Poulin v. Canada (Minister of National Revenue)

Poulin v. Canada (Minister of National Revenue) Court (s) Database Federal Court of Appeal Decisions Date 2003-01-30 Neutral citation 2003 FCA 50 File numbers A-526-01 Decision Content Date: 20030130 Docket: A-526-01 Ottawa, Ontario, January 30, 2003 CORAM: RICHARD C.J. LÉTOURNEAU J.A. NADON J.A. BETWEEN: DANIEL POULIN Applicant and THE MINISTER OF NATIONAL REVENUE Respondent JUDGMENT The application for judicial review is allowed with costs in this Court and the Tax Court of Canada, the decision of the Tax Court of Canada is set aside and the matter is referred back to that Court for redetermination on the basis that the applicant's appeal from the assessment by the Minister of National Revenue for 1999 shall be allowed and the assessment referred to the Minister for reexamination and reassessment, taking these reasons into account. "J. Richard" Chief Justice Certified true translation Suzanne M. Gauthier, C. Tr., LL.L. Date: 20030130 Docket: A-526-01 Neutral Citation: 2003 FCA 50 CORAM: RICHARD C.J. LÉTOURNEAU J.A. NADON J.A. BETWEEN: DANIEL POULIN Applicant and THE MINISTER OF NATIONAL REVENUE Respondent Hearing held at Ottawa, Ontario, January 15, 2003. Judgment delivered at Ottawa, Ontario, January 30, 2003. REASONS FOR JUDGMENT: LÉTOURNEAU J.A. CONCURRING: RICHARD C.J. NADON J.A. Date: 20030130 Docket: A-526-01 Neutral Citation: 2003 FCA 50 CORAM: RICHARD C.J. LÉTOURNEAU J.A. NADON J.A. BETWEEN: DANIEL POULIN Applicant and THE MINISTER OF NATIONAL REVENUE Respondent REASONS FOR JUDGMENT LÉTOURNEAU J.A. [1] This is an application for judicial review of a decision of the Tax Court of Canada in which the Court upheld the determination by the Minister of National Revenue that the following three workers, Mr. Piersotte, Ms. Joseph and Ms. Paquette, were employees of the applicant within the meaning of the Employment Insurance Act, S.C. 1996, c. 11 (the Act), and hence that the three held insurable employment. The applicant asks that we overrule this conclusion. Before addressing the issues, I think it is necessary to establish the particular and disturbing context in which these proceedings originated and have followed their present course. The particular and disturbing context of these proceedings [2] The applicant, Mr. Poulin, on November 29, 1991, was a victim in a terrible tragedy that shattered his entire life: he was rendered quadriplegic as a result of an automobile accident in the Parc des Laurentides, north of Quebec City. The source of his paralysis is a lesion in his spinal cord. He became permanently confined to a wheelchair. He cannot attend to his needs, even the most essential ones. Three or four times a day, he must undergo a urinary catheterization through a probe to empty his bladder. He must use urinary condoms. Rectal touches are needed to make his intestines work. He needs assistance for things as elementary as his personal bathing, i.e. shaving, showering, oral hygiene, preparation of meals, going to bed, travel, etc. Someone must undress him and accompany him in the shower when he bathes. He suffers painful spasms that necessitate taking drugs at fixed and regular times. In short, his dependence on some normal services, even the most primary albeit essential, is total. The situation is pathetic and heart-breaking. Nevertheless, his employer, the Canadian Museum of Civilization, managed to arrange for him half-day employment adapted to and necessitated by his physical condition, as a tourist guide or information officer. This was not at all comparable to the responsibilities he had previously had in personnel, funds and stocks: see the applicant's testimony, Applicant's Record, pages 35 and 51-52. [3] Following his unfortunate accident, the applicant received from the Société d'assurance automobile du Québec (SAAQ) an allowance for loss of salary and compensation for medical and other care necessitated by his physical condition. This care was provided at home. But for the period at issue, the year 1999 and the previous years, the SAAQ was unwilling to manage the recruitment of necessary staff or replacements in case of absence, or to be responsible for negotiating the cost of the services owing to the applicant. Like private enterprise, it prefers to leave this task to the victims, whom it reimburses upon production of supporting documentation, in this case up to $614 per week. Needless to say, this was a significant burden for the applicant given his physical condition and the resulting state of immobility, particularly when a recipient is unfamiliar with health care and attendant services. Conversely, the SAAQ avoids some major costs entailed both in the efforts made to obtain such services and in their administrative management. The parties informed us at the hearing that the SAAQ now handles the management of these services and is no longer simply content to reimburse the recipient his costs: it pays the workers directly and ensures stabilization in terms of services. [4] A reading of the transcript of the testimony at the Tax Court of Canada hearing discloses that at the time the case was tried, in 2001, at least five different persons, not counting the staff of agencies and Local Community Service Centres (LCSCs), were providing services to the applicant. The latter's counsel informed us that the applicant was sued in the Court of Québec for the year 1998, the government authorities alleging that he had 11 persons in his employ. For the year 1999, which is in dispute here, the Minister found that the applicant was the employer of three persons: Mr. Piersotte, a personal care attendant; Ms. Joseph, a personal care attendant and nursing assistant; and Ms. Paquette, a visiting homemaker performing primarily but not exclusively various household duties. [5] A determination that these persons are employees of the applicant has serious consequences for him. In the context of the Act as it now stands, it means that the applicant must pay his share of the employment insurance premiums and collect those of the employees. It may also mean, under other legislation applicable to employment, that he must also pay his share of the other social program charges such as contributions to the Quebec Pension Plan and the Canada Pension Plan. As an employer, the applicant must collect and remit to both the federal and provincial governments his employees' contribution to these charges as well as the income taxes owing to the two governments. Should he fail to do so, he is personally liable for these sums: see Canada v. Corsano, [1999] 3 F.C. 173, leave to appeal to the SCC refused, April 10, 2000. [6] Two further considerations are important and are worth mentioning in order to clarify the context in which this litigation is situated. First, cases such as that of the applicant, while apparently rare and exceptional, may well become much more common. With the shift to ambulatory care now underway in Quebec, where patients are increasingly required to be cared for at home and be reimbursed the costs of such care, will these beneficiaries be considered employers of these service providers and required to defend themselves, like the applicant in this case? [7] Second, the Act, unlike the old Unemployment Insurance Act, increases the number of insurable employments. Under the old Act, an employment, to be insurable, had to include a minimum of 15 hours per week. Under the new Act, each hour worked by a person may be counted for the purpose of meeting the eligibility criteria, which are now expressed in terms of hours worked. In the context of a large increase in short-term, part-time jobs, several of them performed by the same individual, I am not certain that the tests for determining the insurable nature of a job, as laid down in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553 (F.C.A.), will not have to be overhauled to reflect this new reality. [8] After this lengthy preamble situating the present proceedings, I shall now turn to the major findings of the Tax Court of Canada and the reasoning behind them. Decision of the Tax Court of Canada [9] The Tax Court of Canada, as mentioned earlier, upheld the Minister's determination that the jobs performed by the three individuals who were providing services to the applicant were insurable employments for the year 1999. It dismissed the applicant's appeal. [10] The essence of the Tax Court of Canada decision is found in the following four paragraphs: [24] This Court's decisions in Grenon (supra) and Jeannine R. Houle v. M.R.N., another April 27, 2001 decision, also have to do with persons with disabilities who need assistance. Each of these decisions requires that there be a relationship of subordination between the person with the disability and the person hired to perform certain duties according to a set schedule and for a set rate of pay. [25] Also, in the present case, the description of the duties and the conditions of their performance do not tend to indicate that the workers are in business. Although the workers stated at the hearing that it was not they who requested insurability, it must be noted that they did not contest the decision of insurability once it was made. Not that my decision would have been any different had they done so, but the fact that they did not do so is an indication that these workers did not consider themselves to be in business, but rather thought of themselves as being in an employment situation. [26] The appellant exercises control over the workers. The workers have duties to perform that are determined by the appellant, and they must perform those duties themselves. Their schedule is set by the appellant for long periods at a time. It is normal for the appellant to hire persons who know how to perform the duties in question and provide the required assistance. That does not make them self-employed workers. We all know that most persons with diplomas are employees, not self-employed workers. It is the appellant who provides the equipment required for giving the assistance, even though he is reimbursed for the cost of the equipment by the SAAQ; the workers do not provide the equipment. [27] ... [28] On May 7, 1992, in Attikamek-Montagnais Council v. Canada (Minister of National Revenue), [1992] T.C.J. No. 271, I rendered a decision along the same lines on a similar subject. My decision in Insurance Corporation of British Columbia v. Canada (Minister of National Revenue), [2000] T.C.J. No. 151 (Q.L.), although on a different point, also had to do with an employee of a person who had had an accident. The case law cited and the case law I have referred to is consistent. According to that case law, the attendants of accident victims, of persons with disabilities, and of persons unable to live independently, who work under conditions similar to those of the appellant's attendants, are employees. [Emphasis added] Analysis of the decision [11] In his letter to each of the three individuals who were providing services to the applicant, the Minister cited, as a decisive factor in concluding