Deer Creek Training and Therapy Inc. v. M.N.R.

Deer Creek Training and Therapy Inc. v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-08-26 Neutral citation 2005 TCC 504 File numbers 2004-4471(EI) Judges and Taxing Officers David W. Beaubier Subjects Employment Insurance Act Decision Content Docket: 2004-4471(EI) BETWEEN: DEER CREEK TRAINING AND THERAPY INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. Appeal heard together on common evidence with the appeal of Deer Creek Training and Therapy Inc. (2004-4473(CPP)) on August 8th, 2005 at Prince Albert, Saskatchewan By: The Honourable Justice D.W. Beaubier Appearances: Counsel for the Appellant: Peter V. Abrametz Counsel for the Respondent: Julien Bedard JUDGMENT The appeal is allowed and the decision of the Minister is vacated in accordance with the attached Reasons for Judgment. The Appellant is awarded all costs and all disbursements permissible under the Employment Insurance Act. Signed at Regina, Saskatchewan on this 26th day of August, 2005. "D.W. Beaubier" Beaubier, J. Docket: 2004-4473(CPP) BETWEEN: DEER CREEK TRAINING AND THERAPY INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. Appeal heard together on common evidence with the appeal of Deer Creek Training and Therapy Inc. (2004-4471(EI)) on August 8th, 2005 at Prince Albert, Saskatchewan By: The Honourable Justice D.W. Beaubier Appearances: Counsel for the Appellant: Peter V. Abrametz Counsel for the Respondent: Julien Bedard JUDGMENT The appeal is allowed and the determination of the Minister is vacated in accordance with the attached Reasons for Judgment. The Appellant is awarded all costs and all disbursements permissible under the Canada Pension Plan. Signed at Regina, Saskatchewan on this 26th day of August, 2005. "D.W. Beaubier" Beaubier, J. Citation: 2005TCC504 Date: 20050826 Docket: 2004-4471(EI) 2004-4473-(CPP) BETWEEN: DEER CREEK TRAINING AND THERAPY INC., Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent. REASONS FOR JUDGMENT Beaubier, J. [1] These appeals were heard together on common evidence by consent of the parties at Prince Albert, Saskatchewan on August 8, 2005. The Appellant called Carol Ann Brockington-Hansen B.A., M.A., (Ms. Hansen); Peter Griffiths B.S.W., M.S.W. (Mr. Griffiths); Katherine Bird B.A., B.S.W. (Ms. Bird); Cecil Eashappie, a leader of Healing Circles (Mr. Eashappie), described in the pleadings as "Eschappie"; Nora Horan, a bookkeeper; and Ron Friesen, CA. The Respondent called Theresa Lanigan, who has accreditation with the "Mediation Association" and Shirley Penner who has 6 years of studies at the University of Regina, but whose degrees and professional designation are not in evidence. [2] The assumptions are similar, but the CPP appeal is respecting January 1, 2001 to July 31, 2003 whereas the EI appeal is for the period January 1, 2002 to July 31, 2003. Paragraphs 4 to 8 inclusive of the Reply to Appeal 2004-4473(CPP) set out the matters in issue. They read: 4. By Notice of Assessment dated November 6, 2003 the Appellant was assessed for, among other things, Canada Pension Plan contributions in the amount of $7,750.46 for the 2003 years, in respect of K. Bird, Shrolyn Bird (hereinafter "S. Bird"), Connie Desjarlais (hereinafter "Desjarlais"), Cecil Eschappie (hereinafter "Eschappie"), Hansen, Lanigan, Mohl, Penner and Eunice Wood. 5. By letter received December 3, 2003, the Appellant appealed to the Minister for a reconsideration of the 2001, 2002 and 2003 year assessments. 6. In response to the Appellant's appeal, the Minister decided to: (a) cancel the assessment, for the 2001 and 2002 years, with respect to Morrow as she was not employed under a contract of service with the Appellant, and (b) otherwise confirmed the assessments for the 2001, 2002 and 2003 years as K. Bird, S. Bird, Desjarlais, Eschappie, Hansen, Lanigan, Mohl and Penner (collectively hereinafter "the Workers") were employed under a contract of service with the Appellant. 7. In so deciding as the Minister did with respect to the Workers, the Minister relied on the following assumptions of fact: (a) the Appellant operated a business which provided counselling services; (b) K. Bird and Hansen were the directors of the Appellant; (c) the Appellant entered into agreements with the Aboriginal Healing Foundation of Canada (hereinafter "the AHF") to address the healing needs of aboriginal people affected by abuse: (d) K.Bird was a manager and her duties included proposal development and reporting, counselling clients, group program supervision, administration and director duties; (e) Hansen was a manager and her duties included negotiating government contracts, counselling clients, supervising other workers and director duties; (f) S. Bird