Tax Court of Canada Judgments

Date: 20011204

Dockets: 2000-4109-EI,

2000-4108-CPP

BETWEEN:

FAMILY SERVICE LONDON,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

AND

2000-4131(EI)

2000-4132(CPP)

BETWEEN:

SUSAN DENOMY,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Rip, J.T.C.C.

[1]            Family Service London ("FSL") and Susan Denomy appeal from determinations and decisions of the Minister of National Revenue ("Minister"), dated June 29, 2000, made in accordance with the Employment Insurance Act ("Act") and Canada Pension Plan ("CPP"), respectively. The Minister states that FSL was the actual employer and Mrs. Denomy was the deemed employee of C. Jamie Williams during the period from September 17, 1998 to January 7, 1999. There was, according to the Minister, "an employer/employee relationship to constitute a contract of service". According to the Minister, the FSL and Mrs. Denomy were employers; Mr. Williams was the employee in these relationships. Therefore, the employment was "insurable employment" under the Act and "pensionable employment" under the CPP. As a result, FSL and Mrs. Denomy were liable for insurance premiums under the Act and for contributions under the CPP on the earnings received by Mr. Williams. The appeals were heard together on common evidence.

[2]            FSL is a non-profit organization operating in London, Ontario. Among other things, FSL runs a community integration program, which facilitates the integration of developmentally challenged adults in the community and advocates for their participation in community.

[3]            David Morse is a community integration worker with FSL. In late summer of 1998 Mr. Morse received a telephone call from the Ministry of the Solicitor General and Correction Services ("Ministry") asking for assistance for Carl O'Connor. Mr. Morse was advised that Mr. O'Connor, a developmentally challenged adult and a repeat sex offender, was about to be released from Guelph Correctional Institute ("Guelph"), a division of the Ministry. Mr. O'Connor was considered to be a high-risk offender in need of 24-hour supervision.

[4]            Mr. Morse indicated at trial that he could have declined or advised Guelph to send Mr. O'Connor to the "men's mission" but this would have put the community at risk. Mr. Morse proceeded then to inquire into various options in an effort to find support for Mr. O'Connor, but was unsuccessful as Mr. O'Connor did not have any funding. Mr. O'Connor would not have funding until he applied for welfare after his release. Mr. Morse advised Lesley Logan, a social worker at Guelph, that he was unable to find accommodations for Mr. O'Connor because of lack of funding.

[5]            Mr. Morse testified that a little while later he received a phone call from Guelph saying that the Adult Community Operations Branch of the Ministry was committing an amount of $12,000. This was confirmed by letter dated May 29, 1998 from Mrs. Logan advising Mr. Morse that the $12,000 had been committed for Mr. O'Connor and stated that the funding was to be used "to purchase services, supports, respite care etc. This money can be used to establish residential services for Mr. O'Connor to provide him with the supervision and support that he needs in order to reduce the risk and establish an appropriate placement for him".

[5]            Upon learning that funding had been allocated to Mr. O'Connor, Mr. Morse contacted Susan Denomy. Mrs. Denomy provided room and board on one prior occasion in connection with an individual introduced to her by Mr. Morse. Mrs. Denomy and her husband agreed to provide room and board and supervision to Mr. O'Connor while they were home, provided that another person supervised Mr. O'Connor when the Denomys were not at home. Mr. O'Connor would pay Mrs. Denomy out of his welfare payments.

[6]            Mr. Morse suggested to the Ministry that monitors be paid at the rate of $9.00 an hour, which was approved. He also obtained approval for a reimbursement of $20.00 per trip to the monitors if they had to drive Mr. O'Connor to an activity. Mr. Morse then began his search for monitors to supervise Mr. O'Connor when the Denomys were out of the house. He did so by spreading the word with various agencies that monitors were required. Mr. Morse and Mrs. Denomy met with the monitors before they were hired.

[7]            Mr. O'Connor is believed in some areas to function mentally at the level of a 12 year old, and as Mr. Morse testified, as far as decision-making and making purposeful decisions and weighing consequences, perhaps functioned at a five or six year old level. Mrs. Denomy testified that a joint bank account in her name and Mr. O'Connor was opened to assist Mr. O'Connor with bank account matters because as a result of his developmental disability he was unable to deal with the financial arrangements on his own. All money received by Mr. O'Connor was deposited in the joint bank account and payments to monitors were made out of this bank account.

[8]            Mr. Williams was one of the monitors who was engaged to provide supervision to Mr. O'Connor when the Denomys were not at home.

[9]            One of the issues before me is whether Mr. Williams was an employee of one or more of the Ministry, FSL and Mrs. Denomy or was an independent contractor.

