Citation: 2006TCC521
Date: 20060928
Dockets: 2004-4060(EI)
2004-4061(EI)
2004-4812(EI)
2005-93(CPP)
2005-221(CPP)
2005-222(CPP)
BETWEEN:
1392644 ONTARIO INC. o/a CONNOR HOMES,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
KEIRA McKINNON, VALERIE PARCELS-COONEY,
Intervenors.
REASONS FOR JUDGMENT
O'Connor, J.
[1] These reasons shall
serve as reasons in all of these appeals as they were all heard on common
evidence, they all have substantially the same facts and the legal issue in all
appeals is the same, namely whether the three persons involved Valerie
Parcels-Cooney, Lorna Shooter Kerr and Keira McKinnon ("Workers")
were engaged by the Appellant under contracts of service (i.e. employees)
or contracts for service (i.e. independent contractors) for purposes of the Canada
Pension Plan and the Employment Insurance Act. The periods involved
for each Worker were as follows:
Valerie Parcels-Cooney February 1, 2003
to May 8, 2003;
Keira McKinnon January 24,
2003 to February 28, 2004
Lorna Shooter Kerr February 1, 2001
to September 30, 2002
[2] Although all three
Workers testified the only actual interventions filed were by Ms. Parcels-Cooney
and Ms. McKinnon.
Facts
[3] The Appellant's
business was to provide residential care and treatment for disturbed children
associated with Children's Aid Society (CAS) agencies throughout Ontario, operating within the
parameters governing the CAS, the Education Act of Ontario and other government
agencies and education facilities.
[4] The Appellant's
shareholders were Robert Connor with 66.7% of the shares and Elaine Connor with
33.3% of the shares. Robert Connor and Paul Robichaud were the principal
managers of the Appellant's business.
[5] The Workers were
hired as Child Care workers under written agreements.
[6] The following
extracts from pages 4 to 15 of the Hearing Record give a more detailed picture
of the Appellant's operations.
EXAMINATION-IN-CHIEF BY MR. BURGESS:
Q. Mr. Connor, I understand you are an officer
and director of 1392644 Ontario Inc. operating as Connor Homes?
A. Yes, I am.
Q. What is your position with them?
A. I am the director of the – I am president of
the company, but I am the director of the program.
...
Q. Can you describe to the Court, please, what
exactly is the business of Connor Homes?
A. Connor Homes is a service company which
provides services to the children's aid societies for – throughout Ontario. Specifically we operate treatment foster care and
treatment group care for, in contract with, the children's aid societies, ...
MR. BURGESS:
Q. Can you describe for the Court, please,
approximately how many residential homes you operate?
A. There are 40 (actually 41) homes, about 135
beds.
Q. Would you also describe to the Court,
please, how you are paid for your service provided?
A. We are paid on a per diem basis, so if the
child is resident in the home, we get paid.
Q. What services ... do you provide, ... on
this per diem basis?
A. We pay for all the expenses for the
children, food, accommodation, treatment, education in some cases, all expenses
that a parent would normally provide for the child.
We also contact with a
variety of professionals to provide services that we do not in fact –- we don't
have the staff to provide things like psychological services, psychological
assessments, educational assessments, and child and youth workers.
...
JUSTICE O'CONNOR: What are the approximate ages of the
children?
THE WITNESS: They are primarily teenagers.
JUSTICE O'CONNOR: Are they like wards of the state? Have
they been removed from their families, or what?
THE WITNESS: Yes. They are wards of the Children's Aid Society.
There are three types, Crown wards, children's Aid Society, and in some cases
they are an agreement for service, which is a contract or arrangement between
the Children's Aid Society and the parent. So it would be – in that case, they
would not necessarily have gone to Court. That would be simply a contractual
arrangement between the Children's Aid Society and the parent.
...
THE WITNESS: These are all children who have been
physically or sexually abused.
JSUTICE O'CONNOR: Have these children been removed
from their own homes?
THE WITNESS: Yes.
...
JUSTICE O'CONNOR: They actually live in your home?
THE WITNESS: That is right. So we are licenced by the
province to provide these homes, and so these are programs which are over and
above what the Children's Aid Society would provide in their foster care
system.
The children would be perhaps
more difficult in terms of their treatment needs or requiring specialized
service which the Children's Aid Society would not be able to provide within
their own program, particularly with group homes, because children's aid
societies don't typically run group homes. They only run basic foster care.
JUSTICE O'CONNOR: Who actually pays you and how much?
THE WITNESS: The per diem is set by the Ministry of
Community and Social Services, and then there is a different per diem for
foster care and group care, and the group care is different for each home,
because they are licenced as an individual location in the case of group care,
and in the case of foster care it is licenced – the organization is licenced as
opposed to the individual home. Like the Children's Aid Society, it runs under
the same legislation that we do. They run foster care and we are licenced under
the same legislation to provide treatment foster care.
