Boutilier v. Rouvalis, 2021 NSSM 54

2021 Claim No. 504879 IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Boutilier v. Rouvalis , 2021 NSSM 54 BETWEEN: DARLENE MacAULEY BOUTILIER CLAIMANT - and - PETER ROUVALIS and 3088962 NOVA SCOTIA LIMITED DEFENDANTS Hearing Dates: May 20 and August 4, 2021 (by Video Conference) (Peter Rouvalis, by telephone only) Last Written Submission: August 18, 2021 Appearances: Claimant - Lisa Teryl, Barrister & Solicitor Defendants – J.

Alexander (Sandy) Jenkins, Barrister & Solicitor DECISION and ORDER [ 1 ] This claim is for wrongful dismissal, breach of contract as well as compensation for unpaid days and failure to receive notice. [ 2 ] The Defendants allege that the Claimant was not an employee and could be terminated at any time. Alternatively, the Defendants say there was just cause to terminate. [ 3 ] As well, the Defendants counterclaim for alleged breach of contract, negligence in performance of service and associated mitigation costs.

Background Facts [ 4 ] The Defendant [1] is the owner and landlord of several residential premises. The Claimant [2] worked as a Superintendent or Property Manager for the Defendant at various of the apartment sites. [ 5 ] The Claimant’s evidence was that at the time of her termination in June 2020 she had worked for the Defendant for approximately nine years (as will be seen below this conflicts with the evidence of Mr. Rouvalis). The Claimant stated that it was not full-time for nine years but was nearly full-time for about the last four years and then consistently for the last two years.

Up to October 2019 she was an untitled Property Manager and from then until June 2020 she was titled as Property Manager. [ 6 ] She states that in the last two years she would work on average between 20 and 30 hours a week, sometimes more, and on some days it would be as much as 12 to 14 hours. Her duties were apparently quite varied and included cleanings, move-outs, mowing, removal of rodents, fire extinguisher inspections, snow ploughing, salting, painting, obtaining supplies such a salt, and dealing with various issues that would arise and for which she would be on call 24-7. She did not handle leasing.

This was handled by an individual named Mr. Patrick. [ 7 ] Sometimes she would hire other people to assist her with the work that had to be done. She drove a truck owned by the Company and was responsible for units on College Street (45-50 units), Carleton Street (12 units), Robie Street (30 units), and helped out at West End (56 units). With respect to the West End property, I understood that there was another individual or individuals that had primary responsibility. [ 8 ] Mr.

Rouvalis was her manager to whom she took direction and reported to. [ 9 ] While she had done some homecare work in the past, in the last two years she has only worked for the Defendant. [ 10 ] She stated that if she needed additional help she could get it but she would consult with Mr. Rouvalis first. They would report to her. Mr. Rouvalis would give her a cheque for such and she would pass that on to the individual(

s) that she engaged. She stated that Mr. Rouvalis never had any issues with her hiring outside help. [ 11 ] For general housekeeping supplies like Mr. Clean, mop, broom, she supplied those but for bigger items such as lumber, sinks, toilets, she would pay and Mr. Rouvalis would reimburse her. He was fine with her managing the cash accounts at Rona, or other suppliers. She owned a John Deere lawn tractor and a whipper snipper, both of which she apparently used to mow and trim the grass areas on the properties. [ 12 ] She stated that Mr. Rouvalis was not present on the sites a lot of the times.

According to the Claimant he had high expectations and she worked very hard to meet those. He was a difficult man to work for and would always find something not quite right although overall he seemed pleased with her work as Property Manager. [ 13 ] When her status changed to Property Manager in October 2019 her compensation was $1,500 on the first of each month and $1,500 on the 15 th .

She stated that no concerns were ever given to her in writing or raised with her. [ 14 ] She stated that on June 25, 2020, she was terminated. [ 15 ] Two days before that – on June 23 rd , she was asked to come to a meeting with Mr. Rouvalis and, as she found out, Mr. Wendell Thomas. Mr. Rouvalis had brought a contract for the Claimant to sign. She asked to have it reviewed by her lawyer but he said “no.” Mr. Rouvalis said she could show it to her lawyer after.

[ 16 ] She told him that she had issues with Mr. Wendell Thomas being present and she did not feel comfortable with him being there. While not clear in the evidence, he apparently had some participation in the ownership or management of the Defendant Company. [ 17 ] The Claimant stated that Mr. Rouvalis told her that she had to sign it there and then. She testified that she felt she had no option. She felt intimidated and if she did not sign it she would have been terminated. She did not read it at that time. She stated that the meeting ended terribly with Mr.

Thomas yelling at her and calling her a liar and some other names. [ 18 ] Within one or two days after that, the Claimant was asked to come in to see Mr. Rouvalis and the letter dated June 25, 2020, was given to her. It states: As discussed, this letter confirms the termination of your superintendent agreement dated June 1, 2020, with 3088962 Nova Scotia Limited (the “Company”) pursuant to

Section 6.3 thereof, effective immediately. [ 19 ] Following the termination the Claimant looked for another job and ultimately got a job at Shannex Homecare approximately two and a half months before the hearing herein. She stated that she talked to several property management companies and applied to a number of places including under social media sites. [ 20 ] She also stated she did not get all of her property back and ended up contacting the police and the “Tenancy Board.” [ 21 ] She stated that from April 2020 to June 2020 she lived in an apartment unit owned by the Defendant.

While not entirely clear, it was my understanding from the evidence including the Decision of the Residential Tenancies Director of August 28, 2020, that the rent was free for this since she was a Superintendent at least up to the time of termination of her employment. [ 22 ] On cross-examination, she confirmed that she was permitted to and did do work for others apart from the Defendant up to 2017, including home care and cleaning. As well she continued to advertise for these up to June 2020. [ 23 ] There was an issue with a tenant named John who apparently was allowed to temporarily stay in one of the units.

This was after Ms. Boutilier and the Defendant had parted ways. [ 24 ] She was also asked on cross-examination about failing to clean some apartments. Ms. Boutilier stated that Mr. Rouvalis at some point had instructed her to not clean un-rented apartments but was later scolded about this by Mr. Rouvalis. [ 25 ] She was also asked about consuming cannabis which she acknowledged but stated that Mr.

