Citation: 2008TCC178
Date: 20080401
Docket: 2007-281(EI), 2007-282(CPP)
2007-292(E), 2007-293(CPP)
BETWEEN:
MOIRA-EILEEN DROSDOVECH,
O/P PAWSITIVE
VETERINARY CARE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
JACQUELINE KILBURN
and SHANNON CLOUTIER,
Intervenors.
Docket: 2007-287(EI), 2007-288(CPP)
2007-294(EI), 2007-295(CPP)
AND BETWEEN:
JACQUELINE KILBURN
and SHANNON CLOUTIER,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
MOIRA-EILEEN DROSDOVECH,
Intervenor.
REASONS FOR JUDGMENT
Bowie
J.
[1] There are eight appeals before me, four under the Employment
Insurance Act (the Act) and four under the Canada Pension Plan
(the Plan).
[2] Moira-Eileen
Drosdovech is a veterinarian. She operates a veterinary clinic as a
proprietorship under the firm name Pawsitive
Veterinary Care. During the period between January 1, 2005 and July 14, 2005
(the period) Shannon Cloutier and Jacqueline Kilburn worked with her in the
clinic from time to time.
[3] By rulings dated
October 24, 2005, a Rulings Officer of the Canada Revenue Agency determined
that Shannon Cloutier and Jacqueline Kilburn were both employed by Ms.
Drosdovech under contracts of service, and that their employment was therefore
both insurable employment under the Act and pensionable employment under
the Plan. These rulings were appealed to the Minister of National
Revenue under section 91 of the Act and section 27 of the Plan.
[4] The Minister allowed
the appeals in respect of Shannon Cloutier, concluding that she was employed
under a contract for services rather than a contract of service, and that her
employment was therefore neither insurable not pensionable. He dismissed the
appeals of Jacqueline Kilburn. Shannon Cloutier and Jacqueline Kilburn have now
appealed from the Minister’s decision to this Court under sections 103 of the Act
and 28 of the Plan. Ms. Drosdovech has also appealed all four of the
Minister’s decisions, as well as intervening in support of the four appeals
brought by Ms. Cloutier and Ms. Kilburn. Ms. Drosdovech acted in her own
behalf, and as agent for each of the other two appellants. She was also the
only witness.
[5] From the foregoing it
is apparent that the appeals taken by Ms. Cloutier and Ms. Drosdovech from the
Minister’s decision in relation to Ms. Cloutier are appeals from success.
Neither Ms. Drosdovech nor Ms. Cloutier could explain why these appeals were
brought, other than to say that it was from an abundance of caution. As the
appellants in those two appeals seek no relief, the appeals will be quashed.
[6] The hearing of the
appeals in relation to Ms. Kilburn began with two preliminary objections from
Ms. Drosdovech. The first relates to the authority for the Rulings Officer to
make the initial determinations. The letter of October 24, 2005 that embodies
the ruling begins with this paragraph:
We received a
request for a ruling regarding the insurability and pensionability of
Jacqueline Margaret Kilburn’s employment for the period January 1, 2005 to July 14,
2005. This request originates from Canada Revenue Agency’s Revenue Collections
Division.
Ms.
Drosdovech refers to section 90 of the Act and section 26.1 of the Plan,
and argues that they do not authorize the Canada Revenue Agency (formerly the
Canada Customs and Revenue Agency) to initiate the process by making a ruling,
except where there has been a request for a ruling made by one of the persons
mentioned in those sections. Those sections read:
90(1) An employer, an employee, a person
claiming to be an employer or an employee or the Commission may request an
officer of the Canada Revenue Agency authorized by the Minister to make a
ruling on any of the following questions:
(a)
whether an employment is insurable;
(b) how long an insurable
employment lasts, including the dates on which it begins and ends;
(c)
what is the amount of any insurable earnings;
(d) how many hours an insured
person has had in insurable employment;
(e)
whether a premium is payable;
(f)
what is the amount of a premium payable;
(g)
who is the employer of an insured person;
(h)
whether employers are associated employers; and
(i)
what amount shall be refunded under subsections 96(4) to (10).
