Citation: 2011 TCC 56
Date: 20110128
Dockets: 2010-1021(EI)
2010-1022(CPP)
BETWEEN:
OLSON'S WILD WEST BUFFALO RANCHES LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
(Delivered from the Bench on January 28,
2011 at Calgary, Alberta)
Hershfield J.
[1] The Appellant
appeals a decision issued in accordance with subsection 27.2(3) of the Canada
Pension Plan (the “Plan”) and subsection 93(3) of the Employment
Insurance Act (the “EIA”) which determined that a worker, Arnold
Pelly (“Mr. Pelly”), was engaged in pensionable and insurable employment on the
basis that the requirements of a contract of service had been met and that an
employer-employee relationship thereby existed during the period from September
16, 2008 to February 10, 2009.
[2] It is not in
dispute that the Appellant engaged Mr. Pelly’s services during the subject
period.
[3] The worker, Mr.
Pelly, did not intervene in the proceedings and was not called as a witness by
the Respondent. Indeed, the Respondent called no witnesses and gave no evidence
and relied solely on the assumptions in the Reply to the Notice of Appeal
(“Reply”).
[4] The Appellant called
Mr. Thomas Olson (“Mr. Olson”) as a witness in the appeals. Mr. Olson is a
lawyer practising law in Calgary. Mr. Olson has more than one law degree and for the most
part his testimony was credible, although clearly not disinterested. He is the
sole shareholder, officer and director of Olson’s Wild West Buffalo Ranches
Ltd. (“Buffalo Ranches”) which is located in Calgary and started operating in 2008.
[5] The Appellant
introduced two exhibits which were identified and addressed by Mr. Olson. The
first is a copy of a written contract which is entitled “Ranch Hand Services
Agreement”. It is between the Appellant, Buffalo Ranches, and Mr. Pelly. It was for an initial
term of three months and according to the exhibit it was entered into on
September 17, 2008. The contract was extended for an additional two month
period.
[6] The copy of the
contract presented had been executed by the Appellant but it had not been
signed by Mr. Pelly. The second exhibit was a compilation of time sheets for
the period of Mr. Pelly’s engagement. It bore the heading “Employee Weekly Time
Sheet”. Entries by Mr. Pelly commenced on September 16, 2008.
[7] Dealing with the agreement, its preamble reads as follows:
Whereas:
A. Wild West is engaged in the
business of providing staff for custom ranching and farming services; and
B. Wild West wishes to retain the Contractor to provide various
services to corporations (the “Ranch”) owned by the Olson family, including
Pine River Ranches Ltd. and Sweet Grass Ranch Ltd. which carry on the
ranching business in Pine Creek, Manitoba.
[8] In his testimony,
Mr. Olson mentioned another ranch that was part of the ranch owner group, Bison
Conservation Ranches Ltd.. I will refer to these apparently related companies
as the “ranch owners”. Buffalo Ranches was not one of those owners. Buffalo
Ranches provided certain services to the ranch owners which involved amongst
other things, engaging workers to work on the so-called “ranch” owned by the
ranch owners. At this point I also note that Mr. Olson testified that the ranch
owners had acquired the central portion of the ranch from a landowner, Kelly
Schmidt (“Mr. Schmidt”) or his mother.
[9] In his testimony
Mr. Olson related the following events:
·
The operation of the
ranch owners was just commencing when Mr. Pelly was retained. The ranch was to
be a livestock operation consisting of raising buffalo on a 20,000 acres track
of land north of Dauphin, Manitoba in the Duck
Mountain area of Manitoba. The operation was undertaken with the
cooperation of the Manitoba government. The idea was to create a
natural ecosystem for buffalo to thrive. It would serve as a buffalo conservation
area where buffalo could graze in a free range manner. It would also be a
profit-seeking venture on the basis of buffalo meat having a market for
consumption.
·
Initially, the
operation needed fencing to contain the arrival of the buffalo. The first
containment was to be a fenced area of 4 square miles. It was to be a steel
fence in an area of difficult terrain. Buffalo Ranches was looking for people
capable of building the required fencing. Buffalo Ranches, being centered in Calgary, was looking for people who could undertake such a
project without supervision.
