Arpin v. M.N.R., docket 2000-2690-EI

Date: 20010607

Docket: 2000-2690-EI

BETWEEN:

PIERRE ARPIN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

BELL CANADA INTERNATIONAL INC.,

Intervenor.

Reasons for Judgment

Charron, D.J.T.C.C.

[1]            This appeal was heard at Montréal, Quebec, on January 24, 2001, to determine whether the appellant held insurable employment within the meaning of the Employment Insurance Act (the "Act") and section 5 of the Employment Insurance Regulations in 1998 and 1999, when he was employed by Bell Canada International Inc., the payer.

[2]            By letter dated November 10, 1999, the Department of National Revenue informed the appellant and the payer that the employment in question was insurable under paragraph 5(1)(a) of the Act and section 5 of the Employment Insurance Regulations.

[3]            By letter dated February 10, 2000, the payer appealed from that decision.

[4]            By letter dated May 19, 2000, the respondent informed the appellant and the payer that he had changed his position and that the appellant's employment was not insurable because there had been no employer-employee relationship between them during the periods in issue.

Statement of Facts

[5]            The facts on which the respondent relied in making his decision are stated in paragraph 7 of the Reply to the Notice of Appeal, as follows:

[TRANSLATION]

(a)            Télinor Axtel specializes in the development of communication systems outside Canada. (denied)

(b)            Télinor Axtel is not a resident of Canada and has no establishment in Canada. (admitted)

(c)            The payer provides consultants with extensive communication systems experience to businesses specializing in the development of communication systems outside Canada, including Télinor Axtel. (denied)

(d)            The payer is a resident of Canada. (admitted)

(e)            The payer is a minority shareholder of Télinor Axtel. (admitted)

(f)             Mexico wanted to set up a modern telephone system. (denied)

(g)            Télinor Axtel was responsible for setting up this modern telephone system in Mexico. (denied)

(h)            The appellant retired from Bell Canada in 1994. (admitted)

(i)             The appellant is a resident of Canada. (admitted)

(j)             On June 2, 1998, the appellant signed a contract with the payer. (admitted)

(k)            The duration of the contract of employment was three months. (admitted)

(l)             The contract of employment was renewed a number of times. (admitted)

(m)           The place of work was in Mexico. (admitted)

(n)            Transportation expenses were paid by the payer. (admitted subject to amplification)

(o)            The appellant's duties were to write procedures for setting up a communication system similar to that of Bell Canada in Canada. (admitted subject to amplification)

(p)            The appellant's duties were integrated into Télinor Axtel's project to set up a modern telephone system in Mexico. (denied)

(q)            Norma Hietanen and Dany Le Siège co-ordinated the appellant's work in Mexico. (admitted)

(r)             Norma Hietanen and Dany Le Siège were employees of Télinor Axtel. (denied)

(s)            The appellant had certain expenses approved by Norma Hietanen in order to be reimbursed by the payer. (admitted)

(t)             The appellant was paid C$400 per work day. (admitted)

(u)            A work day consisted of 10 hours of work. (admitted)

(v)            The appellant also received an allowance of US$60 per day for his living expenses. (admitted)

(w)           The appellant was paid by the payer every two weeks. (admitted)

(x)             The appellant was not covered by the payer's group insurance plan. (admitted)

(y)            The appellant had to pay the cost of his own insurance. (admitted)

(z)             The payer billed Télinor Axtel for the services rendered by the appellant. (admitted)

(aa)          In April 1999, Télinor Axtel's project was abandoned because Mexico's computer equipment was too old and it was impossible to make the telephone system work. (denied)

[6]            The appellant admitted all the facts alleged in the subparagraphs of paragraph 7 of the Reply to the Notice of Appeal, except those he denied, as indicated in parentheses at the end of each subparagraph.

Pierre Arpin's Testimony

[7]            Mr Arpin resides at 861, rue de Sérigny in Boucherville, Quebec, Canada (J4B 5C5).

[8]            Axtel is a private corporation belonging to Mexican, Canadian and American interests, is not a resident of Canada and has no establishment here. It is a telephone company that is in competition with other Mexican companies.

