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Citation: 2004TCC557
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Date: 20040818
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Dockets: 2003-4666(EI)
2003-4667(EI)
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BETWEEN:
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RICHARD DESBIENS,
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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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AND BETWEEN:
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Dockets: 2003-4669(EI)
2003-4670(EI)
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JACKY DESBIENS,
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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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[OFFICIAL ENGLISH TRANSLATION]
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REASONS FOR JUDGMENT
Tardif J.
[1] This deals with four separate
appeals by the Appellants; each Appellant has two dockets.
Each appeal covers a number of periods. The appeals cover
the following periods and Payors:
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Appellant and Docket Number
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Payor and Period at Issue
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Richard Desbiens (2003-4666(EI))
Jacky Desbiens (2003-4669(EI))
(cont'd)
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AmboisInc.
July 19 to October 22, 1999,
July 10 to November 10, 2000,
and November 5 to November
23, 2001.
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Appellant and Docket Number
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Payor and Period at Issue
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Richard Desbiens (2003-4667(EI))
Jacky Desbiens (2003-4670(EI)
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Les entreprises forestières F.G.
Inc.
November 30 to December 18, 1998,
May 31 to July 16, 1999,
November 1 to 19, 1999,
May 29 to July 7, 2000,
November 13 to December 8, 2000,
June 11 to September 21, 2001,
October 29 to November 2, 2001,
June 3 to September 13, 2002
and October 14 to December 20, 2002.
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[2] The parties agreed to argue their
appeals by presenting the same evidence for the four dockets.
[3] Because the assumptions of fact
used in the determinations under appeal are approximately the
same for the four dockets, counsel for the Appellants made some
admissions based on the facts alleged in the docket of Jacky
Desbiens (2003-4669(EI)), as follows:
(a) the Payor
operated a forest cutting business;
(b) during the
periods at issue, the Payor hired the Appellant to cut wood on
the Payor's lands;
(d) the Appellant
and Richard Desbiens worked as a team;
(e) the Appellant's
tasks consisted of driving the skidder or cutting trees;
(g) a signed
contract did not exist between the Appellant and the Payor;
(h) the Appellant's
tasks consisted of cutting and transporting the wood;
(i) the Payor
did not impose a wood-cutting quota on the Appellant;
(j) the Payor
did not impose a work schedule on the Appellant;
(k) the Payor
remunerated the Appellant based on the quantity of wood cut and
measured;
(m) the Payor's payroll
records for the period beginning July 19 and ended October 22,
1999, showed that the Appellant had been paid $812 for the first
8 weeks and $754 for the last 4 weeks. For the period
beginning July 10 and ended November 10, 2000, the records
showed that the Appellant received $754 per week, and for the
period beginning November 5 and ended November 23, 2001, the
Appellant received $780.16 per week;
(o) the Appellant
was paid by direct deposit;
(p) the total amount
of money paid to the Appellant was to correspond with the amount
of wood cut by the Appellant and measured;
(q) after the final
measurement, the Payor issued a final payment to the
Appellant;
(s) the Appellant
was responsible for the repair and maintenance of his
skidder;
(u) the Appellant
was to insure the equipment appropriately at his own cost;
(v) the Appellant
and Richard Desbiens provided a pick-up truck and various
tools;
(w) the Appellant and
Richard Desbiens incurred the fuel costs for the skidder and the
pick-up truck;
(x) the Appellant
supplied his own chain saw;
(y) the Appellant
was responsible for the costs and maintenance of the chain
saw;
(z) on November
2, 1999, the Payor issued a Record of Employment to the
Appellant, for the period beginning July 19, 1999, and ended
October 22, 1999, showing 540 hours of insurable employment and
total insurable earnings of $10,454.72;
(aa) on November 23, 2000, the
Payor issued a Record of Employment to the Appellant for the
period beginning July 10, 2000, and ended November 10, 2000,
showing 810 hours of insurable employment and total insurable
earnings of $13,572.00;
(bb) on December 5, 2001, the
Payor issued a Record of Employment to the Appellant for the
period beginning November 5, 2001, and ended November 23,
2001, showing 135 hours of insurable employment and total
insurable earnings of $2,340.48;
[4] The following paragraphs were
denied:
(c) for the last 12
years, the Appellant and his father, Richard Desbiens, have been
co-owners of a "Timber Jack" skidder valued at $33,000;
(f) the
Appellant and Richard Desbiens did not allow anyone else to
operate the machinery;
(l) the
Appellant received advances for so-called labour wages and
so-called machinery wages;
(n) the so-called
machinery wages were equal to 80% of the so-called labour
wages;
(r) the Payor
subtracted from amounts owing to the Appellant the
so-called labour wages and so-called machinery wages paid
to the Appellant, including employer and employee
contributions;
(t) when the
skidder was inoperative, the Payor would not assign any other
duties to the Appellant;
(cc) the Appellant and Richard
Desbiens operated their own business.
