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Citation: 2004TCC586
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Date: 20040830
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Dockets: 2002-1379(EI) and 2002-1380(CPP)
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BETWEEN:
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CAMBRIAN COLLEGE,
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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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and
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LORI LYNN BARDELL,
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Intervener.
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REASONS FOR JUDGMENT
Rip J.
[1] This is an appeal by
Cambrian College in Sudbury, Ontario from a decision of the Minister of
National Revenue that the employment of Lori Lynn Bardell on two occasions
(March 18, 1996 to November 1998 and from August 1999 to December 15, 2000)
during the period from March 18, 1996 to December 15, 2000
constituted both insurable employment under the Employment Insurance Act
("Act") and pensionable employment under the Canada Pension Plan ("CPP"). The appellant
submits that at all material times Mrs. Bardell, the intervener, was an
independent contractor. The issue in these appeals, therefore, is whether Mrs.
Bardell was an employee or an independent contractor.
[2] The appellant is a college
of applied arts and technology and operates two licensed child-care programs.
The Play 'n' Learn Day Care Center ("Play 'n' Learn") is a licensed day
nursery operated on the premises of Cambrian College by its employees and Carrousel
Family Child Care ("Carrousel") is a licensed private home day care
agency. We are concerned with the Carrousel operation only.
[3] Carrousel is a
not-for-profit organization that operates a private home childcare program
under the Day Nurseries Act ("DNA"). It is "piggy‑backed"
on Cambrian's licence. Carrousel is licensed for 40 locations and
currently has agreements with 29 caregivers, called "providers". Carrousel recruits
individual providers who use their homes to care for up to five children at a
time. These
providers are not licensed but operate their day cares under the private home
day care licence of Carrousel.
[4] The appeals were heard on
common evidence.
Facts
[5] The appellant called two
witnesses, Ms. Francine Fox, a manager for day care programs at Cambrian and
Mark Edward Oliver, the husband of a former provider.
The respondent called the intervener as his only witness.
Testimony of Francine Fox
[6] Ms. Fox has been an employee with the appellant
since 1992. She was hired as coordinator of Carrousel and served in that
capacity until May 1997, at which time she became the manager of Child Care
Services. Since May 1997, she has been responsible for the administration of
the Carrousel program as well as Play'n' Learn.
[7] As a licensee under the DNA, Ms. Fox
explained, Carrousel has to ensure that providers comply with the DNA.
The DNA requires, amongst other things, health and fire inspections of
the caregiver's home and insurance coverage for both house and car used by the
caregiver. The DNA also limits both the age and number of children
attending a day care. In order to ensure compliance with these provisions
employees of Carrousel regularly attend at the residence of a provider.
[8] The home of potential providers undergoes
health and fire inspections prior to Carrousel accepting children into the
home. Ms. Fox testified that these inspections are arranged by the applicant
providers; however, a Carrousel agent can facilitate visits by helping the
applicant fill out the required form. Ms. Fox stated that with respect to Mrs.
Bardell, she faxed some basic information to the Fire Department, but the
Fire Department communicated with Mrs. Bardell, as it does with all potential
providers, in order to set up a time for a visit. The same procedure was
implemented for the Sudbury and District Health Unit.
[9] Ms. Fox said she facilitated communications
between the insured and the providers for liability insurance, but providers
themselves arranged and paid for house and car insurance. Providers have
liability insurance pursuant to a group policy in their names.
[10] Carrousel and
the providers entered into a purchase of service agreement. This agreement sets
out the responsibilities of the provider. During the period under appeal, Mrs. Bardell entered
into service agreements with Carrousel to provide child care services in her
home for children referred to her by Carrousel. The relevant provisions of this
contract
are as follows:
A. RESPONSIBILITIES OF THE PROVIDER
1. The Provider agrees to comply with
all of the provisions of the Day Nurseries Act and with the requirements of any
other regulatory body.
2. The Provider agrees to allow the
Agency, the Ministry of Community and Social Services' licensing agent, Fire
and Health Officials access to the home at any time during the operating hours
of day care to ensure compliance with this agreement.
...
4. The Provider agrees to maintain a
"Family Day Care Rating" acceptable to the Agency.
5. The Provider agrees to make available
home day care for up to 5 full day equivalent children referred by the
Agency as per Day Nurseries Act home capacity and classification.
6. The Provider agrees not to discharge
a child without prior consent from Carrousel Family Child Care's Manager.
...
9. The Provider agrees to make the
provision of home day care services to the clients of Carrousel Family Child
Care for a minimum of 229 days a year, which excludes the following days
...
10. The Provider will satisfy the Agency
that all persons providing back-up day care to the Provider meet licensing
requirements (ie: proof of valid First Aid & C.P.R. certificate, criminal
record check and up-to-date medical and immunization record).
11. The Provider will maintain valid
certificates in first Aid and C.P.R.
12. The Provider and any other person 18
years of age and up normally resident in the home will have a medical
certificate, proof of up-to-date immunization and a recent 2 step T.B. test
from a licensed physician stating that he or she is free of communicable
disease. The medical will be renewed every two years.
13. The Provider will contract for and
maintain liability insurance in an amount acceptable to the Agency. Should the
Provider choose to travel with the children in her/his vehicle, proof of a 3rd
party liability insurance endorsement stating "permission to carry for
compensation" is required.
...
17. ... The Provider agrees to obtain a
signed travel consent form from the parent for any special outings or field
trips. The consent forms will be returned to the Agency at the end of the month
or upon termination of childcare.
