Citation: 2010 TCC 335
Date: 20100618
Dockets: 2009-2876(EI)
2009-3352(CPP)
BETWEEN:
PERSUADER COURT AGENTS INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
JACQUELINE VAN OVERDIJK,
Intervenor.
REASONS FOR JUDGMENT
Woods J.
[1] Persuader Court Services Inc. appeals in respect of
decisions of the Minister of National Revenue that Mrs. Jacqueline van Overdijk
was engaged by the appellant in insurable and pensionable employment under the Employment
Insurance Act and the Canada Pension Plan.
[2] The issue is whether Mrs. van Overdijk was an employee
or an independent contractor for the period from July 31, 2006 to December 18,
2008 when she performed services as an administrative assistant for the
appellant.
Background facts
[3] During the relevant period, the appellant carried on
the business of providing paralegal services, including representation in small
claims court and in informal procedure appeals in this Court.
[4] All of the appellant’s paralegal services were provided
by its owner, Mr. Gerald Grupp. Administrative services were provided by
administrative assistants and a part-time bookkeeper.
[5] In July 2006, Mrs. van Overdijk was hired as a
part-time administrative assistant to Mr. Grupp, who at that time also had a
full-time assistant. Mrs. van Overdijk worked on an as-needed basis, generally
working about 10 hours per week. She could not work in the mornings because she
was going to school.
[6] Around the end of November 2007, the other
administrative assistant was let go and Mrs. van Overdijk took over her
position and commenced working on a full-time basis.
[7] The appellant’s office hours were adjusted to between
9 a.m. to 5 p.m. in order to accommodate Mrs. van Overdijk’s family
obligations. Typically Mrs. van Overdijk would come to work at 8:45 a.m. and
leave shortly before 5 p.m. On Tuesday’s, she left work at 3:30 p.m. and would
work through the lunch period.
[8] This arrangement lasted until the appellant ceased
operations in December 2008.
[9] At the outset, Mr. Grupp informed Mrs. van Overdijk that
no source deductions would be made by the appellant. He also suggested that she
seek the advice of an accountant with respect to her tax situation.
[10] Mrs. van Overdijk was paid on an hourly basis and she
submitted regular invoices every two weeks for the hours worked. A number of
invoices were submitted into evidence by the appellant. Some of these indicate
that the services were “contract services.”
[11] When the arrangement was terminated, Mrs. van Overdijk
sought a ruling from the Canada Revenue Agency as to whether she was entitled
to employment insurance benefits as an employee of the appellant. The Minister
determined that the relationship was one of employment.
Discussion
[12] The applicable principles in a case such as this are
well known. The hallmark of being an independent contractor is that the person
is in business for herself. The intention of the parties is very relevant, but
it is not determinative. The applicable test was described by the Federal Court
of Appeal in Royal Winnipeg Ballet v. MNR, 2006 FCA 87, 2006 DTC
6323 in the following manner:
64
In these circumstances, it seems to me wrong in principle to set aside, as
worthy of no weight, the uncontradicted evidence of the parties as to their
common understanding of their legal relationship, even if that evidence cannot
be conclusive. The judge should have considered the Wiebe Door factors
in the light of this uncontradicted evidence and asked himself whether, on
balance, the facts were consistent with the conclusion that the dancers were
self-employed, as the parties understood to be the case, or were more
consistent with the conclusion that the dancers were employees. Failing to take
that approach led the judge to an incorrect conclusion.
[13] The first question is whether the parties had an
agreement that Mrs. van Overdijk would be an independent contractor.
[14] There is no question that the appellant intended that Mrs.
van Overdijk be an independent contractor.
[15] Mrs. van Overdijk’s intention is less clear. She
testified that she had assumed that she was an employee. I was not convinced by
this testimony.
[16] Although Mrs. van Overdijk would not be fully aware of
the legal differences between employment and self-employment, she did agree to
an arrangement that was clearly different from a typical employment relationship
because no source deductions were made and she prepared invoices on the basis
that the services were contract services. By agreeing to this arrangement, Mrs.
van Overdijk implicitly agreed to work as an independent contractor.
[17] It remains to be determined whether the relationship
was consistent with the agreement.
[18] The hallmark of being an independent contractor is
being in business for oneself. The usual factors that courts look to are
whether the worker is subject to control as to how the work is done, risk of
loss and opportunity for profit, and ownership of tools.
[19] Based on the evidence as a whole, I have concluded
that at the outset when Mrs. van Overdijk was retained to help out in the
office on a part-time basis, the relationship was consistent with the parties’
agreement that Mrs. van Overdijk was engaged as an independent contractor. However,
the relationship changed when Mrs. van Overdijk began to work full-time as Mr.
Grupp’s sole administrative assistant. From that time onward, the relationship
did not have sufficient characteristics of self-employment to support the
agreement of the parties.
[20] I will first consider the part-time engagement. During
this period, some of the facts point in the direction of employment. The
appellant likely had significant control over how the work was done, it
provided most of the tools and there was little chance for profit or loss.
However, the arrangement was a loose one and Mrs. van Overdijk likely had
significant ability to control her hours of work.
[21] Another factor is the type of work that Mrs. van
Overdijk likely performed during this time. Mrs. van Overdijk testified that
she received instructions from both Mr. Grupp and the full-time administrative
assistant. Given that she worked only a few hours each week and that she was
new to the office, it is likely that the work performed was less comprehensive
and was more task-specific than the duties performed by the full-time assistant.