[5] The Tax Court of Canada and the
Federal Court of Appeal have rendered a number of judgments in
cases involving similar facts. In most of these cases, the
Courts concluded that a contract for services existed.
[6] Counsel for the parties were very
familiar with these rulings, and, therefore, they targeted the
evidence they presented accordingly.
[7] Counsel
for the Appellants prepared very detailed files and was
especially careful not to overlook anything so that the
Appellants could discharge their burden of proof.
Consequently, he called on everyone who could provide information
about the Appellants' work to testify.
[8] He insisted specifically on a
number of elements and facts to demonstrate that the Appellants'
cases were very different from most of those in which the Courts
had ruled, and more specifically, the ruling of the Federal Court
of Appeal in Tremblay v. Canada (Minister of National
Revenue - M.N.R.), [2004] F.C.J. No. 802, (Q.L.).
He pointed out some aspects of this case that, in his opinion,
justified a conclusion in favour of the Appellants.
[9] In addition to the Appellants,
testimony was given by Mr. Armand Gagnon, Mr. Jeannot Simard, and
Mr. Marc Gilbert.
[10] Firstly, it was determined that the two
Payors had more or less the same vocation. Ambois Inc. had
three shareholders, namely, Mr. Armand Gagnon, Mr. Jeannot
Simard, and Mr. Marc Gilbert. Mr. Armand Gagnon was the
sole shareholder in Les entreprises forestières F.G.
Inc.
[11] This company, unlike Ambois Inc., owned
equipment and machinery, namely, trucks, a power shovel, a
delimber, a chain saw, a skidder, and a tractor.
[12] The two companies owned a number of
wood lots and had cutting rights on various lands. They
worked within the scope of development plans on a regular
basis.
[13] Often, they worked in areas enclosed by
boundaries, watercourses, lakes, etc. It was also indicated
that numerous regulations were applicable, and varied from one
area to another and from one site to another.
[14] Mr. Armand Gagnon, the 73-year-old
holder of all of the shares in Les entreprises forestières
F.G. Inc. and of one third of the shares in Ambois Inc., is a
forest enthusiast.
[15] He worked in the forest at various
jobs, particularly as a foreman, for all of his life;
wood-cutting held no secrets for him. His co-shareholder,
Mr. Gilbert, stated that he spent entire days in the forest and
that he would probably keep doing so until the day came where he
could no longer walk.
[16] Mr. Gagnon was always present on one of
his sites, particularly the one on which the Appellants performed
their work. Because the Appellants were not the only
workers to perform forestry work for one of the two companies,
Mr. Gagnon could, at times, go to sites other than the ones on
which the Appellants were working.
[17] On occasion, Mr. Simard and Mr. Gilbert
replaced him such that, in general, representatives of the
Payors-Ambois Inc. and Les entreprises forestières F.G.
Inc.-were present at the sites on which the Appellants were
performing their work.
[18] Based on this presence of a
representative from one of the two Payors on the job sites, the
Appellants maintained that their work had, at all times, been
subject to ongoing, strict, and very significant control.
To establish the existence of the power of control and the de
facto control over the work performed, the Appellants were
insistent about the following:
· practically
continuous presence of representatives of one of the two Payors
who ensured that the work was done properly and in accordance
with expectations in terms of quantity and quality and in
compliance with all of the applicable regulations;
· constant
supervision to ensure that the cutting work was performed in the
correct areas;
· numerous
marked areas and trees to ensure the protection of some trees and
some sites, and to maintain a certain distance from watercourses,
escarpments, wetlands, dangerous areas, and others;
· on-site
representatives' constant concern that the work be performed
properly;
· supervision
carried out for the purpose of ensuring that the wood was placed
properly to facilitate subsequent operations.
[19] The Appellants were paid according to
standard practices in this matter. Generally, they were
paid weekly, based on an estimative assessment of the wood
cut.
[20] Eighty percent of the amount paid to
the Appellants for their work was paid to them as leasing fees
for the skidder that they owned jointly. This 80% as
leasing fees covered all of the expenses incurred for the
maintenance, operation, and repair of the skidder and other
expenses, such as liability insurance premiums.
[21] The lease agreement for the skidder was
an oral agreement. Consequently, the rights and obligations
of the lessees and the lessors were not set out in any written
document.
[22] Unlike in other logging operations,
remuneration in this case was not linked to the potential selling
price of the wood to be made into pulp or sent to a sawmill. The
price was established further to an initial evaluation generally
determined by one of the Payor's shareholders. The
exact value of the work was confirmed by a duly qualified and
certified scaler. The evaluation was based on an industry
table in which the rates are based on the diameter of the base of
the felled tree.
[23] For these reasons, the Appellants'
situation was unusual, because the remuneration payable to the
Appellants for their work and for the skidder was not determined
by the sale of the wood at the end of the process but,
essentially, by the result of an on-site evaluation performed by
the Payors' qualified scaler.
[24] Because the Payors had extensive
experience in forestry and because the parties agreed that the
remuneration would be calculated on the basis of a recognized
table in this field, there was very little difference between the
estimated remuneration and the final remuneration to which they
were entitled as determined by the official scaler's
evaluation.
[25] The table set out the rates by the
diameter of the felled trees; the size of the trunk determined
the price. The larger the diameter of the trunk, the higher the
amount paid for that tree, regardless of height.
[26] This method of determining the value of
the services rendered by the Appellants and the skidder they
owned jointly allowed the Payors to determine the price to pay
quite accurately. The wood cut by the Appellants was later
sold to third parties to be made into pulp or to be sawed.
The prices paid had no impact on the amounts already paid to the
Appellants.
[27] The skidder, owned jointly by the
Appellants, cost $24,000. During the periods at issue, the
value of the skidder ranged from $15,000 to $20,000.
[28] All of the operating expenses, such as
oil, fuel, maintenance, and repair costs were the sole
responsibility of the Appellants. The Payors did not assume
any of the expenses inherent in the operation and repair of the
skidder.
[29] All of the parties acknowledged that
the Payors would not have retained the services of the
Appellants had they not owned the skidder. In other words,
there would not have been a contractual relationship between the
Payors and the Appellants had the Appellants not owned a
skidder. The agreement between the Appellants and the
Payors was identical to that of the three or four other teams
that did the same work for the Payors, depending on the year, the
periods, and the sites.
[30] During all of the periods at issue, the
Appellants worked exclusively for one of the two Payors, Ambois
Inc. or Les enterprises forestières F.G. Inc. The
Appellants have not, at any time, performed any similar work for
other owners of woodlots or cutting rights, before, during, or
after the periods at issue. In fact, the Appellants have
performed this work in a continuous and repetitive manner, year
after year, for more than 15 years-a period that exceeds the
periods at issue.
[31] The Payors considered the Appellants to
be professionals and genuine experts in their field and they gave
the Appellants priority when assigning work.
