Date: 20200626
Docket: A-277-19
Citation: 2020 FCA 113
[ENGLISH TRANSLATION]
CORAM:
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BOIVIN J.A.
GLEASON J.A.
RIVOALEN J.A.
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BETWEEN:
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RAY-MONT LOGISTICS MONTRÉAL 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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Heard by online videoconference hosted by the registry
on May 28, 2020.
Judgment delivered at Ottawa, Ontario, on June 26, 2020.
REASONS FOR JUDGMENT BY:
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BOIVIN J.A.
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CONCURRED IN BY:
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GLEASON J.A.
RIVOALEN J.A.
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Date: 20200626
Docket: A-277-19
Citation: 2020 FCA 113
CORAM:
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BOIVIN J.A.
GLEASON J.A.
RIVOALEN J.A.
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BETWEEN:
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RAY-MONT LOGISTICS MONTRÉAL 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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REASONS FOR JUDGMENT
BOIVIN J.A.
I.
Introduction
[1]
Ray-Mont Logistics (the appellant) provides specialized logistics services for the export of agri-food products. To this end, it hires workers whose duties include transloading bags of grain and legumes from trucks or railway cars into sea containers.
[2]
On July 26, 2016, the Canada Revenue Agency (the CRA) rendered a decision according to which the workers in question are employed in insurable employment by the appellant for the purposes of the Employment Insurance Act, S.C. 1996, c. 23 (the Act). The appellant challenged that decision, which was affirmed by the CRA on February 24, 2017. The appellant subsequently appealed to the Tax Court of Canada.
[3]
Before this Court, the appellant is appealing the judgment of Justice Guy R. Smith of the Tax Court of Canada (TCC) dated June 28, 2019 (2019 TCC 144). In its decision, the TCC determined that the workers in question are not self-employed persons but rather employees of the appellant. Given the existence of an employer-employee relationship, the TCC held that these workers are employed in insurable employment under the Act. However, it allowed the appeal in part with respect to the Canada Pension Plan, R.S.C. 1985, c. C-8 (CPP), deciding that one of the workers was employed in pensionable employment under paragraph (6)(1)(a) for the period from January 1, 2013, to December 31, 2014, rather than for the entire period in dispute, as argued by the CRA. The Minister did not file a cross-appeal on this issue.
[4]
I am of the opinion that the TCC did not commit an error warranting the intervention of this Court. For the following reasons, I would dismiss the appeal with costs.
II.
Legislation
[5]
The provisions relevant to the dispute are reproduced in the Appendix.
III.
Standard of review
[6]
In this case, the TCC’s decision must be reviewed pursuant to the principles set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 [Housen]. Conclusions of law are reviewable on the standard of correctness, whereas findings of fact and findings of mixed fact and law are reviewable on the standard of palpable and overriding error.
IV.
Analysis
[7]
First, the TCC addressed the issue of the applicable law in this case. It properly instructed itself on the law by noting the concept of the complementarity of Quebec civil law and federal law under section 8.1 of the Interpretation Act, R.S.C. 1985, c. I-21. Specifically, to determine the existence of “insurable employment”
within the meaning of the Act with respect to workers working in Quebec, the TCC properly referred to the relevant provisions of the Civil Code of Québec (articles 1425, 1426, 2085, 2086, 2098 and 2099). It is important to note that the definition of a contract of employment under article 2085 of the Civil Code of Québec places emphasis on the essential characteristic of direction or control (9041‑6868 Québec Inc. v. Minister of National Revenue, 2005 FCA 334, [2005] F.C.J. No. 1720 (QL)).
[8]
In this case, to establish the existence of a contract of employment between the appellant and the workers under article 2085 of the Civil Code of Québec, the TCC adopted a “multidimensional approach”
and considered a certain number of guiding factors from the common law: the ownership of tools, the chance of profit and risk of loss, and integration into the business. It is settled law that in assessing a working relationship like the one at issue in this case, while the civil law and common law systems may take a different approach to characterizing a contract of employment (or of enterprise), there is no antimony between the principles of these two systems on this issue, as was observed by this Court in Grimard v. Canada, 2009 FCA 47, [2009] 4 F.C.R. 592 at paragraph 43:
In short, in my opinion, there is no antinomy between the principles of Quebec civil law and the so‑called common law criteria used to characterize the legal nature of a work relationship between two parties. In determining legal subordination, that is to say, the control over work that is required under Quebec civil law for a contract of employment to exist, a court does not err in taking into consideration as indicators of supervision the other criteria used under the common law, that is to say, the ownership of the tools, the chance of profit, the risk of loss, and integration into the business.
[9]
That statement applies here.
