Bartimaeus Inc. v. M.N.R., docket 98-307-UI

Date: 19990419

Docket: 98-307-UI; 98-50-CPP

BETWEEN:

BARTIMAEUS INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for judgment

Somers, D.J.T.C.C.

[1] The Appellant is appealing from a decision made by the Minister of National Revenue (the "Minister") that Judy MacKinnon's, the Worker, engagement with the Appellant during the period January 29 to May 23, 1997 was insurable employment for the reason that she was employed by a placement or employment agency.

[2] The Minister relies on section 5 of the Employment Insurance Act and paragraph 6(g) of the Employment Insurance Regulations as amended. As well, the Minister relies on section 27 of the Canada Pension Plan and subsection 34(1) of the Canada Pension Plan Regulations as amended.

[3] Section 6 of the Employment Insurance Regulations reads in part as follows:

"6. Employment in any of the following employments, unless it is excluded from insurable employment by any provision of these Regulations, is included in insurable employment:

...

(g) employment of a person who is placed in that employment by a placement or employment agency to perform services for and under the direction and control of a client of the agency, where that person is remunerated by the agency for the performance of those services."

[4] Regulation 34 of the Canada Pension Plan Regulations reads as follows:

"(1) Where any individual is placed by a placement or employment agency in employment with or for performance of services for a client of the agency and the terms or conditions on which the employment or services are performed and the remuneration thereof is paid constitute a contract of service or are analogous to a contract of service, the employment or performance of services is included in pensionable employment and the agency or the client, whichever pays the remuneration to the individual, shall, for the purposes of maintaining records and filing returns and paying, deducting and remitting contributions payable by and in respect of the individual under the Act and these Regulations, be deemed to be the employer of the individual.

(2) For the purposes of subsection (1), "placement or employment agency" includes any person or organization that is engaged in the business of placing individuals in employment or for performance of services or of securing employment for individuals for a fee, reward or other remuneration."

[5] In making his decision, the Minister relied on the following facts, which were admitted or denied:

"(a) the Appellant's business is to provide "Professional Child and Youth workers to organizations, agencies and companies"; (admitted)

(b) the Worker's duties were to provide professional child and youth work to the child and to provide services to the child's family; (denied)

(c) the Worker was placed in an employment by the Appellant; (denied)

(d) the Worker was directed, controlled and supervised by the Appellant's clients; (denied)

(e) the Worker was remunerated by the Appellant; (admitted)

(f) the Appellant's clients paid a fee to the Appellant for the services performed by the Worker; (denied)

(g) the Worker was placed in her employment by the Appellant, acting as a placement or employment agency, to perform services for and under the direction and control of the Appellant's clients and was remunerated by the Appellant." (denied)

[6] Only two witnesses were heard in support of this appeal: Mr. William G. Carty, President of Bartimaeus Inc. and the Worker, Judy McKinnon.

[7] The evidence has shown that the Appellant's business is to provide "Professional child and Youth workers to organizations, agencies and companies. The company is set up as broker services between private practitioners in the child and youth work field and social services. The services for children were provided to rehabilitate children who suffered brain injury. Insurance companies or other clients approached the Appellant to supply such services. These services were provided by individuals who had the expertise and qualifications to rehabilitate the children.

[8] The Appellant contacted the Worker, who had the necessary qualifications to perform such duties. A written contract was signed between the Appellant and the Worker to provide the rehabilitative care to children by working 12 hours a week, which she determined in cooperation and convenience of the family concerned. Her hours were flexible but she had to perform at least 12 hours per week. She was at liberty to extend the hours if needed. A plan was submitted to the insurance company setting the number of hours needed. Once the plan was accepted, the Worker was not paid for the extra unspecified hours.

[9] In the questionnaire signed by Mr. William G. Carty, he answered that the Worker had to report to the insurance company. The rate of pay was set by the insurance company and the Worker had to attend conferences as indicated in the contract. The client and the insurance company determined the effectiveness of the treatment given. If the client was not satisfied with the treatment, the client could terminate the contract. The insurance company set the limit of expenses incurred by the Worker. The Worker invoiced the Appellant for the hours worked and expenses incurred and was then paid by the Appellant as admitted in the Reply to the Notice of Appeal.

[10] After having worked from January 29 to May 23, 1997, the Worker was relieved of her duties, as she was unable to provide services at the standard necessary for the troubled children that she contracted to work with. She did not submit reports to the Appellant on time as requested.

