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Citation:2005TCC134
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Date: 20050215
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Dockets: 2004-480(CPP)
2004-481(EI)
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BETWEEN:
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BONNIE JEAN WATSON A PROPRIETORSHIP
o/a BONNIE'S CLEANING SERVICES,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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REASONS FOR JUDGMENT
Sheridan, J.
[1] The Appellant, Bonnie Jean Watson,
operating as Bonnie's Cleaning Services, appealed decisions
of the Minister of National Revenue dated May 30, 2003 that
Holly Johnson was engaged in pensionable[1] and insurable[2] employment for the period August
21 to 29, 2002. The appeals were heard on common evidence, the
grounds of appeal being that Ms. Johnson was engaged with
Bonnie's Cleaning as an independent contractor under a
contract for services. This case is a little unusual in that the
period under appeal is just over a week. Ms. Johnson left
Bonnie's Cleaning suddenly because of a serious family
illness.
[2] Ms. Watson[3] testified on her own behalf. I found
her to be a very credible witness who gave her evidence in a
clear, concise and consistent manner. Ms. Johnson was called
as a witness by the Respondent and was straightforward, if
somewhat vague on details, in the presentation of her
evidence.
[3] During the period August 21 to 29,
2002, Bonnie's Cleaning was in the business of providing
cleaning services in residential and commercial properties in
Moose Jaw, Saskatchewan. Bonnie's Cleaning evolved from Ms.
Watson's success as a self-employed individual cleaning
homes: at a certain point, she had acquired such a number of
happy clients that she needed the assistance of others to keep up
with the demand. She established herself as a sole proprietorship
known as Bonnie's Cleaning. Although she continued to perform
cleaning services herself, as the sole proprietor of Bonnie's
Cleaning, she took on the additional tasks of finding and
maintaining clients, recruiting cleaners to perform the services,
collecting payment from clients, paying cleaners for their
services, providing the cleaning equipment, and all the paperwork
typically associated with running a business. In addition to
cleaning homes, Bonnie's Cleaning provided commercial
cleaning services, particularly at construction sites. For those
jobs, Bonnie's Cleaning was required by the clients to rent
specialized equipment such as scaffolding or industrial
vacuums.
[4] In August 2002, Holly Johnson
answered an advertisement placed by Bonnie's Cleaning and met
with Ms. Watson. As a result of their discussions, it was agreed
that she would undertake certain client contracts starting August
21, 2002. Contrary to the Minister's assumption[4], both Ms. Watson and
Ms. Johnson testified that Ms. Johnson signed an agreement
entitled "Sub-Contract Agreement"[5] according to which she was to be paid
at a rate of $8.00 per hour and in which Ms. Watson noted[6] Ms. Johnson's
working preferences as follows:
Hours
Requested:
"40"
Days
Preferred:
"Mon-Fri"
Starting
Time:
"5 AM"
Ending
Time:
"3 PM"
[5] In considering the issue of
whether on a particular set of circumstances a working
relationship is governed by a contract of service an
(employer/employee) or a contract for services
(independent contractor), the Court must be guided by the
"four-in-one" test as enunciated by the Federal Court
of Appeal in Wiebe Door Services Ltd. v. M.N.R., 87 DTC
5025:
a) The degree or absence
of control exercised by the alleged employer;
b) Ownership of tools;
c) Chance of profit and
risk of loss;
d) Integration of the alleged
employee's work into the alleged employer's business.
According to MacGuigan, J., the four-in-one test has at its
essence "...the search for the total relationship of
the parties". In reaching this conclusion,
MacGuigan, J. put the emphasis on what Lord Wright called
"the combined force of the whole scheme of the
operations". Thus, there is no magic in any one of the four
factors; the nature of the relationship will depend entirely on
the facts found by the Court in any particular case.
[6] In concluding that Ms. Johnson was
an employee of Bonnie's Cleaning, the Minister relied on
certain assumptions; the onus of disproving those assumptions
rests upon Ms. Watson. Applying the Weibe Door
criteria to the evidence presented, I am satisfied that Ms.
