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.
|
"D. W. Beaubier" |
J.T.C.C.
2000-2035(CPP)
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 (2000-2034(EI)), 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.
|
"D. W. Beaubier" |
J.T.C.C.
2000-2037(EI)
BETWEEN:
A.J. MEDICAL SUPPLY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard together on common evidence with the appeals of Paul Collin & Michael Waite (2000-2034(EI), Paul Collin & Michael Waite (2000-2035(CPP)), 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.
|
"D. W. Beaubier" |
J.T.C.C.
2000-2040(CPP)
BETWEEN:
A.J. MEDICAL SUPPLY LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard together on common evidence with the appeals of of Paul Collin & Michael Waite (2000-2034(EI), Paul Collin & Michael Waite (2000-2035(CPP)) and A. J. Medical Supply Ltd. (2000-2037(EI)) 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.
|
"D. W. Beaubier" |
J.T.C.C.