[32] Each year, the Payors ensured that they
assigned work to the Appellants. They did so continuously
for a period of more than 15 years. When asked about the
quality of the work and the productivity of other teams, it was
stated that the services of incompetent, non-productive, or
low-production workers were simply not retained.
[33] On a number of occasions, the Payors'
representatives stated that the way to do the work, the way to
proceed, was "the standard," current practice.
[34] The two Appellants were qualified to
operate the machine; they decided between them who would drive
it. No answer was given when asked whether the Payors could
have assigned someone other than the Appellants to drive the
skidder. Although no speculation should arise from this
question, it is likely that the Appellants would not have agreed
to let the Payors assign a third party to drive the skidder
without giving the Appellants the right of supervision.
[35] The Appellants pointed out some
specific points, namely, that throughout the years, they had not
worked for any company other than the Payors. In fact, they
worked, year after year, for a large number of years, for the
Payors, and they had some assurance that they would be able to
continue doing so. In other words, a highly trusting
relationship had developed between the Appellants and the Payors
over the years.
[36] Although the terms and conditions of
the Appellants' remuneration was different from those found in
some other cases involving the same type of economic activity,
the Appellants were remunerated in accordance with their
productivity, like the other Appellants in all other similar
cases. This was a calculation based on a table known to the
parties and whose rates varied in accordance with diameter of the
base of the tree.
[37] Unlike the situation found in most
cases of this type, the Payors were present at the sites on which
the work was performed.
[38] The evidence also showed that, in some
cases, trees could be cut in small areas located in specific
sectors, near municipalities, watercourses, and neighbours
watching to ensure that property rights and environmental aspects
were being respected. This gave rise to the possibility of
earning additional or compensatory sums to take these aspects
into account.
[39] Are all of the specific elements
emphasized sufficient and decisive enough to conclude that the
work performed by the Appellants during the periods at issue was
performed in accordance with contracts of service?
[40] Admittedly, the specific aspects of the
Appellants' cases must be considered while keeping in mind the
broad principles that have emerged from the numerous Federal
Court of Appeal decisions in this matter. I refer namely to
the following decisions and excerpts:
·
Charbonneau v. Canada(Minister of National
Revenue - M.N.R.), [1996] F.C.J. No. 1337, (Q.L.), par.
4.
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Moreover, while the determination of the legal nature of the
contractual relationship will turn on the facts of each case,
nonetheless in cases that are substantially the same on the facts
the corresponding judgments should be substantially the same in
law. As well, when this Court has already ruled as to
the nature of a certain type of contract, there is no need
thereafter to repeat the exercise in its entirety: unless there
are genuinely significant differences in the facts, the Minister
and the Tax Court of Canada should not disregard the solution
adopted by this Court.
· Jaillet
v. Canada(Minister of National Revenue -
M.N.R.), [2002] F.C.J. No. 1454, (Q.L.), par. 2:
2 [...]
in Charbonneau v. M.N.R., [1996] F.C.J. No. 1337, to the
effect that monitoring the result of the work done is not to be
confused with the concept of controlling the worker.
· Tremblay
v. Canada(Minister of National Revenue -
M.N.R.), [2004] F.C.J. No. 802, (Q.L.), paragraphs 20,
22, 27, 37, 39 and 40:
20 Most of the
clauses in the rental contract, whether involving maintenance of
equipment, loss of income resulting from non-use or delays,
losses of or damage to equipment or the daily expenses of using
and operating the equipment, indicate that it is the lessor, not
the lessee, who remains in control of the equipment for the
duration of the contract and who assumes all risks. Are these not
actually the features of a contract of enterprise in which, for
an agreed price, the contractor provides his work and the tools
necessary to do the work at his own expense?
22 With respect, I
believe that this written contract, referred to as a
"rental" contract, and said to be accompanied by a
verbal contract of employment, is in fact a contract of
enterprise in which the owner of heavy machinery, in return for
remuneration by volume, performs work requested and supplies his
expertise and the equipment needed to do the work, with risks of
loss and chance of profit, as appears in the written contract.
