Dare Human Resources Corporation v. Ontario (Revenue)

Dare Human Resources Corporation v. Ontario (Revenue) Collection Decisions of the Court of Appeal Date 2019-07-02 Neutral citation 2019 ONCA 549 Docket numbers C65974, C65975 Judges Hourigan, C. William; Paciocco, David M.; Fairburn, J. Michal Subject Civil Decision Content COURT OF APPEAL FOR ONTARIO CITATION: Dare Human Resources Corporation v. Ontario (Revenue), 2019 ONCA 549 DATE: 20190702 DOCKET: C65974 and C65975 Hourigan, Paciocco and Fairburn JJ.A. BETWEEN DOCKET: C65974 Dare Human Resources Corporation Appellant (Appellant) and The Minister of Revenue Respondent (Respondent) AND BETWEEN DOCKET: C65975 Azur Human Resources Ltd. Appellant (Appellant) and The Minister of Revenue Respondent (Respondent) Gregory Sanders and Alanna T. Mar, for the appellants James Vlasis and James Elcombe, for the respondent Heard: June 25, 2019 On appeal from the judgment of Justice Charles T. Hackland of the Superior Court of Justice, dated September 5, 2018, with reasons reported at 2018 ONSC 5212. REASONS FOR DECISION Introduction [1] The respondent issued assessments directing the appellants to pay an employer health tax under the Employer Health Tax Act, RSO 1990, c E.11 (the “EHTA”). The appellants appealed to the Superior Court of Justice, and the appeal judge affirmed the assessments. They now appeal the appeal judge’s order. [2] The appeals raise two issues: 1. Did the appeal judge err in his interpretation of the EHTA? 2. In the alternative, did the appeal judge err in his consideration of the evidence? [3] For the following reasons, we answer both questions in the negative and dismiss the appeal. Facts [4] The appellants are placement agencies based in Ottawa who supply temporary workers to the Public Service of Canada and federal agencies under agreements between the appellants and the Government of Canada. [5] When the clients put out a call for temporary workers, the appellants identify appropriately qualified persons from their inventory of candidates, ascertain the person’s willingness to apply, and negotiate an hourly rate of pay for the placement. The appellants profit by paying the workers an hourly wage that is less than what the client pays them. [6] Once an assignment begins, the appellants’ primary function is to pay the worker and administer the payroll, on the basis of time sheets signed off by the client. The client manages and directs the workers while they carry out their assignment. However, both the appellants and the client may be involved in dealing with performance or discipline issues that arise in a worker’s assignment. [7] The appellants were assessed by the respondent to pay the employer health tax, a payroll tax imposed on employers who pay remuneration to their employees. The appellants appealed their assessments under the EHTA, arguing that they were not obliged to pay the tax because they were not the employers of the workers placed with their clients for temporary work. [8] The appeal judge described his task on the appeals as undertaking “a comprehensive review of the relevant factors to determine if an employer/employee relationship exists”, which “includes a review of both the working relationships, and the contractual and statutory framework”: at para. 23. He recognized that he was bound by the Supreme Court’s “comprehensive and flexible approach” to determine whether an employment relationship exists, as provided for in Pointe-Claire (City) v. Quebec (Labour Court), [1997] 1 S.C.R. 1015. The approach in that labour case was adopted by this court in IBM Canada Ltd. v. Ontario (Minister of Finance), 2008 ONCA 216, 89 O.R. (3d) 641, in the context of the EHTA. After considering a number of factors, the appeal judge concluded that the appellants were the workers’ employers for EHTA purposes. Analysis (i) Interpretation of the EHTA [9] The primary submission advanced by the appellants is that the appeal judge determined their liability by default because he was of the view that someone (i.e. the appellants or the Government of Canada) must be the employer. Instead of answering the real issue of whether the appellants were employers for purposes of the EHTA, he wrongly chose between them and the Government of Canada. [10] We would not give effect to this submission. [11] The appeal judge found that the workers are not independent contractors and that finding is not challenged on appeal. It is also not disputed that the workers are earning employment income. [12] The appeal judge determined that the workers, appellants, and the Government of Canada are involved in a tripartite relationship where the appellants and the Government