Rouvalis was well aware of that and never raised it and she also stated she never smoked cannabis while operating machinery or the truck. [ 26 ] Peter Rouvalis, a named Defendant, is the President of the Defendant Company testified by telephone. He referred to the Claimant as a contract employee who started out doing cleaning. Contrary to her evidence, he stated that he first used her in 2018, either August or September and in total she worked three days that year. As to the statement that she starting working for his Company nine years ago he referred to that as a lie. [ 27 ] According to Mr.

Rouvalis he did meet with Ms. Boutilier in October 2019 and told her what he was looking for which was a Superintendent of the buildings. Her remuneration was $3,000 per month. The buildings were in the south end. The responsibilities according to him were cleaning, maintenance, maintaining walkways and lighting, and dealing with trades people. She was not involved in renting. He stated that she knew what her responsibilities were and that they were not micro-managing her. [ 28 ] He stated that she became a tenant when she moved in with a plumber who was a subcontractor and a tenant.

He thought it was at the beginning of May 2020.

[ 29 ] When asked why she was terminated he said that she was not completing tasks. He stated on June 1 st he did an inspection of apartments that were vacant and nothing had been done. He stated that they were in disarray. He thinks the discussion he had with her was in early June. Mr. Patrick was present apparently. [ 30 ] He stated that on June 22 [3] he had a contract signed that he had a lawyer prepare. There was a witness there who had some history with her that he was not fully aware of. [ 31 ] He stated that they incurred lots of loss because of lack of cleaning.

She was responsible to do the out-inspections and they had to incur those expenses because they had no proof of that. He stated that the loss was tens of thousands of dollars. He stated that they lost rent for June, July and August, well over $15,000 per month. He stated that there were 8 apartments that were not cleaned. He said he also raised this at the June 22 meeting. [ 32 ] He further stated that she had a number of her items stored in a separate apartment for which she had not been given permission.

He stated he had no idea what her items were and that he did not take them and does not know anything about the list that she claims. [ 33 ] With respect to Ms. Boutilier’s evidence that she had not been paid for June 16-25, he merely stated that he thought she had been paid up to date. He offered no verification of that through accounting or banking records. [ 34 ] Mr. Rouvalis stated that the date that he had the discussion with Ms. Boutilier was June 22 nd , the same date that he gave her the written contract.

And that he had dropped by her apartment the next day to drop off the signed contract but she was not there. He said she did not show up that day. He said, “enough was enough.” He stated that she moved out in mid-July. [ 35 ] Mr. Rouvalis stated that in the written agreement

Article 3.1 is an error.

Article 3.1 reads: Compensation 3.1 The Contractor will be permitted to live in apartment 1 at 5969 College Street… together with parking at the same location free of charge. It is agreed that this Agreement cancels and supersedes the tenancy agreement between the Owner and the Contractor for the unit and the Contractor expressly waives and[sic] rights thereunder. The Contractor agrees that the provision of the Unit hereunder constitutes good and valuable consideration for the Services. [ 36 ] Mr. Rouvalis stated that Ms. Boutilier was supposed to still receive $3,000 every month but would have to pay $1,000 for the unit. He stated that this

article 3.1 was an error. He confirmed that at no time did he advise Ms. Boutilier of this error in the wording of the contract. [ 37 ] He also stated that if she had not signed the contract he would have continued to employ her at the time but would have had to make a decision. [ 38 ] The other two witnesses were Marion Legalee and Sebastian Kass. In a very

summary fashion I would indicate that both of these witnesses spoke very favourably of the good job that Ms. Boutilier did as Superintendent and that she was hard working and diligent at all times. [ 39 ] I will refer to this evidence later in these reasons. Issues [ 40 ] The issues, as I see it, are as follows:

1. What is the status of the relationship here - was the Claimant an employee, a dependent contractor or an independent contractor? 2. Was the written contract of June 24 th valid? 3. Was there just cause for the termination? 4. Was there a duty to give reasonable notice of termination and if so, how much? 5. Outstanding pay, property not returned, counterclaim, etc. 1. Employee, Independent Contractor, or Dependent Contractor [ 41 ] A significant issue in this case is the characterization of the relationship between the Claimant and the Defendant.

As will be seen, that characterization affects the Claimant’s rights on termination, specifically, whether or not she is entitled to reasonable notice of termination in the absence of just cause. [ 42 ] In McKee v. Reid’s Heritage Homes Limited , 2009 ONCA 916 , the Ontario Court of Appeal reviewed the issue of whether the worker was a contractor, a dependent contractor or an employee.

I will attach to these reasons a lengthy excerpt from that decision which discusses these concepts at some length. [ 43 ] In that decision (para. 34), the Court says the proper initial step is to make a determination of whether or not a worker is a contractor or an employee applying the Sagaz/Belton analysis. The next step, which is only required if the first step results in a contractor conclusion, is to determine whether or not the contractor is independent or dependent.

I quote the Court at paragraph 34: [34] In this way, the proper initial step is to determine whether a worker is a contractor or an employee, for which the Sagaz / Belton analysis, described in the next section, controls. Under that analysis, the exclusivity of the worker is listed as a factor weighing in favour of the employee category ( Belton ’s first principle). The next step, required only if the first step results in a contractor conclusion, determines whether the contractor is independent or dependent, for which a worker’s exclusivity is determinative , as it demonstrates economic dependence.

Therefore, exclusivity might be a “hallmark” of the dependent contractor category vis-à-vis the broader category of contractors. However, it continues also as a factor in determining whether the worker is not a contractor at all, but rather an employee, in the first-step analysis.

Step One – Employer or Contractor? [ 44 ] For this stage one analysis, I again quote from the McKee case which in turn refers to the Sagaz and Belton cases as follows (para 39): [39] In Belton , Juriansz J.A., writing on behalf of the court, upheld the use of the following five principles, modelled on the Sagaz factors, at paras. 11, 15: 1. Whether or not the agent was limited exclusively to the service of the principal; 2. Whether or not the agent is subject to the control of the principal, not only as to the product sold, but also as to when, where and

how it is sold; 3. Whether or not the agent has an investment or interest in what are characterized as the “tools” relating to his service; 4. Whether or not the agent has undertaken any risk in the business sense or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission; 5. Whether or not the activity of the agent is part of the business organization of the principal for which he works. In other words, whose business is it? Whether or not the agent was limited exclusively to the service of the principal [ 45 ] Here the evidence was that Ms.

