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Citation: 2011 TCC 157
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Date: 20110311
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Dockets: 2010-1824(EI)
2010-1823(CPP)
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BETWEEN:
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NEIL DRADER,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent,
and
JOSEPH CLAUDE WAGNER,
Intervener.
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REASONS FOR JUDGMENT
Little J.
A. FACTS
[1]
The Appellant
is a Partnership between Neil Drader, Calay Drader and Doug Drader. Neil Drader
represented the Partnership in this appeal.
[2]
The Partnership
owns a mobile home trailer park and campground located south of Duncan on Vancouver Island, British Columbia. The park is known as
the Malahat Mountain Meadows RV Park and Campground and it is located at 304 Trans Canada
Highway,
Malahat, BC (the “Park”).
[3]
The
principal operator of the Park for the Partnership was Neil Drader.
[4]
In
early 2007, Joseph Claude Wagner (the “Worker”) became a guest at the Park and
stored his truck and trailer at the Park. The Worker also stored his gardening
equipment at the Park.
[5]
The
Appellant maintained that originally he retained the Worker to provide
gardening services for the Park.
[6]
Throughout
the summer of 2007, the Worker provided gardening services to the Park and
invoiced the Park for the gardening services.
[7]
The
Appellant maintained that the Worker used his own gardening equipment to
provide the gardening services. The Appellant stated that the gardening
equipment owned by the Worker included his truck, trailer, lawn mower, leaf
blower and chain saw.
[8]
The
Worker was classified as the Park manager.
[9]
The
Worker lived in the Park before and during his tenure as Park manager.
[10]
The
Worker hired additional helpers to carry out casual labour at the Park.
[11]
The
Worker paid cash to the helpers and was reimbursed by the Appellant for these
payments.
[12]
The
Appellant maintained that, from October 1, 2007 to September 30, 2008
and from October 1, 2008 to December 31, 2008 (the “Periods”), the Worker was a
Contractor who provided gardening services for the Park, administrative duties,
rent collection, labour and cleaning duties, customer relations, tenant
recruitment, evictions, dealing with complaints, and moving recreation vehicle
trailers around the Park with his truck.
[13]
The
Minister of National Revenue (the “Minister”) maintained that the Worker was an
employee of the Partnership during the Periods.
[14]
The
Minister also maintained that the Appellant made the Worker an employee from
January 1, 2009 to May 19, 2009 when the employment was terminated. In the
appeal that was filed by the Appellant with the Canada Revenue Agency (the
“CRA”), the Appellant stated that he takes no position in regard to the CRA ruling
for the period January 1, 2009 to May 19, 2009.
[15]
The
Minister maintained that the majority of tools and equipment required by the
Worker to perform his duties were provided by the Appellant. The evidence
indicated that there were tools owned by the Partnership, there were various
gardening tools owned by the Worker and there were tools and equipment owned by
Drader Environmental Services Ltd..
[16]
Drader
Environmental Services Ltd. was an incorporated company owned and operated by Neil
Drader.
[17]
The
Worker owned and used a personal cellular phone during the Periods. The costs
of the cellular phone were paid for by the Appellant.
[18]
Neither
the Worker nor the Appellant recorded the Worker’s hours.
[19]
In
2007 and 2008, the Worker was paid $3,000 per month. Sometime in late 2008, the
payment made to the Worker was increased to $3,600 per month.
[20]
In
the 2009 year, i.e., commencing on January 1, 2009, the Worker was paid as an
employee of the Appellant at the rate of $4,000 per month.
[21]
The
Minister maintained that the Worker was accountable to the Appellant in the
performance of his duties. The Appellant does not agree with this statement.
[22]
The
Minister maintained that the Worker was not free to provide his services
elsewhere. The Appellant does not agree with this statement.
[23]
The
Appellant performed the duties that were performed by the Worker for the
Partnership prior to October 1, 2007 and after the Worker’s employment was
terminated on May 19, 2009.
[24]
After
the Worker’s employment was terminated by the Appellant on May 19, 2009,
the Worker met with officials of the Department of Human Resources and Skills
Development Canada (“HRSDC”) and advised the officials of HRSDC that he had
been an employee of the Appellant for the following periods: October 1, 2007 to
September 30, 2008 and October 1, 2008 to December 31, 2008. HRSDC advised
officials of the CRA of its decision.
[25]
By
letter addressed to the Appellant and dated September 30, 2009, officials of
the CRA stated that they had received a request on the tax status of the Worker
from officials of HRSDC. The letter from the CRA to the Appellant states, in
part, as follows:
Based on our analysis,
we have ruled that for the periods under review, Joseph Claude Wagner was an
employee and his employment was insurable under paragraph 5(1)(a) of the Employment
Insurance Act and pensionable under 6(1)(a) of the Canada Pension Plan.
(Attachment – Notice of
Appeal)
B. ISSUES
[26]
The
issue under the Employment Insurance Act (the “Act”) is whether
the Worker was employed in insurable employment during the Periods for the
purposes of the Act.
[27]
The
issue under the Canada Pension Plan (the “Plan”) is whether the
Worker was employed in pensionable employment during the Periods within the
meaning of subsection 2(1) and 6(1) of the Plan.
C. ANALYSIS AND DECISION
[28]
An
examination of what Canadian Courts have stated to constitute a contract of
service is required. Canadian Courts have developed a series of tests focusing
on the total relationship of the parties, with the analysis centered around
five elements:
(a) degree of
control and supervision;
(b) ownership of
tools;
(c) chance of
profit;
(d) risk of loss;
and
(e) intention.
A. Control
[29]
The
Appellant maintained that he did not supervise the Worker’s activities on a
day-to-day basis.
[30]
The
Appellant did not give the Worker a schedule during which he had to work and
the Worker was free to provide services on his own schedule.
[31]
The Appellant
said that the Worker was able to hire and pay casual labourers to work at the
Park and the Appellant reimbursed the Worker for the payments made to the
casual labourers.
[32]
The
Appellant also maintained that the Worker was able to provide services to other
organizations;
[33]
In
his argument, the Appellant’s lawyer, Mr. Connolly, said:
Well, my submissions on
that would be, that comes down to an issue of credibility and whether you
believe that Mr. Wagner truly thought he was entering an employment
relationship. If you believe Mr. Drader’s evidence as to who drafted the draft
contract to the handshake deal he referenced, then I still think intention can
be a factor to consider. …
(Transcript, page 3,
lines 6 to 11)
[34]
With
respect to Mr. Connolly’s comments, I wish to state that, as far as credibility
goes, I accept the testimony of Mr. Drader and I do not accept the testimony of
the Worker. I find that Mr. Wagner’s evidence lacks credibility in connection
with the relationship of the parties and in other items which I will refer to
in my Reasons.
[35]
With
respect to control, Mr. Connolly said that it is not credible to believe that
the Worker was being directed by the Appellant on a day-to-day basis with
respect to the operation of the Park.
[36]
On
this point, I accept the evidence of Mr. Drader. I do not find the evidence of
the Worker re control to be credible.
[37]
I
will now deal with the relationship between the parties and the method of
payment of the Worker. The Appellant filed Exhibit A-2. Exhibit A-2 contains copies
of forty-one cheques issued primarily to the Worker from the bank account of
Malahat RV Park and signed by Mr. Drader. (Note: I use the word
“primarily” because some of the cheques were issued to Kywo Industries/ Claude Wagner).
At Exhibit A-1, Tab 3, there is a letter dated May 16, 2007. The letter
contains a number of statements from the Worker. I cite the following:
The Times [this is a reference to the Victoria newspaper] pays me as Kywo Industries, c/o Claude Wagner. If I bill
you under Kywo I have a GST number and have to apply it.
[38]
After
reviewing the forty-one cheques I wish to note the following cheques:
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Date
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Cheque No.
