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.
|
"Alain Tardif" |
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.
|
"Alain Tardif" |
J.T.C.C.
Translation certified true
on this 29th day of November 2001.
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]