Breton v. M.N.R.

Breton v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-03-02 Neutral citation 2005 TCC 171 File numbers 2004-1138(EI) Judges and Taxing Officers Louise Lamarre Proulx Subjects Old Age Security Act Decision Content Docket: 2004-1138(EI) BETWEEN: CHARLES BRETON, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and GÉO TOURS INC., Intervener. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on December 3, 2004, at Québec, Quebec Before: The Honourable Justice Louise Lamarre Proulx Appearances: For the Appellant: the Appellant himself Counsel for the Respondent: Nancy Dagenais Agent for the Intervener: Claude Fettaya ____________________________________________________________________ JUDGMENT The appeal under subsection 103(1) of the Employment Insurance Act concerning the decision of the Minister of National Revenue is confirmed in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 2nd day of March 2005. "Louise Lamarre Proulx" Lamarre Proulx J. Translation certified true on this 20th day of October 2005. Aveta Graham, Translator Citation: 2005TCC171 Date: 20050302 Docket: 2004-1138(EI) BETWEEN: CHARLES BRETON, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and GÉO TOURS INC., Intervener. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT Lamarre Proulx J. [1] This is an appeal from a decision of the Minister of National Revenue (the "Minister") dated February 13, 2004, to the effect that the Appellant was not employed by Géo Tours Inc. under a contract of service within the meaning of paragraph 5(1)(a) of the Employment Insurance Act (the "Act") from January 1 to December 10, 2003. [2] In rendering his decision, the Minister relied on the following facts set out in paragraph 6 of the Reply to the Notice of Appeal (the "Reply"): [TRANSLATION] (a) the Payor was incorporated in 1995 and operates a travel wholesale business; (b) the Payor is primarily involved in "receptive travel," specifically travellers from Europe, and mostly, France; (c) the Payor has approximately nine full-time employees as well as tour guides for the trips; (d) the Payor organizes visits for roughly 350 groups per year and the visits are normally one week long; (e) during the period in issue, the Appellant worked for the Payor as a tour guide on two occasions; (f) the Appellant's principal duties can be summarized as follows: - pick up the travellers at the airport and bring them back, - escort customers during their visits, - inform customers about the places they are visiting, - serve as a guide, - prepare reports concerning trips; (g) the Appellant was free to accept or decline a contract from the Payor and could offer his services to other agencies; (h) the Appellant did indeed work for two other agencies during the period in issue; (i) the Appellant needed no specific equipment to perform his work as a tour guide; (j) the Appellant was paid approximately $85-$90 per day of work and the pay was negotiated for each contract; (k) the Appellant was paid by cheque at the end of each tour; (l) the Payor covered the Appellant's lodging, food and travel for the duration of the contracts. [3] Géo Tours Inc. is an Intervener in the instant appeal. Claude Fettaya, the company's president, represented it at the hearing. [4] The Appellant testified that he began working for the company in 1986, at which time the company was doing business under another name. The Appellant admits to paragraph 6(b). He also admits to paragraph 6(e), which states that he only worked twice for Géo Tours in 2003. However, the Appellant claims that he would have wanted to work much more for the company, but was not given priority because he did not want to be involved in bringing in unreported income. [5] The Appellant testified that he took a guide course from the city of Québec at the CEGEP de Ste-Foy in 1976. He was an historical guide for that city from 1977 to 1981. He began working as a tour guide for Voyages Québec in 1981. [6] The Appellant says that he was paid as an employee at that time. According to his statements, it was in 1987, when Mr. Fettaya took control of trips originating in France, that he began to have problems concerning his method of remuneration. [7] However, the Appellant claims that he was paid a salary from that time until 1998, when the Court of Québec rendered a judgment vacating a notice of assessment involving the Régie des rentes du Québec and the Régie de l'assurance-maladie du Québec. Counsel for the Respondent tendered the judgment in evidence. It is dated June 11, 1998. The company was the applicant and the Quebec Deputy Minister of Revenue was the respondent. The dispute pertained to an assessment dated June 3, 1993, for contributions to the two boards mentioned above. [8] According to the Appellant, a tour guide must sell excursions. Travellers purchase their trips in France. They can do so at low prices because the money is mostly made on the sale of excursions. He was never involved in promoting them. [9] Agreements with Géo Tours concerning work were oral agreements. The Appellant explained that he gets a tour file in Montréal. He is given an envelope containing all the instructions. He pays for the bus ride from Québec to Montréal. The company covers the trip to the airport. During the tour, the lodging and meals are paid for. The Appellant said he was under the total control of the company, which defined, supervised and controlled all his actions. He also argued that the customers were the agency's, not his own. [10] Under cross-examination, counsel for the Respondent put it to him that when he was phoned and offered a contract, he could either accept or decline it. In response, he wondered