Watson has discharged her evidentiary burden. In addition to
presenting her oral evidence in an entirely credible manner, she
provided supportive documentary evidence prepared
contemporaneously with the events described.
a) The degree or
absence of control exercised by the alleged employer
[7] The Minister made the following
assumptions which appear in paragraph 8 of the Minister's
Reply:
g) [Ms.
Johnson] told [Ms. Watson] when she was available for work;
h) [Ms.
Johnson] could turn down a job offered by [Ms. Watson];
i) [Ms.
Johnson] could work for others in the same industry;
j) [Ms.
Johnson] was not supervised;
[8] Before considering the remaining
assumptions, I must say that I am at a loss as to why these
assumptions propelled the Minister to conclude that
Ms. Johnson was an employee; in my view, they are clear
indicia of Ms. Johnson's status as an independent contractor.
As for Ms. Watson, she admitted the above assumptions and
generally speaking, those that follow. She took issue not so much
with their factual accuracy but rather the legal conclusions the
Minister drew from them.
[9] In paragraph 8 the Minister
further assumed:
k) [Ms.
Johnson]'s performance was monitored through feedback from
[Bonnie's Cleaning]'s client;
l) on
residential jobs, [Ms. Johnson] was paired with a more
experienced worker or she worked with [Ms. Watson];
m) on commercial
jobs, [Ms. Johnson] could work with 2 or 3 other workers of
[Bonnie's Cleaning];
...
r)
[Bonnie's Cleaning] set [Ms. Johnson]'s rate of pay;
s) [Ms.
Johnson] was paid $8.00 per hour;
t)
[Bonnie's Cleaning] required [Ms. Johnson] to submit a
timesheet detailing hours worked and duties performed at each
client's premises;
u) [Ms.
Johnson] submitted the timesheet to [Bonnie's Cleaning] at
the end of each week;
...
x) [Ms.
Johnson] was required to correct deficiencies or substandard work
without pay;
y)
[Bonnie's Cleaning] had liability insurance with a $500
deductible;
z) if [Ms.
Johnson] caused damages that were:
(i) less than
$500, the worker was required to pay for the damages; and
(ii) more than $500,
the worker was required to pay the first $500.
[10] In respect of assumptions (k) to (z)
set out above, I find the following: because it was with
Bonnie's Cleaning that the client had made its initial
contact, and because Ms. Watson herself could not be
physically present at every cleaning site, it was to be expected
that Ms. Watson would "monitor" a worker's
performance through feedback from clients. Rather than indicia of
"control" or "supervision", it is a testament
to the good stewardship that made Bonnie's Cleaning so
successful. Although Bonnie's Cleaning "set" the
rate of pay, the rate was based as what the client would pay.
Further, the rate was mutually agreed to, along with the other
conditions under which she would perform cleaning services,
following Ms. Johnson's discussion with Ms. Watson on August
21, 2002. Ms. Watson's evidence was that she had had
trouble finding anyone willing to accept early (5:00 a.m.)
morning cleaning work and was having to do it all herself. Ms.
Johnson stated herself to be willing to accept such jobs and
joined Ms. Watson in her own work at these locations. On the
commercial jobs, more than one person was needed to perform the
work requested by the client. It was for these reasons and not
for the purpose of supervision, that Ms. Johnson happened to be
working with Ms. Watson. She was required to file time sheets
because her payment for services rendered was calculated on an
hourly basis. The mere fact that she was paid on an hourly basis
is not determinative of the nature of the contract.
[11] As for assumptions (x) to (z) regarding
Ms. Johnson having to bear the responsibility for deficiencies in
her work, this is consistent with a contract for services; it is
more typical of an employer-employee relationship that the cost
of an employee error is borne only by the employer.
b) Ownership of tools
[12] In regard to this factor, the Minister
assumed the following facts in paragraph 8 of the Reply:
n) [Ms.
Johnson] was required to provide cleaning cloths and
transportation to and from each job;
o)
[Bonnie's Cleaning]'s client or [Bonnie's Cleaning]
provided a vacuum, mops and pails;
p) [Ms.
