Date: 20010102
Dockets: 1999-3612-EI, 1999-3613-CPP, 1999-4881-EI,
1999-4883-CPP
BETWEEN:
FARR FARMS TRANSPORT LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Dockets: 1999-4884-EI, 1999-4888-CPP
FARR FARMS TRANSPORT LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
HENRY NEMETH,
Intervenor.
Reasons for Judgment
Porter, D.J.T.C.C.
[1]
These appeals were heard on common evidence, by consent of the
parties, on July 6 and 7, 2000 at Regina, Saskatchewan.
[2]
By Notice of Assessment dated May 19, 1999, the Appellant was
assessed inter alia for employment insurance premiums and
Canada Pension Plan contributions for the 1997 taxation year in
respect of the individuals listed in Schedule ‘A'
attached to and forming part of these Reasons for Judgment. The
Notice of Assessment was in error as it incorrectly indicated the
assessment for employment insurance premiums and Canada Pension
Plan contributions as Federal and Provincial tax. However, that
is not a consideration in these appeals.
[3]
By Notice of Assessment dated May 19, 1999, the Appellant was
assessed inter alia for employment insurance premiums and
Canada Pension Plan contributions for the 1998 taxation year in
respect of the individuals listed in Schedule ‘B'
attached to and forming part of these Reasons for Judgment.
[4]
By Notice of Assessment dated May 19, 1999, the Appellant was
assessed inter alia for employment insurance premiums and
Canada Pension Plan contributions for the period January 1, 1999
to February 28, 1999 in respect of the individuals listed in
Schedule ‘C' attached to and forming part of these
Reasons for Judgment.
[5]
By letter dated July 28, 1999, the Appellant appealed to the
Minister for a reconsideration of the said 1997, 1998 and 1999
assessments.
[6]
In response to the appeal, the Minister by letter dated November
4, 1999 decided to confirm each of the assessments on the basis
that each of the individuals named in the respective schedules
"D" for 1997, "B" for 1998, and
"E" for 1999 attached to these Reasons, was employed
by the Appellant under a contract of service and
was thus an employee.
[7]
The Minister also specifically made a separate decision dated
October 7, 1999 that one Matthew Huston was employed in insurable
and pensionable employment under the Employment Insurance
Act (the "EI Act") and Canada Pension
Plan (the "Plan") for the period March 23,
1998 to January 11, 1999 as he was employed by the Appellant
under a contract of service.
[8]
The Minister also specifically made a separate decision dated
October 7, 1999 that one Dallas Lowe was employed in insurable
and pensionable employment under the EI Act and the
Plan for the period December 5, 1998 to March 3, 1999 as
he was employed by the Appellant under a contract
of service.
[9]
Each of the decisions were said to be issued pursuant to section
93 of the EI Act and section 27 of the
Plan.
[10] The
Appellant has now appealed to this Court from each of these
decisions of the Minister.
[11] The
manner in which the Court should go about deciding whether any
particular working arrangement is a contract of
service and thus an employer/employee relationship or a contract
for services and thus an independent contractor
relationship, has been clearly laid out by the Federal Court of
Appeal in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025.
The test to be applied has been further explained by that Court
in Moose Jaw Kinsmen Flying Fins Inc. v. M.N.R., 88
DTC 6099. There are, following these cases, numerous decisions of
this Court, some of which have been cited by counsel, which
demonstrate how these appellate guidelines have been applied. In
the Moose Jaw Kinsmen Flying Fins Inc. case, above,
the Federal Court of Appeal said this:
"[Analysis]
"The definitive authority on this issue in the context
of the Act, is the decision of this Court in Wiebe Door Services
Ltd. v. The Minister of National Revenue, 87 DTC 5025. MacGuigan
J. speaking on behalf of the Court, analyzed Canadian, English
and American authorities, and, in particular, referred to the
four tests, for making such a determination enunciated by Lord
Wright in City of Montreal v. Montreal Locomotive Works
Ltd., [1974] 1 D.L.R. 161 at 169-70. He concluded at page
5028 that:
Taken thus in context, Lord Wright's fourfold test
[control, ownership of tools, chance of profit, risk of loss] is
a general, indeed an overarching test, which involves
"examining the whole of the various elements which
constitute the relationship between the parties". In his own
use of the test to determine the character of the relationship in
the Montreal Locomotive Works case itself, Lord Wright combines
and integrates the four tests in order to seek out the meaning of
the whole transaction.
At page 5029 he said:
... 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.
At page 5030 he had this to say:
What must always remain of the essence is the search for the
total relationship of the parties.
He also observed "there is no escape for the trial judge,
when confronted with such a problem, from carefully weighing all
the facts".
... like MacGuigan J. we view the tests as being useful
subordinates in weighing all of the facts relating to the
operations of the Applicant. That is now the preferable and
proper approach for the very good reason that in a given case,
and this may well be one of them, one or more of the tests can
have little or no applicability. To formulate a decision then,
the overall evidence must be considered taking into account those
of the tests which may be applicable and giving to all the
evidence the weight which the circumstances may
dictate."
[12] The
nature of the tests referred to by the Court can be summarized as
follows:
a)
The degree or absence of control exercised by the alleged
employer;
b)
Ownership of tools;
c)
Chance of profit and risk of loss;
d)
Integration of the alleged employee's work into the alleged
employer's business.
[13] I also
take note of the further words of MacGuigan J., in the
Wiebe case, above, where he approved the approach taken in
the English courts:
"Perhaps the best synthesis found in the authorities is
that of Cooke J. in Market Investigations, Ltd. v. Minister of
Social Security, [1968] 3 AR E.R. 732, 738-9:
"The observations of Lord Wright, of Denning L.J., and
of the judges of the Supreme Court in the U.S.A. suggest that the
fundamental test to be applied is this: "Is the person who
has engaged himself to perform these services performing them as
a person in business on his own account?" If the answer to
that question is "yes", then the contract is a contract
for services. If the answer is "no" then the contract
is a contract of service. No exhaustive list has been compiled
and perhaps no exhaustive list can be compiled of considerations
which are relevant in determining that question, nor can strict
rules be laid down as to the relative weight which the various
considerations should carry in particular cases. The most that
can be said is that control will no doubt always have to be
considered, although it can no longer be regarded as the sole
determining factor; and that factors, which may be of importance,
are such matters as whether the man performing the services
provides his own equipment, whether he hires his own helpers,
what degree of financial risk be taken, what degree of
responsibility for investment and management he has, and whether
and how far he has an opportunity of profiting from sound
management in the performance of his task. The application of the
general test may be easier in a case where the person who engages
himself to perform the services does so in the course of an
already established business of his own; but this factor is not
decisive, and a person who engages himself to perform services
for another may well be an independent contractor even though he
has not entered into the contract in the course of an existing
business carried on by him."
[14] To this I
would add the words of Décary, J.A. in Charbonneau v.
Canada (M.N.R.) [1996] F.C.J. No. 1337, where speaking
for the Federal Court of Appeal he said this:
"The tests laid down by this Court ... are not the
ingredients of a magic formula. They are guidelines which it will
generally be useful to consider, but not to the point of
jeopardizing the ultimate objective of the exercise, which is to
determine the overall relationship between the parties. The issue
is always, once it has been determined that there is a genuine
contract, whether there is a relationship of subordination
between the parties such that there is a contract of employment
... or, whether there is ..., such a degree of autonomy that
there is a contract of enterprise or for services. ... In other
words, we must not pay so much attention to the trees that we
lose sight of the forest. ... The parts must give way to the
whole."
The Facts
[15] The
Minister, in the Replies to the Notices of Appeal, is said to
have relied upon the following assumptions of fact when coming to
his decisions, namely:
"(a) the
facts admitted above;
(b)
the Appellant is in the transportation business;
(c)
the Workers were hired to provide driving and operating
services;
(d)
the Appellant produced a detailed "independent contractor
agreement";
(e)
most of the Workers did not sign the "independent contractor
agreement";
(f)
the Appellant obtained and provided the customers and
contracts;
(g)
the Appellant provided a dispatcher who controlled and assigned
the trips and loads;
(h)
the Workers were in contact with the dispatcher on a daily
basis;
(i)
the dispatcher could track the vehicle at all times with a
satellite tracking system;
(j)
the Appellant was required to meet all delivery deadlines;
(k)
occasionally the Workers were required to report to the
Appellant's client;
(l)
the Workers were paid $.27 or $.30 per mile, depending on the
load;
(m) the
Workers were paid monthly by cheque;
(n)
the Workers were paid by the Appellant;
(o)
the Workers were only paid mileage based on the shortest route
from the supplier to the client;
(p)
the Workers were paid even if the client did not pay the
Appellant;
(q)
the Appellant handled and controlled all of the revenue;
(r)
the Appellant provided the tractor, trailer, supplies, fuel
cards, calling cards, and toll cards;
(s)
the Workers provided their own driver's license;
(t)
the Appellant paid for all normal operating expenses including
gas, oil, grease, washes, repairs, insurance, tolls, and
registration and licensing of the vehicle;
(u)
the Workers were responsible for any fines and repairs incurred
due to their personal negligence;
(v)
the Workers were required to comply with the Appellant's
policies and guidelines;
(w) the
Workers had to follow all government guidelines;
(x)
the Appellant had to approve any major repairs required;
(y)
each Worker was required to maintain a log book;
(z)
the Workers were required to wash the vehicle on a regular
basis;
(aa) the
Workers were responsible for greasing and maintaining proper tire
inflation on a weekly basis;
(bb) the
Workers were required to report all accidents at the time of the
accident;
(cc) the
Appellant provided some training to the Workers;
(dd)
occasionally the Appellant hired a replacement driver when a
Worker was unavailable;
(ee) the
Workers did not charge the Appellant G.S.T.;
(ff)
the Workers' gross wages for the period January 1, 1997 to
February 28, 1999, are detailed on Schedule "G",
attached to and forming part of the Reply to the Notice of
Appeal;
(gg) prior to
July 1, 1997 the Workers were treated as employees by the
Appellant;
(hh) the
working conditions did not change after June 30, 1997."
