Combined Insurance Company of America v. Canada (National Revenue)

Combined Insurance Company of America v. Canada (National Revenue) Court (s) Database Federal Court of Appeal Decisions Date 2007-01-30 Neutral citation 2007 FCA 60 File numbers A-469-05 Decision Content Date: 20070130 Docket: A-469-05 Citation: 2007 FCA 60 CORAM: LÉTOURNEAU J.A. NADON J.A. PELLETIER J.A. BETWEEN: COMBINED INSURANCE COMPANY OF AMERICA Appellant and THE MINISTER OF NATIONAL REVENUE and MÉLANIE DRAPEAU Respondents Hearing held at Montréal, Quebec on December 14, 2006. Judgment delivered at Ottawa, Ontario on January 30, 2007. REASONS FOR JUDGMENT: NADON J.A. CONCURRED IN BY: LÉTOURNEAU J.A. PELLETIER J.A. Date: 20070130 Docket: A-469-05 Citation: 2007 FCA 60 CORAM : LÉTOURNEAU J.A. NADON J.A. PELLETIER J.A. BETWEEN: COMBINED INSURANCE COMPANY OF AMERICA Appellant and THE MINISTER OF NATIONAL REVENUE and MÉLANIE DRAPEAU Respondents REASONS FOR JUDGMENT NADON J.A. [1] This is an appeal from a decision by Mr. Justice McArthur of the Tax Court of Canada dated September 6, 2005, affirming the decision of the Minister of National Revenue (the Minister) dated September 20, 2004 that the respondent Mélanie Drapeau (the respondent) held insurable employment with the appellant during the period from August 18, 2003 to January 16, 2004 within the meaning of paragraph 5(1)(a) of the Employment Insurance Act, S.C. 1996, c. C-23 (the Act). [2] The appellant argued that the judge erred in finding that the respondent held insurable employment. On the contrary, it submitted that, in view of the evidence and in view of this Court’s earlier decisions the respondent was a self-employed worker. Facts [3] A brief summary of the facts will assist in understanding the issue, namely whether the judge erred in finding that the respondent was an employee of the appellant rather than a self‑employed worker. [4] The appellant is an insurance company; its line of business is to sell various insurance policies throughout Canada, including life and health insurance policies. [5] In July 2003 the respondent gave the appellant an undertaking to sell its insurance policies and arrange for their service and renewal. In particular, she signed a contract taking effect on July 14, 2003 entitled [TRANSLATION] “Combined standard agency agreement” and undertook to [TRANSLATION] “sell [the appellant’s] insurance contracts as an independent contractor”. [6] The respondent signed a second contract, similar to the first, which came into effect on January 1, 2004. [7] The contracts signed by the respondent provided as follows: 1. the respondent, who states that she is an independent contractor, acknowledges having no right to participate in any plans offered by the appellant to its employees, and that the appellant shall not required to provide her with fringe benefits; in addition, the respondent acknowledges that she is not an employee within the meaning of the Labour Standards Act or the Quebec Labour Code; 2. the respondent shall act for the appellant on a non-exclusive basis; 3. the appellant shall pay the respondent commissions consistent with and in an amount corresponding to the appellant’s standard practices, in accordance with the provisions set out in the appendices to the contracts signed by the respondent; 4. the respondent shall have complete latitude regarding her choice of persons from whom she shall solicit insurance proposals, and the time, place and manner of soliciting them, in accordance with a level and with standards of quality at least equal to the standards and practices generally recognized for such services in Canada; 5. the respondent shall at all times at her own expense maintain in effect an appropriate insurance policy covering her personal civil liability; 6. the respondent shall at her own expense have an insurance with the appellant against embezzlement. [8] The respondent was recruited by Jean-Guy Saint-Laurent through an advertisement placed in the Granby newspaper La voix de l’est seeking to recruit new sales representatives for the appellant’s products, in particular accident insurance and health insurance policies. At that time Mr. Saint-Laurent held the position of district manager and was himself working for the appellant as an independent representative and contractor. I emphasize the fact that the cost of the advertisement was paid for by Mr. Saint-Laurent, not by the appellant. [9] Mr. Saint-Laurent’s duty, with the assistance of his sales manager Sylvain Poulin, was inter alia to train new representatives, such as the respondent, in the field of insurance. This training followed the eight-day training given to new representatives by the appellant for the obtention of their insurance permit. The appellant also offered two further weeks of training on products, sales technique, sales manuals, administration and ethics in the field of insurance. The training offered by the appellant took place at its offices in Boucherville, Quebec. [10] The training given by Mr. Saint-Laurent consisted of a required period of 15 weeks pursuant