Dryden v. M.N.R.

Dryden v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2006-04-12 Neutral citation 2006 TCC 233 File numbers 2005-4279(EI) Judges and Taxing Officers David W. Beaubier Subjects Employment Insurance Act Decision Content Docket: 2005-4279(EI) BETWEEN: DENISE F. DRYDEN, Appellant, and THE MINISTER OF NATIONAL REVENUE Respondent, and TERESA STREGGER, Intervenor. ____________________________________________________________________ Appeal heard on April 5, 2006, at Regina, Saskatchewan Before: The Honourable Justice D.W. Beaubier Appearances: For the Appellant: The Appellant herself Counsel for the Respondent: For the Intervenor: Sharlene Telles-Langdon No one appeared ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Ottawa, Canada, this 12th day of April, 2006. "D.W. Beaubier" Beaubier J. Citation: 2006TCC233 Date: 20060412 Docket: 2005-4279(EI) BETWEEN: DENISE F. DRYDEN, Appellant, and THE MINISTER OF NATIONAL REVENUE Respondent, and TERESA STREGGER, Intervenor. REASONS FOR JUDGMENT Beaubier, J. [1] This appeal was heard at Regina, Saskatchewan, on April 5, 2006. The Appellant was the only witness. [2] The particulars in appeal are set out in paragraphs 1 to 8 of the Reply to the Notice of Appeal. They read: 1. In response to the allegations of fact contained in the Notice of Appeal, the Minister: (a) admits that the rent paid to the Appellant related to overhead costs, (b) admits that the stylist establish their own working hours, rates and obtained some of their own clientele, (c) denies the allegations of fact that the Stylists were responsible for their own advertising costs and direct costs of operating, and (d) states that the remainder of the Notice of Appeal consists of reasons or argument for the appeal and does not contain any allegations of fact to either admit or deny, but so far as there are allegations of fact, they are denied. 2. By Notices of Assessment dated February 25, 2005 the Appellant was assessed for, among other things, employment insurance premiums in the amount of $3,008.03 for the 2004 year, in respect of Roberta Winter (hereinafter "Winter"), Sharon Dayman (hereinafter "Dayman"), Angel Erickson (hereinafter "Erickson"), Kara Hirsch (hereinafter "Hirsch"), Cherylee Monteyne (hereinafter "Monteyne"), Teresa Stregger (hereinafter "Stregger") and Faye Veroba (hereinafter "Veroba"). 3. By letter received March 11, 2005, the Appellant appealed to the Minister for a reconsideration of the 2004 year assessment. 4. In response to the Appellant's appeal, the Minister decided to confirm the assessments for the 2004 year as Winter, Dayman, Erickson, Hirsch, Monteyne, Stregger and Veroba (collectively hereinafter "the Workers") were: (a) employed in a hairdressing establishment where they provided services normally provided in that establishment, (b) not the owners or operators of the establishment, and (c) therefore included in insurable employment pursuant to regulation 6(d) of the Employment Insurance Regulations. 5. In so deciding as the Minister did with respect to the Workers, the Minister relied on the following assumptions of fact: (a) the Appellant was in the hairdressing business and provided full service hair styling; (b) the Appellant operated a beauty salon under the name "Styles on 12th"; (c) the Appellant operated as a proprietorship; (d) the Workers performed hair stylist duties which included cuts, perms, colours and highlights; (e) the Workers performed their duties at the Appellant's premises; (f) the Workers charged their own clients and were paid directly by their clients; (g) the Workers did not have any set hours of work; (h) the Workers controlled their own hours and days of work; (i) the Workers worked whatever hours were required to complete the work (j) the Appellant did not maintain the right to control the Workers; (k) the Appellant did not supervise the Workers; (l) the Appellant had one appointment book which all of the Workers shared; (m) the Workers all shared the duties of answering the phone and dealing with walk-in clients; (n) the Workers had their own keys to the salon and could come and go as they pleased; (o) the Appellant provided the work location (the salon) which included chairs, a phone, cash register, sinks and large dryers; (p) each of the Workers rented a chair from the Appellant for $30.00 per day; (q) the Workers provided their own hand tools including scissors, blow dryers, curling irons, rollers perm rods, clippers, brushes, combs and capes; (r) the Appellant provided supplies at the sinks including shampoos, conditioners and towels; (s) the Appellant provided advertising; (t) the Workers had a chance of profit and a risk of loss; (u) the Workers were not employed under a contract of service with the Appellant; (v) the Appellant held the business license for the salon; (w) the Workers provided services that were normally provided in a hairdressing establishment; (x) the Workers were not the owners of the establishment, and (y) the Workers' insurable earnings, for the 2004 year, were as follows: Dayman $ 8,100 Erickson $ 6,800 Hirsch $13,600 Monteyne $ 3,300 Stregger $ 3,300 Veroba $18,900 Winter $ 9,300 B. ISSUES TO BE DECIDED 6. The issue to be decided is whether the Workers were included in insurable employment pursuant to paragraph 6(d) of the Employment Insurance Regulations, during the 2004 year. C. STATUTORY PROVISIONS, GROUNDS RELIED ON AND RELIEF SOUGHT 7. The Respondent relies on subsection 2(1) and paragraph 5(1)(d) of the Employment Insurance Act and paragraph 6(d) of the Employment Insurance Regulations. 