Maurice R. Cormier o/a Dan Jo General Cleaning v. M.N.R.

Maurice R. Cormier o/a Dan Jo General Cleaning v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-10-17 Neutral citation 2005 TCC 646 File numbers 2004-3208(CPP) Judges and Taxing Officers François M. Angers Subjects Canada Pension Plan Employment Insurance Act Decision Content Docket: 2004-3208(CPP) BETWEEN: MAURICE R. CORMIER doing business under the firm name and style of DAN JO GENERAL CLEANING, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and HÉLÈNE MAILLET, Intervener. ____________________________________________________________________ Appeal heard on common evidence with the Appellant's appeal number 2004-3209(EI) on May 11 and 12, 2005, at Miramichi, New Brunswick. Before: The Honourable Justice François Angers Appearances: Counsel for the Appellant: Stephen J. Doucet Counsel for the Respondent: For the Intervener: Edward Sawa The Intervener herself ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Edmundston, New Brunswick, this 18th day of October 2005. « Pierre Archambault » Angers, J. Docket: 2004-3209(EI) BETWEEN: MAURICE R. CORMIER doing business under the firm name and style of DAN JO GENERAL CLEANING, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and HÉLÈNE MAILLET, Intervener. ____________________________________________________________________ Appeal heard on common evidence with the Appellant's appeal number 2004-3208(CPP) on May 11 and 12, 2005, at Miramichi, New Brunswick. Before: The Honourable Justice François Angers Appearances: Counsel for the Appellant: Stephen J. Doucet Counsel for the Respondent: For the Intervener: Edward Sawa The Intervener herself ____________________________________________________________________ JUDGMENT The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment. Signed at Edmundston, New Brunswick, this 18th day of October 2005. « Pierre Archambault » Angers, J. Citation: 2005TCC646 Date: 20051017 Dockets: 2004-3208(CPP) 2004-3209(EI) BETWEEN: MAURICE R. CORMIER doing business under the firm name and style of DAN JO GENERAL CLEANING, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and Hélène Maillet, Intervenor. REASONS FOR JUDGMENT Angers, J. [1] These two appeals were heard on common evidence. By notices of assessment dated October 23, 2003, the appellant was assessed for failure to remit Canada Pension Plan contributions and employment insurance premiums on behalf of 22 workers for the period from January 1 to December 31, 2002, and on behalf of 15 workers for the period from January 1 to September 24, 2003, plus related penalties and interest. The workers involved are for the first period: Charlene Adams Shirley Allain Janiece Alward Chantale Babineau Anise Bastarache Vincent Bernard Rose Boucher Régis Bourque Roseanne Caissie Eveline Cameron Daniel Cormier Colette Delaney Yvon Gauvin Doris Goguen Bruce Hickey Cheryl Landry Donat LeBlanc Kelly LeBlanc Meagan LeBlanc Marie L. McDonald Hélène Maillet Noëlla Maillet And for the second period those involved are: Janiece Alward Chantale Babineau Anise Bastarache Vincent Bernard Rose Boucher Charline Bourque Régis Bourque Eveline Cameron Yvon Gauvin Bruce Hickey Meagan LeBlanc Hélène Maillet Noëlla Maillet Marie L. McDonald Gary Pellerin [2] By letter dated May 17, 2004, the Minister of National Revenue determined that all of the above workers, with the exception of Régis Bourque, were employed by the appellant in insurable employment within the meaning of paragraph 5(1)(a) of the Employment Insurance Act (the Act) and in pensionable employment within the meaning of section 6 of the Canada Pension Plan (the Plan), the basis of the determination being that there was a contract of service between the appellant and each of the above workers except Régis Bourque. [3] In making his decision, the Minister relied on a series of assumptions of fact which were all admitted by the appellant, although the Minister's conclusions drawn therefrom were disputed. These admitted assumptions are summarized hereunder. [4] The appellant has been operating his business since 1992. The business provides cleaning and janitorial services in offices, buildings and stores, as well as carpet cleaning, boat and car cleaning and floor mat rental services. It had 29 workers in 2002 and 26 in 2003. Seven of the 29 workers in 2002 were considered employees and they and all the others, with the exception of Régis Bourque and the secretary, were hired to perform duties relating to the various aspects of the appellant's cleaning business. The employees on the appellant's payroll were paid an hourly wage and were hired for small jobs, as needed, while the other workers were hired to fulfill specific yearly contracts negotiated by the appellant and involving mostly the provision of regular janitorial services. Each of these contracts specified the frequency and type of services required. The contract workers were paid a set rate for the particular job based on the approximate time required to provide the service. All the workers were paid by cheque or direct deposit on a weekly, biweekly or monthly basis and none worked full time. None of the workers - neither those who were employees nor those under contract - were responsible for providing cleaning supplies or tools and all performed their duties under the appellant's trade name. [5] The appellant produced examples of the type of cleaning contracts he obtained and made reference to particular terms with regard