RENEE JOHNSON, Appellant, v. THE MINISTER OF NATIONAL REVENUE,, 2018 TCC 201

Docket: 2017-161(EI) BETWEEN: RENEE JOHNSON, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent , and THE BUTLER DID IT INC., Intervenor. Appeal heard on common evidence with the appeal of Renee Johnson, 2017-162(CPP), on July 11 and 16, 2018 at Toronto, Ontario. Before: The Honourable Justice Pierre Archambault Appearances : For the Appellant: The Appellant herself Counsel for the Respondent: Rini Rashid Counsel for the Intervenor: Stephanie J.

Kalinowski Frank Cesario JUDGMENT The appeal pursuant to subsection 103(1) of the Employment Insurance Act is allowed and the decision of the Minister of National Revenue dated November 24, 2016 is vacated on the basis that the appellant held insurable employment with the payer, The Butler Did It Inc., during the period from January 1, 2015 to November 28, 2015. Signed at Ottawa, Canada, this 22 nd day of October 2018. " “Pierre Archambault” " Archambault J. 2017-162(CPP) BETWEEN: RENEE JOHNSON, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and THE BUTLER DID IT INC., Intervenor.

Appeal heard on common evidence with the appeal of Renee Johnson, 2017-161(EI), on July 11 and 16, 2018 at Toronto, Ontario. Before: The Honourable Justice Pierre Archambault Appearances : For the Appellant: The Appellant herself Counsel for the Respondent: Rini Rashid Counsel for the Intervenor: Stephanie J.

Kalinowski Frank Cesario JUDGMENT The appeal pursuant to subsection 28(1) of the Canada Pension Plan is allowed and the decision of the Minister of National Revenue dated November 24, 2016 is vacated on the basis that the appellant held pensionable employment with the payer, The Butler Did It Inc., during the period from January 1, 2015 to November 28, 2015. Signed at Ottawa, Canada, this 22 nd day of October 2018. " “Pierre Archambault” " Archambault J.

Citation: 2018 TCC 201 Date: 2018102 2 Docket: 2017-161(EI) 2017-162(CPP) BETWEEN: RENEE JOHNSON, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and THE BUTLER DID IT INC., Intervenor. REASONS FOR JUDGMENT Archambault J. [ 1 ] Ms. Renee Johnson is appealing ( EI appeal ), pursuant to the Employment Insurance Act, S.C. 1996, c. 23 ( Act ), a decision of the Minister of National Revenue ( Minister ). By her decision dated November 24, 2016, the Minister confirmed the rulings officer’s decision, made on June 2, 2016, that Ms.

Johnson was self-employed when she performed her services for The Butler Did It Inc. ( payer or BDI ) during the period from January 1, 2015 to November 28, 2015 ( relevant period ). A similar appeal ( CPP appeal ) was made pursuant to the Canada Pension Plan , R.S.C. 1985, c. C-8. [ 2 ] BDI, through its attorney, filed a Notice of Intervention on March 20, 2017 in each of the EI and the CPP appeals. I. THE ISSUES [ 3 ] The issue in the EI appeal is whether Ms. Johnson was employed in insurable employment with BDI throughout the relevant period.

As the issues are essentially the same in both appeals, it was agreed that the decision rendered in the EI appeal will apply in the CPP

appeal. II. ASSUMPTIONS OF FACT BY THE MINISTER [ 4 ] In her Reply to the Notice of Appeal, the respondent set out the assumptions of fact on which she relied in making her decision: 13. In making [her] Decision, the Minister relied on the following assumptions of fact: (

a) the Payer operated a business which provided staffing for catered events within the Toronto area; (admitted [1] ) (

b) the Payer provided qualified personnel such as bartenders and servers to its clients (the “Clients”); (admitted) (

c) the Payer is a registered corporation, located in Toronto, Ontario; (no knowledge) (

d) the Payer has been operating since 1989; (no knowledge) (

e) on January 1, 2012 the Payer amalgamated with 1508658 Ontario Inc.; (no knowledge) (

f) the individuals who controlled the day-to-day operations of the Payer were: (

i) James Nienhuls—President; (ii) John Sowden—Vice President; (iii) David Smith—Director of Operations; and (iv) Sean Bruno—Scheduling Operations Manager; (admitted) (

g) the Payer employed 10 to 12 full time employees in its administrative offices; (no knowledge) (

h) the Payer had a roster of approximately 830 workers who were retained on an as-needed basis to provides [ sic ] services to the Clients; (no knowledge) Appellant (

i) the Appellant was hired by the Payer as a banquet server; (admitted) (

j) the Appellant was hired under a written agreement with the Payer on April 21, 2015; (no knowledge) (

k) the Appellant’s duties included: (

i) setting up tables; (no knowledge) (ii) serving food and beverages; and (admitted) (iii) tearing down; (admitted) (

l) the Appellant performed her duties at the Payer’s Clients’ venues which included hotels, banquets, conferences etc.; (admitted) (

m) the Appellant determined how to do the job; (denied) (

n) the Appellant provided her services according to her own availability; (admitted) (

o) the Appellant was not required to complete a set number of hours with the Payer; (denied) (

p) the Payer provided optional training to the Appellant; (admitted, but the word “optional” is denied) (

q) the Appellant was not paid for the optional training; (admitted, but the word “optional” is denied) (

r) if the Appellant accepted the optional training, she would receive a raise, after a few shifts; (admitted, but the word “optional” is denied) (

s) the Appellant could perform her services for any other payer; (denied) (

t) the Appellant was not supervised by the Payer; (denied) (

u) where there was a supervisor at an event, the Appellant received details such as timing of the course of events over the evening; (admitted) (

v) the supervisors at the events would not direct or control how the Appellant performed her services; (denied) (

w) the Appellant’s initial rate of pay was $14.00 per hour; (admitted) (

x) the Appellant had the ability [to] negotiate for a higher rate of pay; (denied)

(

y) the Appellant invoiced the Payer on a monthly basis; (denied) (

z) the Appellant was paid on a monthly basis; (admitted) (aa) the Appellant was paid by cheque; (admitted) (bb) the Appellant was not provided with any benefits from the Payer; (admitted) (cc) the Appellant was not entitled to vacation pay or paid vacation; (admitted) (dd) the Payer contacted the Appellant by email when work assignments were available; (admitted) (ee) the Appellant had the ability to refuse or to accept a work assignment; (admitted) (ff) the Appellant was required to advise the Payer if she was unable to work a scheduled shift or event; (admitted) (gg) the Appellant could subcontract her work out to another individual; (no knowledge) (hh) the Appellant provided her own uniform, corkscrew, lighter, note pad and pen; (admitted) (ii) the Appellant’s uniform consisted of black dress pants, socks, shoes and a classic dress shirt; (admitted) (jj) the Appellant was responsible for the replacement of her tools and equipment; (admitted) (kk) the Appellant was responsible for obtaining her “Smart Serve” certification; (admitted) (ll) the Appellant did not incur any significant expenses; (admitted) (mm) the Payer intended to hire the Appellant as an independent contractor; and (denied) (nn) the Payer issued a T4A slip to the Appellant for the Period. (admitted) III.

FACTUAL BACKGROUND A. BDI

(1) Mr. John Sowden, VP [ 5 ] Mr. Sowden (BDI’s vice-president and one of its shareholders) testified on BDI’s behalf. He has been in the hospitality business for 40 years. He started very young as a worker in a fast-food restaurant chain doing dishwashing; he went to college and obtained a diploma as a food and beverage manager. After his studies, he occupied the position of general manager in several restaurants. He even opened one of his own, which he operated for eight years. [ 6 ] He has been working for BDI for the last 15 years. He started as an operations manager.

He confirmed that BDI has been in business for 29 years. He is still close to the operations aspect of the business, as evidenced by the fact that he attends approximately 100 events per year, which represents two or three times a week.

