Date: 19980313
Docket: 97-442-UI
BETWEEN:
SYLVIE THÉRIAULT,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Cuddihy, D.J.T.C.C.
[1] This appeal was heard in Toronto, Ontario, on February 18,
1998.
I- The appeal
[2] This is an appeal from a determination by the Minister of
National Revenue (the "Minister") of December 27,
1996, where it was determined that
Stéphanie Guénette
(the "Worker") was employed in the Province of
Québec, under a contract of service with the Appellant and
William Pétrie (the "Payor"), from
September 6, 1995 to May 3, 1996, within the meaning of
paragraph 3(1)(a) of the Unemployment Insurance Act
(the "Act") because there existed between
the Payor and the Worker an employer/employee relationship.
II- The Facts
[3] In rendering his decision the Minister relied on the facts
and reasons outlined in his Reply to the Notice of Appeal in
paragraph 5 which forms part of this decision as if recited at
length herein.
[4] The Appellant, admitted the allegations in
subparagraphs (a), (c) and (d). The allegations in
subparagraph (b) were admitted with further explanations to be
given at the hearing. It was submitted that subparagraph (e) was
irrelevant. The allegations in subparagraphs (f) to (h) were
denied.
III- The law and analysis
[5] Definitions from the Unemployment Insurance
Act
"employment" means the act of employing or
the state of being employed."
"Insurable employment"
Subsection 3(1) of the Unemployment Insurance Act reads
in part as follows:
"3(1) Insurable employment is employment that is not
included in excepted employment and is
(a) employment in Canada by one or more employers,
under any express or implied contract of service or
apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other
person and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or
otherwise;
[...]"
Brief summary of the evidence
[6] The Appellant and her husband William Pétrie
during the relevant period under review, were the heads of a
family of five children. They required the services of a
baby-sitter in order to allow them both to earn income to support
the family.
[7] The Appellant learned from her sister that the Worker
would be available to work as a baby-sitter. The Appellant
contacted the Worker by telephone. It was agreed that the Worker
would be paid for her services at a rate of $50 a day or $250 a
week. The Worker was to be at the Appellant’s home from
about 8:00 a.m. till about 5:30 p.m., five days a week.
These hours coincided with the departure and the return from work
of the Appellant and her husband. The Worker was to look after
the two younger children that were not attending school, see that
they were fed and care for the three older children when they
returned from school. The Worker offered to prepare dinner since
she was also a good cook. It was accepted that the Worker would
eat at the Appellant’s residence although this was not a
particular condition of the employment contract. The Worker did
not pay for food.
[8] After the Worker had been at the Appellant’s
premises for three to four weeks, the Appellant was looking
for a housekeeper. The Worker offered to do the housework for an
extra $50 a week, for total weekly earnings of $300. She was paid
by cheque. She was not paid if she did not work.
[9] The Worker advised the Appellant that she paid her own
taxes and that she would provide the Appellant with a receipt. No
premiums for unemployment insurance were to be paid and no taxes
were to be deducted from the Worker’s income.
[10] The Worker decided when to make the meals, do the
laundry, which she was not required to do, and do the housework.
The Worker also decided when the younger children would take
their naps. The Worker chose the contents of the meals. As a
result the Worker needed no instruction as to her baby-sitting,
housework or cooking.
[11] In April of 1996, the Worker gave the Appellant a
two-week notice that she was leaving. She gave two reasons for
leaving: that she was pregnant and tired and wished to continue
baby-sitting but for a family of one or two children instead of
the Appellant’s family of five. When the Appellant asked
the Worker for a receipt, it was not forthcoming. The Appellant
then prepared two copies of a receipt and had the Worker sign
them. The Appellant filed the receipts in her tax returns.
[12] William Pétrie testified that the Worker was
not on salary "if she was there, she was paid, if not she
was not". If the mother of the Worker had taken her place it
would have been acceptable; this indicated that the Worker could
have been replaced by someone else. However, it is accepted that
this could have been done but not on a regular basis. This was
so, since the Worker did have her mother replace her, on one
occasion, for a short period of time. Mr. Pétrie
stated that he and his wife were not asked by the Worker to
provide any record of employment. No vacation pay was requested
or given.
