Citation: 2005TCC299
Date: 20050517
Docket: 2004-4390(EI)
BETWEEN
RÉAL BUJOLD,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Angers J.
[1] This is an appeal
from the determination by the Minister of National Revenue (the Minister) dated
September 20, 2004, that the Appellant was not engaged in insurable
employment within the meaning of the Employment Insurance Act (the Act)
during the period from July 14, 2003, to March 8, 2004, (the period
in issue) while he was associated with North American Forest Products Ltd. (the
payor).
[2] The payor operates
a forestry business that cuts timber, transports logs and sells the logs to
sawmills, and saws timber in its own plants. The Appellant was employed by the
payor to transport logs from the payor's woodlot sites to various destinations.
To do that, he had to load and unload the logs himself. In order to do that
work, the Appellant had to have access to a truck. During the period in issue,
he owned a truck for transporting timber that was equipped with a loader, the
value of which was approximately $75,000.
[3] At the hearing, the
Appellant produced a contract of employment between himself and the payor,
signed on January 24, 2003. The term of the agreement is not clear, in that all
that appears under that heading is [translation]
"From to 2003". The contract states that the Appellant would be paid
by the week, based on an amount determined jointly with the employer each week.
The one-page contract also contains the following provision regarding control
of the work:
[translation]
It is agreed that the employer will control
the manner in which the work is performed on the ground. Control will be
exercised by a foreperson and/or the management. The employer will instruct the
operator-owner as to the location, nature and duration of the work to be
performed by him.
[4] The Appellant
testified that he also had to have a rental contract. He produced a contract
for the period from June 1, 2004, to March 31, 2005, a period after the
period in issue. For the period in issue there could therefore have been only
an oral agreement for the rental of his truck, as the evidence indicated.
[5] The payor paid the
Appellant based on weight, distance traveled and type of timber transported.
Whether the truck was equipped with its own loader had an effect on payment.
The timber was transported on a timetable established by the payor. Each week,
the amount owing to the appellant, based on the timetable, was paid by two
cheques. The Appellant received a paycheque in the amount of $721.20 plus four percent
vacation pay, for driving the truck for one week. The usual deductions from an
employee's earnings were made from that amount. The second cheque issued to the
Appellant represented the amount owing to him based on the timetable. The payer
deducted from that his $721.20 salary, the four percent vacation pay in
the amount of $28.85, the cost of the gas supplied to the Appellant by the
payor, the employer's share of the Canada Pension Plan and employment insurance
premiums, and any other expenses incurred by the payor on the Appellant's
behalf. In fact, the payor did not assume any expenses in connection with the
services provided by the Appellant and his truck. Its role amounted solely to
paying him the agreed amount per kilo for transporting timber.
[6] The Appellant's
salary was based on a 60-hour work week, without regard to the actual number of
hours worked. No record of hours worked was kept by the parties, and they
relied on the documents produced by the sawmills to calculate the hours worked
by the Appellant.
[7] The Appellant also
assumed the costs of insurance, maintenance and repairs during the term of the
agreement. He was responsible for any damage he caused in the course of the
work. He repaired his truck himself, unless there were major repairs. He stated
that he received his pay even when the truck had not been used very much,
because the income generated meant that the payor was able to pay him. In my
opinion, the Appellant's work was closely tied to the use of his truck.
Notwithstanding the Appellant's claim that there was a rental contract for his
truck, it is obvious that the payor exercised no control over the truck during
the period in issue.
[8] The invoices
submitted in evidence confirm that the Appellant's salary was deducted from the
revenue from his truck and that he assumed all the expenses, and so the payor
paid only the rate per kilo to which they had agreed. In the Appellant's income
tax returns, everything is treated as if the Appellant was operating his own
business. In his testimony, he also referred to being self‑employed.
[9] The payor's foreperson stated in his testimony
that he supervised the construction of roads and the transport of timber. He
met with the Appellant to assign work to him. The payor ensured that the
Appellant and the other workers received safety training once a year. A
representative of the payor met with the Appellant every day and filled out a
series of documents. The hours worked by the Appellant were not recorded, but
he knew what to do and he communicated by radio to say where he was with the
work. The witness said nothing about a rental contract for the truck for the
period in issue. The question is therefore whether the Appellant was engaged in
insurable employment with the payor within the meaning of paragraph 5(1)(a)
of the Act during the period in issue. In Wiebe Door Services Ltd. v. Minister
of National Revenue, [1986] 3 F.C. 553, the Federal Court of Appeal provided
a useful guide for distinguishing a contract of service from a contract for
services. In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001]
2 S.C.R. 983, the Supreme Court of Canada approved that guide, and
summarized the law as follows:
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.
[10] In Charbonneau v.
Canada, [1996] F.C.J. No. 1337 (Q.L.), Mr. Justice Marceau of the
Federal Court of Appeal noted that the factors in question are reference points
which are generally useful to consider, but not to the point of jeopardizing
the ultimate goal of the exercise, which is to determine the overall
relationship between the parties.
[11] In a recent judgment, the Federal Court of Appeal once again explained
the legal principles that govern the issue of the insurability of employment.
