Tax Court of Canada Judgments

Docket: 2002-685(EI)

BETWEEN:

CHRISTINE BECHER,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

VICTORIA MICROSYSTEMS LTD.,

Intervenor.

____________________________________________________________________

Appeal heard on common evidence with the appeals of Christine Becher (2002-686(CPP)) and Victoria Microsystems Ltd. (2002-687(EI) and 2002-688(CPP)) on February 3, 2002 at Victoria, British Columbia

Before: The Honourable Deputy Judge D.W. Rowe
Appearances:
Counsel for the Appellant:	George F. Jones
Counsel for the Respondent:	Amy Francis
Counsel for the Intervenor:	George F. Jones

____________________________________________________________________

JUDGMENT

          The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.

Signed at Victoria, British Columbia, this 7th day of June 2003.

"D.W. Rowe"

D.J.T.C.C.

Citation: 2003TCC373

Date:20030607

Dockets: 2002-685(EI) 2002-686(CPP)

BETWEEN:

CHRISTINE BECHER,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

VICTORIA MICROSYSTEMS LTD.,

Intervenor,

AND

2002-687(EI)

2002-688(CPP)

VICTORIA MICROSYSTEMS LTD.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

CHRISTINE BECHER,

Intervenor.

REASONS FOR JUDGMENT

Rowe, D.J.T.C.C.

[1]      The appellant - Christine Becher (Becher) - appealed from two decisions issued by the Minister of National Revenue (the "Minister") on January 18, 2002 wherein assessments - dated November 14, 2000 and November 15, 2000 - issued to Victoria Microsystems Ltd. (VML) for Canada pension plan (CPP) contributions and employment insurance (EI) premiums in respect of certain workers - including Becher - were confirmed on the basis Becher had been placed in employment by VML to perform services for and under the direction and control of a client of VML and was remunerated - by VML - for performance of those services. The decision of the Minister was issued pursuant to subsection 27.2(3) of the Canada Pension Plan (the "Plan") and subsection 34(1) of the Canada Pension Plan Regulations (CPP Regulations) and subsection 93(3) of the Employment Insurance Act (the "Act") and section 6(g) of the Employment Insurance Regulations (EI Regulations).

[2]      The appellant - VML - appealed from two decisions issued by the Minister on January 18, 2002 confirming - inter alia - certain amounts due pursuant to assessments dated November 14, 2000 and November 15, 2000, arising from the failure to pay CPP contributions and EI premiums in respect of certain named workers for either the 1998 or 1999 taxation year or - in the case of some workers - for both years.

[3]      Counsel for both appellants/intervenors and counsel for the respondent agreed all appeals would be heard on the basis of common evidence.

[4]      David Carl testified he is a businessman residing in Victoria, British Columbia. In 1965, he started a computer business in Victoria. He incorporated VML - in 1975 - in order to carry on business with the appellant Becher who - at that time - was his wife. They were equal shareholders and both were directors of the corporation. VML entered into contracts with entities carrying on business in the private sector. In 1989, Carl and Becher separated and - since 1995 - Carl has been the sole shareholder and director of VML. In 1998 and 1999 Becher provided services to VML under the name CB Enterprises. In 1998 and/or 1999, Frank Trice and Susan Trice worked as technical writers. During this period, VML had contracts with Insurance Corporation of British Columbia (ICBC), Synertech Systems Corporation (Synertech) of Vancouver, British Columbia and Cardinal Systems Group Ltd. (Cardinal) operating in Victoria. VML provided technical writing services to its clients by entering into contracts with certain individuals to perform those specialized tasks. Carl stated 1998 and 1999 were boom years for VML because of fears arising from the phenomenon known as Y2K in which all sorts of dire predictions had been issued in relation to the impending arrival of January 1, 2000, a rollover date particularly significant within the computer industry. As a result of the demand, VML turned to retaining the services of independent contractors. In 2000, business dropped dramatically and following the assessments issued by Canada Customs and Revenue Agency (CCRA) - formerly Revenue Canada - Carl stated workers were reluctant to provide services to VML and the corporation is now insolvent and no longer carries on business. Carl had provided CCRA with a list of cheques paid to workers and supplied other details as requested. He received a letter - Exhibit A-1 - dated October 17, 2000, from Gord Hawes at CCRA Verification and Enforcement Division advising a review had established that no employer/employee relationship existed between VML and certain workers - including Becher - but CCRA had determined those workers - even though independent contractors - had been placed into work situations under circumstances consistent with VML having been a placement agency. As a result, CCRA requested payment of funds in respect of CPP contributions and EI premiums pertaining to named workers in accordance with calculations set forth on the two sheets attached to said letter. Carl referred to an Agreement for Services - Exhibit A-2 - dated January 31, 1997 - entered into between VML and ICBC in which VML agreed to provide certain support services as outlined in appendices A to E, inclusive attached to said agreement. Christine Becher and Randy Prime were retained by VML to provide those services. Carl also referred to another contract - Exhibit A-3 - dated April 7, 1999 - between VML and Cardinal pursuant to which VML agreed to provide certain services until March 31, 2000. Pursuant to an agreement set forth in the form of a letter - Exhibit A-4 - dated April 8, 1996 - VML and Synertech defined all aspects of their business relationship as it pertained to the requirements of a contract between Synertech and the Ministry of Health of the Province of British Columbia. In accordance with the agreement between VML and Synertech, VML agreed to offer the services of Imer Shahini - as a contractor - on the basis he would work under the general direction of the Pharmacare Systems Manager, an employee of the provincial government. Carl also referred to a bundle of 7 documents - Exhibit A-5 - containing pages headed: Agreement for Support Services concerning matters such as rates, terms and personnel assigned, scope of work, list of items to be delivered, completion criteria and expenses. The commencement date was December 16, 1997 and the work was to be completed by Randy Prime and Christine Becher on June 30, 1998. An employee of ICBC - Sam van der Merwe - was named as Project Manager and was responsible for liaison with VML. Carl stated VML had not entered into any written contracts with any of its subcontractors. The services provided to ICBC - initially by Randy Prime and later by Becher - related to organizing material for manuals and expanded into the area of testing and training of ICBC employees. Carl stated he did not supervise Becher's work and commented that throughout their multi-faceted relationship he had never been able to exercise any control over her. Becher had a background as a technical writer and in testing computer programs. During her time as co-owner of VML, Becher had managed the Technical Writing side of the business and was a capable practitioner of the art of translating technical "geek-speak" into comprehensible English for the benefit of end users of a particular program. Carl stated VML had access to a pool of highly-skilled individuals who could be called upon - on relatively short notice - to assist on a project and to provide technical writing services for different groups of users at varying levels of sophistication in using computer programs. Carl stated he located Frank Trice and Susan Trice through the Technical Writers Association and contacted Susan Trice in order to obtain her services for the Pharmacare project. Later, Frank Trice joined her and they continued to provide the requisite technical writing services pursuant to what Carl understood to be an informal job-sharing arrangement. Carl stated he met Richard Bird when Bird was employed at British Columbia Systems Corporation (BCSC). Bird left his employment and entered into an agreement with VML to provide his services to Synertech. Carl stated he began receiving complaints concerning Bird's work pattern which was based strictly on a 7-hour day. Carl terminated Bird's services and assumed the duties formerly carried out by him for the benefit of Synertech in connection with a project for the Ministry of Health (Ministry), the end user. Carl stated Randy Prime had been a school teacher in Ontario but moved to Victoria and began working - as an employee - for VML for approximately one year. Prime left VML and worked as a trainer for another company for about 10 years but returned to VML and provided his services thereafter as an independent contractor. Prime operated a proprietorship - Prime Consulting - and worked on some projects but Carl decided Prime was not suitable for the ICBC project. Carl stated Michael Haas was a student at Camosun College and had been participating in a co-op work program in which he worked - as an employee - for VML concerning a project for BC Online, an agency of the provincial government. Haas had to return to regular classes at Camosun before the work was completed but agreed to finish his task provided VML paid him a higher hourly rate on the basis he would be an independent contractor. Carl agreed to the arrangement and Haas completed the project over the course of three weeks and was paid approximately $3,000 in fees. Carl stated he met Imer Shahini when Shahini was delivering pizza. Shahini was a refugee from Kosovo and had some computer skills so Carl arranged for him to work - at Synertech - on the Pharmacare project for the Ministry. Later, Carl stated Shahini informed him that he wanted to work for entities other than VML. Carl stated he became aware Cardinal had been assessed by CCRA on the basis it was a placement agency. However, in his opinion, he regarded VML as a service provider that billed for work done on the basis of time spent and materials expended. The workers involved in the ICBC project submitted a timesheet to ICBC - with a copy to VML - and this document was used as the basis of payment to the workers. Counsel referred Carl to the assumptions of fact set forth at paragraph 7 of the Reply to the Notice of Appeal (Reply) filed in the VML appeal. Carl accepted the following assumptions of fact:

(a)         the Appellant operates a business of providing computer consulting services to governments and various other clients (the "Clients");

(b)         the Appellant enters into contracts with the Clients on the basis of providing them with a Worker who has the expertise required by the Client;

(c)         the Client must approve of the Worker selected to fulfill the terms of the Appellant's contract with the Client;

(d)         the Clients pay the Appellant for the services provided by the Workers as set out in the contracts;

[5]      With respect to the assumption - subparagraph 7(e) - that workers charged Goods and Services Tax (GST) to VML, Carl stated this procedure was followed only if clients were within the private sector as opposed to provincial ministries or agencies. The Minister - at subparagraph 7(f) - assumed VML paid a worker - at an hourly rate - upon receipt of an invoice. Carl stated the work was remunerated at an hourly rate but the worker was paid only after VML had been paid by the particular client. Carl agreed with the subsequent assumption that workers were permitted to do some work at offices in their own homes even though the majority of work was carried out at the clients' premises but pointed out that clients have security concerns which usually dictate that services are performed entirely within the offices of the client. At subparagraph 7(h), the Minister assumed the clients directed workers as to what work was to be done, the manner by which it was to be performed and the location of the work. Carl stated the clients defined the task but VML provided the expertise necessary to achieve the desired result. Carl commented on the assumption - subparagraph 7(i) - that clients instructed the workers as to the number of hours per day and the days per week they were required to work during the period set out in the relevant contract with VML. Carl stated this assumption was incorrect in that the contracts between VML and clients usually specified a maximum number of hours or days allocated for the completion of the work and, while workers attempted to match the normal business hours observed by a client, there was no contractual obligation to do so. Carl agreed the workers were required to provide their services personally and had to obtain prior approval from a client before bringing in another resource person to work on a specified project. Carl disagreed with the assumption - at subparagraph 7(k) - that VML had any preferred call on the services of the workers and stated that if any worker decided to leave, then he had to find a suitable replacement to provide ongoing services to the client. With regard to the assumption that the workers were directed and controlled by the clients while performing services for the clients - subparagraph 7(n) - Carl stated the clients had some authority over a worker in terms of scheduling and prioritizing work in connection with the establishment of deadlines for receipt of certain work product.

[6]      In cross-examination by counsel for the respondent, David Carl agreed that VML provided people - equipped with specialized skills - to undertake specific tasks for others and stated he regarded the appellant corporation as a solution provider by making consultants available to perform technical support services. Carl was referred to a bundle of documents - Exhibit R-1 - and to Appendix A of the contract between VML and ICBC - dated January 31, 1997 - in which Christine Becher is named as the person assigned to perform a specific task - at the billing rate of $62 per hour - 7 hours per day during the 113-day term. Carl agreed that Mark Mauger was named in Appendix B - the following document - as the Project Manager for ICBC. Carl stated his only contact with Mauger was in the context of the invoicing process during which Mauger would approve Becher's time sheet prior to her submitting it to VML for payment. Carl agreed VML had provided certain workers to Synertech and Cardinal in order to work on certain projects but had made workers available to ICBC - directly - without the intervention of another business entity. Carl stated all contracts between VML and its clients specifically named the person(s) who would be performing the work and it was customary for a maximum number of hours to be inserted in the agreement but VML billed on an hourly basis for the work actually performed. Carl explained that a worker's time sheet was used for the purpose of VML invoicing Synertech and - when VML received payment - the worker would be paid the amount due. With regard to the contract between VML and ICBC, Carl agreed the rate of $62 per hour was charged by VML - to ICBC - but Becher was paid - by VML - at a lower rate. Carl agreed that a client was able to control the "big picture" issues arising in the course of a project including the setting of certain targets and could request the presence of a worker at certain meetings. Workers had no ability to hire any replacement workers as that option was the sole prerogative of VML provided, however, it could obtain approval from the client. Carl stated that - at one point - the workers Haas and Shahini had been employees of VML and were paid on a regular basis and provided with computers, Internet access, and had received a guarantee of three months work with the assurance they would be paid for all work done even if the client failed to pay VML. Later, Carl stated Haas and Shahini each provided their own computer and related equipment, paid their own office and related expenses, had no expectation of ongoing work and no guarantee they would be paid in the event of default by a client. When Haas worked on the BC Online project, his work was supervised by a VML employee assigned to that project. During 1998 and 1999, Carl stated VML operated its business with 6 or 7 employees on regular payroll subject to the usual deductions but also relied on subcontractors some of whom operated through a corporation. Carl agreed after VML and Haas had entered into the new arrangement - whereby Haas would no longer be an employee - that Haas carried on in the same manner as before except - as an employee - he had worked from 9:00 a.m. to 5:00 p.m. but - later - had to work around his student schedule and made arrangements for access to the building to accommodate his working hours. When Shahini's relationship with VML was transformed to that of independent contractor - while providing his services to Synertech - the work being performed did not change and time sheets were provided to him for the purpose of billing VML. Shahini had to return the VML computer system he had previously used while working as a VML employee and was required to establish his own in-home office from which location he was free to work additional hours at his own discretion.

[7]      In re-examination, David Carl stated he had never contemplated that VML would be regarded as a placement agency in the sense one thinks of those well-known entities that provide personnel on a temporary basis to a variety of clients. Carl stated VML had not entered into any fixed-price contracts for many years because one earlier project had expanded to the point of unprofitability.

[8]      Christine Becher testified she is self-employed and is the intervenor in the within appeal by VML and also an appellant in her own right. She provided services to VML and invoiced them on a regular basis - in the name of CBE Consulting Services - which she operated as a sole proprietorship. She referred to a bundle of invoices - Exhibit A-6 - issued by her to VML with regard to work done - and expenses incurred - on the ICBC project in 1999. She started working - in 1998 - on the ICBC project to establish a testing team and that process required a mentor for the designated Team Leader. Becher performed this task, assisted in some Y2K training and also did some teaching. Becher stated the services she provided to ICBC - in 1999 - were mainly in connection with the Radar Photo Project as it was necessary to ensure the application of the software to the requisite task in that certain information had to match photographs of offending vehicles. Becher stated she could not recall any contact whatsoever with Mark Mauger, the individual named by ICBC as the Project Manager for purposes of administering its contract with VML. Instead, she worked with an ICBC employee - Sherry Bennett - who had knowledge of traffic enforcement procedures. Becher maintained regular contact with Carl and would seek his advice from time to time concerning certain technical matters pertaining to a mainframe. With respect to certain assumptions of fact relied on by the Minister - as set forth in paragraph 4 of the Reply applicable to her appeal - Becher stated she did not disagree with those assumptions stated in subparagraphs (a) to (g), inclusive, but added that even though ICBC required her to complete a time sheet and to provide it to a named person, she invoiced VML for her time and certain approved expenses. In addition, she explained that - usually - she was paid within 30 days of submitting her invoice to VML and only performed work at home for clients if she did not require any online access. With respect to the assumption contained in subparagraph 4(h) that the client directed her as to the nature and manner of work to be done, Becher stated ICBC had a general intent concerning the work to be performed but she used her own skills and judgment to carry it out. In order to do so, she had 24-hour access to the ICBC premises and could work hours at her own discretion as long as it did not impair progress on the overall project. Becher disagreed with the following assumption in the Reply that she had been told by the client how many hours per day and how many days per week she was required to work during the contract period. She stated the number of hours worked were important in the sense of comprising a total for purposes of the contract between ICBC and VML but not with respect to when those hours were worked or whether she worked on certain days. She stated there were certain scheduled meetings with ICBC officials that required her attendance. She agreed she was required to perform her services personally but denied that VML had any preferred right to obtain her services, as assumed by the Minister at subparagraph 4(k) of the Reply. During 1998, Becher operated a gardening business which occupied some of her time and - during the summer of 1999 - went to England for 5 months during which period she made some business contacts while visiting her family. Becher stated that, in the course of her professional experience, she regarded a placement agency as an entity that is contacted by an individual seeking assistance in finding work. Becher utilized the business name CBE Consulting Services to provide her services and reported her income to CCRA as self-employment income and was assessed on that basis. She received a letter - Exhibit A-7 - from CCRA - dated March 21, 2001 - concerning her 1999 taxation year in which she was advised she would not be permitted to deduct certain business expenses because CCRA considered she had been an employee of VML and would require certain forms to be provided by that employer in order for her work expenses to be considered eligible for deduction. Becher stated the letter was in error as she had not received a T4 slip from VML.

