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Citation: 2003TCC430
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Date: 20030703
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Dockets : 2002-2996(EI)
2002-2997(CPP)
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BETWEEN:
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MCQUEEN AGENCIES LIMITED,
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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.
[1] The
appellant appeals from two decisions issued by the Minister of National Revenue
(the "Minister") – both dated April 23, 2002 – wherein the Minister
decided Ben Buchinski (the "worker") was engaged in both insurable and
pensionable employment with McQueen Agencies Limited (MAL or payor) during the
period from July 22, 2001 to August 30, 2001 because he was employed under a
contract of service pursuant to the relevant provisions of the Employment
Insurance Act (the "Act") and the Canada
Pension Plan (the "Plan"), respectively.
[2] Counsel
agreed both appeals could be heard together.
[3] John
Rennie McQueen testified he is President of MAL, a corporation selling hail
insurance in Saskatchewan, Alberta and Manitoba. MAL, operating out of
Saskatoon, Saskatchewan is a General Agent for Palliser Insurance Corporation,
an insurer. McQueen stated he began working as a life insurance agent during
the summer of 1958 and – in 1960 – began working for MAL - his father’s
business – and assumed the position of President following the death of his
father. McQueen stated the process of administering a claim for crop loss
commences when a farmer contacts MAL and reports damage. As a result, MAL
management refers to a list with the names of between 65 and 80 adjusters -
located throughout the Prairie Provinces - and assigns an adjuster to determine
the extent of the loss. Attempts are made to hire adjusters in a particular
area where the loss occurred. The number of claims and the amount of acres
involved determines how many adjusters are needed and extensive damage from a
severe hailstorm may require the services of 8 or 9 adjusters to handle a large
number of claims. McQueen was referred to a binder of documents tabbed 1-15,
inclusive, filed as Exhibit A-1 (reference to a tab number will indicate the
document(s) are within said Exhibit). After the examination of the crop loss
has taken place, a Hail Adjustment Proof of Loss form – tab 7 - is prepared and
signed by both the farmer and the adjuster. Thereafter, the form is submitted
to MAL for approval and payment. McQueen stated most of the adjusting work is
performed in July, August and September, and during that period an adjuster
would accept assignments and decide the most efficient method of attending at a
site in order to adjust the loss and process the requisite paperwork. On some
occasions, an adjuster may work up to 14 hours per day but other times may be
finished after a few hours. MAL paid all expenses – such as lodging, meals, per-kilometre
compensation for use of private vehicles - directly related to performance of
the work. McQueen stated MAL will attempt – first - to contact an experienced
adjuster who has worked previously for the agency. Sometimes, an adjuster will
hire another person to assist with the paperwork but all adjusting services
must be performed personally by the designated adjuster. Ben Buchinski worked
as an adjuster from July 22 to August 30, 2001. McQueen stated Buchinski – in
late 2000 or early 2001 – visited the MAL office and indicated he wanted to
become an adjuster. Discussions were held during which McQueen advised him not
to quit his regular employment because adjusting work was performed only during
the summer months. McQueen informed Buchinski about the Adjusters’ Conference
held each year in July and suggested he attend in order to learn about the
business. In addition, McQueen advised Buchinski that if he decided to become
an adjuster, he would be accompanied by a senior adjuster in order to learn proper
procedures in accordance with a manual used within the crop insurance industry.
McQueen stated he offered to pay Buchinski the sum of $75 per day during this
training period. McQueen stated that although no written contract was entered
into between MAL and Buchinski, the worker had agreed to the terms discussed
between themselves earlier. Buchinski began working on the basis he would be
trained by experienced adjusters until they were able to conclude – and
subsequently advise McQueen - that he was able to function adequately without
supervision. From time to time, McQueen would telephone Buchinski to advise him
of a particular location where experienced adjusters were handling a claim.