...
19. The Provider agrees to record
children's attendance on a daily basis on the "Attendance Register"
supplied by the Agency. On the last attending day of the month, the Provider
will obtain verification of attendance from the parent. On the last working day
of the month, once signed by the parent, the Provider will forward a copy of
the attendance register to the Agency.
20. The provider agrees to develop and
maintain policies in areas of BEHAVIOUR MANAGEMENT, HEALTH AND SAFETY,
PROGRAMMING and SERIOUS OCCURANCES which meet the minimum requirements of the
DAY NURSERIES ACT, with the assistance and approval of the Agency (see Provider
Manual for Policy samples).
...
23. The Provider understands that she/he
is a self-employed person and will be responsible for his/her own income tax
and applicable deductions. ...
[11] Ms. Fox stated that it was her general
practice to read the contract out loud and answer any questions at the time the
contract was signed. Ms. Fox acknowledged that she did not read any provisions
of the DNA to Mrs. Bardell. Ms. Fox recalled that Mrs. Bardell had
worked as a backup provider in 1995 for a friend who was a provider and was
aware of how providers operated. She said that she explained the implications
of being self-employed and the demands of operating a successful business to
Mrs. Bardell. In addition, Ms. Fox testified that Mrs. Bardell was
informed of the 229-day rule, that she was expected to operate the day care 229
days per year; but the 229 days was only a guideline. Carrousel never imposed a
penalty on providers who did not provide child-care services for less than 229
days a year.
[12] The contract was signed at Mrs. Bardell's
apartment in the presence of Ms. Fox. Mrs. Bardell agrees that Ms. Fox
read the contract out loud, Mrs. Bardell did not review the contract at
the time; however, over time she did read through the contract herself.
According to Mrs. Bardell the contract was not negotiable, if she did not sign
it she could not work at Carrousel. Mrs. Bardell did not seek independent
advice nor did she ask for that opportunity, but she complained that the
opportunity was not provided.
[13] According to Ms. Fox
Carrousel has providers who work during the day, the evening and even
overnight. The provider chooses when she wants to provide the service.
[14] Ms. Fox explained the process by which
parents and children are referred to providers. Parents usually contact
Carrousel which then refers them to providers. If providers are interested,
they meet with the parents and decide whether or not the child and the provider
are compatible. Only when both the provider and the parent agree will the child
be placed in that provider's day care. Providers may refuse a child at any time
of the process, according to Ms. Fox. If a provider accepts a child but then
wishes to reject the child the provider can give two weeks notice to the
child's parents and Carrousel. Ms. Fox explained that two weeks notice allows
Carrousel additional time to find an alternative day care for the child. In
cross‑examination Ms. Fox stated that although the purchase of service
agreement stipulates that Carrousel's consent is required in order for a
provider to discharge a child, two weeks notice to the parents and a copy of
that written notice to Carrousel sufficed.
[15] If Carrousel is unable to place five
children in a provider's day care, that provider may advertise the available
spots and fill them with "outside children", Ms. Fox declared. She
stated that the only time Carrousel would record the presence of an
"outside child" is if the child was at the day care during one of
Carrousel's home visits. However, during cross-examination, she conceded that
providers were not allowed to have "outside children"; "outside
children" had to register with Carrousel. I note the provider's service
agreement with Carrousel does not prohibit "outside children";
paragraph 5 states that the provider agrees to make available day care for up
to five children at a time referred by Carrousel. The question is whether the
provider may have an "outside child" if Carrousel has referred less
then five children to her.
[16] Ms. Fox also testified that Carrousel
distributes first aid kits, fire extinguishers, and equipment such as cribs,
strollers, gates, etc., to the various providers. These items are distributed
on a first come first serve basis, because there are not enough for all of the
providers. In order to borrow the equipment an annual fee of $10 was charged to
a provider.
[17] Carrousel provided resources to help
providers with the development of their programs, but providers are solely
responsible for developing and implementing the programs, Ms. Fox testified.
The weekly activities and menus are the provider's decision, so long as they
comply with the provisions of the DNA. Carrousel gives workshops to
providers to ensure quality childcare. Other workshops are available through
other community organizations and Carrousel promotes them via notices attached
with the provider's paycheque. However, the workshops are voluntary; there is
no mandatory training other than first aid and cardiopulmonary resuscitation
("CPR"). No penalties are imposed on providers who do not attend
these workshops, according to Ms. Fox.
[18] In 1996 Carrousel also held monthly
meetings with providers. These meetings were for communication purposes and
information sharing. The monthly meetings were recommended and encouraged but
not mandatory. Attendance was taken. Depending on Carrousel's budget,
attendance by providers at seminars out of town was facilitated through payment
of all or part of the cost by Carrousel. Mrs. Bardell attended one seminar out
of town.
[19] When a provider
first starts operating a daycare she is given a reference manual which Ms. Fox
described as the "primary document for the operation" of its day
care. Mrs. Bardell referred to the manual as the "bible". The manual
describes health and sanitary practices such as hand washing, kitchen cleanliness
and food preparation, diapering, food and drink, medical and dental hygiene,
illness, administration of medicine, safety procedures, including fire safety,
behaviour policy and setting limits, programming suggestions, available
resources and consents that are to be included in a provider's file:
application, reference checks, reports of fire and health authorities,
inspection reports, copy of purchase service agreement and excerpts of the DNA,
among others.