was hired for special publications; (g) Desjarlais was hired as a facilitator; (h) Eschappie was hired as a consultant; (i) Lanigan was hired as a counsellor and her duties included client intake, advocacy, mediation, data input and monitoring; (j) Mohl was hired as a counsellor and her duties included client intake and facilitating programs; (k) Penner was hired as a mediator and her duties included delivering the school mediation program; (l) the Workers performed most of their services at the Appellant's premises but some services were perfomed in the field; (m) the Workers earned set salaries; (n) K.Bird and Hansen earned set annual salaries of $40,000; (o) Mohl earned a set annual salary of $20,000; (p) Penner earned a set annual salary of $30,000; (q) the Appellant paid the Workers on a semi-monthly basis; (r) the Appellant issued cheques in the Worker's names; (s) the Appellant determined the Worker's wages; (t) the Apellant withheld contributions and premiums from the Worker's wages for part of the 2002 year; (u) Lanigan worked part-time and normally 80 hours per month; (v) Mohl nomally worked 8:00 AM to 5:00 PM, Monday to Friday; (w) Penner normally worked 9:00 AM to 5:00 PM, Monday to Friday; (x) the Workers kept a record of their hours worked and some Workers submitted timesheets to the Appellant; (y) the Appellant obtained the clients; (z) the Appellant was responsible for ensuring that the terms of the contracts with the AHF were fulfilled; (aa) the Appellant administered all paperwork and program funding; (bb) K. Bird and Hansen managed the operations of the Appellant; (cc) the Appellant controlled, instructed, monitored and supervised the Workers; (dd) S.Bird, Desjarlais, Eschappie, Lanigan, Mohl and Penner reported to K. Bird and Hansen; (ee) while performing services for the Appellant's clients, the Workers represented themselves as employees of the Appellant; (ff) the Workers advised the Appellant of any leave requirements; (gg) the Workers could not replace themselves of hire their own helpers; (hh) the Appellant provided the work location including fully furnished office facilities; (ii) some of the Workers provided offices in their own homes; (jj) the Appellant paid some of the Workers a $200/month home office allowance; (kk) the Appellant reimbursed the Workers' travel costs; (ll) the Workers did not incur operating expenses; (mm) the Workers did not have a chance of profit or risk of loss; (nn) S. Bird, Desjarlais, Eschappie, Lanigan, Mohl and Penner did not have their own business names, business bank accounts, GST accounts or business licenses; (oo) the Workers were not in business for themselves while performing services for the Appellant, and (pp) the Worker's wages, for the period January 1, 2001 to July 31, 2003, are detailed on Schedule "A" attached to and forming part of the Reply to the Notice of Appeal. B. ISSUES TO BE DECIDED 8. The issue to be decided is whether the Workers were employed under a contract of service with the Appellant during the period January1, 2001 to July 31, 2003. [3] Assumptions 7 (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (q), (r), (t), (u), (x), (aa), (bb), (dd), (ff), (ii), (kk) and (nn) were not refuted by the evidence. With respect to some of the foregoing and the remaining assumptions, the Court finds: (e) Hansen's "supervision" was of the workers professional ethical relationships with clients and was not day-to-day supervision of work. Ms. Lanigan complained on the witness stand about the loose way that the Appellant operated. It was so little managed that Ms. Lanigan, a part-time receptionist, put in so many hours in a few months of her last year that she was paid her $20,000 annual amount for the last four months without doing any work and the Appellant was upset about this occurrence. But the Appellant had not kept track of Ms. Lanigan's attendances; Ms. Lanigan had kept her own records. The other workers also recorded their own hours personally, but the Appellant did not record workers' hours. (l) Many of the workers, including Ms. Penner, performed much of their work at other premises. (m) (n) (o) (p) This is true but the word "salary" is incorrect. "Draw" is a better description. (r) Sometimes the worker's name and operating trade name were both on the cheque. (v) Mohl's hours were not made clear in the evidence; therefore this was not refuted. (w) Penner worked after hours from time to time as her work included liasing between student and school and with student's parents. (x) The Appellant did not determine the Workers' wages. The professional workers put together proposals for governments and firms such as the AHF and estimated their individual inputs and those of other staff in the proposal's requirements. If the proposal was accepted and contracted for, their individual contract consideration amounts and entries were fixed by title in a schedule to the contract and drawn down quarterly on the contract terms according to the hourly rates estimated by the workers who prepared the proposal. The result was that that each worker had to work for a minimum set of hours and complete a quarterly report of the work done. Most of the time these were the workers who had calculated their own estimates for the proposal which had become a contract. These quarterly reports were assembled by the Appellant into a complete quarterly report to the client, eg. AHF, in order to draw down the quarterly amount allotted in the contract's line item budget. (y) The Appellant's clients were usually obtained by proposals to potential clients which were put together by the professional workers. These professionals had incorporated the Appellant to have a non-profit entity for government contract purposes and to have a place other than their home offices in which to meet dangerous or obstreperous clients. [4] The Appellant was not responsible to see that the term of contracts were fulfilled. If a worker didn't file a satisfactory written report, that worker was not paid. But the other workers who filed written reports had their portions paid by the client and they, in turn, were paid by the Appellant from these funds received. Ms. Penner never submitted a final written report despite being asked for it an she was not paid her last draw. The others reported and were paid. (cc) Is wrong. The Workers represented themselves as "with" the Appellant, but not as "employees" of the Appellant. (ff) The Workers merely wrote the times that they were unavailable in a book kept for that purpose at the reception desk. (gg) The Workers did replace themselves with people of their own choosing. As an example, Mr. Eashappie was, in essence a religious minister, who led native Healing Circles. He replaced himself with his wife from time to time and still received his payment. There is no evidence that they hired "helpers", as distinct from replacements. (hh) The Appellant provided "a" work location. All of the Workers had their own home offices, books, stationery, office equipment, cell phones and cars; many had their own computers. All worked in their home offices or elsewhere than at the Appellant's location when carrying out their contracts. (jj) Some workers received a $200 per month office allowance in specific compliance with the Appellant's contract with AHF, as disbursed by AHF, pursuant to the line item scheduled budget. (ll) Many of the workers had other contracts. Ms. Lanigan had a separate full time job at a Shelter and other contracts. All incurred their own operating expenses. (mm) All workers had a chance of profit by allocating their time and completing their contracted work within the minimum time specified; if they did not, any extra time spent was unpaid as it exceeded the annual lump sum contracted for. They all risked a loss if they exceeded the allotted time, or they did not file a written report that was satisfactory or if their expenses exceeded their remuneration. (eg. If they were not paid or made excessive home office types of purchases.) (oo) Will be dealt with hereafter. (pp) The workers did not receive wages; rather, they drew down on the line items that the Appellant contracted for, to be paid on a quarterly basis in the case of AHF. [5] With respect to (oo): 1. All of the workers except Ms. Penner and Ms. Lanigan will be dealt with herein (a) Control: The only control exercised over these workers was that required by their profession: that a B.A. or B.S.W. be "supervised" by a M.A. or M.S.W. and that control was as to ethical matters and not day to day work. The workers were not told "how" to do their contracts. (b) Tools: The workers had their own tools, books, office equipment, office premises, cell phones and vehicles. They did use the Appellant's premises, offices and office equipment as well. (c) Profit-Loss: Each worker had a chance of profit and risk of loss. (d) Integration: The workers could and did have outside contracts. They could replace themselves. If one aspect of an Appellant's contract was not done and reported on by a worker, the Appellant and the worker were not paid. But another individual could have done that aspect, reported and been paid or the worker could have substituted someone. The workers set their own hours, did things their own ways and were not subordinate in their various work to anyone. They were not integrated into the Appellant. They were each in business for themselves. As a result, the appeals respecting all of the workers except Ms. Lanigan and Ms. Penner are allowed. 