[16] The
assumptions of fact are virtually the same in each appeal,
although the total amount of pay differed for each driver.
[17] Evidence
was given by Jeffrey James Farr who was the major shareholder of
the Appellant and was responsible for overseeing his trucking
operations. In addition, Douglas McCullough gave evidence as the
dispatcher for the Appellant and a former truck driver for it.
Debbie Lynn Darroch was the office manager of the company and
gave evidence as did four truck drivers, Marvin Dreghici,
Henry Nemeth (the Intervenor), James Seed and Steve
Ralston.
[18] In
effect, the Appellant, by the evidence it led, agreed with
certain assumptions of fact relied upon by the Minister, namely
(a), (b), (c) (although the term "hiring" was in
dispute); (d), (f), (g), (h) (although Jeffrey James Farr claimed
this was on an as needed basis, the remainder of the evidence
satisfied me that the assumption was correct); (i), (j), (k),
(l), (m), (n), (o), (p), (q), (r), (s), (t), (u), (v), (w), (x),
(y), (z), (aa), (bb), (cc) (the evidence revealed virtually
none); (dd), (ff) (varied on the individual appeals) and
(hh).
[19] The
Appellant disagreed with items (e) (the evidence before me was
that all drivers sign such contracts and I accept that evidence);
(ee) (there was some evidence that a number of drivers did charge
GST and use business names); and (gg) (this was at the root of
the issue between the parties).
[20] It was
clear to me from the evidence that although there might have been
some minor discrepancies between the manner in which the various
drivers went about their business, on the whole the terms of work
were the same. Bad faith was imputed to Henry Nemeth by the
representatives of the Appellant, but quite frankly, I found him
to be an honest witness when giving his evidence. His evidence
did not differ greatly from the other drivers who testified and
their credibility was not an issue. Futhermore, he admitted that
he was confused as to his situation in the face of the written
terms of the contract and did not know what the status was. His
evidence was factual and I find credible, despite an ongoing
dispute he has with the Appellant over money.
[21] It was
apparent from the evidence that the trucking business of the
Appellant grew originally out of the family farm operation. It
was initially set up to service their own farming needs, but
later evolved into a full-scale trucking operation.
Jeff Farr and other members of his family bought and owned
the trucks. They leased them to the Appellant corporation. They
operated them at cost (including the capital cost) and only made
money when they were paid off and they came to sell the
vehicles.
[22] Up until
June 1997, Jeff Farr had acted as the dispatcher. In that year,
they hired a full-time dispatcher. He introduced them to the idea
of the contracts. They had a large review of their operation and
switched their existing drivers, who had previously been regular
employees, over to this new system. They also switched the
business to hauling long-haul freight. Doug McCullough was the
second dispatcher hired by the Appellant.
[23] The
evidence was clear that every driver was required to enter into
the form of contract which had been drawn up. If they refused,
they were not hired. Although they were given an opportunity to
read the contract, the evidence was that this was done in a most
perfunctory manner and sometimes the drivers just did not read
them at all. I accept, however, that they were all told that they
were independent contractors and responsible for their own
statutory deductions. They all agreed and if they were not
comfortable with that, felt that they had no choice.
[24] The
system, which was established, as I have been able to understand
it from the evidence, on which there is not really any great
divergence by the various witnesses, was that after being engaged
they would take their directions from the dispatch. It was
dispatch which arranged the loads with customers through its
corporate bank and then assign them to the individual drivers.
