Date: 20000310
Docket: 1999-147-EI, 1999-149-CPP
BETWEEN:
GASTOWN ACTORS' STUDIO LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Docket: 1999-3301-EI
TRISH ALLEN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Docket: 1999-274-EI, 1999-275-CPP
PETER HANLON,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
AND
Docket: 1999-362-EI, 1999-363-CPP
SUSAN ASTLEY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Docket: 1999-3300-EI
BART ANDERSON,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Rowe, D.J.T.C.C.
[1]
On October 7, 1998 the Minister of National Revenue (the
"Minister") confirmed an assessment dated February 17,
1998 in which the Minister assessed Gastown Actors' Studio
(Gastown) with respect to employment insurance premiums in the
amount of $12,890.61 for the 1997 taxation year payable by
Gastown pursuant to the Employment Insurance Act in
connection with the services performed for Gastown by certain
individuals listed in Schedule A to the Reply to Notice of Appeal
in respect of whose remuneration Gastown failed to make
remittances to the Receiver General, as required. Gastown
appealed from this assessment.
[2]
On October 7, 1998 the Minister assessed Gastown with respect to
Canada Pension Plan contributions in the amount of $9,190.86 for
the 1997 taxation year payable pursuant to the Canada Pension
Plan in connection with the services performed by the
individuals listed in Schedule A to the Reply to Notice of Appeal
in respect of whose remuneration Gastown failed to make
remittances to the Receiver General, as required. Gastown
appealed from this assessment - 1999-149(CPP) - and
Counsel agreed this appeal would follow the result of the within
appeal.
[3]
Trish Allen, appearing on her own behalf, appealed -
1999-3301(EI) - from the decision of the Minister dated October
7, 1998, on the basis that she was not an employee but was a
self-employed individual providing certain services to Gastown
from time to time. At the conclusion of the evidence in the
Gastown appeal, she requested the evidence apply to her appeal
and agreed she would be bound by the result.
[4]
Peter Hanlon, appearing on his own behalf, appealed -
1999-274(EI) - from the decision of the Minister dated October 7,
1998, on the basis he was employed under a contract for services
and was not an employee of Gastown. At the conclusion of the
evidence in the Gastown appeal, he requested the evidence apply
to his appeal and agreed he would be bound by the result. As
well, he appealed - 1999-275(CPP) - from the decision of the
Minister dated October 7, 1998 issued pursuant to the Canada
Pension Plan and agreed the result in the employment
insurance appeal would apply to said appeal.
[5]
Susan Astley, appearing on her own behalf, appealed -
1999-362(EI) - from the decision of the Minister dated October 7,
1998, on the basis she was self-employed during the period
she provided services to Gastown and also appealed -
1999-363(CPP) - from the decision of the Minister issued pursuant
to the Canada Pension Plan. At the conclusion of the
evidence in the Gastown appeal, she requested the evidence apply
to her appeal and agreed she would be bound by the result.
Further, she agreed that result would apply to her Canada
Pension Plan appeal.
[6]
Bart Anderson, appearing on his own behalf, appealed -
1999-3300(EI) - from the decision of the Minister dated October
7, 1998, on the basis he was a self-employed teacher, actor
and acting coach and was not providing services to Gastown in any
capacity other than as an independent contractor. At the
conclusion of the evidence in the Gastown appeal, he requested
the evidence apply to his appeal and agreed he would be bound by
the result.
[7]
Counsel for Gastown conceded that Jessica Brown and Sue Brown -
workers named in the assessment - were engaged in insurable
employment pursuant to a contract of service throughout the 1997
taxation year. In addition, Counsel for Gastown conceded that
Peter Hanlon was in insurable employment during the relevant
period when he was working as a full-time Acting Director at
Gastown during the months of January, February, March, April,
September, October, November and December, 1997 and that he
earned a total of $4,000.00 from such employment based on a
salary of $500.00 per month. However, from Gastown's
standpoint all the remaining individuals were independent
contractors.
[8]
After having heard some evidence in the within appeal, Counsel
for the Respondent conceded that Jaap Teer - named in the
assessment - was not engaged in insurable employment with Gastown
during the relevant period and should be excluded from the
assessment.
[9]
Andrea MacDonald testified she is the Executive-Administrator of
Gastown Actors' Studio in Vancouver and that she has worked
there since 1992. Gastown is an acting school offering three
programs: a part-time study on a month-to-month basis operating
12 months a year, an independent study program over an 8-month
period and a full-time program over the course of two years -
divided into 5 blocks of instruction a year - each lasting two
months. From the standpoint of an instructor, there is no
substantial difference, as a particular class may be composed of
students from one or more programs. Gastown offers a variety of
classes relating to the craft of acting. In 1997, the instructors
engaged in teaching the full-time program were the only ones who
entered into written contracts with Gastown and the same
procedure had been followed in 1995 and 1996. However, MacDonald
could not locate those contracts. The instructors in the
part-time program did not enter into written contracts with
Gastown. Gastown and the instructors agreed that if an instructor
had an audition on short notice they could find a substitute to
teach the class and pay that person directly for that service. In
the event an instructor landed an acting job which would occupy a
longer period of time, it was understood that he or she would
accept the job and a substitute would be found to teach the
remainder of that particular course. The instructors were paid on
an hourly basis and the remuneration varied in accordance with
qualifications, training and experience. The number of hours
involved in teaching a particular class was - sometimes -
dependent on enrolment. A full class - composed of 10 students -
takes longer to teach and will occupy 32 hours of an
instructor's time during one month. A class of 7 students
will require only 25 hours of instruction during the same period.
A minimum of 6 students was required to make up a class. The
instructors were paid on the 15th and 30th of each month and were
not paid any benefits or for preparation time. Certain
instructors - Bart Anderson, Jessica Van Der Veen,
Trish Allen and Silver Brobst - charged GST to Gastown when
submitting invoices relating to their instruction time. MacDonald
stated all instructors had the option to re-schedule a class
provided space was available. All of the instructors were working
actors and were acquainted with each other. As a result, the
requirement for a substitute to teach a class was frequent
because someone would get an acting job for a day or a week and
would be unavailable to teach the assigned class. On occasion,
students sign up for a class on the basis it will be taught by a
specific instructor. Gastown encouraged the instructors to find
work as actors and to obtain additional experience as a result.
In 1999, Gastown had some cash flow problems and was usually two
months behind in paying the instructors so that it currently owes
them a total of $20,000.
[10] MacDonald
explained the policy of Gastown - in the event a student withdrew
from a particular class - was to reduce, proportionately, the
amount paid to the instructor even though the student had paid in
advance. On occasion, there would be insufficient enrolment and a
proposed class would be cancelled upon giving two working days
notice to an instructor. MacDonald referred to a printout of 97
classes on a month-to-month basis (Exhibit A-1). Originally, 126
classes had been slated but 29 were cancelled due to low
enrolment. The frequency and time of the classes vary widely and
about 20 classes are scheduled in a month for the part-time
students while the full-time students will study approximately 30
hours a week. In the event a teaching contract for a particular
instructor is not renewed, that person is not paid any severance
pay. Various instructors also taught private classes - sometimes
to students from a class they were teaching - and even if the
instruction occurred in a room or space on the Gastown premises,
Gastown was not involved - at all - in any dealings between the
instructor and student. There were occasions when someone would
call Gastown and inquire about obtaining private instruction and
the caller would be instructed to contact an instructor directly
to make the necessary arrangements. Gastown did not give any
instructions to the instructors as to the method or manner of
teaching as each one was qualified within a particular discipline
and utilized individual techniques. All instructors used their
own textbooks and teaching materials, including some props. The
class times were set by the instructors within the framework of
the part-time study program. There was no office space provided
to the instructors. In referring to Schedule A of the Reply to
the Notice of Appeal of Gastown, MacDonald stated that - with the
exception of Jaap Teer - all of the named individuals had hired
substitutes to teach for them - on occasion - during 1997. Peter
Hanlon worked as Program Director for 8 months during 1997 and
was paid a salary of $500.00 per month. Those instructors
involved in teaching dance or voice used their own equipment and
music and some used their own video machines. The individual -
Todd Waite - would only teach during a two or three month period.
In the event an instructor found work as an actor - partway
through a class - and a substitute could not be found, the class
would be cancelled and refunds issued to the students. On other
occasions, it would be the students who found acting work and
they would drop out of class so that there were insufficient
students to meet the minimum class size and it would be cancelled
without any compensation being paid to the instructor.
[11] In
cross-examination, MacDonald stated the substitutes had to be
qualified teachers and this requirement did not present a problem
as the instructors were acquainted with each other's
capabilities. On occasion, an instructor would refuse to teach a
class with more than 12 students but the usual minimum class size
of six could, on a case-by-case basis, be reduced to five if
MacDonald approved it. The refund policy of Gastown studio was in
accordance with the provincial government regulations pertaining
to the type of instruction offered and it depended on the extent
of the total course taken prior to the student seeking to
withdraw. In the event Gastown was entitled to retain a portion
of the tuition paid, that amount, or any part thereof, was not
passed on to the relevant instructor. Gastown - during 1997 - had
three full-time employees carrying out administrative duties but
has since been increased to five. Of the list of workers
contained in Schedule A to the Reply, the following persons
taught in both the part-time and full-time program: Trish Allen,
Bart Anderson, Silver Brobst, Tim Hine, Andrew Johnston,
Andrew McIlroy, and Andrew Olewine. The individuals involved
in teaching only in the full-time program were: Sue Astley, Sarah
Ford, Peter Hanlon, Marlise McCormick and Jeffrey Renn.
Those persons who instructed only in the part-time program were:
Jo Bates, Sarah Ford, Bill MacDonald, David Palffy, Jessica Van
Der Veen and Todd Waite. Andrea MacDonald stated Gastown was
sometimes approached by an instructor to see if a particular
course would be of interest to the studio. The curriculum for the
full-time students was set by Gastown and a program would set out
persons named as members of the Faculty but that changed every
two months. MacDonald identified a full-time program guide -
Exhibit R-1 - and a publication concerning the full-time acting
program for 1998-99 - Exhibit R-2. MacDonald stated the hourly
rate for instructors varied in accordance with the
individual's experience both as a teacher and an actor. She
identified a form of contract - Exhibit R-3 - prepared by Peter
Hanlon, that had been used in 1996 and/or 1997. Gastown did not
suffer any penalty - in relation to paying compensation to an
instructor - if a class was cancelled prior to its commencement
date. In 1997, the full-time program was restricted to 20
students. Gastown staff processed student loan applications and
set tuition fees and terms of payment and undertook collection of
the fees. Gastown did not own much equipment and used Peter
Hanlon's personal inventory but it did have a prop room and
owned the lighting and sound equipment, desks, chairs, couch and
tables. The courses offered to students were set at different
levels as some may have studied elsewhere and did not want to
repeat an entry-level course. Gastown was established by Mel
Austin-Tuck and is a private institution offering particular
instruction but it does not attempt to emulate a degree-granting
institution. The instructors comprising the Faculty of Gastown
and many of their former students have found success within the
industry. A government appointed commission receives an annual
copy of Gastown's program and brochures. The students
enrolled in the full-time program receive a certificate upon
successfully concluding the course of study.
[12] Jessica
Van Der Veen testified she resides in Vancouver and is an actor
and teacher. She has been an instructor at Gastown for the past
10 years and also taught there in 1997 in the capacity - in her
view - of an independent contractor working pursuant to a verbal
contract. She decided what courses she would be interested in
teaching and then determined the content and manner of
instruction. In 1994, she gave birth to a child and had to
rearrange her teaching schedule in order to accord with child
care needs. Van Der Veen stated she brought props and texts to
class and has purchased materials, as required, without ever
seeking reimbursement from Gastown. As an example, she produced a
cancelled cheque dated December 18, 1995 - Exhibit A-2 - relating
to the purchase of a couch to be used in the studio while
teaching courses. She charged Gastown an hourly rate of $40.00
plus GST. Her rate is somewhat higher than other instructors and,
on occasion, she will hire substitute teachers and pay them at a
lower rate than she charged to Gastown. Her classes are capped at
a maximum of 12 students with 6 as the minimum. A smaller class
leads to reduced instructional time. Van Der Veen promotes
herself - as a teacher - within the acting community and places
advertisements in appropriate publications. There have been
occasions in which she wrote out a course description, presented
it to Gastown and obtained permission to teach that subject
matter provided a sufficient number of students chose to enrol.
She was not paid for any preparation time and when she was unable
to teach for 11 weeks as a result of taking time off as maternity
leave, she did not qualify for any unemployment insurance
benefits. Otherwise, the only reason she would not be present to
teach a class would be due to demands of working - as an actor -
on television, film or stage or attending an audition for a role.
In the rare event illness preventing her from fulfilling a
teaching obligation, she would hire and pay a substitute. She
would be paid by Gastown as though she had taught that particular
session herself and the substitute would submit an invoice to
her, usually based on a rate of $30.00 per hour. She referred to
copies of cheques - Exhibit A-3 - she had paid to substitute
teachers in 1995, 1996 and 1999. In 1993, she went to Europe for
7 weeks and there was no guarantee of ongoing work as a
teacher at Gastown following her return. Upon a class being
cancelled due to insufficient enrolment, she received only two or
three days notice. In 1997, only two out of 24 classes were
cancelled. She has been at Gastown for a long time and her
classes are usually subscribed fully with a lower dropout rate
than usual. As to her working relationship with Gastown, she
stated "there is a certain amount of precariousness in my
life which I can trade off so I can leave on a moment's
notice to take an acting job". The Gastown studio owes her
money for teaching - possibly as much as $4,700.00 - and she
regards the outstanding account as a business debt owed to her
and she would expect to be paid in the same manner as other
unsecured creditors. There were times when she paid a substitute
for teaching a class and then had to wait for two months or more
to be paid by Gastown for that same class. She taught classes and
did private coaching for auditions from her own home and also at
the Gastown studio. These private sessions did not involve
Gastown and she charged a fee directly to the student. The
attitude taken by Gastown management was that it enhances the
reputation of the school if a student lands a good acting
job.
[13] In
cross-examination, Van Der Veen stated Gastown had never refused
to accept any of her proposals for teaching a class and had not
required her to pay for props or materials used in the course of
teaching. From the standpoint of earning revenue, she stated the
best scenario is to act in film or television which will pay
between $750.00 and $1,000.00 a day for speaking parts. She also
had earned money teaching a course for the public health
authority. Gastown undertook the responsibility for advertising
the courses, registering the students, collecting tuition and
processing student loans, if required. The teaching was carried
out on Gastown premises and the furniture was - mainly - owned by
Gastown and she had access to a photocopier.
[14] Peter
Hanlon testified he resides in North Vancouver and is an actor
and acting teacher. He has been an instructor at Gastown since
1992. In 1997 - as conceded earlier by Counsel for Gastown - he
agrees he was an employee of Gastown for a total of 8 months - at
a salary of $500 per month - while fulfilling the position of
Program Director. Otherwise, he saw himself as an independent
contractor. He owned certain editing equipment - valued at
$1,700.00 - and Gastown used it without compensating him. He also
hired substitutes to teach his class when he was unable to do so
by reason of having obtained a part in TV or film. These absences
from teaching occurred three or four times a year and could last
one day or as much as 12. Once, he notified Gastown that he would
not be available to teach for a period of two to three months.
Gastown currently owes him about $4,500.00 and he has already
paid substitute instructors for teaching some of the classes
which are included in his outstanding invoice to Gastown. He also
teaches students privately without any involvement by
Gastown.
[15] In
cross-examination, Hanlon stated Gastown did not require him to
purchase materials or supply equipment. He was aware the
curriculum had been presented to the regulatory body established
by provincial legislation. As an example of the method used by
the instructors to obtain substitutes, Andrew McIlroy - at the
beginning of a block of classes - left Vancouver for a job in a
film being made in Europe and merely hired a substitute to teach
the balance of the course.
[16] Bart
Anderson testified he is an actor, acting instructor and private
coach residing in Vancouver. He started teaching at Gastown in
1993 and - in 1997 - taught both part-time and full-time
students. Throughout, he always regarded himself as an
independent contractor. When necessary, he hired substitute
teachers so he could attend auditions or obtain work in TV or
film or if he had been unable to attend due to illness. He
negotiated an hourly rate with the substitute teachers and paid
them directly while billing Gastown for the class at his hourly
rate together with GST. He has both made a profit and sustained a
loss in the course of hiring substitute instructors. In 1997, he
informed Gastown he would not be available because he was taking
time off to write, produce and perform in a one-man show.
He charged students for private coaching and identified copies of
certain receipts - Exhibit A-4 - pertaining to his fees.
[17] In
cross-examination, Anderson agreed he had been listed in the
Gastown published program as a member of the Faculty. He stated
it was understood by the instructors, the students and the
management of Gastown that there would be substitutes hired from
time to time to teach classes because the primary loyalty of an
instructor was to advance his or her career by accepting acting
work.
[18] Patricia
(Trish) Allen testified she lives in Vancouver and is an actor,
voice teacher, director and instructor at Gastown since mid-1997.
She teaches classes composed of both part-time and full-time
students and always proceeded on the basis she was an independent
contractor. When hiring substitutes, she was able to pay them
exactly what she was billing Gastown except she included GST in
her accounts to the studio. Gastown now owes her an amount
between $2,700.00 and $3,000.00. While teaching at Gastown, she
hired an assistant to help her in the course of directing a show
and paid him for those services (Exhibit A-5).
[19] In
cross-examination, Trish Allen agreed Gastown had not required
her to hire an assistant.
[20] Counsel
for Gastown began his submissions by referring to the integration
test, suggesting that it needs updating in the context of the
modern workplace and that it must be applied from the viewpoint
of the instructors. In terms of control over the teachers, he
submitted Gastown exercised very little control over method or
content and the teachers were under no obligation to teach a
particular course and were able to set a maximum number of
students per class. As for ownership of tools, instructors
provided some of their own equipment and costumes and lighting
equipment was provided by Gastown. Counsel pointed out there were
certain elements of risk of loss and chance of profit arising
from the unfettered right to hire substitutes - for whom pay
might be at a lesser or greater rate - and that the policy
regarding substitution was uppermost in the minds of both parties
prior to proceeding to provide teaching services, especially by
recognizing the worker's needs for career advancement had
priority over the demands of Gastown. In addition, several
instructors taught private lessons or earned money by coaching
even though they used the facilities of Gastown without paying
any compensation therefor.
