Citation: 2010 TCC 115
Date: 20100310
Dockets: 2008-3919(EI)
2008-3920(CPP)
BETWEEN:
COLONIALE MAID SERVICE LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
AMENDED REASONS FOR JUDGMENT
Rowe, D.J.
[1] The
Appellant appeals from two separate decisions – both dated October 14, 2008 –
wherein the Minister of National Revenue (the "Minister") – except
for deleting Dionne Danyk-Purcell (“Dionne”) from the Canada Pension Plan (CPP)
assessment on the basis she had no contributory earnings from November 1, 2006
to September 30, 2007 - confirmed earlier assessments dated November 20, 2007 -
in respect of the period from November 1 to December 31, 2006 - and November
30, 2007 - in respect of the period from January 1 to September 30, 2007 -
issued in respect of CPP contributions and Employment Insurance (EI) premiums
relating to certain named workers listed in Schedule A attached to said
decisions. The Minister decided those workers had been employed by Coloniale
Maid Service Ltd. (“Coloniale or payor”) under a contract of service pursuant
to the relevant provisions of the Employment Insurance Act (the "Act")
and the Canada Pension Plan (the "Plan"), respectively.
The Appellant filed a separate appeal – 2008‑3920 (CPP) – from the
decision issued pursuant to the Plan. The agent acting for the Appellant
and counsel for the Respondent agreed the two appeals could be heard together.
[2] The
current appeals are in relation to the workers named in Schedule A and Schedule
B of each Reply to The Notice of Appeal (“Reply”) pertaining to the specified
periods in 2006 and 2007. The amount of remuneration paid to each named worker
during those relevant periods is set out in Schedule C of each Reply.
[3] Ms. Carole
Rutwind - agent for Coloniale - advised the Court that Dionne was the sole
Officer, Director and shareholder of the Appellant corporation.
[4] Kayla
Markiwsky (“Markiwsky”) testified she resides in Beaumont, Alberta, a community
bordering Edmonton, and is currently employed by Coloniale. In May, 2005, she
met with Dionne to discuss providing her cleaning services to Coloniale, an
entity engaged – mainly – in cleaning residential properties but also some
commercial premises. Markiwsky stated Dionne informed her that she would be
self-employed, an independent contractor, and that payments for services
rendered would be made upon receipt of an invoice. Markiwsky stated she advised
Dionne when she would be available for work and named her preferred locations.
She began working in May, 2005 and was employed for most of the relevant
period, although she left prior to an audit by Canada Revenue Agency (“CRA”).
Markiwsky stated she was trained initially by Dionne but later her work was not
inspected on any regular basis by anyone from Coloniale. However, she understood
that if some aspect of a cleaning job was not satisfactory, it was her
responsibility to rectify the problem, failing which her payment for that job
could be withheld fully or in part. Markiwsky drove her own vehicle to job
sites and paid for all related expenses. She stated she was able to refuse to
work at certain locations and could decline an assignment for certain reasons
and believed this privilege was extended to other Coloniale workers. Although
she did not do so, she understood she could provide cleaning services on her
own initiative to others, provided they were not clients of Coloniale. Markiwsky
stated the usual procedure was to attend at Dionne’s residence in Beaumont at
8:45 a.m. where Dionne assigned jobs to the assembled workers by handing out a
clipboard to each cleaning team to which a sheet was attached which stated the
name of the client, location of the residence and the composition of the
members – usually two – of the team dispatched to perform the cleaning service.
All cleaning supplies such as pails, knee-pads, cleaning materials, squeegees,
and a vacuum cleaner - if necessary - were provided by Dionne from an inventory
stored in her garage. In the event a job was running late or if it was finished
early, members of the cleaning team contacted Dionne by telephone and either
were provided with assistance by other workers or were dispatched to another
location to help that team to finish the job. Markiwsky recalled that she broke
some item at a client’s house but did not have to pay for it. She stated that
when unable to work on a particular day, she contacted Dionne who obtained the
services of a replacement and that she was not concerned about whether she could
hire her own substitute. Markiwsky stated she was paid by Coloniale – every two
weeks, by cheque – based on an hourly rate and any gratuities paid by clients
went directly to Coloniale. Prior to working for the payor, Markiwsky owned her
own cell phone. The location of cleaning jobs in Beaumont were about 2 to 5
minutes apart but assignments to residences in south Edmonton required
additional travel time and Coloniale paid Markiwsky – and some other workers –
the sum of $20 per month to compensate for using their private vehicles.
Markiwsky stated she could not make a profit on any job or series of jobs since
she was reimbursed by the hour. For the taxation years at issue, she filed her
income tax returns on the basis she had earned business income as a self-employed
person. However, she was not registered for purposes of the Goods and Services
Tax (GST) and did not advertise her services nor did she have any telephone
number apart from her personal cell phone.
[5] In
cross-examination by counsel for the Respondent, Markiwsky stated that at the
outset, she requested Dionne to demonstrate the best methods to clean a
residence, particularly the bathroom.
[6] In
response to a question from the Bench, Markiwsky stated that she and other
members of the cleaning teams followed a checklist provided by Coloniale but
also abided by instructions delivered by the homeowner(s) either in person or
by a written note.
[7] Irina
Orlova (“Orlova”) testified she is a student residing in Beaumont. She was
named – incorrectly – as Irina Orlove in the decision of the Minister
pertaining to the period in 2007 and that error was reproduced in Schedule B
and Schedule C of each Reply. Orlova moved to Canada – from Russia – with her
parents and was living in Beaumont when her Mother noticed an advertisement –
by Coloniale - in the local paper and contacted Dionne. Orlova stated she met
with Dionne and understood she would not be an employee when providing her
services as a cleaner but would be doing so as a self-employed person. She was
attending high school during the period from November, 2006 to September, 2007.
Her job required her to attend at a dental clinic twice a week and to perform
certain cleaning services according to instructions left by the dentist or his
staff. Usually, she worked each Tuesday evening and on either a Saturday or
Sunday. Any change in this schedule was made by contacting Dionne and not
directly by Orlova through contact with the dentist or his staff. All cleaning
supplies were provided by the clinic but Orlova purchased her own gloves. She
drove her parents’ vehicle or walked the few blocks from her home to the
office. Since she was able to work only on weekends or after school, Dionne did
not offer her any other jobs. Orlova’s mother prepared and submitted invoices
to Coloniale based on the appropriate number of hours – and hourly rate – for
each billable period. Orlova stated that when first hired by Dionne she did a
practice “run” at the dental office and noted it took two hours, so she used
that time as a basis to bill a total of four hours a week based on two visits.
She billed those hours even if there were occasions when the dentist or his
staff requested her to perform certain tasks which were completed in less than
the usual two-hour period.
[8] In
cross-examination, Orlova stated she never hired a replacement worker and was
reimbursed at $16 per hour and not on any flat rate. No complaints about her
work were ever brought to her attention. The Tuesday cleaning job took less
time because the floors did not have to be washed. Orlova stated she did not
have any business telephone or business insurance. She was not a GST registrant
and did not advertise her cleaning services.