Consequently, the work done by Denis Simard for the period
covered by this contract, from May 10 to December 31, 1999, was
not insurable employment under the Employment Insurance
Act.
27 The judge
apparently assessed integration from the standpoint of the
payer's business. This is a mistake for, as this Court said
in Le Livreur Plus Inc., supra, at paragraph 38,
assessing integration "from the standpoint of the business
nearly always leads unavoidably to the conclusion that the
workers' activities were organized and programmed to suit the
principal and overriding activity of the business. In other
words, the workers' activities will always appear to be
integrated into the business". Accordingly, the Court must
assess the services the workers provide from their standpoint and
consider whether the workers were acting on their own behalf.
37 In short, when
the judge concluded at paragraph 210 of his decision that the
payer "exercised adequate control over the workers",
this must be understood to refer to adequate control over
compliance with governmental standards and the quality and result
of the work. Control of the quality and result of work is not the
same thing as control of its performance by the worker
responsible for doing it: see Vulcain Alarme Inc., supra,
paragraph 10.
[...]
39 Finally, on the
concept of control I would add that the respondents were owners
of their heavy machinery and were its only operators: see the
testimony, for example, of B. Simard and D. Simard at pages 305,
316, 325 and 329 of the applicant's record, vol. I. The payer
had no control over choosing the operator of the machinery owned
by the respondents. At most it had a right of oversight or veto
on the choice of a replacement if a respondent wished to be away.
This right is understandable since the payer, who had given the
Ministère an undertaking to comply with the conditions it
laid down, was anxious to honour its commitments and receive the
grants. It is also explained by the fact that for spraying the
operator had to have special competence cards obtained after a
course on herbicides: ibid., at pages 238 and 239.
40 In short,
although it was stated that the heavy machinery was rented by the
payer, the evidence was that it was the respondents who operated
it exclusively and independently, without the sort of control
that characterizes a contract of employment and produces the
relationship of subordination necessary to the status of an
employee.
·
Canada(Attorney General) v. Rousselle (F.C.A.),
[1990] F.C.J. No. 990, (Q.L.), pp. 8 to 10:
[...]
In my view, it is clear that the judge did not understand the
meaning of the word "control". Fixing the
amount of remuneration or defining the purpose of the exercise is
not controlling work. These aspects exist in a
contract for services as much as in a contract of
service. It is still more the case that control does
not lie in the act of payment, whether by cheque or
otherwise.
Finally, the fact of giving instructions on the type of wood
to be cut and checking it when it is measured does not in itself
create a relationship of subordination like that which exists
between an employer and an employee.
[...]
There was evidence in the record on which the judge could find
that it was usual for a logger to provide his own power
saw. The same is not true, however, for a skidder, a
piece of heavy equipment which is of a radically different nature
from what a worker would ordinarily be expected to provide under
a contract of service.
[...]
· Elia
v. Canada(Minister of National Revenue -
M.R.N.), [1998] F.C.J. No. 316, (Q.L.), par. 3:
3 [...]
However, it seems to us that the judge's assertion is also
inaccurate and based on an error of law, since the judge did not
take into account the well-settled rule that the allegations in
the reply to the notice of appeal, in which the Minister states
the facts on which he based his decision, must be assumed to be
true as long as the appellant has not proved them false.
· 671122
Ontario Ltd. v. Sagaz Industries Canada Inc., [2001]
2 S.C.R. 983, (Q.L.), pp. 6, 7, 33, 34, 35, 36, 38, 39,
40 and 41:
[...] There is no one
conclusive test that can be universally applied to determine
whether a person is an employee or an independent
contractor. What must always occur is a search for the
total relationship of the parties. 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. Although the contract designated AIM as an
"independent contractor", this classification is not
always determinative for the purposes of vicarious
liability. Looking at the non-exhaustive list of
factors set out in Market Investigations, it is clear,
based on the total relationship of the parties, that AIM was an
independent contractor.
