Date: 20010205
Docket: 2000-2034-EI, 2000-2035-CPP
BETWEEN:
PAUL COLLIN & MICHAEL WAITE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND BETWEEN:
Docket:2000-2037-EI, 2000-2040-CPP
A.J. MEDICAL SUPPLY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Beaubier, J.T.C.C.
[1]
These appeals were heard together on common evidence by consent
of the parties at Prince George, British Columbia on January 22,
2001. Paul Collin and Michael Waite were the only witnesses.
[2]
Messrs. Collin and Waite have appealed the period January 1, 1997
to August 31, 1997 and A.J. Medical Supply Ltd.
("A.J.") has appealed the period January 1, 1997 to
February 28, 1999 in which periods they operated "The Safety
Training Academy" (the "Academy").
[3]
The assumptions in the A.J. Employment Insurance Reply
(file 2000-2037(EI)) corresponds with all other
assumptions in these appeals except that assumption (j) is not in
2000-2034(EI) or 2035(CPP). They read in paragraph 4:
In making his decision and confirming the Assessments, the
Respondent relied upon the following assumptions of fact:
a)
during the Period the Appellant was in the business of providing
first aide and safety training courses;
b)
the courses offered by the Appellant met the Worker's
Compensation Board ("WCB") standards;
c)
the Appellant was certified by Human Resources Development Canada
to be a qualified educational institute for the purpose of
offering courses to students that provided or upgraded the
students skills in a recognized occupation;
d)
the Appellant incurred and was responsible for the expenses of
advertising the courses offered by the Appellant;
e)
the Appellant hired the Workers to instruct the first aide and
safety courses;
f)
the Appellant established what courses would be available and
when and where each particular course would be available to
students;
g)
the Appellant set up the student registration, set the cost of
each particular course for the student, set the minimum number of
students necessary to run a course;
h)
the Appellant provided the facilities and the equipment necessary
for each particular course;
i)
the Appellant set the rate of pay that the Worker received for
each particular course he or she taught;
j)
the Workers were paid the set rate irrespective of how many
students were enrolled in the class;
k)
Level 1 courses were approximately 8 hours of instruction, Level
2 courses were 1 week of instruction and Level 3 courses were 70
hours of instruction;
l)
the Workers would be paid the set amount for the course taught
regardless of whether or not the Appellant was paid by the
student or client for the course fees;
m)
each Worker had to meet the basic WCB qualifications prior to
being hired to instruct the courses offered by the Appellant;
n)
the Appellant monitored the classes taught by each Worker to
ensure the level of instruction met with the WCB guidelines;
o)
the Workers did not incur any expenses in the performance of
their duties;
p)
the Workers were not at risk of loss nor did the Workers have a
chance of profit while teaching the first aide and safety
courses;
q)
the Appellant covered the Workers for WCB premiums;
r)
the Workers were not registered for Goods and Services Tax
("GST") and the appellant did not include any amounts
for GST on the remuneration paid to the Workers;
s)
the Workers were not in business for themselves during the
Period.
[4]
Subparagraphs a), b), c), d), g) and m) were not refuted. With
respect to the remainder, the Court finds:
e)
The Appellants operated different kinds of courses for which they
contracted Workers. Not all courses were WCB courses.
f)
The Appellants would determine if there was a market for a course
and advertise it. If there was a response, the Appellants would
contact qualified certified individuals who might or might not
want to teach such a course. They would then establish the date
and time of commencement of a course for which they felt there
was a market and a teacher. If too few registered they would
negotiate a new price with the proposed teacher or cancel the
proposed course.
h)
Some courses were held outside of Prince George at other premises
in which case the Appellants paid the Workers mileage. For most
courses h) is true.
i) & j) The pay
rate was negotiated with each Worker and there were generally
recognized rates of pay which might vary up or down depending on
the Worker's following or teaching record or the number
enrolled.
k)
Is correct respecting WCB courses.
l)
The Worker was paid about 30 days after the Appellants were paid
if the course went ahead.
n)
The Appellants did not monitor the classes. The WCB did. The
Appellants relied on student complaints or the WCB de-certifying
the Worker from teaching. It should be noted that the WCB set the
standards and certified the Workers, monitored the classes and
the Workers, and set the exams for the students of the safety
courses conducted for WCB exams.
o)
The Workers incurred expenses to perform their duties. These
included taking WCB exams, and courses, and paper and other
expenses to prepare courses and the use of space to prepare and
possibly a vehicle to carry out their tasks. (See Exhibits A-1
and A-2, Mary-Jo Mackie) They also spent time preparing their
lectures and demonstrations.
p)
The Appellants' risks were very minimal since they did not
put on a course with insufficient registration or they
renegotiated the Workers' fees when registration was small.
The Workers had their overheads for expenditures, described
above, which were also minimal. But both risked losses and both
profited if the courses proceeded.
q)
The Appellants paid WCB premiums for the Workers as
"subcontractor earnings". Thus this is not a
significant factor.
r)
None of the Workers earned over $30,000 at teaching and therefore
none had to deal with GST on their teaching earnings. Most of
them earned very substantial salaries elsewhere or were married
and at home and appear to have taught so as to keep current in
industry.
s)
Will be dealt with hereafter since it is the gist of the
appeal.
[5]
In Wiebe Door Services Ltd. v. M.N.R., (F.C.A.) 1986 2
C.T.C. 200, MacGuigan J.A. said at 201 and 202:
Case law has established a series of tests to determine
whether a contract is one of service or for the provision of
services. While not exhaustive the following are four tests most
commonly referred to:
(a) The
degree or absence of control, exercised by the alleged
employer.
(b)
Ownership of tools.
(c)
Chance of profit and risks of loss.
(d)
Integration of the alleged employees work into the alleged
employers business.
and at 206 and 207:
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 738-9:
The observations of Lord Wright, of Denning L.J., and of the
judges of the Supreme Court in the U.S.A. suggest that the
fundamental test to be applied is this: "Is the person who
has engaged himself to perform these services performing them as
a person in business on his own account?" If the answer to
that question is "yes," then the contract is a contract
for services. If the answer is "no" then the contract
is a contract of service. No exhaustive list has been compiled
and perhaps no exhaustive list can be compiled of considerations
which are relevant in determining that question, nor can strict
rules be laid down as to the relative weight which the various
considerations should carry in particular cases. The most that
can be said is that control will no doubt always have to be
considered, although it can no longer be regarded as the sole
determining factor; and that factors, which may be of importance,
are such matters as whether the man performing the services
provides his own equipment, whether he hires his own helpers,
what degree of financial risk be taken, what degree of
responsibility for investment and management he has, and whether
and how far he has an opportunity of profiting from sound
management in the performance of his task. The application of the
general test may be easier in a case where the person who engages
himself to perform the services does so in the course of an
already established business of his own; but this factor is not
decisive, and a person who engages himself to perform services
for another may well be an independent contractor even though he
has not entered into the contract in the course of an existing
business carried on by him.
[6]
Using the headings described, the Court finds:
(a)
Control
The control of both the Appellants and the Workers was
essentially in the hands of the WCB or other agencies like it. It
set the standards and exams that qualified the teachers; it
monitored them and it decertified them. WCB set the dates of
safety exams, which determined when the Appellants would
advertise courses; it provided the exams and materials
determining course content; and it set the students' exams
and marked them. The Appellants never even received the marks
because of government secrecy provisions. Students needed the
courses because employees had to pass safety level exams set by
WCB to work in the forest and construction industries in B.C.
The Workers sometimes substituted other qualified teachers at
their courses and the Appellants knew this. Mr. Waite was also
able to substitute for WCB teachers since he is a qualified WCB
safety instructor.
The Appellants' procedure in setting up the courses was to
get the WCB list of exams and to determine an industry need for a
course. They then advertised a course to conclude close to the
exam date. Prospective students called indicating interest. The
Appellants then contacted teachers from applicants who had left
their names with them (and who were certified by WCB). The
Appellants then set up a course and hired a teacher (Worker) at a
flat pay rate. If enough students registered, the course
proceeded. The break-even is 6 students. If too few registered
the Appellants sometimes renegotiated the teacher's fee and
put the course on anyway.
(b)
Ownership of Tools
The Appellants did supply premises in which to teach in Prince
George. But courses were also given in employers' premises
and outside of Prince George. The Appellants did supply other
material. But the students had to buy course material issued by
WCB; they purchased this from the Appellants who had purchased it
from WCB. The Workers provided their own slides and material to
work up and teach each class.
(c)
Chance of Profit or Risks of Loss
As stated, both the Appellants and the Workers had these
chances, each risking a minimal loss.
(d)
Integration of the alleged employees work into the alleged
employers business
WCB did not require students to take the courses before the
exams; they were not mandatory. Without the WCB Workers, the
Appellants would not be out of business because Mr. Waite is
a qualified teacher of safety courses. There were also other
teachers to recruit. Respecting non-WCB courses, the Academy
would be out of business since it did not have any qualified
instructors. Similarly the Workers could undoubtedly have set up
courses and attracted students in their own premises or even
their homes even if they were unlicensed for secondary
institutional purposes, because the courses were not mandatory.
The Workers also taught similar courses for others. Peter Austin,
Mary-Jo Mackie and other Workers had their own following of
students who took courses from them regularly when they had to
requalify their safety courses or upgrade. Moreover, each worker
had the choice of whether or not to teach each course which the
Appellants put on. In particular, Peter Austin set up and put on
his own courses and collected the course fees under the
Appellants' auspices.
[7]
Based upon the foregoing, this appeal comes down to the test of
Cooke J. already quoted: "Is the person who has engaged
himself to perform these services performing them as a person in
business on his own account?" That is, who did the students
or another outsider (including WCB) consider was performing the
teaching services? If they chose, the Appellants' approached
other teachers. If that Worker chose to teach, negotiations
followed as to fees, whereupon the Worker might, or might not be
retained.
[8]
This requires a closer comparison to Cooke J's analysis. The
courses did not have to be provided by persons such as the
Appellants even if they were registered and bonded secondary
institutions. The Workers supplied services to a number of these
institutions; they prepared their lectures at their own
facilities, on their own time, with their own tools; on the
chance that they might or might not be hired; they paid their own
fees and purchased their own material to qualify as teachers and
they applied for work at various institutions on the mere chance
that they might be hired. The Workers only got retained if they
developed some kind of a good reputation whether on academics
alone or based on a student following or for other reasons. They
were not integrated into anything at that stage. When retained
they received a flat fee which they negotiated for each job and
if the class was too small they got nothing or negotiated again
and got a lesser lump sum. They substituted others for themselves
at times. The Appellants did not control their lectures other
than setting the time and place for the first lecture. The
Workers then adjusted the times and numbers of remaining lectures
with the students. In essence, control of both the Appellants and
the Workers were with the WCB, which monitored the lectures and
the exams, or with the students who did or did not repeat courses
with either the Appellants or the Workers. The Workers clearly
had followings of students whereas there is no evidence that the
Appellants obtained students by any means other than their
advertisements. It is important to note that some teachers gave
extra lectures over the anticipated number so as to qualify
students to pass the WCB exam or otherwise qualify; thus the
Workers could save time if they were excellent teachers or might
lose time if they had an obtuse class or students. Sound
management or, sometimes luck, determined if the Workers were to
make a return on the amount of their time invested. Finally,
judging from Mary-Jo Mackie's income tax returns and the
practices already described, the evidence is that the Workers
engaged themselves to provide services from established
businesses of their own.
[9]
The essential problem in this case is one which did not exist to
any extent even 20 years ago. The Workers' real tools were
their knowledge. None of the Appellants except Mr. Waite had the
knowledge to check on the Workers respecting WCB courses and even
he had to accept the Workers competence at face value respecting
the other courses. This problem goes to control and to
integration as well. Thus, while the Appellants had a secondary
institutional licence, the students could have taken the exam
without any course and passed it, or the Workers could simply
"coach" the students privately or in groups for a fee
and it would have been legal.
[10] These
Workers were like the original teachers of the middle ages or
Roman or Greek times. They were itinerant purveyors of knowledge.
The Appellants and the Workers were symbiotic to each other. The
Appellants did not have the right to say how the Workers would
teach; WCB checked on that and would simply decertify the
Workers. On non-WCB courses, the success or failure of the course
was solely in the teachers' (Workers') hands and whether
it was ever repeated depended entirely on student response and
the willingness of the Worker to offer it again through the
Academy. There is no evidence that the Appellants either had or
tried to exercise a power to give the Workers orders regarding
the manner in which they were to carry out their work.
[11] Thus the
Workers had businesses of their own to provide a teaching service
to any taker. The Appellants had their own business and acted
like brokers who put students with the Workers or merely
facilitated their arrangements. The Appellants had a business and
the Workers had businesses. They worked together at times and at
other times they worked separately.
[12] The
appeals are allowed. The Workers were in business for themselves.
The Appellants are awarded the costs permitted under the
Employment Insurance Act.
Signed at Ottawa, Canada, this 5th day of February,
2001.
"D. W. Beaubier"
J.T.C.C.
COURT FILE
NO.:
2000-2034(EI) and 2000-2035(CPP)
2000-2037(EI) and
2000-2040(CPP)
STYLE OF
CAUSE:
Paul Collin & Michael Waite and The Minister of National
Revenue
A. J. Medical Supply Ltd. and The Minister
of National
Revenue
PLACE OF
HEARING:
Prince George, British
Columbia
DATE OF
HEARING:
January 22, 2001
REASONS FOR JUDGMENT BY: The
Honourable Judge D. W. Beaubier
DATE OF
JUDGMENT:
February 5, 2001
APPEARANCES:
For the
Appellants:
Jan Christiansen
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
2000-2034(EI)
BETWEEN:
PAUL COLLIN & MICHAEL WAITE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard together on common evidence with
the appeals of Paul Collin & Michael Waite
(2000-2035(CPP)), A. J. Medical Supply Ltd.
(2000-2037(EI)) and
A. J. Medical Supply Ltd.
(2000-2040(CPP)) on January 22, 2001 at Prince George, British
Columbia by the Honourable Judge D.W. Beaubier
Appearances
Counsel for the
Appellants:
Jan
Christiansen
Counsel for the
Respondent:
Victor Caux
JUDGMENT
The
appeal is allowed and the decision of the Minister is vacated in
accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada this 5th day of February,
2001.
J.T.C.C.
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