Citation: 2012 TCC 226
Date: 20120621
Docket: 2010-3852(CPP)
2011-276(EI)
BETWEEN:
EDWARD ASARE-QUANSAH,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
C. Miller J.
[1]
Mr. Asare-Quansah
appeals The Minister of National Revenue’s (the "Minister") ruling
that in 2007 he was in insurable and pensionable employment within the
provisions of the Employment Insurance Act (the "Act")
and Canada Pension Plan ("CPP") at the School of Continuing Studies ("SCS") at the University of Toronto. Mr. Asare-Quansah claims that he was self-employed as
a sessional lecturer.
[2]
The law is reasonably
well settled on this issue which we often hear at the Tax Court of Canada.
While the four-pronged test in Wiebe Door Services Ltd. v. Canada,
massaged slightly by comments of the Supreme Court of Canada in the 671122
Ontario Ltd. v. Sagaz Industries Canada Inc.
case and by recent decisions of the Federal Court of Appeal (see The
Royal Winnipeg Ballet v. M.N.R.
for example) is easily stated, the application of that test to
specific facts can be tricky. And there will be cases, and I believe this is
one of them, where the arrangement, with some subtle tweaking, could be just as
readily viewed as one or the other - an employment or independent contractor
relationship. I have concluded in this case the status is that of an
independent contractor.
[3]
The guidelines that
have been established by the jurisprudence to assist in the identification of a
working arrangement are the factors of control, ownership of tools, chance of
profit and risk of loss, though as the Supreme Court of Canada has pointed out
in Sagaz that list is not exhaustive. The role of the parties’ intention
has also come to be considered a factor, obviously only when that intention is
mutual. Such is not the case before me, as Mr. Asare-Quansah made it clear that
at no time did he intend to be an employee and always considered himself an
independent contractor. The SCS, on the other hand, through the testimony of
its Chief Financial Officer, Ms. Dundas, treated their sessional lecturers,
as a matter of policy, as employees. Unfortunately, Ms. Dundas was unable to
explain any underlying basis for that policy, which she said was established
before her time. Intention of the parties is of no assistance in this case.
Control
[4]
As pointed out in Sagaz,
control is always a factor and my experience is that it is often the
determinative factor. So, what control, if any, did the SCS exercise over
Mr. Asare-Quansah in 2007? A brief review of the facts is in order.
[5]
In the fall of 2007,
Mr. Asare-Quansah, a chartered accountant, did two things for the SCS. First,
he designed and developed a course called Financial Literacy for
Non-Financial Executives: second, he taught a Financial Management course.
I note that Mr. Asare-Quansah has lectured for a number of years both in-class
courses and online courses. In the fall of 2007, the course he taught was an online
course, but as Respondent’s counsel acknowledged, it would be nonsensical to
find a difference in the working relationship of the two formats.
Mr. Asare‑Quansah, in teaching at the SCS, is either an employee or
an independent contractor regardless of the online or in-class format. I agree
with the Respondent on this approach.
[6]
With respect to the
contract to design the Financial Literacy course, the written contract is clear
that both the SCS and Mr. Asare-Quansah considered him to be an independent
contractor. Excerpts of the contract dated August 21, 2007, read as follows:
…
The following Letter of Agreement covers our shared contractual
responsibilities for the design and development of SCS1837 Financial Literacy
for Non-Financial Executives.
…
You agree to design and develop Financial Literacy for Non-Financial
Executives. As part of the design and development of this course, you also
agree to provide a detailed course outline.
…
No amount in addition to the fee above will be payable to you on
account of expenses or disbursements incurred by you.
As an independent contractor and not an employee of the University,
you will not receive any fringe benefit, sick leave, vacation leave, health or
insurance coverage or any other benefit. As an independent contractor, you are
fully responsible for the prompt payment of any tax (including goods and
services tax), levy, contribution, premium or assessment (and any related
interest or penalties) including, without limitation, federal and provincial
sales and commodity tax, income tax, Worker’s Compensation assessment, Employment
Insurance premiums, Canada Pension Plan contributions and Employer Health Tax
that may arise out of the provision of services under this part of the
Agreement.
