REASONS
FOR JUDGMENT
C. Miller J.
[1]
Morris Meadows Country Holidays and Seminars
Ltd. (“Morris Meadows”), according to its
brochure, offers meeting facilities, sleeping facilities and dining facilities.
In doing so it hires workers, as required, to perform certain duties such as
cleaning, gardening, maintenance, cooking and serving food. The Minister of
National Revenue (the “Minister”) assessed Morris
Meadows under the Employment Insurance Act (the “Act”)
and the Canada Pension Plan (“CPP”)
legislation on the basis the workers performing such duties were employees. By
letter dated June 21, 2013 the Minister confirmed that many, but not all, of
the workers were employees.
[2]
Morris Meadows maintains the workers were not in
insurable or pensionable employment because they were either independent
contractors in business on their account or casual employees not employed for
the purposes of Morris Meadows’ business. The Respondent maintains the workers
were neither independent contractors nor casual employees not employed for the
purpose of Morris Meadows’ business.
[3]
Mr. Morris, the moving force behind Morris
Meadows, was the only witness for the Appellant. He was refreshingly forthright
in his testimony to the point of offering me work as a cook at Morris Meadows.
I declined the offer.
[4]
Mr. Morris clearly believed in the underlying
concept of the rural retreat known as Morris Meadows. The brochure described it
as follows:
The concept of
Morris Meadows developed from Sid Morris’ love of the country tranquility which
restored his energy after a gruelling week in the business world. It was his
belief that others who did not have the opportunity for such a retreat on a
working farm may enjoy the same tranquility he did. Hence was born the concept
of a small business and seminar center where a company or firm could afford to
rent this “country club” setting and thus have
their energy restored by its tranquility.
[5]
It is clear that Morris Meadows was available
for retreats or major events such as weddings. According to Mr. Morris,
business at Morris Meadows started slowly in 1996 with ladies’ clubs booking
Morris Meadows and wanting to have lunches served. Mr. Morris’ herdsman could
cook so Mr. Morris enlisted his help to do the cooking, splitting the increased
income with him. The herdsman left in 2001 and a couple, the Pollocks, took
over the food service for a period, but for the years in issue a number of
workers were involved in providing the food service. For 2008, 2009 and 2010,
Ms. Linda Andrews cooked for Morris Meadows. She testified and confirmed
that she, not Morris Meadows, provided the requisite health certificate. She
also indicated that Mr. Morris normally provided the groceries for food
for the guests, though occasionally she might have to do some shopping for
which she would be reimbursed. The menu for meals was set by Morris Meadows,
though Ms. Andrews would contact guests to determine what they wanted.
[6]
Of the 25 workers in issue (see Appendix A
attached hereto) Mr. Morris identified six as providing what he called catering
services (those marked with “c” in Appendix A).
He acknowledged that Morris Meadows provided the kitchen with all the equipment
though some workers, Ms. Andrews for example, would bring their own knives. Mr.
Morris testified he would not look into whether the caterers would cater for
others, though Ms. Andrews indicated she did not feel she had time to do so as
she would wait for a call from Mr. Morris to cook for him. She confirmed work
depended on the guest bookings.
[7]
Morris Meadows would charge guests who requested
food so much per plate, while paying the cook an hourly rate. Mr. Morris
maintained that Morris Meadows was not in the restaurant business but
would only supply meals if requested, and would then have to arrange for a cook
or caterer as he called them.
[8]
Mr. Morris provided a copy of Morris Meadows’
business card which stated:
WE OFFER
COMPLETE WEDDING PACKAGES
COMBINE A FAMILY REUNION FOR BOTH SIDES OF THE
FAMILY IN THIS TRANQUIL SETTING
SKATING POND / SLIDING HILL / CLUB MEETINGS
FAMILY REUNIONS / BIRTHDAY PARTIES
FIRST NATIONS TEE PEE VILLAGE
SMALL BUSINESS MEETINGS FEATURING OVERNIGHT
FACILITIES
IGLOO FOR INDOOR RECREATION
NATURE TRAIL FOR A TRANQUIL WALK – GREAT FOR
BIRD WATCHING
[9]
Appendix A lists the workers in issue with their
corresponding income over the years. 11 workers (those marked with an asterisk)
served as waitresses. Mr. Morris offered no explanation for these workers
individually but testified that Morris Meadows would be asked by the
caterer/cook to get servers. Mr. Morris would then hire servers and Morris
Meadows would pay them directly on an hourly basis. There was no written
agreement. The servers would simply jot down on a paper the hours worked. As
can be seen from Appendix A, apart from the Blocks and Alicia Mckendrick, the
servers do not appear to have had very steady work.
