Date: 20010122
Docket: 2000-1406-EI, 2000-1407-CPP
BETWEEN:
SASKATCHEWAN DEAF AND HARD OF HEARING SERVICES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Porter, D.J.T.C.C.
[1]
These appeals were heard on common evidence, by consent of the
parties, at Regina, Saskatchewan on November 21, 2000.
[2]
The Appellant appeals the decisions of the Minister of National
Revenue (the "Minister") dated January 5, 2000, that
the employment of one Patrick S. Provost (the "Worker")
by the Appellant from February 15, 1999 to August 19, 1999 was
both insurable under the Employment Insurance Act (the
"EI Act") and pensionable under the Canada
Pension Plan ("CP Plan"). The reasons
given for the decisions were as follows:
"It has been decided that this employment was
insurable/pensionable for the following reason: You were employed
under a contract of service and therefore an employee."
The decisions were said to be issued pursuant to section 93 of
the EI Act and section 27 of the CP Plan and were
respectively based on paragraph 5(1)(a) of the EI
Act, and paragraph 6(1)(a) of the CP Plan.
[3]
The material facts reveal that the Appellant is a non-profit
organization, which provides services to the deaf, late-deafened
and hard of hearing persons. As part of those services, it makes
provision for interpreters to be available to such persons. The
worker was engaged to provide such services. The appellant
maintained that his engagement, as part of a roster of
interpreters which it operated, was as an independent contractor
operating under a contract for services and thus not insurable or
pensionable employment. The Minister has decided to the contrary
that it was a contract of service and that is the issue.
The Law
[4]
The manner in which the Court should go about deciding whether
any particular working arrangement is a contract of service and
thus an employer/employee relationship or a contract for services
and thus an independent contractor relationship, has been clearly
laid out by the Federal Court of Appeal in Wiebe Door Services
Ltd. v. M.N.R., 87 DTC 5025. The test to be applied has been
further explained by that Court in Moose Jaw Kinsmen Flying
Fins Inc. v. M.N.R., 88 DTC 6099. There are, following these
cases, numerous decisions of this Court, some of which have been
cited by counsel, which demonstrate how these appellate
guidelines have been applied. In the Moose Jaw Kinsmen Flying
Fins Inc. case, above, the Federal Court of Appeal said
this:
"[Analysis]
"The definitive authority on this issue in the context
of the Act, is the decision of this Court in Wiebe Door Services
Ltd. v. The Minister of National Revenue, 87 DTC 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., [1974] 1 D.L.R. 161 at 169-70. 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."
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.
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.
He also observed "there is no escape for the trial judge,
when confronted with such a problem, from carefully weighing all
the facts.
... like MacGuigan J. we view the tests as being useful
subordinates in weighing all of the facts relating to the
operations of the Applicant. That is now the preferable and
proper approach for the very good reason that in a given case,
and this may well be one of them, one or more of the tests can
have little or no applicability. To formulate a decision then,
the overall evidence must be considered taking into account those
of the tests which may be applicable and giving to all the
evidence the weight which the circumstances may
dictate."
[5]
The nature of the tests referred to by the Court can be
summarized as follows:
a)
The degree or absence of control exercised by the alleged
employer;
b)
Ownership of tools;
c)
Chance of profit and risk of loss;
d)
Integration of the alleged employee's work into the alleged
employer's business.
[6] I
also take note of the further words of MacGuigan J., in the
Wiebe case, above, where he approved the approach taken in
the English courts:
"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, 738-9:
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."
[7]
To this I would add the words of Décary, J.A. in
Charbonneau v. Canada (M.N.R.) [1996] F.C.J. No. 1337,
where speaking for the Federal Court of Appeal he said this:
"The tests laid down by this Court ... are not the
ingredients of a magic formula. They are guidelines which it will
generally be useful to consider, but not to the point of
jeopardizing the ultimate objective of the exercise, which is to
determine the overall relationship between the parties. The issue
is always, once it has been determined that there is a genuine
contract, whether there is a relationship of subordination
between the parties such that there is a contract of employment
... or, whether there is ..., such a degree of autonomy that
there is a contract of enterprise or for services. ... In other
words, we must not pay so much attention to the trees that we
lose sight of the forest. ... The parts must give way to the
whole."