You will not be provided with an office in connection with the
provision of services pursuant to this Agreement. In addition, no office
supplies or support staff will be provided to you.
…
The School of Continuing
Studies is delighted to be working with you on this
program. Should there be any items in this letter of agreement that you would
like to discuss, please contact me via phone or email. Otherwise, please sign
the attached copy of this letter indicating your acceptance.
[7]
As well as this letter,
there was a one-page SCS Instruction Contract dated September 14, 2007, which
reads in part:
…
Part III Contract Terms and
Conditions
The undersigned instructor hereby confirms that this Course
Instruction Contract together with the Manual of Policies for instructors is
the entire contract between the undersigned and the School of Continuing
Studies University of Toronto with respect to the instruction of the course
referred to in Part II hereof.
The undersigned Instructor hereby acknowledges having received and
read the Manual of Policies for Instructors and having read the current version
at www.learn.utoronto.ca
at this date, and agrees to be bound by its provisions, as amended on the
current version at this date, which provisions are hereby incorporated into
this Course Instruction Contract by reference. In particular, the undersigned
Instructor acknowledges that the School of Continuing Studies University of
Toronto has the right to cancel this Course Instruction Contract at any time
prior to the date on which the course is scheduled to commence as set out in
Part II hereof in the case of insufficient enrolment or other academic
consideration, and in such event the contract shall be terminated without any
liability on the part of the School of Continuing Studies University of Toronto
to the undersigned Instructor.
This contract is for the duration of the course as referred to in
part II hereof, unless terminated earlier as herein provided. This contract may
not be renewed or extended. The rights of the parties hereunder shall not be
assigned or assignable. This contract shall be interpreted in accordance with
the laws of the Province of
Ontario.
…
Clearly this contract is not the one in dispute, but I
raise it to illustrate differences and similarities between it and the contract
in dispute, which I now turn to.
[8]
The Letter Agreement
for teaching the Financial Management course signed September 1, 2007 by Mr.
Asare-Quansah reads as follows:
Dear Edward,
The following Letter of Agreement covers our shared contractual
responsibilities for the delivery of the following online distance learning
course(s)
SCS 0976-063 Financial Management
This Letter of Agreement is made in conjunction with the provisions
of the Instructor Handbook, the current version of which can be found at www.learn.utoronto.ca.
You agree to be bound by the provisions of this Handbook.
Contract Services
You agree to provide updated course materials along with the marking
of the term work and final exam. As part of the course materials, you agree to
provide a detailed course outline.
Payment Fees
The payment rate for teaching this course is $500 + $125.00 per
student. Your payment will be calculated mid-way through the course, in order
to allow for any late registrations, withdrawals or transfers. Any necessary
adjustments to this amount will be made at the end of the course.
No amount in addition to the fee above will be payable to you on
account of expenses or disbursements incurred by you.
You will not be provided with an office in connection with the
provision of services pursuant to this Agreement. In addition, no office
supplies or support staff will be provided to you.
The School of Continuing
Studies is delighted to be working with you on this
course. Should there be any items in this letter of agreement that you would
like to discuss, please contact me via phone or email. Otherwise, please sign
this letter indicating your acceptance.
Yours truly,
Alison Baird
Operations Manager
Business & professional Studies Date: Aug
20, 2007
Instructor
Signature: "Edward Asare-Quansah" Date:
September 1, 2007
[9]
Similar to the other
contract, there was also the one-page form SCS Instruction Contract, dated
October 16, 2007. The later date is to allow time for the parties to finalize
the number of registered students, as remuneration was based on the number of
students. Part III of this contract is identical to Part III of the first
contract.
