Date: 20000204
Docket: 98-539-UI; 98-100-CPP
BETWEEN:
OKANAGAN UNIVERSITY COLLEGE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
______________________________________________
Agent for the Appellant: Dr. Claire Budgen
Counsel for the Respondent: Elizabeth Junkin
______________________________________________
Reasons for Judgment
(delivered orally from the Bench at Penticton, British Columbia on October 16, 1998)
Associate Chief Judge Garon, T.C.C.
[1] These two appeals were heard on common evidence. One appeal is from an assessment of premiums and interest made by the Minister of National Revenue pursuant to the Employment Insurance Act. The second appeal is from an assessment of amounts in respect of contributions and interest made by the Minister of National Revenue pursuant to the Canada Pension Plan.
[2] Both assessments are in respect of services performed for the Appellant in 1996 and 1997 by ten individuals, hereinafter called the "workers" (listed on Schedule "A" attached to each Reply to the Notice of Appeal) in respect of whose remuneration the Appellant did not make remittances to the Receiver General of Canada.
[3] In brief general terms, the Minister of National Revenue took the position that the workers were, during the relevant periods, in both insurable and pensionable employment under the Employment Insurance Act and the Canada Pension Plan, respectively. The Appellant contends that these workers were independent contractors.
[4] In assessing the Appellant pursuant to the above-mentioned statutes, the Minister of National Revenue relied on the assumptions of fact set out in paragraph 6 of each Reply to the Notice of Appeal. Paragraph 6 of the Reply to the Notice of Appeal relating to the assessment made under the Employment Insurance Act reads as follows:
6. In so assessing the Appellant and confirming the assessments, the Respondent relied upon the following assumptions of fact:
(a) the Appellant is an educational institution providing post secondary education in the B.C. interior;
(b) as a joint initiative of the Appellant and the South Okanagan Health Unit, wellness centres were set up on the Appellant's campuses;
(c) the funding for the program is provided by the Provincial Ministry of Health;
(d) the Workers, who are registered nurses, were engaged to provide a range of specialized nursing services;
(e) the Workers are hired under contracts for a contract price which is broken down to a specified number of hours per month at an hourly rate of $26.00;
(f) the Workers are paid monthly upon receipt of a payment voucher approved by the budget manager of Campus Health;
(g) the Workers were required to work their specified number of hours within the normal operating hours of the college;
(h) the Workers were required to complete regular reports which include the number of students seen and the type of service performed;
(i) the Workers were required to perform the services personally and could only provide a substitute from the pool of other nurses working for the Appellant;
(j) the Workers were reimbursed for any expenses they might incur in performing the services;
(k) the Appellant had the right to control the work done by the Workers;
(l) the Workers had no chance of profit nor did they risk incurring a loss in performing the services;
(m) during the Period the Workers were employed by the Appellant in insurable employment under a contract of service; and
(n) the Appellant failed to deduct from the remuneration paid to the Workers any amounts with respect to employment insurance premiums under the Act and also failed to remit to the Receiver General any amounts in respect of either the employee or the employer premiums, as required, and is liable for the unremitted amounts, with interest thereon.
[5] On behalf of the Appellant, subparagraphs (a), (b), (c) and (d) were admitted. The other subparagraphs of paragraph 6 were either denied in part or in their entirety.
[6] Paragraph 6 of the Reply to the Notice of Appeal in the appeal relating to the assessment made under the Canada Pension Plan is identical to paragraph 6 of the Reply to the Notice of Appeal in the appeal relating to the assessment under the Employment Insurance Act except for subparagraphs (m) and (n), which speak of pensionable employment and Canada Pension Contributions in one file and insurable employment and employment insurance premiums in the other file.
[7] The Appellant's Agent, Dr. Claire Budgen, and a worker, Mr. Stanley Ivan Marchuk, testified for the Appellant. No one deposed on behalf of the Respondent.
[8] The evidence establishes that the workers in question in these two appeals performed services during the relevant periods within the framework of the Campus Health Services Project. This project is a joint initiative of the Appellant and the South Okanagan Health Unit, as assumed in subparagraph 6 (b) of the Reply to the Notice of Appeal hereinbefore reproduced in extenso. Funding for the project comes from the Ministry of Health of the B.C. Government.
[9] The Campus Health Services Project had received in the past few years an annual grant of about $100,000.00 for staff, supplies and equipment. Space for the provision of the required services is provided by the Okanagan University College. The desired outcome of the project as indicated in the document entitled "Executive Summary", which was filed with the Court, is improved health of the campus population of about 7,000 students, the majority of whom are between 18 and 24 years of age.
[10] As is noted in the aforementioned document:
Significant and long-term improvements are intended for individuals and the overall campus community.
[11] From the evidence, I gather that the Campus Health Services Project has focused primarily on health promotion and injury and disease prevention. The evidence also discloses that prior to the operation of this project there were no health services at the Okanagan University College.
[12] On the other hand, most British Columbia campuses offer health services. The services provided within the above project are unique to the college. There is no physician on staff.
[13] The activities contemplated by this project began in 1993. Two service contracts entered into between the Okanagan University College and Madam Kathy Turner on September 24, 1996 and September 29, 1998 respectively were filed with the Court. Madam Turner is one of the ten workers listed on Schedule "A" of the Reply to the Notice of Appeal in each file.
[14] In the September 24, 1996 service contract, it is stipulated that Madam Turner is:
... to provide services as a nurse clinician for the wellness centres in accordance with the terms of this contract and the attached letter dated September 24, 1996.
[15] The term of this contract was from September 1st, 1996 to April 30, 1997. The contract price was $9,568.00 and the rate was $26.00 per hour for 46 hours monthly. Opposite billing dates, the words "end of each month" appear.
[16] As far as the expenses are concerned, according to this service contract, the worker is:
... to be reimbursed for clinical supplies purchased as approved by the budget manager at Campus Health.
[17] Schedule "E" of the contract reads thus:
Nurse clinician will be paid monthly commencing Sept. 30/96. payment will be issued by Financial Department upon receipt of Payment Voucher duly approved by budget manager Campus Health.
[18] The following clauses in the contract are of some interest. I am referring to clauses 1(b), (i), (k), (l), (o) and (p), and clauses 6 and 7:
(b) supply all labour, materials and approvals necessary to provide the Services at its own expenses;
...
(i) be an independent contractor and not the servant, employer, or agent of the College;
...
(k) accept instructions from the College, with respect to the Services, provided that the Contractor will not be subject to the control of the College in respect to the manner in which such instructions are carried out except as specified in the agreement;
...
(l) ensure that all personnel hired by the Contractor to provide the Services will be the employees of the Contractor and not the College;
...
(o) indemnify and save harmless the College, its employees and agents, from and against any and all losses, claims, damages, actions, causes of actions, costs and expenses that the College may sustain, incur, suffer or be put to at any time either before or after the expiration or termination of this agreement, where the same or any of them are based upon, arise out of or occur directly or indirectly, by reason of any act or omission of the Contractor pursuant to this agreement, excepting always liability arising out of the independent negligent acts of the College;
(p) during the Term, provide maintain and pay insurance in such form and amounts, with such deductibles, according to the terms and the conditions outlined in Schedule "D", as amended from time to time in accordance with directions of the College;
...
6. In the event of a substantial failure of a party to comply with the provisions of this agreement, it may be terminated by the other party on 5 days written notice.
7. The College may, in its sole discretion, terminate this agreement on 10 days written notice and the payment of funds required to be made pursuant to section 8 will discharge the College of all its liability to the Contractor under this agreement.
[19] The service contract entered into between the Okanagan University College and Mr. Stanley Marchuk, dated September 29, 1998, was also tendered in evidence. Although this contract was made outside the periods in issue, the Court was informed that the terms of this contract were similar to some of the contracts made during the relevant periods.
[20] I should also add that as a rule, the workers determined the times at which they will be paid. There is no deduction from pay if a worker is occasionally sick.
[21] A document entitled "Position Statement: The Self-Employed Nurse" issued by the Registered Nurses' Association of British Columbia filed with the Court was also of some interest in its definition of the services offered by a self-employed registered nurse.
[22] From the evidence of Dr. Claire Budgen and from Mr. Stanley Marchuk, it is clear that no day-to-day supervision is exercised over the workers. The workers are not required to work a set number of hours over, say, a period of one month. They could in their discretion work a greater number of hours, for instance, during a particular month and a lesser number of hours the following month.
[23] If a worker is unable to work at the times indicated, at the particular campus where he is scheduled to work, he could on his own make arrangements with a co-worker who is qualified to replace him. He could even retain the temporary services of a registered nurse who has worked within that project earlier and make financial arrangements on his own with this individual for his compensation.
[24] Evaluation reports are to be submitted by each worker in a limited number of occasions, at least one report per semester. I gather from the evidence that this is done at least in part to maintain funding for the project.
[25] The type of extremely general supervision that is exercised by the budget manager is the sort of supervision that is consistent with an independent contractor type of situation.
[26] As far as the ownership of tools is concerned, most tools or materials were provided by the College. The workers may determine if additional resource materials are required. In such a case they will be personally responsible for the acquisition of these materials.
[27] With respect to the chance of profit and the risk of loss test, the evidence is clear that the worker has no real possibility of making a profit. The risk of loss that may be incurred is not likely to happen, except perhaps in emergency situations.
[28] The application of the integration test in my view seems to favour the workers. The provision of the type of services contemplated by the project appears to be accessory to the mission of the Okanagan University College, at least from an historical point of view for this particular institution.
[29] Considering the total relationship of a worker with the Okanagan University College, I find that it is somewhat closer to the independent contractor type of situation than to that of an employer-employee context.
[30] In coming to the above conclusion, I am strongly influenced by the fact that no day-to-day supervision is carried out as to the quality of the services performed by the worker.
[31] There is the additional feature that the workers determine the nature of services to be provided based on the needs of the students as perceived by the workers. In my view, the specified result test applies in this case to the services that are to be provided by the workers.
[32] I am therefore of the opinion that the assessments made by the Minister of National Revenue under the Employment Insurance Act and the Canada Pension Plan must be vacated since the employment of the ten workers listed on Schedule "A" of the Reply to the Notice of Appeal in each file is not insurable under the Employment Insurance Act, nor is it pensionable employment under the Canada Pension Plan.
[33] For these reasons, the appeals from the assessments made under the Employment Insurance Act and the Canada Pension Plan are allowed and the assessments are vacated.
Signed at Ottawa, Canada, this 4th day of February 2000.
"Alban Garon"
A.C.J.T.C.C.