Stratégie Financière Impact Inc. v. M.N.R.

Stratégie Financière Impact Inc. v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-02-16 Neutral citation 2005 TCC 117 File numbers 2004-180(EI) Judges and Taxing Officers Sylvio J. Savoie Subjects Employment Insurance Act Decision Content Docket: 2004-180(EI) BETWEEN: STRATÉGIE FINANCIÈRE IMPACT INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and LISE LONGPRÉ, Intervener. [OFFICIAL ENGLISH TRANSLATION] Appeal heard on December 13, 2004, at Montréal, Quebec Before : The Honourable Deputy Judge S.J. Savoie Appearances: Agent for the Appellant: Alain Parent Counsel for the Respondent: Soleil Tremblay For the Intervener: The Intervener herself JUDGMENT The appeal is dismissed and the Minister's decision is confirmed in accordance with the attached Reasons for Judgment. Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005. "S.J. Savoie" Deputy Judge Savoie Certified true translation J. Poirier Citation: 2005TCC117 Date: 20050216 Docket: 2004-180(EI) BETWEEN: STRATÉGIE FINANCIÈRE IMPACT INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and LISE LONGPRÉ, Intervener. REASONS FOR JUDGMENT [OFFICIAL ENGLISH TRANSLATION] Deputy Judge Savoie [1] This appeal was heard at Montréal, Quebec, on December 13, 2004. [2] The issue is whether Lise Longpré held insurable employment from October 4, 2002, to May 9, 2003, when she was working for the appellant. [3] On November 14, 2003, the Minister of National Revenue ("the Minister") notified the appellant of his determination that the worker held insurable employment. [4] In making his decision, the Minister relied on the following assumptions of fact: (a) The appellant was incorporated on March 26, 1999; (admitted) (b) The appellant being the operator of a business that provided financial advice and sold group insurance and retirement compensation arrangements; (denied) (c) The appellant hired roughly ten salaried employees as well as representatives who were paid by commissions; (admitted) (d) The worker was hired to solicit new clients; (denied) (e) There was no written contract between the worker and the appellant; (admitted) (f) The worker's duties consisted of soliciting appointments for representatives over the telephone; (admitted) (g) The worker made appointments primarily for three representatives: Bruno Lachappelle, Marc St-Onge and Denise Bélanger; (denied) (h) The representatives provided the worker with lists of clients to solicit; (denied) (i) The worker had a script that she was required to use in soliciting clients; (denied) (j) During the first two months of the period, the worker worked from her home, and thereafter, she worked at the appellant's place of business; (denied) (k) The worker's schedule with the appellant was 8:30-9:00 a.m. to 4:30 p.m., 5 days a week; (denied) (l) The worker was to notify the appellant if she was to be absent; (denied) (m) The worker was paid $16 an hour and this hourly rate had been determined by the appellant; (denied) (n) The worker handed the appellant a record of hours worked; (admitted) (o) The worker was paid whether she obtained appointments or not; (admitted) (p) The worker was paid by cheque every 15 days; (denied) (q) Twice a month, the worker had to give reports to the appellant on the appointments that she obtained; (denied) (r) The appellant provided the worker with the office, the equipment and the work materials; (admitted) (s) The worker had no expenses to incur in her work; (no knowledge) (t) The worker assumed no financial risk; (no knowledge) (u) The worker's work was integrated into the appellant's activities; (admitted); and (v) The worker was laid off by the payor because she was not profitable to the payor. (denied) [5] The evidence has disclosed that the appellant operated a financial services firm. At the appellant's office, a group of five to six financial service advisors shared the services of a telephone solicitor, who solicited clients. This arrangement had proven profitable for the advisors therefore profitable for the appellant. Consequently, the appellant suggested that another group of advisors, specifically Marc St-Onge, Bruno Lachapelle and Denise Bélanger, hire a telephone solicitor to increase their sales. Since none of them wanted to take the risk, the appellant decided to serve as an intermediary and look after the worker's compensation. [6] It has been shown that the worker's exclusive task was to make appointments for three financial services advisors: Bruno Lachappelle, Marc St-Onge and Denise Bélanger. [7] Marc St-Onge and Bruno Lachapelle gave the worker the list of prospective customers that they obtained on the Internet. However, the worker could solicit her own customers. Denise Bélanger gave the worker the script that she was required to use in soliciting clients for the financial services advisors. [8] During the first two months of the period in issue, the worker sometimes worked from home. After that, she went to the appellant's place of business. [9] At the hearing, Alain Parent, the appellant's president, stated that the worker could not work from home at the beginning of her period of employment with the appellant because she had no training. However, in his statement to the appeals officer, he said that the worker worked from home and at the appellant's place of business. In addition, he specified in this statement that the worker was free to set her own hours and had no office hours to keep. He also stated that the appellant had no control over the hours she worked. [10] It has been established that the worker did not have to warn the appellant in the event of an absence, but she admits that