(2) BDI’s business as described on its website [ 7 ] “BDI provides services to people or organization that wants to stage events or receptions such as weddings, corporate parties and so on. BDI provides the staffing required for such events”. In her book of documents, [2] Ms. Johnson produced some of the pages from the BDI website, which she printed out on April 20, 2017. [ 8 ] On pages 1 and 2 of Tab 6, it is stated: . . . For over 20 years, we have been staffing events for Toronto’s top caterers, venues, event planners and private functions.

Our commitment to customer service and communication has earned us the distinction as Toronto’s finest event and hospitality staffing firm . We treat each function as a unique affair, putting together a team of experienced service professionals to meet and exceed the specific needs of each event. OUR SERVICES . . . The Butler Did It staff are distinguished by their level of professionalism . All our staff go through our Standards of Professional Service TM program . We build our event staff teams from among a pool of the finest hospitality professionals.

Our supervisors and Head Waits are Food Safety certified , and all our staff are Smart Serve certified, covered by WSIB and fully insured—ensuring responsible alcohol service and protecting you and your guests. Once you make a request for staffing, a sales representative will work with you to determine the exact staffing needs for

your function. [Underlining added.] [ 9 ] During his testimony, Mr. Sowden confirmed that it is BDI that pays the premiums to the Workplace Safety Insurance Board ( WSIB ) for all of its employees and the butlers at a cost of approximately $70,000 per year. In addition, BDI has an insurance policy that covers its third-party liability up to an amount of $10 million, for which it paid $20,000 in 2017.

The amount may have been slightly lower in 2015. [ 10 ] The professional staff is described on the website as follows: Our Service Professionals Supervisor OUR SERVICES A Supervisor [3] is your direct liaison with the Butler team and is responsible for: contacting the client before the event… Wait Staff Support Staff Head Wait Bar Staff Culinary [Underlining added.] [ 11 ] Reproduced below are some of the testimonials posted on the BDI website.

An event manager provided the following testimonial: “Firstly, you went completely above the call of duty to assist us with the unforeseen issues we experienced, and this was extremely impressive and very much appreciated. Secondly, Michael and the other two team members were by all reports absolutely amazing on site . They really stepped in at the last minute to make the event a great success .” [Emphasis added.] Another client, an event coordinator, wrote: “We’d like to thank you for all your help during our Staff Holiday Party . The event went flawlessly and we couldn’t have done it without your support !

Thank you again for supplying us with some amazing staff . Your team have been incredible to work with!” [Emphasis added.] Another client wrote as follows: “ . . . Christian, was an absolute pleasure to work with and took all the pressure off of my shoulders! He managed his staff impeccably and what a wonderful staff we had! Thank you so much again and it was so appreciated.” [Underlining and bold emphasis added.] Another testimonial states: “ . . . It was a great success and it was due in large part to your exemplary staff .

I wanted to pass along my sincere thanks for the level of service your staff have exhibited . . .” [Emphasis added.] Yet, another reads: “As a wedding and event designer, one of the most important elements of running a successful, seamless event is reliable, courteous staff.

The Butler Did It provides exceptional services with professionalism and flare [ sic ] . . .” [Emphasis added.] And still another client wrote: “With so many events happening in one year it was reassuring to know that all staffing needs, from large, high-end functions to small, home dinner parties would be staffed with professional, courteous, responsible and reliable personnel . It continues to be a pleasure to work with you and your team and I would like to thank you for all of your help this past year . . .” [Emphasis added.]

(3) BDI’s business as described by Mr. Sowden (

a) The clients

[ 12 ] Mr. Sowden described BDI’s business as filling staffing needs of different organizers of receptions, such as caterers and event planners, and of venues such as hotels (Ritz Carlton and the Hilton), restaurants, the Scotiabank Convention Centre, Maple Leaf Sports & Entertainment venues, golf and country clubs, the Royal Ontario Museum and the Art Gallery of Ontario. BDI is involved with all kinds of different events, such as weddings, the Rogers Cup tennis tournament, the Toronto International Film Festival and events for various corporate clients.

He described BDI’s high season as being from May to June and from September to December. The company could meet staffing needs for events for anywhere from five guests to five thousand. However, the average is between 500 and 1,000. Generally, the staffing for such events is provided at a ratio of 1 to 15. So for an average gathering of 750 guests, there would be one supervisor and 2 head waiters and a wait staff of approximately 50 to 60 butlers. BDI paid its supervisors at an hourly rate of $20 to $25. [ 13 ] I asked Mr. Sowden to provide a copy of a typical contract with BDI’s clients.

Such a document could not be provided. However, Mr. Sowden explained that BDI would bill its clients at an hourly rate of approximately $22 to $23 for each of its butlers and supervisors. In addition to the hourly rate, the clients could be billed for the transportation costs of the staff provided. (

b) The administrative staff [ 14 ] During the relevant period, BDI had ten permanent and two part-time management employees . (

c) The butler staff [ 15 ] The number of workers BDI hired for staffing events was approximately 600 in the relevant period and today it hires approximately 800. They are recruited by advertising on its website and by word of mouth. Candidates are invited to an open house at which they are screened. [ 16 ] Mr. Sowden described the profile of its workers as being students and persons, such as actors and actresses, in the process of establishing themselves in a more permanent activity.

He estimated that 50% of his staff was made up of students. [ 17 ] He stated that some of these students would be working for other agencies to fill up the hours during which they were available. However, no such workers testified to corroborate this statement. In addition, Mr. Sowden testified that some of BDI’s workers were incorporated. However, again, no one testified, and no documentation was introduced, to this effect. On the other hand, Ms. Johnson testified that she did not know of anyone who would have been incorporated. [ 18 ] According to Mr.

Sowden, the butlers were always told they were going to be treated as independent contractors. Almost everyone working as butlers for BDI preferred to be treated as such in this “gig economy”, to use his expression. That way, the butlers would be entitled to write off their expenses for tax purposes. Besides Ms. Johnson, no other butler testified at the hearing. (

d) The assignments [ 19 ] In his cross-examination by Ms. Johnson, Mr. Sowden recognized that the assignment process was controlled by BDI, more specifically by BDI’s scheduling manager, who would decide which position at a particular function would be filled by a particular butler: for example, whether Ms. Johnson would perform her services as a waitress or as a coat check attendant. However, regardless whether one acted as a coat check attendant, a server or a bartender, the remuneration would be the same. [ 20 ] Mr. Sean Bruno, an administrative employee, is the person in charge of scheduling operations. Mr.

Sowden indicated that approximately 80,000 shift assignments are done every year. The assignments of butlers are usually scheduled three months ahead of time by email. Each butler is asked to confirm his or her availability for the event. The butlers on the roster are not required to accept all assignments offered them, nor is BDI required to offer a minimum number of assignments. [4] However, butlers who refuse too many risk being taken off the roster.

Should there be a last-minute problem, butlers who have accepted an assignment are required to use an emergency phone line to inform BDI. [ 21 ] If for a particular event 100 butlers were required, 105 would be assigned because, in BDI’s experience, there is always a certain number of butlers who do not show up. He also acknowledged that, should all the assigned butlers appear for the event, BDI would pay their remuneration. [ 22 ] If a particular butler cannot make it, that butler does not have an obligation to find a substitute. If the butler recommends one, that replacement has to be approved by BDI.

(4) BDI’s business as described by BDI’s lawyers in the Notice of Intervention [ 23 ] I believe that the expression " “ " staffing referral service " ” " used by BDI’s lawyers in their Notice of Intervention to describe the business is misleading. The impression that one gets on reading these words is that the business of BDI consists only in referring butlers to its clients, who would then hire them. Generally, BDI does not limit its services to providing staff: it also provides the supervisory staff necessary for the work to be executed.

Some of its clients are described as catering companies and event planners. It would thus appear that these catering companies are subcontracting a portion of their services to BDI, which will execute the tasks of carrying the food and the drinks from the bar and from the kitchen to the tables of the guests. So it is more accurate to say that BDI provides banquet serving services to its clients’ guests at the events, although it does not provide the equipment, such as the plates, the cutlery and the glasses. B. Ms. Johnson’s general background and education [ 24 ] Ms.