to the Act Respecting the Distribution of Financial Products and Services, R.S.Q. c. D-9.1. During that time, the new representatives were invited inter alia to participate in morning meetings known as “pep meetings” and lunch meetings, the purpose of which was to motivate them and to give them advice enabling them to improve the quality and effectiveness of their services to the appellant’s customers. [11] In the course of this training, there was of course “on-the-job” training, in which Mr. Saint-Laurent or Mr. Poulin could accompany the new representative. In particular, during the first week of training Mr. Poulin accompanied the new representative. Subsequently, from the second to the seventh week, Mr. Poulin or Mr. Saint-Laurent accompanied the new representative two days a week. Finally, from the eighth to the fifteenth week, Mr. Saint-Laurent or Mr. Poulin accompanied the new representative one day a week. [12] Acting as the respondent’s training supervisor, Mr. Saint-Laurent had to supervise all of her activities in the course of her training. As the new representative’s liability insurance only came into effect at the end of her training period, that is at the time the Autorité des marchés financiers issued her a licence to sell insurance, the respondent’s liability was at that time covered by Mr. Saint-Laurent’s liability insurance. [13] It should be noted that the respondent was part of Mr. Saint-Laurent’s sales team, consisting of a sales manager and four to five representatives. Nevertheless, the respondent had no contractual relationship with Mr. Saint-Laurent, each of them being under contract with the appellant to sell its insurance products as independent contractors. I also note the fact that in connection with sales made by his sales team, including the respondent, Mr. Saint-Laurent was entitled under his contractual agreement with the appellant to receive a percentage of the premiums generated by the sale of new policies by members of his team. [14] The appellant did not make any office space available to its representatives, as the latter had to meet their customers at home, at their workplace or at any other location agreed upon with them. It also provided no phone service or stationery. All operating costs had to be borne by the representatives. At the same time, I would note that Mr. Saint-Laurent leased premises in Granby for which he paid the lease and all expenses. This was where inter alia the morning “pep meetings” were held. [15] In addition, representatives had to bear the cost of any promotional material given to them by the appellant, including presentation portfolios, sales manuals and business cards. The representatives had to use their own cars and assume all the relevant costs, including fuel costs. [16] As stipulated in the contracts signed by the respondent, she was free to sell policies other than those of the appellant and she could be substituted for by other representatives for the performance of her duties so long as the representatives were under contract with the appellant. [17] For her 2003 taxation year the respondent stated she was a self-employed worker, and therefore deducted relevant expenses from her income. [18] In the course of her testimony the respondent acknowledged that she knew that an employee could not deduct expenses. She also testified that when she claimed employment insurance in April 2004 she did not know that a self-employed worker was not entitled to it. Applicable legislation [19] Articles 2085, 2098 and 2099 of the Civil Code of Quebec, S.Q. 1991, c. 64, are applicable and I set them out below: 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. . . . . . 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. 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. 2085. Le contrat de travail est celui par lequel une personne, le salarié, s’oblige, pour un temps limité et moyennant rémunération, à effectuer un travail sous la direction ou le contrôle d’une autre personne, l’employeur. . . . . . 2098. Le contrat d’entreprise ou de service est celui par lequel une personne, selon le cas l’entrepreneur ou le prestataire de services, s’engage envers une autre personne, le client, à réaliser un ouvrage matériel ou intellectuel ou à fournir un service moyennant un prix que le client s’oblige à lui payer. 