to supplies and the use of tools for the performance of the contracts. All these contracts required that the appellant provide the tools, namely mops, pails, waxes, strippers and other janitorial supplies. The supplies to be provided by the other contracting party were not needed for carrying out the work. The appellant testified that in some cases, he would use the tools of the other contracting party to perform his work. [6] It is important to note that two of the contracts that were tendered as examples require that the appellant make sure that the work is well supervised and that it is performed according to the conditions of the contract. They also require that the workers working under these contracts be covered by a "Fidelity Guarantee" provided by a security company licensed to do business in the provinceof New Brunswick. Finally, there is a provision that the appellant cannot make an assignment of the contract without the required consent, to do so exposes him to the risk of losing the contract. [7] All the workers performed their work under a verbal agreement with the appellant. Their duties were determined according to what was specified in the appellant's contract. He advised them of the client's business hours and the workers had to perform their duties outside those hours. The hours needed to perform the work were estimated at the beginning of the contract and the workers' pay was determined accordingly. If they could do the work in less time, they would still get the same pay. Some of them performed cleaning jobs elsewhere as well, to which the appellant did not object, and some of them would refuse work offered by the appellant. The workers were allowed to bring help with them on the job. Spouses and children of the workers could assist, thus reducing the worker's hours. [8] The appellant would himself replace a worker in case of sickness, particularly for clients on whose premises security codes were in place, so as not to have to share the codes. Complaints were generally taken care of by the worker, who also redid any work that had to be redone. [9] The appellant left what he described as comment sheets on his clients' premises and these were to be filled in by the workers. The comment sheets provided a daily report on the time the worker arrived on and left the premises and allowed the clients to leave instructions or comments for the workers. The appellant would collect the comment sheets and could thereby verify whether the workers had performed their work on a daily basis. The sheets were also kept for security reasons, but no explanations were provided in this regard. [10]At all times, the appellant felt himself fully responsible for fulfilling the obligations under his contract. He made sure that the workers understood their duties and were capable of performing them accordingly. He inspected the premises at times and particularly when he himself did other work on those premises. The appellant also testified that he could have used his regular employees to fulfill these contracts. The only difference between the contract workers and his employees is that the former could set their own hours as long as they were outside his clients' business hours and the cleaning that needed to be done was completed. [11]According to the appellant, Eveline Cameron kept time sheets, since he would pay her extra if her hours exceeded the determined number. On the other hand, the appellant could not recall specifically what the arrangements were with Eveline Cameron, as she was earning $ 350 per week no matter how many hours she worked. He added that Eveline Cameron was the only worker who had her travelling expenses paid by the appellant as she had to travel further than the others. [12]Workers were called as witnesses by both parties and they all gave their version of the arrangements made with the appellant regarding their working conditions. [13]Bruce Hickey has been working for the appellant since June of 2000. He is a self-employed beef farmer. He was put in touch with the appellant through a friend and what was offered sounded to him like a good part-time job. His work was as described above and had to be performed between the hours of 4:30 p.m. and 6 a.m. five days a week. The appellant showed him what had to be done. It took from 2 to 2½ hours to perform the work and he was paid $108 a week on a monthly basis. If members of his family helped, the work would take him less time. He says he was not supervised by the appellant on a daily basis and only saw him when he showed up to do the carpet cleaning. A code machine would record the time he arrived and left and he filled in the comment sheet left on the site by the appellant. He used the equipment provided on the premises to do the cleaning but perhaps sometimes brought bags for the vacuum cleaner. If he was unable to go, his wife would replace him, and if neither could go, he would contact the appellant and work something out. [14]Mr. Hickey does the cleaning under one of the contracts that were put in evidence as examples. He has never seen that contract nor has he discussed any of its terms with anyone other than the appellant. According to his testimony, complaints were to be directed to the appellant first and then redirected to him, but he says he never had any. He does not consider himself to be in business. [15]Anise Bastarache is a full-time bus driver. In 2001, she came into contact with the appellant and was offered work doing cleaning for one of the appellant's clients. The former worker under that contract told her what had to be done. She was paid $95 a week for an average of 10 to 12 hours per week. She worked outside the clients' business hours and had the code to enter the premises. Although the tools she needed to do the work were provided, she would use her own pail and rags. She testified that she would do similar work for other employers and refused other offers from the appellant. She filled in the comment sheets provided by the appellant and redid any work not properly done. If she could not be there on a given day, she would make arrangements with the client and not the appellant. Like Mr. Hickey, she does not consider herself to be in business. [16]Hélène Maillet is the intervener in this case. She has her own cleaning business which she advertises and in which she works on a full-time basis. She was contacted by the appellant, who inquired whether she had time available to do any work for him. He offered her contracts and she now has three with the appellant and has had since 2001. She is paid $150 per week and receives her pay on a monthly basis. She works approximately two hours a week on each job. Since the appellant never said anything as to whether she could get help to do her work, Ms. Maillet sometimes brought along her husband or somebody else. This allowed her to do the job faster. As was the case with the other workers, her work was performed outside office hours with no precise schedule. All the required tools and equipment were on the premises but she provided her own rags and pail. She filled in the comment sheets and saw the appellant once a month. She testified that her work was not supervised. If work had to be redone, she did it herself. She says she has refused work offered by the appellant. [17]A fact-finding questionnaire answered by Ms. Maillet was put in evidence. In it, she acknowledges that time sheets were filled in for the work performed for the appellant. By this means, she could know if she was making $10 an hour. She also indicated in the questionnaire that her hours were recorded, but at trial she testified that she had not understood the question and that such was not the case. She also indicated in the questionnaire that the appellant decided if work had to be redone and that he covered the related costs and supplied the materials. At trial, however, she testified that the client decided if work had to be redone and that she covered the cost of redoing it. As for the materials, she testified that they were provided instead by the client and that she used her own rags and pail instead of the appellant's. As for a replacement, she testified at trial that she never needed to look for a replacement as her husband was available to replace her if need be, but on the questionnaire she answered that the appellant was responsible for finding and paying for a replacement. She added at the hearing that she never needed a replacement. In her final remarks, Ms. Maillet stated that she does not work under somebody else, but agreed that, in her work with the appellant, it was he who assigned her her duties. [18]Eveline Cameron was a worker for the appellant from September 2001 to December 2003. She was approached by the appellant and worked at different locations during that period doing cleaning. She was paid a set amount that came to about $8 an hour. She was told what to do by her predecessor and was given by the appellant or his client a list of things to do weekly, monthly and yearly. In her work for one of the appellant's clients, the appellant and his secretary exercised a greater degree of supervision at first. Contrary to the other workers, Ms. Cameron kept a record of her time on a weekly basis so that she and the appellant would know at the end of each year who owed what to whom. In both years, she owed the appellant hours. These he forgave in the first year as a bonus, but she had to give back 50 hours of unpaid time in the second year. She was allowed to get her own replacement at her own cost but could not share the codes so she still had to be there to open and close the premises. [19]Ms. Cameron testified that the appellant preferred that she not work for others in case he should need her. She also testified that the appellant provided her with the tools and the supplies she needed to do the job, except in the case of one client, which provided some of the equipment and supplies. She would travel in her car and the appellant would reimburse her for one tank of gas every week out of the sometimes three she had to buy. She carried no insurance and kept the appellant informed on everything through her time sheets and comment sheets. With respect to one particular client, she had to call the appellant, before leaving, to check to see if there were other things to do. [20]Shirley Allain was a worker in the appellant's business from May to September of 2002. She left the appellant after her request to have weekends off was refused. She worked 8 hours a week and was paid biweekly. She worked for different clients, but for one in particular, she requested that she be the only one to work and therefore could not send anyone else in her place. She had to adhere to what she identified as the list of duties. She filled in the comment sheets so that the appellant would know she had worked. The code for entering the client's premises was provided by the appellant. Ms. Allain testified that she did not