Kaur v. M.N.R., docket 95-1843-UI

Date: 19980520

Docket: 95-1843-UI

BETWEEN:

SURINDER KAUR,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Porter, D.J.T.C.C.

[1] This appeal was heard at Winnipeg, Manitoba on March 16, 1998. The Appellant appeals the determination of the Minister of National Revenue (the "Minister") dated July 6, 1995 that her employment with Ravinder Sandhu and George Sandhu, partners, operating as The Savoy Hotel, from May 3 to October 1, 1993, was not insurable employment under the Unemployment Insurance Act (hereinafter referred to as the "Act"). The reason given for the determination was that:

"...you were not employed under a contract of service, and therefore, you were not their employee."

[2] The established facts reveal that the Appellant carried out cleaning work for The Savoy Hotel between the dates in question. Counsel for the Minister conceded that she was not related to either George Sandhu, who hired her, or Ravinder Sandhu, his brother and partner. The Reply to the Notice of Appeal tended to suggest that the Minister did not believe that the working relationship was a genuine one. However, counsel for the Minister again conceded that such was not the issue. Both counsel agreed that the issue before the Court was whether the Appellant was employed under a contract of service or a contract for services. If she was engaged to work under a contract of service, such would constitute insurable employment under section 3 of the Act, subject to all the other relevant criteria being met. If on the other hand she was engaged by way of a contract for services, that would not be insurable employment and she would not be able to claim unemployment insurance benefits.

The Law

[3] The manner in which the Court should go about deciding whether any particular working arrangement is a contract of service and thus an employer/employee relationship or a contract for services and thus an independent contractor relationship, has been clearly laid out by the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025. The test to be applied has been further explained by that Court in Moose Jaw Kinsmen Flying Fins Inc. v. M.N.R., 88 DTC 6099. There are, following these cases, numerous decisions of this Court, some of which have been cited by counsel, which demonstrate how these appellate guidelines have been applied. In the Moose Jaw Kinsmen Flying Fins Inc. case, above, the Federal Court of Appeal said this:

"[Analysis]

The definitive authority on this issue in the context of the Act, is the decision of this Court in Wiebe Door Services Ltd. v. The Minister of National Revenue, 87 DTC 5025. MacGuigan J. speaking on behalf of the Court, analyzed Canadian, English and American authorities, and, in particular, referred to the four tests for making such a determination enunciated by Lord Wright in City of Montreal v. Montreal Locomotive Works Ltd., [1974] 1 D.L.R. 161 at 169-70. He concluded at page 5028 that:

Taken thus in context, Lord Wright's fourfold test [control, ownership of tools, chance of profit, risk of loss] is a general, indeed an overarching test, which involves "examining the whole of the various elements which constitute the relationship between the parties". In his own use of the test to determine the character of the relationship in the Montreal Locomotive Works case itself, Lord Wright combines and integrates the four tests in order to seek out the meaning of the whole transaction.

At page 5029 he said:

...I interpret Lord Wright's test not as the fourfold one it is often described as being but rather as a four-in-one test with emphasis always retained on what Lord Wright, supra, calls "the combined force of the whole scheme of operations," even while the usefulness of the the four subordinate criteria is acknowledged.

At page 5030 he had this to say:

What must always remain of the essence is the search for the total relationship of the parties.

He also observed "there is no escape for the trial judge, when confronted with such a problem, from carefully weighing all the facts."

...like MacGuigan J. we view the tests as being useful subordinates in weighing all of the facts relating to the operations of the Applicant. That is now the preferable and proper approach for the very good reason that in a given case, and this may well be one of them, one or more of the tests can have little or no applicability. To formulate a decision then, the overall evidence must be considered taking into account those of the tests which may be applicable and giving to all the evidence the weight which the circumstances may dictate."

[4] The nature of the tests referred to by the Court can be summarized as follows:

a) The degree or absence of control exercised by the alleged employer;

b) Ownership of tools;

c) Chance of profit and risk of loss;

d) Integration of the alleged employee's work into the alleged employer's business.

I also take note of the further words of MacGuigan J., in the Wiebe case, above, where he approved the approach taken in the English courts:

"Perhaps the best synthesis found in the authorities is that of Cooke J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732, 738-9:

The observations of Lord Wright, of Denning L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes", then the contract is a contract for services. If the answer is "no" then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him."

The Facts

[5]The Appellant speaks little or no English. She came from Pakistan some 15 years ago. During that time she has worked at the Bombay Restaurant and certain factories in Winnnipeg. George Sandhu and his brother purchased The Savoy Hotel in 1985/86. It is a poor calibre hotel on Main Street in Winnipeg. Eighty per cent of the occupants reside there on a permanent monthly basis; the other twenty per cent come and go more frequently. There is a bar and a restaurant on the main floor, but many of the guests of the hotel are poor, eat only one meal per day and spend little time there.

[6]George Sandhu said in evidence that in 1993 he was under some pressure from the city health department to keep the place cleaner. Prior to that his manager had sort of looked after that end of things, but he had become resistant to doing so. His evidence was that he engaged the Appellant to do the cleaning. She was to clean guest rooms when they were vacated and also the common areas of the hotel such as the lobby and around the bar area.

[7]The evidence of both George Sandhu and the Appellant was that she performed this work for eight hours per day between the hours of 2:00 a.m. and 10:00 a.m. (i.e. after the closing and before the new opening of the bar) five days per week, generally Sunday to Thursday. She had the privilege of picking her days so that if she wanted to change she could let them know and they would make other arrangements. However she had to make up her time on other days.

[8]Basically they each said that she had set duties. It was mundane work, but if it was not done it would be noticed the next morning. Nobody stood over her whilst she did the work but she was expected to get if done. The control test is really indecisive in this respect. There was a measure of control but the work per se and how it was performed, was equally consistent with either type of contract.

[9]All the cleaning materials and equipment were supplied by the hotel. On the basis of this test the work was clearly more consistent with a contract of service.

[10]The question of her hours and wages presents a bit of a problem. It was said in evidence that she was paid $7.00 per hour, for a forty-hour week, inclusive of vacation pay, from which statutory deductions had to be made. Both the Appellant and George Sandhu said she was paid in cash. He said that he paid all his employees cash. He wrote cheques and they signed them back to him just as book entries, because he said Revenue Canada told him he needed to keep some kind of record like this. Neither he nor the Appellant had any other record of employment at court. He said he kept a note of what he paid her but did not have it with him.

[11]Whilst the evidence on these points is somewhat tenuous, they were both adamant that those were the hours she worked and that is how she was paid. On balance I am inclined to believe them.

[12]From the point of view of the chance of profit or risk of loss there was none. There were set hours and a set wage. There was no chance to profit further or to lose anything. The Appellant did say that on a couple of occasions when she was not well she had brought other members of her family to help or even do the work for her but she had to be there. This was not a common occurrence. They say "one swallow does not a summer make" and I view this as nothing nore than a kink in an otherwise regular arrangement.

[13]There is no doubt that keeping the hotel premises clean was an integral part of the business. Without such, it stood to be closed down by the health inspector. To that extent the work was and integral part of the business. Nonetheless the work could have been carried out by either an employee or an independent contractor. If one looks at it from the work perspective this test is somewhat equivocal.

[14]Her employment came to an end in October 1993. George Sandhu said that he had introduced V.L.T.'s into the hotel and made a better arrangement with his manager so that he no longer needed the Appellant. That was cetainly a strange coincidence around the time that she became eligible for unemployment insurance. benefits. Nonetheless that was the evidence and it really went unchallenged. The Appellant said she was laid off for lack of work. The two are not really inconsistent and I accept what they say.

Conclusion

[15]Whether or not a more comprehensive investigation would have turned up anything any thing else, is perhaps a moot point. That however would be speculation on the part of the Court. When I weigh all the factors put before me in this case, some pointing in one direction and some in the other, I have come to the conclusion that indeed the Appellant was employed under a contract of sevice. It is my view, on balance, that she performed the work in question, during regular hours, albeit on different days, that she carried out the specific tasks required of her and was actually paid the cash wages which the two witnesses claimed. In some respects the arrangements were less than satisfactory, certainly from a record keeping point of view. I remind myself that this was not a very sophisticated operation. Nevertheless the facts overall are more consistent with an employer/employee relationship than that of an independent contractor and I so find.

[16]The appeal is accordingly allowed and the determination of the question in issue is reversed.

Signed at Calgary, Alberta, this 20th day of May 1998.

"Michael H. Porter"

D.J.T.C.C.