8. The Respondent submits that the Workers were employed in a hairdressing establishment, provided services normally provided therein, and were not the owners or operators of the establishment and therefore were included in insurable employment within the meaning of paragraph 6(d) of the Employment Insurance Regulations. [3] The assumptions in paragraph 5 of the Reply require extensive explanations. By subparagraph, the findings respecting them follow: (a) Denise Dryden ("Mrs. Dryden") had a small hairstyling business of her own. She leased her building premises from her husband. She owned some hairdressing equipment and chairs (each unit called a chair) in the building. She then leased hairdressing chairs to the Intervenor and other stylists by the day for $30 per day. The premises were located in Estevan, Saskatchewan, a small rural city in the southeast corner of Saskatchewan. (b) Mrs. Dryden registered the trade name "Styles on 12th" and used that name as a business name. (c) Mrs. Dryden leased the chairs as a proprietor. She operated her personal hairdressing business as a businesswoman. Each of the stylists, whom the Respondent calls "Workers", operated their own businesses. (d) The stylists arranged their appointments from their homes for the day they rented at Mrs. Dryden's. They did perform "hairstylist's duties". They also had other jobs and/or had other jobs, among other things, their own household duties. Hairstyling at Mrs. Dryden's premises was a very small part of their weekly work. None appear to have put in enough hours at hairstyling at Mrs. Dryden's premises to make a living from that or to qualify for Employment Insurance. (e) The stylists did not do all of their hairstyling at Mrs. Dryden's premises. They also did hairstyling elsewhere. They each ordered their own supplies from various suppliers and they each sold retail beauty products at retail to their own customers. Each was in an independent business for herself. (f), (g), (h), (i), (j) and (k)Are true. The result is, as Mrs. Drydenpointed out, Mrs. Dryden never had enough knowledge of each stylist's income to be able to estimate an alleged employer's share of Employment Insurance premiums, nor did she have any of their stylists' fees from which to withhold Employment Insurance premiums. (l) Is not correct. The stylists made many or most of their appointments from their homes for the day they leased a chair at Mrs. Dryden's or for some other day in which they did business from another premises. (m) Was not refuted and is therefore correct for those who were in Mrs. Dryden's premises on a given day. (n) Is not refuted respecting the keys; but they each leased a chair for a normal day and they only had a right to the chair or the premises on that day. Each of the leasor and leasee of the chair lease could terminate on that day's notice. (o) From the evidence, each stylist's "chair" included the chair, sink and large dryer. Any use of the phone was a courtesy from Mrs. Dryden. The cash register was not used by individual stylists as a part of their own business operations. (p) Is correct. (q) Is correct. (r) Is wrong. Each stylist provided her supplies for herself. (s) Is wrong. The Appellant may or may not have done her own advertising. Each stylist did do her own advertising - at least one did so as a partner with another woman who had nothing to do with Mrs. Dryden or her premises. (t) Is correct. (u) The only contract between Mrs. Dryden and each stylist was a day-by-day lease of a chair for $30 per day. (v) Is correct. There is no evidence as to whether each stylist also had a business licence. However some operated under different business names. (w) Is correct, but each stylist also did, or was free to, provide those same services elsewhere. (x) This will be dealt with later, respecting the meaning of "establishment". (y) Mrs. Dryden believes the Respondent's allegation that these were the amounts earned at her chairs by these leases, but she had no way of verifying this nor did she have a right to do so. [4] The issue between the parties is based upon section 5 of the Employment Insurance Act and Regulation 6 of the Employment Insurance Regulations. They read: 5. (1) Subject to subsection (2), insurable employment is ... (d) employment included by regulations made under subsection (4) or (5); and ... (4) The Commission may, with the approval of the Governor in Council, make regulations for including in insurable employment ... (c) employment is not employment under a contract of service if it appears to the Commission that the terms and conditions of service of, and the nature of the work performed by, persons employed in that employment are similar to the terms and conditions of service of, and the nature of the work performed by, persons employed under a contract of service; ... Section 6 of the Regulations: 6. Employment in any of the following employments, unless it is excluded from insurable employment by any provision of these Regulations, is included in insurable employment: ... (d) employment of a person in a barbering or hairdressing establishment, where the person (i) provides any of the services that are normally provided in such an establishment, and (ii) is not the owner or operator of the establishment; ... [5] The Oxford English Dictionary defines the word "establishment" as follows: establishment I. Action or means of establishing. 1. The action of establishing; the fact of being established: in various senses of the vb. ... 3. a. Established or stable condition; settlement, permanence; also, settled condition of mind, calmness, confidence. ... b. Manner in which anything is established; organization, 'footing'. ... 4. A means of establishing; something that strengthens, supports, or corroborates. ... [6] The French equivalents of the quotations from the Act, the Regulations and the dictionary are similar. [7] Respondent's counsel presented Nelson v. Canada, 2001 F.C.A. 131 as the authority for denying this appeal. The Court has reviewed various authorities and the foregoing carefully. As a result, this Court does not agree with the Federal Court of Appeal that one need not look beyond the Regulation to the authorizing Act to determine a question. However, in this Court's view, Regulation 6(d) is within the powers granted by paragraph 5(4)(c) of the Employment Insurance Act. [8] The stylists fall within the provisions of the Act and Regulations. The result is that even though these stylists have so few hours at work that they cannot receive Employment Insurance, the Appellant and the stylists are required to pay the premiums levied by the Employment Insurance Act. [9] Thus on the material before the Court, they are not "insured", but they are required to pay for some one else's "insurance" benefits. [10] On this basis, the appeal is dismissed. Signed at Ottawa, Canada, this 12th day of April 2006. "D.W. Beaubier" Beaubier J. CITATION: 2006TCC233 COURT FILE NO.: 2005-4279(EI) STYLE OF CAUSE: Denise F. Dryden, v. MNR PLACE OF HEARING: Regina, Saskatchewan DATE OF HEARING: April 5, 2006 REASONS FOR JUDGMENT BY: The Honourable Justice D.W. Beaubier DATE OF JUDGMENT: April 12, 2006 APPEARANCES: For the Appellant: The Appellant herself Counsel for the Respondent: For the Intervenor: Sharlene Telles-Langdon No one appeared COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada