Tracy Willcott o/a Sandalwood Esthetics v. M.N.R.

Tracy Willcott o/a Sandalwood Esthetics v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2005-07-13
Neutral citation
2005 TCC 428
File numbers
2004-3600(EI)
Judges and Taxing Officers
Dwayne W. Rowe
Subjects
Employment Insurance Act
Decision Content
Docket: 2004-3600(EI)
BETWEEN:
TRACY WILLCOTT O/A SANDALWOOD ESTHETICS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on May 24, 2005 at Edmonton, Alberta
Before: The Honourable D.W. Rowe, Deputy Judge
Appearances:
Agent for the Appellant:
Brook Mishna
Counsel for the Respondent:
Galina Bining
____________________________________________________________________
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Vancouver, British Columbia, this 13th day of July 2005.
D.W. Rowe
Rowe, D.J.
Citation: 2005TCC428
Date: 20050713
Docket: 2004-3600(EI)
BETWEEN:
TRACY WILLCOTT O/A SANDALWOOD ESTHETICS,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Rowe, D.J.
[1] The appellant appealed from a decision of the Minister of National Revenue (the "Minister") dated June 21, 2004, wherein the Minister decided the employment of Jolene Short (Short) with the appellant (Willcott) from January 1 to August 31, 2003, was insurable because Short was performing services normally provided in a hairdressing establishment and was not the owner or operator of said establishment. The Minister relied on paragraph 6(d) of the Employment Insurance Regulations (the "Regulations") made under the relevant provisions of the Employment Insurance Act (the "Act").
[2] Tracy Willcott testified she has operated - for 5 years - an enterprise known as Sandlewood Esthetics and Massage Therapy (Sandlewood) and provides therein services to clientele that includes facials, massages, manicures, pedicures, waxing and nails. During the relevant period, the business was operated from a former residence owned by her then-boyfriend - currently her husband - and the services initially offered to customers did not include hairdressing. Willcott stated Short was a client of Sandlewood and while doing her nails, they entered into a discussion whereby Short agreed to occupy a small space in the premises leased by Willcott in order to offer hairdressing services to members of the public. Short had her own business licence and - unlike Willcott - was qualified to offer hairdressing services. However, she was not licensed to perform massages or manicures or to provide services with respect to nails. Short occupied a former kitchen area in which there was an adequate sink so that with the addition of a haircutting chair and a few other items, it became suitable for a small hair salon. Willcott described the Sandlewood premises as having a front and rear door - leading to a parking area - with a reception area near the front. The hairdressing room was at the rear and stairs led to a lower level where there were tanning beds, a shower and a steam room. The agreement between Wilcott and Short required Short to pay $250 per month rent but that sum was changed to $400 after a short period, and was subsequently increased to $460. Other service providers were also renting space from the appellant and paid an amount dependent on the use of the overall facility as well as for the specific space occupied by their own enterprise. Willcott stated that during the course of discussions with Short, it was clear to both that Short would be an independent operator, free to run her business as she saw fit and to set her own rates. Further, Short was to be responsible for her own income tax remittances and for contributions to the Canada Pension Plan (CPP). Short had her own cash box and if clients paid by cash or cheque, Willcott stated she would have no knowledge of that. However, if it was necessary for Short to accept payment in the form of a credit card or debit card, she used the debit machine in the name of Sandlewood, as did other tenants, is order to save on service fees. Willcott explained that it was not difficult to separate the charge and/or debit slips attributable to Short - or another service provider - and would tally the amounts - usually every two weeks - and issue a cheque on the Sandlewood account to Short and/or other tenants to pay the amounts due to them for having provided services to their own clients. At the end of each month, Short wrote a cheque to Sandlewood in payment of the following month's rent. In addition to cutting hair, Short sold retail hair-care products, ceramic and craft items in her space and used her own tools, equipment and supplies. There was one telephone line to the Sandlewood business. Willcott did facials, manicures and pedicures; Short was the hairdresser and different individuals from time to time provided a tanning service, or performed reflexology and/or massage. Willcott stated she absorbed - as part of the total rental charge - all bank and/or credit card commissions and fees resulting from use of the debit machine and the amount thereof was one of the reasons Short's rent was increased by another $60. The appellant stated Short took holidays at her own discretion but adhered to Sandlewood's hours of operation as posted on a sign at the front door that indicated hairdressing services were provided within. In the beginning when Short rented her space, she used a sign which read "Hair by Jolene" but that was discontinued when a new Sandlewood sign was obtained that listed her as part of the service providers within the Sandlewood group. When Sandlewood did some advertising and promotion, Short and other tenants contributed to the cost. The telephone was located nearby Short's space and upon answering, she responded "Sandlewood". Willcott stated she was surprised to receive the assessment from the Minister in respect of Short, since it had always been clear from the outset - to both of them - that Short would be operating her own independent business and was merely a tenant within the premises that served the overall purpose of Sandlewood as a holistic centre.
