Citation: 2010 TCC 341
Date: 20100621
Dockets: 2009-2549(EI),
2009-2548(CPP)
BETWEEN:
CALDER ENTERPRISES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bédard J.
[1]
The Minister of
National Revenue (the “Minister”) decided: i) that Carey Stoney (the
“worker”) was employed in insurable and pensionable employment within the
meaning of paragraph 5(1)(a) of the Employment Insurance Act
(the “Act”) and paragraph 6(1)(a) of the Canada Pension Plan
(the “CPP”) during the period from January 1, 2006 to September 30,
2007 (the “Relevant Period”) since he was employed pursuant to a contract of
service with the Appellant; and ii) that the worker was not employed by
the Appellant in employment excluded under paragraph 5(2)(i) and
subsection 5(3) of the Act since, in the Minister’s view, the worker and
the Appellant would have entered into a substantially similar contract of
employment if they had been dealing with each other at arm’s length. The
Appellant is appealing the Minister’s decisions.
[2]
The Appellant was in
the trucking business, hauling bulk propane for ECL (“ECL”), the Appellant's sole
client. The Appellant was providing ECL with a truck and a driver during the
Relevant Period. Carey Stoney (the brother of the shareholder of the Appellant)
was hired as a driver by the Appellant.
[3]
The Appellant’s
position is that the worker was an independent contractor and was not employed
under a contract of service.
[4]
Each case in which the
question of whether a pension is an employee or an independent contractor arises
must be dealt with on its own facts. The four components (control, ownership of
tools, chance of profit and risk of loss) of the composite test enunciated in Wiebe
Door Services Ltd. v. M.N.R., 87 DTC 5025, and 671122 Ontario
Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, must each
be assigned its appropriate weight in the circumstances of the case. Moreover,
the intention of the parties to the contract has in recent decisions of the
Federal Court of Appeal become a factor whose weight seems to vary from case to
case (Royal Winnipeg Ballet v. M.N.R., 2006 FCA 87; Wolf v.
Canada, [2002] 4 F.C.A. 396; City Water International Inc. v. Canada,
2006 FCA 350; National Capital Outaouais Ski Team v. M.N.R.,
2008 FCA 132).
[5]
The facts on which the
Minister relied to render his decision in the CPP case (2009‑2548(CPP))
are set out in paragraph 5 of the Reply to the Notice of Appeal, as
follows:
(a) the Appellant was in the trucking
business, hauling bulk propane; (admitted)
(b) the Appellant owned and operated one
truck; (admitted)
(c)
the Appellant entered into an agreement with a
client (hereinafter “ECL”) to provide a truck and driver; (admitted)
(d)
propane is a “dangerous good” and the hauling of
propane is highly regulated by the government; (admitted)
(e)
the sole shareholder of the Appellant was Terry
Calder (hereinafter “the Shareholder”); (admitted)
(f)
the Worker was the brother of the Shareholder; (admitted)
(g)
the Worker was hired as a driver and his duties
included loading, transporting and unloading propane; (admitted)
(h)
the Shareholder was active in the business and
the main driver for the Appellant; (admitted)
(i)
the Worker and the Appellant did not enter into
a written agreement; (admitted)
(j)
the Worker began working for the Appellant in
January of 2003; (admitted)
(k)
the Worker stopped working for the Appellant on
September 30, 2007 when the business ceased; (admitted)
(l)
the Worker earned a set commission of 31% of the
gross earnings of the truck; (admitted)
(m)
the earnings of the truck were based on
kilometres driven; (denied)
(n)
the Appellant paid the Worker on a semi‑monthly
basis; (admitted)
(o)
the Appellant required the truck to be going
7 days a week; (admitted)
(p)
ECL provided enough work to keep the truck going
full‑time; (admitted)
(q)
the Worker drove when the Shareholder didn’t; (admitted)
(r)
the Worker normally worked from Sunday to
Wednesday; (admitted)
(s)
the Worker kept a record of the work completed; (admitted)
(t)
the Worker was in a position of subordination; (denied)
(u)
the Worker reported to ECL on a daily basis; (denied)
(v)
ECL assigned work to the Worker; (admitted)
(w)
ECL determined the delivery schedule; (admitted)
(x)
ECL determined the Worker’s routes; (admitted)
(y)
the truck had a tracking system which recorded
kilometres driven and route taken; (admitted)
(z)
the Worker reported to the Appellant twice a
day; (admitted)
(aa)
the Worker was required to submit log books and
bills of lading; (admitted)
(bb)
the Worker was required to attend ECL safety
meetings; (admitted)
(cc)
ECL provided training for the Worker; (admitted)
(dd)
the Worker informed the Appellant of any leave
required; (admitted)
(ee)
the Worker could not hire his own helper; (denied)
(ff)
the Worker did not replace himself; (admitted)
(gg)
the Appellant was responsible for replacing the
Worker; (denied)
(hh)
the Appellant provided all of the tools and
equipment required including the truck, a CB radio and a two‑way radio; (admitted)
(ii)
ECL provided the trailers for hauling the
propane; (admitted)
(jj)
the Worker provided his own cell phone; (admitted)
(kk)
the Worker could not use the Appellant’s truck
for driving for others; (denied)
(ll)
the Appellant’s truck was normally parked at
ECL’s premises; (admitted)
(mm)
the Appellant paid all operating expenses
including fuel, oil, repairs and maintenance, license, insurance and permits; (admitted)
(nn)
the Worker provided his own transportation to
and from ECL premises; (admitted)
(oo)
the Worker did not have a chance of profit or
risk of loss; (admitted)
(pp)
the Worker did not charge the Appellant GST; (admitted)
(qq)
the Worker did not have an investment in the
business; (admitted)
(rr)
the Worker was not responsible for managing the
business, and (admitted)
(ss)
the Worker was not in business for himself while
performing services for the Appellant. (denied)
[6]
The facts on which the
Minister relied to render his decision in the EI case (2009‑2549(EI)) are
set out in paragraph 5 of the Reply to the Notice of Appeal, as follows:
a.
the Appellant was in the trucking business,
hauling bulk propane; (admitted)
b.
the Appellant owned and operated one truck; (admitted)
c.
the Appellant entered into an agreement with a
client (hereinafter “ECL”) to provide a truck and driver; (admitted)
d.
propane is a “dangerous good” and the hauling of
propane is highly regulated by the government; (admitted)
e.
the sole shareholder of the Appellant was Terry
Calder (hereinafter “the Shareholder”); (admitted)
f.
the Worker was the brother of the Shareholder; (admitted)
g.
the Worker was hired as a driver and his duties
included loading, transporting and unloading propane; (admitted)
h.
the Shareholder was active in the business and
the main driver for the Appellant; (admitted)
i.
the Worker and the Appellant did not enter into
a written agreement; (admitted);
j.
the Worker began working for the Appellant in
January of 2003; (admitted)
k.
the Worker stopped working for the Appellant on
September 30, 2007 when the business ceased; (admitted)
l.
the duration of the Worker’s employment was
reasonable; (admitted)
m.
the Worker earned a set commission of 31% of the
gross earnings of the truck; (admitted)
n.
the earnings of the truck were based on
kilometres driven; (denied)
o.
the Appellant paid the Worker on a semi‑monthly
basis; (admitted)
p.
the Appellant paid the Worker on a regular and
consistent basis; (admitted)
q.
the Worker’s wage rate was reasonable; (admitted)
r.
the Appellant required the truck to be going
7 days a week; (admitted)
s.
ECL provided enough work to keep the truck going
full‑time; (admitted)
t.
the Worker drove when the Shareholder didn’t; (admitted)
u.
the Worker normally worked from Sunday to
Wednesday; (admitted)
v.
the Worker kept a record of the work completed; (admitted)
w.
the Worker was in a position of subordination; (denied)
x.
the Worker reported to ECL on a daily basis; (denied)
y.
ECL assigned work to the Worker; (admitted)
z.
ECL determined the delivery schedule; (admitted)
aa.
ECL determined the Worker’s routes; (admitted)
bb. the truck had a tracking system which recorded kilometres driven and
route taken; (admitted)
cc.
the Worker reported to the Appellant twice a
day; (admitted)
dd. the Worker was required to submit log books and bills of lading; (admitted)
ee.
the Worker was required to attend ECL safety
meetings; (admitted)
ff.
ECL provided training for the Worker; (admitted)
gg.
the Worker informed the Appellant of any leave
required; (admitted)
hh.
the Worker could not hire his own helper; (denied)
ii.
the Worker did not replace himself; (admitted)
jj.
the Appellant was responsible for replacing the
Worker; (denied)
kk. the terms and conditions of the Worker’s employment were reasonable;
(admitted)
ll.
the Appellant provided all of the tools and
equipment required including the truck, a CB radio and a two‑way radio; (admitted)
mm.
ECL provided the trailers for hauling the
propane; (admitted)
nn.
the Worker provided his own cell phone; (admitted)
oo. the Worker could not use the Appellant’s truck for driving for
others; (denied)
pp. the Appellant’s truck was normally parked at ECL’s premises; (admitted)
qq. the Appellant paid all operating expenses including fuel, oil,
repairs and maintenance, license, insurance and permits; (admitted)
rr.
the Worker provided his own transportation to
and from ECL premises; (admitted)
ss.
the Worker did not have a chance of profit or
risk of loss; (admitted)
tt.
the Worker did not charge the Appellant GST; (admitted)
uu.
the Worker did not have an investment in the
business; (admitted)
vv.
the Worker was not responsible for managing the
business; (admitted)
ww.
the Worker was not in business for himself while
performing services for the Appellant; (admitted)
xx.
the Appellant stated that the Worker was treated
the same as an arm’s length person; and (admitted)
yy.
the Minister considered all of the relevant
facts that were made available to the Minister. (denied)
[7]
Mr. Calder was the
only witness.
