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Docket: 2002-3923(EI)
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BETWEEN: |
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OSHAWA COIFFURES LTD. o/a L'ATTITUDES INTERNATIONAL IMAGE CENTERS, |
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Appellant, |
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and |
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THE MINISTER OF NATIONAL REVENUE, |
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Respondent. |
____________________________________________________________________
Appeal heard on April 27, 2004 at Toronto, Ontario
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By: The Honourable Justice J.M. Woods |
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Appearances: |
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Counsel for the Appellant: |
Douglas H. Levitt |
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Counsel for the Respondent: |
Bonnie Boucher |
____________________________________________________________________
JUDGMENT
The appeal of the decision of the Minister of National Revenue made under the Employment Insurance Act is dismissed and the decision that Deborah Walker was engaged in insurable employment is confirmed.
Signed at Toronto, Ontario this 9th day of September, 2004.
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"J.M. Woods" |
J.M. Woods J.
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Docket: 2002-3924(CPP)
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BETWEEN: |
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OSHAWA COIFFURES LTD. o/a L'ATTITUDES INTERNATIONAL IMAGE CENTERS, |
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Appellant, |
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and |
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THE MINISTER OF NATIONAL REVENUE, |
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Respondent. |
____________________________________________________________________
Appeal heard on April 27, 2004 at Toronto, Ontario
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By: The Honourable Justice J.M. Woods |
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Appearances: |
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Counsel for the Appellant: |
Douglas H. Levitt |
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Counsel for the Respondent: |
Bonnie Boucher |
____________________________________________________________________
JUDGMENT
The appeal of the decision of the Minister of National Revenue made under the Canada Pension Plan is dismissed and the decision that Deborah Walker was engaged in pensionable employment is confirmed.
Signed at Toronto, Ontario this 9th day of September, 2004.
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"J.M. Woods" |
J.M. Woods J.
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Citation: 2004TCC616 |
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Date: 20040909 |
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Docket: 2002-3923(EI) 2002-3924(CPP)
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BETWEEN: |
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OSHAWA COIFFURES LTD. o/a L'ATTITUDES INTERNATIONAL IMAGE CENTERS, |
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Appellant, |
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and |
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THE MINISTER OF NATIONAL REVENUE, |
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Respondent. |
REASONS FOR JUDGMENT
Woods J.
[1] These are appeals by Oshawa Coiffures Ltd. from a decision that Ms. Deborah Walker was engaged in insurable and pensionable employment during the period January 1, 1998 to September 1, 2001.
[2] There are three questions to be determined:
(a) Was Ms. Walker employed by Oshawa Coiffures within the common law meaning of "employment"? The answer to this question will be determinative of the appeal under the Canada Pension Plan but not necessarily the appeal under the Employment Insurance Act.
(b) Does paragraph 6(d) of the Employment Insurance Regulations apply to nail technicians working in hair salons?
(c) Should interest on the amount owing be stayed?
[3] The notice of appeal also raises a fourth issue, whether the appeal under the Canada Pension Plan was filed in time. The Crown did not refer to this issue in its reply and I assume that it is no longer in dispute.
Employment under common law
[4] Oshawa Coiffures operates a hair salon under the name L'Attitudes International Image from a shopping mall in Oshawa, Ontario. Ms. Walker worked as a nail technician in the salon from 1998 until 2001. For a short period in 1998, she was engaged as an employee and this period is not in dispute. There is no evidence as to the exact dates that are relevant for this appeal; I have assumed that the period in dispute is from July 1, 1998 to September 1, 2001.
[5] Ms. Walker is an experienced nail technician, having worked in the business for over 20 years. At one point, she operated her own shop and accordingly is generally familiar with how to operate her own business.
