Citation: 2011TCC252
Date: 20110509
Docket: 2010-2758(CPP)
2010-2759(EI)
BETWEEN:
1351678 ONTARIO LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
ELIZABETH RANKIN,
Intervenor.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
The issues raised in
these appeals are:
(a) whether Avie Foxton was employed with
Elizabeth Rankin for the period April 10, 2007 to November 2, 2008 in insurable
and pensionable employment pursuant to paragraph 5(1)(a) of the Employment
Insurance Act (EIA) and paragraph 6(1)(a) of the Canada Pension
Plan (CPP); and,
(b) whether the Appellant was Ms. Foxton’s
deemed employer in accordance with subsections 1(2) and 10(1) of the Insurable
Earnings and Collection of Premiums Regulations (IECPR) and
subsection 8.1(1) of the Canada Pension Plan Regulations (CPPR).
[2]
The Minister of
National Revenue (the “Minister”) determined that there was a contract of
service between Ms. Foxton and Ms. Rankin. He then assessed the Appellant for
employment insurance and Canada Pension Plan premiums on the basis that it was
Ms. Foxton’s deemed employer because it paid her wages. Ms. Rankin has
intervened in these appeals. The Appellant was represented at the hearing by
its agent, Mr. Judges.
[3]
Ms. Rankin was an
associate broker with RE/MAX First Realty Ltd. She operated her business as a
sole proprietor. Her hours of operation varied; but, she worked seven days a
week. It was her evidence that, due to the growth of her business, she was out
of the office, meeting with clients, for most of each day. She decided that she
needed to engage a person to work in the office who would contact her if there
were any important e-mails; who would schedule house showings; who would prepare
materials which she needed to conduct her business; and, who would generally
assist with any other activities on an as needed basis. I gather from the
evidence, that over the years, Ms. Rankin has hired several people to perform
these duties. She stated that, due to the fluctuations in the real estate
market, these persons were always engaged as independent contractors. They were
instructed that they had to submit an invoice to Ms. Rankin for the hours they
worked.
[4]
The Appellant was
incorporated on June 29, 1999 and its sole shareholder was Ms. Rankin. The only
business operated by the Appellant was the management of the two properties
which it owned. Ms. Rankin stated that, on the advice of her previous
accountants, she paid her workers through the Appellant. She has now stopped
that practice and has engaged another accountant.
[5]
Ms. Rankin testified
that Ms. Foxton had been a real estate agent whose licence was rescinded by the
Real Estate Council of Ontario. Ms. Foxton was advised that her licence could
be reinstated if she passed the examinations in several courses. Ms. Rankin
stated that she only hired Ms. Foxton because Ms. Foxton was destitute and she
wanted to help her.
[6]
Ms. Foxton was paid $10
per hour. According to Ms. Rankin, Ms. Foxton worked independent of her; she determined
her own hours of work as her main concern during this time was to complete her
real estate courses so that her licence would be reinstated. Ms. Rankin
testified that she did not check to see if Ms. Foxton actually worked the
number of hours that she invoiced. She was not supervised in her duties. Ms.
Rankin stated that Ms. Foxton had problems completing the tasks assigned and
very often her work had to be completed by one of the other two workers who
were in the office during this period.
[7]
Both parties agreed
that Ms. Foxton performed the following clerical duties:
a) scheduled Ms. Rankin’s
appointments with clients;
b) answered
telephone calls;
c) contacted
Ms. Rankin about important new emails and new messages;
d) sent faxes;
e) screened and
saved data;
f) organized
envelopes for Ms. Rankin’s advertising;
g) prepared, printed and
organized documents related to real estate transactions;
h) assisted
with any other activities as required by Ms. Rankin.
[8]
Ms. Foxton’s real estate
licence was reinstated on June 25, 2008 and from this point in time, she
performed the services of a real estate agent as well as clerical services. She
showed homes; did open houses; and, did home inspections. She still received
$10 per hour for the clerical services; but, as a real estate agent, she was
paid a certain rate for each service that she performed. For instance, she was
paid $100 for home inspections and $50 each time she had to revisit a property
for a home inspection.
[9]
The question is whether
Avie Foxton was engaged by Elizabeth Rankin as an employee or an independent
contractor. Mr. Judges submitted a decision, dated February 11, 2010, from the
Ontario Ministry of Labour which had found that another individual was not an
employee of Ms. Rankin in accordance with the definition of employee as
contemplated by the Employment Standards Act 2000. Mr. Judges relied on
this decision to state that Avie Foxton was self-employed while she was
performing tasks for Ms. Rankin and that she was not an employee.
[10]
This court is not bound
by a decision made by the Ontario Ministry of Labour. The decision relied on by
the Appellant did not concern Avie Foxton and it was made with respect to a
different piece of legislation.
[11]
In 671122 Ontario
Ltd. v. Sagaz Industries Canada Inc.[1], Major J. described the analysis that
should be used when answering the question whether an individual was employed
as an employee or an independent contractor. He wrote:
47 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. (emphasis added)
[12]
These factors described by Major
J. were those given in Wiebe Door. In Combined Insurance Company of America v.
M.N.R.[2],
Nadon, J.A. reviewed the case law and stated the principles to be applied as
follows:
[35] In my view, the following
principles emerge from these decisions:
1. The
relevant facts, including the parties’ intent regarding the nature of their
contractual relationship, must be looked at in the light of the factors in Wiebe
Door, supra, and in the light of any factor which may prove to be relevant
in the particular circumstances of the case;
2. There is
no predetermined way of applying the relevant factors and their importance will
depend on the circumstances and the particular facts of the case.
Although as a general rule the control test is of special
importance, the tests developed in Wiebe Door and Sagaz, supra,
will nevertheless be useful in determining the real nature of the contract.
[13]
I am satisfied from the evidence
that there was a common intention between the parties that Ms. Foxton was to be
employed as an independent contractor. Ms. Rankin testified that she told Ms.
Foxton, at the time that she was being interviewed, that the position was that
of an independent contractor. This was not refuted by Ms. Foxton.
[14]
In the context of a contract of
service, it is the right to control that is important and not the actual de
facto control[3].
In this appeal, control would require that Ms. Rankin have the right or power
to direct what Ms. Foxton did, and the manner in which, or how it should be
done[4].
[15]
Ms. Foxton generally worked on
Wednesdays to Sundays. However, she arranged her hours so that she could attend
her classes. If she left work to attend a class, she sometimes did not return
to work. No one checked the number of hours that she worked. As Ms. Rankin
stated, “It was taken on good faith that she accurately reported her hours”.
[16]
The Minister assumed that Ms.
Foxton was required to have general office experience; that she was trained by
Doreen Bryant; and, that she was supervised by Ms. Rankin and Doreen Bryant.
Ms. Rankin denied these assumptions. She stated that Doreen Bryant showed Ms.
Foxton how the office operated; but she did not train her. There was an office
policy manual that Ms. Foxton could use. It was her evidence that no one
supervised Ms. Foxton. She was given various tasks to do but had problems
functioning in the office. She could not learn how to use the office software,
so she could not prepare a letter. If a client telephoned and Ms. Foxton did
not know how to complete the work, she left it for the other workers to
complete. When she worked evenings (which was Wednesday, Thursday and Friday),
she placed the telephones on call forward so that she would not have to answer
them.
[17]
Ms. Rankin stated that she
probably should have terminated her working relationship with Ms. Foxton on the
basis of non-performance. However, she was trying to help her.
[18]
Ms. Rankin may not have
exercised strict control over Ms. Foxton, but that does not mean that she did
not have the right to exercise that control. Ms. Rankin agreed with the
following assumptions of fact that were pled by the Minister. She instructed
Ms. Foxton on a daily basis on which tasks needed to be completed; she set all
priorities and deadlines; she required that Ms. Foxton report to her on a
regular basis; and she gave Ms. Foxton time off to study but Ms. Foxton was
required to make up that time in the evening. She agreed that she did instruct
Ms. Foxton on the tools and equipment to use when performing her duties.
[19]
Ms. Rankin may have
wanted to assist Ms. Foxton at a time when she was in need. However, I infer
from the evidence that she was not entirely altruistic. Ms. Rankin was lax with
Ms. Foxton concerning the quality of her work because she had hoped that Ms.
Foxton would work with her when she regained her real estate licence.
[20]
I have concluded from a
review of all of the evidence that Ms. Rankin had the right to control how Ms.
Foxton performed her duties.
[21]
I have also concluded
that Ms. Foxton was engaged by Ms. Rankin pursuant to a contract of service and
therefore she was Ms. Rankin’s employee. She was engaged in insurable and
pensionable employment.
[22]
As well as exercising
control over Ms. Foxton, Ms. Rankin agreed that she supplied all of the tools
and equipment which were necessary for Ms. Foxton to perform her duties. Ms.
Foxton was required to provide her duties personally and she could not hire a
substitute. There was no negotiation concerning Ms. Foxton’s rate of pay as a
clerk or as a real estate agent. She received $10 per hour for her clerical
duties and a flat rate for specific tasks as a real estate agent. Both of these
rates were determined by Ms. Rankin. In fact, it was Ms. Foxton’s evidence
that, when she became a real estate agent, she asked for more than an hourly
wage. Ms. Rankin made it very uncomfortable for her so she left.
[23]
Ms. Foxton had no
chance of profit and no risk of loss. She had no expenses. When she had to
drive to perform her duties as a real estate agent, Ms. Rankin reimbursed her
the automobile expenses. If there were complaints from any of Ms. Rankin’s
clients, Ms. Rankin was responsible for resolving those complaints. If a file
was not prepared properly, it was redone by other staff members and Ms. Rankin
covered the related costs. Ms. Foxton was paid regardless.
[24]
Although Ms. Rankin
intended to hire Ms. Foxton as an independent contractor, the terms of their
relationship, when analyzed against the Wiebe Door factors, do not
support her intention.
[25]
Mr. Judges submitted
that Ms. Foxton was an independent contractor because she submitted invoices to
Ms. Rankin. I disagree. In an attempt to create a relationship where her
workers would be independent contractors, Ms. Rankin insisted that they submit
an invoice. This evidence is self serving.
[26]
During the period in
issue, the Appellant was Ms. Foxton’s deemed employer because it paid her
wages.[5]
[27]
The appeals are
dismissed.
Signed at Ottawa, Canada, this 9th day of May 2011.
“V.A. Miller”
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