[8]
With respect to the second aspect of the decision of the
Minister, paragraph 6(g) of the Employment
Insurance Regulations reads as follows:
"6(g) employment of a person who is placed in
that employment by a placement or employment agency to perform
services for and under the direction and control of a client of
the agency, where that person is remunerated by the agency for
the performance of those services. " SOR/97-31, s.1.
[9]
The Appellant also cited to the Court the case of Vulcain
Alarme Inc. v. The Minister of National Revenue, 1999 249
N.R. 1 in which the Federal Court of Appeal revisited the issue.
Létourneau J.A. said this:
"... These tests derived from case law are
important, but it should be remembered that they cannot be
allowed to compromise the ultimate purpose of the exercise, to
establish in general the relationship between the parties.
... This exercise involves determining whether a
relationship of subordination exists between the parties such
that the Court must conclude that there was a contract of
employment within the meaning of art. 2085 of the Civil Code
of Quebec, or whether instead there was between them the
degree of independence which characterises a contract of
enterprise or for services...."
He also said later in the same Judgment:
"... A contractor who, for example, works on site
on a subcontract does not serve his customers but those of the
payer, that is the general contractor who has retained his
services. The fact that Mr. Blouin had to report to the
plaintiff's premises once a month to get his service sheets
and so to learn the list of customers requiring service, and
consequently the places where his services would be provided,
does not make him an employee. A contractor performing work for a
business has to know the places where services are required and
their frequency just as an employee does under a contract of
employment. Priority in performance of the work required of a
worker is not the apanage of a contract of employment.
Contractors or subcontractors are also often approached by
various influential customers who force them to set priorities in
providing their services or to comply with the customers'
requirements."
He also said:
"... Although Mr. Blouin's income was
calculated on an hourly basis, the number of hours of work were
determined by the number of service sheets he received from the
plaintiff. Mr. Blouin and his company thus had no guaranteed
income. Unlike the technicians working as employees within the
plaintiff's business, whose weekly salary was constant, Mr.
Blouin's income fluctuated with the service calls. In fact,
towards the end of his contract with the plaintiff Mr. Blouin was
no longer doing the equivalent of forty hours a month as he
was receiving few service sheets.
Further, Mr. Blouin, who used his own vehicle for work, had to
pay the losses resulting from an accident in which he was
involved and obtain another vehicle."
These comments, it seemed to me, are most pertinent to the
case at bar.
The Facts
[10] The
Minister was said in the Reply to the Notice of Appeal, signed on
his behalf, to have relied upon the following assumptions of
fact:
"(a) the
facts as admitted above;
(b)
the Appellant was not related to the Worker;
(c)
the Appellant is a multi-lingual, multi-cultural, non-profit
organization whose mission is to promote the independence of
deaf, late deafened and hard of hearing persons by providing
services which enhance their quality of life;
(d)
the Appellant provides sign language and oral communication
facilitation services, note taking services, provides information
and accessibility to technical aids and devices and vocational
rehabilitation counselling;
(e)
the Appellant's business is not seasonal;
(f)
the Appellant's regular office hours are 8:00 a.m. to 4:30
p.m. Monday to Friday;
(g)
the Worker included community interpretation services ranging
from Alcoholics Anonymous meetings, anger management training,
information sessions, recreational interpreting and a first
aid-course;
(h)
the Worker worked either alone or with another interpreter;
(i)
the length of time for the service would determine the number of
interpreters required;
(j)
the Appellant's pay scale was approved by the Board of
Directors;
(k)
the pay scale was as follows:
Level
Hourly Wage
Entry Level (no
certification)
$16.50
Interpreter
Graduate
18.50
Interpreting
Certificate 27.50
(l)
the Worker was paid $16.50 an hour and was entitled to a $1.00 an
hour raise after every 250 hours of services were provided;
(m) the
Worker was guaranteed a minimum payment of 1.5 hours of pay for
each session;
(n)
at the end of each month, the Worker would provide the Appellant
with a schedule of the sessions and hours worked;
(o)
the Worker was paid monthly;
(p)
the Worker was paid by cheque on the 15th day of the following
month;
(q)
the Worker was entitled to a one hour cancellation fee if a
session was cancelled within 24 hours of the appointment;
(r)
the Worker was covered by the Appellant's liability insurance
policy and WCB;
(s)
the Worker would notify the Appellant of periods he was unable to
work;
(t)
the Worker performed services for the Appellant during the
evenings and occasionally on the weekends;
(u)
the Appellant would contact the Worker with an assignment;
(v)
the Worker could not change the times of the appointments;
(w) the
Appellant would provide a replacement worker when required;
(x)
the work assigned to the Worker was based on his qualifiction,
skill level and experience;
(y)
the Worker is a member of the Association of Visual Language
Interpreters of Canada ("AVLIC") and the Saskatchewan
Association of Visual Language interpreters
("SAVLI");
(z)
the Worker did not possess the two year diploma necessary to
obtain certification;
(aa) the
Worker was required to follow the code of ethics of AVLIC and
SAVLI;
(bb) the
Appellant's Manager of Communications made the final
decisions on work allotment and what level the Worker is
qualified to work at;
(cc) the
Worker's services were performed away from the
Appellant's premises;
(dd) the
Worker performed the services personally;
(ee)
clients' would contact the Appellant to arrange for an
interpreter;
(ff)
if the client was unhappy with the services provided the Worker
would still get paid;
(gg) the
Worker did not maintain a separate office;
(hh) work
performed by the Worker was only monitored by the client and/or
another interpreter;
(ii)
the Worker did not require training;
(jj)
the Worker did not require any tools in the performance of his
duties;
(kk) the
Worker did not charge the Appellant GST;
(ll)
the Worker was not the only worker providing the same services
under the same circumstances."
[11] The
Appellant agreed with the following assumptions of fact: (a),
(b), (c), (d), (e), (f), (g) (the Appellant said these services
were included as part of their total service); (h), (i), (j),
(k), (m), (n), (p), (q), (r), (s), (t), (z), (aa), (cc), (dd),
(jj), (kk) and (ll).
[12] The
Appellant disputed or wished to amplify or explain items (j),
(l), (o), (u), (v), (w), (x), (y), (bb), (ee), (ff), (gg)
(unknown); (hh), and (ii).
[13] Evidence
was given by Jerry Markin, manager of communication services for
the Appellant, and Patrick Provost, the worker in question.
[14] Mr.
Markin was a straightforward and honest witness. I had no
difficulty in accepting his evidence. He explained the nature of
the organization and that, among other things, he was responsible
for providing the interpreters to the consumers, that is deaf,
late-deafened and hard of hearing persons throughout
Saskatchewan. It is a non-profit organization with certain core
funding, which they received from government. They made no charge
for their services to their consumers, but if other groups or
organizations wished to engage their services, there would be
charges.
[15] The
organization had a certain number of full-time staff employees,
who were employed on a regular basis, worked regular hours and
received various employee benefits. Until a few years ago, they
had employed full-time staff interpreters as employees. That did
not work out well for their consumers as basically, there was
insufficient flexibility both as to choice of interpreter or
times at which they were available to work. Thus, the
organization established a roster of independent freelance
persons who would be available at times they themselves specified
and who were qualified and capable of delivering these services.
Patrick Provost was one of these.
[16] It was
clearly established between the Appellant and the worker, as in
the case of the other interpreters, that they were being engaged
on a freelance, independent contractor basis. Both Mr. Markin and
Patrick Provost were in agreement on this. The worker was in fact
engaged on a full-time basis, as an employee by a local school
board at the same time.
[17] The
arrangement was that if the Appellant received a request for
services, sometimes for a specific interpreter and sometimes not,
it would contact someone on the roster. If that person was
available and agreed to take the assignment, they would take the
assignment and then make their arrangements with the consumer.
