H Lionel Rosen v. Her Majesty the Queen, [1976] CTC 462, 76 DTC 6274

Marceau, J:—This is an appeal from the decision of the Tax Review Board dismissing the plaintiff's appeal against the reassessment of his income tax, for the taxation year 1972, by notice of which the Minister of National Revenue had disallowed the amount of $709.83 he had claimed and deducted as expenses incurred by him for the purpose of gaining part of his income allegedly deriving from a business.

The Issue

The plaintiff was, at the time pertinent to this action, employed on a full-time basis with the Government of Canada as Manager of the Data Services of the Department of Finance, but he was also a part- time lecturer at three schools in Ottawa:

(a) In 1970, when he had resigned as a full-time professor at the University of Ottawa to join the civil service, he had been asked by the University to carry on on a part-time basis, and to give lectures on data processing. As he was not to be prohibited from doing so, he accepted. His lectures proved to be successful. In 1972 he was still giving credit courses in the graduate school program on data processing, computer usage, projects in educational research and statistical analysis. These lectures were given from 4:00 pm to 6:00 pm from Monday to Friday and from 10:00 am to 12:00 noon on Saturdays.

(b) Since 1969 the plaintiff has also been giving courses on a part- time basis at Algonquin College on Management Information Systems and Concepts and, when in 1972 a new course was introduced in the Continuing Educational Division, he accepted to give the lectures called for and taught data processing from 7:00 pm to 10:00 pm on Wednesdays.

(c) During the year 1972 the lecturer on Data Processing and Computing Systems courses at Carleton University became ill and the plaintiff was asked to substitute; so he also gave lectures at Carleton from 6:30 pm to 8:30 pm.

The plaintiff's contention is that he was not an employee of either of the three institutions where he gave lectures during that year 1972; he was an independent contractor engaged in the business of lecturing. It follows that the income he derived from these professorial activities did not constitute income from employment but income from a business within the meaning of subsection 9(1) of the Income Tax Act, and the expenses he incurred in the course of gaining or producing that income were deductible pursuant to paragraph 18(1)(a) of the Act. The defendant, by her counsel, admitted that if the plaintiff’s basic contention were to be accepted, the deductions were properly claimed, but she denied that it be so.

The sole issue for determination in this action is therefore whether the plaintiff was an employee of the schools at which he taught in 1972 or whether he was an independent contractor engaged in the business of lecturing at these schools.

The Evidence

The plaintiff produced a “teaching acceptance formula” from the University of Ottawa, signed by himself and the Dean, in which he undertakes to give 60 hours of lectures, in the winter session, for a stipend of $1,800, and which states:

In consideration of the stipend offered by the University of Ottawa, I do hereby accept to teach the courses as indicated on this contract according to the set standard of the University and as published on the reverse of this present contract in the “Terms of Employment”.

These ‘terms of employment” deal with the various lecturer’s responsibilities; the eventual cancellation of a course; the time recess between lectures; the choice of textbooks; the payment of stipends, etc.

The plaintiff also filed two letters he received from Algonquin College and Carleton University, which were meant to confirm his appointments. In both cases the letters specify the date the lectures are to commence, the number of courses to be given, the hours reserved and the stipend agreed upon which was to be $15 per hour at Algonquin and $60 per lecture at Carleton.

The plaintiff explained that his situation with the three institutions had been, for all practical purposes, identical. First, prior to his signing the teaching acceptance or receiving the letters of confirmation, he had met with the dean of the faculty or the director of the department or the registrar of the school, with a view to discussing the objectives of the course for which he was to be responsible, the number of lectures he would give, the hours during which he could be available and other conditions of his participation. Second, at the three schools he had discretion as to the content of the courses and the choice of the textbooks; he assigned projects to his students without the approval of the dean or the director; he decided what examination questions were to be asked of his students and what evaluation they would be given; and he was free to invite guest lecturers. Third, in neither school was he assigned an office and he had no secretary, consequently, the correction of examinations and the preparation of lectures had to be effected in his home office. Fourth, he was issued by the three schools for the 1972 taxation year, as an employee, a T4 slip in which his income tax, Canada Pension Plan and Unemployment Insurance Plan payments were deducted from his salary, but he had not been consulted on that point and it was done without his approval.

