Date: 20010403
Docket: 2000-441-EI, 2000-443-CPP
BETWEEN:
TRIUMPH IMPLEMENTATION CONSULTING CORPORATION,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
GAÉTANE DOLCI,
Intervenor.
Reasons for Judgment
Lamarre Proulx, J.T.C.C.
[1] This is an appeal from a decision of the Minister of National Revenue (the "Minister") to the effect that Ms. Gaétane Dolci was employed in insurable employment while working for the Appellant for the period from April 28, 1997 to January 29, 1999, within the meaning of the Employment Insurance Act (the "Act") and the Canada Pension Plan.
[2] The legal basis for the Minister's decisions appears to be paragraph 6(g) of the Employment Insurance Regulations and subsection 34(1) of the Canada Pension Plan. In this manner, it would appear that the Minister considered the Appellant to be a placement agency. The Reply to the Notice of Appeal however states that the basis of the employment status is paragraph 5(1)(a) of the Act and alternatively paragraph 6(g) of the Employment Insurance Regulations. The Reply, under the Canada Pension Plan follows the same reasoning: the basis is paragraph 6(1)(a) of the Canada Pension Plan and alternatively subsection 34(1) of the Canada Pension Plan Regulations.
[3] Mr. Thomas Nash was the witness for the Appellant. Ms. Gaétane Dolci was the witness for the Respondent.
[4] Mr. Nash is the Appellant's President. He has a BA in electrical engineering and a management degree. His first employment was at Canadian Pacific ("CP") in the computer and communication division. He worked in Toronto for CP from 1990 to 1996. He explained that in 1996, CP went through a major reorganisation. It is at that time that Triumph Implementation Consulting Corporation ("Triumph") was incorporated on September 23, 1996. Triumph did consulting work for the Railway Division of CP in 1996 in the implementation of computer systems aimed at the transportation side.
[5] The Project Consulting Agreement that was entered into by the Appellant and CP, on September 30, 1996, was produced as Exhibit A-1. The services were for the system design, development and implementation consulting services for the Integrated Customer Service System and Price Worksheet Project. Between September 1996 and around mid-December 1996, Mr. Nash was acting in the capacity of a project advisor.
[6] Around December 1996, Mr. Nash was asked if he could take on a larger role. The ICSS project was nearly terminated and Mr. Nash was asked to take the role of Project Director for the Work Sheet project. The budget of the project in 1997 was of $5 million. About 40 people reported to Mr. Nash of whom 32 were CP employees, in the accounting, marketing, sales and customer service areas. Others were IT contractors and consultants. Mr. Nash was located in Toronto and the project was spread between Toronto, Montreal and Calgary. Different people were working on the project in all three cities.
[7] Soon it was felt that there was a need for additional help for data entering. There had been a number of people laid off a few months prior who had had exposure to this particular computer system, so that the training time would not have to be extensive.
[8] This explains why the Appellant required the services of Ms. Dolci. Mr. Nash explained that he spoke to Ms. Dolci by phone and offered her a contract for a short period of time, as a six month period was first anticipated. In fact, Ms. Dolci remained on the payroll of Triumph more than a year and a half. Mr. Nash offered and Ms. Dolci accepted a pay of $20 per hour. He explained to her that the work would be on the CP premises, that it would be using the Price Worksheet software, for data loading and manipulation primarily, which she was already familiar with, and asked her to see Mr. Ed Starnino, who would be the overseer and who would be located on the same floor as her. Mr. Nash told Ms. Dolci that the working hours could be fairly flexible. There was no need to ask permission for doctor's appointments, but if there was an extended period of time, like a week, Mr. Nash would have to be informed so that he could understand and possibly negotiate the impact on the project.
[9] Triumph paid Ms. Dolci. Once a week at first, and then once every two weeks. Ms. Dolci would send, by e-mail, the number of hours that she had worked during the pay period. She would describe the number of hours worked on a daily basis, total them and multiply by $20/hour. Exhibit A-2 are such invoices send by e-mail. Exhibit A-3 are a few cheques that were used to pay Ms. Dolci.
[10] There were two other persons recruited at the same time as Ms. Dolci, Delphina James and Faye Linton, who had also worked previously for CP.
[11] Mr. Nash stated that if Ms. Dolci had proven to be inadequate, it would have been his decision to terminate her work and find a replacement.
[12] The project was completed in January of 1999 and Triumph's contract with CP came to an end at that time.
[13] Mr. Nash stated that his own contract with CP (Exhibit A-1) provided for a bonus but not Ms. Dolci's. In this agreement, there is no provision concerning the hiring of employees by Triumph. Triumph invoiced CP for the work done by Ms. Dolci, the other two persons and Mr. Nash himself.
[14] Mr. Nash stated that Ms. Dolci, partway during that time period, had expressed that she would have preferred to be a CP employee.
[15] Ms. Dolci's testimony was no different. She stated that she began to work for CP in 1992. Her third and last job was under Mr. Ed Starnino and she worked entering the information on the Price Worksheet Project. She began that last position in March 1996. There were other people working on the Price Worksheet Project, namely Delphina James and Faye Linton.
[16] At the end of the month of April 1997, Mr. Starnino contacted her by telephone. He asked her whether she was interested in doing the same type of work that she used to do before she was laid off. He told her that Mr. Tom Nash would pay for her services. He informed her that she would be paid $20/hour, that there would be no vacation, no sick days or overtime, that she was expected to do at least 40 hours a week, that she would work at the offices of Canadian Pacific and that Mr. Nash would phone her soon. She was entitled to determine her work schedule. She had an assigned space, a desk, a computer, a telephone and a filing cabinet, provided by Canadian Pacific. She never had to consult with Mr. Nash on how to complete the data entry. She normally worked between 7:30 a.m. and 3:30 p.m. to be able to be on site at the same time as the other employees from whom she needed the answers and resources, and also to be there when they themselves needed to ask her questions. She never had an autonomous status with Canadian Pacific.
[17] Exhibit A-4 is a letter from Revenue Canada to the Appellant, dated March 12, 1999. It says the following:
We received a request from the Department of Human Resources Development for a ruling regarding the insurability of Gaétane Dolci employment for the period of April 28, 1997 to January 29, 1999.
Gaétane Dolci engagement with you was insurable under paragraph 6(g) of the Employment Insurance Regulations, and pensionable under section 34(1) of the Canada Pension Plan Regulations.
This is because it meets the two requirements for insurability and pensionability under the above Regulations.
The first requirement is that Gaétane Dolci performed services for your client, Canadian Pacific Railway Company, and was under the direction and control of the client.
The second requirement is that Gaétane Dolci is paid by you for performing these services.
[18] Exhibit A-5 is a letter to Triumph from the Appeals Division for the Minister. It is dated November 4, 1999. It says the following:
It has been decided that this employment was insurable for the following reason: Gaétane Dolci was engaged under a contract of service and, therefore, was considered an employee of Triumph Implementation Consulting Corporation during the periods in question. It has also been decided that this employment was pensionable in accordance with the Canada Pension Plan.
...
The decision in this letter is issued pursuant to paragraph 6(g) of the Employment Insurance Regulations, based on paragraph 5(1)(a) of the Employment Insurance Act and also based on paragraph 34(1) of the Canada Pension Plan.
[19] Paragraph 6(g) of the Employment Insurance Regulations reads as follow:
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:
...
(g) employment of a person who is placed in that employment by a placement or employment agency to perform services for and under the direction and control of a client of the agency, where that person is remunerated by the agency for the performance of those services.
[20] Subsections 34(1) and (2) of the Canada Pension Plan Regulations read as follows:
(1) Where any individual is placed by a placement or employment agency in employment with or for performance of services for a client of the agency and the terms or conditions on which the employment or services are performed and the remuneration thereof is paid constitute a contract of service or are analogous to a contract of service, the employment or performance of services is included in pensionable employment and the agency of the client, whichever pays the remuneration to the individual, shall, for the purposes of maintaining records and filing returns and paying, deducting and remitting contributions payable by and in respect of the individual under the Act and these Regulations, be deemed to be the employer of the individual.
