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Citation: 2003TCC428
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Date: 20030627
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Docket: 2002-2994(EI)
2002-2995(CPP)
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BETWEEN:
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WRAY AGENCIES LTD.,
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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
ROWE, D.J.T.C.C.
[1] The appellant appeals from two
decisions - both dated April 22, 2002 - issued by the Minister of
National Revenue (the "Minister"). The Minister decided
the employment of William Skene (the worker) with Wray Agencies
Ltd. (Agencies or payor) from July 7 to September 2, 2000 and
from July 6 to September 20, 2001 constituted insurable
employment because Skene was employed under a contract of service
pursuant to the relevant provisions of the Employment
Insurance Act (the "Act"). The
Minister also issued a decision pursuant to the relevant
provisions of the Canada Pension Plan (the
"Plan") wherein the employment of Skene was held
to have been pensionable employment under a contract of service
with Agencies. However, the decision issued pursuant to the
Plan covered only the period from July 6 to September 20,
2001.
[2] Counsel agreed both appeals would
be heard on common evidence.
[3] Scott Wray testified he is
President of Wray Agencies Ltd., operating out of Moose Jaw,
Saskatchewan. The appellant's sole business is selling hail crop
insurance to farmers in the Prairie Provinces. Earlier, Wray had
worked for another company engaged in the hail insurance industry
until Agencies was formed in 1983. Wray explained that when a
claim is reported by a policyholder, Agencies management consults
a list of adjusters, chooses a particular individual and contacts
that person - usually at his home - to determine whether he is
willing to accept the assigned task. Wray stated Skene had
contacted Agencies to ascertain whether it had some adjusting
work for him since Co-Op Insurance - the other company for which
he had been adjusting - was not able to provide him with
sufficient work. Wray stated he met with Skene and discussed the
remuneration - on a per diem basis - and the reimbursement - by
Agencies - of any expenses incurred in relation to lodging,
meals, use of a motor vehicle and other costs pertaining to
performance of the assigned work. There was no written contract
between Agencies and Skene. Once Skene began providing his
services to Agencies, Wray stated he did not recall Skene having
adjusted any claims for Co-Op Insurance but the arrangement with
Agencies allowed Skene to accept work from other companies. Wray
referred to a bundle of documents - Exhibit A-1 - containing
sheets entitled Independent Adjusters Expense Voucher and
photocopies of cheques issued by the appellant to Skene during
2000. A similar bundle of documents - Exhibit A-2 - pertained to
adjusting services performed by Skene during 2001. Wray stated
Skene sometimes worked with another adjuster, depending on the
nature of the crop to be examined for the purpose of determining
the extent of damage. In some instances, Skene could request the
assistance of a more experienced adjuster - usually working in
the same geographical area - to provide guidance and instruction.
Wray stated the document - Exhibit A-3 - entitled Hail Adjustment
Proof of Loss - was standard throughout the hail crop insurance
industry except for some minor differences in format. Once a
policyholder submitted a Notice of Loss to the appellant, the
process of preparing the necessary paperwork began and an
adjuster was assigned to attend the site of the damaged crop.
Generally, within the industry, attempts are made to organize an
adjuster's schedule to maximize efficiency within a particular
geographical area. Wray stated there were some areas in the
Prairies in which Agencies had not sold any policies but there
were also instances where farmers had chosen to insure their
crops - against damage occurring during a growing season - with
more than one company. Wray stated that during the years Agencies
had carried on business, there was never any intention to create
any contract of employment with any crop insurance adjuster and
no adjuster had ever been fired. Wray stated a ruling - Exhibit
A-4 - was received from Canada Customs and Revenue Agency (CCRA)
- dated November 29, 2001 - advising Agencies that Skene's
employment was considered to have been both insurable and
pensionable. An appeal - Exhibit A-5 - was directed to the
Minister and, in the course of that process, the questions to the
worker posed within a Questionnaire - Exhibit A-6 - were answered
by way of a separate document filed as Exhibit A-7. The Minister
confirmed the earlier ruling in a letter - Exhibit A-8 - but did
not deal with the period from July 7, 2000 to September 2, 2000
when deciding the issue of pensionable employment pursuant to the
Plan. Wray stated he is the Managing General Agent
for Palliser Insurance Corporation and had the responsibility to
issue cheques to policyholders in payment of losses. The cheques
were drawn on a trust account into which premiums - received from
the sale of hail insurance policies - had been deposited.