The drivers had the right to accept or refuse a load, but it was
clear from the evidence that if they refused for no good cause,
they were let go, such as occurred with James Seed. Steve Ralston
made it clear that it was not advisable to refuse a load. Thus,
in reality, the drivers were assigned a load and were expected to
take it. At their destination, they were assigned another load.
Only one example was given of a driver finding his own load in
California and it was in doubt in my mind whether that had prior
approval of the Appellant or not. Nonetheless, it was the
exception to the rule.
[25] The
dispatch operated a satellite tracking system and thus knew where
the trucks were at any time. The drivers were required to check
in with dispatch daily prior to 10:00 a.m. and at any other time
that they needed something. There was some question as to whether
the check-in was a requirement, but after listening to the
drivers, I was satisfied that it indeed was a requirement imposed
upon them by the Appellant.
[26] The
dispatch contracted with the customers of the Appellant for a
time of pick up and delivery and made it clear to the drivers
that they had "better meet those deadlines". Again,
this was an expectation laid on the drivers. The mileage between
points, on the basis of which they would be paid, was already
established by computer at the time of the assignment. Within
those parameters and the restrictions placed upon their driving
times by regulation in the United States and in Canada, they were
free to pick their routes and establish their rest and meal times
as they saw fit.
[27] They were
paid on the basis of so much per mile, which increased with the
number of miles driven.
[28] It is
clear that the dispatch attempted to accommodate the drivers with
respect to their request to go to particular places with their
families at holiday times, e.g. Orlando, Florida at Christmas
time. However, these were requests and it was not available to a
driver just to take his truck and go to these places without
specific approval from the dispatch. Similarly, the drivers were
not free just to take on loads for other companies. All their
loads had to be approved through dispatch.
[29] All the
truck expenses were paid by the Appellant. The drivers were only
responsible for their own personal expenses such as meals or
accommodation, but I understood that they slept mostly in the
cabs of their trucks. They had to pay their own fines and
penalties for speeding or being overweight or for not keeping
accurate log books of their driving times. They also were
required to pay for any damage caused through their negligence to
the trucks. Examples given were broken side extenders which cost
in the region of $1,000.00 each to replace. Apart from that all
expenses were paid by the Appellant and the drivers had no outlay
of their own. It was mentioned that a driver who damaged his
truck through negligence and had low mileage could be in a loss
situation at the end of the month, but again, that seemed to be
very much the exception rather than the rule. Only one example
was given of a driver who failed to return after an accident.
[30] All
repairs, other than minor ones, which the drivers carried out
themselves, were paid for and approved in advance by the
Appellant.
[31] The
Appellant did not pay for helpers to load or unload trucks.
However, it seemed from the evidence that helpers were generally
not required.
[32] There was
some evidence that two or three of the drivers charged GST and
used business trade names. There was no evidence of their being
incorporated or having registered their business names. Further,
there was no evidence of any of these drivers carrying on any
other work activities, save and except for the driving for the
Appellant.
[33] There was
considerable discussion in the evidence about parking the trucks.
Mostly, they seem to have been parked at the premises of the
Appellant, but there was apparently no strict requirement to this
effect as some drivers parked their trucks elsewhere when they
came back to the home base. It certainly seemed to me that the
Appellant had the right to tell the drivers where to park when at
their home base, even though it may not have exercised that
right.
[34] The
contracts were standard in form. They bore the title
"Independent Contractor Agreement". The relevant
parts of the contract are as follows:
"5.
The Contractor has agreed to become associated with the Company
as an independent contractor for the purpose of providing driving
and operating services to customers of the Company;
1.01 The
Company shall retain the services of the Contractor to provide
driving and operating services to customers of the Company
according to the provisions of this agreement starting the 9th
Day of March, 1998 and thereafter on a trip by trip basis,
provided, however, that this agreement may terminate at any time
upon either the Contractor or the Company giving 48 hours'
notice to the other party.
2.01 The
Company shall be responsible for the provision of a transport
tractor (Class 8 trucks) (as more particularly described in
Clause 5.01) and equipment, supplies, operating procedures,
facilities and contracts to allow the Contractor to drive
competently and professionally.
3.01 It shall
be the Contractor's responsibility to drive competently and
to follow operating procedures in providing services to the
Company's customers in the delivery of the transportation
services.
3.02 The
Contractor agrees and acknowledges that such duties and
responsibilities required to be performed shall be within the
highest standards of driving and operating transport tractors
(Class 8 trucks).
4.01 The
Contractor shall provide driving and operating services to the
Company's customers as directed by the Company from time to
time...
4.02 It is
mutually acknowledged and agreed that the times and places of
performance by the Contractor of driving and operating services
pursuant to this agreement shall be dependent upon the Company
arranging for and maintaining contracts with customers of the
Company for transportation services.
4.03 In order
to ensure that the Company is able to fulfill its obligations to
its customers and to fulfill its contractual obligations to
arrange for the provision of transportation services to customers
of the Company, the Contractor agrees to provide driving and
operating services as directed from time to time by the Company.
It is mutually acknowledged and agreed that the Contractor shall
be entitled to provide driving services to others and to contract
with other transportation companies provided that such other
activities do not conflict with the undertaking of the Contractor
to be available for the provision of services to the customers of
the Company or other organizations as herein provided.
7.01 The
Contractor is an independent contractor, not an employee of the
Company, and accordingly the Company shall not withhold nor be
entitled to withhold any amount for the payment of the
Contractor's income tax, pension plan payments, unemployment
insurance benefit payments, insurance payments including life or
disability insurance payments or payments of any other kind
whatsoever, whether for statutory obligations or private benefit
plans, and both parties acknowledge and agree that each is
individually responsible for any and all such payments on their
own behalf. The Company and the Contractor agree that, because
the Contractor is an independent contractor, the Company shall
not be required to comply with employer/employee labour
legislation.
8.01 The
Contractor hereby agrees and covenants as follows:
a)
That he/she will comply with all of the policies of the Company
as well as the guidelines of the customers of the Company.
b)
That he/she will pay and be responsible for the payment of all
income taxes, pension plan payments, unemployment insurance
benefit payments, insurance payments including life and
disability insurance payments or payments of any other kind
whatsoever on a timely basis;
c)
That he/she will, subject to complying with Highway Traffic
legislation, meet all delivery deadlines unless there is an event
that makes it impossible to meet the deadline or unless he/she
has received approval from the Company.
d)
That he/she will, at all times, maintain in good standing a valid
driver's/operator's licence appropriate for driving and
operating the Company's transport tractors (Class 8 trucks)
and equipment. The Contractor agrees to provide, upon request,
proof that he/she is meeting all requirements to maintain his
driver's/operator's licence in good standing including,
among other things, medical certificates, abstracts and log
books.
e)
That he/she will not at any time drive or operate the
Company's transport tractor (Class 8 trucks) while under the
influence of alcohol or a drug except as may be specifically
authorized by a Medical Doctor if said medication does not impair
driving,
f)
The he/she will be responsible for all damage to the
Company's transport tractor (Class 8 trucks) and/or the
trailer resulting from personal negligence in operating, as
determined by the Company, such as doors being damaged or tire
damage resulting from Contractor driving with frozen brake
drums.
g)
Under no circumstances will the Contractor argue with or
otherwise cause to upset, shipping or receiving personnel, refer
all discussions regarding loading or unloading to dispatch.
h)
The Contractor must not make decisions in regards to obligating
the Company for payment of damages or shortage claims. If the
Contractor does obligate the Company the amount will be charged
back to the Contractor. Only dispatch or management can obligate
the Company to pay for anything.
i)
All accidents of any nature, must be reported immediately to the
Company and all reports must be completed at the time of the
accident. A statement must accompany the Contractors
accident/incident report. Failure to report or conceal any
accident/incident or discrepancy, will be grounds for termination
of this contract.
j)
The Contractor is responsible for fines on overweight loads
resulting from not scaling their loads to make sure the weight
was legal.
The Contractor is responsible for fines resulting from
incomplete manifests when crossing borders.
APPENDIX ‘A'
a)
That he/she will be responsible to wash the Company's
transport tractor (Class 8 truck) and the trailer on a regular
basis so degradation of the equipment does not occur.
b)
That he/she will be responsible to grease and maintain fluid
levels on Company's transport tractor (Class 8 truck) and on
the trailer on a weekly basis.
c)
That he/she will be responsible to check and maintain proper tire
inflation pressures on the Company's transport tractor (Class
8 truck) and on the trailer on a weekly basis.
d)
That he/she will be responsible to keep a maintenance log on the
Company's transport tractor (Class 8 truck) and on the
trailer for all Repairs and Maintenance performed."
[35] It is to
be noted from this that although the drivers were entitled to
provide driving services to others (4.03), they could only do so
to the extent that it did not conflict with the requirements of
the Appellant. It can also be seen that the Appellant imposed a
considerable number of obligations on the drivers as to how they
should go about their duties and their responsibilities,
vis-à-vis the trucks.
[36] Those are
the salient facts that I drew from the evidence.
Application of the 4 Part Test to the Facts
[37] At the
outset, it can be said that it was the intent of the parties, or
at least the Appellant, to set up the drivers as independent
contractors. That was the label put upon the contracts and the
arrangement the contracts purported to establish. The perfunctory
fashion in which the contracts were provided to the drivers,
along with a take-it-or-leave-it attitude, leaves considerable
room for doubt as to the true intentions of the drivers.
Nevertheless, to put the position of the Appellant at its
highest, I accept that these were the agreements in place, signed
by the Appellant and the various drivers.
[38] The
Court, however, is not bound so much by the expressed intent of
the parties or by the label they choose to put upon their
contract, as by the true substance of the arrangement that they
in fact set up. The intent having been expressed in the written
agreement, in the absence of clear evidence that the substance
was not the same as the intent or the label, the Court should
probably be inclined to give considerable deference to the
expressed wishes of the parties. If, however, the substance of
the arrangement clearly derogates from the expressed intention or
label, then clearly it is the substance of the arrangement to
which the Court must give consideration.
[39]
Control: The aspect of control or supervision has to rest
primarily on the right to control or supervise, whether or not it
was actually exercised. Clearly, the more professional and
skilled any worker might be, the less need there is in any
particular case for the person paying him or her to actually
exercise control or supervision. Clearly here, the drivers were
professional drivers entrusted with vehicles worth tens, if not
hundreds of thousands of dollars. Their day-to-day driving did
not need to be supervised. However, there were elements of
control present. They could only take the trucks where and when
dispatch assigned them. They could not take or use the trucks for
any other purpose. They were tracked by satellite. They really,
in practical terms, were unable to refuse loads or else they
faced losing their employment. They had to check in daily. They
had to get approval for substantial repairs. They had to grease
and wash the trucks regularly. They had to be available for the
company which limited their working for others. They had to pick
up and deliver within deadlines passed on to them by the
Appellant from its customers. They could be terminated upon 48
hours notice. All these factors indicate a complete lack of
independence from the control of the Appellant. The fact that
they chose their own routes between two points already specified
over which the mileage had already been settled, and decided when
to take their rests and breaks did not derogate from that element
of control. The Appellant clearly held the hand that fed the
drivers and could withdraw it at very short notice. They clearly,
as was apparent from the evidence of the drivers, had to toe the
line.
[40] This
aspect of the test both from the point of view of actual control
and the right to control, points clearly to an employer/employee
status, that is to say a contract of service.
[41] Tools
and Equipment: There is really very little evidence that the
drivers provided anything other than their ability to drive and
their Class "A" licenses, which I do not consider to
be tools in the sense those words are used in the jurisprudence.
Some may have had a few personal tools along. However, the major
piece of equipment was the truck which, along with the satellite
tracking system and the cell phones, were provided by the
Appellant. The drivers clearly had no significant investment in
any equipment which entitled them to claim money for their
services. They had skills and the equipment was basically
provided by the Appellant. This aspect of the test also, in my
view, points to a contract of service and not a
contract for services with each of the drivers.
[42] Profit
and Loss: The drivers were able to earn more if they drove
more miles. The more they drove, the more they made and at a
certain point, the rate per mile increased. However, that is not
profit in the entrepreneurial sense, which is the criteria
established by the Appellate Courts in these types of cases. They
had time limits within which they were required to work and thus,
nothing they did affected any profit they might make other than
their driving more miles. In a sense, that was payment by the
piece.
[43]
Similarly, there was no downside for them unless they negligently
damaged the trucks. That, it seemed, was the same situation
before 1997 when clearly they were treated as employees. Thus
again, there was no downside for them in any entrepreneurial
sense. It was not as if there might be a profit or loss which
could be anticipated at the end of each trip, depending upon any
number of variables according to which the drivers were expected
to take the risk. It was a set amount per mile, subject to their
paying fines and penalties in the real world for infractions of
the law and paying for the cost of any damage negligently caused.
Again, this total lack of entrepreneurial risk clearly points, in
my view, to a contract of service. A contract with
a truly independent contractor would leave some room for the ups
and downs of the trade to affect the amount made or lost. This
seems to me to be a hallmark of a contract for services, which
was lacking in the case at hand.
