À Propos, Services de Formation Linguistique Inc. c. M.R.N.

À Propos, Services de Formation Linguistique Inc. c. M.R.N. Court (s) Database Tax Court of Canada Judgments Date 2004-05-14 Neutral citation 2004 TCC 370 File numbers 2003-1154(EI) Judges and Taxing Officers Louise Lamarre Proulx Subjects Employment Insurance Act Decision Content Docket: 2003-1154(EI) BETWEEN: À PROPOS, SERVICES DE FORMATION LINGUISTIQUE INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and MÉLANIE SAINTONGE, Intervener. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on common evidence with the appeal of À Propos, Services de Formation Linguistique Inc. 2003-1153(EI) on March 25, 2004, at Montréal, Quebec Before: The Honourable Justice Louise Lamarre Proulx Appearances: Counsel for the Appellant: Lysane Tougas Counsel for the Respondent: Agathe Cavanagh For the Intervener: The Intervenor herself ____________________________________________________________________ JUDGMENT The appeal pursuant to subsection 103(1) of the Employment Insurance Act concerning the decision of the Minister of National Revenue dated January 9, 2003, is allowed and the Notice of Intervention is dismissed, in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 14th day of May 2004. "Louise Lamarre Proulx" Lamarre Proulx J. Translation certified true on this 3rd day of November 2004. Ingrid Miranda, Translator Docket: 2003-1153(EI) BETWEEN: À PROPOS, SERVICES DE FORMATION LINGUISTIQUE INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on common evidence with the appeal of À Propos, Services de Formation Linguistique Inc. 2003-1154(EI) on March 25, 2004, at Montréal, Quebec Before: The Honourable Justice Louise Lamarre Proulx Appearances: Counsel for the Appellant: Lysane Tougas Counsel for the Respondent: Agathe Cavanagh ____________________________________________________________________ JUDGMENT The appeal pursuant to subsection 103(1) of the Employment Insurance Act concerning the decision of the Minister of National Revenue dated January 9, 2003, is allowed in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 14th day of May 2004. "Louise Lamarre Proulx" Lamarre Proulx J. Translation certified true on this 3rd day of November 2004. Ingrid Miranda, Translator Citation: 2004TCC370 Date: 20040514 Docket: 2003-1154(EI) BETWEEN: À PROPOS, SERVICES DE FORMATION LINGUISTIQUE INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and MÉLANIE SAINTONGE, Intervener. AND Docket: 2003-1153(EI) BETWEEN: À PROPOS, SERVICES DE FORMATION LINGUISTIQUE INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT Lamarre Proulx J. [1] These appeals were heard on common evidence. [2] The issue in Appeal 2003-1154(EI) is whether the Worker, Mélanie Saintonge, held insurable employment during the period from January 29 to February 18, for the nine hours during which she provided language training to the Appellant's clients. The Worker was the Intervener and she gave testimony in this appeal. [3] Appeal 2003-1153(EI), concerns Worker Jeannine Lachance. The period is from October 1, 2001 to May 21, 2002. The number of hours is 130.5 hours. The Worker did not attend the hearing. [4] In both appeals, the decision of the Minister of National Revenue (the "Minister") is dated January 9, 2003. [5] The facts that the Minister took into account in rendering his decision are described in each of the appeals in paragraph 15 of the Reply to the Notice of Appeal (the "Reply"). I reproduce paragraph 15 from the appeal concerning Ms. Saintonge. [translation] (a) The Appellant was incorporated in 1995; (b) The Appellant operated a language-training business for private companies and public corporations; (c) The Appellant entered into training agreements with its various clients; (d) The agreements stipulated the cost of the training, the content of the training, the location of the training, the course schedule and the number of participants; (e) The Appellant hired instructors to teach the training sessions; (f) The Appellant hired instructors on the basis of their skills and expertise; (g) The Appellant had approximately 40 instructors at its disposal; (h) Once the Appellant and the client had entered into a training agreement, the Appellant contacted one of the available instructors to provide the training; (i) If the instructor accepted the work, an agreement would be made concerning the instructor's schedule; (j) The client was the Appellant's client, not the instructor's client; (k) The instructor did not need to negotiate with the client; (l) The instructor would go to the client's premises as a representative of the Appellant; (m) If an instructor was sick, it was the Appellant's responsibility to find and pay for a replacement; (n) The Appellant billed its client for the training; (o) The Worker was hired as an instructor; (p) The Worker was required to adhere to the work schedule that the Appellant had established with its client; (q) The Worker was paid $20 per hour, as determined by the Appellant; (r) The Worker was required to deliver the services personally; (s) The Worker was required to submit a time sheet to the Appellant at the end of every month; (u) The Worker did not assume any costs in the course of her duties with the Appellant; (v) The Worker had no chance of profit or loss in the course of her duties with the Appellant; (w) The Appellant or the Appellant's client provided the location and all the educational materials that were necessary to provide the training; (x) The Worker's duties were fully integrated into the Appellant's activities. [6] As for Worker Lachance, the only factual difference lies in subparagraph 15(q). Her hourly wage was $22. [7] The facts listed in each of the Notices of Appeal are identical except for the names of the Workers. In the case of Ms. Saintonge, they read as follows: FACTS [translation] 5. The Appellant provides language training courses (French, English, Spanish) exclusively to corporate clients. 