Tax Court of Canada Judgments

Date: 20000104

Docket: 98-726-UI; 98-106-CPP

BETWEEN:

FAMILY SERVICES PERTH-HURON,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Rip, J.T.C.C.

[1] Family Services Perth-Huron ("Agency"), a non-profit charitable organization, appeals from a decision by Revenue Canada pursuant to the Unemployment Insurance Act and Employment Insurance Act ("Acts") and a determination under the Canada Pension Plan that Nicole Savage, a special service provider, was employed by the Agency under a contract of service and therefore is considered to have been in an employee-employer relationship with the Agency for the period 11 September 1995 to 8 November 1997 ("period"). Therefore, the Agency was informed that it is liable for insurance premiums payable under the Acts on the earnings paid to Ms. Savage during the period and for payment of Canada Pension Plan contributions.

[2] The Agency is operated by a volunteer Board of Directors to carry on a variety of social services in Perth County, Ontario, including marriage counselling, credit and debt management, in-home auspice services, senior citizens' programs, respite services and services for children with disabilities. The Agency is funded from several sources: donations, fees for services and contractual agreements with municipal, provincial and federal governments.

[3] The program in issue is the Special Services at Home Program ("Program") of the Ontario Ministry of Community and Social Services within Perth County. The Agency refers people requiring or desiring the services available under the Program, or under private contract, to what is referred to as a service provider ("provider"). The Agency provides two types of services under the Program: support services and respite services, and frequently a combination of the two.

[4] In the appeals at bar support services under the Program are provided at home to children who may have developmental or physical handicaps or require specific services. These services include behaviour management, speech therapy, occupational therapy, life skills and training. The family sets the goals it wishes to achieve for the child but there is latitude for the family and the provider to adjust the goals. Family members work with the child and the provider to reach the goals.

[5] Respite services under the Program permit a caregiver an opportunity to take time off from caring for a person. This includes day care. The provider will attend at the home of the client to permit the caregiver time off.

[6] There is a contract between the Agency and the provider for support services and another contract for respite services. A provider may render services to more than one client. A provider may offer his or her services elsewhere as well. (Details of the contract between the Agency and a provider are described later on in these reasons.)

[7] Alan MacIntyre, the Agency's Executive Director, testified that the Agency employs 3½ persons who are designated co-ordinators of special services at home and are responsible for the family accepting the Program's services.[1] The co-ordinators are qualified in developmental services and all have a Bachelor's degree. There are about 180 families (sometimes referred to as a "client") in the Program that is carried on by the Agency. The workload is divided amongst the co-ordinators who are responsible for matching each family with a provider. There is also a supervisor of co-ordinators who is also an employee of the Agency.

[8] Potential providers apply for the position directly to the Agency. The Agency advises Human Resources Canada of any vacancy and also advertises in newspapers for providers. It also relies on word of mouth. Résumés are vetted and a police check is made for each applicant. The Agency also interviews each applicant.

[9] The Agency does not engage a provider's services immediately. Once an applicant is accepted by the Agency, the provider's name is placed on a list maintained by the Agency for the purpose of providing services on a case by case basis to approved clients. There are usually about 75 to 100 people on this list, of whom ten are volunteers. While the provider is on the list maintained by the Agency, the provider receives no compensation from the appellant. Only after the provider and the family agree to work together is a contract entered into between the Agency and the provider; the contract is usually for a six month term but can be renewed.

[10] A family applies for assistance to the Agency. The Agency arranges a meeting between the family and a provider. A co-ordinator also attends the meeting. If the family does not like the provider, or if the provider does not want to work with a particular family, another meeting is arranged for the family and another provider.

[11] A psychologist or social worker prepares a program for the client that is to be followed by the provider in servicing the client. Both the family and the provider must agree to work together. They jointly arrange for the hours the provider will provide his or her services. There has to be a good rapport between the client and the provider, said Mr. MacIntyre.

[12] A support contract[2] under the Program entered into between the appellant and the provider sets out the name of the client who will receive the support services as well as the number of hours per week the services will be provided and the rate per hour. The contract specifies that the time periods that services are to be provided are to be established between the parent of the child, the provider and the co-ordinator.

[13] The Agency enters into an agreement with the family of the client who seeks aid. "Private purchase contracts" are completed by the client's family and the Agency. The parent agrees to purchase services from the Agency for their child during a fixed period of time and agrees to pay the Agency a fixed sum per hour plus training costs and transportation costs. There is no payment from the client or his or her family to the provider.

