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Citation: 2004TCC211
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Date: 20040312
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Dockets: 2003-1908(EI)
2003-1909(CPP)
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BETWEEN:
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HELEN PAGE,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent,
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and
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Kevin Campbell, Wende Campbell and
Helen Page, Partners,
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o/a Campbell, Campbell & Page,
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Intervener.
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REASONS FOR JUDGMENT
Bowman, A.C.J.
[1] These appeals are from decisions
made by the Minister of National Revenue that the appellant was
not engaged in insurable employment for the period from
April 29, 2001 to April 30, 2002, for the purposes
of the Employment Insurance Act and the Canada Pension
Plan. The appellant's position is that during the period in
question she was an employee of a bookkeeping firm that operated
as Campbell, Campbell & Page which,
notwithstanding the fact that her name appeared in the name of
the firm, was owned 50/50 by each of the spouses of
Kevin Campbell and Wende Campbell.
[2] The Notices of Appeal are detailed
documents and since I propose to find as a fact that each of the
allegations except one has been established, it is convenient to
reproduce the facts alleged by the appellant. The allegations are
the same in both the Employment Insurance appeal and the Canada
Pension Plan appeal.
(c) Facts
(i) The appellant was
employed by Kevin Campbell, operating as Campbell, Campbell
& Page, during the period in question.
(ii) Campbell, Campbell &
Page, as it was then known, was in the business of providing
bookkeeping, accounting, and income tax preparation services for
its clients.
(iii) The business known as "Campbell,
Campbell & Page" was never a registered partnership pursuant
to the Partnerships Act, R.S.O. 1990, c.P.5 or a
registered business name pursuant to the Business Names
Act, R.S.O. 1990, c.B.17.
(iv) The appellant
had never entered into a partnership agreement with Campbell and
was merely an employee of Kevin Campbell and his wife,
Wende Campbell (now deceased).
(v) The appellant was employed
by Kevin Campbell (hereinafter referred to as "Campbell") to
perform such duties as required on a full-time basis at an
office established by Campbell in his home and was remunerated at
an hourly rate of pay on a weekly basis.
(vi) The appellant reported directly
to Campbell who approved all decisions relating to the
performance of the appellant's duties.
(vii) Campbell provided the guarantee to
clients with respect to the work performed by the appellant.
(viii) The appellant was required to provide
time sheets to Campbell setting out the hours worked which formed
the basis of her remuneration.
(ix) The appellant was not required to
provide any office equipment or supplies necessary to complete
her work, however, had similar resources set up at her own home
and was able to work from home outside of normal office hours or
under other circumstances, if the need arose.
(x) All office
supplies and materials including gas, parking, travel, and
related expenses were provided by Campbell or, if paid for by the
appellant, were reimbursed to the appellant by Campbell.
(xi) The appellant
did not share in the profits made by Campbell other than as part
of her remuneration which was contingent on or varying with the
profits of the business.
(xii) Similarly, the
appellant had no chance of profit nor did she bear any risk of
losses incurred by Campbell.
(xiii) The appellant did
not have signing authority on any bank or other accounts held by
Campbell nor had any authority to bind the Firm relating to the
execution of any deeds, contracts, or negotiable instruments.
(xiv) Campbell determined
the appellant's hours of work, however, was flexible and
accommodating to the appellant.
(xv) Campbell determined
the rate upon which the appellant would be remunerated.
(xvi) Any training
required was provided to the appellant by Campbell.
(xvii) All costs relating to bad
debts was provided by Campbell.
(xviii) The appellant was employed as
part of the business run by Campbell and her work was an integral
part of the business. After her dismissal, she was replaced by an
individual who has apparently taken over the duties previously
performed by the appellant.
[3] The only statement that it is
admitted was wrong is contained in subparagraph (xiii) where
it is said that she did not have signing authority on bank
accounts held by Campbell. In fact she did have authority to sign
payroll cheques.
