Université de Montréal v. M.N.R.

Université de Montréal v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-08-09 Neutral citation 2005 TCC 499 File numbers 2004-2494(EI) Judges and Taxing Officers Louise Lamarre Proulx Subjects Employment Insurance Act Decision Content Docket: 2004-2494(EI) BETWEEN: UNIVERSITÉ DE MONTRÉAL, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and LOUIS JETTÉ, Intervener. [OFFICIAL ENGLISH TRANSLATION] ____________________________________________________________________ Appeal heard on June 23, 2005, at Montréal, Quebec Before: The Honourable Justice Louise Lamarre Proulx Appearances: Counsel for the Appellant: Michel E. Taillefer Counsel for the Respondent: Mounes Ayadi For the Intervener: The Intervener himself ____________________________________________________________________ JUDGMENT The appeal under the Employment Insurance Act concerning the decision of the Minister of National Revenue dated December 16, 2003, is allowed, and the Minister's decision is vacated in accordance with the attached Reasons for Judgment. The intervention is accordingly dismissed. Signed at Ottawa, Canada, this 9th day of August 2005. "Louise Lamarre Proulx" Lamarre Proulx J. Translation certified true on this 14th day of February, 2006. Garth McLeod, Translator Citation: 2005TCC499 Date: 20050809 Docket: 2004-2494(EI) BETWEEN: UNIVERSITÉ DE MONTRÉAL, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and LOUIS JETTÉ, Intervener. [OFFICIAL ENGLISH TRANSLATION] REASONS FOR JUDGMENT Lamarre Proulx J. [1] This appeal and intervention pertain to a decision of the Minister of National Revenue ("the Minister") dated December 16, 2003. [2] The second and fourth paragraphs of the decision read as follows: [TRANSLATION] . . . It has been determined that his employment was insurable for the following reason: Employment as an apprentice or trainee is included in insurable employment. Consequently, Université de Montréal is deemed to be his employer for the purposes of paying, withholding and remitting the required Employment Insurance premiums. It has been determined that the insurable earnings were $14,000 and that there were 1,400 insurable hours during the period of employment in issue. . . . The decision in this letter has been made pursuant to subsection 93(3) of the Employment Insurance Act, paragraph 6(b) of the Employment Insurance Regulations, section 10 and subsection 2(1) of the Insurable Earnings and Collection of Premiums Regulations and section 9.1 of the Employment Insurance Regulations. . . . [3] The Université de Montréal appealed from this decision. The Notice of Appeal was filed on July 29, 2004. [4] In his Notice of Intervention, filed on September 17, 2004, the Intervener states that the Appellant filed its Notice of Appeal late. He therefore contests the validity of the appeal. [5] I will address this ground immediately. On June 2, 2004, the Appellant made a timely application under subsection 103(1) of the Employment Insurance Act for an order extending the time for filing an appeal. The order granting this extension is dated July 29, 2005. The documents are public documents and can be consulted at the Registry of this Court. [6] The Appellant's appeal is therefore valid. [7] There was no intervention at that time, which is why Louis Jetté was not involved. [8] After July 29, 2004, counsel for the Respondent, having analyzed the file, concluded that the Appellant was correct and notified the Respondent accordingly. Since this would lead to the denial of Mr. Jetté's claim, counsel for the Respondent contacted Mr. Jetté to inform him accordingly. Mr. Jetté decided to intervene in this appeal and filed his Notice of Intervention on September 17, 2004. [9] The Reply to the Notice of Appeal explains that the Respondent agrees with the Appellant's position and asks that the appeal be allowed. The document is dated October 5, 2004, and was filed on October 6, 2004. The Reply to the Notice of Intervention states that the Respondent does not agree with the Intervener's position and asks that the appeal be allowed. The document is dated November 30, 2004, and was filed on December 1, 2004. [10] The Appellant produced a Book of Exhibits, containing Exhibits A-1 to A-6. A bundle of cheques was added as Exhibit A-7. [11] The Intervener testified on his own behalf. Michel Champagna and David Bensemana testified for the Appellant. [12] On the whole, the facts described by the three witnesses were consistent. [13] In 1998, the Université de Montréal's Faculty of Pharmacy implemented a master of pharmaceutical science program with an option in medication development. One of the degree requirements is an internship at a pharmaceutical company. This is a joint teaching program involving private industry and the university. Private industry contributes $14,000 per intern. This amount is paid into a special fund. A student enrolled in this master's degree program is paid $1,750 per month for eight months. [14] The Appellant's witnesses explained that this is a relationship between the pharmaceutical company, the faculty and the students. The Faculty considers the companies that participate in the program to be partners in teaching and practical training. [15] I quote from the first three paragraphs of Exhibit A-5, the Guide du stagiaire (guide for interns): [TRANSLATION] The purpose of the internship is to provide practical experience in a number of sectors involved in medication development, and to apply the knowledge acquired in the DESS program (medication development option). The duration of the internship is two full-time academic sessions (eight months). The internship is reserved for students who have no experience in the area selected. Interns must devote 60% of their time to the selected option (roughly five months) and the remainder of the time is divided among the other departments. Interns must also plan and develop a project, and this will allow them to develop the problem resolution component. Candidates must prepare a complete report (synthesis report) on their respective projects and make an oral presentation to demonstrate their written and oral communication skills (see Section B). At the end of the internship, a candidate must have demonstrated the ability to work effectively in the field of medication development. [16] Appendix 15 of the guide for interns describes the different stages of the internship. They are the stages of a program of study at the master's level. [17] Witnesses for the Appellant and the Intervener testified that, on a day specifically devoted to this purpose, the students admitted to the master's program met with pharmaceutical companies at the university and discussed potential projects and other subjects with them. The Appellant's witnesses explained that the faculty and industry representatives then met to determine the various assignments. Ultimately, an internship was awarded to each student admitted to the program. [18] The Appellant's witnesses testified that the scholarship amount for each master's student is identical. The scholarships are considered merit and incentive scholarships and are awarded on the recommendation of the teaching faculty. [19] The research topic is chosen in close collaboration between the student and the site coordinator. It must also be approved by the option coordinator and the faculty's internship coordinator. The intervener's topic was [TRANSLATION] Photodynamic Therapy: Innovation and Challenges. [20] During the period in issue, the Intervener admitted that he was a full-time student at Université de Montréal and had paid his tuition fees (Exhibit A-2). Arguments [21] Counsel for the Appellant submitted that there was no negotiation regarding pay, that this was a master's program at a university and that the project topic was the student's own. He specifically referred to two decisions of this Court: Khadija Benabdallah v. Canada(Minister of National Revenue - M.N.R.)[1997] T.C.J. No. 1180 (QL) and Nabet v. Canada(Minister of National Revenue -M.N.R.), [1999] T.C.J. No. 79 (QL). [22] He quoted the following passages from the latter decision: 13 The case at bar is similar to The Hospital for Sick Children case, supra [[1993] T.C.J. No. 388 (QL)], and it is my view that that decision properly sets out the law regarding the legal status of a student paid out of research funds: there is no insurable employment if the student is paid for research done as part of a work program the student has drawn up himself or herself; although a professor may have helped the student establish the work program, that program remains the student's program and serves the student's purposes; the student controls the use of his or her time; the professor is there to give advice; the work is done for the student's benefit; no services are provided to an employer. 14 . . . In such circumstances, the professor provides supervision but does so as a professor, not as an employer. The work to be done is determined by the student, as is the use of the student's time. In my opinion, the evidence clearly showed that the Appellant was not in an employment situation. The amounts she received were in the nature of grants or financial assistance to students, not remuneration for services provided to an employer. [23] For his part, counsel for the Respondent noted that the Respondent's decision in favour of the Respondent was made under paragraph 6(b) of the Employment Insurance Regulations ("the Regulations") and subsection 10(1) of the Insurable Earnings and Collection of Premiums Regulations. [24] The Intervener said that the Minister's decision was in his favour and that it was in this spirit, and in good faith, that he continued to pursue the matter. Analysis and conclusion [25] I will begin by addressing the question of paragraph 6(b) of the Regulations, which reads as follows: 6. Employment in any of the following employments, unless it is excluded from insurable employment by any provision of these Regulations, is included in insurable employment: [. . .] (b) employment of a person as an apprentice or trainee, notwithstanding that the person does not perform any services for their employer; [26] This provision does not automatically apply to all situations involving trainees. In order for it to apply, there must be an employer-employee relationship. As stated in the following conclusion, I find that there is no such relationship in the case at bar. [27] Article 2085 of the Civil Code of Québec reads as follows: 2085. Contract of employment 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. [28] Exhibit A-3 shows that the payment constitutes a scholarship. On rare occasions, it is possible for a scholarship to be considered a salary. There must be special circumstances involving a relationship of subordination under an employment contract. In the case at bar, no employment contract was signed. A candidate asked to participate in a master's program and his application was accepted. Admission to the master's program entails a scholarship. That scholarship is in the nature of financial assistance to enhance research skills and the quality of research, and is not in the nature of a salary under an employment contract. [29] In the guide for interns (Exhibit A-5), the descriptions of the roles of the program director, the faculty internship coordinator, the on-site internship coordinator, the option coordinator, the training director and the student are descriptions of the teaching and training functions, as well as the obligations associated with student status. [30] For example, in order to obtain their credits, at the end of their projects, master's students had to write an activity report as well as a synthesis report regarding the findings of their projects. [31] The program, as both the Appellant's witnesses and the Intervener described it, is designed to provide an internship at a pharmaceutical company for the purpose of obtaining practical experience as part of university studies. The various obligations that were described are the obligations of professors and students, not employers and employees. [32] The appeal is allowed and the intervention is dismissed. Signed at Ottawa, Canada, this 9th day of August 2005. "Louise Lamarre Proulx" Lamarre Proulx J. Translation certified true On this 14th day of February, 2006. Garth McLeod, Translator CITATION: 2005TCC499 DOCKET FILE NO.: 2004-2494(EI) STYLE OF CAUSE: Université de Montréal and M.N.R. and Louis Jetté PLACE OF HEARING: Montréal, Quebec DATE OF HEARING: June 23, 2005 REASONS FOR JUDGMENT BY: The Honourable Justice Louise Lamarre Proulx DATE OF JUDGMENT: August 9, 2005 APPEARANCES: Counsel for the Appellant: Michel E. Taillefer Counsel for the Respondent: Mounes Ayadi For the Intervener: The Intervener himself COUNSEL OF RECORD: For the Appellant: Name: Michel E. Taillefer Firm: Hart, Saint-Pierre Montréal (Québec) For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada