Date: 20010608
Dockets: 2000-4700-EI,
2000-4701-CPP
BETWEEN:
THE LEARNING LOFT LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Reasonsfor
Judgment
Rip, J.T.C.C.
[1]
The issue in these appeals under the provisions of the Canada
Pension Plan ("CPP") and the Employment
Insurance Act ("Act") is whether a tutor,
Rachelle Cronk ("Worker"), was engaged by the
appellant, The Learning Loft Ltd., as an independent contractor
or an employee of the appellant during the period from
July 5, 1999 to January 5, 2000.
[2]
The shares of the appellant's corporation are owned by Cindy
Jenner who also directs the business activities of the appellant.
The Learning Loft arranges tutoring services for students with
special needs in the London, Ontario area.
[3]
When Ms. Jenner first acquired ownership of The Learning Loft
most, if not all, tutoring took place in the facilities rented by
the appellant. The appellant accepts all students but is equipped
to teach those with special needs, such as students with
attention deficit disorder and learning disabilities. The
Learning Loft engages highly qualified teachers experienced in
dealing with such students. The tutors are certified and take
continuing education courses.
[4]
The appellant's normal hours of operation are from 9:00
a.m. to 3:00 p.m. Some teachers serve clients during the day but
most tutoring is done after school, from 3:00 p.m. to 8:00 p.m.,
Monday to Thursday.
[5]
At the beginning of the period in question the students were
charged $40.00 per hour. As of March 1, 2000, the hourly rate was
reduced to $38.00. The reduction was the result of competition.
The hourly fee is shared equally by the tutor and the
appellant.
[6]
There are no written contracts with the parents of the students.
Tutors (and the Worker) teach and collect the fees from the
parents and remit it to the appellant. Ms. Jenner said that it is
convenient for the tutor to collect the fees because she or he is
in touch with the parent. If the parent does not pay, the tutor
is not paid by the appellant. If a student does not attend a
lesson the parent is billed for a full lesson. The tutor invoices
the appellant in advance (on a form prepared by the appellant)
detailing the prospective dates and number of lessons to be
taught. Billing is on a four-week cycle. The appellant advises
the parent to write the dates of the lessons the payment
represents on the cheque; this helps Ms. Jenner compare the
tutor's invoice to the parent's payment. A tutor may
refuse to teach if the parent has not paid a bill. Usually a
parent has paid the invoice by the student's second lesson
in the cycle. Ms. Jenner recalled that a teacher left the
appellant because she did not get paid because the parent did not
pay the appellant.
[7]
The income of a tutor depends solely on the hours the tutor
teaches. Usually tutors work from three to 24 hours a week. A
prospective tutor will advise the appellant of when she or he is
available to teach and the appellant will try to match these
hours to those preferred by the student. Tutors chose the hours
they wish to work and, subject to arranging another tutor to
cover for her or his students, a tutor may take vacations at her
or his discretion. However, only one tutor at a time takes
holidays. The replacement tutor earns the fee for hours she or he
teaches; no portion goes to the vacationing tutor. Generally,
about seven tutors work at The Learning Loft at any one time.
[8]
The appellant does not guarantee any tutor a minimum number of
hours of work. A tutor may work elsewhere and most have positions
with local school boards. Some tutors operate their own tutoring
business and charge different rates.
[9]
The tutor meets the prospective student and the parents before
she or he commits to teach. The tutor is free to refuse to teach
the prospective student. If the tutor accepts, the tutor
evaluates the student's needs and suggests the duration of
instruction. Compatibility between teacher and student is
important. During the course of study the relationship is between
the student (and parents) and the tutor. The appellant does not
supervise the tutor. If a parent does not like the way a tutor is
teaching, the parent will complain to the tutor or the appellant
and, if requested by the parent, the tutor's services with
the particular student will be terminated. This applied to the
Worker as well.
[10] Ms.
