Date: 20010917
Dockets: 2000-3809-EI, 2000-3819-CPP,
2000-3323-EI, 2000-3324-CPP,
2000-3325-EI, 2000-3326-CPP
BETWEEN:
RE-DIRECTIONS INC.
O/A PRODUCTIVITY POINT INTERNATIONAL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Dockets: 2000-3327-EI,
2000-3328-CPP
RE-DIRECTIONS INC.
O/A PRODUCTIVITY POINT INTERNATIONAL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
BARTON LAMB,
Intervenor.
Reasonsfor Judgment
Rowe, D.J.T.C.C.
[1] All parties agreed the appeals would be heard on common evidence including the appeals filed pursuant to the Canada Pension Plan (the "Plan") arising out of decisions issued concurrently by the Minister of National Revenue (the "Minister") together with decisions issued pursuant to the Employment Insurance Act (the "Act"). The parties also agreed the result in each appeal filed pursuant to the Act would apply to the corresponding appeal pursuant to the Plan. In addition, counsel for the appellant and counsel for the respondent agreed the pleadings filed in appeal 2000-3809(EI) would be used - generally - for the purpose of dealing with all appeals pursuant to the Act.
[2] By letter dated April 26, 2000, the Minister issued a decision to Re-Directions Inc. (RDI) confirming certain assessments - dated November 2, 1999 - for contributions pursuant to the Plan and employment insurance premiums pursuant to the Act for the periods January 1, 1998 to December 31, 1998 and from January 1, 1999 to December 31, 1999, in respect of certain workers named in an attached Appendix A. The Minister decided to confirm the assessments on the basis the individuals were employed under contracts of service and, therefore, were engaged in both pensionable and insurable employment. The appeals from this decision are: 2000-3809(EI) and 2000-3819(CPP).
[3] By letter dated April 26, 2000, the Minister issued a decision to RDI confirming certain assessments dated November 2, 1999 for contributions pursuant to the Plan and employment insurance premiums pursuant to the Act pertaining to named workers listed in an attached Appendix A for the periods from January 1, 1998 to December 31, 1998 and January 1, 1999 to August 31, 1999 on the basis the said workers were employed under contracts of service and, as a result, were engaged in both pensionable and insurable employment. The appellant appealed only from the 1998 assessments - 2000-3323(EI) and 2000-3324(CPP) - as the Notice of Appeal did not include any appeal of the assessments for the 1999 taxation year.
[4] By separate letters - both dated April 26, 2000 - the Minister decided the worker - Randy Berrington - was engaged in both insurable and pensionable employment with the appellant for the period September 30, 1998 to February 5, 1999. The appeal by RDI pursuant to the Act is 2000-3325(EI) and the corresponding appeal pursuant to the Plan is 2000-3326(CPP).
[5] By separate letters - both dated April 26, 2000 - the Minister decided the worker (intervenor) Barton Lamb was engaged in both pensionable and insurable employment with the appellant during the period September 30, 1998 to March 5, 1999 because he had been employed under a contract of service. The appellant appealed from these decisions - 2000-3327(EI) and 2000-3328(CPP) and Barton Lamb joined as an intervenor in both appeals on the basis he supported the decisions of the Minister finding him to have been engaged in insurable employment with the appellant.
[6] Keith Penner testified he is a businessman, residing in Winnipeg, Manitoba, and is the President of the appellant corporation. He was a high school teacher between 1969 and 1975 and then began working as a computer programmer. In 1983, he became the General Manager for a computer company operating in Winnipeg and in certain locations in California, U.S.A. and then he started his own business by incorporating the appellant in 1993. The business of RDI was to provide computer consulting to various entities and to deliver computer training to municipalities or corporations through a system of day classes lasting from one to five days. Leading up to January 1, 2000, the Y2K issue was a major concern - worldwide - and the appellant was extremely busy in dealing with requirements of clients wanting to ensure their computer systems would still be workable following the changeover to the year 2000. Penner stated the appellant corporation is now involved more in training and establishment of networks than in consulting, the workforce has shrunk from a high of 40 to 10 and the corporation has undergone a re-organization. Penner stated that during 1998 and 1999, there had been a lot of concern - mixed with speculation - about the potential effects of the arrival of January 1, 2000 on computers due to the date rollover. In 1998, the government of the Province of Manitoba placed an advertisement for proposals from persons and/or entities within the computer industry for services required in relation to this perceived problem. It took several months for the appellant's bids to be accepted but thereafter documents known as Statements of Work (SOW's) were issued quickly once a contract was signed. A consulting company called Phase Four Technology Management Corp. (Phase Four) had registered with the provincial government to do Y2K work and its bid was accepted and a SOW was issued to complete the Health Care Millennium Assessment Project. In turn, Phase Four entered into a contract with RDI to do part of the field work pertaining to the project. Due to time constraints, Penner stated there was no opportunity to interview and hire people in the normal course and Phase Four acted as the manager of the project and had the responsibility to analyze the results and to make recommendations to the provincial government. Counsel for the appellant referred Penner to the various assumptions of fact contained in paragraph 11 of the Reply to the Notice of Appeal filed in 2000-3809(EI). Penner agreed certain assumptions were accurate, except he did not agree with the characterization of the hourly rate as a wage as stated in subparagraph 11(h) of said Reply because the provincial government had established an appropriate hourly wage and no one in the computer consulting business would undertake a project on a fixed-price basis due to the uncertainty of the potential scope of the work and this policy was widely adhered to within the industry. In addition, the working hours were set by the provincial government in the contract with Phase Four. Penner agreed the following assumptions were correct:
(a) the Appellant is in the computer consulting business and provides installation, compliance testing, and e-commerce services;
(b) Phase Four Technology Management Corp. (hereinafter "the Client") entered into a contract with the Province of Manitoba to complete the Health Care Millennium Assessment Project;
(c) the Appellant entered into an agreement with the Client to provide manpower to the Client so it could complete the contract with the Province of Manitoba;
(d) the Client remunerated the Appellant for the manpower;
(e) the Workers were hired as field technicians and team leaders;
(f) all of the Workers, except Steven Poe and Chris Jones, worked on the Client's project;
(g) Steven Poe and Chris Jones performed services for another client of the Appellant's;
(h) the Workers were paid a set hourly wage between $9.00 and $15.00 per hour, field technicians normally received $9.50 per hour while team leaders normally received $13.00 per hour;
(i) the Appellant paid the Workers semi-monthly by cheque;
(j) the Appellant set the Workers' rates of pay;
(k) the Workers were required to keep track of their hours and submit timesheets;
(l) the Appellant obtained the work;
(m) the Workers normally performed their services at the Appellant's client's premises or the hospitals;
(n) the Workers normally worked regular office hours of 8:00 a.m. to 5:00 p.m., Monday to Friday.
[7] Penner stated the workers would gather at the appellant's premises and then travel to a specific worksite in order to perform the necessary services but - on occasion - the recipient of the services was not prepared and the visit by the appellant's team would be cancelled. In this event, the workers would merely return home but as time progressed they negotiated with RDI for payment of a cancellation fee based on payment for 2-4 hours at the regular rate depending on the circumstances. The position of RDI was that the workers could have subcontracted their duties to others but it would have required approval from RDI management as RDI was required to answer to the client in relation to the performance of their duties. Penner disagreed with the Minister's assumption - at subparagraph 11(r) - that the workers were supervised. In his view of the matter, once the workers were assigned tasks at the work location, thereafter, they were merely directed to the computers which were the subject of inspection and analysis and left to proceed on their own in accordance with the training and policies provided - and established - by RDI. The only tool required to perform the field work was a particular disc - containing a specific test - which was supplied by the appellant. The workers were reimbursed for any travel expenses incurred by them including mileage at 25 cents per kilometer and, in an effort to reduce costs, RDI rented a van which was used to transport several workers to the same site. None of the workers charged the appellant Goods and Services Tax (GST) because no one earned $30,000 per year and they were not registered within the system. Penner stated that once the workers were at a Regional Health Authority (RHA) site, they merely were shown the way to the computers and left alone to perform highly repetitive work that did not require supervision. Penner was referred to the letter of decision - Exhibit A-1 - dated April 26, 2000 pertaining to Randy Berrington. A letter of decision of same date pertaining to the worker (intervenor) Barton Lamb was filed as Exhibit A-2. Another letter of same date confirming assessments in relation to named workers - set forth on an attached Appendix A - was filed as Exhibit A-3. Penner referred to a contract - Exhibit A-4 - between the appellant and RDI dated October 15, 1998 in which - at clause 5.1 - Lamb agreed he was an independent contractor and not an employee or agent of RDI. Penner stated this document was used as the standard agreement between RDI and all workers (Exhibit A-5 - a contract between RDI and Roy Galapon is another example) but there were differences in pay between field technicians and persons functioning as Team Leaders. Pursuant to clause 5.5, Lamb - and others who have signed similar contracts - agreed not to enter into any direct or indirect contracts to provide similar services to any other organization other than through RDI, operating as Productivity Point International (PPI). Penner stated this clause was required to ensure the workers did not provide services to the RHA through Phase Four but only through RDI which had entered into a subcontract with Phase Four in relation to the project. Penner agreed the contract was personal in nature and could not be assigned without the written consent of the appellant corporation. Since the work was done in a three-month period, the situation never arose concerning any request by any worker to assign a contract. Appendix B to the contract - Exhibit A-4 - pertained to payment to the worker for services rendered and also contained a clause relating to the quality of work and the right of the appellant - as PPI - to reject any portion of a worker's invoice when the work performed had received an unacceptable evaluation from any of its clients. Penner stated the appellant could not afford to pay workers for services that did not qualify for payment by Phase Four as that company was often slow in issuing cheques to the appellant. In accordance with the agreement, Lamb was paid the sum of $13.00 for every hour of work that was billable by RDI to Phase Four. Appendix D contained certain clauses relating to non-disclosure pertaining to the project and other information and intellectual property rights of RDI and the signatory agreed to warrant that commitment. Penner explained a typical day in the life of a worker was to arrive at an RHA site and wait until the Team Leader met with the liaison person assigned by the particular facility and the computers requiring inspection would be identified. Some computers were more complex than others but generally the work was carried out in the following sequence. First, the worker checked the BIOS (operating system) and then used a diagnostic disc in order to ascertain if the date would roll over properly. Next, a search was undertaken of directories and applications and software were recorded. Other information of a similar nature was stored on a disc and notes were taken of particular operating systems being used. A Microsoft diagnostic utility was run and information was recorded. Finally, a visual inspection was made of the personal computer and a record was made of attachments such as printers, scanners and drives. In the event a date would not roll over properly - indicating that the program would not function after January 1, 2000 - the mandate of RDI did not include any requirement to repair the defect but merely to observe its nature and to record details so the appropriate information could be delivered to Phase Four where the analysis was undertaken. The workers proceeded to complete their duties and if it was necessary to continue the work the following day, they would stay overnight and all travel expenses were reimbursed by RDI. During the relevant period, Penner stated RDI had regular employees who participated in a Blue Cross Plan and who were subject to the usual deductions from their pay cheques for income tax, employment insurance premiums and Canada Pension Plan contributions. RDI also carried out training and this activity constituted 50% of the corporation's gross revenue with the remainder flowing from consulting which was provided by both regular employees and independent contractors. Due to the short-term nature of the Y2K project, in Penner's view it was not suited to engaging individuals who would work with the status of regular employment. In addition, the Y2K work amounted to only 20% of the total payment - by RDI - to workers.
