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Citation: 2003TCC816
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Date: 20031124
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Docket: 2002-2668(EI)
2003-826(CPP)
2002-4299(EI)
2003-825(CPP)
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BETWEEN:
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1392644 ONTARIO INC., O/A CONNOR HOMES,
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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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____________________________________________________________________
Counsel
for the Appellant: William Innes and Brendan Bissell
Counsel
for the Respondent: Richard Gobeil
____________________________________________________________________
REASONS FOR JUDGMENT
(Delivered
orally from the Bench on
September
4, 2003, at Belleville, Ontario)
McArthur J.
[1] This is the decision in the appeals of
1392644 Ontario Inc., carrying on business under the name of Connor Homes.
These appeals are from determinations made by the Minister of National Revenue
under the Employment Insurance Act and the Canada Pension Plan
that Janet Gawley and Samantha Heyens were employed by the Appellant in
insurable and pensionable employment during the periods May 10, 2000 to January
18, 2001 and March 7, 2001 to July 17, 2001, respectively. Upon consent of the
parties, it is ordered that Exhibit A-1, document briefs, be held under seal.
It contains very personal and sensitive information about the children clients
of Connor Homes.
[2] Connor Homes operates or manages
approximately 40 residential homes for children who have serious behavioural
and developmental disorders and are wards of local Children's Aid Societies.
The issue in these appeals is whether Janet and Samantha were employees of the
Appellant or whether they were independent contractors or, as worded in the Act,
were their relationships with the Appellant of service or for service. The
Appellant, of course, submits that they were independent contractors. Samantha
did not attend the hearing, the Respondent being unable to locate her. For
reasons provided later, the appeals dealing with Samantha are allowed.
[3] Each case turns on its own facts. I will
now deal with Janet's situation. The Appellant presented two witnesses, Paul
Douglas Robichaud and Robert John Connor. Mr. Robichaud was, during the 2000
and 2001 relevant period, an area manager for approximately six homes and Mr.
Connor was the owner and controlling mind of Connor Homes. They gave a synopsis
of how Connor Homes operated with respect to workers such as Janet and
Samantha. The following background, for the most part, is not in dispute.
[4] The Appellant is paid a per diem for each
child in its care. The plans of care are established and continually modified
by committees comprised of social workers representing the appropriate
Children's Aid Societies, a representative of the Appellant, house parents, the
child and, depending on the circumstances of the individual child, natural
parents and probation officers.
[5] Some children receive special one-on-one
care which must be approved by the appropriate Children's Aid Societies of the
Province of Ontario. The Appellant receives additional fees for providing such
one-on-one programs. In accordance with the provision of plans of care for these
children, the Appellant is required to provide a variety of different services
which include psychological assessment, psychological therapy, life skills,
one-on-one programs, if appropriate, relief services for house parents and
transportation services. One-on-one programs, relief services, and
transportation services were to be provided by child care workers. Janet and
Samantha were child care workers.
[6] The child care workers required very few
tools or other equipment. They were responsible for transporting children when
required and were reimbursed by the Appellant for their expenses. To some
extent, they selected their own hours and could work as much or as little as
they wished. There is no doubt that if they were unavailable, they would not be
called upon. They did not have to provide the Appellant with a reason for not
taking assignments or going on vacation. They could pick up assignments at
meetings with the Appellant. There was no evidence of their having accepted
assignments from other organizations while working for the Appellant. 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 one who was reached and agreed to take the assignment. In some cases,
child care workers were contacted by house parents.
[7] Janet applied originally to the Appellant
to be a foster parent. This is a long process and in the interim she became a
child care worker while her application was proceeding. She worked in this
capacity for some eight months. When the Appellant became dissatisfied with her
performance, she was dropped from the list of child care workers. In effect,
she was fired. Her application as a foster parent did not proceed further. The
Appellant misplaced Janet's file and no signed contract of employment with her
was produced by the Appellant. Janet denied signing one, although she stated
she signed many papers upon being retained as a child care worker. The
Appellant believes Janet signed a contract similar to those contained in
Exhibit A-1, Tabs 2 and 11. The contract at Tab 11 is purportedly signed by
Samantha.
[8] While working, Janet and all other child
care workers had to wear a T-shirt imprinted with the logo of Connor Homes. They
purchased these shirts from the Appellant for approximately $7. Part of Janet's
work included inputting specific data in the computer database.