[10]
In reviewing the
control factor, the Respondent put a great deal of emphasis on the contents of
the Instructor Handbook. The Manual of Policies for Instructors referred to in
Part III of the contracts was acknowledged to be the same thing as the
Instructor Handbook. Ms. Dundas described the Handbook as a guide only.
Mr. Asare-Quansah did not describe it as binding or as a guide as, until
trial, he had never looked at it. The following are some highlights from the Handbook
and, where appropriate, Mr. Asare-Quansah’s reaction to those provisions:
…
As an SCS Instructor you are a pivotal member of one of Canada’s most dynamic continuing education
communities. We created this instructor handbook to support you in your vital
work. In its pages you will find essential information, such as
·
the School’s vision, mission, and values;
·
how to plan and design your course;
·
how to assess learners’ progress; and
·
whom to contact if you have any questions or
concerns
...
Your Course Description
In some programs SCS pre-determines course descriptions. In other
cases you will be asked to participate in the development of the course
description. The course description is the School’s property and will be used
in the School calendar and/or other marketing pieces. As a result it may be
changed or edited to ensure the most effective marketing. Consequently, you may
change the course description only with the Program Office agreement.
Your Course Outline
Please ensure the Program Office has an electronic copy of your
course outline three weeks before your course begins. Having your course
outline well in advance will make it possible for us to review the contents,
offer advice if needed, and prepare copies for your students.
…
Planning Your Course Resources
When preparing your course outline you will need to determine the
resources that are necessary to deliver the course. These can include
textbooks, handouts, and other learning resources such as special classroom
arrangements, audio-visual equipment requirements, and guest lecturers.
…
Copyright Clearance
The Canadian Copyright Act requires that appropriate copyright
clearances be obtained for all materials, no matter what the medium (print,
digital, etc.). Before you authorize material to be copied for your courses,
please consult with the Program Office, which will help you with the copyright
clearance process. Specifically, please ensure you do not
·
distribute, or authorize the production of any
copies of any printed or digitized material unless permission to do so has been
obtained from the copyright holder, or there is notice in front of the
publication from the copyright holder that copies may be made for instructional
purposes; or
·
show any film or videotape, including a taped
segment of a television program, unless you have cleared the films or
videotapes for public viewing; or
·
distribute or authorize the reproduction of
materials from a website or from any other digital source unless permission to
do so has been obtained from the copyright holder(s), or there is a notice on
the website or other digital source that the materials may be duplicated for
instructional purposes.
Duplicating Services
Duplicating services are available by bringing the material you want
to be copied to the front desk at 158 St. George Street, Monday through Thursday, 8:30 a.m. to 7:30 p.m., and Friday, 8:30
a.m. to 5:00 p.m., 5 days before the date they are required. During the months
of July and August SCS will close at 4:30 p.m. on Friday. Please ensure
materials to be copied comply with the copyright clearance policy outlined
above. Copied materials will be placed in your mailbox in the Instructor
Resource Centre.
…
Guest Speakers
You may also occasionally wish to enhance the student experience by
having a guest speaker. Please discuss this with the Program Office in advance
to determine the appropriate honorarium.
…
We ask that you not cancel, miss, terminate, or shorten scheduled
classes except in unavoidable circumstances (e.g. illness). If you cancel a
class please give Student and Instructor Services as much notice as possible so
that students can be contacted in a timely manner. You will be required to make
up any classes (or parts thereof) that have been missed, without additional
compensation.
…
Substitute Instructor
If you are unable to teach a scheduled class session you may make
arrangements to have a qualified replacement teach it instead; however, please
notify the Program Office in advance. Financial compensation for your
replacement will be your responsibility.
Mr. Asare-Quansah testified that he never gave a
course outline for approval. He developed the syllabus, chose the text to use
and would unilaterally change the course description. As he pointed out, there
was no one at the SCS with any accounting or financial background who would be
able to offer any assistance in developing the course online. Simply there was
no one to go to.