Time
limit
90(2) The Commission may request a ruling at
any time, but a request by any other person must be made before the June 30
following the year to which the question relates.
Ruling
90(3) The authorized officer shall make the
ruling within a reasonable time after receiving the request.
Presumption
90(4)
Unless a ruling has been requested with respect to an insured person,
(a) an amount deducted from the
remuneration of the person or paid by an employer as a premium for the person
is deemed to have been deducted or paid in accordance with this Act; or
(b) an amount that has not been so
deducted or paid is deemed not to have been required to be deducted or paid in
accordance with this Act.
26.1(1) The Minister of Social Development, an
employer, an employee or a person claiming to be an employer or an employee may
request an officer of the Canada Revenue Agency authorized by the Minister of
National Revenue to make a ruling on any of the following questions:
(a)
whether an employment is pensionable;
(b) how long an employment lasts,
including the dates on which it begins and ends;
(c) what is the amount of any
earnings from pensionable employment;
(d)
whether a contribution is payable;
(e)
what is the amount of a contribution that is payable; and
(f)
who is the employer of a person in pensionable employment.
Time
limit
26.1(2) The Minister of Social Development may
request a ruling at any time, but a request by any other person must be made
before June 30 of the year after the year in respect of which the question
relates.
Ruling
26.1(3) The authorized officer shall make the
ruling within a reasonable time after receiving the request.
Presumption
26.1(4) Unless a ruling has been requested with
respect to a person in pensionable employment,
(a) an amount deducted from the
remuneration of the person or paid by an employer as a contribution for the
person is deemed to have been deducted or paid in accordance with this Act;
or
(b) an amount that has not been so
deducted or paid is deemed not to have been required to be deducted or paid in
accordance with this Act.
Ms.
Drosdovech argues that since the persons authorized by those sections to request
a ruling do not include the Canada Customs and Revenue Agency’s Revenue
Collections Division the proceedings were begun without authority and the
rulings ought to be vacated for that reason alone. This argument is without
merit. The Minister of National Revenue is empowered by section 94 of the Act
and section 27.3 of the Plan to make a decision on his own initiative.
They read as follows:
94 Nothing in sections 90 to 93
restricts the authority of the Minister to make a decision under this Part or
Part VII on the Minister’s own initiative or to make an assessment after the
date mentioned in subsection 90(2).
27.3 Nothing in sections 26.1 to
27.2 restricts the authority of the Minister to make a decision under this Part
on the Minister’s own initiative or to make an assessment after the date
mentioned in subsection 26.1(2).
The
Rulings Officer is a person acting on the Minister’s delegated authority, and
his rulings in this case are authorized by those sections
[7] Ms. Drosdovech also
advanced an argument that, if I understood it correctly, is to the effect that
she carries on her veterinary practice as, in her words, “a natural person”,
and her contractual arrangements with Ms. Kilburn are between two “natural
persons”, all outside the scope and beyond the reach of the Act and the Plan.
She apparently conceives the Act and the Plan as creating a
scheme of employment insurance and a scheme of retirement savings that the
people of Canada – all “natural persons” – may opt into or out of as
they individually choose. This argument also is without merit.
[8] Canada’s
constitution makes specific provision for Parliament to legislate in relation
to unemployment insurance
and old age pensions and supplementary benefits.
No matter how much these appellants may dislike the idea, the Act and
the Plan establish mandatory schemes. They apply to all Canadians who
come within their terms. If the employment of one person by another meets the
definitions of insurable employment and pensionable employment found in the two
statutes then the worker and the employer are both bound to contribute
according to the provisions of the statutes, and the workers are entitled to
the benefits that the statutes provide.