Boutilier was not limited exclusively to the Defendant. She was free to do work for others. [ 46 ] Having said that, her evidence was that she in fact had done no work for any other company except the Defendant for the last two years. Whether or not the agent is subject to the control of the principal, not only as to the product sold, but also as to when, where and how it is sold [ 47 ] Modifying that wording to the case here, it is fair to say that while Ms. Boutilier understood what her responsibilities were, she was not “micromanaged” by Mr. Rouvalis or anyone else.

In saying this, one has to bear in mind the duties that she was carrying out which appears to have largely entailed cleanings of apartments at move-out time, other maintenance of the apartments including mowing and snow ploughing and salting and generally dealing with physical issues raised by tenants, for example, clogged toilets, malfunctioning lights, and the like. How she ordered her day’s work was apparently up to her and was not under the strict control of Mr. Rouvalis.

This is understandable when dealing with the type of functions under discussion. [ 48 ] I note here that counsel for the Defendants say that there was no evidence of Mr. Rouvalis imposing discipline. To the contrary, there was evidence that he spoke to her at one or two meetings (whether it was one or two was not clear) in June about not cleaning some of the apartments. While that evidence was not satisfactory with respect to the degree or issues involved, it nevertheless did indicate an expectation on both sides that such “discipline” could take place. [ 49 ] Ms.

Boutilier did have authority to hire her own workers although she had to first obtain approval from Mr. Rouvalis. I understood this to mean that in some cases she would hire other individuals such as Ms. Legalee to help with cleaning and in some cases, painting. Also, I understood that if it was necessary to hire a subcontractor such as an electrician or a plumber that she would do so with approval from Mr. Rouvalis. In such cases, she either paid the subcontractor and was reimbursed or arranged for payments from the Company.

Whether or not the agent has an investment or interest in what are characterized as the “tools” relating to her service [ 50 ] Here the evidence that I heard was that Ms. Boutilier bought her own cleaning supplies including mop and brooms. For bigger ticket items such as lumber and painting supplies she would pay for those through the Company account or be reimbursed. [ 51 ] She also owned a John Deere lawn tractor and whipper snipper which was used for lawn maintenance.

[52] The truck that she drove was owned by the Defendant Company. Whether or not the agent has undertaken any risk in the business sense or, alternatively, has any expectationof profit associated with the delivery of her service as distinct from a fixed commission [53] Here for the relevant time periods, Ms. Boutilier was paid $3,000 per month, through a $1,500 payment on the first and a $1,500 payment on the 15th of each month.

No taxes or other deductions were made from these payments. [54] There was no evidence that she undertook any financial or other risk and there was no evidence that she had any otherexpectation of profit. Whether or not the activity of the agent is part of the business organization of the principal for which heworks. In other words, whose business is it? [55] In my view, the business was that of the Defendant. Based on the overall evidence, I would expect that the third parties whodealt with Ms.

Boutilier such as tenants, vendors, and other subcontractors, would see her objectively as representing and working as partof the Defendant’s business. This last point is by no means determinative but again, is a factor. [56] As has been emphasized in some of the case law, all of these types of cases are very fact specific. Here, I consider factors 1, 2,and 3, to tend towards the contractor end of the continuum. Factor 4, tends towards the employee status end, as does factor 5. How one isto weight these is also flexible and case specific. [57] On balance, I would find that it was a contractor relationship.

Accordingly, I will move to stage two of the analysis. Step Two - Dependent or Independent Contractor [58] As noted in the McKee case, there is an intermediate position which is considered as a “carve out” from a contractor. The Courtstates (paras 24-25): [24] In 1936, this court recognized the existence of an “intermediate” position “where the relationship of master and servant does notexist but where an agreement to terminate the arrangement upon reasonable notice may be implied”: Carter v. Bell & Sons (Canada)Ltd., (ON CA), [1936] O.R. 290, at p.297.

Carter emphasized the permanency of the working relationship between theparties as a determinant in delineating this intermediate category: see Carter at pp. 297-98. [25] A number of courts in several Canadian jurisdictions have since found such intermediate workers in a number of reasonable noticecases, particularly where the worker is economically dependent on the defendant, generally due to complete exclusivity or a high-level ofexclusivity in their work: see, e.g., Marbry Distributors Ltd. v.

Avrecan International Inc. (1999), 1999 BCCA 172 , 171 D.L.R.(4th) 436 (B.C.C.A.), at paras. 35-38, 46; JKC Enterprises Ltd. v. Woolworth Canada Inc. (1986), 2001 ABQB 791 , 300 A.R. 1(Q.B.); Erb v. Expert Delivery Ltd. (1995), (NB QB), 167 N.B.R. (2d) 113 (Q.B.), at paras. 6-14. [59] I should note here that while Courts in Ontario, British Columbia, Alberta and New Brunswick have recognized the concept of“dependent contractor,” counsel for the Defendant argues that it has not been recognized in the Nova Scotia Supreme Court. [60] With respect, I consider the reasons of Justice Bryson in Egg Films Inc. v.

Nova Scotia (Labour Board) 2014 NSCA 33 do constitute recognition of the concept of dependent contractor. While these were dissenting reasons, Justice Bryson clearlyrecognizes the concept of dependent contractor. And, in the majority reasons authored by Justice Fichaud, at no place is the conceptrefuted; rather it is implicitly accepted. Where they differ is whether not it ought to have applied on the facts of that case.

[ 61 ] I would also note that the concept has been referred to and applied in at least two Small Claims Court decisions (see Shaham v. Airline Employee Travel Consulting Inc. , 2018 NSSM 18 ; and Husbands v. Middleton , 2021 NSSM 47 , both of which are decisions of Adjudicator Slone).

It has also been recognized by the Nova Scotia Occupational Health and Safety Appeal Panel. [ 62 ] In my view, the recognition of a dependent contractor status at common law in Nova Scotia is not creating law but is simply acknowledging a well-recognized principle of Canadian common law. [ 63 ] Referring again to the comments at paragraph 25 in the McKee case quoted above, and based on the evidence of the economic dependence of Ms. Boutilier on the Defendant and the exclusivity of the relationship, at least factually, to the Defendant, I would find that this is a dependent contractor relationship.