[9] Janet is 54 years old. She has completed
grade 10, attended a college for one and one-half years, followed by ten months
at Maxwell College. She worked as a secretary and as a child care worker in a
group home not related to Connor Homes, before working for Connor Homes where
she was paid $10 per hour, or $100 for a 24-hour overnight period. She referred
to Mrs. Connor as her supervisor. When she had a work-related problem, she
called Mrs. Connor and that problem was usually taken over by Connor Homes.
[10] I find that the Appellant ran what can be
described as a tight ship. It had to do so in order to satisfy the strict
criteria imposed by the Province of Ontario legislation. Some of the Appellant
controls over Janet included: (i) that she was subject to the provisions of a
contract as contained in Exhibit A-1, Tab 2; (ii) invoices on Connor Homes
logo paper had to be completed and they required several pages of detailed
information; (iii) while working, she had to wear a T‑shirt with the
Connor Homes logo; (iv) she had to satisfy the Appellant that she had read an
extensive manual and understood the contents and agreed to follow its
instructions (Exhibit A-1, Tab 27); (v) if there was a child problem she left
it with Connor Homes; (vi) she could have someone replace her but that person
must have been an approved person on Connor Homes' list; and (vii) she thought
she was an employee and she knows the difference between being an employee and
being an independent contractor.
[11] In a thorough and well-researched argument,
the Appellant referred to a number of cases and considerations considered to
support the conclusion that Janet was an independent contractor. These included
(i) lack of supervision; (ii) the mislaid contract referred to Janet as
independent contractor; (iii) she was free to take other child care work from
competitors; (iv) her hours were flexible; and (v) counsel emphasized that
the totality of the evidence must be scrutinized.
[12] It is clear from the case law that there
are no hard and fast criteria. It does not serve a purpose to review the many
cases provided. As stated, each case turns on its own facts. Some facts support
the Appellant and others the Respondent. MacGuigan J. of the Federal Court of
Appeal set out a four-in-one test in Wiebe Door Services Ltd. v. M.N.R.,
87 DTC 5025. He stated that no single test dominates. I believe the case 671121
Ontario Limited v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983 is now
the most influential case on the question of the employee-independent
contractor conundrum. The Federal Court of Appeal referred to it in its recent
decision in Wolf v. Her Majesty the Queen, 2002 DTC 6853. After discussing the four-factor test and
the integration test, the Supreme Court of Canada concluded that the key test
is whose business is it. Desjardins J. quoted Major J. in Sagaz at
paragraph 60 on pages 6862-6863 of his reasons:
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 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.
[13] The factors mentioned include control,
ownership of tools, chance of profit and risk of loss, and integration.
Integration was never a very useful factor. In applying the four-in-one test
what do we have? The Appellant provided a book of documents which included 27
tabs. I will attempt to review some of these very briefly. Tab 2 includes a
checklist for a child care worker, a draft of the contract referred to earlier,
an application form, and a staff volunteer's oath of confidentiality. Tab 4
contains, on Connor Homes' letterhead, a timesheet for the month of May 2000
prepared and signed by Janet and is a detailed document of what she did, where
she did it, when she did it, and for whom she did it, and some descriptions of
the activity. I find the material in Tabs 2 and 4 favour the position that she
is an employee. There were several timesheets included. Tab 27 is a 35 to
40-page manual that had to be read and understood by the child care workers
before commencing work for the Appellant.
[14] I have no doubt that Janet's job was
structured by Connor Homes who was obligated to comply with legislation and
regulations. While the manual may follow provincial regulations, this does not
derogate from its being a serious source of control by Connor Homes over Janet
in her carrying out her duties. Counsel for the Appellant referred to the legal
relationship between arm's length parties commencing at page 12 of the Memorandum
of Fact and Law. There are three decisions referred to, Sara Consulting and
Promotions Inc. v. M.N.R., 2001 CarswellNat 2595, TSS-Technical Service
Solutions Inc. v. M.N.R., 2002 CarswellNat 486 and Wolf v. The Queen,
2000 DTC 2595. I find that these decisions do not assist the Appellant in the
present situation. Even if I accept that Janet signed a contract as contained
in Tabs 2 and 11 of Exhibit A-1, this does not assist the Appellant's position.
I agree with the following comments of Judge Bell in Sara Consulting:
… in the absence of clear and credible
evidence that the description of a relationship is other than as agreed between
arm's length parties, the description agreed upon by those parties must stand.