(2) For the purposes of subsection (1), "placement or employment agency" includes any person or organization that is engaged in the business of placing individuals in employment or for performance of services or of securing employment for individuals for a fee, reward or other remuneration.
Argument
[21] Counsel for the Appellant referred to the following cases: Edmonton Nursing Services Assn. v. Canada (M.N.R.), [1991] T.C.J. No. 145 (Q.L.); Rod Turpin Consulting Ltd. (c.o.b. Tundra Site Services) v. Canada (M.N.R.), [1997] T.C.J. No. 1052 (Q.L.); Computer Action Inc. v. M.N.R., [1990] T.C.J. No. 101 (Q.L.); Bartimaeus Inc. v. Canada (M.N.R.), [1999] T.C.J. No. 216 (Q.L.); Sheridan v. Canada (M.N.R.), [1985] F.C.J. No. 230 (Q.L.) and Edmonds (c.o.b. A-1 Lumpers) v. Canada (M.N.R.), [2000] T.C.J. No. 98 (Q.L.).
[22] In Edmonton Nursing (supra), he referred to the following passage:
The Appellant is a non-profit organization registered under the Societies Act of Alberta, set up by a group of private duty nurses, which maintains a registry of nurses and nurses' aides who are available for private duty nursing. Each of the nurses and nurses' aides listed in the registry pays an annual fee of $125.00 to the Appellant for maintaining their name on the registry. Various institutions, individuals and organizations contact the Appellant when they require nurses or nurses' aides and the Appellant in turn contacts workers in its registry who might be able to fill the position.
...
"Agency" refers to agent, and "agent" by definition appears to be "one who or that which acts". And "employment" refers to "employ", and that therein in subpart states, "to find work or occupation for".
In the absence of any other reference I have come to the conclusion, using the plain meaning of words, that an agent is one who acts on behalf of and employment is the action of employment, and that the Edmonton Nursing Services Association is an association who finds work for its members and therefore is an employment agency within the meaning of 12(g). ...
[23] In the decision of Rod Turpin (supra), it was found that the Appellant was not a general contractor. The only responsibility the Appellant had to the client was to provide qualified workers. The Appellant was acting as an employment placement agency, as contemplated by paragraph 12(g) of the Unemployment Insurance Act Regulations. At page 3 :
The contract between the Appellant and Cominco was verbal. Cominco would contact the Appellant and say we need so many journeymen electricians at the Polaris Mines site starting on such and such a date for approximately such and such a period. The Appellant would find the necessary journeymen electricians and arrange to get them to the Polaris Mines site.
The Appellant's responsibility to Cominco was only to the extent that the personnel it provided were qualified to do the work that was to be performed.
...
The Appellant argues that it is not a placement agency but to look at it as a general contractor. This I cannot accept. General contractors usually by the terms of their contracts with clients are responsible to the client to construct the project contracted to be constructed in a good and workmanlike manner. Herein, the only responsibility the Appellant had to Cominco was to provide qualified workers as specified by Cominco.
[24] In Computer Action Inc. (supra), counsel for the Appellant referred to the excerpt at page 5:
Counsel for the Appellant submitted that the Appellant was not a placement or employment agency within the meaning of section 12(g). He argued that the Appellant provided a marketing service for consultants. I do not find the argument persuasive. The term "placement agency" is not defined in the Regulations and must be given its ordinary meaning read in context, VIZ, an organization engaged in matching requests for work with requests for workers. It was argued as well that the appellant differed from a normal employment or placement agency in respect of the arrangement as to fees. In my view, nothing in the language of regulation 12(g) ties the meaning of the term "placement agency" to the presence or absence of any particular type of arrangement for the remuneration of the agency as suggested at one point by counsel for the Appellant.
