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