Abram's Towing Services (Windsor) Ltd. v. M.N.R., docket 1999-5013-EI

Date: 20000811

Docket: 1999-5013-EI

BETWEEN:

ABRAM'S TOWING SERVICES (WINDSOR) LTD.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

MacLatchy, D.J.T.C.C.

[1] This appeal was heard on July 21, 2000, at Toronto, Ontario.

[2] Giulio Tersigni (the "Worker") appealed a ruling to the Respondent for the determination of the question of whether or not he was employed in insurable employment while engaged by the Appellant, for the period from January 14 to October 1, 1998, within the meaning of the Employment Insurance Act (the "Act").

[3] By letter dated September 22, 1999, the Respondent informed the Appellant and the Worker that it had been determined that the Worker's engagement with the Appellant during the period in question was insurable employment for the reason that the Worker was employed pursuant to a contract of service.

[4] The parties agreed that the Appellant operated an automobile towing business and the Worker was hired to operate a tow truck to service the Appellant's clients (the "Clients") in the Windsor area. The duties of the Worker included towing cars, changing tires, delivering gas and dealing with clients locked out of their vehicles. The Worker attended daily at the office of the Appellant to pick up a tow truck, owned by the Appellant, and proceeded where dispatched by the Appellant to service the Appellant's clients. The Worker was required to wear a clean uniform and be shaved and in a well-groomed manner. The uniform had a logo of CAA on it which was the client and the truck was painted in the colours of the CAA with clearly identifiable logo of the CAA emblazened on the sides. The Worker was required to be on call for twelve-hour shifts from 7:00 a.m. to 7:00 p.m. six days a week and to be on call for two night shifts of 12 hours each from 7:00 p.m. to 7:00 a.m. each week. The Worker was trained by accompanying an experienced driver for two weeks, at no remuneration, and after which he must provide an up to date abstract of his required licenses and police clearances and enter into a contract prepared and presented by the Appellant before he would be allowed to drive the company's tow truck. The Worker did not negotiate any of the terms of the contract and was told that he would receive 40% of the income produced by this vehicle when he was on shift. He was told he would be a subcontractor, the meaning of which was not clear in this Worker's mind. He thought he was an employee, notwithstanding the agreement but he understood that there would be no source deductions taken from his percentage of the revenue of the vehicle. Gasoline, health benefits, uniform fee and any damage to the vehicle would be deducted bi-monthly from his percentage.

[5] The tow truck was owned by the Appellant bearing the CAA logo of the client and was equipped with dolly wheels, chains, run sheets and receipt book, two-way radio for dispatch services and a computer for display of clients' information on each call. The driver/Worker had to provide a jack, air tank, bungee cords and lock out kit and gas for the vehicle. The Worker had to turn in a daily run sheet at the end of his shift as well as any monies, cheques or credit card vouchers and receipts that he may have received during his shift from "founds" (cars which may have required service without going through the dispatch service). If the Worker had a "found" he would notify dispatch who would note the information, tell the driver what to charge for the service rendered and approve the method of payment and invoice the "found".

[6] The tow truck had to be returned at the end of each shift, cleaned and filled with gas by the Worker and be available to another driver, if needed. If the Worker was on night shift calls, he would retain the vehicle and not return it until the end of his next shift. This was the only time he could keep the vehicle at the end of a day shift. The vehicle was ostensibly leased to the Worker but only during the times of his on call shifts. He could not loan the vehicle to anyone else nor could he let another person drive the vehicle unless he had another driver connected to the Appellant and who was previously approved by the Appellant. The Worker could trade shifts but only with another driver approved by the Appellant. The Appellant indicated this requirement was for insurance purposes and to ensure that the proper level of service is delivered by their vehicles.

[7] A copy of the form of contract was entered as Exhibit A-1, the terms of which will be discussed further on in this judgment.

