Date: 20020716
Dockets: 2001-3099-IT-I,
2001-3103-IT-I,
2001-3104-IT-I,
2001-3105-IT-I, 2001-3106-IT-I,
BETWEEN:
DONALD J.
ANDERSON, ROBERT G. AUCKLAND,
HOWARD H.
HARDER, WYATT
D.A. PENNER, KEITH W. SCOTT,
Appellants,
and
HER MAJESTY THE
QUEEN,
Respondent.
Reasonsfor
Judgment
Beaubier, J.T.C.C.
[1]
By consent of the parties, these appeals pursuant to the Informal
Procedure were heard jointly and on common evidence at Saskatoon,
Saskatchewan on June 27 and 28, 2002. The Appellants called
Douglas Kellan, Vice-President of Distribution Utility, Sask
Energy Inc. ("Sask Energy") (the natural gas retail
distributor in Saskatchewan); Randy Hahn, Executive Director,
Transmission Operation, TransGas Limited ("TransGas")
(a division of Sask Energy which deals with the high pressure
pipeline transmission and storage of natural gas in
Saskatchewan); the Appellants, Wyatt Penner and Howard Harder,
District Mechanic Operators in Charge ("DMOs") employed
by TransGas and the Appellants Donald Anderson, Robert Auckland
and Keith Scott, Service Technicians employed by Sask
Energy.
[2]
The Appellants have appealed reassessments pursuant to paragraph
6(1)(a) of the Income Tax Act
("Act") on account of the use of their
employers' corporate pickup trucks and, in Mr. Scott's
case, a van, which were allegedly used for driving to and from
home to their employer's office premises which the Respondent
alleged was their place of work in the calendar year
1999.
[3]
All of the Appellants are tradesman employed by Sask Energy and
TransGas. They maintain, troubleshoot and repair all of the
equipment involved in the transmission of natural gas from
storage to the consumer.
[4]
The dispute arises from the fact that their employers require all
of these men to take their company vehicles home at the end of
each work day and to drive from their homes to each place of work
in the vehicle. The employers pay all of the expenses associated
with the vehicles and for all of their tools and equipment. The
tools and equipment include:
1.
Instruments
CO tester
Combustible gas detector
Gas trac
Line locator
and others but the above
are sensitive and some are battery powered.
2.
Safety equipment
Ear muffs/hearing protection
Plastic repair kit
First aid kit
Various portable lights,
and other equipment.
3.
A great many hand tools including: wire, cutters,
files, hammers, pliers, saws, screwdrivers, shovels, skippers,
tape measures, threaders and many wrenches of various
kinds.
4.
Miscellaneous equipment including a jack, a propane tank and a
stopcock greaser.
5.
A fire extinguisher and a fire suit and various fittings and
parts and, in the case of Transgas employees, a 35 pound post
pounder.
The employees undertake the
following services and expenses at their homes:
1.
The cost of plugging the vehicles in to enable immediate starts
in the winter.
2.
The cost, time and trouble of carrying certain instruments (some
of which are battery-powered) from the cab of the vehicle into
their homes and storing them there at night in cold weather so
that they will be operative for immediate use.
3.
The cost, where applicable, of providing parking space for the
vehicle at home.
The employees are
not allowed to use the vehicles for personal use and only one,
Mr. Auckland, admitted to an occasion of personal use of the
vehicles.
[5]
The pickup trucks have an extended cab with the rear seats
removed so that the encased instruments which must be kept warm
can be stored in a special tool box in the cab. The cab also
contains a Fleetnet Radio which is portable so that the employees
can carry it with them when out of the cab. The box of each
pickup has a fitted tool box along each side and, usually, a tool
box fitted behind the cab. The van operated by Mr. Scott is
similarly equipped; he works in Regina and usually also carries
several meters.
[6]
The reassessments were essentially respecting benefits estimated
by the Minister for:
1.
Stand-by days that were also working days, when the vehicle was
driven from home to "work", and
2.
Other working days when the vehicle was driven from home to
"work". "Work" was alleged by the Respondent
to be the employer's premises where the employee had a desk
work space.
The Replies each
contained the Minister's figures and calculations respecting
these allegations in paragraph 11, but these were not in the form
of assumptions. They were alleged as a pleading in each Reply and
then included by assumption (a). The actual days described in the
Replies were generally confirmed by the Appellants'
testimony, although Mr. Scott stated that he prepared the numbers
adopted by the Minister without reference to his own or his
employer's records. The others referred to their records.
Thus, the Court accepts the number of days described in each
Reply as correct. However, the descriptions of "Home to
Office Days" and alleged "Personal Kilometres" are
not accepted as correct descriptions or allegations. All of the
witnesses' testimony is believed.
[7]
The Respondent assessed under paragraph 6(1)(a) of the
Act which reads:
6. (1) There shall be included in computing
the income of a taxpayer for a taxation year as income from an
office or employment such of the following amounts as are
applicable:
(a) the value of board, lodging and other
benefits of any kind whatever received or enjoyed by the
taxpayer in the year in respect of, in the course of, or by
virtue of an office or employment, except any
benefit
(i) derived from the contributions of the
taxpayer's employer to or under a registered pension plan,
group sickness or accident insurance plan, private health
services plan, supplementary unemployment benefit plan, deferred
profit sharing plan or group term life insurance
policy,
(ii) under a retirement compensation
arrangement, an employee benefit plan or an employee
trust,
(iii) that was a benefit in respect of the use
of an automobile,
(iv) derived from counselling services in
respect of
(A) the mental or physical health of the
taxpayer or an individual related to the taxpayer, other than a
benefit attributable to an outlay or expense to which paragraph
18(1)(l) applies, or
(B) the re-employment or retirement of the
taxpayer, or
(v) under a salary
deferral arrangement, except to the extent that the benefit is
included under this paragraph because of subsection
(11);.
[8]
It should be noted that none of the vehicles are
"automobiles" as that is defined under section 248 of
the Act. None of them could seat more than two people, and
the second seat appears to have been left in so that apprentices
could be trained by the Appellants who always worked alone with
only their vehicles, equipment and radios. They could call for
other DMOs or Service Technicians for help if they, in their
discretion, felt they needed them. That assistance would be
supplied on demand.
[9]
Thus the question is whether the Appellants received or enjoyed a
benefit in respect of, in the course of, or by virtue of their
employment in the form of driving their very job-specific
equipped vehicles to and from their homes in 1999.
[10]
In assessing, the Minister did not allege a benefit when the
Appellants went directly from their homes to a job site, rather
than to the premises where their desks were located. The
assessments were respecting those regular working days when the
Appellants drove from their homes to the premises where their
desks were located. But the Minister did assess for those same
days when the Appellants were also on stand-by. In addition, all
of the Appellants were subject at all times to being called to
work for emergencies which occurred when the men on stand-by
needed more help. Although the Appellants could refuse to attend
an emergency, none who was asked ever had.
[11]
These Appellants are the men that make the gas distribution
system in Saskatchewan work. There may be engineers, lawyers,
vice-presidents, managers, bill collectors, personnel staff,
stenographers, clerks, parts men and others who are employed in
great numbers, but all of them could leave work for days or weeks
and the system would operate. If these men ceased to work for a
day, one or more customers or even towns or cities would be
without natural gas to heat their homes or provide other
services. At temperatures of 30 º and 40 º below or
when natural gas or carbon monoxide leaks occur, a failure to
provide their services can mean life or death to consumers. Sask
Energy has 320,000 customers who are serviced with natural gas
and 64,000 kilometres of gas pipeline. TransGas operates the
compressor stations from the gas fields that dehydrate the gas
and compress it to 850 to 1000 pounds of pressure into TransGas
pipelines that range from 20 inches to 4 inches in diameter.
These pipelines carry the natural gas to Sask Energy outlets that
reduce the pressure for their pipelines and retail service to as
low as 4 pounds. The Hatton compressor station, where Mr. Harder
works from his Maple Creek home, is 16 acres in size. TransGas
employs about 80 DMOs. Sask Energy employs about twice that many
Service Technicians in 44 districts in Saskatchewan.
[12]
Each employer requests these employees to take that
employer's vehicles home with them. When the employees are on
stand-by they must live within 15 minutes of their
designated work station from the moment they are
called - this includes the time for getting up,
cleaning up, dressing, taking their home-stored instruments
to their vehicle and driving to that station. All of the
Appellants complied with that rule. However, they are not called
to their work stations or places when on stand-by. Rather they
are telephoned by a 24 hour clerk staffed service and directed to
go to the location where the emergency exists. Once there, he
determines the problem and deals with it. If the stand-by
Appellant can't deal with the problem himself, he calls out
other fellow DMOs or Service Technicians on an emergency basis to
help him. Examples were given such as:
1.
Pipeline blow outs when two men are required to turn off valves
which are 20 miles apart.
2.
The complete loss of natural gas service in 1999 to the Town of
Ituna at a temperature of - 20 or 30 º when air mixed
accidentally into the natural gas pipeline and the system had to
be bled, monitors reset and all pilot lights relit. This required
over 20 Service Technicians to attend (including
Mr. Anderson from Yorkton).
3.
The complete loss of natural gas service to the Town of Chaplin
in 1999 when the wind chill temperature was - 70 º where 20
Service Technicians also attended and had to go house to house to
restore heat (including Mr. Auckland from Moose
Jaw).
4.
The breaking of a 17 inch cylinder at the Hatton compressor
station which required replacement and repair of the engine
(among the DMOs was Mr. Harder, the DMO in charge from Maple
Creek).
In some rural areas
the calls per man on stand-by are as few as three every three
months. In Saskatoon and Regina there are often three per
stand-by shift. In rural areas the stand-by shifts for both
companies are generally about one week in every three. In both
Saskatoon and Regina the Sask Energy stand-by shifts are for one
day in every 14 with a second stand-by man also on call as a
back-up.
[13]
Mr. Kellan described the Service Technicians' work schedule.
He did not refer to paperwork. Rather he stated that they
maintain, service, and repair the Sask Energy pipelines and
services to homes and business. They respond to calls respecting
natural gas smells and carbon monoxide occurrences. They are
called out by individuals and by Fire Departments wherever these
occur. In addition, Fire Departments call them to fires to turn
off natural gas services at the fire sites. Mr. Hahn described
the DMOs work schedule and he did not refer to paperwork either.
Rather he stated that the DMOs operate and maintain TransGas'
pipeline systems and compressors. Their ordinary duties of
maintenance include weed control, painting various ground outlets
and signage. Both sets of Appellants do line finding for the
public doing construction or other digging. Dramatic examples of
what the Appellants do in the ordinary work day included Mr.
Anderson's description of being called to correct a carbon
monoxide situation in a restaurant in which 11 people became sick
and ambulances were called (but not the Fire Department), and Mr.
Scott describing how he and another Service Technician were
working together on a repair job on a 15 pound pressure service
system when fire burst out at the other workman's area and
went up and set Mr. Scott afire. He was saved when the other
Service Technician dragged him out, still afire. Routine
occurrences were described by Mr. Harder as including getting a
35 pound post pounder out of his truck to pound in sign posts or
fence posts along a pipeline, or stopping a construction job as
he drove varying routes to his shift at Hatton and discovered a
construction crew doing excavations within a foot of a TranGas
pipeline, or, in a different environment, Mr. Scott carrying 6
gas meters in his van for replacement purposes because the new
aluminium gas meters crack when they are struck and have to be
replaced at consumers' premises. The routine call outs for
Service Technicians are odour or pilot-light-out calls to
residences.
[14]
But the bottom line is that, while all except one of the
Appellants has an individual desk (not an office), and the one
remaining can use a long counter with others, even their usual
reports are not written up at the desks. They are written up in
their vehicles after each call or incident. Mr. Scott does
everything at his home and only uses his desk for the storage of
paper copies. No one, including the corporate officers, expected
the Appellants to be at their desks. Rather, they were expected
to be in their vehicles. Their vehicles are their work places.
They receive calls and directions on the radios in their
vehicles. All of their tools and instruments must be there. They
do their work from their vehicles. They call for help with radios
that belong in their vehicles. Even when Mr. Harder is at
Hatton, repairs to the 16 acre compressor station are done with
the tools in his vehicle and not by returning to the office
premises there for more equipment. Their employers want them to
take the vehicles home because in an emergency call, they respond
quickly with the vehicle which has all that they need.
[15]
Mr. Scott said it best when, in cross-examination, he stated
"Work starts when I get in the van". The vehicles are
the Appellants' workplace, whether they are paid or not. That
is why their employers want them to take them home. The desk or
premises at which they are allegedly stationed is superfluous to
their needs to carry out their employment in a modern high-tech
industry. Each, with his company vehicle, is self sufficient and
their employers designed it that way and chose men who can carry
out their jobs that way.
[16]
The vehicles, tools, and instruments (which are all owned by the
employers and are requested by the employers to be taken home by
the employees, but cannot be used for personal use), are the
employers' place of business in this case. Once in the
vehicle, the employees were on the job: they were in the
employers' premises and business place and could be called
there on the employers' radio in the vehicle and directed to
go anywhere their employer desired. The evidence is that they all
responded to such directions by their employers. While it is
clear that their work involved public safety, the Appellants'
actions were all done at the direction of their employers. This
included taking the vehicles to and from work, taking the
instruments into their homes, plugging the vehicles in during
cold months for instant responses and providing parking for the
vehicle.
[17]
The question then becomes - what is the benefit to the
employees? In the Court's view there was none. If they were
on stand-by they were required to respond to their employers'
directions. If they were not on stand-by, but they were in the
vehicle going to or from home and the radio was called in the
vehicle, they would naturally answer it. If the employer was
calling, it was in respect to the employer's business, while
they were in the employer's premises, ready to go, and with
all the necessary tools. They would have difficulty
refusing
to accept directions
from the employer even when going home. They could not refuse if
they were leaving home. The evidence is that none of the
Appellants ever refused to respond to an emergency, which is the
kind of call they would get if they were going home. Even though
the Appellants had the right to refuse in the latter
circumstance, the evidence is that they never have refused. From
a practical point of view, they never would refuse - an
emergency for the Appellants is or could easily become a life and
death situation for them if they were asking for help or for
others if another DMO or Service Technician or someone else was
calling for help. They would not refuse directions from their
employers in such circumstances.
[18]
Once in the vehicle, they were in the control of the employers.
At that point, the benefit was entirely the employers'. That
is why the employers asked the Appellants to take the vehicles.
For these reasons, the Court finds that the employees received no
benefit from the use of these vehicles.
[19]
For these reasons, the appeals are allowed. Each Appellant is
granted a full set of costs pursuant to the tariff for the
Informal Procedure, including costs of a hearing for two full
days consisting of four one-half days for each
Appellant.
Signed at Saskatoon, Saskatchewan, this
16th day of July, 2002.
"D. W. Beaubier"
J.T.C.C.
COURT FILE
NO.:
2001-3099(IT)I; 2001-3103(IT)I;
2001-3104(IT)I; 2001-3105(IT)I;
and
2001-3106(IT)I
STYLE OF
CAUSE:
Donald J. Anderson v. The Queen
Robert G. Auckland v. The Queen
Howard H. Harder v. The Queen
Wyatt D.A. Penner v. The Queen
Keith W. Scott v. The Queen
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
June 27 and 28, 2002
REASONS FOR JUDGMENT
BY: The Honourable Judge D.W.
Beaubier
DATE OF
JUDGMENT:
July 16, 2002
APPEARANCES:
Counsel for the Appellant: Curtis
Stewart
Counsel for the
Respondent:
Elaine Lee
COUNSEL OF RECORD:
For the
Appellant:
Name:
Michel Bourque and Curtis Stewart
Firm:
Bennett Jones
Calgary, Alberta
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-3099(IT)I
BETWEEN:
DONALD J. ANDERSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the
appeals of
Robert G. Auckland (2001-3103(IT)I), Howard H. Harder
(2001-3104(IT)I),
Wyatt D.A. Penner (2001-3105(IT)I) and Keith W. Scott
(2001-3106(IT)I)
on June 27, 2002 at Saskatoon, Saskatchewan
by
the Honourable Judge D.W. Beaubier
Appearances
Counsel for the
Appellant:
Curtis Stewart
Counsel for the
Respondent:
Elaine Lee
JUDGMENT
The appeal from the reassessment made under the Income Tax
Act for the 1999 taxation year is allowed, and the
reassessment is referred back to the Minister of National Revenue
for reconsideration and reassessment in accordance with the
attached Reasons for Judgment.
Costs are awarded to the Appellant pursuant to the tariff for the
Informal Procedure, including costs of a hearing for two full
days consisting of four one-half days.
Signed at Saskatoon, Saskatchewan, this 16th
day of July, 2002.
J.T.C.C.
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