...
JUSTICE O'CONNOR: So what is the per diem?
...
THE WITNESS: For treatment foster care, $106 a day.
...
THE WITNESS: Yes. It is roughly $130 a day for group care
where it is a parent model location. That would be house parents with staff
support, ...
MR. BURGESS:
Q. You have indicated, ... that there was a per
diem and you indicated to His Honour that that varies?
A. Yes.
Q. From that per diem, you have indicated that
you pay food and accommodation?
A. Right.
Q. And obviously recreational needs or anything
else for the children?
A. Right, clothing and school supplies, and a
special provision for graduation and other things that come up from time to
time that kids need. We also pay for therapy, psychotherapy. We pay for some
educational testing.
We pay the house parents who
are resident in the homes, and we pay the contract child and youth workers, and
in some cases we pay for school.
Q. I understand there is something, as well,
deemed be a one-on-one program. Could you describe that to His Honour?
A. Right. Well, some children come into care
whose needs cannot be met by the regular programming, and in those cases they
would require a worker sometimes to be – to provide relief for the – to take
the child out of the house, which is called relief, and away from the other children,
because many of the difficulties they have is in interpersonal relationships.
Some children require
specialized recreational programs, specialized programs to do with behaviour,
and for those children we would negotiate a contract outside of the regular per
diem to provide for those services. That contract would be agreed upon by the
Children's Aid Society and the Ministry of Community and Social Services.
Then we would then contract
out those specialized service to child youth workers, who would put in a
proposal around how to meet those needs, and in some cases that also includes school.
Q. You have touched upon these one-on-one
programs. Let me just back you up just a bit, I am sorry. When these children
are in your care, would you describe to His Honour, briefly, how plans of care
are developed for these children?
A. Right. Well, on placement,
every child has a plan of care which is developed to talk about the kind of
treatment that the child will receive during the time frame that they are in
the program. With each plan of care, it is anticipated there will be a
discharge date where the child will either be going home or will be working
towards independent living.
That plan of care is a
document which is constructed by the Children's Aid Society, by a therapist,
perhaps they could be involved in the treatment plan; the child. Perhaps the
child's parent, if the child is not – there are Crown wards with access and
Crown wards without access. So if the child's parent is involved and the plan is
to go home, then the child's parent would be involved.
If the child was on probation
or had some order under the – it is not the Child Justice Act anymore, but the
– Young Offenders Act back in those days, then the probation officer could be
involved in the plan of care, as well. So it is a committee approach to getting
a plan which works for the child.
Within that plan there are
treatment goals which are set. There are goals which are set within the home to
do with school, participation in community-based recreation, and therapy.
Q. So to simplify it, when the child comes into the
home, as you have already touched upon, the plan of care is developed?
A. Right.
Q. Does that change from time to time,
modified.
A. It is reviewed every 30 days for the first
six months and every 90 days thereafter. That is the standard approach,
although, I mean that would be the minimum. It could be, if the child was going
through a particularly difficult period, we could go back to a monthly review.
A. Okay. Then all the services which you
indicated you provided, such as psychological assessment and therapy and life
skills training and the one-to-one programs that you have talked about and
relief services, those are all provided under this plan of care for the child,
correct?
A. That is right. So, for instance, if there
were involvement of the court system in, you know, having the child have to go
to appear before a judge, as far as Family Court or as far any criminal
activities which hadn't yet been dealt with, then the transportation
arrangements and how that would be dealt with would be integral into the plan
of care. So it would be described in how that was to be done.
Q. So with respect to the one-on-one programs –
A. Yes.
Q. -- the relief services which you have
indicated, and the transportation services, who performs those services?
A. Child and youth workers.
...
MR. BURGESS:
Q. The three respondents that we are dealing
with today, did they act in that capacity for you?
A. Yes. Ms. Shooter also worked at the
specialized school program, so that was part of her job, which was different
from the other two.
[7] As can be seen from
the foregoing some children receive special one on one care and the Appellant
receives additional fees for providing such one on one care. In these
situations the Appellant is required to provide a variety of different services
including psychological assessment, psychological therapy and in certain cases
relief services for house parents and transportation services. One main feature
of the Workers' jobs was to provide and service the one on one programs.
[8] More particularly,
the Workers duties were as follows:
• maintaining
the care, welfare and security of the children
• helping
children with academics
• planning
and implementing individual programs to help children with the individual needs
referred to as a "plan of care"
• training
young teens in social and life skills
• counselling
children when problems arose
• providing
to the Appellant daily reports of each child
• providing
transportation of children involved in the one-on-one program
[9] The Workers were
paid $12 per hour based on a 40-hour work week.
