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Citation: 2005TCC49
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Date: 20050120
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Docket: 2004-288(EI)
2004-289(CPP)
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BETWEEN:
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NIPUGT ECO TECH,
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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
Paris, J.
[1] These appeals are from decisions
by the Minister of National Revenue that Maurice Lavigne (the
Worker) was not employed by the Appellant under a contract of
service and therefore that his employment with the Appellant was
neither insurable under the Employment Insurance Act (the
"Act") nor pensionable under the Canada
Pension Plan (the "Plan"). The appeals were
heard on common evidence. The period covered by the decisions was
from September 2 to November 16, 2002 although only the first and
last week of the period was worked by Maurice Lavigne. The
Appellant is a proprietorship and is identified more fully in the
Notices of Determination which are the subject of these appeals
as Theresa Jean operating as Nipugt Eco Tech. For ease of
reference I shall refer to the Appellant in these reasons simply
as Eco Tech.
[2] Although the Notices of Appeal
that were filed purport to challenge decisions made by the
Minister concerning the insurability and pensionability of other
individuals, the Appellant's representative was unable to provide
any particulars of any decision relating to any worker other than
Maurice Lavigne, and he conceded that only the decision relating
to the latter was properly the subject of these appeals.
[3] The Minister made certain
assumptions of fact relating to the Appellant's operations which
were set out at paragraph 6 of each Reply to the Notice of
Appeal. Those assumptions were identical in respect of both of
the decisions in issue and read as follows:
a) during the
period in question, the Appellant was a proprietorship operated
by Theresa Jean;
b) the
Appellant's operation consisted of the harvesting of wild
ground hemlock (the "plant") which was sold to American
pharmaceutical companies for medicinal purposes; the product
obtained from the young tips are used in the treatment of
cancer;
c) the Worker
collected the tips from the plant and sold them to the
Appellant;
d) the Worker
received $0.60 per pound from the Appellant;
e) the
Appellant had no knowledge of the number of hours actually worked
by the Worker;
f) the
Worker was responsible to find land where the plant grows;
g) the Worker
was responsible to ask permission to harvest the plant from the
landowners where the plants were found;
h) the worker
was free to use helpers while harvesting and could sell the total
harvest in his own name;
i) the
Worker had to store the harvest and take it to the
Appellant's collection location each week;
j) the
Worker had to provide his own cutter for the harvest;
k) the
Appellant provided the bags for storage of the harvest;
l) the
Worker decided the volume of tips he was willing to harvest;
m) the Worker
harvested during the first and the last week of the period in
question;
n) the Worker
reported 60 hours of work each week for a total of
120 hours; and
o) the Worker
earned $624 the first week he harvested and $440.49 the second
week he harvested.
Evidence
[4] Three witnesses gave evidence on
behalf of the Appellant: Eric Smith, who worked for the Appellant
in an executive capacity (and who represented the Appellant in
these proceedings), his son Ryan Smith who also worked for the
Appellant, and Maurice Lavigne. Ryan Smith was the spouse of
Theresa Jean. Eric Smith gave evidence about the general
nature of the Eco Tech's operations. He had no recollection of
Maurice Lavigne or the work he did for Eco Tech. Ryan Smith
was attending university during 2002 but worked for the business
as time permitted. He worked mostly at the buying station
operated by Eco Tech at Cross Point, Quebec. He recalled meeting
Maurice Lavigne at the buying station once during each of the two
weeks Maurice Lavigne worked but also said that he could not
remember one harvester from another because there were so many of
them.
[5] Eric Smith said that Eco Tech had
both full-time and part-time workers but was mostly interested in
finding full-time harvesters who would return to work for the
business for each season, so that Eco Tech could maintain
reliable production volumes and fulfill its long-term contracts
with the pharmaceutical company who purchased the hemlock. Eco
Tech wanted to be able to offer harvesters employment that would
be insurable under the Act and considered the full-time
harvesters as employees, creating payroll records for them,
making deductions from the amounts that were paid to them and
providing records of employment to them at the end of the season.
Eco Tech guaranteed that it would purchase the hemlock harvested
by the full-time harvesters and claimed to guarantee them 10
years of work. Part-time harvesters were not considered by Eco
Tech to be employees and they were not guaranteed a market for
their hemlock. In Maurice Lavigne's case, after picking for Eco
Tech for a week he found work as a welder, and returned to
picking hemlock for another week when the welding job ended.
[6] Eco Tech provided all of its
harvesters with bags and in some cases sold them cutters although
many harvesters chose to obtain their own cutters.
Maurice Lavigne provided his own cutters.
[7] The harvesters were also given
some instruction on the cutting procedures that they were
required to follow according to the Canadian Forest Service
Guidelines for harvesting hemlock. Maurice Lavigne said that he
received a couple of hours of instruction, and provided his own
cutters.
[8] Arrangements concerning the land
on which the harvest was carried out appeared to have been
somewhat loose in 2002. In some cases the harvester found the
land, and in other cases Eco Tech became aware of picking
locations and obtained permission for harvesters to go on the
land. Ryan Smith said that Eco Tech found land only for its
full-time harvesters. After 2002 Eco Tech began entering into
written contracts with landowners for the harvesting of the
hemlock, and began paying royalties to them. Neither Eric nor
Ryan Smith could recall on the stand whether Eco Tech or Maurice
Lavigne found the sites on which Maurice Lavigne worked.
Maurice Lavigne said that he found the first one and
Eco Tech arranged the second one.
[9] Harvesters brought the hemlock to
the buying station, where the product was weighed and checked for
quality. The harvesters had to give the location of where the
hemlock was from, which Eco Tech recorded on behalf of the
pharmaceutical company that it sold to. Eco Tech paid the
harvesters 60 cents per pound for the branches. Both full and
part-time harvesters received the same price. Harvesters were
responsible for their own transportation and for bringing the
hemlock to the buying station. The station was open two days a
week between April and January.
[10] Eric Smith said that for full-time
workers a weekly salary was set that was based on a certain level
of production. In order to meet the level of production that was
set, the harvester had to work a certain number of hours.
However, Ryan Smith said that the workers were paid solely
based on poundage produced regardless of the hours that they
worked.
[11] Maurice Lavigne said that he wanted to
earn $600 per week, which meant that he needed to cut 1,000
pounds. At his rate of cutting that amounted to 60 hours of work.
His record of employment showed that he was paid $624 in the
first week he worked and $440 in the second.
[12] Eric Smith also said that Eco Tech had
three field inspectors who carried out spot checks on the areas
where the harvesters were working to ensure that the harvest was
being done properly. Each harvester was checked once or twice in
a season. According to Eric Smith the pharmaceutical company who
purchased the hemlock from Eco Tech was concerned that
environmental standards for the cutting be maintained, and also
sent inspectors to check out the areas in which the hemlock was
harvested. Maurice Lavigne said that his work was inspected once
by someone from Eco Tech.
[13] The Respondent's counsel called one
witness, Louise Boudreault, an appeals officer at the Canadian
Revenue Agency who made the determination that
Maurice Lavigne was not in insurable or pensionable
employment. Ms. Boudreault recounted a conversation that she had
with Eric Smith in October 2003 in which he said that Maurice
Lavigne set his own work schedule and that he was responsible for
finding an area to harvest. She said he also told her that for
the 2003 season the Appellant had changed procedures and that the
harvesters were no longer required to find land because the
Appellant was making the arrangements with the landowners and
paying them for it. She also said that Maurice Lavigne confirmed
that he had to find his own harvest location, that he set his own
work hours and that he was not under the supervision of Eco Tech
when he harvested the hemlock.