[10]
As part of its analysis, the TCC first established the subjective intent of each of the parties to the working relationship in question, which it described as “problematic”
. While the TCC found that there “certainly is ambiguity”
in the parties’ intent, it held nonetheless that “the parties believed that they had established a ‘contract of enterprise or for services’ [and not a contract of employment] as stipulated in article 2098 of the C.C.Q.”
(TCC reasons at paras. 53–54, 56).
[11]
Next, the TCC developed its objective analysis of the working relationship in question. It examined the parties’ behaviour in practice, that is, what is revealed by the true nature of their working relationships. In this regard, the TCC referred to the criteria set out in Wiebe Door Services Ltd. v. Minister of National Revenue, [1986] 3 F.C. 553, 70 N.R. 214 (F.C.A.), that is, (i) the degree or absence of control exercised by the alleged employer; (ii) ownership of tools; (iii) chance of profit and risk of loss; and (iv) integration of the alleged employees’ work into the alleged employer’s business.
[12]
Upon completion of its analysis, the TCC concluded that “the objective reality of the employment relationship, including the factors listed above, indicates that there was an employee/employer relationship”
such that the workers were not self-employed persons (TCC reasons at para. 82). On this basis, the TCC consequently held that the workers were employed in insurable employment by the appellant for the purposes of the Act. The appellant is appealing from that decision.
[13]
At the hearing before this Court, the appellant raised several arguments to the effect that the TCC committed errors in its decision.
[14]
The appellant first argued that the TCC was required to explicitly address the burden of proof and erred by failing to do so. Specifically, according to the appellant, the TCC had to accept the testimony of Mohamed Maarouf, an appeals officer of the Minister of National Revenue, because his testimony, in the appellant’s opinion, identified the reasons upon which the Minister’s decision was based. According to the appellant, by failing to address this testimony, the TCC dismissed as irrelevant the burden of proof with respect to employment insurance, thus precluding the possibility of reversing this burden (Appellant’s Memorandum at paras. 24–25). However, the appellant failed to demonstrate the relevance of Mr. Maarouf’s testimony in the case at hand, and it was subsequently open to the TCC to not give it more weight. Moreover, although the TCC did not make explicit reference to said testimony, the presumption remains that a trial court considered all of the evidence before it, and it is well established that it may prefer the evidence of some witnesses over others (Mahjoub v. Canada (Citizenship and Immigration), 2017 FCA 157, [2018] 2 F.C.R. 344 at paras. 66–68; Housen at para. 46). The appellant’s claim that the TCC erred in this respect consequently cannot be accepted.
[15]
The appellant submits that contrary to the TCC’s finding, no relationship of subordination exists between it and the workers. In this regard, the appellant mainly criticizes the TCC for having placed too much importance on a document called the “Loading Sheet”
, which it translated as “feuille de contrôle”
. According to the appellant, this document is used to control the result of the work rather than the manner in which the work is performed. The appellant adds that [translation] “[in regards to] this document, the control involved is a control of the goods (number of bags) and client requirements and not a control of the manner in which the workers must render their services”
(Appellant’s Memorandum of Fact and Law at para. 44). In my view, it matters little whether the “loading sheet[s]”
are used to control the manner in which the work is performed or to control the result since, in ruling as it did, the TCC did not focus only on the “loading sheet[s]”
. The TCC looked at and described a number of control criteria at paragraphs 77 to 79 of its reasons, which establish the existence of a relationship of subordination, namely the following facts established by the evidence:
- The workers showed up at the worksite and almost always accepted the work and the time proposed;
- A worker could face reprisals if he or she did not accept the time proposed by the employer;
- The work schedule was determined by the appellant;
- The workers could not start work without the
“loading sheet”
, and the operations manager or the supervisor was there during the shift.- The workers could work with other employees; and
- The appellant looked after contacting replacement workers.
[17]
The appellant further argues that the TCC erred in its analysis of the legal nature of working relationships based on other guiding factors. For the following reasons, the intervention of this Court concerning this aspect of the TCC’s analysis is unwarranted.
[18]
Specifically, with respect to the criterion of the ownership of tools, the evidence shows that on one occasion, the appellant reimbursed each worker $50 for the purchase of steel-toed boots. More significantly, however, the TCC noted that the most expensive tool, the conveyors, was supplied by the appellant. According to the TCC, “[w]ithout this tool, the work would have been much harder, slower and therefore less profitable for [the appellant]”
(TCC reasons at para. 60). The appellant criticizes the TCC for having stated that “the analysis of this factor, in particular that few tools were required, supports the finding that there was an employee/employer relationship”
(TCC reasons at para. 61). As the appellant correctly points out, the number of tools indeed depends on the nature of the work to be performed by the workers, and, as the appellant correctly notes, the fact that workers have few, if any, tools does not necessarily support the finding that the workers in question have the status of employees. This being the case, and in light of the evidence in the record concerning the other guiding factors, if this misconception constitutes an error, as the appellant claims, it is not palpable and overriding and is consequently insufficient in itself to invalidate the TCC’s findings as to the legal nature of the working relationship between the appellant and the workers.
