Toronto, Ontario
--- Upon
commencing the Decision with Reasons on
Tuesday,
August 1, 2007 at 3:58 p.m.
JUSTICE WEISMAN:
I have heard two appeals against decisions by the Respondent, Minister of
National Revenue, that the Appellant is responsible for the Employment
Insurance premiums and Canada Pension Plan contributions with reference to some
130 nurses listed on schedule A to the Minister's reply to the notice of
appeal.
It was agreed by
the parties at the beginning of these proceedings that the two witnesses who
are nurses were representative of the remaining nurses listed in schedule A and
were working under the same terms and conditions and had the same relationship
with the Appellant and with hospitals as all the others did, and so therefore
we could proceed on consent to hear these many matters on common evidence,
utilizing the witnesses that were heard viva voce as representative of
all the nurses listed in schedule A.
The Minister
based his decisions on regulation 6(g) under the Employment Insurance Act
and on regulation 34(1) under the Canada Pension Plan. These two
provisions are similar. Regulation 34(1) says:
"Where any
individual is placed by a placement or employment agency in employment with or
for performance of services for a client of the agency and the terms or
conditions on which the employment or services are performed and the
remuneration thereof is paid constitute a contract of service or are analogous
to a contract of service, the employment or performance of services is included
in pensionable employment and the agency or the client, whichever pays the
remuneration to the individual, shall, for the purposes of maintaining records
and filing returns and paying, deducting and remitting contributions payable by
and in respect of the individual under the Act and these Regulations, be deemed
to be the employer of the individual."
The Employment
Insurance Act regulation 6 says:
"Employment
in any of the following employments, unless it is excluded from insurable
employment by any provision of these Regulations, is included in insurable
employment."
And (g) says:
"Employment
of a person who is placed in that employment by a placement or employment
agency to perform services for and under the direction and control of a client
of the agency, where that person is remunerated by the agency for the
performance of those services."
As I have noted
in earlier decisions, notably Isomeric Inc. v. the Minister of National
Revenue, [2000] T.C.J. No. 843, the regulation under the Plan is broader in
scope than regulation 6(g) under the Employment Insurance Act in that it
requires the court, before someone can be fit into this section, to be
satisfied that the terms and conditions were either a contract of service or
analogous thereto. I plan to deal with that in due course.
The facts
established at trial are, first, that all nurses in schedule A were placed in
hospitals or nursing homes or rehabilitation centres by the Appellant. We have
the evidence of Ms. Tran:
"We send the
nurses to the hospitals."
And we also have
the standard-form employment contract, which has been filed as an exhibit in
these proceedings, A2. It specifically provides that:
"The
professional shall not approach or solicit service directly to the healthcare
facility."
So we have
evidence that the Appellant places the nurses in the hospital, and we have a
prohibition by contract against the nurses directly approaching the hospital.
Therefore, I am
satisfied that the first requirement in both statutory provisions has been
satisfied in that the Appellant is a placement agency that has not denied that
they do place these nurses in hospitals. And, of course, the hospitals are the
clients of the Appellant.
The next issue is
whether these nurses are under the direction and control of the client where
they were placed. There is clear evidence from Glennette London that she, and
therefore the rest of the nurses in schedule A, were subject to the direction
and control of the nurse manager or resource person or team leader or
physicians in the hospitals. They could be sent home for unsatisfactory
service. They were, upon reporting in the morning, given their duties and
assignments for the day and they were bound to comply with the hospital's
safety procedures and rules. That was not only the evidence of Ms. London
but also of Ms. Tran. So the second requirement has also been satisfied.
In adverting to
the Canada Pension Plan regulation 34(1) requirement that the terms and
conditions constitute a contract of service or are analogous to a contract of
service, I would point out a few relevant considerations.
There is a case
called Silverside Computer Systems v. the Minister of National Revenue,
[1997] F.C.J. No. 1591 in the Federal Court of Appeal. At paragraph eight,
referring to regulation 34 under the Plan, and in 1997 it was section 12(g) of
the Employment Insurance Act Regulations, which is now 6(g) of the
Regulations, the Court says:
"Those
provisions, in our view, are consistent with the powers so conferred, and
indicate that the respective regulatory authority has implicitly concluded that
the activities of the person who is placed by an agency to perform services for
and under the direction and control of an agency's client, and the nature of
the work done, are “similar” or “analogous” to services performed under a
contract of service." (as read)
And indeed, in
the Silverside case, the Court was dealing with independent contractors
who were expert in computers, and it was nonetheless held that they were caught
by regulation 34(1) under the Plan and regulation 12(g) of the Act.
Therefore,
certainly for the purposes of the Employment Insurance Act, it does not
matter whether the workers are an independent contractor or an employee; both
are caught by that section.
It might make
some difference under the Plan because, as I have said, the Court has to find
that their terms and conditions are similar or analogous to a contract of
service.
