



COURT OF APPEAL FOR ONTARIO

CITATION: Dare Human Resources Corporation v. Ontario
    (Revenue), 2019 ONCA 549

DATE: 20190702

DOCKET: C65974 and C65975

Hourigan, Paciocco and Fairburn JJ.A.

BETWEEN

DOCKET: C65974

Dare Human Resources
    Corporation

Appellant

(Appellant)

and

The
    Minister of Revenue

Respondent

(Respondent)

AND BETWEEN

DOCKET: C65975

Azur
    Human Resources Ltd.

Appellant

(Appellant)

and

The
    Minister of Revenue

Respondent

(Respondent)

Gregory Sanders and Alanna T.
    Mar, for the appellants

James Vlasis and James
    Elcombe, for the respondent

Heard: June 25, 2019

On appeal from the judgment of Justice Charles T.
    Hackland of the Superior Court of Justice, dated September 5, 2018, with
    reasons reported at 2018 ONSC 5212.

REASONS FOR DECISION

Introduction

[1]

The respondent issued assessments directing the appellants to pay an employer
    health tax under the
Employer Health Tax Act
, RSO 1990, c E.11
(the

EHTA
)
.
    The appellants appealed to the Superior Court of Justice, and the appeal judge
    affirmed the assessments. They now appeal the appeal judges order.

[2]

The appeals raise two issues:

1.

Did the appeal judge err in his interpretation of the
EHTA
?

2.

In the alternative, did the appeal judge err in his consideration of the
    evidence?

[3]

For the following reasons, we answer both
    questions in the negative and dismiss the appeal.

Facts

[4]

The appellants are placement agencies based in Ottawa who supply
    temporary workers to the Public Service of Canada and federal agencies under
    agreements between the appellants and the Government of Canada.

[5]

When the clients put
    out a call for temporary workers, the appellants identify appropriately
    qualified persons from their inventory of candidates, ascertain the persons
    willingness to apply, and negotiate an hourly rate of pay for the placement. The
    appellants profit by paying the workers an hourly wage that is less than what
    the client pays them.

[6]

Once an assignment begins, the
    appellants primary function is to pay the worker and administer the payroll,
    on the basis of time sheets signed off by the client. The client manages and
    directs the workers while they carry out their assignment. However, both the
    appellants and the client may be involved in dealing with performance or
    discipline issues that arise in a workers assignment.

[7]

The appellants were assessed by the respondent to pay the employer
    health tax, a payroll tax imposed on employers who pay remuneration to their
    employees. The appellants appealed their assessments under the
EHTA
,
    arguing that they were not obliged to pay the tax because they were not the
    employers of the workers placed with their clients for temporary work.

[8]

The appeal judge described his task on the appeals as undertaking a
    comprehensive review of the relevant factors to determine if an
    employer/employee relationship exists, which includes a review of both the
    working relationships, and the contractual and statutory framework: at para. 23.
    He recognized that he was bound by the Supreme Courts comprehensive and
    flexible approach to determine whether an employment relationship exists, as provided
    for in
Pointe-Claire (City) v. Quebec (Labour Court)
,
[1997] 1 S.C.R. 1015
.
    The approach in that labour case was adopted by this court in
IBM Canada
    Ltd. v. Ontario (Minister of Finance)
,
2008 ONCA 216
,
    89 O.R. (3d) 641, in the context of the
EHTA
. After
considering a number of
    factors, the appeal judge concluded that the appellants were the workers
    employers for
EHTA
purposes.

Analysis

(i)

Interpretation of the
EHTA

[9]

The primary submission advanced by the
    appellants is that the appeal judge determined their liability by default
    because he was of the view that someone (i.e. the appellants or the Government
    of Canada) must be the employer. Instead of answering the real issue of whether
    the appellants were employers for purposes of the
EHTA
, he wrongly chose between them and the Government of
    Canada.

[10]

We would not give effect to this
    submission.

[11]

The appeal judge found that the workers
    are not independent contractors and that finding is not challenged on appeal.
    It is also not disputed that the workers are earning employment income.