[21] Counsel
for the respondent submitted the integration test was alive and
well and did not require any adjustment. Clearly, in
Counsel's view of the evidence, the business was the business
of Gastown. The instructors did not carry on business on their
own account because without Gastown and its organization
structure and administrative capability, there would not have
been compliance with the Private Post-Secondary Education
Commission of British Columbia - a regulatory body - that
approves curriculum, issues certification and sets the rules for
rebates and refunds to students. Gastown also processed student
loan applications and eligibility for study was determined by the
Ministry of Advanced Education. The students paid tuition fees to
Gastown in accordance with the established schedule. While
control was slight, it was consistent with the nature of the
industry and Gastown would encounter difficulty in attracting
quality instructors if it were to be hard-nosed about the
requirement for classes to be taught personally by the
instructors without substitution. Counsel further submitted the
majority of the tools were provided by Gastown and the chance of
profit or risk of loss was not present in any significant manner
in the sense there was a spirit of entrepreneurship flowing from
the relationship between Gastown and the instructors.
[22] The
assumptions of fact relied on by the Minister were set out in
paragraph 5, subparagraphs (a) to (o), inclusive, as
follows:
"(a) the
Appellant operates an acting school (the "School");
(b)
the Appellant engaged the Workers, who are all professional
actors, to teach its students;
(c)
the School offers both full-time and part-time courses;
(d)
the Workers generally have an area of specialty which they teach,
e.g., voice training;
(e)
the Workers are paid an hourly rate for their services, usually
based on the Worker's experience and the number of students
in the class;
(f)
the Workers are not provided with any benefits by the
Appellant;
(g)
the Workers are not trained by the Appellant;
(h)
the Appellant does the advertising and obtains the students;
(i)
the services are performed at the School and the Workers are not
charged for using the Appellant's premises;
(j)
the Appellant has the right to control the manner in which the
classes are taught;
(k)
the students are customers of the Appellant's business;
(l)
the Workers had no chance of profit nor did they have a risk of
loss in performing the services;
(m) the
services provided by the Workers were an integral part of the
Appellant's business;
(n)
in 1997, the Workers were employed by the Appellant in insurable
employment under a contract of service; and
(o)
the Appellant failed to deduct from the remuneration paid to the
Workers any amounts with respect to premiums under the Act
and also failed to remit to the Receiver General any amounts in
respect of either the employee or the employer premiums, as
required, and is liable for the unremitted amounts, together with
penalty and interest thereon."
[23] The
evidence of the witnesses did not establish significant variation
with those facts assumed by the Minister, except for the
assumption contained at subparagraph 5(n) where the Minister
concluded the workers were employed by Gastown in insurable
employment under a contract of service. They do not agree and
maintain they were independent contractors. If that position is
correct, as a matter of law, then it is reasonable to conclude
that the result should apply to all of the named individuals in
the assessment except for the concessions noted earlier.
[24] 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
Control:
[25] Counsel
for the Minister conceded the control over the workers was slight
but attributed the lack of supervision to the nature of the
industry. Certainly, the more benign and flexible the employer,
the more difficult it is to utilize this indicia as a test
especially when dealing with professionals who have a specialized
area of expertise. The instructors had a high degree of freedom
of choice in matters such as class size, scheduling,
re-scheduling and composition of the subject matter and the
method by which it was taught. In my view, the most significant
aspect of the working relationship between the instructors and
Gastown was that Gastown accepted the fact the teachers were all
working actors who were willing and able to accept an acting role
on a moment's notice and to leave behind their teaching
obligation for an extended period of time, if necessary, to
advance their career. In addition, Gastown was aware the teachers
offered private instruction to various individuals including some
who were students in their class or otherwise enrolled at
Gastown. Prior to providing any teaching services to Gastown, it
was clear the instructors were free to hire qualified
substitutes, as required, and that they would be responsible for
paying that person. Perhaps it was the personality of the
instructors - in the context of the life of working actors - but
it is highly unusual for an employer to be relegated to second
place in the event a better "gig" presents itself on
short notice. The arrangement between the instructors and Gastown
was the result of a recognition - between equals - that this
particular method of ensuring the classes would be taught - by
someone - was satisfactory and in the best interest of all
parties involved, even the students. The curriculum was
established by Gastown but - again - there was a high degree of
input by the instructors. On balance, this test favours a status
of independent contractor.
