SUPREME COURT OF CANADA Citation: Modern Cleaning Concept Inc. v. Comité paritaire de l’entretien d’édifices publics de la région de Québec, 2019 SCC 28, [2019] 2 S.C.R. 406 Appeal Heard: November 13, 2018 Judgment Rendered: May 3, 2019 Docket: 37813 Between: Modern Cleaning Concept Inc. Appellant and Comité paritaire de l’entretien d’édifices publics de la région de Québec Respondent - and - Conseil québécois de la franchise Intervener Official English Translation: Reasons of Côté, Brown and Rowe JJ. Coram: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ.

Reasons for Judgment: (paras. 1 to 61) Abella J. (Wagner C.J. and Moldaver, Karakatsanis, Gascon and Martin JJ. concurring) Joint Dissenting Reasons: (paras. 62 to 138) Côté, Brown and Rowe JJ. Modern Cleaning Concept Inc. v. Comité paritaire de l’entretien d’édifices publics de la région de Québec , 2019 SCC 28, [2019] 2 S.C.R. 406 Modern Cleaning Concept Inc. Appellant v. Comité paritaire de l’entretien d’édifices publics de la région de Québec Respondent and

Conseil québécois de la franchise Intervener Indexed as: Modern Cleaning Concept Inc. v. Comité paritaire de l’entretien d’édifices publics de la région de Québec 2019 SCC 28 File No.: 37813. 2018: November 13; 2019: May 3.

Present: Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon, Côté, Brown, Rowe and Martin JJ. on appeal from the court of appeal for quebec Labour relations — Collective agreements — Juridical extension by government decree — Franchises — Provincial legislation guaranteeing minimum conditions of employment by extending collective agreement to all employees and professional employers within scope determined by means of government decree — Parity committee responsible for administering and overseeing scheme created by decree — Franchisee entering into agreement with franchisor to perform cleaning services — Parity committee seeking unpaid wages and other benefits on behalf of franchisee pursuant to applicable decree — Whether decree applies to relationship between franchisor and franchisee — Whether franchisee was employee of franchisor — Act respecting collective agreement decrees, CQLR, c.

D-2, s. 1 (g) “professional employer”, (j) “employee” — Decree respecting building service employees in the Québec region, CQLR, c. D-2, r. 16 . The provision of cleaning services in public buildings located in the Quebec region are covered by a collective agreement, the Decree respecting building service employees in the Québec region . The Decree sets out minimum standards in the workplace, including wages, hours of work, holidays and overtime, and is governed by the Act respecting collective agreement decrees .

The Act makes the Comité paritaire de l’entretien d’édifices publics de la région de Québec (“Committee”) responsible for overseeing compliance with the Decree , and it can therefore take any necessary action arising from the Decree on behalf of employees. In 2014, the Committee commenced proceedings against Modern Cleaning Concept Inc., claiming $9,219.32 in unpaid wages and other benefits in relation to cleaning services performed by B. Modern provides cleaning and maintenance services in the Quebec region through a network of franchises.

It negotiates master cleaning contracts with clients, and assigns them for specific locations to its franchisees, who perform the cleaning and maintenance work. B became a franchisee in January 2014, agreeing to perform cleaning services exclusively through the franchise relationship. After five months of working within the Modern network, B terminated his franchise agreement. The Committee investigated the relationship between B and Modern.

It was of the view that the language of the franchise agreement was not determinative of the reality of the relationship between B and Modern, and that B was in fact an “employee” as defined by the Act, not an independent contractor. He was therefore entitled to be paid the mandatory wages and benefits set out in the Decree . The trial judge concluded that there was a common intention that B would be an independent contractor, not an employee. Accordingly, B was not entitled to the amount claimed by the Committee on his behalf.

Allowing the appeal, a majority in the Court of Appeal was of the view that the trial judge made a palpable and overriding error in failing to consider the nature of the assignments of the cleaning contracts from Modern to B, and that by failing to recognize that Modern remained contractually liable to its clients, the trial judge erred in his analysis of whether B was an employee or an independent contractor. The majority concluded that B was an employee and ordered Modern to pay the $9,219.32 claimed by the Committee on behalf of B. Held (Côté, Brown and Rowe JJ. dissenting): The appeal should be dismissed.

Per Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon and Martin JJ.: The trial judge’s failure to consider the tripartite nature of Modern’s business model was a palpable and overriding error warranting appellate intervention. This error caused the trial judge to err in his assessment of whether B was an employee or an independent contractor. B is an “employee” within the meaning of the Act and Modern is correspondingly a “professional employer”.

The mandatory provisions of the Act and Decree therefore govern the relationship between Modern and B, and B is entitled to the wages and benefits claimed on his behalf by the Committee. The Decree can apply to any contract in which one can conclude that an individual is in a relationship determined to be that of “employee” within the meaning of the Act. Workers may be considered employees for the purposes of the Act and Decree even if they would not be considered employees pursuant to other laws of Quebec. The fact that the franchise agreement identifies B as a franchisee is not determinative.

Nor is the fact that he is identified as an independent contractor with Modern. The Decree can apply to relationships other than those governed by employment contracts. The presence of a franchise agreement cannot function to disguise the true nature of the relationship between an employee and professional employer as those terms are defined in the Act. To the extent that the reality of the relationship between the parties reveals that a franchisee did not in fact assume the business risk and had no meaningful opportunity to make a profit, he or she is an employee and that relationship is subject to the Decree .

Modern’s business structure must be examined as a whole to determine who assumed the business risk and attendant prospect of making a profit. The business relationship in this case was tripartite: the client requesting cleaning services, the franchisor Modern who guarantees the quality and provision of services, and the franchisee who actually performs them.

In the cleaning service agreements between Modern and its clients, the clients consented in advance to the assignment of the cleaning contracts to franchisees, but Modern remained liable to its clients if the cleaning services were not delivered in accordance with the contract between Modern and its client. By failing to consider the tripartite relationship, the trial judge did not consider the business as a whole, and, as a result, improperly concluded that B bore the business risk and was therefore not an employee.

Because of its tripartite business model and ongoing liability to its clients, Modern placed extensive controls on B. B did not assume the business risk and therefore it cannot be said that he was an independent contractor, making him an employee under the Act. Per Côté, Brown and Rowe JJ. (dissenting): The appeal should be allowed and the trial judge’s decision restored.

The trial judge made no reviewable error in concluding that B was not an employee within the meaning of the Act, because the fact that the assignments of contracts between Modern and B were imperfect did not significantly affect the business risk assumed by B. Furthermore, even if it were

assumed that B was an employee, Modern could not have been considered to be his professional employer. The determination of B’s status under the Act raises a question of mixed fact and law, since it involves applying a legal test —specifically the business risk test — to the facts of the case. Unless an exception applies, the standard for intervention in respect of questions ofmixed fact and law is that of palpable and overriding error, which is a highly deferential standard. If no palpable and overriding error is properlyestablished, this Court must restore the trial judge’s decision.

The Act provides for the juridical extension of a collective agreement, by means of a government decree, so that it binds allemployees and employers working in a specific field of activity. The Act’s purpose is to guarantee minimum conditions of employment and toprevent abuses in the industries concerned. Whether the conditions provided for in a decree apply to a worker must be determined by firstconsidering (1) whether the worker is an employee within the meaning of the Act and, if so, (2) whether he or she is within the scope determinedin the decree.

It is then necessary to identify a debtor bound by the decree, that is, a professional employer that employs the employee covered bythe scope of application of the decree. The concept of employee in the Act is broader than it is under the Civil Code because of the inclusion of the term “artisan” in thedefinition of “employee” in the Act. Unlike an employee within the meaning of the Civil Code, an artisan is not, in any true sense, subordinate toan employer in the performance of his or her work.

Generally speaking, an artisan is a natural person who does manual work on his or her ownaccount, alone or with the help of family members, journeypersons, workers or apprentices. An artisan will generally be a contractor in the civillaw. The legal subordination that distinguishes a contract of employment and a contract of enterprise within the meaning of the Civil Code is notessential to the status of employee under the Act. An artisan who is a contractor — and not an employee — within the meaning of the Civil Codemay therefore be considered to be an employee to whom the Act applies.

However, not every contractor who personally, on his or her own account, performs manual work to which a decree applies isnecessarily an artisan within the meaning of the Act. There are some contractors who prima facie fit the definition of an artisan but to whom theAct does not apply because their activities are organized with a view to making a profit and, as a corollary, involve a business risk. This businessrisk must go beyond the risk that any artisan assumes, such as the risk of defective work tools or inefficient work methods.

Further, the courtmust ask whether the worker intended — in fact and in light of the evidence — to accept a real business risk in order to make a profit. In assessing the business risk test, the court must consider a series of factors. The relevant secondary factors include ownership ofthe work tools, the method of remuneration and the degree of freedom in the performance of the work, to the extent that these factors reflect therisk assumed. The terms of the contracts entered into by the worker and his or her clients or business partners are relevant but not in themselvesdeterminative.