·
Although Mr. Olson knew
Mr. Pelly was a farmer in the area, he did not know the extent of Mr. Pelly’s
farming operation or activities. He knew that he had equipment such as a
tractor and that he was able to handle and help maintain such heavy equipment. More
importantly Mr. Pelly knew the terrain which Mr. Olson described as difficult
and hostile. It had tremendous drainage from the Duck
Mountains to Lake Winnipegosis which meant a lot of swampy areas, bogs
and streams with few roads.
·
Mr. Olson was
introduced to Mr. Pelly by Mr. Schmidt who had used Mr. Pelly to provide similar
services as were going to be required at the ranch. Mr. Schmidt recommended Mr.
Pelly to Mr. Olson as someone he had worked with over a 10 year period as an
independent contractor and as a person who knew the terrain, new the area and
was quite experienced and had the skills required to undertake or assist in locating
and constructing the required fencing on such difficult terrain.
·
Mr. Olson met Mr. Pelly
personally to interview him with respect to the engagement. He testified that
he went over the written contract with him and that he believed Mr. Pelly understood
its terms, the work being contracted and the nature of the relationship. Mr.
Pelly was given a choice of working for $10.00 an hour as an employee or $12.00
an hour as an independent contractor. Mr Olson said that Mr. Pelly knowingly
accepted the engagement as an independent contractor at $12.00 an hour and that
he understood the implications of the nature of the relationship being
established having been engaged by Mr. Schmidt in a similar capacity. Mr. Pelly
confirmed what Mr. Schmidt had told him, namely that he took gross pay with no
deductions and he took care of his own expenses. He said Mr. Pelly knew he was
expected to sign the written contract that he went over with him and that he confirmed
the nature of the relationship. Mr Olson did not know however whether Mr. Pelly
had ever signed the contract. He had never seen a copy with Mr. Pelly’s
signature.
·
The
specific terms of a written contract provided for the following services:
1.
Care for and feed all
livestock owned by the ranch;
2.
Maintain in a good
state of repair and rebuild, as necessary, all fences on or surrounding the
ranch;
3.
Assist in all
operational and maintenance matters on the ranch including operation of ranch
machinery and vehicles (the “machinery”);
4.
Ensure that all
machinery, equipment and other vehicles are operating in accordance with the
safety program; and
5.
Perform other services
related to the operation of the ranch.
·
The contract required
the worker to create a written safety program for the safe performance of the
services and to follow that safety program, as well as the safety program of
the ranch itself.
·
The contract also
provided that the worker had to prepare daily timesheets and daily journals,
although the viva voche testimony of Mr. Olson was that records
were assembled less frequently.
·
The contract included
obligations to provide the on-site tools needed for his services. It required
compliance with legal obligations applicable to independent contractors such as
workers’ compensation, income tax, CPP and employment insurance. Termination
was provided for from either side on 14 days notice.
·
Mr. Pelly was one of
eight workers engaged as independent contractors who were engaged from time to
time under similar contracts to do similar work.
·
Buffalo were brought to the ranch in late October
and brought in on a regular basis in November establishing a herd of some 2,000
head.
·
The first containment
was needed to be completed in time for the arrival of the buffalo. A second
phase of the fencing project was at the southern end of the ranch. It commenced
construction once the first containment area was completed. Mr. Pelly would
have worked on this phase, as well, and his contract was extended by two months
to continue to do so. During the period following the arrival of the first buffalo,
his engagement was to include care and feeding the livestock but Mr. Pelly
refused such work even though at the initial interview he said he would.
·
The fencing operation
required a driller and a post pounder which Mr. Pelly could operate. As well, a
tractor was required to haul this equipment to the fencing locations. The
Appellant owned the post pounder and driller and owned a tractor to do the
hauling as well as a truck which was used to take fencing workers from ranch
headquarters to the fencing locations.
·
Mr. Olson testified,
however, that he relied on workers to provide a tractor and truck on occasions
where the Appellant’s tractor and truck were not available due to other
requirements on the ranch.
·
The fencing was
comprised of steel posts and steel wire mesh and stood 6 feet high and
depending on the terrain had to be sunk 6 additional feet meaning that the
steel posts were 12 feet long, cut from 30 foot lengths. Mr. Pelly refused to
be involved in the cutting of the steel posts. The posts were 25 feet apart and
were driven into the ground by the pounder. The drill was used to drill through
rocky terrain where pounding was insufficient to drive the posts to a desired
depth.