[10]
With respect to the provision of food generally,
Mr. Morris explained he looked on this as he did any other additional service a
customer could get at Morris Meadows, for example manicure, pedicure or
massage. He indicated he knew little about cooking and would be unable to
supervise in the kitchen.
[11]
Mr. Morris did testify about all but one of the
remaining individual workers. Mr. Morris had the following comments with
respect to the workers who cooked.
Linda Andrews
[12]
She had previously owned a café in Alix and
continued to provide catering for small jobs after she sold the café. She did
not do this while working for Morris Meadows. In her testimony Ms. Andrews
stated that she believed she was an employee and that her work simply depended
on Morris Meadows’ bookings.
Linda Bellaney
[13]
Mr. Morris stated Ms. Bellaney was a camp cook
for oil companies and would help them out when others could not. He tried to
reach an agreement with her to be Morris Meadows’ cook but could not offer
sufficient work.
Lori Deets
[14]
Ms. Deets appears to have provided most of the
cooking in 2010 but, according to Mr. Morris, after several months it was clear
it was not going to work out for her to take over the catering for Morris
Meadows. Mr. Morris testified that she had tried to get a catering
business going.
Crystal French
[15]
Ms. French worked in 2011 and 2012 and,
according to Mr. Morris, was also trying to start a catering business in
Mirror. She also sold baked goods at Morris Meadows over Christmas.
Julie Richardson
[16]
Ms. Richardson worked at Morris Meadows in 2010
and 2011. She was a daughter of a friend who said she was a good cook and
wanted to get into catering. Mr. Morris had her work with another caterer
before she cooked for a weekend event herself. She did not work out.
[17]
With respect to other workers, Mr. Morris
commented as follows.
Barbara Benner
[18]
Ms. Benner looked after cleaning at Morris
Meadows for a few years. At the time Mr. Morris hired her he understood that
she had seven clients for whom she cleaned house on a regular basis. He advised
her he could not guarantee the same day each week as it depended on bookings,
but she could come on any of the two or three days after an event. She
requested mileage but Mr. Morris told her he would not pay that. She cut back
on her time when she had a baby and eventually Mr. Morris had to move the
cleaning service to Swanson’s Home Maintenance.
Wanda Mckendrick
[19]
Ms. Mckendrick was a neighbour who sold health
products for Nikken Inc. She rented at Morris Meadows on a few occasions for
this purpose. Mr. Morris described her as a host, a position she had with
the Alix Agricultural Society. Mr. Morris asked her to act as such at Morris
Meadows after his wife died. She would also help making beds.
Nadine Lamb
[20]
Ms. Lamb worked for the Lacombe Experimental
Farm, but she helped out as a handyman when the regular handyman was not
available. She also did garden work or painting, supplying her own paintbrush.
She occasionally helped with the beds.
Pat Raabis
[21]
Ms. Raabis also worked as a handyman and worked
as such for other customers.
Tracey Richmire
[22]
According to Mr. Morris, Ms. Richmire had a lawn
care business in Alix for a few years. He used her mainly for yard cleanup in
the fall.
Loree Smith
[23]
Ms. Smith was a neighbour across the road who
would help out cleaning when needed. She did not expect to be paid but Mr.
Morris paid her anyway.
Sharon Smith
[24]
Sharon Smith was Loree’s daughter and helped out
infrequently cleaning.
Mary Anne Stevenson
[25]
Ms. Stevenson is a nurse who offers safety
courses throughout Alberta. She helped her friend, Crystal French, once at a
Christmas party.
[26]
Mr. Morris generalized that all workers came on
a job-by-job basis. The cleaning workers brought their own supplies. Some cooks
brought their own knives. He was unconcerned if any of them worked elsewhere.
[27]
Alicia Mckendrick also testified that she served
as a waitress, helped cleaning, made beds, did some lawn care and also did some
gardening. During the year she worked, she was attending high school. She
believed she was an employee on an hourly wage subject to do whatever Morris
Meadows required. She showed up when called or if needed for gardening or special
events such as a wedding.