aloud whether he was having a bad dream. She asked whether he could confirm that he had refused two trips that he was offered. He replied that this was totally false. [11] Counsel for the Respondent asked him to confirm that he had accepted other trips for other tourism-related organizations during the period in issue. He refused to answer, reiterating that neither the customers nor the timetables are his, and that the instructions are to be carried out precisely as given. [12] Jean-Yves Bourdages, a tour guide, testified at the Appellant's request. He is the president of the Association des guides-accompagnateurs du Québec, which has roughly one hundred members but does not represent all Quebec tour guides. The association was apparently created toward the late 1980s. It suggested that its members ask for written employment contracts and obtain employee status. Mr. Bourdages explained that the members were considered self-employed until the late 1980s. Around that time, the Régie des rentes du Québec sought contributions from several travel companies. This caused problems for certain workers, who had considered themselves self-employed and had claimed deductions on their tax returns accordingly. [13] Claude Fettaya, the president of Intervener Géo Tours Inc., testified that the Appellant did not return at least one of his calls offering him a tour. Before being Géo Tours Inc., the company was known as Cap Canada. Mr. Fettaya claims that the Appellant was never an employee of Cap Canada or Géo Tours. [14] The witness explained that the Intervener's customers are European travel agencies. The company does approximately 350 tours per year. The Appellant only did two of them during the year in issue. [15] Guides greet the groups and lead them. The work does call for some initiative because schedules can change for reasons beyond anyone's control. [16] The foreign agency decides on the itinerary and hotel class and organizes the flights. The company makes reservations in hotels and restaurants, which normally provide room and board for the guides. [17] The witness explained that guides who sell optional excursions get commissions on them. Contradicting the Appellant, he explained that commissions are added to a guide's income and declared on the T4A. Tips also increase a guide's income. Guides can organize discretionary meals, and get a commission from the restaurant owner or pocket the difference between what they charge the travellers and what they must pay the restaurant owner. Some souvenir shops will grant them commissions on their sales as well. [18] Contracts are verbal and they are made over the telephone. Guides know how much they will get each day. All guides are allegedly self-employed. A guide's work is seasonal. Most tourists come at the same time when they come at all. [19] The company has a list of roughly 100 guides who speak a variety of languages. The guides can work for other agencies. There is no exclusivity. Guides are called and asked whether they are available to do the tour in question. If they agree, they do the tour. Evaluation cards from customers enable the quality of the guides to be assessed. The Appellant was a good guide. [20] Mr. Fettaya said the Appellant never told him that he wanted to change his status from self-employed worker to employee. The 1993 assessment included amounts for failing to remit the employer's share of the source deductions to the Régie des rentes du Québec and the Régie de l'assurance-maladie du Québec. The company never changed its position and never treated those workers or the guides as employees. According to Mr. Fettayta, Mr. Breton has been self-employed since at least 1989. Submissions [21] The Appellant argues that he had to carry out the exact instructions regarding itineraries and schedules, and was given no flexibility in this regard. [22] The Appellant cites human rights legislation and argues that his pay was unfair. I must immediately state that this Court has no jurisdiction to decide this type of issue. [23] The Appellant also claims that he asked to be an employee, but that the company did not want to offer him an agreement to that effect. [24] Counsel for the Respondent referred to the decision of the Federal Court of Appeal in Livreur Plus Inc. v. Canada (Minister of National Revenue - M.N.R.), [2004] F.C.J. No. 267 (QL), particularly the following paragraphs: 16 I do not think there is any need to restate some of the legal rules which apply to the question of insurability of employment. A decision on that question involves a decision on the nature of the contractual relationship between the parties. 17 What the parties stipulate as to the nature of their contractual relations is not necessarily conclusive, and the Court may arrive at a different conclusion based on the evidence before it: D & J Driveway Inc. v. The Minister of National Revenue, 2003 FCA 453. However, if there is no unambiguous evidence to the contrary, the Court should duly take the parties' stated intention into account: Mayne Nickless Transport Inc. v. The Minister of National Revenue, 97-1416-UI, February 26, 1999 (T.C.C.). Essentially, the question is as to the true nature of the relations between the parties. Thus, their sincerely expressed intention is still an important point to consider in determining the actual overall relationship the parties have had between themselves in a constantly changing working world: see Wolf v. Canada, [2002] 4 F.C. 396 (F.C.A.);Attorney General of Canada v. Les Productions Bibi et Zoé Inc., 2004 FCA 54. 