Citation:
2014 TCC 267
Date:
20140905
Dockets: 2013-2800(CPP)
2013-2801(EI)
BETWEEN:
MICHELLE
POROTTI,
Appellant,
and
THE
MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS
FOR JUDGMENT
Woods J.
[1]
Michelle Porotti appeals a decision of the
Minister of National Revenue that she was engaged as an independent contractor
with Royal Ascot Care Centre Ltd. (“Royal Ascot”) and accordingly was not
engaged in insurable employment under the Employment Insurance Act or
pensionable employment under the Canada Pension Plan. The period at
issue is from January 1, 2012 to August 8, 2012.
Background
[2]
Royal Ascot is a privately-owned long term care
facility. Ms. Porotti became engaged by the corporation in 2007 to implement a
computerized resident assessment system that had been recently mandated by the
B.C. government. Ms. Porotti’s position, called clinical lead, was funded by
the government and was expected to last about two years.
[3]
The project lasted a year longer than expected,
but Ms. Porotti stayed on further to implement additional computer projects for
Royal Ascot.
[4]
In 2012, the relationship abruptly ended after Ms.
Porotti and Royal Ascot had a falling out concerning the collection of goods
and services tax.
Applicable legal
test
[5]
The test that is to be applied in determining
whether a worker is engaged in employment is summarized in 1392644 Ontario
Inc. (cob Connor Homes) v M.N.R., 2013 FCA 85, at paragraphs 38 to 41.
[38] Consequently, Wolf
and Royal Winnipeg Ballet set out a two step process of inquiry that is
used to assist in addressing the central question, as established in Sagaz
and Wiebe Door, which is to determine whether the individual is
performing or not the services as his own business on his own account.
[39] Under the first
step, the subjective intent of each party to the relationship must be
ascertained. This can be determined either by the written contractual
relationship the parties have entered into or by the actual behaviour of each
party, such as invoices for services rendered, registration for GST purposes
and income tax filings as an independent contractor.
[40] The second step
is to ascertain whether an objective reality sustains the subjective intent of
the parties. As noted by Sharlow J.A. in TBT Personnel Services Inc. v.
Canada, 2011 FCA 256, 422 N.R. 366 at para. 9, “it is also necessary to
consider the Wiebe Door factors to determine whether the facts are
consistent with the parties’ expressed intention.” In other words, the
subjective intent of the parties cannot trump the reality of the relationship
as ascertained through objective facts. In this second step, the parties intent
as well as the terms of the contract may also be taken into account since they
colors the relationship. As noted in Royal Winnipeg Ballet at para. 64,
the relevant factors must be considered “in the light of” the parties’ intent.
However, that being stated, the second step is an analysis of the pertinent
facts for the purpose of determining whether the test set out in Wiebe Door
and Sagaz has been in fact met, i.e whether the legal effect of the
relationship the parties have established is one of independent contractor or
of employer-employee.
[41] The central
question at issue remains whether the person who has been engaged to perform
the services is, in actual fact, performing them as a person in business on his
own account. As stated in both Wiebe Door and Sagaz, in making
this determination no particular factor is dominant and there is no set
formula. The factors to consider will thus vary with the circumstances.
Nevertheless, the specific factors discussed in Wiebe Door and Sagaz
will usually be relevant, such as the level of control over the worker’s
activities, whether the worker provides his own equipment, hires his helpers,
manages and assumes financial risks, and has an opportunity of profit in the
performance of his tasks.
Application to facts
(a) Assessment
of testimony
[6]
Five individuals who had worked at Royal Ascot
testified at the hearing: Ms. Porotti, Abigail Hakim, Kelly Rose, Cheryl
Scarlett and Jacqueline Orina.
[7]
I generally found the witnesses to be credible,
with the exception of Ms. Porotti. Some of the circumstances which have led me
to doubt the reliability of Ms. Porotti’s evidence are set out below.
- In her resume, Ms. Porotti stated that she was self-employed as
“M. Porotti Office Services” since 1993. At the hearing, Ms. Porotti denied
that she had been self-employed and said that the resume had been padded.
Whether this is true or not, Ms. Porotti’s credibility is called into question.
- In an email
to Joanna Martin dated February 22, 2012, Ms. Porotti stated that she was not
employed by Royal Ascot and that she was self-employed. At the hearing, Ms.
Porotti stated that she did not want to tell Ms. Martin the truth. Again, these
circumstances suggest a problem with the reliability of Ms. Porotti’s
testimony.
- At the
hearing, Ms. Porotti sought to explain why she under-reported her Royal Ascot
income on her tax returns. She stated that Royal Ascot’s administrator, Ms.
Scarlett, advised her to report as self-employed so that she could get a tax
deferral. Ms. Scarlett vehemently denied saying this, and I find Ms. Porotti’s
explanation to be implausible.
[8]
Accordingly, to the extent that Ms. Porotti’s
testimony conflicted with the testimony of the other witnesses, I generally
prefer their testimony.
(b) Intention
[9]
The first question is the intent of the parties.
Despite the testimony of Ms. Porotti to the contrary, I find that the parties
clearly intended an independent contractor relationship.
[10]
The evidence reveals that the parties
continuously treated the relationship as an independent contractor
relationship, which was also consistent with Royal Ascot’s policy when hiring
non-nursing staff. No tax was withheld, Ms. Porotti provided invoices, her
resume described herself as being self-employed, and Ms. Porotti attempted to
collect GST.
[11]
Since I have found Ms. Porotti’s testimony to be
unreliable, it is clear that the mutual intent of the parties was an
independent contractor relationship. I now turn to the Wiebe Door
analysis to determine whether the intent is consistent with the objective
reality.
(c) Control
[12]
The ability of the payor to control the manner
in which the work is done is often an important criterion in determining the
nature of the relationship.
[13]
On this issue, the testimony of Ms. Porotti and
Ms. Scarlett were in stark contrast.
[14]
Ms. Porotti testified at length as to situations
in which she performed services unrelated to her main role relating to new
computer systems. She stated that much of this was at the direction of Ms.
Scarlett.
[15]
It is clear that Royal Ascot provided some
ancillary work for Ms. Porotti but I do not think that this was at the
direction of Royal Ascot. Ms. Scarlett testified that Ms. Porotti was very good
at marketing her administrative skills and that she had much to offer in that
regard. In my view, Ms. Porotti was entrepreneurial in her approach to the job,
and she sought out and agreed to many ancillary tasks that were given to her.
However, in my view these ancillary tasks were not mandatory and were
incidental to Ms. Porotti’s main role.
[16]
In reaching this conclusion, I am mindful of the
witnesses who stated that Ms. Scarlett generally got her way. That may be the
case, but I find that Ms. Porotti sought out these additional duties.
[17]
Overall, I find that Royal Ascot treated Ms.
Porotti as an independent contractor who was hired for a specific task and she
mainly managed that task without direction except for reasonable reporting to
Royal Ascot.
[18]
I find that the control factor strongly favours
an independent contractor relationship.
(d) Provision of equipment
[19]
I find that Royal Ascot generally provided the
necessary equipment for the job (i.e., an equipped office), with a noted
exception of times in which Ms. Porotti used her own vehicle to perform errands
on behalf of the organization.
[20]
The provision of office equipment is not
uncommon in an independent contractor relationship, but I find that this factor
slightly favours an employment relationship.
(e) Ability to hire helpers
[21]
It is likely that the hiring of helpers by Ms.
Porotti would have been inconsistent with the arrangement between the parties. This
is not uncommon in an independent contractor relationship and I find that this
factor is not significant.
(f) Manages and assumes financial
risk
[22]
I have not given this factor any weight since
the parties did not focus on it. Since it was intended that Ms. Porotti be an
independent contractor, it is likely that she bore some risk in the event that she
failed to adequately perform the services that she agreed to do.
(g) Opportunity for profit
[23]
Ms. Porotti was paid on an hourly basis, on the
understanding that she would work approximately 37.5 hours per week. This
factor generally favours an independent contractor relationship because of the
entrepreneurial approach that Ms. Porotti took to the relationship which led to
an expansion of the work that she did for Royal Ascot.
(h) Conclusion
[24]
In this case, the objective reality supports the
parties’ intention that Ms. Porotti was engaged as an independent contractor. The
appeal will be dismissed.
Signed
at Toronto, Ontario this 5th day of September, 2014.
“J. M. Woods”__________
Woods J.
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