In Livreur Plus Inc. v. Canada, [2004] F.C.J. No. 267, Mr. Justice
Létourneau summarized those principles as follows at paragraphs 18 and 19
of his judgment:
In these circumstances, the tests mentioned in Wiebe
Door Services Ltd. v. M.N.R., 87 D.T.C. 5025, namely the degree of control,
ownership of the work tools, the chance of profit and risk of loss, and finally
integration, are only points of reference: Charbonneau v. Canada (Minister of National Revenue - M.N.R.) (1996), 207
N.R. 299, paragraph 3. Where a real contract exists, the Court must determine
whether there is between the parties a relationship of subordination which is
characteristic of a contract of employment, or whether there is instead a
degree of independence which indicates a contract of enterprise: ibid.
Having
said that, in terms of control the Court should not confuse control over the
result or quality of the work with control over its performance by the worker
responsible for doing it: Vulcain Alarme Inc. v. The Minister of National
Revenue, F.C.J. No. 749, A-376-98, May 11, 1999, paragraph 10, (F.C.A.); D&J
Driveway Inc. v. The Minister of National Revenue, supra, at
paragraph 9. As our colleague Décary J.A. said in Charbonneau v. Canada
(Minister of National Revenue - M.N.R.), supra, followed in Jaillet
v. Canada (Minister of National Revenue - M.N.R.), 2002 F.C.J. No. 1454,
2002 FCA 294, "It is indeed rare for a person to give out work and not to
ensure that the work is performed in accordance with his or her requirements
and at the locations agreed upon. Monitoring the result must not be confused
with controlling the worker".
[12] Recently, Létourneau
J.A. reiterated all these principles, in Tremblay v. Canada, [2004] F.C.J.
No. 802, in which he had to dispose of issues similar to the issues in this
case, and in particular the application of Coverage Bulletin 97‑1. He
summarized the purpose of that bulletin very clearly, as follows:
The purpose of that Bulletin is to clarify Revenue Canada's policy on workers in the forestry
industry who, in addition to providing services to a contractor, lease their
heavy machinery to the same contractor. The purpose is to facilitate
determining the insurability of the employment and lessen the requests for
rulings on insurability sent to Revenue Canada with regard to such workers.
17 In a word, the Bulletin, which I set out below, enables an
operator-owner of heavy machinery to conclude two separate contracts with a
contractor: a contract to rent the machinery and a contract of employment,
which the Bulletin calls a contract of service. In principle, the separate
agreements must be in writing although verbal agreements are also accepted, but
applications based on verbal agreements are subject to special review by
Revenue Canada: see also the
addendum to Coverage Bulletin No. 97-1 on insurance policy, which confirms
this. The rental contract and the employment contract must comply with strict
conditions, otherwise the employment insurability application will be denied: …
[13] He went on to add:
19 In rental
contracts the Coverage Bulletin properly requires that certain clauses in the
contract should indicate that lessee takes control of the machinery for the
duration of the agreement. The contract of employment must be separate from the
rental contract. Additionally, the services of the operator-owner must not be
directly and exclusively linked to the operation of the machinery and the
employer must be responsible for damages or injuries caused by the operator as
part of his or her duties.
[14] The Appellant
contends that the facts in this case meet the requirements set out in Coverage
Bulletin 97‑1, which operator-owners of machinery must meet in order
to be entitled to employment insurance benefits. The Bulletin provides that in
order for there to be a contract of service, the parties concerned must meet
the following requirements:
(a)
the employment and machinery rental contracts
must be separate;
(b)
the method of remuneration must be indicated in
the contract (hourly, daily, piece rate, etc.);
(c)
the employer must have the right to control the
way the work will be done. Generally, this control is exercised by a foreperson
on the worksite;
(d)
the employer tells the worker where and for how
long he/she will render the services (location or site-timetable or schedule,
duration of the employment);
(e)
the employer has the right to decide what type
of work the operator will do;
(f)
the services of the operator-owner must not be
directly linked to the production of his/her machinery. In case of major
breakdown, the operator may be required by the employer to carry out other
duties for which he/she will be paid accordingly;
(g)
the employer is responsible for damages or
injuries caused or suffered by the operator as part of his/her duties.
[15] Although at first
blush there seems to be a written contract of employment and an oral rental
contract in this case, the particular terms and conditions of those contracts,
and specifically the term and remuneration, are not specified, and so the
contracts completely fail to contain the essential elements of a valid
contract. If there is a valid contract, it is impossible to separate the two
contracts, since the Appellant's remuneration under the contract of employment is
tied directly to the operation of his truck under the rental contract.
[16] The Appellant
assumed liability for injury caused to third parties as a result of his use of
his truck and for expenses associated with the operation of the truck. In my
opinion, this is not remotely like a genuine rental contract. Rather, this is
apparently a case of an entrepreneur operating his own business. Although the
facts of the case seem, at first blush, to establish that the payor had some
control over the Appellant's performance of the work, what it was, rather, was control
over the quality and results of the work. The Appellant only had to comply with
a safety code and environmental standards. For everything else, the Appellant
was on his own. That situation leaves little room for a relationship of
subordination to be established.
[17] The Appellant owned
his own truck and was responsible for all expenses, including gas. Accordingly,
he assumed the chance of profit and risk of loss. The duties he performed were
a good fit with his business, since his remuneration was tied directly to the
operation of his truck. The hours he worked were not recorded, and his record
of employment does not reflect the reality.
[18] For these reasons, I
conclude that in this case there was no genuine contract of service between the
payor and the Appellant during the period in issue. The appeal is dismissed.
Signed at Ottawa, Canada, this 17th
day of May 2005.
"François Angers"
Translation certified true
On this 30th day of March 2009
Monica Chamberlain, Translator
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