2099. L’entrepreneur ou le prestataire de services a le libre choix des moyens d’exécution du contrat et il n’existe entre lui et le client aucun lien de subordination quant à son exécution. Tax Court of Canada decision [20] Mr. Justice McArthur found that the respondent was an employee of the appellant and consequently held insurable employment. In his opinion the degree of control exercised by the appellant was such that a relationship of subordination existed between the respondent and the appellant, and that sufficed to establish the existence of a contract of employment. [21] In view, on one hand, of articles 2085, 2098 and 2099 of the Civil Code of Quebec, defining the contract of employment and the contract for services, and, on the other hand, of the decision of his colleague Judge Dussault in Lévesque v. Canada (Department of National Revenue), 2005 TCJ No. 183, in which the presence or absence of a relationship of subordination between the parties was determinative, it was held that there was no need, apart from the test of control, to adopt the tests stated by this Court in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, namely ownership of the work tools, chance of profit and risk of loss and integration, and accepted by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983. [22] Therefore, the judge approved the following tests set out by Judge Dussault at paragraph 25 of his reasons in Levesque, supra, to determine the existence of a relationship of subordination between the parties: compulsory attendance at a workplace, compliance with a work schedule, supervision of employee vacation absences, submission of activity reports, supervision of quantity and quality of work, imposition of work methods, power to penalize employee performance, source deductions, fringe benefits, status of employee in tax returns and exclusivity of services for the employer. [23] The judge went on to apply the tests to the facts of the case and found that a relationship of subordination existed. At paragraphs 26 to 28 of his reasons, he found as follows: 26. In the light of the indicia listed above, I find that by virtue of the degree of control involved in the relationship between the appellant and the intervener, that relationship was sufficiently subordinate to constitute an employment contract rather than a contract of enterprise. 27. However, the appellant's business model is not on trial in the case at bar. It is quite possible that most of the appellant's representatives are independent contractors. It is even possible that Mr. Saint-Laurent, who had considerable discretion regarding the way in which he managed representatives, did not exercise the same degree of control over the work of other representatives under his supervision. 28. Nonetheless, it is clear to me that the intervener, having been subject to the control that the appellant exercised over her during her period of service, experienced all the drawbacks of employee status without access to its benefits, including eligibility for employment insurance benefits. Case law [24] In Wolf v. Canada (C.A.), [2002] 4 F.C. 396, where the contract between Mr. Wolf and Canadair Limited was governed by Quebec law, this Court considered the tests for determining whether the contract was one of employment or for services. [25] In that case Madam Justice Desjardins stated that in her opinion this determination could be made on the basis of the tests developed by the case law, both in the civil and common law jurisdictions. Therefore, she examined the relationship between the parties in the light of the tests set out by this Court in Wiebe Door, supra, as reformulated by the Supreme Court in Sagaz, supra. In particular, Madam Justice Desjardins relied on the comments of Mr. Justice Major who wrote at paragraphs 47 and 48 of his reasons in Sagaz: 47. Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. 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. 48. It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case. [Emphasis added.] [26] In particular, at paragraph 72 of her reasons, Madam Justice Desjardins stated that the Court had to consider all the evidence in the light of the applicable tests and give the evidence the weight required in the circumstances of the case. In addition, she noted that the parties’ intention should be considered whenever it reflected their real legal relationship. [27] Mr. Justice Décary, who concurred with Madam Justice Desjardins as to the finding that Mr. Wolf’s contract was a contract for services, differed in his reasoning. In his view, provided the parties signed a contract for services in good faith and the contract was carried out “as such”, the parties’ intention was clear and no further consideration of the matter was required. [28] In subsequent decisions, this Court has reiterated the importance to be given to the parties’ intent, as a contract represents the will of the parties to the contract: see D & J Driveway v. The Minister of National Revenue, 2003 FCA 453, Poulin v. The Minister of National Revenue, 2003 FCA 50. In Le Livreur Plus Inc. v. Canada, F.C.J. No. 267, at paragraph 17, Mr. Justice Létourneau wrote for the Court: 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. [Emphasis added.] [29] More recently, in Royal Winnipeg Ballet v. Canada (M.N.R.), 2006 FCA 87, March 2, 2006, this Court had to determine whether three dancers hired by the Royal Winnipeg Ballet (RWB) were employees or independent contractors. A majority of the Court (Mr. Justice Evans dissenting) found that the dancers were not RWB employees. [30] After having noted that the dancers and RWB agreed on the fact that the dancers were independent contractors, Madam Justice Sharlow said that in her opinion the Tax Court of Canada judge had to consider