33 [...] This is
distinguished from the relationship of an employer and
independent contractor which, subject to certain limited
exceptions (see Atiyah, supra, at pp. 327-78), typically does not
give rise to a claim for vicarious liability. [...]
34 What is the
difference between an employee and an independent contractor and
why should vicarious liability more likely be imposed in the
former case than in the latter? This question has been
the subject of much debate. The answer lies with the
element of control that the employer has over the direct
tortfeasor (the worker). If the employer does not
control the activities of the worker, the policy
justifications underlying vicarious liability will not be
satisfied. See Flannigan, supra, at pp.
31-32:
[Emphasis mine.]
[...] Only the worker, authorized to complete a task, could
have affected the probability of loss, for he alone had control
in any respect. Thus, because there is no mischief
where employer control is absent, no remedy is required.
35 [...] Vicarious
liability is fair in principle because the hazards of the
business should be borne by the business itself; thus, it does
not make sense to anchor liability on an employer for acts of an
independent contractor, someone who was in business on his or her
own account. In addition, the employer does not have
the same control over an independent contractor as over an
employee to reduce accidents and intentional wrongs by efficient
organization and supervision. [...] However, control is
not the only factor to consider in determining if a worker is an
employee or an independent contractor. For the reasons
discussed below, reliance on control alone can be
misleading, and there are other relevant factors that should be
considered in making this determination.
37 [...] "the
essential criterion of employer-employee relations is the right
to give orders and instructions to the employee regarding the
manner in which to [page1001] carry out his work" [...]
38 [...]A principal
inadequacy [with the control test] is its apparent dependence on
the exact terms in which the task in question is contracted for:
where the contract contains detailed specifications and
conditions, which would be the normal expectation in a contract
with an independent contractor, the control may even be greater
than where it is to be exercised by direction on the job, as
would be the normal expectation in a contract with a servant, but
a literal application of the test might find the actual control
to be less. In addition, the test has broken down completely in
relation to highly skilled and professional workers, who possess
skills far beyond the ability of their employers to direct..
39 [...]in Montreal v. Montreal
Locomotive Works Ltd., [1947] 1 D.L.R. 161 (P.C.),
at p. 169:
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In earlier cases a single test, such as the presence or
absence of control, was often relied on to determine
whether the case was one of master and servant, mostly in
order to decide issues of tortious liability on the part of
the master or superior. In the more complex
conditions of modern industry, more complicated tests have
often to be applied. It has been suggested that
a fourfold test would in some cases be more appropriate, a
complex involving (1) control; (2) ownership of the tools;
(3) chance of profit; (4) risk of loss. Control
in itself is not always conclusive.
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40 [...]in Stevenson Jordan
and Harrison, Ltd. v. Macdonald, [1952] 1 The
Times L.R. 101 (C.A.), at p.
111:
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One feature which seems to run through the instances is
that, under a contract of service, a man is employed as
part of the business, and his work is done as an integral
part of the business; whereas, under a contract for
services, his work, although done for the business, is
not integrated into it but is only accessory to it.
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[Emphasis mine.]
· Livreur
Plus Inc. v. Canada (Minister of National Revenue -
M.N.R.) [2004] F.C.J. No. 267, (Q.L.), par. 20 and
38:
20 [...] A
subcontractor is not a person who is free from all restraint,
working as he likes, doing as he pleases, without the slightest
concern for his fellow contractors and third parties. He is not a
dilettante with a cavalier, or even disrespectful, whimsical or
irresponsible, attitude. He works within a defined framework but
does so independently and outside of the business of the general
contractor. The subcontract often assumes a rigid stance dictated
by the general contractor's obligations: a person has to take
it or leave it. However, its nature is not thereby altered, and
the general contractor does not lose his right of monitoring the
results and the quality of the work, since he is wholly and
solely responsible to his customers.
38 The degree of
integration of workers into a business has to be assessed from
the standpoint of the workers, not that of the business: 671122
Ontario Ltd. v. Sagaz Industries, [2001] 2 S.C.R. 983, at 1003.
Doing so from the standpoint of the business nearly always leads
unavoidably to the conclusion that the workers' activities
were organized and programmed to suit the principal and
overriding activity of the business. In other words, the
workers' activities will always appear to be integrated into
the business.
[41] The Appellants relied on an information
bulletin in which a section of the relevant content reads as
follows: (Exhibit A-2) (p. 1 to 3)
[TRANSLATION]
Insurance Policy
LIABILITY BULLETIN 97-1
SUBJECT: Liability of Owners-Operators
of Forest Machinery
[...]
Owner-Operator
The fact of owning his own machinery is not, in itself, a
decisive factor in determining the status of a forestry
worker. It is, therefore, possible for an
owner-operator to be employed under a contract of
service while leasing his machinery to his employer under a
lease agreement. In this situation, the employment
income is deemed to be wages, and income generated by the
machinery constitutes rental income.
Written contracts
In the case of an owner-operator, it is essential that
the agreements relating to the lease of the heavy equipment and
to the hiring of the owner-operator pursuant to a contract
of service be made in writing. In these
circumstances, Revenue Canada will consider the
owner-operator to be an employee working in an insurable
employment, provided that the conditions set out at page 4 have
been met.
No written agreement
Any situation in which separate written agreements
(machinery/employee) do not exist must be examined to determine
whether the criteria essential to establishing a contract of
service have been met. Where these conditions have not been
met, Revenue Canada will consider the owner-operator to be
a self-employed worker.
Leasing of machinery
The machinery lease agreement between the
owner-operator (lessor) and the principal
contractor (lessee) must include some clauses that show that
the lessee is taking control of the machinery for the duration of
the agreement. The following points should be covered:
(a) the accurate
identification of the parties involved, for example, lessor and
lessee;
(b) the duration of
the agreement;
(c) the amount of
the lease and the terms on which the calculations are based
(daily, weekly, hourly, by the cord, by the cubic metre, or
length of the logs handled, etc.);
(d) the obligations
of the lessee and lessor;
(e) the contract
must be signed by the two parties
involved.
Contract of employment
It is possible that an owner-operator is employed under
a valid contract of service; however, in general, each case must
be examined in light of the circumstances that surround
it. Revenue Canada may conclude that, in all of the cases
in which an owner-operator's contract of employment meets
all of the conditions set out below, the employment is considered
to be performed pursuant to a valid contract of service.
[42] Case law and interpretation bulletins
are very useful indicators and references that promote consistent
and cohesive judgments in similar cases. However, it is
important to note that each case, each situation, turns on its
own facts. Priority must be given to the principles
relating to the facts that are often specific and proper to human
relations, which, in turn, are as numerous and varied as there
are individuals involved in the issue.
[43] Can it be found that the presence of
the Payor or of one of its representatives on the work site
establishes and demonstrates that control over the facts and of
the actions of the individuals who received remuneration existed
or could have existed?
[44] In this case, the presence of the
Payors' representatives, mainly Mr. Gagnon, was not explained by
concerns about monitoring or controlling the work performed by
the Appellants, but by his love for the forest and his need to be
in the woods.
[45] The Payors' three representatives
acknowledged and repeated that the Appellants knew their work
very well, that they performed their work efficiently,
productively, and responsibly. In other words, they knew
how to get the work done, and they knew what the Payors'
requirements were, and throughout the years, they had adjusted
accordingly. The Payors were so satisfied with the work of
the Appellants that they made sure to offer them work, year after
year.
[46] Power of control includes the concept
of a relationship of subordination. To determine whether a
relationship of subordination exists, it is necessary to look
beyond some elements and aspects which, I admit, may lead to the
conclusion that a contract of service existed.