McQueen stated that on one occasion Buchinski informed the MAL office he would
not attend at a particular farm because he had to travel to Calgary for
personal reasons. McQueen stated he accepted this pronouncement on the
practical basis that "you can’t get mad at adjusters because you have to
rely on them". Buchinski received a manual and the only other tools and
equipment required were a motor vehicle, proper clothing and boots. The worker
submitted numerous Adjusters Weekly Expense sheets – tab 6 – and MAL issued
payment based on those expenditures together with the total amount of fees
earned from adjusting at various farms on certain days - or half-days – based
on the per diem rate of $75. No other benefits or remuneration was paid to the
worker. McQueen stated his opinion that a flat rate per day would not be
attractive to an adjuster if required to travel a substantial distance in order
to attend at the site of a reported loss. Usually, adjusters included in the
MAL list have previous experience but sometimes there is a need to contact
other insurance agencies in order to obtain the services of an adjuster on
their list. When this occurs, the adjuster will either be paid directly by MAL
or by the other agency which will then invoice MAL for his services. McQueen
stated that in the event he did not approve a loss - as calculated by one of
the adjusters - he would attend personally at the farm or hire another adjuster
to provide a second opinion. In circumstances where a farmer and the insurer
are not able to agree on the amount of loss, there is a procedure enumerated as
a statutory condition of the insurance policy that provides for a mechanism to
resolve the dispute. Otherwise, losses are usually paid within two weeks or at
some point well within the required time limit of 60 days. McQueen stated no
adjuster had ever been fired by MAL. As a matter of business practice, if MAL
is not satisfied with an individual’s work, that person will no longer be
contacted and offered adjusting assignments. McQueen referred to an extract ‑ Exhibit A‑2 -
from The Saskatchewan Insurance Act, chapter S-26, 1978, wherein
pursuant to section 15, a procedure for appraisal in case of disagreement
provides for certain steps to be followed. On occasion, there has been a
dispute between a particular farmer/policyholder and an insurance company (other
than Palliser Insurance) and the farmer has telephoned MAL in order to be
provided with some names of adjusters in order to retain one of them for the
purpose of providing an appraisal of damage in the course of pursuing
resolution of the claim. McQueen stated the intention throughout the relevant
period was that Buchinski would be an independent contractor and – at some
point in their discussions – had advised Buchinski that he would be performing
services on the basis he was in business for himself. By letter dated
September 20, 2001 – tab 1 – Human Resources Development Canada (HRDC)
requested MAL to provide a Record of Employment - for Buchinski - for the
relevant period and by letter – tab 2 – dated the same day – informed MAL that
it had determined the worker was employed under a contract of service pursuant
to provisions of the Act. On October 31, 2001, an appeal – tab 3 – was
made to the Minister and in the process a Questionnaire – tab 4 – was completed
by McQueen on behalf of the appellant corporation. On April 23, 2002, by letter
‑ tab 5 – the Minister upheld the previous ruling.
[4] In
cross-examination, John McQueen stated the procedure followed by MAL was to
have the assigned adjuster contact the farmer to advise that he had been
assigned to handle the claim. He stated MAL paid Buchinski the fixed daily rate
of $75 to attend the adjusters’ conference together with related expenses.
Buchinski – probably – did not adjust for any other companies since he was in
training throughout the entire relevant period. McQueen explained that MAL is a
family-run business involving two brother and two sons, one of whom – like
McQueen – is an adjuster. Palliser Insurance Corporation is the underwriter and
there is an extensive amount of work that has to be done by MAL throughout the
entire year. The going rate of remuneration within the hail crop insurance
industry for fully-fledged adjusters ranged to a maximum of $160 per day
depending on skill level and experience in adjusting damage to crops during
various stages of growth. McQueen stated that due to the nature of the work and
the short season, many adjusters are retired policemen, teachers or other
persons who are engaged in other business activity or employment.
[5] Counsel
for the appellant and counsel for the respondent in the within appeals were
counsel in the appeals of Wray Agencies Limited. v. M.N.R. ‑ 2002‑2994(EI)
and 2002-2995(CPP) - heard the same day, albeit separately. For convenience,
counsel combined their submissions on the Wray matter and the within
appeals with respect to the relevant jurisprudence.
[6] Counsel
for the appellant submitted the evidence established the worker and the payor
agreed to have a working relationship wherein Buchinski’s services would be
provided on the basis he was an independent contractor. Due to the nature of
the work being undertaken, there was not much required in the form of tools and
equipment except a motor vehicle, proper clothing and footwear. Direct work‑related
expenses were reimbursed by MAL and the worker was free to decide whether to
accept adjusting assignments during which he was always accompanied by a senior
adjuster. The hours were flexible and Buchinski agreed to provide his services
at a fixed, daily fee.
[7] Counsel
for the respondent that Buchinski – unlike Skene, the worker in the Wray
case - had not had any previous adjusting experience and was in training -
under the supervision of various senior adjusters - throughout the entire
period. In addition, the worker reported to the appellant’s premises from time
to time and accompanied experienced adjusters in an effort to become proficient
in that particular skill.
[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] In
my view, there is a significant difference between the circumstances of the
working relationship between MAL and Buchinski and the worker – Skene - and the
payor – Agencies - in the Wray case. In Wray, Skene came to
Agencies as an experienced adjuster - currently engaged with another company –
and advised he wanted to secure additional adjusting work. Apart from a brief
training period – mainly for the purpose of demonstrating his ability in the
field and his understanding of the relevant paperwork -Skene was able to
operate on his own without any need for supervision. In the within appeals, MAL
exercised control – albeit, in a somewhat unusual manner - in that its other
adjusters (assumed for the sake of argument to have been independent
contractors) agreed to undertake a supervisory role over the activities of
Buchinski who had contacted McQueen and expressed a desire to become an adjuster.
In his testimony, McQueen stated it was these senior adjusters who were willing
to ‑ in effect – provide MAL with an informal certification in due
course – if and when – Buchinski became qualified to carry out crop adjusting
duties on his own. That endorsement did not occur during the relevant period.
The worker also reported to the MAL premises from time to time.
Provision of equipment and/or
helpers
[11] Buchinski
was in no position to retain the services of helpers. He was not able to
perform the actual adjusting service personally but assisted other adjusters
assigned to those tasks from time to time. He was required to provide a motor
vehicle and proper working attire.
Degree of
financial risk and responsibility for investment and management
[12] The
worker was paid the sum of $75 per day. He was not expected to exercise any
management function and could not even manage his own schedule in the fullest
sense because each time he attended at a farm for the purpose of examining the
extent of crop loss, he was required to work under the direct supervision of a
senior adjuster. Buchinski would receive a telephone call from the MAL office
to advise him where senior adjusters were working and could choose whether to
attend those locations in order to participate in the adjusting process and
thereby advance his knowledge, in return for which he could invoice MAL for his
efforts based on the daily rate of $75.
Opportunity for profit in the
performance of tasks
[13] Unlike
a fully-fledged adjuster, Buchinski was stalled at the $75 per day level unless
and until he attained the skill level required by MAL to accord with industry
standards. He was not able to take advantage of efficient time management
because he was required to wait for a telephone call providing him with the
location where some senior adjusters were either already working or were about
to attend.
[14] In
the within appeals, McQueen testified that during the course of discussions
held between himself and Buchinski it was understood – by both parties – that
Buchinski, notwithstanding his trainee status – would be an independent
contractor. McQueen stated he was certain that at some point in their
conversations, Buchinski had been told he would be in business for himself.
Unlike the situation in Wray, supra, there was no further evidence of
intent – on the part of Buchinski – that he had agreed with that
characterization of status for purposes of their working relationship.
Buchinski applied for employment insurance benefits – perhaps, on the basis of
accumulated hours during previous employment – but that conduct is not
consistent with an acceptance that he was an independent contractor while
providing his services to MAL during the relevant period.
[15] At
this point, I am going to quote extensively from my judgment in Wray, supra,
written more or less contemporaneously with these reasons. The jurisprudence
quoted therein together with a discussion of the hail crop insurance industry
and the services provided by adjusters is applicable to the within appeals. In
those appeals, I concluded the worker – Skene – was an independent contractor.
At paragraph 14 of Wray and following, I commented:
[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 ...
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. [18] 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).
[16] I
appreciate that wherever possible an effort should be made to issue decisions
that are as consistent as humanly possible given the propensity for various
fact situations some of which - like a snowflake under close scrutiny ‑ reveal
distinct and – on occasion -seemingly minor differences. There is an argument
to be made that merely because Buchinski was not a full-fledged adjuster, he
could still be an independent contractor providing his services to the best of
his ability at that time. Merely because a trucker only has a ½ ton truck and
no air-brake certification does not mean he must be an employee of the payor
because he is restricted to hauling a lesser load on more or less level ground.
On the other hand – and there always is at least one – it is not unreasonable
to consider Buchinski in the same context as any tyro who is engaged in a
program – formal or informal – with respect to education, training,
certification and/or practical acknowledgement of the attainment of a necessary
level of skill sufficient to provide a service on his own account. There are
several categories of tradesmen and other service providers who must undergo
either formal apprenticeship and licensing procedures or pursue a combination
of study and on-the-job training prior to striking out on their own. The same
principle applies to most professionals who must undergo a period of practical
tutelage under the supervision of senior members of their particular
discipline. The reason the term "fully-fledged" – borrowed from the
avian classification – is used to describe someone able to function
independently is that without the proper feathers of training and experience
one cannot fly solo. One may ask how any person is to acquire experience in the
business of adjusting crop loss if agencies are reluctant to hire someone on
the basis he or she will be an employee in the ordinary sense. Perhaps,
would-be adjusters should attend appropriate conferences and seminars at their
own expense, undertake a study of relevant manuals and enter into an
arrangement with senior adjusters in order to obtain training within the
context of a learning process commonly referred to as work experience or
internship. Once qualified in the eyes of the potential payors, an adjuster can
– in effect – hang out a shingle and start soliciting work from various
insurance companies and/or farmers engaged in dispute resolution as referred to
by McQueen in his testimony. On the evidence before me, it is difficult to
conclude there were two businesses operating as I was able to do in Wray.
During the relevant period, the worker did not possess the ability to perform
at the level required of a person capable of providing adjusting services on
his own account. Since these matters are decided by examining the various
indicia in a global sense, the lack of proof concerning the intent of the
parties played a significant role in this conclusion. It is the perspective of
the worker ‑ applying the test of reasonableness – that
represents the trump card in examining this particular factor within the
overall analysis required to determine working status. In Wray, I had
the benefit of reading the answers of the worker as set forth in the
Questionnaire solicited and relied on - to some extent – by the Minister. The
circumstances in Wray permitted the conclusion to be drawn that the
adjuster – Skene – had provided services on the basis he was in business on his
own account because the original expressed intent was consistent with
subsequent conduct of both parties throughout the working relationship and ‑ overall
– the surrounding factors either supported or – perhaps, more important - did
not destroy the foundation upon which the validity of that characterization was
based.
[17] In
accordance with the foregoing reasons, both appeals are hereby dismissed and
the decisions of the Minister issued pursuant to the Act and the Plan
are confirmed.
Signed at Sidney, British Columbia, this 3rd
day of July 2003.
Rowe, D.J.
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