Date: 20010726
Dockets: 2001-64-EI,
2001-65-CPP
BETWEEN:
HEATH STEELE MINES TRANSITION ADJUSTMENT
COMMITTEE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasonsfor
Judgment
Hamlyn, J.T.C.C.
[1]
The appeal relates to whether Kelly Sherrard [hereinafter
"Ms. Sherrard"] was employed by Heath Steele Mines
Transition Adjustment Committee [hereinafter the
"Appellant"] in an insurable and pensionable manner
for the period October 19, 1998 to January 17, 2000.
[2]
The Appellant is an organization funded equally by the Province
of New Brunswick and Noranda Mines, Heath Steele Division
[hereinafter the "Mines"]. The existence of this
organization was to provide the Mines' employees with
assistance in finding other work, retraining, and writing
resumes, prior to and following the closing of the Mines.
[3]
It is submitted by the Appellant, that Ms. Sherrard was an
independent contractor who provided services to the Appellant.
Ms. Sherrard worked independently with virtually no supervision
by the Appellant and a contract outlining such a relationship
existed between the parties.
[4]
It is submitted and assumed by the Minister that the Appellant
was directed by a committee of twelve members. Prior to the
period in question, Ms. Sherrard was one of the members of the
said committee, acting as an employee of Career Edge, an
internship program for new graduates. As an employee of Career
Edge, Ms. Sherrard was placed on the Mines' Human
Resources section and some of her duties were similar to the
duties performed for the Appellant during the period in question.
At the end of her internship with Career Edge, Ms. Sherrard was
hired as Resource Co-ordinator at the Appellant's Resource
Centre. Ms. Sherrard's duties consisted of researching the
Internet for job opportunities, publishing a news letter every
two months, informing the Mines' employees of training
programs and helping them with their job search and their
resumes. Ms. Sherrard was required to attend committee meetings
and to report to the committee chairman on a regular basis. Ms.
Sherrard was paid $12.00 an hour for 35 hours each week and
received holiday pay, sick leave and paid vacation. Ms. Sherrard
worked on premises supplied by the Appellant and was provided
with all the equipment and supplies that she required to carry
out her duties. The Appellant controlled Ms. Sherrard's
hours of work and had the right to control her activities. Hence,
it was submitted that there was a contract of service between Ms.
Sherrard and the Appellant.
[5]
In response to the Minister's assumptions the Appellant's
evidence was Ms. Sherrard was never an employee of Heath
Steele Mines Transition Adjustment Committee nor was she a voting
member of the committee[1]. That the services she performed for the Appellant
were performed independently without supervision and without
instruction and that she scheduled, controlled and managed her
work. If she required a replacement she engaged and paid her own
replacement subject to the competency approval of the
Appellant.
[6]
The question of compensation according to the Appellant was set
at $840.00 every two weeks calculated on the basis of a 35-hour
week at $12.00/hour. However, the working hours were not rigid
and were changed to suit the Appellant, their client and Ms.
Sherrard's needs.
[7]
According to the Appellant's evidence, the instructions the
Appellant received came from the Chairman of the committee, Mr.
DesBrisay, and not the Committee.
[8]
The contractual relationship between the parties was defined by
two relatively identical documents titled Memorandum of Agreement
(exhibits A-1 and R-2). The documents identify the
relationship of Ms. Sherrard to the Appellant as an independent
contractor. The documents describe the services that
Ms. Sherrard provided as that of a coordination service. Ms.
Sherrard was free to assume other contract work that did not
interfere with the work of the committee.
[9]
During the contractual negotiations the Appellant's chief
witness, Mr. DesBrisay, stated that Ms. Sherrard was
originally offered employment for the provision of her services
to the Appellant as an employee of the United Steelworkers of
America [hereinafter "U.S. of A."]. The evidence went
further to say she refused this offer because she preferred to be
paid as an independent contractor. The next witness was Kelly
Enright, the financial secretary of the U.S. of A., who stated
that Mr. DesBrisay was authorized to make the offer on behalf of
the union.
[10] Ms.
Sherrard in evidence denied that any such offer had been made and
that if she had been offered employment with the union she would
have taken it. The Memorandum of Agreement does not appear to
have been executed by both parties. However, Ms. Sherrard
confirmed receipt of the agreement and confirmed the acceptance
to perform the work and her acceptance of the rate of pay.
ISSUES
I.
Was Ms. Sherrard engaged in "insurable employment"
within the meaning of paragraph 5(1)(a) of the
Employment Insurance Act during the period in
question?
II.
Was Ms. Sherrard engaged in "pensionable employment"
within the meaning of subsection 6(1) of the Canada Pension
Plan Act during the period in question?
STATUTORY FRAMEWORK
[11] The
relevant provisions of the Employment Insurance Act[2] are:
Types of insurable employment
5 (1) Subject to subsection (2), insurable employment is
(a) employment in Canada by one or more employers,
under any express or implied contract of service or
apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other
person and whether the earnings are calculated by time or by the
piece, or partly by time and partly by the piece, or
otherwise;
[...]
[12] The
relevant sections of the Canadian Pension Plan Act[3] are;
2(1)"employee"
"employee" includes an officer;
2(1) "employer"
"employer" means a person liable to pay salary,
wages or other remuneration for services performed in employment,
and in relation to an officer includes the person from whom the
officer receives his remuneration;
2(1) "employment"
"employment" means the performance of services under
an express or implied contract of service or apprenticeship, and
includes the tenure of an office;
2(1) "excepted employment"
"excepted employment" means employment specified in
subsection 6(2);
Pensionable employment
6. (1) Pensionable employment is
(a) employment in Canada that is not excepted
employment;
ANALYSIS
[13] The
distinction between an employee and an independent contractor is
a fine line that is often difficult to distinguish. Consequently,
jurisprudence has developed a number of tests to aid in this
determination. In Wiebe Door Services Ltd. v. M.N.R.,[4] MacGuigan, J.
reviewed the various tests applied by the courts and affirmed the
comments of Cooke, J. in Market Investigations Ltd. v.
