Citation: 2011TCC65
Date: 20110209
Docket: 2009-3679(EI)
BETWEEN:
1770200 ONTARIO INC.
O/A BAKER REAL ESTATE,
Appellant,
and
THE MINSTER OF NATIONAL REVENUE,
Respondent,
Docket: 2009-3680(CPP)
BETWEEN:
1770200 ONTARIO INC.
O/A BAKER REAL ESTATE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2009-3681(EI)
BETWEEN:
1770200 ONTARIO INC.
O/A BAKER REAL ESTATE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Docket: 2009-3682(CPP)
BETWEEN:
1770200 ONTARIO INC.
O/A BAKER REAL ESTATE,
Appellant,
and
THE MINSTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The issue in these
appeals is whether Vanessa Al-Jbouri (Vanessa) and Amanda Mercer (Amanda) were
employed by the Appellant under a contract of service for purposes of the Employment
Insurance Act and the Canada Pension Plan. The relevant period of
work for Vanessa was May 16, 2007 to January 13, 2009 and the relevant period
of work for Amanda was April 1, 2007 to October 1, 2008. The appeals were heard
on common evidence. The witnesses at the hearing were Vanessa and Barbara Lawlor,
President of the Appellant.
[2]
The Respondent brought
a motion, at the start of the hearing, to amend the Reply to Notice of Appeal
in each of the appeals to include alternative statutory provisions which had
not been relied on by the Minister of National Revenue (the “Minister”) when he
made his assessments in these appeals. In the proposed Amended Replies, the
assumptions of fact remained the same and no new facts were pled. The Minister
submitted, in the alternative, that the Appellant was the deemed employer of
Vanessa and Amanda (the “Workers”) within the meaning of subsections 1(2) and
10(1) of the Insurable Earnings and Collection of Premiums Regulations (IECPR)
and subsection 8.1(1) of the Canada Pension Plan Regulations (CPPR).
[3]
Counsel for the Appellant
opposed the motion on the grounds that the amendment raised an entirely new
basis for the assessment and he was given only six days notice of this proposed
amendment.
[4]
After a review of the
submissions made by both counsel and the circumstances of these appeals, I have
concluded that the motion to amend the pleadings should not be granted. To
grant the motion to amend the Replies on the eve of trial would be procedurally
unfair to the Appellant[1].
The Respondent filed its Reply to Notice of Appeal on February 19, 2010 and on
April 23, 2010, the parties were directed to file and serve a list of documents
on the other party on or before May 23, 2010. The Notice of Hearing for these
appeals was issued by the Court on September 27, 2010. During this period, the
Respondent had sufficient time to review the pleadings which had been filed by
its agent and to bring a motion to amend the Reply. If the Appellant had
sufficient notice of the proposed amendment, counsel for the Appellant might
have called evidence to rebut the assertion that the Appellant was the deemed
employer of the Workers.
[5]
Counsel for the
Appellant has likened these appeals to walking through an art gallery. He has
stated that the relationships in these appeals must be appreciated beyond the
tests listed in the jurisprudence just as the paintings in a gallery must be
appreciated for the techniques used and the history of the paintings. With this
in mind, I will review the facts in these appeals.
[6]
The Appellant is in the
business of real estate marketing and sales. Many of its clients are developers
of high-rise condominium buildings. The developers contract with the Appellant
who brings the new building to the marketplace. The developers usually build a
sales office and the Appellant staffs it with a Project Manager, a Project
Administrator, a receptionist and licensed sales people. The sales office
operates until sufficient condominiums are sold; at which time, it is
demolished so that the condominium building can be constructed. After the sales
office is demolished, most of the remaining sales are done out of the
Appellant’s head office.
[7]
The Appellant, in
consultation with the developer, decides the number of staff employed at a
sales office on a regular basis and for special events. The Appellant must
consult with the developer as it ultimately pays for the services provided. It
was Ms. Lawlor’s evidence that, if the condominiums are not selling, the
developers can instruct the Appellant to reduce the number of staff at a sales
office.
[8]
The Workers were hired
by the Appellant as Project Administrators to provide administration services
for one particular condominium project. Amanda was hired to provide services at
the marketing and sales office of Chestnut Hill Homes which was the developer
of the San Francisco Bay project. Vanessa was engaged by the
Appellant to provide services to The Ritz-Carlton Hotel Company LLC. She is
still employed in this capacity.
[9]
The Workers’ duties
included data entry such as completing standard purchase and sale agreements and
amendments thereto; arranging delivery of purchasers’ cheques and purchase and
sale agreements; ordering materials and supplies; assembling marketing kits;
answering the phones and inquiries from potential purchasers; booking
appointments for the Appellant’s real estate agents; maintaining and updating
information in the Appellant’s database; preparing weekly status reports; and,
filing. The Appellant paid the Workers by cheque on a semi-monthly basis. They
received $18 per hour.
[10]
The question is whether
the Workers were engaged by the Appellant as employees or independent
contractors. Barbara Lawlor testified that it was the Appellant’s intention
that the Workers were hired as independent contractors. Vanessa testified that
it was her intention that she was hired as an independent contractor.
[11]
To determine whether
the Workers were employees or independent contractors while employed by the
Appellant, it is necessary to determine
if the Workers were performing the services as persons in business on their own
account. The factors from Wiebe Door[2]
are used to analyze the work relationship between the Workers and the
Appellant. Those factors are control, ownership of tools, chance of profit and
risk of loss. In Combined Insurance Company of America
v M.N.R.[3], Nadon, J.A. reviewed the case law and stated the
principles to be applied as follows:
[35] In my view, the
following principles emerge from these decisions:
1.
The relevant facts, including the parties’ intent regarding the nature of their
contractual relationship, must be looked at in the light of the factors in Wiebe
Door, supra, and in the light of any factor which may prove to be relevant
in the particular circumstances of the case;
2.
There is no predetermined way of applying the relevant factors and their
importance will depend on the circumstances and the particular facts of the
case.
Although as a general rule the control test
is of special importance, the tests developed in Wiebe Door and Sagaz,
supra, will nevertheless be useful in determining the real nature of the
contract.
[12]
The test that was stated in Sagaz[4]is as follows:
47
Although there is no universal test to determine whether a person
is an employee or an independent contractor, I agree with MacGuigan J.A. that a
persuasive approach to the issue is that taken by Cooke J. in Market
Investigations, supra. The central question is whether the person who has
been engaged to perform the services is performing them as a person in business
on his own account. In making this determination, the level of control the
employer has over the worker's activities will always be a factor. However,
other factors to consider include whether the worker provides his or her own
equipment, whether the worker hires his or her own helpers, the degree of financial
risk taken by the worker, the degree of responsibility for investment and
management held by the worker, and the worker's opportunity for profit in the
performance of his or her tasks.
Control
[13]
The Appellant told the Workers not
only what their duties were but also how they were to perform their duties. The
Appellant trained the Workers at its headquarters. It gave the Workers detailed
instructions on how to open and close the sales office; how to dress; how to
greet and register clients; how to record registrations; how and when to use
the Appellant’s database; how to answer the telephone; and, how to prepare
Agreements of Purchase and Sale and amendments to same. The Workers prepared their
own timesheets and sent them to the Appellant’s payroll department. The Project
Managers, who were employed by the Appellant, reviewed and approved the
timesheets[5].
[14]
Although Ms. Lawlor stated that
the Workers were not supervised, I find that they were closely supervised in
their duties. The Project Managers strictly monitored the work performed by the
Workers. They checked that the data entered into the computer was correct as
that data formed the basis of the reports that the Appellant used for its
weekly meetings with the developers. They also checked the Purchase and Sale
Agreements to ensure the accuracy of the data before the agreement was
executed.
[15]
The Workers were required to wear
the Appellant’s name tags at all times while they were in the sales office.
[16]
Ms. Lawlor stated that the Workers
could take time off whenever they chose. However, they first had to give notice
so that the Appellant could find a replacement for them. The Workers could not
hire someone to replace them nor could they hire an assistant.
[17]
The Appellant determined that the
Workers’ wages would be $18 per hour. There was no negotiation concerning wages
between the Appellant and the Workers. If there was any negotiation with
respect to the Workers’ hourly rate, it was between the Appellant and the
developer. In fact, Ms. Lawlor testified that if the Appellant was pleased with
an administrator’s services, the Appellant might ask the developer for an
increase in the hourly rate.
[18]
While employed by the Appellant,
the Workers were only free to work elsewhere when they were not performing
their duties at the sales office.
[19]
The Appellant, in consultation
with the developers, determined the hours that the sales offices were open for
business. The sales office for The
Ritz-Carlton Hotel Company LLC was open
from 12:00 to 6:00 on Monday through Thursday and 12:00 to 5:00 on Saturday to
Sunday. Vanessa worked these hours.
[20]
Based on my review of the above, I
have concluded that the Workers were subject to the control and supervision of
the Appellant. This factor indicates that the Workers were employees.
Ownership of Tools
[21]
The developer provided all of the
tools which the Workers required to complete their duties except the database
which was the property of the Appellant. The Workers provided no tools.
[22]
The fact that the only tool
provided by the Appellant was its database would normally indicate that the
Workers were independent contractors. However, the Workers provided no tools;
and, without getting too technical as to the source of the tools, I find that
this points to the Workers being employees[6].
Chance of Profit/Risk of Loss
[23]
The Workers had no
chance of profit or risk of loss. They were paid a fixed hourly wage and they
had no expenses. The fact that the Workers could work elsewhere when they were
not required to be at the sales office does not indicate that they had a chance
of profit with the Appellant. There is a difference between increased earnings
and profit from a business[7].
This factor also points to the Workers being employees.
[24]
When I consider all of
the factors, I conclude that the Workers are not performing their services as
persons in business for themselves. Although
the parties intended that the Workers would be independent contractors, the
terms of their relationship, when analyzed against the Wiebe Door
factors, do not support this intention.
[25]
The appeals are
dismissed.
Signed at Ottawa,
Canada, this 21st day of February 2011.
“V.A. Miller”
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