[3] In cross-examination, Willcott confirmed she was the only signatory on the Sandlewood business account. She identified a price list and brochure sheet - Exhibit R-1 - that included Short's fees for cutting hair or performing other services such as shampoo and set, colouring, conditioning, etc. - as well as other fees attributable to services provided by others at Sandlewood, including those pertaining to hands and feet, nails, facial treatments, waxing, tanning, and for relaxation and therapeutic massage. Willcott identified a photocopy - Exhibit R-2 - of the business cards she and Short and another tenant handed out. The card advertised Sandlewood as a "Full Service Salon" and on the third line thereof included "hair" as one of the services provided therein. Willcott stated she and Short and another service provider - Bonnie - shared the cost of promoting a package of services to customers and agreed that a sheet - Exhibit R-3 - was an example of a joint promotion prepared by Short who also had created the invitation - Exhibit R-4 - to an Open House event at Sandlewood Spa. Willcott agreed with counsel's suggestion that a first-time visitor to the premises would assume Short was part of the Sandlewood business. Clients were greeted by either the appellant or by Bonnie in the reception area. Willcott stated she wrote a cheque to Short or to Bonnie - on demand - and the period ranged from one week to one month. The appellant stated that at one point when Short was paying only $250 per month rent, she had wanted to hire another hairdresser but did not proceed with the plan because she became pregnant and - for health and safety reasons - was advised not to continue working as a hairdresser. Willcott agreed Short did not have any separate telephone line or listing apart from Sandlewood. With regard to the haircutting space, there was a door between it and the reception area and Willcott explained that if one of Short's clients parked in the back, entered through the rear door, received a haircut or other service and paid by either cash or cheque, she might not be aware of it.
[4] In re-examination by her counsel, Willcott stated the purpose of the price list - Exhibit R-1 - was to avoid confusing Sandlewood customers by offering them three separate sheets. In addition, the three of them wanted to promote each other's business by participating in a package program that provided a full range of services to a customer that might occupy an extended period, perhaps one-half day or more. The appellant stated she sold trinkets, costume jewelry and gel candles in her own space. With respect to cleaning and tidying up, Willcott stated she and Short and Bonnie or - in earlier times - one or more of the other tenants - shared the cleaning of common areas, as required, and looked after their own business space. Willcott stated she informed Short the rent would have to be increased if another hairdresser was brought in because it would increase overall costs including those attributable to using the debit machine and/or in accepting credit cards for payment of services.
[5] Jolene Short testified she was getting her nails done - by Willcott - when the appellant indicated she wanted a hairdresser at Sandlewood. About 6 weeks later - in July, 2002 - Short moved her hairdressing business to Sandlewood and began operating from a space therein. She brought her own equipment, tools and retail products. In March, 2003, she was informed a rent increase was necessary and - following some discussions - agreed to pay $460 per month. Short agreed that if a customer paid in cash or by cheque, she simply retained the funds. Only if a payment had to be facilitated by using the debit machine did it involve Willcott who calculated the amount due by examining the slips and subsequently issued a cheque twice a month. The amount of accumulated charges or debits was always sufficient to pay Short's rent. Short confirmed she shared the Sandlewood phone and appointment book and stated the door between her work area and the rest of the main floor - usually - was closed but not locked when a customer was in the chair. Short stated she was free to set her own hours but Willcott wanted her to be available to perform hairdressing services as part of any package deal that had been sold to a customer through the joint promotion of Sandlewood as a full-service spa.