Mr. Calder’s testimony
[8]
Mr. Calder, whose testimony
generally seemed credible, first talked, in an evasive way, about the discussions
that took place between him and the worker before they entered into an oral
contract. He explained that it was agreed upon with the worker that the Appellant
would not deduct EI premiums and CPP contributions or any other amount from the
worker’s remuneration. He added that it was also agreed that the worker would
be responsible for his own tax remittances. Mr. Calder actually talked
more about the objective in entering into the contract than their understanding
of the contract. He later specifically stated in his testimony that the parties
certainly did not want an employer‑employee relationship.
[9]
Mr. Calder explained
that the earnings of the truck were based as well on the weight of the load. He
also explained that the worker could hire his own helper and that, at the
beginning of the relationship, the worker was in fact working for others. I would
point out immediately that Mr. Calder admitted that the worker never had
anyone replace him during the Relevant Period, nor did the Appellant ever have to
find a replacement for the worker during the Relevant Period. Mr. Calder
also testified that the worker was required by the Appellant to provide his own
cell phone. Finally, he added that on one occasion, the Appellant reimbursed
the worker for hotel and meal expenses incurred while performing work for the
Appellant.
Analysis and conclusion
[10]
Starting with the issue
of intention, what evidence do I have of the Appellant’s and the worker’s intention
as regards the legal relationship they had entered into. Firstly, it should be
pointed out that there is no written agreement to which I can refer. Secondly,
there is no oral evidence from the worker. The only oral evidence is that of
Mr. Calder. It is not clear from Mr. Calder’s testimony, which was
very vague and evasive in that regard, what was actually discussed between the
parties before entering into the contract. It seems to me that they talked more
about their objectives in entering into the contract than about the nature of
the contrat they wanted to enter into. I cannot infer from Mr. Calder’s
testimony that the parties shared a common understanding that the worker was to
be self‑employed and not an employee. Where the intention of the parties
cannot be ascertained, it is quite proper, indeed necessary, to look at all the
facts to see what legal relationship they reflect. In that regard, the four
components of the composite test enunciated in Wiebe Door are relevant
and helpful in ascertaining the intent of the parties to the contract and the
legal nature of the contract.
[11]
Turning now to the
facts, what factors suggest that the worker was in business on his own account?
Control
i.
He was not really under
any direct supervision by Mr. Calder.
ii.
He was a professional
driver who knew what to do and who knew all the regulations applying to the
hauling of propane.
iii.
He could work for
anyone else.
iv.
He could have someone
replace him.
Tools
v.
He provided his own
cell phone.
Chance of profit / Risk of loss
vi.
By working more hours,
he could increase his income.
[12]
What factors suggest that
the worker was an employee of the Appellant?
Tools / Equipment
i.
The Appellant provided
all the tools and equipment required, including the truck.
Responsibility for investment
and management
ii.
The worker had no such
responsibility.
Chance of profit/Risk of
loss
iii.
The worker had no
expenses and no liability exposing him to a risk of loss.
iv.
There was in reality, no
opportunity for him to increase his income since the safety regulations prevented
a truck driver hauling propane from driving over a certain number of hours and
since the worker only drove when Mr. Calder did not.
Control
v.
The worker received instructions
from ECL. In fact, the worker reported to ECL on a daily basis. ECL assigned
work to the worker. ECL determined the delivery schedule. ECL determined the
worker’s route. ECL required the worker to adhere to a dress code. The worker
was required to attend ECL safety meetings. ECL provided training for the worker.
In fact, the Appellant delegated most of its authority over the worker to ECL.
vi.
The worker also reported
regularly to Mr. Calder.
vii.
The worker informed the
Appellant if he required any leave.
[13]
Here we have a worker,
who, if I accept the Appellant’s submissions, was an independent contractor, and
yet brought no truck to his alleged trucking business: he was not responsible
for insurance on the truck, he did not pay for gas, and he effectively had no
exposure to liability. He just showed up to drive the Appellant’s truck, and he
did so wearing a uniform (a shirt and black pants) the Appellant was required
by ECL to have the worker wear. I cannot find in these circumstances that a
degree of absence of control by the Appellant when it came to supervising how the
worker drove the truck outweighs the overall view that the worker was not in
business on his own account.
Did the Minister properly exercise his
discretion?
[14]
This is not an issue since
the Appellant admitted indirectly that the worker and the Appellant would have
entered into a substantially similar contract if they had been dealing each
other at arm’s length. I would point out, in this regard, that the Appellant
admitted that the worker’s wage rate was reasonable. The Appellant also
admitted that the duration of the worker’s employment was reasonable. Lastly, the
Appellant admitted that the worker was treated the same as an arm’s length
person would have been.
[15]
For these reasons, the
appeals are dismissed.
Signed at Ottawa, Canada, this 21st day of June 2010.
“Paul Bédard”
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