Date: 20010628
Docket: 2000-598-EI
BETWEEN:
SERVICES TECHNIQUES GÉONORDIC INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Docket: 2000-599-EI
DENIS CHÉNARD,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Docket: 2000-600-EI
PETER BAMBIC,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for judgment
Charron, D.J.T.C.C.
[1] These appeals were heard on common
evidence at Montréal, Quebec, on February 16, 2001,
to determine whether the decisions by the Minister of National
Revenue (the "Minister") that the employment of
Denis Chénard during the period from January 1997 to
February 26, 1999, and of Peter Bambic during the
period from June 1996 to February 26, 1999, with Services
Techniques Géonordic Inc., the payer, was insurable within
the meaning of the Employment Insurance Act (the
"Act"), are correct.
[2] By letters dated November 16,
1999, the Minister informed the appellants that the employment in
question was insurable on the ground that it met the requirements
for a contract of service and that there was an employer-employee
relationship between them and the payer.
Statement of Facts
[3] The facts on which the Minister
relied in making his decisions are set out in paragraph 8 of
each Reply to the Notice of Appeal, as follows:
Appeal No. 2000-598(EI) - Services Techniques
Géonordic Inc.
[TRANSLATION]
(a) The appellant, a
corporation that has been operating since 1994, is a mining
exploration project management business carried on in Quebec.
(admitted)
(b) The appellant
specializes in the metallurgical aspects of exploration, in
particular the areas of ore content and size of deposits.
(denied)
(c) The appellant
goes to sites designated by public corporations, conducts its
research and reports on that research to the requesting public
corporations. (admitted)
(d) The appellant is
operated in cyclical fashion, essentially in the summer, because
exploration is mainly carried out in the North. (denied)
(e) The main tools
and equipment of the business are the camp equipment, electronic
hardware (computers) and field equipment (vehicles).
(admitted)
(f) During the
periods in issue, the appellant employed the workers
Denis Chénard, geologist and member of the Ordre des
Ingénieurs du Québec (Quebec association of
engineers), and Peter Bambic, lithogeochemist. (denied)
(g) The workers were
hired by the appellant under oral agreements. (denied)
(h) The workers went
to the exploration sites designated by the appellant; the clients
were the appellant's, not the workers'. (denied)
(i) On the
sites, the workers worked as experts in their specialties; they
supervised the work by acting as project managers for the
appellant. (denied)
(j) The
workers themselves had to provide services to the appellant but
were required to comply with the appellant's instructions and
meet the timetable set by the appellant. (denied)
(k) The appellant
did not keep a record of the workers' hours of work; the
workers were remunerated by the appellant according to a daily
rate. (admitted)
(l) The
workers billed the appellant in accordance with the number of
days worked; the workers were reimbursed by the appellant for the
use of their computers and for their meals, photocopies,
telephone, gasoline and other expenses. (denied)
(m) The workers had to
make frequent oral and written reports to the appellant on the
progress of the work. (denied)
(n) The workers used
the appellant's equipment; when they had to use their own
tools, they received compensation from the appellant.
(denied)
(o) The workers
incurred no financial risk; they were remunerated for the number
of days they worked and all their expenses were reimbursed by the
appellant. (denied)
Appeal No. 2000-599(EI) -
Denis Chénard
[TRANSLATION]
(a) The payer, a
corporation that has been operating since 1994, is a mining
exploration project management business carried on in Quebec.
(admitted)
(b) The payer
specializes in the metallurgical aspects of exploration, in
particular the areas of ore content and size of deposits.
(denied)
(c) The payer goes
to sites designated by public corporations, conducts its research
and reports on that research to the requesting public
corporations. (admitted)
(d) The payer is
operated in cyclical fashion, essentially in the summer, because
exploration is mainly carried out in the North. (denied)
(e) The main tools
and equipment of the payer's business are the camp equipment,
electronic hardware (computers) and field equipment (vehicles).
(admitted)
(f) The
appellant has a bachelor's degree in geological engineering
from the Université du Québec à Chicoutimi
and is a member of the Ordre des Ingénieurs du
Québec (Quebec association of engineers). (admitted)
(g) The appellant
provided services to the payer starting in mid- or late January
1997. (admitted)
(h) The appellant
went to the premises of clients designated by the payer and was
responsible for conducting a mineral inventory on properties and
assessing the potential of deposits. (admitted)
(i) More
specifically, the appellant had to prepare a description of the
rocks, determine drilling sites, take samples for analysis and
draft a report for the purpose of recommending potential work.