There is no such clear and credible evidence in this case.
In the present case, we
do have clear and credible evidence that the description of the workers as
"independent contractors" was not reality. It makes little difference
whether Janet signed the contract. She considered herself an employee and when asked to work, she did as
she was told, although she clearly stated that she felt she had the freedom to
refuse work. Although Connor Homes did not directly supervise her work, she had
specific rules to follow such as those set out in the manual and timesheets.
When a serious problem arose, such as a child becoming uncontrollable or going
AWOL, she called Connor Homes and it took over from her. Her autonomy was not
inconsistent with an employment relationship enjoyed by a skilled employee. I have no doubt that the
Appellant controlled her method of performing her duties during the working
day.
[15] Briefly dealing with the other tests, I
find Janet was paid an hourly rate and a 24-hour rate set by Connor Homes. She
did not set the rates. She was paid a set amount for using her car. She had no
say in her rate of pay. She was only paid for the hours she worked. She
testified that she never refused when called to work.
[16] With respect to tools, she provided her own
car to transport the children to various appointments or activities, but she
was paid for the use of her car. This is analogous to her being provided a
leased car. She did use her own computer from time to time.
[17] There is no doubt in answer to the question
of whose business was it, it was not her business. Her overall relationship
with Connor Homes has the indicia of employment. The independence that she had
is greatly overshadowed by the control exercised by Connor Homes. The appeals
with respect to Janet are dismissed.
[18] I now turn briefly to Samantha's situation.
She did not give evidence. The Appellant, through Mr. Robichaud and Mr. Connor,
testified to the effect that she was autonomous, carried out her work when and
how she decided at her sole discretion. She was skilled and needed no
direction. She was free to refuse work or work for third parties. Although many
of the assumptions of fact relied on by the Minister of National Revenue set
out in paragraph 8 of the Reply to the Notice of Appeal were admitted as
accurate by the Appellant several were demolished.
[19] The assumptions of
fact relied on by the Minister with respect to Samantha as taken paragraph 8 of
the Reply to the Notice of Appeal are as follows:
(a) The
Appellant is a business involved in the care and treatment of disturbed
children (the "children") with various Children's Aid Society
agencies throughout the Province of Ontario;
(b) The
Appellant owns and operates group home and foster home residences;
(c) The
Worker was hired by the Appellant to provide one-on-one supervision of
children, to provide observation on behaviour of children, to provide
transportation of children, to write reports and to liase with supervisors and
agencies;
(d) The
Worker's duties were performed in foster homes, group homes, and other
locations;
(e) The
Worker's duties were performed under a written agreement which outlined issues
such as Duties, Code of Conduct and Confidential Information;
(f) The
worker's hours of work were determined by the Appellant;
(g) The
Worker's hours of work were recorded on a timesheet which were required to be
signed by the house parent involved;
(h) The
Worker was paid $10.00 per hour by the Appellant;
(i) The
Worker's rate of pay was determined by the Appellant;
(j) The
Worker was paid a per mileage rate by the Appellant for the transportation of
the children;
(k) The
Appellant provided the Worker with a computer;
(l) The
Worker was required to complete reports for the Appellant.
[20] Reviewing these assumptions, I find that:
(a) Is accurate but it
does not establish one position over the other and is irrelevant to the issue;
(b) The same as 8(a);
(c) This may be accurate;
(d) I find is accurate but establishes
nothing for our purposes;
(e) There was no
evidence from Samantha to this effect, although the Appellant's evidence was
that she was a skilled worker;
(f) The opposite was
asserted by the Appellant and not contradicted by the Respondent;
(g), (h), (i), (j), (k) and
(l) These assumptions may be accurate although the worker was not present to
confirm. I do not accept the assumptions without the evidence of the worker.
[21] The Appellant has sufficiently disproved
the Minister's assumptions of fact to reverse the onus. Without the evidence of
Samantha, the Minister was unable to prove the assumptions. It would be a leap
of faith that I am not prepared to take to accept that Samantha's position is
the same as Janet's. For the most part each case under paragraph 5(1)(a)
of the Employment Insurance Act depends on its own facts. Samantha may
have had less supervision than Janet. Other circumstances may have been
different.
[22] In conclusion, the
appeals with respect to Janet are dismissed and the appeals with respect to Samantha are allowed.
Signed at Ottawa, Canada, this 24th day of November,
2003
J.T.C.C.
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