[25] In the decision Vendor Surveillance Corp. v. Canada (M.N.R.), [2000] T.C.J. No. 620 (Q.L.), the Court found that although the Appellant was a placement agency, the consultant was not under the control of the client of the placement agency. Therefore, the worker had a status of self-employed and not of an employee. I will quote the following passage from page 4 of this decision:
... With respect to the fact that the employee had to submit time sheets and expense reports in order to be paid at an hourly rate determined by the payer, Vulcain Alarme Inc., Létourneau J. referred to the decision in Canada v. Rousselle et al. (1990), 124 N.R. 339, in which Hugessen J., then sitting on the Federal Court of Appeal, stated the following at page 344:
Fixing the amount of remuneration or defining the purpose of the exercise is not controlling work. These aspects exist in a contract for services as much as in a contract of service. It is still more the case that control does not lie in the act of payment, whether by cheque or otherwise.
...
Létourneau J. then referred to a passage in Charbonneau v. M.N.R., [1996] F.C.J. No. 1337, in which Décary J. said:
... It is indeed rare for a person to give out work and not to ensure that the work is performed in accordance with his or her requirements and at the locations agreed upon. Monitoring the result must not be confused with controlling the worker.
...
The evidence revealed that Mr. Budgen did not receive instructions from a supervisor in New York. Rather, he made daily calls to someone at Northrop in Dallas to keep them informed of the different problems faced by the suppliers. Northrop did not indicate to Mr. Budgen on a daily basis the work to be done. It was rather Mr. Budgen who kept them informed of his input and instructions regarding any changes or adjustments to the suppliers' operations. Mr. Budgen was not subject to any control with respect to his hours worked. He filed a time sheet using the honour system and was paid on the basis of the time sheet. The fact that overtime had to be approved was part of the contractual arrangement. Mr. Budgen agreed to being paid on the basis of a 40-hour week for the work that had to be done. This is not in my view necessarily indicative of an employer-employee relationship as he could and did in fact work more than 40 hours per week without additional remuneration. Furthermore, Mr. Budgen could work at home at his own convenience without Northrop being informed of this fact. It is obvious that he did not have to work during the business hours of Northrop, which was located in Dallas and in Florida. Although he was told that it was preferable that he be present at the suppliers' place of business during the working hours of their employees, nobody checked to see that he was. He was in a sense free to organize his schedule to suit himself.
[26] Counsel for the Appellant also relied on the decision of Quantum Information Resources Ltd. v. Canada (M.N.R.), [1991] T.C.J. No. 420 (Q.L.). He referred first to the headnote and to the following passages:
The appellant corporation was in the business of providing computer programming services for computer users and manufacturers, and employed approximately five hundred employees, supplemented by additional specialized workers when needed. The supplemental workers, whose status was the subject matter of this appeal, worked on fixed term contracts that characterized them as subcontractors and placed ultimate control over their performance in the hands on the clients of the appellants. The Minister determined that these supplemental workers were engaged in insurable employment. The appellant appealed against this determination to the Tax Court of Canada.
HELD: Appeal allowed. The appellant kept full control over the relationship of the client and its subcontractor and compensated the subcontractor in such a way as to lead to the conclusion that the subcontractor was self-employed.
...
Quantum is a corporation incorporated under the laws of Canada and has as its objects the following: to provide computer programming services for computer users and computer manufacturers; to provide system analysis and design services for commercial and scientific application; and to act as consultants in the field of electronic data processing. It canvasses various businesses that use computers and offers its services to them. To carry out the above-mentioned objects, Quantum employs approximately five hundred employees and supplements these computer programmers and computer analysts with qualified persons that can be called on from time to time when it is unable to provide the services to its clients from within the numbers of its own employees. Mr. Rafie and Mr. Roberge were qualified programmers whose services were called upon when needed by Quantum. They both signed similar contracts with Quantum whereby they agreed to carry out the specific task required by the clients on behalf of Quantum as "subcontractors". The body of subcontractors made up approximately two percent of Quantum's work force of programmers. Their contracts were for a fixed term and provided that they would receive no fringe benefits as employees, no deductions at source for taxes, pension plans, U.I. premiums, medical or dental insurance; each subcontractor was responsible for his own expenses; the fixed term could be extended by mutual consent; compensation was on an hourly basis; the hours of work were designed to accommodate the client and were to be certified by the client before being submitted to Quantum for payment; and the agreement could be terminated by each of the parties with reasonable notice.