[8] In cross-examination by counsel for the respondent, Ken Penner stated RDI provided corporate training in various software programs by means of classes lasting one to five days. In 1997 and 1998, the vocational training component of the appellant's business was split off to an allied corporation, Midwestern School of Business and Technology Inc. During the relevant periods involved in the within appeals, most of the workers were former students at Midwestern or were still taking classes at that institution. All workers handed in résumés to the RDI office and then an interview would be held with an applicant. Penner stated the same procedure was followed prior to signing a contract with any independent contractor willing to supply a service to RDI. Penner was referred to a contract - Exhibit R-1 - between RDI and Christopher Jones - dated December 9, 1998 - whereby Jones agreed to provide services to an entity described as Ceridian. Penner explained that this contract was not in relation to Y2K work as Jones was a computer programmer and he carried out most of the necessary work on site at Ceridian. RDI and Ceridian had entered into an agreement - Exhibit R-2 - dated November 25, 1998 - whereby RDI would provide certain services. The workers required to perform the work were named in attached Work Schedules and were to complete the task in less than one month. The contract - Exhibit R-3 - dated October 15, 1998 - entered into between Randy Berrington and PPI provided for payment to him in the sum of $9.50 per hour as opposed to the rate of $13.00 per hour for a Team Leader. Penner agreed workers were trained by RDI prior to commencing work and they were paid for that training because RDI could bill Phase Four for that time. Penner stated it is common within the industry for a client to pay a consulting company to train workers in order to be able to provide services within the context of a specific project. Although RDI developed a methodology for testing in connection with the Y2K project, it had not created the actual rollover test or other standard methods in common use within the computer consulting industry. Penner identified certain documents filed in a bundle - Exhibit R-4 - as a timesheet on Phase Four letterhead, an RDI timesheet and an RDI Employee Expense Form. Penner stated Phase Four requested a worker's time be recorded on its own form. Penner was referred to a document entitled Team Handbook - Exhibit R-5 - which had been produced by Phase Four and - at page 11, clause 2.8.1 - two timesheets were required to be completed weekly by each worker and handed over to the person acting as the Team Leader. The usual practice was to have the Team Leader work with the same group of technicians during the project. Penner agreed each worker was provided with a disc to check the rollover capability of a computer and all workers were - probably - provided with pens, paper and related supplies but the tools were not particularly significant in his opinion because the skills required to complete the task were most important. In a location distant from Winnipeg - such as Brandon - the workers would remain there until the work was completed. Otherwise, they would come back to Winnipeg each night and return - next morning - to the site. Penner was directed to clause 1.2 of Appendix A of Exhibit R-3 - the contract between RDI and Berrington - wherein it stated the subcontractor (Berrington) "may be asked by PPI to assist with other duties from time to time, provided their services are not required by Phase Four and have no impact on the project." Penner agreed that any person hired by a worker as a substitute would have to be familiar with the methodology utilized for Y2K testing. With respect to the contract with Barton Lamb - Exhibit A-4 - his duties - as Team Leader - included overseeing a team of five Field Technicians and he also worked on servers which were more complex than the ordinary personal computer at a work station. If technicians encountered a problem, they would seek advice from the Team Leaders who had been provided with cellular telephones by RDI and that expense was then billed to Phase Four. In the early stages of the project, workers would wait in the staircase on the RDI premises until they were advised whether or not an RHA site was ready for a visit by a team and, if it was not prepared, then the workers assigned to that location would be sent home. Penner stated he did not consider this procedure to be fair to the workers and - later - was able to negotiate with Phase Four for them to be paid a cancellation fee. While waiting to travel to an RHA site, Penner agreed some of them did data entry work at the RDI premises.
[9] The intervenor - Barton Lamb - chose not to cross-examine.