[22] These factors support the parties’ agreement that Mrs.
van Overdijk be an independent contractor. The relationship during this period
is consistent with the parties’ agreement and that agreement should be
respected.
[23] The situation was different when Mrs. van Overdijk
began to work full-time. At that time, she was the only one to whom Mr. Grupp
would look for assistance. There were set hours in which she was expected to
report for work, and she was under the close direction of Mr. Grupp to provide
whatever assistance he required. The relationship had significant
characteristics of a traditional employment relationship at that time and very
few characteristics of self-employment.
[24] Mr. Grupp submitted that Mrs. van Overdijk required
little supervision. However, the question is not how much supervision was
required, but whether the appellant had the ability to dictate how the work was
done. In the relationship, it is clear that Mr. Grupp was the “boss” and that
Mrs. van Overdijk had to comply with his instructions.
[25] Mr. Grupp stated that sometimes Mrs. van Overdijk
failed to show up for work. Mrs. van Overdijk testified that on a few occasions
she had to stay home at the last minute to care for a sick child. She testified
that she called Mr. Grupp as soon as possible to notify him when that happened.
This is an occurrence that routinely happens in the workplace with working
mothers. It is not indicative of Mrs. van Overdijk being in business for
herself.
[26] Mr. Grupp testified that Mrs. van Overdijk insisted on
coming to work even when he did not need her. This suggests that Mrs. van
Overdijk felt that the appellant was obligated to provide her with full-time
working hours. It also suggests that the appellant agreed to employ her on this
basis.
[27] Mr. Grupp submitted that Mrs. van Overdijk had an
opportunity for profit because she earned money as a process server for clients
of the appellant and in attending court when Mr. Grupp was double-booked.
[28] In my view, the process server activity was outside
the employment relationship and was separate from Mrs. van Overdijk’s
engagement as an administrative assistant. Mrs. van Overdijk essentially had a
very small business as a process server. She also had employment as an
administrative assistant.
[29] As for attendance at court, I was not satisfied from
the evidence that Mrs. van Overdijk made a profit from this activity apart from
her hourly pay as an employee.
[30] Mr. Grupp also submitted that Ms. Van Overdijk could
have sent someone else in her place, provided that he trusted the person. Based
on the evidence as a whole, it is likely that Mr. Grupp would have welcomed
someone selected by Mrs. van Overdijk as her replacement on the few occasions
that she could not be at work. If that had occurred, which it did not, it would
not be evidence that Mrs. van Overdijk had her own business. It would have been
an instance of Mrs. van Overdijk helping her employer out. The relevant factor is
that authority over who performed the work remained with the appellant.
[31] Mr. Grupp also testified that Mrs. van Overdijk
sometimes took work home outside office hours. This happened on only one or two
occasions. This is a neutral factor. The nature of the business was that
deadlines had to be met and Mrs. van Overdijk proved to be a diligent worker in
assisting Mr. Grupp in meeting these deadlines. The circumstances do not
suggest that this was indicative of Mrs. van Overdijk having her own business.
[32] Mr. Grupp testified that Mrs. van Overdijk was absent
frequently due to family responsibilities. Mrs. van Overdijk disagreed with
this and suggested that Mr. Grupp was confusing her with the other
administrative assistant.
[33] To the extent that there were inconsistencies between
the evidence of Mr. Grupp and Mrs. van Overdijk, I prefer Mrs. van Overdijk’s
evidence. In general, she had a much better recollection of the relevant events
than Mr. Grupp. I would also mention, however, that the evidence of both
individuals was self-interested and I viewed the testimony of both of them with
some caution.
[34] The appellant’s bookkeeper, Ms. Patricia Lepper, also
provided testimony on behalf of the appellant. She testified that Mrs. van
Overdijk did not act as if she was an employee and that she performed specific
functions.
[35] This evidence is also neutral in my view. I would
first comment that Ms. Lepper appeared to side with Mr. Grupp in this dispute
because she felt that Mrs. van Overdijk was wrong to pursue employment
insurance benefits given the agreement that she had with the appellant. In any
event, Ms. Lepper’s evidence was not nearly as detailed as the other witnesses.
Her conclusion that Mrs. van Overdijk did not act as an employee may reflect
that Mrs. van Overdijk had family responsibilities that she had to juggle with
her work. It does not suggest that Mrs. van Overdijk was in business for
herself. As for performing specific functions, this is the case with most
administrative assistants who are engaged on an employment basis. The important
factor is that Mrs. van Overdijk was obligated to perform whatever duties were
assigned by Mr. Grupp.
[36] Parliament has provided that employed persons are
entitled to employment insurance benefits. If parties wish to contract on some
other basis they need to ensure that the terms of the engagement are consistent
with self-employment. This was not done when Mrs. van Overdijk commenced to
work full-time.
[37] For these reasons, I conclude that Ms. Van Overdijk
was engaged in insurable and pensionable employment only for the period from
December 1, 2007 to December 18, 2008. The appeal will be allowed on this
basis.
[38] The parties, including Mrs. van Overdijk, will bear
their own costs.
Signed at Ottawa, Canada this 18th
day of June 2010.
“J. M. Woods”
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