Analysis
[14] In this case, the first issue that must
be addressed is whether Maurice Lavigne was under a contract
to provide services to Eco Tech, or whether he simply sold
hemlock that he had gathered to Eco Tech. In the latter case, he
would not have been in insurable or pensionable employment
because there was no employment relationship between Eco Tech and
Maurice Lavigne. For the reasons that follow, I find that the
amounts that were paid by Eco Tech to Maurice Lavigne were for
the purchase of hemlock and not for services rendered by him.
[15] According to the assumptions in the
Reply to Notice of Appeal, Maurice Lavigne collected the
hemlock and sold it to Eco Tech for 60 cents per pound. The
Appellant has the onus of demonstrating that these assumptions
are wrong. I am not satisfied that the Appellant has met the onus
to show that Maurice Lavigne did not sell the hemlock to Eco
Tech. In fact, Eric Smith, in his evidence, referred to
guarantees given by Eco Tech to full-time harvesters to purchase
the hemlock they picked.
[16] The alternative position, that the
Appellant paid Maurice Lavigne and the other harvesters to
harvest hemlock which belonged to Eco Tech, was not advanced on
behalf of the Appellant. Unfortunately the evidence which was led
concerning what arrangements, if any, that were made with
landowners to harvest hemlock on their land was vague and
incomplete. In any event, the evidence was insufficient to show
that Eco Tech acquired any right to harvest the hemlock. It
appears to me that in 2002 the Appellant only obtained permission
from landowners for harvesters to go on their property, but did
not negotiate a right to harvest the hemlock itself. Both Eric
and Ryan Smith said that prior to 2003, Eco Tech did not pay
anything to the landowners who allowed harvesters on their
property. In these circumstances, the hemlock would have been
owned by the person harvesting it, and the amount he or she
earned from harvesting was through the sale of the product to a
buyer such as Eco Tech. Therefore, there was no employment
relationship between the Appellant and Maurice Lavigne during the
periods in issue.
[17] Even if I had determined that Maurice
Lavigne was harvesting hemlock on behalf of the Appellant (i.e.
that the Appellant owned the hemlock that was collected) I would
have found that Maurice Lavigne was an independent contractor for
the reasons that follow.
[18] The question of whether a worker is an
employee or an independent contractor must be determined on a
consideration of all of the circumstances of the relationship
between the worker and the payor. In the Supreme Court of Canada
decision, 671122 Ontario Ltd. v. Sagaz Industries Canada
Inc., [2001] 2 S.C.R. 983, Major J. stated:
... 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.
...
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.
[19] Here, the Appellant's representative
admitted that Eco Tech did not control Maurice Lavigne's hours of
work, nor were those hours of work monitored. The evidence also
shows that it did not determine where he worked, and the only
direction provided by Eco Tech over how the work was done was by
means of a single site inspection. The absence of any right by
Eco Tech to control, to any substantial degree, the work of
Maurice Lavigne, is not consistent with a contract of
service.
[20] The test relating to the ownership of
the tools used in the harvest also goes against a finding that
Maurice Lavigne was an employee. Although Eco Tech supplied bags
for storing the hemlock, the Appellant provided the vehicle that
was necessary to access the cutting sites, and to transport the
cut hemlock, and he was required to provide his own cutters, or
to buy them from the Appellant.
[21] Since Maurice Lavigne was paid for the
quantity of hemlock that he harvested, he could increase his
profit by becoming more efficient in harvesting it. He
could also presumably increase his profit by locating better
harvesting areas. This is also indicative of a contract for
services. Evidence concerning his right to hire others to help
with the harvest was inconclusive in this case.
[22] Finally, it cannot be said that Maurice
Lavigne's work was substantially integrated into the operations
of Eco Tech. His role was that of a supplier, and while suppliers
are essential to a business, they are external to it. Also, the
fact that Maurice Lavigne chose to work only the first and last
weeks of the period under review shows that the Appellant did not
need his regular or continuous service in order to carry on its
business.
[23] For all of these reasons, the appeals
are dismissed.
Signed at Ottawa, Canada, this 20th day of January 2005.
Paris, J.
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