Johnson was 46 years old during the relevant period. While in Calgary, she obtained a certificate in administrative secretarial work at “Career College”. [5] After she moved from Calgary to Toronto, she could not find work, so she enrolled in a two-year paralegal

program at Humber College. After graduating from Humber, she was not able to find work as a paralegal. She had intended to establish a business in that field, but it was difficult to do so because she needed to build up a clientele. C. The hiring by BDI

(1) The open house [ 25 ] While looking for job opportunities, Ms. Johnson saw on the Internet an invitation to attend an open house organized by BDI, which was looking to hire servers and bartenders. She accepted in June 2014 an offer by BDI to work as a banquet server. [ 26 ] At the interview, which took place at the open house, she met Mike Nickerson, whom she described as an operations manager, and Mr. David Smith, who is described as director of operations in paragraph 13(

f) of the Reply to the Notice of Appeal.

(2) Ms. Johnson’s experience as a worker in the hospitality business [ 27 ] During the aforementioned interview, she described her work experience as a waitress and bartender. She would carry plates when working as a waitress. In her testimony, Ms. Johnson described her experience in the restaurant and bar business. She mentioned that she had been a volunteer bartender at the Muhtadi International Drumming Festival, which takes place once a year in Toronto and lasts two days. In her résumé, [6] filed by BDI, she states that she has been a volunteer at that festival since 2007.

So in 2015 it would have been for eight years. At the time of the BDI open house, she had also been doing work for a small agency called Server, Servers and Shakers since October 2011, preparing food and vegetable trays, heating and serving food for guests, serving appetizers and alcohol, washing dishes and cleaning the preparation area. She testified that this would occur two or three times a year, usually at the residences of the agency’s clients. These would have been six hour events. [ 28 ] In addition, Ms.

Johnson worked in truck stop restaurants as a waitress during her summer vacations and for a few months during her school year when she was a teenager in Calgary. She also worked for Wendy’s and McDonald’s. (3) The hiring agreement [ 29 ] Ms. Johnson testified that she was never told at the open house or at the initial orientation which followed that she was being hired as an independent contractor. However, she acknowledged that she was told there would not be deductions at source from her remuneration.

She also stated that she did not sign any written contract in June 2014 when she was first hired by BDI. [ 30 ] To Mr. Sowden’s knowledge, Ms. Johnson never complained to BDI about being treated as an independent contractor or about the fact that there were no withholdings at source for 2014 and 2015. (

a) The sign-off sheet [ 31 ] During her cross-examination, Ms. Johnson discussed the document appearing in Exhibit I-1, Tab 5, which is described as the " “ " Sign Off Sheet " ” " . In this document, Ms. Johnson states that she understands the conditions for working for 1508658 Ontario Inc. (an entity which is assumed by the Minister, according to paragraph 13e) of the Reply to the Notice of Appeal, to have been amalgamated with BDI in 2012).

The sign-off sheet appears to be a document taken from a website because it says that " “[ " b " ] " y checking the box below and typing your name into the Sub-Contractor Signature box, you are confirming that the above statements are true. You agree that by typing your name, you are electronically signing this document. " ” " However, on the document filed, there are handwritten check marks next to " “I agree” " . [ 32 ] Ms.

Johnson recognized her signature in the disclaimer box bearing the heading " “D " isclaimer and Hardcopy Signature " ”, " in which it is indicated that " “ " [b]y signing below, I agree that I have read and agreed to the terms and conditions of the following forms that I have filled and signed " ” " . One of the forms is an Independent Contractor Agreement next to which there is a handwritten check mark in the " “ " I agree " ” " box, and next to that the date “Jun, 10 th /14” is entered by hand. Ms.

Johnson recognized her signature, but she denied having checked the boxes and written the dates appearing in that disclaimer box. In all likelihood, this was done by Ms. Christine Latimer who was described by Mr. Sowden and in emails filed in Exhibit A-1 as the people manager and whose job was to take care of the hiring process. [ 33 ] In Ms. Johnson’s mind, by signing her name she only agreed that she was being hired seasonally at the rate of $14 per hour.

It should also be stated that the sign-off sheet states the following in item number 2: " “ " I will submit a monthly invoice by the 5 th of each month for all shifts worked in the previous month. " ” " Ms. Johnson also testified that she had looked for the written independent contractor agreement that she had allegedly read and signed but had been unable to find such a document. (

b) The Food Handlers Agreement [ 34 ] A copy of an independent contractor agreement ( Food Handlers Agreement ) between The Food Handlers ( Food Handlers ) a division of The Butler Did It Inc., and Ms. Johnson, dated April 21, 2015, was produced as evidence. This agreement is signed only by Ms. Johnson. At paragraph 5 of the agreement, it is stated that the subcontractor—this is how Ms. Johnson is described—is not an employee of the contractor (Food Handlers). Although she signed this agreement, Ms. Johnson testified that she never actually worked for Food Handlers.

The work for this company would have involved being in the kitchen helping a chef by doing such chores as peeling potatoes, cleaning vegetables and doing the dishes. In the present case the payer is BDI and not Food Handlers. [ 35 ] Ms. Johnson acknowledged that she read the agreement before signing it and realized that she was described as an independent contractor and not as an employee. However, she said she had received that document by email and that she signed it because she needed

a job. She had been in school for two years and social services does not pay rent. She was in a difficult situation and had to work for her living. She sent the document back by email. So it was out of necessity that she signed it. In addition, she did not obtain legal advice with respect to the agreement. (

c) Culinary Butler Application Form [ 36 ] Another document which was also signed by Ms. Johnson on April 21, 2015 is entitled The Culinary Butler Application Form. [7] On this form, it is indicated that Ms. Johnson heard about The Culinary Butler from Mike Nickerson. It is interesting to read on page 2 of the document the applicant’s acknowledgement " “ " that I will attend the information and orientation session as a condition of being a subcontractor. " ” " On the form, Ms. Johnson indicates that she is available on Thursdays and Saturdays after 2 p.m. and for evening shifts.

She also checked the box for full-time availability (at least four shifts per week). It should be noted that part-time availability is described as at least one to three shifts per week. Occasional availability is described as being at least one shift per month. In this document, Ms. Johnson indicates that she has food handling certification and a Smart Serve card, and that she has experience in banquet/catering service, restaurant service and stations. Even if she did make this application, Ms. Johnson never worked for The Culinary Butler division. (

d) BDI Agreement [ 37 ] When Mr. Sowden testified, he filed a typical written agreement, the BDI Agreement between BDI and its workers. [8] It resembles the Food Handlers Agreement signed by Ms. Johnson. However, he was not able to produce the agreement between Ms. Johnson and BDI. When I asked Mr. Sowden the purpose of

section 3 of the agreement, which states that the term of the agreement is one year, considering that under

section 4 it could be terminated at any time on written or verbal notice. The witness was not able to explain this. (

e) The missing guidelines [ 38 ] Ms. Johnson was not aware what the Standards of Professional Service Guideline referred to in paragraph 1.f(

i) of both the Food Handlers Agreement and BDI Agreement was. Mr. Sowden acknowledged in his testimony that the Guideline was a 15-page document attached to the agreement. However, he did not bring it to court and he could not produce it during his testimony. (

f) The remuneration [ 39 ] According to Ms. Johnson, she did not and could not negotiate her hourly rate of $14. That was all decided by BDI. Mr. Sowden insisted that the butlers could come at any time and discuss a raise in their remuneration even though Ms. Johnson did not do so. [ 40 ] Although BDI clients do not normally pay tips to the butlers, if any were offered, they would be distributed among the staff. The usual circumstance in which this could happen is at a private function. Ms. Johnson also confirmed that the BDI workers were not allowed to ask for tips.

In Exhibit A-1, Tab 23, there is an email discussing the distribution of tips. During her testimony, Ms. Johnson said that this sort of distribution occurred only in the context of one outside festival held once a year. She only got $100 for that event, although she had expected that the workers would have received a lot more. [ 41 ] According to Ms. Johnson, the minimum hourly wage at the time for workers in Ontario was $10 or $11 while waiters would receive a lesser amount under the Ontario minimum wage standard.