[9] Dionne
Danyk-Purcell testified she resides in Beaumont and that in addition to being
the sole shareholder of Coloniale, is a self-employed musician. Coloniale
recruited staff through verbal contacts and by running an advertisement in Beaumont
News, the local paper. Dionne stated that when interviewing prospective
workers, she made it clear that the service to be provided to Coloniale would
be as an independent contractor which meant they would be responsible for paying
their own income tax and would not be supervised when cleaning a residence.
Dionne stated she advised potential clients during initial discussions that if
she did not clean their house personally, the cleaners assigned for that task
would be subcontractors of Coloniale. Dionne wrote specific client requirements
on a sheet which included preferred hours for the service and instructions
pertaining to the cleaning of areas such as hardwood floors or items such as
mirrors. Dionne stated that most homeowners/occupants did not want to be at
home while the cleaners were working so the teams were assigned times which conformed
to the client’s schedule. Generally, the same team – usually composed of two
persons, except for large houses which could require three – was not sent to
the same house but workers could request repeat assignments to a location. Any
complaints by clients were made directly to Coloniale and, although Dionne was
aware of the composition of a cleaning team, she did not know which member was
responsible for the error or omission. Therefore, it was the responsibility of
that team to return to that residence and to rectify the problem. If another
worker had to be sent to perform that service, the workers in the original team
were not paid for the time required to correct their mistake. It was very rare
that any item was broken but on one occasion a worker broke a vase and paid the
sum of $60 to reimburse Coloniale’s client. Dionne stated she wanted the
workers to meet at the garage at her residence at 8:50 a.m., at which point she
advised them of the jobs available that day and assigned teams to various locations
and handed out clipboards with attached client contracts and instruction sheets
containing particular requests of certain clients, some of which were so
idiosyncratic that some workers refused to clean that residence. The jobs in
Beaumont took one-half day to complete whereas the Edmonton locations required
a full day, including unpaid travel time. Dionne stated she is a single mother
and worked alone in some instances to satisfy a specific request or as a member
of a two-person team and did not act as a “boss” or supervisor. Workers
arranged for their own transportation to the job site and some of them were
able to work only on evenings or certain days of the week. As a result,
workdays for some ended by 1 p.m. and other workers dictated the hours and days
they were available due to other work commitments or child care requirements.
Dionne stated she did not supervise the cleaners but each member of the team
checked the work done by her co-worker. On occasion, workers cleaned Dionne's
house using the standard cleaning methods applied to the residences of
Coloniale clients. Dionne received a call from CRA advising her that Coloniale
was the subject of a payroll audit. She contacted the accountant Coloniale had
retained – at that time – who advised her to prepare a written contract to
incorporate terms of the previous verbal agreement between her – as President
of Coloniale – and each worker which would confirm the pre-existing status of
independent contractor. She was also advised to obtain invoices from workers
for services rendered and that they be requested to provide replacement
invoices since some were missing due to the inadequate state of Dionne’s
record-keeping. Dionne stated one worker – Kimberley Chiasson (“Chiasson”) -
refused to sign the written agreement when it was presented to her and was
emotionally upset about the matter. Dionne stated that throughout the relevant
periods in 2006 and 2007, no worker ever questioned her in relation to the lack
of deductions for EI, CPP and income tax from their bi-weekly payments for
services rendered. Christmas bonuses in the form of cheques were received by
Coloniale and Dionne attempted to distribute portions of the total amount to
workers who had cleaned in the houses that were the source of said bonuses.
Neither Coloniale nor Dionne retained any of that bonus money.
[10] Dionne
was cross-examined by counsel for the Respondent. Dionne acknowledged that she
had trained some workers with respect to certain tasks mainly by having a new
worker clean her house while observing and providing advice, if requested.
Otherwise, a worker was at liberty to use her own skills and methods. Dionne
stated that workers had input into where they would work - and for whom - and
could suggest that a certain co-worker be assigned to form a team. She agreed
that Coloniale provided most cleaning supplies until the commencement of the
CRA audit after which – on the advice of her accountant – she began charging
workers for supplies and tools. Dionne stated that throughout the relevant
periods, any worker could use their own supplies or tools as a matter of
personal preference. If a team was running behind on a job, the workers had the
right to call members of another team directly and to request assistance
without contacting Dionne. On those rare occasions when some item in a
household was broken or sustained slight damage, the worker involved advised
Dionne who discussed the matter with the client. It was necessary on only one
occasion for the householder to be reimbursed as otherwise any potential claim
was waived, probably because the loss or damage was trivial. Coloniale did not
“do windows” as it did not have appropriate equipment or liability insurance. Dionne
stated that some workers advised her – initially – they could work only from
April to September and others made it clear they could not work on certain days
or during certain hours. If a worker was ill or otherwise unable to attend,
Dionne located a replacement and paid that person directly with a Coloniale
cheque. In the period prior to the CRA audit, no worker had hired her own
substitute or assistant. Dionne agreed the remuneration was based on an hourly
rate but stated that was linked to a time frame reasonably required to complete
the cleaning of a particular residence. On occasion, there were more workers
gathered outside Dionne’s garage in the morning than the number of jobs
available so some volunteered to return home so others could be assigned the
cleaning jobs. Dionne was referred to a Questionnaire – Exhibit R-1 – signed by
Rutwind & Associates on behalf of Coloniale and dated May 5, 2008. The
typed response – by way of attachment – at Q. 23 – pertaining to hourly rates
paid to workers – indicated higher rates were paid to some workers – $14.00 to
$14.50 – while others were paid $11.50 or $12.00 with the greater amount in
each case being paid when the work site was in Edmonton rather than in Beaumont.
Dionne stated the variations were the result of negotiations with workers based
to some extent on the nature of the premises to be cleaned as some clients set
a maximum amount they were willing to pay for cleaning while others paid
Coloniale for whatever hours were necessary to perform the task. Dionne
acknowledged that prior to the CRA audit, most workers did not submit an
invoice to Coloniale and expressed her regret at not having insisted on
receiving an invoice prior to issuing a cheque in payment for services
rendered. However, she was otherwise occupied with a variety of other matters
and the quality of bookkeeping suffered as a result. Dionne stated that some of
the workers cleaned homes or had other cleaning jobs that were performed for
people who had no business relationship with Coloniale. Early in the working
relationship with each worker, Dionne had inquired whether GST would be added
to the amount submitted to Coloniale for payment but no one had registered to
obtain a number so it was not an issue thereafter. All workers – except
Chiasson – signed a one-paragraph document – copies of which were attached to the
response to the Questionnaire – and the title and body thereof reads as
follows:
Contract for
(blank space for name)
as sub-contractor
I, (blank space for name)
recognize that I am being hired as a sub-contractor and that I am responsible
for filing and paying my own source deductions (CPP, E.I., and income tax).
Coloniale Maid Service Ltd. does not submit source deductions on my behalf.
[11] As
requested by Dionne, all documents were dated November 1, 2006 in an attempt to
confirm and ratify the working status that she considered had existed since the
commencement of the working relationship with Coloniale in each case. Dionne
stated most workers provided replacement invoices for services previously
rendered to permit her to complete her records for purposes of the CRA audit.
Dionne identified an e-mail – Exhibit R-2 – dated November 5, 2007 – she sent
to Brenda Hinse (“Hinse”) in which she listed the dates and amounts required to
be included in invoices to be prepared by Hinse and submitted to Coloniale.
Dionne identified another e-mail – Exhibit R-3 – sent to Chiasson which listed
cheques paid by Coloniale to her at various times in 2007 and included an
estimate of money also earned in October, apparently at the request of the CRA
auditor. Dionne identified a printout – Exhibit R-4 – of amounts paid to
Jacqueline McCormick (“McCormick”) and there was reference therein at an entry
– dated 15/12/2006 – that she had received a bonus in the sum of $40.00 when
Dionne apportioned holiday bonus money received from clients. Dionne stated she
did not command workers to appear at her house prior to 9 a.m. and if enough
people were not present to handle all the jobs, she worked herself or found
someone who was willing to work that day. It was not unusual for someone to
quit without any prior notice. In Dionne’s opinion, McCormick had started to
poach Coloniale’s clients and this led to a confrontation which resulted in the
termination of their working relationship. Dionne referred to an advertisement
– filed as Exhibit A-1 – in the Beaumont paper where Natalia Parsons (“Parsons”)
advertised her cleaning services under the name: Sparkle Cleaning Services. To
the best of Dionne’s recollection, that notice appeared about the first week or
two of September, 2007. At some point, the price of gasoline had increased to
more than $1.40 and Parsons requested a contribution for “gas money” so Dionne
decided to pay her the sum of $20 per month and offered the same amount to
other workers who used their own vehicles to drive themselves or other workers
to job sites. Dionne stated she had purchased accounting software for her
computer and was learning it on her own as she went along and had tried her
best but that aspect of her business was assigned low priority because the care
of her family also demanded a lot of time.
[12] In
response to questions from the Bench, Dionne stated that at some point,
Coloniale increased its rates to clients and the workers requested additional
money which led to their hourly rates being increased and these new hourly
amounts may have been included in the response to Q. 23 of the Questionnaire –
Exhibit R-1. Dionne stated Coloniale paid all Workers’ Compensation Board (“WCB”)
premiums as required by provincial law which exempted only services provided by
individuals through corporations. Most cleaning contracts were carried out
within Beaumont so adverse weather conditions were not a factor although some
jobs in Edmonton had to be cancelled due to bad driving conditions. The
liability insurance policy obtained by Coloniale provided coverage only for
liability arising from the provision of Dionne’s services personally and did
not cover the workers whom she considered to be subcontractors. Although it was
rare, there were occasions when a job had to be cancelled due to a shortage of
workers attending the morning assembly at her garage. Usually, there were
enough workers to handle the demand and replacements – in Beaumont – were
telephoned and could be assigned quickly to a nearby location and Dionne also
worked personally when necessary to fulfil a cleaning contract.
[13] The
Appellant closed its case.
[14] Amy
Holstein (“Holstein”) was called to the stand by counsel for the Respondent.
Holstein testified she saw the Coloniale advertisement in the Beaumont paper.
Prior to providing her cleaning services to Coloniale in 2007, Holstein did not
sign any written contract and was trained by Dionne with whom she worked for
the first “couple of shifts.” Holstein stated the workday started at 9 a.m. and ended – usually – by 5 p.m., although some houses took longer to finish. The
cleaning teams remained until the job was finished and if the task was
completed earlier than projected, a team member telephoned Dionne and sometimes
received instructions to proceed to another location to assist the team working
there. Holstein stated there was some ability to choose work locations but the
teams were required to follow the sequence of job sites as stated on the sheet
attached to the clipboard. The workers assembled at Dionne’s residence before 9 a.m. and obtained supplies and necessary tools. Once assigned to teams, the workers left
for the work sites where the cleaning was performed without supervision. At the
beginning, Holstein had to return to a house to re-do some task and cannot
recall whether she was paid for that additional work. She did not use a vehicle
to travel to work sites and was paid $13.50 per hour for cleaning. She did not
submit any invoice to Coloniale prior to receiving payment which was calculated
in accordance with the information in the Coloniale client invoice handed out
in the morning with the clipboard. Holstein stated she was not able to gain any
profit from the provision of her services and could increase income only by
working more hours. She did not provide her services to any other cleaning
companies nor on her own initiative. She was not registered for GST and did not
advertise her services. She stated that after the CRA audit had commenced,
workers began buying their own mops and buckets.
[15] Holstein
was cross-examined by the agent for the Appellant. Holstein stated she obtained
rides from co-workers or walked to the jobs – weather permitting – during the 7
or 8 months she worked as a cleaner for Coloniale. She was never advised by
Dionne that she was forbidden to work for other cleaning services and knew that
some of her co-workers had done so. Once the work was completed at a particular
location, the relevant number of hours was inserted into the space provided on
the Coloniale invoice which had been prepared in the name of that specific
client. On occasion, Holstein declined a particular cleaning assignment which
Dionne accepted and sent her to another location.
[16] Natalia
Parsons – also known as Natasha – testified she read a classified advertisement
in the Beaumont paper in which Coloniale was seeking cleaners to work for
$12.00 per hour. She did not sign any written contract prior to cleaning for
Coloniale and received training from fellow workers on the teams to which she
was assigned by Dionne. She never objected to any placement with another team
member. Parsons stated the group met at Dionne’s house before 9 a.m. and, if unable to attend, a worker was expected to call Dionne. Usually, the work
was finished by 3 p.m. but the cleaning team had to remain until the job was
complete. The locations were assigned by Dionne and Parsons was unaware whether
she had the ability to refuse work at any specific residence. Parsons never
encountered any dissatisfaction with her work or that of her team but was aware
of situations where a client had called Dionne to complain and the matter was
discussed with the assembled workers the following morning. Parsons recalled
that at some point there was a general increase in the hourly wage paid to workers.
Prior to receiving payment – by cheque – from Coloniale, she did not prepare
any invoices and all supplies and materials were distributed by Dionne. Parsons
stated there was no chance to gain a profit and there was no risk of loss in
providing her services to Coloniale. For several months when the price of
gasoline was excessive, she received the sum of $20 per month from Coloniale as
a contribution towards fuel purchases. In May, 2008, Parsons started her own
cleaning company but during her working relationship with Coloniale did not
work for others and considered she had been an employee. She was not registered
with GST. After CRA had completed the audit, Parsons signed a “paper” in which
she was described as a subcontractor and thereafter certain cleaning supplies
had to be purchased from Coloniale. Parsons identified a Questionnaire –
Exhibit R-5 – that she completed and signed on April 20, 2008. In responding to Q. 32, thereof, Parsons wrote that Coloniale informed her how many hours were
required to complete each house. However, despite any such estimate, she and
other workers were paid for the actual time spent at any residence or premises.
Parsons stated there was never any agreement with Dionne as to the status of
the working relationship.
[17] In
cross-examination, Parsons stated that any training received was from other
workers whom she assumed had been requested to do so by Dionne. Parsons stated
that during the initial interview, Dionne advised her that she wanted to be
contacted if Parsons was unable to work on a certain day but that situation
never arose. Parsons ability to speak English was somewhat limited at that
point so she was accompanied by her husband. Although there was no discussion
with Dionne concerning any source deductions, Parsons stated her husband
mentioned later that she should have had deductions taken from her pay cheques.
Parsons stated she was not familiar with the Canadian system and spoke with
other workers about the matter but was happy just to have a source of revenue.