[10] Darcy Sabourin testified he is a resident of Winnipeg, Manitoba and had entered into a contract - similar to Exhibit A-4 - with RDI in order to provide services as a Team Leader. He performed hardware and software assessments for Y2K compliance and participated in field testing of computers at various RHA centres. When he was away from Winnipeg, he was not subject to any supervision by the appellant. Sabourin stated he would meet with the contact person at the RHA facility who would point out the location of the computers to be checked and Sabourin would then assign workers to various stations within the premises to carry out the required testing. He always regarded himself as being self-employed and reported his income on that basis. He was paid every two weeks in accordance with the entries on the timesheets and told the Field Technicians that the timesheets would be considered as invoices - to RDI - upon which payment for their services would be based. He informed his team of workers that they were considered - by RDI - to be independent contractors.
[11] In cross-examination, Darcy Sabourin stated he submitted timesheets to Brian Meyer - the RDI Project Coordinator - every Friday. During his two-week training period, he was paid at the rate of $13.00 per hour, the same as when he later went into the field and there had been no negotiation concerning that sum. He stated he had always understood the work had to be performed by him - personally - and he also agreed he had done some data collection work at the RDI office in Winnipeg. The Team Handbook - Exhibit R-5 - was provided to Field Technicians and it contained guidelines concerning the work to be performed. He was reimbursed for travel expenses and usually paid for overnight accommodation by using an RDI credit card as arranged for by someone at the appellant's office. Sabourin stated that when filing his income tax return pertaining to the revenue earned on the Y2K project, he had not claimed any deductions by way of business expense.
[12] Counsel for the respondent called Barton Lamb as a witness. Lamb stated he was a computer consultant and had received two designations from computer schools. Between September, 1997 and February, 1998, he had attended Midwestern and studied certain courses in pursuance of a certificate as a Microsoft Certified Professional. Out of six examinations required, he had successfully completed three. The contract - Exhibit A-4 - dated October 15, 1998 - originally intended to expire on November 6, 1998 was extended until February 26, 1999 and a letter of confirmation - Exhibit R-6 - was issued by RDI to that effect as well as serving to further extend the contract to March 5, 1999. The extension of the contract was not connected with the provision of services relating to the Y2K project but pertained - instead - to marketing certain services. The letter - Exhibit R-6 - had been signed by Val Kroeker - an officer of RDI - as she had been the person advising the Team Leaders and other workers of any changes in procedures during the project. Lamb stated that Phase Four and RDI handled the project and two discs were provided to each Field Technician, one of which was used to test for viruses, bugs, worms, etc. and Phase Four later provided an updated disc. Various forms were designed by Lamb and other Team Leaders but the testing document was provided by RDI and was completed by the workers in the field. A document entitled Testing Methodology - Exhibit R-7 - was provided by the appellant - operating as PPI - to the workers and the final version of the boot disc was written by a person working at Phase Four. Meetings were held at RDI premises and at least once a week there was a performance review of the Team Leaders. One individual had difficulty performing the work and, in an effort to obtain a satisfactory performance level, this person was placed on three different teams during the project. Lamb stated he brought a résumé to Brian Meyer - at RDI - and was interviewed by him. After working for three days as a Field Technician - at the rate of $9.50 per hour - he was asked to become a Team Leader. He accepted that position - at $13.00 per hour - and there was no negotiation with RDI in that regard. He received training at RDI premises in Winnipeg and referred to a training agenda - Exhibit R-8 - pertaining to October 9, 1998. He described the training as hit-and-miss due to uncertainty as to the scope of the Y2K project and amendments were made - on two occasions - to testing parameters. The Field Technicians were not experienced in dealing with servers but were more accustomed to working on personal computers. On occasion, if workers attended at a site only to discover the facility was not prepared for their visit, then some workers were assigned to collect data from previous field operations. Workers were expected to be available between the hours of 8:00 a.m. and 9:00 p.m., Monday through Friday. Phase Four made the bookings for field trips, teams were assigned to a site and persons with specialized skills were added, as required. As the scope of the project came to be enlarged, additional forms had to be created and, prior to departing from a facility, the technicians and Team Leader would meet and review the various forms and sheets to ensure the information had been properly recorded and each technician was required to hand in the two discs which would be needed to work at other sites. The decision whether or not a team would stay overnight at a location or return to Winnipeg was made by Brian Meyer at RDI in Winnipeg and communicated to the Team Leader. As the project continued, different tasks were carried out in the field by the workers including gathering information concerning the different levels of software in use as - in Lamb's opinion - the Manitoba government wanted to coordinate usage of programs and to eliminate certain other versions. The teams varied in size from 3 to 8 persons - depending on the nature of the site to be visited - and the Field Technicians were requested to be at the RDI office by 7:30 a.m. each morning. Workers were transported to the relevant site in a van leased by RDI but once the work was nearly completed, a Jeep was substituted. As the volume of the work dwindled, certain workers were laid off and others retained and Lamb and other Team Leaders were involved in providing input - to Brian Meyer - on their capabilities. All expenses were fully reimbursed and all materials purchased became the property of RDI. Pursuant to the non-disclosure provisions in the contract, the workers were advised not to communicate directly with any official of an RHA concerning any computer problems - even if it were of a serious nature - as that advice had to be forthcoming from Phase Four. The Team Handbook - filed as Exhibit R-5 - was described by Lamb as being one of two or three drafts in circulation before a final version was adopted. He had never been required to attend at any site in order to rectify a problem arising from his own work performance but had gone to an RHA facility in order to finish work previously attempted by a Field Technician and later - while working for RDI as a marketer - did some follow-up work in that regard. His duties - pursuant to the contract - required him to assist in overseeing a team of five Field Technicians, one of whom would interview a representative of the end-user concerning various aspects of the hardware and software. Lamb stated he ensured all workers were equipped with pens, plastic folders, cell phone holders and fanny packs, all of which were provided by RDI. Workers could not take any of their own discs to a site in order to prevent misappropriation of information stored on the computers which were the subject of the testing process. Timesheets were turned over to an RDI employee every Friday afternoon. Any person unable to attend for work was expected to advise the Team Leader and either Brian Meyer or Val Kroeker at RDI.