I would note particularly the following comment in McKee (para 34 ): The next step, required only if the first step results in a contractor conclusion, determines whether the contractor is independent or dependent, for which a worker’s exclusivity is determinative , as it demonstrates economic dependence. [Emphasis added] [ 64 ] The significance of that is that she was entitled to reasonable notice. As will be expanded on below, this obligation may be limited if there is a binding contract stating otherwise or if there is cause for termination of the relationship. 2.

Validity of “Independent Contractor Agreement” [ 65 ] For the reasons that follow, I find that this agreement was unenforceable. [ 66 ] In so concluding, I refer first to the doctrine of unconscionability. That doctrine was recently front and center in a case from the Supreme Court of Canada called Uber Technologies Inc. v. Heller , 2020 SCC 16 .

In describing the elements of unconscionability, the majority confirm that there are two elements: 1. proof of inequality in the positions of the parties, and 2. proof of an improvident bargain. [ 67 ] Turning to the case at hand, I think it is clear that there was inequality of bargaining power. [ 68 ] Ms. Boutilier was called to this meeting without knowledge of what she was going to be confronted with. She did not know that Mr.

Thomas was going to be there and apparently there was some “history” between them which, while the specifics were not disclosed in the evidence, clearly caused anxiety with the Claimant and apparently escalated to Mr. Thomas yelling at the Claimant and calling her names during and at the end of this meeting. [ 69 ] According to Ms. Boutilier, Mr. Rouvalis insisted that she sign the agreement then and there. She asked that she be allowed to take it to her lawyer for review first but was denied that opportunity.

Moreover, she was not even provided with her own copy of the agreement which she had signed until two days later. [ 70 ] She stated that she did not read the agreement. She also stated that she felt she had no choice but to sign it then as otherwise it was her understanding that she would lose her position and be terminated. While it was not clear in the evidence whether that was expressly stated by Mr. Rouvalis, I accept that it was the clear inference based on what was said and the pressure that she was faced with in this meeting.

In my opinion, the background of the relationship and the particular circumstances of this meeting create a classic

scenario of inequality of bargaining power. [ 71 ] Then there is the issue of an improvident transaction. That, in my view is clearly satisfied when one considers that she was being paid $3,000 a month, or $36,000 per year, up to that point but, according to the plain language of the agreement that she had signed was going to be provided with a free apartment and no more by way of compensation. Given that the value of this apartment was $1,000 per month, that was the amount she was being given under this agreement. On the face of it therefore, she was going from $3000 per month to $1000 per month.

Such a change in compensation is clearly improvident. [ 72 ] It is interesting to note that in his evidence Mr. Rouvalis stated that this was an error and should have been $3000 per month with $1000 to be paid for the apartment. It is hard to accept that such a grievous error would have been made in a legal document which, by Mr. Rouvalis’ own evidence, was drafted by a law firm and appears in all respects to have been meticulously prepared with specific details of duties; a separate

section on compensation which, in 3.1 refers solely to the provision of Apartment 1 at 5969 College Street free of charge; provisions regarding it being an independent contract relationship; and other specific provisions. I cannot accept that this was a simple error as alleged in Mr. Rouvalis’s testimony. How the “correct” compensation would not have been properly captured in this agreement is beyond the range of credibility. [ 73 ] A further basis for setting aside this agreement is duress. In the case of Keating Construction Company Limited v.

Ross , 2015 NSSC 173 , Justice Gogan stated as follows: [34] Duress is a coercion of will so as to vitiate consent. If established, the contract will be unenforceable against those so coerced. [35] In advancing a claim for duress, Ross and Crouse rely on Hickey’s Building Supplies Limited v. Sheppard , 2014 NLCA. That case involved a variation to an existing contract and adopted the test for duress set out by the New Brunswick Court of Appeal in Greater Fredericton Airport Authority v.

NAV Canada , 2008 BNCA 28 at paras 25-26: [25] My review of the authorities leads me to the conclusion that a finding of economic duress is dependant initially on 2 conditions precedent: (

i) the contractual variation must be extracted by pressure in the form of a demand or threat; (ii) the exercise of pressure must be such that the coerced party has no practical alternative but to comply with the demand or threat. [26] If these 2 conditions are met, the focus shifts to whether the party consented to the contract variation. The factors to be considered are (

i) whether the promise was supported by consideration (ii) whether the coerced party protested the variation or executed it on a “without prejudice basis” and (iii) [if not,] whether the coerced party took steps to disavow the variation on a timely basis. [ 74 ] Based on my review of the facts outlined above, I would find that the two conditions to support a finding of economic duress are satisfied. [ 75 ] As to whether there is evidence that Ms. Boutilier consented or acquiesced afterwards, that issue does not appear to arise at all here since within one (or two) days, she was terminated.

I would find therefore, that duress would also provide a legal basis for voiding this written contract. [ 76 ] Thirdly, I must observe that it is somewhat suspicious that there were only one or two days between the signing of the contract and the termination of her relationship by the Defendant. This is a significant “pivot” in my opinion and is not satisfactorily explained by any of the evidence that Mr.

Rouvalis gave. [ 77 ] It is highly unusual that parties to a commercial arrangement such as this which, has many hallmarks of an employer-employee relationship, would meet and discuss potential issues with performance (although that is not entirely clear on the evidence) but most

significantly, enter into a new and, for the first time, written agreement which by outward appearances would suggest starting afresh but then within a mere one or two days the “employer” terminates the relationship. In my view, this is extremely odd and unusual behaviour. [ 78 ] A possible explanation is that the Defendant had already, and previous to the meeting of June 22 nd , made a decision to terminate Ms. Boutilier but wished to shore up their legal position by limiting her entitlement to notice of two weeks if just cause could not be established.

Such a motivation would certainly raise the spectre of a breach of the duty of good faith in contractual performance, a subject that has been treated by the Supreme Court of Canada in the recent case of Bhasin v.