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Description
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Amount
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1
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Dec. 29/07
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0273
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Contract work – December 2007
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$2,500.00
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2
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Dec. 14/07
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0266
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Contract work – October 2007
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$2,500.00
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3
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Dec. 14/07
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0272
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Contract work – November 2007
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$2,500.00
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4
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Feb. 15/08
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0279
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Contract work – January 2008
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$2,500.00
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5
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Feb. 15/08
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0281
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Prepaid for February contract
work
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$2,500.00
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6
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Apr. 14/08
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0297
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Contract work management – March
2008
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$2,500.00
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7
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May 25/08
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0309
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Contract work – May 1 to May 15
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$3,396.00
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8
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May 25/08
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0310
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Contract work – April
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$3,414.34
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9
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June 19/08
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0318
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Contract work – June 1 to
June 15, 2008
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$3,634.96
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10
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July 24/08
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0324
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Contract management and labour –
July 1 to July 24, 2008
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$5,180.00
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11
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July 31/08
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0337
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July 15 to July 31, 2008
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$2,925.00
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12
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Aug. 25/08
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0342
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Contract management
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$4,160.00
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13
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Sept. 17/08
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0350
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Contract management – September 1 to September 15, 2008
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$3,629.00
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14
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Sept. 12/08
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0349
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Contract management, labour part
– August 22 to August 31, 2008
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$2,460.00
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15
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Oct. 15/08
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0356
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Contract management and costs – September 15 to September 30, 2008
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$2,991.00
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16
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Oct. 15/08
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0355
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Contract management – October 1
to October 15, 2008
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$1,500.00
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17
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Nov. 7/08
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0359
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Contract management services
including out-of-pocket purchases
(Note: This cheque was payable to Kywo
Industries. This company was identified by the Worker as a company whose
shares were owned by him).
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$3,287.84
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18
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Nov. 24/08
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0360
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Extra bonus, holiday pay
(Note: This cheque was payable to Kywo
Industries/Claude Wagner).
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$3,300.00
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19
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Undated
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0362
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Contract work, supplies, etc. –
November 1 to November 15, 2008
(Note: This cheque was payable to Kywo
Industries/Claude Wagner).
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$2,346.00
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20
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Dec. 3/08
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0364
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Contract management – per invoice November 15 to December 1, 2008
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$2,821.17
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21
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Dec. 15/08
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0366
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Contract management – December 1, to December 15, 2008
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$1,800.00
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22
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Dec. 31/08
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0367
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Contract management – December 15 to December 31, 2008
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$1,500.00
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(Note: All of these cheques
were issued after the Worker presented invoices to the Appellant).
Comment: The above cheques were all of the
cheques issued by the Appellant to the Worker during the Periods in connection
with the services that he provided to the Appellant as a “Contractor”. (Note:
There were also some cheques issued by the Appellant to reimburse the Worker
for expenses).
[39]
From
an examination of this evidence, it will be noted that all of the cheques indicated
refer to Contract Work for a period, i.e., the work provided to the Appellant
as a Contractor. In my opinion, these cheques clearly indicate that the Worker
was a Contractor and not an employee of the Partnership during the Periods. If
the Worker were an employee, the cheques would probably say “salary for the
period” or “wages for the period”.
[40]
With
respect to the relationship of the parties, it should also be noted that the
Appellant paid the Worker by cheque, without deductions for Income Tax,
Employment Insurance and Canada Pension Plan and the Worker accepted this
arrangement from October 1, 2007 to December 31, 2008.
B. Tools
[41]
With
respect to tools, Mr. Connolly noted that the Worker had some tools and the Appellant
had some tools and there was really no clear breakdown of one side bringing all
the tools to the table. Mr. Connolly said:
… And I’d submit that,
in these circumstances, tools and equipment really isn’t going to be of much
assistance.
(Transcript, page 9,
lines 2 to 3).
[42]
In
his argument, Counsel for the Minister noted that the Appellant:
… has the burden of
demolishing the Minister’s assumptions. That’s the general proposition. The
Minister’s assumptions included the fact that the worker primarily used the
tools of the appellant. So, I submit with the evidence before the court, the appellant
hasn’t demolished that assumption. So that’s the general comment.
… He mentioned on two occasions he used his
own tools, but his evidence was basically he used the park's, or the environmental
company's tools. And so I would submit that that evidence wasn't destroyed or
demolished, or undermined in cross-examination. And so I submit, on the tools
question, that evidence supports the proposition that the worker was using the
employer's tools, and that supports the finding of an employment relationship.
…
(Transcript, page 20,
lines 9 to 15)
[43]
I do
not agree with the position as outlined by Counsel for the Minister. In my
opinion, the Appellant did demolish the Minister’s assumption on this point. I
accept the evidence of Mr. Drader and I do not accept the evidence of the
Worker because the Worker’s evidence was not credible. In connection with the
Worker’s evidence, I note that the Worker was charging the Partnership for the
use of the Worker’s tools. I refer to the following notes found at Exhibit A-1,
Tab 2. I cite the following:
Invoice May 1 to 15,
2008
Claude Wagner’s tool fee $125.00
Invoice June 1 to 15,
2008
Tool rental $225.00
Invoice July 25 to 31,
2008
Tools $225.00
Invoice August 22 to 31,
2008
Equipment $225.00
Invoice September 15 to
September 30, 2008
Equipment $225.00
Invoice October 15 to
October 31, 2008
Equipment
rental/September $225.00
Invoice November 1 to 15,
2008
Equipment rental $225.00
[44]
In
other words, the Worker testified that he primarily used the tools and
equipment owned by the Appellant. However, the invoices prepared by the Worker indicate
that the Worker was charging the Partnership either $125.00 or $225.00 per
month for the use by the Partnership of the Worker’s tools. This is another
example which indicates that the Worker’s evidence was unreliable and not
credible. I reject the Worker’s evidence on this issue.
[45]
I
prefer the evidence of Mr. Drader on this point and I reject the evidence of
the Worker because his testimony was not reliable and was not credible.
C. Intention
[46]
There
was no common intention here because the Appellant claims that the Worker was a
Contractor during the Periods and the Worker claims that he was an employee
during the Periods.
[47]
It
should also be noted that the relationship between the Appellant and the Worker
appears to have fallen apart and the Worker commenced a “vendetta”
against Mr. Drader. I cite the following:
(a) The
Worker sent an e-mail dated April 10, 2009 to the members of the Partnership
(Exhibit A-4). The e-mail contained the following comment:
The present situation is
as untenable today as it was in Oct./08 when I point out to MMM the incredible
conflict of interest between myself as gen. mgr., and partner Neil Drader in
that although I took over his responsibilities as gen. mgr., he continues to
draw a most substantial salary for the sole purpose of opposing everything I
do, the latest his refusal to install a sewer pipe (Cost $1,000) that will
negate thousands in revenue to wit the cancellation of a Quebec booking company
promising up to 150 reservations?
(b) The
Worker also sent an e-mail to Mr. Drader dated April 17, 2009 (Exhibit A-3).
This e-mail contained a number of comments that were critical of Mr. Drader. I
cite the following:
3. Not
true the entire crew of addicts and pushers you had on the payroll robbed you
blind and did nothing to stop it?
…
You [referring to Mr. Drader] have no business experience or acumen. Nothing and if not
where would you have acquired such experience? Who did you ever work for so you
can glean experience? No one.
Your daily decision
making is oh so flawed.
(c) After
the Worker was fired, he went to HRSDC and claimed that he was an employee
during the Periods.
(d) The
Worker also sued Mr. Drader in Small Claims Court and recovered some money from
Mr. Drader.
(e) The
Worker also brought an action against Mr. Drader under the Employee
Standards Act.
(f) The
Worker attempted to report Mr. Drader under the Human Rights Act
but he discovered that he was too late to file a complaint under that Act.
[48]
Based
on the evidence and the comments made in the e-mails, I have concluded that the
Worker was so bitter regarding his relationship with Mr. Drader that he
did everything that he could do to damage Mr. Drader. The comments referred to
above are a further reason for not accepting the testimony of the Worker.
[49]
In
conclusion, I accept the evidence of Mr. Drader and I reject, in its entirety, the
evidence of the Worker because, in my opinion, the Worker’s evidence on all of
the relevant issues was not credible.
[50]
I
have concluded that the Worker was not an employee of the Appellant but was an
independent Contractor during the Periods for the purposes of the Employment
Insurance Act and the Canada Pension Plan.
[51]
The
Appellant’s appeals are allowed, without costs.
Signed at Ottawa,
Canada, this 11th day of March 2011.
Little
J.
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