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Citation: 2004TCC616
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Date: 20040909
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Docket: 2002-3923(EI)
2002-3924(CPP)
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BETWEEN:
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OSHAWA COIFFURES LTD. o/a L'ATTITUDES
INTERNATIONAL IMAGE CENTERS,
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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
Woods J.
[1] These are appeals by Oshawa
Coiffures Ltd. from a decision that Ms. Deborah Walker was
engaged in insurable and pensionable employment during the period
January 1, 1998 to September 1, 2001.
[2] There are three questions to be
determined:
(a) Was Ms. Walker employed by
Oshawa Coiffures within the common law meaning of
"employment"? The answer to this question will be
determinative of the appeal under the Canada Pension Plan
but not necessarily the appeal under the Employment Insurance
Act.
(b) Does paragraph 6(d) of the
Employment Insurance Regulations apply to nail technicians
working in hair salons?
(c) Should interest on the amount owing be
stayed?
[3] The notice of appeal also raises a
fourth issue, whether the appeal under the Canada Pension
Plan was filed in time. The Crown did not refer to this issue
in its reply and I assume that it is no longer in dispute.
Employment under common law
[4] Oshawa Coiffures operates a hair
salon under the name L'Attitudes International Image from a
shopping mall in Oshawa, Ontario. Ms. Walker worked as
a nail technician in the salon from 1998 until 2001. For a short
period in 1998, she was engaged as an employee and this period is
not in dispute. There is no evidence as to the exact dates that
are relevant for this appeal; I have assumed that the period in
dispute is from July 1, 1998 to September 1, 2001.
[5] Ms. Walker is an experienced nail
technician, having worked in the business for over 20
years. At one point, she operated her own shop and
accordingly is generally familiar with how to operate her own
business.
[6] When Ms. Walker was originally was
hired by Oshawa Coiffures as an employee, she was paid 45 percent
of her billings and her supplies were largely provided by Oshawa
Coiffures. After a couple of months, the arrangement was changed
at Ms. Walker's request and she signed an acknowledgement
that she was self-employed and would be responsible for premiums
for Canada Pension Plan and employment insurance. Under the new
arrangement, Ms. Walker was entitled to an increased portion of
her billings, 70 percent, but was responsible for her own nail
supplies and would pay Oshawa Coiffures for towel service. Oshawa
Coiffures continued to supply other items, such as makeup and
waxing materials. Although the evidence on this point was not
clear, it appears that Oshawa Coiffures continued to supply items
for services provided by other workers in addition to Ms. Walker.
Under the new arrangement, Ms. Walker could sell her own products
but she chose not to.
[7] There are no bright line tests for
determining whether a person is an employee or independent
contractor and each case is determined on its own particular
facts. The general principles to be applied are described by
Major J. in the leading case, Sagaz Industries Canada Inc. v.
671122 Ontario Limited, [2001] 2 S.C.R. 983:
[47] ... 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.
[48] 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.
[8] The essential issue is whether Ms.
Walker was carrying on business on her own account. Ms. Walker
testified that she thought that she was to be self-employed and
expected that she would be able to carry on her own business and
make important business decisions such as pricing and hours of
work. She stated, however, that the corporation did not respect
the arrangement that it had agreed to and essentially treated her
like an employee, dictating her hours of work and the pricing for
her services.
[9] The owner of Oshawa Coiffures,
Antonio Conforti, testified on behalf of the corporation. In a
great many respects, his testimony conflicted with Ms.
Walker's. He stated that Ms. Walker was free to come and go
as she chose and determine the prices for her services without
interference by the corporation. The following are examples
of where the testimony of the two witnesses differed:
(a) Mr. Conforti indicated that
Ms. Walker wanted to change the employment relationship so that
she could determine her own hours of work. Ms. Walker testified
that she wanted the change in order to increase her percentage of
billings.
(b) Mr. Conforti indicated in his
examination in chief that Ms. Walker brought her own manicure
table with her to the job and that the shop did not have a nail
technician before or after her. His answer was modified
somewhat on cross-examination when he stated that he
"didn't recall" a nail technician at the salon
before Ms. Walker. Ms. Walker indicated that there was a
manicurist working at the salon before her and that the manicure
table was already there.
(c) Mr. Conforti testified that Ms.
Walker only worked when she had clients and otherwise did not
have to be at the shop. Ms. Walker indicated that she had to work
regular shifts, six days a week, and that she always had to be
available for "walk-ins."
(d) Mr. Conforti testified that Ms.