Hrynew , 2014 SCC 71 . [ 79 ] That issue was not raised in the hearing or submissions before me and it would not be appropriate at this stage to go any further down the road of considering that argument. [ 80 ] In all events, and in conclusion on this issue, I would find that the “Independent Contractor Agreement” which apparently was signed on either June 23 rd or June 24 th , with a stated effective date of June 1, 2020, is not enforceable against the Claimant. 3.

Just Cause [ 81 ] As a general statement, it appears that the case law relevant to the dependent contractor category adopts by analogy the case law applicable to the pure employee relationship. Thus, while there is the right to reasonable notice, such right does not exist where there is cause for the dismissal. [ 82 ] In Fisher v.

Hirtz , 2016 ONSC 4768 , the Court stated (para 21): Under employment law, the significance of a finding that a worker is an “employee” or a “dependent contractor,” as distinguished from a “independent contractor,” is that if the worker is dismissed without cause then he or she is entitled to reasonable notice of termination of compensation in lieu of reasonable notice. [Emphasis Supplied] [ 83 ] I would add that no one has suggested that a dependent contractor cannot be terminated for cause.

Indeed, it would be perverse to suggest that the “employer” could not summarily dismiss the worker for just cause in a dependent contractor relationship. [ 84 ] The question however is what are the rules applicable thereto and what are the categories of cause. Are the various rules applicable to the pure employment situation to be adopted and applied identically to the dependent contractor relationship? Also, do the procedural and evidentiary requirements of proving just cause apply?

For example, it is well recognized in both common law and arbitral jurisprudence that the onus is on the employer to show cause for dismissal. In Canadian Employment Law , S.

Ball, it is stated (para 11:20): The onus is on the employer to show cause for dismissal, “which must be misconduct of the most serious kind.” It is also been stated that there “is a substantial onus on the defendant to prove just case.” [ 85 ] I am not aware of any case authority and none has been shown to me which provides guidance on these questions. [ 86 ] However, given that there are many of the same historical and policy bases that exist with respect to the dependent contractor relationship as compared to the pure employment relationship it would seem that all of the same principles should apply.

Apart from that, in dealing with the issue of onus of proof, as a general proposition of law, it is and has for hundreds of years been recognized that he/she who asserts, must prove. In other words, the party that makes an allegation is generally the party who must provide it in a law suit. [ 87 ] Here, it is the Defendant who has alleged cause for the termination of the relationship. The onus of proof therefore ought

properly to lie on the Defendant. [88] The evidence in support of this is the evidence of Mr. Rouvalis. He stated that Ms. Boutilier was not completing tasks and thatan inspection in early June indicated vacant apartments that had not been cleaned and were in disarray. This apparently was alsodiscussed at the meeting on June 23 according to Mr. Rouvalis. The next day he said that this was still not done. In his evidence hestated, “enough was enough.” [89] In Ms.

Boutilier’s evidence she indicated that there was confusion about whether vacant apartments were in all cases to becleaned or at least to be cleaned immediately. This makes sense from the point of view of a landlord who may be trying to document itswork in cleaning up an apartment after a tenant has left and making a claim against the tenant for failure to leave the premises in a neatand tidy condition as required under the Residential Tenancies Act, RSNS 1989, c. 401 and the standard form lease. [90] The whole circumstances and chronology of the termination do not make sense when one considers that Ms.

Boutilier was made to sign a contract on June 23rd or 24th and then within one or two days was terminated ostensibly for cause. I cannot rationalize thatsequence of events except with the possible explanation that I provided earlier in these reasons. In all events, I do not think the evidenceon behalf of the Defendant satisfies the onus to prove cause for the termination. [91] While Mr. Rouvalis said there were eight apartments left uncleaned, there was no corroborating evidence of that.

This againstthe evidence of two third party witnesses who testified that she was extremely diligent and a “fantastic worker”. [92] Where are the photographs, or list of the apartments in question, or other documents. Why did Mr. Patrick, the leasing agent,not get called. [93] These are surely a number of means of proving such a very significant allegation. I find Mr. Rouvalis’ bald assertionsunconvincing. [94] A further basis to consider is whether she ought to have had the benefit of a progressive discipline regime. Counsel gave writtenbriefs on this point.

No authority has been found to support the notion that progressive discipline would apply in a dependent contractorscenario. Yet, principle and logic supports its adoption. [95] If correct, the Defendant would have been compelled to have given Ms. Boutilier a warning (preferably in writing) outliningspecifically how her performance was deficient and allowing her a reasonable amount of time to correct matters.

Then, after thatreasonable time period passes and if she has not made appropriate corrections, a further warning in writing advising her clearly and inspecific terms as to how she must correct her performance or termination may and likely will result if she does not. [96] None of this took place here. [97] I find that the Defendant has not satisfactorily proven just cause. 4. Reasonable Notice [98] The classic statement of the factors to determine reasonable notice were set out in the case of Bardal v.

Globe & Mail (1960), (ON SC), 24 D.L.R. (2d) 140 (H.C.J.) - the character of employment, length of service, age of employee and likelihoodof attaining reasonably comparable replacement employment. [99] Here the individual was a property manager with primary duties involving maintenance of the properties and cleaning. Whilenot explicitly stated, she appeared to be middle-aged. She had worked near full time for two years and something less than that but on aconsistent basis for the previous two years. I accept her evidence in this regard. Before that the evidence conflicts more significantly, and

at best, for the Claimant, she worked sporadically on a contract basis. [ 100 ] The likelihood of attaining replacement employment would have, at the time of termination, appeared to be positive, but, for whatever reasons, she appears to have had some difficulty and in fact ended up taking a personal care position with Shannex Homes. [ 101 ] In all the circumstances, I find that a reasonable period of notice here is three months. At $3,000 per month, that would equate to $9,000. 5. Other Matters [ 102 ] The Claimant has also claimed for return of items she says are still on the Defendants’ premises.

On reviewing those lists, they appear to all be personal items and therefore that would be within the jurisdiction of the Residential Tenancies Act and Director of Residential Tenancies and not this case. [ 103 ] The Defendant has counterclaimed for loss of income. I consider that claim specious. As I already indicated, the evidence was not convincing with respect to the lack of cleanliness or cleaning. Further, even if that were the case, to extend that to the loss of tens of thousands of dollars, is extremely untenable.

