Date: 20030122
Docket: A-446-01
CORAM: DESJARDINS J.A.
LÉTOURNEAUJ.A.
NADONJ.A.
BETWEEN:
CAROL LAGACÉ
Applicant
and
MINISTER OF NATIONAL REVENUE
Respondent
Hearing held at Québec, Quebec, on January 20 and 22, 2003.
Judgment delivered from the bench at Québec, Quebec, on January 22, 2003.
REASONS FOR JUDGMENT OF THE COURT BY: DESJARDINS J.A.
Date: 20030122
Docket: A-446-01
Neutral Citation: 2003 FCA 29
CORAM: DESJARDINS J.A.
LÉTOURNEAU J.A.
NADON J.A.
BETWEEN:
CAROL LAGACÉ
Applicant
and
MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT OF THE COURT
(Delivered from the bench at Québec, Quebec,
on January 22, 2003.)
[1] The applicant is challenging a decision of a Deputy Judge of the Tax Court of Canada, who held that his employment with the Commission de l'Exposition provinciale de Québec (the Commission) from January 2, 1997, to December 31,1997, was not insurable, because it was carried out under a contract for services, not a contract of service.
[2] The applicant argues that the Trial Judge erred in law because his analysis does not take into account all the tests developed by the courts, as set out in the Wiebe Door case (Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553 (C.A.)), to distinguish those two types of contracts.
[3] The applicant, who had previously worked as a manager for a company that operated restaurants on sites owned by the Commission, accepted the Commission's offer to manage the same restaurants when his previous employer ceased operations in 1997. To that end, he signed an agreement with the Commission under the firm name Gestion Carol Lagacé-an agreement that the parties described as a mandate. It was later determined that his employment was not insurable, and the applicant had no choice but to appeal the Minister's decision.
[4] The Trial Judge dismissed his appeal, considering only the parts of the agreement dealing with remuneration.
[5] The contract provided that the applicant, described as the mandatary, would receive a basic amount of $6,000 as consideration for performing his mandate, plus a percentage of the net operating profits. The balance of the net operating profits was to be paid by the mandatary to the Commission.
[6] The Trial Judge noted that the appellant's income would vary according to the business's results, which were not guaranteed. Therefore, in the judge's view, the remuneration was uncertain and subject to variations that could be significant in one direction or the other. Based on that, the judge found that there was no agreed upon salary for specific work, and that the applicant was working at his own business, which was the carrying out of the mandate between him and the Commission.
[7] We are of the view that the Trial Judge misunderstood the true nature of the contract in this case.
[8] Read in its entirety, the agreement provided that the applicant, or mandatary, would control the operation and administration of a cafeteria, two snack bars and some restaurant counters, which were all owned by the Commission. All the facilities and equipment were provided by the Commission.
[9] The mandatary could use income from the business to make improvements to it, provided that he had first obtained the consent of the Commission. It must be recalled that the net operating income belonged to the Commission.
[10] The contract contained other significant measures of control. For example, the price list of items for sale had to be approved by the Commission, which also ensured that the mandatary dealt exclusively with the suppliers who had agreements with the Commission. All the employees working at the sites were hired and paid by the mandatary from the business income. However, the list of employees and their rates of pay had to be approved by the Commission. In addition, no contract or agreement concerning personnel could be signed without the agreement of the Commission.
[11] It is true that the applicant operated the facilities under his own firm name, that he had to take out liability insurance for the benefit of his employees, the public and the Commission, that he was responsible for obtaining all necessary operating licences and that he had to provide a letter of indemnity. However, the costs incurred, if any, were always taken directly from the business income. That is why the applicant testified that he had not had to spend a cent for his contract with the Commission (transcript, respondent's record, page 58).
[12] The applicant's work was supervised by Nicole Bilodeau, Assistant Director General of Expo-Cité (transcript, respondent's record, page 36). Among other documents, she was provided with the financial statements of the applicant's operations. She confirmed that the information about the applicant's operations was implicitly part of the financial statements of the Commission [TRANSLATION] "because he (Carol Lagacé), was managing on our behalf" (transcript, respondent's record, page 66).
[13] Therefore, it seems clear from the agreement that the control of the employees' salaries, supplies, and consumer prices resulted in a rigid operational framework that is not characteristic of a contract for services. The ownership of the tools remained completely in the hands of the Commission, and this supports the concept of an employment contract.
[14] The likelihood of profit was seriously limited by the fact that the mandatary had to remit all of the net operating profits to the Commission, after taking his basic remuneration and his percentage of net operating profits. It is true, as the Trial Judge noted, that the percentage of the net profits could vary, but that variation is not a definitive characteristic of a contract for services. The concept of variable income is not inconsistent with the concept of salary nor does it exclude the status of employee.
[15] Moreover-and this was not mentioned by the Trial Judge-the fact that the applicant remitted the net operating profits, after taking his remuneration, is an important factor. It constitutes an obligation that seems inconsistent with the concept of a contract for services.
[16] Lastly, the risk of loss was apparently minimal, since there would almost certainly be consumers on exhibition sites owned by the Commission.
[17] The tests set out in Wiebe Door, supra, of ownership of tools, control, chance of profit, risk of loss and degree of integration lead us to conclude that the applicant was employed, not
self-employed.
[18] The characteristics of an employment contract are so dominant as to warrant the intervention of this Court.
[19] The application for judicial review will be allowed with costs, the decision of the Deputy Judge of the Tax Court of Canada will be set aside and the matter will be returned to the Chief Judge of the Tax Court of Canada or to a judge designated by him for a rehearing on the basis that the applicant's employment with the Commission in 1997 was insurable employment.
"Alice Desjardins"
____________________________
J.A.
Certified true translation
Mary Jo Egan, LLB
FEDERAL COURT OF CANADA
APPEAL DIVISION
SOLICITORS OF RECORD
DOCKET: A-446-01
STYLE OF CAUSE: Carol Lagacé v. Minister of National Revenue
PLACE OF HEARING: Québec, Quebec
DATE OF HEARING: January 20 and 22, 2003
REASONS FOR JUDGMENT
BY THE COURT: (Desjardins, Létourneau and Nadon JJ.A)
DELIVERED FROM THE
BENCH ON JANUARY 22,
2003 BY: Desjardins J.A.
APPEARANCES:
Denis Gingras FOR THE APPLICANT
Marie-Andrée Legault FOR THE RESPONDENT
SOLICITORS OF RECORD:
Gingras, Vallerand, Barma, Laroche, Amyot FOR THE APPLICANT
Québec, Quebec
Department of Justice Canada FOR THE RESPONDENT
Montréal, Quebec