[9] The Minister’s
decisions that the employment of Ms. Kilburn by Ms. Drosdovech was
insurable and pensionable employment was based on certain assumptions of fact
which are set out in the Reply to the Notice of Appeal in each case. They are
the following:
a) the Appellant operated a
veterinary clinic during the Period;
b) the Appellant
hired Kilburn to work with the Appellant’s clients performing dog obedience
counselling duties and in addition, Kilburn provided receptionist duties (the
“Duties”) during the Period;
c) the Appellant
controlled and directed Kilburn in the performance of the Duties;
d) the Appellant
required Kilburn to perform the Duties at the Appellant’s place of business;
e) the Appellant
provided the supplies, tools and equipment used by Kilburn in the performance
of the Duties;
f) the Appellant scheduled
Kilburn’s hours and days of work;
g) the clients belonged to the
Appellant;
h) Kilburn did not have clients
of her own during the Period;
i) Kilburn did
not risk incurring a loss in the performance of the Duties; and
j) Kilburn did
not have an opportunity to profit in the performance of the Duties.
[10] Before Ms Drosdovech
gave her evidence, I advised her of the significance that these assumptions
have in cases of this kind. Her immediate response to this was to the effect
that none of these assumptions were accurate. When cross‑examined by Ms.
Akey, however, her answers were much different. The cross-examination
established that Ms. Kilburn does in fact work for her at the veterinary
clinic, where she sits in a reception area, at a desk, equipped with a
telephone and a computer for her use. She greets the customers, answers the
telephone by identifying the clinic, and does some clerical work. The equipment
that she uses is provided by Ms. Drosdovech, and Ms. Drosdovech pays her at the
rate of $17.25 per hour for some, but apparently not all, of the time that the
clinic is open. She is paid monthly, and Ms. Drosdovech testified that she
established the duties to be performed by Ms. Kilburn. She agreed that Ms.
Kilburn cleans the kennels at the clinic, but maintains that this is not part
of her duties, but is something that she does voluntarily.
[11] Ms. Kilburn,
according to the evidence of Ms. Drosdovech, performs some dog obedience
training for clients of the clinic, but does so on her own account and not as
an employee of the clinic. Sometimes the clients pay Ms. Kilburn for these
lessons, and sometimes they pay the clinic. That, at least, was Ms.
Drosdovech’s evidence.
[12] The evidence
satisfied me that the Minister’s assumptions in this case are correct. Ms.
Drosdovech testified that there is a written contract between her and Ms.
Kilburn. However, she said that she did not bring the contract with her
because, in her opinion, it is not relevant to the issues. Without either the
written contract or evidence from Ms. Kilburn corroborating Ms. Drosdovech’s
evidence, I am not inclined to accept the evidence that Ms. Kilburn’s obedience
training activities were conducted entirely on her own account. That evidence
could easily have been corroborated by Ms. Kilburn, but she chose not to
testify. It may be a matter that is covered by their written agreement, but
they chose not to bring it to Court with them.
[13] Clearly the work
done by Ms. Kilburn in the office is done under a contract of service. She is
subject to the direction and control of the employer; she works on the
employer’s premises, using the employer’s equipment. She is paid at a fixed
rate, with no opportunity either to earn a profit or to suffer a loss. She has
no investment in the business. Applying the well-settled legal principles found
in the Supreme Court’s recent decision in 671122 Ontario Ltd v. Sagaz
Industries Canada Ltd.
to these facts leads inexorably to the conclusion that Ms. Kilburn is engaged
by Ms. Drosdovech under a contract of service, with the result that her
employment is insurable under the Act and pensionable under the Plan.
[14] In the result, then,
the appeals in respect of the employment of Ms. Cloutier, 2007-292(EI),
2007-293(CPP), 2007-294(EI), and 2007-295(CPP), are quashed. The appeals in
respect of the employment of Ms. Kilburn, 2007-281(EI), 2007‑282(CPP),
2007-287(EI), and 2007-288(CPP), are dismissed.
Signed at Ottawa, Canada, this 1st
day of April, 2008.
“E.A. Bowie”
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