The business risk test remains the same regardless of whether the contractual relationship in issue is bipartite or tripartite in nature,including in the context of a franchise agreement. In each case, the purpose of the analysis is simply to determine whether the worker assumes abusiness risk. It is not a matter of establishing which party to a contract assumes the business risk, as if there could be only one risk. The partieseach incur such risks at the same time.

Fundamentally, the level of risk assumed by the party performing the work is what determines whetherthat party can be characterized as an artisan within the meaning of the Act, regardless of the fact that another party also incurs a business risk, forexample by assuming liability for the same contractual obligations. The fact that the assignments of contracts were imperfect affected B’s business risk only to a limited extent, if at all. In the instantcase, failure to deal with this aspect was not a palpable and overriding error.

In the absence of such an error, the conclusions reached by the trialjudge cannot be called into question. Despite the tripartite relationship among Modern, B and their clients, it was open to the trial judge to findthat B had assumed a business risk in order to make a profit and that he was not an “employee” for the purposes of the Act. That conclusion isentitled to deference. A franchise agreement cannot function to disguise the reality of a relationship between an employee and an employer, as those termsare defined in the Act. The trial judge shared this concern in the instant case.

Far from relying blindly on the terms of the agreement, he renderedhis decision on the basis of extensive evidence concerning the reality of the relationship between B and Modern. Furthermore, not every person who has work to which a decree applies done by an “employee” can, on that basis alone, be treated asa professional employer and be required to assume the obligations that flow from that status. There are “employees” within the meaning of theAct who quite simply do not have a professional employer.

For a “professional employer” to be required to meet the obligations provided for in adecree, the work must be done in the context of a relationship that is sufficiently similar to an employment relationship within the meaning of theCivil Code, which is to say that a certain degree of control or economic dependence is required.

Here, even if it is assumed that the concept of“professional employer” has a meaning broader than that of an employer under the Civil Code, the franchise agreement does not readily support aconclusion that Modern was subject to the Decree, since the supervision it exercised did not suffice to characterize it as a professional employer.Modern’s powers as a franchisor cannot be confused with the relationship of subordination that characterizes a contract of employment. As well,B was not in a position of economic dependence toward Modern. Cases Cited By Abella J.

Applied: Comité paritaire de l’entretien d’édifices publics v. Confédération des caisses populaires et d’économie Desjardins duQuébec, (QC CA), [1985] C.A. 17; Confection Coger Inc. v. Comité paritaire du vêtement pour dames, [1986] R.J.Q. 153;referred to: Comité paritaire de l’entretien d’édifices publics de la région de Québec v. Station de ski Le Valinouët Inc. (1994), 63 Q.A.C. 143;Québec (Office municipal d’habitation) v. Comité paritaire de l’entretien d’édifices publics de la région de Québec, 2009 QCCA 2428; Comitéparitaire de l’entretien d’édifices publics v.

Caisse populaire Immaculée Conception de Sherbrooke (1991), 43 Q.A.C. 1; Groupe d’entretienSalibec Inc. v. Québec (Procureur général), ; Parity Committee for the Building Services (Montreal Region) v. 4523423Canada Inc. (Sani-Vie-Tech), 2011 QCCQ 12209; Dunkin’ Brands Canada Ltd. v. Bertico Inc., 2015 QCCA 624, 41 B.L.R. (5th) 1. By Côté, Brown and Rowe JJ. (dissenting) Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Prud’homme v. Prud’homme, 2002 SCC 85, [2002] 4 S.C.R. 663;Churchill Falls (Labrador) Corp. v.

Hydro-Québec, 2018 SCC 46, [2018] 3 S.C.R. 101; 3091-5177 Québec inc. (Éconolodge Aéroport) v.Lombard General Insurance Co. of Canada, 2018 SCC 43, [2018] 3 S.C.R. 8; Benhaim v. St-Germain, 2016 SCC 48, [2016] 2 S.C.R. 352; SouthYukon Forest Corp. v. R., 2012 FCA 165, 4 B.L.R. (5th) 31; Canada (Attorney General) v. Bedford, 2013 SCC 72, [2013] 3 S.C.R. 1101; J.G. v.Nadeau, 2016 QCCA 167; Van de Perre v. Edwards, 2001 SCC 60, [2001] 2 S.C.R. 1014; Nelson (City) v. Mowatt, 2017 SCC 8, [2017] 1 S.C.R.138; H.L. v. Canada (Attorney general), 2005 SCC 25, [2005] 1 S.C.R. 401; Salomon v.

Matte-Thomson, 2019 SCC 14, [2019] 1 S.C.R. 729;

Schwartz v. Canada, (SCC), [1996] 1 S.C.R. 254; Comité paritaire de l’industrie de la chemise v. Potash, (SCC), [1994] 2 S.C.R. 406; Comité paritaire d’installation d’équipement pétrolier du Québec v. Entreprises Nipo Inc. (1994), 65 Q.A.C. 29;Comité paritaire des agents de sécurité v. Société de services en signalisation SSS inc., 2008 QCCS 335, aff’d 2009 QCCA 1787; Comitéparitaire de l’entretien d’édifices publics de la région de Québec v. Station de ski Le Valinouët Inc. (1994), 63 Q.A.C. 143; Comité paritaire del’industrie de l’automobile des régions Saguenay-Lac St-Jean v.

Soucy (1993), 60 Q.A.C. 76; Cabiakman v. Industrial Alliance Life InsuranceCo., 2004 SCC 55, [2004] 3 S.C.R. 195; Dicom Express inc. v. Paiement, 2009 QCCA 611, [2009] R.J.Q. 924; Comité paritaire de l’entretiend’édifices publics v. Confédération des caisses populaires et d’économie Desjardins du Québec, (QC CA), [1985] C.A. 17;Confection Coger Inc. v. Comité paritaire du vêtement pour dames, [1986] R.J.Q. 153; Comité paritaire de l’entretien d’édifices publics v.Caisse populaire Immaculée Conception de Sherbrooke (1991), 43 Q.A.C. 1; Québec (Procureur général) v. Groupe d’entretien Salibec Inc.,; Bérubé v.

Tracto Inc., (QC CA), [1998] R.J.Q. 93; Provigo Distribution Inc. v. Supermarché A.R.G. Inc., (QC CA), [1998] R.J.Q. 47; Dunkin’ Brands Canada Ltd. v. Bertico Inc., 2015 QCCA 624, 41 B.L.R. (5th) 1; Québec(Procureur général) v. Lazarovitch (1940), 69 B.R. 214; Comité paritaire de l’industrie de l’automobile de Montréal et du district v. Giguère,[1987] R.J.Q. 1176; Quebec (Construction Industry Commission) v. M.U.C.T.C., (SCC), [1986] 2 S.C.R. 327; Comité Paritairede l’Industrie de l’Imprimerie de Montréal et du District v.

Dominion Blank Book Co., (SCC), [1944] S.C.R. 213; McKee v.Reid’s Heritage Homes Ltd., 2009 ONCA 916, 315 D.L.R. (4th) 129. Statutes and Regulations Cited Act respecting collective agreement decrees, CQLR, c. D-2, ss. 1(f), (g), (j), 2, 3, 5, 6, 11, 12, 13, 16, 22 para. 2(a), (e), (i), 24, 52. Act respecting labour standards, CQLR, c. N-1.1, s. 1(10). Canada Labour Code, R.S.C. 1985, c. L-2, s. 3(1). Civil Code of Québec, arts. 9, 2085, 2098, 2098 et seq., 2099. Consumer Protection Act, CQLR, c. P-40.1. Decree respecting building service employees in the Québec region, CQLR, c. D-2, r. 16.

Decree respecting hairdressers in the Outaouais region, CQLR, c. D-2, r. 4. Decree respecting the cartage industry in the Québec region, CQLR, c. D-2, r. 3. Labour Code, CQLR, c. C-27. Labour Relations Act, 1995, S.O. 1995, c. 1, Sch. A, s. 1(1). Loi relative à l’extension des conventions collectives de travail, S.Q. 1934, c. 56. Authors Cited Baudouin, Jean-Louis, et Pierre-Gabriel Jobin. Les obligations, 7e éd. par Pierre-Gabriel Jobin et Nathalie Vézina. Cowansville, Que: YvonBlais, 2013. Beaulieu, Marie-Louis. Les Conflits de Droit dans les Rapports Collectifs du Travail.

Québec: Presses universitaires Laval, 1955. Bich, Marie-France. “Contracts of Employment”, in Reform of the Civil Code, vol. 2-B, Obligations. Texts written for the Barreau du Québecand the Chambre des Notaires du Québec. Montréal, Barreau du Québec, 1993, 1. Boubli, Bernard. “Contrat d’entreprise”, dans Éric Savaux, dir., Encyclopédie juridique Dalloz: Répertoire de droit civil, t. IV, 2e éd. Paris:Dalloz, 1979 (mise à jour juin 2018). Carbonnier, Jean. Droit civil, vol. II, Les biens, Les obligations. Paris: Quadrige/PUF, 2004. Coutu, Michel.