[20] A family day care
rating scale manual was used by Carrousel to evaluate providers. Ms. Fox said
the rating scale was standard in the industry. Once a year a home visitor from
Carrousel made an unannounced visit to the provider to observe and evaluate the
provider's operation. The provider is marked on approximately 32 items on the
scale. The evaluation sets out the criteria of space and furnishings for care
and learning, for example, space arrangement of furnishings and child-related
displays; language and reasoning, which includes helping children understand
and use language; learning activities, such as eye-hand coordination and music;
basic care, which includes meals and snacks, rest time, toiletry and grooming;
social development such as discipline; and adult needs, which includes relationship
of the child with his or hers parents.
[21] A provider has a
responsibility to upgrade and if the provider does not meet the minimum
requirements of the DNA, the contract with Carrousel may be rescinded.
Indeed, Ms. Fox declared, if there is non-compliance by a provider, Carrousel
itself is non compliant and may lose its licence. Ms. Fox declared that
Carrousel strives to ensure compliance by providers through monthly, quarterly
and annual visits. Ms. Fox acknowledged that under the DNA, directly or
indirectly, it is Carrousel who is responsible for fire prevention,
programming, liability insurance and adequate childcare.
[22] Fees are established according to a list
published by Carrousel, but although set by Carrousel the funder has the final say
on how much to charge a parent. Carrousel keeps $2.50 out of the fees charged
to parents whereas the balance is for the provider. The $2.50 is used to cover
administration costs. When a child is absent because of vacation or sickness, a
provider receives 80 per cent of the amount she normally would have received
had the child been present. Mrs. Bardell acknowledged that she received 80 per
cent of the amount she would normally charge when a child under her care was
away. As for the non-charged days of absence, parents are allowed one day per
month. Part of the $2.50 kept by Carrousel goes to pay the 80 per cent of the
amount normally received. Providers must consult Ms. Fox in order to charge
less than the established rates. A provider receives payment after filling out
an attendance sheet and sending it to Carrousel. Later on, fees were increased
by Carrousel without input from the providers. Providers do not issue invoices
to Carrousel; Carrousel determines payment from the children's attendance sheets;
the attendance sheets are also used as a source to invoice parents.
[23] In order to keep their day care open at all
times, providers may hire backup providers to assist with the childcare. A backup provider is an employee of the provider. The
only limitation to hiring a backup provider is that the backup provider must
comply with the DNA qualifications and requirements. As a consequence of
the DNA, Carrousel can refuse a helper if there is no proof that all
licensing requirements have been met.
[24] Ms. Fox was
questioned about third party liability insurance purchased by the provider.
Under the contract with Carrousel providers were required to secure $1,000,000
of liability insurance; however, another $1,000,000 was added by the providers
to insure against child abuse. In her view, she only "arranged" for
insurance for the provider but it was each provider who purchased the
insurance. Cambrian "was not a party to the insurance". Ms. Fox, as
manager of Carrousel, facilitated the purchase, disseminating the information
to Reed Stenhouse, the insurance broker. A provider was in charge of the
providers acquiring the group policy.
Testimony of Mark Oliver
[25] Mark Oliver is the husband of a former
Carrousel day care provider. Mr. and Mrs. Oliver provided childcare
services under a contract with Carrousel from August 1998 to August 2002. Mr.
Oliver considered himself a "co‑provider". Mr. Oliver
worked "shift work" and was home three days a week. He claims he did
40 per cent of the work at his wife's day care.
[26] In 1998 Mr. Oliver and his wife initially
wanted to start a private day care; however they had very little success in
attracting clients. They found it difficult to recruit clients without actually
being licensed. Parents can receive government subsidies for day care expenses
only if the facility is licensed. Mr. Oliver stated that one of the main
reasons for becoming a day care provider with Carrousel was because Carrousel
had a licence.
[27] As with Mrs. Bardell, Mr. Oliver's client
contact was established through Carrousel. Carrousel actively recruited parents
and provided them with a phone number for a provider. The provider and the
parents set-up an interview at the provider's home in order to see if the
provider, parent and child are compatible. Mr. Oliver agreed with Ms. Fox
that the decision to accept a child was exclusively his and his wife's decision
and pre-placement interviews were a way for them to screen children and
parents; Mrs. Bardell thought otherwise. Mr. Oliver and his wife decided to
accept applicants on the basis of the ages of their own children, socialization
needs, toys and equipment.
[28] Mr. Oliver testified that he and his wife
had control over the daily hours of operation. Their hours of operation
fluctuated over the years. In the beginning they were open Monday to Friday but
as their children got older they closed Fridays. They adjusted the hours as
they saw fit, approval was not sought or required, they simply called Carrousel
and gave them two weeks notice.
[29] Mr. Oliver and his wife went on vacation
during the summers. Their day care was closed for two to three weeks and
for the rest of the summer the day care was operated through backup providers.
Mr. Oliver and his wife hired, trained and paid these backup providers. Mr.
Oliver stated that other than checking that the helpers met the DNA
requirements, Carrousel had no say in the hiring of the helpers.
Mr. Oliver and his wife would call Carrousel, give them the names of their
helpers, and sent in their first aid certificates, police check, and medical
records. Once the backup
provider's services were no longer needed Mr. Oliver and his wife terminated
the relationship without any input from Carrousel.
