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Citation: 2004TCC370
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Date: 20040514
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Docket: 2003-1154(EI)
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BETWEEN:
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À PROPOS, SERVICES DE FORMATION LINGUISTIQUE 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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and
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MÉLANIE SAINTONGE,
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Intervener.
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AND
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Docket: 2003-1153(EI)
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BETWEEN:
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À PROPOS, SERVICES DE FORMATION LINGUISTIQUE 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
Lamarre Proulx J.
[1] These appeals were heard on common
evidence.
[2] The issue in
Appeal 2003-1154(EI) is whether the Worker,
Mélanie Saintonge, held insurable employment during
the period from January 29 to February 18, for the
nine hours during which she provided language training to
the Appellant's clients. The Worker was the Intervener and
she gave testimony in this appeal.
[3] Appeal 2003-1153(EI),
concerns Worker Jeannine Lachance. The period is from
October 1, 2001 to May 21, 2002. The number
of hours is 130.5 hours. The Worker did not attend the
hearing.
[4] In both appeals, the decision of
the Minister of National Revenue
(the "Minister") is dated
January 9, 2003.
[5] The facts that the Minister took
into account in rendering his decision are described in each of
the appeals in paragraph 15 of the Reply to the Notice of
Appeal (the "Reply"). I reproduce
paragraph 15 from the appeal concerning
Ms. Saintonge.
[translation]
(a) The Appellant
was incorporated in 1995;
(b) The Appellant
operated a language-training business for private companies
and public corporations;
(c) The Appellant
entered into training agreements with its various clients;
(d) The agreements
stipulated the cost of the training, the content of the training,
the location of the training, the course schedule and the number
of participants;
(e) The Appellant
hired instructors to teach the training sessions;
(f) The
Appellant hired instructors on the basis of their skills and
expertise;
(g) The Appellant
had approximately 40 instructors at its disposal;
(h) Once the
Appellant and the client had entered into a training agreement,
the Appellant contacted one of the available instructors to
provide the training;
(i) If the
instructor accepted the work, an agreement would be made
concerning the instructor's schedule;
(j) The client
was the Appellant's client, not the instructor's
client;
(k) The instructor
did not need to negotiate with the client;
(l) The
instructor would go to the client's premises as a
representative of the Appellant;
(m) If an instructor was
sick, it was the Appellant's responsibility to find and pay
for a replacement;
(n) The Appellant
billed its client for the training;
(o) The Worker was
hired as an instructor;
(p) The Worker was
required to adhere to the work schedule that the Appellant had
established with its client;
(q) The Worker was
paid $20 per hour, as determined by the Appellant;
(r) The Worker was
required to deliver the services personally;
(s) The Worker was
required to submit a time sheet to the Appellant at the end of
every month;
(u) The Worker did
not assume any costs in the course of her duties with the
Appellant;
(v) The Worker had
no chance of profit or loss in the course of her duties with the
Appellant;
(w) The Appellant or the
Appellant's client provided the location and all the
educational materials that were necessary to provide the
training;
(x) The Worker's
duties were fully integrated into the Appellant's
activities.
[6] As for Worker Lachance, the
only factual difference lies in subparagraph 15(q). Her
hourly wage was $22.
[7] The facts listed in each of the
Notices of Appeal are identical except for the names of
the Workers. In the case of Ms. Saintonge, they read as
follows:
FACTS
[translation]
5. The
Appellant provides language training courses (French, English,
Spanish) exclusively to corporate clients.
6. The
Appellant does not own nor rent a business location where the
language training services are offered.
7. The
Appellant is not a "school" in the traditional sense of
the word.
8. The
Appellant did not demand that Ms. Saintonge agree or not
agree to give a course for the benefit of the Appellant.
9. The
Appellant did not decide on Ms. Saintonge's behalf how
much work she should accomplish. When Ms. Saintonge offered
her services, it was she who informed the Appellant that she was
available.
10. The Appellant did not
establish rules, directives or procedures with respect to the
content of the language training courses taught by
Ms. Saintonge.
11. The Appellant did not
have the right to direct the manner in which Ms. Saintonge
taught her language training courses.
12.
Ms. Mélanie Saintonge:
(a) has the right to
accept or to decline the assignment. In return, the
Appellant may decide whether or not to give her an assignment.
Mélanie Saintonge has the absolute right to establish
her working schedule since she informs the Appellant of her
availability and seeks assignments with the Appellant;
(b) has the right to
have someone replace her;
(c) is not receiving
any training or courses from the Appellant;
(d) is not receiving
any remuneration for preparing the lessons;
(e) is not subject
to any exclusive employment rules;
(f) is free to
offer her services to any other person;
(g) provided she
respects her undertakings, she may take holidays any time of the
year, for as long as she wants;
(h) has only one
obligation: to come to the location determined by the client for
her to offer the training (on the client's premises) and to
respect the schedule set by her students;
(i) she is
free to prepare the content of the course as she pleases. The
Appellant does not provide a method with tapes or books,
therefore Mélanie Saintonge provides her own working
tools, and she freely decides how she will teach her courses.