Johnson] wore a t-shirt with [Bonnie's Cleaning]'s name
on it;
[13] Ms. Watson did not dispute these
assumptions, except in respect of having providing transportation
to cleaning jobs. Again, however, I do not find that these facts
support the Minister's position . It would have been a
physical impossibility for Ms. Watson to have driven each of the
Bonnie's Cleaning cleaners to each of the job sites. In the
case of Ms. Johnson, Ms. Watson admitted that they drove together
to the cleaning site - that only made sense when they were both
working there. Ms. Johnson testified, however, that she had her
own car which she used to drive to Bonnie's Cleaning from her
home in a rural community several kilometers north of Moose Jaw.
She did not expect transportation to be provided to her. As for
the cleaning tools, it was reasonable for Bonnie's Cleaning
to provide the major tools needed given Bonnie's Cleaning
contractual obligations to its construction site clients, the
difficulty of imposing specific equipment requirements on
self-employed cleaners working for other clients as well as
Bonnie's Cleaning clients, and Ms. Watson's own
concerns of ensuring hygenic standards in the delivery of
cleaning services. I am of the view that in these particular
circumstances, to the extent the ownership of tools has any
application, it favours Ms. Watson's position.
c) Chance of Profit,
Risk of Loss
[14] The Minister assumed[7] that Ms. Johnson told
Bonnie's Cleaning when she was available for work, that she
could turn down a job offered by Bonnie's Cleaning, and that
she could work for others in the same industry. Ms. Watson's
testimony was entirely consistent with these assumptions. She
explained that some cleaners were "real go-getters" who
accepted every contract available; others had clients of their
own and only accepted Bonnie's Cleaning client contracts as
they could fit them into their own schedules. As for Ms. Johnson,
she performed cleaning services for only a few days. It was her
first venture into cleaning as a means of earning income. What
her choice might have been had she continued with Bonnie's
Cleaning is not known. What is clear, from the Minister's own
assumptions and the evidence presented, is that Ms. Johnson was
able to determine how much or how little work she would do.
Consequently, I am of the view that Ms. Johnson had the
opportunity to increase her profit by accepting more client
contracts, by performing her work in as efficient a manner
possible thus increasing her availability for more work, by
rejecting Bonnie's Cleaning client contracts if she had more
profitable cleaning work from other sources. Conversely, she had
no guarantee of client contracts from Bonnie's Cleaning:
it depended on a range of unknowns such as the number of client
contracts at any given time, the rejection or acceptance of those
contracts by other cleaners, whether Bonnie's Cleaning chose
to offer them to her. None of this is consistent with an
employer-employee relationship where a diligent employee can rely
on receiving a fixed amount if she performs her duties during
working hours assigned to her by the employer. Rather, such
uncertainty points to a finding that Ms. Johnson was working at
Bonnie's Cleaning as an independent contractor.
d) Integration of the alleged employee's work into the
alleged employer's business
[15] There is no question that generally
speaking, having cleaners available to perform client contracts
was integral to the business of Bonnie's Cleaning. However,
the performance or not of services by Ms. Johnson specifically,
was in no way integral to Bonnie's Cleaning. Bonnie's
Cleaning was under no obligation to offer contracts to Ms.
Johnson; Ms. Johnson had merely identified herself to
Bonnie's Cleaning as a person to whom client contracts could
be offered from time to time. Likewise, Ms. Johnson owed no
allegiance to Bonnie's Cleaning and was under no obligation
to accept cleaning contracts if offered.
[16] When looked at in the context of
MacGuigan, J.'s "search for the total relationship of
the parties", I am of the view that, on a balance of
probabilities, the evidence does not support a finding that Ms.
Johnson was an employee of Bonnie's Cleaning within the
meaning of the Weibe Door test. Having weighed all of the
relevant factors as set out above, I am satisfied, on a balance
of probabilities, that Ms. Johnson was performing cleaning
services through Bonnie's Cleaning as an independent
contractor. Accordingly, her work is neither pensionable nor
insurable. The appeals are allowed and the Minister's
decisions are vacated.
Signed at Ottawa, Canada this 15th day of February, 2005.
Sheridan, J.
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