Date: 20010124
Docket: 2000-3610-EI, 2000-3611-CPP
BETWEEN:
FOUR CORNERS COMMUNITY DEVELOPMENT SOCIETY
DBA PRIDE TRAINING CENTRE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Rowe, D.J.T.C.C.
[1] The appellant is an incorporated society and appeals from a decision of the Minister of National Revenue (the "Minister") dated May 8, 2000 wherein the Minister decided the employment of Gloria Johnson (the "worker") with Four Corners Community Development Society (Four Corners) from January 25 to February 5, 1999, from March 1 to March 4, 1999 and from March 29 to April 1, 1999 was insurable employment pursuant to the provisions of the Employment Insurance Act (the "Act") because she was engaged pursuant to a contract of service. The Minister issued a letter - on the same date - to the appellant wherein it was decided Gloria Johnson was employed in pensionable service with the appellant during the same periods stated above by virtue of the relevant provisions of the Canada Pension Plan. A separate appeal - 2000-3611(CPP) - was filed and the agent for the appellant and counsel for the respondent agreed the disposition in the within appeal would apply.
[2] Andrea Newton testified she resides in Vancouver, British Columbia and is the Manager of Finance and Administration for the appellant, a society incorporated on January 11, 1996 pursuant to the Society Act of British Columbia. The constitution of the appellant focuses on education and training for unemployed individuals who are eligible to work within Canada. The federal government - through Human Resources Development Canada (HRDC) - acting in concert with the provincial government of British Columbia - as administered by the Ministry of Social Development and Economic Security - provided funding for the various programs offered by Four Corners. The appellant was a registered charity and was able to receive donations from the public. Since its inception, Newton stated the appellant had carried out 36 projects ranging in duration from four months to one year. The appellant has had as many as 13 employees who were accountable to a General Manager and a Board of Directors but - in 1999 - there were 10 full-time staff assigned to various projects. In 1999, the appellant offered four programs - each lasting five months - in which 15 participants provided by the ministries of the respective participating governments would be enrolled. Currently, as many as 7 programs may be running concurrently, although they may be of different duration. Each project is funded separately and Newton stated she is responsible for the payroll. Individuals such as Gloria Johnson provide a specific form of training, perhaps in computer basic instruction, within the premises leased by the appellant and operated under the name, Pride Training Centre. Newton stated the appellant's previous General Manager had died and there was no written documentation on file concerning the working relationship between the worker and Four Corners. Usually, 10 to 12 persons were retained by the appellant's Training Coordinator to teach certain components of a curriculum and it could be for only one or two hours or as long as one week. Gloria Johnson worked a total of 10 days between January 25 and April 1, 1999. In order to receive payment, she submitted an invoice to the appellant based on a hourly rate of $35.00. Newton stated that after a particular session had been completed she would issue a cheque to the worker - and other instructors - in payment of a submitted invoice. She believed the previous General Manager had prepared invoice sheets for use by the various instructors but was unable to locate any within the office. Newton did not issue any T4 slips to any of the instructors. A binder of documents was filed as Exhibit A-1 and it contained various documents pertaining to the formation and operation of Four Corners including the constitution of the society and a typical contract entered into between the appellant and the provincial government through the Ministry of Advanced Education, Training and Technology. A separate contract would be entered into between Four Corners and HRDC to provide the basis of funding by the federal government. Instructors were well aware that each project had a budget cap and the instructional component was fixed within that overall amount. Newton stated the appellant was not using - in 1999 - a document entitled "Workshop Contract" or another one described as "Instructor Workshop Agreement" but did so in 2000, blank examples of which were included in Exhibit A-1. The Workshop Contract had no reference at all to status but the Instructor Workshop Agreement included the term, as follows: "It is understood that this is an independent Contractor's agreement only". The appellant also utilized various forms and documents pertaining to persons on the regular payroll, including authorization for a criminal records search, TD1 for purposes of income tax deductions and these employees were issued a manual in which their rates of pay were governed by the operation of Section 5. Gloria Johnson did not charge Goods and Services Tax (GST) to the appellant but some other instructors had done so when submitting an invoice for services rendered. The cheques issued to instructors were referred to as non-payroll cheques and were prepared at a different time than the regular payroll but were done together with other cheques made out in payment of specific payables. Newton stated that a cheque could be issued to an instructor other than during the usual payables "run" but it would require special circumstances. The appellant held a business license issued by the City of Vancouver and had an Accreditation Certificate from the Private Post-Secondary Education Commission of British Columbia recognizing it as a registered institution. Newton stated all instruction is carried out on the Four Corner's premises although there may be some field trips involved during a project. The leased space occupied by the appellant contained 9,000 square feet and housed four separate fully-equipped classrooms and one computer lab. Instructors used their own teaching aids. The Pride Training Centre was viewed by the appellant as providing a "base of operations" for the instructors. On occasion, contracts for the purpose of obtaining instruction were entered into between the appellant and corporations or other societies.