[11] The Worker essentially corroborated the testimony given by Mr. William G. Carty. She stated that she was qualified to work in this field of activity. Her initial agreement was to work 12 hours a week. Her work was not directed or controlled by the Appellant or insurance company and she set her own schedule. She was free to work elsewhere independently without reporting to the Appellant. She had to attend conferences and submit reports to the Appellant once a month. Invoices were sent to the Appellant and paid by the Appellant at the rate of $22 per hour.

[12] The issue in these appeals is whether the Worker was engaged, by the Appellant, in insurable employment during the period in question within the meaning of paragraph 6(g) of the Employment Insurance Regulations and section 34 of the Canada Pension Plan Regulations.

[13] Case law has been submitted for the purposes of these appeals. In all cases cited, the decision of Sheridan v. Canada (Minister of National Revenue), [1985] F.C.J. No. 230, appeal no. A-718-84, was the leading decision and was the basis for the reasons for judgment. The facts in these appeals are similar to those related in the case law submitted.

[14] By referring to paragraph 6(g) of the Regulations, the Appellant is in fact a placement or employment agency as required by this paragraph. It is a company which provides professional child and youth workers on a contract basis to organizations, agencies and companies. In a letter which was sent by Mr. Carty to Revenue Canada, he indicates that the company was set up to provide broker services between private practitioners in the field and social service agencies.

[15] The insurance company called the Appellant to provide special services by qualified people. The Appellant in turn contacted the Worker to perform such specialized services for which the Appellant charged a fee.

[16] The Worker submitted invoices to the Appellant who in turn paid the Worker for the services invoiced at a rate of $22 per hour. The rate of pay was determined by the insurance company. The manner in which the Worker was paid meets the definition of remuneration as indicated in paragraph 6(g).

[17] The other requirement of this section is that the Worker was placed to perform the services for and under the direction and control of a client of the agency. In this case the Worker was under the control of the insurance company and the parents' of the child rehabilitated.

[18] The Worker had to submit monthly progress reports to the insurance company as part of her duties. In fact her services were terminated because her reports were not submitted on time. She also had to attend conferences to discuss the treatment she was providing. The client determined the effectiveness of the Worker.

[19] The Worker had a certain amount of discretion due to her expertise to provide adequate treatment but she was required to fulfil objectives, which were set by the particular client. The schedule was determined by the Worker but had to be flexible enough to coincide with a convenient time for the client. The number of working hours was determined by the insurer. The Worker could not freely charge extra hours to the Appellant without having the consent of the insurer.

[20] The terms, direction and control used in paragraph 6(g) can have a broad application. There are various degrees of direction and control. It is true that the Worker had a wide discretion in performing her services, being a specialist in this field, but the insurer and the patient, through the parents, had the ultimate control as to the type of treatments given and the effectiveness of such treatments. The facts as adduced from the evidence, meet the requirements as set out in paragraph 6(g).

[21] Counsel for the Appellant submitted that paragraph 6(g) of the Employment Insurance Regulations and subsection 34(1) of the Canada Pension Plan Regulations are written differently, therefore should be interpreted differently. I cannot agree with this submission in reading the two. The essential elements are similar; the two have the same objective.

[22] In the case of Sheridan (supra), the Federal Court of Appeal, in its decision rendered on March 21, 1985, said this:

"The only other submission of the applicant which should be addressed is to the effect that Regulation 12(g) does not apply here because the nurses placed by the applicant were not "remunerated" by the agency as the regulation requires. Counsel submitted that, on these facts, the applicant was merely a conduit of the remuneration paid by the hospitals. I do not agree with this view of the matter. As stated supra, the applicant here received all of the pay earned by the nurses from the hospitals. Thereafter she remitted to the individual nurses the proper amount earned by each after deducting from that amount, her fee of 10% in most cases."

[23] The facts in the Sheridan case are similar to the facts as presented in these appeals. I must conclude that the Worker was placed in her employment during the period in question by the Appellant acting as a placement or employment agency to perform services for and under the direction and control of the Appellant's clients and was remunerated by the Appellant. The employment is both insurable and pensionable within paragraph 6(g) of the Employment Insurance Regulations and subsection 34(1) of the Canada Pension Plan Regulations.

[24] The appeals are dismissed and the Minister's decision is confirmed.

Signed at Ottawa, Canada, this 19th day of April 1999.

"J.F. Somers"

D.J.T.C.C.

Jurisprudence Consulted

Sheridan v. Canada (Minister of National Revenue) (1985) F.C.J. no. 230, A-718-84