Citation: 2009 TCC 516
Date: 20091014
Dockets: 2008-2951(EI)
2008-2952(CPP)
BETWEEN:
DONALD LaCHANCE, O/A
D & L’S FISH N CHIPS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Woods J.
[1] This is an appeal by Donald LaChance in respect of decisions
made under the Employment Insurance Act and the Canada Pension Plan
for the period from January 1, 2006 to December 31, 2006.
[2] The question is whether a worker, Nicole Morley, was
engaged as an employee or an independent contractor. The Minister of National
Revenue determined that the relationship was one of employment. Mr. LaChance
submits that Ms. Morley was engaged as an independent contractor.
[3] Mr. LaChance and Ms. Morley each testified at the
hearing.
[4] Mr. LaChance, with the assistance of his wife, Lisa
LaChance, operates a fish and chip restaurant. The restaurant seats about 60
customers and a take out service is provided as well.
[5] Ms. Morley was hired as a full-time waitress in April
of 2005 at an agreed hourly wage. At the commencement of the engagement, Ms.
Morley agreed that no source deductions would be made from her pay. All of Ms.
Morley’s pay cheques referred to her as a subcontractor. It is clear that Mr.
LaChance considered Ms. Morley to be an independent contractor from the outset
of the relationship.
[6] Ms. Morley generally worked in accordance with a
regular weekly schedule. The schedule was modified a few times to accommodate
Ms. Morley’s child-rearing responsibilities.
[7] In addition, there were a few other instances where
Ms. Morley was not able to come to work for a scheduled shift. In such cases,
Ms. Morley notified Mr. LaChance or his wife and they would find a replacement.
[8] Mr. LaChance submits that the arrangement should be
respected as a subcontractor relationship. He submits that the parties agreed
to it, Ms. Morley was paid $2 more than an hourly wage, and the arrangement
provided flexibility in terms of work hours.
[9] Mr. LaChance testified that no supervision was
required of Ms. Morley because she knew how to do the job. He also testified
that Ms. Morley had flexibility with her work hours because she was free to
find a replacement for any shift among the other workers at the restaurant.
[10] 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.
[11] With
these principles in mind, I will first
consider the intention of the parties.
[12] Ms. Morley testified that, although she knew that she
was responsible for paying tax at the end of the year, she was not aware of the
legal niceties between employment and a subcontracting relationship. She did
not remember Mr. LaChance using the term “subcontractor” when they negotiated
the arrangement, although she acknowledges that this term was used on her pay
cheques.
[13] I accept that Ms. Morley was not aware of the legal difference
between an employee and a subcontractor. However, she had agreed to an
arrangement that was clearly different from her previous employment
relationships because no taxes were deducted from her pay. Further, all of her
pay cheques referred to her as a subcontractor. In effect, Ms. Morley agreed to
go along with Mr. LaChance’s characterization of the arrangement as a
subcontracting relationship.
[14] In these circumstances, I accept that the intention of
the parties was a subcontractor relationship.
[15] That is not the end of the matter, however. As
indicated in the above excerpt from Royal Winnipeg Ballet, it must be
considered whether the relationship was actually consistent with this
intention.
[16] In my view, on a balance of probabilities the
relationship was not consistent with a subcontractor relationship.
[17] Of all of
the factors listed in the Wiebe Door decision, the factor of “control” is the most important in this
case.
[18] The evidence regarding the ability of Mr. LaChance to
control how the work was performed was fairly limited, which is common in
appeals under the informal procedure. Based on the evidence, however, I
conclude that it is likely that Mr. LaChance could provide detailed directions
regarding Ms. Morley’s work. The degree of the ability to control makes the
relationship inconsistent with Ms. Morley being in business on her own.
[19] Mr. LaChance testified that it was not necessary to tell
Ms. Morley how to do the job because it was apparent what the job entailed and
she knew how to do it.
[20] The applicable test, though, is not whether Mr.
LaChance gave detailed directions to Ms. Morley, but whether he had the ability
to do so.
[21] I find that Mr. LaChance, as owner and hands-on
manager of the restaurant with his wife, likely had the ability to tell Ms.
Morley what tasks to perform and how to perform them.
[22] Ms. Morley provided very detailed testimony regarding
her various duties, down to filling up ketchup bottles and preparing individual
butter cups. Based on the evidence as a whole, these duties likely were
performed under the supervision of Mr. LaChance and his wife. If the work was
not done to their satisfaction, they could have asked for it to be done
differently.
[23] Mr. LaChance submitted that Ms. Morley had flexible
work hours and that she could find a replacement from among her co-workers if
she was not available for a shift.
[24] The evidence as a whole does not establish to my
satisfaction that Ms. Morley knew that she could find her own replacement if
she was not able to work a particular shift. Her understanding was likely
consistent with her course of conduct, which was to contact the LaChances on
the rare occasions that she was not able to come to work. They would find the
replacement.
[25] As for flexibility of work hours, I accept that Ms.
Morley’s schedule was changed on occasion to accommodate her needs, but this is
not evidence of someone in business for themselves.
[26] Ms.
Morley’s work schedule was mutually agreed with Mr. LaChance. The scheduling arrangement is reflective of an employer
providing flexibility to a valuable employee. It is not evidence of someone in
business for herself and determining her own work schedule.
[27] As for the rate of pay, Mr. LaChance testified that
Ms. Morley was paid $2 more than the minimum wage to compensate for the
subcontractor relationship.
[28] Based on
the evidence as a whole, I am not
satisfied that the subcontractor relationship influenced the rate of pay.
[29] Ms. Morley testified that at one point during the
engagement she looked for new work so that she could have Saturdays free for
her children. She indicated that Mr. LaChance offered her a pay increase and a
change of schedule so that she would stay. I accept this testimony.
[30] In the result, I conclude that the engagement of Ms.
Morley was one of employment. In brief, the relationship was not consistent
with Ms. Morley being in business on her own.
[31] The appeal will be dismissed, and the decisions of the
Minister of National Revenue will be confirmed. Each party shall bear their own
costs.
Signed at Ottawa, Canada this 14th
day of October 2009.
“J. M. Woods”
Email this Content