1392644 Ontario Inc. v. Minister of National Revenue, (2013) 444 N.R. 163 (FCA)

• Judge: Pelletier, Gauthier and Mainville, JJ.A.
• Court: Federal Court of Appeal (Canada)
• Case Date: March 20, 2013
• Jurisdiction: Canada (Federal)
• Citations: (2013), 444 N.R. 163 (FCA);2013 FCA 85

1392644 Ont. v. MNR (2013), 444 N.R. 163 (FCA)

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

Temp. Cite: [2013] N.R. TBEd. AP.002

1392644 Ontario Inc. o/a Connor Homes (appellant) v. The Minister of National Revenue (respondent)

(A-117-12; A-118-12; A-122-12; A-125-12; A-126-12; A-127-12)

1324455 Ontario Inc. (appellant) v. The Minister of National Revenue (respondent)

(A-120-12; A-128-12; 2013 FCA 85; 2013 CAF 85)

Indexed As: 1392644 Ontario Inc. v. Minister of National Revenue

Federal Court of Appeal

Pelletier, Gauthier and Mainville, JJ.A.

March 20, 2013.

Summary:

Connor Homes (CH) operated group homes. Connor Group Homes (CGH) was a service provider to CH. CH and CGH retained persons to provide services (child and youth workers, social workers, etc.). Three such workers were retained under contracts describing them as "independent contractors" rather than "employees". The Minister of National Revenue determined that the workers were "employees", employed in "pensionable employment" (Canada Pension Plan) and "insurable employment" (Employment Insurance Act). CH and CGH appealed.

The Tax Court of Canada dismissed the appeals. The workers were "employees". CH and CGH exercised significant control over the workers, there was no opportunity for workers to increase their income by reducing expenses or producing more and the only tools workers required were cell phones and computer access. Describing the workers as "independent contractors" was inconsistent with how the contractual relationship operated in fact. The court noted that three prior decisions involving the same issue between CH, CGH and the Minister, albeit involving other workers, all determined that the workers were employees. CH and CGH appealed, arguing that the court erred in relying on the fact findings in the prior cases and misapplied the appropriate test in determining that the workers were "employees" rather than "independent contractors".

The Federal Court of Appeal dismissed the appeals.

Courts - Topic 2

Stare decisis - Authority of judicial decisions - General principles - The nature of the judicial decision - At issue was whether workers retained by two companies operating group homes were "independent contractors" (as their contracts labelled them) or "employees" - The Tax Court, in finding the workers to be "employees", noted three prior Tax Court decisions involving the same two companies, albeit involving other workers - The three decisions also found the workers to be "employees" - On appeal, the companies argued that the Tax Court erred in relying on the fact findings in the prior cases - The Federal Court of Appeal held that "I agree that one trial judge is not bound by the conclusions of fact of another trial judge since each case must be decided on the evidence submitted. That being said however, when similar facts are submitted repeatedly by the same party to different judges, and where the same conclusions are being drawn from these facts by all judges, it is certainly not inappropriate for a trial judge to note this. Obviously, the trial judge is not bound by the findings of the other judges, but the party which is relying on the same or similar facts to draw another conclusion should provide some explanation as to why the findings of the other judges are distinguishable from the case at hand or inappropriate in the circumstances." - See paragraphs 19 to 20.

Government Programs - Topic 1244

Canada Pension Plan - Assessments and contributions - Pensionable employment - Contracts of service - [See Unemployment Insurance - Topic 226 ].

Master and Servant - Topic 308

Nature of relationship - Contract of service and contract for services distinguished - [See Unemployment Insurance - Topic 226 ].

Unemployment Insurance - Topic 226

Insurable employment - General principles - Employer-employee relationship - Connor Homes (CH) operated group homes - Connor Group Homes (CGH) was a service provider to CH - CH and CGH retained workers to provide services - Three such workers were retained under contracts describing them as "independent contractors" rather than "employees" - The Minister of National Revenue determined that the workers were "employees", employed in "pensionable employment" (Canada Pension Plan) and "insurable employment" (Employment Insurance Act) - The Tax Court of Canada dismissed appeals by CH and CGH, agreeing that the workers were "employees" - CH and CGH exercised significant control over the workers, there was no opportunity for workers to increase their income by reducing expenses or producing more, and the only tools workers required were cell phones and computer access - Describing the workers as "independent contractors" was inconsistent with how the contractual relationship operated in fact - The Tax Court's decision was consistent with three prior decisions involving the same issue between CH, CGH and the Minister, albeit involving other workers - CH and CGH appealed, arguing that the Tax Court erred in relying on the fact findings in the prior cases and misapplied the appropriate test in determining that the workers were "employees" rather than "independent contractors" - The Federal Court of Appeal dismissed the appeals - It was not inappropriate for the Tax Court to note the prior decisions where similar facts were submitted repeatedly by the same party to different judges - The Tax Court did not err in finding the workers to be "employees" - The fact that the contract defined the workers as "independent contractors" was relevant, but not determinative - That determination had to be grounded in a "verifiable objective reality" - The workers were not performing services "as a person in business on his own account", they were performing services as "employees".