However, she acknowledged that waiters would usually be entitled to gratuities. [ 42 ] She also confirmed that there was no contractual relationship between her and the venue or the clients serviced by BDI. D. Training by BDI [ 43 ] When Ms. Johnson was hired at the open house, she was told that she had to attend what she described as a training session. She also received an email [9] telling her to attend what BDI described as orientation on Tuesday, June 10, 2014.

The email is entitled “Welcome to the Butler Did It Seasonal Team” and signed by Christine Latimer from " “ " The People Department " ” " of BDI, which looks like a euphemism for Human Resources Department. [ 44 ] This document states that there is to be a " “ Uniform approval (mandatory)— ONE HOUR PRIOR to the Orientation " start time " ”, and that uniform sale and approval will " end 15 minutes before the orientation start time. It adds that the orientation “begins PROMPTLY and last 3 hours.

Latecomers will not be permitted.” [ 45 ] The email describes the orientation attire as follows: Plain black long-sleeved dress shirt. Note: Also bring White Dress Shirt (same criteria as Black Dress Shirt) Plain, black wide tie Plain, black dress pants ( no cotton / denim , not tight fitted ) Black polishable dress shoes ( no runners / ballet flats) Black plain Vest ( No Shiny back, No Buckle , Plain) (Preferably purchased through us at Orientation as it is difficult to get

approved ) Items available at Orientation Uniform Sale : Shirts: $18.00 (+tax), Vest . . . $27.00 (+tax), Tie: $10.00 (+tax) via Cash, Visa, and MasterCard. [Underlining added.] [ 46 ] Ms. Johnson testified that she brought her own clothes and did not purchase them through BDI. However, her uniform had to be approved. " [ " " 47 " " ] " The email describes what it means to be a seasonal hire: " “ " Season ends July 31 st , 2014 Rate of pay: $14.00 " ”. " It also advises that the following missing documents are " “ " required " ” " for the orientation: Smart Serve Card, three references and confirmation that Ms.

Johnson has completed the " “ " Ministry of Labour Health and Safety for Workers Online Training " ”. " " " [ 48 ] In order to obtain a Smart Serve card, Ms. Johnson had to watch a one-hour video presentation and pass the test which is included in the one-hour video presentation. This card allows a worker to serve alcohol and is a requirement of the Ministry of Health in Ontario. Relying on his own experience in obtaining such a card many years before the relevant period, Mr.

Sowden testified that the video lasted two hours and that those viewing it would be told about the limits as to the amount of alcohol that a server can offer to a particular guest, about a guest’s capacity to drink based on the guest’s size and, in the case of a woman, depending on whether she is pregnant. The cost of that Smart Serve card is approximately $40 and this is a one-time expense. The card does not have to be renewed every year or at other intervals. [ 49 ] One has also to watch a one-hour video presentation on work safety, with regard to chemicals, for example. Ms.

Johnson got her Smart Serve card in 2006 for the Drumming Festival and obtained the work safety certificate in 2014 at the request of BDI. [ 50 ] The orientation session was given by Michael Nickerson and David Smith. At the session, they described the butlers’ duties and the three types of service to be provided. They taught the servers how to attach the tablecloth to a table, how to set up the table, how to fold napkins, how to arrange the plates, the glasses and the utensils, how to approach a guest, i.e., on which side guests were to be served. [ 51 ] The first type of service is French service.

This involves carrying up to three plates in one hand. According to Ms. Johnson, during such service all the servers work as a team and enter the room in procession following the team leader or supervisor. The supervisor directs the servers regarding the table for which each is to be responsible. [ 52 ] The second type is called simultaneous service.

During such service, the servers stand with one plate in each hand between two guests at the table—at which 10 to 12 persons are normally seated—and all the servers present the plates at the same time at the signal of the team leader. [ 53 ] The third type is called banquet trays, which means that one server carries the plates on a tray and deposits the tray on a table near the guest table and another server takes the food from the tray to the guest. After the server has brought the tray to the table, he or she returns to the kitchen for the other trays.

While they are in the kitchen, a person described as an expeditor informs the servers about the different plates on the trays. [ 54 ] In the email at Tab 4 of Exhibit A-1, the BDI server and bartender staff are told about additional " “[u]pcoming 2.0 / 3.0 / 4.0 Orientations” with BDI. These additional sessions were to last between one and half and two hours. Each orientation entitles the server to a 50 cent hourly increase in remuneration. However, a minimum number of assignments is required between these so-called orientation sessions.

" Furthermore, the email states that if a person attends a particular orientation more than once, that person will receive only one 50 cent increase for that orientation. This document is signed by Christine Latimer. [ 55 ] According to Mr. Sowden, these orientation sessions were abandoned after 2015 because, in his view, they were not working. [ 56 ] Further training is offered by BDI to its workers on an ad hoc basis, as illustrated by the following email [10] from the bookings department dated January 29, 2016, and dealing with available shifts.

It is stated in that email: This is just a quick note that we are looking to fill a few more spots tomorrow at the Metro Toronto Convention Centre . . . at 4pm. This is a Banquet Tray Dinner Service so you need to be comfortable with Banquet Trays. If you would like to practice we have spot [ sic ] set up in our office for you to drop by and practice (please ask for available drop in times if you would like to utilize this practice). [Emphasis added.] [ 57 ] There is another example in an email [11] of March 10, 2016.

The servers working for BDI are being informed by the bookings department about the launching of a new scheduling platform called Next Crew to provide a faster way for the staff to receive the latest booking requests for shifts. The email states: " . . . " In this fast moving market we are doing all that we can to provide you with alerts of openings in a way that you can respond to with ease. We have already pre-loaded your basic information into Next Crew. All you need to do is log into the link below and update your profile. . . . . . .

We have attached step by step procedures on how to update your profile once you log in. Please take the time to update your profile so that we have accurate information on file. We are asking that you update your profile before March 25th .

If you would like “live” support with updating your profile we have set up weekly tutorial sessions in the office . You can drop by the office any Tuesday from now until March 25th between the hours of noon and 4pm and someone will be available to help you. If these times are not convenient for you please give us a call and we will arrange an alternate time. [Emphasis added.] Attached to the email is a PDF file entitled “NC Step by step instructions”. E. Work during relevant period

(1) Duration of work [ 58 ] Although the relevant period is from January 1, 2015 to November 28, 2015, Ms. Johnson testified that in 2015 she really only worked as a server from June to November. In 2014, she was hired in June and, contrary to what was indicated in the welcome email, she continued working past July 31 up until the end of December.

(2) Direction and supervision (

a) Reporting at the beginning of the assignment [ 59 ] At the beginning of a reception, the servers were to report to a BDI supervisor or team leader who would normally make a roll call to ensure that all the servers were present. There would be a sheet on which the server would sign in to confirm the date and the server’s time of arrival and then sign out at the end of the evening. On June 16, 2015, someone from the BDI accounting department asked Ms.

Johnson for her “sign-out time for Friday night at the ROM”. [12] [ 60 ] During a particular reception, the representative of the venue or the client would normally talk to the supervisor, who would then inform his team leaders as to the client’s expectations. Sometimes, the venue would delegate to BDI full responsibility for conducting the reception. [ 61 ] The assignment received by email ahead of time from the BDI bookings department would have specified the position the worker would hold at the event in question, i.e., bartender, server or coat check attendant.

It was also BDI that decided which venues and how many shifts were offered to its workers. [ 62 ] At the event, the supervisor or the team leader would specify in greater detail the task to be performed by the worker. If the circumstances warranted it, the supervisor could decide to change the position that had been assigned to the worker in the email. [ 63 ] Depending on the size of the reception, whether a wedding or a corporate party, the staff provided by BDI would be composed of 50 to 60 servers divided into teams of five or six servers, each team generally being led by a team leader. Mr.

Sowden indicated that when you are serving 750 guests all the food must be served within a time frame of 15 to 25 minutes. As one can imagine, it requires a lot of people and a lot of coordination to achieve this result. (

b) Work during an event [ 64 ] Ms. Johnson testified that the servers were supervised by the supervisor and/or team leaders. The role of the supervisor was to direct what duties were to be performed by each member of the staff, and the team leader was responsible for the direct supervision of the service at the table. The team leader would remind the servers if they did not follow the protocol that they had been told to follow for a particular reception. [ 65 ] Furthermore, if there were any problems during a particular shift, the worker had to report to the team leader. At one point, Ms.

Johnson was yelled at by a representative of a venue and she informed her team leader that she would not be returning to work. She was informed by a representative of BDI that it would investigate this incident because it was BDI’s policy not to accept any harassment from clients or from representatives of venues. [ 66 ] Mr. Sowden testified that the team leader would also be involved in serving guests. Therefore, he or she was not in a position to really supervise the butlers. This statement was contradicted by the testimony of Ms.

Johnson, who said that they followed the orders and the directions of the team leader. I am convinced that if a particular butler did not set up the tables in the proper way, that butler’s team leader would tell the butler how to do it. (

c) Permission required to leave an event [ 67 ] Ms. Johnson confirmed that breaks had to be approved by the team leader. She could not take a break or go home at the end of the evening without the team leader’s approval. She confirmed that in one instance, when the client had requested that the butlers stay longer than the time agreed to by BDI, the team leader told Ms. Johnson that she had to stay because the client was paying and they had to do what the client wanted. (

d) Examples of written directives given by BDI to its workers [ 68 ] There were numerous written directives given to Ms. Johnson with respect to the various events at which she performed her services. The directives are in the form of emails from the BDI bookings department. The first, [13] dated November 20, 2015 at 5:09 p.m., states:

Please sign in with your supervisor at the catering office at the south west corner of the building . Please note that the subway doesn’t start running until 9AM so please plan your trip accordingly . There are multiple bus options available. If you need help mapping your TTC trip please visit www.myttc.ca. Friendly reminder from the booking department. You are confirmed. Bring a lighter, corkscrew and pen to every job . [Emphasis added.] At the bottom of this email, under the heading “ATTIRE”, is written “BLACK BISTRO VEST " ” " . And the position assigned to Ms. Johnson is " “COAT CHECK” " . [ 69 ] Mr.

Sowden acknowledged that there were two types of attire that the butlers could wear: either a black bistro or white bistro. The wearing of one or the other would often be a requirement set by the organizer of the event. Mr. Sowden confirmed that the butlers would be required to have a pen, a pad, a corkscrew and a lighter ( small tools ) that they would have to pay for themselves.

The same applied for the uniforms. [ 70 ] In a similar email, [14] dated October 1, 2015 at 4:08, for a VIP wedding event to take place on October 3, 2015, it is stated: " “ " [i]f you are taking the bus please be at our office . . . at 12:30PM. Please arrive dressed and ready . Bring a snack and water as it’s a long bus ride. You also get 4 hours of billable travel time for this event. If you are driving there is no actual address, but please follow [these] directions " ”. " [Emphasis added.] At the end of the directions, it says: " “ " Park there and Hal will come and collect the team.

" ” " There is in addition a “friendly reminder” about bringing the small tools, and it is specified that “black bistro vest " ” attire is required and that the assigned " position is " “wait/coat check”. " [ 71 ] Similarly, in an email, [15] dated October 18, 2015 at 4:04 p.m., for an event on October 20, 2015 at the Ritz-Carlton, it is stated: “ must bring photo ID " ” " . In addition, the email says: Please arrive 10 minutes BEFORE your scheduled start time as you will need extra time to sign in with security.

Enter through the unmarked silver door on the West side of the RBC Dexia building right beside the Ritz-Carlton. Follow the stairs down to the security to sign in. Once you are signed in please WAIT AT SECURITY until someone comes to get you . YOU MUST ARRIVE DRESSED IN YOUR FULL UNIFORM – DO NOT CHANGE ON SITE . Attire and grooming standards at this venue are closely monitored . Your uniform must be clean and pressed . Shoes must be polished . The client does not allow facial hair of any kind —if you have facial hair please call the office right away . Hair must be neat, tidy, and tied back .

No jewellery is allowed . *** PLEASE BRING GOVERNMENT-ISSUED I.D. TO ENT. " ” " [Underlining added.] There is again the “friendly reminder” about the small tools. With regard to attire, there is the following: “WHITE BISTRO VEST (MEN MUST BE CLEAN SHAVEN)”. The position assigned to Ms. Johnson is “wait”. [ 72 ] There is another similar email, [16] dated June 11, 2015 at 8:42 p.m., for an event to take place on Saturday, June, 13, 2015. The email states: " E " nter AGO [Art Gallery of Ontario] from the front entrance. The AGO is fragrance free. Please arrive DRESSED AND READY with minimal baggage .

Please wait in the corridor behind the Café and lets [ sic ] be quiet while we wait to be picked up , reminder seating is for guests . [Underlining added.] And there is again the “friendly reminder” about the small tools. The attire is described as being “black bistro vest " ” and the " position assigned to Ms. Johnson is " “wait”. " [ 73 ] On September 23, 2015, the bookings department is emailing to Ms. Johnson stating that " “ " this may be the original time you had but there have been a number of changes and we just want to make sure everyone has the right time.

" ” " [17] This was an event involving David Foster to be held on September 26, 2015. The attire was stated to be “black bistro vest” and Ms. Johnson was directed to bring ID. The position assigned to her was " “wait”. " [ 74 ] In an email [18] dated November 12, 2015 respecting an event to be held on Saturday, November 14, 2015, Ms. Johnson is reminded to pay the driver $5 one way and $8 for a round trip. The attire for that event was black bistro. On November 10, 2015, the bookings department of BDI wrote to Ms.

Johnson regarding an event for November 12, 2015: [19] " “ " Lockers are provided at this venue *** please bring your own lock ***. We suggest to bring minimal personal items . If you are taking the bus, please be at our office for 4:15AM . Coffee and continental breakfast will be provided . Please let us know if you will be taking the bus. There will be a draw for a 250$ Visa gift card for those who worked this event. " ” " [Emphasis added.] There is the usual “friendly reminder” about the small tools, and the attire is stated to be “black bistro”. The position assigned to Ms. Johnson is " “wait”.

" [ 75 ] In an email [20] from the bookings department dated October 23, 2015, all the staff is being informed of events to take place in Niagara Falls from October 25 to October 27 and on November 2, 3 and 12. The staff is reminded that “if you are available to help with rides we have drivers incentives of $25 per person in your car . " ” " (

e) Disciplinary reports [ 76 ] According to Ms. Johnson, the team leader would make reports about the workers’ performance. She acknowledged that she had never seen such a report, but said she was aware that a report was written for one worker for her misbehaviour in dealing with her team leader. That worker had apparently on one occasion talked back to the team leader. That is when Ms. Johnson learned that a report was being made for every shift. Mr.

Sowden acknowledged that the team leaders might send feedback to the management team on the performance of the butlers, including whether the butlers were punctual or wore the right uniform. [ 77 ] When asked whether she had ever been disciplined, Ms. Johnson mentioned an event with respect to which a problem had occurred.

Having tried to coordinate her transportation to an event with a person in whose car she was supposed to ride, she ultimately had to cancel her shift at the event at the last minute because the place at which she was to meet that person appeared to Ms. Johnson to be a hazard to her safety. An investigation was carried out by Sean Bruno and Mike Nickerson to get both workers’ side of the story. Ms. Johnson claimed that she lost three shifts as a result of not showing up in those particular circumstances. [21]

(3) Number of assignments per week [ 78 ] Usually, Ms. Johnson only worked three shifts or assignments per week, each lasting approximately ten hours and sometimes thirteen. For the rest of her time, she was looking for regular office work. She actually found one job with the government. That job started in November 2015, which corresponds to the end of her work for BDI, but it lasted only a few months. [ 79 ] Ms. Johnson said that besides her three shifts for BDI she did no work for any other staffing agencies.

