|
Citation: 2003TCC549
|
|
Date: 20030819
|
|
Dockets: 2002-2027(EI)
2002-2028(CPP)
|
|
BETWEEN:
|
|
MICHAEL JUSENCHUK,
|
|
Appellant,
|
|
and
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent,
AND
Dockets: 2002-2040(EI)
2002-2042(CPP)
LYTE ENTERPRISES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
|
REASONS FOR JUDGMENT
MacLatchy,
D.J.
[1] These
appeals were heard on common evidence, on consent, on July 16, 2003 at Toronto,
Ontario.
[2] Lyte
Enterprises Inc., the Payor, appealed a ruling to the Minister of National
Revenue (the "Minister") for the determination of the question of
whether or not the Workers, Craig Bagshaw, Philip Greg Banks,
Brian Carpenter, Frank Danek, Roland Dodman, Michael Downie, Thomas
Glister, Paul Humphrey, Ghulam Mohammad, Erastus Wall, Philip West and Michael
Jusenchuk, who is also an Appellant in the cases at bar, were employed in
insurable and pensionable employment, while engaged by it from January 1, 2000
to August 15, 2001, within the meaning of the Employment Insurance Act
(the "Act") and the Canada Pension Plan (the "Plan").
[3] By
letter dated February 28, 2002, the Minister informed the Workers and the Payor
that it had been determined that their engagement with the Payor, during the
period in question, was insurable and pensionable employment for the reason
that they were employed pursuant to a contract of service.
[4] The
question before this Court is whether the Workers were engaged as independent
contractors by the Payor (Lyte) under contracts for services or as employees
under contracts of service.
[5] A
brief review of the decisions of the Higher Courts that provide guidance to
assist this Court in reaching its determination would be in order. In 1986, the
Federal Court of Appeal in Wiebe Door Services Ltd. and M.N.R.,
87 DTC 5025, directed that there should be four tests that could
assist the courts to determine the type of arrangement of the parties. Control,
ownership of tools/equipment, chance of profit and risk of loss were the
recommended tests. But it was also realized that this four-fold test should
lead to the ultimate test of "examining the whole of the various elements
which constitute the relationship between the parties". Lord Wright in Montreal
v. Montreal Locomotive Works Ltd. et al., [1947] 1 D.L.R. 161, uses the
four tests to seek out the meaning of the whole transaction.
[6] Out
of further decisions, the organizational test, also known as the integration test,
became accepted as stated by Denning, L.J. in Stevenson, Jordan and
Harrison, Ltd. v. MacDonald and Evans, [1952] 1 T.L.R. 101 (C.A.),
at 111:
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.
...
[7] MacGuigan,
J.A. in Wiebe Door (supra) stated at p. 5030:
...
What must always remain
of the essence is the search for the total relationship of the parties. ...
...
Of course, the
organization test of Lord Denning and others produces entirely acceptable
results when properly applied, that is, when the question of organization or
integration is approached from the persona of the "employee" and not
from that of the "employer," because it is always too easy from the
superior perspective of the larger enterprise to assume that every contributing
cause is so arranged purely for the convenience of the larger entity. We must
keep in mind that it was with respect to the business of the employee that Lord
Wright addressed the question "Whose Business is it"?
The further admonition is given:
There is no escape for the trial
judge, when confronted with such a problem, from carefully weighing all of the
relevant factors, ...
[8] The
recent decision of the Supreme Court of Canada in 671122 Ontario Ltd. v.
Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, 274 N.R. 366, although
the issue being vicarious liability, considered the question of whether the
parties had entered into a contract for services or a contract of service.
Major, J. in paragraph 47 of this judgment stated:
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, .... 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.
[9] Recent
decisions of the Federal Court of Appeal in Wolf v. Canada, [2002]
F.C.J. No. 375 and Precision Gutters Ltd. v. Canada (Minister of National
Revenue – M.N.R.), [2002] F.C.J. No. 771 give further insight into a more
generous interpretation of who "is deemed an employee". Mr. Justice
Décary in the Wolf decision stated:
In our day and age, when a worker decides
to keep his freedom to come in and out of a contract almost at will, when the
hiring person wants to have no liability towards a worker other than the price
of work and when the terms of the contract and its performance reflect those
intentions, the contract should generally be characterised as a contract for
services. If specific factors have to be identified, I would name lack of job
security, disregard for employee-type benefits, freedom of choice and mobility
concerns.
[10] There appears to be a shifting towards recognizing that in consulting
work the parties can call themselves independent contractors and, as a result,
their characterization of their relationship should not be interfered with by
the Courts, bearing in mind, however, that the Courts have recognized that
labelling of the relationship is not determinative (see Standing v. Canada
(Minister of National Revenue – M.N.R.) (F.C.A.), [1992] F.C.J. No. 890 and
Wolf (supra).
[11] The facts in this case need the careful consideration by this Court.