[30] Mr. Oliver explained his understanding that
pursuant to the DNA a provider is not allowed to have more than five children on the
premises and no more than two
children under the age of two. A provider can have more children registered
just as long as there are no more than five children with them at one particular
time. In 1998 Mr. Oliver and his wife chose to provide day care services for
only four children, at a later time they only provided child care for three
children. In both instances Mr. Oliver and his wife chose to have less
than the maximum amount allowed. Although Carrousel informed them of children
on the waiting list, Mr. Oliver and his wife refused those children. Children
did not have to be accepted according to Carrousel's waiting list. Mr. Oliver's
nephew needed a day care; the Olivers called Carrousel and told them that they
were accepting their nephew. Mr. Oliver believed he and his wife could
take in other children outside of Carrousel as long as the maximum number of
children at one time did not exceed five.
[31] Mr. Oliver testified that in his view he
had the right to discharge a child, although he thought Carrousel's consent was
required. Prior to a child being discharged he would provide the parent with
two week's notice and inform them that the child was no longer welcome. (The
service agreement requires written notice to discharge a child; Carrousel's
consent is not required.) It was his understanding that the day care was his
and his wife's business, it was in their home, they were the owners and
operators, which meant they could determine who came in, who left, how long
they stayed, when they came, and if they wanted to discharge them or not. He
stated that this was clear to him and his wife from the onset.
[32] The car insurance was secured by Mr. Oliver
and his wife personally. In regards to the liability insurance for the house,
they were given a name of another Carrousel provider who had pooled together
all of the providers to get a better premium. Mr. Oliver stated that he
personally scheduled the visits with the Sudbury Board of Health and the Fire
Department, although he could not say who contacted the Health and Fire
Departments on his behalf. Mr. Oliver never read the contract signed by his
wife and Carrousel. Neither did he read the parenting manual nor the DNA.
He only read "some provisions" of the provider's manual. As a result
of his employment with young offenders he was aware of what was required, he
intimated.
[33] Before 2001, Mr. Oliver and his wife
purchased the toys and equipment they required to run their day care. Also, on
the children's birthdays, Mr. Oliver and his wife organized birthday parties
for the children, at their cost.
[34] Mr. Oliver explained that weekly menus and
activities were posted at the entrance of their home because the DNA
required it. Although not a requirement by Carrousel, parental consent was
always sought prior to taking the children on a car or bus ride. Finally, an
employee of Carrousel inspected their house on a monthly and quarterly basis to
ensure the DNA was respected.
[35] Mr. Oliver said he would not have continued
his relationship with Carrousel if Carrousel had control over the day care's
hours and demanded, for example, that his day care be open on Saturdays or
evenings. Mr. Oliver did not consider himself or his wife an employee of
Carrousel. At no time did Mr. Oliver send an invoice to Carrousel. He
telephoned Carrousel at the middle of the month and at the end of the month,
informing Carrousel of attendance. His wife, he said, received cheques from
Carrousel based on the telephone calls. The attendance sheets, he said,
confirmed his earlier information to Carrousel.
Testimony of Lori Lynn Bardell
[36] Mrs. Bardell signed her first purchase of
service agreement on or about March 1, 1996 pursuant to which she
would provide child care in her home for children referred to her by Carrousel.
[37] Mrs. Bardell testified that she expected
Ms. Fox and Carrousel to tell her what the DNA and Carrousel's
requirements were and how she could meet them. In order to assist her in complying
with the DNA Carrousel provided her with a manual, the
"bible".
[38] Prior to accepting children Mrs. Bardell
had to update her medical background and undergo a police check. Mrs. Bardell,
when initially providing services to Carrousel, lived in an apartment. In 1997
she moved into her house. Both her apartment and house were inspected by
Carrousel, the fire prevention officer, and an officer of the Public Health
Unit. Carrousel arranged all of these visits.
[39] After inspecting Mrs. Bardell's house Ms.
Fox informed her that she would have to install a fire detector, erect a fence
around the pool and add extra spindles on the deck. Ms. Fox also asked Mrs.
Bardell to replace loose wood panels on the fence and hammer in some nails on
the side entrance deck. The fire prevention officer required several changes; a
fire retardant door had to be installed, drywall had to be put up and a
sprinkler head had to be installed. The public health officer required her to
install a thermometer in the fridge. All of these expenses were paid by
Mrs. Bardell and she was not reimbursed by Carrousel.
[40] Once the changes were implemented,
Carrousel started to refer parents to Mrs. Bardell. Initially she and Ms.
Fox both met families interested in her day care, later on Mrs. Bardell met
with parents alone. It was Mrs. Bardell's understanding that if parents wanted
their child to attend her day care, it was ultimately their choice. The parent
would sign an agreement with Carrousel, not with Mrs. Bardell, and Carrousel would
place the child with her. Mrs. Bardell said that she was never asked whether or
not a child or parent was acceptable and she felt that she was not in a
position to refuse or reject a child. This contrasts Ms. Fox's evidence
that both parties involved must agree. She did admit that at the time she gave
birth to her first child she did request that no more children be referred to
her and this request was honoured.
[41] Mrs. Bardell testified that she was unable
to remove children that had been assigned to her by Carrousel. Mrs. Bardell
believed her contract stated she could not remove a child without Carrousel's
approval.
[42] Mrs. Bardell was paid twice a month. In
order to receive payment an attendance record had to be provided to Carrousel.
However, attendance sheets were filled out monthly, but in the middle of the
month Carrousel's secretary would telephone her for the attendance information
for the first two weeks, she would be paid based on the telephone information.