provide anything in terms of equipment or tools and carried no insurance. She also testified that she refused some jobs offered by the appellant. She acknowledges that the hours actually worked were not relevant, and yet on one occasion an extra hour of work done at the client's request was added to her pay. [21]Ghislaine Desprès is an appeals officer for the respondent. She submitted the same fact-finding questionnaires to seven of the 24 workers, as she had been informed by the appellant's secretary that all 24 performed the same work and had the same duties. Those given the questionnaires were all chosen at random except one. In addition to having the questionnaires completed, she met the appellant's secretary, and had telephone conversations with employees at the appellant's office. She obtained and reviewed contracts, time sheets and comment sheets and concluded that 23 of the 24 workers over the period in question were under a contract of service and therefore held insurable and pensionable employment. [22]The issue is whether those 23 workers were employed by the appellant in insurable employment within the meaning of paragraph 5(1)(a) of the Act and in pensionable employment within the meaning of subsection 6(1) of the Plan. Is there a contract of service between them and the appellant such that the appellant should have deducted and remitted employment insurance premiums and Canada Pension Plan contributions on behalf of the workers during the period in question? [23]The Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] S.C.J. No. 61 (QL), has confirmed that the four-fold test found in Wiebe Door Services Ltd. v. The Minister of National Revenue, 87 DTC 5025, is a persuasive approach to the issue, as stated in paragraphs 47 and 48 of its decision: 47 Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. 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. [24]These factors have been applied and the overall nature of the inquiry has been taken into account by the Federal Court of Appeal in many cases, and that court has also considered other factors such as whose business it is and what the intention of the parties was in entering into their contract (Wolf v. Canada), [2003] 4 F.C. 396. [25]Counsel for both parties have submitted cases that favour their respective positions and that are similar to the facts of this case. The fact remains, nevertheless, that the question at issue is to be decided according to the facts and circumstances of each case. [26]It has been agreed by the parties that although there are some differences in the manner in which the appellant dealt with the workers, the nature of the overall relationship between the appellant and the workers, which is to be determined by this Court, will be the same for all the workers. It is also important to note that all the assumptions of fact relied upon by the Minister have been admitted by the appellant in this case; what he does not accept is the Minister's conclusion that these facts support a finding that the relationship is one that is compatible with the existence of a contract of service. However, all the admitted facts and the evidence tendered at trial are supportive of such a conclusion. [27]The appellant tendered for and negotiated cleaning contracts with various clients. The evidence did not disclose that there were any assignments of these contracts to the benefit of the worker. In fact, the contracts tendered in evidence specifically required the consent of the client before the appellant could assign it to someone else. One of the contracts tendered in evidence required that the work be supervised and that the workers be covered by a "Fidelity Guarantee", which I understand to mean that the workers had to be bonded in order to perform any work under those contracts. The other clients' contracts were not as detailed but they were nevertheless made with the appellant. [28]The appellant therefore needed workers to perform the work required under these contracts. Some were offered work by the appellant and others offered their services to the appellant. Although most of them were left on their own once their duties had been explained, the appellant kept track of their performance so as not to lose the contracts. He initiated his comment sheet system so that he could verify if the workers had performed their work on a daily basis and as well make sure that his clients were satisfied with the work performed. [29]Although the hours of work may have been left to the workers' discretion, they were to be performed according to the contract. An approximate time for the performance of the work was agreed to by the parties; as a consequence, the time it took to perform it and who actually performed it became irrelevant as long as there were no complaints from the client. It remained the appellant's responsibility to find substitute workers for whatever reasons they may have been required and security codes were not to be shared with those substitutes. [30]The appellant has always felt that he had full responsibility for fulfilling the obligations under his contract. In my view, in order for him to fulfill these obligations, he had to maintain a certain degree of control. Although he may not have been present on a daily basis, the workers' work and performance was reviewed by the appellant through the comment sheets, the time sheets (with respect to some workers) and his own presence on the client's premises when he had to do the carpet