Tax Court of Canada Judgments

Docket: 2004-2227(EI)

BETWEEN:

DANIEL GOURD,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent. [OFFICIAL ENGLISH TRANSLATION]

Appeal heard on common evidence with the appeals of Jimmy Morin (2004-2228(EI)), Éric Morin (2004-2230(EI)), Guy Lemay (2004-2232(EI)), Michel Gadoury (2004-2233(EI)), Sylvie Gourd (2004-2236(EI)), Jean-Guy Carrier (2004-2237(EI)) and Patrick Ducharme (2004-2238(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	The Appellant himself
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision and the assessments are confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Docket: 2004-2228(EI)

BETWEEN:

JIMMY MORIN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeals of Daniel Gourd (2004-2227(EI)), Éric Morin (2004-2230(EI)), Guy Lemay (2004-2232(EI)), Michel Gadoury (2004-2233(EI)), Sylvie Gourd (2004-2236(EI)), Jean-Guy Carrier (2004-2237(EI)) and Patrick Ducharme (2004-2238(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	No one appeared
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Docket: 2004-2230(EI)

BETWEEN:

ÉRIC MORIN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

[OFFICIAL ENGLISH TRANSLATION]

Appeal heard on common evidence with the appeals of Daniel Gourd (2004-2227(EI)), Jimmy Morin (2004-2228(EI)), Guy Lemay (2004-2232(EI)), Michel Gadoury (2004-2233(EI)), Sylvie Gourd (2004-2236(EI)), Jean-Guy Carrier (2004-2237(EI)) and Patrick Ducharme (2004-2238(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	No one appeared
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Docket: 2004-2232(EI)

BETWEEN:

GUY LEMAY,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

[OFFICIAL ENGLISH TRANSLATION]

Appeal heard on common evidence with the appeals of Daniel Gourd (2004-2227(EI)), Jimmy Morin (2004-2228(EI)), Éric Morin (2004-2230(EI)), Michel Gadoury (2004-2233(EI)), Sylvie Gourd (2004-2236(EI)), Jean-Guy Carrier (2004-2237(EI)) and Patrick Ducharme (2004-2238(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	No one appeared
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Docket: 2004-2233(EI)

BETWEEN:

MICHEL GADOURY,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

[OFFICIAL ENGLISH TRANSLATION]

Appeal heard on common evidence with the appeals of Daniel Gourd (2004-2227(EI)), Jimmy Morin (2004-2228(EI)), Éric Morin (2004-2230(EI)), Guy Lemay (2004-2232(EI)), Sylvie Gourd (2004-2236(EI)), Jean-Guy Carrier (2004-2237(EI)) and Patrick Ducharme (2004-2238(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	No one appeared
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Docket: 2004-2236(EI)

BETWEEN:

SYLVIE GOURD,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

[OFFICIAL ENGLISH TRANSLATION]

Appeal heard on common evidence with the appeals of Daniel Gourd (2004-2227(EI)), Jimmy Morin (2004-2228(EI)), Éric Morin (2004-2230(EI)), Guy Lemay (2004-2232(EI)), Michel Gadoury (2004-2233(EI)), Jean-Guy Carrier (2004-2237(EI)) and Patrick Ducharme (2004-2238(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	No one appeared
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Docket: 2004-2237(EI)

BETWEEN:

JEAN-GUY CARRIER,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

[OFFICIAL ENGLISH TRANSLATION]

Appeal heard on common evidence with the appeals of Daniel Gourd (2004-2227(EI)), Jimmy Morin (2004-2228(EI)), Éric Morin (2004-2230(EI)), Guy Lemay (2004-2232(EI)), Michel Gadoury (2004-2233(EI)), Sylvie Gourd (2004-2236(EI)) and Patrick Ducharme (2004-2238(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	The Appellant himself
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Docket: 2004-2238(EI)

BETWEEN:

PATRICK DUCHARME,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

[OFFICIAL ENGLISH TRANSLATION]

Appeal heard on common evidence with the appeals of Daniel Gourd (2004-2227(EI)), Jimmy Morin (2004-2228(EI)), Éric Morin (2004-2230(EI)), Guy Lemay (2004-2232(EI)), Michel Gadoury (2004-2233(EI)), Sylvie Gourd (2004-2236(EI)) and Jean-Guy Carrier (2004-2237(EI)),

on December 15, 2004, at Montréal, Quebec

Before: The Honourable S.J. Savoie, Deputy Judge
Appearances:
For the Appellant:	The Appellant himself
Counsel for the Respondent:	Simon Petit

JUDGMENT

          The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

SavoieD.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

Citation: 2005TCC121

Date: 20050216

Docket: 2004-2227(EI)

BETWEEN:

DANIEL GOURD,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

Docket: 2004-2228(EI)

JIMMY MORIN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

Docket: 2004-2230(EI)

ÉRIC MORIN,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

Docket: 2004-2232(EI)

GUY LEMAY,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

Docket: 2004-2233(EI)

MICHEL GADOURY,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

Docket: 2004-2236(EI)

SYLVIE GOURD,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

Docket: 2004-2237(EI)

JEAN-GUY CARRIER,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

Docket: 2004 2238(EI)

PATRICK DUCHARME,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

[OFFICIAL ENGLISH TRANSLATION]

REASONS FOR JUDGMENT

SavoieD.J.

[1]      These appeals were heard on common evidence in Montréal, Quebec, on December 15, 2004.

[2]      The issue in these appeals is the insurability of the employment of the workers Jimmy Morin, Éric Morin, Guy Lemay, Michel Gadoury, Sylvie Gourd, Jean-Guy Carrier and Patrick Ducharme, while working for the Appellant Daniel Gourd during the years 2002 and 2003.

[3]      By Notice of Assessment dated May 21, 2003, the Minister of National Revenue (the "Minister") assessed Daniel Gourd, hereinafter the Appellant, for unpaid employment insurance premiums, in respect, inter alia, of the above-mentioned workers for the years 2002 and 2003.

[4]      On June 3, 2003, the Payor asked the Minister to reconsider the assessments made in his notice dated May 21, 2003, but the Minister confirmed those assessments.

[5]      In rendering his decision, the Minister determined that the workers were employed in insurable employment and that employment insurance premiums were payable. He relied on the following assumptions of fact:

[TRANSLATION]

(a)         the Appellant operated a road sign business under the name Agence de signalisation Lanaudière; (admitted)

(b)         the business operated all year long; (subject to amplification)

(c)         the Appellant's main customers were Hydro Québec and Puits Lanaudière; (subject to amplification)

(d)         the business employed about 18 workers; (admitted)

(e)         the workers directed traffic on job sites where traffic was affected; (admitted)

(f)          they worked in teams of 2 or 4 workers per job site; (admitted)

(g)         the workers were equipped with walkie-talkies and directed cars to move one at a time; (admitted)

(h)         the hours of work were established by the Appellant's customers; (admitted)

(i)          the Appellant's customers controlled the workers' comings and goings; (admitted)

(j)          the Appellant supplied the workers with walkie-talkies, safety vests and flags; (admitted subject to clarifications)

(k)         the Appellant paid the workers $10 per hour; (admitted)

(l)          the workers' jobs were integrated into the Appellant's business. (admitted)

[6]      It should be noted from the outset that the Appellant has never denied any of the Minister's presumptions of fact.

[7]      The Appellant admitted that, in theory, the business operated all year long, but not full-time; it all depended on the contracts he had with the customers. He said that several months could pass without a contract. He acknowledged that his main customers were Hydro Québec and Puits Lanaudière, but noted that the business had others.

[8]      It was established that some of the workers, such as Jean-Guy Carrier, owned their own equipment, such as walkie-talkies, safety vests, etc. The Appellant supplied what the other workers needed.

[9]      The evidence shows that, on March 13, 2002, the Appellant, who wished to work as an independent contractor, registered the business name Agence de signalisation Lanaudière with the Registraire des entreprises for his sole proprietorship on the advice of his accountant (Exhibit I-1).

[10]     After registering, the Appellant offered his services to potentially interested companies like Hydro-Québec. When he obtained contracts from certain customers, he hired workers to help him with his work. These workers were recruited from his network of friends and acquaintances and were hired at $10 per hour. The Appellant billed customers at an hourly rate plus $5 to $6.

[11]     The Appellant gave his workers basic training. The work was not difficult, but, according to worker Jean-Guy Carrier, [TRANSLATION] "good judgment and courtesy were needed." The workers had to position signs along the road to warn motorists, and they had to direct traffic according to the customer's orders. The customer supplied the signs. The workers' work was supervised by an inspector from the customer's company.

[12]     The Appellant paid the workers weekly and made no source deductions.

[13]     Following his investigation, the Minister determined that the workers were employed in insurable employment.

[14]     Counsel for the Minister cited several well-known decisions in support of his arguments. These decisions must serve to enlighten the Court with regard to the principles to apply in this review of the Minister's decision regarding the insurability of the Payor's workers' employment.

[15]     In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, the Supreme Court of Canada held as follows:

There is no one conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor. What must always occur is a search for the total relationship of the parties. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker's activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks.

CONTROL

[16]     It was established that the Appellant recruited his workers from his network of friends and acquaintances, and that he provided basic training. The work to be done was not difficult, and did not require a great deal of training, but, according to worker Jean-Guy Carrier, it required good judgment and courtesy. Since the work was not complicated, it did not require strict supervision. However, the workers were supervised by the customer's inspector. The customers determined the details of the work to be done. They issued the orders to the Appellant, who passed them along to the workers. The Appellant was the one who hired and paid the workers.

OWNERSHIP OF TOOLS

[17]     Some of the workers owned their own walkie-talkies and safety vests. For other workers, the required materials, such as signs, were supplied by the Appellant or the customer.

CHANCE OF PROFIT AND RISK OF LOSS

[18]     The Appellant was in charge of the jobs. He was responsible for management, he hired and paid the workers, and he invoiced his customers. He was the one who stood to win or lose.

[19]     The workers had no chance of profit and ran no risk of loss.

INTEGRATION

[20]     The evidence shows that the workers' work was integrated into the Appellant's business. It was he who registered the business and solicited customers. He also hired and controlled the workers. The workers performed their jobs according to the needs of the Appellant's business. They did not freelance for other businesses. The workers did not own their own businesses.

[21]     In my opinion, the facts of the case at bar appear to support the idea that there was a relationship of subordination between the Payor and the workers. While this is an essential characteristic of an employment contract, the Federal Court of Appeal, in Charbonneau v. Canada(Minister of National Revenue - M.N.R.), [1996] F.C.J. No. 1337 (QL), cautioned courts against applying the test mechanistically as though it were a magic formula. As Décary J.A. wrote:

The tests laid down by this Court in Wiebe Door Services Ltd. v. M.N.R. [[1986] 3 F.C. 553 (C.A.).] - 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).

[22]     The Federal Court of Appeal issued another warning regarding the application of the control test to the facts of a given case. This time, the warning was against an overly broad application of the test. In the words of Pratte J.A. in Gallant v. Canada(Department of National Revenue) (F.C.A.), [1986] F.C.J. No. 330:

. . . the first ground is based on the mistaken idea that there cannot be a contract of service unless the employer actually exercises close control over the way the employee does his work. The distinguishing feature of a contract of service is not the control actually exercised by the employer over his employee but the power the employer has to control the way the employee performs his duties.

[23]     This Court acknowledges that the Appellant made several attempts, with the workers' consent, to establish a business relationship between the parties which conveyed the impression that the workers were contractors or independent workers. This led the Federal Court of Appeal to issue the following warning in Standing v. Canada(Minister of National Revenue - M.N.R.), [1992] F.C.J. No. 890 (C.A.) per Stone J.A.:

. . . Regardless of what may have been the Tax Court's appreciation of the Wiebe Door test, what was crucial to it in the end was the parties own post facto characterization of the relationship as that of employer/employee. There is no foundation in the case law for the proposition that such a relationship may exist merely because the parties choose to describe it to be so regardless of the surrounding circumstances when weighed in the light of the Wiebe Door test.

[24]     At the hearing, counsel for the Minister pointed out that neither the Appellant nor his workers denied any of the Minister's presumptions of fact.

[25]     On this point, it is helpful to recall the Federal Court of Appeal's instructions in Elia v. Canada(Minister of National Revenue - M.N.R.), [1998] F.C.J. No. 316 (QL) per Pratte J.A.:

Contrary to what the judge believed, he therefore could have intervened and should have intervened if, as he asserted, the evidence established that the Minister's decision was unreasonable. However, it seems to us that the judge's assertion is also inaccurate and based on an error of law, since the judge did not take into account the well-settled rule that the allegations in the reply to the notice of appeal, in which the Minister states the facts on which he based his decision, must be assumed to be true as long as the Appellant has not proved them false.

[26]     In view of the case law cited above, the facts of the case at bar support the idea that the workers held insurable employment because they were working under an employment contract.

[27]     This is an appropriate time to examine how the legislator has addressed this situation. The relevant excerpts are as follows.

INSURABLE EMPLOYMENT

5. (1) Subject to subsection (2), insurable employment is

(a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise.

CHAPTER VII

CONTRACT OF EMPLOYMENT

Art. 2085. A contract of employment is a contract by which a person, the employee, undertakes for a limited period to do work for remuneration, according to the instructions and under the direction or control of another person, the employer.

Art. 2087. The employer is bound not only to allow the performance of the work agreed upon and to pay the remuneration fixed, but also to take any measures consistent with the nature of the work to protect the health, safety and dignity of the employee.

CHAPTER VIII

CONTRACT OF ENTERPRISEOR
FOR SERVICES

Art. 2098. A contract of enterprise or for services is a contract by which a person, the contractor or the provider of services, as the case may be, undertakes to carry out physical or intellectual work for another person, the client or to provide a service, for a price which the client binds himself to pay.

Art. 2099. The contractor or the provider of services is free to choose the means of performing the contract and no relationship of subordination exists between the contractor or the provider of services and the client in respect of such performance.

EMPLOYMENT INSURANCE ACT

Payment of Premiums

82.(1) Every employer paying remuneration to a person they employ in insurable employment shall

(a) deduct the prescribed amount from the remuneration as or on account of the employee's premium payable by that insured person under section 67 for any period for which the remuneration is paid; and

(b) remit the amount, together with the employer's premium payable by the employer under section 68 for that period, to the Receiver General at the prescribed time and in the prescribed manner.

EMPLOYMENT INSURANCE ACT

Overpayments and Refunds

95. The total amount of any employee's premiums deducted during a year from the insurable earnings of a person in excess of the maximum yearly insurable earnings is an overpayment made by the person.

96. (2) If an amount on account of a premium has been deducted from the remuneration of a person during a year, or has been paid by an employer with respect to a person employed by the employer during a year, and by a decision on an appeal under section 91, 92 or 103 it is decided that the amount so deducted or paid exceeds the amount required to be deducted or paid, or should not have been deducted or paid, the Minister shall refund the excess amount or the amount that should not have been deducted or paid if the person or the employer applies in writing to the Minister within 30 days after the decision is communicated to the person or employer, as the case may be.

96. (4) If a person has insurable earnings of not more than $2,000 in a year, the Minister shall refund to the person the aggregate of all amounts deducted as required from the insurable earnings, whether by one or more employers, on account of the person's employee's premiums for that year.

[28]     An examination of the legislation supports the Minister's determination that the workers' employments were insurable.

[29]     For all these reasons, the appeals are dismissed and the Minister's decisions and assessments are confirmed.

Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005.

"S.J. Savoie"

Savoie D.J.

Translation certified true

on this 1st day of December 2005.

Aveta Graham, Translator

CITATION:

2004TCC121

COURT FILE NO.:

2004-2227(EI), 2004-2228(EI), 2004-2230(EI), 2004-2232(EI), 2004-2233(EI), 2004-2236(EI), 2004-2237(EI) and 2004-2238(EI)

STYLE OF CAUSE :

Daniel Gourd and M.N.R. Jimmy Morin and M.N.R. Éric Morin and M.N.R. Guy Lemay and M.N.R. Michel Gadoury and M.N.R. Sylvie Gourd and M.N.R. Jean-Guy Carrier and M.N.R.. Patrick Ducharme and M.N.R.

PLACE OF HEARING:

Montréal, Quebec

DATE OF HEARING:

December 15, 2004

REASONS FOR JUDGMENT BY:

The Honourable S.J. Savoie, Deputy Judge

DATE OF JUDGMENT:

February 16, 2005

APPEARANCES:
	For the Appellants Daniel Gourd, Jean-Guy Carrier and Patrick Ducharme:	The Appellants themselves

For the Appellants     Jimmy Morin, Éric Morin, Guy Lemay, Michel Gadoury, Sylvie Gourd

No one appeared

Counsel for the Respondent:

Simon Petit

COUNSEL OF RECORD:
	For the Appellants:
		Name:
		Firm:

For the Respondent:

John H. Sims, QC Deputy Attorney General of Canada Ottawa, Canada