[43] If a parent was late in picking up a child
and made it a habit, providers could charge a $5 fee per 15 minutes. Mrs.
Bardell said she did not need approval from Carrousel to charge this fee. She
simply had to tell the parents she was charging the late fee and then inform Carrousel
when she would report her hours. The parent paid the late fee to Carrousel who
would then remit it to Mrs. Bardell.
[44] Any positions available, due to the absence
of the children on holidays, for example, were filled with "replacement
children". These children came from other providers who were on vacation
or among children who were next in line on the waiting list. If the available
positions were filled Mrs Bardell received 100 per cent of her regular pay, but
did not receive the additional 80 per cent for the children on vacation. In
July 1996, Mrs. Bardell received a "provider of the month" award for
her hard work and flexibility in accepting replacement children of any age and
at any time over the summer.
[45] Providers did not receive paid vacations.
As summer approached Carousel would ask the providers to complete a form
advising if and when they were planning to take a vacation. During the time a
provider was on vacation children under her care were placed elsewhere.
[46] Mrs. Bardell never hired a replacement to
take care of the children while she was on vacation. However, at one time she
did hire a helper to provide child care services while she was at medical
appointments. She had to inform Carrousel of the helper's presence and the helper
was required to have a medical check, a criminal record check, proof of
immunization, first aid and CPR. Mrs. Bardell established the helper's hours of
work. She trained and paid the helper. When she decided the helper was no
longer required she terminated the relationship. She did not ask Carrousel for
permission to terminate.
[47] Mrs. Bardell explained she received
unannounced monthly and quarterly home visits from Carrousel employees,
referred to as home visitors. The home visitors were to ensure compliance with
the DNA. They evaluated her pursuant to Carrousel's family day care
rating scale on items such as menus, activities and furnishing. In order to
receive a high score on this evaluation - she received 6.96 out of 7 on
one evaluation - Mrs. Bardell followed both the criteria set out in the scale
as well as in the Carrousel manual.
[48] Mrs. Bardell
referred to the provider's manual for ideas on planning menus and activities. The manual required that two snacks and
lunch had to be served. Mrs. Bardell admitted that she could either change
the menu and activity or use exactly what was in the manual. It was her
decision what foods to purchase and activities to pursue.
[49] Mrs. Bardell stated that she purchased some
toys for both her own daughter and the children to whom she provided services.
Both sets of toys would be mixed up and the children would play with both. Mrs.
Bardell agreed that Carrousel provided a toy library and toys could be
borrowed. Carrousel also provided larger equipment such as booster seats, gates
and strollers.
[50] A plan of activities and a menu list for
the week were to be posted on a bulletin board by the door of Mrs. Bardell's
home. She also had to use the activity and menu sheets provided by Carrousel.
When Mrs. Bardell wanted to take the children on a day trip she said she had to
obtain written permission from the parents. Carrousel required her to perform a
monthly fire drill and fill out a form accordingly. First aid and CPR
qualifications had to be renewed regularly and Carrousel arranged the renewal
dates. Also, pets in her home had to be vaccinated.
[51] Overall, Mrs. Bardell said her hours were
regular during her years with Carrousel. Only once did she have a child that
required care over and above regular hours, on Tuesdays. The rest of the time,
she worked more or less Monday to Friday, between 45 and 50 hours per week,
from 6:30-7:00 a.m. to 6:00-6:30 p.m. daily.
[52] Regarding income tax, Mrs. Bardell said she
kept all her receipts and she sent them to her accountant who filled her
personal tax return as if she was operating her own business.
[53] In November 1998, Mrs. Bardell parted ways
with Carrousel. Apparently a parent had let herself into Mrs. Bardell's home
while Mrs. Bardell was absent. Mrs. Bardell informed Carrousel of the
incident and asked that the child be removed from her care. Mrs. Bardell stated
that Carrousel informed her that she had to give notice, she could not have the
child removed without notice. Mrs. Bardell felt this trespass by the
parent was inappropriate and hence she ended the relationship with Carrousel.
[54] After leaving Carrousel Mrs. Bardell ran a
private day care. She continued to look after three children who were with her
when she operated a day care for Carrousel. Mrs. Bardell stated she ran the day
care differently from when she was with Carrousel. She had verbal agreements
with parents, no forms and no inspections from the city. She decided the menus
and programs. In contrast with Carrousel, she decided when and how she was paid
and who came to her day care.
[55] Mrs. Bardell returned to Carrousel in
August of 1999 because she wanted to receive regular pay and she knew that
Carrousel would provide her with clients.
[56] When she was with Carrousel, Mrs. Bardell
did not advertise. She said that she distributed pamphlets for Carrousel but
her phone number was not on the pamphlet. Mrs. Bardell did get calls from
parents directly because of word of mouth but she believed that she was not
entitled to enter into private agreements with the parents. She would refer
those parents to Carrousel. When she left Carrousel in 1998, and again in 2000,
she posted advertisements for her own day care.