13. The Appellant and
Ms. Saintonge signed a contract in which
Ms. Saintonge's status is clearly established as a
freelance consultant.
[8]
Ms. Hélène Hill is the president of the
Appellant. She explained that, for the purposes of her language
training business, she must have a list of teachers or
instructors who teach language. That is one part of her work. The
other part is to obtain language-teaching contracts with
businesses.
[9] The Appellant does not train
instructors. She recruits them on the basis of their degrees. She
establishes a general contract with them. Whenever she has
contracts, Ms. Hill telephones a teacher or an instructor.
If the individual is available, she indicates where the courses
will take place and the number of hours. The terms and conditions
of the general contract apply.
[10] The Appellant negotiates and sets a
budget with the clients. Courses are taught in groups or on a
private basis. The courses are taught on the clients' premises.
For group courses, the Appellant determines the schedule with the
client.
[11] With respect to private courses, the
teacher assesses the student's knowledge and sets a course
plan during the first meeting with the student.
[12] Ms. Hill says that the instructor
may have someone replace him or her, however, this has never
actually happened. Usually, she finds a substitute or, as an
alternative, the instructor and the student make arrangements to
change the day or teaching time. When a course is cancelled, the
teacher is not paid.
[13] Usually, the instructor uses his or her
own material. The instructor may borrow some material from
Ms. Hill, since the latter has been in the field for a long
time and has built up a good library.
[14] Ms. Hill says that
Mélanie Saintonge contacted her with respect to
teaching assignments. Ms. Hill accepted her.
Ms. Saintonge is bilingual and holds a Masters in Education.
She was recruited to teach English.
[15] The schedule was two lunch hours per
week, from 11:30 a.m. to 1:00 p.m. The assignment was
to last ten weeks, for a total of 30 hours.
Ms. Saintonge, however, only worked three weeks.
Ms. Hill lent her some educational material.
[16] The contract between Ms. Saintonge
and the Appellant was produced as Exhibit A-1. The
contract is entitled: [TRANSLATION]"Contract of
service" and is dated January 21, 2002. It reads
as follows:
...
À • PRO'POS Services de Formation
Linguistique inc. vous embauche à titre
d'enseignant(e) de français langue seconde ou langue
maternelle. Vous aurez un statut de consultant à la pige
et vous recevrez un honoraire de travail.
Le taux horaire sera de 20.xx
.
La préparation pédagogique n'est pas
rémunérée.
Il n'y aura aucune retenues effectuées à la
source.
Vous vous engagez à respecter la confidentialité
de ce contrat (taux horaire, conditions de travail, etc.)
Les deux parties peuvent convenir de gré à
gré en tout temps de mettre fin à ce contrat en
donnant un préavis d'au moins quatorze (14) jours
ouvrables.
...
[translation]
. . .
À • PRO'POS Language
Instruction Services Inc. is hiring you to teach French as a
Second Language or as a First Language. You will be a freelance
consultant and will receive a teaching fee.
Your hourly rate will be $
20.xx
Class preparation is not remunerated.
No source deductions will be deducted from your wages.
You commit to respecting the confidentiality of this contract
(hourly wages, working conditions, etc.).
This contract may be terminated by mutual agreement, provided
prior notice of fourteen (14) days is given.
. . .
[17] During her testimony,
Ms. Saintonge said that she was now an employee, working as
an administrative assistant.
[18] She insistently repeated that
Ms. Hill provided her with educational material. She
produced as Exhibit I-1, a diagnostic test of English
grammar, level I, prepared by the Appellant. She produced as
Exhibit I-2 an invoice, a monthly attendance report, a
progress report, a course evaluation; and as Exhibit I-5,
"Course Outline English Second Language".
[19] Jeannine Lachance had a few
assignments during the period at issue. Ms. Lachance's
contract was produced as Exhibit A-3. It is entitled
"Letter of Agreement" and is dated
January 15, 2001. It reads as follows:
. . .
À • PRO'POS Language Instruction
Services Inc. is hiring your services as a teacher of English as
a Second Language.
Your status as a free-lance consultant will command an
hourly salary of $ 22.xx per hour,
paid to you on a monthly basis. Class preparation and/or personal
expenses are not remunerated. No Income Tax is deducted from your
wages.
You are committed to respect the confidentiality of this
contract (hourly wages, working conditions, language programmes)
and comply with the ethics of
À • PRO'POS and its clients.
This contract may be terminated by mutual agreement or by
À • PRO'POS, provided a 14-days
notice is given.
[20] Ms. Hill testified that
Ms. Lachance had an assignment of one hour and a half per
day, five days a week. She worked for three schools at the same
time. She had a lot of experience and had her own material.
[21] Ms. Hill affirms that every one of
the instructors could offer his or her services to other schools
or to other businesses.
[22] At the end of each month, the teacher
prepares an invoice in accordance with the teaching hours
completed. At the end of each session, the teacher prepares an
attendance sheet and a progress report. The student produces a
course evaluation.
