Date: 20001117
Docket: 1999-3778-EI
BETWEEN:
SASKATCHEWAN INTERCULTURAL ASSOCIATION INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Rowe, D.J.T.C.C.
[1] The appellant, Saskatchewan Intercultural Association Inc. (SIA), appealed from a decision issued by the Minister of National Revenue (the "Minister") dated June 17, 1999 wherein the Minister decided Heather Anwender-Rempel (the "worker") was engaged in insurable employment with the appellant pursuant to a contract of service during the periods from January 16, 1998 to June 30, 1998 and from July 14, 1998 to October 16, 1998.
[2] Lee Foster testified he has been the Program Manager of SIA since June, 1998 and is responsible for the day-to-day operations of the appellant. His status is that of employee and he reports to the Board of Directors. He was present for a portion of the period at issue in the within appeal. SIA is incorporated under the Non-Profit Corporations Act of the Province of Saskatchewan. Its mandate is to pursue multi-cultural and cross-cultural activities among 75 diverse ethnic groups as well as assisting new immigrants to Saskatchewan. Funding is provided by all three levels of government as well as from private foundations. The Province of Saskatchewan - in response to a proposal put forward by the previous Program Manager of the appellant - provided funding for the contracts at issue in the within appeal. The worker entered into three separate contracts with the appellant as follows: Exhibit A-1 - contract dated January 16, 1998; Exhibit A-2 - contract dated July 14, 1998; Exhibit A-3 - contract dated July 14, 1998. Foster explained that Exhibit A-3, although dated July 14, 1998, was signed by the parties on August 27, 1998 and was not intended to take effect until September 30, 1998 with an expiration date of September 30, 1999 and provided for payment - in total - of $3,200.00 to the worker. The other 52-week contract - Exhibit A-2 - signed on the same date - would expire on June 30, 1999. In the contracts, the title of the worker varies from: Project Assistant/Instructor to Project Instructor to Project Coordinator. However, Foster stated the function of the worker remained the same throughout. The grantor of the funds does not specify whether the status of the worker is to be that of employee or independent contractor. Ms. Anwender-Rempel ceased working for the appellant in May, 1999 before the term stated in the contracts - Exhibit A-2 and Exhibit A-3 - had expired. The balance of the payment due pursuant to the contract was negotiated and a new person was hired - as a consultant - to finish off the remaining work which was estimated as requiring an additional 1.5 months. SIA operated out of an office rented from the Saskatoon School Division. The office was furnished with the usual furniture and equipment including computer, printer, scanner, fax machine, telephones, supplies and resource materials. The appellant raised funds through sale of memberships and also generated revenue from providing translation and consulting services. The annual budget of SIA was approximately $165,000 and from time to time is required to use a small surplus for operating expenses until funding from a new source is in place. On March 30, 2000, the appellant had two full-time employees together with three other persons working on specific projects. The Auditor's Report And Financial Statements of SIA - dated March 31, 2000 - was filed as Exhibit A-4. The work required of Anwender-Rempel was to complete the project as structured within the time frames specified in the contract. This process involved some classroom instruction as well as workshops and SIA provided no support staff, per se, to assist her in fulfilling the terms of each contract. The worker did not have fixed office hours but Foster stated he would see her nearly every day during the first part of a project and then not as often during the latter stages. The office hours of SIA were from 8:30 a.m. to 5:00 p.m. and Anwender-Rempel had her own computer, printer and telephone at her own residence so she could carry out some of her work away from the SIA office. The projects were designed to assist foreign-born professionals to enter into the workplace and 10 candidates were chosen to participate in a program similar to an internship. Foster stated the assumption contained at paragraph 9(t) of the Reply to the Notice of Appeal was incorrect as computer training was not carried out at the premises occupied by the appellant. Instead, computer training was done at Kelsey Institute pursuant to a contract between that institution and SIA that has been negotiated by Anwender-Rempel. Advertisements were placed in local papers and posters were printed and distributed in an effort to attract recruits for the project and the cost was taken out of funds allotted for that purpose. A grantor providing funds to a project supplied the money in stages and, before the final amount would be paid over to SIA, it was necessary to provide the grantor with a report concerning the administration of the funded project. The worker was required to complete the report which was then submitted to the Program Manager of SIA who would then follow through with the formal request for the balance of funds due from the grantor. The funds which were used to carry out the project encompassed by the contract dated January 16, 1998 - Exhibit A-1 - arrived by means of four separate equal payments. As a result, payments to the worker were also subject to periodic payments beginning with an initial amount of $500.00 on January 16, 1998 and then continuing at the rate of $1,616.00 per month thereafter until May 15, 1998 with a final payment due on June 30, 1998 after all written reports had been submitted to the SIA office. This contract did not contain any termination clause but the subsequent ones - Exhibits A-2 and A-3 - provided for termination of those contracts following the provision of six weeks written notice by either party. The wording of clause 2(b) in Exhibit A-2 required receipt of a final report - from the worker - concerning a particular phase of the project prior to payment being made to her for that portion of the contract. While there was no specific workspace assigned to the worker, she was able to use the general work area and the equipment, as needed. The budget for each project contained a certain amount to be used for the purchase of supplies, as required, and the worker was not expected to provide any of her own supplies or materials to be used in the project. While working on projects for SIA, Foster stated Anwender-Rempel had also entered into a contractual relationship with another organization whereby she taught English as Second Language (ESL) courses at Estey School. As for the projects undertaken by SIA, they were only a small part of the organization's overall operations in that the appellant served as the umbrella entity for 28 different language schools operated by community non-profit groups. SIA was also involved in supporting 45 different performing arts groups and carried out equity and anti-racism programs in the form of workshops and seminars. In addition, SIA coordinated a program whereby the University of Saskatchewan issued certificates to foreign-language teachers as well as being involved with a Heritage Language Program where classes were held in various public schools. The task of SIA was to book the space, advertise the programs and provide information to callers. Any fees for participating in a language program were paid directly to the particular school. As for evaluating the project carried out by Anwender-Rempel, the candidates participating in the programs were requested to provide feedback on the project undertaken by her. At the request of the worker, SIA requested a ruling on her working status.
[3] In cross-examination, Lee Foster agreed that in the financial statement - Exhibit A-4 - the entry under the category for salaries in the expense sheet referred to the Program Manager and the other full-time employee. Foster was referred to a Questionnaire - Exhibit R- 1- completed by William Kalmakoff on behalf of the appellant. Foster agreed one of the functions of the Program Manager was to liase between the Board of Directors and the individual undertaking a particular project pursuant to a contract to ensure funding guidelines were adhered to and to keep the Board aware of events. When a list of candidates for a program had been prepared, Foster stated it was presented to him - as a courtesy - by Anwender-Rempel. He had never sat in on any of her teaching sessions and at the end of a project she provided him with a report for his perusal. Foster was referred to Exhibit A-1 and the clause at paragraph 1(j) requiring the worker to "assist with performing general clerical duties - typing, mail-outs, reception, filing, etc.". Foster stated the reference was intended to apply only to this type of work being performed by Anwender-Rempel as it applied to the project being carried out by her. Foster agreed the statement - at paragraph 6 - in the Notice of Appeal that the worker was not required to personally carry out the services forming the subject matter of the contract was mainly referring to her ability to contract out - to others - certain portions of the project, if needed. When Anwender-Rempel notified SIA of her intention to leave before the last contract had expired, she suggested a worker as a replacement and payment was made to that person from the balance due to her under the contract. She had given SIA about 4 weeks notice of her desire to accept a full-time job with another organization carrying on a similar type of work. The final payment to the worker was based on the days worked by her during the last month.
[4] William Kalmakoff testified he was on the Board of Directors of the appellant during the relevant period until his term expired in May, 2000. Prior to his retirement in 1987, he had been employed as Regional Director of Education for the North Battleford School Division. Following retirement, he was actively involved with the Saskatchewan Doukhobour Society and other groups. There had been a project funded by a grant from the provincial government but the original person in charge had departed for other opportunities so advertisements were placed in order to seek a replacement. The mandate was to provide training to foreign-trained individuals in an effort to assist them in finding employment in Canada. As a Director of SIA, he sat on the interview committee together with the President and the Program Director. Ms. Anwender-Rempel had run similar programs during her career and she was chosen to complete the project. She had presented her résumé - similar to the one used by her - Exhibit A-5 - when applying for the second contract - when responding to the SIA advertisement placed in a local newspaper. Once she began working on the project, she placed an advertisement - Exhibit A-6 - in the Saskatoon Star-Phoenix seeking qualified candidates for a work readiness/work placement program from July-December, 1998. Kalmakoff stated he had not had a lot of contact with the worker but the Board - at meetings - would be presented with a report by the Program Manager which provided an overview of ongoing projects. Kalmakoff was at the SIA office once a week, on average. His understanding of the working conditions applying to Anwender-Rempel was that she was not required to work set hours but there were certain deadlines to be met. The amount and type of training required depended on the needs of the various applicants and could not be determined in advance. Kelsey Institute carried out the computer training and the Women's Immigrant Society conducted language training. The worker carried out work at home using her own computer and equipment but the SIA office was the means by which people contacted her. During the course of discussions which led to the contracts - Exhibits A-1, A-2 and A-3 - between SIA and Anwender-Rempel - she had requested payments be made to her monthly. In May, 1999, she indicated she wished to leave her work at SIA and the Board was satisfied with the notice given by her. The report to be provided to the grantor was completed by the worker and her replacement. At one point, the appellant had applied for funding for two separate projects but because Anwender-Rempel held a B.Ed degree it was possible for her to handle the project coordination as well as the instructional component. As a result, the budgets for the two projects were merged and SIA and the worker agreed on a satisfactory amount for her compensation. Kalmakoff stated the grantor for a project looks only to SIA for satisfaction of the terms and conditions of the funding. Although the period covered by the decision of the Minister extended only to October 16, 1998, Anwender-Rempel actually worked at SIA until May 7, 1999.
[5] In cross-examination, William Kalmakoff agreed the reference in Exhibit A-1 to performing clerical duties related only to that sort of work arising in the course of the worker carrying out a project. It was never intended that she would be assigned general office duties. The person in charge of the SIA office was the Program Manager. The worker had the right to obtain assistance from others with regard to certain portions of a program but - as he had stated in paragraph 8 of the Questionnaire - Exhibit R-1 - the contract for the project was with the worker. Persons responding to the advertisement were expected to apply to the SIA office. The placements of the advertisements seeking participants in the program were paid for directly by SIA and the only travel expense paid to the worker was for an out-of-town trip. Kalmakoff stated the projects carried out by the worker were apart from the normal functions of the appellant through its staff which was not able to handle the extra duties created by the projects. As a result, the Board turned to hiring outside persons as independent contractors. Any funds remaining once a particular project had been completed were retained by the appellant and were later expended in the course of its general mandate.
[6] Counsel for the appellant submitted the worker was not under the control of SIA in the sense of having to report to work at specific times or to perform work in accordance with a set schedule. She was able to do work away from the SIA office at her own pace. In addition, counsel submitted the worker used many of her own tools such as telephone, computer and printer and she was able to work out of an office in her own home and carried out the duties set forth in the various contracts at different locations. As for the aspect of the chance of profit or risk of loss, counsel pointed to the three contracts between the worker and SIA as an indication that Anwender-Rempel must have assessed her opportunity to earn a profit therefrom considering the time, effort and cost of supplies and equipment in order to complete the task. In considering the matter of integration, counsel submitted that SIA - as an non-profit corporation - provided a variety of programs for recent immigrants and unlike the situation in certain other cases, in the within appeal, the carrying out of specific projects in accordance with particular funding mechanisms was not the raison d'être of the appellant.
[7] Counsel for the respondent submitted the worker - while not under tight supervision - was still required to submit reports to the Program Manager of the appellant and it was SIA that supplied the tools, office space, equipment and the means by which other training facilities owned and operated by other teaching institutions would be made available to the particular projects. As such, the worker had no chance of profit and risk of loss and was not required to pay for any supplies or other expenses. In addition, counsel submitted that even though SIA performed a variety of services, the projects occupying the time and efforts of the worker were significant to its overall operations and were not merely peripheral.
[8] 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:
[9] There was not much control exercised by the appellant in relation to the day-to-day activities of the worker. She had been hired/retained as a result of her expertise and held a degree in education which permitted her to perform both parts of a task which originally had been a two-part proposal with the intent of having the work undertaken by two people. The terms of the three contracts did not require much more of the worker than to accomplish certain goals by following general guidelines and to do so within a stated timeline. The fact that she reported to the Program Manager so the Board of Directors could be kept aware of the ongoing projects is not inconsistent with the requirements of any independent consultant delivering professional services. Apart from the terms of these contracts, the evidence did not establish any fact pattern which would permit one to state the working conditions clearly defined the worker's status, although they lean toward supporting the view that in this respect she was providing her services to SIA in her capacity as an independent contractor even though it is recognized that a professional assigned to accomplish a stated task is less likely to be subject to ongoing supervision in the usual sense.
Tools:
[10] Although the worker had a computer and related equipment and did perform some work from her own home, the overwhelming component in this regard was provided by the appellant. All potential applicants for the advertised programs attended at the SIA office and these individuals made contact with the worker in this manner. Certain workspace was provided - or arranged for - by SIA and the necessary supplies were provided by SIA through the funding of a grant. The worker had access to the general office equipment and supplies within the SIA office and to the telephone system and reception facilities in order to maintain a communication channel between herself and the people involved in the training programs. Today, when nearly everyone has a personal computer at home - serving both personal and employment/business needs - in order that consideration of tools be examined in its proper context, I would tend to confine the significance of owning this type of equipment to circumstances where the primary reason for its acquisition, up-grading, replacement and/or maintenance was driven by the work or business component. In the within appeal, the tools test favours the view the worker was an employee.
Chance of Profit or Risk of Loss:
[11] As mentioned above, the cost of supplies was included in the budget for a particular project and the worker was not required to bear any expenses related thereto. Like any worker, she bore the cost of operating her own vehicle in order to travel to work and she chose to have a computer and equipment available in her work space at home but this was not purchased by her specifically in order to carry out the projects set forth in the three contracts. The amount available to be paid to the worker pursuant to each contract was a product of the budgetary process involved in submitting the funding proposal to a grantor and was fixed - or nearly so - as a result. There was no real opportunity for the worker to earn more money, although if it took her more hours to complete the stated tasks or to achieve the final goal, then her return - per hour - would be diminished. The fact that one project might provide her with a higher return per hour - based on a 40-hour work week - than another one does not indicate the presence of risk of loss in an entrepreneurial sense. The worker was well aware that the money available to pay her for services rendered - within a particular time frame - was dependent on a process whereby SIA obtained funding from various sources. While the method of payment utilized was not the usual one where there is a wage or salary clearly linked to an hourly, weekly or monthly unit or rate, throughout the working relationship at issue in the within appeal, the parties clearly regarded the remuneration as being paid - for the most part - in equal amounts on the last day of each month. If piece work can be considered as employment pursuant to a contract of service, then payment for having performed a defined lump of work within a particular time does not necessarily transform the service-provider into an independent contractor. Sometimes, the crumbs scattered to mark the trail will be strewn about by the wind and it is the dominant course that must be ascertained when examining these matters. Overall, with regard to this particular test, the path leads towards the status of employee.
Integration:
[12] There is no doubt that SIA was more than a one-trick pony. As a non-profit corporation of some 30 years standing in Saskatoon, it provided a variety of programs and acted as a liasing body to coordinate many different programs all designed to carry out the mandate of assisting immigrants to integrate into Canadian society and - more specifically - to gain entry to the workforce. In terms of language training, SIA acted as an umbrella organization and also carried out important functions in the field of education and anti-racism programs as well as providing a resource base for persons wishing to retain the services of translators and consultants for matters related to language or culture. SIA acted in concert with the University of Saskatchewan in relation to a program offering a certificate in language instruction to qualified individuals.
[13] At p. 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."
[14] The method of payment was structured as though the worker was an independent contractor and upon executing the contract dated January 16, 1998 - Exhibit A-1 - she received the sum of $500.00. Depending on one's point of view, that was either an advance against future salary - as set forth in the contract - or a retainer which had an initial sum paid contemporaneously with execution of the contract thereafter requiring further payments to be made in accordance with a schedule provided the work was completed within certain timelines. In the event there was a delay, the worker was still expected to complete the work at no extra cost and payment - including the final amount - would depend on the worker providing a satisfactory report which would be the basis upon which SIA sought the balance of project funds from the grantor. The second contract - Exhibit A-2 - dated July 14, 1998 did not result in the worker receiving any payment until July 30, 1998 at which time she received the sum of $1,560.00. Thereafter, she received the same amount on the last day of each following month until the expiration of the project on June 30, 1999. The third contract - Exhibit A-3 - also dated July 14, 1998 did not call for any payment to the worker until September 30, 1998 even though it commenced on July 14, 1998 and was a 52-week mentorship project for which the worker was to serve as the Project Instructor. The contract provided for a payment to her in the sum of $1,600.00 on September 30, 1998 and a further amount of $1,600.00 on March 30, 1999 for a total sum of $3,200.00.
[15] In terms of the question, "Whose business is it?", one must consider that SIA was the body corporate capable of obtaining the funding from various sources in order to carry out its mandate and that one of its important purposes was to operate the type of mentorship program which formed the subject of the three contracts. Unless and until the funding was in place as a result of the efforts of SIA, there was no project which would require the services of the worker. The channels of communication connected SIA to the grantor and the worker was required to provide reports on accomplishments in order that payment could be obtained for a specific phase. Certainly, an independent contractor has to start somewhere and cannot always take on work within the context of an up-and-running enterprise. At the same time, it is reasonable to conclude that a newly-formed consulting business cannot be expected to have the capital to hire employees or to have expensive equipment and a high profile operation. Indeed, the one-person operation may truly be run on the basis of the owner being a jack of all trades. However, in the within appeal, the worker was not required to have her own equipment and the workspace required was either provided - or arranged for - by SIA as well as contracting with other institutions for training facilities and instruction, as required, and being responsible for payment to that entity. It was clear the worker was expected to perform the work personally, including the clerical duties related to the specific program, but it was accepted that she was free to contract with third parties to accomplish this aspect of the overall work. The advertising for participants in the projects was paid for directly by SIA and it was clearly stated therein that:
"The Saskatchewan Intercultural Association will be offering a work readiness/work placement program from July-December 1998."
[16] It was also indicated in the advertisement that participants could qualify for a Provincial Training Allowance and they were directed to apply for the program by submitting a résumé‚ to the SIA office. Again, it must be noted the expense of the publicity and related matters was borne by SIA as a previously budgeted expense. Also discussed earlier, I fail to see how the worker could have benefited from the sound management of the task other than to obtain further work from SIA. Any excess in funds resulting from successful completion of a funded project was retained by SIA. There was no assumption of financial risk and when she gave notice that she would not be able to finish the last project set forth in the contract - Exhibit A-3 - she located a suitable replacement and assisted that person in completing the contract. SIA and the worker agreed on a suitable amount - based on a percentage of the month actually worked by her - to be deducted from her last payments in view of the need for another person to act as a substitute for the final period. This work was an important part of the overall purpose and function of SIA and whoever performed it was doing it in the context of it being an integral part of the business - in the widest sense of that term - and not merely in a collateral sense. By comparison, when SIA acted as an umbrella organization and liased with various community groups who - in turn - provided language instructors for a variety of classes, the fees were paid by students directly to the language schools. In that sense, one can see the difference between persons providing a service not integral to an organization but merely as an accessory to it. On occasion, SIA earned fees by providing translators or other consultants to persons who might otherwise have had difficulty in locating that particular expertise. In this manner, it was generating revenue on its own account. Looking at the evidence, it is apparent the evidence the worker was providing services within the infrastructure established by the appellant and that SIA was directly involved in the delivery of the specific mentorship and employment training programs as a vital part of its overall function. By example, one can look at the computer training done by Kelsey Institute which was only a small part of the mentorship program and was contracted for by SIA, as needed, from time to time. The work done by Anwender-Rempel - including being involved in the contracting out process for the computer training - was a hands-on continuous function carried out for the most part from the SIA facility or classrooms rented by it for that purpose within the context of a complex funding process involving three levels of government and private foundations. If one looks at the working relationship from the standpoint of the worker as disclosed by the evidence, it is difficult to see how she would have been able to characterize herself as an independent contractor.
[17] The parties entered into three separate contracts intending that the worker would be an independent contractor. However, the jurisprudence is clear on this point. 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 pages 239-240 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."
[18] Taking into account the evidence and applying it in the manner directed by the relevant jurisprudence, I conclude the decision of the Minister is correct and it is hereby confirmed.
[19] The appeal is dismissed.
Signed at Sidney, British Columbia, this 17th day of November 2000.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE NO.: 1999-3778(EI)
STYLE OF CAUSE: Saskatchewan Intercultural Association Inc.
and M.N.R.
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: August 3, 2000
REASONS FOR JUDGMENT BY: the Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: November 17, 2000
APPEARANCES:
Counsel for the Appellant: Marvin Henderson
Counsel for the Respondent: Julie Rogers-Glabush
COUNSEL OF RECORD:
For the Appellant:
Name: Marvin Henderson
Firm: Henderson Campbell
Saskatoon, Saskatchewan
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-3778(EI)
BETWEEN:
SASKATCHEWAN INTERCULTURAL ASSOCIATION INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on August 3, 2000 at Saskatoon, Saskaschewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Marvin Henderson
Counsel for the Respondent: Julie Rogers-Glabush
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 17th day of November 2000.
|
"D.W. Rowe" |
D.J.T.C.C.