·
Mr. Pelly was
experienced with the equipment and provided his own hand tools such as wire
cutters. At this point, I note that it must be acknowledged that, living in
Alberta and not being on-site, some of Mr. Olson’s evidence might only be
surmised or hearsay. However, in addition to the personal interview, he
testified that he had some 10 or so personal telephone conversations with Mr.
Pelly and that much of his knowledge of Mr. Pelly’s work would have come from
those conversations. As well, the ranch owners or a person associated with
ranch owners, as well as a manger, could check on the status of the fence. The
work done confirmed that Mr. Pelly was up to the task. It was the contractors
like Mr. Pelly that worked out the exact locations and dealt with obstacles
like crossing rivers, going through or around bogs or trees. These were people retained
to produce the desired result based on their know-how.
·
As noted, Mr. Olson
testified that the tractor and truck owned by the company were not always
available to use on the fencing project. The tractor for example was needed to
move bales of hay for feeding the herd. As well, there were other operations
although little use of the ranch’s equipment could be attributed to those
operations; namely, crop growing and seeding hay. These were also undertaken by
independent contractors who were paid to provide the planting and harvesting services
in the case of crops and the planting, cutting and baling services in the case
of hay. Local farmers provided these services as independent contractors. Mr.
Pelly never provided any such contractor services. Still, there were occasions
when the ranch’s tractor or truck was not available for the fencing project, and
in that event workers were expected to provide same. Since the other
contractors, like Mr. Pelly, seem to be farmers in the area, provision of such
equipment did not appear to be a problem. In any event, Mr. Pelly provided his
tractor on three occasions and received $100.00 per day for its use. His truck
was provided on occasion, as well, and he was given a per kilometre
reimbursement in respect of such use. These occasions and charges are shown on
the time sheets.
·
Mr. Olson testified that
the three times that the Appellant used Mr. Pelly’s tractor was not indicative
of the number of times that it needed to use an independent contractor’s
equipment. He testified that Mr. Pelly’s tractor was not reliable. Accordingly,
other independent contractors’ tractors would be used.
·
Mr. Olson testified
that Mr. Pelly was free to come and go in terms of start times and quitting
times and even what days he would work. The timesheet records did show some
variations in start time and quitting time and on a few occasions showed reasons
why the worker did not work on a given day.
·
The contract also had a
provision whereby the Appellant would pay Mr. Pelly a bonus or bonuses at such
times and at such amounts as it may determine in its sole discretion. Mr. Olson
testified that this was there to reward good work and that Mr. Pelly never
earned such a bonus while other contractors like Mr. Pelly did earn such
bonuses.
·
Some time after Mr.
Pelly was retained, a ranch manager was retained and the ranch manager approved
time sheets submitted by the worker on two occasions. Mr. Olson testified,
however, that the manager was retained because of her experience and education
relating to dealing and interfacing with the government and livestock
physiology. She was not a field person and although she did drive workers out
to the fencing sites once she was hired and when the ranch vehicle was
available, she had no responsibilities in terms of supervising Mr. Pelly’s work.
He was retained, like others, because he knew how to build a fence in this
difficult terrain. She would have no control over when their work would start
or finish or whether they would work at all on a given day.
·
Mr. Olson testified
that if a worker like Mr. Pelly did not get a ride to a fencing site with the
company truck, then he would drive to the site on his own and not be reimbursed
for any fuel costs.
·
Mr. Olson also
testified that hourly rates were subject to be negotiated by each contractor and
that on occasion rates were increased when a worker negotiated such an
increase. He testified that other workers did provide the other services
contemplated by their written agreements which were the caring and feeding of
livestock which would include moving bales of hay. However, he testified that
these were farmers who did their own work first on their own farms first.
·
Mr. Olson did say that
one of the ranch owners would have attended at fence building locations but that
would only be to check on the status of the project.
·
Mr Olson said that Mr.
Pelly was free to work the times he was able, was free to take on other work
and could hire his own helpers. He testified that, in fact, Mr. Pelly proposed
to hire a helper who was interested in assisting with the fencing work but the
helper chose to be retained directly by the Appellant.
