Mohr v. M.N.R., docket 97-481-UI

Date: 19971127

Docket: 97-481-UI; 97-90-CPP

BETWEEN:

LOUISE MOHR,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

(Delivered orally from the Bench in Regina, Saskatchewan, on October 24, 1997)

Mogan, J.T.C.C.

[1] The issue in these appeals is whether Shelley Agnew (Shelley) who provided childcare services to the children of Louise Mohr (the Appellant), was engaged in insurable employment or whether she was an independent contractor. The Appellant and her husband have three children: Colin born in August 1990, Spencer born in September 1991 and Renee born in June 1993. The father is employed with Saskatchewan Power and the mother is employed by the Regina Fire Department in the capacity of an administrator. Both the father and the mother have full-time employment in those capacities. Because they were fully employed, they needed someone to provide childcare for their three infant children.

[2] In January 1994, the Appellant and her husband entered into an arrangement with Shelley to provide childcare to the three children as follows. Shelley would come to the house of the Appellant and her husband each weekday at 7:30 a.m. and remain there until 5:30 p.m. During that ten-hour day, Shelley had the sole custody of the three children and was responsible for their physical and emotional care and needs. She fed them meals, took them out to the park and to the library. She could take them to her own home which was an apartment, but the daycare had to be provided in the home of the Appellant because it was not convenient to take the children to Shelley's apartment. Also, by having Shelley come to the Appellant's home, all of the facilities were there for looking after small children, such as bottles, toys and supplies like clothes, diapers and laundry facilities. The arrangement was that Shelley would do laundry and light housekeeping so that the parents would not come home at night to find an accumulation of soiled children's clothing. Shelley had great freedom during the daytime so long as the children were cared for in a responsible manner. She could go pretty well where she wanted. If she was going to use a vehicle, however, the Appellant and her husband insisted that Shelley use their family van which was fitted with appropriate childcare seats and seatbelts to protect the children while the van was in motion.

[3] Shelley apparently had a Bachelors degree in Education, and also a CPR course in health science and safety as well as a first aid course. She was compensated at the rate of $50 per day or $250 per week and she was paid twice a month so that there were 24 pay periods per year. As mentioned, she began work for the Mohr family in January 1994 and continued until September 1997, when she left to work elsewhere. Shelley was obviously a responsible person.

[4] The question in these appeals is whether the services provided by Shelley can be characterized as a contract of service, therefore giving rise to insurable employment, or whether she was an independent contractor and not an employee engaged in insurable employment pursuant to the Unemployment Insurance Act and the Canada Pension Plan.

[5] The Appellant argues that Shelley was an independent contractor because, apart from the duties assigned by the Appellant and her husband, she had considerable freedom in taking on other similar work. For example, in 1994, a child by the name of Amanda Walton who was eight or nine years of age needed childcare since her parents worked. An arrangement was made with Amanda’s parents that she could go to the Mohr home at 12:00 noon to have lunch prepared by Shelley and also go there in the afternoon from 3:30 p.m. to 5:30 p.m. to be under Shelley's care until Amanda’s parents were able to pick her up. The Appellant stated that she had no knowledge of what the compensation arrangement was between Shelley and Amanda's parents because she thought that was not her concern. She did note, however, that Amanda came to the Mohr home and she had no objection to that.

[6] Similarly, in 1995, Shelley looked after two other children named Ben and Heidi, a brother and sister. They were quite young, one being six months old and the other about 2½ years old. Apparently, the parents of Ben and Heidi struck an arrangement with Shelley whereby she did look after them and, when the Appellant became aware of this additional arrangement, she did not object because Shelley seemed to be able to handle two more children and the arrangement was casual and on a less frequent basis. The Appellant was not aware of what compensation was being paid to Shelley by the parents of Ben and Heidi.

[7] Also, there was another child, Nicholas, from across the street whose parents worked and they asked the Appellant if Shelley could look after their son on occasion as well. The Appellant said to Nicholas' parents: “You will have to ask Shelley. It is okay with us, if it is okay with her, but that is your separate deal.” In that situation, Shelley declined to look after Nicholas because he was such a tiny baby. She did, however, from time to time provide childcare services for Nicholas in the Appellant’s home, but only in situations which I would call “panic calls” when whoever was looking after Nicholas could not come and they needed a caregiver on short notice. Shelley would take Nicholas for one-half day to a full day, but not as a regular commitment.

[8] The Appellant put forward these examples of Amanda, Ben and Heidi and Nicholas to show the flexibility that Shelley had; that she was not tied down to giving services exclusively to the children of the Appellant and her husband; and to put Shelley more in the position of being a person engaged in a business with clients among whom the Appellant and her husband were only two. There is some merit in that. Shelley had other discretionary uses of the Mohr home. She used their home computer for her own assignments; she did needlework and other hand work and obviously earned the responsibility which the Appellant and her husband vested in her.

