Citation: 2006TCC316
Date: 20060602
Dockets: 2004-3214(EI)
2004-3215(CPP)
BETWEEN:
COMMUNITY LIVING BURLINGTON (FORMERLY BURLINGTON ASSOCIATION FOR THE INTELLECTUALLY
HANDICAPPED),
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] These are appeals by Community Living Burlington (the
“Association”) in respect of assessments for failure to remit premiums under
the Employment Insurance Act and the Canada
Pension Plan. The total amount
assessed for the relevant years, 2002 and 2003, is approximately $170,000
exclusive of interest.
[2] The Association
is a non-profit organization that provides various services for approximately
350 children and adults who are disabled. The organization was formed 50 years
ago by parents of disabled children and continues to be managed by volunteers.
[3] The question to
be decided is whether the Minister of National Revenue correctly determined
that 40 individuals who provided caregiving services were engaged by the
Association as employees notwithstanding that most of them had signed written
contracts evidencing an intention to be self-employed.
[4] It is the
position of the Minister that the intention of the parties should only be taken
into account in a “close case” where the relevant factors point in both
directions with equal force: Respondent’s Outline of Argument, at paragraph 3.
[5] This may have
been a reasonable argument for the Minister to make at the time of the hearing
based on the jurisprudence at the time but it is clearly not the law today.
[6] At the end of
the hearing, I indicated to the parties that I wished to defer rendering a
decision in these appeals until the release of the Federal Court of Appeal’s
decision in The Royal Winnipeg Ballet v. The Minister of National Revenue.
[7] That case was an
appeal of a Tax Court decision in which dancers with The Royal Winnipeg
Ballet were found to be employees of the ballet company. In reaching that
conclusion the judge concluded that the intention of the parties was a factor
to be considered only if a tiebreak was needed.
[8] On March 2,
2006, the Federal Court of Appeal released its decision (2006 FCA 87) and
reversed the Tax Court, finding that the judge erred in considering that
intention was a tiebreak only. Sharlow J.A. writing for the majority in the
appeal court stated:
[59] It seems to me from Montreal
Locomotive that in determining the legal nature of a contract, it is a
search for the common intention of the parties that is the object of the
exercise.
[9] In light of this
decision, the submission of the Minister that intention is only to be used in a
“close call” cannot be accepted. The intention of the parties as expressed in
written contracts should govern if the facts are consistent with it.
[10] As noted earlier,
most of the workers whose status is at issue in these appeals had written
contracts that expressed an intention that they not be employees. For the
reasons below, I conclude that the facts are consistent with this intention and
consequently that these workers are independent contractors and not employees.
[11] During the
relevant period, the Association managed 20 government-funded homes for
developmentally disabled persons. Each home accommodates four or five persons
and the arrangement is designed to replicate normal home life as much as
possible. The concept was innovative when it was initiated by the Association
in the 1980s and it has now become a model used by other communities. The
workers at issue provide the “parental” role in these homes.
[12] There are three
categories of workers: (1) the primary caregivers who are referred to as
“live-in managers,” (2) the husbands or boyfriends of the live-in managers who
are referred to as “live-in partners,” and (3) part-time workers who come into
the homes on a periodic basis to provide relief.
[13] The majority of
the evidence concerned the live-in managers and I will consider them first.
[14] Live-in managers
were formerly called “house parents” and this aptly describes their role. They
were engaged to provide around-the-clock care and supervision in the same way
as a parent to four or five disabled persons living in the home. The managers
live in the home, sometimes with a spouse or other partner, and interact with
the persons in their care as extended family.
[15] The nature of the
disabilities of the individuals living in the homes is such that they all
require different care. The live-in managers liaise closely with family members
to ensure that the care is appropriate. The role that the Association plays is
mainly to facilitate and be available for support rather than to provide
detailed supervision. One of the live-in managers testified that the executive director
provided initial hands-on support to new live-in managers but after that the
executive director visited the homes just once or twice a year.
[16] Based on the
terms of the contract and the testimony of the various witnesses, all of whom
gave forthright and credible evidence, I conclude that the relationship is more
consistent with an independent contractor relationship rather than employment.
The following are some of the factors that I have taken into account:
·
The relationship is governed by a
written agreement called a “Live-In Manager Purchase of Services Contract.”
