Rudzik v. M.N.R., docket 97-532-UI

Date: 19981014

Docket: 97-532-UI

BETWEEN:

KATHERINE RUDZIK,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

O'Connor, J.T.C.C.

[1] The only issue in this appeal is whether in the 1995 year the Appellant was engaged in a contract of service with the Robert McLaughlin Gallery ("Gallery") or was the relationship rather one of a contract for services.

[2] In Moose Jaw Kinsmen Flying Fins Inc. v. Minister of National Revenue, (1988), 88 N.R. 78 N.R. 78 the Federal Court of Appeal stated as follows:

[7] The definitive authority on this issue in the context of the Act, is the decision of this court in Wiebe Door Services Ltd. v. Minister of National Revenue (1986), 70 N.R. 214; 87 D.T.C. 5025. MacGuigan, J., speaking on behalf of the court, analyzed Canadian, English and American authorities, and, in particular, referred to the four tests for making such a determination enunciated by Lord Wright in City of Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161, at pp. 169-170. He concluded at page 5028 that:

"Taken thus in context, Lord Wright's fourfold test [control, ownership of tools, chance of profit, risk of loss] is a general, indeed an overarching test, which involves 'examining the whole of the various elements which constitute the relationship between the parties'. In his own use of the test to determine the character of the relationship in the Montreal Locomotive Works case itself, Lord Wright combines and integrates the four tests in order to seek out the meaning of the whole transaction."

[8] At page 5029, he said:

"... I interpret Lord Wright's test not as the fourfold one it is often described as being but rather as a four-in-one test with emphasis always retained on what Lord Wright, supra, calls 'the combined force of the whole scheme of operations', even while the usefulness of the four subordinate criteria is acknowledged."

(emphasis added)

[9] At page 5030, he had this to say:

"What must always remain of the essence is the search for the total relationship of the parties."

[3] In addition to the fourfold test referred to above there is also the organization or integration test analyzed by the Federal Court of Appeal inWiebe Door Services Ltd. v. Minister of National Revenue, [1986] 3 F.C. 553. At 561 the Court stated:

The organization test was approved by the Supreme Court of Canada in Co-Operators Insurance Association v. Kearney, [1965] S.C.R. 106, at page 112, where Spence J. for the Court quoted with approval the following passage from Fleming, The Law of Torts (2^nd ed., 1961) at pages 328-329:

Under the pressure of novel situations, the courts have become increasingly aware of the strain on the traditional formulation [of the control test], and most recent cases display a discernible tendency to replace it by something like an 'organization' test. Was the alleged servant part of his employer's organization? Was his work subject to co-ordinational control as to 'where' and 'when' rather than to 'how'?

As Bendel points out, supra, at page 381, the organization test is now "firmly established in Canada". He explains its attractiveness as follows, supra, at page 382:

The aspect of the organization test which makes it so attractive in the labour relations context is that integration into another person's business, the key feature of the test, is a very useful indicator of economic dependence. The relationship between integration and economic dependence has been explained this way by the Ontario Labour Relations Board (in a case predating the Ontario dependent contractor amendments):

The essence of operating a business is holding out to a market society the availability of goods and services at the best possible price having regard to competing pressures exacted upon a particular market. In seems patently obvious to this Board that a particular business will not flourish in circumstances where growth is totally integrated with the operations of a particular customer. The essence of resolving and distinguishing the contractor from the employee is his independence ... In instances where the driver's means of financial support is [sic] inextricably bound up with the respondent we are of the view that he cannot be considered an independent contractor.

[4] The Appellant was retained by the Gallery under two essentially identical agreements the first dated January 9, 1995 and the second dated April 18, 1995. Combined, these two agreements cover the period from early January, 1995 to December 23, 1995.These agreements contain provisions that on the one hand point to a contract of service and on the other hand to a contract for service. The Appellant is referred to as the "Contractor" and was paid a fixed bi-monthly rate based on invoices which she had to submit to the Gallery. A contract of service might be inferred from certain provisions which describe the Appellant as an education coordinator and set out her work specifications and indicate that the rate of pay was based on a 35 hour week. The agreements indicate that the services were to be provided at the Gallery "or at other locations as determined by the Chief Administrator" and also provided that the normal working hours were seven hours per day, five days per week during Gallery operating hours.

[5] However, from the testimony of the Appellant it is clear that the elements of control and hours were much more flexible than would appear from these agreements. She worked sometimes at her home using her own computer, printer, copier, art supplies, art clothing - and texts available to her at home. She hired third parties for special tasks and arranged the funding out of which they were paid by the Gallery.

[6] Her testimony was somewhat shaken by the application and questionnaire she filed with the Unemployment Insurance ("U.I.") office which referred to her "employment" with the Gallery. The Appellant testified that she realized she was not entitled to any U. I. benefits with respect to the Gallery work because no premiums were paid. She explained her reference to the Gallery in the application and questionnaire as a misinterpretation of advice she had received at the U. I. office. In other words, she thought she was only to refer to her most recent engagement although she was seeking benefits with respect to previous employment where U.I. premiums had been paid.

[7] On the whole I accept completely the credibility of the Appellant and her explanations in regard to the adverse implications arising from the said application and questionnaire.

[8] Control was limited. The Appellant set her own hours and for the most part acted independently. As to ownership of tools, certain items such as a computer, printer, copier and an office were made available to her at the Gallery. However, she also had her own tools at her home as described above.

[9] Her rate of remuneration was fixed but unlike an employer/employee relationship, she submitted invoices.

[10] The organization or integration test is not conclusive. Some of her duties related to the general work of the Gallery but her main assignment was the introduction of special programs which had not been part of the regular Gallery displays.

[11] As to risk of loss and chance for gain, the Appellant had neither with respect to her work with the Gallery but one cannot ignore the possibility of future gains for her, should the work at the Gallery have enhanced her reputation and experience in the museum world.

[12] Her education was extensive, as were her work experiences, not only at the Gallery but with certain other institutions such as The Art Gallery of Ontario as more fully detailed in Exhibit A-1.

[13] After considering all of the testimony and the exhibits filed, I am of the opinion that the Appellant, on a balance of probabilities has established that she was engaged under a contract for services and not a contract of service. Consequently the appeal is allowed and the determination of the Minister is reversed.

Signed at Ottawa, Canada this 14^th day of October, 1998.

"T.P. O'Connor"

J.T.C.C.