Citation: 2005TCC271
Date: 20050505
Docket: 2004-2966(EI)
BETWEEN:
GLEN MCMAHON
OPERATING ÉPREUVES ILLIMITÉES,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
MARIA MILAGROS RUANO,
Intervener.
REASONS FOR JUDGMENT
Savoie, D.J.
[1] This appeal was heard
in MontrÉal, Quebec, on March 7,
2005.
[2] This is an appeal
from a decision of the Minister of National Revenue (the "Minister")
whereby he determined that Maria Milagros Ruano, the worker, held insurable
employment while working for the Appellant from August 19, 2002 to August 20,
2003, the period under review.
[3] In reaching his
decision, the Minister relied on the following assumptions of fact:
a) The Appellant
has been incorporated on November 24, 1994; (denied)
b) The Appellant
operated a graphic arts business under the name of 'Épreuves Illimitées';
(admitted)
c) During the said
period, the Worker worked for the Appellant, as a full‑time employee, in
the Appellant's office; (denied)
d) The duties of
the Worker were:
-to mix the
colors
-to cut boxes
or business cards
-to make
deliveries; (admitted)
e) The Worker
generally worked from 9:00 a.m. to 5:00 p.m., for a total of 37.5 hours
per week; (denied)
f) The Worker
received a salary of $8.00 per hour; (denied)
g) All the
equipment, tools and furniture were provided by the Appellant to the Worker;
(denied)
h) When she had to
use her car, the Worker received an allocation of $0.30 per kilometer from the
Appellant; (denied)
[4] The evidence
disclosed that the Appellant operates a business under the name of
"Épreuves Illimitées" since February 2, 1990.
[5] The worker was hired
by the Appellant in 2002 as a full-time employee. Previously, he had turned
down her job application because she had sought full‑time employment.
Instead, he wanted to hire her as a self-employed person under contract. The
Appellant disputes that he hired her for full-time employment. They entered
into an oral employment contract which provided that she perform her services
for the Appellant on a full-time basis, daily from 9:00 a.m. to 5:00 p.m.
The Appellant needed an assistant and he agreed to pay the worker $8.00 an
hour. She was to be paid time and a half for overtime work.
[6] The worker performed
her services at the Appellant's place of business and although she was hired as
a full-time employee, there were periods when she was unable to work because
the Appellant was absent. The nature of the work to be performed required the
services of two people, namely, the Appellant and the worker, as his assistant.
The Appellant provided the necessary training for the work she was to perform.
All tools required for the work were provided by the Appellant and the worker
was paid 30 cents per kilometer for the use of her automobile upon submitting
her invoice. According to the worker, the Appellant would sometimes refuse to
pay the worker her kilometer rate.
[7] The work schedule was
prepared by the Appellant on a calendar which the worker would then fill in
with her hours of work. She testified that the Appellant was meticulous with
this schedule, deducting $20.00 off her pay if she took a phone call and
compelling her to account for every single minute of her time, otherwise, the
time would not be paid. The work of the worker was supervised by the Appellant
who, at times, required her to redo the work because it did not meet with his
approval. The Appellant replaced the worker on August 20th, 2003 when she left
for a vacation in Spain,
a trip which she claims he authorized but he denies she even gave him a notice
of her intention to make the trip.
[8] The Appellant states
that the worker established her own schedule and was free to work the hours she
wanted. This is disputed by the worker who insists that she was unable to work
alone. The very nature of the work required the participation of two people and
she was the assistant in this process. The Appellant states further that the
worker took time off for personal matters and had another job during the
weekends. The worker confirms that she took another employment in July of 2003,
because she wanted to survive. She explains that the Appellant kept reducing
her working hours.
[9] The testimony of the
worker is corroborated by two former employees of the Appellant. Wendy Boode
testified that as an employee of the Appellant, she was expected to be there from
9:00 a.m. to 5:00 p.m. for duties similar to those entrusted to the worker.
Further, she stated that she often visited the Appellant's place of business
and can state that the worker was there 85% of the time. She added that the
worker often made deliveries to her place of business while employed with the
Appellant. She added that although she was hired for full-time work, she ended
up self-employed because that status was forced upon her by the Appellant. Ms.
Boode further stated that her work schedule varied from week to week because
the Appellant would often send her home and deduct that time off her pay. All
of this is documented in a letter signed by Ms. Boode and filed as Exhibit I-1.
[10] This Court also heard
the testimony of Wendy Demongey who turned down full-time employment with the
Appellant because she wanted to provide her services as a freelancer for $12.00
an hour. She then provided as a reference the worker's name to the Appellant.
[11] It must be stated that
the independent testimony of these witnesses casts a serious doubt on the
Appellant's credibility. Furthermore, the Appellant failed to discredit their
testimony in his cross-examination. The Appellant also failed to cross-examine
the worker on the contents of her memo dated December 3, 2003, received in
evidence and filed as Exhibit R-3, wherein she charges that the Appellant,
because of her complaint to Commission des normes du travail, threatened
her over the telephone, intimidated and blackmailed her.