She also confirmed that if a worker refused too many assignments that worker’s name would be dropped from the database or the worker could receive fewer assignments, even though, according to the BDI Agreement, a worker could decline any assignment made by BDI. [ 80 ] Mr. Sowden gave the following explanation for adopting such a course of action. Students were refusing assignments because they had started a career in their field of interest and actors were receiving a more steady flow of income from their artistic activities.

The presence of their names in the BDI database was a source of operational inefficiency.

(4) The remuneration process [ 81 ] Ms. Johnson was paid on a monthly basis according to the hours that she worked. She provided her hours to BDI using a template in an Excel spreadsheet prepared by BDI, although BDI had already received that information from the supervisor/team leaders, who were making roll calls and having each worker complete a sign-out sheet for every assignment. On this spreadsheet, Ms.

Johnson would indicate the name of the client, the date on which the services were provided to the client, the order number, her time in and her time out, her travel time (when relevant), her total hours and her rate of remuneration. In his testimony, Mr. Sowden indicated that the template prepared for invoicing was not necessarily used by the butlers. He indicated that some of the butlers prepared their own invoices. [ 82 ] Ms. Johnson was told by BDI how to submit her invoice as well as how to advise them of her availability for future shifts.

For instance, for any shift worked in a month, the invoice sheet must be completed and emailed to the accounting department by the 15th of the following month. [ 83 ] In her cross-examination by BDI’s attorney, Ms. Johnson testified that although the spread sheet is called a contractor’s monthly invoice, it was not an invoice from her: she was only reporting her hours. Had she been a subcontractor, she said, she would have charged a lot more than $14 an hour. In her view, there was no way one could make a profit at $14 an hour. [22] [ 84 ] In Ms.

Johnson’s view, working for BDI was not an opportunity for her to make a profit or to get work on her own at venues other than those serviced by BDI. First of all, she did not have the staff to fulfil the needs of the different hotels and other venues. In addition, there is a non-competition clause in the BDI Agreement. [23] [ 85 ] On all the spreadsheets which she used to report her hours, no GST/HST was charged. Ms. Johnson confirmed that she was not registered for HST purposes. [ 86 ] The T4As issued to Ms. Johnson by BDI show a total remuneration of $4,063.31 for 2014 and $7,952.25 for 2015. [24]

(5) Banquet equipment [ 87 ] Usually, the glasses and plates would not be provided by BDI, but by the venue or by the client or would be obtained from a rental company. Ms. Johnson testified that servers drop glasses or plates and that she never heard of such servers being asked to reimburse the cost of these objects. [ 88 ] Mr. Sowden acknowledged that if there was such breakage, the workers would not be required to pay for it. He said that that was the responsibility of the company renting the equipment and that their fees took into account such risk.

(6) WSIB Employer’s Report of Injury/Disease [ 89 ] Ms. Johnson pulled a chest muscle on November 14, 2015 when, in trying to lift a banquet tray, she experienced a sharp pain. BDI filed an Employer’s Report of Injury/Disease, WSIB Form 7. [25] An employer is required to fill out such a form when an employee/worker gets hurt on the job. On that form, which appears in Tab 2 of Exhibit A-1, the name of BDI is entered in the " “ " Employer Information " ”

section " . The form was not modified to replace " “Employer Information” with “Contractor Information”. " Ms. Johnson is described as being a waiter. The description of the business activity of BDI provided in

section B, the employer information section, is “event staffing”. In

section C, “Accident Illness Dates and Details” the accident is stated to have been reported to the “Bookings/Dept Scheduler”. This form was signed by David Smith as Director of Operations. There is on page 3, where the name of Mr. Smith appears, a “Base Wage/Employment Information” section. In the first part of this section, the worker can be described as “casual/irregular”, “seasonal” or “contract”. Mr. Smith checked only " the “ " contract " ” box " . In the same part of the section, the “owner operator or (sub) contractor” box is left unchecked. The regular rate of pay indicated is $15.50 per hour.

Finally, above the name of Mr. Smith, it is stated that it is an offence to deliberately make false statements to the Workplace Safety and Insurance Board. The form includes, on the same page, the following declaration: “I declare that all of the information provided on pages 1, 2 and 3 is true.” [ 90 ] Ms. Johnson was informed that BDI had a joint health and safety committee. It was her understanding that if an employer has more than 50 employees such a committee was required under the Employment Standards Act. To reach that level, BDI had to include its roster of 600 butlers.

(7) Risk of butlers not being paid [91] Mr. Sowden testified that there was a potential risk of a butler not being paid if the client was not satisfied with the servicesprovided. However, it was not clear that anything would be subtracted from the remuneration of the particular butler. He acknowledgedthat the amount of the fee that the client had agreed to pay to BDI might be subject to reduction. There was no evidence that there wasany reduction in the case of Ms. Johnson. IV. ANALYSIS A. The issues and relevant law [92] The issue that this Court must decide in the EI appeal is whether Ms.

Johnson was engaged in "“"insurable employment"”" withBDI during the relevant period. Insurable employment is defined in subsection 5(1) of the Act as follows: 5(1) Subject to subsection (2), insurable employment is (

a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship,written or oral, whether the earnings of the employed person are received from the employer or some other person andwhether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise; [Emphasis added.] [93] So the issue is whether Ms. Johnson provided her services pursuant to a contract of service (also called a contract employment) ora contract for services (also called an independent contractor agreement).

Only employment under the former would qualify asinsurable employment in the present case. As the expression "“"contract of service"”" found in

section 5 is not defined in the Act,reference must be made to the law of the province governing the relationship between the parties pursuant to

section 8.1 of theInterpretation Act of Canada [26] . [94] Here the contract was entered into in Ontario and therefore reference must be made to the law of that province in determining whata contract of employment is. Given that there is no legislation of general application such as the Quebec Civil Code, we must resort to thecommon law applicable in Ontario. The common law approach is to review the facts in order to determine whether we have a contract ofemployment or an independent contractor agreement. The two leading cases that illustrate this approach are the Supreme Court decisionin 671122 Ontario Ltd. v.

Sagaz Industries Canada Inc., 2001 SCC 59 , [2001] 2 S.C.R. 983 (per Major J.) (Sagaz) and theFederal Court of Appeal decision in Wiebe Door Services Ltd. v. M.N.R., (FCA), [1986] 3 F.C. 553 (per MacGuiganJ.A.) (Wiebe Door). B. The common law principles

(1) The two-step approach [95] In my view, my colleague Justice Campbell Miller provides an excellent

summary of the current state of the law in MorrisMeadows Country Holidays and Seminars Ltd. v. Canada (Minister of National revenue), [2014] T.C.J. No. 139(QL), 2014 TCC 191[27] (Morris Meadows): (

a) Employee v. Independent Contractor 30 The oft-cited starting point for the employee versus independent contractor discussion is the Supreme Court of Canada'scomments on the subject in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.: 47. Although there is no universal test to determine whether a person is an employee or an independentcontractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. inMarket Investigations, supra.

The central question is whether the person who has been engaged to perform theservices is performing them as a person in business on his own account. In making this determination, the levelof control the employer has over the worker's activities will always be a factor.

However, other factors toconsider 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 andmanagement 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 totheir application.

The relative weight of each will depend on the particular facts and circumstances of the case. 31 The Federal Court of Appeal in 1392644 Ontario Inc. o/a Connor Homes v. Minister of National Revenue massaged thisapproach with its review of recent jurisprudence as to the role of intention in the analysis, a factor not mentioned by theSupreme Court of Canada. The Federal Court of Appeal offered the following: 37.

Because the employee-employer relationship has important and far reaching legal and practical ramificationsextending to tort law (vicarious liability), to social programs (eligibility and financial contributions thereto), tolabour relations (union status) and to taxation (GST registration and status under the Income Tax Act), etc., thedetermination of whether a particular relationship is one of employee or of independent contractor cannotsimply be left to be decided at the sole subjective discretion of the parties. Consequently, the legal status of

independent contractor or of employee is not determined solely on the basis of the parties[’] declaration as totheir intent. That determination must also be grounded in a verifiable objective reality. 38. Consequently, Wolf and Royal Winnipeg Ballet set out a two step process of inquiry that is used to assist inaddressing the central question, as established in Sagaz and Wiebe Door, which is to determine whether theindividual is performing or not the services as his own business on his own account. 39. Under the first step, the subjective intent of each party to the relationship must be ascertained.

This can bedetermined either by the written contractual relationship the parties have entered into or by the actual behaviourof each party, such as invoices for services rendered, registration for GST purposes and income tax filings as anindependent contractor. 40. The second step is to ascertain whether an objective reality sustains the subjective intent of the parties. Asnoted by Sharlow J.A. in TBT Personnel Services Inc. v.

Canada, 2011 FCA 256 , 2011 FCA 256, 422N.R. 366 at para. 9, "it is also necessary to consider the Wiebe Door factors to determine whether the facts areconsistent with the parties' expressed intention." In other words, the subjective intent of the parties cannot trumpthe reality of the relationship as ascertained through objective facts. In this second step, the parties[’] intent aswell as the terms of the contract may also be taken into account since they colors [sic] the relationship. Asnoted in Royal Winnipeg Ballet at para. 64, the relevant factors must be considered "in the light of" the parties'intent.

However, that being stated, the second step is an analysis of the pertinent facts for the purpose ofdetermining whether the test set out in Wiebe Door and Sagaz has been in fact met, i.e[.] whether the legaleffect of the relationship the parties have established is one of independent contractor or of employer-employee. 41. The central question at issue remains whether the person who has been engaged to perform the services is,in actual fact, performing them as a person in business on his own account.

As stated in both Wiebe Door andSagaz, in making this determination no particular factor is dominant and there is no set formula. The factors toconsider will thus vary with the circumstances. Nevertheless, the specific factors discussed in Wiebe Door andSagaz will usually be relevant, such as the level of control over the worker's activities, whether the workerprovides his own equipment, hires his helpers, manages and assumes financial risks, and has an opportunity ofprofit in the performance of his tasks. [Emphasis added.]

(2) Definition of contract of service [96] The main issue in Sagaz was whether that company could be held vicariously liable for tortious conduct of its consultant, AmericanIndependent Marketing Inc. (AIM).

The Supreme Court stated in this regard: "“"Based on policy considerations, the relationship betweenan employer and independent contractor does not typically give rise to a claim in vicarious liability.” [28] [Emphasis added.] Major J.,speaking for the Court, found that although "“"[t]here is some evidence to suggest that Landow and AIM were employees of Sagaz"”."[29] " “"[o]n the totality of the evidence, I agree with the trial judge that AIM was in business on its own account."”" [30] In thosecircumstances, Major J. adopted an approach similar to that of MacGuigan J.A. in Wiebe Door.

This approach focuses on whatdistinguishes an employee from an independent contractor. MacGuigan J.A. preferred the general test applied by Lord Wright inMontreal v. Montreal Locomotive Works Ltd., [31] which emphasizes “the combined force of the whole scheme of operations,” to the“integration” or “organization” test used by Lord Denning. [97] In my view, it would be useful to define what a contract of service is so as to better apply the approach—including the fourfold testknown as the “entrepreneur test” [32] —described in Sagaz and Wiebe Door and better understand its scope.

In Ready Mixed Concrete(South East), Ltd. v. Minister of Pensions and National Insurance, [1968] 2 QB 497 at 515-17, [1968] 1 All E.R. 433 at 439-41 (ReadyMixed), MacKenna J. offers the following definition and enlightening analysis: [33] I must now consider what is meant by a contract of service. A contract of service exists if these three conditions are fulfilled. (

i) The servant agrees that, in consideration of a wage orother remuneration, he will provide his own work and skill in the performance of some service for his master. (ii) Heagrees, expressly or impliedly, that in the performance of that service he will be subject to the other's control in a sufficientdegree to make that other master. (iii) The other provisions of the contract are consistent with its being a contract of service. . . . As to (i). There must be a wage or other remuneration. Otherwise there will be no consideration, and without considerationno contract of any kind.

The servant must be obliged to provide his own work and skill. Freedom to do a job either by one'sown hands or by another's is inconsistent with a contract of service, though a limited or occasional power of delegation maynot be: see Atiyah's Vicarious Liability in the Law of Torts (1967) pp. 59 to 61 and the cases cited by him As to (ii). Control includes the power of deciding the thing to be done, the way in which it shall be done, the means to beemployed in doing it, the time when and the place where it shall be done.

All these aspects of control must be considered indeciding whether the right exists in a sufficient degree to make one party the master and the other his servant. The rightneed not be unrestricted. “What matters is lawful authority to command so far as there is scope for it. And there must always be someroom for it, if only in incidental or collateral matters.”—Zuijs v. Wirth Brothers Proprietary, Ltd.[(1955), 93 C.L.R. 561, 571]

To find where the right resides one must look first to the express terms of the contract, and if they deal fully with the matterone may look no further. If the contract does not expressly provide which party shall have the right, the question must beanswered in the ordinary way by implication. The third and negative condition is for my purpose the important one, and I shall try with the help of five examples toexplain what I mean by provisions inconsistent with the nature of a contract of service. (

i) A contract obliges one party to build for the other, providing at his own expense the necessary plant and materials. Thisis not a contract of service, even though the builder may be obliged to use his own labour only and to accept a high degree ofcontrol: it is a building contract.

It is not a contract to serve another for a wage, but a contract to produce a thing (or aresult) for a price. (ii) A contract obliges one party to carry another's goods, providing at his own expense everything needed for performance.This is not a contract of service, even though the carrier may be obliged to drive the vehicle himself and to accept the other'scontrol over his performance: it is a contract of carriage. (iii) A contract obliges a labourer to work for a builder, providing some simple tools, and to accept the builder's control.Notwithstanding the obligation to provide the tools, the contract is one of service.

That obligation is not inconsistent withthe nature of a contract of service. It is not a sufficiently important matter to affect the substance of the contract. (iv) A contract obliges one party to work for the other, accepting his control, and to provide his own transport. This is still acontract of service. The obligation to provide his own transport does not affect the substance. Transport in this example isincidental to the main purpose of the contract. Transport in the second example was the essential part of the performance. (

v) The same instrument provides that one party shall work for the other subject to the other's control, and also that he shallsell him his land. The first part of the instrument is no less a contract of service because the second

part imposesobligations of a different kind: Amalgamated Engineering Union v. Minister of Pensions and National Insurance. [ (MB KB), [1963] 1 W.L.R. 441, 451, 452; [1963] 1 All E.R. 864] I can put the point which I am making in other words. An obligation to do work subject to the other party's control is anecessary, though not always a sufficient, condition of a contract of service. If the provisions of the contract as a whole areinconsistent with its being a contract of service, it will be some other kind of contract, and the person doing the work will notbe a servant.

The judge's task is to classify the contract (a task like that of distinguishing a contract of sale from one of workand labour).

He may, in performing it, take into account other matters besides control. [Emphasis added.] [98] This UK decision, like others, [34] shows that the right of control is an essential characteristic of a contract of service. [35] This isconsistent with the dicta of the Supreme Court of Canada in Sagaz, in particular with the following in which Major J. discusses the policyconsiderations that come into play for the purpose of applying vicarious liability: 33 The most common relationship that attracts vicarious liability is that between employer and employee, formerly masterand servant.

This is distinguished from the relationship of an employer and independent contractor which, subject to certainlimited exceptions (see Atiyah, supra, at pp. 327-78), typically does not give rise to a claim for vicarious liability. . . . 34 What is the difference between an employee and an independent contractor and why should vicarious liability morelikely be imposed in the former case than in the latter? This question has been the subject of much debate. The answer lieswith the element of control that the employer has over the direct tortfeasor (the worker).

If the employer does not controlthe activities of the worker, the policy justifications underlying vicarious liability will not be satisfied. See Flannigan, supra,at pp. 31-32: This basis for vicarious liability discloses a precise limitation on the scope of the doctrine. If the employer doesnot control the activities of the worker it is clear that vicarious liability should not be imposed, for theninsulated risk-taking [by the employer] does not occur. Only the worker, authorized to complete a task, couldhave affected the probability of loss, for he alone had control in any respect.

Thus, because there is no mischiefwhere employer control is absent, no remedy is required. 35 Explained another way, the main policy concerns justifying vicarious liability are to provide a just and practical remedyfor the plaintiff's harm and to encourage the deterrence of future harm (Bazley, supra, at para. 29). Vicarious liability is fairin principle because the hazards of the business should be borne by the business itself; thus, it does not make sense to anchorliability on an employer for acts of an independent contractor, someone who was in business on his or her own account.

Inaddition, the employer does not have the same control over an independent contractor as over an employee to reduceaccidents and intentional wrongs by efficient organization and supervision. Each of these policy justifications is relevantto the ability of the employer to control the activities of the employee, justifications which are generally deficient ormissing in the case of an independent contractor.

As discussed above, the policy justifications for imposing vicariousliability are relevant where the employer is able to control the activities of the employee but may be deficient in the case ofan independent contractor over whom the employer has little control. . . . [Emphasis added.] [99] The concept of contract of service (employment contract) having been clarified, the distinction between this contract and a contractfor services (independent contractor agreement) must be made by following the approach described by Major J. in Sagaz: 47 . . .

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. [36] [ Emphasis added.]

(3) The role of the Court [ 100 ] One more common law principle has to be discussed before reviewing the facts. It has to do with the judicial process. In Canada, we have inherited the English common law tradition in which this process is described as the adversary system, as opposed to the inquisitorial system. We find the following

definitions in Black's Law Dictionary (10th ed.): adversary system.

(1936) A procedural system, such as the Anglo-American legal system, involving active and unhindered parties contesting with each other to put forth a case before an independent decision-maker inquisitorial system. (18c) A system of proof-taking used in civil law, whereby the judge conducts the trial, determines what questions to ask , and defines the scope and the extent of the inquiry. • This system prevails in most of continental Europe, in Japan, and in Central and South America. [Emphasis added.] [ 101 ] The adversary system is founded on the belief that the parties and not judges are best positioned to advance their case and that the truth will emerge from the clash of the evidence presented by each party in front of a passive judge.

However, experience has shown that this is not necessarily so. Many countries have embarked on a review of this judicial process to find ways to improve it. This has occurred not only in Canada [37] , but also in England [38] and other common law jurisdictions such as Australia. [ 102 ] For instance, the Law Reform Commission of Western Australia undertook in 1997 a major review of its criminal and civil justice system. Many people had raised concerns about the efficiency of the adversary system, and there was a trend towards more judicial intervention in the trial process in both criminal and civil matters.

The Honourable Mr. Justice D. A. Ipp, of the Supreme Court of Western Australia, presented to the Australian Bar Association in 1994 a paper in which he stated: [39] Society, I suggest, is no longer content with the proposition that litigation is a pure “ affair of the parties ” and the judge is a passive referee having no power—or, de facto, being extremely reluctant—to control the conduct and unfolding of the litigation. Community values are inexorably moving towards more active judging . In many western nations, it is now accepted that judges have a duty to assist litigants.

There is a trend towards increased judicial powers and an attenuation of the traditional adversary theory . This development is often justified as necessary to increase the efficiency of judicial administration—making it the judges’ task to assure a swift and orderly progress of the litigation. Another important justification is the acceptance of judicial responsibility to find the objective “truth” , that being essential to the achievement of justice . . . .

Inquisitorial procedure is becoming far more the norm in administrative tribunals , and, generally, the adversary system has come under sustained pressure. [Emphasis added.] [ 103 ] Given this situation, the Commission reviewed the advantages and disadvantages of the adversarial system in civil litigation. In one of the consultation papers, we find this interesting analysis: The actual history of the adversarial system reveals that the connection between adversarial processes and civil disputes is not as intimate or long-standing as some suppose.

Adversarial processes in civil matters crystallised only in the nineteenth century , following the spread of an adversarial spirit from eighteenth century criminal procedure which was intermingled with procedural reforms between 1852 and 1875. [40] . . . . . . High level

definitions, or at least descriptions, of the adversarial system abound, such as that of the Lord Denning in Jones v The National Coal Board . They are all to the effect that the judge is a passive and neutral umpire who cannot descend into the arena for fear of having her or his judgment clouded (and decisions overturned on appeal ). The parties choose the issues to be tried . . . and the evidence to be adduced. The judge, and occasionally still in civil matters the jury, decides which of the parties’ cases to prefer. . . .

In contrast, according to the orthodox account, in the inquisitorial system the judge (who is trained from law school to be a judge) has the carriage of a case from the outset and decides which issues and evidence are most relevant . The case develops over a series of hearings and may never culminate in a ‘trial’ in the sense that common lawyers understand it. The parties’ advocates assist the court and put their clients’ cases, when permitted, but the judge runs the trial. As the name of the system implies, the court conducts an inquiry and is not confined to deciding between the submissions of the opponents.

. . . . . . The adversarial system is said to be the most efficient means of arriving at approximate truth because it harnesses the power of self-interest on each side to unearth the best evidence . Similarly, the best legal arguments are thought to emerge from the clash of advocates’ submissions on the law . . . . At a high level of generality and for periods during the last two centuries, the orthodox account above may have been sustainable . On a closer enquiry, the accuracy of the factual premises and the coherence of the justifications today are greatly weakened . [41] . . .

The supposed efficiency of the adversarial system in fact-finding and high quality legal argument is itself crucially dependent upon each side being able to fund a lawyer or legal team to roughly the same extent , and upon each side’s lawyer being competent , expeditious and ethical . Ethics become relevant because, inter alia, the court embarks on virtually no fact-finding of its own, and so the supply of accurate information depends upon the lawyers not actively concealing damaging material or relevant legal authorities and on them spotting the other side’s passive omission to proffer it .

There is now considerable concern about the unfairness resulting from the incapacity of many people to afford lawyers who exhibit these qualities of competence , promptness and ethics . [42] [Emphasis added.] [ 104 ] Peter Murphy in his Practical Approach to Evidence (Shrewsbury: Blackstone Press Limited, 1980, at page 1) gives this instructive example to illustrate the orthodox common law approach with regard to the passive role of judges in court.

A frustrated judge in an English court asked a barrister, who had objected to his opponent tendering documentary evidence which appeared relevant to the case but inadmissible in law, “Am I not to hear the truth?” “No, your Lordship is to hear the evidence”, replied counsel. [ 105 ] In its final report in Project 92, the Law Reform Commission of Western Australia stated: [43] 6.2 . . .

Many of the public submissions we received characterise the focus of the adversarial system as being on winning cases rather than truth or justice . . . . we believe that the complaints and concerns about the existing adversarial system need to be taken seriously .

We believe the changes we recommend will alleviate part of the frustration expressed by some who made submissions asking us to abandon the adversarial system. [Emphasis added.] [ 106 ] I prefer to the 1936 orthodox definition of the adversary system the more modern description given in a discussion paper of the Australian Law Reform Commission: [44] 2.25 In broad terms, an adversarial system refers to the common law system of conducting proceedings in which the parties, and not the judge, have the primary responsibility for defining the issues in dispute and for investigating and advancing the dispute.

The term “inquisitorial” refers to civil code systems in which the judge has such primary responsibility. “Inquisitorial” also connotes an inquiry where the decision maker investigates a matter. . . . 2.26 Notwithstanding variation between these models, in civil matters at least, there is a significant degree of convergence of the practices in common law and civil code countries. . . . [Emphasis added.] [ 107 ] The Western Australia Law Reform Commission also makes the following statement which raises doubt that the orthodox definition of the adversary system adequately describes the reality of the common law adversary system and which gives one reason to believe that the approaches of the two great legal systems have more in common than we think: [45] 6.4 . . .

Historically the judiciary played a far more active role in the courts of equity than in common law courts. Judicial powers may have exis

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