[4] The Minister's decisions were
based upon the assumption that the appellant was a partner with
Kevin Campbell and Wende Campbell. The assumptions
pleaded are the following:
9. In making his decision, the
Respondent relied on the following assumptions of fact:
(a) The Payor is a business
which provides bookkeeping, accounting and tax services to its
clients (the "clients");
(b) At all material time, the
Payor effectively operated as a partnership (the
"partnership");
(c) The partnership commenced in
April, 1998;
(d) The Appellant was one of the
partners in the partnership;
(e) The Appellant performed
various duties for the Payor's clients (the "clients") which
included bookkeeping, accounting, tax services, consultation on
labour matters and other related duties;
(f) The Appellant
performed her duties either on the Payor's premises, at the
client's premises and at her home;
(g) The Appellant's remuneration
was $34.00 per hour, plus 1% of the billings to clients and 1.5%
of the Accounts Receivable collections;
(h) The Appellant did not
receive vacation pay or paid vacations from the Payor;
(i) The Payor did not
provide any benefit plans to the Appellant;
(j) The Appellant had
signing authority on the Payor's bank account;
(k) The Appellant participated
in management decisions for the Payor;
(l) For the years 2000 and
2001, the Appellant reported self-employed income on her
income tax returns;
(m) At all material time, the
Appellant provided services to others besides the Payor's
clients;
(n) For the years 2000 and 2001,
the Appellant did not report any employment income on her income
tax returns;
(o) For the years 2000 and 2001,
the Payor considered the Appellant self-employed and the Payor
did not deduct any Employment Insurance premiums from the
Appellant's remuneration, nor did the Payor issue the Appellant a
T4.
[5] Kevin Campbell intervened in
the appeal in the name of Kevin Campbell, Campbell, Campbell
& Page in support of the Minister's decision. I shall not
reproduce his lengthy notice of intervention. His position is
that in April 1998 the appellant became a partner in the
bookkeeping and accounting firm Campbell, Campbell & Page and
that from 1998 to April 30, 2002, she was a partner in the
firm.
[6] The issue is whether Ms. Page
was an employee, a partner or an independent contractor. The
appellant says she was an employee of the partnership of
Mr. and Mrs. Campbell. The respondent based its
determination on the premise that she was a partner in the firm
Campbell, Campbell & Page, but contends in the alternative
that she was an independent contractor and the intervener says
that she was a partner.
[7] The evidence is in some instances
contradictory and inconsistent. Issues of credibility abound.
Some facts appear arguably to point in the direction of
partnership, some in the direction of independent contractor and
some in the direction of an employment relationship. No single
factor predominates. It is a matter simply of sifting through the
mass of contradictory evidence, extracting those portions that
seem on a balance of probabilities to be most worthy of
acceptance, assembling them and deciding which of the three
relationships contended for is most consistent with the evidence
as a whole, bearing in mind that the traditional tests are not
exhaustive and the relative weight to be given to the various
factors will depend on the particular circumstances of the
case.
[8] Ms. Page's association with
Mr. and Mrs. Campbell began in November of 1989 when she
moved from Toronto to Oshawa. She began work in the Oshawa office
of Chaplin & Burd, Chartered Accountants. That
office was managed by Mr. and Mrs. Campbell.
Mr. Campbell was not a chartered accountant and was not a
partner. He was described as a principal.
[9] Ms. Page worked for Chaplin
& Burd and reported to Kevin Campbell or Mark Burd.
She was paid on an hourly basis. Canada Pension Plan and
Employment Insurance premiums and income tax were deducted at
source.
[10] In 1994, the appellant asked for a
raise. Mr. Campbell said he would give her a raise but only
if she agreed to work as an "independent contractor" which as a
practical matter meant no payroll deductions for income tax,
Employment Insurance and Canada Pension Plan contributions. She
said that she did not understand the distinction between an
employee and an independent contractor. I believe her. She is not
alone in this.
[11] Apart from that there was no change in
the relationship. She was paid parking expenses as before and was
paid on an hourly basis at a higher rate.
[12] In 1998 Chaplin & Burd wished to
close the Oshawa office and so the relationship of the Campbells
with that firm came to an end. They had negotiations with another
firm, Laing, McHardy & Rohr who agreed to engage
Kevin and Wende Campbell. The appellant and the
receptionist, Ms. Dianne Doucette, from the old firm,
joined Laing, McHardy & Rohr. The relationship was short
lived and the Campbells, the appellant and the receptionist
parted company with Laing, McHardy & Rohr. Litigation
ensued.
[13] The Campbells set up a new firm, under
the name of Campbell, Campbell & Page and Helen Page was
hired as an accounting technician. The relationship between the
Campbells and the appellant continued until 2002. It is that
relationship that is the subject of these appeals.
[14] I shall deal first with the argument
that she was a partner. Notwithstanding certain factors that
superficially might point in that direction, she was certainly
not a partner with the Campbells.
