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Citation: 2007TCC269
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Date: 20070510
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Dockets: 2006-1187(EI)
2006-1188(CPP)
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BETWEEN:
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PLAINS WELDING SUPPLIES LTD.
O/A BOYCHUK SALES AND SERVICE,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent.
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REASONS FOR JUDGMENT
Little J.
A. FACTS:
[1] The
business was formed in 1964 by Mr. Boychuk Senior.
[2] In
1975, Mr. Samuel Boychuk and his brother began to work with their father in the
operation of the business.
[3] Samuel
Boychuk provided testimony for the Appellant.
[4] Samuel
Boychuk said that his brother left the family business and moved to Calgary.
[5] The
Appellant company was incorporated in 1986 and it carries on business in Kindersley, Saskatchewan.
[6] Mr.
Boychuk said that the Appellant’s business may be summarized as follows:
(a) selling, repairing
and servicing recreational trailers, industrial and cargo trailers;
(b) selling truck and
trailer parts;
(c) carrying on a
welding business and selling welding supplies;
(d) selling and
installing overhead doors in garages and other buildings.
[7] Julie
Boychuk, Samuel’s wife, owns 100% of the shares of the Appellant. Julie Boychuk
is the President of the Appellant and Samuel Boychuk is the General Manager.
[8] Mr.
Bryon Mock (the “Worker”) was hired by the Appellant in 1993. The Worker was
hired by the Appellant as a “Handyman” to carry out servicing and repairs on
recreational trailers.
[9] Mr.
Samuel Boychuk explained that the Worker would work for the Appellant for a period
of time and then quit. Mr. Boychuk further explained that the Worker left the
Appellant on several occasions from 1993 to 2003 and then returned to work. During
this period the Worker was treated by the Appellant as an employee.
[10] In December - January 2004 the Worker told Mr. Boychuk that he again wanted
to work for the Appellant.
[11] Mr. Boychuk testified that the Worker was hired by the Appellant on
the understanding that he would be an independent contractor and not an
employee for the period commencing January 1, 2004. The Worker worked for the
Appellant under this arrangement from January 1, 2004 to July 21, 2005 (the
“Period”).
[12] Mr. Boychuk testified that the Appellant currently has seven employees
and that the Appellant also hires approximately 20 independent contractors.
[13] The Worker requested a ruling from the Canada Revenue Agency (the
“CRA”) regarding his employment status with the Appellant for the Period.
[14] By letters dated July 21, 2005, the Saskatoon Office of the CRA issued
a Ruling which stated that the Worker was in insurable employment with the
Appellant for the Period for the purposes of the Employment Insurance Act
(the “Act”) and that the Worker was pensionable for the
purposes of the Canada Pension Plan (the “Plan”).
[15] The Appellant filed an appeal to the Court with respect to the
position as determined by the CRA.
B. ISSUE:
[16] The issues are whether the Worker was employed by the Appellant in
insurable employment during the Period for the purposes of the Act and
whether the Worker was employed in pensionable employment for the purposes of
the Plan.
C. ANALYSIS:
[17] In order to determine if the Worker was an employee of the Appellant,
I have referred to a number of Court decisions.
[18] In Precision
Gutters Ltd. v. Canada (Minister of National Revenue), [2002] F.C.J.
No. 771, Mr. Justice Sexton, speaking for the Federal Court of Appeal said at
paragraphs 15 to 19:
15. ...
The four criteria of the four-in-one test are (1) the degree or absence of
control exercised by the employer; (2) ownership of the tools; (3) chance
of profit; (4) risk of loss (see Mirichandani v. Canada (Minister of
National Revenue) [2001] F.C.J. 269 and Wiebe Door Services, supra
at p. 5028).
16. The
issue has been dealt with more recently by the Supreme Court of Canada in Sagaz
Industries Canada v. 67112 Ontario Limited, [2001] S.C.J. No. 61. In that
case Mr. Justice Major, speaking for the Court, reviewed the various tests for
determining whether a person is an employee or an independent contractor. He
agreed with MacGuigan J.A.'s statement of a four-in-one test as set out in Wiebe
Door, supra. Major J. said:
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47. Although there is no universal test to determine whether a
person is an employee or an independent contractor, I agree with MacGuigan
J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market
Investigations, supra. The central question is whether the person
who has been engaged to perform the services is performing them as a person
in business on his own account. In making this determination, the
level of control the employer has over the worker's activities will always be
a factor. However, other factors to consider include whether the worker
provides his or her own equipment, whether the worker hires his or her own
helpers, the degree of financial risk taken by the worker, the degree of
responsibility for investment and management held by the worker, and the
worker's opportunity for profit in the performance of his or her tasks.
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17. The
passage relied upon by Major J. in Market Investigations, Ltd. v. Minister
of Social Security, 9 [1968] 3 All E.R. 732 is as follows:
The
observations of LORD WRIGHT, of DENNING L.J. and of the judges of the Supreme
Court in the U.S.A. suggest that the fundamental test to be applied
is this: "Is the person who has engaged himself to perform these
services performing them as a person in business on his own account?" If
the answer to that question is "yes", then the contract is a contract
for services. If the answer is "no" then the contract is a contract
of service. No exhaustive list has been compiled and perhaps no
exhaustive list can be compiled of considerations which are relevant in
determining that question, nor can strict rules be laid down as to the relative
weight which the various considerations should carry in particular cases. The
most that can be said is that control will no doubt always have to be
considered, although it can no longer be regarded as the sole determining
factor; and that factors, which may be of importance, are such matters as
whether the man performing the services provides his own equipment, whether he
hires his own helpers, what degree of financial risk he takes, what degree of
responsibility for investment and management he has, and whether and how far he
has an opportunity of profiting from sound management in the performance of his
task. [Emphasis added]
18. Thus
Major J. has indicated that the central question to be decided in cases such as
these is whether the person who has been engaged to perform the services is performing
them as a person in business on his own account or is performing them in the
capacity of an employee. In order to make this determination the
four criteria set out in Wiebe Door are factors to be considered.
19. While
neither Major J. in Sagaz nor MacGuigan J.A. in Wiebe Door
completely rejected the "integration test", they did find that it
could be difficult to apply.
[19] I will
comment upon the four factors set out by Mr. Justice MacGuigan in Wiebe Door
Services Ltd. v. M.N.R., 87 DTC 5025.
Control
[20] The
evidence before me established the following facts:
(a) Samuel Boychuk would provide quotes for
repairs or service work on trailers with input from the Worker.
(b) Samuel Boychuk assigned the work to the
Worker.
(c) The Worker was asked to be at the
Appellant’s place of business for eight hours during business hours.
(d) The Worker was required to maintain time
sheets.
(e) The Worker received instructions from
Samuel Boychuk so there was no misunderstanding as to the work to be performed.
(f) Samuel Boychuk set time frames for the
Worker to complete a job assigned to him.
(g) Samuel Boychuk inspected the work that the
Worker performed.
(h) The Appellant’s customers would speak to
Samuel Boychuk if they had any concerns about work that the Worker performed.
(i) The Worker did not deal directly with the
Appellant’s clients.
(j) The Worker did not have a trade name,
business license or Goods and Service Tax Registration Number.
[21] Based on
the evidence presented to me, I have concluded that the Worker was effectively
controlled by Samuel Boychuk during the Period.
Ownership of Tools
[22] The evidence established that the Worker owned small
hand tools but the Appellant provided larger tools, specialty tools, equipment
and a workshop.
[23] In my opinion, the evidence regarding the ownership
of tools indicates that the Appellant was supplying the shop and the majority
of the tools. This “test” indicates an employer-employee relationship.
Chance of Profit or Risk of Loss
[24] The Worker was paid by the hour. The Worker did not incur
any expenses in the performance of his duties. In my opinion, the evidence
establishes that the Worker did not have the opportunity for profit nor the
risk of loss in the performance of his duties for the Appellant.
[25] This “test” also indicates an employer-employee
relationship.
Intent of the Parties
[26] Mr. Boychuk
stated that there was no written agreement between the Appellant and the Worker
that dealt with their relationship. Mr. Boychuk said that he understood that the Worker was an independent
contractor but the Worker did not agree that he was an independent contractor.
In support of this statement it is noted that the Worker asked the CRA to
advise him if he was self-employed.
[27] I have
concluded that the comments made by Justice Sharlow in the Royal Winnipeg
Ballet v. Canada, [2006] FCA 87, do not apply to this case because there
was no common understanding as to the nature of the relationship between the
Appellant and the Worker.
D. CONCLUSION:
[28] In order to
deal with the points noted above, I believe that it is very useful to refer to
the comments made by Justice Major in 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc, [2001] S.C.J. No. 61, where he
indicated that the central question to be decided in cases such as these
is whether the person who has been engaged to perform the services is
performing them as a person in business on his own account or is performing
them in the capacity of an employee. (underlining added)
[29] Based on
the evidence before me I have concluded that it cannot be said that the Worker
was performing his duties as a person in business. It is my opinion that the
Worker was performing his duties as an employee of the Appellant.
[30] The appeals
are dismissed, without costs.
Signed at Vancouver, British Columbia,
this 10th day of May 2007.
Little
J.
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