[23] Instructors are liable for their own
expenses, computer and transportation. Sometimes, the Appellant
reimburses a percentage of the transportation costs.
[24] Some instructors testified. Each has
affirmed that he or she wanted to be self-employed. They
all had other sources of income, such as translation, research,
revision or other teaching assignments.
[25] Lucie Heppell describes herself as
being a freelancer since 1999. She explained that she meets
and evaluates the student, develops a course training plan with
the student, and completes the assignment. She is not supervised
by Ms. Hill. She chooses the most appropriate method for her
student. She owns her own textbooks. When she is available, she
telephones Ms. Hill or the latter telephones her to offer
her assignments. She has never needed a replacement. She has
other schools. She is a translator, writer and editor, and she
helps with homework. She submits an invoice at the end of the
month. She considers herself to be self-employed.
[26] Ms. Bozena Feltz also
testified. She has been teaching for twenty years. She
enjoys her self-employed status.
[27] Tanis Whitfield,
France Ménard and Kurt Chaboyer have also
testified in the same way.
[28] Appeal Officer Paul Hyland
produced his reports as Exhibits I-6 and I-7. By
and large, the facts described in the Reply encapsulate the
statements in the reports.
Conclusion
[29] The latest decisions of the Federal
Court of Appeal show us how to proceed in those cases where usual
case law tests cannot clearly reveal whether we are dealing with
employment or a business. The intentions of the parties then
become material.
[30] I refer to the Federal Court of Appeal
decision in
Wolf v. Canada (C.A.)[2002] F.C.J. 375
(Q.L.), paragraphs 67, 120 and 124:
67 The appellant
submits that absent a scam, window-dressing or other vitiating
circumstances, none of which are alleged in this case, his status
is governed by his contract which describes him as a consultant
and independent contractor.
. . .
120 In our day and age, when a
worker decides to keep his freedom to come in and out of a
contract almost at will, when the hiring person wants to have no
liability towards a worker other than the price of work and when
the terms of the contract and its performance reflect those
intentions, the contract should generally be characterized as a
contract for services . . .
. . .
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
. . .
[31] I refer to another decision of the
Federal Court of Appeal D & J Driveway Inc.
v. Minister of National Revenue,
2003FCA453, paragraphs 7, 9, 10, 11, 12 and
15:
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.
10 There is no
question that the applicant controlled the results in the case at
bar. It ensured that the trucks were delivered to the correct
recipients at a convenient or agreed upon time; but that is where
its control stopped.
11 In fact, drivers
could agree or refuse to make a delivery when called by the
applicant, which certainly is not characteristic of a person
bound by a contract of employment. They had no premises at the
applicant's place of business and were not required to be
available there. They only went there to take possession of the
truck they had agreed to deliver.
. . .
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.. . .
[32] Here, in the same way as the workers in
D & J Driveway (supra), the teachers
did not have a home base in the Appellant's premises.
Moreover, they used their own computer. They could borrow
educational material from the Appellant, but usually, they
drafted and used their own material. For the most part, the
teachers determined the lesson plans they taught.
[33] Workers could accept or turn down a
teaching assignment. They could work for other companies. They
informed the Appellant when they were available and the latter
offered them contracts. By and large, they had a sporadic
contractual relationship.
[34] The Appellant did not directly
supervise the teachers. The Appellant did quality control by
means of students' evaluations. This type of control, a control
of the results, is characteristic of contracts for services.
[35] Whether or not the teachers could have
someone take their place is not a material component of a
contract for services. In many cases, the person who executes the
contract for services is chosen in the contract.
[36] In my opinion, the working conditions
described by Ms. Hill and the teachers indicate a contract
for services.
[37] However, if this had been a neutral
case, what was the common intention of the parties? According to
the testimony of the teachers, their intention was to execute a
contract for services. The Appellant chose to proceed by means of
contracts for services due to the economic and organizational
requirements of its operations.
[38] As to the two Workers at issue,
one of them-the one that had accumulated more working hours-did
not testify. Therefore, we can attribute to her no other
intention than that expressed in the contract between her and the
Appellant, and this was a contract for services. Moreover, her
working conditions as described by Ms. Hill were similar to
those of the teachers who rightly claim self-employment
status.
[39] Ms. Saintonge testified at the
hearing. In her case, it is possible that her unexpressed
intention was to be an employee. However, she agreed to the terms
of the work contract offered to her. There were no negotiations
to modify the terms and the Appellant did not lead her to believe
that she was an employee. For instance, the Appellant did
not make the source deductions prescribed by the Employment
Insurance Act and by the Income Tax Act against the
compensation paid to the employee, as was the case in Tip
Investment Advisors Ltd., 2004CCI236.
[40] Moreover, in this matter, I see no
elements indicating any masking of the true intent of the parties
with respect to the nature of the contract for services.
[41] Accordingly, the appeals are
allowed.
Signed at Ottawa, Canada, this 14th day
of May 2004.
Lamarre Proulx J.
Translation certified true
on this 3rd day of November 2004.
Ingrid Miranda, Translator
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