[4] In cross-examination, Scott Wray
stated that each adjuster was paid the standard sum - within the
industry - of 37 cents per kilometre as compensation for using
their own motor vehicle. In those circumstances where the
services of a more experienced crop adjuster might be required,
Wray stated Skene was not required to bear any cost associated
with that decision because - like other adjusters - it was
recognized that while he may have had a great deal of overall
experience, he might not have adjusted damage in relation to a
particular type of crop. Wray stated Skene was paid a per diem
fee and related expenses to attend the annual conference for hail
damage crop adjusters.
[5] In re-examination, Wray stated
neither Skene nor any other adjuster providing services to
Agencies was required to attend any such conference but if they
chose to participate, they could bill Agencies for one day at the
usual rate or, as some had done, to issue an invoice based on
one-half day.
[6] Counsel for the appellant
submitted the worker has been compensated for his knowledge,
skill and time spent in the course of adjusting crop damage
claims. Since there was no doubt both Skene and the appellant had
premised their working relationship on the basis the worker was
an independent contractor, counsel submitted the evidence did not
disclose any factors capable of detracting from the validity of
their intention. Counsel referred to the testimony of Scott Wray
in which he made it clear that Skene - an experienced adjuster -
was free to work for other parties. Counsel submitted Skene did
not require many tools in order to perform his services and, even
though he was paid a per diem fee by the appellant, was still
capable of managing his own schedule in order to maximize
efficiency and permit generation of additional income. As part of
the fee for services rendered, the appellant reimbursed Skene and
other adjusters for out-of-pocket lodging and food expenses and
paid a set amount per kilometre for use of a private motor
vehicle. As a result, counsel conceded this arrangement reduced
the risk of any loss but argued that within the total context of
the working relationship under examination, this facet
represented a normal term or condition of the contract entered
into by the parties.
[7] Counsel for the respondent
submitted it was evident the occupation of crop damage adjuster
within the hail crop industry was somewhat unusual. Under the
conditions of the working relationship, it was nearly impossible
for Skene to have occurred any loss as he was reimbursed for all
expenses and received payment for his services - at a flat daily
rate - set by the appellant. Overall, counsel submitted the
evidence did not disclose the existence of a commercial
enterprise being operated by the appellant during the relevant
period.
[8] The Supreme Court of Canada - in a
recent decision - 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc., [2001] 2 S.C.R. 983 - (Sagaz) dealt with
a case of vicarious liability and in the course of examining a
variety of relevant issues, the Court was also required to
consider what constitutes an independent contractor. The judgment
of the Court was delivered by Major, J. who reviewed the
development of the jurisprudence in the context of the
significance of the difference between an employee and an
independent contractor as it affected the issue of vicarious
liability. After referring to the reasons of MacGuigan, J.A. in
Wiebe Door Services Ltd. v. M.N.R., [1986] 2 C.T.C. 200
and the reference therein to the organization test of Lord
Denning - and to the synthesis of Cooke, J. in Market
Investigations, Ltd. v. Minister of Social Security, [1968]
3 All E.R. 732 - Major, J. at paragraphs 45 to 48,
inclusive, of his judgment stated:
Finally, there is a test that has emerged that relates to the
enterprise itself. Flannigan, ... ("Enterprise control: The
servant-independent contractor distinction" (1987), 37
U.T.L.J. 25, at p. 29) sets out the "enterprise test"
at p. 30 which provides that the employer should be vicariously
liable because (1) he controls the activities of the worker; (2)
he is in a position to reduce the risk of loss; (3) he benefits
from the activities of the worker; (4) the true cost of a product
or service ought to be borne by the enterprise offering it.
According to Flannigan, each justification deals with regulating
the risk-taking of the employer and, as such, control is always
the critical element because the ability to control the
enterprise is what enables the employer to take risks. An
"enterprise risk test" also emerged in La Forest
J.'s dissent on cross-appeal in London Drugs where he stated
at p. 339 that "[v]icarious liability has the broader
function of transferring to the enterprise itself the risks
created by the activity performed by its agents".