·
Addressing the
timesheets being headed “Employee” he said that was just the form the Appellant
happened to provide; it was not indicative of the relationship. An independent
contractor’s invoicing record would have looked the same and the parties treated
them as invoices. With the exception of the December timesheet there were no
totals on the time sheets. Monthly timesheet summaries that showed total hours
with calculations of amounts owed and paid were part of the timesheet exhibit
but it would appear that these monthly summaries were prepared by the
Appellant. The copy of the December timesheet had a photocopy overlay that
appeared to be Mr. Pelly’s calculation of the amount owed to him and it included
a one day tractor rental fee and subtracted out advances received and fuel
taken. That can more readily be seen as a true invoice. It was approved and the
summary sheet for the month showed the same calculations and same amount owing.
[10] The Respondent, not
having called a witness, relies entirely on the assumptions stated in the Reply
which are as follows:
(a) the Appellant operated a bison
ranch;
(b) the Appellant
provided a resident ranch manager (hereinafter “the manager”);
(c) the Worker
was hired as a labourer(sic) and his duties included fencing;
(d) the Appellant
produced an unsigned written agreement between the Worker and the Appellant
(hereinafter “the Agreement”);
(e) the Worker did
not provide all of the services detailed in the Agreement;
(f) the Worker performed
his services at the Appellant’s jobsite;
(g) during the
period under review, there was no livestock at the jobsite;
(h) the Worker
earned a set wage of $12.00 per hour;
(i) the Worker
did not invoice the Appellant;
(j) the Manager
determined the Worker’s start and finish times;
(k) the Worker
normally started work between 8:00AM and 9:00AM and normally finished around
5:00PM;
(l) the hours
of work were dependent on the weather and the work to be completed;
(m) the Worker kept
a record of his hours worked and submitted timesheets to the Appellant;
(n) the Manager
instructed and directed the Worker;
(o) the Worker
reported to the Manager on a daily basis;
(p) the Manager
supervised the Worker;
(q) the Worker
normally worked as part of a crew;
(r) the Appellant
determined the safety rules;
(s) the Worker did
not develop his own safety plan;
(t) the Manager
was required to approve any leave;
(u) the Worker did
not hire his own helper or replace himself;
(v) the Worker did
not work for others while performing services for the Appellant;
(w) the Appellant
provided all of the tools and equipment required including the work location,
truck, tractor, post pounder and driller;
(x) normally the
Manager would transport the crew, including the Worker, to the jobsite;
(y) the Worker
was not required to provide any tools or equipment;
(z) the Worker
provided his own truck for a short period when the Appellant’s truck broke
down;
(aa) the Appellant
paid the Worker a mileage allowance for the use of his truck;
(bb) the Worker also
provided his own tractor for two days;
(cc) the Appellant
used the Worker’s tractor because it had specialized equipment;
(dd) the Appellant
paid the Worker a daily amount for the use of his tractor;
(ee) the Worker did
not incur any expenses in the performance of his duties;
(ff) the Appellant
provided all of the supplies and materials required;
(gg) the Appellant
reimbursed the Worker if he purchased any supplies;
(hh) the Worker did
not have a chance of profit or a risk of loss;
(ii) the
Worker’s intention was that he was an employee;
(jj) the Agreement
was not representative of the terms and conditions of the Worker’s employment
with the Appellant;
(kk) the Worker
did not act in the manner of a person in business;
(ll) the Worker did
not keep business books and records;
(mm) the Worker did not
charge the Appellant GST, and
(nn) the Worker
was not in business for himself while performing services for the Appellant.
[11] It is apparent that
many, if not most, of the Minister of National Revenue’s (the “Minister”)
assumptions were made in reliance on the unsworn assertions of persons such as Mr.
Pelly who were not called as witnesses.
Appellant’s Arguments
[12] Appellant’s counsel referred
me to the Supreme Court of Canada decision in Hickman Motors Ltd. v. Canada and to the Federal Court of Appeal
decision in Pollock v. R. as
authority for asserting that her job was to demolish the relevant assumptions
of the Minister.
[13] She argued that Mr.
Olson’s testimony that the terms of the written contract accurately set out the
agreement between the Appellant and Mr. Pelly, was uncontradicted and must be
taken as accurately setting out the terms of the engagement regardless of
whether Mr. Pelly signed it or not. She pointed out that there was no evidence
to show he did not sign it, only evidence that the Appellant did not have, and
had not seen, a signed copy.
[14] She argued that any apparent
control over the worker, Mr. Pelly, was simply to monitor that the result was
in accordance with the requirements of the project. She relied on the Federal
Court of Appeal decision in D&J Driveway Inc. v. M.N.R. as authority for saying that such
monitoring could not be confused with control in the context of the control test
in Wiebe Door Services Ltd. v. M.N.R..
[15] She argued that the
fencing project was capable as being seen as a distinct project that was not
inherently part of the Appellant’s business. Such distinct projects could more
readily be treated as being undertaken by an independent contractor working for
his own account in a separate business. While she referred to this initially as
not meeting the integration test, she urged that the argument applied equally
to the question as to whether Mr. Pelly might be seen as having his own
business as envisioned by the 2001 Supreme Court of Canada decision in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc..
[16] She relied on a
number of cases that she argued were sufficiently similar on the facts to those
in the case at bar to guide me in the application of the Wiebe Door tests
and to come to a conclusion here that favoured a finding that the relationship between
Mr. Pelly and the Appellant was one of independent contractor. At this point, I
find no value in referring to any of those authorities. Each case must be decided
on its own facts.
[17] She argued that if
it was a close call, I should find that the intention of the parties should
govern the nature of the relationship. She cited the 2006 Federal Court of
Appeal decisions in Royal Winnipeg
Ballet v. M.N.R. and City Water
International Inc. v. The Queen as authorities for this position. In addition to arguing,
as noted above, that the written contract must be taken as accurately
describing the nature of the relationship, she argued that, at least, it must
be seen as evidencing the intentions of both parties. The intention of Mr. Pelly
is demonstrated by his acceptance of the manner in which he was paid with no
withholdings and no benefits.
[18] Addressing the Wiebe
Door tests, specifically, she made the following arguments:
· Mr. Pelly knew the
terrain and was relied on to work independently without supervision in the
construction of the fence.
· He was free to decline
work. He declined to feed or care for livestock. He declined cutting steel
posts.
· He was not required to
be at any particular location at any particular time. If he arrived in time to
be shuttled to the fencing location he might be driven there in the Appellant’s
vehicle or he might be expected to drive others if the Appellant’s vehicle was
not available or he could go to the fencing site directly on his own if he
chose to arrive late. He was free to start work late and end early or not work
at all. There was evidence on the timesheets reflecting this freedom. There were
no minimum hour impositions or minimum output requirements.
· As to tools, there was
a requirement for the provision of hand tools and an expectation for the
provision of truck and tractor as needed.
· As to chance of profit
he could earn more by working more and earn a bonus if his work warranted it.
He could negotiate a higher hourly rate. Others earned bonuses and negotiated a
higher rate. Cases were cited where bonus provisions were found to be factors
pointing to a chance of profit as were cases such as the 2010 decision of
Justice Boyle of this Court in Labrash v. M.N.R. where chance of profit was said to
include increasing income by increasing work time. Mr. Pelly’s contract also allowed
increased profit if he was willing to care for and feed the livestock. He had
chances to use his tractor to earn more. He was free to pursue work elsewhere.
· Mr. Pelly was
responsible for damage to his equipment, tractor and truck, if and when he used
them in the performance of his work on the ranch. He had to indemnify the
Appellant for any damage to ranch property as per clause 13 of the written
agreement.
· As to the question of
whether Mr. Pelly had his own business, the Appellant relies largely on Mr.
Olson’s testimony that Mr. Pelly represented himself as a person in business
for himself being a person experienced and knowledgeable in constructing
fencing in this difficult terrain. He had worked as an independent contractor
for others and promoted his services on that basis. He agreed to invoicing without
GST because his income was under $30,000.
[19] Referring to the
assumptions, Appellant’s counsel went through each assumption and demonstrated
how the Appellant had sufficiently answered them thereby making a prima facie
case as to the nature of the relationship between the Appellant and Mr. Pelly
as required by the Supreme Court of Canada in Hickman Motors.
[20] Examples of negating
assumptions include: there was no ranch manager during most of the first term
of the contract and when she arrived she did not determine the worker’s start
and finish times or instruct or direct him; the worker did not report to her
daily or need her approval not to work; she did not supervise his work; the
worker was not a mere labourer; there were livestock at the jobsite during the
period under review; the worker did invoice the Appellant; the hours of work
were not solely dependent on the weather; the worker did provide tools, some as
required and some as expected on an increased compensation basis.