[6] In cross-examination, Short stated she understood she would operate her own hairdressing business within the Sandlewood framework and was to be responsible for her own Workers Compensation Board premiums and CPP contributions. Although Willcott arranged to have a proper sink installed in the hairdressing space, a desk, mirror, chair, and the normal tools and equipment were installed and/or supplied by Short. Short stated she had been in the hairdressing business for 11 years and brought over most of her former clients to the new premises at Sandlewood. In addition to being qualified to cut hair, she was trained as a cosmetologist - over a period of 1,400 hours - and held a provincial licence as well as one issued by the City of Edmonton. She was permitted to perform the full range of esthetic services but chose to limit her business to those services generally associated with hairdressing. Short stated she kept track of payments processed through the debit machine and estimated they amounted to 80% of her total revenue. The tabulation by Willcott was a simple process because each service provider within Sandlewood had a different identification code for processing debit and/or credit card payments. Short agreed Willcott would not know the extent of her revenue or her profit and loss position for any period. In addition to haircutting and selling hair products, Short sold crafts and small ornaments and participated with Willcott and Bonnie in operating a small tea room in the reception area. In order for clients to access the esthetics work area, they had to pass through the hairdressing space. Short stated she had painted the words "Hair by Jolene" on the front window but usually identified herself as a "hairdresser at Sandlewood". In the event she took a holiday - usually two weeks - she informed Willcott and Bonnie because no one else at Sandlewood was qualified to perform haircutting services. Originally, Short wanted to enter into a written lease and prepared - and signed - a draft agreement - Exhibit A-1 - but it was not signed by Willcott. Short stated that in the course of her career when she worked at salons and establishments that did hair cutting and styling - primarily - Employment Insurance (EI) premiums had been deducted from her remuneration.
[7] In re-examination, Short stated most of her customers entered through the front door of Sandlewood and passed through the reception area to her space at the rear.
[8] Counsel for the appellant submitted the Minister had accepted Short was an independent contractor but decided she was engaged in insurable employment by virtue of paragraph 6(d) of the Regulations. Counsel submitted the evidence did not support the view that Sandlewood was a hairdressing establishment in the normal sense because it was a full-service spa that had not offered haircutting until Short became a tenant. Counsel submitted the within fact situation was not comparable to those cases where hairdressers were renting a chair within a large salon and were found to have been in insurable employment by virtue of the application of said paragraph. In counsel's view of the evidence, the appellant, Short and Bonnie or - prior to her - other service providers within Sandlewood were attempting to maximize exposure to customers while minimizing costs by sharing space, telephones, directories, signage, advertising, and the debit machine. In that sense, counsel argued Sandlewood was not a "barbering or hairdressing establishment" since the main focus of that business entity was to provide a wide range of other services. Even if it did fall within that definition, counsel submitted it was reasonable to find Parliament never intended paragraph 6(d) of the Regulations to apply under these circumstances and that Short should be regarded not only as an independent entrepreneur but also as a person who was either the owner or operator of her own self-contained establishment within the overall business - Sandlewood - as carried on within those premises leased by Willcott.
[9] Counsel for the respondent submitted Sandlewood was an establishment that provided services normally provided in such an establishment, as stated in paragraph 6(d) and that the extent of Short's participation with Willcott and Bonnie was such that she was an integral player in promoting the Sandlewood brand as part of a joint marketing strategy. Counsel pointed out that money was always due to Short as a result of her customers having paid through the debit machine and that those funds were deposited electronically into the Sandlewood account, for which the appellant was the sole signatory. Therefore, Willcott had the means to deduct EI premiums in the same manner as she deducted the monthly rent prior to issuing a cheque to Short for the net amount. Counsel conceded the provision at issue in the within appeal may not take proper account of recent small business trends in terms of space and cost sharing but submitted the language of said provision does not require the provision of hairdressing services to be the main or primary part of the business of the establishment.
[10] The relevant provision of the Regulations reads as follows:
6. Employment in any of the following employments, unless it is excluded from insurable employment by any provision of these Regulations, is included in insurable employment:
...
(d) employment of a person in a barbering or hairdressing establishment, where the person
(i) provides any of the services that are normally provided in such an establishment, and
(ii) is not the owner or operator of the establishment;
...
[11] In the case of Nelson v. Canada ( Minister of National Revenue - M.N.R.), [2001] F.C.J. No. 700, 2001 FCA 131, Docket A-372-00, the Federal Court of Appeal held that chair renters in a hairdressing establishment who provided no service to the owners of the establishment were nonetheless engaged in employment described by paragraph 5(4)(c) of the Act and fell within the scope of paragraph 6(d) of the Regulations and that EI premiums should have been deducted by the owners of the establishment even though they had no means of withholding funds for that purpose. At paragraph 21 of her reasons, Sharlow J.A. stated:
21 However, when Parliament empowered the Commission to extend the scope of the legislation to workers not engaged under contracts of service, they would surely have been aware that in some situations there might not be a flow of funds from the owners of business establishments to insured persons to permit the operation of the normal withholding and remittance procedure. That procedural deficiency was resolved by permitting the enactment of additional regulations that impose on the owners of such establishments an independent obligation to pay the employee premiums, presumably leaving it to them to work out a method of recovering the employee premiums from the insured workers.
[12] In the Nelson case it was clear that the establishment was a "barbering or hairdressing establishment" within the meaning of paragraph 6(d) of the Regulations. The case of E & S Tresses Ltd. v. Canada(Minister of National Revenue - M.N.R.), [1998] T.C.J. No. 1014, dealt with paragraph 12(d) of the Regulations, the predecessor to the paragraph - 6(d) - at issue in the within appeal. It is important to set out the wording of the former provision because there are a couple of differences in the current version that the appellant considers have a significant bearing on the interpretation to be applied. The former provision read:
12 (d) employment of a person in connection with a barbering or hairdressing establishment, where that person
(i) provides any of the services that are normally provided therein, and
(ii) is not the owner or proprietor thereof;
[13] In the E & S Tresses decision, Porter D.J.T.C.C considered the appeal of a company that had set up a relationship with certain hairdressers. Judge Porter decided each haircutter was involved in a business activity in connection with a hairdressing establishment and that each provided services that are normally provided therein. However, the issue revolved around whether any or all of those persons were "the owner or proprietor thereof" and whether there was one or several "hairdressing establishments" within the overall physical space. Commencing at paragraph 21 of his reasons, Judge Porter found these facts as hereinafter stated:
21 The shares of the Appellant Company were owned 50% by Rupert Engen and 50% by Francesco's Hair Design Ltd. The shareholders of the latter Company were Pat Spadafora and Frank Spadafora. The Company owned the building in which the hairdressing activity was carried on. The Company in years prior to 1990 had operated a hair salon, aesthetician service, make-up artists and nail technicians, which operated under the name of "Mary's Place". Over the years various of these components left. In 1990, a number of hairstylists approached Engen and Spadafora with a view to renting space and sharing common area costs; the majority of them were the present Intervenors. Some of them have left since and Angie Desautels arrived later. The intention of each of them was to set up their own individual business under the same roof. Engen and Spadafora did not want to be involved in hiring staff. Thus, together they decided as a group to lease the building, that is the Intervenors plus Engen and Spadafora, from the Company and each would run his or her own separate operation.
22 This, they proceeded to do. Contracts were set up as in exhibit R-1. The old signage was taken down and new signage put up under the name of "Francesco's Tresses Hair". The building was a converted house and this name appeared on the new awning put up outside the front of the premises. Below the awning a sign was erected under the heading "E & S Tresses and Associates". On this sign the names of all parties were listed. Each party, including Engen and Spadafora, took out their own individual business licence. Each signed a contract with E & S Tresses Ltd. called a "Service and Expense Contract". This seems to have been done annually and the terms were re-negotiated each year.
23 The contract in question was signed on January 1, 1995. The first recital, it should be noted, stated that the corporation (E & S Tresses Ltd.) "is a hairdressing salon operating in the City of Edmonton". The Company agreed to provide "apropriate [sic] space and chairs", but the specific area was not defined. It also agreed to provide many administrative and support services such as receptionist, office manager, shampoo help, technical help, maintenance help, telephone and utilities, repairs and maintenance of equipment, charge card costs, business and property taxes, liability insurance and signage.
24 It made clear that the individuals were responsible for their own statutory deductions and expenses, accounting, legal, advertising and education costs.
25 It provided for the individuals to be independent contractors who could set their own hours of work. All clients' fees for services were to be made directly to the individuals and not to the Company. A monthly fee of $1,575.90 was required to be paid by each individual to the Company. If they became sick or pregnant they had to pay full fee for the first month in which they were absent, and 60% thereof for subsequent months. The agreement could be terminated on 30 days notice and G.S.T. was added onto the fees. That, in short, was the nature of the agreements.
26 In practice all the individuals set to, doing renovations and setting up their own area as they chose. They each operated independently, kept their own cash receipts and made their own appointments with the help of the receptionist. E & S Tresses Ltd. provided the management and support services and had some full-time employees for this but did not hire any hairstylists. They each ordered their own individual products through Francesco's Tresses. They ordered their business cards in the same way. These were all the same design with just the names interchanged. They had joint meetings and decided how to run the joint operation. If absent, their space was not used by others. They indicated that they had the freedom to sublease if they wished, although none in fact did this.
27 There were some common entrances to the premises and a common waiting area. Their areas were not physically separated one from the other by walls and doors although they spread out over three floors. The fees they paid to the Company were calculated as follows:
7% to wages
9% to utilities
6% to maintenance
8% to charge cards (they were paid by cheque daily)
50% to products
20% to space rental
28 They considered the joint management operation as a sort of co-op. The Company however operated the bank account on behalf of this group of people. It struck me that whilst they were clearly operating independent businesses they had a type of joint venture in the management of the communal aspects of their operations, and they then used the Company as a vehicle to carry those out.
29 If one or more individuals left, at the end of their 30-days notice, they would take with them their goodwill, their equipment and supplies but leave the space and the chairs. The other individuals would carry on in the same way. The departing party would take no capital payout with them.
[14] Having ascertained those facts, Judge Porter continued as follows:
31 There is no doubt that the Intervenors carried on their separate businesses. They clearly did all they could to establish that, and much of their concern at the hearing of these appeals was directed to this point. In this they succeeded. I also gleaned from the evidence that they were extremely honest straightforward and well principled people, who were somewhat upset by the manner in which they had been dealt with by Revenue Canada officials over this matter. However, that is not the issue before this Court.
32 In actual fact they all carried on their separate businesses in one building under one common banner in which they shared a great deal. It was no doubt an extremely efficient business arrangement. However there was no division of the space such as one might find in a shopping mall where separate businesses are clearly delineated by walls and entrances or as in professional offices in office buildings where each has its own defined space with an individual entrance. Here they all carried on their separate businesses in a communal fashion, whereby an outside observer looking on, could not but come to the conclusion that there was one "business establishment" operating. They each in my view formed part of that establishment, a hairdressing salon. That of course is what the contract said, the Company was a hairdressing salon. I am unable to see a number of different "establishments". There was sufficient community of effort in my mind to say that this was one establishment. In my view the individuals did not own that establishment. They did not own or have a lease of specific space. If I am correct in saying that it was the physical space, then clearly that was owned by the Company not by the Intervenors. They may have formed part of the business establishment to the extent that they contributed to it, but in the end the funds belonged to the Company who owed them a duty to provide the services for which they had contracted. The Intervenors owned nothing but their own goodwill, equipment and products and had any one of them left, "the establishment" would have remained.
33 In conclusion then I find as follows:
a) The Intervenors were self-employed operating their own independent businesses.
b) The Intervenors were carrying on a business activity in connection with a hairdressing establishment.
c) The Intervenors provided the services which were normally carried on therein, that is to say in such an establishment.
d) The Intervenors were not the owners or proprietors of that establishment.
e) The activity in which they were each engaged was insurable employment under Regulation 12(d).
34 In the event, the appeals are each dismissed and the determinations of the Minister are confirmed.
[15] I heard a case involving the same provision and the facts therein were much closer to those in the within appeal. In Excel Studio Ltd. (c.o.b. Excel Hair and Skin Care v. Canada (Minister of National Revenue - M.N.R.), [1998] T.C.J. No. 48, I referred to several cases where persons were held to have been in insurable employment by virtue of the wording of paragraph 12(d) and commencing at paragraph 11 of my reasons recited some of those decisions as follows:
[11] In each of the cases submitted by Counsel for the respondent, the fact situations therein were common in that the persons held to be included in insurable employment by virtue of the wording of Regulation 12(d), were all performing the same duties as the appellants in the various appeals. In other words, these persons were rented space within a hairdressing establishment and performed services that were normally provided therein and were not owners of that establishment. In the case of Anderson (c.o.b. as 1st Impressions Hair Design) v. M.N.R., [1994] T.C.J. No. 869, Margeson, T.C.J. found that each of the intervenors and appellants were trained hair stylists and that there were a variety of ways under which hair designers could work. Some were engaged as commission agents and retained a percentage of the fees they took in while paying a portion to the owner or operator of the establishment, some were paid an hourly wage as an employee and others rented or leased a chair. In Hilts v. M.N.R. [1994] T.C.J. No. 872, Beaubier, T.C.J. relied on the following facts in order to hold that the appellant employed the hairdressers and was liable to pay unemployment insurance premiums:
- there was a common telephone
- prices were co-ordinated
- there was one business name and sign on the premises
- the services were the same as those normally offered by the establishment
- the hairdressers leased "space" by the week.