The Argument

What legal inference must be drawn from these facts as to the relationship between the plaintiff and the schools? Was the plaintiff an employee or was he an independent contractor? The difficulty which is inherent in deciding a question of this kind is very well known. As the many cases before the courts have shown, it is sometimes very difficult to determine what the correct legal relationship is. What test is to be relied on?

Counsel for the plaintiff relies on a single one: control. He contends that the plaintiff was not an employee because the authorities of the three educational institutions did not have a sufficient degree of control over his lecturing activities. I must say that I disagree with him.

On the one hand, I am of the opinion that, in a case like this one, it may be insufficient to rely on the single test of control even if the characteristic that test alludes to remains the main one of a normal employer-employee relationship.

In Morren v Swinton and Pendlebury Borough Council, [1965] 2 All ER 349, Lord Parker, CJ said (p 351):

The cases have over and over again stressed the importance of the factor of superintendence and control, but that it is not the determining test is quite clear. In Cassidy v Minister of Health [[1951] 1 All ER 574; [1951] 2 KB 343], Somervell, LJ referred to this matter, and instanced, as did Denning, LJ in the later case of Stevenson, Jordan & Harrison, Ltd v MacDonald & Evans [[1952] 1 TLR 101], that clearly superintendence and conirol cannot be the decisive test when one is dealing with a professional man, or a man of some particular skill and experience. Instances of that have been given in the form of the master of a ship, an engine driver, a professional architect or, as in this case, a consulting engineer. In such cases there can be no question of the employer telling him how to do work; therefore, the absence of control and direction In that sense can be of little, if any, use as a test.

On the other hand, the degree of control that the universities could exercise over the plaintiff’s lecturing activities appears to me to have been no different than the degree of control a modern university today exercises over the experienced and specialized members of its teaching staff, who are undoubtedly employees. The general freedom he was given in the teaching and examination of his students is certainly not exceptional today, specially at the postgraduate level or in a continuing education division. Besides, the fact that the plaintiff did not have his own office at the universities, that he did not have to attend faculty meetings and was not required to perform extracurricular services, had nothing to do with the degree of control the universities had over his teaching activities and was simply a consequence of his being employed on a part-time basis only.

I believe that the decisive test in a case like this one is that given by Lord Denning in that well known case of Stevenson, Jordan and Harrison, Ltd v Macdonald and Evans, [1952] 1 TLR 101, referred to by Lord Parker, CJ, cited above, and I wish to quote him at length on this point:

It [the case] raises the troublesome question of the distinction between a contract of service and a contract for services. The test usually applied is whether the employer has the right to control the manner of doing the work. Thus in Collins v Herts County Council, Mr Justice Hilbery said:

“The distinction between a contract for services and a contract of service can be summarized in this way: In the one case the master can order or require what is to be done, while in the other case he cannot only order or require what is to be done but how it shall be done.”

But in Cassidy v Minister of Health, Lord Justice Somervell pointed out that that test is not universally correct. There are many contracts of service where the master cannot control the manner in which the work is to be done, as in the case of a captain of a ship. Lord Justice Somervell went on to say: “[O]ne perhaps cannot get much beyond this: ‘Was his contract a contract of service within the meaning which an ordinary person would give to these words?’” I respectfully agree. As my Lord has said, it is almost impossible to give a precise definition of the distinction. It is often easy to recognize a contract of service when you see it, but difficult to say wherein the difference lies. A ship’s master, a chauffeur, and a reporter on the staff of a newspaper are all employed under a contract of service, but a ship’s pilot, a taxi-man, and a newspaper contributor are employed under a contract for services. One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business, and his work is done as an integral part of the business; whereas, under a contract for services, his work, although done for the business, It not integrated into it but is only accessory to it.

The work done by the plaintiff for the three schools at which he taught was done as an integral part of the curricula of the schools: the courses were regular courses and, if I may say so, the business in which he was actively participating was the business of the schools not his own. His situation as part-time teacher was essentially different from that of a guest speaker or lecturer but it was not for that matter essentially different from that of a full-time professor.

It is my opinion that the Minister was right in considering that the plaintiff's relationship with the three educational institutions in 1972 was that of an employee engaged for the purpose of delivering lectures on a part-time basis, and not that of an independent contractor.

The action must therefore be dismissed with costs.