Date: 20000628
Docket: 1999-1335-EI
BETWEEN:
ANGE-ALBERT PARADIS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
CIT DES FRONTIÈRES (CDRHT INC.),
Intervenor.
Reasons for Judgment
Tardif, J.T.C.C.
[1] The appellant has appealed from an
April 9, 1999 determination that the work performed by the
appellant from October 30, 1995 to January 5, 1996 for
Laurier St-Pierre was not insurable employment since it was
performed not pursuant to a contract of service, but under a
contract for services.
[2] The facts assumed in support of
that determination, which are set out in paragraph 5 of the
Reply to the Notice of Appeal, are as follows:
[TRANSLATION]
(a) the payer was a
timber hauler and dealer;
(b) the payer used
the pay service of Corporation Intermédiaire de Travail
(CIT) des Frontières (CDRHT Inc.) to pay the
appellant;
(c) the
appellant's activities were to fell and haul timber;
(d) the appellant
owned a Timberjack 225 skidder;
(e) the appellant
was responsible for maintaining and repairing the skidder;
(f) during the
period in dispute, the appellant felled timber on woodlots
belonging to Denis Barisselle;
(g) the payer
purchased the timber from the appellant and from Denis
Barisselle;
(h) the appellant
and Denis Barisselle had entered into an agreement to share the
selling price of the timber, 50% each;
(i) Nicole
St-Pierre-Lavoie, the appellant's spouse, received cheques
from the payer for the timber sold by the appellant;
(j) the
appellant worked alone;
(k) on January 10,
1996, corporation Intermédiaire de Travail (CIT) des
Frontières (CDRHT Inc.) issued a Record of Employment to
the appellant for the period from October 30, 1995 to January 5,
1996, indicating 10 weeks of employment and insurable earnings of
$624 per week.
(l) in a
statutory declaration signed on March 10, 1998, the appellant
stated that he had felled timber on Denis Barisselle's
woodlots during the period at issue;
(m) in his statutory
declaration signed on March 10, 1998, the appellant admitted that
the number of weeks worked, the remuneration paid, and the start
employment and end employment dates on the Record of Employment
were false;
(n) the payer was
never the appellant's employer;
(o) the Record of
Employment was one of convenience;
(p) the payer and
the appellant entered into an arrangement in order to make the
appellant eligible to receive employment insurance benefits.
[3] The appellant specifically
admitted subparagraphs (a) to (l) and (o); he denied
subparagraphs (m), (n) and (p).
[4] Despite making a formal appeal,
the intervenor, CIT des Frontières (CDRHT Inc.), was not
present or represented at the hearing, and this failure has
therefore been noted.
[5] In this case, the appellant said
that he should not have signed the March 10, 1998 statutory
declaration, in which he admitted that the number of weeks
worked, the remuneration paid, and the start employment and end
employment dates on the Record of Employment were false. The
appellant's Record of Employment was issued by CIT des
Frontières (CDRHT Inc.). Denis Barisselle, the owner
of the woodlots where the appellant presumably worked, did not
testify in support of the appeal. It is appropriate to reproduce
that part of the declaration in which the appellant states that
the Record of Employment for the period at issue was false:
[TRANSLATION]
March 10, 1998 declaration by Ange-Albert Paradis (Exhibit
I-1), Docket 1999-1334(EI)
. . . Denis Barisselle was the owner, and I had
an agreement with him to share the money from sales
50-50 . From November 13, 1995 or
thereabouts until November 27, 1995, I cut a road on one of Denis
Barisselle's woodlots; Denis Barisselle erected a fence at
the entrance to the road. Since I was not paid to fell that
timber, I did not declare it on my unemployment cards; it was on
lot 2, range 4, St-Elzéar. I agree that Record of
Employment No. 92037468 issued by C.I.T. des
Frontières for work I did for Laurier St-Pierre from
October 30, 1995 to January 5, 1996 is false because the start
employment and end employment dates and the number of weeks
worked are not correct or accurate. . . .
[6] This is a case (another of this
type) in which the amounts shown on Record of Employment No.
92037468, issued by CIT des Frontières (CDRHT Inc.)
and acknowledged to be false by the appellant himself, indicated
that the appellant apparently received exactly the same amount
for each of the 10 weeks when the remuneration paid essentially
depended on the quantity of timber felled. What is the
explanation for this situation? The appellant simply said
it was a chance occurrence.