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, ... ([1952] 1 The Times L.R. 101) 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, ...(Vicarious Liability in the Law of
Torts. London: Butterworths, 1967) 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.
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.
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.
[9] I will examine the facts in
relation to the indicia set forth in the judgment of Major J. in
Sagaz.
Level of control:
[10] The worker had already been a qualified
crop insurance adjuster prior to contacting the appellant for the
purpose of obtaining some adjusting assignments. Rather than
merely being assigned a particular crop damage adjustment, he was
contacted by Scott Wray or another person at Agencies and invited
to undertake one or more adjusting jobs generally clumped
together within a limited geographical area. At the site of the
damage, the worker was free to use his own skills and experience
in order to arrive at a conclusion concerning the extent of the
hail damage. If he was not familiar with the specific crop under
examination, he was able to contact Agencies and derive the
benefit - free of charge - of the services of another adjuster
who would attend at the policyholder's farm in order to assess
the situation and subsequently offer his opinion. Often, Skene
would prepare the Proof of Loss form - Exhibit A-3 - as a matter
of courtesy since that document was a prerequisite to the farmer
receiving any payment from the insurer. Even the matter of
attending the annual industry conference was optional and if
Skene - or any other adjuster - chose to participate in the
relevant sessions pertaining to adjusting crop loss they could
bill Agencies for either one-half day or a full day at the
established rate. In certain assumptions found at subparagraphs
13(h) to13(k) inclusive, of the Reply to the Notice of Appeal
(Reply), the Minister accepted that Skene was able to set his own
hours of work, was not required to report to the appellant, was
free to accept or reject work offered to him by the appellant and
was able to work for other insurance companies when the appellant
did not have any adjusting services for him to perform. The
appellant conceded that during the training period Skene was
accompanied and supervised by a senior adjuster. However, there
was no evidence provided concerning the length of said
period - in 2000 - but the fact Skene had previous
experience leads one to infer that it was not only relatively
short in duration but directed mainly towards learning the method
of completing the paperwork used by Agencies to process
claims.
Provision of equipment and/or helpers
[11] As discussed above, if any assistance
was required in the process of adjusting a particular loss, the
worker was not obligated to incur any expense in that regard.
Instead, Agencies contacted another adjuster and dispatched that
individual to assist Skene in arriving at an appropriate
conclusion pertaining to the extent of the loss. The equipment
required to carry out the task consisted only of pens, paper, a
clipboard, and a motor vehicle in order to travel to the various
farms where crop loss had occurred. The appellant provided Skene
with a manual required to be utilized by adjusters in order to
calculate the amount of crop loss. The appellant also provided
Skene with worksheets and a briefcase. Provided the quality of
the adjusting service was adequate, Skene was able to retain the
services of others to assist him in carrying out his tasks and
would have been responsible for payment other than in the
circumstance earlier discussed, although he had not exercised
this option during the relevant periods. It was agreed Skene had
completed the unsigned Questionnaire - Exhibit A-7 - wherein he
indicated he was responsible for repairs to his vehicle and had
equipped himself with appropriate all-weather clothing.
Degree of financial risk and responsibility for investment
and management
[12] The worker in the within appeals
undertook each adjusting assignment with the knowledge he would
be paid the daily rate in the sum of $130 in 2000 and $140 in
2001. Work-related expenses were reimbursed by the appellant and
a per-kilometre allowance was paid to compensate for use of
Skene's vehicle. As counsel for the respondent pointed out,
rather than attempting to build a variable flat fee structure
based on the location of the property to be inspected, the
adjusters were reimbursed their travel costs including those
pertaining to the operation of a vehicle. Skene had the
responsibility of managing his own time and maintaining whatever
minimal in-home office facilities were required in order to
perform his services adequately.