[3] In cross-examination, Andrea Newton stated she was not involved in the administration and finance functions of the appellant during the relevant period concerning the working relationship of Gloria Johnson. She was aware that no instructor would ever teach more than two weeks during that period. Invoices were issued by the worker on the basis of an hourly rate of $35.00 but were calculated on that basis mainly for the purpose of verification to the Ministry or HRDC as to the number of hours of instruction for that segment of the project.
[4] Sylvia Drysdale-Hunt testified that since 1999 she has been the General Manager of the appellant. She stated the method followed by Four Corners was to have the Training Coordinator contact potential instructors and discuss the services required by the appellant. The maximum service to be rendered by any instructor would occupy only two weeks with the exception of a tourism program which might extend to three or four weeks. Different arrangements were made with various instructors within the limit determined by the specific amount designated for the instructional component of a particular program. The Training Coordinator had to work with limitations imposed by the funding cap for that project. The relevant Ministry of the provincial government wanted the appellant to report expenditures paid to instructors in the form of hourly rates rather than merely the total sum. The remuneration paid to an instructor could not exceed the rate set forth in the budget which was submitted to the funding authority. Drysdale-Hunt stated the work carried out by Gloria Johnson was scheduled to last two weeks and the specific hours or instruction were not assigned nor was there any monitoring of the method of instruction. The curriculum was designed by the Training Coordinator and any evaluation of an instructor's performance was undertaken at the conclusion of a training period at which time a decision would be made by the appellant's management whether or not that individual would be engaged in the future. All the computers and software were provided by HRDC and/or the relevant Ministry of the provincial government for purposes of training students in accordance with the terms of a specific contract. Despite the fact the funding apparatus required separate contracts and funding proposals for each project, the computers remained on site for five years and were to be used only for teaching purposes or by the staff of Four Corners. The previous General Manager of the appellant died suddenly and then the person occupying the position of Training Coordinator left her employment on short notice. Gloria Johnson accepted that vacant position but soon revoked her agreement to work in that capacity upon concluding it adversely affected her disability benefits.