cleaning. The comment sheets provided him with the number of complaints and their nature. [31]The fact that the workers had to rectify themselves any deficiencies in their work is consistent with the simple performance of their duties and not necessarily an indication that they were carrying on a business of their own. In my view, the fact that they had no set hours and no time limits for completing their work is not in the circumstances an indication of that either, nor is it in any way conclusive. The end result was what mattered and that the work got done. It may be that in the circumstances of this case the cleaning business concerned and some of the working conditions in that business are different but they are not so different as to permit me to conclude that the appellant has relinquished his right to control his workers and the performance of their work. The appellant still required that their work be performed in accordance with his obligations under his various contracts. [32]On the question of ownership of tools, essentially, none were provided by the workers. Other than pails and rags, all the supplies were provided either by the appellant or by the clients under the contracts. The evidence does not disclose that the issue of supplies ever became a matter or term for the workers to negotiate with the appellant. It must be asked if the issue would have been raised had the workers been in a business of their own. In any event, the fact that they may have provided their own pails and rags is not a sufficient basis for concluding that they incurred a significant expense that would point toward their being independent contractors or in a business of their own. [33]On the issue of whether the workers stood to make a profit or faced a risk of loss, the appellant submitted that they had an opportunity to increase their profits by accepting more contracts, by performing their work in a more efficient manner thus increasing their availability for work, and also by their ability to reject client contracts offered by the appellant if more profitable cleaning work was available from other sources. In my view, the above circumstances are more compatible with the fact that the workers perhaps stood to make more money under their working relationship with the appellant than with their being necessarily in a position to make profits or even suffer losses in the entrepreneurial sense. The fact that the workers provided their own transportation to and from work does not make them independent contractors. In my view, the evidence does not support a finding that the workers stood to make a profit or risked suffering losses in the entrepreneurial sense. In my view, their working conditions were flexible and allowed them to make money in less time or to refuse work or to accept better-paying jobs, as any worker in an employer-employee situation and in similar circumstances would be able to do. [34]Consideration of the integration criterion leads one to ask whose business it is. The evidence in my view does not support a finding that any of these workers - other than the intervener, Ms. Hélène Maillet - were in business for themselves in the entrepreneurial sense. All the workers offered their services to the appellant or were offered work by the appellant in order for him to fulfill obligations he had under contracts with his own clients. In Ms. Maillet's case, although she had her own cleaning business, she was performing work for the appellant under his supervision and in fulfillment of the appellant's contractual obligations toward his clients and not hers. In that situation, in my view, she was not in business for herself. [35]Considering, the total relationship of the parties, it is my view that the evidence presented supports a finding that the workers were not in business for themselves. In my view, the appellant is the only party who acted as a businessperson in that he submitted tenders to various potential clients, took risks in the entrepreneurial sense of the word and invested in equipment and supplies. The workers performed their duties and were paid therefore at a predetermined hourly rate based on an approximate time required for performance, and none of them could improve their earnings other than by working more hours. [36]In view of the above analysis, this Court is satisfied that all the workers referred to in paragraph 1 for both periods, with the exception of Régis Bourque, were employed by the appellant in insurable employment within the meaning of the Act and in pensionable employment within the meaning of the Plan, as they were employed under a contract of service. The appeal is dismissed and the decision of the Minister is confirmed. Signed at Edmundston, New Brunswick, this 18th day of October 2005. « Pierre Archambault » Angers, J. CITATION: 2005TCC646 COURT FILE NOS.: 2004-3208(CPP) 2004-3209(EI) STYLE OF CAUSE: Maurice R. Cormier doing business under the firm name and style of Dan Jo General Cleaning and M.N.R. and Hélène Maillet PLACE OF HEARING: Miramichi, New Brunswick DATE OF HEARING: May 11 and 12, 2005 REASONS FOR JUDGEMENT BY: The Honourable Justice François Angers DATE OF JUDGMENT: October 18, 2005 APPEARANCES: Counsel for the Appellant: Stephen J. Doucet Counsel for the Respondent: Edward Sawa COUNSEL OF RECORD: For the Appellant: Name: Stephen J. Doucet Firm: Stephen J. Doucet Avocat - Lawyer Bouctouche, New Brunswick For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Ontario