[6] When Ms. Walker was originally was hired by Oshawa Coiffures as an employee, she was paid 45 percent of her billings and her supplies were largely provided by Oshawa Coiffures. After a couple of months, the arrangement was changed at Ms. Walker's request and she signed an acknowledgement that she was self-employed and would be responsible for premiums for Canada Pension Plan and employment insurance. Under the new arrangement, Ms. Walker was entitled to an increased portion of her billings, 70 percent, but was responsible for her own nail supplies and would pay Oshawa Coiffures for towel service. Oshawa Coiffures continued to supply other items, such as makeup and waxing materials. Although the evidence on this point was not clear, it appears that Oshawa Coiffures continued to supply items for services provided by other workers in addition to Ms. Walker. Under the new arrangement, Ms. Walker could sell her own products but she chose not to.
[7] There are no bright line tests for determining whether a person is an employee or independent contractor and each case is determined on its own particular facts. The general principles to be applied are described by Major J. in the leading case, Sagaz Industries Canada Inc. v. 671122 Ontario Limited, [2001] 2 S.C.R. 983:
[47] ... The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker's activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker's opportunity for profit in the performance of his or her tasks.
[48] It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application. The relative weight of each will depend on the particular facts and circumstances of the case.
[8] The essential issue is whether Ms. Walker was carrying on business on her own account. Ms. Walker testified that she thought that she was to be self-employed and expected that she would be able to carry on her own business and make important business decisions such as pricing and hours of work. She stated, however, that the corporation did not respect the arrangement that it had agreed to and essentially treated her like an employee, dictating her hours of work and the pricing for her services.
[9] The owner of Oshawa Coiffures, Antonio Conforti, testified on behalf of the corporation. In a great many respects, his testimony conflicted with Ms. Walker's. He stated that Ms. Walker was free to come and go as she chose and determine the prices for her services without interference by the corporation. The following are examples of where the testimony of the two witnesses differed:
(a) Mr. Conforti indicated that Ms. Walker wanted to change the employment relationship so that she could determine her own hours of work. Ms. Walker testified that she wanted the change in order to increase her percentage of billings.
(b) Mr. Conforti indicated in his examination in chief that Ms. Walker brought her own manicure table with her to the job and that the shop did not have a nail technician before or after her. His answer was modified somewhat on cross-examination when he stated that he "didn't recall" a nail technician at the salon before Ms. Walker. Ms. Walker indicated that there was a manicurist working at the salon before her and that the manicure table was already there.
(c) Mr. Conforti testified that Ms. Walker only worked when she had clients and otherwise did not have to be at the shop. Ms. Walker indicated that she had to work regular shifts, six days a week, and that she always had to be available for "walk-ins."
(d) Mr. Conforti testified that Ms. Walker determined the prices for her services. On cross-examination, he did not have a clear recollection of whether the nail services were advertised and when or how the signage was prepared. Ms. Walker indicated that the prices for nail services were previously advertised in the window because there had been a manicurist there. She stated that one of the reasons she wanted to work at this salon was that she thought that the prices were good. She also related several stories where she tried to give discounts or free services for promotional purposes and was told by the manager not to do this. On one occasion her pay was docked by an amount equal to the amount of revenue lost through promotional work. This story was supported by documentary evidence, introduced as Exhibit R-2.
(e) Mr. Conforti testified that Ms. Walker did not have to attend staff meetings and that she did not attend any promotional shows. Ms. Walker disagreed with both these statements and gave details of a promotional show that she had volunteered for.
(f) Mr. Conforti indicated that Ms. Walker could take vacation without notifying the manager and stated that she had in fact done this. Ms. Walker stated that she did not take any vacation while working at the salon but that she did take time off on the occasion of a death in the family. She also indicated that the manager rebuked her whenever she left the shop, even for a coffee.
[10] In general, to the extent that there were differences in the testimony of the two witnesses, I prefer that of Ms. Walker. I found her detailed accounts about the relationship credible. On the other hand, I had difficulty with much of Mr. Conforti's testimony concerning the engagement of Ms. Walker. His testimony generally consisted of perfunctory answers and he was not able to explain satisfactorily certain important facts, such as how the nail services were advertised. It may have been that Mr. Conforti had very little detailed knowledge of the relationship. Ms. Walker did not report to him and he visited the store only for oversight purposes. Generally, I find that Mr. Conforti's description of the relationship not credible to the extent that it differed with Ms. Walker's.