[9] Sometime in the fall of 1995, Shelley wanted to upgrade her skills and went to the Canada Employment Centre to see about courses. When the Centre inquired into her background, it was discovered that there were no unemployment insurance premiums and Canada Pension Plan contributions being paid by her or by the Appellant with regard to the services she was providing and the question arose as to whether she was engaged in insurable employment. In February 1996, the Minister of National Revenue ruled that Shelley was an employee and that her insurable employment should be regarded as commencing as of January 1995. Shelley and the Appellant appealed from that ruling and late in 1996, the Minister’s ruling was confirmed. From that confirmation, an appeal is brought to this Court.

[10] I had some doubt as to whether this might be regarded as casual employment within the meaning of paragraph 3(2)(b) of the Unemployment Insurance Act. However, no argument was put to me with any jurisprudence on the extent to which that paragraph has been construed, and my instinct is that without hearing legal argument, it is not casual employment because of the regularity and consistency with which the service was rendered 10 hours per day, five days per week, 52 weeks per year. I believe that takes it out of the category of being employment of a casual nature. It does not, however, answer the question as to whether Shelley was an employee or an independent contractor. In argument, counsel for the Respondent referred me to the well-known tests laid down by the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. For convenience, I shall briefly apply those tests to this situation.

[11] On the question of control, that test favours employment over independent contractor because the hours were laid down by the Appellant, the service was to be performed to the convenience of the Appellant and her husband, namely, from 7:30 a.m. to 5:30 p.m. The duties were assigned by the Appellant and had to be performed to her satisfaction both with regard to the physical care such as providing meals, cleaning the children, doing the laundry, and the emotional care of looking after the children in an atmosphere where they would feel secure, comforted and protected. There is a certain responsibility in control because in 1995, the oldest child would have been five years old and able to complain to his mother. Both Colin and Spencer could have complained to their parents by 1995 and 1996 if they were not happy or if Shelley had been treating them in an irresponsible manner. Therefore, although there was no direct hands-on supervision through the 10 hours of the day, there was a control mechanism in terms of whether the children were being cared for in a responsible, secure, safe and happy environment. On the test of control, I believe that test favours employment over Shelley being an independent contractor.

[12] With regard to the ownership of the tools, my first reaction is that tools were never thought of in connection with services like this. Tools in the workplace usually relate to either hand tools, like the carpenter's hammer and saw, or a machinist’s tools, like a lathe and a drill press. One does not think of tools in connection with childcare but, if the word is to be given a broader meaning, that is the properties that would permit a service to be rendered, those personal properties would be dishes and cutlery to feed the children, a stove to warm their food, toys with which they played, diapers for infant children because they are necessary items for the care of a very small child, a van to transport the children if they are to be taken on outings of any kind. Since all of these “tools” were owned by and provided by the Appellant, that test favours employment.

[13] The third test is the chance of profit and risk of loss. In this regard, the Appellant argues that Shelley’s opportunity either to take on additional children like Amanda, Ben and Heidi and Nicholas, or decline, is a chance for her to enhance her earnings or not. There is no question that she had that discretion with the permission of the Appellant, but I do not think that is the relevant fact in applying the test of chance of profit or risk of loss. I see no risk of loss at all because as long as the assigned duties were performed, the compensation of $50 per day would be paid. Although it was not fixed like an hourly rate, it was just as secure as any hourly wage or a daily or weekly salary that might arise in other service situations. I see the chance of profit and risk of loss as being in favour of employment because there was an assured compensation and no risk of loss. Whether Shelley was inclined to take on the services of looking after other children was up to her and the parents of the other children. It has no bearing, in my view, on the fixed permanent relationship that was established between Shelley and the Appellant.

[14] The integration test as I indicated to the parties in argument, is not relevant in this case. Shelley was primarily the caregiver on behalf of the Appellant.

[15] It is interesting how this case came up because, in my view, and I think this is clear from the evidence of the Appellant, neither she nor Shelley ever thought of this service as being insurable employment. The thought simply had not crossed their minds and would not have crossed their minds but for the fact that Shelley went to the Canada Employment Centre to find out about certain programs that might be available to her. Her inquiry caused some officer of that Centre to ask the logical question “Are you now engaged in insurable employment and what are you doing?” Once Shelley tells her story, it triggers a whole series of inquiries as to whether the service Shelley provides to the Appellant is insurable employment and, after a long process, it brings the parties to this Court.

[16] I find on the law that Shelley was engaged in insurable employment. The jurisprudence states that that is so. I might say, however, that I cannot imagine that when the legislation was originally introduced in the late 1940s or revised as it has been from time to time, that up until recently anyone would have thought of the casual work of a childcare person in the home as being insurable employment, giving rise to rights to unemployment insurance. We live in a society where laws and regulations are becoming overly intrusive in the lives of cititzens. This is an area where one person who wants to expand her skills inquires about some form of assistance and triggers a whole series of ramifications, which suddenly put Shelley and the Appellant not only into an employer/employee relationship, but into one which gives rise to the need to withhold and remit unemployment insurance premiums and Canada Pension Plan contributions. It is an indication that we are an over-regulated society, but Judges do not make laws. They only interpret them and apply them to certain fact situations: what I am obliged to do in this case. Reluctantly, I hold that Shelley was engaged in insurable employment in 1995, 1996 and 1997 and the appeals are dismissed.

Signed at Ottawa, Canada, this 27th day of November, 1997.

"M.A. Mogan"

J.T.C.C.