[57] Mrs. Bardell terminated the relationship
with Carrousel on December 15, 2000. Mrs. Bardell explained the
events leading up to her termination. A day or two after her annual rating,
Mrs. Bardell started experiencing problems with a particular child. After the
first incident Mrs. Bardell just took notes; however, a similar incident occurred
a day or two after and at that time she called Carrousel and asked that the
child be removed from her home. According to Mrs. Bardell, Carrousel informed
her that she could not just remove the child, she had to give notice and give
Carrousel time to find a replacement provider. Mrs. Bardell stated that Ms. Fox
recommended that she treat the three year old child as a six month old, meaning
that she observe him and keep him close to her. Within a couple of days there
was a third incident. Mrs. Bardell explained that she was sick at the time and
had asked for some time off because of health reasons. During this time off
Mrs. Bardell was unaware that the problem child had been removed from her
day care. Mrs. Bardell testified that she assumed the child would continue to
be in her care after her return to Carrousel. Mrs. Bardell sent Carrousel a
letter informing them that she would return to provide child care services on
November 20, 2000. On November 15, 2000 she received thirty-day notice of
termination.
[58] Mrs. Bardell now operates a private day
care centre in her home. She admits that she currently takes care of three
children and that on average she has no more than five. She is also aware that
the Ministry of Community and Social Services could check on her if she was
reported. She stated that the children are treated the same now as they were
with Carrousel. There are no changes in the utilization of her car and she has
third party liability insurance. She still has the fire and carbon dioxide detector.
Mrs. Bardell testified that she has no fire extinguisher and that she does not
receive any visits from either the fire or health department.
Analysis
[59] The issue of whether a
person is an employee or an independent contractor recently was considered by
the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz
Industries Canada Inc. Major
J., speaking for the Court, confirmed the application of the four criteria
described in Wiebe Door Services Ltd. v. Minister of National Revenue.
Major J. stated:
47. 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.
[60] In Wiebe Door,
McGuigan J.A. discussed the four tests of control, ownership of tools, chance
of profit or risk and integration and adopted Lord Wright's description
that it is the "combined force of the whole scheme of operations" that one must consider in determining
whether a person is an employee or carrying on her own business; the four
criteria are, of course, important in struggling to arrive at a conclusion. The
whole of the various elements which constitute the relationship between the
parties must be examined.
Control
[61] The respondent argued that according to the
evidence Carrousel controlled Mrs. Bardell's work. The contract presented
to Mrs. Bardell was non-negotiable. Mrs. Bardell had to accept referrals; she
could not refuse a child. Mrs. Bardell was unable to unilaterally discharge
children from her care; she had to provide two weeks notice. Carrousel
exercised supervision, Carrousel had home care visitors that conducted monthly,
quarterly and annual visits, and only quarterly visits are required under the DNA
and its Regulations. These home visitors supervised Mrs. Bardell,
reviewing the activities program and the menu. In addition they ensured that
activities and menus were posted on a board provided by Carrousel.
[62] Respondent's counsel contended that Mrs.
Bardell was not allowed to offer services outside of Carrousel. She could not
accept private children and solicit clients on her own. She stated that factors
such as Mrs. Bardell being required to display Carrousel's advertisement in her
window, conduct monthly fire drills, use attendance registers, make phone calls
in order to receive payment and attending mandatory monthly meetings and
training sessions are all signs of the control Carrousel exercised over Mrs.
Bardell. The respondent further submitted that Carrousel set the rates of pay,
had enrolment schedules and contracted directly with parents, all factors of control
that went well beyond the scope of the DNA.
[63] While it is obvious that Carrousel
exercised a degree of control over Mrs. Bardell I am not satisfied that
the degree of control was so overwhelming that Mrs. Bardell lost any discretion
in deciding how to operate the day care. Many provisions in the contract
between Mrs. Bardell and Carrousel were attempts by Carrousel to ensure the
provisions of the DNA would be complied with on a continuing basis, that
Cambrian maintained its licence and that a standard be maintained by all the
providers who operated under the name of Carrousel. At the end of the day it
was Mrs. Bardell who was responsible for the success or failure of her day
care.
[64] Mrs. Bardell was free to set her own hours
of work. She controlled when the day care would stay open and when it would
close. Mrs. Bardell testified that she made a conscious decision not to work on
weekends because she considered weekends overtime. She determined whether to
attend Carrousel meetings; they were not mandatory.
[65] She also had the option to choose her own
vacation time and while she was on vacation she did not receive payment. Mrs.
Bardell could either close the day care completely or arrange for a backup
provider in the event of her vacation or absence. It was her decision whether
or not she needed a backup provider. She in fact did hire a helper once. She
trained that person, established the rate of pay, paid that person and
terminated that relationship when she no longer needed her.
[66] Mrs. Bardell controlled her day-to-day
duties. She decided how to utilize the premises and materials. She decided what
programs, menus and field trips to implement within the framework provided. She
bought the food for the children. She purchased arts supplies, installed the
fence, smoke and carbon dioxide detectors, and drywall required to bring the
home up to standard.
[67] Mrs. Bardell gave evidence that she felt
she could not reject children that were referred to her by Carrousel. However,
in cross-examination she did admit that the acceptance of children was a good
business decision and a business necessity in order to continue to run a
successful business. Mrs. Bardell was given the provider of the month award due
to her flexibility in accepting children. Yet she testified that it was her
understanding she could not refuse children and that other providers were also
not able to refuse children. I question whether her understanding is correct.
If she were compelled to accept children designated by Carrousel, why would
Carrousel award her for her flexibility in accepting children? In fact she
could reject children but chose not to exercise such control. It was her belief
that she had to take all children referred to her; however, this does not mean
she had to accept everyone.
[68] Although a home visitor would make unannounced
visits, these visits cannot be taken to be akin to the supervision an employer
has over an employee. The monthly visits were implemented to ensure Mrs.