[10] Essentially a Worker's
rate of pay was offered by the Appellant at the time of hiring a Worker. The Workers
testified that they felt obliged to accept that as they were in need of a job
at the time. The Workers' hours were Monday to Friday 8:00 am to 4:00 pm and
sometimes overtime. Hours of work were recorded by the Workers on extremely
detailed time sheets, (Exhibits A-5, R-2, R-3 and R-4). The Workers were paid
on the basis of invoices (Exhibit A-2).
[11] The Workers reported
directly to the Appellant's manager, Paul Robichaud.
[12] Each Worker was
required to attend monthly meetings with representatives of the Appellant.
[13] Each Worker was
required to wear a "Connor Homes" T-shirt and/or sweater paid for by
the Worker concerned.
[14] Ms. McKinnon and Ms.
Parcels-Cooney signed Agreements (Exhibits A-1 and A-4) setting forth their
duties. They were given a choice of four separate duties according to their
interests namely a relief staff contract worker; support in the home with day
to day functioning; support for children in regular school; and support for
children in alternate school program. Ms. Shooter's Agreement described her
duties as "relief staff/contract worker" (Exhibit A-3).
[15] The Agreements with
a Worker referred to the Worker as an "independent contractor". The
testimony of the Workers was that they did not understand that concept nor the
expression "self employed" and that they did not consider themselves
as independent contractors nor self employed.
[16] The Workers were
supplied with a "Policies and Procedures Manual" containing 34 pages
plus four appendices. The Manual (Exhibit R-1) contains considerable detail as
to how a Worker was to carry out her duties. Mr. Connor stated that these policies
were established pursuant to regulations under the Child and Family
Services Act.
[17] The Workers in the
one-on-one programs were responsible for transporting children in their own
cars. They paid all of the expenses related to their cars and were reimbursed
by the Appellant either on a mileage basis or time basis at the choice of the Worker
concerned. Other tools or equipment that were involved would be computers not
necessarily supplied by the Appellant or by the Worker. In some cases the
computers were owned by house parents. Other equipment involved would be desks
and certain school equipment supplied by neither the Worker nor the Appellant but
rather by the Board of Education or by one of the government agencies.
Submissions of
Appellant's Counsel
[18] Counsel, after
summarizing the basic facts stated:
17. The Child Care Workers, and
specifically Ms. Shooter, Ms. Parcels-Cooney and Ms. McKinnon, signed written
agreements outlining their status as independent contractors (Schedule 'A').
18. All of the Child Care Workers
were made aware of the consequences of their independent contractor status and
advised of their rights, obligations and filing requirements.
19. None of the Child Care Workers
were provided with any tools or other equipment by the Appellant.
20. Child Care Workers responsible
for transporting children were required to provide their own car.
21. The Appellant did not exercise
any control over the Child Care Workers in terms of the manner in which they
carried out their duties.
22. The Child Care Workers dealing
with one-on-one programs were responsible for designing the specific content of
such programs through their professional training and experience.
23. The Child Care Workers selected
their own hours and could work as much or as little as they wished. Child Care
Workers did not have to give the Appellant any reason for not taking
assignments and similarly did not have to, and most often did not notify the
Appellant if they were going on a vacation.
24. The Child Care Workers could
pick assignments at meetings with the Appellant. Child Care Workers also
accepted assignments from other organizations from time to time.
25. Where the Appellant required a
Child Care Worker for a specific assignment, it would telephone through a
roster of Child Care Workers and the assignment went to the first Child Care
Worker who was reached and who agreed to take the assignment.
26. In a number of cases, the house
parents would contact Child Care Workers directly for relief assignments or
transportation assignments without contacting the Appellant.
27. In a number of cases, the house
parent would contact directly the Child Care Workers and pay them personally
for relief services beyond what the house parents were entitled to under their
arrangements with the Appellant.
28. In a number of cases, Child
Care Workers who had accepted an assignment for one-on-one care for a child
would contract directly with other Child Care Workers to complete a portion of
that assignment. The approval of the Appellant for these arrangements was not
necessary and the Appellant was usually not aware that such arrangements had
been made until it was invoiced at the end of the month.
29. In the case of transportation
services, the Child Care Workers could opt for either an hourly rate or
mileage.
30. They would make such choice
depending on which mode would be the most profitable for them.
[19] Counsel then analyzed
the applicable law and jurisprudence and concluded as follows:
The Control Test
62. On the evidence
the Appellant did not exercise any degree of control over the manner in which
they were to perform their duties. They determined the manner in which they
would perform their duties, chose when they would work and what type of work
they would accept.
The Ownership of Tools Test
63. The Appellant
did not provide any tools to Ms. Shooter, Ms. Parcels-Cooney and Ms. McKinnon.
The only tool required for this work was a car if they agreed to transport the
children under their care; if so, they were responsible for providing the car.