[7] This Court is of the view that the
truth lies in the appellant's statutory declaration; I attach
no value to his testimony at the hearing. The testimony of
Danielle Lavoie, the spouse of Laurier St-Pierre, for whom the
timber was apparently felled, was simple, clear and coherent. She
testified that her spouse did indeed purchase timber from the
appellant and that the payments were made according to the
appellant's instructions alone. She said that the appellant
sold timber to her spouse and that the cheques were often made
out to the appellant's spouse, whose name appeared as either
Nicole St-Pierre or Nicole Lavoie.
[8] Moreover, in a November 12, 1997
statutory declaration (Exhibit I-3), Danielle Lavoie stated the
following:
[TRANSLATION]
I was met and interviewed at my home at 1693 Principale,
Pokénégamook. I was identified by means of my
driver's licence, No L1002-270154-17. I am the
secretary and bookkeeper for my husband Laurier St-Pierre's
business, Transport de bois Laurier St-Pierre, which is
unincorporated. It purchased timber from Ange-Albert Paradis
and/or Denis Barisselle in 1995 and 1996. The invoice dates are
the dates payments were made to those vendors. The invoices were
drawn up after the timber was measured at the sawmill, one or two
weeks after it was purchased and hauled to the sawmill. In the
case of Denis Barisselle, the cheques in payment for the timber
were made out either to Denis Barisselle or to his daughter
Marianne Barisselle, as Denis Barisselle requested. In the
case of Ange-Albert Paradis, the cheques in payment for the
timber were made out either to Ange-Albert Paradis or to his
spouse (who uses either the name Nicole St-Pierre or the name
Nicole Lavoie), as Ange-Albert Paradis requested. In 1995
and 1996, there were invoices for timber purchased from
Denis Barisselle alone, from Ange-Albert Paradis alone, and
from both of them. The woodlots belonged to Denis Barisselle, and
the skidder belonged to Ange-Albert Paradis. Payments for the
timber were issued 50% to Denis Barisselle and 50% to Ange-Albert
Paradis; it was they who had asked to be paid in that way. Since
Transport de bois Laurier St-Pierre has no employees and usually
deals with self-employed persons, if someone wants to be an
employee, the business uses the services of C.I.T. des
Frontières (CDRHT Inc.). With respect to Record of
Employment No. N92037468, issued by CIT des
Frontières for the period from October 30, 1995 to January
5, 1996, Ange-Albert Paradis had asked to be paid in that way.
Neither I nor my husband, Laurier St-Pierre, is able to give the
actual dates on which the work was performed because we just
purchased the timber and had no control over the work done by
Denis Barisselle and Ange-Albert Paradis. When there was timber
ready to be hauled to the sawmill, they called us to go and
take delivery. Ange-Albert Paradis was responsible for
maintaining, repairing and insuring his skidder; Transport de
bois Laurier St-Pierre merely purchased timber from Denis
Barisselle and Ange-Albert Paradis. The control and investigation
officer has read my declaration to me; it is accurate and true
and was made freely and willingly, without threats or promises of
favours.
[9] The evidence showed that Nicole
St-Pierre or Nicole Lavoie did not own any woodlots or perform
any work in the forest. When asked to explain and justify his
spouse's entitlement to the aforementioned cheques, the
appellant answered that they were gifts. This scheme confirms
that the appellant's bookkeeping was elastic and that the
appellant was very careless about the transparency and
consistency of his business dealings and had no hesitation about
disguising very important information.
[10] The case law has established four main
tests for determining whether work is performed under a contract
of service or under a contract for services. Those test are as
follows:
· a
relationship of subordination characterized by the payer's
power of control;
· ownership
of the tools;
· chance of
profit and risk of loss;
·
integration.
[11] In the case at bar, there is no doubt
as to ownership of the tools: the appellant owned the equipment,
and that equipment was worth a great deal. A skidder is an
imposing, expensive and very special machine. The evidence has
established that the skidder was a sophisticated piece of
equipment requiring a skilled, qualified operator. Generally
speaking, unless there are exceptional circumstances, the owners
of this kind of equipment do not allow anyone other than
themselves to operate it.
[12] As for chance of profit and risk of
loss, here again, there is no doubt that the appellant could
expect higher income if his skidder were in steady use. The
situation would have been entirely the opposite in case of a
major mechanical breakdown. Such a breakdown would have had two
major repercussions: firstly, the appellant himself would have
had to pay all the costs of repairs; secondly, he would have had
to spend time on the repairs and stop felling and hauling timber,
thus losing income during the time required for the
repairs.
[13] It is easy to imagine, if that had
happened, that the appellant would have had no income while at
the same time having to lay out large amounts for repairs.
[14] With respect to the test of
integration, too, the weight of evidence indicated that the
appellant operated his own business, which was completely
independent of the payer's business.