[15] We have, of course, the fact that her
name appeared in the firm name Campbell, Campbell & Page. She
is referred to in a brochure of Campbell, Champbell & Page as
a "partner". She signed a Business Banking agreement with the
Toronto-Dominion Bank in which she and the Campbells
disclosed that they are carrying on business as a partnership.
They opened a Toronto-Dominion Bank Merchant Visa Agreement
in which she and the Campbells described themselves as
partners.
[16] This sort of holding herself out to the
public as a partner would make it difficult for her to deny that
she was a partner to a member of the public or to the bank who
relied upon her representation to their detriment. The fact that
she is estopped as against certain persons and in certain
circumstances does not prevent her from denying that she is a
partner as against the Minister of National Revenue by whom
estoppel is not alleged and in any event there are no facts that
would warrant the invocation of the doctrine. The objective
existence of a partnership does not depend upon, and cannot be
established by, the application of a rule of evidence or law that
would prevent her stating the true facts as against persons who
are not able to invoke the doctrine of estoppel.
[17] Apart from the fact that the Campbells
held Ms. Page out to the public as a partner, there is no
evidence that would support the view that the appellant was a
partner. Indeed the evidence is to the contrary.
[18] In an affidavit signed on
March 1, 1999, Kevin Campbell, the intervener, who
was called as a witness by the respondent, said:
Helen S. Page is not a partner of the defendants.
Her name appears on the letterhead and business cards for the
sole purpose of promoting her association with us.
Helen S. Page is a self-employed accounting
technician that provides services to the defendants and other
clients on her own.
Helen S. Page is paid weekly upon presentation of a
time sheet at the rate of $30 per billable hour and $28 per
administrative hour.
Helen S. Page is in no way involved in the billing
or collection policies of the defendants and never has been.
This affidavit was filed in an action in which Laing, McHardy
& Rohr were plaintiffs and Kevin Campbell and
Wende Campbell were defendants.
[19] Helen Page filed an affidavit in
the same action:
4. I am not a partner of the defendants. My name appears
on the
letterhead and business cards for the sole purpose of
promoting my continued association with the defendants so as
to give
comfort to client's, some of whom have been
associated with myself for 11 years and the defendants for
16 years.
5. I continue to be a self employed accounting
technician to the
defendants and continue to be paid strictly based on hours
worked. I have no say
in the billing, collection or delivery
policies of the defendants. Attached as Schedule "B" to this
my affidavit are a copy of my time
sheet summary and billing
and
collection history since I started providing services to the
defendants on April 20, 1998
In both affidavits she was described as a "self-employed
accounting technician". What people call their relationship is
not determinative and the inadvisability of placing much weight
on the nomenclature used by the parties is demonstrated by
Mr. Johncox' cross-examination of Mr. Campbell on his
affidavit.
Q. Mr. Campbell, you just said
that this affidavit relates to - you're saying Helen Page is
not a partner of Campbell & Campbell with respect to the
Campbell & Campbell and Laing, McHardy & Rohr dispute,
right?
A. That's correct.
Q. But the second sentence in
paragraph 1 says, "Her name appears on the letterhead."
A. Yeah.
Q. Which indicates that we're talking
about 1999 when -
A. That's correct.
Q. Campbell, Campbell & Page is
the partnership that you're
touting, and you're saying that she's not a partner. You're not
saying she wasn't a
partner prior to 1998. You're saying she's
not a partner.
A. That's correct.
Q. So in this affidavit, you're
swearing under oath that she was
an independent
contractor?
A. Mm-hm. Correct.
Q. And were you telling the truth?
A. I'm telling the truth as I believed
it at that point time.
Q. You believed she was an independent
contractor of Campbell, Campbell &
Page at that time?
A. I believed she had no relationship
to the lawsuit entwined with
Laing, McHardy & Rohr.
Q. That's not what it says.
A. Well, then - I signed it. Then I
must have believed it.
Q. And you're saying that that is not
inconsistent with the position -
with the evidence you've given today?
A. I'm saying that I signed the
affidavit.
Q. You swore it was true?
A. This was prepared by your office,
was it not?
Q. Yes, it was. You swore it was
true?
A. Yes, I did.
Q. Do you swear it is true now?
A. I'm not swearing it now. I swore it
then.
Q. I'm asking you is it true now?
A. I don't believe it to be true now,
no.