Walker determined the prices for her services. On
cross-examination, he did not have a clear recollection of
whether the nail services were advertised and when or how the
signage was prepared. Ms. Walker indicated that the prices for
nail services were previously advertised in the window because
there had been a manicurist there. She stated that one of the
reasons she wanted to work at this salon was that she thought
that the prices were good. She also related several stories where
she tried to give discounts or free services for promotional
purposes and was told by the manager not to do this. On one
occasion her pay was docked by an amount equal to the amount of
revenue lost through promotional work. This story was supported
by documentary evidence, introduced as Exhibit R-2.
(e) Mr. Conforti testified that
Ms. Walker did not have to attend staff meetings and that she did
not attend any promotional shows. Ms. Walker disagreed with
both these statements and gave details of a promotional show that
she had volunteered for.
(f) Mr. Conforti indicated that
Ms. Walker could take vacation without notifying the manager and
stated that she had in fact done this. Ms. Walker stated
that she did not take any vacation while working at the salon but
that she did take time off on the occasion of a death in the
family. She also indicated that the manager rebuked her whenever
she left the shop, even for a coffee.
[10] In general, to the extent that there
were differences in the testimony of the two witnesses, I prefer
that of Ms. Walker. I found her detailed accounts about the
relationship credible. On the other hand, I had difficulty with
much of Mr. Conforti's testimony concerning the engagement of Ms.
Walker. His testimony generally consisted of perfunctory answers
and he was not able to explain satisfactorily certain important
facts, such as how the nail services were advertised. It may have
been that Mr. Conforti had very little detailed knowledge of the
relationship. Ms. Walker did not report to him and he visited the
store only for oversight purposes. Generally, I find that Mr.
Conforti's description of the relationship not credible to the
extent that it differed with Ms. Walker's.
[11] I have concluded that Oshawa Coiffures
has not satisfied the burden of establishing that Ms. Walker was
engaged as an independent contractor. In my opinion, the control
exercised by Oshawa Coiffures, which extended to most aspects of
the relationship other than how to perform manicures and
pedicures, is the most important factor in this case and
outweighs the fact that Ms. Walker purchased many of her own
supplies and could sell her own products. Although Oshawa
Coiffures agreed to enter into an independent contractor
relationship with Ms. Walker, it failed to provide credible
evidence to show that it respected a key element of that
relationship.
Regulation 6(d)
[12] In light of the finding that Ms. Walker
was engaged as an employee of Oshawa Coiffures at common law, it
is not necessary to consider an alternative argument that Ms.
Walker's employment is deemed to be insurable for purposes of
the Employment Insurance Act by reason of paragraph
6(d) of the Regulations.
[13] Counsel made written submissions on
this issue at my request because this issue had not been raised
in the pleadings. I was informed that this alternative argument
was not raised in the Crown's reply because it was believed that
it was improper to raise alternative arguments. This is not
correct but it does explain why the argument was not raised by
the Crown.
[14] In deference to these submissions, I
would make a brief comment about this issue. Paragraph
6(d) of the Regulations deems a person to have
insurable employment if the person is employed at a hairdressing
or barbering establishment, provides any of the services normally
provided by such an establishment, and is not the owner or
operator of the establishment. The issue is whether the services
of a nail technician are "normally provided" by a
hairdressing establishment. In their written submissions, each
counsel reported the results of a search of telephone listings to
determine how often nail services are provided in hair salons.
Not surprisingly, the results by each were quite different, with
the appellant's search suggesting that it was unusual for hair
salons to provide nail services and the Crown's search leading to
the opposite conclusion.
[15] This issue deserves more consideration
than is possible in written submissions. However, based on the
limited information provided, I would be reluctant to find that
nail technicians were subject to the regulation for the following
reasons:
(a) The regulation refers to
"hairdressing establishment," not the broader term
"beauty salon." If the regulation were intended to apply to
persons who provide aesthetic services, one might expect that the
description of the establishment in the regulation would be
broader.
(b) Aesthetic services such as manicures
are often provided in establishments that do not cut hair, such
as nail salons and spas. If nail technicians were intended to be
included in by the regulation, it is likely that the regulation
would have referred to these other establishments as well.
Stay of interest
[16] Oshawa Coiffures submits that an order
should be granted staying the accrual of interest while the
appeals are outstanding. The only authority cited for this was
the general power of a superior court to control its own
process.
[17] I cannot agree with this submission.
The general power of a superior court to control its own process
generally does not extend to a statutory imposition of interest.
It is well established that a statutory court such as the Tax
Court has no power to override a statutory requirement to pay
interest: Roussel v. M.N.R., 2000 D.T.C. 6608
(F.C.A.).
[18] For these reasons, the appeals are
dismissed.
Signed at Toronto, Ontario this 9th day of September,
2004.
J.M. Woods J.
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