[5] In cross-examination, Sylvia Drysdale-Hunt stated the mandate of the appellant is to assist people in entering the job market. A particular program begins with a formal "Request for a Proposal" being submitted to either the provincial or federal government in which a specific form of instruction is to be provided and the individual components - such as computer training - are outlined. Apart from training, the appellant also provides job search facilities and members of the public can come into the Pride Centre and use certain computers which have been donated to the appellant. As a result of receiving charitable donations, the appellant is able to assist people with photocopying, paper supplies and related materials pertaining to the activity of searching for employment. A group of candidates is submitted by a Ministry of the provincial government and/or HRDC and from that list the Training Coordinator chooses the participants in the program. Drysdale-Hunt agreed with counsel for the respondent that without the efforts of Four Corners in obtaining the appropriate funding from two levels of government there would be no instruction offered. The various instructors do not have any input into class composition except with the permission of the Training Coordinator and any efforts in that regard by any instructors are purely voluntary and the time so spent is not subject to any remuneration. The instructors prepare their own lesson plans without any supervision or instruction by any member of the management or staff of Four Corners and have some flexibility in scheduling classes provided it falls within the appellant's regular office hours. An instructor will receive the same pay even if some students drop out of the class or whether the class size is 6 or 12. They cannot earn more money or lose any money in the course of their instruction and it would require some serious misconduct for the appellant to dismiss an instructor during the short period of an engagement. However, that person might not be contacted by the Training Coordinator to teach any other classes. The instructors would prepare any hand-out material required by the students. Under the terms of the contracts entered into between the appellant and the provincial and/or federal government a representative could - at any time - attend any class to ensure the relevant funded program was the subject of appropriate instruction. If an instructor was unavailable to attend, he or she would have to find a replacement but that would rarely - if ever - occur due to the extremely short duration of the teaching engagement. Instructors were hired based on their qualifications and references. The individual classes were not operated on a pass/fail basis but if the students attended each class until the end they would receive a certificate of completion, although there were some specific programs that required the students to write an examination. Drysdale-Hunt stated Gloria Johnson or any other instructor would personally deliver the instruction, as discussed earlier with the appellant's Training Coordinator.
[6] Mia Bonnettemaker testified she is a Certified General Accountant practising in Vancouver and the appellant has been a client since 1998. She advised management of Four Corners to institute the practice of entering into an independent contractor's agreement. She also performs the audit which is necessary because the appellant is a registered financial institution. The St. John's Ambulance Society provided instruction to the appellant and charged GST on the relevant invoices. She had advised the appellant that any instructor earning less than $30,000.00 per year would not need to charge GST. Bonnettemaker stated that when Gloria Johnson requested a T4 slip she was told none would be issued by Four Corners as she was not an employee but had been providing services in her capacity as an independent contractor. No further discussions were forthcoming on this matter.
[7] Counsel for the respondent did not cross-examine.
[8] In Wiebe Door Services Ltd. v. M.N.R., [1986] 2 C.T.C. 200, the Federal Court of Appeal approved subjecting the evidence to the following tests, with the admonition that the tests be regarded as a four-in-one test with emphasis on the combined force of the whole scheme of operations. The tests are:
1. The Control Test
2. Ownership of Tools
3. Chance of Profit and Risk of Loss
4. The integration test
Control:
[9] The period of engagement was extremely short and the instructors - including Gloria Johnson - were informed of the substance of the particular segment of the program to be taught by them and the time frame in which it had to be carried out. There was no monitoring of performance but the right to supervise existed and the appellant - pursuant to contract - agreed the funding Ministry could enter into the classroom at any time for purposes of verification that the program was being put into action in accordance with the accepted funding proposal. A specific class was assigned and the intention was the instructor would personally deliver the service within the parameters of the fixed curriculum. This aspect of the test favours the status of employee.
Tools:
[10] The classroom and all necessary instructional facilities were provided by the appellant. The worker and other instructors provided only their own teaching materials. This is inconsistent with provision of services by an independent contractor.
Chance of profit and risk of loss:
[11] The instructors were paid an amount which was fixed at the outset by the appellant in the course of matching the program budget to the required expenditure for the instructional component of a project. In order to satisfy an oversight requirement by a funding Ministry, the worker's remuneration - as set forth on the invoice to Four Corners - was calculated at the hourly rate of $35.00. The General Manager of the appellant conceded there was no opportunity for the worker to increase the amount of payment for teaching services nor was there any risk of loss since all expenses pertaining to the instruction were borne by Four Corners. This test favours a characterization of the worker's services as being delivered pursuant to a contract of service.
Integration:
[12] At p. 206 of his judgment in Wiebe, supra, MacGuigan, J.A. stated:
"Of course, the organization test of Lord Denning and others produces entirely acceptable results when properly applied, that is, when the question of organization or integration is approached from the persona of the "employee" and not from that of the "employer," because it is always too easy from the superior perspective of the larger enterprise to assume that every contributing cause is so arranged purely for the convenience of the larger entity. We must keep in mind that it was with respect to the business of the employee that Lord Wright addressed the question "Whose business is it?"
Perhaps the best synthesis found in the authorities is that of Cooke, J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All. E.R. 732 at 738-39:
The observations of Lord Wright, of Denning L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes", then the contract is a contract for services. If the answer is "no" then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him.
There is no escape for the trial judge, when confronted with such a problem, from carefully weighing all of the relevant factors, as outlined by Cooke, J."
[13] There is no significant evidence upon which one could conclude that Gloria Johnson had any intention of performing services other than in the context of an employee. There is no indication she was operating a business or was holding herself out to the appellant as someone willing to deliver the service of basic computer instruction in the course of her own enterprise. Instead, there is evidence she had earlier accepted the position of Training Coordinator and later declined to continue on the basis the employment would adversely affect her entitlement to some sort of disability benefits. Once Gloria Johnson had concluded her instruction - occupying only 10 days in total during the relevant periods - she sought to have the appellant issue her a T4 slip. The appellant declined on the basis she was considered to have provided her services as an independent contractor. The entire infrastructure was provided by Four Corners. It was responsible for obtaining the funding from two levels of government and it chose the participants in the various programs that were designed by the Training Coordinator, an employee of the appellant. The classrooms and all the office space, equipment and computer facilities were leased by the appellant and it was also able to raise money on the basis of being a registered charity. The business - in the broadest sense of the word - was that of the appellant and not of Gloria Johnson who was an individual hired to perform a specific task during a particular period within the context of the accredited educational institution being operated by Four Corners. The apparatus and method of obtaining funding utilized by the appellant in the within appeal in order to carry out specific programs within the mandate of the society is similar to the situation in the case of Saskatchewan Intercultural Association Inc. v. M.N.R., 1999-3778(EI), a decision of mine dated November 17, 2000. In that matter, I found the instructor/coordinator to have been an employee. It is also consistent with my earlier decisions in the cases of Widdows (c.o.b. Golden Ears Entertainment) v. Canada (M.N.R.), [1999] T.C.J. No. 119 and Gastown Actors' Studio Ltd. v. M.N.R. 1999-147(EI) dated March 10, 2000, in which reference was made to the relevant jurisprudence. In each of the above decisions, the workers, who were music teachers and professional acting instructors, respectively, were found to have been employed pursuant to a contract of service in the same manner as alpine ski coaches or figure skating instructors, as determined by the Tax Court of Canada in other decisions such as Whistler Mountain Ski Club v. Canada (M.N.R.), [1996] T.C.J. No 876 and Puri v. Canada (M.N.R.), [1998] T.C.J. No. 175.
[14] What the parties thought their relationship was will not change the facts. Further, one party cannot unilaterally assign a status to the other one responsible for providing the service(s). In the case of The Minister of National Revenue v. Emily Standing, 147 NR 238, Stone J.A. at pp. 239-240 stated:
"...There is no foundation in the case law for the proposition that such a relationship may exist merely because the parties choose to describe it to be so regardless of the surrounding circumstances when weighed in the light of the Wiebe Door test."