Droit des rapports collectifs du travail au Québec, vol. 2, Les régimes particuliers, 2e éd. Cowansville, Que.: Yvon Blais, 2013. De Niverville, Patrick, et Hélène Ouimet. Loi annotée sur les décrets de convention collective, par Patrick de Niverville, Claude Carignan etHélène Ouimet. Montréal: Wilson & Lafleur, 1996 (feuilles mobiles mises à jour septembre 2001, envoi no 3). Dubé, Jean-Louis. Décrets et comités paritaires: L’extension juridique des conventions collectives. Sherbrooke: Éditions Revue de DroitUniversité de Sherbrooke, 1990. Gagnon, Jean H. La franchise du Québec.

Montréal: Wilson & Lafleur, 2003 (feuilles mobiles mises à jour septembre 2007, envoi no 32). Gagnon, Robert P. Le droit du travail du Québec, 7e éd., mise à jour par Langlois Kronström Desjardins, sous la direction de Yan Bernard etautres. Cowansville, Que.: Yvon Blais, 2013. Gagnon, Robert P., Louis LeBel et Pierre Verge. Droit du travail. Québec: Presses de l’Université Laval, 1987. Gagnon, Robert P., Louis LeBel et Pierre Verge. Droit du travail, 2e éd. Sainte-Foy, Que.: Presses de l’Université Laval, 1991.

Jobin, Carol. “Statuts de salarié et d’employeur dans les lois du travail”, dans JurisClasseur Québec — Rapports individuels et collectifs dutravail, vol. 1, par Guylaine Vallée et Katherine Lippel, dir. Montréal: LexisNexis, 2009, fascicule 8 (feuilles mobiles mises à jour juillet 2018,envoi no 17). Lluelles, Didier, et Benoît Moore. Droit des obligations, 2e éd. Montréal: Thémis, 2012.

Lluelles, Didier, et Benoît Moore. Droit des obligations , 3 e éd. Montréal: Thémis, 2018. Mathieu, Paul-André. La nature juridique du contrat de franchise . Cowansville, Que.: Yvon Blais, 1989. Morin, Fernand, et autres. Le droit de l’emploi au Québec , 4 e éd. Montréal: Wilson & Lafleur, 2010. Perrault, Antonio. Traité de droit commercial , t. II. Montréal: Albert Lévesque, 1936. Pineau, Jean, Danielle Burman et Serge Gaudet. Théorie des obligations , 4 e éd., par Jean Pineau et Serge Gaudet. Montréal: Thémis, 2001. Quebec. Assemblée nationale. Commission permanente de l’économie et du travail. “Étude détaillée du projet de loi n° 75 — Loi modifiant la

Loi sur les décrets de convention collective”, Journal des débats , vol. 35, n o 30, 2 e sess., 35 e lég., 6 décembre 1996. Quebec. Ministère du Travail. Rapport sur l’application de la Loi modifiant la

Loi sur les décrets de convention collective . Québec: Bibliothèque nationale du Québec, 2000. Reid, Hubert. Dictionnaire de droit québécois et canadien , avec la collaboration de Simon Reid. Montréal: Wilson & Lafleur, 2016. Sylvestre, Chantal. “Le contrat de franchise”, dans Droit spécialisé des contrats , vol. 2, Les contrats relatifs à l’entreprise , par Denys-Claude Lamontage, dir. Cowansville: Yvon Blais, 1999. APPEAL from a judgment of the Quebec Court of Appeal (Kasirer, Morin and Bélanger JJ.A.), 2017 QCCA 1237 , [2017] AZ-51418252, [2017] J.Q.

No. 10958 (QL), 2017 CarswellQue 7138 (WL Can.), setting aside a decision of Lavoie J., 2016 QCCQ 1789 , [2016] AZ-51267820, [2016] J.Q. No. 2589 (QL), 2016 CarswellQue 2561 (WL Can.). Appeal dismissed, Côté, Brown and Rowe JJ. dissenting. Marc-André Fabien , Frédéric Gilbert , Alain Gutkin and Christine Provencher , for the appellant. Jacques Cantin , for the respondent. Paul-André Mathieu , for the intervener.

The judgment of Wagner C.J. and Abella, Moldaver, Karakatsanis, Gascon and Martin JJ. was delivered by [ 1 ] Abella J. — The provision of cleaning services in public buildings located in the Quebec region are covered by a collective agreement: the Decree respecting building service employees in the Québec region , CQLR, c. D-2, r. 16 . The Decree , or collective agreement, sets out minimum standards in the workplace, including wages, hours of work, holidays and overtime. [ 2 ] The Decree in turn is governed by the Act respecting collective agreement decrees , CQLR, c. D-2 .

The purpose of the Act was to encourage the negotiation of collective agreements which would lead to improved working conditions for a greater number of workers. The Act also sought to achieve uniformity of working conditions within workplaces in the same industry and region.

Section 22 para. 2(

a) of the Act makes the Comité paritaire de l’entretien d’édifices publics de la région de Québec responsible for overseeing compliance with the Decree , which may exercise all recourses arising from the Decree “in favour of employees who have not caused a suit to be served”. Pursuant to s. 12 of the Act , employers cannot pay their employees less than the minimum set out in a decree. [ 3 ] In light of the Act ’s remedial, benefit-conferring objectives, the Quebec Court of Appeal has held that the Act and the Decrees governed by it must be given a large and liberal

interpretation ( Comité paritaire de l’entretien d’édifices publics de la région de Québec v. Station de ski Le Valinouët Inc. (1994), 63 Q.A.C. 143 ; Québec ( Office municipal d’habitation de) v. Comité paritaire de l’entretien d’édifices publics de la région de Québec , 2009 QCCA 2428 ) . At its peak, the Act governed approximately 100 collective agreements. It now applies to 15, including the one at issue in this appeal. [ 4 ] Related to its aims of protecting and promoting collective agreements in order to improve workplace conditions, s. 11 of the Act states that the provisions of a decree are of “public order”.

Article 9 of the Civil Code of Québec (“ C.C.Q. ”) states that provisions of public order cannot be varied. That means that, if applicable, the provisions of the Decree are mandatory and cannot be changed. [ 5 ] The dispute underlying this appeal is whether the Decree applies to the relationship between Modern Cleaning Concept Inc. and Francis Bourque because Mr. Bourque is an “employee” within the meaning of the Act .

In resolving this dispute, this Court must determine whether the majority in the Court of Appeal ( 2017 QCCA 1237 ) was justified in intervening because the trial judge ( 2016 QCCQ 1789 ) committed a palpable and overriding error in concluding that the Decree did not apply. [ 6 ] Modern provides cleaning and maintenance services in the Quebec region through a network of approximately 450 franchises. Its clients are typically small and medium sized businesses requiring cleaning services in multiple locations. [ 7 ] Modern’s business model is to negotiate a master cleaning contract with its clients.

It then assigns cleaning contracts for specific locations to its various franchisees, who perform the actual cleaning and maintenance work. The franchisees are not involved in negotiating the contracts with Modern’s clients. [ 8 ] Modern negotiated a cleaning services contract with the National Bank of Canada in 2012 for approximately 400 of the Bank’s locations. The agreement between Modern and the Bank stated that the contract would be assigned by Modern to franchisees who would perform the actual cleaning.

Modern would, however, remain responsible to the Bank for the implementation of the contracts at each location. The contract also stated that the price of Modern’s cleaning services would increase if the wages required under the Decree increased. Modern had a similar contractual relationship with the Société des alcools du Québec (SAQ). [ 9 ] Francis Bourque owned and operated his own part-time cleaning business, Nettoyage Francis Bourque. His spouse, Jocelyne Fortin, helped him operate the business. Mr.

Bourque first contacted Modern in 2013, when he learned that it was looking for a replacement cleaner at a SAQ branch. He initially took on this work as a subcontractor. Several months later, Mr. Bourque decided to become a franchisee. He signed the franchise agreement with Modern on January 1, 2014. [ 10 ] The franchise agreement between Modern and Mr. Bourque is a lengthy document with multiple appendices. The

preamble

states that the franchisee, Mr. Bourque, would have [ translation ] “complete control over the management of his operations, which involves a business risk as in any other business, for which THE FRANCHISOR is in no way a guarantor” (emphasis in original). [ 11 ] The agreement stipulated that Mr. Bourque agreed to be assigned cleaning contracts and stated that he was an “independent contractor”. Modern was to be indemnified for any and all suits, claims or other demands related to a failure to comply with any obligation in the agreement. Modern was also entitled to cancel Mr.

Bourque’s cleaning contracts on “mere notice”. [ 12 ] Mr. Bourque agreed to perform cleaning services exclusively through the franchise relationship, not to compete with Modern’s network, and to use his own tools and equipment. He was required to identify himself as a member of the Modern network in relation to any business activity and was to immediately report any complaints he received from clients to Modern. Any of Mr. Bourque’s employees deemed to be unacceptable to either Modern or one of its clients were to be let go.

Modern’s representatives were entitled to perform quality control checks at any time without prior notice. Any new cleaning opportunities had to be reported to Modern so that Modern could negotiate the contracts. [ 13 ] In accordance with the franchise agreement, Modern billed the clients in Mr. Bourque’s name. It paid Mr. Bourque by direct deposit after deducting the various amounts Mr. Bourque owed it. At any given time, Mr.

Bourque could owe up to 43% of his revenue to Modern, including 25% paid in advance for the rights to the franchise and the acquisition of the first contract, plus 7% of gross revenue, 10% for administrative fees and up to 1% of annual gross revenue for publicity fees. Additionally, Mr. Bourque made loan arrangements with Modern to help him acquire the cleaning contracts and assist with the franchising costs. These arrangements were appended to the franchising agreement. [ 14 ] Mr. Bourque was initially assigned cleaning contracts for one National Bank location and one branch of the SAQ.

Over the next few months, Mr. Bourque was assigned cleaning contracts for three additional National Bank locations. He had limited interaction with the clients whose premises he cleaned. His spouse, Ms. Fortin, helped him perform the cleaning services. [ 15 ] On May 31, 2014, after approximately five months of working within the Modern network, Mr.

Bourque, increasingly frustrated by his lack of profits and inability to develop his business as he wished, terminated his franchise agreement and recommenced the operation of his own cleaning business. [ 16 ] After the termination of the franchise agreement, the Comité investigated the relationship between Mr. Bourque and Modern. It concluded that the language of the franchise agreement was not determinative of the reality of the relationship between Mr. Bourque and Modern, and that despite the language in the franchise agreement, Mr.

Bourque was in fact an “employee” as defined by the Act , not an independent contractor. He was therefore entitled to be paid the mandatory wages and benefits set out in the Decree . [ 17 ] On November 12, 2014, the Comité commenced proceedings against Modern in the Court of Quebec, claiming $9,219.32 in unpaid wages and other benefits in relation to the cleaning services performed by Mr. Bourque and Ms. Fortin. [ 18 ] The trial judge considered the relationship between Modern and Mr. Bourque to determine whether Mr. Bourque was an employee or independent contractor.

He found that the following factors suggested Mr. Bourque was an independent contractor: he owned his own cleaning business; he acted as a subcontractor for Modern prior to becoming a franchisee; and Mr. Bourque hoped to enlarge his business. The factors the trial judge said supported Mr. Bourque being an employee included his inability to negotiate the terms of the franchise agreement; Modern’s ongoing supervision of his work; and the fact that Mr. Bourque’s clients paid Modern who then paid Mr. Bourque. [ 19 ] In order to determine whether Mr.

Bourque was actually an employee or an independent contractor, however, the trial judge emphasized Mr. Bourque’s intention. He concluded that Mr. Bourque clearly entered into the franchise relationship with the aim of expanding his own cleaning business. That the venture did not go as planned — due to Mr. Bourque’s dissatisfaction with Modern’s role as franchisor — did not, in the trial judge’s view, detract from Mr. Bourque’s actual purpose: to expand his own business. [ 20 ] Relying on the language of the franchise agreement, the trial judge concluded that there was a common intention that Mr.

Bourque would be an independent contractor, not an employee. Accordingly, as an independent contractor, he was not entitled to the full amount claimed by the Comité on his behalf. He was, however, entitled to $2,877.28, an amount Modern conceded it still owed him pursuant to the franchise agreement. [ 21 ] Kasirer J.A., writing for a majority in the Court of Appeal, allowed the appeal. He held that the trial judge had misapprehended the nature of the tripartite contractual relationship between Modern, its clients and its franchisee, Mr. Bourque.

Specifically, Kasirer J.A. was of the view that the trial judge had made a palpable and overriding error in failing to consider the nature of the assignments of the cleaning contracts from Modern to Mr. Bourque. By failing to recognize that Modern remained contractually liable to its clients, the trial judge erred in his analysis of whether Mr. Bourque was an employee or an independent contractor. Various elements of this tripartite model led the Court of Appeal to conclude that Mr. Bourque was an employee not an independent contractor and ordered Modern to pay the Comité the $9,219.32 it claimed on behalf of Mr.

Bourque and Ms. Fortin. [ 22 ] For the following reasons, I agree with Kasirer J.A. that the trial judge’s failure to consider the tripartite nature of Modern’s business model was a palpable and overriding error warranting appellate intervention. This error caused the trial judge to err in his assessment of whether Mr. Bourque was an employee or an independent contractor. Analysis [ 23 ] Two provisions of the Act are primarily engaged by this appeal, s. 1 (

g) which defines “professional employer”, and s. 1 (

j) which defines “employee”. The provisions state: 1. ( g ) “ professional employer” means an employer who has in his employ one or more employees covered by the scope of application of a decree; 1. ( j ) “employee” means any apprentice, unskilled labourer or workman, skilled workman, journeyman, artisan, clerk or employee, working individually or in a crew or in partnership; [ 24 ] The

definitions of “employee” and “professional employer” are related: a professional employer is one who employs one or more employees covered by a Decree (see F. Morin et al., Le droit de l’emploi au Québec (4th ed. 2010), at para. III-508 ; Comité paritaire de l’entretien d’édifices publics v. Caisse populaire Immaculée Conception de Sherbrooke , 43 Q.A.C. 1 , at paras. 13-15 , per Proulx J.A.). I agree

with Kasirer J.A. that the definition of “professional employer” must, like the definition of “employee”, be given a large and liberal

interpretationin light of the remedial purposes of the Act and Decree. [25] Consistent with those objectives, the definition of “employee” in the Act is broader than set out in the C.C.Q. Workers maytherefore be considered “employees” for the purposes of the Act and Decree even if they would not be considered employees pursuant to otherlaws of Quebec. The fact that the franchise agreement identifies Mr. Bourque as a franchisee is not determinative.

It also means that, contrary tothe views of the dissenting judge in the Court of Appeal, the Decree can apply to relationships other than those governed by employmentcontracts. It can, in fact, apply to any contract in which one can conclude that an individual is in a relationship determined to be that of“employee” within the meaning of the Act. [26] Part of that task, therefore, is interpreting “artisan”, listed in the definition of “employee” in the Act.

Artisans are one suchcategory of worker not generally seen to be an employee under Quebec labour legislation because artisans, like independent contractors, oftenexercise a great deal of autonomy (A. Perrault, Traité de droit commercial (1936), vol. II, at p. 225).

As Professor Carol Jobin noted, theinclusion of artisan in the definition of “employee” indicates that the notion of employee in the Act has a greater reach than just what comes froman employment contract (“Statuts de salarié et d’employeur dans les lois du travail”, in JurisClasseur Québec —Rapports individuels et collectifsdu travail (loose-leaf), vol. 1, by G. Vallée and K. Lippel, eds., fasc. 8, at para. 145).

The language of the French version of the Act clarifiesfurther the wider breadth of the category of “employee”, defining a “salarié” as including an “employé”, not merely, as in the English, the use ofthe tautological “employee”.

The inclusion of “artisan” in the Act’s definition of “employee” clearly demonstrate that the Act and the Decreeapply to relationships other than those governed by employment contracts. [27] The seemingly anomalous inclusion of “artisan” in the definition of “employee” in the Act has resulted in a body ofjurisprudence to determine whether a worker is an artisan who is therefore covered by the Act, or an independent contractor. Two decisions ofthe Quebec Court of Appeal have grappled with this distinction. In Comité paritaire de l’entretien d’édifices publics v.

Confédération des caissespopulaires et d’économie Desjardins du Québec, (QC CA), [1985] C.A. 17, the Court of Appeal established the test fordistinguishing between an artisan and an independent contractor under s. 1(

j) of the Act. [28] In Desjardins, the Caisse populaire of St-Pascal-de-Maizerets had entered into an agreement with a worker to clean itspremises. The worker owned his own cleaning business and used his own equipment. He was also responsible for ensuring that he had adequatestaffing to complete the work. Some years later, he sold his cleaning business and the contracts he had with the Caisse populaire to Louis-ÉmileGirard, who carried on business under the name “Service d’Entretien Ménager Louis-Émile Girard Enr.”.

The dispute in Desjardins centred uponwhether the Caisse populaire was an employer within the meaning of the Act. In order to answer that question, it was necessary to determinewhether the workers were “employees” as defined by the Act. [29] After considering dictionary

definitions of “artisan”, the Court of Appeal emphasized that artisans are those who performmechanical or manual trades or arts and that, generally, an artisan works alone or with a small enterprise. Jacques J.A. noted that despite thesimilarities between artisans and independent contractors, the legislation included artisans within the definition of “employee” in the Act in orderto provide them with greater benefits and improved working conditions.

The independence usually relied on to distinguish independentcontractors from employees could not, therefore, be determinative in deciding who was entitled to legislated employment standards. [30] The critical factor distinguishing artisans from independent contractors was held to be the respective degree of risk and theattendant ability to make a profit. The independent contractor, in attempting to generate profit, accepts the business risk. Artisans, on the otherhand, do not.

Jacques J.A. noted that this distinction was also reflected in French law where it is used to differentiate business contracts fromemployment contracts (see B. Boubli, “Contrat d’entreprise”, in É. Savaux, eds., Encyclopédie juridique Dalloz: Répertoire du droit civil (2nded. 1979), vol. IV, updated June 2018, at para. 11 et seq.). [31] The acceptance of risk and attendant ability to make a profit were therefore found to be the primary indicia distinguishingartisans from independent contractors — independent contractors assume the risk of the business while artisans do not.

Secondary indicia arealso relevant in distinguishing artisans from independent contractors, including the ability to set working hours, and determine methods andmanner of payment. [32] Applied to the facts of the case, the Court of Appeal concluded that the risk of the enterprise, or business risk, was with theworker. He was free to create his own

schedule and to use his own methods to complete the necessary work. He received remuneration in theform of a lump sum. The business risk — including having more or less work and the ability to control the pace of work — was the worker’s. Hewas, as a result, an independent contractor, not an artisan. As such, he was not an employee, the Caisse populaire was not a professionalemployer, and neither the Act nor Decree applied. [33] The Court of Appeal returned to the issue in Confection Coger Inc. v. Comité paritaire du vêtement pour dames, [1986] R.J.Q.153 (C.A.).

The court was asked to determine whether the relationship between Coger and a group of female workers in the garment industry wasan employment relationship, or whether the workers were independent contractors. The workers sometimes solicited work themselves and atother times received work from Coger. They were unable to set the price for their work. They were free, however, to set their own hours and dotheir work either in Coger’s workshop or in their own homes.

They owned their own equipment. [34] To determine whether these workers were artisans and therefore employees in accordance with the Act, the Court of Appealreturned to the Desjardins “risk and profit” test. Once again, Jacques J.A. wrote for the court. He emphasized that the relevant risk is businessrisk, not simply any risk accepted by the worker in relation to his or her working conditions. Artisans, by virtue of their independence, willalways have a degree of autonomy and will likely accept some risk in structuring their work.

Even in circumstances where the worker owns his orher own equipment and is characterized as an independent contractor by tax law, as these women were, a worker may, for the purposes of s. 1(j)of the Act, nonetheless be characterized as an artisan and thus an “employee”. The working relationship has to be examined in its entirety todetermine who bears the business risk. If it is the worker, then he or she is properly characterized as an independent contractor.

If not, the workeris an artisan, and, as a result, an employee for the purposes of the Act. [35] Applying the law to the facts before it, the Court of Appeal concluded that the workers did not assume the business risk andwere therefore employees of Coger. Coger dictated the work to be done and the prices. While Coger did not control the minutiae of the worker’sdaily activities, it set delivery times which effectively created deadlines for the work’s completion.

The Decree, as a result, applied to therelationship. [36] The case law distinguishing independent contractors from artisans thus demands a highly contextual and fact-specific inquiryinto the nature of the relationship in order to determine which party bears the business risk. The question is not one of comparative risk; rather, it

is which party actually assumes the risk of the business. [37] While, on the surface, the presence of a franchise relationship in this appeal distinguishes it from both Desjardins and Coger,for the purposes of the Act, Mr. Bourque’s status as a franchisee is not determinative.

Instead, in accordance with Desjardins and Coger, theinquiry must assess the actual nature of the relationship between the parties, regardless of the terms of and labels used in the franchise agreement.I agree with Kasirer J.A.: Modern’s business structure must be examined as a whole to determine who assumed the business risk and attendantprospect of making a profit. This inquiry is consistent with the longer judicial tradition in Quebec of looking behind contracts to ascertain the truenature of the relationship of the parties (P. de Niverville et H.

Ouimet, Loi annotée sur les décrets de convention collective (loose-leaf), at p. 27). [38] The relevant question in this appeal is whether Mr. Bourque assumed the business risk and corresponding ability to make aprofit that would qualify him as an independent contractor. The presence of a franchise agreement cannot function to disguise the presence of arelationship between an “employee” and “professional employer” as those terms are defined in the Act.

This is consistent with the generalprinciple that the desire to evade the application of a decree cannot overcome the reality of the contractual relationship (Groupe d’entretienSalibec Inc. v. Québec (Procureur général), (Que. C.A.)). This principle does not change in the case of franchise agreements(see Parity Committee for the Building Services (Montreal Region) v. 4523423 Canada Inc. (Sani-Vie-Tech), 2011 QCCQ 12209, at para. 38). To the extent that the reality of the relationship between the parties reveals that Mr.

Bourque did not in fact assume the business riskand had no meaningful opportunity to make a profit, that relationship is subject to the Decree. [39] Modern’s business model requires it to enter into two types of contracts — cleaning service agreements with its clients likethe Bank, and franchise agreements with individual cleaners, like Mr. Bourque. The terms of the contract between Modern and the Bankstipulated that the service contract would be assigned to a franchisee. After “purchasing” the cleaning contract from Modern, Mr.

Bourque, asfranchisee, agreed to perform the work in accordance with terms agreed to by Modern and the Bank as client. Kasirer J.A. properly characterizedthis business relationship as being tripartite in nature, since it involves three parties: the client requesting cleaning services, Modern whichguarantees the quality and provision of services, and the franchisee who actually performs them. [40] To fully understand this relationship, it is necessary to examine the nature of the assignments made by Modern. Quebec law,as Kasirer J.A. noted, draws a distinction between perfect and imperfect assignments.

In a perfect — or true — assignment, the assignor transfersthe rights and obligations it has under the contract to an assignee. The assignor is released from the assigned contract, and the assignee becomesbound as if it was the original party to the contract (see J. Pineau, D. Burman and S. Gaudet, Théorie des obligations (4th ed. 2001), by J. Pineauand S. Gaudet, at No. 505.1). [41] In an imperfect assignment, however, the assignor is not released from its obligations under the contract: [translation] “Thereis no substitution of a contracting party, [but] rather, a new contracting party is added” (D.

Lluelles and B. Moore, Droit des obligations (3rd ed.2018), at No. 3217 (first emphasis added; second emphasis in original)). The assignor therefore remains contractually bound by the contract andthe other party to the assigned contract will then have two parties it can pursue for the performance of the contract’s obligations: the assignor andthe assignee (see J. Carbonnier, Droit civil, vol. II, Les biens, Les obligations (2004), at No. 1240; J.-L. Baudouin and P.-G. Jobin, Lesobligations (7th ed. 2013), by P.-G. Jobin and N.

Vézina, at Nos. 1028 and 1047-48). [42] In the cleaning service agreements between Modern and its clients, the clients consented in advance to the assignment of thecleaning contracts to franchisees, but they did not consent to releasing Modern from the original service contract. The provisions of the servicecontract indicated that despite any subcontracting, assignment or franchising, Modern remained responsible for ensuring that the services wereperformed and for the quality of the cleaning services.

The inclusion of an indemnity clause in the franchise agreement between Modern and Mr.Bourque does not change the fact that Modern remained liable to its clients if the cleaning services were not delivered in accordance with thecontract between Modern and its client. The assignment of cleaning contracts by Modern are therefore “imperfect assignments” because a directcontractual link subsists between Modern and its client. The effect of this “imperfect” assignment was to create an ongoing tripartite relationshipbetween Modern as franchisor, Mr. Bourque as franchisee, and the Bank as client.

From the perspective of the Bank, both Modern and Mr.Bourque were obliged to perform the contract. [43] Both the cleaning services contract and the franchise agreement must be considered to understand Modern’s business model.By virtue of the imperfect assignment, Modern’s cleaning services contract with the Bank and its franchise agreement with Mr. Bourque areinextricable. Mr. Bourque’s non-performance of the cleaning contract would permit Modern to terminate the franchise agreement. Similarly, therenewal of the franchise agreement between Mr. Bourque and Modern was contingent on Mr.

Bourque’s compliance with the obligations to theBank as set out in the cleaning services contract. [44] This, however, was overlooked by the trial judge. Instead, he only examined whether Mr. Bourque assumed some risks, notwhether he assumed the business risk. In Desjardins, Jacques J.A. emphasized that artisans will always have a degree of autonomy. But the factthat an employee has a degree of autonomy and assumes some degree of risk does not mean that he or she bears the business risk, in the sense ofbeing able to organize his or her business venture in order to make a profit.

By failing to consider the tripartite relationship, the trial judge did notconsider the business as a whole, and, as a result, improperly concluded that Mr. Bourque bore the business risk. [45] As Kasirer J.A. noted, by virtue of its imperfect assignments, Modern’s tripartite business model is distinct from mostfranchise models in which the franchisee has a direct, autonomous relationship with its clients independent of the franchisor. In those franchisemodels, it is only the franchisee who is contractually liable to the clients, and it is therefore the franchisee who will generally bear the risk of thebusiness.

By “imperfectly assigning” cleaning contracts to franchisees like Mr. Bourque, however, Modern maintained a direct relationship withits clients. I agree with the majority at the Court of Appeal that characterizing Mr. Bourque’s business risk in light only of the franchiseagreement, as the trial judge did, constituted a palpable and overriding error because it was an unduly narrow and restrictive one whichobfuscated Modern’s continuous contractual relationship with its client, a contractual relationship that placed the business risk squarely onModern’s shoulders.

An understanding of this tripartite relationship is the indispensable context for applying the Desjardins/Coger test. Thequestion asked by this test remains the same of whether or not the relationship is bipartite or tripartite in nature. [46] In light of Modern’s ongoing liability to the Bank, the fact that Mr. Bourque and Modern agreed to a term stating that Mr.Bourque would be an independent contractor does not materially affect the analysis, as the trial judge concluded it did. [47] Through the operation of the franchise agreement, Mr.

Bourque accepted certain risks, including an indemnification clause tothe effect that Modern could recover against him for any failure to comply with the terms of the cleaning contracts. Mr. Bourque also assumedsome risks relating to any improper use of time, equipment and product. But as the Quebec Court of Appeal noted in Coger, artisans, by virtue oftheir independence, will typically accept some risk in connection with their workplace conditions. There is, however, a fundamental distinctionbetween the risks assumed by workers relating to working conditions, and the business risk.

[48] By virtue of its imperfect assignment to Mr. Bourque and the terms of its cleaning service contract with the Bank, Modernretained the risk of contractual non-performance. From the Bank’s perspective, as Modern’s client, Modern’s continued involvement was critical.As a stranger to the franchise agreement with Mr. Bourque, Modern’s ability to demand that Mr. Bourque indemnify it was of no relevance to theBank. Modern’s preferred strategy in circumstances where a franchisee failed to perform the cleaning contract was, indeed, to pre-emptively takeback the cleaning contract and assign it to another franchisee.

This strategy allowed Modern to maintain good relations with its clients whileavoiding potentially costly indemnification proceedings against the non-performing franchisee. This preventative strategy and desire to maintaina positive relationship with its clients resulted in the franchise agreement imposing extensive controls on Mr. Bourque so as to detect any non-performance as early as possible. [49] Modern’s ongoing liability to its clients by virtue of the imperfect assignments is inexorably linked to the controls it placed onMr. Bourque through the franchise agreements.

Modern, at all times, remained liable to its clients. The controls it placed on Mr. Bourque aimedto limit this liability. Modern’s strategy to strictly control its franchisees, like Mr. Bourque, is the context for examining Modern’s assumption ofrisk. These controls were critical because from the Bank’s perspective it was Modern, not Mr. Bourque, who bore the risk of contractual non-performance. As Kasirer J.A. noted, Modern was well-rewarded for assuming this risk: Mr. Bourque could owe Modern up to 43% of hisrevenue. [50] As part of its scheme, Modern limited Mr.

Bourque’s ability to organize his own business, and therefore also limited Mr.Bourque’s prospect of making a profit. The terms of the agreement limited Mr. Bourque’s ability to transfer his cleaning contracts to thirdparties. Despite the fact that Mr. Bourque had paid for obtaining the cleaning contracts, he was not free to transfer them — either by sale orassignment. Once Mr. Bourque terminated his relationship with Modern, it was Modern, not Mr. Bourque, who reassigned the contracts whichMr. Bourque had paid to obtain.

Modern had the option of repurchasing the cleaning contract if a franchisee decided either that he or she wantedto cease operating a particular franchise or leave the Modern network altogether, and Modern retained the right to oppose the transfer or sale of acleaning contract to a third party. These measures permitted Modern to retain control over its network of franchises, critical for Modern’s ongoingcontractual relationship with — and liability to — its business clients. [51] Further, the franchise agreement tightly controlled how franchisees could get new business. Mr.

Bourque was bound by anon-competition clause. Any new cleaning contracts Mr. Bourque sought to obtain had to be submitted to Modern. Modern would then negotiatethe master service contract with the new client. A franchisee would then be able to purchase the rights to the new client, despite having broughtthe client to Modern’s attention to begin with. [52] Beyond these constraints on Mr. Bourque’s ability to organize his own business, Modern exercised ongoing supervision overMr. Bourque’s work. At any time, Modern could access the locations serviced by Mr. Bourque.

He was also required to document the work hecompleted. Ongoing supervision allowed Modern to minimize its business risk vis-à-vis its clients, which was critical to the success of Modern’sbusiness model given that it remained directly liable to its clients for non-performance. In contrast, Mr. Bourque had limited dealings with theemployees of the Bank, which reported any complaints to Modern, not Mr. Bourque. When a Bank branch complained to Modern about Mr.Bourque’s services, it was Modern which had the ability to — and did in fact — deduct Mr. Bourque’s pay without discussing the complaintwith Mr.

Bourque. [53] Moreover, Mr. Bourque’s receipt of payment from Modern more closely resembled a salary than business revenue. Mr.Bourque received no direct payment from the clients, who paid Modern. Modern paid Mr. Bourque through direct deposit, after deductingamounts for franchising fees, the loans and the products sold by Modern to Mr. Bourque. [54] Because of the imperfect assignments, Modern remained responsible to its clients. The extensive supervision and limitsimposed on Mr.

Bourque through the franchise agreement, restricting his ability to control, organize and expand his own business, were designedto protect Modern from the possibility of liability generated by Mr. Bourque’s conduct. Modern, however, argues, unpersuasively, that the termsof its franchise agreement with Mr. Bourque merely complied with its obligations as a franchisor, that is, it controlled Mr. Bourque, a franchisee,in a manner that discharged its duties to support and enhance its brand. [55] There is no provision of the C.C.Q. or any other Quebec legislation dealing specifically with franchise agreements.

In Dunkin’Brands Canada Ltd. v. Bertico Inc. (2015), 2015 QCCA 624 , 41 B.L.R. (5th) 1, the Quebec Court of Appeal set out the obligationsowed by a franchisor to its franchisees in a franchise relationship. Writing for the court, Kasirer J.A. emphasized that franchisors have an impliedobligation to take reasonable measures to support their franchisees and maintain the strength and relevance of the brand, including measures topreserve the brand’s goodwill in the marketplace.

The franchisor owes this duty to each individual franchisee and to its entire network offranchisees in order to preserve the integrity of the franchise. To enhance the brand, the franchisor has a duty to assist the franchisees in adaptingto a changing marketplace, in implementing reasonable measures to remain competitive, and in promoting ongoing innovation. [56] The controls put in place by Modern undoubtedly align with some of the supervisory authority contemplated by Dunkin’Brands, since Modern, as franchisor, owed all of its franchisees a duty to protect and enhance the Modern brand.

But, as previously noted, thefact that the relationship between Modern and Mr. Bourque was one of franchisor-franchisee does not answer the question of who assumed theacceptance of and remuneration for business risk. As Desjardins and Coger delineate, it is substance, not form, that is determinative. In the casebefore us, the extent of the controls placed on Mr. Bourque by Modern were necessary for Modern to organize and supervise the business risksince it remained in a direct contractual relationship with its clients. Modern limited Mr.

Bourque’s ability to organize his own business so that itcould limit its own risk in its ongoing relationship with its clients, a risk it retained because of its imperfect assignment of cleaning contracts.Whether the arrangement is also consistent with the franchisor’s obligations as set out in Dunkin’ Brands is immaterial. [57] Determining who bears the business risk is, of course, a fact-specific, contextual inquiry.

There may be other circumstances inwhich a franchisee could be said to bear sufficient risks so as to assume the business risk of his or her enterprise and thus be considered anindependent contractor. [58] In this case, the trial judge’s failure to consider the effect of the imperfect assignment of the cleaning contracts from Modernto Mr. Bourque, caused him to err in his application of the Desjardins/Coger test. At all times, both the cleaning services contract and franchiseagreement governed Modern’s business model. The effect of Modern’s business model was that it, not Mr.

Bourque, assumed the “risk andprofit” of the business. Because of its tripartite business model and ongoing liability to its clients, Modern placed extensive controls on Mr.Bourque to limit its own business risk. Mr. Bourque did not assume the business risk and therefore it cannot be said that he was an independentcontractor. I agree with the majority of the Court of Appeal that the trial judge’s failure to consider the nature of the imperfect assignments at theheart of Modern’s business model, and the resulting tripartite nature of the relationship between Modern, its clients and Mr.