[14] A contract between the Ministry of Community and Social Services and the Agency for similar services authorizes the Agency to provide the service to a specific person and the Agency is paid a fixed amount per hour.

[15] The Agency offers the provider a basic training program. Notwithstanding any qualification the provider has obtained elsewhere, the Agency wants to ensure he or she is properly trained for the work he or she will undertake under the Program. The Agency also provides training for specific needs of a child. For example, the Agency will train a provider how to serve a child with cerebral palsy. In the latter case, the provider is expected to attend at a medical practitioner's office with the family and patient.

[16] The provider is to maintain time sheets and travel expense sheets. These documents are signed by the client and submitted to the appellant on the first day of each month. The time sheet sets out the name of the client, the type of service provided, the day of the week the provider was at a particular client's and the number of hours the provider was at the client's home. The provider is not paid until the time sheet is approved by the Agency. This applies to both service and respite providers.

[17] A provider is entitled to a travelling allowance if the provider used his or her vehicle more than 20 kilometres in a given day. Any travel is recorded on the travel expense sheet. The 20 kilometres is calculated on the basis that the provider would travel 20 kilometres to and from the provider's home and the client's home. The allowance is for mileage incurred by the provider for outings while at the client's home and for mileage when travelling from one client's home to another client's home. In the appeal at bar, Ms. Savage owned her own automobile and was responsible for insurance and licencing of the vehicle together with all operating costs.

[18] A service provider is responsible for implementing the programs prepared by the Agency, keeping program records and submitting progress reports to the Agency. The provider is also to report to the special services co-ordinator as assigned. The special services co-ordinator is responsible for supervising and monitoring the program used. A job description is attached to the contract. The job description of a support provider sets out the responsibilities of the provider and the personal qualities required. Responsibilities include:

- provide for the overall care and welfare of the client by meeting all the standards and requirements of the program;

- meet regularly and review contract hours with co-ordinator and/or Program Consultants as assigned;

- attend training sessions;

- accompany client/family to treatment assessment centres as assigned;

- observe, participate and implement client's individual therapies as assigned (e.g. physio, occupational, and speech therapy);

- attend and participate in case conference;

- maintain accurate clinical records within parent relief booklet;

- submit finished reports/clinical notes to co-ordinator monthly;

- keep all relevant parties informed of client's condition/progress both verbally and through written reports;

- ensure that medical information and medication forms, assessments, consent forms, and client information forms on the client are up-to-date for current parent relief period where appropriate;

- administer and record documented medication if service provider is over 18 years of age;

- understand the needs of the client;

- provide opportunities for stimulation and development;

- maintain a safe environment for the client;

- fulfil primary responsibility of providing in-home support while doing appropriate light housekeeping duties in the absence of client's caretaker (e.g. prepare simple meals);

- plan and/accompany client on leisure/recreation activities;

- assist in development of resources for programing;

- encourage parents to carry through programs;

- inform co-ordinator of need for change in program for client as necessary;

- inform co-ordinator immediately if any problems/concerns arise.

[19] A provider is required to have good communication skills, flexibility, willingness to learn, ability to function in an independent working situation according to the job description. A respite contract contains a similar, although not identical, job description.

[20] Under a respite contract the provider provides services to the client for a maximum number of hours per week or up to so many days per a month at an hourly rate. If the provider works over seven hours in any one day, that is considered a per diem rate and the provider will be paid at a flat fee per day. The services to be provided are established by the parents, the provider and the co-ordinator.

[21] The respite contract also states the provider is not an employee. The respite provider is responsible for the overall care and welfare of the client, record keeping and reporting to the special services co-ordinator. Again, the special service co-ordinator is responsible for supervision and monitoring of the program for the client. A similar job description, but not identical to that attached to a service provider's contract, is also attached to the contract for respite services.

[22] A provider is to consult with the co-ordinator before going on any outings and any outing must be accounted for on a program outline for the particular client.

[23] No services are provided by the provider at the Agency's establishment, nor is there space available at the Agency for the provider to work. The provider carries no identification indicating that she or he works for the Agency. The provider is not under the direction, control or supervision of the Agency or any of its officials at the time the provider is performing services with a client.

[24] The Agency may direct a provider to attend meetings and conferences and the provider is paid for attendance. If a provider is ill, he or she is not paid for time not working.

[25] A program that has been devised for a particular client must be followed by the provider. Within the constraints of the individual's program, the provider is responsible, and has discretion, for providing the services for which the family engaged the Agency. If a program does not appear to be successful, the provider is to inform the Agency. The provider plans and accompanies the client on leisure or recreational activities and implements programs and individual training plans or plans of care. It is the service provider who encourages parents to carry through with suggested programs. The provider and the client and his or her family determine how the services will be provided, when they will be provided and how they will be provided. However, the provider must provide the service within the context of the contract he or she has with the Agency.

[26] Mr. MacIntyre and Ms. Susan Melkert, a supervisor of the family support team at the Agency, agreed that the Agency is required to monitor the services being undertaken under the Program and ensure that the contractual responsibilities of the Agency and the providers are fulfilled to the satisfaction of the client and the family involved. However, it is their view that such monitoring occurs as an oversight function rather than as a daily control mechanism.

[27] From time to time co-ordinators may attend the homes of the families who have secured the services to evaluate the type of job the provider is performing and to ensure that the services are being provided. The co-ordinator and the provider may also meet regularly to discuss the progress of the clients. The meetings may be weekly at first, then twice a month and, thereafter, when the provider has proven himself or herself, monthly or less frequently.

[28] The client's family and the co-ordinator prepare a book (referred to at trial as a "yellow book") of detailed instructions for the service provider. The book is prepared from questions the co-ordinator has asked the family and the answers given by members of the family. The co-ordinator "co-ordinates" the information from the family and other participants dealing with the child and is made available as an aid to the provider. Ms. Melkert explained that this is not a book of instructions given to the provider for the purpose of monitoring, supervising or controlling the day-to-day discretionary activities of the provider.

[29] A "green" jacketed file is also given to the provider. This file describes the goals the family wish to accomplish through the program designed by the Agency.

[30] The number of hours worked on any particular day or in any particular week or month is dependent upon the hours the provider has agreed with the family to work. A provider may provide services to one or more clients and the amount of work the provider will undertake is dependent on the number of clients that provider wishes to serve and the Agency views as a reasonable workload.

[31] If a provider, in the course of providing services to a family, is of the view that the child for whom the services are being performed lacks certain toys or equipment the provider has to provide these toys and tools out of his or her own pocket. The Agency does not provide any "tools" or "equipment". If a child is to attend at the home of a provider, the provider pays for food, bedding, and other supplies, including a toilet training seat, out of his or her own pocket without reimbursement by the Agency. Also, the provider must ensure the house is safe and, toward this end, must place all medicines under lock and have a fire extinguisher at home.

[32] The Agency hired Ms. Savage to provide both support and respite services. The services she provided to clients were similar to services provided by other providers to clients in similar circumstances.

[33] Ms. Savage first worked for the Agency as a volunteer. During the period in issue she had approximately 15 to 20 contracts, each for a six month term, with different families. During part of the time in issue, she also worked part-time as a customer services representative at the Stratford Festival. Ms. Savage was in her final year at Sir Wilfrid Laurier University, studying psychology, in 1995. One of the courses Ms. Savage studied was entitled "Children with Disabilities". She acknowledges that the university courses helped her in her job. Ms. Savage had only had two respite clients at home where she resided with her parents. She acknowledged that she did not have much training as a respite provider. The Agency informed Ms. Savage on fire precautions and procedures and how to give a child medication. She stated she attended therapy with a child but did not purchase any toys or equipment. She was also paid for attending the meetings with the Agency.

[34] The principles that a court should consider in determining whether persons are in an employer-employee relationship are set out in the Federal Court of Appeal decision of Wiebe Door Services Ltd. v. Canada.[3] In Wiebe Door, MacGuigan J.A. adopted what he refers to as the "four-in-one test" of Lord Wright in Montreal v. Montreal Locomotive Works Ltd. et al.[4] Lord Wright combined and integrated the traditional tests of (a) degree or absence of control by the alleged employer, (b) ownership of tools, (c) chance of profit or risk of loss and (d) integration of the worker's work to the employer's business in order to seek out the meaning of the transaction between an employer and a worker.[5] It is "the combined force of the whole scheme of operations" that must be emphasized even while acknowledging the usefulness of the four traditional tests.