that this was insurable employment, the control that he alleges the applicant exercised over the three attendants. He inferred this control from the fact that: (a) the applicant established the hours of work; (b) the workers had to provide the services personally; (c) the workers had to follow instructions as to the work to be performed and the method to be used; and (d) the workers did not need to provide the equipment or materials required for the performance of the work. The Tax Court of Canada also cited the notion of control and justified its conclusion by referring with approval to the facts relied on by the Minister. It concluded as well that there was a quasi-automatic relationship of subordination between a person with disabilities and the person recruited to perform certain duties, owing to the fact that these duties are carried out according to a given schedule and compensation. The court also cited as notorious and indisputable a fact of which it subsequently took judicial notice, as an additional justification: that most persons with diplomas are employees. Finally, the court relied on its own case law in deciding that attendants "of accident victims, of persons with disabilities, and of persons unable to live independently", who provide services under conditions similar to those of the appellant's attendants, are employees. [12] With respect, I think the legal nature of the relationship between the applicant and the three workers providing services to him has been misunderstood. This misunderstanding stems from a misapplication of some of the tests in the Wiebe Door Services Ltd. case, supra, and a failure to pay sufficient attention to the intention of the parties in the determination of the overall relationship they have to each other: 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, at paragraphs 46 and 47. I will begin my remarks with the test of control and the subordinate relationship cited by the Tax Court of Canada. (a) existence of control and a relationship of subordination [13] The issue under this test is whether, based on the evidence as a whole, there is control on the one hand, i.e. the applicant, and subordination on the other, the workers: Wolf v. Her Majesty the Queen, A-563-00, Neutral Citation 2002 FCA 96, March 15, 2002, para. 117 (per Décary J.A.). Technically, the two notions define an important element in the contract of employment, as opposed to the contract for services. Article 2085 of the Civil Code of Québec, which determines the applicable law in this case since the contract must be interpreted in accordance with the laws of the province of Quebec (see Federal Law - Civil Law Harmonization Act No. 1, S.C. 2001, c. 4), states: 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. [14] Conversely, the contract for services or of enterprise does not involve any relationship of subordination in respect of performance and the provider of services is free to choose the means of performing the contract: article 2099 of the Civil Code of Québec. The provider who operates a business or simply provides some services does so on his own account. [15] What must be retained from these definitions of the two contracts is that the notion of control is important to the legal determination of the nature of the relationship between the parties. However, this notion of control is not always conclusive in itself, notwithstanding the importance it must be given. As our colleague, Madam Justice Desjardins, said in Wolf, supra, at paragraph 76, "While the control test is the traditional civil law criterion of employment, it is often inadequate because of the increased specialization of the workforce": see also Wiebe Door Services Ltd., supra, at pages 558-59, where our colleague, Mr. Justice MacGuigan, states that the test has broken down completely in relation to highly skilled and professional workers, who possess skills far beyond the ability of their employers to direct. [16] Furthermore, the notion of control is not necessarily lacking in the contract for service. It is generally apparent, albeit to varying degrees, as it is somewhat in the contract of employment, and sometimes to a surprising extent without necessarily distorting its nature as a contract of enterprise. For example, control in regard to the premises in general and the specific places in which the work is to be performed is exercised over general contractors and their subcontractors. The latter are also given specific instructions as to the materials and the drawings and specifications with which they must comply. Often the times and work schedules of some in relation to others are also controlled and determined to ensure the effective and harmonious operation of the construction site. The work performed by contract for services is also subject to some performance, productivity and quality controls. [17] In the case at bar, Ms. Joseph provided the applicant with nursing care commensurate with her profession and its practices, without the applicant actually having any control in this regard. The care and drugs were prescribed by the physician and necessitated by the applicant's medical condition. The medical services thus rendered could have been delivered under either a contract for services or a contract of employment without the applicant really having much input, still less control, in either case. [18] As to the services supplied by the care attendants and visiting homemaker, they too may be rendered equally under a contract for services or a contract of employment. The