Bourque, was apalpable and overriding error which led to the improper application of the Desjardins and Coger tests.

[ 59 ] When Modern’s tripartite business model is properly brought into the analysis, it becomes clear, as the Court of Appeal held, that it was Modern who assumed the business risk and ability to make a profit. Mr. Bourque therefore was an artisan, making him an employee under the Act . Given that Mr. Bourque and Ms. Fortin are employees within the meaning in the Act , Modern is correspondingly a “professional employer”. [ 60 ] The mandatory provisions of the Act and Decree therefore govern the relationship between Modern and Mr. Bourque. As a result, both Mr. Bourque and Ms.

Fortin are entitled to the wages and benefits claimed on their behalf by the Comité. [ 61 ] Accordingly, the Court of Appeal properly intervened. I would dismiss the appeal with costs. English version of the reasons delivered by Côté, Brown and Rowe JJ. ( dissenting ) — TABLE OF CONTENTS Paragraph I. Background and Judicial History 63 II. Issues and Standards for Intervention 66 III. Statutory Framework of the ACAD 72 A. History and Scheme of the ACAD 72 B. Scope of a Decree 77 IV. Status of Mr. Bourque Under the ACAD 81 A. Concept of Employee in the ACAD 81 B. Business Risk Test 87 C. Application to the Facts 96

(1) Trial Judge’s Analysis of the Evidence 98

(2) Effect of the Imperfect Assignment of Cleaning Contracts on Business Risk 106 V. Status of Modern Under the ACAD 116 A. Concept of Professional Employer in the ACAD 117 B. Application to the Facts 128

(1) Supervision Exercised by the Franchisor 129

(2) Economic Dependence 136 VI. Conclusion 138 [ 62 ] We have carefully read our colleague’s reasons, which essentially reiterate the position stated by the majority of the Quebec Court of Appeal with regard to the effect of imperfect assignments of contracts. With respect, we believe that the reasoning underlying that position is flawed. The fact that the assignments of contracts between Modern Cleaning Concept Inc. (“Modern”) and Mr. Bourque were imperfect did not significantly affect the business risk assumed by Mr.

Bourque, and therefore the trial judge’s failure to deal with this aspect of the contractual relationship between Modern and Mr. Bourque is not a reviewable error. The appeal should be allowed and the trial judge’s decision restored. I. Background and Judicial History [ 63 ] The appellant, Modern, operates a large network of cleaning and maintenance franchises. Francis Bourque, a contractor in the same field of activity, decided to join the network as a franchisee in the hope of enlarging his client base and expanding his own business.

Modern therefore assigned him cleaning contracts with commercial clients, including branches of the National Bank (“Bank”). After just a few months, Mr. Bourque, who was not satisfied with the results, gave up his franchise and continued carrying on business under his own name. [ 64 ] The respondent, the Comité paritaire de l’entretien d’édifices publics de la région de Québec (“Parity Committee”), argued that Mr. Bourque and his spouse, Jocelyne Fortin, who worked with him, were in fact “employees” of Modern for the purposes of a specific statute, the Act respecting collective agreement decrees , CQLR, c.

D-2 (“ ACAD ”). On this basis, the Parity Committee claimed $9,219.32 on their behalf for wages that had allegedly not been paid. [ 65 ] The Court of Quebec dismissed the action, finding that Mr. Bourque had been engaged in a business venture involving a business risk that was incompatible with the status of “employee” under the ACAD ( 2016 QCCQ 1789 ). The Court of Appeal reversed that decision after concluding that the trial judge had erred in assessing that risk by failing to consider the imperfect nature of the assignments of contracts between Modern and its franchisees ( 2017 QCCA 1237 ).

Morin J.A., dissenting, was of the view that Mr. Bourque could not be characterized as an employee for the purposes of the ACAD in the absence of a contract of employment within the meaning of the Civil Code (“ C.C.Q. ”). II. Issues and Standards for Intervention [ 66 ] The appeal to this Court essentially raises two issues: was Mr. Bourque an employee within the meaning of the ACAD and, if so, was Modern his “professional employer” for the purposes of that statute? [ 67 ] We begin by noting, with regard to Modern’s status under the ACAD , that the judge did not analyze this second issue directly.

There is therefore no need to discuss the applicable standard for intervention in this regard, other than to note that the Court must defer to the relevant findings of fact made by the trial judge. [ 68 ] The determination of Mr. Bourque’s status under the ACAD raises a question of mixed fact and law, since it involves applying a legal test — specifically the business risk test — to the facts of the case ( Housen v. Nikolaisen , 2002 SCC 33 , [2002] 2 S.C.R. 235, at paras. 26-37 ; Prud’homme v. Prud’homme , 2002 SCC 85 , [2002] 4 S.C.R. 663, at para. 66 ).

One of the main points to consider is what the parties to the franchise agreement intended, including what risk Mr. Bourque intended to assume. In this regard, this Court recently noted in Churchill Falls (Labrador) Corp. v. Hydro-Québec , 2018 SCC 46 , [2018] 3 S.C.R. 101, at paras. 49 and 147 , that the

interpretation of a contract

is generally a question of mixed fact and law. The same is true with the characterization of a contract where it rests on the determination of theparties’ common intention, at least when regard must be had to extrinsic evidence, as is the case here (3091-5177 Québec inc. (ÉconolodgeAéroport) v. Lombard General Insurance Co. of Canada, 2018 SCC 43, [2018] 3 S.C.R. 8, at paras. 18 and 59). [69] Unless an exception applies, the standard for intervention in respect of questions of mixed fact and law is that of palpable andoverriding error, which is a “highly deferential” standard (Benhaim v.

St-Germain, 2016 SCC 48, [2016] 2 S.C.R. 352, at para. 38, citing SouthYukon Forest Corp. v. R., 2012 FCA 165, 4 B.L.R. (5th) 31, at para. 46). Under this standard, an appellate court’s role is not to reconsider theevidence globally and reach its own conclusions, but simply to ensure that the trial judge’s conclusions — including the trial judge’s legalinferences — are supported by the evidence (Housen, at paras. 1, 4, 22-23 and 26; Canada (Attorney General) v. Bedford, 2013 SCC 72, [2013]3 S.C.R. 1101, at para. 55; J.G. v.

Nadeau, 2016 QCCA 167, at para. 79 ). [70] It is important to remember that “failure to discuss a relevant factor in depth, or even at all, is not in itself a sufficient basis foran appellate court to reconsider the evidence” (Housen, at para. 39). The trial judge is presumed to have considered the evidence in its entirety(Housen, at para. 72). As the Court noted in Van de Perre v.

Edwards, 2001 SCC 60, [2001] 2 S.C.R. 1014, at para. 15, “an omission is only amaterial error if it gives rise to the reasoned belief that the trial judge must have forgotten, ignored or misconceived the evidence in a way thataffected his conclusion”. [71] Appellate intervention is warranted only where it is shown that a palpable error, that is, an error that is “plainly seen”, hasaffected the result (Nelson (City) v. Mowatt, 2017 SCC 8, [2017] 1 S.C.R. 138, at para. 38).

If no palpable and overriding error is properlyestablished, this Court must restore the trial judge’s decision, even if it considers the appellate court’s conclusions to be more persuasive in somerespects (H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401, at para. 74; see also Nelson (City), at para. 38; Salomon v.Matte-Thomson, 2019 SCC 14, [2019] 1 S.C.R. 729, at paras. 33 and 110; Schwartz v. Canada, (SCC), [1996] 1 S.C.R. 254, atpara. 36). III. Statutory Framework of the ACAD A.

History and Scheme of the ACAD [72] The purpose of the ACAD is to provide for the juridical extension of a collective agreement, by means of a governmentdecree, so that it binds all employees and employers working in a specific field of activity. The initial version of the statute, which was inspired by European legislation, was enacted in Quebec in 1934,[1] at a time when the labour movement was still relatively weak and legislated minimumlabour standards were not stringent.

The statute’s original purpose was to promote the establishment of decent conditions of employment whileensuring that employers that granted concessions to their employees would remain competitive. In authorizing the government to issue a decreeimposing conditions of employment negotiated by an association of employees and an employer on an entire field of activity, the statute reflecteda compromise between state intervention, on the one hand, and negotiation on a voluntary basis by workers and employers, on the other (seeJ.-L.

Dubé, Décrets et comités paritaires: L’extension juridique des conventions collectives (1990), at pp. 5-22). [73] Over time, the mechanism of juridical extension of collective agreements has declined in importance. Whereas in 1948 therewere nearly 100 decrees in Quebec governing labour relations between approximately 18,000 employers and 200,000 employees (Dubé, at p. 21),today there are only 15 decrees in force under the ACAD.