[44]
Integration: I have to look at this aspect of the test
from the point of view of the individual drivers and not the
Appellant. It would be rare that the Payor did not have a
business. The question which has to be asked is, "whose
business is it?" in relation to the work being performed by
the drivers. Were they in fact operating their own separate
individual business when they were driving, or was their work
truly part and parcel of the business itself of the Appellant? In
other words, were they working on the inside of the
Appellant's business integrated into it, or were they
simply providing services for it from the outside during the
course of operating their own respective businesses? The fact
that they had only one person for whom they worked is certainly
relevant but not a determinative factor. It is not to say that an
independent contractor might not have only one client or
customer. Indeed that might be quite common in the high tech age
of today. However, it is a relevant fact to consider here. None
of these drivers operated their own trucks or apparently drove
for anybody else. Indeed, they had to be available on a priority
basis to work for the Appellant. There is quite frankly, not a
shred of evidence that any of them were doing anything in the way
of carrying on their own businesses. Indeed, the whole
arrangement seems to have been thrust upon them by the Appellant,
causing some of the drivers, who gave evidence, considerable
confusion in their minds. Apart from the two or three drivers who
had a business name and charged GST, of which the evidence is
most scant, there is virtually nothing to suggest that any of
them were in business on their own account in any entrepreneurial
sense of the word. If they had not driven, the company would
simply have found other drivers and the drivers would have been
left with nothing.
[45] In my
view, there is nothing in the evidence which points to these
arrangements truly being contracts for services as
they purported to be. Everything points, in reality, to their
work being fully integrated into the business of the Appellant
under contracts of service.
Conclusion
[46] When I
look, at the end of the day, not just at the individual trees all
of which bear the hallmark of contracts of service, but also at
the whole forest, I see only a picture of an employment situation
and not that of independent contractors. In my view, there was
not sufficient independence from the Appellant on the part of the
drivers to say that they were engaged by way of contracts
for services.
[47] It seems
to me from the cases coming before the Court, that all too often
in the trucking industry, but also in other fields, the parties
think that all they have to do is agree to be independent
contractors and not make statutory deductions, in order to make
that happen. Clearly, wherever they are getting their advice,
they are misinformed. It is unfortunate because as here, the
employers often face substantial assessments many years later,
when they are not in a position to recover from their workers.
This puts them in a highly disadvantageous position. They have a
remedy and that is to set the arrangement up properly and obtain
a ruling from the Minister in each case ahead of time.
Unfortunately, too few of them choose to do that.
[48] In the
result, the appeals are dismissed and the decisions of the
Minister are confirmed.
Signed at Calgary, Alberta, this 2nd day of January 2001.
"Michael H. Porter"
D.J.T.C.C.
SCHEDULE A
CARTIER, NORMAN
COZAC, PETER
FARREL, JAMES
FRANK, MICHAEL
HARRIS, CHRIS
ISFAN, DOUG
LEIBEL, JOANNE
LEWIS, HARVEY
MCEWEN, WADE
NEAULT, ROY
SANFORD, DON
THOMPSON, ROGER
YAKEL, JASON
SCHEDULE B
ASHWORTH, JAMES
BECHARD, HECTOR
BELANGER, KEN
BULYAKI, JOSEPH
CARTIER, NORMAN
COZAC, PETER
DAVIS, JAMES
DRAGHICI, MARVIN
FLOREK, KEVIN
GESSNER, ERIC
HARRIS, CHRIS
HUSTON, MATTHEW
ISFAN, DOUG
KINRADE, SCOTT
LALIBERTE, MICHEAL
LEIBEL, JOANNE
LOWE, DALLAS
MARTIN, GERD
MCCULLOUGH, DOUG
MCEWEN, WADE
MCNABB, JOHN
MUXLOW, DALE
NEAULT, ROY
NEMETH, HENRY
SAKUNDIAK, WALTER
SANFORD, DON
TUDHOPE, BRIAN
WILLOCK, LYLE
YAKEL, JASON
SCHEDULE C
BECHARD, HECTOR
BELANGER, KEN
COCKBURN, MICHAEL
DRAGHICI, MARVIN
FLOREK, KEVIN
GESSNER, ERIC
GIROUX, GARY
KINRADE, SCOTT
LALIBERTE, MICHAEL
LEIBEL, JOANNE
LOWE, DALLAS
MARTIN, GERD
MCCULLOUGH, DOUG
MCEWEN, WADE
MCNABB, JOHN
NEMETH, HENRY
RALSTON, STEVEN
ROYLE, TED
SEED, JAMES
YAKEL, JASON
SCHEDULE D
CARTIER, NORMAN
COZAC, PETER
FARREL, JAMES
FRANK, MICHAEL
GRAHAM, DOUGLAS
HARRIS, CHRIS
ISFAN, DOUG
LEIBEL, JOANNE
LEWIS, HARVEY
MCEWEN, WADE
NEAULT, ROY
SANFORD, DON
THOMPSON, ROGER
YAKEL, JASON
SCHEDULE E
BECHARD, HECTOR
BELANGER, KEN
COCKBURN, MICHAEL
DRAGHICI, MARVIN
FLOREK, KEVIN
GESSNER, ERIC
KINRADE, SCOTT
LALIBERTE, MICHAEL
LEIBEL, JOANNE
LOWE, DALLAS
MARTIN, GERD
MCCULLOUGH, DOUG
MCEWEN, WADE
MCNABB, JOHN
NEMETH, HENRY
RALSTON, STEVEN
ROYLE, TED
SEED, JAMES
YAKEL, JASON
COURT FILE
NO.:
1999-3612(EI) and 1999-4881(EI)
STYLE OF
CAUSE:
Farr Farms Transport Ltd. and M.N.R.
PLACE OF
HEARING:
Regina, Saskatchewan
DATE OF
HEARING:
July 6 and 7, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge Michael H. Porter
DATE OF
JUDGMENT:
January 2, 2001
APPEARANCES:
Counsel for the
Appellant:
Barry P. Nychuk
Counsel for the
Respondent:
Stacy Cawley
COUNSEL OF RECORD:
For the
Appellant:
Name:
Barry Nychuk
Firm:
Richmond Nychuk
Regina, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE
NO.:
1999-3613(CPP) and 1999-4883(CPP)
STYLE OF
CAUSE:
Farr Farms Transport Ltd. and M.N.R.
PLACE OF
HEARING:
Regina, Saskatchewan
DATE OF
HEARING:
July 6 and 7, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge Michael H. Porter
DATE OF
JUDGMENT:
January 2, 2001
APPEARANCES:
Counsel for the
Appellant:
Barry P. Nychuk
Counsel for the
Respondent:
Stacy Cawley
COUNSEL OF RECORD:
For the
Appellant:
Name:
Barry Nychuk
Firm:
Richmond Nychuk
Regina, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE
NO.:
1999-4884(EI)
STYLE OF
CAUSE:
Farr Farms Transport Ltd. and M.N.R.
and Henry Nemeth
PLACE OF
HEARING:
Regina, Saskatchewan
DATE OF
HEARING:
July 6 and 7, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge Michael H. Porter
DATE OF
JUDGMENT:
January 2, 2001
APPEARANCES:
Counsel for the
Appellant:
Barry P. Nychuk
Counsel for the
Respondent:
Stacy Cawley
For the
Intervenor:
The Intervenor himself
COUNSEL OF RECORD:
For the
Appellant:
Name:
Barry Nychuk
Firm:
Richmond Nychuk
Regina, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervenor:COURT FILE
NO.:
1999-4888(CPP)
STYLE OF
CAUSE:
Farr Farms Transport Ltd. and M.N.R.
and Henry Nemeth
PLACE OF
HEARING:
Regina, Saskatchewan
DATE OF
HEARING:
July 6 and 7, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge Michael H. Porter
DATE OF
JUDGMENT:
January 2, 2001
APPEARANCES:
Counsel for the
Appellant:
Barry P. Nychuk
Counsel for the
Respondent:
Stacy Cawley
For the
Intervenor:
The Intervenor himself
COUNSEL OF RECORD:
For the
Appellant:
Name:
Barry Nychuk
Firm:
Richmond Nychuk
Regina, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervenor:
1999-3612(EI)
1999-4881(EI)
BETWEEN:
FARR FARMS TRANSPORT LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on common evidence with the
appeals of Farr Farms Transport Ltd. (1999-3613(CPP),
1999-4883(CPP), 1999-4884(EI) and 1999-4888(CPP)) on
July 6 and 7, 2000, at Regina, Saskatchewan, by
the Honourable Deputy Judge Michael H.
Porter
Appearances
Counsel for the
Appellant: Barry
Nychuk
Counsel for the Respondent: Stacy
Cawley
JUDGMENT
The
appeals are dismissed and the decisions of the Minister are
confirmed in accordance with the attached Reasons for
Judgment.
Signed at Calgary, Alberta, this 2nd day of January 2001.
D.J.T.C.C.
Email this Content