[12]

The appeal judge determined that the
    workers, appellants, and the Government of Canada are involved in a tripartite
    relationship where the appellants and the Government of Canada each appear to
    possess some of the traditional attributes of an employer. Contrary to the
    submission of the appellants, he did not err in commenting that in these circumstances
    the workers had to be employees of either the appellants or the Government of
    Canada for
EHTA
purposes
. The whole point of the analysis provided for in
IBM

is to
    determine the employer for
EHTA
purposes in such a tripartite arrangement. On the facts of this case, that had
    to be either the appellants or the Government of Canada.

[13]

The appeal judge is said to have
    compounded his primary error by focussing on the fact that the appellants pay
    remuneration, instead of undertaking a comprehensive analysis of all of the facts
    to determine whether the appellants are employers.
The appellants argue
    that under the two-part test mandated by
IBM,
the appeal judge should
    have first determined whether an employment relationship existed and then
    considered whether the putative employers paid remuneration.
He did not do so, the appellants submit, and instead
    focused solely on the fact that they paid remuneration.

[14]

We do not accept the appellants submission. The appeal judge properly considered
    the issue of who paid remuneration as part of his analysis of whether an
    employment relationship existed. The payment of remuneration was a relevant
    factor and the appeal judge did not rely on it exclusively. He carefully
    reviewed the statutory context including the provisions of the
EHTA
,
    noting that the legislation provides that the employer is the party who pays
    remuneration to the employee: see s. 1(1). In addition, he observed that the
    provisions of the
Public Service Employment Act
, SC 2003, c 22, ss 12, 13,
and the
Financial
    Administration Act
, RSC 1985, c F-11,
are inconsistent with the notion of the Government of Canada being the employer
    of the workers.

[15]

The appeal judge went on to consider the
    factual circumstances surrounding this tripartite relationship. These include
    the fact that the appellants are the only parties with contractual
    relationships with the workers and that the contractual documentation with the
    Government of Canada makes it clear that it was the governments intention that
    the workers be the employees of the placement agencies.

[16]

A fair reading of the appeal judges
    reasons make plain that he did not limit his analysis to a consideration of the
    fact that the appellants pay remuneration.

[17]

Next, the appellants submit that the
    appeal judge erred in ignoring a previous decision of the Ontario Labour
    Relations Board that held that they were not employers of the workers for
    labour legislation purposes: see
International Brotherhood of
    Electrical Workers, Local 586 v. Dare Personnel Inc.
, [1995] OLRB Rep. 935 (Ont. LRB), affd [1996] OLRB
    Rep. 1014 (Ont. CJ (Div. Ct.)).

[18]

In fact, the appeal judge considered and
    declined to follow that decision. He held that it was possible to find that a
    placement agency was an employer for taxation purposes and not labour relations
    purposes, noting that,
[l]
abour and employment statutes
    are directed toward protection of workers in the workplace, which the employer
    normally controls. In contrast, in regard to a revenue generating payroll tax,
    payable by employers, the employer may well be the entity that is contractually
    mandated to administer the payroll. We agree with that analysis.

[19]

In summary, the appeal judge undertook a
    comprehensive review of all of the circumstances in concluding that the
    appellants were employers for

EHTA
purposes. We see no error in his analysis and accordingly dismiss this
    ground of appeal.

(ii)

Consideration of the Evidence

[20]

In the alternative, the appellants submit
    that the appeal judge erred in failing to consider factors that suggested that
    they were not the employer. We disagree.

[21]

The appeal judge acknowledged, as is typical in a
    tripartite arrangement, that the appellants and the Government of Canada each
    appeared to possess some of the traditional attributes of an employer. He
    explicitly referenced recruitment, payroll administration, discipline issues,
    testing, and security clearances. While some factors may have pointed to the
    Government of Canada as the employer, after an analysis of all of the factors, the
    trial judge determined that the appellants were the employers. The appeal judge
    did not misapprehend the evidence or fail to consider any relevant factor. We
    therefore reject this ground of appeal.

Disposition

[22]

The appeals are dismissed. The appellants
    shall pay the respondent its costs of the appeals fixed in the all-inclusive
    sum of $25,000.00.

C.W. Hourigan
    J.A.

David M.
    Paciocco J.A.

Fairburn J.A.