the tests set out in Wiebe Door, supra, in accordance with the understanding the parties had of the nature of their relationship, in order to determine whether that understanding was consistent with the way in which they had “performed” their contract. [31] As Madam Justice Sharlow observed, since the judge had erred by not taking this approach it became necessary for the Court to consider the relationship of the parties in the light of the factors set out in Wiebe Door, supra. This review led her to hold that “the common understanding of the parties as to the nature of their legal relationship is borne out by the contractual terms and the other relevant facts” (paragraph 67 of the reasons). [32] Further, although Madam Justice Sharlow was of the view that as in most cases the control test required special attention, she nevertheless found that the control exercised by the RWB over its dancers was not inconsistent with the parties’ intention to regard them as independent contractors. At paragraph 66 of her reasons she said: [66] The control factor in this case, as in most cases, requires particular attention. It seems to me that while the degree of control exercised by the RWB over the work of the dancers is extensive, it is no more than is needed to stage a series of ballets over a well planned season of performances. If the RWB were to stage a ballet using guest artists in all principal roles, the RWB’s control over the guest artists would be the same as if each role were performed by a dancer engaged for the season. If it is accepted (as it must be), that a guest artist may accept a role with the RWB without becoming its employee, then the element of control must be consistent with the guest artist being an independent contractor. Therefore, the elements of control in this case cannot reasonably be considered to be inconsistent with the parties’ understanding that the dancers were independent contractors. [Emphasis added.] [33] Madam Justice Desjardins, concurring in the reasons of Madam Justice Sharlow, reiterated the principle that the judge should ensure that the classification given to the contract by the parties was consistent with the actual state of affairs. At paragraphs 79 and 80 of her concurring reasons, Madam Justice Desjardins wrote the following: [79] In the case at bar, it is the nature of the contract which must be determined, through an analysis of its terms in the light of the fourfold test, namely the level of control, the ownership of the equipment, the degree of financial risk and the opportunity for profit. [80] Given the above case law, I see no compelling reason why the common law judge, who embarks on the difficult task of determining whether a contract is one of service or for service, should be deprived of the possibility of adverting to as many criteria and indicia as may reasonably be recognized in order to assess the true nature of the relationship governing the parties. [34] To conclude this review of the applicable case law, I refer to the comments made by Mr. Justice Létourneau in Le Livreur Plus Inc. v. Canada, supra. After having determined that the question on which the Court had to rule was always that of the true nature of the relationship between the parties, Mr. Justice Létourneau stated at paragraph 18 of his reasons, regarding the relevance of the test in Wiebe Door, supra: [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. [Emphasis added.] [35] In my view, the following principles emerge from these decisions: 1. The relevant facts, including the parties’ intent regarding the nature of their contractual relationship, must be looked at in the light of the factors in Wiebe Door, supra, and in the light of any factor which may prove to be relevant in the particular circumstances of the case; 2. There is no predetermined way of applying the relevant factors and their importance will depend on the circumstances and the particular facts of the case. Although as a general rule the control test is of special importance, the tests developed in Wiebe Door and Sagaz, supra, will nevertheless be useful in determining the real nature of the contract. Analysis [36] For the reasons that follow, I find that the respondent was a self-employed worker and therefore, did not hold insurable employment with the appellant. [37] The judge had conflicting evidence before him. On the one hand, he had the respondent’s testimony, on which he relied in finding that she held insurable employment with the appellant. On the other hand, he had the testimony of two of the appellant’s employees, Michel Rivest and Stéphane Fortin, at the relevant time respectively director of training and trainer, as well as that of Yves Crevier, a self-employed worker-representative, and Jean-Guy Saint-Laurent, the district manager and the respondent’s supervisor during her training period. [38] After having carefully read the reasons of Mr. Justice McArthur, I have no doubt that he did not consider the testimony of Messrs. Rivest, Fortin, Crevier and Saint-Laurent. As he made no finding as to the credibility of the witnesses, the judge had to consider all the evidence before making a finding as to the relationship between the parties. With all due respect for Mr. Justice McArthur, it is clear that he based his conclusions solely on the respondent’s testimony, and this was an error. Further, it is beyond question that the judge did not in any way consider the tests developed by this Court in Wiebe Door, supra, which are, as Mr. Justice Létourneau stated in Le Livreur Plus, supra, at the very least useful guidelines in determining whether a contract is one of employment or for services. [39] In view of this finding, it becomes necessary for this Court to examine anew the evidence in this case in the light of the applicable tests. A. Ownership of work tools [40] On this point the evidence is clear: the respondent was the owner of all the work tools she needed to carry out her duties as the appellant’s representative. According to the agreements she had concluded with the appellant, the respondent had to bear the cost of her licence to practise as an insurer and the liability insurance policy she had to take out. In addition, she needed a vehicle and she bore all the relevant costs. [41] The appellant provided her with no office space and the respondent had to meet her customers at a location agreed upon between them. She also had to use her own stationery to fill the documentation required by the appellant. Although the sales equipment and business cards were prepared by the appellant on account of statutory and regulatory requirements regarding the sale of insurance, the respondent had to bear all or at least a significant part of the cost of this material. B. Chance of profit and risk of loss [42] As appears from the contracts signed by the respondent, she was entitled to receive payment of commissions on policies which she sold and renewed. The evidence showed that the commissions were larger in the case of a new policy than in the case of a renewed policy. It is thus clear that the respondent’s income largely depended on her success in selling new insurance policies. Therefore, in order to succeed, the respondent had to solicit new customers and persuade them that it was in their interests to take out a health or sickness insurance policy with the appellant. [43] It is clear from the testimony of Messrs. Rivest, Crevier and Saint-Laurent that a representative’s income was entirely dependent on the hours of work he or she put into selling insurance policies. In addition, though the evidence was that Mr. Saint-Laurent had personally guaranteed the respondent’s minimum commission of $400 weekly for her first eight weeks of work, the appellant paid its representatives no salary. [44] Since the respondent had to incur a great deal of expenses in order to earn her commissions, regardless of the success which she had in selling insurance policies, I am of the view that the respondent incurred all the risks of loss if she did not manage to sell a large enough number of new policies. C. Integration [45] Since the respondent worked as a representative of the appellant for only a short period of time (August 18, 2003 to January 16, 2004), the evidence clearly could not indicate to what extent she had developed her clientele so that it would constitute a business. [46] In addition, it is worth noting the testimony of Mr. Crevier, a self‑employed worker‑representative like the respondent, that after a difficult beginning he was able to develop and maintain an extensive clientele as a result of which he received a significant amount of commissions annually. Mr. Crevier testified (page 205 of transcript) that he received approximately $2,700 a month [TRANSLATION] “before starting work”, this amount representing commissions on insurance policies renewed each month. As to his income, Mr. Crevier explained that, of course, he had to cover all the expenses incurred in earning the income such as meals, fuel, maintenance of his vehicle, cellular telephone, stationery and so on. [47] Finally, according to the testimony of Messrs. Rivest, Crevier and Saint-Laurent, a representative of the appellant like the respondent was not required to work exclusively for the appellant, and therefore, could sell other insurance products than those of the appellant. Further, Mr. Rivest, now the appellant’s division manager, testified that although his representatives could sell insurance policies for other insurance companies he did not encourage them to do so [TRANSLATION] “just for financial reasons” (page 179 of transcript). [48] I therefore find that the respondent’s activities were not integrated with those of the appellant, in particular because her contract stipulated that she was not an exclusive representative of the appellant, that she could accordingly sell the products of other companies, and further, provided that she complied with statutory and regulatory requirements, she could be replaced by other representatives. [49] I conclude on this point by noting that once she had obtained her insurer’s licence the respondent could