r v. 4523423 CANADA INC., 2011 QCCQ 12209

Parity Committee for the Building Services (Montreal Region) c. 4523423 Canada Inc. (Sani-Vie-Tech) 2011 QCCQ 12209

Loi sur les décrets de convention collective – Entretien des édifices publics – Employeur vs franchiseur COURT OF QUEBEC CANADA PROVINCE OF QUEBEC DISTRICT OF MONTREAL TOWN OF MONTREAL Criminal and Penal Division N o. 500-61-304134-118 DATE : October 7, 2011 PRESIDING : MADAM SUZANNE BOUSQUET PRESIDING JUSTICE OF THE PEACE THE PARITY COMMITTEE FOR THE BUILDING SERVICES, MONTREAL REGION Prosecutor v. 4523423 CANADA INC. (SANI-VIE-TECH) Defendant _________________________________________ _____________________________ JUDGMENT ______________________________________________________________________ [ 1 ] Sani-Vie-Tech, the defendant company, is charged with 24 offences to

section 38 of the Act respecting collective agreement decrees, R.S.Q.,

chapter D-2. [ 2 ] In eight of the 24 statements of offence, it is held that Sani-Vie-Tech failed to forward its monthly report to the the Parity Committee for the building services, Montreal region ( “the Parity Committee”) for the months of March 2010 to October 2010 inclusively, in contravention of the Regulation respecting the monthly report of the Parity Committee for the building services, Montreal region [1] . [ 3 ] In eight other statements of offence, it is held that the company failed to forward to the Parity Committee, for the same period, the sums of money levied in accordance with the Regulation respecting the levy of the Parity Committee [2] . [ 4 ] Finally, in the final eight statements of offence, it is held that the company failed to send to the Parity Committee, for the same period, its contribution to the Group Registered Retirement Savings Plan, as prescribed in the Decree respecting building service employees in the Montreal region [3] . [ 5 ] All 24 offences held against the company concern one person, Mr.

Walter Fleurvil, whom an inspector for the Parity Committee has deemed to be an employee of Sani-Vie-Tech, as defined in the Act. [ 6 ] Therefore, although the company is charged with 24 counts, there is really only one issue to be decided : is the company a professional employer, covered by the jurisdiction of the Decree respecting building service employees ? In other words, is Mr. Fleurvil considered by law to be an employee of the company for the work that he did from March 2010 to October 2010 ? [ 7 ] At the hearing that was held on September 7, 2011, three witnesses testified for the prosecution, Mr.

Walter Fleurvil, the franchisee whose status is in question, Mr. James Torney, manager for West Penetone Inc., a client, and Mr. Steve Girard, inspector for the Parity

Committee. Mr. Vincent Guglielmetti, president of Sani-Vie-Tech, testified in defence. [ 8 ] From their testimonies, and from the various documents filed in evidence, the Court has established the following facts : [ 9 ] According to the Quebec Enterprise Register, Sani-Vie-Tech is a company specialised in commercial maintenance work. In fact, it does not perform any maintenance work itself, but its sells franchises to persons interested in doing commercial maintenance work. [ 10 ] On May 13, 2009, Mr.

Walter Fleurvil and an associate buy a franchise from the defendant company for 20 000 $. [ 11 ] According to their franchise agreement, filed under P-6, Sani-Vie-Tech undertakes to solicit clients for them and provide them with contracts worth 65 000 $ annually. Furthermore, the company agrees to do all the administration work for the franchisee and send them their net income by monthly checks. [ 12 ] The franchisee, on the other hand, is not allowed to solicit clients himself or refuse a client, unless the distance or work hours are unacceptable.

Th e franchisee also acknowledges that all client-contracts belong to Sani-Vie-Tech, as well as lists of clients, lists of prices, specifications and other documentation. [ 13 ] Finally, there is a clause in the agreement stipulating that “ Le Franchisé n'est pas un employé de la compagnie Sani-Vie- Tech ” . [ 14 ] In his testimony, Mr.

Fleurvil adds that : – he and his partner did the actual maintenance work ; – Sani-Vie-Tech found them four contracts worth between 35 000 $ and 40 000 $, but that they lost two of these contracts; – it was Sani-Vie-Tech that notified them that these contracts were terminated ; and that – in contravention of their agreement, Sani-Vie-Tech did not find them other contracts to replace the two that were terminated. [ 15 ] Mr. James Torney, in turn, testified that his company, West Penetone Inc., was one of the four companies that signed a contract with Sani-Vie-Tech and Mr. Fleurvil.

Their agreement lasted about one year, from December 2009 to February 2011. [ 16 ] Mr. Torney was told by Mr. Guglielmetti that, if problems occurred, he was to contact him. Filed under P-2 is a complaint that he sent by e-mail to Mr. Guglielmetti, which states : “ Nov. 09 th , the first night your replacement staff were on site. You assured me that they would do a complete cleaning job. (...) Vincent, if this is the best your staff can do, I will give you until the end of the month to get things right. Otherwise I will have to cancel our agreement .” [ 17 ] Filed under P-3, is a letter notifying Mr.

Guglielmetti that West Penetone Inc. is terminating its contract with Sani-Vie-Tech. Filed under P-5 is a copy of eight invoices sent to West Penetone Inc. by Sani-Vie-Tech. [ 18 ] The third witness for the prosecution, Mr. Steve Girard, an inspector for the Parity Committee, testifies that following a complaint, he investigated the defendant company and concluded, among other things, that Mr.

Walter Fleurvil and his associate were not to be considered subcontractors under the Act respecting collective agreement decree , but rather employees. [ 19 ] Consequently, he sent notices to Sani-Vie-Tech, filed under P-9, P-10 and P-11, advising the company that it must send the Parity Committee its monthly reports as well as the corresponding levy and RRSP contributions for Mr. Fleurvil. These were never sent. [ 20 ] Mr. Vincent Guglielmetti does not challenge the main facts nor does he deny that he never complied with the Parity

Committee's notices. However, he claims that Mr. Fleurvil was not an employee of Sani-Vie-Tech. His main argument is that the terms of the franchise agreement are clear and that Sani-Vie-Tech was only a mandatory and a “ gestionnaire ” for Mr. Fleurvil. [ 21 ] He adds that he never hired Mr. Fleurvil. In fact, Mr. Fleurvil and his partner are the ones who hired Sani-Vie-Tech to find clients for them and manage their business. Finally, he claims that the concept was clearly explained to Mr.

Fleuvil and his associate when they came to him to buy a franchise. [ 22 ] The Parity Committee, on the other hand, claims that, notwithstanding the franchise agreement, Mr. Fleurvil was in fact an employee of Sani-Vi-Tech. The jurisprudence is clear : one must examine the facts to determine if a person is an employee or a subcontractor – and not rely only on the terms of a contract. Analysis [ 23 ] Is Sani-Vie-Tech a professional employer covered by the jurisdiction of the Decree respecting building service employees ? Is Mr.

Fleurvil considered by law to be an employee of the company for the work that he did from March 2010 to October 2010 ? [ 24 ]

Section 1 (

f) of the Act respecting collective agreement decrees provides that an “ employer includes any person, partnership or association who or which has work done by an employee ”.

Section 1.01 (

i) of the Decree respecting building service employees in the Montréal region define an employer as “ any person, partnership, firm or corporation that has maintenance work done by an employee ”. [ 25 ]

Section 1 (

g) of the Act and

section 1.01 (

h) of the Decree both define a professional employer as “ an employer who has in his employ one or more employees covered by the scope of application of a decree ”. [ 26 ]

Section 1 (

j) of the Act provides that “ employee means any apprentice, unskilled labourer or workman, skilled workman, journeyman, artisan, clerk or employee, working individually or in a crew or in partnership ”. [ 27 ] Although the franchise agreement between SANI-VIE-TECH and Mr. Fleurvil clearly stipulates that Mr. Fleurvil is not an employee, this mention alone does not suffice to define his status.

The jurisprudence is clear: many other criteria must be taken into account to determine if a person is an employee covered by the Decree respecting building service employees. [ 28 ] In Comité paritaire de l'entretien d'édifices publics, région de Montréal c. Service d'entretien Clairvoyant (2002) inc . [4] , Judge Sirois lists the main ones and describes the purpose of the legislation : Le but de la

Loi sur les décrets de convention collective est la protection des travailleurs dans leurs conditions de travail et du même coup l’élimination de la concurrence déloyale (...) Il s’agit d’une loi d’ordre public (art. 11) et les parties ne peuvent s’y soustraire par convention. Les principaux critères utilisés en jurisprudence pour évaluer s’il s’agit vraiment d’un contrat de sous-traitance sont le contrôle, la propriété des outils, les chances de profit et les risques de perte .

Il y a des indices secondaires comme la liberté des horaires, les méthodes de travail, la forme de paiement, la présence de salariés travaillant pour le sous-traitant, l’existence d’un contrat détaillé, le nombre de clients ou la dépendance vis-à-vis un client, le fait que ce client soit en semblable matière, l’existence d’une véritable organisation. (Comité paritaire de l’entretien des édifices publics, région de Montréal c.

Can-Jan, 500-61-066217-986, C.Q. , 22-10- 98 [5] ). [ 29 ] Among these criteria, the first to be considered is the possibility of making a profit or incurring a loss (“ les chances de profit et les risques de perte ” ). T he Quebec Court of Appeal refers to this factor as the risk acceptance and reward (“ l'acceptation et la rémunération du risque ”). In Comité paritaire de l'entretien d'édifices publics c. Confédération des Caisses Desjardins du Québec [6] , the Court of Appeal states that it is the most significant factor in distinguishing an employee from a subcontractor :

L'indice le plus important qui différencie le contrat de l'entrepreneur de celui de l'artisan est que l'entreprise comporte une organisation dans un but de profit, i.e. l'acceptation et la rémunération du risque, alors que cet aspect est absent du contrat que conclut l'artisan.» (…) D'autres indices secondaires sont la liberté des horaires et des méthodes de travail, le paiement global et forfaitaire. Ils peuvent permettre de qualifier le contrat s'il y a a corrélation avec le risque de l'affaire. [ 30 ] In the present case, all financial risks were taken by Sani-Vie-Tech.

The company was the one who found clients and negotiated all terms and monetary conditions of the contracts. Mr. Fleurvil had absolutely no say in the work to be done, the price that was charged to the client, or the amount that he would receive at the end of the month. Furthermore, he was forbidden, by contract, to negotiate with a client.

In fact, Sani-Vie-Tech's computer system established the franchisee's hourly rate according to each client- contract. [ 31 ] This left him and his associate with very little room – in fact, almost none – to realise a profit. [ 32 ] The company, on the other hand, was in a much better position to realise a profit, by being in charge of all the administration and management. [ 33 ] Sani-Vie-Tech, it must be said, was also the one to loose money if an unsatisfied client terminated his contract.

According to clause 6 of the franchise agreement, the company then had to give the franchisee a month's income if it could not recruit another client. (The fact that Sani-Vie-Tech did not fulfil this obligation is not relevant.) Dans le cas ou ( sic ) le Franchisé ne rends ( sic ) pas un service d'entretien adéquate ( sic ) et le client décide de résilier le contrat, Sani-Vie- Tech sera en mesure de remplacé ( sic ) ce contrat et des frais supplémentaire ( sic ) au Franchisé équivalent a ( sic )un (1) mois de revenu du Contrat Client dans un délai de dix (10) à cent (100) jours ouvrables. [ 34 ] Analysing this first and main criteria, the Court concludes that Mr.

Fleurvil is indeed an employee of Sani-Vie-Tech. An analysis of other factors lead to the same conclusion. [ 35 ] Firstly, the work he did was very regular, Monday to Friday evenings, 52 weeks a year. [ 36 ] Secondly, Mr. Fleurvil was not paid by the client, but by Sani-Vie-Tech. Their income was paid monthly, after deductions, by check, signed by Sani-Vie-Tech. [ 37 ] Thirdly, because Sani-Vie-Tech was in charge of quality control, and because it received the clients' complaints directly, it was no doubt in a situation of authority with Mr.

Fleurvil, having to tell him that his work was not done to the client's satisfaction and to correct the situation. [ 38 ] Although the franchise agreement states that Mr. Fleurvil was not an employee, facts speak for themselves. In this relationship, Mr. Fleurvil must be considered an employee of Sani-Vie-Tech and not a subcontractor. [ 39 ] Mr. Fleurvil simply did the work that he was told to do, where, when and how to do it, without having any say in the process. The Court agrees with the prosecutor : although he was looking for a business opportunity, what Mr.

Fleurvil got was a job. [ 40 ] Our courts have often been asked to qualify the relationship between workers and their counterparts. For example, in Groupe d'entretien Salibec Inc. c. Procureur general du Québec [7] , the Quebec Court of Appeal examined the issue that is before us. Groupe d'entretien Salibec Inc. was also a company specialised in commercial maintenance and it also signed contracts with other persons who did the actual work, in conditions quite similar to the ones in this case. The only difference is that, in their contract, workers were not

called franchisees, but rather sub-contractors. [ 41 ] As in the present case, Groupe d'entretien Salibec Inc. was accused of offences to the Act respecting collective agreement decrees . The trial judge concluded that Groupe d'entretien Salibec Inc. was an employer and that the workers were employees, and found the company guilty. [ 42 ] The company appealed the decision before the Superior Court and the Court of Appeal, who both maintained the trial judge's decision.

This Court considers that the Court of Appeal's final remarks apply entirely to the present case : Toutefois, la volonté des appelants de se soustraire à l'application du décret ne peut faire obstacle à la réalité qui transparaît au travers du rempart contractuel: les pseudo-artisans exécutent, sous l'autorité des appelants, un travail visé par le décret. En effet, il a été établi que ces personnes exécutent un travail d'entretien de certains édifices publics de la région de Québec. Dans l'accomplissement de leur travail, elles bénéficient d'une bien faible autonomie.

En effet, ces personnes exécutent leur travail par prestations régulières et successives, cinq jours par semaine, entre 17:00 heures et 2:00 heures et ce, avec l'équipement fourni par les appelants. Elles reçoivent, en contrepartie de leur travail, un salaire hebdomadaire dont le montant est invariable. Elles n'assument aucun risque inhérent à l'entreprise et ne peuvent, par leur rendement et leur administration, accroître leurs chances de profit ou rendre leur horaire de travail flexible.

Finalement, les appelants contrôlent l'exécution du travail en transmettant leurs instructions et en leur acheminant les plaintes formulées par les clients. Ainsi, on peut dire que ces personnes accomplissent leur travail "à l'avantage" des appelants qui constituent, dans les circonstances particulières de cette affaire, des employeurs professionnels. En conséquence de ce qui précède, le juge de première instance était bien fondé de conclure que les appelants, à

titre d'employeurs professionnels, étaient assujettis au décret et à la loi. [ 43 ] In the same manner, Sani-Vie-Tech must be considered to be Mr. Fleurvil's employer, under the Act respecting collective agreement decrees . [ 44 ] As such, Sani-Vie-Tech was under the obligation to forward monthly reports to the Parity Committee for Mr.

Fleurvil as well as the corresponding levy and RRSP contributions, for the duration of their relationship, which it did not. [ 45 ] FOR THESE REASONS, THE COURT : [ 46 ] FINDS THE DEFENDANT, 4523423 Canada Inc., guilty of all 24 offences ; [ 47 ] ADJURNS THE PROCEEDINGS to Friday, October 7, 2011, in room 5.06 for sentencing arguments. __________________________________ Suzanne Bousquet, Presiding Justice of the Peace Me Isabelle Boivin For the prosecutor

Mr. Vincent Guglielmetti, For the defendant Date of hearing : September 7, 2011 [4] 2006 QCCQ 1807 .