The link #23 ... December 2005

The Bijural Revision Services Unit (Taxation and Comparative Law) of the Legislative Revision Services Group of the Department of Justice of Canada is pleased to keep you posted on the most recent harmonization news.

Recent decision on bijuralism (I) - 9041-6868 Québec inc. c. M.R.N.

On October 17, the Federal Court of Appeal issued its judgment in the case of 9041-6868 Québec inc. c. The Minister of National Revenue (2005 CAF 334) (French only). The issue in this case was whether the contract was one of service or a contract of enterprise. The Tax Court of Canada had previously found that the relationship was a contract of service and that the employment was therefore insurable under the Employment Insurance Act, S.C. 1996, c. 23. The Federal Court of Appeal confirmed the conclusion of the Tax Court but for different reasons. Indeed, Mr. Justice Décary, writing for the Court, stated that Quebec civil law must be applied to determine whether a contract concluded in the province of Quebec is a contract of service as opposed to the common law rules developed in Wiebe Door Services and Sagaz Industries.

Mr. Justice Décary recalled that the addition of section 8.1 of the Interpretation Act and the adoption of the Federal Law–Civil Law Harmonization Act No. 1 have “[translation] restored the credibility of the civil law of Quebec for federal matters, which the courts sometimes had a tendency to ignore” (at para. 3). In support of his analysis, Mr. Justice Décary referred to the decision in St-Hilaire v. Canada, [2001] 4 F.C. 289 (C.A.) and to an article written by Judge Pierre Archambault of the Tax Court of Canada, which was published in The Harmonization of Federal Legislation with Quebec Civil Law and Canadian Bijuralism, Second Collection of Studies in Tax Law (2005). Mr. Justice Décary’s comments on the complementarity of federal law and Quebec civil law can be found at paragraphs 2 to 7 of the decision.

Recent decision on bijuralism (II) - 9079-6038 Québec inc. c. M.R.N.

In an another case decided by the Tax Court of Canada, the issue of the characterization of a contractual relationship involving workers was raised for the purposes of the application of the Employment Insurance Act (“EIA”). In the case of 9079-6038 Québec inc. c. M.R.N. (2005 CCI 743) (French only), the court was asked to determine if the contract was a contract of service within the meaning of paragraph 5(1)(a) of the EIA. Judge Bédard clearly stated that where courts must define Quebec private law concepts for the purposes of applying federal legislation, they must comply with the interpretation rule found in section 8.1 of the Interpretation Act. At paragraph 7 of his judgment, he stated:

[translation] "To determine the nature of a contract of employment in Quebec and distinguish it from a contract for services, it is necessary, at the very least since June 1, 2001, to look to the relevant provisions of the Civil Code of Québec (“Civil Code”). These rules are incompatible with the rules set out in cases such as 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983 and Wiebe Door Services Ltd. v. M.R.N., [1986] 3 F.C. 553. As opposed to the situation at common law, the necessary elements of a contract of employment have been codified and courts no longer have, since the coming into force of articles 2085 and 2099 of the Civil Code on January 1, 1994, the same latitude that common law courts enjoy to define what a contract of employment is. If it is necessary to rely on court decisions to determine whether there is a contract of employment, one must choose those that are consistent with civil law principles." [Our emphasis].

Publication on bijuralism

Me Joseph Sirois is the author of a column published in the Revue de planification fiscale et successorale titled: “Une deuxième loi d'harmonisation du droit fédéral avec le droit civil du Québec partie 1” (2005) vol. 26, no. 1, p. 195. The author conducted a comparative review of a number of concepts and explained the amendments that were introduced in the Federal Law–Civil Law Harmonization Act, No. 2, S.C. 2004, c. 25 (Bill S-10). These amendments modified the following statutes: Employment Insurance Act, the Excise Act, the Customs Act, and the Canada Pension Plan. The concepts that are discussed in the article are those of “joint and several” / “solidary liability” among debtors, “mortgage”/“hypothec” and “executor of an estate” / “liquidator of a succession”.

Index of Bijuralism and Harmonization Caselaw

An index of bijuralism and harmonization caselaw has been published. Please note that a page containing all cases in alphabetical order can be found in the index.

The index contains several new judgments. Among the most recent, we would like to point out the following two judgments rendered by the Federal Court of Appeal and the Supreme Court of Canada. These judgments apply the principle of complementarity, that is, the recourse to the private law of the provinces in a suppletive manner to complete federal legislation.