very nature of these services means that the notion of control is not decisive. For example, if the applicant describes her duties to the visiting homemaker and indicates to her, down to the smallest detail, the household tasks she is to perform, this does not transform a clear-cut contract of enterprise that she holds into a contract of employment. As it happens, Ms. Paquette, the visiting homemaker, was employed by the agency Remue-Ménage de Gatineau, which provided this kind of services. It is true that the applicant was able to retain her services part time (every second weekend) without going through the agency in order to keep the cost of the services at a level corresponding to his limited ability to pay. However, I fail to see how that alters the nature of the relationship between the applicant and her. [19] Finally, the fact that the duties performed were performed according to a schedule and with payment by the hour does not necessary lead, as the Tax Court of Canada apparently thought, to the existence of a relationship of subordination between the parties. It is not uncommon for contractors, for example in plumbing, heating or electricity, to work and invoice according to established hourly rates, and, as in the case of employees, increased rates on holidays. Likewise, it is not uncommon for a client to determine the times at which the services are to be provided by the contractor he has hired. [20] The respondent also made much of the fact that the workers had to render the services personally. I agree with Madam Justice Desjardins that the fact that a person cannot delegate his labour to someone does not necessarily mean that this person is an employee: Wolf v. Her Majesty the Queen, supra, at paragraph 80. Similarly, the fact that the person providing the services holds a diploma is not proof of employee status. It is necessary to examine the facts and the circumstances surrounding the provision of services: each case is sui generis. [21] It is not hard to understand why, in this case, the applicant was insistent that the highly intimate and personalized medical care necessitated by his state of health be provided by the nurse with whom he had contracted and in whom he had confidence. The same comment applies to many of the services rendered by the care attendants and the visiting homemaker as a result of the applicant's neurological difficulties. The record discloses that these two workers attended to the applicant's person and his residential premises: see Applicant's Record, transcript of testimony, pages 52 and 108-09. The difficult physical condition in which the applicant found himself did not deprive him of his rights to human dignity and privacy and to his expectations in that regard. [22] In short, I think that on the facts of this case the notions of control and relationship of subordination are at best neutral, at worst misleading. They are not terribly useful in determining the nature of the agreement between the parties. (b) ownership of the tools needed for the performance of the work [23] The Tax Court of Canada concluded that the applicant supplied the equipment needed for the care he needed, but that he was subsequently reimbursed by the SAAQ. It interpreted this as an indicator of a contract of employment between the applicant and the workers. [24] Once again, I do not think that in this case much weight can be accorded to this factor, given the nature of the services rendered, the needs served and the few work instruments used. Furthermore, ownership and supply of equipment must not be confused with ownership and supply of work instruments. In short, it is necessary to avoid confusing work materials and work instruments. What homeowner has not purchased materials in order, for example, to renovate a bathroom, build or rebuild a patio, and subsequently hired the services of a contractor, through a contract for services, to have the latter do the erection and installation of the materials acquired thereby using his own work tools? The fact that the applicant owns the drugs he swallows, the urinary condoms he wears, the catheters he uses, the waterproof covers on his bed to protect against leaks, etc. and that he supplies these materials to the workers who install them does not make him an employer. These are not work instruments, but materials necessitated by the work. The installation of these materials and the administration of the drugs, like most of the services rendered to the applicant, for all practical purposes do not require any work instruments. [25] Much was made of the fact that the applicant supplied his own automobile for his trips, until it was destroyed by fire. The reason is quite simple: his car was adapted for transportation of persons with disabilities, while those of the workers were not, so he was unable, in any meaningful sense, to get in and out of them. To the degree that the automobile used in such circumstances could be considered a work instrument necessary to the performance of the work, one fact remains: the situation was the same whether the care attendant driving the automobile or the nursing assistant who provided the health care came from the LCSC or an agency hired for these purposes under a contract for services. (c) chances of profit and risks of loss [26] This test is of no use in the case at bar. Had the services been rendered by an agency under a contract for services, the risks of losses and the chances of profits would have been no different than they were for the three workers in