Date: 19981209
Dockets: 97-1402-UI; 97-150-CPP
BETWEEN:
WOMEN IN FILM & TELEVISION TORONTO INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
MARGOT La ROCQUE,
Intervenor.
Reasons for judgment
(Delivered orally from the Bench in Toronto, Ontario, on
November 3, 1998.)
Hamlyn, J.T.C.C.
[1] This is in the matter of Women In Film & Television
Toronto Inc., the Appellant, and the Minister of National Revenue
(the "Minister"), the Respondent, and Margot
La Rocque, the Intervenor.
[2] By Notice of Assessment dated June 6, 1996 the Appellant
was assessed for failure to remit unemployment insurance premiums
in respect of Margot La Rocque in the amount of $1,602.93
and for related penalties and interest for 1995 and 1996. And by
Notice of Assessment dated June 6, 1996 the Appellant was
assessed for failure to remit Canada Pension Plan contributions
in respect of Margot La Rocque in the amount of $1,082.74
and for related penalties and interest for 1995 and 1996.
[3] The Appellant applied to the Respondent for
reconsideration of the assessments and the Respondent confirmed
the assessments by letter dated May 9, 1997. From the
confirmation of the Minister, the Appellant appealed to this
Court and Margot La Rocque intervened.
THE PLEADINGS
[4] From the Notice of Appeal the following Statement of Facts
was pleaded and I will comment as to the Minister's position
as found from the Reply to the Notice of Appeal (the
"Reply") in relation to the Statement of Facts.
[5] "1. On or about July 15, 1995, Margot LaRocque's
services were contracted on a per diem basis to carry out a
specific project because of her knowledge and expertise. It
involved developing a professional program and preparing a report
to follow." That was denied by the Minister.
[6] "2. Ms. LaRocque rendered invoices as services were
provided..." That was denied by the Minister.
[7] "3. Ms. LaRocque's hours and methodology were not
under the control of WIFT-T." That part was denied. The
following was admitted: "She was not responsible for any
employees or assets of WIFT-T, nor for any of the day to day
operations of the organization."
[8] "4. Ms. LaRocque provided services to other entities
during the course of the months that she provided services for
WIFT-T." That was admitted.
[9] "5. The terms of the contract were confirmed by
WIFT-T, as described in the letter attached dated February 13,
1996." That was admitted.
[10] "6. The terms of Ms. LaRocque's services were
limited in scope and timeframe." That was denied by the
Minister.
[11] "7. WIFT-T is a non-profit organization with limited
financial resources. At that time WIFT-T employed one or two
employees to carry out office / administrative functions for the
organization. All other services are provided by volunteers or
when funds are available, paid consultants, such as Ms. LaRocque,
to write courses, programs, reports, etc." That was
admitted.
[12] "8. In April of 1996 Revenue Canada sent an auditor
to audit the payroll, including a review of payments for
professional services." That was admitted.
[13] "9. Revenue Canada issued assessments dated June 6,
1996 assessing CPP of $480 and UI of $652.53, plus penalty and
interest for 1996 and C.P.P. of $602 and U.I. of $950, plus
penalty and interest for 1995." That was admitted by the
Minister.
[14] "10. On July 9, 1996 WIFT-T filed Form CPT 100 to
appeal against the assessment." That was admitted by the
Minister.
[15] "11. On July 12, 1996 WIFT-T also filed a Form T400A
Notice of Objection with respect to the charge of Federal and
Provincial income tax for 1996 with respect to the same
situation." The Minister said there was no knowledge in
relation to that.
[16] "12. In a letter dated May 9, 1997 Revenue Canada,
Appeals issued a letter (...) confirming their assessment."
That was admitted by the Minister.
[17] Turning now to the Reply. On page 2 (paragraph 8) of the
Reply we have the following in terms of the facts relied upon by
the Minister. I am dealing at this time with the Reply that was
filed in relation to the unemployment insurance matter that
follows right along with the Reply that was filed with the Canada
Pension Plan matter:
[18] "(a): the Appellant is a non profit
corporation." This was agreed to by the Appellant at
trial.[1]
[19] "(b) the Appellant is in the business of promoting
women in film." This was agreed to by the Appellant.
[20] "(c) The Appellant's business is controlled by a
volunteer board of directors." This was agreed to by the
Appellant.
[21] "(d) the Worker [I am now going to change that
throughout to the word 'Intervenor', just to make it
quite clear] was hired as a Director of Professional
Development." The Appellant at trial indicated that
specifically related to the function of Director of Professional
Development but not beyond.
[22] "(e) the [Intervenor] had a variety of duties to
perform in her role as Director of Professional Development such
as:
- research and review courses offered by the Appellant
- write reports for funding agencies
- provide support and advice to members
- design and administer the Mentor program
- attend committee and board meetings
- work on the development and promotion of professional
development workshop
- research funding opportunities
- represent the Appellant at a conference on professional
development."
In relation to those assumptions the Appellant generally
agreed with the assumptions as stated but clearly delineated only
insofar as they related to the project that was undertaken for
the Appellant by the Intervenor. In relation to one specific
assumption, that is attend committee and board meetings, the
Appellant stated to the Court that this was on occasion and it
was only in relation to progress of the report. The Intervenor,
in her evidence, indicated that this was only part of her
duties.
[23] "(f) the [Intervenor] also performed some general
office work when needed, such as answering the telephone, proof
reading letters and calendars, helping out with computer problems
and helping to find staff for short term contracts." The
Appellant's position in relation to this was that if she (the
Intervenor) was in the office and she helped carrying out the
mandate of this small organization, those tasks were done. But
the Appellant stipulated clearly that she was not required to do
so under her contract. The Intervenor, in her evidence, stated
that she felt that she had to do these things and that it was
part of her arrangement with the Appellant.
[24] "(g) The [Intervenor] was to be paid an annual
salary of $30,000.00 based on a weekly salary in the amount of
$600.00 for a 3 day work week." The Appellant totally
disagreed with this and I will review this a little later on. The
Appellant said it was really a per diem basis payment and it was
not a fixed salary of $30,000.00 a year. The Intervenor felt that
the assumption was correct.
[25] "(h) the [Intervenor] was paid by cheque on a
regular bi-weekly basis, whether or not she submitted the
invoices requested by the Appellant." The Appellant's
position was that this was an informal organization and that if
an invoice had not arrived, in good faith they paid the
Intervenor in any event but at the end of the day, when the whole
matter was completed, all invoices had been provided.
[26] "(i) even if the hours of work and/or the days of
work could vary based on meetings to attend, the [Intervenor] had
to report to the Executive Director on each day of work."
The Appellant disagreed with this assumption and I will review
that later on in terms of reporting to the Executive
Director.
[27] "(j) the [Intervenor] was supervised by the
Executive Director." The evidence of Ms. Day, the Executive
Director of the Appellant, indicated the supervision was related
only to the project that the Intervenor undertook at the behest
of the Appellant and it was nothing more than to report to the
Executive Director on behalf of the Appellant organization as to
the progress of that contract and was not supervision of the
Intervenor as an employee as such. I will speak to that
later.
[28] "(k) the [Intervenor] had to perform her duties
personally." That was agreed to by the Appellant.
[29] "(l) all the required tools and equipment were
provided to the [Intervenor] by the Appellant, at no
charge." I will review this later but generally the
equipment involved was office equipment including the use of a
computer and use of telephone and space.
[30] "(m) the [Intervenor] was reimbursed for
out-of-pocket expenses incurred in performing her duties."
That was agreed to.
[31] "(n) the Appellant had the right to terminate the
[Intervenor's] services." That was agreed to.
[32] The next assumption is a question of law. I won't
review it at this time. And the last one: "(p) the Appellant
did not withhold unemployment insurance premiums from the
[Intervenor's] remuneration." That was agreed to.
[33] Also, in relation to the Canada Pension Plan, the
Appellant did not withhold Canada Pension Plan contributions from
the Intervenor's remuneration. That did not appear to be in
contention.
OTHER EVIDENCE AND CONCLUSIONS
[34] So with that background, we will go now to certain
significant evidence and conclusions that emerged during the
hearing.
[35] I find the intention of the parties at the outset was for
a contract for service. The Intervenor had specific expert
intellectual skills that the Appellant needed for a project and
that project was in part to assess and administer a mentor
programme, amongst other things.
[36] The Intervenor invoiced for her services and both the
Appellant and the Intervenor discussed the question of Goods and
Services Tax ("GST") and there was GST to be charged.
No deductions were taken (withheld) nor intended to be taken
(withheld).
[37] The record of employment filled out by the Appellant was
done by the Appellant organization at the insistence and behest
of Revenue Canada and the Appellant organization disagreed that
such a record of employment should be issued.
[38] The Appellant organization was small, a volunteer
organization and could only undertake projects after funding was
found.
[39] At the end of the relationship the Intervenor and the
Appellant organization were at the point of disengagement and the
Intervenor was dismissed.
[40] I conclude in retrospect the Intervenor saw her role at
that time, looking back, more of an employee than as an
independent contractor, whereas throughout the process, including
to today, the Appellant saw the Intervenor as an independent
contractor engaged under a contract for service.
[41] Some of the other evidence I heard included the evidence
of an office manager but I found that that evidence was somewhat
influenced by the office manager's view that some of the
tasks that she was asked to do and some of the tasks that the
Intervenor was asked to do were outside defined tasks, the tasks
being the office manager's tasks, and the Intervenor's
tasks. Those directions from the Executive Director were resented
by the office manager.
[42] In assessing the role of the Intervenor, I find her
evidence was not complete as to specifics of what went on whereas
the Appellant's witness, that is, the Executive Director, Ms.
Day, was more precise and more exact.
[43] In terms of the assumptions of the Minister and the
significant evidence as to the role of Director of Professional
Development, this assumption has been somewhat rebutted by the
Appellant's evidence in that those tasks done related only to
the Intervenor's contractual relationship for the projects
engaged and not beyond.
[44] The other tasks that the Intervenor did as to office
assistance, etc., were not part of the Intervenor's
contractual relationship but were done by the Intervenor in an
effort to keep the small organization moving. She was not
required to do these things, however, as such.
[45] The fee for the contractual engagement was $200.00 a day
not to exceed $600.00 a week. The Intervenor had a choice of how
the project was to be done within the Appellant's
organization and the engagement operated around the
Intervenor's other schedule.
[46] The method of supervision by the Executive Director was
not in the sense of master and servant supervision but by way of
a report by the Intervenor on a regular basis as to where the
project was at in terms of the Appellant organization. However,
from the Intervenor's evidence, as the relationship
progressed towards the end, she interpreted the supervision more
as a mandatory mode than a report mode. The Appellant's
position was constant throughout.
JURISPRUDENCE
[47] From that we go now to a brief review of the
jurisprudence background to the analysis of this relationship. As
has been cited in many cases, including Moose Jaw Kinsmen
Flying Fins Inc. v. M.N.R., 88 DTC 6099, the Federal Court of
Appeal at page 6100 stated:
The definitive authority on this issue in the context of the
Act, is the decision of this Court in Wiebe Door Services Ltd.
v. The Minister of National Revenue, 87 DTC 5025. MacGuigan
J. speaking on behalf of the Court, analyzed Canadian, English
and American authorities, and, in particular, referred to the
four tests for making such a determination enunciated by Lord
Wright in City of Montreal v. Montreal Locomotive Works
Ltd., [1974] 1 D.L.R. 161 at 169-170. He concluded at page
5028 that:
Taken thus in context, Lord Wright's fourfold test
[control, ownership of tools, chance of profit, risk of loss] is
a general, indeed an overarching test, which involves
"examining the whole of the various elements which
constitute the relationship between the parties". In his own
use of the test to determine the character of the relationship in
the Montreal Locomotive Works case itself, Lord Wright combines
and integrates the four tests in order to seek out the meaning of
the whole transaction.
At page 5029 he said:
...I interpret Lord Wright's test not as the fourfold one
it is often described as being but rather as a four-in-one test
with emphasis always retained on what Lord Wright, supra,
calls "the combined force of the whole scheme of
operations," even while the usefulness of the four
subordinate criteria is acknowledged. (emphasis added)
At page 5030 he had this to say:
What must always remain of the essence is the search for the
total relationship of the parties.
He also observed "there is no escape for the trial judge,
when confronted with such a problem, from carefully weighing all
the facts."
[54] The four in one test referred to by MacGuigan J. from the
City of Montreal v. Montreal Locomotives Works Ltd.
(supra) is made up of the following subordinate tests,
that is: control, ownership of tools, chance of profit, risk of
loss.
ANALYSIS
[55] And with that background I will now give you my analysis
of the relationship.
[56] To determine if a contract of service or a contract for
service exists, looking firstly at control and supervision, the
key question. At the inception, the intent of the Appellant was
to engage the Intervenor under a contract for service where the
Intervenor developed projects for the Appellant and the
Intervenor had to report to the Appellant as to the status and
progress of the project. After the engagement there was a certain
evolution that took place where the Intervenor attended at the
Appellant's premises on a part-time schedule and during the
period of attendance, from time to time, also did other tasks at
the request of the Appellant organization, including answering
the telephone and miscellaneous office tasks.
[57] The Appellant maintained that this was not part of the
contract but part of keeping the overall volunteer organization
going.
[58] It would appear from the evidence that towards the end
the Intervenor saw her services, and more particularly after
dismissal, as that of an employee. And, as I have indicated, the
Appellant continued to see the Intervenor as an independent
contractor with a fixed defined role.
[59] In my overall view of the relationship and terms of
control and supervision, I find the supervision was on a report
basis as to progress and not on a job supervision basis. The
Intervenor clearly had a choice to do or not to do the other
activities over and above her retained intellectual skills in
relation to the report preparation and the mentor programme.
[60] In terms of the second heading, profit and loss: the
opportunity of profit and the risk of loss is based on the notion
that in an employee/employer relationship, the employee does not
generally incur expenses and does not bear any financial risk and
has no chance of profit.
[61] In this case the retained fee was $200.00 per diem and
not to exceed $600.00 per week. The definition originally was one
of trainor coordinator and that evolved to a Director of
Professional Development, and the Intervenor took this role in
relation to specific projects that were specifically funded on
the condition that she would not engage in a contractual
relationship with a competitor, but she could work for other
organizations and indeed did so in her continued work. She did
have other clients. More particularly, in relation to the
Appellant organization, she invoiced for her services as she did
invoice other individuals for her services.
[62] Ownership of tools: generally, if an employer supplies
the tools this indicates control over the worker, however, there
are exceptions. One example discussed earlier was a mechanic who
supplies tools to do the job.
[63] In this case, I conclude the Intervenor was retained for
her intellectual capabilities and skills and that she did provide
some of the tools and the Appellant provided some of the tools
and, at least at one point, the Intervenor used her own office in
the home but through most of the time used the office of the
Appellant organization.
[64] So with that overall analysis of the fourfold test, we
now go to the organization or integration test. That is the
analysis to determine the ultimate question, whose business is
it? The combined force of the whole scheme of operations is used
to what conclusion? It is necessary to look at more than the
surface relationship, that is look at the overall intrinsic
relationship between the parties.
[65] And from that, with the foregoing analysis, I find the
Intervenor performed services to the Appellant organization as a
person in business on her own account. She had intellectual
skills to assist the Appellant organization to carry out part of
its mandate and operated a project and entered into a contract
for service towards this end.
CONCLUSION
[66] I conclude the evolution to a contract of service, as
viewed by the Intervenor at the end of the engagement, did not
happen. Thus, I have reached the conclusion that the Intervenor
was not in insurable employment within the meaning of paragraph
3(1)(a) of the Unemployment Insurance Act (the
"Act") as she was engaged by the Appellant under
a contract for service, with the result that the Appellant was
not properly assessed pursuant to section 56 of the
Act.
[67] In relation to the Canada Pension Plan appeal, the
Intervenor was not in pensionable employment within the meaning
of paragraph 6(1)(a) of the Canada Pension Plan as she was
engaged by the Appellant under a contract for service, with the
result that the Appellant was not properly assessed pursuant to
section 22 of the Canada Pension Plan.
DECISION
[68] Therefore, my decision in this matter is that the appeal
is allowed and referred back to the Minister for reconsideration
and reassessment on the basis that the Intervenor was engaged
under a contract for service.
Signed at Ottawa, Canada, this 9th day of December 1998.
"D. Hamlyn"
J.T.C.C.