Dockets: 2010-2399(EI)
2010-2400(CPP)
BETWEEN:
THE GIRLS GYM OF CANADA LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on June 8 and 9, 2011 at Sudbury, Ontario
By: The Honourable Justice Judith Woods
Appearances:
|
Agent for the Appellant:
|
Mary
Duhaime
|
|
Counsel for the Respondent:
|
Ashleigh Akalehiywot
|
____________________________________________________________________
JUDGMENT
The appeal, with respect to decisions of the Minister of
National Revenue made on April 19, 2010 under the Employment Insurance Act and
the Canada Pension Plan relating to the insurable and pensionable
employment of Ashley Carr-Venhola and Natasha Delaney, is dismissed, and the
decisions are confirmed.
The appeal, with respect to decisions of the Minister of
National Revenue made on April 19, 2010 under the Employment Insurance Act and
the Canada Pension Plan relating to the insurable and pensionable
employment of Renee Fuchs and Ashley Veale, is allowed, and the decisions are
vacated.
Each party shall bear their own costs.
Signed at Toronto, Ontario this 21st
day of June 2011.
“J. M. Woods”
Citation: 2011 TCC 312
Date: 20110621
Dockets: 2010-2399(EI)
2010-2400(CPP)
BETWEEN:
THE GIRLS GYM OF CANADA LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1]
The Girls Gym of Canada Ltd.
appeals in respect of decisions made by the Minister of National Revenue under
the Employment Insurance Act and the Canada Pension Plan concerning
the insurable and pensionable employment of four workers during various periods
between August 1, 2006 and March 30, 2008.
[2]
Counsel for the respondent
informed the Court at the commencement of the hearing that the respondent
consents to the appeals being allowed with respect to two of the workers, Renee
Fuchs and Ashley Veale. Those decisions will therefore be vacated.
[3]
The workers whose status is still
at issue are Ashley Carr-Venhola and Natasha Delaney (the “Workers”).
[4]
The relevant period for Ms.
Carr-Venhola is from August 10, 2006 to February 9, 2007. The relevant period
for Ms. Delaney is from February 1, 2007 to March 26, 2008.
[5]
The only question to be determined
in this appeal is whether the Workers were engaged as employees or independent
contractors during the relevant periods. The decisions of the Minister were
that the Workers were employees.
[6]
At all material times, the appellant
operated a fitness club for women. The facility is no longer in operation.
[7]
The principals of the appellant were
Maria Duhaime and her husband, David Beaudry. Ms. Duhaime was the manager of
the business and she represented the appellant at the hearing.
[8]
Ms. Duhaime provided testimony on
behalf of the appellant. The respondent called two witnesses, Ms. Delaney and Marlene
Cundari. Ms. Cundari was the CRA rulings officer in charge of this matter.
[9]
The applicable principles in a
case such as this are well known. The hallmark of being an independent contractor
is that the person is in business for herself. The intention of the parties is
very relevant, but it is not determinative. The proper approach was described
by the Federal Court of Appeal in Royal Winnipeg Ballet v. MNR, 2006 FCA
87, 2006 DTC 6323 in the following manner:
64 In
these circumstances, it seems to me wrong in principle to set aside, as worthy
of no weight, the uncontradicted evidence of the parties as to their common
understanding of their legal relationship, even if that evidence cannot be conclusive.
The judge should have considered the Wiebe Door factors in the light of
this uncontradicted evidence and asked himself whether, on balance, the facts were
consistent with the conclusion that the dancers were self-employed, as the parties
understood to be the case, or were more consistent with the conclusion that the
dancers were employees. Failing to take that approach led the judge to an incorrect
conclusion.
[10]
With these principles in mind, I
will first consider the intention of the parties.
[11]
The parties’ intention was not
entirely clear at the commencement of the relationship. It was agreed that
there would be no source deductions and this is often a strong indicator of a
mutual intent that the worker be self-employed. The situation was clouded,
however, by the use of the term “employment” in the written engagement
agreements.
[12]
On balance, I would conclude that
there was a mutual intention for the Workers to be self-employed. I find that this
is what the appellant intended, and that the use of the term “employment” in
the agreements was a casual reference that was not intended to define the
relationship. The intention was discussed briefly with Ms. Delaney at the time
of her engagement and she agreed to it.
[13]
At the hearing, Ms. Delaney briefly
testified that she thought she was an employee. I found this testimony to be too
brief to be persuasive.
[14]
The mutual intention of the
parties is not the end of the matter, however. Intention is an important factor,
but it is not determinative. One must consider whether the parties’ conduct was
consistent with this intention. In my view, it was not.
[15]
The Wiebe Door factors to
be considered include control, ownership of tools, opportunity for profit, risk
of loss and integration.
[16]
In this particular case, as often
happens, the factor of “control” is the most important. In determining whether
the appellant had control, it is relevant to consider the extent to which the
appellant had the ability to control the manner in which the work was
performed.
[17]
The Workers were engaged primarily
as personal trainers, and their work included general duties related to the
operation of the facility as assigned to them by Ms. Duhaime. This strongly
suggests that the Workers were not in business for themselves.
[18]
The evidence reveals that the
appellant most definitely had the authority to dictate the manner in which the
work was performed. This is sufficient to establish control for these purposes,
but I would also mention that control was actually exercised in a significant
manner. Detailed directions were provided to the Workers and scripts were provided
for certain activities such as sales solicitation.
[19]
The other Wiebe Door
factors also suggest that the Workers were not in business for themselves.
[20]
As for tools, the tools that were
provided by the Workers were minimal, such as personal clothing and occasional transportation
to charity events. This factor suggests employment.
[21]
As for the opportunity for profit,
the Workers were paid on an hourly basis and received a bonus when a new client
was brought in through their efforts.
[22]
Ms. Duhaime suggested that the Workers
could earn a profit through their own efforts because the hours assigned to a
Worker would depend partly on client requests.
[23]
This is not a strong factor in
favour of self-employment, in my view. The key point is that the Workers were
paid on an hourly basis, which suggests an employment relationship. The fact
that good performance may lead to greater hours is relevant, but not a strong
factor. As for the bonuses given for new clients, the evidence did not persuade
me that this was a significant factor. On balance, the factor of opportunity
for profit is more indicative of employment in this case.
[24]
As for risk of loss, the evidence
does not suggest that the Workers were exposed to any significant risk of loss.
This also points towards an employment relationship.
[25]
As for integration, the Workers
were involved in the general operation of the gym, from soliciting new clients,
performing personal training, and looking after the physical facilities. The
Workers seemed to be involved in all aspects of the business except management
and administration. They were well integrated in the business operation, and
this also points towards employment.
[26]
Based on all these factors, the
conduct of the parties was inconsistent with an independent contractor
relationship in my view. As the Royal Winnipeg Ballet case informs us,
the mutual intention of the parties will not govern if the parties’ conduct is not
consistent with that intention. Unfortunately for the appellant, it was not in
this case.
[27]
The appeal with respect to Ms.
Carr-Venhola and Ms. Delaney will be dismissed, and the decisions with respect
to them will be confirmed.
[28]
Each party shall bear their own
costs.
Signed at Toronto,
Ontario this 21st day of June 2011.
“J. M. Woods”
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