Date: 19980313
Docket: 97-442-UI
BETWEEN:
SYLVIE THÉRIAULT,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Cuddihy, D.J.T.C.C.
[1] This appeal was heard in Toronto, Ontario, on February 18, 1998.
I- The appeal
[2] This is an appeal from a determination by the Minister of National Revenue (the "Minister") of December 27, 1996, where it was determined that Stéphanie Guénette (the "Worker") was employed in the Province of Québec, under a contract of service with the Appellant and William Pétrie (the "Payor"), from September 6, 1995 to May 3, 1996, within the meaning of paragraph 3(1)(a) of the Unemployment Insurance Act (the "Act") because there existed between the Payor and the Worker an employer/employee relationship.
II- The Facts
[3] In rendering his decision the Minister relied on the facts and reasons outlined in his Reply to the Notice of Appeal in paragraph 5 which forms part of this decision as if recited at length herein.
[4] The Appellant, admitted the allegations in subparagraphs (a), (c) and (d). The allegations in subparagraph (b) were admitted with further explanations to be given at the hearing. It was submitted that subparagraph (e) was irrelevant. The allegations in subparagraphs (f) to (h) were denied.
III- The law and analysis
[5] Definitions from the Unemployment Insurance Act
"employment" means the act of employing or the state of being employed."
"Insurable employment"
Subsection 3(1) of the Unemployment Insurance Act reads in part as follows:
"3(1) Insurable employment is employment that is not included in excepted employment and is
(a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise;
[...]"
Brief summary of the evidence
[6] The Appellant and her husband William Pétrie during the relevant period under review, were the heads of a family of five children. They required the services of a baby-sitter in order to allow them both to earn income to support the family.
[7] The Appellant learned from her sister that the Worker would be available to work as a baby-sitter. The Appellant contacted the Worker by telephone. It was agreed that the Worker would be paid for her services at a rate of $50 a day or $250 a week. The Worker was to be at the Appellant’s home from about 8:00 a.m. till about 5:30 p.m., five days a week. These hours coincided with the departure and the return from work of the Appellant and her husband. The Worker was to look after the two younger children that were not attending school, see that they were fed and care for the three older children when they returned from school. The Worker offered to prepare dinner since she was also a good cook. It was accepted that the Worker would eat at the Appellant’s residence although this was not a particular condition of the employment contract. The Worker did not pay for food.
[8] After the Worker had been at the Appellant’s premises for three to four weeks, the Appellant was looking for a housekeeper. The Worker offered to do the housework for an extra $50 a week, for total weekly earnings of $300. She was paid by cheque. She was not paid if she did not work.
[9] The Worker advised the Appellant that she paid her own taxes and that she would provide the Appellant with a receipt. No premiums for unemployment insurance were to be paid and no taxes were to be deducted from the Worker’s income.
[10] The Worker decided when to make the meals, do the laundry, which she was not required to do, and do the housework. The Worker also decided when the younger children would take their naps. The Worker chose the contents of the meals. As a result the Worker needed no instruction as to her baby-sitting, housework or cooking.
[11] In April of 1996, the Worker gave the Appellant a two-week notice that she was leaving. She gave two reasons for leaving: that she was pregnant and tired and wished to continue baby-sitting but for a family of one or two children instead of the Appellant’s family of five. When the Appellant asked the Worker for a receipt, it was not forthcoming. The Appellant then prepared two copies of a receipt and had the Worker sign them. The Appellant filed the receipts in her tax returns.
[12] William Pétrie testified that the Worker was not on salary "if she was there, she was paid, if not she was not". If the mother of the Worker had taken her place it would have been acceptable; this indicated that the Worker could have been replaced by someone else. However, it is accepted that this could have been done but not on a regular basis. This was so, since the Worker did have her mother replace her, on one occasion, for a short period of time. Mr. Pétrie stated that he and his wife were not asked by the Worker to provide any record of employment. No vacation pay was requested or given.
