Citation: 2008TCC194
Date: 20080404
Docket: 2006-209(EI)
2006-210(CPP)
BETWEEN:
STARSKY ENTERPRISES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bowie
J.
[1] This appeal is concerned with the perennial question, whether the
worker is engaged in employment that is insurable employment under the Employment
Insurance Act (the Act) and pensionable employment under the Canada
Pension Plan (the Plan). That question, in turn, depends on the
answer to the question whether the contract between the appellant and the
worker is a contract of service or a contract for services. The original
rulings under section 90 of the Act and section 26.1 of the Plan
were that Linsay Huber was engaged by the appellant in insurable and
pensionable employment. Those rulings were affirmed on appeals to the Minister
under sections 91 and 27 of the Act and the Plan.
[2] The sole shareholder of the appellant is Eric Lecompte. He and Ms.
Huber were the only witnesses. Mr. Lecompte’s evidence was clear and
forthright. He founded the company and designed its method of operation. Ms.
Huber worked for Starsky for less than three weeks. She seemed uncertain as to
a number of aspects of their relationship. I do not doubt her truthfulness, but
I have more confidence in Mr. Lecompte’s understanding of the company’s
procedures and the terms on which it engaged workers than I do in hers. In the
few instances where their evidence conflicts, I prefer his evidence to hers.
[3] Starsky is in the business of operating marketing campaigns, including
door‑to-door campaigns, for various non-profit and charitable
organizations. It has developed a donor card system, which has space for up to
28 donors to indicate the amount of their donation. When individuals make
donations, they are issued an official tax receipt and a red ribbon. At the end
of a day of canvassing, the workers submit their donor cards to Starsky and
receive a commission based on total donations collected that day.
[4] On November 29, 2004, Ms. Huber commenced working for the appellant as
a canvasser. She worked five days a week going door-to-door soliciting
donations for Mothers Against Drunk Driving (“MADD”).
[5] A Letter of Agreement (the “Agreement) was signed by Ms. Huber and
Starsky on December 3, 2004. Ms. Huber testified that she went over the
Agreement with Joe Blais, a manager at Starsky. She did not recall whether she
read through the whole Agreement before signing it. The terms of the Agreement
were, inter alia:
[a] Ms.
Huber was an independent contractor. She was responsible for her own
transportation, remitting taxes, carrying liability insurance, and any other
expenses incurred in the course of her work.
[b] Ms.
Huber’s role was to solicit money from individuals on behalf of the non-profit
organizations.
[c] She
would be paid commission, which was calculated daily based on total dollars
collected per donor card.
[d] She
was required to keep Starsky informed of the results of her work by filling out
a street log and daily reports outlining total donations.
[e] All
donor cards, ribbons, receipts and brochures were the property of Starsky. Starsky
would consign donor cards to Ms. Huber. Ms. Huber was required to compensate
Starsky if any donor cards were lost, stolen or damaged.
[f]
Ms. Huber was restricted by the terms of the Agreement. The Agreement
provided that she could not engage in any activities which, in Starsky’s view,
were competitive with and directly related to the work Ms. Huber provided for
Starsky.
[g] Ms.
Huber could not subcontract her rights, duties or obligations to another person
without Starsky’s consent.
[h] Ms.
Huber agreed to abide by thirteen codes and standards set out in Schedule “C”
to the Agreement. For example, she agreed to act in a professional manner, to
wear an identification badge when canvassing, and not to abuse the trust of
donors;
[i]
In the event that Ms. Huber breached any of her obligations under the
Agreement, Starsky could terminate the Agreement upon written notice.
[6] Mr. Lecompte testified that the canvassers were able to set their own
hours and dates of work. They could pick up their supplies, which included
ribbons, receipts and donor cards, from his office every day between 10:00 a.m.
and 1:00 p.m. and were required to drop off completed donor cards and all
donations that same day between 8:00 p.m. and 10:00 p.m. These hours were
designated because Starsky does not have the resources to keep its office open
24 hours a day. Mr. Lecompte explained that the hours were chosen in order to
allow canvassers to maximize their canvassing time. He testified that provincial
regulations provide that a person can only canvass between the hours of 11:30 a.m.
and 9:30 p.m. A canvasser could pick up supplies on Monday, and not work until
Wednesday for example, but the canvasser would be required to return the
donations and cards on Wednesday evening. This requirement was not followed by
all canvassers.
[7] Mr. Lecompte explained that new canvassers had a full day of training
before they started working where they would shadow another canvasser. The
purpose of this training was for prospective canvassers to learn what the job
was like and whether it was something they wanted to do. As he explained it, door-to-door
canvassing is not for everybody. When canvassers start working for Starsky,
they are sent out with an experienced worker on the first day. This is the only
required training. Canvassers can request additional training at any time. There
are also daily meetings in the morning which canvassers can attend to learn
tips on selling technique. These meetings are all optional. Canvassers are not
paid for attending training sessions or meetings.
[8] Mr. Lecompte testified that canvassers were free to hold other jobs and
gave the example of working as a bartender in the evenings. He said that the
non‑competition clause had never been exercised. He understands it to
mean that canvassers could not use the donation card system when they were
canvassing for another organization, and that they would not be permitted to
ask potential donors to support MADD or some other organization as this would
be a conflict of interest. He said that canvassers were free to go door-to-door
for other organizations, just not at the same time as they were canvassing for
MADD.
[9] Ms. Huber considered herself a fulltime employee of Starsky. When she
met with the manager to sign some preliminary paperwork, she indicated that she
was looking for fulltime employment. During the three weeks that she worked as
a canvasser, she worked every day. She also attended meetings nearly every
morning before canvassing. She initially testified that these meetings were
mandatory, although she later conceded that she may have misunderstood. She did
not have any other source of income and said she would not have had time for
another job.
[10] The Agreement provided that all workers must have access to a reliable
vehicle. In reality, many canvassers relied on public transit. Mr. Lecompte
explained that many canvassers were students, and he recognized that many of
them could not afford a vehicle. Ms. Huber usually carpooled with other
canvassers and gave the driver some money for gas. Starsky did not reimburse
the canvassers for mileage or other transportation costs. Other than gas money,
Ms. Huber did not incur any expenses as a canvasser.
[11] In the event that a canvasser loses a card or does not submit the
donations to Starsky, Starsky would pay MADD for the lost donations and would
then collect the money from the canvasser. In the event that the canvasser does
not come back to work, Starsky would likely not be able to get the money back.
[12] Under the Agreement, workers are required to carry liability insurance.
Mr. Lecompte said that he knew that most workers probably did not carry
any insurance and that this was not a “serious requirement”. Ms. Huber did not
know who was responsible for insurance.
[13] Mr. Lecompte described canvassing as each of the workers’ “own little
mini business”. The canvassers choose how often and for how long they work and
in which neighbourhoods they canvass. The canvassers are required to tell
Starsky where they will be working to avoid duplication, and so that Starsky
can advise the Police department. This is done so that the police know the
canvassers are truly representing MADD. Nobody supervised the canvassers while
they worked, or kept track of how many hours were worked.
[14] Ms. Huber testified that every morning when she arrived at the office,
she was given a map with a highlighted area which set out where she could
canvass that day. If she did not finish canvassing in that area in one day, she
or another canvasser was sent back another day. Additionally, she was given a
timesheet or calendar with an estimate of which days she would be working and
how much money she expected or hoped to raise that day. Ms. Huber did not know
what the schedules were for but guessed they might be for personal motivation. After
the morning meeting, she would carpool with other workers and would get a ride
back with the same driver in the evening. Ms. Huber was not sure whether she
could have requested or chosen to work in a particular area.
[15] Canvassers could work as many or as few days as they liked. They would
not be disciplined for not coming into work one day. Mr. Lecompte testified
that he would occasionally receive complaints from a person in the
neighbourhood regarding a canvasser’s attitude. He said in these cases, he
would talk to the canvasser to hear their side of the story and he would
generally remind the canvasser to stay calm when dealing with people. In the
event that the canvasser had breached the code of conduct, Starsky could choose
not to consign the donor cards to that canvasser. This would effectively
terminate the Agreement. Mr. Lecompte also testified that in most cases,
canvassers who run into problems going door-to-door will likely decide on their
own that they are not interested in this kind of work.
[16] The principles that govern this type of case are well-settled, and are
found in the Supreme Court’s decision in 671122 Ontario Ltd v. Sagaz
Industries Canada Ltd.
where Major J., writing for the Court, said at paragraphs 46 - 48:
46 In
my opinion, there is no one conclusive test which can be universally applied to
determine whether a person is an employee or an independent contractor. Lord
Denning stated in Stevenson Jordan, supra, that it may be
impossible to give a precise definition of the distinction (p. 111) and,
similarly, Fleming observed that “no single test seems to yield an invariably
clear and acceptable answer to the many variables of ever changing employment
relations . . .” (p. 416). Further, I agree with MacGuigan J.A. in Wiebe
Door, at p. 563, citing Atiyah, supra, at p. 38, that what must
always occur is a search for the total relationship of the parties:
[I]t is
exceedingly doubtful whether the search for a formula in the nature of a single
test for identifying a contract of service any longer serves a useful
purpose.... The most that can profitably be done is to examine all the possible
factors which have been referred to in these cases as bearing on the nature of
the relationship between the parties concerned. Clearly not all of these
factors will be relevant in all cases, or have the same weight in all cases. Equally
clearly no magic formula can be propounded for determining which factors
should, in any given case, be treated as the determining ones.
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.
48 It
bears repeating that the above factors constitute a non-exhaustive list, and
there is no set formula as to their application. The relative weight of each will
depend on the particular facts and circumstances of the case.
[17] I turn now to the Wiebe Door
factors.
Control
There was no supervision and very little control. Ms.
Huber was free to work when and for how long she wanted. She did not need to
report to anyone. No one monitored her hours or her productivity. Although Ms.
Huber testified that she was told where to canvass, I prefer the evidence of
Mr. Lecompte who testified that canvassers could work where they wanted so long
as they told someone at Starsky where that was. This level of coordination was
necessary so that Starsky could keep local police departments informed, and to
avoid canvassing the same homes more than once. I accept that Ms. Huber
believed that she was a fulltime employee, who was required to attend daily
meetings and canvass every day. However, I prefer the evidence of Mr. Lecompte,
which established that Starsky exercised very little control over the
canvassers, including Ms. Huber.
Ownership of Tools
The canvassers were responsible for their own
transportation. Starsky supplied the ribbons, receipts and donor cards,
although Mr. Lecompte testified that these were consigned to the canvassers. Should
a canvasser lose any receipts or donor cards, they would have to reimburse
Starsky. The fact is that the canvassers used no tools of any significant
value. This factor is not a significant one in this case.
Chance of Profit/Risk of Loss
The method of remuneration in this case gives the
workers some opportunity to increase their incomes, both by working longer
hours, and also by organizing their efforts in a way that maximizes their
efficiency. Clearly, not all workers who are paid on the basis of commission
can be said to be in business for themselves. Mr. Lecompte described his
canvassers as having their own mini businesses, and no doubt the method of
remuneration is one factor that leads towards that conclusion.
Conclusion
[18] Twenty years ago, in Bradford v. M.N.R., Judge Taylor of this Court
made the following observation:
The general
principle that commends itself to me arising out of this appeal and the recent
jurisprudence noted is that under a given set of circumstances within which
there are certain aspects of 'employee', some others of 'independent
contractor', and even others that are somewhat ambiguous, that the intentions
and objectives of the parties, if clearly and unequivocally stated and agreed
upon, should be a prime factor in the determination of the Court.
That proposition has since been followed by Judge
Teskey in Manhattan Multi-Marketing Inc. v. M.N.R., by Judge Sobier in Whistler Mountain Ski Club v. M.N.R.,
and by O’Connor J. in Armstrong v. M.N.R.
[19] In my view, the same principle should be applied in this case. While
there are factors that tend towards a contract of service, and some that tend
in the direction of a contract for services, the written agreement between the
parties is unequivocal, and should be respected. The appeal will therefore be
allowed, the decisions of the Minister will be set aside, and the rulings will
be varied to provide that the employment of Ms. Huber by the appellant was not
insurable employment under the Act, and was not pensionable employment
under the Plan.
Signed at Ottawa, Canada, this 4th day of April, 2008.
“E.A. Bowie”
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