(admitted)
(j) The
appellant's work was done in the field at (locations
specified by the payer), on the payer's premises and
occasionally in his own office. (denied)
(k)
The appellant had no specific schedule to meet; he was
remunerated by the payer on the basis of a daily billing, not by
the hour. (admitted)
(l) The payer
supplied the camp equipment and reimbursed all expenses
(computer, meals, photocopies, telephone, gasoline and other
expenses) incurred by the appellant in his work. (admitted)
(m) It could happen that
the appellant used some of his own tools, such as his computer, a
geologist's hammer and his truck in his work for the payer,
but he received compensation from the payer for their use.
(denied)
(n) During the
period in issue, the appellant rendered services to the payer as
a professional in his specialty; he provided services to the
payer's clients under the payer's supervision and
control. (denied)
Appeal No. 2000-600(EI) - Peter Bambic
[TRANSLATION]
(a) The payer, a
corporation that has been operating since 1994, is a mining
exploration project management business carried on in Quebec.
(admitted)
(b) The payer
specializes in the metallurgical aspects of exploration, in
particular the areas of ore content and size of deposits.
(denied)
(c) The payer goes
to sites designated by public corporations, conducts its research
and reports on that research to the requesting public
corporations. (admitted)
(d) The payer is
operated in cyclical fashion, essentially in the summer, because
exploration is mainly carried out in the North. (denied)
(e) The main tools
and equipment of the payer's business are the camp equipment,
electronic hardware (computers) and field equipment (vehicles).
(admitted)
(f) The
appellant has a master's degree in mining exploration from
McGill University. (admitted)
(g) The appellant
has provided services to the payer since June 1996.
(admitted)
(h)
The appellant went to the premises of clients designated by the
payer and did rock chemistry computer processing; he analyzed
changes in the chemistry of rocks using computers. (admitted)
(i) The
appellant's work was done essentially in the field (at
locations specified by the payer) and occasionally in his own
office. (denied)
(j) The
appellant had to make frequent oral and written reports to the
payer and the payer's clients on the progress of his work.
(denied)
(k) The appellant
had no specific schedule to meet; no record was kept of his hours
of work by the payer, which remunerated him upon submission of
invoices. (admitted)
(l) The
appellant had to personally perform the work required by the
payer because the payer had hired him for his knowledge and his
expertise in his field of specialization. (admitted)
(m) The payer reimbursed
all expenses (computers, meals, photocopies, telephone, gasoline
and other expenses) incurred by the appellant in his work.
(denied)
(n) It could happen
that the appellant used some of his own tools, such as his
computers, his truck, his snowmobile, his office, etc., in his
work for the payer, but he received compensation from the payer
for their use. (denied)
(o) During the
period in issue, the appellant rendered services to the payer as
a professional in his specialty; he provided services to the
payer's clients under the payer's supervision and
control. (denied)
[4] The appellants admitted that all
the subparagraphs of paragraph 8 of each Reply to the Notice
of Appeal were true, except those that they denied, as indicated
in parentheses at the end of each subparagraph.
Denis Chénard's Testimony
[5] Mr. Chénard is a
geological engineer and member of the Ordre des Ingénieurs
du Québec (Quebec association of engineers), to which he
has paid registration fees ever since he has been working for
himself as a geological consultant. Prior to January 1997, he
worked as an employee for Mine Aurizon. He has since founded a
registered company under the firm name
Datac Géo-Conseil enrg., having a place of
business at 289 Chemin Val-du-Repos,
Val-Senneville, Quebec. Mr. Chénard specializes in
the evaluation of copper, zinc, gold and other mineral deposits,
which work he did for Services Techniques Géonordic Inc.,
the payer, and has carried out specific mandates for Exploration
Boréal and Mines d'or Virginia without a written
contract. The payer assigned him specific mandates and allowed
him to accept others. The payer, for its part, had no obligation
to provide work. Mr. Chénard set his work schedules
and his fees and determined his work methods. He was free to
accept or turn down any mandate offered to him. He was paid by
the day, receiving payment every two or three weeks or monthly,
in accordance with the requirements of the invoices sent to the
payer, Mines d'or Virginia or Exploration Boréal
(Exhibit A-1) and upon submission of reports to the
clients concerned (Exhibit A-2). The field work was
performed on the clients' sites. Most of the time, the
reports were drafted at Datac Géo-Conseil enr.'s
office, but this was also done at the payer's office whenever
it was necessary to facilitate meetings with the drawing
technicians. The equipment such as computers, the necessary
software to perform the work, geologist's hammers, backpacks,
GPS units, stone saws, chainsaws and the truck were acquired by
the appellant Chénard at a cost of approximately $60,000;
he bore the maintenance and insurance costs with respect thereto.
The larger equipment, such as camp equipment, drilling machines
and motor boats, was supplied by the payer.
Mr. Chénard was entitled to no fringe benefits and no
sick leave or vacation leave. He had to pay his office
maintenance expenses and electricity, heating and training
expenses. He also had to pay the GST and QST. It is impossible
for geological engineers to acquire the large equipment because
it is too costly. The truck was rented on a per-kilometer basis
($0.40) and the computer equipment was rented at $10 a day.
Mr. Chénard earned $80,000 a year, 90 percent of
which came from the payer. He could not carry out alone the type
of mandate he was given. His meals were provided to him when he
was in the field. A 5,000- or 10,000-meter drilling program
could cost from $100,000 to $200,000.
Peter Bambic's Testimony
[6] Mr. Bambic is a geological
engineer and resides at 105 Rue Cotnoir, Évain,
Quebec. He is a member of the Association des géologues et
géophysiciens du Québec (Quebec association of
geologists and geophysicists) and of the Geological Association
of Canada, to both of which he pays dues. He is also a
lithography specialist and has worked for Barrett Gold and Inco.
From 1996 to 1999, he worked for the payer, Virginia, Ormico,
Osisco, Gordy Enricson and the Cree Nation of Wemindji. He never
had a contract with the payer, but obtained mandates from that
company. He was free to do as he wished, when he wished, and the
payer had no obligation to provide him with work. Mr. Bambic
set his remuneration at $350 a day, which he reduced to $300 to
please such a big client, but soon realized that was a mistake.
He now asks for fixed remuneration payable on receipt of an
invoice. Mr. Bambic did not need to visit a site: he relied
on what he saw and set a reasonable price. He then had to make ad
hoc reports to the clients of Boréal or Virginia, but
there was no such requirement with respect to the payer. In the
payer's case, a report at the end of the project was
sufficient. Mr. Bambic supplied a computer, a desk, a truck,
a snowmobile, camping equipment, tents, walkie-talkies, stoves,
and power saws worth approximately $1,000. He used all kinds of
things that belonged to him and was reimbursed his expenses for
the use of his truck on a per-kilometer basis. Only when he
incurred hotel and restaurant expenses did he request
reimbursement from his client, but he never claimed anything if
he camped and used his own equipment. He asked for no fringe
benefits from the payer and had neither sick leave nor vacation
leave. He himself paid for his wage loss insurance, training
courses, life insurance and liability insurance. He had no
employees or costly machinery, and had to pay any QST and
GST.
Jean-François Ouellette's Testimony
[7] Mr. Ouellette, a geologist,
like the two appellants, is the president of the payer and
resides at 1112 Ranges 9 and 10 East in Bellecombe,
Quebec. The payer is a mining exploration company which performs
work for companies listed on the stock exchange with a view to
finding metalliferous deposits of gold, copper, zinc and other
metals. Seventy percent of that work is done in northern Quebec,
in areas where there are often no roads and that are accessible
only by air. The payer employs approximately 10 to
35 employees, depending on the season. From June 1996 to
February 1999, the company was overwhelmed with work and called
on Messrs. Chénard and Bambic because they are mining
and mining exploration specialists. They have special skills and
the company cannot afford to employ such people year-round.
Dealings with them take place orally with respect to both salary
and the work to be done. The payer had no obligation to provide
these consultants with work. They were completely free to accept
or to refuse any mandate for any reason whatever in order to
protect the aura of secrecy surrounding them. These persons
controlled their schedules themselves; they were professionals
who made their own decisions and determined themselves their work
methods. They accepted no control whatever. Their remuneration
was the result of a common agreement reached following
negotiations. The consultants supplied their personal equipment,
their computer equipment, their vehicles and other such things.
Large items such as helicopters and camp equipment were provided
by the payer because they were too costly: in most cases, it
costs $25,000 to $40,000 to get set up at a site and the payer
assumes those costs. The payer also provided its employees with
all their work equipment, from pencils to vehicles (a truck,
snowmobiles and so on). Messrs. Chénard and Bambic
were responsible for maintenance of their employees' tools.
The relationship between the payer and its employees was as
provided for in a written contract which stipulates their hours
of work, leave days, fringe benefits and wages and includes an
undertaking of confidentiality. Between the consultants and the
payer, there was no agreement on fringe benefits, sick leave and
vacation, nor was there any training plan. The payer paid for its
employees' training courses, leave and travel. The
consultants themselves were in control of their time when they
were in the forest. Similarly, the consultants' employees
were supervised by the consultants themselves and they worked
seven or eight hours a day. All meals were provided at no cost to
the consultants' employees and to the payer's employees
at the client's expense. Messrs. Chénard and
Bambic were paid by the payer on submission of an invoice.
Analysis of the Facts in Relation to the Act
[8] The case law has established four
essential tests for recognizing a contract of employment. The
decisive case in this area is City of Montreal v. Montreal
Locomotive Works Ltd., [1947] 1 D.L.R. 161. The tests in
question are as follows: (1) control, (2) ownership of
the tools, (3) chance of profit and risk of loss, and (4)
the degree of integration, this last test having been added by
the Federal Court of Appeal in Wiebe Door Services Ltd. v.
M.N.R., [1986] 3 F.C. 553. This list is not
exhaustive however.
[9] The evidence showed that the work
performed by the appellants was done under the payer's
direction and that there was no relationship of subordination
between them. The payer managed the business and owned the
machines and tools necessary for its operation. The payer alone
could realize profits or incur losses in the operation of its
business; the appellants could not as they received only a fixed
fee. Lastly, the appellants performed their work in the field and
were well integrated into the business. I therefore conclude for
the following reasons that the payer operated a business and that
the appellants were employed by it during the periods in
issue.
[10] Mr. Chénard is a geological
engineer and a member of the Ordre des Ingénieurs du
Québec (Quebec association of engineers), to which he pays
dues. He is a specialist in the evaluation of mineral deposits
and carried out specific mandates for the payer, Boréal
and Virginia, without a written contract. He was permitted to
accept other mandates. He set his hours of work and his fees and
determined his work methods. He was remunerated upon submission
of his invoices and a final report to the clients concerned. The
field work was performed on the clients' land. The equipment
such as computers and the necessary software, geologist's
hammers, backpacks, stone saws, chainsaws, the truck and other
tools were acquired by Mr. Chénard at a cost of
$60,000. He was entitled to no fringe benefits, sick leave or
vacation. He paid his office expenses and had to pay the GST and
QST. The large equipment and the truck were leased and the rental
was paid by Mr. Chénard.
[11] Mr. Bambic is likewise a
geological engineer and a lithography specialist as well. He has
also worked for Barrett Gold, Inco and the payer, without a
written contract. He was free to do what he wanted, and the payer
had no obligation to provide him with work. Mr. Bambic set
his remuneration at $300 a day and claimed payment by submitting
an invoice. He did not need to visit a site in advance: he set a
price which he felt was reasonable and, with the exception of a
final report, never made any report to the payer. He supplied his
computer, a truck, a snowmobile, camping equipment, tents,
stoves, walkie-talkies, and power saws worth $1,000 and was
reimbursed his expenses for the use of the truck. He was also
reimbursed his hotel and restaurant expenses, if any. He was not
entitled to any fringe benefits, sick leave or vacation leave. He
paid his wage loss insurance, life insurance and liability
insurance premiums, his training course costs and any GST and
QST. He had no employees.
[12] In the Court's view, the appellants
Chénard and Bambic were self-employed workers; therefore,
the appeals are allowed and the Minister's decisions
vacated.
Signed at Ottawa, Canada, this 28th day of June 2001.
D.J.T.C.C.
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