Bardell was complying with the DNA and, also, that Carrousel was
compliant. As long as Mrs. Bardell complied with the various provisions of the DNA
she was able to run her day care the way she saw fit.
[69] Control can be very subjective. A person may control one person in a
way he or she cannot control another. Personality is important. In the appeal
at bar the personality of the actors - Mrs. Bardell and Ms. Fox, for example –
influence the degree of control. A worker with a strong or aggressive
personality may be able to do things that a worker with a passive personality
would hesitate to do, although entitled to do. And where the worker has a
passive personality, the "employer" may take advantage of the
passivity. It may be that the difference between how Mrs. Bardell operated her
day care and Mr. Oliver and his wife operated their day care was due to Mr.
Oliver having a more active and aggressive personality then does Mrs. Bardell.
This is my observation. He seemed to have commanded more respect from Carousel
than did Mrs. Bardell. To some extent Mrs. Bardell perceived a lack of control
or ability to act in a certain way because she feared making the decision or
preferred someone else telling her what to do. Mrs. Bardell
"believed" she could not do certain things that Mr. Oliver did not hesitate
to do. Mrs. Bardell delayed pursuing her right to operate in her own home in
her own way until conditions became intolerable. This passivity, however, does
not necessarily transform a person carrying on a business to an employee.
Ownership of Tools
[70] The respondent argued that Carrousel
provided tools and equipment to Mrs. Bardell. Carrousel provided a fire extinguisher for each provider and
also performed annual maintenance on these extinguishers. Carrousel provided an
extensive toy library and equipment.
[71] Mrs. Bardell provided all tools and
equipment necessary to take care of the children. The principal and necessary
tool, the day care facility, was Mrs. Bardell's home. She did borrow toys
from Carrousel's toy library as well as some equipment; however, she provided
the house, car, activities, and food. She provided a helper in circumstances
were she could not provide day care. Although backup providers had to meet
certain requirements it was she who hired the backup. She trained her, paid her
and terminated the relationship.
Chance of Profit and Risk of Loss
[72] The DNA imposes a
restriction on the maximum number of children on the premises of the day care
at a given time, whether the day care operator is an employee or carries on her
own business. Section 1 of the DNA defines “private‑home day care” as:
Temporary care for reward or compensation of
five children or less who are under ten years of age where such care is
provided in a private residence, other than the home of a parent or guardian of
any such child, for a continuous period not exceeding twenty-four hours;
(“garde d’enfants en résidence privée”)
"Private-home day care
agency" is defined by the DNA as a:
a person who provides private-home day care at
more than one location; (“agence de garde d’enfants en résidence privée”)
The DNA
defines "day nursery" as follows:
a premises that receives more than five children
who are not of common parentage, primarily for the purpose of providing
temporary care, or guidance, or both temporary care and guidance, for a
continuous period not exceeding twenty-four hours, where the children are,
(a) under eighteen years
of age in the case of a day nursery for children with a developmental
disability, and
(b) under ten years of age
in all other cases,
but does not include,
(c) part of a public
school, separate school or private school under the Education Act; (“garderie”)
Section
11.(1) of the DNA provides:
No person shall establish, operate or maintain a
day nursery or a private-home day care agency, as the case may be, except under
the authority of a licence issued by a Director under this Act.
[73] According
to these provisions Mrs. Bardell is limited in her chance of profit even if she
operates outside of Carrousel. Her ability to take in more than five children
would depend on her obtaining a licence and hiring a certain number of
providers depending on the number of children attending the day nursery.
Although she was limited to a maximum of five children on the premises at one time
she was free to choose which and how many children she accepted within the
maximum limit.
[74] The
rates of pay that Carrousel paid to a provider effective
January 1, 2000 are described in the following "Fee for
Services" schedule:
|
CHILDREN UNDER 2 YEARS OLD
|
PROVIDER RATE
|
RATE AT 80%
|
Codes
|
|
Play group: Less
than 6 hours without meal
|
$11.50
|
$9.20
|
1
|
|
Part Day: Under
6 hours in care
|
$20.50
|
$16.40
|
2
|
|
Full Day: 6 to 9
hours in care
|
$23.50
|
$18.80
|
3
|
|
Extended Day: 9
to 13 hours in care
|
$35.50
|
$28.40
|
4
|
|
OVER 2 YEARS OLD
|
|
|
|
|
Play group: Less
than 6 hours without meal
|
$11.50
|
$9.20
|
1
|
|
Part Day: Under
6 hours in care
|
$19.00
|
$15.20
|
5
|
|
Full Day: 6 to 9
hours in care
|
$21.50
|
$17.20
|
6
|
|
Extended Day: 9
to 13 hours in care
|
$31.50
|
$25.20
|
7
|
|
SCHOOL AGE
CHILDREN
|
|
|
|
|
Before school
only
|
$5.00
|
$4.00
|
8
|
|
After school
only
|
$8.00
|
$6.40
|
9
|
|
Before and after
school
|
$11.50
|
$9.20
|
1
|
|
Part Day: Under
6 hours in care
|
$19.00
|
$15.20
|
5
|
|
Full Day: 6 to 9
hours in care
|
$21.50
|
$17.20
|
6
|
|
Extended Day: 9
to 13 hours in care
|
$31.50
|
$25.20
|
7
|
Rates of pay vary depending on the
age of the child and the hours of care at the day care. A provider can maximize
income by exploiting the variances in rates.