[12] The following facts did not alter this determination:
- the hairdressers had a key to the premises
- the hairdressers purchased their own supplies
- the hairdressers each kept their own cash drawer
- the hairdressers had access to common areas.
[13] At paragraph 5, Judge Beaubier referred to the definition of "establishment" from The Dictionary of Canadian Law (Dukelow & Nurse, Thomson Professional Publishing 1991) as:
"a place of business or the place where an undertaking or a part thereof is carried on."
[14] In Farron v. M.N.R. [1991] T.C.J. No. 1119, Rip, T.C.J. relied on the following facts to find the appellants were employers:
- the hair salon had one name
- the hair salon had one sign
- the "employees" enjoyed a common area
- the "employees" were not owners
- there was one telephone
- the appellants - the "employer"- was a licensed hairdressing establishment
- there was one appointment book
- the hairdressers performed services which were regularly available on the premises.
[15] The fact the hairdressers purchased their own supplies, kept their own books and cash drawer and set their own hours was not sufficient to remove them from the application of Regulation 12(d).
[16] However, the fact situation in Excel was different from those cases referred to and I commented as follows:
[16] In the within appeals, the appellant and the intervenors were totally separate in design and function. Each was licensed by The Hairdressers' Association of British Columbia to provide different services and the appellant and its staff, including its own president, Jeanne Cleary, was not authorized by the licensing authority - nor by the business license issued by the City of Kelowna - to carry on the business of Esthetician or Nail technician/Manicurist. The relevant words used in Regulation 12(d) are:
"employment of a person in connection with a barbering or hairdressing establishment, where that person provides any of the services that are normally provided therein."
[17] Neither intervenor was authorized or licensed to carry on business by providing any of the services normally provided in the studio owned and operated by the appellant because the services each of them provided - within the context of their own separate business - were never provided within the establishment that was the appellant's salon/studio. It is common in small commercial centres for a person or entity to lease space from the landlord of a strip mall and then, with approval of the landlord, to enter into sub-leases with other entrepreneurs. If a dentist leases a block of space and then decides to sublet a portion to a chiropractor and the chiropractor's office is then located in part of the space originally designated on the mall floorplan as being attributable to the dentist, that does not make the chiropractor a dentist or vice-versa. In the within appeals, it is clear on the evidence the parties truly functioned as independent entities each having a separate identity from a variety of standpoints, including registration for PST, GST, business licenses, trade licenses, bank accounts, insurance coverage, telephone numbers and answering machines, signage, service and product lines which were distinct. This is not one of those cases where an appellant attempts to avoid being categorized as an employer by virtue of the Regulation by entering into a series of thinly-disguised manoeuvres to mask the real function and status of the worker.
[18] In the within appeals, referring to the relevant portion of the Regulation, the word "therein" must refer to the actual establishment or place of business operated by the appellant. In effect, it must relate to the actual establishment which is the subject matter of the determination and not some other business in the same trade which might offer - if permitted - a wider range of services. I cannot see how the sharing of space in a commercial retail area within a small mall by the intervenors can be seen as the provision of services in connection with the hairdressing or barbering establishment owned and operated by the appellant pursuant to the licenses and authority issued for that specific purpose and none other. The words above underlined are much more narrow in scope than the words, "in respect of" as discussed by the Supreme Court of Canada in Nowegijick v. The Queen et al., 83 DTC 5041 where the Court said, at p. 5045, that:
"The words "in respect of" are, in my opinion, words of the widest possible scope. They import such meanings as "in relation to", "with reference to" or "in connection with". The phrase "in respect of" is probably the widest of any expression intended to convey some connection between two related subject matters."
[19] It is clear from the wording of the Regulation in issue that the intent is to connect the services provided by the putative employee to the ones provided by the purported employer within the establishment operated by the employer so as to eliminate exclusion from the unemployment insurance system of a person who is a worker within the same business or establishment but, to whom - with varying degrees of consent - there have been assigned certain attributes which - without a closer look - could place that person in a category where insurability would not be applicable.
[17] In the Excel case, there was some commonality of purpose and I dealt with that aspect in paragraph 20:
[20] The offering, to the public, by the appellant in its advertisement in the Yellow Pages, of services, not provided by it, but otherwise available, on referral, to the intervenors, or others, is not particularly significant when looked at in the context of all of the evidence. The separate listing of the businesses of the intervenors, the separate telephone numbers and advertising, physical separation of each business by barriers, and the adequate signage identifying each establishment and the function and/or services provided or products sold therein, all served to make the relationship of the appellant to each of the intervenors one of quasi-landlord-tenant and neighbour/entrepreneur with a friendly relationship which permitted referral of customers and clients back and forth so as to offer them the opportunity to access full service in the various trades dealing with health, hair, beauty, and skin care within that particular area of the mini-mall. Customers and clients of the intervenors had no need - by physical intrusion or otherwise - to ever enter the space or intrude upon the business of the appellant. The particular Regulation, in my opinion, was never intended to apply in a fact situation such as in the within appeals where distinct businesses offering mutually exclusive services, as authorized by a regulatory body, are to be merged by reason of sharing physical space pursuant to a master lease subject to a practical, workable method of sub-leasing which was suitable to all concerned, including the owner of the mall who collected rent directly from the intervenors. The 72 square feet occupied by Norma Hill operating as Nails by Norma was very much her little domain in every sense, legally, physically, and in harmony with a commonly held concept of business. Similarly, the larger space occupied by Tamara Fisher was her own establishment for the purpose of carrying on her trade as a licensed Esthetician in her own right without reference to the appellant. There was absolutely no sharing of cash flow in any sense whatsoever between the appellant and either intervenor nor was there any legal ability to do so. The Regulation - while recognizing its intent - must be interpreted in a manner consistent with ordinary language and cannot be an instrument by which to bring about an impractical result not intended by any party and in direct opposition to their true status - on objective examination - as being persons not connected in the manner required by the legislation.
[18] The effect of the change in the wording of the relevant provision in the Regulations was considered by Judge Porter in the case of Shepherds Care Foundation v. Canada (Minister of National Revenue- M.N.R.),[2002] T.C.J. No. 163 (Shepherd's Care). At paragraphs 4 and 5 of his judgment, Judge Porter stated:
4 The material facts reveal that during the years in question, the Appellant operated a long-term care nursing home in the City of Edmonton, Alberta. For many years since its opening in 1984, Molly had been employed by the Appellant to operate a hairdressing salon on the ground floor of the premises of the Centre. Originally, she had done so as an employee. In 1995, the arrangement changed when the Centre leased the salon premises to Molly and she purported to become an independent contractor providing the hairdressing service from the same premises throughout the years in question. The Minister while conceding that she was not an employee working under a contract of service, has decided that her situation was covered by paragraph 6(d) of the Employment Insurance Regulations (the "EI Regulations") as in his view, she was not the owner or operator of the hair dressing establishment, but simply a provider of service therein under a contract for services. The Appellant maintains that she was indeed the "owner or operator" of the establishment. That then is the issue in this appeal.
5 In passing, I note that this is not the usual type of case where persons renting or leasing chairs in a salon seek to maintain that they are a number of different establishments under the one roof. In this case, it boils down to a question of whether it was the Appellant "operating" the hairdressing salon engaging the worker to do the work and provide the service under a contract for services, or whether the worker herself "carried on or operated" the establishment.
[19] At paragraphs 10, 11 and 12 of his reasons, Judge Porter commented as follows:
10 It is to be noted that this Regulation is different from the former Regulation, promulgated under the Unemployment Insurance Act, which in paragraph 12(d)(ii) read as follows:
(ii) is not the owner or proprietor thereof; ...
Thus, the word "operator" is now used in place of the word "proprietor", which latter word might have more generally referred to some proprietary rights. Now the person just has to be either the "owner" or the "operator" of the "establishment" in order to remain outside the ambit of the Regulation as opposed to the "owner or the proprietor". The prior cases cited under the former legislation must therefore be looked at in this new light.
11 In my view, "operator" must be given its ordinary meaning in the context. The person who runs the overall business in the establishment is the operator of it. That is the person responsible for the clientele, the scheduling, the invoicing, the payment of accounts attributable to the establishment as a whole, e.g. insurance and utilities, the person who holds the business license, the person who one might say runs the business as a whole. The New Shorter Oxford English Dictionary, 1993 Edition, defines "operator" as:
a person engaged in performing the practical or mechanical operations belonging to any process, business, ...
or
a person who or c