[15] The appellant, realizing he faced an
uphill struggle to discharge his burden of proof, repeatedly
insisted that his work was subject to control, to daily
supervision by the payer. He also argued that the performance of
his work was subject to the payer's directives, instructions
and recommendations. He concluded by stating that he had been
given specific instructions about which trees were to be felled
and where.
[16] Are these arguments enough to allow one
to conclude that there was a relationship of subordination
between the appellant and Laurier St-Pierre? Can it be concluded
that Laurier St-Pierre had or exercised a power of control?
[17] I do not believe so; instead, I believe
that the purpose of Laurier St-Pierre's
interventions was to ensure that the results were as desired,
that they were consistent and corresponded to his expectations.
He could not have cared less in what manner and by what means the
work was performed. He wanted good results and no problems with
organizations such as environmental agencies and Quebec's
Commission de la santé et de la sécurité du
travail (CSST), whose requirements he had to meet.
[18] Moreover, there is no doubt about why
the appellant obtained the contract: he had the expertise and the
skill and, above all, he had a skidder. Could he have obtained
the same work if he had not owned the skidder, or if he
himself had not dealt in timber? I do not think so.
[19] Obtaining a Record of Employment
stating that employment insurance contributions were deducted and
remitted is irrelevant in characterizing the work. Earnings from
work performed under a contract for services are not
contributory.
[20] Furthermore, contributions do not
create entitlement to employment insurance benefits since, to be
contributory, earnings must be from work performed under a
contract of service.
[21] The work in this case did not meet the
requirements of a contract of service and the earnings from that
work were thus not contributory. What was involved was rather a
contract for services.
[22] This Court certainly has the authority
and the jurisdiction to determine whether or not there was a
contract of service; however, it also has an obligation to
conform with and follow the guidelines set by the Federal Court
of Appeal in similar matters. In that regard, that Court has
handed down three relevant decisions, as follows:
- Attorney General of Canada v. Vaillancourt,
A-639-91;
- Attorney General of Canada v. Charbonneau,
A-831-95 and A-832-95; and
- Attorney General of Canada v. Rousselle et al.,
A-1243-88, A-1244-88 and A-1246-88.
[23] The Federal Court of Appeal decision in
Attorney General of Canada v. Normand Charbonneau,
A-831-95, dealt with facts very similar to those in the present
case. Décary J.A. wrote as follows:
Contract of employment or contract of enterprise? This, once
again, is the question that arises in this case, the issue in
which is whether the respondent, the owner and operator of a
skidder, was engaged in insurable employment for the purposes of
the application of paragraph 3(1)(a) of the
Unemployment Insurance Act.
Two preliminary observations must be made.
The tests laid down by this Court in Wiebe Door Services
Ltd. v. M.N.R. - on the one hand, the degree of control, the
ownership of the tools of work, the chance of profit and risk of
loss, and on the other, integration - are not the ingredients of
a magic formula. They are guidelines which it will generally be
useful to consider, but not to the point of jeopardizing the
ultimate objective of the exercise, which is to determine the
overall relationship between the parties. The issue is always,
once it has been determined that there is a genuine contract,
whether there is a relationship of subordination between the
parties such that there is a contract of employment (art. 2085 of
the Civil Code of Québec) or, whether there is not,
rather, such a degree of autonomy that there is a contract of
enterprise or for services (art. 2098 of the Code). In
other words, we must not pay so much attention to the trees that
we lose sight of the forest - a particularly apt image in this
case. The parts must give way to the whole.
Moreover, while the determination of the legal nature of the
contractual relationship will turn on the facts of each case,
nonetheless in cases that are substantially the same on the facts
the corresponding judgments should be substantially the same in
law. As well, when this Court has already ruled as to the nature
of a certain type of contract, there is no need thereafter to
repeat the exercise in its entirety: unless there are genuinely
significant differences in the facts, the Minister and the Tax
Court of Canada should not disregard the solution adopted by this
Court.
In our view, when the judge of the Tax Court of Canada allowed
the respondent's appeals in this case and found that the
contract was a contract of employment, he fell into the trap of
doing a too mathematical analysis of the tests in Wiebe
Door, and as a result he wrongly disregarded the solution
adopted by this Court in Attorney General of Canada v.
Rousselle et al. and upheld in Attorney General of Canada
v. Vaillancourt.
Here, the payer was a forestry business. It assigned the work
of felling and hauling the wood to crews of two persons - a
feller, who cut the trees, and a skidder operator, who picked
them up and transported them to the edge of a forest road. The
respondent was the owner of the skidder, a piece of heavy
machinery valued at about $15,000, and he was responsible for the
cost of maintaining and repairing it. He had himself recruited
the feller, with whom he made up a crew. He and the feller were
paid by volume, based on the number of cubic metres of wood cut
down, and the contract did not specify any volume; the volume was
measured every two weeks by a "measurer" employed by
the payer.