[12] The Minister determined
the insurability of the employment of the worker on the basis of paragraph
5(1)(a) of the Employment Insurance Act (the "Act").
The relevant provision reads as follows:
INSURABLE EMPLOYMENT
5.(1) Subject to subsection (2), insurable
employment is
(a) employment in Canada by one
or more employers, under any express or implied contract of service or
apprenticeship, written or oral, whether the earnings of the employed person
are received from the employer or some other person and whether the earnings
are calculated by time or by the piece, or partly by time and partly by the
piece, or otherwise;
...
[13] The Courts have laid
down certain criteria under which the circumstances of a particular case may be
examined in determining whether the test of insurability has been met. The
Federal Court of Appeal in Wiebe Door Services Ltd. v. Canada (Minister of National
Revenue – M.N.R.) [1986] 3 F.C. 553 referred to the test applied by Lord
Wright in Montreal v. Montreal Locomotive Works Ltd. [1947] 1 D.L.R. 161
when he wrote, inter alia, as follows:
...In the more complex conditions of
modern industry, more complicated tests have often to be applied. It has been
suggested that a fourfold test would in some cases be more appropriate, a
complex involving (1) control; (2) ownership of the tools; (3) chance of
profit; (4) risk of loss. ...
CONTROL
[14] The worker had studied
plastic art and could make models, etc., but was unfamiliar with the different
methods used by the Appellant which is why he provided training to her. The
worker was under the constant supervision of the Appellant who had hired her as
his assistant and the two would work together, with the worker as the assistant.
In other words, she could only perform her services when the Appellant was
there. The work of the worker was constantly assessed by the Appellant who, at
times, required her to do the work all over again because it was unsatisfactory
to him. According to the timesheets, the Appellant controlled the worker's
schedule with minute precision. The Appellant decided when the worker could
take her vacation. The worker was dismissed by the Appellant on August 20th,
2003.
OWNERSHIP OF THE TOOLS
[15] All tools, some of
which were complicated and were used in the laminating and plastification
process, were provided by the Appellant.
CHANCE OF PROFIT AND RISK OF LOSS
[16] The worker could not
work weekends for the Appellant because he was absent from the business. She
was paid time and a half for overtime. Her remuneration varied from week to
week because the Appellant would, at times, send her home and did not pay her
for that time. Although at times he was unwilling to do so, most of the time he
would compensate the worker for running errands and making deliveries, for her
time and a 30 cent per kilometer rate for the distances traveled.
INTEGRATION
[17] Mr. Justice Major went
on to explain the notion of integration in the case of 671122 Ontario Ltd.
v. Sagaz Industries Canada Inc. [2001] 2 S.C.R. 983, when referring to the Wiebe
Door decision, supra, he stated at paragraph 40:
As MacGuigan J.A. notes, a similar
general test, known as the "organization test" or "integration
test" was used by Denning L.J. (as he then was) in Stevenson Jordan and
Harrison, Ltd. v. Macdonald, [1952] 1 The Times L.R. 101 (C.A.), at p. 111:
One feature which seems to run through
the instances is that, under a contract of service, a man is employed as part
of the business, and his work is done as an integral part of the business;
whereas, under a contract for services, his work, although done for the
business, is not integrated into it but is only accessory to it.
And, at paragraph 44, Mr. Justice
Major wrote:
According to MacGuigan J.A.,
the best synthesis found in the authorities is that of Cooke J. in Market
Investigations, Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732
(Q.B.D.), at pp. 73-38 (followed by the Privy Council in Lee Ting Sang v. Chung
Chi-Keung, [1990] 2 A.C. 374, per Lord Griffiths, at 382):
The observations of LORD
WRIGHT, of DENNING, L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is
this: "Is the person who has engaged himself to perform these services
performing them as a person on business on his own account?". If the
answer to that question is "yes", then the contract is a contract for
services. If the answer is "no" then the contract is a contract of
service. ...
[18] Later, at paragraphs 47
and 48, he provided further insight into the analysis of the criteria for
determining, as in the case at bar, whether there is an employer-employee
relationship between the parties when he wrote the following:
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, 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 noon-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.
[19] The Appellant is asking
the Court to set aside the decision of the Minister who relied on paragraph
5(1)(a) of the Act to determine that the worker held insurable
employment.
[20] This Court has examined
and analyzed the facts which the Minister investigated as well as the evidence
both oral and documentary produced at trial under the criteria of the above
quoted jurisprudence. This Court is of the view that the Minister's
determination with respect to the insurability of the worker's employment is
correct and in accordance with the Act and the case law. Consequently,
the appeal is dismissed and the Minister's decision is confirmed.
Signed at Grand-Barachois, New Brunswick, this 5th day of May 2005.
"S.J. Savoie"
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