question. [27] In conclusion, the tests developed by the courts to differentiate a contract of employment from a contract for services prove to be of little use in the particular context of this case. The services rendered to the applicant during 1999 and the conditions in which they were rendered reveal a supply of services that is as compatible with one resulting from a contract for services or of enterprise as it is with one emanating from a contract of employment. That being said, as our colleague Mr. Justice Décary noted in Wolf, supra, at paragraph 117, these tests are simply factors to be considered in the determination of what "is the essence of a contractual relationship, i.e. the intention of the parties". And as he also says, "one ends up in the final analysis, in civil law as well as in common law, looking into the terms of the relevant agreements and circumstances to find the true contractual reality of the parties": ibid., at para. 113. [28] This leads me to examine the intention of the parties, in order to determine the overall relationship that they wished to maintain between themselves. (d) intention of the parties [29] There is not, in this case, as is often the case in similar matters, any written agreement; this obviously makes the search for intention more difficult but not necessarily impossible. [30] Given the applicant's physical condition and the consequences that result from employer status, I do not think it is reasonable to infer that the applicant intended to enter into a contract of employment with the three workers that would make him their employer. I suspect that this hypothesis did not even cross his mind, persuaded as he must have been that he had retained the services of self-employed workers in regard to whom his only obligation was to pay the agreed price for the services. Moreover, as the applicant was aware, Ms. Paquette, the visiting homemaker, was already working full-time for an agency and provided services to the applicant only on every second weekend: Applicant's Record, pages 107 and 135. Furthermore, it should not be overlooked that, from the applicant's perspective, all of the services received were services provided by the SAAQ, which was the payer. [31] As for the workers, there is no indication whatever that they considered the applicant to be their employer. The Tax Court of Canada noted that these workers were not opposed to having their employment declared insurable employment, inferring from this that they considered themselves employees. But the three workers testified at the hearing of the assessment appeal filed by the applicant and none of them stated that he or she considered themselves employees of the applicant. Equally significant, perhaps, and indicative of their intention at the time when the agreement was entered into with the applicant, is the fact that these three workers never complained to the Minister about the insurability of their job and never asked that it be declared an insurable employment: they considered themselves self-employed workers and thought that it was in that capacity that they had dealt with the applicant. [32] There is one objective item on the record that might, prima facie, tend to demonstrate the existence of a contract of employment with two of the three workers: the applicant paid vacation pay to Mr. Piersotte, the personal care attendant and Ms. Joseph, a personal care attendant and nursing assistant. Given the severity of the applicant's handicap and the essential, recurrent and day-to-day nature of his needs and consequently the services rendered by these two workers, it was impossible for them to take vacations. The payment of a bonus or some compensation in the form of vacation pay is understandable in such circumstances. The situation is not unlike the one that existed in the Wolf case, supra, in which vacation pay was paid to the consultant because he did not have time for vacations throughout the duration of the contract. This fact did not prevent his contract from being interpreted as a contract for services or of enterprise. Conclusion [33] I am persuaded that during the period at issue, 1999, the applicant was not the employer of the three workers who provided services to him and that the legal relationship between him and these workers was in the nature of a contract for services. [34] For these reasons, I am of the opinion that the application for judicial review should be allowed with costs in this Court and the Tax Court of Canada, the decision of the Tax Court of Canada should be set aside and the matter referred back to that Court for redetermination on the basis that the applicant's appeal from the assessment by the Minister of National Revenue for 1999 shall be allowed and the assessment referred to the Minister for reexamination and reassessment, taking these reasons into account. "Gilles Létourneau" Judge "I concur J. Richard C.J." "I concur M. Nadon J.A." Certified true translation Suzanne M. Gauthier, C. Tr., LL.L. FEDERAL COURT OF CANADA APPEAL DIVISION NAMES OF COUNSEL AND SOLICITORS OF RECORD FILE NO: A-526-01 STYLE: DANIEL POULIN v. THE MINISTER OF NATIONAL REVENUE PLACE OF HEARING: OTTAWA DATE OF HEARING: January 15, 2003 REASONS FOR JUDGMENT: LÉTOURNEAU J.A. CONCURRING: RICHARD C.J. NADON J.A. DATE OF REASONS: January 30, 2003 APPEARANCES: Chantal Donaldson FOR THE APPLICANT Gatien Fournier FOR THE RESPONDENT SOLICITORS OF RECORD: Leblanc, Dioguardi FOR THE APPLICANT Hull, Quebec Morris Rosenberg FOR THE RESPONDENT Deputy Attorney General of Canada