In that regard,
adverting to the four-in-one test set out in Wiebe Door, which is still
the law and was confirmed as recently as 2001 by the Supreme Court of Canada in
Sagaz Industries, which is 671122 Ontario Ltd. v. Sagaz Industries
-- the 2001 Supreme Court judgment is No. 61 -- and more recently in Precision
Gutters v. the Minister, [2002] F.C.J. No. 771, the control issue, which is
the first guideline, I have already said is clearly established. Counsel for
the Minister had a question as to whose intention one was talking about. I
think it is pretty clear in a control issue that it has to be the control of
the client. I have already said that the evidence is quite clear that these
nurses were working under the control of the client.
As far as tools
are concerned, the evidence of Ms. London was that while she had her own uniform,
and while she had her own stethoscope, when she went to a hospital the hospital
provided the stethoscope. That takes it out of the rule in Precision
Gutters where a worker owns the tools that it is normal and reasonable for
him or her to own, that person is an independent contractor.
In these
particular circumstances, we have the hospital providing all the equipment and
facilities, and whatever is required in a complicated function of looking after
ill people, and that all the nurse provided was her uniform. Therefore, under
the peculiar circumstances of this trade, I find that the tools factor
indicates that the workers were also employees.
Of course, there
is no chance of profit. They are getting paid on an hourly basis as was
recognized by the Minister, and also was ruled upon in the case, cited by the
Minister, of Hennick, [1995] F.C.J. No. 294, in the Federal Court of
Appeal.
As far as risk of
loss is concerned, I have not heard any evidence that the nurses had any
expenses other than the uniform, and the four guidelines being determinative,
it really isn't necessary to go into the conundrum of whose intention is
involved, because of the cases as recently as City Water International,
[2006] F.C.A. No. 350.
At paragraph 31
the Court says:
"Since the
relevant factors", which are about four-in-one Wiebe Door factors,
"yield no clear result, greater emphasis should have been placed on the
parties' intention by the Judge in this case."
In the matter
before me, the relevant factors do yield a clear result.
So I find within
the meaning of regulation 34(1) of the Canada Pension Plan that the
terms and conditions were indeed analogous to a contract of service.
The next
requirement of these sections are that the nurses be remunerated by the agency,
and it is patently clear on the evidence that they were.
Notwithstanding
the fact that both sections are clearly satisfied on the facts of this case,
there were various arguments raised by the representative of the Appellant that
I feel, in fairness, I should address myself to. The first one was the
argument that regulations 6(g) and 34(1) cover only employees.
We have already
said that it is negated by the case of Silverside, but also the cases
cited by counsel for the Minister, Sheridan v. the Minister of National
Revenue, [1985] F.C.J. No. 230, 57 N.R., page 69 in the Federal Court of
Appeal, dealing with nurses, as in this case. The Court held that even though
there was no contract of service either with the agency or with the hospital,
the nurses were still caught by Employment Insurance regulation 12(g), which is
now 6(g).
And, using the
same reasoning if that is the case, I see no reason why it should be different
under the Plan regulation 34(1).
The
representative of the Appellant also argued that there was no direction and
control because we are dealing with highly skilled and experienced nurses who,
while they had to be told what to do, could not be told how. The problem with
that argument is that it evokes archaic law, which is no longer followed in the
courts in the case of highly skilled workers.
That conclusion
comes directly out of Wiebe Door itself, where they quote Baron Bramwell
in Regina v. Walker, [1858] 27 LJMC, pages 207-208, and he lays down the
principle as follows:
"A principal
has the right to direct what the agent has to do; but a master has not only
that right, but also the right to say how it is to be done."
Justice McGuigan
has said:
"The test
has broken down completely in relation to highly skilled and professional
workers, who possess skills far beyond the ability of their employers to
direct."
So the cases no
longer speak the language of "what" versus "how", and people have
been found to be employees even though they were so skilled that their
employers could tell them what to do but not how.
Finally, it was
argued that the employment in regulation 34(1) of the Plan and regulation 6(g)
of the Act means a contract of service; but as counsel for the Minister has
pointed out, quoting, I believe, my decision once again in Isomeric:
"It was held
in the case of A.G. v. Skyline Cabs, [1986] F.C.J. No. 335, employment
in section 12(g)," which is now 6(g), "is not to be given a narrow
interpretation of contract of service but is to be construed in a broader sense
of activity or occupation."
I repeat that
that applies under the Employment Insurance Act, and I see no reason why
it should not apply to the construction of the relevant regulation of the Plan
as well.
In these matters,
the burden is on the Appellant to demolish the assumptions contained in
paragraph 13 in the Minister's reply to the Notices of Appeal, both under the Employment
Insurance Act and the Canada Pension Plan. I would say that the
only assumption that has been demolished would be 13(d): The workers did not
run their own businesses and did not represent themselves as self-employed
persons. The remaining assumptions, accordingly, clearly satisfy the
requirements of regulations 34(1) and 6(g), and the Appellant has failed to
demolish them.
The decision of
the Minister is objectively reasonable within the meaning of Légaré,
[1999] F.C.J. No. 878 and Pérusse, [2000] F.C.J. No. 310, both in the
Federal Court of Appeal.
In the result,
the appeals with reference to all the workers mentioned in schedule A under the
Canada Pension Plan and under the Employment Insurance Act will
be dismissed and the decisions of the Minister confirmed.
Thank you for
your assistance.
--- Whereupon the hearing
concluded at 4:24 p.m.
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