undoubtedly sell the insurance products of any insurer provided she was able to conclude an agreement with that insurer. D. Degree of control [50] As I mentioned earlier, the contracts signed by the respondent provided that she would act for the appellant as a self-employed worker and would have complete latitude in choosing the persons from whom she would solicit insurance proposals, as well as the times, locations and ways in which she would make such solicitations. Despite the fact that the respondent testified that she signed these contracts without reading them, it is clear from the testimony of Messrs. Fortin and Rivest that the terms of the contracts were explained to her before she signed them. [51] Although her contracts with the appellant expressly stipulated that she would act as an independent worker, the respondent maintained that this was not the actual state of affairs. After having carefully read all the testimony, there can be no doubt in my view that the respondent’s argument is based on her relationship with her district manager, Jean-Guy Saint-Laurent. In her testimony, the respondent told the Court that she [TRANSLATION] “was basically afraid of him” (page 50 of the transcript). [52] Before considering the specific reasons why the respondent argued that she was an employee and not a self-employed worker, it is worth noting there was no contractual relationship between the respondent and Mr. Saint-Laurent. Indeed, like the respondent, he had signed a contract with the appellant undertaking to work for it as a self-employed worker. Neither the respondent nor the Minister disputed Mr. Saint-Laurent’s status. It is also worth noting again that since Mr. Saint‑Laurent was entitled to receive a percentage of the premiums generated by sales made by the respondent he had a definite interest in the respondent’s being able to sell as large a number of insurance policies as possible. [53] The respondent argued that she was an employee because she was required daily to attend a morning meeting and a lunch meeting with Mr. Saint-Laurent and other representatives, she had to report to Mr. Saint-Laurent at the end of each day to inform him about her sales, she had to follow a work schedule (8 a.m. to 9 p.m.), she had to cover territory decided on in advance by Mr. Saint-Laurent, and finally, she was subject to penalties if she did not carry out Mr. Saint‑Laurent’s instructions. [54] In my view, the evidence provided no support for the respondent’s argument. E. Required presence at workplace and observance of work schedule [55] According to the respondent, she had without fail to meet with Mr. Saint-Laurent and other representatives every morning and during the lunch hour to discuss their sales techniques and receive maps regarding renewal of the appellant’s policies. In addition, she testified she had to work from 8 a.m. to 9 p.m.. [56] At the same time, she admitted that, except for her training period, neither her district manager nor her sales manager could really check her use of her time, since it was up to her to set meetings with customers and to attend those meetings. Therefore, Mr. Saint-Laurent did not know all her comings and goings. During her testimony the respondent even admitted that occasionally she did not tell Mr. Saint-Laurent the truth regarding the use of her time. [57] At the same time, Messrs. Rivest, Crevier and Saint-Laurent testified that there was no need to impose or dictate a fixed schedule for representatives, since it was impossible for them to build up clientele unless they worked long hours every day. In particular, according to Mr. Rivest, the appellant did not impose a fixed schedule or a minimum number of hours on its representatives. As to the morning “pep meetings”, he pointed that they were not in any way compulsory and no penalties were imposed on representatives who did not attend the meetings. [58] Mr. Crevier, also a representative of the appellant, further testified that no work schedule was imposed on representatives since, in his view, it would have been impossible to exercise such control. Mr. Crevier had worked with various district managers, including Mr. Saint‑Laurent, during his career and testified that he had derived great benefits from attending the morning and lunchtime meetings, especially at the start of his career, since he had been able to develop his sales techniques from the experience of other representatives. He also testified he had never considered such meetings as compulsory. He further testified that he had never thought that penalties could be applied for failing to attend meetings, but he nevertheless would notify his district manager when he was unable to attend, simply out of respect and courtesy for those attending the meetings. [59] Mr. Saint-Laurent testified that the meetings were not compulsory but it was beneficial for a new representative to attend them so as to have the advantage of the experience of other representatives. Mr. Saint-Laurent also admitted that he was entitled to a percentage of the premiums generated by his representatives’ sales, and he thus had a great interest in ensuring that they were fully motivated to sell policies. F. Control of absences for vacation [60] The respondent testified that she had taken no vacation during the period in question, but had taken several days’ leave on account of a difficult pregnancy, adding that she had to justify her absences to Mr. Saint-Laurent or Mr. Poulin, with supporting documentation. [61] Mr. Crevier testified, as he did in the case of absences from daily meetings, that no penalty was applied when he took vacations, but he always made sure to notify his district manager in due time that he would not be available for a certain period. In Mr. Crevier’s submission, no approval was necessary for him to take his vacations. G. Penalties [62] The respondent was unable to tell the Court what penalties could be imposed on her by Mr. Saint-Laurent if she did not meet his requirements. In particular, she admitted that despite the fact Mr. Saint-Laurent had told her he might send her to another team if her performance was not satisfactory, he had never threatened to terminate her contract. H. Imposition of work methods [63] The respondent testified that Mr. Saint-Laurent required that her work be done in accordance with specific instructions; in particular, she had to use certain approved phrases when meeting customers. In this regard, she added that during her period of training with the appellant, the latter provided her with material containing information on sales techniques developed by the appellant and Mr. Saint-Laurent insisted on her using those techniques when he accompanied her. At the same time, she admitted that since Mr. Saint-Laurent did not accompany her regularly he could not verify whether she was using the techniques. She further admitted that, when she was accompanied by Mr. Poulin, her sales manager, he did not require that the appellant’s sales techniques be used. [64] Mr. Rivest explained to the Court that, owing to the strict regulatory control of the field of insurance, the appellant had to ensure that its representatives complied with the requirements of the Act and Regulations in all respects. This is why the appellant gave its representatives complete training and provided them with detailed sales material which could be used by them when meeting customers. He also explained that by the compulsory 45-day training period, followed by a period of 30 days in which representatives were to be supervised while waiting for their insurer’s licence to be issued, the appellant had to ensure that its representatives complied with the Act and Regulations. [65] Mr. Rivest further testified that the appellant had developed sales techniques considered to be effective and made these techniques available to its representatives. At the same time, he added that since the appellant had no direct contact with its representatives it in fact had no means of verifying whether the techniques were actually being used by the representatives. In his opinion, the representatives were not required to necessarily adopt these techniques. On these points, Messrs. Crevier and Saint-Laurent agreed with Mr. Rivest’s view. I. Submission of activity reports [66] All the witnesses agreed that the respondent had to file a weekly written report listing renewed and new insurance policies. The respondent could not receive her commissions without submitting such a report, since the commissions were paid by the appellant to its representatives on the basis of these reports. J. Control of quantity and quality of work [67] The respondent testified that the appellant set no base objectives, but that she set weekly objectives herself and informed Mr. Saint-Laurent of them. She testified that if he was not satisfied with her performance Mr. Saint-Laurent could penalize her by assigning maps for policy renewal in a less productive geographic sector. [68] As to the customers she could solicit, the respondent testified that each week she received renewal maps from Mr. Saint-Laurent relating to customers located in a specific geographic sector. Therefore, she was limited to meeting customers in the sector assigned to her by Mr. Saint-Laurent. In her submission, she could not solicit customers outside that sector, except for family members or friends. [69] On this point, Mr. Rivest explained to the Court that for reasons of efficiency it was usual to arrange for representatives to limit their visits to certain specific sectors, but that the appellant did not make any attempt to prevent its representatives developing their clientele outside the sectors assigned to them. He further testified that the appellant advised its representatives not to solicit their families, in view of the possibilities of conflicts of interest, but apart from such considerations no limits were imposed on them as to who might be solicited. This testimony was consistent with that of Messrs. Crevier and Saint-Laurent, who considered that it was more efficient for representatives not to solicit customers in sectors covered