[28]
While there is no uniformity as to the
responsibility of all the workers in issue, there are some common elements:
-
hired as and when needed dependent on bookings
-
paid on an hourly basis at a rate determined by
Mr. Morris
-
no written agreement
-
with some minor exceptions equipment to perform
work was supplied by Morris Meadows
Issue
[29]
Is Morris Meadows required to withhold and remit
Employment Insurance and CPP source deductions for the 25 workers? To
determine this issue it must be asked:
(1) Were the workers employees or independent
contractors?
(2) If they were employees, was the employment of a
casual nature other than for the purpose of Morris Meadows’ business?
Analysis
(a) Employee v Independent
Contractor
[30]
The oft-cited starting point for the employee
versus independent contractor discussion is the Supreme Court of Canada’s
comments on the subject in 671122 Ontario Ltd. v Sagaz Industries
Canada Inc.:
47. Although
there is no universal test to determine whether a person is an employee or an
independent contractor, I agree with MacGuigan J.A. that a persuasive approach
to the issue is that taken by Cooke J. in Market Investigations, supra. The
central question is whether the person who has been engaged to perform the
services is performing them as a person in business on his own account. In
making this determination, the level of control the employer has over the
worker’s activities will always be a factor. However, other factors to consider
include whether the worker provides his or her own equipment, whether the
worker hires his or her own helpers, the degree of financial risk taken by the
worker, the degree of responsibility for investment and management held by the
worker, and the worker’s opportunity for profit in the performance of his or
her tasks.
48. It bears
repeating that the above factors constitute a non-exhaustive list, and there is
no set formula as to their application. The relative weight of each will depend
on the particular facts and circumstances of the case.
[31]
The Federal Court of Appeal in 1392644
Ontario Inc. o/a Connor Homes v Minister of National Revenue massaged this approach with
its review of recent jurisprudence as to the role of intention in the analysis,
a factor not mentioned by the Supreme Court of Canada. The Federal Court of
Appeal offered the following:
37. Because
the employee-employer relationship has important and far reaching legal and
practical ramifications extending to tort law (vicarious liability), to social
programs (eligibility and financial contributions thereto), to labour relations
(union status) and to taxation (GST registration and status under the Income
Tax Act), etc., the determination of whether a particular relationship is
one of employee or of independent contractor cannot simply be left to be
decided at the sole subjective discretion of the parties. Consequently, the
legal status of independent contractor or of employee is not determined solely
on the basis of the parties declaration as to their intent. That determination
must also be grounded in a verifiable objective reality.
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 (CanLII), 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.
[32]
In the case before me there is no mutual intent;
there is no written agreement expressing intent. I am left with pursuing a
traditional Sagaz/Wiebe Door Services Ltd. v. Minister of National
Revenue
analysis to determine the central question whether the worker who has been
engaged to perform the services does so as a person in business on his or her
own account.
[33]
In conducting this analysis, I am going to
divide the workers into four categories: waitresses (11), caterers/cooks (6),
cleaners (3) and the rest.
Waitresses
[34]
In considering the 11 workers who served as
waitresses it becomes apparent that not all of the traditional factors play a
determinative role in figuring out the workers’ status. For example, with
respect to control, there was certainly no evidence that Mr. Morris was bustling
around telling them how to serve tables. Having to show up at a certain time
because, for example, there is a wedding, is a neutral factor as far as whether
the workers show up as employees or independent contractors. What else is
controllable? These were very informal unwritten arrangements. If a worker did
not show up on the day and sent a sister I have no doubt Mr. Morris would have
found this perfectly acceptable. Does this suggest the worker is in the
business of serving tables? I think not.
[35]
There is no equipment the worker serving as a
waitress requires; a non‑factor.
[36]
What it comes down to with respect to these
workers is, what was their chance of profit, and conversely, risk of loss? I
find there was none. They simply showed up for an event to serve meals and
receive their hourly wage, a wage determined by Mr. Morris, for doing so – no
more, no less. They incurred no expense. They were exposed to no liability. Any
concerns by customers would be directed to Morris Meadows. There is no evidence
to suggest these workers performed the services as a person in business on her
own account. They were employees.
