TATIANA IARUTINA , Appellant, v. THE MINISTER OF NATIONAL REVENUE,, 2011 TCC 114

Dockets: 2010-2993(CPP) BETWEEN: TATIANA IARUTINA , Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent . ____________________________________________________________________ Appeal heard on common evidence with the appeal of Tatiana Iarutina (2010-2994(EI)), on February 1, 2011, at Toronto, Ontario.

Before: The Honourable Justice Patrick Boyle Appearances : For the Appellant: The Appellant herself Counsel for the Respondent: Christian Cheong ____________________________________________________________________ JUDGMENT The appeal under the Canada Pension Plan is allowed and the Minister’s decision of September 15, 2010 is vacated in accordance with the Reasons for Judgment attached hereto. Signed at Ottawa, Canada, this 22 nd day of February 2011. "Patrick Boyle" Boyle J.

Docket: 2010-2994(EI) BETWEEN: TATIANA IARUTINA , Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. ____________________________________________________________________ Appeal heard on common evidence with the appeal of Tatiana Iarutina (2010-2993(CPP)), on February 1, 2011, at Toronto, Ontario.

Before: The Honourable Justice Patrick Boyle Appearances : For the Appellant: The Appellant herself Counsel for the Respondent: Christian Cheong ____________________________________________________________________ JUDGMENT The appeal under the Employment Insurance Act is allowed and the Minister’s decision of September 15, 2010 is vacated in accordance with the Reasons for Judgment attached hereto. Signed at Ottawa, Canada, this 22 nd day of February 2011. "Patrick Boyle" Boyle J. CITATION: 2011 TCC 114

2010-2993(CPP) 2010-2994(EI) BETWEEN: TATIANA IARUTINA , Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. EDITED VERSION OF TRANSCRIPT OF REASONS FOR JUDGMENT Let the attached edited transcript of the Reasons for Judgment delivered orally from the Bench at Toronto, Ontario, on February 1, 2011, be filed . I have edited the transcript (certified by the Court Reporter) for style, clarity and to make minor corrections only. I did not make any substantive change. Signed at Ottawa, Canada, this 22 nd day of February 2011. "Patrick Boyle" Boyle J. Citation: 2011 TCC 114 Date: 20110222 Dockets: 2010-2993(CPP) 2010-2994(EI) BETWEEN: TATIANA IARUTINA , Appellant, and

THE MINISTER OF NATIONAL REVENUE, Respondent. EDITED VERSION OF TRANSCRIPT OF REASONS FOR JUDGMENT [ Delivered orally from the Bench at Toronto, Ontario, on February 1, 2011] Boyle J. [ 1 ] This is my decision in this afternoon's appeals in the Iarutina Canada Pension Plan (“CPP”) and Employment Insurance (“EI”) matters in Toronto. [ 2 ] The question to be decided in this case is whether a part-time babysitter with no set hours or availability is an employee or a self-employed independent contractor.

Both the payor and the worker intended and understood from the outset and throughout that the babysitter was self-employed. The babysitter has not changed her mind and has not sought to collect EI or CPP benefits. The assessment of EI and CPP appears to have been raised by the government of its own initiative. In addition to EI and CPP, the Canada Revenue Agency (“CRA”) has assessed penalties. [ 3 ] Both the Appellant Ms. Iarutina and the babysitter Ms. Mikhaylovskaya testified. Each testified in Russian through an interpreter. Mr.

Iarutina's submissions were largely made through the interpreter as well. [ 4 ] Ms. Iarutina is an accountant with an office in the basement of her home and with regular needs to attend to clients outside the home. In 2008 her two daughters were eight years old and one year old. She placed an ad looking for a Russian-speaking babysitter for her children. [ 5 ] Ms. Mikhaylovskaya was 67 years old and retired at that time, and had raised her two children and aided in the upbringing of her two grandchildren. She also has, at least now, a great-grandchild. Both parties described the job as babysitting and Ms.

Mikhaylovskaya as a babysitter, even in their original Russian, I noted. [ 6 ] The babysitter looked at several babysitting positions offered. The others did not satisfy her. She said she took this babysitting job with Ms. Iarutina because its requirements satisfied her. She was able to set her own hours to the needs she had, and it provided her enough for her financial needs. Both witnesses said there were no set hours, and it was up to Mrs. Iarutina to either arrange for the babysitter’s next work time as she left the last, or to telephone her and inquire.

Both witnesses were clear that the babysitter decided if she would come, and that Mrs. Iarutina had to work her

schedule around the babysitter’s availability. The babysitter had the ability to and did call Ms. Iarutina at times to tell her she would be going home earlier than planned and to please return as soon as possible. [ 7 ] Both witnesses were clear this was intended to be self-employment. They were similarly clear and consistent that the babysitter did not receive any instructions on how the children were to be cared for. When she arrived at the children’s house, everything was there, available, and ready for her use.

I take this to mean no specific or particular instructions were given beyond a typical casual babysitting arrangement with an experienced and trusted babysitter. The babysitter was not expected to and did not do any household chores or other work when not directly involved in taking care of the children. Most of the time the children were babysat in their own home. Occasionally, to accommodate the babysitter, they would be cared for at her home. [ 8 ] Both witnesses testified they could not remember occasions where Ms. Iarutina called to check up on the babysitter or the children.

[9] The babysitter prepared meals, when necessary, of food the children liked and was available at their home. They ate her foodwhen at her house. [10] While the babysitter reported her babysitting income on her tax return as "Other Employment Income", this is hardly surprisingsince she viewed it as, in her words, self-employment income and it was not employment income reported on a T4 form. [11] The tests for a contract of service/employment versus a contract for services/independent contractor are well settled. The issueof employee versus independent contractor for purposes of the

definitions of pensionable employment and insurable employment are tobe resolved by determining whether the individual is truly operating a business on his or her own account. This is the question set out bythe British courts in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732 (Q.B.D.), approved by the FederalCourt of Appeal in Wiebe Door Services Ltd. v. M.N.R., (FCA), [1986] 3 F.C. 553, for purposes of the Canadiandefinitions of insurable employment and pensionable employment, and adopted by the Supreme Court of Canada in 671122 Ontario Ltd.v.

Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983. This question is to be decided having regard to all of the relevantcircumstances and having regard to a number of criteria or useful guidelines including: 1) the intent of the parties; 2) control over thework; 3) ownership of tools; 4) chance of profit/risk of loss and 5) what has been referred to as the business integration, association orentrepreneur criteria.

There is no predetermined way of applying the relevant factors and their relative importance and their relevancewill depend upon the particular facts and circumstances of each case. [12] The decision of the Federal Court of Appeal in Royal Winnipeg Ballet v. M.N.R., 2006 FCA 87, [2007] 1 F.C.R. 35, highlightsthe particular importance of the parties’ intentions and the control criterion in these determinations. This is consistent with the FederalCourt of Appeal’s later decisions in such cases as National Capital Outaouais Ski Team v.

Canada (The Minister of National Revenue),2008 FCA 132, Combined Insurance Company of America v. Canada (The Minister of National Revenue), 2007 FCA 60, and City WaterInternational Inc. v. Canada (The Minister of National Revenue), 2006 FCA 350. The reasons of this Court in Vida Wellness Corporation(Vida Wellness Spa) v. M.N.R., 2006 TCC 534, also provide a helpful

summary of the significance of the Royal Winnipeg Balletdecision. [13] In D.W. Thomas Holdings Inc. v. Canada, 2009 FCA 371, the Federal Court of Appeal stated in paragraph 5: Contrary to the appellant’s assertion, Miller J. did consider the issue of intention. In keeping with the approach set out in Royal WinnipegBallet v. Canada (Minister of National Revenue), 2006 FCA 87 , [2007] 1 F.C.R. 35 (FCA), she examined the evidence toascertain whether it supported that intention and concluded that it did not. [14] In this afternoon’s case I am satisfied that the relationship in fact maintained between Ms.

Iarutina and the babysitter wasconsistent with the self-employment they both intended and understood it to be. [15] With respect to the consideration of control over the babysitter and how and when she cared for the children, this leans towardsindependent contractor services since it was worked around the babysitter’s availability or left to the babysitter’s discretion. It does notappear to have been dictated to such an extent that it must have been employment.

Indeed, the babysitter herself says she was given noparticular instructions. [16] With respect to the ownership of tools, I do not consider it a helpful consideration in the case of determining when childcareprovided in the child’s home is employment and when it is not. It is generally consistent with either case; the children’s clothes, toys,beds, bottles, and food are at their home in either case. I find support for this view in our former Chief Justice Bowman’s decision Hastiev. Canada (Minister of National Revenue - M.N.R.), [1999] T.C.J. No. 864, at paragraphs 9(

e) and (

f) in particular. That case involved aflexible part-time babysitter who was found to not be the parent’s employee. [17] This case differs considerably with respect to control in particular from the decisions in Mohr v. Canada (Minister of NationalRevenue - M.N.R.), [1997] T.C.J. No. 1252, and Gati v. Canada (Minister of National Revenue - M.N.R.), [2002] T.C.J.

No. 166, each ofwhich involved full-time home childcare with regular daily set hours. [18] With respect to the babysitter’s economic position of profit and loss, I do not find it a helpful consideration which points ineither direction in a case such as this. Employed, self-employed, full-time, part-time, and casual babysitters charge and are paid an hourlyrate. In this case the rate was set by agreement of the parties, and the babysitter said she insisted on a higher rate for the times the older

child was also home. [ 19 ] For all of the above reasons, I find that the babysitter, Ms. Mikhaylovskaya, was not Ms. Iarutina’s employee in 2008, and that the CPP and EI assessments should be vacated. Signed at Ottawa, Canada, this 22 nd day of February 2011. "Patrick Boyle" Boyle J. CITATION: 2011 TCC 114 COURT FILE NOS.: 2010-2993(CPP), 2010-2994(EI) STYLE OF CAUSE: TATIANA IARUTINA v.

THE MINISTER OF NATIONAL REVENUE PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: February 1, 2011 REASONS FOR JUDGMENT BY: The Honourable Justice Patrick Boyle DATE OF JUDGMENT: February 22, 2011 APPEARANCES: For the Appellant: The Appellant herself Counsel for the Respondent: Christian Cheong ALSO PRESENT: Russian Interpreter: Rachel Ovadia Court Registrar: William P. O’Brien Court Reporter: Elisa De Angelis

COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: Myles J. Kirvan Deputy Attorney General of Canada Ottawa, Canada