Respondent’s Arguments
[21] The Respondent’s
counsel relies on Sagaz and argues that the totality of the evidence in
this case does not demonstrate, in any way, or create, a prima facie
case that the worker, Mr. Pelly, had a business that he operated for his own
account. He argued that the fencing operation should not be seen as a distinct
project apart from the operations of the Appellant as it was a vital part of
the infrastructure of the ranch as a whole and certainly was part of the
Appellant’s business which was to assist the ranch owners in these very
matters.
[22] He argued that the
case of National Capital Outaouais Ski Team v. Minister of National
Revenue, a
decision of the Federal Court of Appeal, concurred with the view that it is not
the stated intention of the parties that govern the nature of the relationship
but rather it is whether the facts and circumstances of the case reflect those
intentions. He also cited D.W. Thomas Holdings Inc. v. Minister of National
Revenue,
as an example of a finding that although the intention of the hiring enterprise
was to hire the worker as an independent contractor, the terms of their
relationship when analyzed in light of the Wiebe Door factors did not
support this intention.
[23] He argued that the
contract should not be considered as descriptive of the relationship. Mutuality
cannot be attested to by one side.
[24] He argued that the
assumptions must be taken as true and the burden to disprove them is on the
Appellant. He argued that Mr. Olson had little exposure to the day to day
functions at the ranch and could not speak authoritatively in respect of many
of the assumptions that he sought to negate. He argued that the assertions of a
person not personally present and without knowledge of the day to day affairs
or day to day operations cannot be a sufficient basis for finding that the
Appellant has made a prima facie case such as would shift the onus of
proof.
[25] He pointed to the
time sheets and noted that on the vast majority of days, Mr. Pelly reported to
work consistently at 8 a.m. and left at or around 5:00 p.m.. His time sheets
were more like time sheets prepared by employees and less like invoices as
asserted by the Appellant. He noted that timesheets were on a couple of
occasions approved by the manager and that the absent days had notations
entered by Mr. Pelly indicating the reason for being absent such as a doctor’s
appointment and weather conditions.
[26] He argued that the
worker was a labourer and that he had none of the indices of a professional
contractor who might come in with his own equipment, his own workers and quote
a job at a price with a view to profit. The farmers who bid on planting and
harvesting and seeding and cutting hay, were those types of independent contractors.
They bid on a project, supplied the equipment and performed the work. Mr. Pelly
was an hourly wage worker.
[27] He argued that the
Appellant’s position that Mr. Pelly was free to hire workers made no sense. How
could Mr. Pelly hire a worker when he, himself, was only making a $12.00 hourly
wage?
[28] There is no record
that Mr. Pelly kept books or records or did anything of the sort that an
independent worker having his own business would do.
Analysis
[29] The Appellant puts
emphasis on the written contract. I do not, for several reasons.
[30] The contract is a
form contract unilaterally imposed on a party who likely has little interest in
the printed legalese. Its title is “Ranch Hand Services Agreement” yet Mr.
Olson described Mr. Pelly as anything but a ranch hand. Mr. Olson’s testimony
defies reliance on the written contract. The written contract is for fence
mending and feeding livestock. That was not the essence of the work engaged
according to Mr. Olson’s own testimony. The work engaged was to construct a
fence in extraordinarily difficult terrain without supervision. Still, I do not
put Mr. Olson’s credibility as a sworn witness in doubt as it relates to the
real basis for Mr. Pelly’s retention. The inconsistency simply shows that the
written contract is of no assistance in this matter. That said then, I accept
that a prima facie case has been made that Mr. Pelly was not a ranch
hand. He refused ranch hand work. Indeed, prima facie, the case made by
Mr. Olson is that Mr. Pelly would likely never have signed a contract that said
he would do such work in spite of assurances he may have given when first
interviewed. Without any evidence to the contrary a prima facie case has
been made that Mr. Pelly was a neighbouring farmer not a subservient ranch
hand.
[31] Referring still to
the written contract, the idea of imposing an obligation on Mr. Pelly to create
his own safety program and follow it is likely only in the contract so it could
be used to reinforce the independent contract argument. Indeed, the entire
contract, in my view, is cleverly crafted to support an argument that the
nature of the relationship is one of independent contractor. It is window
dressing and a distraction that could cause suspicion in respect of other
matters. The same might be said for arguments that seem to rely on a fictional spin
on the facts such as arguing that Mr. Pelly could hire his own co-worker when
he only earned $12.00 an hour. However, as I noted above, I do not put Mr.
Olson’s general and overall credibility at issue.
[32] As argued by
Respondent’s counsel, it is not, in any event, the stated terms of a contract that
govern the nature of the relationship but rather it is the actual performance
of the contract which may or may not reflect those stated terms that is
determinative. As well, I note, as I have in other decisions, that employers are
misguided to believe that they can contract out of the legislative requirements
of the EIA and the Plan. Both might be described as social
programs designed to protect workers from such abuse. If a worker wants to
respect the terms of an agreement that impose independent contractor status the
system may not be able to intervene. However, when a worker chooses to
disregard the terms of such an agreement that were unilaterally imposed and
accepted as the only means of obtaining the position, then the employer should
have no expectation that the true nature of the relationship will not be
examined.
[33] That is to say, a
contract that asserts that it is the intention of the parties to create an
independent contractor relationship, is of minimal value. What is of value, in
this case, however, is Mr. Olson’s personal interaction with Mr. Pelly. I
cannot accept his evidence of Mr Schmidt’s view of Mr. Pelly. It was admitted
on the basis that it demonstrated that Mr. Olson relied on it, but that does
not address the underlying truth of what Mr. Schmidt told him. That is hearsay.
However, there is a personal interview and as many as 10 telephone
conversations during the term of the contract. On the basis of these
interactions, Mr. Olson can speak to the issue of mutuality of intention which
is borne out in any event by Mr. Pelly’s conduct. He never communicated any
problem with the Appellant not withholding taxes, EI premiums or CPP
contributions or not providing a T4 slip in 2009 for his earnings in 2008.
Given Mr. Olson’s uncontradicted evidence, a prima facie case has been
made that there was mutuality of intention as to the nature of the engagement.
There is a better chance than not that Mr. Olson could accurately appreciate
that there was such a mutual intention and that Mr. Pelly was no farm labourer
but rather an independent person with an entrepreneurial approach to offering
his services. I accept Mr. Olson’s view that Mr. Pelly promoted himself as
someone who could bring added value to the construction and installation of the
fence. He could assess the location, determine depths necessary to ground the
posts and he could operate and assist in the maintenance of the Appellant’s
equipment. The picture Mr. Olson paints, in this regard, is most credible, in
my view.
[34] As to the
assumptions, I agree with the Appellant’s counsel that a prima facie
case has been made that most of the assumptions that bear to the tests in Wiebe
Door are wrong although one such assumption deserves comment; namely, the
question of invoices.
[35] Timesheets submitted
by an independent contractor working on an hourly basis might readily be used
as an invoicing system but an invoice would show total hours at the contract
rate with a total amount due clearly shown. That was not done in this case
except where, for example, there was an extra amount owing for the tractor
rental. In that case it appears clear that an invoice including time was
prepared. This may suggest that the time sheets were intended as invoices as
well. Alternatively, it might suggest that the tractor rental operation was a
separate business that required an invoice which his hourly rate work did not
require. I would not, however, in this case, separate the services. I accept
Mr. Olson’s testimony that there was mutuality to the understanding that the
time sheets were invoices. However, I would place little weight on this finding
in terms of it being a factor supporting the view that Mr. Pelly operated in a
fashion that reflected that he had his own business.
[36] While I agree then
that a prima facie case supporting the Appellant’s position might well
have been established so that the onus of proof has shifted, it is always
necessary to confirm that such negation of assumptions has, prima facie,
stood up to the application of the Wiebe Door tests. In this regard, the
Respondent is in a very vulnerable position in this case. I know of no case
similar in nature to this, where the Crown has not brought evidence. It is
evident that many, if not the vast majority, of the most relevant assumptions
could have been based on representations of Mr. Pelly. The reliability of the
unsworn statements of an interested party who might feel somewhat injured by a
termination of a relationship needs to be tested. I appreciate that there are
distances here and associated costs with Mr. Pelly intervening or being
subpoenaed that would also apply to any other witness that the Crown might have
felt would have been helpful to call, and there was a request for a
videoconference as a format for calling such evidence. Such request was refused
on the basis that the finding of credibility would be essential and that the
inconvenience and expense of travel was not a sufficient reason to depart from
the better approach to effective cross-examination and assessment of
credibility. Accordingly, the request was denied. A request for a change of
venue might have been made and allowed, however, no such request was made.
[37] In any event,
Respondent’s counsel did his best in the circumstances. However, in my view, he
could not overcome the hurdle of having no evidence to call.
[38] I turn now to the Wiebe Door factors or tests.
[39] I accept that Mr.
Pelly was not in a subservient position. He did not perform a function that
needed to be given direction; nor would it appear that he would be a person who
needed to be given, or would take, direction. He was not told what to do or how
or when to do it. This is not only a view taken from Mr. Olson’s uncontradicted
assessment based on personal contact but one that is wholly consistent with an
uncontested assertion, one with no contrary assumption, namely that Mr. Pelly
operated his own farm in the area. It is more probable than not that such a
person would put his own operation first and thereby needed to be retained,
even in the winter, on a basis that he could come when he could and leave when
he had to. That his hours were largely consistent with an 8:00 a.m. to 5:00
p.m. job does not suggest otherwise. It suggests that circumstances permitted
it.
[40] As well, I do not
find that the notation on the timesheets of reasons for absences as being
persuasive of a different view. Nor do I find the manager’s approval of timesheets
to be indicative of supervision. Indeed, I accept the evidence of Mr. Olson
that Mr. Pelly, with other contractors like him, constructed a fence to meet
the requirements of the Appellant. They managed the project in terms of how to
locate and construct the fence in this hostile terrain. There is no evidence to
contradict this testimony. Any monitoring of the work would on a balance of
probability be to see to the result which is not control in the Weibe Door
sense of the word.
[41] On balance, I find
that the control factor favours an independent contractor relationship. At the
least, the evidence of the lack of control is sufficient to shift the onus of
proof on this very relevant factor in this case.
[42] As to tools, I find
this factor favours neither position. In a case like this, the question of
tools is better addressed when considering whether or not Mr. Pelly has a
business of his own.
[43] As to the chance of
profit and risk of loss, again I find it favours neither position. Certainly an
independent contractor can be paid by the hour and that can support, and in
some cases has been found to support, a finding of their being a chance for
profit by working more. That may be the case here but it does not speak loudly.
As to the bonus, it is so vague, in this case, that giving it weight would be
to exaggerate its significance. A bonus with a prescribed benchmark would have
more meaning. Indeed, the bonus provision of the contract seems to be just
another trapping inserted to support a desired outcome.
[44] The risk of loss is
minimal, if there was any at all. Regardless, it is a neutral factor, in my
view, in a case like this. On this basis, I would conclude that in this case,
the control factor weighs the most heavily and favours a finding of a contract
for services.
[45] That said, this
finding needs to be considered from the perspective of the Sagaz formulation
of the question of whether Mr. Pelly can be said to have his own business. This
need not be seen, of course, as a separate test but rather it can and should be
seen as the lens through which the Wiebe Door tests should be viewed. A
person with his own business has certain indices. There is an investment in
equipment and an associated risk of loss. There is generally an office and
business records, there is evidence of advertising and promotion, there is a
separate bank account and other indices such as being able to refuse work and
being able to hire your own workers and replacement workers for a particular
job. These are examples, of course, however some entrepreneurs have little to
show in respect of these types of indices. Mr. Pelly appears to be engaged in a
business that would have few, if any, of these benchmarks. Arguably, his
freedom to come and go required him to have his own vehicle which is consistent
with having tools for his own business and arguably his tractor can be seen as
a necessary tool in this freelancing type of enterprise. However, even without
treating these as relevant to the issue, the absence of business indicia in
general, in this case, is not fatal to a finding that he is, in fact,
conducting a business for his own account. I accept that he offered and
performed a service that drew, almost solely, on his knowledge and experience. I
accept Mr. Olson’s testimony that he promoted himself on that basis, in an
entrepreneurial fashion, and that is consistent with a finding that he entered
into a contract for services. His business required few of any of the
benchmarks that the Respondent asserts are relevant. They are not, in this
case.
[46] In my view then, it
is reasonable to conclude in this case that Mr. Pelly was engaged in a contract
for services, not a contract of service. Were the case a close one so as to require
a finding of the intentions of the parties, that factor too would support a
finding that the relationship here was that of an independent contractor. As
noted above, I am satisfied that the evidence supports, at least on a prima
facie basis, that there was mutuality of intent in this case.
[47] Accordingly, the
appeals are allowed, without costs.
Signed
at Calgary, Alberta this 28th day of January 2011.
"J.E. Hershfield"
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