[13] In cross-examination by counsel for the respondent, Barton Lamb agreed the discs initially provided by Phase Four had later been amended in conjunction with input from various Team Leaders. At the beginning of the project, Phase Four was located in the same building as RDI but it later moved to another building. As for signing the contract - Exhibit A-4 - Lamb stated the choice was either to work - or not - at the rate offered by RDI and he wanted the work, even if it meant agreeing to the status of an independent contractor in connection with the provision of his services. He agreed that improper work could have been the subject of a deduction from payment for other work performed and this could have resulted in a loss of income. He never questioned the lack of deductions from the cheques issued to him by RDI in payment of his services and he did not inquire as to his status within the working relationship but stated he now agrees with the decision of the Minister that he had been engaged in insurable - and pensionable - employment with the appellant. The hours of work varied in accordance with the demands of the particular site being visited by the team. He did not consider it to be at all practical to attempt to assign his contract with RDI to someone else in order to have the work performed at a lower rate and then retain the difference.
[14] In re-examination by counsel for the respondent, Barton Lamb stated the information disseminated to the workers was based on material flowing from Phase Four and all Team Leaders were made aware of matters pertaining to human rights, racism, and sexual harassment in the workplace because they were out in the field with a group of people. Any violations of that nature were to be reported to RDI by using the cell phones provided to each Team Leader. Lamb stated he was unaware of any worker who had not been paid for each hour of work due to a deduction for unsatisfactory performance at a specific site.
[15] Barton Lamb - in his capacity as intervenor - testified that none of the Team Leaders had passed a sufficient number of exams in order to earn any professional designations. The Y2K problem was unique and while working as a Team Leader he was supervised by Brian Meyer - by telephone conversations during the day - and in the course of reporting to Meyer during the evening if it had been necessary for the team to stay overnight.
[16] Roy Galapon testified he was a computer programmer and had worked as a Field Technician during the Y2K project. He had been a student at Midwestern but had already graduated when he was telephoned by a secretary at RDI advising of the availability of certain work. He submitted a résumé and was interviewed by a person from Phase Four. He completed a Questionnaire - Exhibit R-9 - as requested by an official at Canada Customs and Revenue Agency (CCRA) - and believes his answers were accurate. Although timesheets were submitted weekly, he was paid bi-weekly at the rate of $9.50 per hour and had earlier received training from persons representing both RDI and Phase Four. He was required to be at RDI premises each morning and did not believe it would have been possible to hire other persons to perform his work at various sites.
[17] In cross-examination by counsel for the appellant, Galapon agreed he had been aware of the clause in the contract whereby he was to provide services as an independent contractor. He stated he reported his 1998 and 1999 income - earned from RDI - as revenue from self-employment. At the time, he had another job - between 11:00 p.m. and 7:00 a.m. - and now believes he had been an employee of RDI during the relevant period.
[18] In cross-examination by Barton Lamb - intervenor - Galapon agreed everything he did at work was under directions or according to standards pursuant to a work schedule. As duties were amended, the handbook was changed to accommodate the collection of additional on-site information at various RHA facilities.
[19] Ken Penner - testifying in rebuttal, stated Midwestern does not require the Microsoft examinations to be completed prior to graduation, although it is recommended students do so during the course of their study.
[20] Counsel for the appellant submitted the facts in the within appeals supported a finding that the workers were independent contractors even though they were utilizing tools provided by RDI because the unique nature of the Y2K project was consistent with the obligations of the parties as set forth in a contract entered into by a worker and the appellant. In counsel's view of the evidence, the fact the workers were paid at a set hourly rate on the basis of timesheets submitted to the appellant did not transform them into employees since RDI - in turn - was a subcontractor to Phase Four and the government of Manitoba had established rates it was willing to pay for certain services in connection with the Y2K project.
[21] Counsel for the respondent submitted the workers were under the control of the appellant and were restricted in their ability to perform similar services to others even though the opportunity for this type of work would not re-occur for another 1,000 years. Counsel pointed to evidence of control over workers while they were in the field and the requirement that they abide by detailed instructions contained in various documents including the Team Handbook. Counsel submitted the workers brought nothing of consequence to the job in terms of tools and there was no opportunity - whatsoever - for profit or any true risk of loss as all expenses were paid by the appellant and the services performed by the workers were totally within the context of the business of the appellant.
[22] Barton Lamb - intervenor - submitted there was no real opportunity for any worker to have subcontracted any portion of the work to another person with a view to gaining a profit on the differential in remuneration. He submitted the reality of the situation was contrary to the wording of his own contract as throughout the relevant period of his working relationship with RDI, he was - in effect - told "where to jump, when to jump, where not to jump and with whom to jump."
[23] 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 or risk of loss
4. The integration test
[24] Counsel for the appellant relied on the decision of the Federal Court of Appeal in Vulcain Alarme Inc. v. M.N.R., [2000] 1 C.T.C. 48. I will, therefore, refer to that decision while undertaking an analysis of the evidence in accordance with the four-in-one test required by the decision in Wiebe, supra.
Control:
[25] It is apparent from the evidence that a high degree of control was exercised by the appellant throughout the course of the Y2K project and other related work. Brian Meyer - from RDI - was in contact with the Team Leaders and appropriate instruction was provided, as required, together with direction as to whether or not the team was to remain overnight in a certain municipality and arrangements to that end were made by RDI staff. The workers assembled each morning at the RDI premises and waited there - in the stairway - until they were advised of a destination. In the interim, some worked in the RDI office performing various tasks. On site, having travelled there in a van leased by RDI, they were instructed as to the method of performing the work and were required to abide by standards set forth in the Team Handbook provided by Phase Four. The fact that a payor agrees to assign a degree of control and supervision over workers to be exercised by a third party pursuant to a contract does not - without more - transform those persons into independent contractors. The evidence of Barton Lamb - intervenor - was clear on this point and it is apparent there was not the sort of freedom one would normally associate with an entrepreneur performing the same service within the context of his or her own business. In fact, the workers were forbidden to engage in similar work with any other entity even though this type of service was relevant only in the context of the turnover of the date on January 1, 2000. In Vulcain Alarme, supra, the worker had been operating a business under his own trade name since 1965 and even though he had to report to the Vulcain Alarme premises once a month to receive the list of customers requiring service, he could work at his own pace on condition the service was provided to those clients within 30 days. In that case, the worker - Mr. Blouin - worked exclusively for Vulcain Alarme even though he was not contractually bound to do so and was required to submit his time sheets and expense reports in order to be paid at a rate determined by the plaintiff. In this sense, Létourneau, J.A. - writing for the Court - found Vulcain Alarme did exercise control over Blouin through the operation of the billing system. However, Létourneau stated, at p. 51 of the judgment:
In the case at bar, the evidence did not disclose that the plaintiff controlled Mr. Blouin by giving him orders and instructions in the way his work was to be done. On the contrary, the latter was complete master of the way in which he provided his services, except that they had to be done within 30 days. No one imposed any control on him or exercised any supervision over his provision of the services, and Mr. Blouin set his own schedule. We will also return to this concept of control in the following analysis of the concept of ownership of tools.
[26] With regard to this particular test, I find the evidence favours the status of employment.
Tools:
[27] The only tools required to perform the tasks carried out by the workers were provided by the appellant directly or through its contractual arrangements with Phase Four. The workers were provided with discs to check the computer operating systems and all other incidental office supplies were provided by RDI and remained the property of the appellant. The cell phones were provided by the appellant and the workers were transported to the sites in vehicles leased by RDI. In the Vulcain Alarme appeal, the worker - because he had been in business for himself over the course of nearly 35 years - had owned various tools and equipment. However, in order to perform the particular tests required of him, Blouin had to use a special detector not readily available and - in any event - the inspection of the detectors did not require many tools. Due to the nature of the Y2K project and the fact the work had to be performed on the premises of the client, the issue of tools is not particularly significant nor is the requirement that - for security purposes - the workers were not permitted to take their own discs into the premises being inspected. With regard to this test, there is no evidence supporting the status of independent contractor. However, within the special context of the task being performed, the issue of ownership of tools does not play a significant part in the overall analysis. In many cases now arising out of working relationships within a modernized workplace this traditional test is losing much - if not most - of its significance and - in my view - requires redefinition in light of existing technology and use of intellectual property. When old-fashioned hardware gives way to software and tasks can be performed at various locations by way of transmission of data through cyberspace using shared networks and a variety of computer systems, the question of who owns the hammer and the pick-up truck is increasingly less relevant and the need to draw an analogy between modern devices and those sorts of items is usually not appropriate in the context of the analysis demanded by existing jurisprudence.
Chance of profit or risk of loss:
[28] The workers were offered two positions: Field Technician at $9.50 per hour or Team Leader at $13.00 per hour. There was no evidence supporting the view that any worker could have subcontracted out the task to another person since approval was required from the appellant and it was not practical to do so for a variety of reasons. There was no evidence that any worker had suffered any loss due to having performed unsatisfactory work and Barton Lamb testified he was paid to attend at an RHA site to finish providing the requisite services that had not been supplied properly by a member of a team during a previous visit for that purpose. All work-related expenses were paid by RDI and they were reimbursed for all expenditures including travel at the rate of 25 cents per kilometer if they chose to travel to a work site in their own vehicle. For the most part, the teams travelled to work in vehicles leased by the appellant. The Team Leaders were provided with cellular telephones owned by RDI. In the Vulcain Alarme case, the Court found Blouin had to use his own vehicle in the course of providing the service and - due to an accident - had to pay for losses arising from that misfortune. In addition, Létourneau, J.A. placed reliance on the fact Blouin's income fluctuated with the service calls and that he had no guaranteed level of income. In the within appeals, the workers were instructed to work specific hours - Monday through Friday - and, once the management of RDI was able to obtain a cancellation fee in the event a site was not ready for inspection, their hours of work - per week - would have been capable of calculation with a high degree of certainty. In my opinion, this test favours a finding that the workers were engaged in employment as opposed to providing services as independent contractors.
Integration:
[29] In the within appeals, RDI obtained work in its own right by bidding in response to proposals advertised by the provincial government. In addition, it entered into a contract with Phase Four to perform services in connection with a successful bid submitted by Phase Four in relation to the Y2K work. The entire infrastructure was owned and operated by RDI and was not created by grouping together the individual workers in the sense of organizing a consortium of persons each engaged in the operation of their own businesses. The work was obtained by RDI through its bid and by virtue of the contract with Phase Four. The training of the workers - many of whom were current or former students of Midwestern - a school operated by RDI - was carried out by RDI and/or Phase Four. The assignment of work sites was carried out by the appellant and all activities related to the successful conclusion of the work - including entries of data - were performed by the workers within the framework of the business organization of RDI. The workers were forbidden to work for others and could not communicate directly with the appropriate official of an RHA even if a serious computer deficiency had been discovered on site. It is clear from the evidence that the end-user would always seek redress from RDI itself or through Phase Four, in which case RDI was still responsible pursuant to the terms of its contract with Phase Four. The evidence of Ken Penner - President of RDI - was that only 20% of the annual payroll that year related to the Y2K work and that this one-time project was not vital to the operation of the business. It is apparent the workers were required to carry out the terms of the Statements of Work received from the government of Manitoba by both RDI and Phase Four and there were no independent consulting entities chosen to be recipients of an assignment of work by way of subcontracts. Instead, the workers were recruited - by RDI - from the classroom at Midwestern or former students were called by an office worker at RDI and invited to submit an application for forthcoming Y2K work. From the standpoint of a worker, in response to the question - "whose business is it?" - the evidence supports only one reasonable conclusion; it was the appellant's business. In the Vulcain Alarme decision, Létourneau, J.A. relied on the fact the worker had chosen to work exclusively for the company and accepted the evidence that all complaints were directed to that entity but found these factors did not make him an employee even in view of the fact the testing service provided by Blouin - at 20% of turnover - was a significant portion of its overall business. In that case, Vulcain Alarme also maintained an internal technical section consisting of a manager and about 15 technicians and Blouin was not part of that group and the services he did provide - through the vehicle of his established trade name - Service Électronique Enr. - were only a small part of that revenue stream. In my view, a significant finding was that Blouin was not working in the offices or workshops of Vulcain Alarme and, as noted by Létourneau, J.A. at p. 53 of his judgment:
... Further, his comings and goings, his work hours and days were in no way integrated into or coordinated with the plaintiffs operations.
[30] The appellant relied on the agreement with Barton Lamb - intervenor - and other workers which stated the parties agreed the status of independent contractor was appropriate in relation to the work being performed. In the case of the Minister of National Revenue v. Emily Standing, 147 N.R. 238, Stone, J.A. at pages 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 ...
[31] In all of these cases, there is a need to examine the evidence with a view to determining the appropriate status of the workers involved. Sometimes, it is obvious and on other occasions it is extremely difficult because relatively small differences in facts - examined during a sequence of events and circumstances - within a particular context - can lead to a contrary result. Certainly, the appellant was correct to seek comfort from the decision of the Federal Court of Appeal in Vulcain Alarme as a casual reading of that judgment could lead one to believe it was at odds with several others decisions - in this field of jurisprudence - issued by that Court over the course of several years, none of which - in my opinion - support the proposition advanced by the appellant. However, the evidence in the within appeals does not establish the same conditions - overall - to have been present in sufficient force so as to assign the status of independent contractor to the workers named in the various assessments and/or in the relevant decisions issued by the Minister. Taking into account all of the factors on the basis set forth in the Wiebe decision, I cannot find any error in the decisions issued by the Minister - whether in confirmation of previous assessments or by way of decision(s) as to the status of any worker(s). The workers were engaged in both insurable and pensionable employment with the appellant during the relevant periods pertinent to each appeal filed pursuant to the Act and the Plan. As a result, the decisions of the Minister are hereby confirmed and each of the within appeals is hereby dismissed. As agreed by the parties at the outset, this result will apply to all appeals filed pursuant to the Plan and each appeal is hereby dismissed.