Concluding analysis summary
[13] This Court must adopt the reasoning used by Desjardins, J.A. of the Federal Court of Appeal in Hennick,[1] and I quote:
“While this test is well known, it might be useful at the outset to emphasize that in his analysis of both Lord Wright's fourfold test (control, ownership of the tools, chance of profit, risk of loss) and of Lord Denning's organization or integration test, MacGuigan J.A. in Wiebe Door Services Ltd., stressed all along that what remains of the essence is the search for the total relationship of the parties. He first quoted at length Lord Wright in Montreal v. Montreal Locomotive Works Ltd.[2]
In earlier cases a single test, such as the presence or absence of control, was often relied on to determine whether the case was one of master and servant, mostly in order to decide issues of tortious liability on the part of the master or superior. In the more complex conditions of modern industry, more complicated tests have often to be applied. It has been suggested that a fourfold test would in some cases be more appropriate, a complex involving (1) control; (2) ownership of the tools; (3) chance of profit; (4) risk of loss. Control in itself is not always conclusive. Thus the master of a chartered vessel is generally the employee of the shipowner though the charterer can direct the employment of the vessel. Again the law often limits the employer's right to interfere with the employee's conduct, as also do trade union regulations. In many cases the question can only be settled by examining the whole of the various elements which constitute the relationship between the parties. In this way it is in some cases possible to decide the issue by raising as the crucial question whose business is it, or in other words by asking whether the party is carrying on the business, in the sense of carrying it on for himself or on his own behalf and not merely for a superior.”
[Emphasis in text]
[14] Then, she added:[3]
“... I interpret Lord Wright's test not as the fourfold one it is often described as being but rather as a four-in-one test, with emphasis always retained on what Lord Wright, supra, calls "the combined force of the whole scheme of operations," even while the usefulness of the four subordinate criteria is acknowledged.
. . .
What must always remain of the essence is the search for the total relationship of the parties . . .
Of course, the organization test of Lord Denning and others produces entirely acceptable results when properly applied, that is, when the question of organization or integration is approached from the persona of the "employee" and not from that of the "employer", because it is always too easy from the superior perspective of the larger enterprise to assume that every contributing cause is so arranged purely for the convenience of the larger entity. We must keep in mind that it was with respect to the business of the employee that Lord Wright addressed the question "Whose business is it?"
[my emphasis]
[15] It is not the name you give a contract that makes it what it is. It is the total relationship of the parties that determines what the contract is.
[16] Décary, J. of the Federal Court of Appeal in Normand Charbonneau,[4] stated:
“...
Two preliminary observations must be made.
The tests laid down by this Court in Wiebe Door Services Ltd. v. M.N.R. [5] - on the one hand, the degree of control, the ownership of the tools of work, the chance of profit and risk of loss, and on the other, integration - are not the ingredients of a magic formula. They are guidelines which it will generally be useful to consider, but not to the point of jeopardizing the ultimate objective of the exercise, which is to determine the overall relationship between the parties. The issue is always, once it has been determined that there is a genuine contract, whether there is a relationship of subordination between the parties such that there is a contract of employment (art. 2085 of the Civil Code of Québec) or, whether there is not, rather, such a degree of autonomy that there is a contract of enterprise or for services (art. 2098 of the Code)...
Moreover, while the determination of the legal nature of the contractual relationship will turn on the facts of each case, nonetheless in cases that are substantially the same on the facts the corresponding judgments should be substantially the same in law. As well, when this court has already ruled as to the nature of a certain type of contract, there is no need thereafter to repeat the exercise in its entirety: unless there are genuinely significant differences in the facts, the Minister and the Tax Court of Canada should not disregard the solution adopted by this court.
In our view, when the judge of the Tax Court of Canada allowed the respondent’s appeals in this case and found that the contract was a contract of employment, he fell into the trap of doing a too mathematical analysis of the tests in Wiebe Door, and as a result he wrongly disregarded the solution adopted by this court in Attorney General of Canada v. Rousselle et al.[6] and upheld in Attorney General of Canada v. Vaillancourt.”[7]
[17] Section 2099 of the Code civil du Québec, reads as follows:
ART. 2099 L’entrepreneur ou le prestataire de services a le libre choix des moyens d’exécution du contrat et il n’existe entre lui et le client aucun lien de subordination quant à son exécution. CCBC 1139, 1666, 1670
[underlining by undersigned]
[18] What was the total relationship between the parties? What was the combined force of the whole scheme of operations?