The Risk of Loss/Chance of Profit Test
64. On the evidence
Child Care Workers bear the risk of loss and stand to profit depending on their
costs of reaching the homes of individual children, the costs of transporting
children and the number of hours involved in one-on-one programs.
The Extent of
Integration Test
65. On the evidence,
the services of Child Care Workers are ancillary to the business of the
Appellant, generally arising out of the needs of special needs of individual
children in its care.
The Recharacterization
Issue
66. Ms. Shooter, Ms.
Parcels-Cooner and Ms. McKinnon signed a contract in which they chose to
characterize their relationship as one of an independent contractor.
67. There is no
suggestion of sham and no reason to recharacterize the relationship that the
parties have themselves freely entered into.
D. RELIEF
SOUGHT
68. The Appellant
submits that these appeals should be allowed with costs.
Submissions
of Respondent's Counsel
[20] Respondent's counsel
indicated the evidence contradicted or materially modified paragraphs 18 to 28
of Appellant Counsel's Submissions. Respondent's counsel also canvassed the law
and the applicable jurisprudence. She stressed the extensive control by the
Appellant over the Workers as evidenced by the detailed time sheets, the
invoices and the many rules, regulations and procedures set forth in the
Policies and Procedures Manual (Exhibit R-1). The ownership of tools test was
not that persuasive one way or another. The cars were owned by the Workers and
they paid expenses but they were paid on a mileage or time basis for using
their cars. She also highlighted the Connor Homes T-shirt and/or sweater fact
as being clearly contradictory of an independent contractor relationship.
Integration was not conclusive. The chance of profit and risk of loss test did
not point to an independent contractor relationship. The Agreements labelling
the Workers as independent contractors did not square with the actual facts.
Analysis
[21] In 671122 Ontario Ltd. v.
Sagaz Industries Canada Inc.,
[2001] 2 S.C.R. 983 (S.C.C.), Mr. Justice Major of the Supreme Court of Canada
said:
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 Ltd. v. The
Minister of Social Security2, 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.
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.
[22] The Workers had to produce daily reports of their
work, detailed time sheets and they were bound by the Policies and Procedures
Manual. Moreover, they had to wear a "uniform" identifying and
connecting them with Connor Homes.
[23] The Procedures Manual contained
directions that the Workers were expected to follow and constituted a very
powerful means of control. It is true that this Manual conforms with
regulations under the Child and Family Services Act but that explanation
of where the controls come from does not alter the fact that the controls existed
and were extensive.
[24] The Workers did not assume
any financial risk in their work for the Appellant. They were required to
provide their own car but the Appellant reimbursed them for any use that they
were required to make of the car. The involvement of the car as pointing to an
independent contractor relationship is minimized by the fact of reimbursement
by the Appellant. Much of the work was performed at the premises run by the
Appellant and owned by a related company. Workers were permitted to use
computers owned by a house parent to do reports.
[25] Mr. Connor suggests that
the Workers' skills were a tool but this is not a convincing argument. Not all
skilled workers are automatically independent contractors.
[26] Another factor to consider is a
Worker's opportunity for profit. The hourly rates of pay were essentially
established by the Appellant. The only manner in which a Worker could increase
her pay was to work more hours.
[27] On a consideration
of all factors I am of the opinion that the Workers were employees of the
Appellant at the material times and not in business on their own account. I am
not persuaded by the terms of the Agreements purporting to establish an
independent contractor relationship because the actual facts do not establish
that relationship. In the circumstances of these appeals I find the test of
control to be very significant and it points to a contract of service.
[28] Finally I refer to two judgments of this Court
involving this very same Appellant where it was held that the relationships
between the Appellant and two other workers involved in the same type of work
were employee relationships. These judgments are reported at [2003] T.C.J. No.
670 (McArthur, T.C.J.) and [2004] T.C.J. No. 214 (Paris, T.C.J.). McArthur, J.
actually held the employee relationship applied to one worker but not to a
second one because that second one had not appeared and given evidence in
support of the Minister's assumptions. In other words, when McArthur, J.
analyzed the merits with respect to the first worker he concluded that an
employee relationship existed.
[29] I should add that I am not unmindful of the decision of
the Federal Court of Appeal in Royal Winnipeg Ballet v. Canada [2006] F.C.J.
No. 339 where the importance of the intention of the parties was analyzed. In
my view that decision is not applicable because in these present appeals,
contrary to the facts in the Federal Court of Appeal decision, when both
parties intended an independent contract, the intention of the Workers here to
actually be independent contractors was not established. In fact, from the
testimony of the Workers, the opposite is true.
[30] In these appeals all three Workers testified and
confirmed the Minister's main assumptions pointing to an employee relationship.
[31] Consequently for all of the above reasons the appeals
are dismissed and the decisions of the Minister are confirmed in accordance
with these Reasons for Judgment.
Signed at Ottawa, Canada, this 28th day of September, 2006.
"T. O'Connor"
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