of Canada each appear to possess some of the traditional attributes of an employer. Contrary to the submission of the appellants, he did not err in commenting that in these circumstances the workers had to be employees of either the appellants or the Government of Canada for EHTA purposes. The whole point of the analysis provided for in IBM is to determine the employer for EHTA purposes in such a tripartite arrangement. On the facts of this case, that had to be either the appellants or the Government of Canada. [13] The appeal judge is said to have compounded his primary error by focussing on the fact that the appellants pay remuneration, instead of undertaking a comprehensive analysis of all of the facts to determine whether the appellants are employers. The appellants argue that under the two-part test mandated by IBM, the appeal judge should have first determined whether an employment relationship existed and then considered whether the putative employers paid remuneration. He did not do so, the appellants submit, and instead focused solely on the fact that they paid remuneration. [14] We do not accept the appellants’ submission. The appeal judge properly considered the issue of who paid remuneration as part of his analysis of whether an employment relationship existed. The payment of remuneration was a relevant factor and the appeal judge did not rely on it exclusively. He carefully reviewed the statutory context including the provisions of the EHTA, noting that the legislation provides that the employer is the party who pays remuneration to the employee: see s. 1(1). In addition, he observed that the provisions of the Public Service Employment Act, SC 2003, c 22, ss 12, 13, and the Financial Administration Act, RSC 1985, c F-11, are inconsistent with the notion of the Government of Canada being the employer of the workers. [15] The appeal judge went on to consider the factual circumstances surrounding this tripartite relationship. These include the fact that the appellants are the only parties with contractual relationships with the workers and that the contractual documentation with the Government of Canada makes it clear that it was the government’s intention that the workers be the employees of the placement agencies. [16] A fair reading of the appeal judge’s reasons make plain that he did not limit his analysis to a consideration of the fact that the appellants pay remuneration. [17] Next, the appellants submit that the appeal judge erred in ignoring a previous decision of the Ontario Labour Relations Board that held that they were not employers of the workers for labour legislation purposes: see International Brotherhood of Electrical Workers, Local 586 v. Dare Personnel Inc., [1995] OLRB Rep. 935 (Ont. LRB), aff’d [1996] OLRB Rep. 1014 (Ont. CJ (Div. Ct.)). [18] In fact, the appeal judge considered and declined to follow that decision. He held that it was possible to find that a placement agency was an employer for taxation purposes and not labour relations purposes, noting that, “[l]abour and employment statutes are directed toward protection of workers in the workplace, which the employer normally controls. In contrast, in regard to a revenue generating payroll tax, payable by employers, the employer may well be the entity that is contractually mandated to administer the payroll.” We agree with that analysis. [19] In summary, the appeal judge undertook a comprehensive review of all of the circumstances in concluding that the appellants were employers for EHTA purposes. We see no error in his analysis and accordingly dismiss this ground of appeal. (ii) Consideration of the Evidence [20] In the alternative, the appellants submit that the appeal judge erred in failing to consider factors that suggested that they were not the employer. We disagree. [21] The appeal judge acknowledged, as is typical in a tripartite arrangement, that the appellants and the Government of Canada each appeared to possess some of the traditional attributes of an employer. He explicitly referenced recruitment, payroll administration, discipline issues, testing, and security clearances. While some factors may have pointed to the Government of Canada as the employer, after an analysis of all of the factors, the trial judge determined that the appellants were the employers. The appeal judge did not misapprehend the evidence or fail to consider any relevant factor. We therefore reject this ground of appeal. Disposition [22] The appeals are dismissed. The appellants shall pay the respondent its costs of the appeals fixed in the all-inclusive sum of $25,000.00. “C.W. Hourigan J.A.” “David M. Paciocco J.A.” “Fairburn J.A.”