The assumptions relied on by the Minister were listed in paragraphs 11(a) to
(n) of the Reply to the Notice of Appeal as follows (file 2002-2027(EI)):
a) The Payor
operates a trucking business which hauls freight for the Payor's clients (the
"clients"), across Canada and the United States;
b) The Workers
and the Appellant [Michael Jusenchuk (Micheal)] were hired by the Payor to
drive the Payor's trucks to deliver the freight for the Payor's clients;
c) The Workers
and the Appellant [Michael] were required to have a AZ Driver's License and
have experience driving trucks;
d) The Workers
and the Appellant [Michael] were required to keep logbooks of the time driven
in order to comply with government regulations;
e) The Workers
and the Appellant [Michael] had to comply with laws and regulations governing
the trucking industry;
f) The Workers
and the Appellant [Michael] reported regularly to the Payor when a load was
delivered, to obtain new assignments or for other miscellaneous reasons;
g) The Workers
and the Appellant [Michael] were provided with pagers;
h) The Workers
and the Appellant [Michael] were required to perform their duties within
timeframes which were determined by the Payor, in order to ensure clients'
satisfaction and needs;
i) The Workers
and the Appellant [Michael] were required to perform the services personally
for the Payor;
j) The trucks
and equipment used by the Workers and the Appellant [Michael] were provided by
the Payor;
k) The Payor's
name and authority numbers appeared on the trucks driven by the Workers and the
Appellant [Michael];
l) The Workers
and the Appellant [Michael] were mainly paid on a per mile basis;
m) All the costs
related to the trucks and equipment including repairs, maintenance, fuel,
insurance, road and bridge tolls were paid by the Payor;
n) The Payor offered
the workers and the Appellant [Michael] medical, dental and life insurance
coverage under the Payor's plans.
[12] The questions of control, ownership of tools, chance of profit and
risk of loss must be firstly considered.
[13] Control - The concept of control in this more complicated and
sophisticated environment can be a neutral item. The driver is not supervised
directly at anytime because he is beyond the sight of the Payor. His job is to
deliver products for clients of the Payor. The driver is called to see if he is
available and wishes to work. If he wishes to work he reports to a dispatcher
and is given the necessary paperwork to carry out the delivery. This would
include custom forms and declarations, manifest and bills of lading and whatever
was required by the driver to deliver the load. If a time limit is set by the
dispatcher, it must be complied with, and the driver must contact the
dispatcher after the delivery is completed in order to be directed where to
obtain a return load. It was admitted that the driver could return empty but he
would not be paid for his time. It would not be fiscally responsible to do
this, however.
[14] The ultimate element of control would be the right of termination
retained by the Payor. The Payor could just not call the driver for any further
work without any explanation whatsoever. As to control in these circumstances,
I would suggest it points toward an employer/employee relationship.
[15] Ownership of tools – I believe it is a test strongly in favour
of an employer/employee relationship. The tool being a truck of obvious value
and/or a trailer included is owned by the Payor and its name is on the vehicle.
It is a large investment made by the Payor. The driver had his qualifying
license in order to be available to the Payor. This, in my opinion, is not a
tool as such. The major tool is the vehicle. If unavailable the Worker cannot
perform his function. It is also important to note that the Payor covered all
of the expenses for the vehicle including insurance, maintenance, gasoline or
other fuel, workers compensation for injury or costs occasional by a breakdown
of the vehicle.
[16] Chance of profit – The only way a driver could increase his
income was to drive more miles. He is limited by the laws that govern drivers
and can only perform his duties for a prescribed period of time. This is not
profit in the true entrepreneurial sense.
[17] The Payor stated that the driver could substitute himself by providing
another driver but the substitute must have the necessary qualifications which
would have to be reviewed by the Payor before he would entrust an expensive
vehicle to someone else.
[18] The risk of loss to the driver is negligible. He could take a
longer route to the destination that was approved by the Payor and he would not
be paid for the extra mileage involved. He could return from a delivery without
a load when such was available but this would mean he would not receive payment
for the return trip. It would also put a further burden on the Payor to get
another person to pick up the load while its expensive equipment was returning
empty.
[19] The driver would be responsible for his own meals and other personal
comforts on his trip. These items cannot be considered as an entrepreneurial
loss. The rates for delivery were pre-set by the Payor. All costs on the road
were paid by the Payor except for driving infractions imposed by statute or
by-law.
[20] The question of integration further points to an
employer/employee relationship. From the Workers' perspective it could be said
that it was otherwise because they signed a simple acknowledgement of them
being independent contractors; this is not a signed contract. Nowhere does the
Payor become involved, thus a decision only of the driver/worker wishing to be an
independent contractor. The law is reasonably clear in this regard that the
mere naming of the relationship by the parties (in this instance only named by
the worker) is not determinative of the relationship. This Court must look at
the actual circumstances of that relationship based on the evidence adduced.
The driver did not approach the Payor and state he had a driving business and
that he would be prepared to take the Payor's business deliveries on as his
business. If he had done so it would be assumed he would seek some protection
guarantees from the Payor against other persons offering to do the same work.
Michael Jusenchuk did advise he had a "drivers' overload
business" but it included only himself and his services were only required
as the Payor decided. The only investment to be made by the Workers was time.
[21] After considering the evidence adduced and giving it the necessary
weight relative to the classical tests, as above described, it seems clear to
this Court that the relationship between the Payor and the Workers was one of
employer/employee and the Workers were engaged pursuant to contracts of
service.
[22] These appeals are dismissed and the decisions of the Minister are
hereby confirmed.
Signed at Toronto, Ontario, this 19th day of
August 2003.
MacLatchy,
D.J.
Email this Content