Tools:
[26] While
there was no requirement instructors provide props or equipment,
the evidence is that some did so within the context of carrying
out their duties as teachers and they were not reimbursed for
these expenditures. The textbooks and other materials were
provided by the instructors while the lighting and sound
equipment and majority of props were owned by Gastown. Peter
Hanlon loaned some of his personal equipment to Gastown and did
not charge any fee for that service. The space within the studio
and the furniture was the property of Gastown. One must be wary
of putting too much weight on the provision of a physical plant
in instances like this because an independent management
consultant or computer expert will nearly always use the hard
assets of a business or institution in order to perform services
which - otherwise - would fall squarely within the context of a
contract for services. The bulk of what was necessary for
the job to be done properly was for the teacher to apply his or
her talent to the task of instruction and to rely on the
textbooks and materials appropriate to that end. With regard to
this test, it is neutral and does not assist greatly in the
determination of status.
Chance of Profit or Risk of Loss:
[27] The
evidence established that Jessica Van Der Veen was able to make a
profit when required to hire a substitute teacher because she
billed Gastown at a higher hourly rate than charged by her
replacement. Trish Allen paid her substitute exactly what she had
received except she paid it before receiving payment from Gastown
and she is currently owed a substantial sum of money. Bart
Anderson has experienced a loss on occasion when hiring
replacements but he has also earned a profit. The instructors who
testified saw themselves as independent contractors within the
framework of operating a business that involved acting, teaching,
directing and/or coaching not only at a private level but also at
Gastown while teaching the classes which formed the subject
matter of their arrangement. They were not paid by Gastown for
preparation time but were permitted to generate private revenue
from teaching and, on occasion, to use Gastown premises - without
payment - for that purpose. In return, they provided certain
materials and props without seeking reimbursement from Gastown.
The instructors who gave evidence before me indicated they
included GST when billing Gastown for their services. There was
also a small element of risk present in that an instructor had to
weigh the probable revenue to be gained from an acting job
against the cost of hiring a replacement. On the other hand, if
an opportunity to act for a day or so in a TV or film production
was declined, that might impact later on the individual's
ability to generate income - both as an actor and a teacher -
since Gastown paid an hourly rate for instruction based on a
combination of factors including the extent of teaching and
acting experience forming the overall qualifications of that
person. While the chance of profit or risk of loss was relatively
small, the evidence discloses that it did exist for Jessica Van
Der Veen because she was paid a higher hourly rate than other
instructors. For the other teachers the evidence did not disclose
it would not produce - overall - a profit or a loss. The payment
for teaching was at a negotiated hourly rate and if cancellation
of a class reduced revenue it was no different than any hourly
worker not being required to come to work for a particular
period. On balance, although slight, this aspect of the test
favours the status of employee.
Integration:
[28] This is
probably the most difficult test to apply. Certainly, without
teachers - as a group - Gastown cannot offer courses of
instruction in accordance with the curriculum advertised to
interested parties. From the standpoint of the individual
workers, the method employed by Gastown to permit the instructors
to locate and pay other qualified persons - without the knowledge
or input of Gastown management - created a constant source of
instruction which could be delivered to the students by means of
the co-operative organism with its interchangeable components.
While the instructors could carry out private instruction - often
on Gastown premises - and be paid for their efforts, when they
were teaching students enrolled in the actor's studio, it is
difficult to see them as carrying on business on their own
account when the establishment in which they worked was the
creation of Gastown and functioned as a recognized post-secondary
educational institution in accordance with provincial
legislation. It was a school of instruction recognized by various
levels of government and was permitted to issue a Certificate
upon successful completion of a course of full-time study. The
students were eligible to obtain student loans through the
appropriate mechanism. Without Gastown and its premises, the
instructors could have generated revenue from private teaching
and coaching and from acting or in the course of providing other
services to the film and television industry. The arrangement
between Gastown and the instructors was mutually beneficial and
Counsel for Gastown urged me to find that it was in the nature of
a joint venture. However, Gastown had the administrative
infrastructure, established the curriculum, owned the premises,
and had carried out an advertising program which led to students
being enrolled in their institution. All administrative aspects
relating to setting of tuition, collection of fees and issuing
appropriate refunds in accordance with government regulations
were carried out by Gastown. Once the students had been assembled
ready to study in a variety of different classes, the missing
component of instructional capability was then provided by the
group of instructors as it existed from time to time. In the case
of Widdows, o/a Golden Ears Entertainment and M.N.R.,
unreported, - 98-486(UI) - I was dealing with an appeal involving
a music school - combined with a retail store - and the appellant
there had regarded his music teachers as independent contractors.