[19]
With respect to the chance of profit and risk of loss, I agree with the respondent that there is no reason to find that the TCC erred in holding that earnings calculated by the piece, that is, the number of bags transloaded, can constitute earnings from insurable employment. In support of this assertion, it is useful to reproduce paragraph (5)(1)(a) of the Act:
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[20]
Moreover, apart from the isolated cases where a third party came to work with one of the appellant’s workers, the evidence fails to show that the workers could contract out work, with the result that the workers were not behaving as if they were running their own business. The most probative piece of evidence in this regard is unquestionably that which shows that the invoices were prepared by the appellant rather than the workers. Indeed, contractors do not normally ask their client to prepare the invoices. Consequently, the TCC did not err in asserting that this factor “suggests”
that the workers were integrated into the business, even if the work was seasonal (TCC reasons at para. 74). As for integration of the workers into the business, these persons worked with other employees and remained available for work even during the off‑season (Appeal Book, vol. II at pp. 53, 65–66, 75, 118–119, 139–140, 168, 175–177). In short, I see no error in the application of the legal framework or in the TCC’s review of the evidence requiring the intervention of this Court.
[21]
Finally, the appellant criticizes the TCC for failing to give any weight to the findings of the Court of Québec in a decision rendered nearly twenty years ago (Entreprises Yvon Bessette Inc. c. Québec (Sous-ministre du Revenu), [2002] R.D.F.Q. 331, [2002] J.Q. No. 10639 (QL) [Bessette]) that involved one of the appellant’s competitors. However, although the factual background may have certain similarities, it is important to note that in this case, the parties to the dispute and the evidence adduced were different. Contrary to the appellant’s arguments, the TCC was consequently not bound by the conclusions of fact of the Court of Québec in Bessette (see: 1392644 Ontario Inc. (Connor Homes) v. Canada (National Revenue), 2013 FCA 85, [2013] F.C.J. No. 327 (QL) at para. 20). Since the issue at the heart of the dispute of whether the workers are the appellant’s employees is essentially one of fact that has to be decided on the basis of the evidence in the record, the TCC did not err in the circumstances by determining that “[a]lthough the facts submitted were similar, this Court is not bound by this decision and must perform a thorough and independent analysis of the case before it”
(TCC reasons at para. 49).
[22]
Lastly, it is not clear upon reading the notice of appeal, the appellant’s memorandum and the relief sought by the appellant whether the appellant is challenging only the TCC’s finding in respect of the Act or also its finding under the CPP. Before this Court, counsel for the appellant simply confirmed that he was also challenging the TCC’s finding with respect to the fact that one of the workers was employed in pensionable employment, but he did not, however, raise any arguments in that regard. The respondent has not cross-appealed. In its reasons, the TCC laconically referred to subsection 4(4) and paragraph (6)(1)(a) of the CPP as well as to paragraph (5)(1)(a) and subsection 5(3) of the Act, and I do not see any palpable and overriding error in its analysis with respect to the evidence before it concerning a worker’s pensionable employment.
[23]
For all of these reasons, I would dismiss the appeal with costs.
“Richard Boivin”
J.A.
“I agree.
Mary J.L. Gleason J.A.”
“I agree.
Marianne Rivoalen, J.A.”
APPENDIX
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FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
Docket:
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A-277-19
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STYLE OF CAUSE:
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RAY-MONT LOGISTICS MONTRÉAL INC. v. THE MINISTER OF NATIONAL REVENUE
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PLACE OF HEARING:
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by online videoconference
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DATE OF HEARING:
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May 28, 2020
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REASONS FOR JUDGMENT BY:
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BOIVIN J.A.
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CONCURRED IN BY:
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GLEASON J.A.
RIVOALEN J.A.
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DATED:
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June 26, 2020
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APPEARANCES:
Christopher R. Mostovac
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For the appellant
RAY-MONT LOGISTICS MONTRÉAL INC.
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Gabriel Girouard
Annie Laflamme
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For the respondent
THE MINISTER OF NATIONAL REVENUE
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SOLICITORS OF RECORD:
Starnino Mostovac SENC
Montreal, Quebec
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For the appellant
RAY-MONT LOGISTICS MONTRÉAL INC.
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Nathalie G. Drouin
Deputy Attorney General of Canada
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For the respondent
THE MINISTER OF NATIONAL REVENUE
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