[9]      In cross-examination, Christine Becher stated she met Sherry Bennett and another ICBC employee after she began working on the project. The user acceptance testing was a major requirement for success of the project and Becher stated she devoted her skills to that end in accordance with her own judgment. She had not been part of the process by which the contract had been formed between VML and ICBC and had not been aware of the specific document - Exhibit A-2 - during 1999. While providing her services to the ICBC project, at the request of another contractor engaged in a particular facet of the undertaking, she wrote a test plan which was reviewed by others - including Bennett - who had to be satisfied with the services provided by Becher in her role as a consultant. Becher agreed that the majority of her services were provided to ICBC within the normal business hours of that corporation. In the event she did not want to attend at ICBC premises on a certain day, Becher stated she was not required to seek permission from any ICBC official but - as matter of courtesy - informed certain ICBC employees of her intended absence. Becher stated the overall project underwent a change from a developmental phase to operational status. Becher stated no complaints were made by ICBC about her work but presumed any communication in that regard would have been directed to Carl at VML.

[10]     In re-examination, Becher stated that, both before and after the 1998-1999 period, she provided her services to different entities and after leaving VML - in 1995 - had worked on the Pharmacare project as an independent contractor. In 2000, she incorporated her business as CBE Consulting Services Ltd.

[11]     Counsel for the respondent called Richard Bird to the witness stand. He testified he is a Senior Systems Analyst and - in 1998 - provided his services - through an arrangement with VML - with regard to a project under the auspices of the Ministry. While working at BCSC, he met David Carl who had been on the premises as an outside consultant. Bird was aware of VML's mainframe consulting business and began having discussions with Carl concerning consulting work and - subsequently - entered into an agreement with VML whereby Bird would provide his services at a certain hourly rate. The work assigned to him - through VML - was in relation to an audit done for the benefit of the Medical Services Plan as it concerned certain billings by physicians and this procedure required a support person to perform certain revisions and updates and to modify the scope of the audit. All services were performed at the premises of the Ministry between 8:00 a.m. and 4:00 p.m., Monday through Friday. An individual - Darcy Ayres - had been provided by Cardinal to exercise a management function with respect to the services being provided to the Ministry and Ayres supervised - as required - work done by Bird. Bird stated he had to attend regular meetings and, although not ordered to perform any specific tasks, was expected to achieve a particular result. In the event he was unable to attend work, he would seek approval from Ayres or the designated employee of the Ministry also involved in the audit process. He reported his time to Ayres and also submitted an invoice to VML. Throughout, Bird stated he was never aware which person or entity had the right to terminate his services.

[12]     In cross-examination, Richard Bird stated he had known David Carl for years and Carl had once co-signed a loan for him. Bird stated he had never seen any contract between any entity and the Ministry but understood VML had a contract with Cardinal.

[13]     Susan Trice testified she is a self-employed technical writer and had provided her skills to VML from the end of January, 1998 until June 30, 2000. She worked with Synertech in the course of providing services to the Ministry. At the beginning, she had understood that VML had only two months remaining in its contract with Synertech. As a member of the Society for Technical Communications, she had received a call from the secretary to inform her that David Carl of VML was searching for a subcontractor to work on a certain project. Trice stated she contacted Carl and also met Jaime Peschiera of Synertech. She was aware of the broad scope of the work - and the amount thereof remaining - as it related to technical writing and business communications. When undertaking to provide her services for a limited time, she hoped the contract would be renewed by the provincial government. The contract was extended and she reported to different people at Pharmacare - one of whom was another independent contractor - and also to a member of Pharmacare management. There were no regular reporting requirements and communications were carried out on a daily or weekly basis, as required. Various completion targets were established by Division Heads and Managers within Pharmacare. In addition to other duties, Trice wrote and edited Pharmacare newsletters. In her opinion, the project was an undertaking by Pharmacare - a division of the Ministry - and it could set priorities. She had no regular office hours and performed most of her work on the premises but because there were different shifts, she was able to gain access to the building during evenings. She recorded her hours of work and submitted them to Synertech and - as of May 1, 1999 - also to an employee of Pharmacare. After May 1, 1999, Frank Trice shared some of her work and carried out certain tasks. Susan Trice invoiced VML monthly and was paid 30 days later.

[14]     In cross-examination, Susan Trice agreed that David Carl had accepted the arrangement whereby Frank Trice would assist her in performing work on the Pharmacare project and the Ministry and Synertech management also approved this new arrangement. She stated she filed her income tax return on the basis of being a self-employed person and CCRA had assessed her accordingly.

[15]     Frank Trice testified he is a self-employed technical writer. Between May 1, 1999 and June 30, 2000 - pursuant to an oral contract with David Carl at VML - he provided his services to the Pharmacare project with regard to the production of two manuals required for a new computerized system to be used by pharmacists throughout British Columbia. The contract Susan Trice had been working under had called for the delivery of 1,800 hours of services in a year. Frank Trice stated he had experience in long-term projects and was aware of the particular requirements inherent in such an undertaking. In his view, it was important to "keep the client - Pharmacare - happy". Initially, he had been in contact with Carl. Later, he met with the Operations Manager of the Pharmacare project but had not been introduced to anyone at Synertech. Frank Trice stated he reported - at his own discretion - to the Operations Manager who had the ability to establish priorities in respect of his work. Frank Trice and Susan Trice were partners in an entity called Trice Technical Writing and submitted one invoice to VML in which the hours worked by each of them were set out in detail. For the most part, Frank Trice worked at home but would attend at the Ministry two or three times a week for part of an afternoon when required to meet certain people. He maintained a weekly time sheet and Synertech and the Operations Manager each received a copy. At the end of the month, he issued an invoice to VML in which the hours worked by himself and Susan Trice were billed out at the same hourly rate.

[16]     In cross-examination, Frank Trice stated that Synertech and Pharmacare were interested in the end result and not in the details by which it was achieved. He did not consider he was ever at a risk of loss during this period and had reported his income on the basis of being a self-employed individual and had not been reassessed by the Minister.

[17]     Counsel for the appellant submitted that in order to determine whether VML is a placement agency, one must take into account the two different standards established by the relevant legislation, namely the Act and the Plan and the respective Regulations thereunder. Employment under section 6(g) of the Regulations under the Act falls into the category of insurable employment provided the worker has been providing services for and under the "direction and control" of the client of the agency where that worker is remunerated by the agency for the performance of those services. Pursuant to the relevant provision of the Regulations under the Plan, a different test is applied in which one must consider whether the services performed by the worker were analogous to a contract of service. Counsel submitted the intent of section 6(g) of the EI Regulations is clear in that the client must control the worker and that aspect thereof would ordinarily include the right to terminate the services being provided by that individual. Counsel referred to the evidence pertaining to several workers named in the assessment - issued under the Act - and pointed out there was very little evidence of control over their work, particularly by the end user/client of their services. Moreover, counsel submitted the Regulations under the Act and/or the Plan were never intended to apply to the sort of circumstances applicable to the within appeals but are directed towards placement or employment agencies which are required to be licensed pursuant to provincial legislation. As an example of the confusion surrounding the entire matter, counsel referred to the finding by the Minister - through CCRA - that Christine Becher had been regarded as an employee for purposes of assessing her income tax return, yet for EI and CPP assessments, the same Minister had decided she was self-employed and not an employee of VML during the relevant period.

[18]     Counsel for the respondent conceded the application of section 6(g) of the EI Regulations was the sole basis upon which the Minister decided the named workers were engaged in insurable employment with VML since none of the workers had provided their services to VML pursuant to a contract of service. As a result, the first question to be answered is whether VML is a placement agency. If it is, the next task is to determine whether the workers were under the direction and control of the client for purposes of the EI Regulations and then to analyze the evidence in order to decide whether the workers had provided their services under circumstances which were analogous to a contract of service for purposes of determining whether they were engaged in pensionable employment pursuant to subsection 34(1) of the Regulations under the Plan. Counsel referred to the evidence relating to various workers as it concerned issues of control, approval of work and other relevant factors and submitted it was apparent a great deal of control and direction had been exercised by various clients in respect of the services provided by the relevant worker.

[19]     Section 6(g) of the EI Regulations reads as follows:

6. Employment in any of the following employments, unless it is excluded from insurable employment by any provision of these Regulations, is included in insurable employment:

(g) employment of a person who is placed in that employment by a placement agency or employment agency to perform services for and under the direction and control of a client of the agency, where that person is remunerated by the agency for the performance of those services.

[20]     The relevant CPP Regulation is section 34 which reads:

Sec. 34. - (1) Where any individual is placed by a placement or employment agency in employment with or for performance of services for a client of the agency and the terms or conditions on which the employment or services are performed and the remuneration thereof is paid constitute a contract of service or are analogous to a contract of service, the employment or performance of services is included in pensionable employment and the agency or the client, whichever pays the remuneration to the individual, shall, for the purposes of maintaining records and filing returns and paying, deducting and remitting contributions payable by and in respect of the individual under the Act and these Regulations, be deemed to be the employer of the individual.

            (2) For the purposes of subsection (1), "placement or employment agency" includes any person or organization that is engaged in the business of placing individuals in employment or for performance of services or of securing employment for individuals for a fee, reward or other remuneration.

[21]     In the case of Vendor Surveillance Corp. v. Canada (Minister of National Revenue - M.N.R.), [2000] T.C.J. No. 620 (Vendor), the Honourable Judge Lamarre, T.C.C. considered the appeal of a business that provided its clients with a list of qualified candidates capable of providing certain services to meet their needs within the aerospace industry. The workers were experienced consultants and - as noted by Judge Lamarre at paragraph 7 of her reasons - were "able to provide the appellant's clients with information, suggestions, recommendations and support in ensuring that contractual obligations between a client and the third party suppliers are met in timely fashion, and also in ensuring product quality control". The relevant circumstances in the Vendor case were set out in paragraphs 8 to 12, inclusive of Judge Lamarre's reasons, as follows:

During the period at issue, Mr. Budgen was hired by the appellant as a consultant for the above purposes. An independent contractor's agreement between the appellant and Mr. Budgen was drafted on October 2, 1997. According to the agreement, the appellant wished to have Mr. Budgen available to perform procurement quality control services at times and pursuant to terms agreed upon by the parties. In that document, Mr. Budgen and the appellant mutually agreed that Mr. Budgen's business was independent of that of the appellant and its clients and that any work performed at a client's facility was simply a function of the nature of quality control. Mr. Budgen did not sign that agreement but signed the addendum attached thereto stating the terms of payment and the services to be rendered for the purposes of the project for which Mr. Budgen was retained. According to that addendum, Mr. Budgen was to be paid $17 an hour. Overtime had to be pre-authorized by the client. It was stipulated in the addendum that charges with respect to time and expense were to be submitted to the appellant within a certain time frame so that it could bill the client for them. Without the time sheets, the appellant could not be paid by the client, and neither would Mr. Budgen have been paid by the appellant.

            There was, on the other hand, a purchase order signed by the appellant and Northrop. That purchase order authorized the appellant to proceed with the supply of expertise and to assign someone to perform specific work at a specific price. In addition, the purchase order acknowledged that Northrop would pay the appellant for the services provided.

            Northrop is an American company and a major airframe subcontractor. Northrop had subcontracted work to, among others, two supplies (Cercast and Héroux), and required the services of Mr. Budgen (through the appellant) at the suppliers' place of business in Montreal in order to monitor, review and analyze the various components of the manufacturing process and the delivery procedures for parts ordered from those suppliers. Mr. Budgen was acting as a quality control inspector.

            According to Mr. Budgen's testimony, his main contact with Northrop was Mr. Louis Alfano in New York. He however spoke daily over the telephone with Northrop's project manager in Dallas about Cercast and sent a full written report once a week. With respect to Héroux, he kept in touch with the project manager in Florida on a weekly basis.

            Mr. Budgen's role was to keep the client informed as to his input and instructions regarding any changes or adjustments to the suppliers' operations. People from Northrop only came to Montreal three times to visit the suppliers' premises. Mr. Budgen testified that he met those people at the airport and took care of them during their visit. He was not reimbursed his expenses for those services. Mr. Budgen was asked to be present at the suppliers' place of business during the working hours of their employees. Although the working hours started at 6:30 a.m., Mr. Budgen did not arrive before 7:00 or 8:00 o'clock a.m. and left between 4:00 and 5:00 p.m. He worked 40 hours a week, Monday to Friday. Although an office was provided to him at the suppliers' place of business, he did 25 per cent of his work (all the paperwork) at home. Nobody really checked his hours worked and he reported his hours on a time sheet using the honour system.

[22]     Judge Lamarre noted that " placement agency" was not defined in the Act and also referred to the definition found at section 34 of the Regulations under the Plan. At paragraphs 19 and 20 of her judgment, she stated:

            The next question to be determined is whether Mr. Budgen worked under the direction and control of the appellant's client Northrop. It is not contested here that Mr. Budgen received his remuneraiton from the appellant.

            Counsel for the respondent referred to the case of Hennick v. Canada, [1995] F.C.J. No. 294, in which Desjardins J. of the Federal Court of Appeal made the point that what is relevant is not so much the actual exercise of control as the right to exercise control. In Ms. Hennick's particular case, Desjardins J. said that while Ms. Hennick's contract with the payer did not specify how she was to teach, there were parameters she had to meet with regard to time which clearly constituted control.

[23]     In the within appeals, all workers were remunerated by VML.

[24]     In Computer Action Inc. v. M.N. R., [1990] T.C.J. No. 101, the Honourable Judge Bonner, T.C.C. considered an appeal by a business that had been assessed as a placement or employment agency pursuant to section 12(g) of the Regulations made under the Act. The current provision is section 6(g) but the slight change in wording from its predecessor is not material in respect of any analysis relevant to the within appeals. With respect to the issue whether that appellant was a placement or employment agency, Judge Bonner - at page 5 of his judgment - stated:

            Counsel for the Appellant submitted that the Appellant was not a placement or employment agency within the meaning of section 12(g). He argued that the Appellant provided a marketing service for consultants. I do not find the argument persuasive. The term "placement agency" is not defined in the Regulations and must be given its ordinary meaning read in context, VIZ, an organization engaged in matching requests for work with requests for workers. It was argued as well that the appellant differed from a normal employment or placement agency in respect of the arrangement as to fees. In my view, nothing in the language of regulation 12(g) ties the meaning of the term "placement agency" to the presence or absence of any particular type of arrangement for the remuneration of the agency as suggested at one point by counsel for the Appellant.

            Next it was argued that the consultants were not remunerated by the Appellant for the performance of their services. I can see no force in that argument. The evidence is clear. The consultants in point of fact invoiced the Appellant for services performed and were paid by the Appellant even when the client had not yet paid the Appellant. It is difficult to see how the consultants could have looked in the clients for payment in light of paragraph 3 of the consultant contract which prohibited disclosure to the client of the consultant's rate of pay. Further on that point I will observe that there did not exist between consultant and client any privity of contract upon which a claim by a consultant for his hourly rate could be founded.

