
subordination existed, and that there was consequently a contract
of employment, when the relationship between the parties involved
sporadic calls for the services of persons who were not in any
way bound to provide them and could refuse them as they saw fit.
Concluding that a contract of employment existed in such
circumstances is also not without serious and burdensome
practical consequences for a payer, especially as more often than
not such a conclusion and the resulting assessment for fringe
benefits, such as income tax, employment insurance and pension
plan, which the payer must pay are retroactive in nature. The
payer becomes liable not only for his share but, with a right of
recovery, for what the employee has not paid.
[30] In work circumstances in which the
distinction between contract of employment and contract for
services is difficult to determine, according to the recent
principles laid down by the Federal Court of Appeal, attention
must be directed to the common intent of the parties, as in all
contracts. Here, the common intent was a contract for services.
At the end of the period at issue, the Worker asked the Appellant
for employee status, which the Appellant refused.
[31] The Appellant's choice to continue
with a contract for services rather than a contract of employment
was made in consideration of the economic and operational
requirements of his operation. This is not a contract of
employment masquerading as a contract for services. Like the
delivery truck drivers in D & J Driveway Inc.
(supra), the worker had no facilities at the
Appellant's premises. These were sporadic contractual
relationships. There was control of the outcome and not a
relationship of subordination. The worker was free to refuse any
request to work. He provided his own tools.
[33] The appeal is allowed.
Signed at Ottawa, this 20th day of
April 2004.
Lamarre Proulx J.
Translation certified true
on this 8th day of
November 2004.
Sharon Winkler Moren, Translator
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