Unemployment Insurance - Topic 257

Insurable employment - Exceptions - Employment under contract of service - [See Unemployment Insurance - Topic 226 ].

Cases Noticed:

1392644 Ontario Inc. v. Minister of National Revenue, 2003 TCC 816, refd to. [para. 11].

1392644 Ontario Inc. v. Minister of National Revenue, [2004] T.C.J. No. 214, refd to. [para. 11].

1392644 Ontario Inc. v. Minister of National Revenue, 2006 TCC 521, refd to. [para. 11].

Wiebe Door Services Ltd. v. Minister of National Revenue, [1986] 3 F.C. 553; 70 N.R. 214 (F.C.A.), refd to. [para. 2].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 16].

671122 Ontario Ltd. v. Sagaz Industries Canada Inc. et al., [2001] 2 S.C.R. 983; 274 N.R. 366; 150 O.A.C. 12; 2001 SCC 59, refd to. [para. 23].

Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161; [1946] 3 W.W.R. 748 (P.C.), refd to. [para. 27].

Stevenson Jordan and Harrison Ltd. v. Macdonald, [1952] 1 The Times L.R. 101 (C.A.), refd to. [para. 27].

Wolf v. Minister of National Revenue (2002), 288 N.R. 67; 2002 D.T.C. 6053 (F.C.A.), refd to. [para. 30].

Royal Winnipeg Ballet v. Minister of National Revenue, [2007] 1 F.C. 35; 346 N.R. 276; 2006 FCA 87, refd to. [para. 30].

Lang v. Minister of National Revenue, 2007 D.T.C. 1754; 2007 TCC 547, refd to. [para. 30].

City Water International Inc. v. Minister of National Revenue (2006), 355 N.R. 77; 2006 FCA 350, refd to. [para. 34].

Combined Insurance Co. of America v. Minister of National Revenue et al. (2007), 359 N.R. 358; 2007 FCA 60, refd to. [para. 34].

Kilbride v. Minister of National Revenue, [2008] N.R. Uned. 135; [2009] 4 C.T.C. 114; 2009 D.T.C. 5002; 2008 FCA 335, refd to. [para. 34].

Woodcock Youth Centre Ltd. v. Minister of National Revenue, 2007 TCC 443, refd to. [para. 35].

Unison Treatment Homes for Youth v. Minister of National Revenue, 2007 TCC 447, refd to. [para. 35].

TBT Personnel Services Inc. v. Minister of National Revenue (2011), 422 N.R. 366; 2011 FCA 256, refd to. [para. 40].

Authors and Works Noticed:

Friedlander, Lara, What has Tort Law Got to Do with It? Distinguishing Between Employees and Independent Contractors (2003), 51(4) Can. Tax J. 1467, generally [para. 25].

Goucher, Alain, A Worker's Status as Employee or Independent Contract, 1999 Canadian Tax Foundation Conference, Report 33, generally [para. 25].

Magee, Joanne, Whose Business Is It? (1997), 45(3) Can. Tax J. 584, generally [para. 25].

Wintermute, Kate, A Worker's Status as Employee or Independent Contractor, 2007 Canadian Tax Foundation Conference, Report 34, generally [para. 25].

Counsel:

Louise R. Summerhill, for the appellant;

Deborah Horowitz and Ashleigh Akalehiywot, for the respondent.

Solicitors of Record:

Aird & Berlis LLP, for the appellant;

William F. Pentney, Deputy Attorney General of Canada, Vancouver, British Columbia, for the respondent.

This appeal was heard on January 31, 2013, at Toronto, Ontario, before Pelletier, Gauthier and Mainville, JJ.A., of the Federal Court of Appeal.

On March 20, 2013, Mainville, J.A., delivered the following judgment for the Court of Appeal at Vancouver, British Columbia.