Minister of Social Security, in which he stated:
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.[5]
[14] Hence,
four primary tests must be examined by the Court when determining
whether an individual is engaged as an employee or as an
independent contractor: the degree of control and supervision,
the risk of profits and losses, the ownership of tools, and the
integration of the individual into the Appellant's
business.
[15] It should
be noted that no single test is determinative of the issue as
they must be examined together in light of all the circumstances.
This point was noted in Moose Jaw Kinsmen Flying Fins Inc. v.
M.N.R.[6] in
which the Federal Court of Appeal stated at page 6100 that:
[...] 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.
CONTROL AND SUPERVISION
[16] A classic
explanation of the control test was seen in Wiebe Door,
where MacGuigan J. stated at page 5027:
The traditional common-law criterion of the employment
relationship has been the control test, as set down by
Baron Bramwell in R. v. Walker (1858), 27 L.J.M.C.
207, 208:
It seems to me that the difference between the relations of
master and servant and of principal and agent is this: A
principal has the right to direct what the agent has to do; but a
master has not only that right, but also the right to say how it
is to be done.
[17] The
Minister submitted that Ms. Sherrard was subject to a degree of
control and supervision. Ms. Sherrard was required to attend
meetings and regularly report to the chairman of the committee
that directed the organization.
[18] I
conclude Ms. Sherrard was under the supervised control of the
Appellant, that reporting to Mr. DesBrisay was continuous when
needed and direction from Mr. DesBrisay was given if needed. Ms.
Sherrard did perform her duties without constant monitoring but
direction and communication was always available by way of
telephone or E-mail.
[19] In terms
of subordination, the Memorandum of Agreement reserved to the
Appellant the right to terminate the agreement at any time
without prior notice.
PROFIT AND LOSS
OWNERSHIP AND PROVISION OF TOOLS AND WORK
LOCATION
INTEGRATION
[20] The
question of risk of profit and loss, ownership of tools and
integration are resolved from the evidence.
[21] Ms.
Sherrard's workweek was a guaranteed payment of $420/week
regardless of required work. She was not in a position of risk.
However, if she needed a replacement she paid for the
replacement.
[22] The
Appellant provided the work location as well as all equipment and
supplies necessary for Ms. Sherrard to perform her duties.
[23] It is
also evident that the services provided by Ms. Sherrard were for
the purposes and objectives of Heath Steele Mines Transition
Adjustment Committee and that Ms. Sherrard's duties were an
integral part of the organization as its whole purpose was to
assist employees in finding other work, retraining, and writing
resumes.
[24] All these
factors lead to the conclusion that Ms. Sherrard was providing a
contract of service to the Appellant.
CONCLUSION
[25] It is
clear the intention of the Appellant was to engage Ms. Sherrard
as an independent contractor. It is also clear that Ms. Sherrard
knew this was the intention of the Appellant, however, did not
accept the intention but in any event took the position.
[26] The
analysis of the reviewed four primary tests and the weighing of
all the factors leads to the conclusion that Ms. Sherrard,
notwithstanding the Appellant's intention, was engaged in a
contract of service. Kelly Sherrard was employed in insurable and
pensionable employment while engaged by the Appellant for the
period October 19, 1998 to January 17, 2000 within the meaning of
the Employment Insurance Act and the Canada Pension
Plan Act.
DECISION
[27] The
appeal is dismissed.
Signed at Ottawa, Canada, this 26th day of July 2001.
"D. Hamlyn"
J.T.C.C.
COURT FILE
NO.:
2001-64(EI)
STYLE OF
CAUSE:
Heath Steele Mines Transition Adjustment Committee and
The Minister of National Revenue
PLACE OF
HEARING:
Moncton, New Brunswick
DATE OF
HEARING:
July 19, 2001
REASONS FOR JUDGMENT BY: The
Honourable Judge D. Hamlyn
DATE OF
JUDGMENT:
July 26, 2001
APPEARANCES:
Agent for the
Appellant:
R.B. DesBrisay
Counsel for the
Respondent:
Simon Nicolas Crépin
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE
NO.:
2001-65(CPP)
STYLE OF
CAUSE:
Heath Steele Mines Transition Adjustment Committee and
The Minister of National Revenue
PLACE OF
HEARING:
Moncton, New Brunswick
DATE OF
HEARING:
July 19, 2001
REASONS FOR JUDGMENT BY: The
Honourable Judge D. Hamlyn
DATE OF
JUDGMENT:
July 26, 2001
APPEARANCES:
Agent for the
Appellant:
R.B. DesBrisay
Counsel for the
Respondent:
Simon Nicolas Crépin
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-64(EI)
BETWEEN:
HEATH STEELE MINES TRANSITION ADJUSTMENT
COMMITTEE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard together with the appeal of Heath
Steele Mines Transition Adjustment Committee (2001-65(CPP)) on
July 19, 2001, at Moncton, New Brunswick, by
the Honourable Judge D. Hamlyn
Appearances
Agent for the
Appellant:
R.B. DesBrisay
Counsel for the Respondent: Simon
Nicolas Crépin
JUDGMENT
The
appeal is dismissed and the decision of the Minister is
confirmed.
Signed at Ottawa, Canada, this 26th day of July 2001.
J.T.C.C.
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