Royal Winnipeg Ballet v. Canada (Minister of National Revenue)

Royal Winnipeg Ballet v. Canada (Minister of National Revenue)
Court (s) Database
Federal Court of Appeal Decisions
Date
2006-03-02
Neutral citation
2006 FCA 87
File numbers
A-443-04
Notes
Reported Decision
Decision Content
Date: 20060302
Docket: A-443-04
Citation: 2006 FCA 87
CORAM: DESJARDINS J.A.
EVANS J.A.
SHARLOW J.A.
BETWEEN:
THE ROYAL WINNIPEG BALLET
Appellant
and
THE MINISTER OF NATIONAL REVENUE
Respondent
Heard at Toronto, Ontario, on September 28, 2005.
Judgment delivered at Ottawa, Ontario, on March 2, 2006.
REASONS FOR JUDGMENT BY: SHARLOW J.A.
CONCURRING REASONS BY: DESJARDINS J.A.
DISSENTING REASONS BY: EVANS J.A.
Date: 20060302
Docket: A-443-04
Citation: 2006 FCA 87
CORAM: DESJARDINS J.A.
EVANS J.A.
SHARLOW J.A.
BETWEEN:
THE ROYAL WINNIPEG BALLET
Appellant
and
THE MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT
SHARLOW J.A.
[1] The Royal Winnipeg Ballet (the RWB) is appealing a decision of the Tax Court of Canada that Tara Birtwhistle, Johnny Wright and Kerrie Souster, when engaged by the RWB as dancers during the period from January 1 to July 29, 2001, were employees of the RWB and not independent contractors. The decision is reported as Royal Winnipeg Ballet v. Canada, 2004 TCC 390, [2004] T.C.J. No. 291 (QL), (2004) 35 C.C.E.L. (3d) 101.
[2] The RWB asked the Minister for a ruling on this point for the purpose of determining whether it had any legal obligation, in relation to the dancers, to pay contributions under the Canada Pension Plan, R.S.C. 1985, c. C-8, and premiums under the Employment Insurance Act, S.C. 1996, c. 23. Such obligations would exist only if the dancers were employees of the RWB.
[3] A delegate of the Minister concluded that the dancers were employees of the RWB. The RWB, Ms. Birtwhistle, Mr. Wright and Ms. Souster appealed separately to the Tax Court of Canada. Each of them commenced two appeals, one pursuant to section 28 of the Canada Pension Plan, and the other pursuant to section 103 of the Employment Insurance Act.
[4] The eight appeals were heard together on common evidence. In judgments dated June 3, 2004, all of the appeals were dismissed.
[5] The RWB has appealed the Tax Court judgment. The dancers have not appealed. Their bargaining agent, Canadian Actors' Equity Association (the CAEA), sought leave to intervene in support of the appeal of the RWB. Leave was denied on the basis that the CAEA did not represent a point of view that would not otherwise be adequately represented (order of Pelletier J.A. dated March 16, 2005).
The Facts
[6] The facts are not in dispute. The RWB is a world renowned ballet company. In a typical season, running approximately from September to May, the RWB produces four ballets, which it performs in Winnipeg and on tour in Canada and abroad. Approximately twenty-five dancers are engaged by the RWB for a season. The RWB may also engage guest artists and other dancers, referred to as "local jobbers", for limited periods within a season. The dancers are supported by numerous staff who work behind the scenes.
[7] The performances for a season are planned two to three years in advance. In February of each year, the recruitment of dancers begins for the following season. A dancer who is engaged for a particular season cannot be assured of an offer of engagement for the next season, but normally will be advised by the end of February if no new engagement offer is to be made. Ms. Birtwhistle, Mr. Wright and Ms. Souster were engaged for the season covered by the period in issue in this case.
[8] The RWB recruits dancers from those engaged for the current season, from its affiliated ballet school, and from an open audition process. The dancers the RWB wishes to engage are chosen by the artistic director, who also decides which dancers are assigned to particular roles.
[9] The rehearsal and performance of a ballet is an artistic collaboration involving the choreographer who creates the dance movements, the dancers who perform the dance, the ballet masters and ballet mistresses who instruct and coach the dancers, and the artistic director who coordinates the work of the dancers with the work of others, including the musicians and designers. A dancer is not free to dance his or her assigned role in a manner that departs from the choreography or the artistic vision of the artistic director. However, each dancer's artistic expression is necessarily unique, even while performing choreographed dance movements.