[75] The respondent submitted that Mrs. Bardell
did not have a chance of profit or risk of loss. Carrousel set the pay rate;
there was no room to negotiate and no ability to charge a greater amount.
Counsel submitted that controlling one's expenses is not a meaningful way of
calculating profit. She argued that Mrs. Bardell was guaranteed pay even
when the children were absent. Counsel also argued that Mrs. Bardell was
limited to a maximum number of children, even if a backup provider was hired,
and hence was severely limited in her chance of profit.
[76] The Intervener's counsel submitted that
increase in hours of work cannot be perceived to be a chance of profit. She
relied on the following paragraph in While‑Away Security Services Inc.
v. Canada, [2001] T.C.J. No. 252, where the Court stated, at paragraph 47:
... The only chance of profit to the workers
was if they were able to increase the number of their jobs; this is not
inherent to independent contractors. Employees may increase their wages by
working long hours, if work is available.
[77] Mrs. Bardell did have a chance of profit
because she controlled the hours of her work. While it is true that Mrs.
Bardell was paid a set rate per child, her profit was determined by the number
of hours worked, number of children and the age of the children. She also would
have increased her profit by accepting children who were charged a greater fee,
for example. She could select children applying the fee schedule to her maximum
advantage.
[78] Another way that Mrs. Bardell could have
increased her profit was to require parents to provide food and materials such
as diapers and art supplies. Mrs. Bardell was not obligated to purchase these
supplies and tools. Indeed, the contract with the parent provides that the
parent will supply diapers.
[79] Potentially a major risk of loss to Mrs.
Bardell is from the upkeep of both her house and car. She was also liable for
bodily injury to children in her home or in the car. To protect herself from
loss, Mrs. Bardell secured liability insurance.
[80] Justice Desjardins, in Wolf v. Canada,
expanded the
factor of risk of loss to factors beyond financial risk, at paragraph 87:
|
|
In consideration for a higher pay, the appellant, in the case at
bar, took all the risks of the activities he was engaging in. He was not
provided health insurance benefits nor a pension plan by Canadair. He had no
job security, no union protection, no educational courses he could attend, no
hopes for promotion. The profit and risk factors were his.
|
|
[81] Mrs. Bardell was not provided with health
insurance benefits by Carrousel. She had no job security, no union protection
and no hope for promotion.
Integration
[82] The value of the
integration test has been questioned by the Federal Court of Appeal in Precision
Gutters Ltd. v. Canada. Nevertheless, courts have
considered the test when determining the existence of an employer‑employee
relationship. In Wolf, supra, the Court of Appeal held at paragraph 93:
Both
Canadair's work and the appellant's work were integrated in the sense that they
were directed to the same operation and pursued the same goal, namely the
certification of the aircraft. Considering, however, the fact that the
integration factor is to be considered from the perspective of the employee, it
is clear that this integration was an incomplete one. The appellant was at
Canadair to provide a temporary helping hand in a limited field of expertise,
namely his own. In answering the question “whose business is it?” from that
angle, the appellant's business stands independently. Once Canadair's project
was completed, the appellant was, so to speak, ejected from his job. He had to
seek other work in the market place. He could not stay at Canadair unless
another project was under way.
[83] In Canada v. Rouselle et
al.,
Hugessen J. made the following comments on the integration test:
The judge did not mention the factor of
"integration" as such. Clearly in light of the case law cited above,
it was not essential for him to speak of it. However, if he had considered it
is apparent that, from the employees' standpoint, the latter were not in any
way integrated into the employer's business.
Their comings and goings, their hours and
even their weeks of work were not in any way integrated into or coordinated
with the operations of the company paying them. Although their work was done
for the company's business, it was not an integral part of it but purely
incidental to it.
[84] Mrs. Bardell was not integrated into the
appellant's business. She was engaging in services as a person in business on
her own account. The contract she signed described her as self-employed. There
is no evidence that, at the end of the day, contradicts this description of the
relationship.
Contract
[85] Ms. Fox read the contract to Mrs. Bardell
every year on the date of its renewal. Over time Mrs. Bardell has read the
contract herself. Mrs. Bardell was always aware that the contract between her
and Carrousel was not a contract of employment but for her services in the
course of her business.
[86] Justice Nöel, in Wolf,
commented on contractual intent and its significance in an employer-employee or
independent contractor relationship, at paragraph 122:
...
I acknowledge that the manner in which parties choose to describe their
relationship is not usually determinative particularly where the applicable
legal tests point in the other direction. But in a close case such as the
present one, where the relevant factors point in both directions with equal
force, the parties' contractual intent, and in particular their mutual
understanding of the relationship cannot be disregarded.
[87] Mrs. Bardell was not
an employee of Carrousel. She carried on her own business. The "combined
force of the whole force of operating" leads to this conclusion. Whether
or not the day care would be successful would be solely due to the efforts of
Mrs. Bardell, not Carrousel. If she was not as gifted dealing with children as
she obviously is, her day care would have failed once she left Carrousel. When
she did leave Carrousel she was able to continue the day care with many of the
same children she had when she was with Carrousel. The business at Mrs.
Bardell's home was her business.
Conclusion
[88] When I consider the
"combined force of the whole scheme" of the day care operation I
conclude that Mrs. Bardell was carrying on her own business during the periods
in issue. Mrs. Bardell was not engaged in insurable employment under the Act
and was not engaged in pensionable employment under the CPP. The
appeals are allowed
Signed at Ottawa, Canada, this 30th day of August 2004.
Rip J.
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