[15] It is understandable that the management of the appellant and its advisors would have difficulty in regarding the instructors as employees - in the ordinary sense - since their tenure was never more than two weeks and the instruction was sometimes completed in only one day. Gloria Johnson worked 40 hours between January 25 and February 5, 1999. Then, between March 1 and March 4, 1999 she worked another 14 hours and from March 22 to April 1, 1999 she billed the appellant for an additional 36 hours. That does not seem to jibe with the decision of the Minister in which one of the relevant periods was stated to be from March 29 to April 1, 1999. However, it may be the invoice issued by Gloria Johnson to the appellant misstates the relevant time frame covered by her instructional services. In any event, I do not intend to vary the decision to reconcile that anomaly and - probably - the decision of the Minister regarding the status of the worker beginning with the provision of services on January 25, 1999 and ending on April 1, 1999 will be sufficient to encompass all work done by her.
[16] Not long ago there were certain minimum periods required before short-term employment was considered insurable for purposes of the unemployment insurance scheme. However, that was changed by Parliament when the Employment Insurance Act was assented to on June 30, 1996. Under the new legislation, the re-labelled insurance system was no longer based on weeks of work - with an effective minimum number of hours required - but became based on total earnings and total hours worked - albeit in a number of different jobs - so that every dollar earned is counted, beginning with the first hour spent in a specific employment. The purpose of the legislation was to become more in tune with the reality of the modern workplace in which young people - especially - may have as many as three or four part-time jobs or only one or two jobs mixed with a sideline business or other income-producing activity. The fact that sources of income from employment are transitory and non-repeating is irrelevant to the new regime. For persons engaged in business, the days of hiring people to wash windows 8-10 hours a week or to work stocking shelves when a shipment is received or to assist taking inventory for 20 hours once a year and then treating these part-time employees as "casual labour" - and therefore not included in insurable employment - are over and done. While it may be a nuisance to treat these individuals in the same manner as the employees on the regular payroll for purposes of the Employment Insurance Act and/or the Canada Pension Plan, that is what the law requires.
[17] Taking into account the evidence and applying it in the manner directed by the relevant jurisprudence, I conclude the decision of the Minister is correct and it is hereby confirmed.
[18] As earlier agreed by the agent for the appellant and counsel for the respondent, the above result applies to apppeal 2000-3611(CPP) and it is hereby dismissed.
Signed at Vancouver, British Columbia, this 24th day of January 2001.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE NO.: 2000-3610(EI)
STYLE OF CAUSE: Four Corners Community Development Society DBA Pride Training Centre and M.N.R.
PLACE OF HEARING: Vancouver, Biritsh Columbia
DATE OF HEARING: December 6, 2000
REASONS FOR JUDGMENT BY: the Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: January 24, 2001
APPEARANCES:
Agent for the Appellant: Mia Bonettemaker
Counsel for the Respondent: Victor Caux
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE NO.: 2000-3611(CPP)
STYLE OF CAUSE: Four Corners Community Development Society DBA Pride Training Centre and M.N.R.
PLACE OF HEARING: Vancouver, Biritsh Columbia
DATE OF HEARING: December 6, 2000
REASONS FOR JUDGMENT BY: the Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: January 24, 2001
APPEARANCES:
Agent for the Appellant: Mia Bonettemaker
Counsel for the Respondent: Victor Caux
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-3610(EI)
BETWEEN:
FOUR CORNERS COMMUNITY DEVELOPMENT SOCIETY
DBA PRIDE TRAINING CENTRE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Four Corners Community Development Society DBA Pride Training Centre (2000-3611(CPP))
on December 6, 2000, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Agent for the Appellant: Mia Bonettemaker
Counsel for the Respondent: Victor Caux
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 24th day of January 2001.
|
"D.W. Rowe" |
D.J.T.C.C.
2000-3611(CPP)
BETWEEN:
FOUR CORNERS COMMUNITY DEVELOPMENT SOCIETY
DBA PRIDE TRAINING CENTRE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Four Corners Community Development Society DBA Pride Training Centre (2000-3610(EI))
on December 6, 2000, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Agent for the Appellant: Mia Bonettemaker
Counsel for the Respondent: Victor Caux
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 24th day of January 2001.
|
"D.W. Rowe" |
D.J.T.C.C.