2. Ms. Lanigan: Theresa Lanigan is a mature, middle-aged woman who has now worked full time in a Shelter in Prince Albert, Saskatchewan for 25 years. She was recruited by Ms. Hansen at about the time her husband died to do part time work as a "crisis intake worker" who would see someone related to the AHF contract who contacted the Appellant on a crisis basis and who needed to see someone immediately. Ms. Lanigan retained her full time Shelter work at all times and would set the crisis person up with an appointment, record their intake, and do various data entry. On occasion she would substitute for another worker, for example, for Ms. Penner respecting student school attendances. She did not describe any university degrees but at the material periods she obviously had voluminous work experience and working knowledge of crisis-related matters in the Prince Albert area. Respecting the criteria to be applied to her: (a) Control: No control was exercised over her. She came and went as she pleased. The Appellant kept no record of her time or tasks done and she acted as a short term substitute for others as she felt she could help out. (b) Tools: She had a full office at her home. (c) Profit-Loss: She had other employment and other businesses. Testimony was heard from others that she appeared to operate some of them by phone from the Appellant's premises without interference. As it turned out she profited dramatically by putting in and recording unsupervised time and then getting paid for 4 months for that time without ever again going to the Appellant's premises. Any loss would have resulted if she had tasks that absorbed so much time that she could not have earned other income from other work that she was doing. (d) Integration: The Appellant appears to have done just as well without her. The others could and did do her tasks and she, like the rest, was paid by a line item in the AHF contract. She was not integrated into the Appellant. The appeal respecting Theresa Lanigan is allowed. 3. Shirley Penner was hired by the Appellant on a contract of employment for $15.00 per hour and was an employee pursuant to it from its inception on April 1, 2002 (see Exhibit R-6). The question is did it terminate and, if so, when: the Court finds that she was terminated as an employee on January 20, 2003 when she signed Exhibit A-5. Shortly after commencing employment she suffered a series of strokes. On June 4, 2002 she was told that she could not return to work without filing a doctor's certificate of authorization (Exhibit R-2). Eventually she returned to work where her duties were to deal with problem students at local schools, the schools and the parents. Ms. Hansen testified that Ms. Penner wanted her withholdings because she needed money. Ms. Penner denied this. Ms. Penner was paid her withholdings on the basis that she was no longer an employee and her signature accepts this on Exhibit A-5 dated January 20, 2003. On the evidence she was of sound mind then, she was doing was her public consulting work and she terminated her employment on that day. It was not retroactive. Thereafter she received full drawings and she was treated and acted like the other professionals at the Appellant's insofar as control, tools, profit-loss and integration may be regarded. Thus, the Court finds that Ms. Penner was employed by the Appellant from April 1, 2002 to and including January 20, 2003. After January 20, 2003 Ms. Penner was self employed and in business for herself. She protested that she thought that her monthly total cheques for her gross draw resulted from a change in the Appellant's accounting procedure. She is not believed about this. She was a mature educated woman with years of work experience in 2003. The Court has no doubt that after January 20, 2003, she was in business for herself, as she wished to be and as the other workers were. [6] The Appellant is awarded such costs or disbursements as are permitted by the Canada Pension Plan and by the Employment Insurance Act. Signed at Regina, Saskatchewan, on this 26th day of August, 2005. "D.W. Beaubier" Beaubier, J. CITATION: 2005TCC504 COURT FILE NO.: 2004-4471(EI), 2004-4473 (CPP) STYLE OF CAUSE: Deer Creek Training and Therapy v. The Minister of National Revenue PLACE OF HEARING: Prince Albert, Saskatchewan DATE OF HEARING: August 8th, 2005 REASONS FOR JUDGMENT BY: The Honourable Justice Beaubier DATE OF JUDGMENT: August 26th, 2005 APPEARANCES: Counsel for the Appellant: Peter V. Abrametz Counsel for the Respondent: Julien Bedard COUNSEL OF RECORD: For the Appellant: Name: Peter V. Abrametz Firm: Eggum, Abrametz & Eggum For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Canada