Lambert v. M.N.R., docket 98-169-UI

Date: 19990526

Docket: 98-169-UI; 98-22-CPP

BETWEEN:

JACK S. LAMBERT,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for judgment

MacLatchy, D.J.T.C.C.

[1] These appeals were heard together at Toronto, Ontario, on April 14, 1999.

[2] These appeals arise from decisions of the Minister of National Revenue (the "Minister") that unemployment insurance premiums and Canada Pension Plan contributions were payable by the Appellant in respect of Shari Elkind (the Worker).

[3] The Respondent informed the Worker and the Appellant that it had been determined that the Worker's engagement with the Appellant during the period in question was insurable and pensionable employment for the reason that the Worker was employed pursuant to a contract of service.

[4] The Appellant is a barrister and solicitor carrying on business in the City of Toronto performing legal and administrative work.

[5] The Worker was engaged as a receptionist and copy-typist under a verbal agreement and performed her work at the Appellant's place of business on a part-time basis.

[6] The Worker was paid a flat daily fee for the days that she chose to work or that she was required to work; her rate of pay was set by the Appellant.

[7] The Worker recorded her own hours and invoiced the Appellant in order to be paid.

[8] All the Worker's decisions had to be approved by the Appellant who, at all times supervised the Worker. This area of supervision was required by the Law Society of Upper Canada, as explained by the Appellant. As he was directed nothing was to leave his office unless personally examined and approved by him. The Appellant was personally responsible for whatever issued from his office. It was evident that the Appellant felt strongly about his duty to supervise and the necessity to approve the work of any worker in his office.

[9] The Appellant applied to the Respondent for the determination of the question of whether or not the Worker was employed in insurable employment while engaged by the Appellant for the period from June 2, 1996 to June 2, 1997 within the meaning of the Unemployment Insurance Act (the "Act") and the Employment Insurance Act (the "Amended Act").

[10] The Respondent informed the Worker and the Appellant that the Worker's engagement during the period in question was insurable employment for the reason that the Worker was employed pursuant to a contract of service.

[11] The question to be determined by this Court is whether the Worker had been engaged under a contract of service or a contract for services (i.e. an employee of the Appellant or an independent contractor). The law has developed slowly through the years, culminating in the definitive judgment of the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R. [1986] 3 C.F. 553. That judgment determined the best method to test the total relationship of the parties weighing all the relevant facts. Four criteria were to be used in analyzing the facts: (i) control and supervision – was the Worker under the control of and directed by the owner of the business and could he/she be suspended or dismissed? (ii) opportunity of profit and risk of loss – could the Worker share in the profit of the venture and/or suffer loss by reason of the failure of the exploit? Did the Worker pay his/her own expenses, materials, etc.? (iii) ownership of tools – what was provided to the Worker to perform his/her work, if anything? (iv) the organizational or integration test - whose business is it and how did the parties see their relationship and what was the true character of that relationship based on the facts elicited? The test is conclusive – all the evidence must be examined and the tests applied in order to determine the totality of the relationship at issue.

[12] Control and supervision – The Appellant admitted that he was "the boss". The business was carried on in his offices, the Worker performed her services there and while there, she was required to work exclusively for the Appellant. If she was required to leave the office it was at the direction of the Appellant who would reimburse her for filing fees paid by her or for travelling expenses. The Appellant was clear that the Rules of the Law Society required his constant and complete supervision of any and all work issuing from his office. This would explain in a way his close supervision of this Worker; she was employed to do his work as he directed while in his office and as a prudent businessman he would have supervised material leaving his office for it was his business and his reputation that was at stake. The Worker could not hire anyone to do her job – it was she, the Worker, who was engaged by the Appellant. This final test supports the employer/employee interpretation.

[13] Profit/Loss – The Worker would not be expected to share in the profits of the law office. She was employed and paid for the hours she worked, nor would she be expected to suffer any loss if the same occurred in the operation of the law practice.

[14] Ownership of tools – The Worker performed her duties in the offices of the Appellant or occasionally outside the offices, at his direction. The equipment used by the Worker was all owned and provided by the Appellant and she used nothing of her own to perform her duties. Although this factor is not very determinative, on its own, to define the employment relationship, it is clear that her duties could not be performed without the use of the equipment provided.

[15] Organizational or integration test – The business was that of the Appellant – no one else could carry on the endeavour. The Worker was part of and performed a necessary function in that business but it was not a business activity that she was performing for the Appellant. She was not hired to perform a particular part of or as an adjunct to the legal practice, such as that of a real estate conveyancer might. Notwithstanding the fact that the Worker invoiced the Appellant for her working hours, it was irrelevant to the real relationship existing between the parties. The Worker could advise the Appellant when she was available for work and to some degree could set her own time schedule. At any time, the Appellant had the power to refuse to have the Worker come to his office at her determined hours. In fact, the Appellant had the ability not to hire the Worker then or at any further times, as he saw fit. These facts would support the employer/employee relationship.

[16] The understanding between these parties is not necessarily determinative of the relationship. It can be important when the broad rules above are equivocal. In this instance, considering all the relevant factors in the relationship , this Court finds that a "contract of service" existed not one "for services". The evidence supports the determination that the relationship was one of employer and employee and the Worker was employed in insurable employment.

[17] The appeals are dismissed and the decisions made by the Minister are confirmed.

Signed at Toronto, Ontario, this 26th day of May 1999.

"W.E. MacLatchy"

D.J.T.C.C.