N.B. Crimestoppers Inc. v. M.N.R., docket 97-1983-UI

Date: 20000221

Dockets: 97-1983-UI; 97-208-CPP

BETWEEN:

N.B. CRIMESTOPPERS INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

CAIN, D.J.T.C.C.

[1] This is an appeal by N.B. Crimestoppers Inc., hereinafter referred to as the "Appellant", from a determination of the Minister of National Revenue, hereinafter called "Respondent", dated August 21, 1997, that one Josée Larocque, hereinafter referred to as the "Worker", was performing her services with and for the Appellant under a genuine contract of service during the period October 1, 1995 to October 1, 1996, hereinafter referred to as the "period in question" and the employment was not excepted or excluded under the Unemployment Insurance Act, hereinafter referred to as the "UI Act", the Employment Insurance Act, hereinafter referred to as the "EI Act" or the Canada Pension Plan, hereinafter referred to as the "C.P. Plan".

[2] The Respondent based his determination upon the following assumptions set out in the Reply to the Notice of Appeal:

"(a) the Appellant was a corporation duly incorporated under the laws of the Province of New Brunswick;

(b) the Worker was engaged by the Appellant to perform secretarial duties;

(c) the Worker's hours of work were scheduled by an agent of the Appellant;

(d) the Worker's duties were dictated by an agent of the Appellant;

(e) the Worker was paid an hourly rate of pay by the City of Fredericton on behalf of the Appellant;

(f) the Worker was paid for statutory holidays;

(g) the Worker was paid vacation pay;

(h) the Worker was supervised by an agent of the Appellant;

(i) the Worker required permission from the Appellant's agent in order to take time off from her responsibilities;

(j) the Worker was not free to substitute her personal services;

(k) the Worker did not supply any equipment nor did she pay any expenses relating to the performance of her duties;

(l) the Worker was not subject to a risk of loss nor did she have a chance to profit from services to the Appellant;

(m) the Worker was not an employee of the R.C.M.P. or the Provincial Police Coordinator;

(n) the Worker was under a contract of service with the Appellant during the period in question;"

FACTS

[3] The Appellant was incorporated in New Brunswick in or about 1985. It was a volunteer organization created to assist in the gathering of information for dissemination to police forces throughout the Province in respect to unsolved crimes.

[4] It is composed of chapters throughout the Province of New Brunswick and governed by a Board of Directors composed of two representative of each chapter. The Association is headed by a President who is presently Mr. Ronald Godin, the only witness called during the appeal.

[5] The role of the Appellant was to advertise in various media that evidence was being sought by police in respect to specific unsolved crimes. Cash payments were made to interested citizens who supplied the information anonymously. These payments were financed by grants from the New Brunswick Police Chief's Association, by funds raised by local chapters and from contributions received from service clubs.

[6] At the outset the Appellant got the co-operation of the R.C.M.P. and the Police Force of the City of Fredericton who agreed to provide at their cost all the personnel needed to operate the program. The R.C.M.P. provided an office in its headquarters in Fredericton, one of their number to be police coordinator and police constables from the Fredericton Police Force manned the phones. A provincial telephone company provided the phone at no cost for installation or service. The Appellant had no paid employees.

[7] In 1991 because of the increase in the number of calls and that no other police personnel were available to service the program, the Appellant approached the Department of the Solicitor General of the Province of New Brunswick seeking a solution. The Department agreed to fund the employment of two civilian personnel to handle the phone lines.

[8] The Department of the Solicitor General of New Brunswick appointed the City of Fredericton its agent to administer the hiring and to pay the employees and grants were made to the City for this purpose. Over the next five years employees were hired by the City of Fredericton with the input of the R.C.M.P. police coordinator and paid by the City. The Appellant had no input in respect to the hiring. No premiums were paid or deductions made under the UI Act, the EI Act or the C.P. Plan by the City of Fredericton.

[9] In 1996 the Worker, who had been employed for a year was terminated. The police coordinator informed the Appellant of the decision with the Appellant who agreed that there was good reason and just cause for the termination.

[10] On her termination the Worker made application for benefits. The Department of Human Resources Development advised the Appellant that the Worker was its employee and that it was responsible for paying premiums and making deductions for her and all other employees.

[11] The Appellant requested the Respondent to determine the insurability and pensionability for unemployment and employment insurance and C.P. Plan purposes of the Worker's employment for the period in question. The Respondent confirmed the Department's decision and the Appellant appealed to this Court.

[12] At the outset it is clear that the employee in question was hired under a contract of service and not a contract for services and that the employment was insurable and pensionable under the respective legislation governing that employment. However the question to be determined is, who is the employer? The Appellant submits that it was not the employer.

[13] The Appellant led evidence that it had no right to hire, fire, or discharge any employee including the police coordinator and no responsibility to pay the Worker.

[14] The Respondent submits that the Appellant was the employer for the following reasons:

1) The salary received by the employee was from monies advanced to the Appellant by the Department of the Solicitor General of New Brunswick through the City of Fredericton to ensure the continuation of the Appellant's program and the fact that it is a volunteer or non-profit organization does not exempt from paying premiums when a contract of service exists.

2) That the City of Fredericton, the police coordinator and the executive of the Appellant hired the Worker.

3) The police coordinator, office space provided by the R.C.M.P. and the donated telephone service assisted the Appellant in training the Worker and ensured the success of its program. These personnel and provisions became an integral part of the Appellant's operation.

4) Pursuant to paragraph 3(1)(a) of the UI Act and paragraph 5(1)(a) of the EI Act, employment is insurable even if the earnings from such employment are received from someone other than the employer.

5) That if the Appellant claimed that the City of Fredericton was the employer, it should have called the City as a witness and its failure to do so should result in the Court drawing an adverse inference.

[15] In respect to submission 1, the evidence is that the Appellant had no control over the money provided by the Department of the Solicitor General to the City of Fredericton.

[16] In respect to submission 2, the evidence is clear that the executive of the Appellant had nothing to do with the hiring of the Worker.

[17] In respect to submission 5, the onus on the Appellant is to demolish the assumptions of the Respondent by a preponderance of evidence that the Appellant is not the employer, not to prove who the employer is.

[18] From the outset I sensed the issue to be whether the status of employer-employee existed between the Worker and the Appellant or whether her provision merely represented another form of gratuitous financial assistance and support with which the Appellant operated its program. The distinction is difficult to make especially since the descriptions of the same facts with some slight variation can support completely different conclusions. Clearly there was an employer but I am satisfied that the assumption that the employer was the Appellant has been demolished by the Appellant's evidence and it is not the task of the Appellant to prove who the employer was. All it has to do is demolish the Respondent's assumption that it was the employer. Submissions 3 and 4 have no application to this case.

[19] I can find nothing in the UI Act or the EI Act which prohibits a person from hiring a worker, paying the worker and gratuitously making that person available to perform services for another. I conclude that the Department of the Solicitor General and the R.C.M.P. did exactly that in this case.

[20] It must be remembered that the task of the police coordinator was more than training and supervising the Worker. Once the Worker received information that would assist in a criminal investigation, the police coordinator would cause either his police agency or some other police agency to act upon that information, a task that the Appellant was not created or authorized to do. The Appellant was only created to assist in gathering useful information for police agencies.

[21] I considered the question of drawing an inference that the money was in fact provided for the Appellant and notwithstanding the intervening activities of the City of Fredericton and the police coordinator, the Appellant was the ultimate beneficiary of the funds. I rejected that position for the reasons set above.

[22] The question of employer by delegation was considered in Minacori c. Canada (ministre du Revenu national – M.R.N.) by the Federal Court of Appeal, [1994] A.C.F. no 584 No d'appel A-966-92 (See [1992] A.C.I. No 377 No du greffe 91-128(UI) for trial judgment in the Tax Court of Canada.).

[23] In Minacori, A hired B company to manage and administer the investments of certain of its clients. B company hired one employee who had been in the employ of A for several years. B company paid the employee. However the employee's daily work was supervised by A. Subsequently the employee appealed a decision of the Minister of National Revenue that she was not employed by B company and therefore was not entitled to benefits.

[24] The Tax court found that there was not in fact a relationship of employer-employee between B company and the employee since B company exercised no control over the employee. It declined to find who the employer was.

[25] The Federal Court of Appeal granted the appeal and found that B company was the employer by delegation. Décary J. wrote the decision for the majority and said in the first paragraph of the judgment:

"Il importe peu, à notre avis, que l'employeur, au sens de l'alinéa 3(1)(a) de la Loi sur l'assurance-chômage, soit l'employeur proprement dit ou la société de gestion à laquelle cet employeur a confié la gestion de son entreprise. Cette société peut fort bien être considérée comme l'employeur par délégation relativement à un emploi donné."

[26] This case can be distinguished from the case at bar since the Appellant at no time exercised any control over the Worker. It did not in any way contribute to the payment of the Worker's salary. It did not engage the City of Fredericton or the police coordinator to perform any services on its behalf. The services of all personnel, including the Worker, were gratuitously provided by the Province of New Brunswick through the Department of the Solicitor General and the R.C.M.P.

[27] It is not incumbent on the Appellant to lead evidence to establish who the employer was. If the Respondent is correct in his submission that the Appellant was the employer, then applying Minacori to the facts of this case, it might be argued that the City of Fredericton was the employer of the Worker by delegation and therefore the employer required to pay the premiums and make the deductions at law required.

[28] I am satisfied that the Appellant has by a preponderance of evidence demolished the assumption of the Respondent that it was the employer of the Worker.

[29] The appeal of the Appellant is granted. The Court finds that during the period in question the Worker was not an employee of the Appellant and the determination of the Respondent is accordingly varied.

Signed at Rothesay, New Brunswick, this 2lst day of February 2000.

"Murray F. Cain"

D.J.T.C.C.