At p. 8 - paragraph 14 - of the judgment I commented:
"In terms of integration, there is no doubt the business
being carried on was the business of the appellant operating as a
sole proprietor. When a student or a parent of a child wanted
music lessons, all arrangements to that end were made with the
appellant or his school administrator. The hostility surrounding
the termination of the working relationship of the appellant and
the worker which had endured for more than 7 years was due
largely to the apprehension of the worker that the appellant was
attempting to take with her certain students as though they were
her students and not individuals who were bound by contract to
his business operating as Golden Ears Music School. The teaching
of lessons was carried out within the same premises as the retail
store and the selling of instruments and music supplies
constituted the overall business of the appellant and he
integrated these revenue-producing components into the total
structure. It would be completely illogical to regard the
teaching of a student by the worker under the circumstances
revealed by the evidence as the furtherance of Ferrari's own
business in a school bearing the name of the appellant's sole
proprietorship in premises leased by him in a commercial centre
when all financial aspects of the teacher-student relationship
were conducted directly with the appellant. There was a lot more
to the music instruction business than what transpired in a
studio during a half-hour session although it is clear the
instruction was an integral part of the revenue-producing
component of the business which relied on charging fees to
students. The school administrator was not engaged to merely
co-ordinate activities of a dozen independent contractors
who were retained to provide music lessons each within the
context of a separately owned business. Again, one must look at
the overall nature of the business organization operated by the
appellant and the interplay between that operation and the
services provided by the worker."
[29] In the
case of Puri and Hesketh v. M.N.R., unreported, -
96-2519(UI) and 96-2520(UI) - I considered the status of
two figure skating coaches who were providing services to the
Campbell River Skating Club. I held there was a substantial
degree of control exercised by the Club and that the tools were
mainly provided by the coaches. In addition, I found there to be
no real opportunity for profit or risk of loss except as it arose
from cancellation of a class that could not be re-scheduled.
Dealing with the matter of integration, at p. 7 - paragraph 13 -
I noted:
"In terms of integration, it is clear the Club - a
non-profit Society - was incorporated for purposes in connection
with the sport of skating. The programs taught by the appellants
were the product of organization by the Club and, as canvassed
earlier in these Reasons within the context of the indicia of
control, could be held only because the Club had booked the
necessary ice-time and had organized the various programs and
administered them in a manner so as to obtain sufficient
participants in a particular program. Only then was it feasible
for each appellant to be assigned coaching duties in accordance
with the details set out in Schedule "A" - Exhibit A-2.
Both appellants stated it was vital to their success as a skating
coach to have access to students through the Club. Due to the
CFSA stricture against advertising or solicitation, participation
as a coach within the context of programs sponsored by the Club
was, almost, the only way they could develop a client base. The
teaching of students privately, without any connection to the
Club, occurred only after the requirements pursuant to the
contract with the Club had been fulfilled. While each appellant
was in the business of providing private lessons or coaching
advice to assist skaters entering a competition or participating
in an ice carnival or other special event, the organization and
administration of the group skating programs in the arena was
totally within the purview of the Club."
[30] At page
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."
[31] In the
case of Big Pond Publishing and Production Ltd. v. M.N.R.,
unreported, - 96-1865(UI) - Porter, D.J.T.C.C. held that
musicians working as part of the band for well-known Canadian
entertainer Rita MacNeil were independent contractors. He found
that from the standpoint of an individual musician they were not
integrated into the business of MacNeil because they had
opportunities to avail themselves of other sources of income.
Further, Judge Porter found the contracts between the payor and
the musicians to have been retainers - or stand-by fees - which
served to keep them available when needed and away from potential
competition. In addition, the musicians provided their own tools
in the form of musical instruments and amplifiers. Judge Porter
found there was little chance of profit or risk of loss and while
there was some control over what music they played - and when -
they were at liberty to perform in accordance with their own
professional standards and to work for other entities and to earn
revenue from writing or performing.
[32] Gastown
and the instructors had been dealing with each other - some for a
considerable period of time - on the basis the instructors were
independent contractors. I draw the inference that the
instructors who testified before me were filing their income tax
returns on the basis of being self-employed individuals.
Certainly, the Minister had regarded them as carrying on a
business when accepting a registration for GST under the
Excise Tax Act and the necessary returns made in
compliance with this legislation. The Minister is not bound in
any way by those events but it indicates the workers were
providing services - from their standpoint - as part of their
overall business, albeit one substantially different in form than
the usual enterprises making up the mosaic of the modern
workplace. It does not make it any easier when people earn
revenue through a mixture of income-producing activities. A
person may have several part-time jobs and be an employee in all
of them. On the other hand, an individual may have one full-time
job, one part-time job and also carry on a sideline business on
his or her own account. While on an acting job, an instructor
would be paid in accordance with a fee schedule established by
the actor's guild. Later that week, the instructor might earn
revenue by tutoring a student privately, offering techniques to
be used during an audition to improve the chances of obtaining a
role. Woven into that fabric of creative activity would be some
teaching at Gastown - on one or more days - in accordance with
the contract entered into with the management of Gastown.
Although not signed by any of the individual appellants, the
contract - Exhibit R-3 - merely confirmed that an instructor was
accepting a teaching period for a specified period - or block -
and recognized that the job "in no way constitutes a
permanent full-time position with the Gastown Actors' Studio
Ltd.". Apparently, the instructors in the full-time program
had signed this document while the others had provided services
pursuant to a verbal contract based on the same general
understanding.
[33] What the
parties thought their relationship was will not change the facts.
In the case of The Minister of National Revenue v. Emily
Standing 147 N.R. 238, Stone J.A. at p. 239 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."
[34] It is
regrettable that people cannot determine their own status under
circumstances where there has been no duress or improper conduct
and the parties have conducted themselves in a straightforward
manner in the course of an efficient and satisfying working
relationship over a considerable period of time. However, as a
matter of public policy there is no provision for people to
exempt themselves from the application of the Employment
Insurance Act or the Canada Pension Plan, even though
the legislation is better suited to meet the needs of a post-war
traditional workplace that has almost totally disappeared -
except in the public sector - rather than the rapidly emerging
modern hummingbird economy in which workers undertake a variety
of revenue-producing activities often with very short life spans,
producing sporadic, limited sources of revenue. The instructors
and Gastown had an excellent working relationship and they do not
regard the intervention by the Minister as an ameliorating
factor.
[35] In
Wiebe, supra, at p. 205 of his judgment, MacGuigan
J.A. stated:
"I interpret Lord Wright's test not as the fourfold one
it has often been described 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."
[36] Having
regard to the evidence I conclude that the instructors were
employed under a contract of service and, as a result,
were engaged in insurable and pensionable employment during the
relevant period covered by the assessment. However, the
assessments issued pursuant to the Employment Insurance
Act and the Canada Pension Plan require variation to
exclude Jaap Teer. The evidence demonstrated - and Counsel for
the respondent conceded - that Jaap Teer was an independent
contractor providing piano lessons - mainly to his own students -
and that he merely rented some space from Gastown which he paid
for by teaching two students from the school, pursuant to an
exchange arrangement.
[37] The
appeal of the corporate appellant, Gastown, is allowed and the
assessment is referred back to the Minister for reconsideration
and reassessment on the basis that Jaap Teer was not employed in
insurable employment with Gastown during the relevant period.
Otherwise, the assessment will remain, as issued.
[38] The
appeals of the individual appellants pursuant to the
Employment Insurance Act and/or the Canada Pension
Plan are hereby dismissed.
Signed at Sidney, British Columbia, this 10th day of March
2000.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE
NO.:
1999-147(EI)
STYLE OF
CAUSE:
Gastown Actors' Studio Ltd. and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
Counsel for the Appellant: Dave Graham
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Dave Graham
Firm:
Koffman Birnie & Kalef
Vancouver, British Columbia
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-149(CPP)
STYLE OF
CAUSE:
Gastown Actors' Studio Ltd. and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
Counsel for the Appellant: Dave Graham
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Dave Graham
Firm:
Koffman Birnie & Kalef
Vancouver, British Columbia
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-3301(EI)
STYLE OF
CAUSE:
Trish Allen and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
For the
Appellant:
The Appellant herself
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-274(EI)
STYLE OF
CAUSE:
Peter Hanlon and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-275(CPP)
STYLE OF
CAUSE:
Peter Hanlon and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-362(EI)
STYLE OF
CAUSE:
Susan Astley and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
For the
Appellant:
The Appellant herself
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-363(CPP)
STYLE OF
CAUSE:
Susan Astley and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
For the
Appellant:
The Appellant herself
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-3300(EI)
STYLE OF
CAUSE:
Bart Anderson and M.N.R.
PLACE OF
HEARING:
Vancouver, British Columbia
DATE OF
HEARING:
January 13, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
March 10, 2000
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Eric Douglas
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-147(EI)
BETWEEN:
GASTOWN ACTORS' STUDIO LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard with the appeals of Gastown
Actors' Studio Ltd. (1999-149(CPP)), Trish
Allen (1999-3301(EI)), Peter Hanlon (1999-274(EI) and
1999-275(CPP)), Susan Astley (1999-362(EI) and
1999-363(CPP)) and Bart Anderson
(1999-3300(EI)) on January 13, 2000, at Vancouver, British
Columbia, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the
Appellant: Dave
Graham
Counsel for the Respondent: Eric
Douglas
JUDGMENT
The
appeal is allowed and the assessment is referred back to the
Minister of National Revenue for reconsideration and reassessment
in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 10th day of March
2000.
D.J.T.C.C.
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