Opportunity for profit in the performance of tasks
[13] The worker was paid at a fixed daily
rate and did not incur any additional expenses. The opportunity
to earn more revenue was based on the willingness to accept more
work and/or to be efficient in the manner by which the adjusting
assignments were carried out so that during the course of the
short working season more claims could be adjusted. Most
professionals or fee-for-service providers perform tasks in
return for a fixed fee together with related expenses. Sometimes,
the fee is set by the provider and the client is free to accept
or reject that tariff. In other circumstances, remuneration may
be established through negotiation but in a substantial number of
instances, a level of government or a large corporation within an
established industry, merely offers a fixed sum for a particular
service and invites submissions from persons willing to undertake
the work at the stated rate. Prior to accepting the work, an
individual will have calculated whether the remuneration offered
is sufficient to cover the direct and indirect costs of operating
a business.
[14] In the case of Canadian Fitness and
Lifestyle Research Institute v. M.N.R., [1990] T.C.J. No.
1020, Judge Mogan, T.C.C., considered the status of workers
supplying services to a non-profit organization funded mainly by
the federal government. The appellant in that case had engaged 82
fitness appraisers for a period of approximately two months to
conduct a fitness survey of a pre-selected group of Canadians and
had entered into agreements with the workers on the basis they
would be independent contractors. At pp. 6 - 8 of his reasons
Judge Mogan stated:
In the circumstances outlined above, I am required to
decide whether the fitness appraisers were employees of the
Appellant or independent contractors. In Moose Jaw Kinsmen Flying
Fins Inc. v. M.N.R., 88 DTC
6099, the Federal Court of Appeal confirmed that the
definitive authority on this issue is the decision of that Court
in Wiebe Door Services Ltd. v. M.N.R., 87 DTC
5025. In the Wiebe Door case, there was reference to an
earlier decision in which Lord Wright had described a fourfold
test comprising (1) control; (2) ownership of the tools; (3)
chance of profit; and (4) risk of loss. MacGuigan J. stated at
page 5029:
... I interpret Lord Wright's test not as the fourfold one
it is often described as being but rather as a four-in-one test,
with emphasis always retained on what Lord Wright, supra, calls
'the combined force of the whole scheme of operations',
even while the usefulness of the four subordinate criteria is
acknowledged.
When I view the Appellant's 1988 survey with
emphasis on "the combined force of the whole scheme of
operations", I conclude that the fitness appraisers were
independent contractors and not employees. On the first two
tests, I find that the Appellant owned the equipment (i.e. tools)
but had virtually no control over the fitness appraisers. Because
the 1988 survey was national in scope, statistical accuracy
required all appraisers to use standard equipment. There were
minimal instructions given to the appraisers: locate selected
families and book appointments; ensure that the questionnaire is
completed; perform the physical tests if, in the opinion of the
appraiser, the subject was able; complete all tests within two
months; and maintain information contact with the Regional
Supervisor. The appraisers had very wide discretion as to how
they would follow these instructions. The Regional Supervisor had
no control over the appraisers but would know if certain
appraisers were not performing the required tests.
On the third and fourth tests, I find that there was
little chance of profit or risk of loss in an accounting sense
because the fitness appraiser received a progress payment every
two weeks over the two-month period of the survey and all travel
expenses were reimbursed. Although a fitness appraiser would not
earn a profit or suffer a loss in an accounting sense by taking
on this engagement, there was an opportunity to consolidate
appointments and, by performing two or three family surveys on
selected days, a team of appraisers could free up other days when
they would be paid the per diem fee of $96.15 for performing
little or no work. In other words, a team of appraisers could
work hard; finish early; and continue to draw the per diem fee
for the balance of the two months. There is a profit
incentive in this kind of arrangement which is different from the
production incentive in piece work.
The overall scheme of the 1988 survey permitted each
fitness appraiser to retain any prior employment or business
through the two-month survey period. The training period was only
one week and debriefing was only one day. There were no fixed
hours. Indeed, because it was a "family" survey, the
evidence indicated that most surveys were in fact done in the
evening or on weekends apart from the normal working hours of a
five-day week.