Caterers/cooks
[37]
There were six individuals who cooked at Morris
Meadows identified as such in Appendix A. Ms. Andrews was the only one to
testify. But it was clear from her testimony, and that of Mr. Morris, that
while Mr. Morris had no hands on supervision as such in the kitchen, Morris
Meadows set the menu and for the most part bought the necessary food. Ms.
Andrews, and the other caterers/cooks, simply worked in Morris Meadows’
kitchen. In the food industry, control over what to serve and control over the
buying of the necessary groceries is significant. I do not accept that a cook
is in business on her own account when she only controls how to cook but not
what to cook and with what groceries.
[38]
I add to the control factor that Morris Meadows
had over the caterers/cooks the fact that the caterers/cooks used Morris
Meadows’ kitchen without any accounting or adjustment to the remuneration to
reflect some rental of the kitchen. It confirms my view that the caterers/cooks
were not independent contractors. I do acknowledge that Ms. Andrews provided
the requisite health certificate and used her own knives, but on balance, I
find these factors do not outweigh the provision of a fully equipped kitchen
without change.
[39]
Further, Ms. Andrews testified she did not
believe she could hire her own helpers. Though there was no direct testimony on
point from Mr. Morris, my overall impression of Morris Meadows’ modus operandi
was that it would simply hire extra help if needed. While Mr. Morris referred
to this group of workers as caterers, I conclude that they were cooks, hired on
an individual basis, not as a catering service which would in turn hire
assistant cooks, waiters or cleaning staff. That was left to Morris Meadows.
[40]
Finally, with respect to this group of workers,
and similar to the waitresses, there is nothing to suggest the cooks had either
opportunity for greater profit or any risk of loss. It was Mr. Morris who simply
set an hourly rate on what I gather was a take it or leave it basis.
[41]
I conclude that an objective review of the
factors points more to an employment relationship than that of independent
contractor. I find the six cooks were not in business on their own account.
[42]
I wish to address Mr. Morris’ evidence that with
a couple of the cooks they were attempting to start a catering business. Without
further collaborative evidence this does not convince me these workers were in
business. At best, I view the situation as Mr. Morris providing some
cooking experience.
Cleaners
[43]
Morris Meadows’ primary cleaner during the years
in issue was Ms. Benner, with a neighbour, Ms. Smith, helping when
necessary. Unfortunately there was little evidence, but the key facts with
respect to Ms. Benner are: Mr. Morris set the hourly rate though he denied
Ms. Benner’s request for mileage, Ms. Benner could clean on any two or three
days following an event, Ms. Benner had other clients, Ms. Benner supplied
cleaning supplies.
[44]
There was no evidence Mr. Morris had any control
over how Ms. Benner cleaned the property.
[45]
With respect to chance of profit and risk of
loss, Ms. Benner could arrange her schedule as she saw fit to accommodate
attendance to her other regular customers. The fact that she sought mileage, although
denied by Mr. Morris, does illustrate a business arrangement being
negotiated. Though the facts are scant, I do see Ms. Benner in a different
light from the others. It appears she was in fact in the cleaning business. I
conclude that she was not an employee but an independent contractor.
[46]
With respect to the neighbours, Ms. Smith and
her daughter, given they were called on an as needed basis, I do not find they
necessarily had cleaning supplies at the ready. While again there was no
evidence of any controlling factor, there is also no evidence they were in the
cleaning business. They were neighbours helping, gratuitously paid by Mr.
Morris. There was no chance of profit or risk of loss. On balance, I find the
work was in the nature of employment.
Other workers
[47]
Of the remaining workers, two worked in
gardening (Ms. Alicia Mckendrick indicated she did some gardening as
well as a number of other jobs), two as handymen and one as a hostess and one
on an one-off basis to help a friend at a certain event. I have no evidence
from these workers to flush out in greater detail the true working
relationship. I am left to rely on Mr. Morris’ evidence, which with
respect to all but Ms. Wanda Mckendrick is sketchy. He did, however, testify
that Ms. Richmire had a lawn care business and he used her for fall yard clean
work. Yet, without providing any detail of the real working arrangement, this
evidence of Mr. Morris simply stating that she was an independent contractor is
insufficient. Ms. Alicia Mckendrick did testify though that she did some
gardening work, but at Mr. Morris’ direction, indicating that Mr. Morris would
set the hours and the rate and that she had to report to him. Further, all
equipment she needed was provided. With no evidence from Ms. Richmire as to
what she provided, what she did or how she did it, I find Mr. Morris has
not proven on balance that she was an independent contractor.