6. The Appellant does not own nor rent a business location where the language training services are offered. 7. The Appellant is not a "school" in the traditional sense of the word. 8. The Appellant did not demand that Ms. Saintonge agree or not agree to give a course for the benefit of the Appellant. 9. The Appellant did not decide on Ms. Saintonge's behalf how much work she should accomplish. When Ms. Saintonge offered her services, it was she who informed the Appellant that she was available. 10. The Appellant did not establish rules, directives or procedures with respect to the content of the language training courses taught by Ms. Saintonge. 11. The Appellant did not have the right to direct the manner in which Ms. Saintonge taught her language training courses. 12. Ms. Mélanie Saintonge: (a) has the right to accept or to decline the assignment. In return, the Appellant may decide whether or not to give her an assignment. Mélanie Saintonge has the absolute right to establish her working schedule since she informs the Appellant of her availability and seeks assignments with the Appellant; (b) has the right to have someone replace her; (c) is not receiving any training or courses from the Appellant; (d) is not receiving any remuneration for preparing the lessons; (e) is not subject to any exclusive employment rules; (f) is free to offer her services to any other person; (g) provided she respects her undertakings, she may take holidays any time of the year, for as long as she wants; (h) has only one obligation: to come to the location determined by the client for her to offer the training (on the client's premises) and to respect the schedule set by her students; (i) she is free to prepare the content of the course as she pleases. The Appellant does not provide a method with tapes or books, therefore Mélanie Saintonge provides her own working tools, and she freely decides how she will teach her courses. 13. The Appellant and Ms. Saintonge signed a contract in which Ms. Saintonge's status is clearly established as a freelance consultant. [8] Ms. Hélène Hill is the president of the Appellant. She explained that, for the purposes of her language training business, she must have a list of teachers or instructors who teach language. That is one part of her work. The other part is to obtain language-teaching contracts with businesses. [9] The Appellant does not train instructors. She recruits them on the basis of their degrees. She establishes a general contract with them. Whenever she has contracts, Ms. Hill telephones a teacher or an instructor. If the individual is available, she indicates where the courses will take place and the number of hours. The terms and conditions of the general contract apply. [10] The Appellant negotiates and sets a budget with the clients. Courses are taught in groups or on a private basis. The courses are taught on the clients' premises. For group courses, the Appellant determines the schedule with the client. [11] With respect to private courses, the teacher assesses the student's knowledge and sets a course plan during the first meeting with the student. [12] Ms. Hill says that the instructor may have someone replace him or her, however, this has never actually happened. Usually, she finds a substitute or, as an alternative, the instructor and the student make arrangements to change the day or teaching time. When a course is cancelled, the teacher is not paid. [13] Usually, the instructor uses his or her own material. The instructor may borrow some material from Ms. Hill, since the latter has been in the field for a long time and has built up a good library. [14] Ms. Hill says that Mélanie Saintonge contacted her with respect to teaching assignments. Ms. Hill accepted her. Ms. Saintonge is bilingual and holds a Masters in Education. She was recruited to teach English. [15] The schedule was two lunch hours per week, from 11:30 a.m. to 1:00 p.m. The assignment was to last ten weeks, for a total of 30 hours. Ms. Saintonge, however, only worked three weeks. Ms. Hill lent her some educational material. [16] The contract between Ms. Saintonge and the Appellant was produced as Exhibit A-1. The contract is entitled: [TRANSLATION]"Contract of service" and is dated January 21, 2002. It reads as follows: ... À • PRO'POS Services de Formation Linguistique inc. vous embauche à titre d'enseignant(e) de français langue seconde ou langue maternelle. Vous aurez un statut de consultant à la pige et vous recevrez un honoraire de travail. Le taux horaire sera de 20.xx . La préparation pédagogique n'est pas rémunérée. Il n'y aura aucune retenues effectuées à la source. Vous vous engagez à respecter la confidentialité de ce contrat (taux