[11] I have concluded that Oshawa Coiffures has not satisfied the burden of establishing that Ms. Walker was engaged as an independent contractor. In my opinion, the control exercised by Oshawa Coiffures, which extended to most aspects of the relationship other than how to perform manicures and pedicures, is the most important factor in this case and outweighs the fact that Ms. Walker purchased many of her own supplies and could sell her own products. Although Oshawa Coiffures agreed to enter into an independent contractor relationship with Ms. Walker, it failed to provide credible evidence to show that it respected a key element of that relationship.
Regulation 6(d)
[12] In light of the finding that Ms. Walker was engaged as an employee of Oshawa Coiffures at common law, it is not necessary to consider an alternative argument that Ms. Walker's employment is deemed to be insurable for purposes of the Employment Insurance Act by reason of paragraph 6(d) of the Regulations.
[13] Counsel made written submissions on this issue at my request because this issue had not been raised in the pleadings. I was informed that this alternative argument was not raised in the Crown's reply because it was believed that it was improper to raise alternative arguments. This is not correct but it does explain why the argument was not raised by the Crown.
[14] In deference to these submissions, I would make a brief comment about this issue. Paragraph 6(d) of the Regulations deems a person to have insurable employment if the person is employed at a hairdressing or barbering establishment, provides any of the services normally provided by such an establishment, and is not the owner or operator of the establishment. The issue is whether the services of a nail technician are "normally provided" by a hairdressing establishment. In their written submissions, each counsel reported the results of a search of telephone listings to determine how often nail services are provided in hair salons. Not surprisingly, the results by each were quite different, with the appellant's search suggesting that it was unusual for hair salons to provide nail services and the Crown's search leading to the opposite conclusion.
[15] This issue deserves more consideration than is possible in written submissions. However, based on the limited information provided, I would be reluctant to find that nail technicians were subject to the regulation for the following reasons:
(a) The regulation refers to "hairdressing establishment," not the broader term "beauty salon." If the regulation were intended to apply to persons who provide aesthetic services, one might expect that the description of the establishment in the regulation would be broader.
(b) Aesthetic services such as manicures are often provided in establishments that do not cut hair, such as nail salons and spas. If nail technicians were intended to be included in by the regulation, it is likely that the regulation would have referred to these other establishments as well.
Stay of interest
[16] Oshawa Coiffures submits that an order should be granted staying the accrual of interest while the appeals are outstanding. The only authority cited for this was the general power of a superior court to control its own process.
[17] I cannot agree with this submission. The general power of a superior court to control its own process generally does not extend to a statutory imposition of interest. It is well established that a statutory court such as the Tax Court has no power to override a statutory requirement to pay interest: Roussel v. M.N.R., 2000 D.T.C. 6608 (F.C.A.).
[18] For these reasons, the appeals are dismissed.
Signed at Toronto, Ontario this 9th day of September, 2004.
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"J.M. Woods" |
J.M. Woods J.
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CITATION: |
2004TCC616 |
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COURT FILE NO.: |
2002-3923(EI) and 2002-3924(CPP) |
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STYLE OF CAUSE: |
Oshawa Coiffures Ltd. o/a L'Attitudes International Image Centers v. M.N.R. |
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PLACE OF HEARING: |
Toronto, Ontario |
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DATE OF HEARING: |
April 27, 2004 |
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REASONS FOR JUDGMENT BY: |
The Honourable Justice J.M. Woods |
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DATE OF JUDGMENT: |
September 9, 2004 |
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APPEARANCES: |
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Counsel for the Appellant: |
Douglas H. Levitt |
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Counsel for the Respondent: |
Bonnie Boucher |
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COUNSEL OF RECORD: |
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For the Appellant: |
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Name: |
Douglas H. Levitt |
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Firm: |
Horlick Levitt Toronto, Ontario |
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For the Respondent: |
Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada |