Date: 19990817
Docket: 98-251-UI
BETWEEN:
MARGARET BASTASIC,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Taylor, D.J.T.C.C.
[1] These are appeals heard in Ottawa, Ontario, on July 15, 1999 against determinations made by the Respondent under the Employment Insurance Act (the "Act") and the Canada Pension Plan (the "Plan") that the Appellant (the Worker) was employed under a contract of service with Netvision Inc. (Netvision – the Payor also known as Oncourse Learning Centre (Oncourse) during the year 1996, and also as Productivity Point International (P.P.I.). The Notice of Appeal filed on March 23, 1998 is informative and warrants reproduction here in full:
"Registry of the Tax Court of Canada
200 Kent Street
4th Floor
Ottawa, ON, K1A 0M1
Appeal hand delivered on March 23, 1998 to 200 Kent Street 4th floor by:
Margaret Bastasic
2912 Turquoise Cr.
Navan, Ontario, K4B 1K2
(613) 841-5167
Since this involves me directly it would have been nice to receive a copy of the assessment of February 24, 1997! I want to receive in writing documents that pertain to me. Some hazy little paragraph in a Notice to me does not explain anything. I am sending you a copy of what I received and I expect a more detailed explanation. Because quite frankly this notice does not explain anything.
I am not an employee of Oncourse Learning Centres. I am a contract trainer. This means that I have none of the following:
1. No employee benefits
2. No guaranteed work days
3. No guaranteed income
4. No statutory holidays
5. No sick days
6. No insurance
7. No overtime
8. No bonuses
9. No involvement with the company at all except to invoice and receive the money we agreed on for the work.
If my performance is unsatisfactory I answer to the client directly. The client evaluates me every single time I teach. If I give a class to a group of 10 people, at the end of the day they all fill in evaluation sheets and I am accountable to each of them. The client decides when lunch and breaks will be held. The client decides where the course will be held and how long the day will be. I simply let Oncourse know how much my price for the day is. My rate fluctuates depending on the type of course I am giving. So there is No set rate. I get work only if Oncourses employees are all busy. They can cancel courses at any time for which I get no compensation. If the client has problems and needs to stay an extra hour after class I have no option but to comply. For this extra time I get no compensation.
For the above reasons I want to appeal the arbitrary decision of Revenue Canada.
Margaret Bastasic March 23/98"
I also provide the attached letter from Revenue Canada to which objection was taken by the Appellant:
"Margaret Bastastic Officer Mrs. Raghunandan
2912 Turquoise Crescent Tel: (613) 598-2150
Navan, Ontario Fax: (613) 957-7932
K4B 1K2
Date of mailing: Dec. 24 1997
Dear Madam:
This letter concerns Oncourse Learning Centres Ottawa Inc.'s appeal against the assessment of February 24, 1997, for Canada Pension Plan contributions and unemployment insurance premiums for 1996.
It has been decided to confirm the portion of the assessment pertaining to you for the following reasons: You were engaged under a contract of service and, therefore, were in pensionable and insurable employment.
If you disagree with this decision, you may appeal to the Tax Court of Canada within 90 days of the mailing date of this letter. Details on how to initiate an appeal can be found on the enclosed form entitled "How to Appeal to the Tax Court of Canada."
The decision in this letter is issued pursuant to subsections 27(5) of the Canada Pension Plan and 93(3) of the Employment Insurance Act, and is based on paragraphs 6(1)(a) of the Canada Pension Plan and 3(1)(a)/5(1)(a) of the Unemployment/Employment Insurance Acts.
Yours sincerely,
K.N. Malhotra
Chief,
Appeals Division
for
Minister of National Revenue
Enclosure"
[2] Included with the documents filed with this appeal to the Court was a copy of the Notice of Objection earlier filed with Revenue Canada by Oncourse, including attachments (from Oncourse) one document of which listed the 32 persons – including the Appellant – for which assessments had been issued by Revenue Canada against Oncourse. There was also another document (stating the position of Oncourse regarding those assessments as follows:
"Schedule "A"
1. The Minister has assessed as "part-time employees" a number of independent trainers contracted by the Taxpayer to provide the service of teaching computer trainer courses to clients of the Taxpayer, and has requested payment of source deductions not previously paid, as shown on the attached Notice of Assessment.
2. The Taxpayer objects to the assessment of such persons as part-time employees of the Taxpayer for the following reasons:
a) There is no agreement for a "contract of service" between the individuals and the Taxpayer, and the Taxpayer does not exercise the necessary degree of control over the individuals for the relationship of Master and Servant.
b) The individuals being assessed are offered an opportunity to teach a computer training course for a specified period of time, within their area of expertise, at facilities provided by the Taxpayer. They are paid for the provision of such teaching services, and the individual trainers control all teaching aspects of the class/course being taught. The Taxpayer is invoiced by the contracted trainer for the trainer's time plus GST. The individual trainers do not participate in employee fringe benefits provided to Taxpayer's employees.
c) The relationship between the Taxpayer and the trainers/individuals assessed is the relationship between a contractor, and a party who has agreed to perform certain specific work specified in the contract. This relationship is a norm of the computer training industry.
3. The Taxpayer requests relief in the form of a determination that the individuals involved are not employees or part-time employees of the Taxpayer."
I do point out, since Oncourse (Netvision) had also originally appealed its determination as the "Employer" to this Court, the Court was notified recently that this appeal from Oncourse had been withdrawn. The Court, at this trial, was also informed by this Appellant that she had been notified by Oncourse that nevertheless she could continue her appeal if she wished to do so. It is against this background of a then existing appeal from Oncourse that the Respondent filed the following Reply to the Notice of Appeal for this Appellant dated May 26, 1998.
"By Notice of Assessment dated February 24, 1997 Netvision Inc. formerly Oncourse Learning Centre Ottawa Inc. (the "Payor") was assessed for failure to remit unemployment and/or employment insurance premiums in respect of the Appellant and other workers (the "Workers") and for related penalties and interest for the year 1996.
The Payor applied to the Respondent for reconsideration of the assessment and the Respondent confirmed the assessment by letter dated December 24, 1997.
In so assessing the Payor, the Respondent relied on the following facts:
(a) the Payor is in the business of offering computer training and consultation;
(b) Workers' services included course delivery, software presentation, course design and project management;
(c) Workers' duties were usually performed at the Payor's facility;
(d) Workers performed their services when required;
(e) Workers were paid after having submitted invoices;
(f) Workers' rate of pay was based on courses given;
(g) Workers had to perform their services personally;
(h) the Payor scheduled the Workers' days of work;
(i) student evaluations were done at the end of each course;
(j) most of the required equipment was provided by the Payor;
(k) the Workers were employed by the Payor pursuant to contracts of service;
(l) the Payor did not withhold unemployment and/or employment insurance premiums from the Workers' remuneration."
[3] During her testimony, the Appellant filed with the Court, documents indicating the scope of her work and as she saw it, her working arrangements. Exhibit A-1 consisted of four similar messages from Netvision to Bastasic, and although dated in 1999, no objection was raised by the Respondent to filing them. It was my understanding that they were representative of the kind of request – oral or written that the Appellant considered, and if accepted by her constituted her agreement to a specific contract. One of these – as an example – contained the following:
"From: Beth Blackmore@NETVISION on 06/17/99 01:32 PM
To: ivanb@magi.com
cc: Allen McKeown/NetVision Inc.@NetVision
Subject: Margaret – June 21-22
Please confirm if you are able to teach the following course:
Course: Project 98 Intro
Course Date: June 21-22
Course Location: 111 Sussex Drive,
Contact Name and Number: Betty Hansis 244-5300 ext 3477
Special Instructions:"
(Judge's note: there were no special instructions)
[4] A-2 was a copy of a check, together with attachments including the invoice from P.P.I. dated September 22, 1995 for $603.75, for the cost of a course on "Lotus" developed and provided by P.P.I.
[5] A-3 was a group of summaries of days and times worked by the Appellant, with details of courses provided, and particular invoices to Oncourse giving the number of days at the rate previously agreed upon with Oncourse for each particular course. That rate according to the Appellant was normally $200 per day - but it did vary depending on the complexity of the course and the degree to which her specialized skills and training were a requirement in the course. It was my understanding from the testimony that she had unique qualifications for many of the courses demanded by the clients of Oncourse.
[6] A-4 was a business card, listing the Appellant as a "Training Partner" of P.P.I.
[7] There were several important points made by the Appellant, among which were:
(1) She had filed her income tax returns on a "business" basis not as an employee.
(2) She had been "in business" as she saw it for several years (since about 1987) and during that time she had worked for clients in addition to the services she provided to Oncourse.
(3) She described her academic and professional training and background - an impressive record certainly in her chosen field. She had a Bachelor of Science degree, plus university courses in both civil and chemical engineering.
(4) By about 1995, she was sufficiently in demand by Oncourse that she agreed to give their work priority over any other possible engagements, and that has continued to the present day. However, she regarded herself as completely available to accept other work particularly in her specialties for which she herself had created dedicated routines and procedures. She taught mostly at clients offices (clients belonged to Oncourse), but often new work or added work came as a direct result of very satisfactory work and reports from her teachings. She described such special training and development – done at her time and expense – and the reward she was now earning by being in demand up to the maximum she was prepared to work each month. She had turned down an offer from P.P.I. to be on the regular staff – as an employee. She required and obtained from the Payor a higher per diem rate than paid the employees. She had an excellent reputation, was known as responsible and dedicated, and could choose her own days to work. She always provided at the start of each class, her own personal telephone number, and encouraged the participants to contact her directly if they had any problem and if she could be of assistance. Since this could be in evenings or on weekends, there was often no one available at Oncourse on a ready basis.
(5) She had only one occasion that she could not fulfil an engagement and she sent her sister to teach the course for a day. She would have no hesitation if the necessity arose again to provide a qualified substitute whether from Oncourse or outside, and she agreed the results of such a change would rest with her whether good or bad. It did not happen (except on the one occasion above) since her professional development and unique contribution to the course was almost always the reason she had accepted the engagement in the first place.
(6) Basically, if called by Oncourse she would decide if she wanted to teach a certain course offered, and if she accepted then she was committed to it.
(7) At the end of each day, each student in her class prepared an "evaluation", which was read over and if necessary went over it with individuals. The evaluation report was then provided to Oncourse. She was aware that if the performance was not satisfactory she would not be called on by Oncourse to do it again or perhaps not even continue in the course, but that did not happen.
(8) She was qualified to, and did adjust and repair any minor changes in the computer programs used in the course, if such difficulties arose.
(9) The total cost of the course was negotiated between Oncourse and the client and her role was only to accept or reject the engagement at an agreed rate per day. Neither her arrangements with Oncourse nor her role changed because of any such negotiations with the client.
[8] Under cross-examination, some of the above information was elicited or enlarged upon from the Worker, but counsel for the Respondent raised terms such as "payroll", "assignment", etc. in such cross-examination, which the Appellant did not appear to accept as appropriate in the circumstances. One point stressed by counsel was that Bastasic did not apparently advertise "her services" – relying on Oncourse to contact her. The Appellant pointed out that she did not need to advertise as long as Oncourse fulfilled its end of the bargain, and provided her with the agreed upon number of engagements – which they always did. She had her three children at home and had set time available for Oncourse to accommodate her domestic responsibilities. Her testimony was that she had the complete discretion to accept or reject such engagements. Counsel for the Respondent provided as a witness, a man - formerly both an "employee" and also an "independent contractor" – at different periods of about six months duration each – during a time not relevant to this appeal. He described his working arrangement with Oncourse – which in my mind served to support the Appellant's position more than that of the Respondent. He no longer works for Oncourse in any capacity. His testimony was of no value in determining this matter although it was accepted as providing some general background.
Argument
[9] The Appellant summarised her position in succinct terms:
"Ms. Bastasic: Why I differentiate me from the witness and why I feel so strongly that I am a contractor, first of all was called, I never had to go through any interview, no test teaching, no train the trainer. I never had recording requirements; they would call me if they had some work and asked me if I could train, and for how much I would do that. I had no written contract, or other, about exclusivity. I worked for other places during my 10-year or so relationship with PPI; I had worked at four different companies at the same time during my relationship with PPI.
I never had to meet with them on evaluations. My price was not fixed, it was negotiated for each contract. I still get asked by different companies to submit my résumé so that they could bid on government jobs. I never had any time sheets, just the invoices that I sent in.
There was never any control by PPI about how I dressed, or they never gave me any presentation guidelines. I was given the manual and told what course it is, and when I got into that classroom and I closed the door, it was me and the client.
As I said, my relationship with PPI was much different than the witness that you had, it goes back two years almost. And I have always been a contractor, and during that time I have worked for other companies. And I had always done my utmost best in order to please the client and to get more work from that client."
[10] For the Respondent, I shall simply quote portions of the argument directly and comment on certain parts of it:
"Your Honour, the appellant is a highly qualified professor. She has a science degree and a background in engineering. Netvision trusted her, and the evaluations received confirm that they had no reason to question her skills. There was not a high degree of control exercised over her, and no one would expect it considering her qualifications and the service being provided.
