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Citation: 2003TCC28
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Date: 20030224
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Docket: 2002-326(EI)
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BETWEEN:
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RÉSIDENCES PLACE DE L'ÉTOILE
SUR LE LAC 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
Alain
Tardif, J.T.C.C.
[1] This is an appeal from a determination dated November 22, 2001, in
which the respondent concluded that the work performed by Richard Ouellet
between June 11, 2000, and August 4, 2001, was done under a contract of
service.
[2] During the periods at issue, the appellant held a mandate to
market and sell condominium units built by Construction Longer Inc. The
condominiums were built in two phases.
[3] For sales, the appellant used various methods, one of which was to
engage the services of salespersons who were not real estate agents. One of the
salespersons, the one to whom the appeal relates,
was Richard Ouellet.
[4] According to Marc Guillemette, C.G.A., the appellant’s agent,
the work performed by Richard Ouellet in sales was not insurable
employment under the Employment Insurance Act. He focussed in particular
on facts relating to the sale of the Phase I condominiums.
[5] Mr. Guillemette also maintained that the commissions were paid to
Mr. Ouellet not by the appellant, but by the notary, Mr. Guérin, who
prepared the notarial deeds that made the sales by the salespersons, including
Richard Ouellet, legal.
[6] Mr. Guillemette stated that Richard Ouellet had total discretion
in performing his work as a salesperson in that he could work from home, his
schedule was based on his availability, and no controls were exercised or
constraints placed on him by the payer who, it should be remembered, was
according to the appellant’s agent not the appellant, but the notary who
prepared the notarial contracts.
[7] According to Richard Ouellet, his work as a salesperson had on the
whole been performed in substantially the same way in both Phase I and Phase
II.
[8] For Phase II, a number of documents were available to assess and
characterize the legal relationship between Mr. Ouellet and the appellant. They
included a contract entitled [translation]
“Basis for payment of Richard Ouellet” (Exhibit I-1) and some bundles of
invoices and cheques (Exhibit I-2). It should be noted that the amounts of the
cheques matched the invoices.
[9] Mr. Ouellet explained that a number of condominium units had been
sold when he started working as a salesperson. As Phase I had been completed,
he was able to close the sales and deliver the condominiums within a very short
period, and this enabled him to receive the agreed-upon commission quite
quickly.
[10] As for Phase II, sales were based on plans, since no condominiums
had been built yet; this meant lengthy delays before the formal sales took
place, and payment of the related commissions was delayed accordingly.
[11] An agreement was then reached whereby the salesperson, Mr.
Ouellet, would receive advances based on the hours he spent in the sales office
set up at the appellant’s place of business. The documentary evidence is
conclusive in this respect (Exhibits I-1 and I-2).
[12] This very important agreement was signed in September 2000. I feel
it is important to reproduce the contents of the agreement (Exhibit I‑1).
[translation]
LE LITTORAL/SALE OF CONDOS/SALE OF ROOMS
BASIS FOR PAYMENT OF RICHARD OUELLET
A- COMMISSIONS
The commissions for the sale of
condos and hotel rooms to be built in Phase 2 are:
- $3,000 per condo
- $1,000
per room
B- METHOD OF
PAYMENT
The commissions are paid as
follows:
- 1/3 when the work
begins
- 1/3
4 months after the work begins
- the other
1/3 on delivery of the condos and rooms to the clients.
RESTRICTIONS
Commissions shall be payable only
if the construction of Phase 2 of the project begins, or in other words, if 16
of the 26 condos and 15 hotel rooms are sold.
PROGRESSIVE ADVANCES
Progressive advances may be made at
the rate of $120 a week if the seller is present at least 12 hours a week,
i.e., 6 hours on Saturday and 6 hours on Sunday.
The advances will be deducted from
the commissions to be paid at each of the above-mentioned stages.
If the construction of
Phase 2 cannot be started before February 15, 2001, the advances paid may be
kept by the salesperson as wages for the work accomplished and no further
commission will be paid.
(Emphasis
added.)
[13] The part entitled “PROGRESSIVE ADVANCES” is particularly
interesting and relevant to the characterization of the nature of the legal
relationship between the appellant and its salesperson, Mr. Ouellet. This is
especially true of the last paragraph relating to delays in construction of the
condominiums.
[14] Did Richard Ouellet perform this work under a genuine
contract of service? To answer this question, I must analyse the facts in light
of the tests developed by the courts.
Control and
relationship of subordination
[15] The courts have long held the control test on which the
relationship of subordination is based to be essential to finding that a contract
of service exists. However, it is not necessary for the employer to have
exercised or to be exercising the power of control; it is enough for the
employer to have the right to do so.
[16] In the case at bar, not only did the appellant employer have this
power during the periods at issue, it exercised the power in planning minimum
work schedules and in requiring that the salesperson be in the sales office, on
weekends, for a minimum of six hours a day. In addition, Mr. Ouellet had to
report on his work, notify the appellant when he would be absent and explain
his absences.
Ownership of
tools
[17] Richard Ouellet did his work primarily from the office set up
for sales. In performing his work as a salesperson, he used advertising
material provided and paid for by the employer.
Risk of loss and chance of profit
[18] Richard Ouellet had no risk of loss and his income was based on
the sales he closed. The amount of the commissions had been determined
beforehand. He received fixed commissions that were paid to him during Phase II
in the form of advances based on the hours he worked in the sales office. If he
did not make any sales, he quite simply had no income; he had nothing to spend
on advertising, rent, travel, etc. For Phase II, the salesperson would have
kept the advances if the project had not seen the light of day.
Integration
[19] The appellant had a specific mandate to sell condominiums that had
been built and others that were to be built. Mr. Ouellet's work was
performed under the appellant's mandate.
[20] Where insurability is in issue, the burden of proof lies on the
person who appeals the determination; the Court must dispose of the appeal
based on a preponderance of evidence.
[21] In the case at bar, the presentation by the appellant's agent of
the facts and circumstances relating to the performance of the work in Phase I
was questionable.
[22] He maintained, inter alia, that the notary was the payer
and not the appellant. However, it is clear from the evidence that the
appellant was in fact the debtor for the commission. The fact that the notary
was the one who handed over the cheque for the commission is neither sufficient
nor conclusive to make the notary the employer of Mr. Ouellet. The appellant’s
claims that the notary was the one who paid the commission and that the notary
was therefore Mr. Ouellet’s employer are completely unfounded. This
conclusion also makes it possible to understand why Mr. Guillemette said that
the payer of the commission had no control or authority over Mr. Ouellet's acts
and deeds.
[23] According to the salesperson, Mr. Ouellet, the terms and
conditions of his work were the same in Phase II as in Phase I except that he
had to wait longer to be paid his commission. However, the documentary evidence
relating to Phase II enables us to draw some interesting conclusions as to the
issue of the existence of an employment contract that, moreover, are consistent
with the respondent’s determination that led to this appeal. The facts showed
that, on a preponderance of evidence, the work had been performed under a
genuine contract of service.
[24] For these reasons, the appeal is dismissed on the basis that the
work performed by Richard Ouellet was done under an insurable contract of
service for all of the periods at issue.
Signed at Ottawa, Canada, this 24th day of
February 2003.
J.T.C.C.
Translation certified true
on this 20th day of April 2004.
Stephen Balogh, Revisor
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