[11]          Subject to paragraph 5(1)(a) of the Act "insurable employment" 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;[1]

[12]          "Personable employment", under the CPP, "is employment in Canada that is not excepted employment".[2]

[13]          Mrs. Denomy, the respondent says, is a "deemed employer". Generally a "deemed employer" is one who supervises or controls an insured person or who concurs in permitting an insured person to work on the "deemed" employer's premises or property under licence or agreement or pays the employee. The Regulations to the Act and CPP describe such an employer. A "deemed employer" is described in the Insurance Earnings and Collection of Premiums Regulations[3] to the Act. Section 10 of this Regulation reads as follows:

10. (1) Where, in any case not coming within any other provision of these Regulations, an insured person works

                (a) under the general control or direct supervision of, or is paid by, a person other than the insured person's actual employer, or

                (b) with the concurrence of a person other than the insured person's actual employer, on premises or property with respect to which that other person has any rights or privileges under a licence, permit or agreement,

that other person shall, for the purposes of maintaining records, calculating the insurable earnings of the insured person and paying, deducting and remitting the premiums payable on those insurable earnings under the Act and these Regulations, be deemed to be the employer of the insured person in addition to the actual employer.

(2) The amount of any employer's premium paid by the person who is deemed to be the employer under subsection (1) is recoverable by that person from the actual employer.

(3) Where a person who is deemed under these Regulations to be an employer of an insured person fails to pay, deduct or remit the premiums that an employer is required to pay, deduct or remit under the Act or these Regulations, the provisions of Parts IV and VI of the Act shall apply to the person as if the person were the actual employer.

[14]          The relevant sections of the Canada Pension Plan Regulations[4] are:

Sec. 8.1. -- (1) Every person by whom the remuneration of an employee for services performed in pensionable employment is paid either wholly or in part is, for the purpose of calculating the employee's contributory salary and wages, maintaining records and filing returns, and paying, deducting and remitting the contributions payable thereon under the Act and these Regulations, deemed to be an employer of that employee in addition to the actual employer of that employee.

(1.1) The amount of any contributions paid by the person who is deemed to be the employer under subsection (1) is recoverable by that person from the actual employer.

(2) Where a person who is deemed by subsection (1) to be an employer fails to pay, deduct or remit the contributions that an employer is required to pay, deduct and remit under the Act and these Regulations, the provisions of Part I of the Act shall apply to that person as if he were the actual employer.

[15]          Of course if Mr. Williams was an independent contractor the appeals will be allowed.

[16]          The leading case on whether an individual is employed pursuant to a contract of service (i.e. an employee) rather than a contract for service (i.e. an independent contractor) is Wiebe Door Services Ltd. v. M.N.R.[5]. In Wiebe Door, MacGuigan J., reviewed the various tests applied by the Courts and affirmed the comments of Cooke J. in Market Investigations Ltd. v. Minister of Social Security,[6] in which he stated:

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 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 he takes, 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.

[17]          Hence, in determining whether an individual is engaged as an employee or as an independent contractor, a court must examine the degree of control and supervision of the worker, the risk of profits and loss to the worker, the ownership of tools to perform the task and the integration of the individual into the purported employer's business.

[18]          When determining whether the parties have established an employee-employer relationship, the total relationship of the parties must be considered. Circumstances may arise in which one or more of these factors are not applicable. ". . . The overall evidence must be considered taking into account those of the tests which may be applicable and giving to all the evidence the weight which the circumstances may dictate."[7]

[19]          In the appeals at bar the facts are that Mrs. Denomy, Mr. Morse and Mr. O'Connor interviewed Mr. Williams for the position of monitor. Mr. Morse testified that it was Mr. O'Connor who ultimately determined who would be hired. Three or four monitors were hired for Mr. O'Connor. Mr. Williams was referred to Mrs. Denomy by a co-worker at the institution where he worked. He was a direct care worker for individuals with developmental disabilities and mental illness. The monitors worked out of Mrs. Denomy's home, as that was where Mr. O'Connor was living. Mr. Williams provided his own automobile in order to perform some of his duties. Mrs. Denomy testified that at the interview the monitors were told what the rate of pay for the services was and that they would be responsible to pay CPP and EI premiums. Mr. Williams testified that there was no discussion about benefits and that he did not expect he was going to receive any benefits.

[20]          Mr. Williams testified that he informed Mrs. Denomy what shifts he was available for and had control over the number of shifts he could work. He stated that the monitors would set their own hours, subject to the voluntary extension of his hours when he waited for his replacement to arrive. Mr. Williams set his own work schedule around his other job. Mrs. Denomy testified that if one of the monitors could not work a shift then he would find his own replacement.