Under the terms of the contract, the parties expressly negate an intention to
enter into an employment relationship;
·
Live-in managers have considerable
freedom in determining how care is provided as long as the needs of the
individuals are met and government regulations are complied with;
·
Although live-in managers are
essentially “on-duty” around the clock, they do have time to themselves. During
the day, the individuals under their care attend structured programs provided
by the Association and consequently the live-in managers have flexibility with
their time unless there are special needs such as, for example, driving someone
to a medical appointment. The managers also have flexibility at night provided
that someone, often a relative of the live-in manager, is available to provide
relief;
·
Although the contracts provide
that the Association has access to the homes at any time, it is not
contemplated that live-in managers be under the detailed supervision of the
Association;
·
Generally the live-in managers
consult the family of the persons living in the home in relation to their care
more than the Association;
·
Live-in managers are responsible
for managing the home within a budget that is nominally set by the Association
but in effect is mandated by the Ontario government which provides most of the funding;
·
Live-in managers are responsible
to arrange for a relief worker from an approved list if they want to take time
off. In practice relatives often provide the relief and some of these
individuals are not on the approved list;
·
Live-in managers are paid on a per
diem basis and receive extra compensation if additional duties are assumed;
·
Pursuant to the contracts, live-in
managers are to work between 313 and 327 days per year which far exceeds what
would be expected in an employment relationship. What most distinguishes this
situation is the blending of personal and work life. I also note that live-in
managers often work more than the maximum stipulated number of days in a given
year, although there are instances where this is not by choice but because no
relief workers are available;
·
Although live-in managers are
required to fill out detailed reports, such as medication reports, this is generally
in accordance with government requirements;
·
At the hearing, conflicting
testimony was given as to whether participation in administrative duties such
as committees is mandatory or voluntary. Even if some administrative duties are
mandatory, this is not a significant factor if the relationship is considered
as a whole;
·
Although the contracts provide
that live-in managers cannot take on other work, including volunteer work, the
evidence suggests that the Association is flexible in this regard.
[17] The foregoing
factors generally are consistent with the submission of the Association that
the live-in managers are engaged to independently manage the homes under very
little supervision and control from the Association, except as required by law.
I accept the argument of the Association that their role was primarily as a
facilitator and conduit with respect to government funding and regulations.
[18] In deciding that
the live-in managers are employees, the Minister relied in part on a provision
in the contracts that provided that “adequate housing” and “care and
supervision” were to be defined by the Association. These terms have not been
defined by the Association and it is not clear what the provision is intended
to mean. Based on the evidence as a whole, it appears that the provision is
likely intended to permit the Association to set standards with respect to the maintenance
of the homes and the care of the individuals residing in them. Presumably it is
important for the Association to have this power in order to comply with
government guidelines. In the absence of further evidence, I do not interpret
it to mean that the Association has the authority to dictate the manner in
which the caregivers perform their services where there are no issues regarding
safety or quality of care.
[19] For these reasons, I
conclude that the Association did not have a general ability to control the
manner in which live-in managers perform their services except to ensure that
the standards of care are in accordance with government guidelines.
[20] Where the control
that can be exercised is no more than is necessary in the circumstances of the
particular job, it is generally not inconsistent with an independent contractor
relationship: Royal Winnipeg Ballet, paragraph 66.
[21] Before
concluding, I would note that the person who could best have explained the
relevant circumstances is the person who acted as executive director during the
relevant period and he did not testify. This is unfortunate and if these
appeals had been heard under the Court’s general procedure, an adverse
inference might be made against the Association which has the burden of proof.
However, the appeals were heard under the informal procedure and the officers
who represented the Association at the hearing did an admirable job in the
presentation of the appeals. I do not think that it is appropriate to make an
adverse inference in the circumstances. I also note that the Minister could
have called the former executive director to testify but did not do so.
[22] I find that the
live-in managers are not engaged in an employment relationship.
[23] Turning to the
status of the husbands and boyfriends of the live-in managers, I have no
hesitation in concluding that they are not employees. Live-in partners are allowed
to live in the home free of charge in return for assisting with the maintenance
of the house and socializing with others in the home. Whatever one might call
this relationship, it is certainly not employment.
[24] Finally, the
Association was also assessed for failure to remit premiums for relief workers.
There was very little evidence presented at the hearing regarding this
relationship and none of the relief workers testified. The representatives for
the Association indicated that they did not focus on this aspect of the appeals
because the amounts at issue were small. I find that the Association has not
satisfied the burden of establishing that they are self-employed.
[25] In the result,
the appeals will be allowed and the assessments will be referred back to the
Minister of National Revenue for reconsideration and reassessment on the basis
that live-in managers and live-in partners are engaged as independent
contractors and that relief workers are engaged in employment.
[26] There will be no
order as to costs.
Signed at Toronto, Ontario, this 2nd day of June 2006.
"J. Woods"
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