by other representatives, and as a matter of courtesy representatives respected this arrangement. [70] The judge also referred to the control of the respondent’s work quality in support of his finding that the appellant exercised control over the respondent. At paragraph 19 of his decision, he wrote “it is the degree of control exercised over the quality of work that counts”. This was an error of law, as this Court’s case law is consistent on this point: control of the quality of work, like that of results, does not necessarily create a relationship of subordination. They also should not be confused with control of the performance of work: see Desbiens v. Attorney General of Canada, 2005 FCA 439, at paragraph 6. Conclusions [71] In my view, the classification given by the appellant and the respondent to their contractual relationship reflects the actual state of affairs. In other words, the actual state of affairs reflects the respondent’s undertaking, as set out in the contracts, to sell the appellant’s policies as an independent contractor. After a careful review of the evidence, I cannot, with all due respect for the judge, find that a relationship of subordination existed as to performance of the work which the respondent had to do for the appellant. [72] First, I am satisfied that the tests in Wiebe Door, supra, support the appellant’s argument, namely that the respondent was a self-employed worker. It appeared from the evidence that the respondent was the owner of the tools required to pursue her activities, that the perspectives of profit and risk of loss depended on the work put in by the respondent and that it is likely that if the respondent had worked as a representative for the appellant for a longer time she could have developed a significant number of customers. Therefore, it is warranted to find that during the period from August 2003 to January 2004 the respondent was working on developing her own business. Finally, the evidence was that the appellant exercised only a limited amount of control over the results of the respondent’s work, primarily to ensure compliance with statutory and regulatory requirements. [73] Secondly, I cannot agree with the Minister’s contention that Mr. Saint-Laurent exercised such a degree of control over the respondent as to create a relationship of subordination in the performance of her work. In my view, Mr. Saint-Laurent did not exercise over the respondent the control necessary to support a conclusion that a contract of employment existed. Rather, I find that, in view of his financial interest in the respondent selling as large a number of insurance policies as possible, Mr. Saint-Laurent did everything he could to motivate his representatives and make them more efficient. There can be no doubt that Mr. Saint-Laurent exerted considerable pressure on the respondent to encourage her to sell the appellant’s policies. [74] Nevertheless, it appears that Mr. Saint-Laurent’s directives were not binding on the respondent and that she was not required to follow them. Although Mr. Saint-Laurent had an interest in new representatives attending meetings and increasing their productivity on account of the percentages he received on their sales, there is no indication that he exercised any control over them through the application of penalties. [75] Thirdly, the fact that in her 2003 taxation year the respondent was regarded as a self‑employed worker and at that time deducted from her income the expenses she had incurred is in my view indicative of her understanding of the contracts she had concluded with the appellant. [76] I accordingly find that the respondent did not hold insurable employment with the appellant during the period from August 18, 2003 to January 16, 2004. Decision [77] For these reasons, I would allow the appeal with costs and set aside the decision by the Tax Court of Canada. Rendering the judgment which the Tax Court of Canada should have rendered, I would allow the appellant’s appeal with costs and, as authorized by subsection 103(3) of the Employment Insurance Act, S.C. c. 23, I would vary the Minister’s decision to find that the respondent Mélanie Drapeau was not an employee of the appellant for the period from August 18, 2003 to January 16, 2004. “M. Nadon” J.A. I concur. Gilles Létourneau J.A. I concur. J.D. Denis Pelletier J.A. Certified true translation François Brunet, LL.B., B.C.L. FEDERAL COURT OF APPEAL SOLICITORS OF RECORD DOCKET: A-469-05 STYLE OF CAUSE: Combined Insurance Co. of Canada v. The Minister of National Revenue and Mélanie Drapeau PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: December 14, 2006 REASONS FOR JUDGMENT BY: Nadon J.A. CONCURRED IN BY: Létourneau J.A. Pelletier J.A. DATED: January 30, 2007 APPEARANCES: Yves St-Cyr FOR THE APPELLANT Nathalie Goulard Sylvain Ouimet FOR THE RESPONDENT MINISTER OF NATIONAL REVENUE SOLICITORS OF RECORD: Ogilvy, Renault, S.E.N.C.R.L., s.r.l. Montréal, Quebec FOR THE APPELLANT John H. Sims, Q.C. Deputy Attorney General of Canada FOR THE RESPONDENT MINISTER OF NATIONAL REVENUE