They were, however, paid by the Appellant at an hourly rate
agreed upon ahead of time based upon their experience. They would
record their time and the assignment and submit an invoice at the
end of each month to the Appellant. Provided it was received
before the 5th of the ensuing month, they would be paid that
month. If not, they were paid the following month.
[18] There
were professional standards set by professional organizations
which they were required to follow.
[19] If the
assignment required more than a certain number of hours, a second
interpreter was assigned so that they each worked 20 minutes on
and 20 minutes off. There were also different levels of
assignment which related to the difficulty of the task, such as
court proceedings compared to a recreational occasion.
[20] The
interpreters, am I satisfied, were always free to refuse a
proposed assignment if they did not wish to take it, for any
reason and were not pressured or queried at all. They were quite
clearly free agents in this respect. If they took an assignment
and then for some reason they could not make it, they would
cooperate with the Appellant in finding someone who was suitable
and that person would then be paid by the Appellant.
[21] How the
interpreters performed their work, within their professional
standards, was very much up to them. Once the assignment had been
given, the Appellant no longer was involved, save and except to
make payment to the interpreter at a later date.
[22] The
worker was responsible for his own travel costs within the city,
his own parking, his own cell phone, and his own professional
fees. There were literally no other expenses. If he was required
to go out of town, he would be reimbursed for his expenses in
this respect.
[23] Whilst it
did not happen, the worker was free to take any other fee-paying
assignments from other sources that he chose.
[24] For what
it was worth, the worker was covered by a public liability
insurance policy taken out and paid for by the Appellant. This
policy covered their full-time staff, their freelance workers
such as Provost, their volunteers and their board members. I saw
nothing of significance in this.
[25] The
worker was also covered by Workers' Compensation as a
"freelance contractor", paid for by the Appellant.
The worker received no staff benefits, nor was he required to be
available at any set times. He had no reason to and did not
attend at the offices of the Appellant.
[26]
Complaints which were apparently few and far between, were made
directly to the Appellant who may or may not have passed them on
to the worker, depending upon their nature. Sometimes there were
personality problems between consumers and interpreters, but
there was no disciplinary process in place.
[27] Patrick
Provost, when he gave evidence, confirmed his understanding of
this freelance arrangement. When his full-time employment came to
an end with the school board, he applied for employment insurance
benefits and was told that this work also was counted as
insurable employment. He said he was not only told that, but that
it was insisted upon at the employment insurance office. That
apparently was how this matter came about.
[28] Those are
the salient facts as I have been able to discern them.
Application of the 4 Part Test to the Facts
[29] It was
quite clear that the law requires the Court to look at the
substance of the arrangement between the parties and not just the
title. If the substance of the arrangement is not in accord with
the label put upon it by the parties, it is the substance which
must prevail. However, where the parties have clearly indicated
to each other the nature of the contract they wish enter into and
there is no compelling evidence leading to a contrary conclusion,
I am of the view that the Court should give due deference to the
initial intention of the parties. It is not for the Court or for
the Minister to rewrite the contract entered into by the parties,
absent clear evidence of the substance differs from the stated
intention.
[30]
Control: I must remind myself that it is not the actual
control exercised by the payor which is all important in this
situation, but rather the right to control. The more professional
and qualified the worker, the less actual control can be
anticipated and it is the right to exercise their control which
must be considered.
[31] Apart
from the initial assignment of the work, in the case at bar, to a
person qualified to do the work, there was no control exercised
by the Appellant. It simply assigned a qualified person to the
consumer and that person then went about his assignment
accordingly, subsequently billing the Appellant. The worker was
free to take the assignment or not, and to work elsewhere or not
at any time that he chose. Clearly, there was a complete lack of
control and a lack of right to control in this arrangement. This
aspect of the test points squarely, in my view, to a contract
for services with an independent contractor.
[32] Tools
and Equipment: There were no tools or equipment. The worker
provided his own means of travel and his own cell phone. He paid
his own professional fees and all of these items would point also
to a contract for services.
[33] Profit
and Loss: There was not really a chance of making a profit in
an entrepreneurial sense as the affair was too small. He was
simply paid an hourly rate for a service he provided and expenses
were negligible. He was not in a position to lose money and
simply to earn more for working more hours does not constitute a
profit in the sense of this test. This aspect of the test does
not really help come to a decision one way or the other.