...
Taking into consideration the evidence heard in these appeals, I am satisfied that Quantum established on a balance of probabilities that it was not in fact a placement or employment agency and that when it entered into the agreements with Mr. Rafie and Mr. Roberge, it was for the purpose of achieving its own objects and not for the benefit of the two subcontractors. Although Quantum charged its client more than it paid to the subcontractors, this was not done so much for the purpose of generating income, but it was done to keep its client happy when it was unable to meet the particular demand at that point in time from within its own resources of employees. Quantum kept full control over the relationship of the client and its subcontractor and compensated the subcontractor in such a way as to lead to the conclusion that the subcontractor was self-employed
[27] In Quantum Information Resources (supra), counsel for the Appellant submits that, similarly to the Appellant in that case, the present Appellant contracted as principal with the client, not as an agent. His contract with Canadian Pacific was to provide computer advisory services and project management services. He hired workers to carry out the duties to meet the goals, the incentives and the bonuses. He never advertised as a placement agency and he is not a placement agency. Ms. Dolci had, on a daily basis, contact with Mr. Starnino but he was not there to control her but to report to Mr. Nash. If a problem had occurred, it would have belonged to Mr. Nash to terminate the employment of the worker.
[28] Counsel for the Appellant submitted that although he does not have to argue the point that the worker was not in an employee situation with the Appellant's client, he is going to address to some extent the situation. There was no control exerted by CP over Ms. Dolci. Her schedule was flexible. Her presence at CP was required by Mr. Nash.
[29] Counsel for the Respondent argued that Ms. Dolci, the worker, was doing the same work after and before her hiring by the Appellant. He argued that the price was not determined by Mr. Nash. He submitted that the Appellant was a placement agency, since it had hired three persons. A placement agency does not need to register. There is no definition of a placement agency or an employment agency. It may be a matching of requests.
[30] He also referred to the decision of Vendor Surveillance Corp. (supra) and to paragraph 18 thereof, stating that there is no requirement in the Act that the placement agency be registered under a provincial statute. He submitted that the Appellant was working as a placement agency on an ad hoc basis for business reasons. So if the Appellant was a placement agency, now he has to turn to see whether the worker was under the control of Canadian Pacific. He submitted that the worker felt part of the team, she went to meetings, she reported to Mr. Starnino, from whom she received directions. She was consulted by Minneapolis and worked with the other CP employees. She had no chance of profit, no risk of loss, she did not have the ownership of tools and about the integration test, she was part of the team receiving instructions from employees.
[31] Counsel for the Appellant reminded the Court that the Appellant engaged in the management of a project, bringing all parties together to complete the project. Mr. Nash realized he would need more people power. He decided to bring additional services. It was a data entry position. It was decided that it was better if people who were familiar with the mode of entering the data would be recruited. That was a smart business decision. On the $20/hour that was paid to the workers, he had a $5/hour profit. He was taking the risk. The instructions came from the Mr. Nash as project manager. He was the supervisor. To find that the Appellant would be a placement agency and to accept the Respondent's position would be too wide a proposition.
Conclusion
[32] It is my view that the evidence has shown clearly that the Appellant was not acting as a placement agency. It was acting as a consultant when it entered into the agreement with CP. The services to be rendered were the design, the development and the implementation of a computer system or program that was called the Price Worksheet Project. The Appellant did not have as one of its tasks the finding and the placement of employees for a third party.
[33] The ultimate control over the worker was exercised by the Appellant and not CP since it is the Appellant that had the direction of the project. It is a case similar to that of Quantum Information Resources Ltd (supra). However, I do not reach the same conclusion as to the work status of the worker. The judge in Quantum Information Resources Ltd (supra) found that the worker was in circumstances of self-employment. In this instance, I cannot but find that the circumstances of work of the worker were those of an employee, that is the Appellant's employee.
[34] The duration of the contract, the nature of the work, the hours of the work, the site at which the work had to be performed and the mode of remuneration are elements pointing towards the status of employee.
[35] I will now refer to the usual criteria: the control, the ownership of the tools, the chance of profit or risk of loss and the integration test.
Control: Ms. Dolci had to be present 40 hours a week on CP premises which was the Appellant's situs of work for the particular project. She entered data in the computer system. She does not seem to have required much instructions as to how to do it. She was hired because she had had previous experience with that particular work and she had been found to be a conscientious and skilful worker. In her previous experience, she was an employee.
Ownership of Tools: They were provided by CP and not the worker.
Chance of Profit or Loss: There does not appear to be any. She was paid on an hourly basis.
Whose Business Is It (or the Integration Test): The previous conduct and the conduct of the worker at the times in question is not that of an independent contractor. The worker did not offer or advertise her services as a consultant. It was the Appellant's business. The Appellant needed workers to accomplish its task in the time allotted. It hired the services of the worker.
[36] The decisions of the Minister appear to have assessed the Appellant principally as a placement agency. The Reply to the Notice of Appeal is more general. It submits first that the worker is the Appellant's employee and further submits that the Appellant acted as a placement agency. The facts described in the Reply to the Notice of Appeal are substantially the same as those found in the evidence except that in the Reply there is a greater emphasis on the control exercised by CP than what the evidence revealed. The Worksheet Project had been contracted out of the main organisation. It had been privatised. The Appellant had the lead role in the realisation of the computer program and it was its responsibility. That is why it was paid for. The worker was under its supervision and the worker had to perform in accordance with the expectation otherwise the Appellant had the authority to terminate the worker's contract of service.
[37] The worker was in a contract of service with the Appellant for the period under appeal. The appeal is dismissed.
Signed at Ottawa, Canada, this 3rd day of April, 2001.
Louise Lamarre Proulx
J.T.C.C.
COURT FILE NO.: 2000-441(EI) and 2000-443(CPP)
STYLE OF CAUSE: Triumph Implementation Consulting Corporation and M.N.R.
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: December 8, 2000
REASONS FOR JUDGMENT BY: The Hon. Judge Louise Lamarre Proulx
DATE OF JUDGMENT: April 3, 2001
APPEARANCES:
Counsel for the Appellant: Paul S. Carenza
Counsel for the Respondent: Arnold Bornstein
For the Intervenor: The Intervenor herself
COUNSEL OF RECORD:
For the Appellant:
Name: Paul S. Carenza
Firm: Thorsteinssons
Toronto, Ontario
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-441(EI)
BETWEEN:
TRIUMPH IMPLEMENTATION
CONSULTING CORPORATION,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
GAÉTANE DOLCI,
Intervenor.
Appeal heard together with appeal No. 2000-443(CPP)
on December 8, 2000 at Toronto, Ontario by
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the Appellant: Paul S. Carenza
Counsel for the Respondent: Arnold Bornstein
For the Intervenor: Ther Intervenor herself
JUDGMENT
The appeal from the decision of the Minister of National Revenue is dismissed and the Minister's decision is affirmed, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 3rd day of April, 2001.
|
Louise Lamarre Proulx |
J.T.C.C.
2000-443(CPP)
BETWEEN:
TRIUMPH IMPLEMENTATION
CONSULTING CORPORATION,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
GAÉTANE DOLCI,
Intervenor.
Appeal heard together with appeal No. 2000-441(EI)
on December 8, 2000 at Toronto, Ontario by
the Honourable Judge Louise Lamarre Proulx
Appearances
Counsel for the Appellant: Paul S. Carenza
Counsel for the Respondent: Arnold Bornstein
For the Intervenor: Ther Intervenor herself
JUDGMENT
The appeal from the decision of the Minister of National Revenue is dismissed and the Minister's decision is affirmed, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 3rd day of April, 2001.
|
Louise Lamarre Proulx |
J.T.C.C.