horaire, conditions de travail, etc.) Les deux parties peuvent convenir de gré à gré en tout temps de mettre fin à ce contrat en donnant un préavis d'au moins quatorze (14) jours ouvrables. ... [translation] . . . À • PRO'POS Language Instruction Services Inc. is hiring you to teach French as a Second Language or as a First Language. You will be a freelance consultant and will receive a teaching fee. Your hourly rate will be $ 20.xx Class preparation is not remunerated. No source deductions will be deducted from your wages. You commit to respecting the confidentiality of this contract (hourly wages, working conditions, etc.). This contract may be terminated by mutual agreement, provided prior notice of fourteen (14) days is given. . . . [17] During her testimony, Ms. Saintonge said that she was now an employee, working as an administrative assistant. [18] She insistently repeated that Ms. Hill provided her with educational material. She produced as Exhibit I-1, a diagnostic test of English grammar, level I, prepared by the Appellant. She produced as Exhibit I-2 an invoice, a monthly attendance report, a progress report, a course evaluation; and as Exhibit I-5, "Course Outline English Second Language". [19] Jeannine Lachance had a few assignments during the period at issue. Ms. Lachance's contract was produced as Exhibit A-3. It is entitled "Letter of Agreement" and is dated January 15, 2001. It reads as follows: . . . À • PRO'POS Language Instruction Services Inc. is hiring your services as a teacher of English as a Second Language. Your status as a free-lance consultant will command an hourly salary of $ 22.xx per hour, paid to you on a monthly basis. Class preparation and/or personal expenses are not remunerated. No Income Tax is deducted from your wages. You are committed to respect the confidentiality of this contract (hourly wages, working conditions, language programmes) and comply with the ethics of À • PRO'POS and its clients. This contract may be terminated by mutual agreement or by À • PRO'POS, provided a 14-days notice is given. [20] Ms. Hill testified that Ms. Lachance had an assignment of one hour and a half per day, five days a week. She worked for three schools at the same time. She had a lot of experience and had her own material. [21] Ms. Hill affirms that every one of the instructors could offer his or her services to other schools or to other businesses. [22] At the end of each month, the teacher prepares an invoice in accordance with the teaching hours completed. At the end of each session, the teacher prepares an attendance sheet and a progress report. The student produces a course evaluation. [23] Instructors are liable for their own expenses, computer and transportation. Sometimes, the Appellant reimburses a percentage of the transportation costs. [24] Some instructors testified. Each has affirmed that he or she wanted to be self-employed. They all had other sources of income, such as translation, research, revision or other teaching assignments. [25] Lucie Heppell describes herself as being a freelancer since 1999. She explained that she meets and evaluates the student, develops a course training plan with the student, and completes the assignment. She is not supervised by Ms. Hill. She chooses the most appropriate method for her student. She owns her own textbooks. When she is available, she telephones Ms. Hill or the latter telephones her to offer her assignments. She has never needed a replacement. She has other schools. She is a translator, writer and editor, and she helps with homework. She submits an invoice at the end of the month. She considers herself to be self-employed. [26] Ms. Bozena Feltz also testified. She has been teaching for twenty years. She enjoys her self-employed status. [27] Tanis Whitfield, France Ménard and Kurt Chaboyer have also testified in the same way. [28] Appeal Officer Paul Hyland produced his reports as Exhibits I-6 and I-7. By and large, the facts described in the Reply encapsulate the statements in the reports. Conclusion [29] The latest decisions of the Federal Court of Appeal show us how to proceed in those cases where usual case law tests cannot clearly reveal whether we are dealing with employment or a business. The intentions of the parties then become material. [30] I refer to the Federal Court of Appeal decision in Wolf v. Canada (C.A.)[2002] F.C.J. 375 (Q.L.), paragraphs 67, 120 and 124: 67 The appellant submits that absent a scam, window-dressing or other vitiating circumstances, none of which are alleged in this case, his status is governed by his contract which describes him as a consultant and independent contractor. . . . 120 In our day and age, when a worker decides to keep his freedom to come in and out of a contract almost at will, when the hiring person wants to have no liability towards a worker other than the price of work and when the terms of the contract and its performance reflect those intentions, the contract should generally be characterized as a contract for services . . . . . . 