18 In these circumstances, the tests mentioned in Wiebe Door Services Ltd. v. M.N.R., 87 D.T.C. 5025, namely the degree of control, ownership of the work tools, the chance of profit and risk of loss, and finally integration, are only points of reference: Charbonneau v. Canada(Minister of National Revenue -M.N.R.) (1996), 207 N.R. 299, paragraph 3. Where a real contract exists, the Court must determine whether there is between the parties a relationship of subordination which is characteristic of a contract of employment, or whether there is instead a degree of independence which indicates a contract of enterprise: ibid. 19 Having said that, in terms of control the Court should not confuse control over the result or quality of the work with control over its performance by the worker responsible for doing it: Vulcain Alarme Inc. v. The Minister of National Revenue, A-376-98, May 11, 1999, paragraph 10, (F.C.A.); D & J Driveway Inc. v. The Minister of National Revenue, supra, at paragraph 9. As our colleague Décary J.A. said in Charbonneau v. Canada (Minister of National Revenue - M.N.R.), supra, followed in Jaillet v. Canada (Minister of National Revenue - M.N.R.), 2002 FCA 394, "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". 20 I agree with the applicant's arguments. A subcontractor is not a person who is free from all restraint, working as he likes, doing as he pleases, without the slightest concern for his fellow contractors and third parties. He is not a dilettante with a cavalier, or even disrespectful, whimsical or irresponsible, attitude. He works within a defined framework but does so independently and outside of the business of the general contractor. The subcontract often assumes a rigid stance dictated by the general contractor's obligations: a person has to take it or leave it. However, its nature is not thereby altered, and the general contractor does not lose his right of monitoring the results and the quality of the work, since he is wholly and solely responsible to his customers. 21 Finally, determining the value of the remuneration, defining the purpose sought or making payment for work by cheque or otherwise does not amount to controlling work, since these features exist both in a contract of enterprise and in a contract of employment: Canada (Attorney General) v. Rousselle et al. (1990), 124 N.R. 339 (F.C.A.). [25] She argues that the Appellant rendered services twice during the entire period in issue. He was completely free to accept or decline the company's offer. The worker could render services for any other tourism business because there was no agreement giving the company exclusivity. The Appellant had to carry out a task or a package. He could supplement his income with tips and commissions. [26] In response to this last remark, the Appellant interjected that he would prefer to have a higher salary and no tips. Analysis and conclusion [27] In addition to the decision cited by counsel for the Respondent, I wish to refer to another decision of the Federal Court of Appeal in D & J Driveway Inc. v. The Minister of National Revenue, 2003 FCA 453, and, in particular, 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. . . . [28] Similarly, the Appellant had no facilities at the Intervener's premises. The relationship between the Appellant and the Intervener consisted of sporadic calls which the Appellant was not required to take. [29] The Appellant called as a witness a guide who works for another agency as an employee. Such a thing is possible. While we have no knowledge of this guide's terms of employment, the employment relations could be rather neutral, in which case the parties' intention is determinative and is shown by the offer and its acceptance. [30] The Appellant claims that he wanted a contract of employment, not a contract of enterprise. However, he was offered a contract of enterprise. By accepting it, he accepted its nature. [31] Despite such acceptance, it is possible that a court will consider such an agreement to be of the nature of an employment contract rather than a contract of enterprise. However, this will only occur if the indicia of an employment contract are so pressing that they require an alteration of the agreement between the parties. The most determinative of these indicia is a relationship of subordination or control. [32] With regard to the concept of control, it is true that the Appellant had to comply with schedule and itinerary-related instructions to the extent possible. However, as with the cases cited above, the control was over the result and quality of the services, not over the worker. Moreover, there was no exclusivity agreement between the Intervener and the Appellant; the Appellant could accept assignments from other agencies just as he was entitled to accept or decline the assignments proposed by the Intervener. [33] I must conclude that the Respondent correctly analyzed the contractual relationship between the Appellant and the Intervener as being more characteristic of a contract of enterprise than a contract of employment. Consequently, the appeal must be dismissed. Signed at Ottawa, Canada, this 2nd day of March 2005. "Louise Lamarre Proulx" Lamarre Proulx J. Translation certified true on this 20th day of October 2005. Aveta Graham, Translator CITATION: 2005TCC171 COURT FILE NO.: 2004-1138(EI) STYLE OF CAUSE: Charles Breton v. M.N.R. and Géo Tours Inc. PLACE OF HEARING: Québec, Quebec DATE OF HEARING: December 3, 2004 REASONS FOR JUDGMENT BY: The Honourable Justice Louise Lamarre Proulx DATE OF JUDGMENT: March 2, 2005 APPEARANCES: For the Appellant: the Appellant himself Counsel for the Respondent: Nancy Dagenais Agent for the Intervener: Claude Fettaya COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, QC Deputy Attorney General of Canada Ottawa, Canada