She was aware that at the end of the year she would be required to calculate
her total income and to pay the appropriate amount of tax. Parsons stated the
allowance of $20 per month to be used for gasoline purchases was satisfactory.
Prior to the CRA audit, Coloniale supplied all mops, cleaning materials and
other supplies. Other than McCormick, who at some point worked for another
cleaning service, Parsons was not aware of any others who worked for other
cleaning businesses or provided services privately to their own clients. She
had not been informed by Dionne that she was not permitted to work for other
cleaning companies or to find her own jobs.
[18] Brenda
Hinse testified she resides in Beaumont and is employed as an Education
Assistant. She responded to an advertisement by Coloniale – in the Beaumont
paper – offering workers $10 per hour for cleaning services. In meeting with
Dionne, she was not told it was a business opportunity as opposed to
employment. Dionne demonstrated certain cleaning methods with particular
attention devoted to dealing with more difficult areas in a residence.
Assignments were handed out by Dionne to the workers assembled prior to 9 a.m.
and supplies were distributed along with special client instructions and
security codes to permit entry. A team remained until the job was completed and
if it was running behind, a worker called Dionne who sent other workers to
help. If finished early, the reverse situation applied. Hinse stated she was
not able to refuse a job and Dionne established the priority of work to be
performed on any given day. Hinse stated she wanted to work with McCormick but
Dionne did not agree. Once, Dionne took a brief vacation and Hinse assumed a
managerial role to continue Coloniale’s service to clients. Although it did not
apply to her, Hinse was aware of occasions when Dionne was critical of one or
more workers who were part of the morning assembly. Hinse assumed either Dionne
– through Coloniale – had paid for any broken or damaged items in a residence or
the clients had waived any claim for reimbursement. Hinse did not find her own
replacement worker and even though she wanted to hire her sister as an
assistant, Dionne did not grant permission. She was paid – by cheque – twice a
month based on the number of hours worked, multiplied by the applicable hourly
rate which at one point was increased. Each clipboard handed out in the morning
contained two invoices. One was left in the residence and the other was
returned to Dionne at the end of the workday when remaining supplies were
dropped off at her garage and the clipboard was left on the steps to her
residence. Hinse used her own vehicle and received $20 per month towards fuel
purchases. She paid an extra vehicle insurance premium of $158 because she was transporting
co-workers to job sites. Hinse stated she did not supply any tools or equipment
and did not have any opportunity to gain a profit nor did she incur any risk of
loss. While providing her services to Coloniale, Hinse was employed as an
Education Assistant in a school but did not work for other cleaning companies.
Hinse stated that even though – at the beginning – Dionne informed her that she
was self-employed, later she began to question that status for various reasons
including the lack of control over work locations and the relationship with
co-workers. She was not registered with GST and did not advertise her cleaning
services. Hinse terminated her working relationship with Coloniale on October 26, 2007, at which point all workers were required to supply their own mops,
buckets and supplies. Hinse completed and returned a Questionnaire – Exhibit
R-6 – dated April 16, 2008 - in which she stated – at Q. 30 – that she did not
submit an invoice to receive payment and that Coloniale paid for any substitute.
She did not recall having had any ability to choose or refuse any particular
location or cleaning job.
[19] In
cross-examination, Hinse confirmed that it was clear to her during the initial
interview with Dionne – in March, 2006 - that her services were to be provided
to Coloniale as an independent contractor. She acknowledged that she had raised
the matter with Dionne thereafter but continued to assume that source
deductions would be made at some point even though none were taken from any
cheque. Hinse stated her work for the school board – beginning in March, 2007 -
was on a casual basis whereby she substituted for someone so when called to
work at a school, she had to contact Dionne if not available to clean. Hinse
stated the hourly rate paid by the school board was higher than that paid by
Coloniale and she could accept work as an Education Assistant whenever the
opportunity arose. Although some cleaning jobs were not completed until 3 p.m., most were done by 1 p.m. and Hinse was able to request an assignment of shorter
duration if necessary to meet some other commitment, usually pertaining to her
family. Any call from the school regarding the availability of work was made at
7 a.m., and if Hinse decided to accept, telephoned Dionne to advise she would
not be available to work that morning. Hinse stated she filed her income tax
returns for the 2006 and 2007 taxation years on the basis she was self-employed
and provided receipts to her tax preparer pertaining to the extra insurance
premium, cell phone, gasoline purchases and details concerning an in-home
office. Hinse stated she did not provide any tools or supplies. Although some
workers left without notice, Hinse was advised – verbally – by Dionne that two
weeks notice of intention to quit was required. She was not requested to
provide invoices to Coloniale prior to receiving payment for services rendered
but later was asked by Dionne to provide invoices to conform with a list of
Coloniale cheques that were issued to her. Hinse stated she complied with the
request – even though she did not understand the purpose – and when doing so,
spotted certain errors in amounts and dates which she corrected in her
response. Hinse stated that she merely wanted to finalize her relationship with
Dionne.
[20] During
re-direct examination by counsel, Hinse stated she considered it a common
courtesy to drive co-workers to job sites and that her status with the school
board was that of employee. She did not consider that it would be unusual for
an employee to request some time off to attend to a matter concerning child
care.
[21] Jacqueline
McCormick testified she resides in Beaumont and works as a cleaner and a
waitress. She responded to the Coloniale advertisement in the local paper
seeking cleaners who would work – for $10 an hour - between 9 a.m. and 3 p.m..
When interviewed by Dionne, she was informed that her services would be
provided to Coloniale as a self-employed individual. As part of initial
training – which she considered mandatory – Dionne demonstrated the best method
to clean a bathroom. The workers gathered at Dionne’s residence prior to 9 a.m.
when teams were assigned to jobs and supplies – and clipboards with attached
sheets – were distributed. McCormick did not have small children so was able to
work later than 3 p.m. in the afternoon and could help out other teams when
necessary. She stated that despite her objections about cleaning a particular
house, Dionne insisted she attend there and perform the work. Complaints by
clients were handled by Dionne who checked on the quality of work and resolved
the issue. McCormick stated she understood Dionne had deducted an amount from
the cheque of a co-worker – Holstein – because of an unsatisfactory cleaning
job at a residence. McCormick did not hire an assistant nor had she arranged
for a substitute and was paid an hourly rate that was later increased. While
providing her services, she did not submit invoices to Coloniale prior to
receiving payment. Until the CRA audit, all supplies were provided by Coloniale
and distributed by Dionne. McCormick drove her vehicle about 50 km per week for
work purposes and received the sum of $20.00 per month towards fuel purchases.
In her view, there was no opportunity to make a profit from providing her
services and the only potential for loss was “wear and tear” on her vehicle as
she did not pay for any extra liability insurance. McCormick, who also worked
at a restaurant in Beaumont, stated that as time went on she began to “feel
like an employee” of Coloniale. She left Coloniale in November, 2007, but later
provided Dionne with backdated invoices, as requested. McCormick stated she
did not receive her last cheque – for work done in October – until December 27
and had complained to the appropriate provincial government department. She
identified a Questionnaire – Exhibit R-7 – that she completed and signed on
April 16, 2008. She did not have a GST number during the relevant periods.
[22] McCormick
was cross-examined by the agent for the Appellant. McCormick stated she worked at
a bar from 5:30 p.m. onwards and so did not work for Coloniale past 4 p.m. but
was always finished before then. She worked as a cleaner 3 days a week for
Coloniale and did not have any other cleaning jobs. McCormick stated she wanted
to work with Hinse whom she considered to be “a strong worker” but was refused
by Dionne who preferred to pair an experienced cleaner with one not as capable
or experienced. McCormick and other workers followed a checklist and Dionne –
on occasion – attended a work site. When she was a member of a team, McCormick
assumed responsibility to perform the final check of the premises. Sometimes,
the householder wanted additional services performed and if that required extra
time, it was noted on the invoice and she and her team member were paid
accordingly. McCormick stated she filed her 2006 and 2007 income tax returns as
a self-employed person and does not know if any expenses were deducted since
her husband prepared the returns. She did not have any in-home office. She
worked cleaning houses in Edmonton on Mondays and, although she never refused
such assignments, felt she could have done so without any negative consequence
except – perhaps – incurring the displeasure of Dionne. She had refused to work
cleaning a certain home and Dionne had accepted that. McCormick acknowledged
that at some point in 2007, she cleaned two other houses on her own. McCormick
identified her signature on a document – Exhibit A-2 – which Dionne wanted her
to sign as an acknowledgement that she had been providing her services to
Coloniale as a subcontractor. The document was signed in October, 2007,
although it was dated November 1, 2006. McCormick stated she was not aware that
her last cheque from Coloniale may have been withheld because Dionne was
waiting for an invoice covering that final period. McCormick agreed she had
never questioned Dionne about the lack of deductions from her cheque.
[23] Kimberley
Chiasson testified she responded to the Coloniale advertisement in the Beaumont
paper seeking cleaning staff at the hourly rate of $11 or $12 per hour. During
the first telephone conversation with Dionne, she was told to call back in a
week and when she did so was instructed to be at the garage at Dionne’s
residence before 9 a.m.. Chiasson told Dionne she was available to work on
Monday, Wednesday and Friday of each week except if her children were not in
school and also that she was not available to work during the summer school
holidays. Dionne’s children and those of most of the other Coloniale cleaners
attended the same school in Beaumont. During subsequent meetings – starting at
8:45 a.m. – Dionne handed out supplies and clipboards with invoices and a sheet
indicating the sequence of jobs and the composition of the cleaning teams.
Chiasson stated she refused to clean one residence due to exceptional
circumstances but otherwise considered she had to comply with Dionne’s
assignments. As for the composition of a cleaning team, Chiasson stated she did
not choose her co-workers but once requested Dionne to assign a particularly
experienced person to work with her cleaning a specific house. Chiasson
recalled an incident where a client had been upset with the work performed and
complained to Dionne who addressed the group concerning the matter but as far
she knew there were no repercussions – financial or otherwise – resulting from
that complaint. Chiasson was able to abide by the schedule established with
Dionne at the outset and did not hire any replacement or assistant. She was
paid an hourly rate which did not include travel to a job. At one point, her
salary was subject to a general increase of 50 cents per hour for all workers.
She did not submit an invoice prior to receiving payment and when she used her
own vehicle during a short period, received an allowance of $20. Chiasson
stated she did not have any opportunity for profit nor was there any risk of
loss from providing her cleaning services to Coloniale. Her last day of work
was October 31, 2007 but she received a call from Dionne on November 3, requesting
that she return. A few days later, Dionne asked Chiasson to sign a document in
which she agreed that she had provided her services as an independent
contractor and also was handed a sheet which listed the cheques paid to her by
Coloniale. Chiasson stated she requested time to reflect on the matter and to
consider the significance of signing the document. Dionne advised Chiasson that
as the result of an audit by CRA, she needed that document to be signed. After
the audit, Dionne informed workers they were required to purchase their own
supplies. Chiasson stated that throughout the working relationship Dionne acted
like an employer or “boss” with respect to all aspects of the services provided
to Coloniale clients.
[24] In
cross-examination, Chiasson stated that when she decided to try working for
Coloniale, Dionne gave her instructions and sent her to a house with two other
workers where it took them 5 hours to finish cleaning. Later, as a matter of
course, there was a checklist provided and sometimes it included additional
instructions. Chiasson stated that most Beaumont jobs were finished by 3 p.m.
but those in Edmonton took longer. Although Chiasson did not refuse to take
jobs in Edmonton, she preferred to work in Beaumont. Chiasson stated that for
the first three days of work, Dionne gave her instructions and demonstrated
preferred methods according to Coloniale policy. The only time Dionne inspected
her work was when they had worked together as a team which was considered
normal since she checked the work of all co-workers when performing a
particular job. It was understood that the client had to be satisfied with the
quality of the work. There was no requirement to wear a uniform and workers
could wear a tee shirt and sweat pants provided their appearance was neat and
tidy. Chiasson used her personal cell phone and her vehicle usage was limited.
She provided her accountant with a list of pay cheques received and was advised
later by Brenda Woo (“Woo”) – an employee of CRA – to report her earnings as
employment income on her 2007 income tax return. Chiasson stated she did not
clean any houses on her own and the only other work-related activity was to
exchange child care with a neighbour. Chiasson stated she did not question
Dionne about the absence of deductions from her pay cheques and it was not a
matter of particular significance since she only worked for Coloniale a total
of 10 weeks prior to the school summer vacation and 8 weeks thereafter. Once –
at work – she became ill and Dionne was called and paramedics arrived at the
job location and administered oxygen. She was sent home and received full
payment for the hours allotted to that job. She did not work again at that
particular house.
[25] Brenda Woo testified she has been employed by CRA for 11 years
and has worked as a CPP/EI Appeals Officer since 2005. She was assigned the
Coloniale file and reviewed the material therein. Questionnaires were sent out
to most of the affected parties and when additional workers were located, she
telephoned them and posed questions that more or less conformed to those in the
printed Questionnaires. All Coloniale workers for the relevant periods – except
four – were contacted. Woo identified a Questionnaire – Exhibit R-8 – received
from Morgan Lapointe who provided her services to Coloniale in 2006 and 2007.
Woo prepared a Report On An Appeal – CPT110 – Exhibit R-9 – and attached a
Schedule “A” thereto. A Questionnaire – Exhibit R-10 – was completed and
returned – with attached payroll printouts – by Sarah Burns (“Burns”) who
provided services to Coloniale in 2006. Woo identified her notes on two T2020
Forms – Exhibit R-11 and Exhibit R-12 – concerning her contact with Burns and
Markiwsky, respectively. Markiwsky advised Woo that she and her husband
operated a siding business but she also had worked cleaning houses for
Coloniale and was paid $12 per hour. She indicated she rode with other workers
to job sites and did not supply any tools or equipment and did not incur any
job-related expenses. The time spent cleaning a house was recorded on the
sheets/invoices provided by Dionne each morning. Markiwsky declared her
Coloniale income as forming part of business income for the 2006 and 2007
taxation years. Woo contacted Lisa Longmire (“Longmire”) and recorded details
in her T2020, filed as Exhibit R-13. Longmire provided her services in 2007 and
informed Woo she was paid $13.50 per hour, increased later to $14. She had been
informed by Dionne that her status was that of subcontractor and no deductions
were made from any pay cheque. Longmire informed Woo that she provided her own
kneepads but all other supplies and tools were distributed by Dionne. Longmire
advised Woo that she did not bid on any jobs and performed them according to
the locations and sequence assigned by Dionne. When she used her own vehicle to
travel to jobs she received $20 per month. Woo referred to the relevant T2020 –
Exhibit R-14 - concerning Merridee Dykstra who provided cleaning services to
Coloniale between June and October, 2007. She reported her income as business
income for that taxation year in accordance with instructions from Dionne
received at the outset concerning her working status. She did not participate
in finding clients for Coloniale and provided no tools or supplies. Woo spoke
with Susan McDade (“McDade”) and details of the telephone conversation were
recorded on the T2020, Exhibit R-15. According to McDade, she considered that
she had been an employee of Coloniale and a request for a ruling on her status
was issued by Human Resources and Skills Development Canada (“HRSDC”) which
determined she was an employee of Coloniale. It was this ruling which led to an
audit by a CRA Trust Examiner which resulted in the assessments being issued to
Coloniale in respect of named workers for 2006 and 2007. An additional request
for a ruling had been issued with respect to Chiasson. Woo spoke with Holstein
and recorded in the T2020 – Exhibit R-16 – that Holstein recalled that
deductions for EI and CPP had been made from two pay cheques but that these
amounts were later refunded, apparently after Dionne had obtained certain
accounting advice. Woo recorded notes – Exhibit R-17 - of her conversation with
Chiasson. By utilizing the CRA data base, Woo gathered information which
permitted her to discover the following: the taxation year reported; the method
of reporting income; whether expenses were claimed; other relevant details
pertaining to a specific individual. In that framework, Woo testified as
follows:
|
Name
|
Year(s)
|
Method of Reporting
|
Comments
|
|
Sarah Burns
|
2007
|
Business & employment income
|
|
|
Kimberley Chiasson
|
2007
|
Business income
|
No expenses claimed
|
|
Merridee Dykstra
|
2007
|
Business income
|
Not known if expenses offset
|
|
Brenda Hinse
|
2006
2007
|
Business income
Business income
|
Net income lower but no expense detail
$4,000 expenses but no details
|
|
Amy Holstein
|
2007
|
T4 income
|
Source not known
|
|
Morgan Lapointe
|
2006
2007
|
Line 101 Employment income
Line 101 Employment income
|
Maybe no T4s filed
Maybe no T4s filed
|
|
Lisa Longmire
|
2007
|
Business income
|
No expenses claimed
|
|
Louise Markiwsky
|
2007
|
Business income – two sources
|
No expenses claimed
|
|
Jacqueline McCormick
|
N/A
|
|
No returns filed
|
|
Susan McDade
|
2007
|
Employment income
|
Amount more than paid by
Coloniale
|
|
Natasha Parsons
|
2006
2007
|
Not known
Not known
|
|
|
Kayla Markiwsky
|
2006
2007
|
Business income
Business income
|
No expenses claimed
No expenses claimed
|
|
Christine Begin
|
2006
2007
|
Employment income
Employment income
|
|
|
Lisa Coltman
|
2007
|
Employment income
|
|
|
Rachel Eck
|
N/A
|
|
No return filed for 2007
|
|
Jill Ellis
|
2006
2007
|
Business income
|
No expenses claimed
No data
|
|
Kristina McLean
|
2006
2007
|
Employment income
|
No data
|
|
Amanda Ryan
|
2006
|
Employment income
|
Only $416.07 from Coloniale
|
|
Laura Van Walleghem
|
2007
|
Business income
|
No expense statement
|
[26] Woo
stated she analyzed all the information gathered with respect to the Coloniale
matter and concluded Dionne had determined the work locations and sequence, the
composition of teams and provided some training to some workers. Woo considered
the factors pertaining to control and included them in her CPT110 – Exhibit R-9
– under the category: Level of Control. With respect to provision of equipment,
Woo concluded that with rare exceptions involving small items, all necessary
tools, supplies and equipment were provided by Coloniale. Woo’s assessment of
the issue relating to the ability to hire assistants or to subcontract work to
others was that it had not arisen nor had it been discussed – by Dionne – with
the workers and that the workers believed their personal service was required.
Dionne took care of locating replacements or additional workers, as required.
With respect to economic issues involved in providing the cleaning services,
Woo’s opinion was that the workers were not required to expend their own capital
and any additional expense for fuel was offset by the payments made by
Coloniale. Woo noted that any extra employment-related expenses could have been
claimed by completing a Form T2200 when filing returns of income. On the
material before her and having regard to information gathered subsequently, Woo
decided the clients were those of Coloniale and that this business entity was
responsible – ultimately – for the quality of the work. Even if a worker
refused to return to a cleaning job, Dionne either sent someone to repair the
deficiency or did it herself. Woo concluded the workers had no degree of
responsibility for investment and management and that Dionne – as sole
shareholder of Coloniale - was responsible for the operation of the business.
The facts before Woo led her to decide the workers had no opportunity for
profit as Dionne set the hourly rate Coloniale was willing to pay and there was
little room for negotiation. There was no real risk of loss as Coloniale paid
WCB premiums and was responsible for loss or damage to the house or property of
clients. Woo noted that only Markiwsky had any business experience which had
been gained by operating a siding business with her husband. In Woo’s opinion,
the rest of the named workers were not providing services on their own account
even though some reported earnings from Coloniale as business income. In her
CPT110 – Exhibit R-9 - Woo recommended the Minister decide that the assessments
issued in 2006 and 2007 to Coloniale for CPP contributions and EI premiums in
respect of named workers be confirmed, with the exception of CPP contributions
for Dionne for the period November 1, 2006 to September 30, 2007, because she
had no contributory earnings and – therefore – the assessment should be reduced
accordingly.
[27] Woo
was cross-examined by the agent for Coloniale. Woo stated that when
interviewing workers by telephone, she used the Questionnaire as a guide but
posed other questions depending on the responses and the circumstances
pertaining to the individual. She estimated that each interview took between 20
minutes and an hour to complete. Woo stated her printouts of information
relating to the returns of income filed by Hinse in 2006 and 2007 did not
support her comment during the telephone interview that deductions for EI/CPP –
at some point – had been made by Dionne.
[28] Dionne
was permitted to testify in rebuttal. She stated that when informed by other
workers that McCormick was offering her services – at a lower rate – to
existing Coloniale clients, she confronted her and was advised that those
clients were unhappy with Coloniale’s service. Dionne stated McCormick went to England
and had advised that her husband would pick up the final cheque. However,
Dionne received accounting advice that payment should be made only in response
to an invoice. On McCormick’s return to Beaumont, Dionne issued a cheque for
work done in late October or early November as payment of an invoice submitted
by McCormick for that period. With respect to Hinse, Dionne stated the only
time she inspected her work was when they were paired as a cleaning team.
Although it would have been easier if workers had found their own replacements,
none had done so even when requested. During a one-week vacation, Hinse agreed
to assume responsibility for handling the usual morning routine including the
assignment of workers to teams. She did not receive any extra pay. During the
relevant periods, Coloniale was never out of pocket for any damages caused by
workers.
[29] Ms.