she warned the receptionist as a courtesy. The worker was paid at a rate of $16 per hour, as agreed with the appellant. She was paid upon submission of invoices once the appellant accounted for her hours, but she was paid on an irregular basis in accordance with the invoices submitted. [11] Alain Parent, the appellant's president, testified that the appellant worked with self-employed persons, and that an arrangement had been made with the worker under which she would provide support for the advisors when soliciting. This, added Mr. Parent, made it easier for certain advisors who did not have the initiative to hire telephone solicitors. She also specified that the appellant assumed the costs associated with the worker's work, even if it had to bill the advisors later. The worker therefore solicited for several clients, including two financial security advisors who were the appellant's clients. Thus, the appellant acted as an intermediary between the worker and the financial security advisors who were the appellant's business' clients. [12] In his statement, Mr. Parent said that the contract negotiated with the worker provided for an hourly rate that was GST and QST-exempt. [13] It has been established that the worker was not familiar with the appellant's financial services, so she asked the appellant to refer her to training that would enable her to understand the appellant's field better. She was referred to a self-employed financial security advisor for such training, and the appellant paid for that training. The worker's duties were to phone company presidents to tell them about individual retirement compensation arrangements and then propose they make an appointment with an advisor. Her modus operandi for group insurance was the same. [14] In her statement to the appeals officer, the worker said she was hired as a self-employed worker but now considered herself an employee because she was paid on an hourly basis whether she obtained contracts or not. She also said that she worked as a full-time employee of Telus during a part of the period in issue, specifically until October 2002. She said that she worked approximately 40 to 50 hours a week, 35 of which were at Telus premises. She was paid strictly on commission, and since her duties with the appellant had just begun, she worked for Telus, but only on a part-time basis, and only until January 2003. She said she did this work for Telus from home in the evening and never billed the appellant for it. [15] In her letter of March 12, 2004 (Exhibit A-1), which was tendered at the hearing, the worker wrote that at the time she was hired, she was free to do her work at home or at the appellant's office. However, after her first week, the appellant told her that it would be preferable for her to work at its offices between 8:30 a.m. and 4:30 p.m. She added that she worked at the appellant's place of business because the appellant expressly asked her to, not because she chose to. Furthermore, she said she was always paid by cheques signed by Alain Parent, the appellant's president. The cheques were produced as Exhibit A-3 at the hearing. In her statement to the appeals officer, the worker said that she worked in the same office as Denise Bélanger and that her schedule was 8:30-9:00 to 4:30, five days a week. The worker admitted that she sometimes made certain phone calls from home in the morning if she had been unable to contact certain clients during normal office hours. [16] The worker submitted a time sheet to the appellant setting out the hours she worked at the office. She did not claim that time that she worked from home in the mornings. In her statement, she adds that Alain Parent's wife Eloise Lachappelle asked her at the beginning of her employment to provide reports on the telephone calls that she made and the appointments she obtained. She submitted these reports to Ms. Lachappelle periodically. It has been established that the appellant required the worker to perform the work personally. The worker added that Denise Bélanger, one of the appellant's advisers, gave her the script that she had to use when soliciting for the advisors. The worker said that the appellant paid $140 for her to take a computer course because it planned to have her do data entry. However, she claimed that she received no remuneration for the 30 hours required for this course. The worker also claimed that she used all the appellant's equipment and materials, except for the costs associated with her cellular phone, which was purchased because it was found that when clients called the appellant back, this increased the receptionist's workload. [17] The worker said that Mr. Parent laid her off and told her that her work was no longer profitable to his business. [18] The function of this Court is to decide whether the worker was in insurable employment. In carrying out this task, this Court must examine all the evidence before it, including certain evidence that deserves to be mentioned. Mr. Parent testified that the appellant periodically paid the worker upon submission of invoices, and then passed along the invoices to the advisors. However, Mr. Parent's statement to the appeals officer tends to confuse matters. For example, in his statement of October 20, 2003, he said that the worker's invoices were charged to the advisors that provided the client lists. However, in his statement of October 28, 2003, he specified that the appellant charged the representatives no fees for the services rendered by the worker. He later added that the three representatives and the appellant shared the costs of the worker's remuneration, particularly at the beginning of the worker's job. [19] However, at the hearing, the worker testified that the appellant paid her upon periodic submission of her invoices. This confirmed what she had told the appeals officer: she was paid by cheque every 15 days at a rate, determined by the appellant, of $16 per hour. With regard to the appellant's remuneration, it should be specified that Exhibit A-3, produced at the hearing, established that the worker received three cheques from the appellant totalling $4,032 for the period of October 18, 2002, to January 6, 2003. [20] For his part, Mr. Parent claimed in his testimony that the worker could not work from home at the beginning of the period in issue because she had no training. He also noted that he often found that the worker's office door at the appellant's place of business was closed, and that he had no idea what the worker might be doing. Later on, he stated that the worker was free to work from home or at the appellant's place of business, but added that the appellant provided her a room in which she could work. [21] During her testimony, the worker admitted that she had worked from home, but that the appellant told her that she would have to work at its place of business. [22] The Employment Insurance Act defines insurable employment as follows: 5.(1) Subject to subsection (2), insurable employment is (a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise; [23] A contract of service is a contract by which one party, the employee, agrees for a determinate or defined period, and on a full-time or part-time basis, to work for the other party. [24] A contract of enterprise (self-employment) is one by which a party agrees to perform very specific work, stipulated in the contract, for another party. [25] It is well settled that four basic elements distinguish a contract of service from a contract of enterprise (self-employment): (a) ownership of tools; (b) chance of profit or risk of loss; (c) degree to of integration of the employee's work into the employee's business; and d) degree or absence of control exercised by the employer. [26] In Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, (C.A.), the Federal Court of Appeal stated as follows: [TRANSLATION] In order properly to distinguish a contract of lease and hire of services from a contract of enterprise, one must examine the whole of the various elements which constitute the relationship between the parties. [27] In his submissions at the hearing, the Minister relied on 2966743 Canada Inc. (Promotion Contact) v. Canada (Minister of National Revenue - M.N.R.), [2002] T.C.J. No. 501 in support of his position. The facts of that case are very similar to those in the case at bar. The following are some excerpts. [TRANSLATION] 1. The Appellant operated a business that sells advertising on restaurant place mats; 2. The Appellant hired the Worker to perform telephone solicitation; 3. The Worker's duties consisted of contacting businesses located in the vicinity of the client's place of business and offering them the opportunity to have their name and logo appear on place mats; 4. The Worker performed her duties at the Appellant's office; 5. The Worker had a flexible schedule; however, she normally worked Monday to Friday from 9:30 a.m. to 4:30 p.m.; 6. The Worker received a list of clients to solicit on behalf of the Appellant; 7. The Worker was under the Appellant's constant control; 8. The Appellant provided a closed office, including office furniture and a telephone; 9. The Appellant provided all of the equipment that the Worker required; 10. The Worker assumed no risk of financial loss; 11. The Worker's duties were integrated into the Appellant's activities; 12. The Workers signed a contract entitled [TRANSLATION] "SELF EMPLOYED SALESPERSON/COLLECTOR," which reads as follows: [TRANSLATION] I, the undersigned, declare that I am a self employed salesperson or collector and consequently, I request that no deduction be made from my commission. 13. Regular employees worked from 8:30 a.m. to 4:30 p.m., Monday to Friday. However, the Workers/solicitors had a flexible work schedule and they worked as they wished. 14. According to Marcel Côté, the workers were paid a sales commission of 20%. 15. He claims that the Appellant assumed the costs associated with the use of the offices by the Workers/solicitors. 16. Merchants that purchased advertising paid the Appellant, which in turn, paid the commission to the Workers. 17. She [the Worker] worked at the Appellant's offices by choice. 18. She [the worker] states that she agreed to work as a self-employed worker. 19. The evidence disclosed that Mr. Côté gave the Worker instructions and a list of merchants to call. [28] In view of the facts partially listed above, Judge Somers, of this Court, held that the workers held insurable employment under the circumstances. [29] Let us now examine the facts under review in light of the tests established in Wiebe Door,supra. 1. Ownership of tools [30] For most of the period, the worker provided services at the place of business in which she used the appellant's equipment and materials, except for her cell phone, which she purchased, though she was compelled to do so because the calls she received at the appellant's place of business resulted in an excessive workload for the appellant's receptionist. 2. Control [31] The courts have established that the degree of control that the beneficiary of services exercises over the work done by the person who provides them remains the essential factor in determining whether a relationship of subordination - the hallmark of an employment contract - exists. This degree of control varies depending on the circumstances, and often depends on the nature of the work to be performed and the worker's expertise. The worker in the case at bar solicited over the phone using lists of potential clients that she got from financial services advisors who had an agreement with the appellant. In soliciting these prospective clients, she was to use a specific script that an advisor who worked at the appellant's place of business provided her. She was to submit reports periodically regarding the appointments she obtained. The appellant required the worker to provide her services at its place of business for training and for profitability reasons. At the beginning of her employment, the worker benefited from a flexible schedule because the appellant allowed it, and as soon as the appellant asked that she work at its place of business in accordance with its business hours, she acceded to the request. Mr. Parent, who spoke on the appellant's behalf, admitted that its revenues came from the commissions that advisors remitted on the sales they made with the help of the worker, who got them some of their customers through her solicitation work. Thus, whether the work was given to her directly by the appellant, or by an independent advisor with whom the appellant had signed an agreement, has no bearing on the fact that she was working for the appellant. Indeed, she was hired by the appellant to render services in the appellant's premises and she was paid by the appellant. It was established that the worker was under the supervision of Ms. Bélanger and the other advisors in her training and her work. She submitted a sheet, which confirmed the appointments she obtained for the advisors and her total hours, to Ms. Lachapelle, the appellant's director. 3. Chances of profit and risk of loss [32] It was established that the appellant defrayed all operating costs, whereas the appellant had no expenses to incur in the performance of her duties. She was paid at an hourly rate that was not in any way limited by the number of customers her solicitation might produce. The manner in which the worker was paid was unrelated to the profits that the business generated. Thus, the worker had no risk of loss and no chance of financial gain. 4. Integration [33] The worker did work for the appellant's clients, not her own. Her work was integrated into the appellant's business activities. She worked for the appellant's benefit and could not have subsisted without the appellant. She was employed by the appellant, which required her to perform the work personally, and she would not have been able to have someone of her choosing replace her. The question of whom the business belonged to can only be answered in one way: it was the appellant's business, not the worker's. [34] The evidence showed that the appellant had some control over the worker's work. The appellant did claim that the worker had freedom over her work and that, in several respects, the appellant had no knowledge of what the worker was doing. However, as we have established, the control exercised by the appellant was real and constant. In Gallant v. M.R.N., [1986] F.C.J. No. 330 (C.A.), Pratte J.A. of the Federal Court of Appeal held as follows: . . . The distinguishing feature of a contract of service is not the control actually exercised by the employer over his employee but the power the employer has to control the way the employee performs his duties. If this rule is applied to the circumstances of the case at bar, it is quite clear that the applicant was an employee and not a contractor. [35] In fact, it has been shown that the worker was hired and paid by the appellant and that the appellant laid her off and terminated her period of employment. [36] It has been established that the appellant intended to establish a relationship with the worker that differed from an employer-employee relationship. The evidence even disclosed that the parties thought they had shown the worker was self-employed. Given this context, it is appropriate to cite the decision in Standing v. Canada(Minister of National Revenue - M.N.R.), [1992] F.C.J. No. 890, where the Federal Court of Appeal stated as follows: . . . There is no foundation in the case law for the proposition that such a relationship may exist merely because the parties choose to describe it to be so regardless of the surrounding circumstances when weighed in the light of the Wiebe Door test. [37] The evidence in the instant case showed that there was a relationship of subordination between the appellant and the worker. [38] An analysis of the evidence in light of the tests set out above leads me to the conclusion that the worker's terms and conditions of employment were more like those of a worker within the employer's business. Consequently, this Court finds that the worker held insurable employment within the meaning of the Act. [39] Accordingly, the appeal is dismissed and the decision of the Minister is confirmed. Signed at Grand-Barachois, New Brunswick, this 16th day of February 2005. "S.J. Savoie" Deputy Judge Savoie Certified true translation J. Poirier CITATION: 2005TCC117 COURT FILE NO.: 2004-180(EI) STYLE OF CAUSE: Stratégie Financière Impact Inc. and the M.N.R. and Lise Longpré PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: December 13, 2004 REASONS FOR JUDGMENT BY: The Honourable S.J. Savoie, Deputy Judge DATE OF JUDGMENT: February 16, 2005 APPEARANCES: For the Appellant: Alain Parent For the Respondent: Soleil Tremblay For the Intervener: The Intervener herself COUNSEL OF RECORD: For the Appellant Name: Firm: For the Respondent John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada For the Intervener: Name: Firm: