Always Towing Inc. v. M.N.R., docket 1999-1091-EI

Date: 20000929

Docket: 1999-1091-EI

BETWEEN:

ALWAYS TOWING INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

RICHARD S. PITRE,

Intervenor.

Reasons for Judgment

Rowe, D.J.T.C.C.

[1]            The appellant, Always Towing Incorporated (ATI) appeals from a decision of the Minister of National Revenue (the "Minister") dated December 1, 1998 wherein the Minister found the employment of Richard S. Pitre with the appellant during the period from November 15, 1996 to February 28, 1998 to have been insurable employment pursuant to a contract of service. The appellant corporation was the subject of a Certificate of Dissolution - dated February 16, 1999 - issued pursuant to the Business Corporations Act of the province of Saskatchewan. The towing business previously carried on by the appellant corporation had earlier been transferred to a numbered company - 619583 Saskatchewan Ltd. - which in February, 1999, underwent a name change to Always Towing '99 Incorporated. Counsel for the appellant requested that I grant intervener status to the new corporation since the business currently is carried on in the same manner as during the period covered by the ruling and it is his belief that a decision in favour of ATI in the within appeal will have the practical effect of leading to a change in a recent ruling (May, 1999) by Revenue Canada (as it then was) and to the issuance of a new ruling in which the tow-truck drivers will be found to be independent contractors rather than workers employed under a contract of service.

[2]            Counsel for the respondent raised the matter of whether there was any merit in the appellant corporation proceeding with the within appeal since it had been dissolved and was not able to be affected by the decision. However, counsel for the appellant referred to subsection 219(2) of the Business Corporations Act which permits civil or administrative proceedings commenced before dissolution by - or against - a corporation to continue as though it had not been dissolved. In addition, if the decision of the Minister were to be confirmed, then there could be potential liability against the Directors of the corporation.

[3]            Prior to hearing any evidence on the appeal, I ruled the new corporation - Always Towing '99 Incorporated - could not be an intervener since it may not have existed at the time the decision under appeal was issued, not even in its earlier form as the numbered company. Certainly, it was not operating the towing business during the period covered by the Minister's decision and could not otherwise be a person "affected by the decision" as required by subsection 103(1) of the Employment Insurance Act. As a consequence, it had no status to intervene. The section reads as follows:

                "The Commission or a person affected by a decision on an appeal to the Minister under section 91 or 92 may appeal from the decision of the Tax Court of Canada in accordance with the Tax Court of Canada Act and the applicable rules of court made there-under within 90 days after the decision is communicated to the Commission or the person, or within such longer time as the Court allows on application made to it within 90 days after the expiration of those 90 days."

[4]            Rule 9.(1) of the Tax Court of Canada Rules of Procedure governing the Employment Insurance Act appeals reads as follows:

                9.(1) A person who wishes to intervene shall intervene in an appeal by filing in or mailing to the Registry in which the notice of appeal was filed, or to which it was mailed, a notice of intervention that may be in the form set out in Schedule 9. (emphasis added)

[5]            Notwithstanding the wording of the Rule, in my view, one has to be directly affected by the decision of the Minister which is under appeal in the same manner as the appellant. An intervention has a special meaning in relation to appeals launched under the Act and is not to be confused with the increasingly popular procedure whereby persons or groups seek leave to appear before a Court because they purport to have a significant interest in the outcome of the litigation. To hold otherwise, would be to invite participation by a business group, union, fellow workers, or related corporations to make representations and otherwise participate in an appeal from a decision of the Minister affecting named workers within a specific period of time in the course of a particular working relationship. That form of intervention is not in accord with the type of proceedings contemplated by the Rules relating to Informal Procedure appeals nor does it conform with the intent of subsection 103(1) of the Act.

[6]            I also ruled the appellant had standing to proceed with the appeal. The fact the result may appear to be of direct limited value to the now-defunct corporation is irrelevant. It has the right to continue a civil proceeding pursuant to the Business Corporations Act and it was a person affected by the decision of the Minister issued on December 1, 1998 and, as such, has a right to appeal.

[7]            Monique Martin testified she has been involved in the towing business for 10 years in Saskatoon, Saskatchewan, as carried on by the appellant and the new corporation. While employed at a paging company she began dispatching calls for ATI. In 1994, she met Rick Martin, President of ATI, and they were later married. Her husband had also worked as a tow truck driver while she handled the dispatch duties which was based on a rotation system whereby drivers were called to perform a job and then were placed at the bottom of the list following which they proceeded to work up to the top again as further towing jobs were assigned to the drivers next in line. During a night shift, a driver dispatched to handle a trip could decide if assistance was required and all drivers could "book off" without notice or could "pass" on a trip which would then be assigned to another driver. Monique Martin stated she worked as a dispatcher for 6 months in 1995 but that duty was then turned over to an answering service which was independent from ATI. Once the new agency took over handling the calls, the trips continued to be assigned in the same manner as before except the drivers - all of whom were equipped with pagers - had 5 minutes in which to respond to the dispatcher and failure to do so would result in the trip being dispatched to another driver. Again, drivers could refuse trips for a variety of reasons including the distance involved or if responding to the dispatch would interrupt a meal. The drivers - in Monique Martin's view - treated their assigned truck as their own and placed their name on the door and otherwise decorated the unit. The trucks were fully-equipped and had a value of approximately $15,000. The mechanical maintenance and repair of the trucks was done by Rick Martin and his father but the drivers were held responsible for damage caused while towing another vehicle and were required to reimburse a customer for the deductible portion of any property damage policy coverage on the vehicle being towed. Many drivers performed minor repairs to the trucks and provided their own small tools and equipment. ATI had a supply of parts on hand at the business premises. The drivers were responsible for their own food costs while on duty. Apart from being dispatched to a tow job, a driver could obtain business from a "flag" (being summoned on a street) by a person needing a tow or someone who had locked the ignition key inside the vehicle. Other times, a driver would pull up by a stopped vehicle and inquire whether assistance was required. Some drivers handed out business cards while others relied on word of mouth and attempted to solicit business from other businesses in Saskatoon. Some customers - when calling dispatch - requested a particular driver and if that person happened to be on duty, the request was honoured. If not, another driver was assigned to the call. Drivers were permitted to use the tow truck for personal errands including towing their own private vehicles. There were no restrictions on carrying a passenger while on duty and wives, girlfriends and friends would often ride along and assist with hook-ups and the necessary paperwork involved in completing a tow. At night, the drivers took their trucks home and many of the units were used as personal transportation. The rotation system for working specific shifts was managed by one of the drivers who would place names on a sheet based on advice from individual drivers as to availability for work during a certain period ranging from one week to one month in the future. In Monique Martin's opinion, experience counted in the towing business - in order to perform the task properly - and the rotation system worked best with 5 trucks, each with one driver. During the night shift, the driver assigned the privilege of being "first out" - preferably on a Saturday - had the right to take all the calls he could handle - including the discretion to postpone immediate response - thereby "stacking" up trips based on a personal judgment call. On other occasions, a driver would have to call in other drivers to assist, some of whom would be in their truck while others might be at home, available to respond after being contacted by pager. An experienced driver could judge probable demand during a specific period by observing weather conditions or the presence of special events during a particular evening or weekend. Monique Martin stated most drivers seemed to enjoy their work and generally could respond to a dispatch within the five-minute deadline. Repeated failures to answer a call from a dispatcher would - probably - have led to a discussion with that individual. Drivers were not required to attend at the ATI office where she worked and where Rick Martin carried out repairs and managed the remainder of the operations of the business.

[8]            In cross-examination by counsel for the respondent, Darrel B. Nordquist stated he cannot recall when Richard S. Pitre handed him the card - Exhibit A-1 - but thought it was probably during summer, 1998. At that time, he thought Pitre was driving a tow truck for Always Towing Incorporated but agreed the timing would be wrong as ATI did not commence operating under that name until 1999. During the time he owned his own truck, Nordquist agreed he had been responsible for all operating costs. At the time, his wife had worked as the dispatcher and the business was not advertised in the telephone directory but he received work from word of mouth and from his brother who also owned a towing business.

[9]            The intervener did not wish to cross-examine.

[10]          Wayne Sellar testified he is Operations Manager for Premium Moving but drove a tow truck for ATI and then Always - on and off - from May, 1991 until April 30, 1999. Sometimes he would work for one year and at other times would work only during the winter. Then, there were periods when he worked at the towing business and also held down another job at a moving company. While working as a tow truck driver, he was part of the rotation system which was administered by the drivers so that each operator was given a fair opportunity to earn revenue. The process of scheduling was a team effort involving all the drivers. While working as a tow truck driver, he sometimes used the unit for personal transporation and, on occasion, when he took time off he merely parked the truck but - other times - he arranged for a substitute driver. His wife accompanied him on trips in the truck and assisted with hook-ups and completing the paperwork. He handled the maintenance on the truck in order to gain a working knowledge of mechanics but was not required to do so by Rick Martin. While there was a base rate to be charged for various types of towing jobs, on occasion, he would give a discount to a customer with the expectation of future business. He had full discretion to charge customers according to the circumstances and it could vary from a per-service charge to an hourly rate of $40.00. Some drivers charged more than others depending on their personal judgment of the time and effort involved in carrying out the task. The towing contract with the City of Saskatoon was awarded on an annual basis through a bidding process and sometimes ATI and/or Always were successful in obtaining the work.

[11]          In cross-examination by counsel for the respondent, Sellar stated he learned mechanics from Richard Martin by assisting him in the repair of the tow truck at the ATI garage.

[12]          The intervener did not wish to cross-examine.

[13]          David Chivers testified he currently works as a wheel-repair technician but worked as a tow truck driver from 1996 to early 1999. At all times the truck displayed an insignia indicating it was part of the business of Always. The truck was placed in a rotation and when he wanted to take time off he trained a friend how to handle towing jobs and then had him drive it for him. His friend did not accept any pay - from Sellar - for working as a substitute driver. While driving an Always truck, Sellar stated he solicited work from a car dealer and the dealership would call the towing company and request he be given the job, if available, but if he was not on shift then another driver responded to the call.

[14]          In cross-examination, Sellar agreed he was probably the only driver who had an arrangement whereby a substitute driver operated the truck for no compensation purely as a favour or for his own personal entertainment. The cost of fuel, insurance, maintenance and repairs was covered by the 65% of the revenue retained by ATI and/or Always.

[15]          The intervener did not wish to cross-examine.

[16]          Corinne Waldner testified she is an office manager and had worked - as an operator - at Norplex Calling Centre. Norplex answered calls, dispatched trips to the drivers and acted as a communication channel. The published phone number for ATI was answered at Norplex. A rotation of truck numbers was on a list at the Norplex office and the operators used a radio, then pager, and radio - again - to contact the driver at the top of the list. In the event that driver did not respond within five minutes, the next truck on the list was called and - if unavailable - then the next one was contacted until a driver accepted the trip. Some drivers refused to handle a trip which led to the truck next on the rotation being contacted by 2-way radio. The rotation sheet was faxed over to the Norplex office from the ATI office and any subsequent changes would be done by the drivers. She was acquainted with Rick Pitre during the time he was driving an Always or ATI truck.

[17]          In cross-examination by counsel for the respondent, Corinne Waldner stated some drivers would request they not be called until a certain time and she used her own method of placing drivers on the list in order to be assigned or dispatched to calls.

[18]          The intervenor did not wish to cross-examine.

[19]          Brian Whitehead testified he worked as a tow truck driver at Always from early, 1998 until the doors were closed in April, 1999. During this period, he had two of his own tow trucks and had one driver working for him at another towing company while he was in the process of selling that unit. There were no rules or supervision of workers by Always management and prices could be established by the operator - on the scene - depending on the circumstances but Always did have a base price set for various services. If he took time off, then the substitute driver received the amount resulting from 35% of the revenue earned by the truck by means of Whitehead turning in invoices to Always for the trips and paying the amount to the substitute driver when he received it from Always.

[20]          In cross-examination by counsel for the respondent, Whitehead stated when he owned his own truck he paid a dispatch fee of 18% of the revenue generated by the call while - as a driver - he received 35% of gross revenue. While working at Always, he never encountered any difficulty in taking time off.

[21]          The intervener did not wish to cross-examine.

[22]          Richard Pitre was called as a witness by counsel for the respondent. He identified a Questionnaire - Exhibit R-3 - he had completed. In his view, once a driver had been provided with a pager, the effect of that was to be on call 7 days a week, 24 hours a day, every day of the year. Copies of his pay cheques - Exhibit R-4 - indicated he was paid twice per month on the basis of 35% of gross revenue earned while operating the tow truck. In his opinion, if he had been dispatched then he regarded it as his duty to perform the trip personally. The day shift - during which most of the trucks worked - would begin at 7:00 a.m. and the night shift commenced at 5:30 p.m. Norplex recorded the time a truck was dispatched and when it was later "cleared" (indicating the assigned job had been completed) and the truck could return to the rotation. When starting to drive the tow truck, he rode along with a driver for three or four days before he was permitted to take calls by himself. On one occasion, he went away for Christmas holidays and on his return, discovered his truck had been taken out of his driveway and stored at the Always compound. He considered his work at Always to have been full time and, as such, did not permit him to work at another towing company. He stated he lost his operator's license for five months as a result of a drinking and driving conviction and had inquired of Rick Martin if he would be allowed to return to work once the suspension had been lifted. Martin informed him such a reinstatement might be possible but did not guarantee any work in the future. After losing his license, the truck was operated by Wayne Sellar. Pitre stated he paid for small repair items and reimbursed himself from any cash he had collected from towing jobs but always placed the relevant receipt in the envelope and it would be taken into account when the calculations for pay were done at the ATI office. In the event any cash was missing, Always imposed a penalty of 100% of the shortage - later increased to 200% - on the driver. He stated he was able to use the truck for personal errands but not if it involved a lot of mileage and he also had requested time off - on occasion - only to be denied. While on standby, Pitre paid his own food costs and, since he had no responsibility for any of the operating costs pertaining to the truck he drove, he regarded himself as an employee. The business card - Exhibit A-1 - was made up just before he began working as a spare driver for Astro Towing and did not relate to his work at Always. The surcharge for insurance - as a result of incurring convictions - is applied only to the personal operator's license and must be paid in order to hold that license.

[23]          In cross-examination by counsel for the appellant, Pitre agreed he used the tow truck for personal purposes if he were on call during an evening. He placed his name on the door of the truck as well as that of his friend, Donna, who went with him on "ride-alongs" and assisted with the paperwork. During the summer, five trucks were operating and he worked - on average - 11 hours a day. That amount of time was not spent actually working straight through but he was always available for calls during that period. He had used the tow truck to drive to bars but would not consume alcohol prior to operating the unit. He had never entered into a written contract with Always and/or ATI. On the business card - Exhibit A-1 - he used the pager number previously assigned to him when he worked at Always. Some days - while working from 7:00 a.m. to 10:30 p.m. - he might handle only four calls while other times - if the weather was very cold - he would constantly be responding to various dispatches. Pitre stated he chose to attend at the ATI premises prior to commencing a trip and cannot ever recall passing up a trip offered to him by dispatch as he was motivated to maximize his income.

[24]          Counsel for the appellant submitted the drivers had very little control or supervision over their activities and the role of dispatcher was fulfilled by an independent entity. In addition, there was an air of entrepreneurship surrounding the activity because the drivers could increase revenue in a variety of ways and the division of the gross revenue generated by the trucks driven by the workers created a sort of co-venture between them and the appellant. In that sense, counsel submitted, the drivers could act independently but still function within a mutually satisfactory business arrangement with the appellant.

[25]          Counsel for the respondent submitted the jurisprudence supported a finding in the within appeal that - on the basis of the tests to be employed - the Minister_s decision was correct because the services provided by the intervener were pursuant to a contract of service and the employment of Richard Pitre during the relevant period was insurable.

[26]          In Wiebe Door Services Ltd. v. M.N.R., [1986] 2 C.T.C. 200, the Federal Court of Appeal approved subjecting the evidence to the following tests, with the admonition that the tests be regarded as a four-in-one test with emphasis on the combined force of the whole scheme of operations. The tests are:

                1. The Control Test

                2. Ownership of Tools

                3. Chance of Profit or Risk of Loss

                4. The integration test

Control:

[27]          The evidence revealed the drivers were able to arrange - among themselves - a schedule whereby the full range of business hours offered by the appellant to the public would be covered and each driver would have an equitable opportunity to drive during certain periods known to produce peak revenue. However, Rick Martin - on behalf of ATI - acted a arbiter in the event of disputes arising among the drivers and he also exercised a disciplinary role in speaking to drivers about complaints from other drivers, usually concerning a tardy response to a call for assistance. The drivers were free to book off certain days and to "pass" on certain calls. As explained by Rick Martin, the appellant had sufficient trucks on duty - or on call - at any given time so that one or more drivers deciding not to work on a particular day did not affect - adversely - the income of the appellant. In the modern workplace there are a couple of significant factors relating to the issue of control. First, there are many jobs being performed which require a specialized degree of expertise beyond the competence of a supervisor and the hands-on control of an earlier time is no longer the norm. Second, many businesses - including the appellant in the within appeal - are owned or managed by individuals who are in the same general age bracket as the workers and there is a modern style of management utilizing worker-input, team decision-making and policy by consensus with more flexibility within the day-to-day operating systems and less reliance on micro-management by the one who - if push comes to shove - is still the boss. The fact that a work environment has the atmosphere of a happy family does not transform it into one in which independent entities are dealing with each other. In the within appeal, the overall supervisory capability rested in the hands of Rick Martin and his wife, Monique, who ran the office and was responsible for levying the penalties on drivers in instances where the proper amount of cash had not been turned in within the deadline. The decision to take a truck - and the driver - out of rotation was made by ATI management. Similarly, during a holiday period, ATI decided to pick up the truck driven by Pitre and return it to the ATI compound.

               

Tools:

[28]          The fully-equipped tow trucks - in accordance with industry standards - were provided by ATI to the drivers and were ready to roll, as is. The fact that drivers could add lights, decals, hooks, and use their own jack or personal tools is not particularly significant. The necessary tools at the core of the revenue-generating activity were provided by the appellant as well as the equipment and tools to keep them functioning in a proper manner.

Chance of Profit or Risk of Loss:

[29]          The drivers - including the intervener - earned 35% of the gross revenue generated by the truck. While they had some discretion to charge a customer according to the circumstances discovered at the scene, many of the towing jobs had a fixed rate set by ATI. The fuel was purchased by ATI and all operating costs associated with the operation of the trucks were borne by the appellant. The intervener was reimbursed by ATI for purchases required for the truck. In the event a driver could promote or solicit additional business, then any revenue produced was still subject to the 65-35 split in favour of the appellant. The drivers were not subject to any potential for loss except if they caused damage to a customer's car and there was no evidence that had ever been relied on by ATI. In any event, if the status of the workers is truly that of employees, then any such deduction for causing damage while in the course of performing the job or any other method of imposing penalties would be in violation of provincial legislation concerning employment standards.

Integration:

[30]          This test is one of the most difficult to apply. At page 206 of his judgment in Wiebe, supra, MacGuigan, J.A. stated:

"Of course, the organization test of Lord Denning and others produces entirely acceptable results when properly applied, that is, when the question of organization or integration is approached from the persona of the "employee" and not from that of the "employer," because it is always too easy from the superior perspective of the larger enterprise to assume that every contributing cause is so arranged purely for the convenience of the larger entity. We must keep in mind that it was with respect to the business of the employee that Lord Wright addressed the question "Whose business is it?"

Perhaps the best synthesis found in the authorities is that of Cooke, J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All. E.R. 732 at 738-39:

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.

There is no escape for the trial judge, when confronted with such a problem, from carefully weighing all of the relevant factors, as outlined by Cooke, J."

[31]          In the within appeal, the trucks were the subject of what appears to be an informal leasing arrangement between Rick Martin, his father and the corporation - ATI - equally owned by them. The premises from which the business operated and the tools, equipment and ability to carry out the necessary repairs and maintenance were owned and/or leased by ATI. The ability to purchase fuel at a bulk rate was the result of a contract entered into between ATI and the supplier. The contracting out of the dispatch function to Norplex was undertaken by ATI management, although Monique Martin had performed the task until 1996. The number called by a potential customer was answered by Norplex - on behalf of ATI - and all advertising and listings in directories indicated the towing business was that of ATI or Always depending on the time period. When the intervener lost his driving privileges, ATI responded by removing the corporate truck from Pitre's premises and promptly assigned another driver to operate it. Bidding for the contract with the City of Saskatoon - on an annual basis - was done by the appellant. From the moment someone called the relevant number seeking the assistance of a tow truck, the infrastructure established by ATI and its predecessor came into play and a driver was dispatched through a mechanism arranged and paid for by the appellant. The driver performed the task and - more often than not - charged a fee for service previously fixed by ATI. Even if the driver used discretion to charge an additional amount, that revenue was still shared on the basis of a 65% - 35% division and - significantly - that included all money earned by a driver even when flagged down, called privately, or otherwise contacted to perform a towing job without the customer having gone through the dispatcher. The drivers turned in the required paperwork and their share of the gross revenue was calculated by Monique Martin who then issued a cheque. This procedure is not consistent with an independent contractor invoicing a customer and is more in tune with a worker handing in timesheets or an employee being remunerated on a commission or piece-work basis handing in the requisite information so that payment can be tallied by the employer.

[32]          I am aware that the drivers - except the intervener - regarded themselves as independent contractors. What the parties thought their relationship was will not change the facts. In the case of The Minister of National Revenue v. Emily Standing 147 N.R. 238, Stone J.A. at p. 239 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."

[33]          As I noted in the case of Blues Trucking Inc. v. M.N.R., [1999 T.C.J. No. 675] commencing at page 13, paragraph 18 and following:

"In the case of F.G. Lister Transportation Inc. v. M.N.R., 96-2163(UI), unreported, dated June 23, 1998, I dealt with the case of long-haul truck drivers and found they were employees working pursuant to a contract of service. Because most of these cases can turn on an apparent slight difference in facts, in the Lister decision, at paragraph 13, I commented as follows:

                I now find myself in the position of being required to point out the differences in the facts in the within appeal and those in two other decisions issued by me in which I held the drivers were independent contractors. In the case of Lee (c.o.b. D & A Transport) v. M.N.R. [1995] T.C.J. No. 426 I held the driver of a long-haul transport truck to have been an independent contractor. In that case, the driver had registered his business for purposes of the Goods and Services Tax, maintained a business bank account and had filed income tax returns on the basis of being self-employed. In Lee, the appellant had earlier been an employee of the payor and had agreed to alter the working relationship and there was clear evidence he could have hired another driver to work for him on long-hauls thereby generating a profit. As well, in Lee, it came down to choosing between two versions of circumstances surrounding a working relationship and the choice did not favour the worker. I also held the tools of the trade were the personal skills of the driver as a qualified person capable of hauling a loaded trailer over long distances. That finding was in the context of the driver operating a business under the trade name, Rick's Driving Services, having a bank account under that name and otherwise doing business with third parties on that basis. Income tax returns had been filed on the basis the worker was a self-employed person.

                In another decision of mine, Metro Towing Ltd. v. M.N.R. [1991] T.C.J. No. 717, I found a tow-truck driver to have been an independent contractor. In that case, while there was a high degree of control over the worker, he had leased the vehicle and all of the equipment needed to carry out his task and bore all of the costs, including insurance, relating thereto. That driver also had a substantial risk of loss arising from the operation of that vehicle in the event he was not able to generate sufficient gross revenues which fluctuated on a monthly basis, as did, to a lesser extent, his costs of operation. In that case, like Lee, supra, the worker had earlier been on the regular payroll and had decided to enter into a new arrangement whereby he was the lessor of a truck and certain equipment and would be entitled to receive 30% of gross towing revenue arising from jobs which were dispatched by Metro Towing Ltd. The evidence in the Metro Towing Ltd. appeal disclosed that other tow-truck drivers operated through a limited company or a partnership arrangement.

                In the case of Summit Gourmet Foods Inc. v. M.N.R. 97-470(UI), a decision of The Honourable Judge Mogan, T.C.C., dated November 24, 1997, Judge Mogan considered the status of a person - Freeman Walters, the intervenor - who drove a truck for the appellant, a corporation carrying on business as a supplier to pizza restaurants. Judge Mogan held the driver to have been an employee engaged in insurable employment and, at page 5 and following, stated:

"On control, I regard that test as marginally favouring employment and not independent contractor even though counsel for the Appellant stressed that Freeman was not told the way to do his work. I accept that. On the other hand, he was assigned trips; he could arrange the order of delivery and the date but they had to be delivered within a week, and he had to call in to the Appellant's office each morning. This was brought out in Freeman's testimony. He said: "Every person operating a truck has to report in, and I specifically did. I had to call in every morning to say where I was going so that they would know where I would be that day, and whether there were additional orders that had come in from customers which I might have to fill out of the extra product I was carrying". There was an opportunity for the Appellant to call evidence in reply to contradict that bald statement by Freeman but it failed to do so. On a common sense basis, I believe the statement.

Eric described a freezer truck which Freeman used costing between $70,000 and $80,000. When a company sends a person out in its truck of that value, it wants to know not only where the truck is day-by-day but also, when there are established customers to be serviced, it wants to know in a timely manner whether the customers are being serviced because they are the lifeline of a business. I cannot believe that a person in Freeman's position would not be required to report in daily on where he went and what he had serviced and whether there were fresh orders.

The fact that Freeman could arrange the order in which he would service these customers, or that he could arrange the time when he started on a trip does give him some freedom from control but, on balance, I would say that although he was not under the hand of the Appellant, they knew on a daily basis where he was, what he was doing and what customers he had serviced. Therefore, on the test of control, I find that there is more of an indication of the type of control one finds in employment than the simple direction which is given to an independent contractor.

With regard to the test of ownership of tools, it is very strongly in favour of employment and not an independent contractor. The only relevant tools for this kind of work were the truck and the dolly, both of which were owned by the Appellant. Counsel for the Appellant brought to my attention a similar case in Saskatchewan, where Mr. Justice Kyle of the Court of Queen's Bench said:

...To draw a parallel between the ownership of tools in the case of a tradesman and the hotel and equipment therein in a case such as this appears to be stretching the logic of the Montreal Locomotive case beyond reason.

I would agree with that statement. I think that an $80,000 truck was never in the minds of those learned Judges half a century ago who laid down these early tests and talked about ownership of tools. In my view, they were talking about tradesmen's tools like a carpenter's hammer and saw. The fact is, however, that in a more sophisticated society, this truck was the only vehicle through which the service was performed. The driver's licence that was held by Freeman was a pre-qualification to his engagement with the Appellant; and he could not be engaged if he did not have a driver's licence. I do not regard his driver's licence as a tool. I look at the only thing that Freeman used to perform the services and it was a very expensive and sophisticated piece of equipment. Therefore, the test of ownership of tools favours employment.

On the chance of profit and risk of loss, I find that also favours employment because there was virtually no risk of loss. There was a chance of compensation because all Freeman had to do was complete the round trip and he would receive the amount that had been settled between himself and the Appellant in Exhibit A-1. Compensation in this context is not profit. Counsel for the Appellant argued that it was possible for Freeman to incur a loss because, on the surplus product that he carried, he could say: "I will buy some of that and resell it for profit on my own". If he had committed to that kind of arrangement, he could buy the product at the point of departure on the trip; let us say 10 cases of completed pizza, and take a chance on selling them either on this trip, and make money by the trading in pizza product. That opportunity may have been available to him, but I draw the inference that the extra product was not there just for the trading and commercial activities of the driver. It was also there as backup product for the needs of established customers who might, in the course of the trip, decide that they needed more than the order destined for them at the time of departure of the truck."

[34]          The foregoing observations and reference to the Summit Gourmet Foods, supra, case are relevant to the within appeal.

[35]          In the case of Information Communication Services (ICS) Inc. v. M.N.R. - 97-839(UI) and 97-841(UI) - I held the drivers of vehicles involved in a delivery service within a specified industry were independent contractors. In that case, the drivers owned their own vehicles, there was very little control over their daily activity and there was a chance of profit and risk of loss. Most important, however, in the ICS case was the body of evidence leading to the conclusion the workers were operating a business on their own account including registration for GST, filing income tax returns on the basis of being a self-employed person and hiring replacement drivers to handle the assigned route. Another significant factor in that case was the purported employer did not have any corporate establishment or presence in the area where the services were being performed and had to rely on third party common carriers to transport product from Vancouver to Nanaimo on Vancouver Island where the drivers then proceeded to carry on with delivery of the parcels to the intended recipients. There was also the opportunity for the drivers to charge a fee for delivery of items between customers of ICS on the route without any involvement, whatsoever, of ICS.

[36]          In a recent judgment - Flash Courier Services Inc. v. M.N.R., [2000 T.C.J. No. 235] dated April 14, 2000, I found a courier to be an independent contractor in accordance with the facts specific to that appeal. In that case, the worker - an experienced courier - had come to Flash Courier with his own van and equipment and had been operating previously on the basis that he had been in business for himself. I found the worker had paid for his own Workers' Compensation Coverage (WCB) in accordance with an account he had established with that agency and to have been totally responsible for the expense side of his business. (In the within appeal, counsel for the appellant advised the Court ATI had not paid WCB coverage for the drivers.) When the income-earning vehicle or machine is wholly owned by the driver/operator - thereby exposing that person to risk of loss - and potentially affecting the opportunity for profit by permitting an increased percentage of total revenue due to a vehicle's manner of operation and/or special characteristics, then the situation has been changed significantly and often - in combination with other factors - can produce a different result.

               

[37]          Having considered the evidence with a view to paying attention to the overall scheme of operations, I conclude Richard Pitre was an employee providing services pursuant to a contract of service and was engaged in insurable employment with the appellant. However, the relevant period contained in the decision issued by the Minister is from November 15, 1996 to February 28, 1998. The evidence is confusing on this point as there is conflicting testimony and it is not possible to determine whether ATI only came into existence at some point in 1997 or whether it had been incorporated earlier and the business - itself - was transferred to the numbered company at that time. In this case, ATI would continue to exist as a corporation but would no longer be operating the tow truck business which seemed to be referred to - wrongly - as being owned by Always Towing '97 Incorporated. The pay cheques issued to Richard Pitre up to September 15, 1997 - contained in Exhibit R-4 - have the heading, Always Towing Incorporated. Then, commencing in October, 1997 the cheques began to bear the name Always Towing (1997) Incorporated which did not actually exist as a limited company but - apparently - was the name used by the numbered company to carry on the towing business. Regardless of the corporate structure, the trucks bore the insignia of Always Towing. Prior to any incorporation, Rick Martin and his father had been operating the towing business - since 1988 - as No-Name Towing. The appellant was incorporated to operate the business only because of a potential lawsuit by business interests selling generic brand food under a designation which capitalized on the product being sold without a well-known brand name affixed to the container, thereby building a reputation on the basis of being known as a "no-name" item. Apparently, the risk for confusion in the mind of a potential consumer between removing a spoon stuck in a jar of unbranded peanut butter and - as a driver of an immobilized motor vehicle - seeking the services of a tow truck, was seen as overwhelming. The difficulty is that I cannot determine from the evidence whether ATI was in existence throughout the period from November 15, 1996 until February 28, 1998 or if it continued to exist - without assets - but did not operate the towing business after October 1, 1997 because it had transferred the business to the new corporation, 619583 Saskatchewan Ltd. The employer, prior to any corporations having been formed, would have been Rick Martin - and his father - operating as a partnership. It may be the newly-formed corporation kept the previous employer number. It may be that - until ATI was formally dissolved on February 16, 1999 - it continued to be an employer pursuant to the Act even though the earnings of the employee were received from some other person, namely the numbered company. In the absence of solid evidence on this point, I cannot find that the employer was not ATI during the timeframe covered by the decision of the Minister issued on December 1, 1998. There was nothing contained in the responses provided by Rick Martin when completing the questionnaire - Exhibit R-1 - to indicate there was any entity other than ATI that had a working relationship with the intervener at any time during the period November 15, 1996 to February 28, 1998.

[38]          The decision of the Minister is confirmed and the appeal is dismissed.

Signed at Sidney, British Columbia, this 29th day of September 2000.

"D.W. Rowe"

D.J.T.C.C.

COURT FILE NO.:                                                 1999-1091(EI)

STYLE OF CAUSE:                                               Always Towing Inc. and M.N.R.

PLACE OF HEARING:                                         Saskatoon, Saskatchewan

DATE OF HEARING:                                           August 1, 2000

REASONS FOR JUDGMENT BY:                      The Honourable Deputy Judge D.W. Rowe

DATE OF JUDGMENT:                                       September 29, 2000

APPEARANCES:

Counsel for the Appellant:                                  Melvin A. Gerspacher

Counsel for the Respondent:                              Marvin Luther

For the Intervenor:                                                The Intervenor himself

COUNSEL OF RECORD:

For the Appellant:                

Name:                                                                      Melvin A. Gerspacher

Firm:                                                                        Robertson, Stromberg

                                                                                Saskatoon, Saskatchewan

For the Intervenor:

For the Respondent:                                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

1999-1091(EI)

BETWEEN:

ALWAYS TOWING INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

RICHARD S. PITRE,

Intervenor.

Appeal heard on August 1, 2000 at Saskatoon, Saskatchewan, by

the Honourable Deputy Judge D.W. Rowe

Appearances

Counsel for the Appellant:                             Melvin A. Gerspacher

Counsel for the Respondent:                         Marvin Luther

For the Intervenor:                                        The Intervenor himself

JUDGMENT

          The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.

Signed at Calgary, Alberta, this 29th day of September 2000.

"D.W. Rowe"

D.J.T.C.C.