Rutwind, agent for Coloniale, submitted that the whole of the evidence
supported the proposition that payments to workers were made to them in their
capacity as independent contractors who provided cleaning services. Rutwind
pointed to the lack of control and supervision and the ability of a worker to
refuse a particular job or to decline work for various reasons including their
own personal schedule. She submitted that the flexibility afforded by being
able to choose working hours – and days – and the ability to call in at the
last moment – or just not show up at Dionne’s garage – on a particular day,
coupled with the opportunity to elect to devote time to higher-paying
employment instead of cleaning, were indicia of an independent contractor and
not that of an employee. Had no worker attended at Dionne’s garage at 8:50 a.m., she would not have been able to administer any reprimand or other discipline
normally associated with an employer-employee relationship. The method of
assembling each morning was an efficient method to operate the business and
Dionne was able to match workers to jobs available that day. The Coloniale
clients set certain quality standards and the majority of workers were able to
meet those demands without receiving any training from Dionne. Rutwind conceded
that except for Orlova, who cleaned the dental office, almost all the tools and
supplies were provided by Coloniale. She acknowledged there was not much risk
of loss particularly when those using their vehicles received those $20
periodic contributions towards fuel purchases. However, some workers were able
to negotiate a higher hourly wage. Rutwind submitted Dionne had made it clear
during each initial interview with a potential worker, that their services
would be provided as an independent contractor and that Coloniale would not be
making any usual source deductions from their payments. The workers provided
their services within that framework and did not question their status nor did
anyone complain about the absence of those deductions. Many workers filed
income tax returns in accord with the status of subcontractor and reported
income as either business income or self-employed income. Rutwind submitted the
particular nature of the business and the specific circumstances relevant to
the provision of the cleaning services together with the common intention of
the parties was sufficient to demonstrate the decisions of the Minister were
incorrect and that the appeals should be allowed.
[30] Counsel
for the Respondent submitted the evidence had established that the workers
provided their services pursuant to a contract of service. The tests and
indicia flowing from established jurisprudence supported the decisions of the
Minister, including the category of control. Counsel referred to the testimony
of workers – and Dionne – which disclosed that the cleaners assembled at
Dionne’s garage at a specific time each morning where they received
instructions and assignments for that day. Workers were paired up and, on rare
occasions, a team was composed of three cleaners. Although some workers were
able to convince Dionne not to send them to a particular residence, for the
most part workers did not have a choice either as to job location or the
assignment of a co-worker to their team. The worker – Hinse – had requested a
particular teammate but was refused. Counsel submitted that even an employee
can stand his or her ground under exceptional circumstances if they honestly
cannot deal with a certain individual or situation when required to perform a
particular task. Apparently, the homeowner referred to several times by
different witnesses was somewhat of a legend among the workers and none of them
wanted to clean her house. The evidence supported the contention that if
workers finished their jobs earlier than 3 p.m., that they felt obligated to
assist others so they could complete their tasks. Once jobs were done, workers
went to Dionne’s house where they returned tools and supplies and dropped off
the clipboards and invoices, with the number of hours of work performed for
each client written in the appropriate space. Counsel referred to the testimony
of workers who were trained by Dionne with respect to certain preferred methods
of cleaning certain potential problem areas in a house – kitchen and bathroom –
and senior workers were assigned to a team with those who were newer or
less-experienced. The senior member of the team performed the final inspection
and Dionne retained the ability to visit any premises to view the quality of
the work and did so when there had been a client complaint. Counsel pointed out
that the tools, supplies and equipment were provided by Coloniale and the only
items used by workers were minor such as kneepads. Workers already owned their
own cell phones and motor vehicles prior to providing services to the payor.
With respect to an opportunity for profit, counsel submitted there was none as
all workers were paid based on an hourly rate. The only means by which to
increase revenue was to work more hours and there was no ability to negotiate a
flat rate with Dionne with respect to individual houses. A faster worker was
paired with one who was less experienced and both were paid an hourly rate,
although some workers may have earned about 10% more per hour than others at
certain times within the relevant periods. As for the risk of loss, counsel
submitted that was minimal, in view of the reimbursement paid by Coloniale for
gas used in private vehicles and the potential for any other loss was not
quantified in the evidence adduced by the Appellant. The only worker with a
capacity for operating a business on her own account was McCormick and that
involved cleaning two houses towards the end of her working relationship with
Dionne. Only one worker attempted to hire her own assistant but had been
refused by Dionne and the rest of the workers had not contemplated that
scenario. The workers were not required to submit invoices prior to receiving
payment. Counsel referred to the absence of evidence that could support the
contention any of the workers named in the assessments had been providing
services within the context of their own business. None were GST registrants
and they did not advertise their services nor carry on in a manner consistent
with operating a business. Counsel submitted the overall thrust of the evidence
by the workers was that they were under the control of Dionne who was the sole
owner of Coloniale. Counsel conceded the circumstances pertaining to Orlova
were different in that she went directly to the dental office and all supplies
were provided by that premises. However, counsel submitted the evidence
established that Orlova contacted Dionne in the event of any change to the
cleaning schedule and that the dentist was an existing client of Coloniale and
had not been solicited by Orlova. Rather, she had been hired to provide
cleaning to that specific client. Counsel submitted the decisions of the
Minister were correct and the assessments in each instance ought to be
confirmed.
[31] In several recent cases including Wolf v. The Queen, 2002 DTC
6853, The Royal Winnipeg Ballet v. The Minister of National Revenue – M.N.R., 2006 DTC 6323, Vida Wellness Corp. (c.o.b. Vida Wellness Spa) v.
Canada (Minister of National Revenue - M.N.R.), [2006] T.C.J. No.
570 and City Water International Inc. v. Canada (Minister of National
Revenue – M.N.R.), [2006] F.C.J. No. 1653, there was a clearly‑expressed
mutual intent of the parties that the person providing the services would be
doing so as an independent contractor and not as an employee. That is not the
case here. There was no evidence that any worker opposed that status prior to
providing her services. However, the testimony established that there was
merely acquiescence – or grudging acceptance - by most workers in the face of
that unilateral declaration of status by Dionne at the initial interview or
prior to starting work. There was no written contract between Coloniale and the
workers except for the document – Exhibit A-2 – that McCormick and other
workers signed after September, 2007 which was backdated to November 1, 2006. The document was created by
Dionne on the advice of Coloniale’s accountant – at
that time – in an effort to demonstrate to the CRA
auditor that the payments made to workers were in their capacity as
self-employed cleaners rather than as employees. There were various reasons for
workers signing that document. McCormick did so in order to receive payment –
in December, 2007 – for work done at the end of October or early November as
Dionne had insisted that Coloniale receive an invoice for that period. Chiasson
did not sign the purported subcontractor agreement/ratification pertaining to
the purported working status. Others did so to conclude their relationship with
Coloniale while some complied out of loyalty or respect for Dionne with whom they
had a courteous and agreeable relationship. Even in those cases referred to
earlier where the parties have clearly expressed a mutual intention that the
worker will provide his or her services as an independent contractor, their
subsequent conduct was examined to determine if it was substantially in accord
with that desired status throughout the working relationship. In the within
appeals, there was no coercion on the part of Dionne to force workers to accept
the purported status of independent contractor, merely a matter-of-fact bold
statement. Some workers were content with that categorization and filed their
returns of income accordingly. However, mere acceptance of a declaration of
status by a payor and the subsequent method of reporting earned income by the
worker are not determinative indicia of self-employment as the jurisprudence is
clear that the parties cannot determine their status as a matter of preference
or convenience through choice.