124 This is not a case where the parties labelled their relationship in a certain way with a view of achieving a tax benefit. No sham or window dressing of any sort is suggested. It follows that the manner in which the parties viewed their agreement must prevail unless they can be shown to have been mistaken as to the true nature of their relationship. In this respect, the evidence when assessed in the light of the relevant legal tests is at best neutral. As the parties considered that they were engaged in an independent contractor relationship and as they acted in a manner that was consistent with this relationship, I do not believe that it was open to the Tax Court Judge to disregard their understanding . . . [31] I refer to another decision of the Federal Court of Appeal D & J Driveway Inc. v. Minister of National Revenue, 2003FCA453, paragraphs 7, 9, 10, 11, 12 and 15: 7 The drivers have no facilities at the applicant's premises. Their services are retained and provided on call. They are entirely free to refuse the offer made to them to drive a truck, for example, to Halifax, Québec or Montréal. Deliveries are made from Saint-Jacques in New Brunswick. The drivers receive a fixed amount which is determined in accordance with the distance to be travelled. . . . 9 A contract of employment requires the existence of a relationship of subordination between the payer and the employees. The concept of control is the key test used in measuring the extent of the relationship. However, as our brother Décary J.A. said in Charbonneau v. Canada (Minister of National Revenue - M.N.R.), [1996] F.C.J. No. 1337, [1996] 207 N.R. 299, followed in Jaillet v. Canada (Minister of National Revenue - M.N.R.), 2002 FCA 394, control of the result and control of the worker should not be confused. At paragraph 10 of the decision, he wrote: 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. 10 There is no question that the applicant controlled the results in the case at bar. It ensured that the trucks were delivered to the correct recipients at a convenient or agreed upon time; but that is where its control stopped. 11 In fact, drivers could agree or refuse to make a delivery when called by the applicant, which certainly is not characteristic of a person bound by a contract of employment. They had no premises at the applicant's place of business and were not required to be available there. They only went there to take possession of the truck they had agreed to deliver. . . . 15 We feel it is legally incorrect to conclude that a relationship of subordination existed, and that there was consequently a contract of employment, when the relationship between the parties involved sporadic calls for the services of persons who were not in any way bound to provide them and could refuse them as they saw fit.. . . [32] Here, in the same way as the workers in D & J Driveway (supra), the teachers did not have a home base in the Appellant's premises. Moreover, they used their own computer. They could borrow educational material from the Appellant, but usually, they drafted and used their own material. For the most part, the teachers determined the lesson plans they taught. [33] Workers could accept or turn down a teaching assignment. They could work for other companies. They informed the Appellant when they were available and the latter offered them contracts. By and large, they had a sporadic contractual relationship. [34] The Appellant did not directly supervise the teachers. The Appellant did quality control by means of students' evaluations. This type of control, a control of the results, is characteristic of contracts for services. [35] Whether or not the teachers could have someone take their place is not a material component of a contract for services. In many cases, the person who executes the contract for services is chosen in the contract. [36] In my opinion, the working conditions described by Ms. Hill and the teachers indicate a contract for services. [37] However, if this had been a neutral case, what was the common intention of the parties? According to the testimony of the teachers, their intention was to execute a contract for services. The Appellant chose to proceed by means of contracts for services due to the economic and organizational requirements of its operations. [38] As to the two Workers at issue, one of them-the one that had accumulated more working hours-did not testify. Therefore, we can attribute to her no other intention than that expressed in the contract between her and the Appellant, and this was a contract for services. Moreover, her working conditions as described by Ms. Hill were similar to those of the teachers who rightly claim self-employment status. [39] Ms. Saintonge testified at the hearing. In her case, it is possible that her unexpressed intention was to be an employee. However, she agreed to the terms of the work contract offered to her. There were no negotiations to modify the terms and the Appellant did not lead her to believe that she was an employee. For instance, the Appellant did not make the source deductions prescribed by the Employment Insurance Act and by the Income Tax Act against the compensation paid to the employee, as was the case in Tip Investment Advisors Ltd., 2004CCI236. [40] Moreover, in this matter, I see no elements indicating any masking of the true intent of the parties with respect to the nature of the contract for services. [41] Accordingly, the appeals are allowed. Signed at Ottawa, Canada, this 14th day of May 2004. "Louise Lamarre Proulx" Lamarre Proulx J. Translation certified true on this 3rd day of November 2004. Ingrid Miranda, Translator