[48]
With respect to Ms. Wanda Mckendrick, her major
role was to act as a hostess for events held at Morris Meadows, though also did
some housekeeping work. Mr. Morris suggested that Ms. Mckendrick was a member
and paid host of the Alix Agricultural Society. Again, I have nothing to
substantiate or corroborate that Ms. Mckendrick was a professional host. There
is no evidence of control one way or the other. There is no equipment. Ms.
Mckendrick showed up as needed to act as host and was paid her hourly wage.
There was no evidence of any negotiations over remuneration. There was no
evidence of any chance of profit or risk of loss. Regrettably there was simply
little evidence. Mr. Morris has not proven that Ms. Mckendrick was an
independent contractor.
[49]
Apart from Ms. Benner who I find was carrying on
her own business, I conclude the remaining workers were not.
Casual employment
[50]
Were any workers in casual employment as
contemplated by paragraph 5(2)(a) of the Act? It reads:
5(2) Insurable
employment does not include
(a) employment of a casual nature other than for the
purpose of the employer’s trade or business;
…
[51]
In the Federal Court of Appeal decision of Roussy
v Minister of National Revenue
the court described casual employment as follows:
7. Hence,
the duration of the time a person works is not conclusive in categorizing
employment as casual; the length of time may be a factor to be considered, but
a more important aspect is whether the employment is “ephemeral”
or “transitory” or, if you will, unpredictable and
unreliable. It must be impossible to determine its regularity. In other words,
if someone is spasmodically called upon once in a while to do a bit of work for
an indeterminate time, that may be considered to be casual work. If, however,
someone is hired to work specified hours for a definite period or on a
particular project until it is completed, this is not casual, even if the
period is a short one. The Tax Court Judge was, therefore, wrong to focus
exclusively on the “built-in expiration known to both at
the commencement”, and on the need to provide “ongoing
employment”. That is not an automatic requirement.
[52]
The workers were hired on an event-by-event
basis. This may have been “spasmotic” to borrow a word
from the Federal Court of Appeal, but the event had a definite start and
finish, even if it may have been short. This work is more properly described as
part-time than as casual. While there is an element of unpredictability, on
balance I find this work was not casual employment. However, even if I
determine that the workers were engaged in casual employment, there is a second
hurdle in the legislation to overcome, that it must have been “other than for
the purpose of the employer’s trade or business”.
[53]
Unfortunately, in publishing the requirements
for the application of this provision, the Canada Revenue Agency (the “CRA”) writes that employment is not insurable in the
situation of “casual employment if it is not for your usual
trade or business”. Mr. Morris has grabbed hold of the term “usual” and argued that providing food was never part of
Morris Meadows’ “usual” trade or business, and
therefore the workers who served food were casual employees excluded from
insurability and pensionability under the legislation. He points to the fact
that in the years in issue he would rely on the caterers to prepare the food.
Indeed, Morris Meadows did not have the requisite health certificate, which he
would require from the caterers who did provide the food. I have, however,
found that the caterers or cooks were employees of Morris Meadows.
[54]
While I can appreciate Mr. Morris’ concern that
by adding “usual” to their understanding of
subsection 5(2) of the Act, the CRA has confused what should be
relatively clear. I need not address whether the serving of food was
Morris Meadows’ “usual” trade or business.
The legislation does not distinguish business from a “usual”
business. And I conclude that by advertising dining facilities, available for
business meetings or weddings, by hiring workers itself to serve the food and
by profiting from such commerce, Morris Meadows was indeed in a business to
which the employment related; that is the casual employment was for the purpose
of Morris Meadows’ business. This is to be contrasted for example to a private
wedding at the home of the parents of the bride, where the parents pay workers
to serve cocktails. The parents are not in the business of hosting weddings.
Morris Meadows was.
[55]
The workers do not fall under excluded
employment as defined in both the Act and CPP legislation.
[56]
In summary, I allow the Appeals only with
respect to the worker, Barbara Benner, who I find was an independent
contractor. The balance of the workers were in contracts of service and,
consequently, in insurable and pensionable employment with Morris Meadows.
Signed at Ottawa, Canada, this 6th day of June 2014.
“Campbell J. Miller”
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