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Citation:2003TCC484
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Date:20030714
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Dockets: 2003-235(EI)
2003-236(CPP)
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BETWEEN:
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CINDY SCOTT,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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REASONS FOR JUDGMENT
MacLatchy, D.J.
[1] These appeals were heard on common
evidence on May 27, 2003 at Hamilton, Ontario.
[2] 1087338 Ontario Limited operating
as The Neufeld Group, the Payor, appealed a ruling to the
Minister of National Revenue (the "Minister") for the
determination of the question of whether or not the Appellant was
employed in insurable and pensionable employment while engaged by
it during the period in question, from January 1 to June 18,
2001, within the meaning of the Employment Insurance Act
(the "Act") and the Canada Pension Plan
(the "Plan") respectively.
[3] By letter dated October 23, 2002,
the Minister informed the Appellant and the Payor that it had
been determined that the Appellant's engagement with the
Payor, during the said period, was insurable and pensionable
employment for the reason that the Appellant was employed
pursuant to a contract of service.
[4] The issue before this Court is
whether the Appellant was employed under a contract of service,
during the referred period, within the meaning of the Act
and the Plan or whether she was retained under a contract
for services as an independent contractor. This Court has been
given guidance to attempt to answer this question by the Federal
Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., 87
DTC 5025, where MacGuigan, J., speaking on behalf of the Court,
analyzed Canadian, English and American authorities and referred
to the four tests of Lord Wright in City of Montreal
v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161,
stated at page 5028 that:
Taken thus in context, Lord Wright's fourfold test
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.
and further 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.
[5] The trial judge must weigh all the
facts in each situation in order to search for the total
relationship of the parties.
[6] The accepted tests can be
summarized as follows: (a) the degree or absence of control
exercised by the alleged employer; (b) the ownership of the
tools; (c) the chance of profit and risk of loss; and (d)
the integration of the work performed as part of the overall
business of the alleged employer.
[7] In this circumstance, it was
agreed that the Payor carried out a business which includes the
provision of consulting strategy, planning, leadership and
governance. The Appellant provided bookkeeping and accounting
services on a part-time basis, averaging approximately 30 hours
per week and was paid at an hourly rate of $18 on a bi-weekly
basis on the submission of an invoice for the hours worked. The
work was generally performed at the office of the Payor, using
the Payor's equipment. There was no written agreement between
the Appellant and the Payor. The Appellant assumed she was an
independent contractor and performed her services
accordingly.
[8] The application of the test of
control is not easily disclosed as there is no clear control
shown. The Court must look at the facts presented, keeping in
mind that the control, although not clearly exercised, may be the
right of the Payor. The Appellant had flexible hours but the
Payor knew when she would be on his premises and approximately
how many hours she would be in attendance. A pattern of
attendance appeared to develop that indicated the Appellant was
at the office of the Payor every other week from Monday to
Thursday, depending on how busy the Payor was. There was a
meeting on Monday mornings and the Appellant attended, although
she was not required to be there. If there was an increase in
volume of business because of month or year-end statements, then
the Appellant was required to provide further time. It was
admitted the Payor could terminate the Appellant at any time. The
hourly rate was essentially set by the Payor depending on the
norm in the business as a whole. There was no negotiated rate of
pay established.
[9] The work of the Appellant was
performed at the office of the Payor using the equipment and
office space provided. The Payor knew when the Appellant would be
present and structured meetings accordingly so that she could
answer accounting questions, if needed. The Payor did not
supervise the Appellant directly. The Appellant was qualified to
do the work and needed no supervision nor was there any training
required other than to be shown the system of accounting that was
required.
[10] There does appear to be some elements
of control that the Payor could exercise. In modern businesses,
it is difficult to include supervision as a very important
element as the worker - or employee - may have skills and
expertise that cannot be understood by the Payor/employer but
nonetheless the Payor can end the position occupied by the
Appellant at any time whether the particular enterprise continued
or not.
[11] The Appellant performed her services at
the office of the Payor because it was more convenient for both
parties. The computer and its program was there along with
letterhead, cheques and other supplies required by the Appellant
to perform her work. The Appellant stated she could perform her
services in her own home by taking supplies home and installing
the Payor's accounting software but she would not be
immediately available to answer inquiries of the Payor. An office
was provided with the usual furniture and equipment including
telephone availability. All of the above would indicate an
employer/employee relationship.
[12] There does not appear to be any
evidence of a chance of profit for the Appellant in the
entrepreneurial sense. The Appellant worked at an hourly wage and
could only increase her income by working more hours. There,
likewise, appeared to be no risk of loss. Once again, this would
support the existence of a contract of service.
[13] The integration test is difficult to
apply as there is integration to the extent that the services of
the Appellant were needed in the business of the Payor. The real
question is whether the Appellant was in business for herself or
merely a part-time employee of the Payor. The Appellant stated
that she ran her own business and in fact was an employee with
another organization; that employment was quite minimal and
produced little income.
[14] Having examined the whole relationship
between the Appellant and the Payor and giving the proper weight
to the aforementioned tests based on the evidence presented, it
would appear that the arrangement between the parties was one of
employee and employer and that the Appellant was operating under
a contract of service. It may be that the parties called their
arrangement a contract for services and that the Appellant was to
be an independent contractor, but this is not supported by the
facts presented. The parties cannot place a name on their
relationship for their own convenience that is to be accepted by
all others at face value. The relationship must exist, in fact,
and supported by clear evidence in that regard.
[15] The appeals are dismissed and the
decisions of the Minister are confirmed.
Signed at Toronto, Ontario, this 14th day of July 2003.
MacLatchy, D.J.
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