In fields of activity like hairdressing, automotive services, cartage and cleaning andmaintenance, to name just a few, juridical extension is still aimed at maintaining decent conditions of employment for certain classes ofemployees while preserving healthy competition among employers. [74] The juridical extension mechanism works as follows. When a collective agreement is entered into by an association ofemployees and an employer, any party to the agreement may apply to the government to have its content imposed on others in the industry in aparticular region (ACAD, s. 3).

If, upon inspection, the application is considered admissible, the Minister must publish a notice specifying thatany objection to the draft collective agreement extension must be filed within 45 days (or a shorter time in certain cases) (ACAD, s. 5).

At theexpiry of that time, the Minister may recommend that the government issue a decree ordering the extension of the collective agreement, with orwithout changes, if the Minister considers that the application meets the conditions set out in s. 6 ACAD, which concern matters such as the scopeof the decree, the preponderant importance of the proposed conditions of employment and the absence of serious inconvenience for theenterprises concerned.

Where appropriate, the government may then order that the collective agreement will, by juridical extension, bind allemployees and employers within the geographical and sectoral limits provided for in the decree (ACAD, s. 2). [75] Once in effect, the conditions of employment imposed by decree become minimum standards of public order from which theemployers and employees concerned may not derogate (ACAD, ss. 11 to 12). However, as under the Act respecting labour standards, CQLR,c.

N-1.1, the parties may, through a contract of employment, provide for conditions that are more advantageous for employees (ACAD, s. 13). Aparity committee made up of employer and employee representatives is responsible for overseeing and ascertaining compliance with the decree(ACAD, s. 16).

The parity committee may, among other things, receive the complaints filed by employers and employees (ACAD, s. 24), collectlevies (ACAD, s. 22 para. 2(i)), inspect worksites (ACAD, s. 22 para. 2(e)), make claims on behalf of employees (ACAD, s. 22 para. 2(a)) andinstitute penal proceedings (ACAD, s. 52). [76] The ACAD is considered remedial legislation because its purpose is to guarantee minimum conditions of employment and toprevent abuses in the industries concerned (see Comité paritaire de l’industrie de la chemise v.

Potash, (SCC), [1994] 2 S.C.R.406, at p. 419; Comité paritaire d’installation d’équipement pétrolier du Québec v. Entreprises Nipo Inc. (1994), 65 Q.A.C. 29; Comité paritairedes agents de sécurité v. Société de services en signalisation SSS inc., 2008 QCCS 335, at para. 31 , aff’d 2009 QCCA 1787). TheACAD must therefore be given a large and liberal

interpretation (Société de services en signalisation SSS inc. (Que. Sup. Ct.), at para. 38, citingComité paritaire de l’entretien d’édifices publics de la région de Québec v. Station de ski Le Valinouët Inc. (1994), 63 Q.A.C. 143). B. Scope of a Decree [77] In 1996, the government undertook a major reform of the ACAD in order to modernize it and harmonize it with the LabourCode, CQLR, c. C-27, and the Act respecting labour standards (An Act to amend the Act respecting collective agreement decrees, S.Q. 1996,c. 71).

At the time of the reform, one of the legislature’s concerns was with countering the practice of [translation] “horizontal extension”,whereby a decree was extended outside the fields contemplated when it was passed (Commission permanente de l’économie et du travail, “Étudedétaillée du projet de loi n° 75 — Loi modifiant la

Loi sur les décrets de convention collective”, Journal des débats, vol. 35, No. 30, 2nd Sess.,35th Leg., December 6, 1996, at pp. 1-2; Ministère du Travail, Rapport sur l’application de la Loi modifiant la

Loi sur les décrets de conventioncollective (2000), at pp. 28-29). To address that problem, the legislature amended the ACAD to ensure that the juridical extension mechanism

could be used only in relation to employees and employers falling within the scope of a decree. [78] Since that reform, the scope of a collective agreement decree has been defined by the interplay of ss. 1(g), 1(

j) and 2 ACADand by the sectoral and geographical parameters specified in the decree.

Section 2 provides that the juridical extension of a collective agreementbinds all employees and professional employers within the scope determined in the decree.

Section 1(

j) defines an employee as “any apprentice,unskilled labourer or workman, skilled workman, journeyman, artisan, clerk or employee, working individually or in a crew or in partnership”.Section 1(

g) defines a professional employer as an employer that has in its employ one or more employees covered by the scope of application ofa decree. [79] Whether the conditions provided for in a decree apply to a worker must therefore be determined by first considering(1) whether the worker is an employee within the meaning of the ACAD and, if so, (2) whether he or she is within the scope determined in thedecree.

It is then necessary to identify a debtor bound by the decree, that is, a professional employer that employs the employee covered by thescope of application of the decree. [80] In the instant case, it is not in dispute that the activities of Modern and its franchisees are within the parameters specified inthe Decree respecting building service employees in the Québec region, CQLR, c. D-2, r. 16 (“Decree”), which applies to maintenance workperformed for others in the Quebec region. The only issues before the trial judge were therefore whether Mr.

Bourque was an employee withinthe meaning of the ACAD and, if so, whether Modern was his “professional employer”. The judge concluded that Mr. Bourque could not becharacterized as an “employee”. IV. Status of Mr. Bourque Under the ACAD A.

Concept of Employee in the ACAD [81] The ACAD defines the term “employee” as follows: In this Act and in its application, unless the context requires otherwise, the following words and expressions have the meaning hereinaftergiven to them: . . . “employee” means any apprentice, unskilled labourer or workman, skilled workman, journeyman, artisan, clerk or employee, workingindividually or in a crew or in partnership; [s. 1(j)] [82] The concept of employee in the ACAD has been the subject of much discussion in light of the broad and, to say the least,vague definition in s. 1(j).

That being said, both the authors and the courts are of the view that the concept is broader in the ACAD than it is underthe Civil Code because of the inclusion of the term “artisan” in the definition in the ACAD (Comité paritaire de l’industrie de l’automobile desrégions Saguenay Lac St-Jean v. Soucy (1993), 60 Q.A.C. 76, at pp. 77-79; Dubé, at p. 54; R. P. Gagnon, L. LeBel and P.

Verge, Droit du travail(2nd ed. 1991), at p. 556). [83] Under the Civil Code, the concept of employee refers to a person who undertakes, for remuneration, to do work under thedirection or control of an employer under a contract of employment (art. 2085 C.C.Q.). An agreement may be characterized as a contract ofemployment when the following three elements exist: performance of work by the employee, payment of wages by the employer and arelationship of subordination between the parties (Cabiakman v. Industrial Alliance Life Insurance Co., 2004 SCC 55, [2004] 3 S.C.R. 195, atpara. 27; R. P.

Gagnon, Le droit du travail du Québec (7th ed. 2013), at p. 88; F. Morin et al., Le droit de l’emploi au Québec (4th ed. 2010), atpara. II-52). The most important characteristic of a contract of employment is the legal subordination of the employee to the employer. This iswhat distinguishes a contract of employment from a contract of enterprise or for services governed by arts. 2098 et seq. of the C.C.Q. (seeCabiakman, at para. 28; Dicom Express inc. v. Paiement, 2009 QCCA 611, [2009] R.J.Q. 924, at para. 15; R. P. Gagnon (2013), at p. 90;M.-F.

Bich, “Contracts of Employment”, in Reform of the Civil Code, vol. 2-B, Obligations (1993), 1, at p. 6). [84] Unlike an employee within the meaning of the Civil Code, an artisan is not, in any true sense, subordinate to an employer inthe performance of his or her work. Generally speaking, an artisan is a natural person who does manual work on his or her own account, alone orwith the help of family members, journeypersons, workers or apprentices (C. Jobin, “Statuts de salarié et d’employeur dans les lois du travail”, inJurisClasseur Québec — Rapports individuels et collectifs du travail (loose-leaf), vol. 1, by G.

Vallée and K. Lippel, eds., fasc. 8, at para. 146;Dubé, at pp. 40-43; M.-L. Beaulieu, Les Conflits de Droit dans les Rapports Collectifs du Travail (1955), at pp. 143-44). [85] In fact, an “artisan” will generally be a “contractor” in the civil law (A. Perrault, Traité de droit commercial (1936), vol. II, atpp. 225-26).

The Civil Code defines a contract of enterprise (or for services) as “a contract by which a person, the contractor or the provider ofservices, as the case may be, undertakes to another person, the client, to carry out physical or intellectual work or to supply a service, for a pricewhich the client binds himself to pay to him” (art. 2098 C.C.Q.). Because the artisan works on his or her own account, he or she generally entersinto a contract of enterprise (or for services) with the client.

As a contractor, the artisan is free to choose the means of performing the contract,and no relationship of subordination exists between him or her and the client (art. 2099 C.C.Q.). In other words, the artisan is legally independentof the client. [86] Nevertheless, once an artisan performs work to which a decree applies, he or she becomes an “employee” within the meaningof the ACAD despite having a certain level of independence. The inclusion of the term “artisan” in s. 1(

j) therefore means that the concept of“employee” in the ACAD has a broader scope than that

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