[47] Concern about work well-done and
compliance with the applicable legislation and regulations is not
a prerogative exclusive to the individuals who perform their work
under a contract of service; it is also a requirement of the
parties who contract out the work in a contract for services.
[48] In this case, the evidence clearly
revealed some aspects that are not open to interpretation or that
are not cause for confusion. I refer specifically to the
fact that the Appellants would not have worked nor performed any
work whatsoever for Ambois Inc. and Les entreprises
forestières F.G. Inc. had they not owned the skidder for
which they paid $24,000 and which had a value ranging from
$15,000 to $20,000 during the periods at issue.
[49] The Appellants were responsible for all
of the expenses relating to the repairs, operation, and
maintenance of the skidder. The work of the Appellants
depended on the use and proper working order of the skidder.
[50] They had even purchased an insurance
policy to cover their liability stemming from the use of the
skidder. Productivity and efficiency were synonymous with
higher income. Losses, breakdowns, etc. could have a direct
and significant impact on the Appellants' income.
[51] The Appellant Jacky Desbiens stated
that breakdowns were always minor and that he always had
replacement parts on hand to make repairs quickly and without
impact on production overall. More serious problems arose
once during the periods at issue, when the engine failed; he
repaired it within one day and made up the lost work day.
[52] What would have happened if the skidder
had been destroyed by fire, given that the Appellants did not
have replacement insurance, and they did not have the financial
means to replace it?
[53] Mr. Desbiens, a forestry engineer, made
a powerful argument for the Appellants, whose work was essential
to the survival of the two Payors, Ambois Inc. and Les
entreprises forestières F.G. Inc.
[54] It was shown that the companies had
stopped their activities, because the owners of the skidder
refused to work from then on, given that they were not eligible
for employment insurance benefits, which confirms the very
specific status of the Appellants: in fact, they had the power to
refuse to work for the Payors. The Appellants, therefore,
were independent and had the right to refuse work, which confirms
that their status was equal to the Payors'.
[55] The Respondent drew the Court's
attention to the fact that the Appellants, in their annual income
tax returns, described themselves as salaried workers for a
portion of their income ("T4") and as contractors for the income
generated by the skidder, which amounted to 80% of the
proceeds.
[56] Aside from expenses that are directly
attributable to the operation of the skidder-namely, operation,
maintenance, repair, and insurance expenses-the Appellants also
deducted, on a number of occasions, meal expenses, expenses
relating to a pick-up truck used to travel to the work site, and
lodging expenses where travel was required. This is a
choice that they made themselves, a choice that is proper to a
contract for services, not a contract of service.
[57] Regarding the criterion of control,
without a doubt the most decisive criterion in an analysis such
as this one, the presence of the Payors' representatives was
explained. What was the purpose of this nearly continuous
presence? Was it to intervene with the Appellants, to coach
them, and to impose some authority? The Payors'
representatives answered these questions themselves by insisting,
a number of times, on the reliability and experience of the
Appellants with respect to the performance of the work at
issue. Throughout the years, the Appellants learned the
Payors' requirements and complied with them strictly, such that
the Payors planned their cutting activities around the
Appellants' availability.
[58] Where a person assigns work of any
nature to another person or to a group of people, very often,
that person is present from the beginning to the end of the work,
which does not change the nature of the contract for
services.
[59] For example, a homeowner contracts out
various work such as landscaping, excavation work, or the
installation of interlocking stone. These are situations in
which the Payor is present, in which he controls the quality of
the performance of the work, without being a party to a contract
of service.
[60] In this case, the Appellants
successfully showed that there were, in fact, specific aspects
that corresponded with a contract of service; however, the
balance of probabilities does not allow me to conclude that a
contract of service existed.
[61] For all of these reasons, the appeals
must be dismissed.
Signed at Ottawa, Canada, this 18th day of August
2004.
Tardif J.
Translation certified true
on this 8th day of March 2005.
Colette Dupuis-Beaulne, Translator.
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