[25]     The above decision was relied upon by the Honourable Judge Watson, T.C.C. in arriving at the same conclusion in the case of Silverside Computer Systems Inc. v. Canada (Minister of National Revenue - M.N.R.), [1997] T.C.J. No. 38. At paragraph 14 of his reasons, Judge Watson concluded the worker in that appeal "was hired by the Appellant because of his skills and qualifications in order to perform services for the Appellant's client that was in need of those skills and in fact was an organization 'engaged in matching requests for work with requests for workers'". In Silverside, all workers providing services to clients were independent contractors.

[26]     With respect to the first issue to be determined - whether VML is a placement or employment agency for purposes of the EI Regulations - and within the meaning of section 34 of the CPP Regulations - one must consider the evidence as it applies to the named workers. David Carl, sole shareholder of VML, admitted the following assumptions of the Minister - as set forth in subparagraphs 7(a) to 7 (d), inclusive of the Reply - were correct. Although set out earlier in these reasons, for the purpose of zeroing in on this particular issue, they are restated, as follows:

(a)         the Appellant operates a business of providing computer consulting services to governments and various other clients (the "Clients");

(b)         the Appellant enters into contracts with the Clients on the basis of providing them with a Worker who has the expertise required by the Client;

(c)         the Client must approve of the Worker selected to fulfill the terms of the Appellant's contract with the Client;

(d)         the Clients pay the Appellant for the services provided by the Workers as set out in the contracts;

[27]     A perusal of the contract - Exhibit A-2 - between VML and ICBC makes it clear VML was supplying support services in relation to the contractual obligation to perform certain tasks in connection with the installation and use of data processing products. At paragraph 1 of said agreement, there is reference - at line A - to "[R]ates, Term and Personnel Assigned".

[28]     The letter - Exhibit A-4 - between VML and Synertech which was utilized by both corporations to define their business relationship sets forth various aspects of their agreement including recognition that Synertech "agrees to offer the services of Imer Shahini under Contract Number 97/040 issued by the Ministry of Health, for the period starting April 1st 1996 and ending June 30th , 1996". Thereafter, there was reference in said letter to terms of the agreement between VML and Synertech being extended to conform with any subsequent renewals of the contract between Synertech and the Ministry. The letter confirmed that VML "agrees to provide the services of Imer Shahini for a minimum of 7.5 hours each day, five days a week, excepting holidays. The schedule of vacation times will be determined by the parties. Provision will be made for up to three weeks vacation per year". The letter went on to state that from time to time, the proposed schedule may be revised by the three parties involved, the Ministry, VML and Synertech.

[29]     The services provided to ICBC by Randy Prime and Christine Becher were documented in Exhibit A-5, comprised of various Appendices A to F, including 3 sheets described as Appendix D. All appendices were part of and subject to the agreement - Exhibit A-2 - dated January 31, 1997 - between VML and ICBC. Either Randy Prime or Christine Becher is defined as the personnel assigned to the specific tasks within an overall project being undertaken by ICBC.

[30]     The terms of the contract - Exhibit A-3 - between Cardinal and VML are somewhat different. That agreement - dated April 7, 1999 - covering the period from April 1, 1999 to March 31, 2000, inclusive, does not call for the placement or provision of any particular individual named therein or any person(s) to be provided later. Instead, it is a contract between VML and Cardinal wherein VML agrees to provide its services at a certain hourly rate to perform tasks in connection with the services Cardinal had contracted to provide to the Ministry of Health. Pursuant to clause 11 of the contract between VML and Cardinal, VML had to obtain the written consent of Cardinal before it could subcontract any of its obligations or assign any right accruing thereunder. In clause 24 of said agreement, VML - named therein as the Contractor - warranted that it would pay and discharge all wages, salaries, etc. incurred in providing the contracted services and that no employee of the Ministry - referred to as the Client - would receive anything of value as a result of said agreement. Although the contract referred to an attached Schedule "B", that document was not attached to the document filed as Exhibit A-3. The worker - Richard Bird - testified he had been working as a systems analyst for the provincial government but had left that employment in order to provide his services to VML for the specific purpose of working on a medical audit for the Ministry that was being carried out by Cardinal pursuant to a contract with the provincial government. However, he provided his services in 1998, prior to the term provided for in Exhibit A-3.

[31]     The workers - Imer Shahini and Michael Haas - had been employees of VML but later each transformed his status into that of independent contractor. Shahini carried on working on a project managed by Synertech and Haas completed the task at BC Online - an agency of the provincial government - that he had worked on earlier as a co-op student while an ordinary employee of VML.

[32]     The services of Susan Trice had been retained by Carl - on behalf of VML - as a result of Trice having received a call from the secretary of her professional association to advise that Carl was searching for a subcontractor. Susan Trice contacted Carl and it was apparent her services were required in connection with a specific project being undertaken by Synertech in relation to the Pharmacare project and VML was carrying out a contractual obligation to Synertech by making her specialized services available. Later, Frank Trice began to provide his technical skills to the same project with the concurrence of Carl and Jaime Peschiera, on behalf of Synertech.

[33]     Taking into account the evidence as it pertains to each of the workers named in the assessment, it is clear that while there are some differences in the circumstances applicable to each individual, the appellant - VML - in each instance was responsible for the placement of those persons in a situation where they performed certain services in return for which they received remuneration from VML. The only effect of the requirement that a person must not operate an employment or talent agency unless licensed under the Employment Standards Act, RSBC Chap. 113, is to subject a person - such as VML - to prosecution for having failed to obtain the appropriate permission. It does not - however - mean that a failure to obtain the license prevents one from conducting business in a manner consistent with an employment or placement agency within the provisions of the EI and CPP Regulations relevant to the within appeals. An unlicensed dog is still a dog.

[34]     There was a specific purpose inherent in Parliament having created categories of insurable and pensionable employment for workers who - by application of ordinary standards - would not satisfy the usual test of employment. In the case of Sheridan v. M.N.R. 57 N.R. 69, the Federal Court of Appeal held that the former EI Regulation 12(g) sets out its own conditions for defining "insurable employment" and there is no need to search for other conditions in the enabling provision of the legislation. In that case, the effect was to include - into insurable employment - nurses who were referred to employment by a placement agency. The Federal Court of Appeal had decided earlier in Canada (A.G.) v. SkylineCabs (1982) Ltd., 70 N.R. 210 that even though taxi drivers and bus drivers were self-employed, they were included - by regulation - into the national insurance scheme and recognized that the word " employment " has a broader meaning for purposes of the Regulations and was capable of including an activity or occupation.

[35]     I am satisfied that - during 1998 and 1999 - VML acted as a placement or employment agency in respect of the named workers.

[36]     The next issue to be decided - for purposes of determining the question of insurable employment pursuant to the provisions of the EI Regulations - is whether some or all of the workers were under the direction and control of the relevant client of VML, now found to have been a placement agency.

[37]     In the Vendor, supra, case, Judge Lamarre considered aspects of control in relation to the particular worker and at paragraphs 26 and 27 of her judgment commented:

In the present case, I have to determine whether Mr. Budgen was under the direction and control of Northrop. The facts on which Ms. Bienvenue of Revenue Canada relied to conclude that Mr. Budgen was under such control are the following: Mr. Budgen had to file time sheets; he gave daily reports; overtime had to be approved; he received instructions from a supervisor in New York; and he had to accompany people from Northrop when they visited Montreal.

            The evidence revealed that Mr. Budgen did not receive instructions from a supervisor in New York. Rather, he made daily calls to someone at Northrop in Dallas to keep them informed of the different problems faced by the suppliers. Northrop did not indicate to Mr. Budgen on a daily basis the work to be done. It was rather Mr. Budgen who kept them informed of his input and instructions regarding any changes or adjustments to the suppliers' operations. Mr. Budgen was not subject to any control with respect to his hours worked. He filed a time sheet using the honour system and was paid on the basis of the time sheet. The fact that overtime had to be approved was part of the contractual arrangement. Mr. Budgen agreed to being paid on the basis of a 40-hour week for the work that had to be done. This is not in my view necessarily indicative of an employer-employee relationship as he could and did in fact work more than 40 hours per week without additional remuneration. Furthermore, Mr. Budgen could work at home at his own convenience without Northrop being informed of this fact. It is obvious that he did not have to work during the business hours of Northrop, which was located in Dallas and in Florida. Although he was told that it was preferable that he be present at the suppliers' place of business during the working hours of their employees, nobody checked to see that he was. He was in a sense free to organize his schedule to suit himself.

[38]     In the Computer Action, supra, case, with respect to the issue of direction and control exercised in respect to a worker by a client of the employment or placement agency, Judge Bonner - at page 5 of his judgment - stated:

Finally it was argued that the consultants were not placed by the Appellant to perform services "for and under the direction and control" of the clients of the Appellant. Here of course the services were not performed for anyone other than the client. The question of control is more complex. Not surprisingly there was no evidence tending to show that control was in fact exercised by the clients over the manner in which the consultants performed their work. However, in my view, section 12(g) of the Regulations looks to the existence of the right of control and not to the exercise of such right. Nothing in the evidence suggests that the clients did not, under the arrangements in place, possess the right to direct and control the manner in which the work was to be done. It might of course be unrealistic to expect such right to be exercised particularly by a client who is not "computer literate". As McGuigan J. noted in Weibe Doors Services Ltd. v. M.N.R. 87 D.T.C. 5025 at 5028:

...the test has broken down completely in relation to highly skilled and professional workers, who possess skills far beyond the ability of their employers to direct.

But, I reiterate, the test is not whether the right is or is likely to be exercised but rather whether it exists. The onus is on the Appellant to establish that the determination under appeal was wrong. The onus has not been discharged. The appeal therefore fails.

[39]     In Silverside, supra, after having found the appellant to have been a placement agency, Judge Watson turned to the issue of direction and control and - at paragraphs 15 -18, inclusive of his judgment, commented as follows:

            The only question remaining is whether the Worker was performing services "under the direction and control of a client" of the Appellant.

            In the written agreement between the Appellant and the Worker, he was hired to perform all services for Pitney Bowes, one of the Appellant's clients, "in a competent, efficient and effective manner" so that Pitney Bowes would be satisfied; Pitney Bowes was "responsible for designating the nature of the services to be performed" by him; anytime Pitney Bowes was not satisfied, his employment with the Appellant would be terminated. The Appellant did not train the Worker or supervise his work at Pitney Bowes but was told to, in effect, please the client.

            As far as Pitney Bowes was concerned, it had a need for a highly skilled computer operator and the Worker was found to have the necessary qualifications. Its manager told the Worker what to do, where to work, provided him with office space and necessary tools and checked on the results of his work both as to form and content. Although, in its agreement with the Appellant, it was stated that the Worker had "the sole and absolute discretion as to the manner in which services are to be performed", its manager had, where necessary, the right to review, edit and control the quantity and quality of the work done, since at any time it was not satisfied, the agreement could be terminated or its manager could refuse to sign the Worker's time-sheet. The Worker was not one of its employees; but was in a "subordinate position".

            From the Worker's point of view, he was sent to perform the services for which he was qualified to the Appellant's client, Pitney Bowes. He was told what to do, where to work, and what was expected from him by Pitney Bowes; he had to have his time-sheet signed by Pitney Bowes' manager in order to be paid, he had to notify Pitney Bowes if he was absent from his work place, he had to work during the Pitney Bowes office hours and he had to be available to work overtime. He was aware that he could be terminated if Pitney Bowes was not satisfied with his services, but apparently was not told that he had "the sole and absolute discretion as to the manner in which" his services were to be performed. He first had to obtain the signature of the Pitney Bowes manager before submitting his time-sheet to the Appellant for payment.

[40]     Now, I will deal with the evidence as it pertains to specific workers with respect to the issue of direction and control exercised by a particular VML client. All parties agreed each VML client had the right to establish priorities, change direction of the work and revise goals.

Christine Becher:

[41]     Becher provided her services to ICBC pursuant to an oral contract between herself and VML and in order to satisfy the contractual obligations of VML resulting from having entered into an agreement with ICBC - Exhibit A-2 - to supply certain personnel to perform defined tasks in order to achieve certain stated goals. The services provided by Becher were detailed further in the bundle of documents - Exhibit A-5 - and Appendix A thereof makes it clear Becher was to work "under the direction of the Project Manager, Sam van der Merwe", in relation to certain deliverables identified in Appendix C. The services of Becher were to be provided during the period from December 16, 1997 to June 30, 1998 but she continued to work at ICBC until the end of 1999 and billed VML for her services as illustrated in the bundle of invoices filed as Exhibit A-6. Becher testified she was able to work at her home only under circumstances not requiring access online. She was required to liaise on a regular basis with Sherry Bennett - an employee of ICBC - and the majority of Becher's hours were devoted to the needs of ICBC in order that VML could fulfill its contractual obligation. When the project changed from a developmental phase into operational status, the role previously carried out by Bennett was assumed by another employee of ICBC. Becher had to complete a time sheet which was handed to a specific ICBC employee. Although Becher had 24-hour access to the client's premises, she understood her presence was required at certain meetings scheduled by ICBC employees and any flexibility in her own work schedule had to be subject to the needs of ICBC so as not to impair progress on the specific project undertaken. While not requiring specific permission to be absent on a particular working day, Becher stated she informed ICBC employees of her intention to be elsewhere purely as a matter of professional courtesy. In providing services to ICBC, Becher testified she was able to use her own skills and judgment but was responsible to accomplish certain tasks - described as deliverables - under the direction of Mark Mauger, the ICBC employee named as the Project Manager. Carl testified he had little contact with Mauger except with respect to the process of invoicing for hours worked by the consultants and stated Mauger had to approve Becher's time sheets. Clearly, while not an employee of ICBC, per se, she was in a subordinate position and had to conform - to a high degree - with the inner workings of that client on an almost daily basis in order to achieve the goals enumerated in the ongoing contracts between ICBC and VML.

[42]     Taking into account the relevant factors with respect to the aspect of direction and control, I am satisfied that Becher was - at all times material - subject to the direction and control of ICBC within the ordinary meaning of that compound term relevant to the determination of this issue.

Randy Prime:

[43]     The evidence, with respect to this worker, was provided by David Carl who testified Becher had been brought into the picture in order to replace Prime who had been providing his services to ICBC in respect of a certain project. At that point, Becher took over the job of assembling material for a working manual to be used by ICBC employees. Becher later provided other services required by the expansion of her role within the ICBC project. With respect to the services provided by Prime, Carl identified Derek Prout - an employee of ICBC - as the designated Project Manager. There was no other evidence supplied by VML in respect to this worker. Taking the facts assumed by the Minister, together with the concession by VML that ICBC - as the client - had the right to establish priorities, change direction of the work and revise goals, and taking into account the language of the overriding contract - Exhibit A-2 - between VML and ICBC - concerning the provision of services by certain persons supplied by VML, there is no reason to dispute the finding by the Minister that Prime was under the direction and control of ICBC when he provided his services for the benefit of that corporation.

Richard Bird:

[44]     This worker had been a public servant for the Province of British Columbia. He left that employment in order to provide his specialized skills to VML under an agreement whereby he performed his tasks as an independent contractor and billed his services at a specified hourly rate. Bird testified he took direction from Ayres - a designate of Cardinal - in relation to the audit project being undertaken for the Ministry. Bird's services were performed - on site - between 8:00 a.m. and 5:00 p.m., Monday through Friday. Certain requests were forthcoming from Ministry officials and Bird stated he had to attend meetings on a regular basis. In the event he was unable to work on a certain day, he notified a Cardinal employee - usually Ayres - but also sought approval from an official at the Ministry. Bird handed in his time sheet to Ayres and also submitted an invoice to VML based on that time sheet. It is apparent Bird - particularly from his perspective as a former public employee - became submerged into the daily routine and schedule of the Ministry. He took direction from a designated official and otherwise observed regular office hours and followed office protocol in obtaining permission to be absent from work. Taking into account all the evidence relevant to the determination of this point, I find Bird was under the direction and control of the Ministry since it was the client receiving the benefit of his services pursuant to the business arrangement between VML and Cardinal.

Imer Shahini:

[45]     Carl testified Shahini had been a regular employee of VML while providing his services to Synertech in relation to a particular project. During this period, VML had supplied Shahini with a computer and Internet access. Later, Shahini agreed to transform his relationship with VML into that of independent contractor but continued to provide his services to Synertech for the benefit of a project undertaken by the Ministry. The contract - Exhibit A-4 - between VML and Synertech deals with the provision of the services of Shahini to the specified project and makes it clear this individual was required to satisfy the requirements of the Ministry as specified in the contract with Synertech. Carl testified that under the new arrangement, Shahini had to purchase his own computer and establish his own in-home office in order to work additional hours if he chose. However, the basic work did not change and Shahini continued to provide time sheets to Synertech and these were submitted - by Synertech - to the Ministry for approval and payment. A term of the contract between VML and Synertech required VML to comply with all the terms and conditions established by the Ministry including the specific work performed by Shahini during the relevant period. In the first paragraph of the letter - Exhibit A-4 - VML and Synertech agree that they are "entering into an agreement to propose the services of Imer Shahini as a contractor who will work under the general direction of the Pharmacare Systems Manager". In my opinion, that is a clear acknowledgment the Ministry had the right to exercise direction and - implicitly - control over Shahini, the named worker.

Susan Trice:

[46]     Susan Trice was a technical writer accepted by Synertech as an individual sufficiently skilled to work on the Pharmacare project. She stated she reported to various employees of Pharmacare and - from time to time - dealt directly with a member of Pharmacare management on an as-needed basis. Completion targets had been established by certain Division Managers and Trice wrote and edited newsletters published and distributed by Pharmacare. Trice stated that, while there were no set working hours, she performed most of her work on the premises and, even if she decided to work during an evening, was able to access the building along with Ministry employees working the regular late shift. She recorded her time and submitted a sheet to Synertech and - as of May 1, 1999 - also provided a copy to the relevant member of Pharmacare management. Taking these various factors into account, I find Susan Trice was under the direction and control of the managers of the Pharmacare project within the overall Ministry.

Frank Trice:

[47]     This individual entered the picture by sharing the job performed by his wife, Susan Trice. Prior to this occurring, Susan Trice had to obtain the approval of Carl - at VML - as well as the manager of Synertech and the management of the Pharmacare project. Frank Trice provided his services in relation to certain manuals being prepared by Pharmacare and was aware that a total of 1,800 hours per year had been established under the contract pertinent to the provision of services by Susan Trice. Frank Trice testified he had no contact with any person at Synertech and was able to choose when to report to the Project Manager of Pharmacare and agreed this official had the right to establish priorities in relation to his work. He stated it was always understood that he and his wife - operating as partners under the name of Trice Technical Writing - had to "keep the client - Pharmacare - happy". Although he did most of his work from home, he still attended scheduled meetings - two or three times per week for part of an afternoon - at the Ministry premises in order to hold discussions with a designated employee in respect to some aspect of the ongoing project. He maintained weekly time sheets and provided a copy to Pharmacare and to Synertech.

[48]     I am satisfied that Frank Trice was under the direction and control of the Project Manager at Pharmacare as well as other officials of the Ministry as designated from time to time for a particular purpose within the context of the overall project.

Michael Haas:

[49]     Haas had been a regular employee of VML while working there as part of his co-op student program through Camosun College. When he had to return to regular classes, he and Carl entered into an arrangement whereby Haas would work varying hours in order to accommodate his student schedule. At this point, Haas agreed his further services would be provided - through VML - to BC Online on the basis he was now an independent contractor. Carl testified Haas carried on in the same manner as when he had been an employee except he had to gain access to the building after ordinary business hours. With respect to the particular tasks undertaken by Haas for VML - both as an employee and later as an independent contractor - Carl stated another VML employee was present at the BC Online premises in order to supervise work being performed by Haas. There was no evidence adduced that any employee or official of the provincial government had any contact whatsoever with Haas in connection with the provision of his services. This leaves VML in the position where it was exercising direction and control over Haas even after he began providing his services within the context of his new-found entrepreneurial spirit. If the designated employee of VML was the person providing the direction and control, then I suggest it is a stretch to find Haas was under the direction and control of the provincial government - through BC Online - because the point of the relevant provision in the Regulations under the Act is that the client must be the one discharging this supervisory role - in a direct sense - in order to conform with the ordinary meaning of the wording "for and under the direction and control of a client of the agency". If VML is the agency and the provincial government is the client - but the only control over the worker is that exercised by VML as part of its subcontracting arrangement with Haas - then it would be completely illogical to find the worker was under the requisite direction and control of the client, the very ingredient required to constitute insurable employment pursuant to the EI Regulations. Otherwise, VML would be the placement agency and also an agent of its own client for purposes of discharging the supervisory function pertaining to the work. I doubt the intent of the provision is to permit the direction and control of the worker to be carried out in this manner. I prefer to leave any clarification on this point to the lawmakers and do not intend to muddy the waters further by thrashing around in this part of the pond.

[50]     I find Michael Haas was not engaged in insurable employment - in 1998 - with respect to the provision of his services to the provincial government.

[51]     The next issue to be decided is whether the workers were engaged in pensionable employment under the Plan by virtue of section 34 of the Regulations thereunder. I have decided VML was a placement or employment agency and that finding is applicable to this stage of the analysis concerning the CPP appeals particularly taking into account the wording of subsection 34(2) of the applicable Regulations. On the evidence, it is clear that the business of VML was to place skilled workers into a situation where they could utilize their talents in return for payment from VML. In return, VML - by securing employment for these individuals (in the sense they could employ their skills) - was able to make a profit from the direct efforts of the workers who had been placed at the disposal of a client. VML earned its remuneration by retaining the difference between the hourly rate charged to the client for the services of a worker and the lesser amount paid to that worker for those services.

[52]     Subsection 34(1) of the CPP Regulation includes a worker into the category of pensionable employment if the "terms or conditions on which the employment or services are performed and the remuneration thereof is paid constitute a contract of service or are analogous to a contract of service".

[53]     One must keep in mind that the relationship under examination is not the one between any worker and VML since in every case the Minister had decided none were employees of VML because no worker had been providing services pursuant to a contract of service to VML or to any its clients. Instead, the question to be answered is whether any of the workers provided services to a VML client under circumstances that were "analogous" to a contract of service in the sense of being "partially similar or parallel to", in accordance with the definition found in The Canadian Oxford Paperback Dictionary, Oxford University Press, 2000.

[54]     The Supreme Court of Canada - in a recent decision - 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] S.C.C. 59; 274 N.R. 366 - (Sagaz) dealt with a case of vicarious liability and in the course of examining a variety of relevant issues, the Court was also required to consider what constitutes an independent contractor. The judgment of the Court was delivered by Major, J. who reviewed the development of the jurisprudence in the context of the significance of the difference between an employee and an independent contractor as it affected the issue of vicarious liability. After referring to the reasons of MacGuigan, J.A. in Wiebe Door Services Ltd. v. M.N.R., [1986] 2 C.T.C. 200 and the reference therein to the organization test of Lord Denning - and to the synthesis of Cooke, J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732 - Major, J. at paragraphs 45 to 48, inclusive, of his judgment stated:

Finally, there is a test that has emerged that relates to the enterprise itself. Flannigan, ... ("Enterprise control: The servant-independent contractor distinction" (1987), 37 U.T.L.J. 25, at p. 29) sets out the "enterprise test" at p. 30 which provides that the employer should be vicariously liable because (1) he controls the activities of the worker; (2) he is in a position to reduce the risk of loss; (3) he benefits from the activities of the worker; (4) the true cost of a product or service ought to be borne by the enterprise offering it. According to Flannigan, each justification deals with regulating the risk-taking of the employer and, as such, control is always the critical element because the ability to control the enterprise is what enables the employer to take risks. An "enterprise risk test" also emerged in La Forest J.'s dissent on cross-appeal in London Drugs where he stated at p. 339 that "[v]icarious liability has the broader function of transferring to the enterprise itself the risks created by the activity performed by its agents".

In my opinion, there is no one conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor. Lord Denning stated in Stevenson Jordan, ... ([1952] 1 The Times L.R. 101) that it may be impossible to give a precise definition of the distinction (p. 111) and, similarly, Fleming observed that "no single test seems to yield an invariably clear and acceptable answer to the many variables of ever changing employment relations..." (p. 416) Further, I agree with MacGuigan J.A. in Wiebe Door, at p. 563, citing Atiyah, ...(Vicarious Liability in the Law of Torts. London: Butterworths, 1967) at p. 38, that what must always occur is a search for the total relationship of the parties:

[I]t is exceedingly doubtful whether the search for a formula in the nature of a single test for identifying a contract of service any longer serves a useful purpose... The most that can profitably be done is to examine all the possible factors which have been referred to in these cases as bearing on the nature of the relationship between the parties concerned. Clearly not all of these factors will be relevant in all cases, or have the same weight in all cases. Equally clearly no magic formula can be propounded for determining which factors should, in any given case, be treated as the determining ones.

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.

[55]     I will examine the facts in relation to the indicia set forth in the judgment of Major J. in Sagaz in the course of considering whether the workers had provided services under circumstances analogous to a contract of service.

Level of control

[56]     I have already discussed this factor in the context of finding that VML was a placement agency due to the circumstances relating to the performance of services by workers under the direction and control of the clients when the workers were being remunerated by VML for those services. Certainly, there were degrees of control exercised in relation to various workers but overall there was still a significant amount of direction provided by the clients including adherence to regular office hours, reporting to a designated official, abiding by reporting requirements and internal policy, and meeting deadlines in accordance with priorities established by the client from time to time. Each worker included in the assessment - issued by the Minister under the Plan - possessed a particular skill and ability to work in the environment in which they were placed by VML with the concurrence of the client - directly - or through the intervention of Synertech and/or Cardinal depending on the circumstances. In my view of the evidence, there was little to distinguish any of the workers - except Michael Haas - from any other highly-skilled person having the status of employee within the premises of the client where the majority of the work was being performed. Any differences in this aspect are not sufficiently significant to constitute a marked departure from the norm applicable to this field of expertise. Some of the workers may not have had a clear understanding as to which entity had the right to terminate their services but all understood their function was to provide their services in a manner capable of satisfying the particular client named in a specific contract by which VML had obligated itself.

Provision of equipment and/or helpers

[57]     It is clear that Prime and Becher - while providing their services to ICBC - did not provide any particular equipment or tools in order to complete their tasks. Becher testified she was able to do some work from her home but only when Internet access was not required. The worker - Richard Bird - occupied a space within the premises of the Ministry and observed regular office hours. Imer Shahini carried on as before when he had been an employee of VML and even though he established an in-home office and purchased his own computer, there was no ability on his part to hire any helper without obtaining approval from VML and the client. Susan Trice worked at the Pharmacare/Ministry premises and the majority of her work was done there. Frank Trice was permitted to share the work which Susan Trice had committed herself to perform pursuant to her contract with VML and this arrangement required the approval of Ministry officials. Frank Trice did some work from home but also utilized the space, facilities and equipment of the client. Michael Haas continued to work at BC Online in the same manner as when he had been a co-op student and an employee of VML except he could choose working hours to fit his student schedule. The only thing he had to provide was himself in order to finish off the work he had been doing before he had to return to attending classes at Camosun College.

Degree of financial risk and responsibility for investment and management

[58]     On the evidence, I cannot find any worker had any degree of financial risk. No worker was required to make any investment in order to provide services to a client. As discussed earlier in another context, each worker was subject to direction and control of the client in varying degrees and no worker exercised a managerial function in the sense that term is utilized in a business setting.

Opportunity for profit in the performance of tasks

[59]     All workers were paid at an hourly rate and expenses - if applicable - were reimbursed by the client via VML. Some workers were subject to a maximum amount of hours that could be devoted to the project. Carl testified he only entered into contracts - on behalf of VML - that were based on an hourly rate in order to avoid incurring a loss. In turn, none of the workers was able to gain any extra money from the skillful management of his or her own tasks since the working hours were to some extent circumscribed by the contractual arrangements entered into by VML and the particular client and the workers were paid in accordance with time sheets based on actual hours worked. No worker was able to hire another person to perform the tasks at a lesser rate, thereby gaining a profit from the difference. That opportunity was within the domain of VML and - to a large extent - that spread in hourly rates constituted the means by which that corporation earned its revenue. Workers could not deal directly with the client in order to negotiate a higher payment or benefits and were prohibited from doing so by reason of their agreement with VML and/or an intermediary such as Synertech or Cardinal. There was no privity of contract between any worker and the client and no client had any obligation to ensure the workers received remuneration for their services other than by ensuring the invoices submitted to them by VML were paid. In the event these appeals had involved a determination whether the workers had provided their services to ICBC, the Ministry, or any other client pursuant to a contract of service rather than a contract for services, there is not much evidence to support the proposition that any of them had been providing services as a person in business on his or her own account. It is the relationship between the relevant worker and the particular client that is under examination since it is conceded by the Minister that no contract of service ever existed - during the relevant period - between any worker and VML.

[60]     Taking into account the evidence and applying it to the principles expounded in Sagaz, supra, I conclude that each worker - whether during 1998 or 1999 - was providing his or her services to a client of VML under terms and conditions and overall circumstances that were analogous to a contract of service and the remuneration - in each case - was paid by VML.

[61]     It was not necessary to decide the following point in order to dispose of the within appeals but there is a strong likelihood in those instances where a worker was assigned to provide services to Cardinal and/or Synertech as opposed to being placed directly with a client - such as ICBC or BC Online - that while VML would still be an employment or placement agency for purposes of the EI and CPP Regulations, respectively, the client would be either Cardinal or Synertech. When these companies placed certain workers with the Ministry, they - in turn - could be regarded as placement agencies within the meaning of the relevant Regulations pertaining to insurable and pensionable employment.

[62]     The VML appeal - 2002-687(EI) - from the Minister's decision dated January 18, 2002 - confirming an earlier assessment issued pursuant to the Act - is allowed and the decision is varied to find:

that Michael Haas was not under the direction and control of the client - the Province of British Columbia and/or its agency BC Online - and, therefore, was not engaged in insurable employment within the meaning of section 6(g) of the Employment Insurance Regulations.

[63]     The appeal by Christine Becher - 2002-685(EI) - from said assessment is hereby dismissed and the decision of the Minister is confirmed.

[64]     The VML appeal - 2002-688(CPP) - is hereby dismissed and the decision of the Minister is confirmed.

[65]     The appeal by Christine Becher - 2002-686(CPP) - is hereby dismissed and the decision of the Minister is confirmed.

[66]     One would hope that Gord Hawes - from CCRA - who determined Becher was not an employee of VML during 1998 and 1999 (Exhibit A-1) would find the time to have a chat with G. Kanelles - also of CCRA - who decided Becher was an employee of VML and, by letter (Exhibit A-7) dated March 21, 2001, requested that Becher obtain the appropriate T2200 form (applicable to an employee) from VML so she could claim certain expenses related to her work.

Signed at Victoria, British Columbia, this 7th day of June 2003

"D.W. Rowe"

D.J.T.C.C.

CITATION:

2003TCC373

COURT FILE NO.:

2002-685(EI), 2002-686(CPP) 2002-687(EI), 2002-688(CPP)

STYLE OF CAUSE:

Christine Becher and M.N.R. and Victoria Microsystems Ltd. and Victoria Microsystems Ltd. and M.N.R. and Christine Becher

PLACE OF HEARING:

Victoria, British Columbia

DATE OF HEARING:

February 3, 2003

REASONS FOR JUDGMENT BY:

Honourable Deputy Judge D.W. Rowe

DATE OF JUDGMENT:

June 7, 2003

APPEARANCES:

Counsel for the Appellant:

George F. Jones

Counsel for the Respondent:	Amy Francis
Counsel for the Intervenor:	George F. Jones

COUNSEL OF RECORD:
	For the Appellant:
		Name:	George F. Jones
		Firm:	Jones Emery Hargreaves Swan Victoria, British Columbia

     For the Intervenor:

             Name:                                     George F. Jones

             Firm:                                      Jones Emery Hargreaves Swan

                                                          Victoria, British Columbia

For the Respondent:

Morris Rosenberg Deputy Attorney General of Canada Ottawa, Canada