While Mr. Asare-Quansah was aware that the SCS could
provide free photocopying, he did not avail himself of this. All materials he
used he obtained through the publishers of the text which he relied upon, not
from the SCS.
With respect to copyright, Mr. Asare-Quansah said this
simply was not applicable to his courses. With respect to guest lecturers, he
did not use them as he believed it was his expertise and his knowledge that the
students were paying to obtain. He did not use substitutes during the period in
question, but he has in other years. He did not provide make-up classes but
would extend times of scheduled classes if make‑up time was required.
…
Confidentiality
Please plan to be available to students for reasonable consultation
regarding their progress in the course. You can do this through formal or
informal methods of consultation, as needed.
…
Mr. Asare-Quansah was aware, simply as a professional,
that there would be confidentiality requirements.
…
Please ensure the Program Office has an electronic copy of your
learner assessment plan before the course start date. Course grading formats
are set up according to the assessment plan.
Assessment Instruments
Please include, in your assessment plan, a variety of different assessment
instruments.
Changes to the Assessment Plan
It is important to be confident in your assessment plan, because
once your students have been informed of it and have received the course
outline you will not be able to change the means of assessment or relative
weighting without first discussing the alteration(s) with your program manager
and receiving his/her approval.
Value of Final Examination/Project
The final examination/project for your course should constitute no
less than 33% of the final mark.
Feedback
Throughout your course it will be helpful to provide students with
feedback on assessed term work and an opportunity to discuss such comments and
work. In general, feedback should consist of four elements:
·
Positive – an indication of what is right about
the work
·
Negative – an indication of where the work is
lacking
·
Direction – suggestions of how and where to go
about improving
·
Standing – an overall grade
Grade Scales
Grades are a measure of a student’s knowledge in an individual
course. The grade scales SCS uses are as follows:
…
No Bell Curve
Final results are not to be determined by any system of quotas,
including the use of the Bell
curve.
Mr. Asare-Quansah did all the grading himself. He had
no idea what a learner assessment plan was, and consequently he had never
provided such, nor provided the feedback the Handbook suggests was required. He
admitted that he had tried to use a Bell curve once and
was advised this was not acceptable. He was not aware of any policy with
respect to assignments.
…
Non-Competition
By agreeing to teach a course at the School, instructors further
agree that they will not use the course description or any related materials
produced at the expense of the School to teach a similar course at another
educational institution for the duration of the contract and for a period of
one year following the expiry of the contract.
…
Contract is Conditional
All instructional contracts, whether with contractors or employees,
are conditional upon adequate registration in the respective course and other
academic considerations, as determined by the School in its sole discretion.
For example, a class may be cancelled in the week prior to its expected start
date if the number of students enrolled is deemed by the School to be too few.
…
Mr. Asare-Quansah did not see this non-competition
provision as a bar to teach financial or accounting at other institutions. He
felt at liberty to do so. He relied on no materials produced at the SCS. Ms.
Dundas also acknowledged that an instructor was free to teach elsewhere, and
that the one year restriction was just with respect to materials from the SCS,
although, even there, there was no monitoring.
[11]
The Respondent argued
that the Handbook provided for significant controls over instructors, and that
by the Letter Agreement signed by Mr. Asare-Quansah on September 1, 2007 he
agreed to be bound by those controls. I do not find the Handbook as controlling
a factor as the Respondent suggests. First, the university’s own representative
acknowledged it was simply a guide, something to assist an instructor. Second,
the Handbook, as indicated on page 23 under the heading "Contract is
Conditional" acknowledges that it is applicable to both employees and
independent contractors. When asked what the consequences would be for failure
to comply, Ms. Dundas responded that the individual may not get another
contract. This is no greater indication of employment than an independent
contractor, and is not the type of controlling feature that distinguishes the
two. Also, the fact Mr. Asare-Quansah did not even read the Handbook is
not determinative, but he testified that SCS never raised it or referred him to
it or suggested he was not in compliance. It was unclear whether any reference
was made to the handbook when advised that he could not use the Bell curve. Also, the SCS Instruction Contract, agreed to
by Mr. Asare-Quansah for his course development, where the SCS acknowledged he
was an independent contractor, stipulated that the Handbook was part of the contract.
It is difficult to then turn to the Handbook as proof of an employment arrangement.
Finally, my review of the Handbook left me with the impression that it was to
serve as a support for the instructors more so than a control over the
instructors. As Mr. Asare-Quansah put it, there was a difference between
the Handbook and the reality. And, even Ms. Dundas responded, when asked if an
instructor has to follow everything in the handbook - "that is difficult
to answer".
[12]
Other facts that
address the control issue. Yes, the university sets the date and time of the
course but not without input from the instructor. Indeed Mr. Asare‑Quansah
indicated that he recommended the course go from six to eight weeks. He also
had course dates changed when conflicting with his work schedule. Also, the
three-hour class time was the minority of time spent on the course: the
majority of time was in preparation and grading, time spent when, how and where
Mr. Asare-Quansah determined.
[13]
According to
Mr. Asare-Quansah no one from the SCS even looked at his syllabus,
attended a lecture or, other than a student evaluation, in any way evaluated or
commented upon how he taught the course. If he had student issues, he would
personally deal with them without the intervention from the SCS.
[14]
The SCS could set the
minimum and maximum number of students for a course, but Ms. Dundas testified
that the number of students would be determined through discussion with the
instructor and the SCS would "defer to the instructor", though the
ultimate decision remained with the school.
[15]
With respect to the
controlling factor of setting remuneration, Ms. Dundas’ testimony was quite
telling, as she said the SCS wanted to engage instructors as "partners to
share in revenues". This sharing attitude is evident in the SCS Letter
Agreement:
…
…The following Letter of Agreement covers our shared contractual
responsibilities.
…
The School of
Continuing Studies is delighted to be working with you…
She also admitted that an instructor could ask for a
differential rate and they would consider different factors and it was possible
for someone to get something different.
[16]
As I indicated at the
outset, a sessional lecturer is one of those positions that could easily be
looked at from both sides. The control factor does not point overwhelmingly in
one direction. In reality, I agree with Mr. Asare-Quansah that the SCS
wielded little control over how he taught the course. This lack of control is
not outweighed by potentially controlling authority set out in the Handbook, especially
given the SCS’ own view of the Handbook. I find on balance there are
insufficient elements of the type of control by the SCS that indicate
employment, and that there are several elements of independence by
Mr. Asare-Quansah to conclude that the control factor does not support the
Respondent’s position.
[17]
There was some
suggestion that the SCS offered training to its instructors, though not in
2007, but these were not the type of courses Mr. Asare-Quansah indicated
would be of any benefit to him. They were, for example, courses in how to
engage students. Any professional development courses dealing in the financial,
business or accounting area were taken on by Mr. Asare-Quansah personally,
on his own initiative, and for his own professional development. There were no
discounts for instructors for courses at the SCS. Again, this does not suggest
an employment arrangement.
Tools and Equipment
[18]
With respect to tools
and equipment, Mr. Asare-Quansah testified that he covered all his own
expenses of his home office, computer, professional development training and
printing and copying. He acknowledged there is something through the computer
called the Instructor Portal, though this was not available in 2007. It offered
a template for a course outline, an audio-visual request form and a copyright
permission form. Ms. Dundas could not be any more descriptive as she had never
gone into the Instructor Portal: neither had Mr. Asare‑Quansah.
[19]
The SCS would provide a
classroom, and for an online course, a program called Blackboard. It also had
what it called a resource centre, but Mr. Asare‑Quansah said that
this was a very limited space with a couple of old computers. Even Ms. Dundas
acknowledged, when asked what resources were available to the instructors -
"very few". The resource centre was really just what she called a
touchdown space. It was not situated at the location where Mr. Asare‑Quansah
taught even. He used materials from the publisher of the course text, not
materials from the SCS.
[20]
Mr. Asare-Quansah
argued that his knowledge was his main tool, developed completely independently
of the SCS. This has not traditionally been the type of tool or equipment that courts
usually refer to. I need not explore this intriguing argument further as I
conclude the factor of equipment is neutral – no more indicative of one
relationship than the other.
Chance of Profit
[21]
With respect to the
chance of profit, the evidence was that the university had a couple of
remuneration systems: a flat rate or per student basis, which
Mr. Asare-Quansah could choose or indeed could take or leave. However,
Ms. Dundas acknowledged that an instructor could also negotiate. It was
clear Mr. Asare-Quansah was not in this for the money and saw no need to
negotiate. I note that the remuneration Mr. Asare-Quansah chose was
based on the per student fee. Ms. Dundas acknowledged the maximum number of
students was determined in consultation with the instructor and, as already
indicated, looked to share revenues with the instructor. As with any course,
numbers can depend on the quality and reputation of not just the institution
but very much on the particular instructor as well. Further, while
Mr. Asare-Quansah had a set number of teaching hours, his preparation and
marking time was entirely at his discretion. Less hours meant presumably a
greater effective rate. I conclude that the chance of profit factor does not
loom large given the quantum of remuneration and motivation for teaching.
However, there is some small element favouring an independent contractor
arrangement.
Risk of Loss
[22]
With respect to the
risk of loss, it is difficult to imagine loss of any significance.
Mr. Asare-Quansah covered all his expenses of the course, though they
would not be large. Preparation time, if unduly extensive, could cut into time
more profitably spent in the accounting business. Risk of loss is a neutral
factor.
Jurisprudence
[23]
The Respondent referred
me to two cases dealing with instructors. The first, Heritage Baptist
College v. Minister of National Revenue,
involved part-time instructors at this particular Bible college. They were
required to answer questions at the end of a semester as to how their courses
had fared. The academic dean would review these in determining who would be
invited back to teach. The instructors were paid a flat rate regardless of the
number of students. One instructor also had an on-campus office. The court
found the instructors were employees.
[24]
In cases dealing with
sessional lectures, little may be required to tip the balance one way or the
other. There are enough differences, as detailed above, in the Heritage
case and the case before me that it does not alter my view that
Mr. Asare-Quansah’s status with the SCS was that of an independent
contractor.
[25]
In the case of Lopez
v. Minister of National Revenue,
Mr. Lopez was a part-time instructor at Algonquin College. Again,
while there are some similarities, there are one or two differences that are
striking. First, the college had "a great deal of input into to the work
itself by the college, such as how the exam was to be composed, the marking of
it and subsequently the issue of the appeal". The Court was also satisfied
that Mr. Lopez could not provide a substitute.
[26]
No, I do not find these
cases are of any assistance to the Respondent. These cases are fact specific
and fact sensitive. Even a small tweaking of the facts in the case of someone
like a part-time instructor can shift the nature of the working relationship.
Conclusion
[27]
Mr. Asare-Quansah
did what many professionals did and gave back to his profession the benefits of
the knowledge and experience of a practising chartered accountant. He did this
over and above his regular working life. He could have done so at different
institutions. He chose the SCS. He never believed he signed on as an employee
subject to university standards, but as a professional with high professional
standards and freedom to teach how and what he deemed appropriate. Yes, there
were some SCS requirements that any instructor (employee or independent contractor)
would as a practical matter have to meet. But these were not, I conclude,
sufficient elements of control to justify a finding of an employer/employee
relationship. And it is control that is the most significant factor to consider
in this case: the other factors were either neutral or not strongly determinative
one way or the other; they leaned slightly towards the independent contractor
status.
[28]
The appeals are allowed
and the Minister’s decision that Mr. Asare-Quansah is in insurable and
pensionable employment is vacated.
Signed at Ottawa, Canada, this 21st day of June 2012.
"Campbell J. Miller"
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