[35] One must search for the essence of a relationship between an employer and a worker. MacGuigan J.A. describes Professor P.S. Atiyah's[6] counsel to be of great value:

[I]t is exceedingly doubtful whether the search for a formula in the nature of a single test for identifying a contract of service any longer serves a useful purpose. ... The most that can profitably be done is to examine all the possible factors which have been referred to in these cases as bearing on the nature of the relationship between the parties concerned. Clearly not all of these factors will be relevant in all cases, or have the same weight in all cases. Equally clearly no magic formula can be propounded for determining which factors should, in any given case, be treated as the determining ones. The plain fact is that in a large number of cases the court can only perform a balancing operation, weighing up the factors which point in one direction and balancing them against those pointing in the opposite direction. In the nature of things it is not to be expected that this operation can be performed with scientific accuracy.

This line of approach appears to be in keeping with what Lord Wright said in the little-known Privy Council decision in Montreal Locomotive Works ...

[36] MacGuigan J.A. found the best synthesis in the words of Cooke J. :[7]

The observations of Lord Wright, of Denning L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes", then the contract is a contract for services. If the answer is "no" then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him.

[37] When considering an appeal of this nature there will be factors that favour an employer-employee relationship and those that suggest the worker is an independent contractor. The trial judge, the authorities say, is to consider all of the factors together – one factor not necessarily being more important than another factor – and from his or her appreciation of, or reaction to, the relevant factors or tests, make a decision. The trial judge should look at the forest, not the trees. It is the sum of all relevant factors that determine the relationship between the worker and the employer, not separate factors or tests. There are cases, however, where in the same way one tree may dominate a forest, a particular factor or test may dominate and determine the nature of the relationship. This is not the case in the appeals at bar.

[38] In the case at bar the weight of all the relevant factors lead me to conclude that the relationship between the Agency and Ms. Savage was not one of employer and employee: Ms. Savage was an independent contractor.

[39] Any control the Agency exercised over Ms. Savage was minimal. Ms. Savage was required to attend a training course as well as periodic meetings. She was required to prepare reports on the progress of the clients. She followed a program prepared by the Agency to be used in serving the client. None of these requirements, or the combined requirements of the Agency set forth in the contracts with providers, culminate in a degree of control that significantly colours the relationship between the Agency and the providers. Evidence was led that Ms. Savage had the ability to exercise her discretion, ability and judgment when providing services to the children and their respective families and to any reports she was required to write was for the purpose of reporting progress of the client. Meetings with the co-ordinator of services were to assist Ms. Savage in performing her work, not in limiting her discretion.

[40] At the same time it was Ms. Savage and the client's family who determined when she would work. Ms. Savage had the freedom to accept or reject working with a particular family. The job description attached to the contract with the Agency is just that: a description of what is expected from a provider; it is not a means of control. Similarly, progress reports submitted by a provider ought not be construed as a means of control.

[41] The Agency had no tools and provided no facility in its offices to the provider to perform any of his or her functions. Any tools had to be obtained by the provider from his or her own resources. The work was primarily done at the home of the client.

[42] The provider's profit was determined by the number of hours worked with a client and the number of clients a provider wished to serve. The provider elected whether to diminish his or her earnings by purchasing supplies and tools for the client. The provider was not paid when, because of illness, for example, he or she could not attend at the client's home. The provider was paid only for the time he or she was contracted to work. And it appears that if the provider is ill, the Agency cannot replace him or her with another provider.

[43] The Agency carries on social services in the community. Of course, without the provider it cannot provide services under the government Program. The work performed by the providers forms an integral part of the services the Agency is mandated to perform. On the other hand, a person, after successfully completing various courses, may obtain a skill which he or she may use for profit. Nothing prevents the Agency from contracting the services of these persons and, as Cooke J. stated, a person like Ms. Savage who engages herself to perform services for another, in the appeals at bar, the Agency, may well be an independent contractor even though the provider may not carry on an existing business.

[44] Ms. Savage was not engaged in insurable employment or pensionable employment during the period in issue within the meaning of the Acts and the Canada Pension Plan. The appeals are allowed and the decisions of the Minister of National Revenue under the Acts are vacated and the Minister's determination under the Canada Pension Plan is reversed.

Signed at Ottawa, Canada, this day of January 2000.

"Gerald J. Rip"

J.T.C.C.

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