[10] The artistic director chooses dancers for particular roles based on their individual artistic qualities. Dancers considered for lead roles generally are so advised when they are offered an engagement for the season. Discussions and negotiations ensue and, if fruitful, result in a written contract.
[11] The legal relationship between the RWB and each dancer is determined and governed by the Canadian Ballet Agreement in force for that season, which may in some cases be supplemented by an individual contract between the dancer and the RWB. The Minister does not argue, and there is no evidence, that the RWB or the dancers have acted in any way that is inconsistent with any of those contracts.
[12] The Canadian Ballet Agreement is an umbrella agreement between the CAEA and the RWB. It is negotiated every three years. Under the Canadian Ballet agreement, the RWB recognizes the CAEA as the exclusive bargaining agent for all dancers, narrators, singers, choreographers, stage managers, assistant stage managers, ballet masters and ballet mistresses that the RWB engages. The RWB agrees to engage only members of the CAEA for those positions.
[13] The record establishes that the understanding of the CAEA, the dancers, and the RWB is that dancers covered by the Canadian Ballet Agreement are independent contractors and not employees of the RWB. It is also generally understood that stage managers engaged by the RWB under the Canadian Ballet Agreement are employees of the RWB.
[14] The understanding that dancers are self-employed exists in relation to all but one of the ballet agreements to which the CAEA is a party. The one exception is the ballet agreement between the CAEA and the Alberta Ballet in Calgary. Dancers with the Alberta Ballet were employees before they were represented by the CAEA, and remain so even though they are covered by a ballet agreement negotiated with the CAEA.
[15] There is no evidence that there are any practical considerations relating to the activities of the RWB, or the work environment of dancers engaged by the RWB, that compels dancers to be employees of the RWB, or that compels them to be independent contractors.
[16] There is no contractual instrument that purports to characterize the dancers as employees of the RWB or as independent contractors. The Canadian Ballet Agreement is silent on that point. Although the record does not disclose a reason for that silence, the omission may be deliberate because the Canadian Ballet Agreement covers some members of the CAEA (stage managers) who are understood to be employees and some (dancers) who are understood to be independent contractors.
[17] The Canadian Ballet Agreement sets minimum rates of remuneration, including overtime and vacation pay, contributions to a health care plan and a disability insurance plan, and minimum standards for a large number of working conditions for dancers of varying levels of experience. A dancer may be classified under the Canadian Ballet Agreement as apprentice, corps de ballet (levels 1 to 6), second soloist (levels 1 to 2), first soloist (levels 1 to 5), or principal dancer. Among the dancers' working conditions covered by the Canadian Ballet Agreement are rehearsal and performance conditions, periods of rest between performances, and travel arrangements and allowances.
[18] A dancer is free to negotiate with the RWB terms of engagement that are better than those set out in the Canadian Ballet Agreement. Normally, the soloists and principal dancers are the individuals who are most likely to obtain such terms, which generally include a slightly better rate of remuneration, better billing, and special concessions of a relatively minor nature.
[19] A dancer who is engaged by the RWB may accept an engagement for a live performance with another company after the start of rehearsals for the season, if there is a permissive term in the individual contract or the RWB consents. A dancer has the right to accept other engagements that do not conflict with the fulfilment of his or her contractual obligations, if the RWB consents. A principal dancer or soloist engaged by the RWB is free to accept any radio or television broadcast engagement but is required to ensure that his or her engagement with the RWB is publicized.
[20] The RWB is obliged to display the names of all dancers prominently on its premises, and to list in programmes distributed to its audiences the names of all dancers performing in a principal or soloist role. Dancers retain ownership of their images, subject to the limited licence given to the RWB under the Canadian Ballet Agreement to use them for certain purposes.
[21] The RWB cannot require a dancer to perform any tasks that are not stipulated in the Canadian Ballet Agreement or in the dancer's individual contract. For example, a performance cannot be filmed or broadcast unless a separate agreement is negotiated.
