Eurochem Dist. Inc. v. M.N.R.

Eurochem Dist. Inc. v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2006-05-03 Neutral citation 2006 TCC 267 File numbers 2005-1416(EI) Judges and Taxing Officers Lucie Lamarre Subjects Employment Insurance Act Decision Content Docket: 2005-1416(EI) BETWEEN: EUROCHEM DIST. INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. ____________________________________________________________________ Appeal heard on common evidence with the appeal of Christophe Steinle (2005-1417(EI)) on April 10, 2006, at Montreal, Quebec. Before: The Honourable Justice Lucie Lamarre Appearances: Agent for the Appellant: Anton Bertram Counsel for the Respondent: Vlad Zolia ____________________________________________________________________ JUDGMENT The appeal pursuant to subsection 103(1) of the Employment Insurance Act is dismissed and the decision of the Minister of National Revenue dated February 18, 2005, for the period from January 1, 2002, to December 31, 2002, is confirmed. Signed at Ottawa, Canada, this 3rd day of May 2006. "Lucie Lamarre" Lamarre J. Docket: 2005-1417(EI) BETWEEN: CHRISTOPHE STEINLE, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. ____________________________________________________________________ Appeal heard on common evidence with the appeal of Eurochem Dist. Inc. (2005-1416(EI)) on April 10, 2006, at Montreal, Quebec. Before: The Honourable Justice Lucie Lamarre Appearances: For the Appellant: The Appellant himself Counsel for the Respondent: Vlad Zolia ____________________________________________________________________ JUDGMENT The appeal pursuant to subsection 103(1) of the Employment Insurance Act is dismissed and the decision of the Minister of National Revenue dated February 18, 2005, for the period from January 1, 2002, to December 31, 2002, is confirmed. Signed at Ottawa, Canada, this 3rd day of May 2006. "Lucie Lamarre" Lamarre J. Citation: 2006TCC267 Date: 20060503 Docket: 2005-1416(EI) BETWEEN: EUROCHEM DIST. INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and 2005-1417(EI) CHRISTOPHE STEINLE, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. REASONS FOR JUDGMENT Lamarre J. [1] These are appeals from a decision by the Minister of National Revenue ("Minister") that Christophe Steinle (the "worker") held insurable employment while working for Eurochem Dist. Inc. ("Eurochem") during the period from January 1, 2002, to December 31, 2002. Both Eurochem and the worker disagreed with that decision. [2] The facts relied upon by the Minister that were admitted by the appellants are the following: a) the Appellant was formed in 1997 and operates a business involved in the sales and distribution of chemicals and dyes for the textile industry; b) the Appellant's head office is located at 31 Lafford St. in Kirkland QC and the company also has a distribution location in LaSalle QC; c) the Appellant retains the services of 3 full time salespersons: the Worker, Richard Steinle (Worker's father) and Anton Bertram; d) the Worker provided services to the Appellant from January 1, 2002 to December 31, 2002; e) the work contract between the Worker and the Appellant was verbal; f) the Worker was involved in the sales and distribution of the Appellant's products; . . . h) the Worker had to visit the Appellant's clients at their place of business during normal business hours to promote the Appellant's products; . . . m) the installations, office, equipment, furnishings and materials were provided by the Appellant; . . . q) the Worker was remunerated on a commission basis; he received a percentage of the total sales that he negotiated with the clients of the Appellant; r) in 2002, the Worker received $29,200 in commissions from the Appellant; s) the Worker was paid by cheque every two weeks. [3] Eurochem is owned by the wives of the two principal directors, Anton Bertram and Richard Steinle. The worker is the son of Richard Steinle. In hiring the worker, Richard Steinle's intent was to train him and eventually transfer the business to him. The worker acknowledged that he did not have any knowledge of the business's operations and that he learnt with his father. As a matter of fact, the worker does not work for Eurochem anymore. [4] Eurochem is a small family business and, according to Mr. Bertram, was not in a position to hire employees. There were only three people working at the distribution location (Anton Bertram, Richard Steinle and his son, the worker). The work was the same for everyone. The main tasks were developing clientele, making samples of new products for distribution to clients, obtaining from suppliers safety data sheets for the products, unloading the containers of imported products, clearing goods through customs, and looking after shipping and receiving of goods. The worker was asked to develop a new clientele in the Montrealarea. His father covered the Ontariomarket and Mr. Bertram was in charge of the Montrealmarket. [5] The worker said that, when he was hired by his father and Mr. Bertram, the understanding was that he would have to find new clients