[21]          The monitors used their own discretion when working with Mr. O'Connor outside of the house. Mr. Morse testified that Mr. O'Connor would give the monitor instructions as to the activities he wanted to do on a given day. Neither Mrs. Denomy nor Mr. Morse directed the monitors what to do. However, the monitors were asked to provide a short summary of what occurred with Mr. O'Connor during their respective shifts; this description was written in a communication book for the exclusive use of Mr. O'Connor's clinician. It had nothing to do with FSL.

[22]          The hours of work of each monitor were recorded on a time sheet. Mrs. Denomy would forward the hours to Mr. Morse at FSL who in turn would forward the information to Guelph. The Ministry would then issue a cheque to Mrs. Denomy, which Mrs. Denomy would deposit in the joint bank account with Mr. O'Connor and, as stated earlier, the monitors would be paid from this account. Mr. Williams testified that while he was paid on a regular basis, there was a period of about five to six weeks where he did not get paid and when he inquired with Mrs. Denomy she mentioned that this had happened once before.

[22]          The Minister states that Mr. Williams had to perform the services personally. However, Mr. Williams had the flexibility to get one of the other monitors to work his shift, or simply tell Mrs. Denomy that he could not work a certain shift.

[23]          The Minister also assessed based on the belief that FSL set the general duties and conditions of employment, including the rate of pay and reporting requirements. From the evidence before me it appears that FSL merely recommended a rate of pay and that the Ministry agreed. The reporting requirements were for the benefit of Mr. O'Connor's clinician and not FSL. As well, Mr. Williams' general duties were simply to monitor Mr. O'Connor, how he chose to monitor Mr. Williams was up to him.

[24]          The Minister also states that the terms of Mr. Williams' employment did not allow him to profit or expose him to a risk of loss. That appears to be true, however, even when Mr. Williams did not receive payment for services for five to six weeks, he continued to work with Mr. O'Connor not knowing if or when he would be paid.

[25]          FSL did not supervise Mr. Williams either directly or indirectly. Mr. Williams was paid to take care of Mr. O'Connor and exercise his skill (he had experience working with developmentally and disabled individuals), without control or supervision. Mr. Williams required a car to transport Mr. O'Connor to activities. Mr. Williams provided his own car and was paid by the Ministry for the use of his car. The monitoring required no other tools except a location, which was provided by Mr. O'Connor in consequence of his room and board relationship with Mrs. Denomy.

[26]          FSL provided no training to Mr. Williams in connection with his monitoring activities, as Mr. Williams already had experience working with mentally challenged individuals. I infer that this was one of the main reasons Mr. Williams' services were retained. It does not appear that FSL was in the business of providing monitoring services. Mr. Williams was not in the business of providing monitoring services; he was a direct care worker at an institution. However, Mr. Williams did have specific skills that made him ideal for the position, specifically his experience working with developmentally and mental disabled people. As well, Mr. Williams was free to offer these skills to other organizations.

[27]          In Hastie v. Canada,[8] the appellant had been assessed for failure to deduct and remit unemployment insurance and Canada pension premiums from amounts paid by her to a babysitter, who took care of the appellant's children in the afternoon and evenings three days a week. The appellant was a single mother of twin girls. The appellant was supported entirely by welfare benefits. The appellant also received a subsidy of $326 per month from the Province of British Columbia for childcare. Bowman J., as he then was, allowed the appeal on the basis that the babysitter was employed pursuant to a contract for service and was not employed by the appellant in insurable employment. The circumstances in that case are not dissimilar to those at bar.

[28]          The total relationship of Mr. O'Connor and Mr. Williams, as well as that of Mr. Williams and the appellants, was one in which Mr. Williams was paid to supervise Mr. O'Connor at Mrs. Denomy's home when neither she nor her husband were at home. Mr. Williams was hired to exercise his skills. His work with Mr. O'Connor was not restricted to the Denomy's residence. At all times when Mr. Williams was with Mr. O'Connor he was not answerable to, nor under the direction of, either appellant.

[29]          I should also add that if Mr. Williams were not an independent contractor during the period in question, then his employer was not FSL, but the Ministry, and these five such employment would be "excepted employment" for CPP purposes and not insurable for purposes of the Act.[9] FSL acted simply as a conduit to facilitate the Ministry's goal of establishing a residence for Mr. O'Connor and provide him with the requisite supervision and support. FSL did not otherwise provide such services.

[30]          Whether, in these circumstances, Mrs. Denomy was also an employer is questionable. I have held that if Mr. Williams was an employee, his employer was the Ministry. The employment was in Canada by Her Majesty in the right of Ontario and was thus not insurable employment for purpose of the Act and was "excepted employment" for purposes of the CPP. It would offend common sense to hold that Mr. Williams' employment was not insurable (and excepted) as far as the Ontario government is concerned and insurable (and not excepted) as far as Mrs. Denomy is concerned.

[31]          The appeals are allowed. The decisions and determinations of the Minister that Mr. Williams was employed by FSL and Mrs. Denomy as employer and deemed employee respectively during the period in issue are reversed.

Signed at Ottawa, Canada, this 4th day of December 2001.

"Gerald J. Rip"

J.T.C.C.

COURT FILE NO.:                                                 2000-4109(EI) & 2000-4108(CPP)

2000-4131(EI) & 2000-4132(CPP)

STYLE OF CAUSE:                                               Family Service London and

Susan Denomy and Her Majesty the Queen

PLACE OF HEARING:                                         London, Ontario

DATE OF HEARING:                                           April 25, 2001

REASONS FOR JUDGMENT BY:      The Honourable Judge G.J. Rip

DATE OF JUDGMENT:                                       December 4, 2001

APPEARANCES:

Agent for the Appellant:                     Warren Brooke

Counsel for the Respondent:              Daniel Bourgeois

COUNSEL OF RECORD:

Agent for the Appellant:    

Name:                                Warren Brooke

Firm:                  125 Woodward Avenue

                                                                                                London, Ontario N6H 2H1

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

Ottawa, Canada

2000-4109(EI)

BETWEEN:

FAMILY SERVICE LONDON,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeal of Susan Denomy,

(2000-4131(EI)) on April 25, 2001, at London, Ontario, by

the Honourable Judge Gerald J. Rip

Appearances

Agent for the Appellant:                                     Warren Brooke

Counsel for the Respondent:                              Daniel Bourgeois

JUDGMENT

                The appeal pursuant to subsection 103(1) of the Employment Insurance Act ("Act") is allowed and the decision of the Minister of National Revenue, on the appeal made to him under section 91 of that Act, is reversed on the basis that the worker, Christopher Jamie Williams, was not engaged in insurable employment during the period from September 17, 1998 to January 7, 1999.

Signed at Ottawa, Canada, this 4th day of December 2001.

"Gerald J. Rip"

J.T.C.C.

2000-4131(EI)

BETWEEN:

SUSAN DENOMY,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeal of Family Service London,

(2000-4109(EI)) on April 25, 2001, at London, Ontario, by

the Honourable Judge Gerald J. Rip

Appearances

Agent for the Appellant:                                     Warren Brooke

Counsel for the Respondent:                              Daniel Bourgeois

JUDGMENT

                The appeal pursuant to subsection 103(1) of the Employment Insurance Act ("Act") is allowed and the decision of the Minister of National Revenue, on the appeal made to him under section 91 of that Act, is reversed on the basis that the worker, Christopher Jamie Williams, was not engaged in insurable employment during the period from September 17, 1998 to January 7, 1999.

Signed at Ottawa, Canada, this 4th day of December 2001.

"Gerald J. Rip"

J.T.C.C.

2000-4108(CPP)

BETWEEN:

FAMILY SERVICE LONDON,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeal of Susan Denomy,

(2000-4132(CPP)) on April 25, 2001, at London, Ontario, by

the Honourable Judge Gerald J. Rip

Appearances

Agent for the Appellant:                                     Warren Brooke

Counsel for the Respondent:                              Daniel Bourgeois

JUDGMENT

                The appeal pursuant to subsection 28 of the Canada Pension Plan is allowed and the decision of the Minister of National Revenue, on the appeal made to him under section 27 of that Plan, is reversed on the basis that the worker, Christopher Jamie Williams, was not engaged in pensionable employment during the period from September 17, 1998 to January 7, 1999.

Signed at Ottawa, Canada, this 4th day of December 2001.

"Gerald J. Rip"

J.T.C.C.

2000-4132(CPP)

BETWEEN:

SUSAN DENOMY,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeal of Family Service London,

(2000-4108(CPP)) on April 25, 2001, at London, Ontario, by

the Honourable Judge Gerald J. Rip

Appearances

Agent for the Appellant:                                     Warren Brooke

Counsel for the Respondent:                              Daniel Bourgeois

JUDGMENT

                The appeal pursuant to subsection 28 of the Canada Pension Plan is allowed and the decision of the Minister of National Revenue, on the appeal made to him under section 27 of that Plan, is reversed on the basis that the worker, Christopher Jamie Williams, was not engaged in pensionable employment during the period from September 17, 1998 to January 7, 1999.

Signed at Ottawa, Canada, this 4th day of December 2001.

"Gerald J. Rip"

J.T.C.C.