The Court of Appeal confirmed that the sole shareholder of a corporation (the "owner") was also an employee of that corporation. Although the corporation had a board of directors, the evidence showed that the corporation's business was conducted predominantly by its owner. For example, the owner had supervised the work of another individual, whose contract was with the corporation and not with the owner - this would be unusual if the owner were an independent contractor, but not if he were an employee.
The Court of Appeal noted that the trial judge erred in concluding that the owner's status as a de facto or de jure director was determinative. Webb J.A. stated (at para. 10):
[A]n individual could enter into more than one contract with his or her own company and therefore could provide services in different capacities. It follows that the simple fact that an individual is a director or an officer of a company does not, in and of itself, exclude the possibility that other services may be provided by that individual as an independent contractor.
The trial judge had also erred in applying the "control" factor in Sagaz Industries. The trial judge had been caught up in the question of whether the corporation had any practical control over the taxpayer as an employee given that, as sole shareholder, the taxpayer controlled the corporation. The correct question was whether the corporation, as a separate person, had the legal power to control the individual (para. 14). It was unnecessary to decide this question in light of the finding that the owner was conducting business for the corporation rather than on his own account. The taxpayer's appeal was dismissed.