[22] Dancers personally bear certain costs in order to carry out their contractual obligations, including the cost of fitness and rehearsal wear, physical conditioning (including gym memberships), orthopaedic devices, makeup, and certain health related items. The RWB is required by the Canadian Ballet Agreement to purchase pointe shoes, specialized belts and costumes. The RWB, as a bulk purchaser, is able to obtain discounts for such items.
[23] For all fiscal purposes, the dancers and the RWB have acted consistently with their understanding that the dancers are independent contractors. The dancers are registered for GST purposes, and charge GST to the RWB for their services. The RWB does not withhold tax from the remuneration paid to a dancer, except at the dancer's request. If a dancer requests that tax be withheld, the dancer also stipulates the amount to be withheld. The RWB complies with any such request by a dancer.
[24] A dancer may choose to contribute to a fund called the "Dancer's Resource Transition Plan" operated by a not-for-profit organization called the Dancer Transition Resource Centre. The fund is used to assist dancers moving from a dancing career to their next endeavour. If a dancer contributes to that fund, the RWB makes a matching contribution although it has no obligation to do so under the Canadian Ballet Agreement or the dancers' individual engagement contracts.
The Tax Court Decision
[25] The judge found that the dancers were employees of the RWB. He provided a lengthy account of the legal principles upon which he based his decision, and an extensive explanation of his application of those principles to the facts. I do not propose to restate the judge's reasons, but I observe that he considered it unnecessary to take into account what he referred to as "the intention of the parties" in determining the legal character of the relationship between the dancers and the RWB, because his consideration of other relevant factors yielded what he found to be a conclusive result (see paragraph 82 of the judge's reasons). For the reasons that are discussed below, I must respectfully disagree with the judge that the intention of the parties was irrelevant in this case. In my view, his error in that regard led him to an incorrect conclusion.
Discussion
1. Preliminary points
(a) Consequences of the status of the dancers as employees or independent contractors
[26] It is common ground that the RWB is entitled to succeed in this appeal if the dancers were not employees of the RWB during the relevant period. The importance of this to the RWB is that the RWB has no obligation to pay employment insurance premiums or make contributions to the Canada Pension Plan for the dancers unless they are employees of the RWB. Although this case deals with only three dancers for a limited period of time, it is anticipated that as a practical matter the conclusions reached in this case will be applied in later periods to all dancers engaged by the RWB, unless the facts change significantly.
[27] From the point of view of the dancers, the finding of the Tax Court that they are employees of the RWB means that their work as dancers for the RWB is insurable employment under the Employment Insurance Act. Also, if the dancers are employees of the RWB, they are obliged to make only a portion of the required contributions under the Canada Pension Plan (the "employee's share"), because the RWB must pay the "employer's share". An independent contractor is required to pay both portions (although the earnings upon which the required contribution is based may be reduced by certain deductions that are not available to employees).
[28] If the RWB's appeal to this Court is successful, the dancers whose cases were before the Tax Court would not necessarily be at risk of any negative consequences, at least in relation to the Employment Insurance Act and the Canada Pension Plan for the period in issue, because they did not appeal their Tax Court judgments. However, as indicated above, they and other dancers engaged by the RWB may be affected for later periods, unless the facts change significantly.
(b) Potential tax issues
[29] A question may arise as to the extent to which the dancers, if they are employees, are entitled to tax relief for certain expenses typically borne by a dancer, such as agent's fees, special clothing, shoes and equipment, and physical training costs. Generally, a self-employed person may claim tax relief for all expenses reasonably incurred to earn his or her income from self-employment. By contrast, the tax relief available to an employee is restricted to a permitted list of items, most of which would not be applicable to a dancer who is an employee. This differential treatment assumes that essential employment expenses generally are borne by the employer. It is generally recognized that in particular cases, that assumption may not be valid.
[30] The record of this case contains no particulars on the extent to which any dancer could be adversely affected by being found to be an employee, rather than an independent contractor. Nor does the record disclose whether the RWB would be amenable to a change in the terms of engagement to ameliorate the potential negative income tax consequences of a finding that the dancers are employees.
(c) Provincial employment laws
[31] The record does not disclose whether and in what respect the labour and employment laws of Manitoba would affect the RWB or the dancers if the dancers are employees of the RWB rather than independent contractors. Neither party made any submissions about whether the Canadian Ballet Agreement is or should be governed by The Labour Relations Act, C.C.S.M. c. L10, or any other provincial legislation that establishes employment standards or authorizes collective bargaining for employees. Since no argument was presented in this regard, I have assumed that the scope of provincial labour legislation is not relevant to the issues raised in this case.
(d) The Status of the Artist Act
[32] The Status of the Artist Act, S.C. 1992, c. 33, was referred to in argument in the Tax Court and in this Court. It deals with a number of issues relating to self-employed artists engaged in work that is within federal legislative jurisdiction. It contemplates collective agreements between self-employed artists and federal government organizations, and between self-employed artists and broadcasting undertakings within the jurisdiction of the Canadian Radio-television and Telecommunications Commission (CRTC). The Status of the Artist Act has no application in this case because the RWB is not an organization that is regulated by a federal authority.
[33] The only relevance of the Status of the Artist Act in these proceedings is that it represents a formal recognition by the Parliament of Canada that performing artists may be independent contractors whose minimum terms of engagement are the subject of a collective agreement. The existence of the Status of the Artist Act does not and cannot establish that performing artists are always self-employed or that they cannot be employees.
2. The jurisprudence
[34] 67112 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R 983 (Sagaz) is the leading case from the Supreme Court of Canada on the determination of the status of a person as an employee or an independent contractor. However, before discussing Sagaz, it is useful to consider Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553, [1986] 2 C.T.C. 200, 87 D.T.C. 5025 (F.C.A.), because it forms an important part of the jurisprudential foundation for Sagaz.
(a) Wiebe Door
[35] The issue in Wiebe Door was whether certain installers and repairers of overhead doors were employees of a corporation, even though the corporation hired them on the basis that they would be running their own businesses. If the installers were employees, the result would have been to confirm an assessment against the corporation for the payment of unemployment insurance premiums and Canada Pension Plan contributions for the years 1979, 1980 and 1981.
[36] The Tax Court Judge had determined that the installers were employees, citing the "integration test" from Stevenson Jordan and Harrison, Ltd. v. Macdonald, [1952] 1 The Times L.R. 101 (C.A.), per Denning L.J. The key part of that case is quoted in Wiebe Door, and reads as follows:
One feature which seems to run through the instances is that, under a contract of service, a man is employed as part of the business and his work is done as an integral part of the business: whereas, under a contract for services his work, although done for the business, is not integrated into it but is only accessory to it.
[37] MacGuigan J.A. said that the Tax Court Judge had misapplied this statement by treating it as though it stated a single test for distinguishing between an employee and an independent contractor. He found that test not to be a fair one because it will necessarily result in a finding of employment if the parties have developed a relationship of mutual dependence. MacGuigan J.A. adopted instead the following analytical framework from the decision of Cooke J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All. E.R. 732 (Q.B.D.):
The observations of Lord Wright, of Denning, L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?". If the answer to that question is "yes", then the contract is a contract for services. If the answer is "no" then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him.
[38] MacGuigan J.A. concluded that the Tax Court Judge had erred in law in determining the matter on the basis of the integration test alone, when he should have considered all of the relevant factors as taught in Market Investigations. MacGuigan J.A. did not engage anew in a detailed review of the relevant factors, but returned the matter to the Tax Court for reconsideration based on the correct law. I have been unable to find a published report of a decision of the Tax Court on the reconsideration.
[39] Some years after the decision in Wiebe Door, the Judicial Committee of the Privy Council considered the same issue in the context of a mason who was injured on a construction site in Hong Kong: Lee Ting Sang v. Chung Chi-Keung, [1990] 2 A.C. 374. The mason was entitled to compensation from the principal construction contractor only if he was its employee. The District Court in Hong Kong found him not to be an employee, based essentially on the integration test from Stevenson Jordan. The Hong Kong Court of Appeal upheld the decision. The Judicial Committee reversed the decision, citing as the correct law the statement of Cooke J. quoted above.
[40] Thus, the state of the law after Wiebe Door was that, in determining whether an individual is an employee, the key question is whether the individual has been engaged to provide services as a person in business on his or her own account. The list of factors from Wiebe Door, cited in practically every case of this kind, are aimed at finding an answer to that question.
(b) Sagaz
[41] The problem of determining whether a party was an independent contractor arose in Sagaz. Although that case did not involve employment insurance, the analysis in Wiebe Door was approved and adopted.
[42] The issue in Sagaz was whether Sagaz Industries Canada Inc. and Sagaz Industries Inc. (collectively, "Sagaz") could be held liable for the tortious conduct of a New York corporation called American Independent Marketing Inc. ("AIM") and its controlling shareholder, Stewart Landow. Sagaz had engaged AIM to assist in marketing synthetic sheepskin seat covers to Canadian Tire Corporation. For approximately 30 years, those products had been supplied to Canadian Tire by 671122 Ontario Limited, formerly called Design Dynamics Limited ("Design"). Sagaz was initially successful in replacing Design as a supplier to Canadian Tire because Mr. Landow bribed Robert Summers, a Canadian Tire official, who was fired from his job and eventually went to prison. By the time the bribe was discovered, Canadian Tire had concluded that the Sagaz product was superior to the Design product. As a result, Design was not awarded a new contract with Canadian Tire. Design's fortunes declined as a result, and its assets were sold. Design sued thirteen defendants, including Sagaz, AIM and Mr. Landow. Canadian Tire was sued, but settled. Mr. Summers was sued, but the action was discontinued when he went bankrupt. By the time of the trial, the only remaining defendants were Sagaz and its president, AIM and Mr. Landow.
[43] Design's claim against Sagaz could succeed only if Sagaz could be held vicariously liable for the tortious conduct of AIM. In the Supreme Court of Canada, the determination of that issue turned on whether AIM was an independent contractor of Sagaz. The Court found that AIM was in business on its own account, and thus an independent contractor. The result was that Sagaz could not be held vicariously liable for the tortious conduct of AIM.
[44] The conclusion that AIM was an independent contractor of Sagaz was based on the application of the principles stated by MacGuigan J.A. in Wiebe Door. Those principles were quoted and endorsed by Major J., writing for the Supreme Court of Canada. Major J. provided this summary of the relevant principles (paragraphs 46 to 48):
[46] 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, supra, that it may be impossible to give a precise definition of the distinction (p. 111) and, similarly, Fleming [John G. Fleming, in The Law of Torts, 9th ed. Sydney, Australia: LBC Information Services, 1998] 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 [P.S. Atiyah, in 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.
[47] 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.
[48] 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.
(c) Wolf
[45] In 2002, this Court decided Wolf v. Canada (C.A.), [2002] 4 F.C. 396, 288 N.R. 67, [2002] 3 C.T.C. 3, 2002 D.T.C. 6853, another leading case on the problem of distinguishing an employee from an independent contractor.
[46] Mr. Wolf was a mechanical engineer specializing in aerospace. Many aerospace companies that might have employed his services did not hire mechanical engineers as employees. They often preferred to engage independent contractors because their contracts could be terminated at any time without incurring liabilities. For the contractors, the pay generally was higher but there was less job security. Mr. Wolf sought out such contracts because of the prospect of higher pay. A company called Kirk-Mayer of Canada Ltd. (Kirk-Mayer), located in Calgary, had a contract with Canadair Limited under which it provided Canadair with personnel. Mr. Wolf signed a contract with Kirk-Mayer under which he agreed to provide his services to Canadair. The expected duration of the assignment was one year, renewable at Canadair's discretion, but dependent entirely on the workload available at Canadair. The agreement provided that if, in the opinion of Kirk-Mayer and its client Canadair, Mr. Wolf did not provide his services in a workmanlike and professional manner, Kirk-Mayer could terminate the agreement.
[47] The contract established an hourly rate of remuneration and provided extra remuneration for overtime, vacations and statutory holidays. It also stipulated a per diem allowance payable in certain circumstances, and a completion bonus if the contract was completed to Canadair's satisfaction. Canadair was also obliged to pay all travel costs incurred by Mr. Wolf in the performance of the contract. Mr. Wolf invoiced Canadair for his work. Canadair paid Kirk-Mayer, which then paid Mr. Wolf, after deducting income tax, Canada Pension Plan contributions and employment insurance premiums, on the basis that Mr. Wolf was an employee.
[48] Mr. Wolf worked with a team at Canadair involved with the testing of aircraft. He reported to a Canadair project manager. He worked on a number of different projects, to which he was assigned by Canadair as the need arose. Mr. Wolf had no promise of future engagement, no pension and no employee benefits. He was employed in this manner from 1990 until 1995, during which time he worked on nine projects, but there were some periods during that time when he had no work. In 1995 when the time came to terminate the contract, Canadair wrote to Kirk-Mayer asking them to inform Mr. Wolf of the termination.
[49] A number of tax disputes arose between Mr. Wolf and the tax authorities. When his case reached this Court, the only issue was whether he was an employee or an independent contractor. I summarize as follows the relevant portion of the lead judgment, written by Desjardins J.A.
[50] The contract in issue was governed by the law of Quebec. It was therefore necessary to consider whether the contract was a "contract of employment" or a "contract of enterprise" as those terms are defined in the Civil Code of Quebec. It is generally accepted that, under the Code, the key distinction lies with the element of subordination or control, but in the jurisprudence, the distinction is also examined in light of the tests now found in Wiebe Door and Sagaz: see Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161 (J.C.P.C.), Hôpital Notre-Dame de l'Espérance and Théoret v. Laurent, [1978] 1 S.C.R. 605, and Curley v. Latreille (1920), 60 S.C.R. 131. On that basis, Desjardins J.A. considered it appropriate to apply to Mr. Wolf's case the principles stated in Sagaz and Wiebe Door. She concluded that those factors, considered in the context of the special nature of Mr. Wolf's highly specialized work and the economic environment in which he chose to work, justified his contention that he was an independent contractor.
[51] Décary J.A. rendered separate reasons in which he analyzed the issues somewhat differently but reached the same conclusion as Desjardins J.A. He also suggested that it might not even have been necessary to have recourse to Wiebe Door and Sagaz because the nature of their contract was so clear. He said this at paragraph 119 (my emphasis):
Taxpayers may arrange their affairs in such a lawful way as they wish. No one has suggested that Mr. Wolf or Canadair or Kirk-Mayer are not what they say they are or have arranged their affairs in such a way as to deceive the taxing authorities or anybody else. When a contract is genuinely entered into as a contract for services and is performed as such, the common intention of the parties is clear and that should be the end of the search. Should that not be enough, suffice it to add, in the case at bar, that the circumstances in which the contract was formed, the interpretation already given to it by the parties and usage in the aeronautic industry all lead to the conclusion that Mr. Wolf is in no position of subordination and that Canadair is in no position of control. The "central question" was defined by Major J. in Sagaz as being "whether the person who has been engaged to perform the services is performing them as a person in business on his own account". Clearly, in my view, Mr. Wolf is performing his professional services as a person in business on his own account.
[52] Noël J.A. also concurred in the result, but on the basis of a different analysis. His reasons are short and I quote them in their entirety:
[122] I too would allow the appeal. In my view, this is a case where the characterization which the parties have placed on their relationship ought to be given great weight. I acknowledge that the manner in which parties choose to describe their relationship is not usually determinative particularly where the applicable legal tests point in the other direction. But in a close case such as the present one, where the relevant factors point in both directions with equal force, the parties' contractual intent, and in particular their mutual understanding of the relationship cannot be disregarded.
[123] My assessment of the applicable legal tests to the facts of this case is essentially the same as that of my colleagues. I view their assessment of the control test, the integration test and the ownership of tool tests as not being conclusive either way. With respect to financial risk, I respectfully agree with my colleagues that the appellant in consideration for a higher pay gave up many of the benefits which usually accrue to an employee including job security. However, I also agree with the Tax Court Judge that the appellant was paid for hours worked regardless of the results achieved and that in that sense he bore no more risk than an ordinary employee. My assessment of the total relationship of the parties yields no clear result which is why I believe regard must be had to how the parties viewed their relationship.
[124] This is not a case where the parties labelled their relationship in a certain way with a view of achieving a tax benefit. No sham or window dressing of any sort is suggested. It follows that the manner in which the parties viewed their agreement must prevail unless they can be shown to have been mistaken as to the true nature of their relationship. In this respect, the evidence when assessed in the light of the relevant legal tests is at best neutral. As the parties considered that they were engaged in an independent contractor relationship and as they acted in a manner that was consistent with this relationship, I do not believe that it was open to the Tax Court Judge to disregard their understanding (compare Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R. 161 (P.C.), at page 170).
[53] It is common ground that Wiebe Door, Sagaz and Wolf establish the principles of law that must be applied in determining whether the dancers were employees of the RWB, or independent contractors. Precisely how they apply in this case is the heart of the dispute.
3. The relevance of the intention of the parties
[54] I turn now to the judge's conclusion that it was unnecessary to take into account the intention of the parties. The judge does not explain what he meant by the phrase "the intention of the parties", but it seems to me that he considered himself free to disregard the uncontradicted evidence that the parties shared a common understanding that the dancers were self-employed and were not employees of the RWB.
[55] The judge's explanation for disregarding the intention of the parties appears at paragraph 31 of his reasons:
Intent only becomes a factor in the event the relevant legal tests yield no definitive result, and where no sham or window dressing is suggested. I agree with this approach. In appropriate circumstances intention simply serves as a tie-breaker. This accords with Justice Major's approach; it does not elevate "intention" to a more primary role. If "intention" was given the prominence the Supreme Court of Canada appears to have reserved for the control factor, there would be a risk that payors, employers, employees and independent contractors might view it as some endorsement of a right to opt in or out of the employment insurance scheme. It should be borne in mind this is not a voluntary program.
[56] The judge apparently was concerned that parties may escape the legal consequences of creating an employment relationship simply by denying that they had created an employment relationship. In my view, the judge's concern is unfounded. There is ample authority for the proposition that parties to a contract cannot change the legal nature of that contract merely by asserting that it is something else. This is why Major J. said, in Sagaz (at paragraph 49):
Although the contract designed AIM as an "independent contractor", this classification is not always determinative for purposes of vicarious liability.
Similarly, in Wiebe Door, the parties' understanding that the door installers were self-employed was not conclusive. In Wolf, this Court respected the parties' declared intention that Mr. Wolf would be an independent contractor but only after determining, after due consideration of all of the relevant evidence, that the parties had succeeded in creating the legal relationship that they intended to create.
[57] The judge apparently understood the reasons of Noël J.A in Wolf as treating the parties' contractual description of their legal relationship as a kind of tie-breaker, to be taken into account only if the Wiebe Door factors fail to yield a conclusive result. In my view, those reasons are not authority for that proposition. I reach that conclusion because of Montreal Locomotive, the case cited by Noël J.A. at the end of his reasons.
[58] The issue in Montreal Locomotive was whether a manufacturer was liable for taxes imposed by the City of Montreal in 1941 to 1943. The manufacturer had entered into a contract with the Government of Canada, which was stated to be governed by the law of Quebec, to manufacture armaments. The contract stated that the manufacturer would be an agent of the Crown. The manufacturer located the factory in Montreal. The City of Montreal sought to tax the manufacturer in respect of its occupation and its use of the land. It could do so only if the manufacturer held the land and was carrying on business on its own account (that is, as an independent contractor). It would not be liable for any taxes if it owned and used the land in its capacity as agent of the Crown. The Judicial Committee of the Privy Council found that the manufacturer was an agent of the Crown. The Judicial Committee noted that the contract stated that the manufacturer would be an agent of the Crown, but then went on to conduct an extensive and detailed analysis of all of the terms of the contract, and in particular what the contract said about the factors that were later adopted in Market Investigations, Wiebe Door, and Sagaz.
[59] It seems to me from Montreal Locomotive that in determining the legal nature of a contract, it is a search for the common intention of the parties that is the object of the exercise. The same idea is expressed as follows in the reasons of Décary J.A. in Wolf, at paragraph 117:
I say, with great respect, that the courts, in their propensity to create artificial legal categories, have sometimes overlooked the very factor which is the essence of a contractual relationship, i.e. the intention of the parties.
[60] Décary J.A. was not saying that the legal nature of a particular relationship is always what the parties say it is. He was referring particularly to Articles 1425 and 1426 of the Civil Code of Quebec, which state principles of the law of contract that are also present in the common law. One principle is that in interpreting a contract, what is sought is the common intention of the parties rather than the adherence to the literal meaning of the words. Another principle is that in interpreting a contract, the circumstances in which it was formed, the interpretation which has already been given to it by the parties or which it may have received, and usage, are all taken into account. The inescapable conclusion is that the evidence of the parties' understanding of their co