Date: 19980616
Dockets: 97-52-UI; 97-78-CPP
BETWEEN:
RAYMOND STERN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Lamarre, J.T.C.C.
[1] These are appeals against determinations by the Minister of National Revenue ("Minister") of a question under section 61 of the Unemployment Insurance Act ("Act") and under section 27 of the Canada Pension Plan ("Plan"). These determinations were to the effect that Mr. George Inniss, while employed by the appellant for the period from November 15, 1992 to November 20, 1995, held insurable employment pursuant to paragraph 3(1)(a) of the Act and pensionable employment pursuant to paragraph 6(1)(a) of the Plan.
[2] In making his determinations, the Minister relied on the assumptions of fact set out in paragraph 4 of the Reply to the Notice of Appeal, as follows:
(a) the Appellant is involved in rental properties;
(b) the rental properties in question are located at 91 James Street and 519 Gilmour Street in Ottawa;
(c) the employee was hired by the Appellant to perform janitorial and maintenance services at the properties mentioned in paragraph (b) above;
(d) the employee's duties included collecting the rent from tenants, distributing mail and to show the property to potential tenants;
(e) the employee lived and performed the services on the Appellant's properties;
(f) the employee had a sign on his door indicating the office hours were between 9:00 a.m. and 6:00 p.m.;
(g) in 1993, the employee was paid $100.00 per month in cash by the Appellant and the employee was also provided with rent free accommodations by the Appellant, valued at $450.00 per month;
(h) just prior to leaving his employment with the Appellant, the employee was paid $600.00 per month in cash and in addition was provided with rent free accommodations valued at $550.00 per month;
(i) although no moneys were paid by the employee to the Appellant for the employee's apartment, the Appellant required the employee to give him a receipt for rent purportedly paid by the employee to the Appellant;
(j) the employee's rate of pay was determined by the Appellant;
(k) in addition to performing the duties indicated in paragraphs (c) and (d) above, the employee also performed other repairs or performed services at other properties owned by the Appellant;
(l) the employee was paid additional remuneration by the Appellant, for the additional work performed by the employee, indicated in paragraph (k) above;
(m) the services had to be performed personally by the employee and any substitute worker would have to meet with the Appellant's approval;
(n) the employee's hours were controlled by the Appellant;
(o) the employee was supervised by the Appellant who visited the premises on a frequent basis;
(p) the employee was required to report to the Appellant on a regular basis;
(q) all of the equipment and supplies required to perform the services were provided to the employee by the Appellant;
(r) the employee did not incur any expenses in the performance of his duties for the Appellant;
(s) the Appellant had priority on the employee's time for specified hours and days;
(t) the employee could not realise a profit or a loss as a result of performing the services for the Appellant;
(u) the employee performed services to the Appellant on a continuous and recurring basis;
(v) the employee was an integral part of the Appellant's operation since the Appellant was in the business of renting rooms and apartments, and the employee provided janitorial, maintenance and repair services to the Appellant's buildings;
(w) the employee did not represent, advertise or promote himself as a self-employed individual;
(x) the employee was employed by the Appellant pursuant to a contract of service.
[3] The agent for the appellant admitted only subparagraphs 4(a), (b) and (f) above. He denied all the other allegations. He called the appellant as a witness and Mr. George Inniss was called to testify by counsel for the respondent. The testimony of the two witnesses diverged on practically all aspects of the agreement that was reached between them.
[4] The appellant testified that Mr. Inniss was hired as a rental agent to collect rents and to interview prospective new tenants so as to keep the twenty-three units building fully-rented every month. According to Mr. Inniss, he was hired as a building superintendent after that position was advertised in the newspaper in November 1992 by the appellant.
[5] According to the appellant, Mr. Inniss had introduced himself as a self-employed janitor. Mr. Inniss testified that he had never occupied a position as a superintendent before. He had previously been employed by the Jewish Community Centre as a handyman to do maintenance work from 3:00 p.m. to 11:00 p.m., six days per week.
[6] According to the appellant, it was Mr. Inniss’s responsibility to arrange interviews and to decide whether people interviewed should become tenants in the building. The appellant would simply be informed afterwards that the units had been rented. Mr. Inniss said that it was the appellant who put the ads in the newspapers in order to find new tenants and that the appellant always had the final word on the choice of tenants.
[7] The appellant said that Mr. Inniss was required to be present the last two days of the month to collect the rents but, apart from some routine cleaning work he had to do during the month, his presence was not required on a full time basis. The appellant expected Mr. Inniss to clean the hallways and the common bathrooms shared by the tenants in order to keep them tidy, but not always on a daily basis. As for the tenants’ mail, he advised Mr. Inniss that it was either to be left in the lobby for them to pick up or to be put under their doors.
[8] Mr. Inniss testified that his duties were mainly to look after the building (cleaning, minor repairs, watering the plants, delivering mail, snow shovelling in winter) and to collect the rents and find new tenants. He also dealt with minor problems that came up among tenants or between tenants and the landlord. He said that tenants usually came to him on the average of two or three times per week and that he would refer them to the appellant for important matters. Although the tenants expected him to be there from 9:00 a.m. to 6:00 p.m. (as there was a sign on his apartment door indicating that such were his hours), he encouraged them to come by in the morning since he did his routine jobs at that time. He said that he generally worked between 7:00 a.m. and noon every day for a total of approximately 60 hours per month at this job. If the appellant wanted to meet him in the afternoon, Mr. Inniss would arrange to be available.
[9] As for the terms of payment, the appellant said that he had an ad hoc arrangement with Mr. Inniss. He said that if the building was fully-rented, he would give Mr. Inniss his full rental fee. When Mr. Inniss started, he was receiving $200 per month and this rental fee grew to $600 per month. The appellant testified that if the building was not fully-rented, he would not have given Mr. Inniss the full rental fee. On the other hand, it could happen that one unit was rented to two tenants. In such a case, Mr. Inniss would be granted a bonus. The appellant conceded, however, that the building was fully rented more or less all the time and that Mr. Inniss in fact was paid his full fee. That fee was paid in cash, at the request of Mr. Inniss, twice a month. The appellant said he did not have the receipts with him for the extra commission that was allegedly paid to Mr. Inniss.
[10] If the appellant asked Mr. Inniss to do some extra odd jobs, he would pay him $10 per hour or, most of the time, they would agree on a certain fee. The appellant brought some receipts for a variety of work thus performed by Mr. Inniss (cleaning windows, painting and repairs). One of these receipts was for payment for the referral of one tenant to another building.
[11] The appellant also provided Mr. Inniss with rent-free accommodation. The appellant said that he was not paying for the telephone or for the paperwork. He said that it was not a requirement that Mr. Inniss live in the building but recognized that it was convenient that he do so. He acknowledged that the superintendents of all three of the rental properties he owned were living in. According to Mr. Inniss, it was understood from the beginning that it was a live-in position. His remuneration was $600 per month plus $525 per month representing the value of the rent for his furnished apartment. He said that the appellant was responsible for telephone service and cable television. Mr. Inniss corroborated the fact that he had received referral fees from the appellant, however, he said that this had happened only about 10 times in three years.
[12] With regard to the tools, the appellant testified that he provided the cleaning supplies as well as a few pieces of equipment which he kept in a garage in one of his buildings which Mr. Inniss could use. He also said that Mr. Inniss had an extensive set of tools and owned his own snow-clearing and yard equipment. In fact, the appellant said, Mr. Inniss was working for other people, either doing yard work in summer or snow-clearing in winter, or taking on electrical contracts.
[13] Mr. Inniss denied that he owned any equipment. He was using the appellant’s equipment. He said that he never advertised his services for snow shovelling or other types of labour. He said that during the period in issue, he also worked for the Ottawa School of Ballet as a handyman, where he did maintenance until 1994. After that, he worked evenings for a restaurant. He said that these other jobs did not interfere with his employment with the appellant. He also said that it happened once that he was approached by a neighbour to shovel her driveway. He, however, refused that job, stating that he did not want to do it on the appellant’s time.
[14] Mr. Inniss had 10 days' holidays per year. The appellant said that Mr. Inniss was responsible for finding someone to replace him for those days. Mr. Inniss said that it was on the suggestion of the appellant that he asked a tenant to replace him and that he first obtained the approval of the appellant.
[15] A letter signed by the appellant but undated was filed in evidence as Exhibit R-1. The appellant testified that he prepared that letter in 1994 at the request of Mr. Inniss who had an opportunity to provide janitorial services for another building. This letter reads as follows:
To whom it may concern
George Inniss has been employed by me, Raymond Stern, since November, 1992 in the capacity of residential building superintendent.
During this time George has been very reliable, honest and responsible when carrying out his duties such as rent collection, tenant supervision and general repairs and maintenance.
[16] In November 1995, the relationship between the appellant and Mr. Inniss began to deteriorate. According to the appellant, it became more and more difficult to reach Mr. Inniss who had allegedly ceased doing any work for the appellant. Mr. Inniss ejected the appellant from his apartment and obtained a summons of charge against the appellant on November 11, 1995 under the Provincial Offences Act, accusing him of trespassing, pursuant to the Landlord and Tenant Act (Exhibit A-2). The appellant stated that he was acquitted of the charge.
[17] The appellant responded by sending to Mr. Inniss a letter dated November 15, 1995 (Exhibit R-2) which reads as follows:
Dear Mr. Inniss:
RE: Your Employment as Superintendent
This is to confirm arrangements for your employment to cease as of Friday, November 24, by which time you will have peaceably left the premises with your possessions.
You will be paid in full up to end of the month.
Please sign the bottom of this letter as your acknowledgement of these arrangements.
Yours very truly,
[18] The appellant then sent a notice to the tenants informing them that George Inniss was no longer the superintendent of the building (91 James Street) and informed them to cease paying rent to Mr. Inniss (Exhibit R-3).
[19] The appellant testified that he offered Mr. Inniss $300 to leave since he refused to go. He then took legal action to get him out of the building.
[20] Later, the appellant was made aware of a T-4 slip that had been issued to Mr. Inniss for 1995 showing an employment income of $10,377 while working for the appellant and source deductions for CPP and UI contributions. The appellant who had not issued any T-4 slip, was very surprised. He was told by the Ontario Ministry of Labour that the T-4 slip was generated to activate unemployment insurance payments to Mr. Inniss.
[21] Mr. Inniss testified that he had asked the appellant several times if deductions at source had been taken from his income and the appellant allegedly answered that it was not important as nobody would know. Mr. Inniss said that he kept $200 each month in a separate bank account in order to pay his contributions when he left his job with the appellant. Indeed, after being fired, Mr. Inniss went to Revenue Canada with all the information. He said that he did not make application for unemployment insurance benefits following the termination of employment with the appellant.
Analysis
[22] The question I must consider is whether, during the period in issue, Mr. Inniss was employed by the appellant under a contract of service pursuant to paragraph 3(1)(a) of the Act and subsection 2(1) and paragraph 6(1)(a) of the Plan. To make this determination, the tests adopted in Wiebe Door Services Ltd. v. M.N.R.,[1] namely control, ownership of tools, chance of profit and risk of loss as well as integration or organization, i.e. whether the appellant worked for his own business or for the payor, must be analyzed in order to define the total relationship between the parties.
[23] Given the divergence in the testimony of the witnesses, the appeals come down to the question of credibility. As the evidence showed some features of a contract of service and some of a contract for service, I must decide the present case on the whole of the evidence presented to me and give more weight to the testimony which I believe is more probable.
[24] So far as the control exercised by the appellant over the work done by Mr. Inniss is concerned, though it was not exercised regularly, it seems to me that the appellant did, to some extent, have a right of control over the appellant's work.[2] While the appellant testified that he did not meet regularly with Mr. Inniss, he did admit, that he was on-site at least twice per month to pay Mr. Inniss: once at the end of the month when he collected the rents and again in the middle of the month when he took the opportunity to check whether the building was clean and everything going well. The appellant also said in speaking of the rental process that he did supervise it. He expected Mr. Inniss to report to him on the renting of the rooms or he would himself contact Mr. Inniss to check on this. As to Mr. Inniss’s testimony, it clearly implied that the appellant exercised control over his work. If there were any problems with tenants, Mr. Inniss would definitely report to the appellant. Before renting to a tenant, Mr. Inniss would obtain the appellant's approval. Similarly with his replacement, Mr. Inniss would select a few people and he could not assign his duties to anyone without the prior approval of the appellant. To this extent, if Mr. Inniss's version is true, he would meet the requirement of having been hired under a contract of service (see Dr. William H. Alexander v. Minister of National Revenue, 70 DTC 6006 (Ex. Ct.)).
[25] As for the work schedule, although the appellant testified that Mr. Inniss had no scheduled hours, he still acknowledged that Mr. Inniss had daily duties to perform (cleaning, mail and repairs, etc.). Mr. Inniss said that although the tenants expected him to be available from 9:00 a.m. to 6:00 p.m., he performed his work from 7:00 a.m. to noon. He also said that he did not accept other work that would interfere with his work for the appellant. On the other hand, Mr. Inniss had some latitude and he did not really have to account for the number of hours he worked and for what he did during those hours. However, if the appellant requested that he be there, Mr. Inniss had to be available.
[26] As for remuneration, although the appellant said that Mr. Inniss was paid in accordance with the number of units rented, he admitted that Mr. Inniss was regularly paid a fixed amount (twice per month) during the entire period he worked for him, which amount was in addition to the rent-free apartment. It seems that only a few times did it happen that Mr. Inniss received extra remuneration for referring tenants to other buildings owned by the appellant. On the other hand, both Mr. Inniss and the appellant testified that if some extra work needed to be done they would agree on a certain price. Furthermore, Mr. Inniss was not paid during his holidays as he had to be replaced by someone else who was paid in his place.
[27] With regard to equipment, the appellant provided all supplies required to do the job. There were contradictions as to the equipment owned by Mr. Inniss but I am satisfied that Mr. Inniss was not required to use his own tools to perform his work for the appellant.
[28] With regard to the chance of profit and risk of loss, I do not find that I should attribute much weight to the chance of profit. Mr. Inniss received a fixed salary and was provided with a rent-free apartment. I do not find that the extra work done and the few referral fees he received during the whole period are of such importance that Mr. Inniss can be considered to have been acting as an independent contractor on that basis. In addition, I find that the evidence did not reveal that Mr. Inniss had any risk of loss. When the appellant wanted to fire Mr. Inniss, he had to pay him his full fee to the end of that month and he had to go to court to force Mr. Inniss to leave the premises.
[29] As to the integration of Mr. Inniss's activities into the appellant's business, it is possible to see at first glance, combined features of a contract of service and a contract for service, especially if I take into account the various contradictions in the testimony of the witnesses. However, I find that the appellant used Mr. Inniss's services not for a very specific contract but rather for general duties to be performed by him. In the words of the appellant, as set out in the letter filed as Exhibit R-1, Mr. Inniss was acting in the capacity of residential building superintendent. In the same letter, the appellant defined Mr. Inniss’s duties to be “rent collection, tenant supervision and general repairs and maintenance”. In this sense, the appellant was not acting as a person operating a business for himself, but as an employee of the appellant. A residential building superintendent is generally expected to be there on a full time basis. The fact that Mr. Inniss was also working elsewhere during the period in issue does not, in my view, change the nature of the contractual relationship which existed with the appellant. Indeed, Mr. Inniss had his other jobs during evening hours while he was required to be available for the appellant from 9:00 a.m. to 6:00 p.m.
[30] Taking all of these various features into account, I am of the view that the appellant has not established, on a balance of probabilities, that Mr. Inniss was not employed under a contract of service during the period in issue and accordingly, Mr. Inniss’s employment was insurable under the Act and pensionable under the Plan.
[31] The appeals are therefore dismissed and the Minister's determination is affirmed.
Signed at Ottawa, Canada, this 16th day of June 1998.
"Lucie Lamarre"
J.T.C.C.