[9]            As partner companies often recruit the specialized employees of their sister companies when they need them, Bell Canada Inc. dispatched some 30 telephone experts, including the appellant, to Axtel to help it set up a telephone system through improvements and repairs. On June 2, 1998, Pierre Arpin signed a three-month contract with the payer which was renewed a number of times. The place of work was located in Mexico, and the purpose was to compete with the small companies existing in that country. The payer paid the employees' transportation expenses, accommodation and wages. The appellant's duties were described in the contract signed between Bell Canada Inc. and him, which was filed as Exhibit A-1. Norma Hietanen and Dany Le Siège co-ordinated the appellant's work in Mexico. Some expenses incurred by the appellant were reimbursed by the payer. The appellant was paid $400 a day and the work day was 10 hours long. The payer paid the appellant an allowance of $60 a day for his living expenses. Wages and expenses were paid in Mexican currency every two weeks. The payer sent Axtel an invoice to claim reimbursement of the expenses it had paid and outlays it had made for the appellant. The appellant's wages and those of Norma Hietanen were revised annually in accordance with Axtel's recommendations. The appellant reported to and was supervised by Norma Hietanen. He was not entitled to holidays or to compensation in lieu thereof. He had to submit reports to Ms. Hietanen and/or Ms. Le Siège every week and to work for the client. The client could ask him to perform duties that were not mentioned in his contract of employment. Mr. Arpin did not have to submit any reports to Bell Canada Inc. in Montréal; he had only contacts with it. Axtel decided on the work start and end dates; Ms. Hietanen was its spokesperson to the employees. Axtel provided the tools of work, such as a telephone, stationery, a computer, furniture, a secretary and an office, all of which were located in an Axtel building. Mr. Arpin lived at a hotel during his stay and the bill was paid by Axtel. He travelled from the hotel to the office on a bus driven by a private driver, along with other passengers going to Axtel's premises. On returning to Canada at the end of his contract, Mr. Arpin did not return to Bell Canada International Inc.'s premises or those of Bell Canada Inc. because he had been retired since 1994. Axtel's employees in Mexico came from all continents and some had been recruited by other contractors. The appellant's reports were submitted to Raoul Pineda Cardenas, who gave them to Ms. Hietanen or Ms. Le Siège. Mr. Cardenas was an Axtel employee. Mr. Arpin had the additional task of training another consultant who would replace him upon his departure. The appellant submitted his invoice for fees and living expenses to Ms. Hietanen every two weeks for her approval. No source deductions were made. Ms. Hietanen signed the invoice and forwarded it to Montréal for payment of the fees and other expenses by Bell Canada International Inc. The fees were then charged to Axtel for reimbursement in accordance with the terms of the document composed and drafted by Ms. Hietanen for Axtel.

Michel Jalbert's Testimony

[10]          Mr. Jalbert, the director of human resources at Bell Canada International Inc., explained that the intervenor invests in foreign companies and must occasionally undertake to provide resources to assist them in starting up. The intervenor thus acts as a recruiter in sending Canadian telecommunications experts to those companies. When Axtel needs a resource, it makes a request for services, specifying the type of expertise desired and the period for which it is required, and the intervenor locates the people within Bell Canada International Inc. or Bell Canada Inc., which are part of the Bell Canada family. Having received a request for a consultant with Mr. Arpin's expertise, experience and availability, Mr. Jalbert submitted the appellant's application to Axtel and it was accepted. The request specified a salary of $400 a day (Exhibit A-4) and the appellant had to report his hours and days worked and have the report approved by an Axtel employee, Norma Hietanen in his case. Once the report was approved, it was sent to Bell Canada International Inc. for payment. Bell Canada International Inc. subsequently submitted its own invoice to claim reimbursement from Axtel of all the appellant's costs and expenses together with administrative expenses on a cost-plus basis. When the appellant's contract was terminated, he returned to Canada and subsequently had no further professional relationship with Bell Canada International Inc. Axtel paid the appellant's hotel expenses in Mexico.

Analysis of the Facts in Relation to the Law

[11]          It must now be determined whether the appellant's activity is included in the notion of insurable employment, that is to say, whether there was a contract of employment.

[12]          The courts have laid down four essential tests for determining whether a contract of employment exists. The leading case in this regard is City of Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161. The tests are: (1) control, (2) ownership of the tools, (3) chance of profit and (4) risk of loss. The Federal Court of Appeal added the degree of integration in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, although this list is not exhaustive.

[13]          The evidence showed that the work performed by the appellant was not under the payer's direction and that there was no relationship of subordination between them. Under the contract (Exhibit A-1), the appellant was hired as a consultant for Axtel.

[14]          Axtel is a private corporation belonging to Mexican, Canadian and American interests, is not a resident of Canada and has no establishment here. It is a telephone company that is in competition with other Mexican companies. In this case, the respondent decided that there was no employer-employee relationship between the intervenor and the appellant. The appellant, who had 30 years' experience with the intervenor, submitted an application and was selected to do the work for Axtel.

[15]          The respondent's grounds are as follows: the appellant normally resided in Canada; the payer was a resident of Canada or had an establishment in Canada; the employment would have been insurable if it had been held in Canada; and the employment was not insurable in the country where the appellant was employed (letter of November 10, 1999). The appellant's employment was thus not insurable because he was nothing more than a self-employed worker.

[16]          In the alternative, if he was employed, it was with Axtel, and the employment would accordingly be insurable in Mexico because it was performed for a Mexican company performing work in Mexico.

[17]          The burden of proof is on the appellant. He had to show on a preponderance of evidence that there was in fact a contract of service between him and the payer, but he did not do so. All the appellant's evidence depended on the credibility of the witnesses.

[18]          Accordingly, the appeal is dismissed and the Minister's decision is confirmed.

Signed at Ottawa, Canada, this 7th day of June 2001.

"G. Charron"

D.J.T.C.C.