At the time the contract was signed, the respondent was given
[translation] "a list and terms of holidays" which,
according to the evidence, was based on provincial employment
standards. He was also given a document containing [translation]
"internal regulations for workers in forests" which,
according to the testimony of a representative of the payer,
reflected the requirements of the Quebec ministère des
Ressources naturelles. Appended to that document were
[translation] "general rules", that is, a list of
technical details relating to cutting down trees, as well as the
[translation] "minimum standards for protecting forests
against fire" laid down by the Société de
conservation de l'Outaouais.
The respondent worked about thirty-two hours per week and his
daily work period was generally, but not necessarily, within the
period proposed in the internal regulations, that is, between
7:30 a.m. and 4:00 p.m. A foreman employed by the payer checked
every second day to ensure that the respondent's crew was in
fact cutting the trees that had previously been identified by the
payer. The method of payment was as follows: one quarter of the
amount owing to the crew was paid to the respondent, one quarter
was paid to the feller, and half was paid to the respondent for
the use of the skidder. Thus three cheques were issued by the
payer every two weeks. The cost of transporting the skidder at
the beginning and end of the season was borne by the respondent;
in the event that there was a change of location during the
season, it was borne by the payer.
When we look at the overall picture, it is quite apparent that
this was, prima facie, a contract of enterprise. The ownership of
the skidder, the choice of the other crew member, payment based
on an undefined volume and the autonomy of the crew are
determining factors which, in the context, can only be associated
with a contract of enterprise.
Supervision of the work every second day and measuring the
volume every two weeks do not, in this case, create a
relationship of subordination, and are entirely consistent with
the requirements of a contract of enterprise. 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.
The same is true of the standards imposed in respect of hours
and days of work, holidays, operating method and safety. The
standards are common to all workers in public forests whose
activities are "governed" by the ministère des
Ressources naturelles. They apply regardless of whether the
worker is a mere employee or a contractor.
One factor on which the judge relied, and which led him to
conclude that [translation] "there could be no chance of
profit and risk of loss" during the contract, was the fact
that the respondent was paid a wage, at the rate of $2.50 per
hour. This is a major factual error. In fact, the respondent was
paid based on his volume of production, and the mere fact that
his skidder had broken down would be sufficient for him to find
himself with nothing.
Counsel for the respondent advanced a hypothesis which the
judge seems to have accepted: in this case, two distinct
contracts were made, one a contract of employment and the other a
contract for the lease of the skidder, so that the fact that the
respondent was the owner of the skidder and bore the cost of
maintaining and repairing it should not be taken into
consideration in analysing the contract of employment, properly
speaking. If in fact the hypothesis that there was a dual
contract has the legal effects reckoned on by the respondent, it
is not based on any evidence in this case and could most
certainly not have been considered, and a fortiori adopted, by
the judge.
The observations we have made had already been made by this
Court, with slight variations, in Rousselle. While that
case involved a contract of convenience, the Court could not have
decided it based on that aspect alone and was required to examine
the relations between the parties in detail, which it did. The
respondent has not satisfied us that it was open to it, in the
instant case, to disregard the conclusion of this Court in
Rousselle.
The application for judicial review will be allowed, the
decision of the Tax Court of Canada will be set aside and the
matter will be referred back to it to be redetermined on the
basis that the respondent was not engaged in insurable
employment.
[24] The burden of proof was on the
appellant. The evidence produced contained no facts or elements
that could lead this Court to conclude differently than did the
Federal Court of Appeal.
[25] The appeal is therefore dismissed.
Signed at Ottawa, Canada, this 28th day of June 2000.
J.T.C.C.
Translation certified true
on this 29th day of November 2001.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
1999-1335(EI)
BETWEEN:
ANGE-ALBERT PARADIS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
CIT DES FRONTIÈRES (CDRHT INC.),
Intervenor.
Appeal heard on May 25, 2000, at
Rivière-du-Loup, Quebec, by
the Honourable Judge Alain Tardif
Appearances
Counsel for the
Appellant:
Jérôme Carrier
Counsel for the
Respondent:
Simon-Nicolas Crépin
Agent for the
Intervenor:
No one appeared
JUDGMENT
The appeal is dismissed and the Minister's decision
confirmed in accordance with the attached Reasons for
Judgment.
Signed at Ottawa, Canada, this 28th day of June 2000.
J.T.C.C.
Translation certified true
on this 29th day of November 2001.
Erich Klein, Revisor
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