It is significant that the three fitness appraisers who
testified at the hearing had all maintained their outside
employment or other commercial engagements throughout the
two-month period when they were doing the 1988 survey. It is also
significant that the costs of the four prior qualifications
were absorbed by the individual appraisers: personal liability
insurance; being a CFA or RFA; having a CPR certificate; and
having automobile business insurance. In an ordinary
employer/employee relationship, I would expect the employer to
pay for one or both kinds of insurance. In my opinion, there was
no employer/employee relationship between the Appellant and the
82 fitness appraisers. The appeal is allowed.
[15] In the case of Ariana Appraisals
Inc. v. Canada (Minister of National Revenue -
M.N.R),. [1994] T.C.J. No. 303 Judge Teskey, T.C.C.,
held that a real estate appraiser, although requiring periodic
supervision from an accredited appraiser as part of her course of
study, was an independent contractor because she worked from her
home, used her own equipment, set her own hours and invoiced the
company for appraisals done. In addition, she was free to work
for other companies at the same time.
[16] In the Questionnaire - Exhibit A-7 -
with respect to the question whether he considered himself to be
an employee or self-employed while working for Agencies, Skene
responded as follows:
Self-employed - Could work hours of my choice, could work for
other companies, could choose to work or take time off, supplied
my own working tools.
[17] In the case of Minister of National
Revenue v. Emily Standing, [1992] F.C.J. No. 890 Stone, J.A.
stated:
...There is no foundation in the case law for the proposition
that such a relationship may exist merely because the parties
choose to describe it to be so regardless of the surrounding
circumstances when weighed in the light of the Wiebe Door
test ...
[18] In Wolf v. Canada, 2002 DTC
6853, the Federal Court of Appeal
- post-Sagaz - considered the income tax
appeal of a mechanical engineer specializing within the aerospace
industry. The question arose whether that appellant was an
employee of Canadair or an independent contractor. Analysis of
the various factors to be taken into account in deciding this
issue was based upon the relevant articles of the Civil Code of
Québec in addition to the applicable jurisprudence up to
and including the decision of the Supreme Court of Canada in
Sagaz, supra. For purposes of the within appeals, the
interesting aspect of the decision of the Federal Court of Appeal
in Wolf concerns the weight to be given to the intent of
the parties in determining the characterization of their working
relationship. The discussion is significant in that the caveat
inherent in the words of Stone, J.A. in Standing, supra,
have served to remind parties they cannot merely affix a label to
their working situation and expect it to stick unless the overall
context otherwise permits. Prior to concluding that the
engineer's relationship with Canadair had been that of an
independent contractor, Desjardins, J.A. - at paragraph 93
of her reasons for judgment - stated:
Both Canadair's work and the appellant's work
were integrated in the sense that they were directed to the same
operation and pursued the same goal, namely the certification of
the aircraft. Considering, however, the fact that the integration
factor is to be considered from the perspective of the employee,
it is clear that this integration was an incomplete one. The
appellant was at Canadair to provide a temporary helping hand in
a limited field of expertise, namely his own. In answering the
question 'whose business is it?' from that angle, the
appellant's business stands independently. Once
Canadair's project was completed, the appellant was, so to
speak, ejected from his job. He had to seek other work in the
market place. He could not stay at Canadair unless another
project was under way.
[19] Décary, J.A. - concurring in the
result - commented at paragraph 115 of his reasons:
As a starting point, I would like to quote the very
first paragraph of an article written by Alain Gaucher (A
Worker's Status as Employee or Independent Contractor, 1999
Conference Report of Proceedings of the 51st Tax Conference of
the Canadian Tax Foundation, p. 33.1):
In an ever-changing Canadian economy, the legal relevance of a
worker's status as independent contractor or employee
continues to be important. The issues relating to employment
status will only increase in importance as employers continue to
move toward hiring practices that favour independent contractors
and a greater number of individuals enter or re-enter the work
force as independent contractors.
[20] At paragraphs 117 to 120, inclusive,
Décary, J.A. continued as follows:
The test, therefore, is whether, looking at the total
relationship of the parties, there is control on the one hand and
subordination on the other. I say, with great respect, that the
courts, in their propensity to create artificial legal
categories, have sometimes overlooked the very factor which is
the essence of a contractual relationship, i.e the intention of
the parties. Article 1425 of the Civil Code of Quebec establishes
the principle that ' [t] he common intention of the parties
rather than the adherence to the literal meaning of the words
shall be sought in interpreting a contract'. Article 1426
C.C.Q. goes on to say that ' [i] n interpreting a contract,
the nature of the contract, the circumstances in which it was
formed, the interpretation which has already been given to it by
the parties or which it may have received, and usage, are all
taken into account'.