Signed at Sidney, British Columbia, this 17th day of September 2001.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE NO.: 2000-3809(EI), 2000-3323(EI) and
2000-3325(EI)
STYLE OF CAUSE: Re-Directions Inc. o/a Productivity Point
International and M.N.R.
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: May 22, 2001
REASONS FOR JUDGMENT BY: the Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: September 17, 2001
APPEARANCES:
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
COUNSEL OF RECORD:
For the Appellant:
Name: Sean D. Shore
Firm: Pitblado Buchwald Asper
Winnipeg, Manitoba
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE NO.: 2000-3819(CPP), 2000-3324(CPP) and
2000-3326(CPP)
STYLE OF CAUSE: Re-Directions Inc. o/a Productivity Point
International and M.N.R.
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: May 22, 2001
REASONS FOR JUDGMENT BY: the Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: September 17, 2001
APPEARANCES:
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
COUNSEL OF RECORD:
For the Appellant:
Name: Sean D. Shore
Firm: Pitblado Buchwald Asper
Winnipeg, Manitoba
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE NO.: 2000-3327(EI)
STYLE OF CAUSE: Re-Directions Inc. o/a Productivity Point
International and M.N.R. and Barton Lamb
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: May 22, 2001
REASONS FOR JUDGMENT BY: the Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: September 17, 2001
APPEARANCES:
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
Counsel for the Intervenor: The Intervenor himself
COUNSEL OF RECORD:
For the Appellant:
Name: Sean D. Shore
Firm: Pitblado Buchwald Asper
Winnipeg, Manitoba
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervenor:
Name:
Firm:
COURT FILE NO.: 2000-3328(CPP)
STYLE OF CAUSE: Re-Directions Inc. o/a Productivity Point
International and M.N.R. and Barton Lamb
PLACE OF HEARING: Winnipeg, Manitoba
DATE OF HEARING: May 22, 2001
REASONS FOR JUDGMENT BY: the Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: September 17, 2001
APPEARANCES:
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
Counsel for the Intervenor: The Intervenor himself
COUNSEL OF RECORD:
For the Appellant:
Name: Sean D. Shore
Firm: Pitblado Buchwald Asper
Winnipeg, Manitoba
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervenor:
Name:
Firm:
2000-3809(EI)
2000-3323(EI)
2000-3325(EI)
BETWEEN:
RE-DIRECTIONS INC.
O/A PRODUCTIVITY POINT INTERNATIONAL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on common evidence with the appeals of Re-Directions Inc. o/a Productivity Point International (2000-3819(CPP), 2000-3324(CPP) and 2000-3326(CPP)) and Re-Directions Inc. o/a Productivity Point International and Barton Lamb (2000-3327(EI) and 2000-3328(CPP)) May 22, 2001 at
Winnipeg, Manitoba, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
JUDGMENT
The appeals are allowed and the decisions of the Minister are confirmed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 17th day of September 2001.
|
"D.W. Rowe" |
D.J.T.C.C.
2000-3819(CPP)
2000-3324(CPP)
2000-3326(CPP)
BETWEEN:
RE-DIRECTIONS INC.
O/A PRODUCTIVITY POINT INTERNATIONAL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on common evidence with the appeals of Re-Directions Inc. o/a Productivity Point International (2000-3809(EI), 2000-3323(EI) and 2000-3325(EI)) and Re-Directions Inc. o/a Productivity Point International and Barton Lamb (2000-3327(EI) and 2000-3328(CPP)) May 22, 2001 at
Winnipeg, Manitoba, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
JUDGMENT
The appeals are allowed and the decisions of the Minister are confirmed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 17th day of September 2001.
|
"D.W. Rowe" |
D.J.T.C.C.
2000-3327(EI)
BETWEEN:
RE-DIRECTIONS INC.
O/A PRODUCTIVITY POINT INTERNATIONAL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
BARTON LAMB,
Intervenor.
Appeal heard on common evidence with the appeals of Re-Directions Inc. o/a Productivity Point International (2000-3809(EI), 2000-3819(CPP), 2000-3323(EI), 2000-3324(CPP), 2000-3325(EI) and 2000-3326(CPP)) and Re-Directions Inc. o/a Productivity Point International and Barton Lamb (2000-3328(CPP)) May 22, 2001 at Winnipeg, Manitoba, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
JUDGMENT
The appeal is allowed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 17th day of September 2001.
|
"D.W. Rowe" |
D.J.T.C.C.
2000-3328(CPP)
BETWEEN:
RE-DIRECTIONS INC.
O/A PRODUCTIVITY POINT INTERNATIONAL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
BARTON LAMB,
Intervenor.
Appeal heard on common evidence with the appeals of Re-Directions Inc. o/a Productivity Point International (2000-3809(EI), 2000-3819(CPP), 2000-3323(EI), 2000-3324(CPP), 2000-3325(EI) and 2000-3326(CPP)) and Re-Directions Inc. o/a Productivity Point International and Barton Lamb (2000-3327(EI)) May 22, 2001 at Winnipeg, Manitoba, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Sean D. Shore
Counsel for the Respondent: Tracey Harwood-Jones
JUDGMENT
The appeal is allowed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 17th day of September 2001.
|
"D.W. Rowe" |
D.J.T.C.C.