[34]
Integration: Clearly, the Appellant was in the business of
providing many different services to its consumer group, of which
the interpretation service was one. However, one must look at it
from the point of view of the worker, not the payor. He was
clearly just holding himself out as a professional interpreter to
do work for clients of the Appellant as and when it suited him.
As Létourneau J.A. said in the case of Vulcain
(above), a contractor who, for example, works on a building site
as a sub-contractor, does not serve his own customers, but those
of the person paying him, that is the general contractor who has
retained his services. It is no different in the case at hand.
The Federal Court of Appeal in that case clearly indicated that
such a factor is consistent with a contract of enterprise.
[35] In my
view, this aspect of the test clearly points, in the case at
hand, to a contract for services with an
independent contractor. Although the worker provided services to
the clientele of the Appellant in doing so, he was not enveloped
into the business of the Appellant, but was retained as an
outsider to provide services to their clientele. That is the
distinction.
Conclusion
[36] At the
end of the day, one must stand back from the individual trees and
look at the forest as a whole, and must consider whether all of
the evidence there was sufficient independence in an
entrepreneurial sense to say that this was an independent
contractor, or whether the work which was done and the manner in
which it was done was so intertwined with the business of the
Appellant that there was not a sufficient degree of
independence.
[37] In the
situation at hand, the parties expressed the clear intention to
enter into a contract for services. Several aspects of the
four-part test are completely consistent with this intention, and
there was virtually nothing which is inconsistent with that
intention. There is nothing in the evidence which, in my view,
unequivocally detracts from that expressed intention to indicate
in any way that this was a contract of service.
[38] In the
result, I am of the view that the arrangement was indeed a
contract for services with an independent contractor. The
employment was thus not insurable under the EI Act nor
pensionable under the Canada Pension Plan. The appeals are
accordingly allowed and the decisions of the Minister are
varied.
Signed at Calgary, Alberta, this 22nd day of January 2001.
"Michael H. Porter"
D.J.T.C.C.
COURT FILE
NO.:
2000-1406(EI)
STYLE OF
CAUSE:
Saskatchewan Deaf and Hard of Hearing
Services Inc. and M.N.R.
PLACE OF
HEARING:
Regina, Saskatchewan
DATE OF
HEARING:
November 21, 2000
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge M.H. Porter
DATE OF
JUDGMENT:
January 22, 2001
APPEARANCES:
Counsel for the Appellant: Christine Clifford
Counsel for the
Respondent:
Angela Evans
COUNSEL OF RECORD:
For the
Appellant:
Name:
Christine Clifford
Firm:
Gates and Company
Regina, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE
NO.:
2000-1407(CPP)
STYLE OF
CAUSE:
Saskatchewan Deaf and Hard of Hearing
Services Inc. and M.N.R.
PLACE OF
HEARING:
Regina, Saskatchewan
DATE OF
HEARING:
November 21, 2000
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge M.H. Porter
DATE OF
JUDGMENT:
January 22, 2001
APPEARANCES:
Counsel for the Appellant: Christine Clifford
Counsel for the
Respondent:
Angela Evans
COUNSEL OF RECORD:
For the
Appellant:
Name:
Christine Clifford
Firm:
Gates and Company
Regina, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-1406(EI)
BETWEEN:
SASKATCHEWAN DEAF AND HARD OF HEARING SERVICES
INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal
of Saskatchewan Deaf and Hard of Hearing Services Inc.
(2000-1407(CPP)) on November 21, 2000 at Regina, Saskatchewan,
by
the Honourable Deputy Judge Michael H.
Porter
Appearances
Counsel for the
Appellant:
Christine Clifford
Counsel for the
Respondent:
Angela Evans
JUDGMENT
The
appeal is allowed and the decision of the Minister is vacated in
accordance with the attached Reasons for Judgment.
Signed at Calgary, Alberta, this 22nd day of January 2001.
D.J.T.C.C.
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