We are dealing here with a type of worker who chooses
to offer his services as an independent contractor rather than as
an employee and with a type of enterprise that chooses to hire
independent contractors rather than employees. The worker
deliberately sacrifices security for freedom ('the pay was
much better, the job security was not there, there were no
benefits involved as an employee receives, such as medical
benefits, pension, things of that nature...' Mr. Wolf's
testimony, Appeal Book, vol. 2, p. 24). The hiring company
deliberately uses independent contractors for a given work at a
given time ('it involves better pay with less job security
because consultants are used to fill in gaps when local
employment or the workload is unusually high, or the company does
not want to hire additional employees and then lay them off.
They'll hire consultants because they can just terminate the
contract at any time, and there's no liabilities
involved', ibid., p. 26). The hiring company does not, in its
day-to-day operations, treat its consultants the same way it
treats its employees (see para. 68 of Madam Justice
Desjardins's reasons). The whole working relationship begins
and continues on the basis that there is no control and no
subordination.
Taxpayers may arrange their affairs in such a lawful
way as they wish. No one has suggested that Mr. Wolf or Canadair
or Kirk-Mayer are not what they say they are or have
arranged their affairs in such a way as to deceive the taxing
authorities or anybody else. When a contract is genuinely entered
into as a contract for services and is performed as such, the
common intention of the parties is clear and that should be the
end of the search. Should that not be enough, suffice it to add,
in the case at bar, that the circumstances in which the contract
was formed, the interpretation already given to it by the parties
and usage in the aeronautic industry all lead to the conclusion
that Mr. Wolf is in no position of subordination and that
Canadair is in no position of control. The 'central
question' was defined by Major, J. in Sagaz as being
'whether the person who has been engaged to perform the
services is performing them as a person in business on his own
account'. Clearly, in my view, Mr. Wolf is performing his
professional services as a person in business on his own
account.
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.
[21] In his brief judgment - also concurring
in the result - Noël, J.A. considered the matter of
intention of the parties and his reasons are reproduced
below:
I too would allow the appeal. In my view, this is a
case where the characterization which the parties have placed on
their relationship ought to be given great weight. I acknowledge
that the manner in which parties choose to describe their
relationship is not usually determinative particularly where the
applicable legal tests point in the other direction. But in a
close case such as the present one, where the relevant factors
point in both directions with equal force, the parties'
contractual intent, and in particular their mutual understanding
of the relationship cannot be disregarded.
My assessment of the applicable legal tests to the
facts of this case is essentially the same as that of my
colleagues. I view their assessment of the control test, the
integration test and the ownership of tool tests as not being
conclusive either way. With respect to financial risk, I
respectfully agree with my colleagues that the appellant in
consideration for a higher pay gave up many of the benefits which
usually accrue to an employee including job security. However, I
also agree with the Tax Court Judge that the appellant was paid
for hours worked regardless of the results achieved and that in
that sense he bore no more risk than an ordinary employee. My
assessment of the total relationship of the parties yields no
clear result which is why I believe regard must be had to how the
parties viewed their relationship.
This is not a case where the parties labelled their
relationship in a certain way with a view of achieving a tax
benefit. No sham or window dressing of any sort is suggested. It
follows that the manner in which the parties viewed their
agreement must prevail unless they can be shown to have been
mistaken as to the true nature of their relationship. In this
respect, the evidence when assessed in the light of the relevant
legal tests is at best neutral. As the parties considered that
they were engaged in an independent contractor relationship and
as they acted in a manner that was consistent with this
relationship, I do not believe that it was open to the Tax Court
Judge to disregard their understanding (Compare Montreal v.
Montreal Locomotive Works Ltd., [1947] 1
D.L.R. 161 at 170).