[32] In the case of Standing
v. Canada (Minister of National Revenue – M.N.R.)(F.C.A.), [1992] F.C.J. No. 890 Stone, J.A. stated:
… There is no
foundation in the case law for the proposition that such a relationship may
exist merely because the parties choose to describe it to be so regardless of
the surrounding circumstances when weighed in the light of the Wiebe Door test.
...
[33] The Supreme Court
of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001]
2 S.C.R. 983 – (“Sagaz”) dealt with a case of vicarious liability and in
the course of examining a variety of relevant issues, the Court was also
required to consider what constitutes an independent contractor. The judgment
of the Court was delivered by Major, J. who reviewed the development of the
jurisprudence in the context of the significance of the difference between an
employee and an independent contractor as it affected the issue of vicarious
liability. After referring to the reasons of MacGuigan, J.A. in Wiebe Door
Services Ltd. v. Canada (Minister of National Revenue - M.N.R.), [1986] 2
C.T.C. 200 and the reference therein to the organization test of Lord Denning -
and to the synthesis of Cooke, J. in Market Investigations Ltd. v. Minister
of Social Security, [1968] 3 All E.R. 732 - Major, J. at
paragraphs 47 and 48 of his judgment stated:
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.
48 It
bears repeating that the above factors constitute a non-exhaustive list, and
there is no set formula as to their application. The relative weight of each
will depend on the particular facts and circumstances of the case.
[34] I will examine
the facts in the within appeals in relation to the indicia set forth in the
judgment of Major, J. in Sagaz.
Level
of Control:
[35] There is no doubt
that the nature of the enterprise carried on by Coloniale afforded flexibility
in terms of working hours and days of the week and afforded some workers the
opportunity to spend school holidays with their children and others were
permitted to schedule their provision of services to Coloniale to accommodate
employment or other activity. The advertisements placed in the Beaumont paper
indicated cleaners were sought who would work between 9 a.m. and 3 p.m. – even
for only three days a week - between Monday and Friday. The evidence
established there was some training afforded to certain people who were not
experienced in cleaning houses. All cleaners were provided with a checklist
that set forth the standard policy of Coloniale together with any special
instructions issued by a particular client. The overall thrust of the evidence
was that workers were not able to choose either the residences to be cleaned
nor the person with whom they would be paired to form a team. There were
exceptional circumstances where Dionne accepted an outright, adamant refusal by
one or more workers to clean a certain house but there is no doubt on the
evidence that the workers were instructed to assemble at Dionne’s residence
each morning at around 8:45 a.m. to be assigned work at specific locations. If
a cleaning team finished early or was running late, all workers who testified
were clear that they felt obligated to contact Dionne and to provide assistance
to another team or to request assistance as the circumstances dictated. Dionne
did carry out rare inspections but reserved the right to do so, at all times,
particularly if a team had a new worker or if there had been a client
complaint. The cleaners did not deal directly with the client with respect to
any matters pertaining to the business arrangement in place between said client
and Coloniale.
Provision
of equipment and/or helpers:
[36] The evidence is
clear that for most or perhaps all of the period in question, the tools,
equipment, supplies and materials needed to perform the work were provided by
Coloniale. The only exception was the worker – Orlova – who used supplies
provided by Coloniale’s client when she cleaned the dental office. At some
point, upon receiving accounting advice as a result of the commencement of a
CRA audit, Coloniale began charging workers some amount for those items but the
evidence did not permit a finding when that practice began although it appears
to have commenced about September, 2007 and the limit of the 2007 period at
issue in the within appeals is September 30. A worker was expected to notify
Dionne if she was unable to work on a certain day but some did not do so. In
such case, Dionne either worked personally or found a replacement. The evidence
disclosed that the only attempt by a worker to hire an assistant was rebuffed
by Dionne.
Degree
of financial risk and responsibility for investment and management:
[37] None of the
workers had any investment pertaining to the provision of the cleaning services
relevant to the within appeals. The majority of workers did not use their own
vehicle to travel between jobs. The ones who did so were reimbursed an amount
that appeared to be sufficient to cover the cost – or at least the increased
cost – of fuel during the period of particularly high prices, especially for Alberta. Most
of the houses cleaned by workers were within the Town of Beaumont and
were within 3-5 kilometers of each other. The cleaning jobs in Edmonton
required greater travel but a $20 payment would have purchased about 15 litres
of gasoline at that time which could enable someone to drive from 120 to 150
kilometers between work locations. The workers who used their vehicles to drive
themselves or co-workers from Dionne’s residence to work locations - and back
at the end of the workday - did so as a matter of choice and not pursuant to
any direction from Dionne. Vehicles and cell phones used for work purposes had
been purchased for personal use and there was no evidence before me that would
permit any work-related proportion thereof to be quantified. It is probable
that expenses – if proven – for two or three workers, at most – would be minimal in relation to earned income. With
the exception of Hinse, who supervised Coloniale’s operations during Dionne’s
one-week vacation, any management function exercised by workers was solely in
relation to ensuring that their particular cleaning team had performed all
tasks satisfactorily prior to leaving a work site. Dionne paired
less-experienced workers with those with more experience or ability but no worker
was tasked with the responsibility to supervise members of other teams.
Opportunity
for profit in the performance of tasks:
[38] The evidence
established there was no opportunity for profit in the performance of the
cleaning tasks by workers at any point during the periods at issue. Each was
paid an hourly rate and any bonuses received by Coloniale during the holiday
season were distributed to relevant workers by Dionne as a matter of courtesy
and goodwill and she did not retain any gratuities for herself or Coloniale.
[39] The central issue
to be decided is whether any of the workers named in the assessments had
provided her services as a person in business on her own account. None of the
workers were GST registrants and only two performed cleaning services apart from
those assigned by Coloniale. The evidence pertaining to McCormick is not clear
but any outside cleaning work was done either at or near the end of the
relevant period in 2007 or perhaps after October when a confrontation with
Dionne over that issue led to the termination of her working relationship. Any
cleaning business carried on by Parsons was not done until May in 2008. None of
the workers advertised their services during 2006 and 2007 nor did they exhibit
any indicia of commerciality in relation to their function as cleaners of
residences or other premises. Orlova did not assemble with the other workers at
Dionne’s house during weekday mornings but the dentist whose office she cleaned
was a pre-existing client of Coloniale and the hours and days of the part-time
work suited her as she was a student at that time. The evidence is clear that
the cleaning business was entirely that of Coloniale. There were not two separate
businesses functioning – one by Coloniale
and another by each worker in providing the actual cleaning service to a client
– within an overall mutually-advantageous
framework. In the case of Precision Gutters Ltd. v. Canada
(Minister of National Revenue – M.N.R.), [2002] F.C.J. No. 771, the Federal Court of Appeal found that one
business concerned the manufacture of the gutters and the other arose from the
physical installation.
[40] I have concluded
the workers named in the assessments provided their cleaning services pursuant
to a contract of service and were employees of Coloniale. The decisions of the
Minister issued in respect of each assessment are hereby confirmed.
[41] Both appeals are
dismissed.
Signed at Sidney,
British Columbia this 10th day of March 2010.
“D.W. Rowe”
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