Your Honour, we submit that she was an excellent asset to the company, and therefore they were trying to accommodate her. They knew she had three kids, and it was very flexible in the nature of scheduling."
I am not sure how that supports the Respondent's position.
"...the appellant was hired by Netvision to perform services as a teacher. She was teaching, following their specific program, and in the circumstances they would add more, but she would teach whatever they told her to teach."
I do not see that the testimony and evidence leads to those opinions.
"Each week she was told who she would be instructing, what, how, when and where."
That is not correct.
"She was not able to come in where she pleased. She was supposed to work exclusively for Netvision, and she could not subcontract her work.
That is not correct.
"...it (Netvision) was preparing a weekly schedule and assigning its employees to a class. The scheduling arrangements for substitute teaching if necessary was done by Netvisions's management, was possible to be replaced internally but only by Netvision's staff, who had followed Netvision's training."
Assigning is not proper terminology. There is no evidence, replacements could only come from Netvision staff.
"As for the method of payment, the appellant was paid a fixed rate for each course given, no matter how many students were in the class. It is true in some situations the price varied, but this was according to the difficulty of the course, and according to her experience and expertise."
The number of students had nothing to do with the engagements accepted by the Appellant – in her own words. The rest of the statement supports the Appellant's position rather than that of the Respondent.
"...the reason the appellant was submitting invoices was for payroll to control how many courses were in fact done so they could just confirm how many hours and how she should be paid."
There is no evidence of "payroll" only invoices for services performed. And this alone could not demonstrate "control" even if there was a "payroll".
"I submit, Your Honour, that the course the appellant is referring is a highly trained, highly advanced from which she (benefited)--she admitted she was trying to provide herself, and this was to her own risk and to her personal benefit. And that's why Netvision didn't want to pay for it."
That is exactly the reason the Appellant considers this as one mark in favour of her position.
"...Netvision was providing facilities and equipment, which were the computers the classrooms and the books. When she was teaching at the client's location, they would provide the classroom and computers, however she would bring Netvision's manual to the premises."
The Appellant's main function was at the location selected by the client where she would teach – little time was spent at the office of Netvision. I do not regard the provision of a basic manual – expanded upon as the circumstances required by the Appellant – as a "tool" sufficient to qualify under the relevant case law.
"Netvision was advertising its services. It was negotiating with the client. It was fixing the price charged to the client. It was also collecting the money from the client."
Of course it was.
"...it was clearly Netvision's business;"
Of course Netvision's part of the working arrangement was Netvision's business. But how does that preclude the Appellant from having her own "business" also?
"...I would like to point out the fact that we submit that the reason why no income tax or UI were withheld from the worker, it is because at the time that's how they worked. But when they were assessed by Revenue Canada, they changed their method of doing so."
That may be nice to know – but there is no evidence to support it. The Court only knows that Netvision withdrew that appeal. It is questionable whether this point even should be raised at the trial, let alone only in argument. Further, it has no bearing on the right of this Appellant to proceed, as far as I know.
"In the present case, the appellant was assigned classes or programs which Netvision organized, advertised, structured, scheduled and funded. She could not subcontract out her duties, neither could she add outsiders in the class. She did not risk loss as she was paid a set rate regardless the number of students in her class."
The points made here have not been demonstrated at the trial. The number of students had no relationship to the agreed on role for an engagement accepted by the Appellant.
"...she didn't even look for other clients, potential clients, by sending either publicity--doing any publicity or things like that."
The Appellant adequately explained her circumstances, and there appeared to be no reason she should seek out further work – beyond the limitations and arrangements she had with Netvision.
[11] Counsel for the Appellant provided the Court with certain case law all of which I think was either easily distinguishable from the current appeal, or generally supportive of it.
Conclusion
[12] I would refer to other recent cases from this Court as follows:
Les Restaurants Masalit Inc. and M.N.R, 98-861(UI), Q-Ponz Inc. and M.N.R., 98-917(UI) and Royal Sales and Leasing Inc., 98-434(UI).
[13] In my view, this Appellant has more than adequately substantiated her position with regard to the arrangements with Netvision. There was little if any support provided by the Respondent for the opposite view.
[14] The appeals are allowed and the assessments are vacated.
Signed at Ottawa, Canada, this 17th day of August 1999.
"D.E. Taylor"
D.J.T.C.C.