Jenner denies the students are clients of the appellant. She
testified that a tutor "takes a client on [her] own"
if The Learning Loft cannot accommodate the client and, over the
years, six teachers have opened their own businesses with the
appellant's purported clients.
[11] Ms.
Jenner explained that she provides all the appellant's
tutors with keys to the appellant's office. Tutors are
assigned space in the office for the times they are scheduled to
tutor. If a tutor wishes, he or she may teach on a Saturday or
any other time. The appellant, Ms. Jenner insisted, does not
control the hours of work.
[12] A new
trend in tutoring, Ms. Jenner said, is home tutoring. However,
some tutors prefer working at the appellant's office where
the distractions are absent. Whether to teach at the
student's home or not is the tutor's decision. The
request for home tutoring is from the parents. The Learning Loft
pays no mileage allowance to the tutor for travel between a
student's residence and its offices or between the
tutor's and student's residences.
[13] The
appellant has no regular meetings with the tutors. Workshops had
been held in the past but were stopped because of conflict in
schedules of the tutors. The appellant does not review the
performance of the tutors; whether a tutor is performing well is
determined by the reaction of the parents.
[14] Ms.
Jenner is in charge of the appellant's management, finances
and marketing. When she works at the appellant's office she
also answers the telephone. Another tutor answers the telephone
when Ms. Jenner is absent from the office.
[15] The
appellant supplies some equipment and tools; the desk and chairs,
for example, when the tutoring takes place at its offices. Tutors
sometimes bring compact discs and games to their lessons. The
Worker provided some pencils and paper and purchased some
supplies for which The Learning Loft did not reimburse her. On
some occasions, the appellant does reimburse expenses of the
tutor, usually for supplies required by the appellant. The Worker
used her own blank paper although "once in a while"
the appellant would provide the paper. In March 1999 the Worker
purchased a book for about $20.00 and was not reimbursed.
[16] The
Worker was engaged by the appellant in 1999. She was an exception
to the rule that tutors are certified. The appellant had a
waiting list for tutors in mathematics and the Worker had
experience teaching mathematics. The Worker taught one child in
particular. The child had help from The Learning Loft when he was
in elementary school. He returned as a high school student
requiring help in mathematics and French. Ms. Cronk agreed to
"take on" this student. The student did not have
"special needs". Ms. Cronk worked elsewhere as well
and she tried to schedule her time with the student around her
other work. She was to teach the student for two hours a
week.
[17] Ms. Cronk
could not fulfill her commitments to the student and asked if
Sheryl Cronk could help out during July and August 1999. Since
Sheryl Cronk was qualified, she taught the student, but only
after she and Rachelle Cronk together reviewed the
student's program. As far as Ms. Jenner is concerned
"Sheryl didn't work for me ... she was not a
teacher at The Learning Loft ...". In fact, Ms. Jenner
declared, she did not know Sheryl's work nor her
qualifications. The Learning Loft, she testified, did not require
the tutor to perform the services personally. In fact, however,
Sheryl Cronk was the first person to replace a tutor who herself
was not a tutor. Eventually, the Worker returned to teach this
student.
[18] The
Worker realized that both she and the student, although they
lived one block from each other, spent time "driving across
town" to the appellant's office for lessons. They
both agreed to save time and have the lessons at her apartment or
at his home.
[19] Ms.
Jenner advised that like other tutors, the Worker gave
Ms. Jenner times when she was available for work. She
"took extra jobs" and had to make sure she had no
conflict. Ms. Cronk worked with the student at hours
mutually convenient to them. She also taught on Saturdays.
[20] It was
rare that Ms. Cronk saw Ms. Jenner once a student was assigned to
her; they would meet only when "passing cheques and
invoices".
[21] Ms. Cronk
has a degree in psychology. She also studied engineering for one
year. She tutored students at Fanshawe College, a community
college in London, in mathematics and physics and was paid by the
College. The hourly fee paid to her by Fanshawe College was
greater than the fee paid by the students. The College apparently
considered her to be an employee.
[22] At a
given time, Ms. Cronk realized she was busy and refused to take
on extra students. From September 1999 to December 1999 she was
working full-time as a photographer. However, she still
continued tutoring at Fanshawe College and later commenced her
own tutoring business.
Analysis
[23] The
Worker was an independent contractor during the period in issue.
A person, like the Worker, may be both an employee of Fanshawe
College and an independent contractor with the appellant. In the
case of the College, the students were students of the College
and the College subsidized the costs of the tutoring. In the case
of the appellant, there was no restriction that the student
attend any particular school, the costs of their tuition was not
subsidized and the relationship, to the greatest extent, was
between the tutor and the student.
[24] The
appellant, as far as the evidence reveals and common sense
dictates got the student and Worker together and once their
relationship was established moved out of the way. The appellant
exacted a charge from the tutor for providing the service. But it
was the tutor who determined (with the student) who would be
taught, what would be taught, how the lesson would be taught,
when the lesson would be taught and where the lesson would be
taught. These were not the appellant's decisions. There was
no master-servant relationship between the Worker and the
appellant. The appellant did not exercise any meaningful control
over the Worker, nor did it wish to exercise such control. The
Worker could always teach students for her own account without
the intervention of the appellant.
[25] If the
Worker wished to use supplies, which the appellant had no use
for, the cost of these supplies was that of the Worker. If the
Worker wanted to reduce her expenses, for example, travel costs,
she could teach at her home. If a parent of a child did not pay
and the Worker insisted on continuing to tutor the child, the
Worker risked loss since if the parent did not pay, the Worker
was not paid.
[26] The
four-in-one test set out in the reasons for judgment of the
Federal Court of Appeal in Wiebe Door Services Ltd. v.
M.N.R.[1]
requires a trial judge to search for the total relationship of
the parties. The business of the appellant is to get students
requiring help and tutors together, to establish and promote a
relationship between a tutor and a pupil. The appellant's
business is not to teach the pupil; that is the business of the
tutor.
[27]
Accordingly, the appeals are allowed. The Worker was not an
employee of the appellant under a contract of service during the
period July 5, 1999 to January 5, 2000. Therefore her
employment was not insurable employment under the provisions of
paragraph 5(1)(a) of the Employment Insurance Act
and was not pensionable employment under the provisions of
paragraph 6(1)(a) of the Canada Pension Plan.
Signed at Ottawa, Canada, this 8th day of June
2001.
"Gerald J. Rip"
J.T.C.C.
COURT FILE
NO.:
2000-4700(EI)
2000-4701(CPP)
STYLE OF
CAUSE:
The Learning Loft Ltd. and
The Minister of National Revenue
PLACE OF
HEARING:
London, Ontario
DATE OF
HEARING:
April 26, 2001
REASONS FOR JUDGMENT BY: The
Honourable Judge G.J. Rip
DATE OF
JUDGMENT:
June 8, 2001
APPEARANCES:
Agent for the
Appellant:
Jeff Jenner
Counsel for the
Respondent:
Daniel Bourgeois
COUNSEL OF RECORD:
Counsel for the Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-4700(EI)
BETWEEN:
THE LEARNING LOFT LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal
of The Learning Loft Ltd., (2000-4701(CPP)) on
April 26, 2001, at London, Ontario, by
the Honourable Judge Gerald J. Rip
Appearances
Agent for the
Appellant:
Jeff Jenner
Counsel for the
Respondent:
Daniel Bourgeois
JUDGMENT
The
appeal pursuant to subsection 103(1) of the Employment
Insurance Act during the period from July 5, 1999 to January
5, 2000 is allowed and the decision of the Minister of National
Revenue, on the appeal made to him under section 91 of that
Act, is vacated.
Signed at Ottawa, Canada, this 8th day of June
2001.
J.T.C.C.
Email this Content