and that he would be paid by way of commission on sales to new clients. [6] It seems that, in fact, the worker was paid, every two weeks, a commission of 16.6 percent on his sales, and if he made no sales in any two-week period, he would still be paid a fixed amount. Richard Steinle testified that adjustments were made to subsequent payments to take into account such advances. The worker had previously testified that he was not paid if he did not make any sales in a given two-week period and that he was not given advances by Eurochem. He also said that he was not paid during his holidays. [7] Jocelyne Simard, an employment insurance agent working for the Canada Customs and Revenue Agency, was told during her audit that the worker's remuneration consisted of a guaranteed minimum salary that was paid even if he did not make any sales. She was also told that the worker received holiday pay and that he took holidays for a period of two weeks during the year and also had some days off at Christmastime. In addition, Eurochem paid for life and invalidity insurance for the worker. [8] The worker said he was working 25 to 30 hours per week but set his own work schedule. Ms. Simard was told during her audit that the worker had to be present at work five days a week. [9] The worker recognized in his testimony that he did not make any decisions for Eurochem. All the business decisions were taken by his father and Mr. Bertram. [10] The worker was selling the products selected by his father and Mr. Bertram and at the price fixed by them, they being the ones knowledgeable in the business. When he delivered products to clients, the worker was reimbursed for his gas expenses, but apparently not when he went to the airport to clear products through customs. [11] The worker testified that in 2002 he brought four or five new clients to the business, which, according to Mr. Bertram, already had a total of 35 clients. If a client did not pay its bill, the worker was not responsible; Eurochem was. The worker did not invest any money in Eurochem. He worked exclusively for that company. [12] Mr. Bertram testified that all three workers were paid commissions on sales varying from 10 to 16 percent, depending on the prices at which the products were sold. However, Exhibit I-1 shows that in 2002 the three workers were all paid 16.6 percent on their sales, for a total of $31,198 for Anton Bertram, $24,483 for Richard Steinle, and $29,200 for Christophe Steinle. [13] However, from that document (Exhibit I-1), prepared by Maureen Balasingham (Mr. Bertram's spouse), it appears that the worker, Christophe Steinle, could not have been paid only commissions on sales to new clients. Indeed, he said he had added four or five clients to the business, which, according to Mr. Bertram, was already serving 35 clients. The worker's commissions were almost equal to, if not higher than, those paid to Mr. Bertram and to Richard Steinle. It would appear therefore, that Ms. Simard was right in reporting that the worker was not only paid commissions on sales to new clients, but was guaranteed a minimum salary even if he did not make any sales. [14] The worker did not have signing authority for cheques drawn on Eurochem's account. Apart from his gas expenses, that were not fully reimbursed, the worker did not have to incur any expenses. [15] It is clear that in the province of Quebec the control exercised over a worker is the most important factor to take into account in determining whether he is working under a contract of service (see article 2085 of the Quebec Civil Code and 9041-6868 Québec Inc. c. Canada, 2005 CAF 334, [2005] A.C.F. no 1720 (QL). [16] That the worker had to be present at work every day (even though the schedule varied), that he went to his father or Mr. Bertram for any decision to be taken with respect to the kinds of products to be sold and with regard to pricing and that he was trained by his father are all factors that point to the exercise of control by Eurochem over the worker. If we add to this that the worker was paid a salary every two weeks (which, as we saw earlier, does not seem to have been based only on commissions from his sales), that he received holiday pay, that he was provided with all the necessary tools, that he was given life and invalidity insurance coverage and that he did not incur much risk, these are certainly other factors that point in the direction of an employer-employee relationship. [17] For these reasons, the appeals are dismissed. Signed at Ottawa, Canada, this 3rd day of May 2006. "Lucie Lamarre" Lamarre J. CITATION: 2006TCC267 COURT FILE NO.: 2005-1416(EI) and 2005-1417(EI) STYLE OF CAUSE: EUROCHEM DIST. INC. v. M.N.R. CHRISTOPHE STEINLE v. M.N.R. PLACE OF HEARING: Montreal, Quebec DATE OF HEARING: April 10, 2006 REASONS FOR JUDGMENT BY: The Honourable Justice Lucie Lamarre DATE OF JUDGMENT: May 3, 2006 APPEARANCES: Agent for the Appellant Eurochem: For the Appellant Christophe Steinle: Anton Bertram The Appellant himself Counsel for the Respondent: Vlad Zolia COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada