Citation: 2012TCC243
Date: 20120718
Docket: 2008-4212(EI)
2009-14(CPP)
BETWEEN:
A-1 LUMPERS INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
V.A. Miller J.
[1]
A-1 Lumpers appeals the
decision made by the Minister of National Revenue (the “Minister”) that Michael
R. Trueman (the “Worker”) was employed by it in insurable and pensionable
employment during the period January 7, 2007 to July 21, 2007.
[2]
In making his decision,
the Minister decided that the Appellant was acting as a placement agency with
respect to the Worker in accordance with paragraph 6(g) of the Employment
Insurance Regulations (the “EI Regulations”) and subsections
34(1) and 34(2) of the Canada Pension Plan Regulations (the “Plan”).
[3]
The Appellant denied that
it was a placement or employment agency. According to Mae LeBlanc, president
and sole shareholder of the Appellant, the Appellant’s primary business was to
offer brokerage services to lumpers. (A “lumper”
is a person who is hired to load
and unload goods from trucks into warehouses or from warehouses onto trucks.)
[4]
It was Mae LeBlanc’s
evidence that the Appellant considered its clients to be the lumpers. The
description she gave of the brokerage service offered by the Appellant to
lumpers was basically the same as that given in paragraph 10 of the Notice of
Appeal. That paragraph reads:
10. The
primary service provided by the Appellant is to offer lumpers a method of
expedited and regulated payment. After the completion of a lumpering task or
several lumpering tasks, a lumper may bring confirmation of the completed
task(s) to the Appellant. The lumper then receives from the Appellant an
expedited, lump sum payment for the work done. The Appellant withholds a
percentage of the lumper’s pay as a commission for this expedited payment
service. By withholding a percentage of the wage, the Appellant buys / the
lumper assigns the lumper’s claim for payment which the Appellant later
enforces against the relevant carrier, warehouse receiver, or truck driver to
recover the money fronted to the lumper. In this way, the Appellant acts, inter
alia, as a broker and conduit of monies for the lumpers.
[5]
To support the evidence
given by Mae LeBlanc, the Appellant also led evidence through two witnesses who
are lumpers. Darrel Carruthers stated that he worked at different warehouses;
he knew the warehouse receivers and he obtained his own lumpering jobs. He only
used the Appellant to do his administrative tasks; to invoice the carriers for
whom he unloaded goods; and, to pay him his wages on an expedited basis.
However, it was Shawn Carter’s evidence that all of his lumpering work was
obtained through the Appellant. Although he has never discussed with the
carriers whether they would pay him directly, he assumed that he could bill
them directly or sell his information to another company which offered lumping
services.
[6]
In the Notice of Appeal,
the Appellant also described a rate negotiation service which it offered to the
lumpers:
12. In
addition to its primary brokerage services, the Appellant also offers a rate
negotiation service to lumpers. The Appellant determines where merchandise will
be delivered and when lumpering services will be required. The Appellant then
negotiates the lumpering rate, in advance, with the relevant carrier, warehouse
receiver, broker, or truck driver. The Appellant only negotiates the rate; the
Appellant does not contract with the carrier, warehouse receiver, or truck
driver to provide lumpering personnel.
[7]
The Respondent called
three witnesses: Michael Trueman, the Worker; Jeff Pearson, a terminal manager
with Day & Ross Transportation (“Day & Ross”); and, Robert Brittain, a
rulings officer from the Canada Revenue Agency (“CRA”).
[8]
The regulations at
issue in this appeal read as follows:
EI Regulations
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 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.
Plan
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.
[9]
The term “placement or
employment agency” is not defined in the EI Regulations; but, it is my
view, that the definition of that term in the Plan is applicable to the EI
Regulations[1].
In its Pre-Hearing Brief, the Appellant agreed with this conclusion.
[10]
The regulations are
satisfied if:
a)
The Worker was placed in
his employment by the Appellant;
b)
The Worker performed
services for the Appellant’s client;
c)
The Worker was remunerated
by the Appellant;
d)
In respect of the Employment
Regulations, the Worker was under the direction and control of the
Appellant’s client; and
e)
In respect of the Plan,
the Worker performed services for the Appellant’s client under terms or
conditions that constitute a contract of service or that are analogous to a
contract of service.
Placement Agency
[11]
Although the Appellant may
have offered the various services which it described in its pleadings, it is my
view that it also acted as a placement or employment agency with respect to the
Worker whose evidence was unequivocal that all of his lumpering jobs were
obtained through the Appellant. Either he called the Appellant or the
Appellant’s dispatcher called him to advise him when, where and on which
carrier his services were needed. At the time that he was called by the
Appellant’s dispatcher, he was also told the hourly or per load rate he would
receive from the Appellant. The Worker did not negotiate his rate nor do I
believe that he was asked what his costs would be as was indicated by Mae
LeBlanc. The Worker’s evidence was not shaken on cross-examination.
[12]
The Appellant advertised
with Service Canada for lumpers. It was the Worker’s evidence that he learned
about the Appellant from its advertisement with Service Canada.
[13]
The Appellant advertised
its lumpering services on its website where it asserted that “A1 Lumpers serves
the greater Moncton area with untouchable lumper services” and “only the best
and most experienced lumpers have lumper contracts with A1 Lumpers” and that it
provided “an excellent and efficient crew with over a decade of proven
dependability”. Clearly, the Appellant marketed its services to the carriers
and the warehouses.
[14]
Although Mae LeBlanc tried
to distance herself from the statements on the website by saying that she had
no input into the phraseology used in the website and that it was designed by
her daughter, I note that the Appellant’s new website made the exact same
declarations.
[15]
The Minister assumed that
the Appellant advertised the services of providing lumpers to carriers and
warehouses. That assumption was not demolished by the Appellant and in fact the
evidence supported the assumption. I find that one of the services offered by
the Appellant was that of a placement agency and that it placed the Worker in
employment during the relevant period.
Placed with the Appellant’s Clients
[16]
Mae LeBlanc was adamant
that it was the lumpers, not the carriers or the warehouses, which were the
Appellant’s clients. I found her evidence to be self-serving.
[17]
It was Jeff Pearson’s
evidence that Day & Ross contracted with the Appellant to supply lumpers to
unload its carriers. Likewise, it was Robert Brittain’s evidence that he spoke
to Don Depuis, the general manager for the Appellant, who informed him that the
Appellant contracted with the carriers and the warehouses to supply lumpers to
unload trucks. The Appellant maintained a list of active lumpers to provide
these services.
[18]
I do not know if the
Appellant had a written contract with those who used its lumpering services but
the lack of formality does not negate the evidence that they were the
Appellant’s clients. The carriers and warehouses complained to the Appellant
when there were insufficient lumpers on site. They were invoiced by the
Appellant and they paid the Appellant’s bill. In fact, Jeff Pearson stated that
Day & Ross would not pay an invoice from an individual lumper when the
arrangements to provide the lumping services had been made with the Appellant.
[19]
As further evidence of my
finding that the warehouses and carriers were the Appellant’s clients, Mae
LeBlanc testified that when Source Medical contacted the Appellant to do work,
they specifically asked for the Worker to be sent to do the job.
[20]
Based on the evidence, I
conclude that the Appellant’s clients were the various warehouses and carriers
(the clients) which requested the lumping services.
Under the Direction or Control of the Appellant’s Client
[21]
All witnesses, including
Mae LeBlanc, testified that when the lumpers were performing all of their
tasks, such as unloading or loading a carrier, or wrapping goods in plastic,
they were under the direction and control of the truck drivers or the warehouse
personnel.
Remuneration
[22]
I do not believe that the
Appellant negotiated a rate with the carriers and warehouses for the benefit of
the lumpers. The Appellant’s motives were not altruistic. It negotiated a rate
with those who used its lumpering services and then told the lumpers what they
would be paid for each job. According to Mae LeBlanc, if the Appellant
negotiated a rate of $60 or $65 per load with the carrier, it would pay the
lumper anywhere from $30 to $45 per load.
[23]
I found that Mae LeBlanc’s
evidence was not very forthcoming when she was questioned about the particulars
of the rate negotiation services which the Appellant allegedly offered.
[24]
The Worker was told by the
Appellant’s dispatcher what his rate of pay would be when he was called to do a
job. I conclude that the Appellant determined the Worker’s rate of pay.
[25]
The Worker was paid by the
Appellant by way of direct deposit in his bank account after a two week
holdback. The Appellant invoiced the clients and was paid by cheque made
payable to it alone. According to Mae LeBlanc, the Appellant was paid within 30
to 100 days of the invoice being sent.
[26]
In Graphic Assistants
Inc./Assistance Graphique Inc. v. Minister of National Revenue[2], Weisman D.J.
concluded that in the context of paragraph
6(g) of the EI Regulations, prima facie, the person who actually
pays the worker, remunerates the worker. In Lebov v. Minister of National
Revenue[3],
Justice Campbell Miller agreed with this conclusion and he added that evidence
was needed to displace this prima facie conclusion. I agree with both of
these conclusions.
[27]
Based on the evidence, it
is clear that the Worker was remunerated by the Appellant and that the
Appellant was not a mere conduit of the funds between its clients and the
Worker as it alleged[4]
Contract of Service or Terms Analogous to a Contract of Service
[28]
Paragraph 34(1) of the Plan
requires that the terms or conditions under which the Worker’s services are
performed for the Appellant’s client constitute a contract of service or are
analogous to a contract of service. This necessitates that I review the
relationship using the criteria identified in Wiebe Door Services Ltd. v.
Minister of National Revenue[5]
while being cognizant of the question posed by the Supreme Court of Canada in 671122
Ontario Ltd. v. Sagaz Industries Canada Inc.[6] at paragraph 47 of its reasons:
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. (emphasis added)
[29]
The evidence supported
that both the Appellant and the Worker intended that the Worker be engaged as
an independent contractor. However, that does not end the discussion. It is
necessary to ascertain whether the terms of the relationship between the Worker
and the client support this intention.
[30]
I have already
concluded that the Worker was directed and controlled in his employment by the
Appellant’s clients. This factor indicates that a contract of service existed
between the Worker and the Appellant’s clients.
Tools
[31]
In order to have access
to the warehouses, the Worker required steel toed boots, a hard hat and a vest.
These were supplied by the Worker. Equipment such as pallet jacks, wire
snippers and box cutters were provided by the warehouses. I find that this
factor is neutral.
Risk of Loss/Chance of Profit
[32]
It was Mae LeBlanc’s
evidence that the Worker was liable for any goods damaged by him in the
performance of his duties and that she discussed this with all lumpers when
they were first engaged. However, the Worker stated that no such conversation
ever took place and he did not have to pay for goods he damaged.
[33]
In the case of Day
& Ross, if there was damage on one of its loads, its customer made a claim
against Day & Ross. Jeff Pearson confirmed that Day & Ross never tried
to recover the cost of damaged goods from the individual lumpers.
[34]
I cannot extrapolate
from Mr. Pearson’s evidence that all carrier companies operated in a like
manner; but, I do conclude from the Worker’s evidence that he was not liable
for any goods which he may have damaged.
[35]
The Worker held several
part time jobs while he was engaged by the Appellant. Although this usually
indicates that the Worker is an independent contractor, I note that in today’s
market many people have to work at several jobs just to make ends meet. In the
appeal before me, the Worker was paid either an hourly rate or a rate per load,
both of which were set by the Appellant. He did not negotiate his rate of pay.
I realize that Mae LeBlanc testified that the lumpers could negotiate their
rate of pay; but, I found her evidence to be self serving.
[36]
The Worker could not
hire a replacement to perform his duties for the Appellant if he was
unavailable when called by the Appellant. He did not have a chance of profit.
[37]
The Appellant paid the
Workplace Health and Safety Compensation Commission premiums for the Worker.
[38]
It is my view that the
Worker had neither a risk of loss nor a chance of profit. These criteria
indicate that the Worker was an employee during the period.
[39]
It is my view that the
Worker had neither a risk of loss nor a chance of profit. These criteria
indicate that the Worker was an employee during the period.
[40]
Although the common intention of
both the Appellant and the Worker was that the Worker be an independent
contractor, the terms or conditions of the Worker’s working relationship with
the Appellant’s clients, when analyzed against the Wiebe Door factors,
do not support this intention. The terms or conditions under which the Worker
performed his services and was paid remuneration were analogous to a contract
of service.
[41]
On a review of all the evidence, I
conclude that the Appellant has failed to demolish the assumptions set out in
the Minister’s replies to the notices of appeals and those assumptions are
assumed to be true.
[42]
The appeals are dismissed and the
Minister’s decisions are confirmed.
Signed at Halifax, Nova Scotia, this 18th
day of July 2012.
“V.A. Miller”
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