[19] In this case, what were the legal obligations of the parents, toward their children, while working and no longer at home in order to earn income to support the family? The Appellant and her husband were both legally required to have someone either take their place at home or away from home. Thus the contract between the parties.
[20] The terms of the contract, the way it was entered into and the conduct of the parties before, during and after the work period, must be analysed in order to decide whether the relationship was one of an employer/employee or whether the degree of autonomy was such that the evidence demonstrated a contract for services.
[21] From the evidence, it appeared conclusive that the Worker was a baby-sitter with some experience. The fact she was found through the Appellant’s sister is an indication that she had rendered this type of service previously. Also, when she voluntarily left the premises of the Appellant, she indicated that one of the reasons for leaving was she would rather work as a baby-sitter for a family of one or two children rather than work for the Appellant’s family of five. It is accepted that her pregnancy and her fatigue were also invoked as the other reasons for ending her services. The evidence did not indicate whether she offered her services elsewhere after her departure, but it would not be unreasonable to conclude that this was her intention and that this could have occurred.
[22] When she began her work, she informed the Appellant that she paid her own taxes and that a receipt would be provided. In fact, the evidence established that on her departure she did admittedly with reluctance give a receipt as explained by the Appellant. Why would she at the beginning consent to give a receipt and then change her mind in April? This evidence goes to show that at the initial stage of the contract and up until she decided to leave in April the intentions of the parties were that the Worker would provide a receipt for her services.
[23] In the carrying out of her duties the Worker was free to organize her own schedule and needed or required no direct supervision in this respect. It is accepted that the Worker rendered the services at the home of the Appellant, which in the present case, was much more practical than if the children had to be dropped off at another location. This factor did not modify the initial agreement between the parties. As to the important test of subordination, the Worker was free to decide how she would execute the work in the absence of the Appellant. It is accepted that the Appellant would call the Worker at times to inquire about the children but this would be expected in every situation of this nature. This did not prevent the Worker from deciding on her own the way she would execute her services.
[24] As to the chance of profit and risk of loss, it appeared that if the Worker had worked more days she would get more pay. If she did not work she did not get paid. She did offer to do housework and was actually paid $50 extra a week. Even the Minister alleged that she was paid according to the number of days worked. Although she worked from Monday to Friday, nothing in the evidence demonstrated that she was exclusively employed by the Appellant. She could have worked nights or week-ends elsewhere and in fact she was contemplating after the work with the Appellant to work for a less numerous family and voluntarily stopped providing the services. Was she working nights or on week-ends for others?
[25] As to the integration test, it would be accepted that the baby-sitter replaces the parents and is vested with their parental authority in their absence and her work is thus integrated into the organisation of the day-to-day operation of the family but the Worker executes her services in the manner which was described above.
[26] Why did the Worker not request a record of employment when she left? What did she say in her application for unemployment insurance benefits that prompted the Minister to request from the Appellant a record of employment and also to pay the Worker’s taxes? What did the Worker report in her income tax return for 1995, which must have been filed with the Minister before the Worker left her employment? The evidence of the Appellant was to the effect that the last cheque made out to the Worker was May 3, 1996. Did the Worker file her return on or before April 30, 1996? Did she indicate, as an employer, the Appellant? Did she file a copy of the receipt she signed or the cheques she received? Did the Worker report earnings from the Appellant as an employer in her taxation year 1996? Could it be that the Worker did not report her income and that the Minister took the position he did as a result?
[27] No evidence was heard from the Worker, she did not intervene in the proceedings as she could have, and the only accepted evidence is what was heard before me. I heard nothing more from the Respondent.
[28] After seeing and hearing these two witnesses, I have no reason to disbelieve them. They have demonstrated on a balance of probabilities, that the Worker was paid for the services offered and provided, which must be qualified as a contract for services since this Worker was in the business of providing this type of service on her own account. This is the only logical conclusion which may be derived from the evidence in this case when analysing the total conduct and contractual relationship of the parties.
IV- Decision
[29] The appeal is allowed and the Minister's decision is vacated.
Signed at Dorval, Quebec, this 13th day of March 1998.
"S. Cuddihy"
D.J.T.C.C.