Concluding analysis summary
[13] This Court must adopt the reasoning used by
Desjardins, J.A. of the Federal Court of Appeal in
Hennick,[1]
and I quote:
“While this test is well known, it might be useful at
the outset to emphasize that in his analysis of both Lord
Wright's fourfold test (control, ownership of the tools,
chance of profit, risk of loss) and of Lord Denning's
organization or integration test, MacGuigan J.A. in Wiebe
Door Services Ltd., stressed all along that what remains of
the essence is the search for the total relationship of the
parties. He first quoted at length Lord Wright in Montreal v.
Montreal Locomotive Works Ltd.[2]
In earlier cases a single test, such as the presence or
absence of control, was often relied on to determine whether the
case was one of master and servant, mostly in order to decide
issues of tortious liability on the part of the master or
superior. In the more complex conditions of modern industry, more
complicated tests have often to be applied. It has been suggested
that a fourfold test would in some cases be more appropriate, a
complex involving (1) control; (2) ownership of the
tools; (3) chance of profit; (4) risk of loss. Control
in itself is not always conclusive. Thus the master of a
chartered vessel is generally the employee of the shipowner
though the charterer can direct the employment of the vessel.
Again the law often limits the employer's right to interfere
with the employee's conduct, as also do trade union
regulations. In many cases the question can only be settled by
examining the whole of the various elements which constitute the
relationship between the parties. In this way it is in some cases
possible to decide the issue by raising as the crucial question
whose business is it, or in other words by asking whether the
party is carrying on the business, in the sense of carrying it on
for himself or on his own behalf and not merely for a
superior.”
[Emphasis in text]
[14] Then, she added:[3]
“... I interpret Lord Wright's test not as the
fourfold one it is often described as being but rather as a
four-in-one test, with emphasis always retained on what Lord
Wright, supra, calls "the combined force of the whole scheme
of operations," even while the usefulness of the four
subordinate criteria is acknowledged.
. . .
What must always remain of the essence is the search for
the total relationship of the
parties . . .
Of course, the organization test of Lord Denning and others
produces entirely acceptable results when properly applied, that
is, when the question of organization or integration is
approached from the persona of the "employee" and not
from that of the "employer", because it is always too
easy from the superior perspective of the larger enterprise to
assume that every contributing cause is so arranged purely for
the convenience of the larger entity. We must keep in mind
that it was with respect to the business of the employee that
Lord Wright addressed the question "Whose business is
it?"
[my emphasis]
[15] It is not the name you give a contract that makes it what
it is. It is the total relationship of the parties that
determines what the contract is.
[16] Décary, J. of the Federal Court of Appeal in
Normand Charbonneau,[4] stated:
“...
Two preliminary observations must be made.
The tests laid down by this Court in Wiebe Door Services
Ltd. v. M.N.R. [5] - on the one hand, the degree of control, the
ownership of the tools of work, the chance of profit and risk of
loss, and on the other, integration - are not the ingredients of
a magic formula. They are guidelines which it will generally be
useful to consider, but not to the point of jeopardizing the
ultimate objective of the exercise, which is to determine the
overall relationship between the parties. The issue is always,
once it has been determined that there is a genuine contract,
whether there is a relationship of subordination between the
parties such that there is a contract of employment (art. 2085 of
the Civil Code of Québec) or, whether there is not,
rather, such a degree of autonomy that there is a contract of
enterprise or for services (art. 2098 of the Code)...
Moreover, while the determination of the legal nature of the
contractual relationship will turn on the facts of each case,
nonetheless in cases that are substantially the same on the facts
the corresponding judgments should be substantially the same in
law. As well, when this court has already ruled as to the nature
of a certain type of contract, there is no need thereafter to
repeat the exercise in its entirety: unless there are genuinely
significant differences in the facts, the Minister and the Tax
Court of Canada should not disregard the solution adopted by this
court.
In our view, when the judge of the Tax Court of Canada allowed
the respondent’s appeals in this case and found that the
contract was a contract of employment, he fell into the trap of
doing a too mathematical analysis of the tests in Wiebe
Door, and as a result he wrongly disregarded the solution
adopted by this court in Attorney General of Canada v.
Rousselle et al.[6] and upheld in Attorney General of Canada v.
Vaillancourt.”[7]
[17] Section 2099 of the Code civil du Québec,
reads as follows:
ART. 2099 L’entrepreneur ou le prestataire de
services a le libre choix des moyens d’exécution
du contrat et il n’existe entre lui et le client
aucun lien de subordination quant à son
exécution. CCBC 1139, 1666, 1670
[underlining by undersigned]
[18] What was the total relationship between the parties? What
was the combined force of the whole scheme of operations?
[19] In this case, what were the legal obligations of the
parents, toward their children, while working and no longer at
home in order to earn income to support the family? The Appellant
and her husband were both legally required to have someone either
take their place at home or away from home. Thus the contract
between the parties.
[20] The terms of the contract, the way it was entered into
and the conduct of the parties before, during and after the work
period, must be analysed in order to decide whether the
relationship was one of an employer/employee or whether the
degree of autonomy was such that the evidence demonstrated a
contract for services.
[21] From the evidence, it appeared conclusive that the Worker
was a baby-sitter with some experience. The fact she was
found through the Appellant’s sister is an indication that
she had rendered this type of service previously. Also, when she
voluntarily left the premises of the Appellant, she indicated
that one of the reasons for leaving was she would rather work as
a baby-sitter for a family of one or two children rather than
work for the Appellant’s family of five. It is accepted
that her pregnancy and her fatigue were also invoked as the other
reasons for ending her services. The evidence did not indicate
whether she offered her services elsewhere after her departure,
but it would not be unreasonable to conclude that this was her
intention and that this could have occurred.
[22] When she began her work, she informed the Appellant that
she paid her own taxes and that a receipt would be provided. In
fact, the evidence established that on her departure she did
admittedly with reluctance give a receipt as explained by the
Appellant. Why would she at the beginning consent to give a
receipt and then change her mind in April? This evidence goes to
show that at the initial stage of the contract and up until she
decided to leave in April the intentions of the parties were that
the Worker would provide a receipt for her services.
[23] In the carrying out of her duties the Worker was free to
organize her own schedule and needed or required no direct
supervision in this respect. It is accepted that the Worker
rendered the services at the home of the Appellant, which in the
present case, was much more practical than if the children had to
be dropped off at another location. This factor did not modify
the initial agreement between the parties. As to the important
test of subordination, the Worker was free to decide how she
would execute the work in the absence of the Appellant. It is
accepted that the Appellant would call the Worker at times to
inquire about the children but this would be expected in every
situation of this nature. This did not prevent the Worker from
deciding on her own the way she would execute her services.
[24] As to the chance of profit and risk of loss, it appeared
that if the Worker had worked more days she would get more pay.
If she did not work she did not get paid. She did offer to do
housework and was actually paid $50 extra a week. Even the
Minister alleged that she was paid according to the number of
days worked. Although she worked from Monday to Friday, nothing
in the evidence demonstrated that she was exclusively employed by
the Appellant. She could have worked nights or week-ends
elsewhere and in fact she was contemplating after the work with
the Appellant to work for a less numerous family and voluntarily
stopped providing the services. Was she working nights or on
week-ends for others?
[25] As to the integration test, it would be accepted that the
baby-sitter replaces the parents and is vested with their
parental authority in their absence and her work is thus
integrated into the organisation of the day-to-day operation of
the family but the Worker executes her services in the manner
which was described above.
[26] Why did the Worker not request a record of employment
when she left? What did she say in her application for
unemployment insurance benefits that prompted the Minister to
request from the Appellant a record of employment and also to pay
the Worker’s taxes? What did the Worker report in her
income tax return for 1995, which must have been filed with the
Minister before the Worker left her employment? The evidence of
the Appellant was to the effect that the last cheque made out to
the Worker was May 3, 1996. Did the Worker file her return
on or before April 30, 1996? Did she indicate, as an
employer, the Appellant? Did she file a copy of the receipt she
signed or the cheques she received? Did the Worker report
earnings from the Appellant as an employer in her taxation
year 1996? Could it be that the Worker did not report her
income and that the Minister took the position he did as a
result?
[27] No evidence was heard from the Worker, she did not
intervene in the proceedings as she could have, and the only
accepted evidence is what was heard before me. I heard nothing
more from the Respondent.
[28] After seeing and hearing these two witnesses, I have no
reason to disbelieve them. They have demonstrated on a balance of
probabilities, that the Worker was paid for the services offered
and provided, which must be qualified as a contract for services
since this Worker was in the business of providing this type of
service on her own account. This is the only logical conclusion
which may be derived from the evidence in this case when
analysing the total conduct and contractual relationship of the
parties.
IV- Decision
[29] The appeal is allowed and the Minister's decision is
vacated.
Signed at Dorval, Quebec, this 13th day of March 1998.
"S. Cuddihy"
D.J.T.C.C.
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