I would need much more in the evidence to show causation between lack of cleaning (which itself is questionable) and loss of rental income. Also, I was provided with no documentary evidence of outside cleaning expenses. [ 104 ] There was an allegation in the evidence that Ms. Boutilier smoked marijuana while at work. She alleged that Mr. Rouvalis would have known that and that he had no objection. He denied that. She also stated that she did not consume cannabis when driving.

It is this last point that is of most concern but given the lack of direct evidence, I do not see that I can make any findings based on that. [ 105 ] Ms. Boutilier also claimed for pay for the period June 16-25. This equates to $ 1,000 (10 days out of 30 = 1/3 * $3,000). Mr. Rouvalis had no evidence to refute that and I allow that claim.

Summary [ 106 ] As outlined above and for the reasons indicated, I find that the relationship between Darlene Boutilier and 3088962 Nova Scotia Limited was one of a dependent contractor. As such, on termination and in the absence of just cause, she was entitled to reasonable notice of termination. Given the evidence, I found that there was no just cause. I have also found that three months’ notice was appropriate.

At $3,000.00 per month, that results in an amount of $9,000.00. [ 107 ] With respect to the written agreement, I found that it is not enforceable both because it was an unconscionable contract and secondly because Ms. Boutilier’s signature was obtained through duress. [ 108 ] With one exception I find that the other matters in issues here and claims made by the respective parties have no basis. The one item I will allow is for the pay for the work actually supplied for June 16-25 which equates to $1,000. [ 109 ] Therefore, I will allow $10,000.00 exactly. [ 110 ] With respect to the claim against Mr.

Rouvalis, I see no basis for finding him personally liable and the claim will be dismissed as against him. [ 111 ] It appears that there was a waiving of the filing fee. There is no indication of any service fee. I will allow costs of $50 for copying and the like.

[ 112 ] I will allow pre judgment interest in accordance with the Regulations at 4% for one year. This is $400.00 ORDER [ 113 ] It is hereby ordered that the Defendant, 3088962 Nova Scotia Limited, pay to the Claimant as follows: Debt: $10,000.00 Prejudgment interest: 400.00 Costs: 50.00 __________ Total: $10,450.00 [ 114 ] It is further ordered that the claim against the Defendant, Peter Rouvalis, be and is hereby dismissed. DATED at Halifax, Nova Scotia, this 12th day of November, 2021. MICHAEL O’HARA Adjudicator APPENDIX Excerpt from McKee v. Reid's Heritage Homes Ltd . , 2009 ONCA 916

(1) Employee vs. dependent contractor [22] RHH submits that the law provides for an intermediate position of “dependent contractor” between employee status and independent contractor status. I agree.

The caselaw’s evolution demonstrates the existence of an intermediate category, defined by economic dependency in the work relationship, requiring, inter alia , some reasonable notice for termination. [23] RHH further submits that the trial judge erred in determining that McKee was an employee because a proper application of the law to this case necessitates a conclusion that McKee was a dependent contractor of the sort defined above. For the reasons that follow, I disagree.

Although I conclude that a “dependent contractor” category exists, I nevertheless conclude that the existing principles defining the employee category remain intact. Employing these principles, the trial judge concluded that McKee is an employee, a decision for which he is owed substantial deference. (

a) Existence of an Intermediate Category [24] In 1936, this court recognized the existence of an “intermediate” position “where the relationship of master and servant does not exist but where an agreement to terminate the arrangement upon reasonable notice may be implied”: Carter v. Bell & Sons

(Canada) Ltd., (ON CA), [1936] O.R. 290, at p. 297. Carter emphasized the permanency of the working relationshipbetween the parties as a determinant in delineating this intermediate category: see Carter at pp. 297- 98. [25] A number of courts in several Canadian jurisdictions have since found such intermediate workers in a number ofreasonable notice cases, particularly where the worker is economically dependent on the defendant, generally due to complete exclusivityor a high-level of exclusivity in their work: see, e.g., Marbry Distributors Ltd. v.

Avrecan International Inc. (1999), 1999 BCCA 172, 171 D.L.R. (4th) 436 (B.C.C.A.), at paras. 35-38, 46; JKC Enterprises Ltd. v. Woolworth Canada Inc. (1986), 2001 ABQB 791, 300 A.R. 1 (Q.B.); Erb v. Expert Delivery Ltd. (1995), (NB QB), 167 N.B.R. (2d) 113 (Q.B.), at paras. 6-14. [26] This court impliedly recognized the existence of an intermediate category for work relationships involving adistributorship agreement in Paper Sales Corporation Ltd. v. Miller Bros. Co.

(1962) Ltd. (1975), (ON CA), 7 O.R.(2d) 460. There, the court upheld, orally, Stark J.’s decision below, which held that a non- employment relationship whereby the plaintiffwas “the exclusive distributor of the defendant’s products in [two provinces]” was “closer to a contract of employment than to acommission agency” and thereby required reasonable notice for termination: Paper Sales at pp. 463-64. [27] Mancino v. Nelson Aggregate Co., [1994] O.J. No. 1559 (C.J. (Gen.

Div.)), at paras. 9-13, applied the reasoning in PaperSales to self-employed truckers, requiring reasonable notice where the work relationship was permanent and exclusive in nature, suchthat the plaintiff was in a “position of economic dependence”. Mancino thereby exemplifies the applicability, in Ontario, of theintermediate category analysis beyond merely sales or distributorship relationships. [28] Recently, this court again impliedly recognized the intermediate category where the case required the court to determinethe status of a commissioned salesperson. In Braiden v.

La-Z-Boy Canada Ltd. (2008), 2008 ONCA 464 , 294 D.L.R. (4th) 172,at para. 24, Gillese J.A. noted the trial judge’s suggestion that a “third category of relationship has emerged, between [the employer-employee and independent contractor relationship categories], in which reasonable notice of termination must also be given”, whileupholding his conclusion that the plaintiff, Braiden, was nevertheless an employee. [29] Finally, recognizing an intermediate category based on economic dependency accords with the statutorily providedcategory of “dependent contractor” in Ontario,[1] which the Labour Relations Act, S.O. 1995, c. 1, Sch.

A, s. 1(1), defines as: [A] person, whether or not employed under a contract of employment, and whether or not furnishing tools, vehicles, equipment,machinery, material, or any other thing owned by the dependent contractor, who performs work or services for another person forcompensation or reward on such terms and conditions that the dependent contractor is in a position of economic dependence upon, andunder an obligation to perform duties for, that person more closely resembling the relationship of an employee than that of anindependent contractor. [30] I conclude that an intermediate category exists, which consists, at least, of those non-employment work relationships thatexhibit a certain minimum economic dependency, which may be demonstrated by complete or near-complete exclusivity.

Workers in thiscategory are known as “dependent contractors” and they are owed reasonable notice upon termination. (

b) Distinguishing between Employees and Dependent Contractors [31] RHH submits that exclusivity and economic dependence are hallmarks of the dependent contractor relationship, such thatalthough they take a relationship out of the independent contractor category, they do not give rise to an employment relationship.

ThoughI do not disagree with this characterization, it requires some refinement. [32] Having concluded that there is an intermediate category between independent contractor and employee, namely“dependent contractor”, I also conclude that the legal principles applicable to distinguishing between employee and independentcontractors apply equally to the distinction between employees and dependent contractors.

In this way, the dependent contractor categoryarises as a “carve-out” from the non- employment category and does not affect the range of the employment category. [33] In Braiden, at para. 35, Gillese J.A. employed the general principles for distinguishing between an employee and anindependent contractor, as laid out by Juriansz J.A. in Belton v. Liberty Insurance Co. of Canada (2004), (ON CA), 72O.R. (3d) 81 (C.A.), at para. 11. Had Braiden been a contractor, he would have been a dependent contractor, as he worked exclusively

for the defendant, La-Z- Boy: Braiden at para. 35. However, Gillese J.A. did not have to consider what sort of contractor Braiden mightbe, because she concluded that Braiden was in fact an employee: Braiden at para. 37. [34] In this way, the proper initial step is to determine whether a worker is a contractor or an employee, for which theSagaz/Belton analysis, described in the next section, controls. Under that analysis, the exclusivity of the worker is listed as a factorweighing in favour of the employee category (Belton’s first principle).

The next step, required only if the first step results in a contractorconclusion, determines whether the contractor is independent or dependent, for which a worker’s exclusivity is determinative, as itdemonstrates economic dependence. Therefore, exclusivity might be a “hallmark” of the dependent contractor category vis-à-vis thebroader category of contractors. However, it continues also as a factor in determining whether the worker is not a contractor at all, butrather an employee, in the first-step analysis. [35] This process of analysis serves the policy purposes that underlie the jurisprudence.

In summarizing the caselaw, GeoffreyEngland, Roderick Wood & Innis Christie, Employment Law in Canada, 4th ed. (Markham, Ont.: LexisNexis Canada) vol. 1, at s. 2.33,describes the frequently stated policy reasons for recognizing an intermediate category: These decisions have frequently acknowledged the policy justification for using the “intermediate” status doctrine in order to extend thesafeguards of the employment contract to self- employed workers who are subject to relatively high levels of subordination and/oreconomic dependency, but who, technically, do not qualify as “employees” strict sensu. [36] Given this concern to safeguard workers who are formally “contractors” but who are in a position of economicvulnerability, it only makes sense to carve the dependent contractor category out of the broader existing contractor category and leavethe range of the employee category intact.

Therefore the appropriate analysis for distinguishing employees from “contractors” generallyis the existing analysis for distinguishing employees from independent contractors. (

c) Deference to the Trial Judge [37] The legal principles to be applied in labelling the status of a work relationship admit of broad discretion to the trier of fact.As the Supreme Court of Canada has recognized, “there is no one conclusive test which can be universally applied”: 671122 Ontario Ltd.v. Sagaz Industries Canada Inc., 2001 SCC 59 , [2001] 2 S.C.R. 983, at para. 46. Instead, Major J. stated, at para. 45, that “whatmust always occur is a search for the total relationship of the parties.” He then approvingly quoted MacGuigan J.A. in Wiebe DoorServices Ltd. v.

M.N.R., (FCA), (FCA), [1986] 3 F.C. 553, at p. 563: The most that can profitably be done is to examine all the possible factors which have been referred to in these cases as bearing on thenature of the relationship between the parties concerned.... [N]o magic formula can be propounded for determining which factors should, in any given case, be treated as the determining ones. [38] In my opinion, this language endorses a case-specific, discretionary analysis. Such analyses are best left to the trier offact, who is closest to the facts of the case and has the best handle on the true nature of the work relationship.

More specifically, the trierof fact is best equipped to settle the “central question” based on the balance of factors put forth in Sagaz at para. 47: The central question is whether the person who has been engaged to perform the services is performing them as a person in business onhis 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 herown helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by theworker, and the worker's opportunity for profit in the performance of his or her tasks. [39] In Belton, Juriansz J.A., writing on behalf of the court, upheld the use of the following five principles, modelled on theSagaz factors, at paras. 11, 15: 1.

Whether or not the agent was limited exclusively to the service of the principal;

2. Whether or not the agent is subject to the control of the principal, not only as to the product sold, but also as to when, where and how it is sold; 3. Whether or not the agent has an investment or interest in what are characterized as the “tools” relating to his service; Whether or not the agent has undertaken any risk in the business sense or, alternatively, has any expectation of profit associated with the delivery of his service as distinct from a fixed commission; 4. Whether or not the activity of the agent is part of the business organization of the principal for which he works.

In other words, whose business is it? [40] In the present case, the trial judge reviewed the Sagaz balancing inquiry. Although he did not explicitly reference the five Belton principles, his description of the “established practice” between McKee and RHH was clearly patterned on them: [Principle 1:] [T]here was a tacit agreement, carried out in practice for almost twenty years, that the plaintiff would sell “exclusively” for the defendant. [Principle 2:] The defendant assigned particular subdivisions to the plaintiff, built model homes and told her which lots she could sell.

The defendant told her [when she] could sell, and maintained control over how the lots were sold. The defendant set the prices and conditions of sale, and retained the right to set the hours that the model homes were open.... [Principle 3:] [T]he principle tool was the model home – provided by [RHH]. [Principle 4:] The plaintiff here had no risk in the business and was paid on a strictly commission basis. [Principle 5:] Finally, the plaintiff’s activity in the present case is part of the business of the defendant. Selling the homes is the most integral part of the defendant’s business.

It is the defendant’s business in which the plaintiff is engaged. [41] Based on this review of the practice, the trial judge held: “I am satisfied that the plaintiff was an ‘employee’ of the defendant when she was terminated in 2005.” The appellant does not challenge the trial judge’s

summary of these facts. [42] Instead, the appellant submits that the trial judge’s error in determining that McKee was an employee was based, in part, on a palpable and overriding factual error in finding that McKee had “a limited freedom to recruit others also to work exclusively for [RHH], but only to the extent that they worked under her and discharged her own sales responsibilities.” For RHH, this limitation actually underscores that she was a dependent contractor, so the trial judge misapprehended the evidence.

However, the trial judge does not offer this finding as a factor weighing in favour of employee status, as RHH submits. Instead, he makes this finding in the context of characterizing the work that continued after the 1987 Agreement was “spent”. It continued “pursuant [to] a mutual understanding” or “tacit agreement”. It incorporated elements of the 1987 Agreement, but evolved over the subsequent 18 years in several aspects, such as McKee’s “limited freedom” to hire subagents.

Read in context, therefore, this finding was to establish that the 1987 Agreement ended and the ensuing relationship evolved therefrom, and was not material to deciding that McKee was an employee. Therefore, the deference due in this case is not undermined by palpable and overriding factual errors. [43] As such, I would defer to the trial judge, unless the facts of this case could not support the trial judge’s decision that McKee is an employee under the applicable legal principles. (

d) Employee Determination Defensible under Law [44] In my opinion, the trial judge’s decision is defensible under the legal principles defining work relationships and the employee category. [45] Recently, Gillese J.A., writing on behalf of the court, applied the Belton principles in Braiden , at paras. 33-36 . She emphasized the fifth principle at para. 34: In many ways, the question posed at the end of the fifth principle -- whose business is it? -- lies at the heart of the matter. Was the individual carrying on business for him or herself or was the individual carrying on the business of the organization from which he or she was receiving compensation?

[46] Gillese J.A. considered Braiden ’s relationship with La-Z-Boy under each of the principles and concluded that Braiden was an employee: Braiden at para. 35 .

Her comprehensive consideration of each principle further elucidates their meaning and facilitates application to this case. [47] On the first principle: McKee, like Braiden, also worked exclusively for the defendant company and the trial judge found that this was pursuant to her implied agreement with RHH. [48] Second: the trial judge’s findings demonstrate that McKee was, as Gillese J.A. characterized Braiden’s work relationship, subject to the defendant’s control as to “where [s]he was to sell, the promotional methods [s]he was to use, what [s]he was to sell and how much [s]he was to sell it for.” With respect to the promotional methods, the evidence revealed that RHH took advertising responsibilities away from McKee.

This is indicative of the sort of specialization of tasks that one expects to find with respect to an in- house agent rather than an independent, or even dependent, realty firm. Gillese J.A. also noted that La-Z-Boy “regularly monitored Mr. Braiden’s sales performance and measured it against the performance of other of La-Z-Boy’s sales agents”.

Although the trial judge did not refer to it, there was also evidence in this case that RHH had engaged “professional shoppers” to review the sales performance of McKee’s subagents. [49] Third: the third principle places McKee’s situation further in favour of employee status than Braiden’s. Gillese J.A. questioned the applicability of the “tools” consideration to the case at hand, but noted, at para. 36: “If ‘tools’ includes anything necessary to perform one’s contractual responsibilities, it would encompass Mr.

Braiden’s car and office, both of which he furnished and maintained at his own expense.” McKee, by contrast, performed her sales function in model homes provided by RHH and the evidence indicates that RHH supplied her stationery and forms. [50] Fourth: McKee, like Braiden, “was financially dependent on [the defendant] and had no expectation that [s]he might earn a profit as distinct from the fixed commissions.” Throughout the contract, McKee’s profit was based on “fixed commissions” from RHH alone.

Further, there is no indication that McKee risked any significant capital in her sales operation, given that RHH supplied the necessary facilities and “tools”. [51] Finally, fifth: although RHH gradually came to make use of other sales services in addition to McKee’s, the evidence suggests that, like Braiden, “the sales force of which [McKee] was a member was a crucial element of [RHH’s] business organization.” [52] Nevertheless, RHH submits a number of reasons that Braiden should be distinguished.

However, I do not find them persuasive. [53] First, the submission that McKee differs in that Braiden began his work relationship as an employee places the cart before the horse: McKee’s status in her work for RHH since the end of the 1987 Agreement is the issue at hand. [54] Second, the fact that McKee operated through a business in her work for RHH from the beginning is not determinative of her work status: see Braiden at para. 30 ; Kordish v. Innotech Multimedia Corp. (1998), 46 C.C.E.L. (2d) 318 , at paras. 16-17 (Ont. C.J. (Gen. Div.)), aff’d [2000] O.J.

No. 2557 (C.A.) . [55] Third, I am of the opinion that an “employee” can have the intermediary relationship between subordinate staff and higher management that McKee did. As RHH submits, McKee preferred that RHH communicate with “her sales staff” through her. However, this is consistent with certain organizational set-ups where employees who manage certain divisions, such as sales, act as a conductor between higher management and staff within their division. [56] Finally, it is true that McKee obtained greater profit than a salesperson in Braiden ’s situation by employing subagents.

However, McKee’s services to RHH included supervision of a subordinate sales staff, for which she received a fixed commission. Therefore, in respect of the facts relevant to principle 4, McKee did not have an “expectation of profit in the delivery of her services” distinct from a “fixed commission”. [57] As such, I adopt Gillese J.A.’s conclusion in Braiden , at para. 37 :

Accordingly, I see no basis on which to interfere with the trial judge's determination that the continued relationship between the appellant and [respondent] was that of employer and employee. This determination was based on careful, thorough findings of fact which are fully supported on the record, and was responsive to the issues raised by the parties. Although the reasons do not identify the factors set out above, the findings reflect a consideration of the appropriate factors. The letter of termination and the date it was delivered appears to have been June 25th, and all of the evidence is consistent in that regard.