Q. What parts of it do you not believe
to be true?
A. I would say just paragraph number 1
and 2 I would not swear to today.
Q. When did you change your mind?
A. Right now.
MR. JOHNCOX: Thank you, Your Honour.
For reasons that should be obvious from the above passage,
this witness' evidence is not reliable. In every instance where
his evidence differs from that of Ms. Page I prefer that of
Ms. Page.
[20] There is other evidence that is
inconsistent with the appellant's being a partner with the
Campbells.
(a) In
the general ledger of the partnership, Helen Page is shown
as an independent contractor. Her remuneration was deducted in
computing the partnership's income or loss, which was divided
between Mr. and Mrs. Campbell on a 50:50 basis.
(b) There was
no written partnership agreement and no partnership
registration.
(c) In the
income tax returns of Mr. and Mrs. Campbell their business
name is shown as Campbell & Campbell and the percentage
ownership of each of Mr. and Mrs. Campbell is shown as
50 percent. Mr. Campbell said that it really was a
three way split between himself, his wife and Ms. Page. I do
not accept this ex post facto rationalization for a
moment. Patently, Mr. Campbell never treated Ms. Page as a
partner. Her remuneration was deducted in the computation of the
income of the partnership Campbell & Campbell, which was
split 50:50 between the two parties. I shall come presently to
the question whether it was from a contract of service or a
contract for services.
(d)
Ms. Page never had access to the financial records or
financial statements of the partnership.
(e)
Ms. Page never shared in the profits or losses of the
business as a partner.
[21] This situation prevailed in 1998, 1999
and 2000. In 2001 Ms. Campbell died and the income was
apportioned between Mr. Campbell and his wife, 69:31.
[22] In his return for 2002,
Mr. Campbell called the business name Campbell &
Associates and attributed 100 percent of the profits to
himself. Ms. Page was not consulted or advised of this
change. One might have thought that if there were a partnership
and it were dissolved, or its name changed or 100 percent of
the partnership profits were reallocated to one partner, that
partner might at least have mentioned it to the other
partner.
[23] Mr. Campbell stated that on May 6,
2002, the relationship ended when Ms. Page quit and she tore
up his offer of employment of February 7, 2002 and threw it on
his desk. I do not think that that is how it happened at all. On
January 17, 2002, Ms. Page wrote to Mr. Campbell
proposing a salary of $60,000 per annum and a number of other
terms. He wrote back on February 7, 2002 and proposed a
different arrangement. She was upset at his summary firing of the
bookkeeper and took some files with her. She returned a few days
later but refused to leave until she was paid. I find as a fact
that it was Kevin Campbell who terminated the relationship
by firing the appellant. One does not fire a partner.
[24] The foregoing is sufficient to
demonstrate that the assumption of partnership has been
demolished. Whatever may have been the relationship between
Ms. Page and the Campbells, it certainly was not one of
partnership. Counsel for the respondent relied upon
Exhibit R-6, a letter of May 9, 2001, as
establishing a partnership. I shall set out the provisions of
that letter below, but for the present it is sufficient to say
that I see nothing in it that supports a partnership.
[25] The letter is of some importance in
delineating the relationship between the parties in the period
from April 2001 to April 2002, the period in question.
It appears from the evidence that the parties acted substantially
in accordance with the letter. It is therefore of some assistance
in deciding the remaining question whether Ms. Page was an
employee or an independent contractor.
[26] Before dealing with the letter,
however, I should preface my comments with a couple of
observations. We are all familiar with the four-in-one test
expressed by MacGuigan, J. in Wiebe Door Services Ltd. v.
M.N.R., [1986] 3 F.C. 553 - ownership of tools, control,
chance of profit and risk of loss.
[27] There is also the "organization" or
"integration test". In the multitude of cases that have come
before this Court and the Federal Court of Appeal, to the extent
that the integration test is comprehensible at all, I have yet to
see it applied as a decision or even a helpful factor. One must
also be careful about mechanically applying the other factors. A
skilled senior employee, particularly a professional, may well be
subject to no control by the employer, supply his or her own
tools and may well be paid an incentive that will determine how
much money he or she makes. The existence of these factors will
not prevent the person from being an employee if the overall
picture that emerges is that of employment.
[28] The authorities were discussed by
Bonner, J. in 1280659 Ontario Inc. v. M.N.R., 2004 T.C.C.
138. He applied the tests to the case before him and it is
interesting to note the weight he gave to the factors is useful
to quote from his reasons for judgment. Although the facts
obviously differ from this case the approach commends itself. In
paragraphs 17 to 23 he said:
The leading case on the
distinction between a contract for services and a contract of
service (employment) is 671122 Ontario Ltd. v. Sagaz
Industries Canada Inc., 2001 SCC 59. There, Major, J.
delivering the judgment of the Court reviewed the control test,
the four-factor test[1] and the integration test. He held that the key is set
out in Market Investigations Ltd. v. Minister of Social
Security, [1968] 3 All. E.R. 732, namely, whose business is
it? At paragraphs 47 and 48, Major, J. stated:
Although there is no universal test to determine whether a
person is an employee or an independent contractor, I agree with
MacGuigan J.A. that a persuasive approach to the issue is that
taken by Cooke J. in Market Investigations, supra.
The central question is whether the person who has been engaged
to perform the services is performing them as a person in
business on his own account. In making this determination, the
level of control the employer has over the worker's
activities will always be a factor. However, other factors to
consider include whether the worker provides his or her own
equipment, whether the worker hires his or her own helpers, the
degree of financial risk taken by the worker, the degree of
responsibility for investment and management held by the worker,
and the worker's opportunity for profit in the performance of
his or her tasks.
It bears repeating that
the above factors constitute a non-exhaustive list, and
there is no set formula as to their application. The relative
weight of each will depend on the particular facts and
circumstances of the case.
Applying the tests, it seems
clear that Klein was an employee of the Appellant. He was hired
by the Appellant to work for it at an hourly rate of pay at such
times and in such stores as Bohbot might direct. The right to
control the manner in which the work was to be done was clearly
present.
The ownership of tools test
does not loom large in this case. The tools required by Klein to
do the work were few and basic and, I gather, not of great value.
The arrangement with the Appellant required Klein to pay a small
amount when the tools were supplied to him. That amount was
ultimately treated as if it was a security deposit. The money was
in fact refunded when Klein was fired. The arrangement bears only
a faint resemblance to the case where a task is carried out under
a contract for services which, typically, requires the contractor
to do all that is necessary to carry out the work using his own
forces, tools, ingenuity and managerial skills. Klein apparently
used his car in the course of his work but he was paid an
allowance to cover that expense. Klein acquired and used a pager
for purposes of his work. Although that circumstance might appear
to support the Appellant, that support is more than offset when
it is remembered that the pager was required by Bohbot to enable
him to exercise control over Klein in the performance of his
work.
Klein was not subject to
financial risk arising from his relationship with the Appellant.
He was in the same position in relation to such risk as any
hourly-rated worker. It simply was not open to him to
employ managerial skills with a view to maximizing revenue and
reducing costs.
Equally, it was not open to
Klein to employ a substitute or assistant.
In Alexander v. M.N.R.,
70 DTC 6006, Jackett, P. stated at page 6011:
...On the one hand, a contract of service is a contract under
which one party, the servant or employee, agrees, for either a
period of time or indefinitely, and either full time or part
time, to work for the other party, the master or the employer. On
the other hand, a contract for services is a contract under which
the one party agrees that certain specified work will be done for
the other. A contract of service does not normally envisage the
accomplishment of a specified amount of work but does normally
contemplate the servant putting his personal services at the
disposal of the master during some period of time. A contract for
services does normally envisage the accomplishment of a specified
job or task and normally does not require that the contractor do
anything personally.
Klein's activities in
relation to Agents Are Us do not involve carrying out any
specified task or group of tasks as an independent contractor
would. Rather, he agreed to put his personal services at the
disposal of the Appellant on a pay per hour worked basis. It must
be emphasized that the description adopted by the parties as to
the nature of their contractual relationship is not necessarily
determinative.
[29] The letter of May 9, 2001,
from Mr. Campbell to Ms. Page contains the following
important passages:
YOUR CURRENT SITUATION
Currently you are paid a base rate of $ 28 per hour for
non-billable time, a base rate of $ 32 per hour for
billable time with a bonus of $ 2 per hour in February,
March and April. In addition you are paid a 15% commission on
billings that you bring in to the practice, you are paid for your
gas and are provided with a cell phone. You have been taking a
draw against these earnings at the rate of $ 27 per hour and
we have been paying Revenue Canada on your behalf and banking any
excess or floating any shortage.
HISTORICAL HOURS AND REMUNERATION
In 1999 you booked 1161.9 billable hours and 96.0 in admin for
a total of 1257.9 hours. In 2000 you booked 1229.8 billable hours
and 75.1 in admin for a total of 1304.9 hours. In 2001 to
April 30th you have booked 543.8 billable hours
and 27.2 in admin for a total of 571 hours.
I have gone and calculated your total remuneration for 1999,
2000, and 2001 to date and it works out to $ 99,552 or $ 31.77
per hour on average. This includes pay, bonuses and commissions
but does not include cell phones or gas.
PROPOSED PAY RATE
Starting on May 1, 2001 and going to
April 30, 2002 I am proposing that your base rate
remuneration be increased to $ 34 per hour billable or
non-billable hour. I am willing to pay the $ 34 per
hour for admin time up to a maximum of 100 hours in a year, and
after that it will be absorbed by you or burried in a file. In
order to assist in management of workload and cash flow a
contribution of a half hour or an hour of your time a week will
be expected at a management meeting.
BONUS STRUCTURE
In recognition of your important role in the day to day
operations of the practice, and to encourage you to keep track of
your time and to help me in billing my time, I propose a bonus to
you of 1% of all billings (net of GST), and a further bonus of
1.5% of collections (net of GST). This bonus will be calculated
quarterly and will be paid to you April 30th (to
March 31st), July 31st (to
June 30th), October 31st (to
September 30th), and January 31st
(to December 31st).
ANTICIPATED REMUNERATION
Based on the year 2000 hours worked and the new proposal
before you, your remuneration would compare as follows:
1305 hours at $ 34 per
hour
$ 44,370
1% of billings $ 225,081 @
1%
2,251
1.5% of collections $ 199,813 @
1.5%
2,997
$ 49,618
Your actual remuneration for 2000 was $ 42,456 so this
represents an increase of 17%. I would also anticipate the
availability of an extra 150-200 hours per year as a result of
Wende's absence.
GROWTH BONUS
With the loss of Wende the firm will have to take on more
payroll, be it yours or a third party. I anticipate this cost to
be in the $ 15,000 to $ 20,000 range. In order to
encourage growth I propose to reward you with a further bonus of
10% of any billings over $ 250,000. This bonus will be paid
annually by the 31st of January.
CASH FLOW
In order for you to have some constant in your life, I propose
a base draw for 6 months of $ 800 per week against
anticipated earnings. This will be reconciled monthly, and
anything owed to you will be paid on the first payday of the
following month. Any overpayment will be deducted from your
quarterly bonus. We will review this arrangement at the end of
the six months, or earlier if need be.
LIFE INSURANCE
You have a most valid concern about what happens to the
practice if I get sick or pass away. To alleviate this concern I
will be designating $ 100,000 of my life insurance to you as
a benificiary.
CREDIT CARD
Canada Trust will be issuing you a credit card on the company
account. This card is to be used for all of your gas purchases
and where applicable for client entertainment. You are also to
put billings for high-speed internet access on this card.
COMPUTERS
In order to be of productive use to the practice you need to
have state of the art computers at your house and need to be able
to research etc on the net. Campbell, Campbell and Page will pay
for the upgrade of your existing computer to a maximum of
$ 1,500 and will put your computer on our maintenance plan
with Durham Computer Solutions. The Computer upgrades must be
purchased from Ed Hosmar. In addition all computer related
supplies are to be purchased by Campbell, Campbell &
Page.
FINANCIAL CONCERNS
I understand that you have debts with Revenue Canada and with
credit card companies that total about $ 13,000. I propose
that the firm advances you $ 15,000 to pay all of your tax
and credit card arrears. This will be re-repayable at the rate of
6% over 3 years at the rate of $ 455.83 per month. The firm
will pay Revenue Canada directly and you will be on your own
to take care of your other obligations. These funds will be fully
disbursed by May 15, 2001 and the first payment will be
due on June 15, 2001. Obviously if you leave the firm
the balance will be payable in full.
PROFESSIONAL AND SOCIAL DEVELOPMENT
Campbell, Campbell & Page will allocate up to $ 1,000
a year for personal or professional development courses or
publications. You will be expected to attend a ½ day Dr.
Tax course each spring and will be paid for your attendance. It
is now more important than ever that we get Caseware up and
running. The firm will allocate up to $ 2,500 of your
non-billable time to assist with this conversion and learning
curve. On occasion we may be called on to attend certain business
related social events. If needed you will attend these at no cost
to the firm.
SALE OF THE BUSINESS
In case of the sale of Campbell, Campbell & Page, you will
be involved in any such discussions and will be entitled to 25%
of any sale proceeds.
[30] As noted above, in my view there was no
partnership between the appellant and the Campbells. The
remaining question here is whether her engagement was under a
contract for services or a contract of service. With which
relationship was the evidence, including the letter, more
consistent?
[31] The payment of a base rate for billable
and non-billable time, with a bonus plus a commission on
billings is in my view more indicative of an employee
relationship.
[32] The discussion of her remuneration
under proposed pay rate, bonus structure, anticipated
remuneration growth bonus and cash flow are not the sort of thing
one would say to an independent contractor carrying on business
on his or her own behalf. It is the kind of régime that
one would expect of an employee who was to put in a certain
number of hours per year and to whom a bonus was to be paid. This
is precisely the type of incentive that one would pay to a valued
employee. It is not something that one would pay to an
independent contractor who was carrying on his or her own
business.
[33] The assignment of life insurance and
the provision of a company credit card, as well as payment of
courses for professional courses and publications, is something
that one would give to a senior employee. It would be unheard of
to provide such advantages to an independent contractor who was
rendering services to the payor as part of a separate business
carried on by the contractor.
[34] The same observation can be made about
the computer upgrade in the appellant's home. The firm provided
the tools which she required when she was working at the firm's
premises. When she worked at home she did so on her own computers
that the firm paid to upgrade.
[35] The provision that she would be
involved in the discussion if the business were sold and would be
entitled to 25 percent of the sales proceeds might have supported
the view that she was a partner if there were any other
indications of partnership, which there are not. Therefore, we
are then left with the question whether this somewhat unusual
provision affords any assistance in determining whether she is an
employee or an independent contractor. I do not think the
introduction of this provision causes the scales to move in
either direction, subject to one observation: it would be more
unusual to offer an independent contractor 25 percent of the
proceeds of the sale of the payor's business than it would be to
offer it to a valued employee. Therefore, I would regard this
provision as somewhere between neutral and an infinitesimal
nudging of the scales in the direction of employment.
[36] I have taken all of the factors and,
given then the weight that appeared appropriate in the context of
this case. Counsel for the respondent put forward, I believe,
every argument possible in support of the Crown's position but
notwithstanding the skill and thoroughness of her presentation I
think Ms. Page was an employee of the Campbells in the
period in question.
[37] In deciding cases of this type a trial
judge must endeavour to steer a course between Scylla and
Charybdis. The judge must avoid the slavish and mechanical
application of the four elements in the Wiebe Door test
without standing back and looking at the overall picture that
emerges. On the other hand, the judge must look at the
relationship as a whole but nonetheless keep an eye on the
elements in the Wiebe Door test. It is a fine balancing
act.1
[38] So far as Wiebe Door is
concerned, Campbell set the hours and the hourly rate and told
Ms. Page what files she was to work on. That provides the
requisite element of control. He did not need to keep looking
over her shoulder. He checked her work when it was necessary.
Campbell provided the tools - the computers, books, paper and
desks. He even paid for the upgrade of her computers at her home.
The chance of profit or risk of loss from the accounting business
was entirely Campbell's - the appellant had an incentive to work
harder and get paid more but this is not the commercial risk of
running a business that a proprietor runs. Even applying the much
criticized "integration" test, Ms. Page was certainly an
integral part of the business, for what that consideration may be
worth.
[39] Therefore, even if one goes through the
mechanical and, in my opinion, somewhat unedifying process of
applying separately the elements in the Wiebe Door test,
one still ends up with the conclusion that Ms. Page was an
employee of the Campbells.
[40] The appeal is allowed and the decisions
that during the period in question the appellant was not engaged
in pensionable employment for the purposes of the Canada
Pension Plan and the Employment Insurance Act are
varied to read that during the period from
April 29, 2001 to April 30, 2002, the
appellant, Helen Page, was engaged in pensionable employment
under a contract of service with the firm Campbell, Campbell
& Page and she was not a partner in that firm.
Signed at Toronto, Ontario this 12th day of March
2004.
Bowman, A.C.J.
1
See also Wolf v. The Queen, 2002 DTC 6853.
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