[22] It is apparent a new wind is blowing
through the musty repositories of traditional jurisprudence
concerning the method by which to analyze circumstances relevant
to the determination of working relationships. As a consequence,
the former employer/employee relationship - which drew heavily
upon precepts inherent in the bond between master and servant -
has undergone a fresh examination in an effort to catch up to the
realities of the new workplace and to recognize the fresh face of
a modern workforce that has learned how to adapt to unpredictable
demands for specialized services - often, in the short-term -
within the new rules of engagement applicable to a highly
competitive global marketplace.
[23] In the within appeals, one must bear in
mind that Agencies sells insurance against damage to crops caused
by hail. The hail season - thankfully - is short and during some
growing seasons it may not hail much - if at all - on most of
those crops that have been insured by the particular insurance
company on whose behalf Agencies sells the policies. As stated by
Wray in the course of his testimony, there are some areas within
the Prairie Provinces where Agencies will not have sold any
policies in a particular year. In addition, if it does not hail
upon the crops of those farmers who have chosen to purchase
insurance from the appellant, there will be no need for adjusters
- like Skene - to perform any services. The business of Agencies
is substantially greater and more complex than adjusting crop
loss and operates year-round. As a result, the working
relationship between the hail insurance industry and its
adjusters, who are able to accept or reject adjusting assignments
during a short summer period, is not conducive to
characterization of a traditional employer/employee relationship.
In the within appeals, Skene was not like a fireman at an airport
who may never have to put out a fire on the runway but has to be
at work each day, in uniform, ready to roll in the event of
trouble. In the interim, there are a hundred things to accomplish
in order to maintain that state of readiness. In contrast, Skene
was not required to stand by nor was he compelled to accept any
assignment should he receive a call from Agencies. If he accepted
certain adjusting jobs, he could work 7 days per week including
some evenings. He could choose whether to travel to other areas
within Saskatchewan or to neighbouring provinces and was free to
set up his own appointments with farmers. He was able to organize
his own schedule to the point where he could advise the appellant
he would not accept assignments during a specified period. At the
beginning of the growing season, the fixed daily amount for
adjusting services was established by Agencies and Skene was free
to accept that rate or not. In 2001, the per diem remuneration
had been increased to $140 from $130 the previous year.
[24] I return to the issue - identified as
the central question in the judgment of Major, J. in Sagaz,
supra - whether the person who is performing the services is
doing so as an individual in business on his own account. There
is very little to suggest that Skene was not ready, willing,
able, and content to provide his services to the appellant on
that very basis. There is no jarring incongruity within the
overall circumstances of the working relationship under
analysis that would cause one to question the legitimacy of that
characterization by both the worker and the payor in the within
appeals. Not every aspect of each commercial enterprise can be
made to fit the traditional mould. In those circumstances where
the usual indicia are ambiguous and do not favour a clear
characterization of working status - when properly considered in
a global sense - and, having regard to the context in which the
services were provided, including an appreciation of any
specialized aspect of the relevant activity, business or
industry, then the intention of the parties - provided
their subsequent conduct was consistent with their original
expressed intent - should be accorded deference during any
subsequent analysis of their working relationship.
[25] In the within appeals, the evidence
supports the proposition that there were two businesses
operating, one on the part of Agencies - in a much broader sense
- and the other on the part of Skene who was offering his
services as a skilled crop loss adjuster knowledgeable in
processing the specific documentation utilized by Agencies and
the insurer as it pertained to processing a claim for crop damage
(See Precision Gutters Ltd. v. Canada (Minister of National
Revenue - M.N.R.), [2002] F.C.J. No. 771).
[26] Both appeals are allowed. Each decision
of the Minister dated April 22, 2002, issued pursuant to the
Act and the Plan, respectively, will be varied to
find:
- that William Skene
was not engaged in insurable employment with Wray Agencies Ltd.
from July 7, 2000 to September 2, 2000 nor from July 6, 2001 to
September 20, 2001, because he was providing his services as an
independent contractor.
- that William Skene
was not engaged in pensionable employment with Wray Agencies Ltd.
from July 6, 2001 to September 20, 2001, because he was providing
his services as an independent contractor.
Signed at Sidney, British Columbia, this 27th day of June
2003.
D.J.T.C.C.
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