[8] The question to be determined by this Court is whether the Worker was engaged by the Appellant under a contract of service or as a provider of services. The leading authority to determine the relationship is Wiebe Door Services Ltd. and M.N.R., 87 DTC 5025. The provision for the four-in-one test allows for the examination of the terms of engagement that were entered into between the Appellant and the Worker. In light of that examination, the whole relationship must be looked at in its entirety to make the determination. The tests referred to are as follows:

1. Control test:

[9] Did the Appellant exert control over the Worker in his day-to-day duties? The evidence disclosed that, unless he was on night call, the Worker had to attend at the Appellant's office each day to pick up and return the vehicle and to file his daily run reports. The Worker did not have the vehicle as his sole property unless he was on shift. On return of the vehicle, it was then made available for another driver as needed. The truck was unavailable to the Worker for his personal use or for him to make further income when not on shift with the Appellant. When on duty the Worker could entertain "found" business (not scheduled through the Appellant) but he had to immediately advise the office of the name and other necessary information of this found client and the nature of the service to be performed. The Appellant would then advise the Worker what to invoice the "found" and approve the method of payment. The Appellant would retain 60% of the account and allocate the balance to the Worker. The agreement signed by the Worker provided for inumerable elements of control such as "to preserve the COMPANY'S image of efficiency, courtesy, and high standards of customer service and satisfaction." This is a clear element of direction and control not found with a subcontractor whose reputation in the community would have been known by the Appellant.

[10] The Worker was to be readily available to the Appellant or his dispatcher at all times while on shift. He had a two-way radio in the truck, the clients' computer, a cell phone and a pager provided by the Appellant. He was required to call the Appellant whenever and advise if he was going to be absent from his truck for any reason, including a comfort stop and a need for food or beverage.

[11] The Worker felt he could not refuse to take a particular call else he would be terminated. If he was deemed uncooperative by the Appellant this Worker said he would go and sit in his truck for his shift and not be assigned any work. This is a strong element of control that could be exercised by the Appellant. The evidence of the Appellant was that this type of sanction would not and never was exercised. This is not the evidence of the Worker.

[12] The reporting conditions and accounting daily in subparagraph 6(e) of the agreement is direct control over the Worker. No subcontractor would be subject to such directions.

[13] Subparagraph 6(f) of the agreement, again, directed the Worker "to maintain and keep clean at all times, the company vehicle, and to present themselves daily, in a clean uniform, cleanly shaven, and in a well groomed manner." The Worker indicated that he was directed on two occasions to return home and shave. Direction and control? The Worker wore a uniform with the logo on it of the client of the Appellant. It was not his own logo for his own business but that of the Appellant or his client. The vehicle assigned to him by the Appellant bore the logo of the Appellant's client. He did no advertising for his own business on the vehicle or on his person but only that of the Appellant or its client. Termination of the agreement was at the whim of the Appellant: "The Company may terminate this agreement at any time it deems necessary for the total well being of the Company". This is an open ended right to the Appellant to terminate the agreement for any reason whatsoever. This is not in the best interest of the Worker no matter what he may wish. The hold back provisions in subparagraph 10 are also to benefit the Appellant not the Worker. This is not usual to an agreement between equals but would be so between a master and his servant. Control and direction clearly lies in favour of the Appellant.

2. Ownership of tools:

[14] The Worker used the Appellant's truck, dolly, slides, chains and lock out kit to perform his functions daily. He did, in a very minor sense, rent the vehicle, however, there was no lease agreement, no specified rental and he had no right to the vehicle once his shift had ended. These are not indices of a true rental agreement. The Worker used the Appellant's two-way radio in the vehicle in order to be available to the Appellant's dispatcher. This was an absolute necessity for the Appellant's business that he be in constant contact with the Worker. The Worker was also given a cell phone and a pager so that he would be able to be immediately summonsed at the will of the Appellant. The Worker was required to have his own jack, four-way wrench, bungee cords, air tank and gasoline containers. These were of minimal value compared to the truck and its equipment.

3. Chance of profit and risk of loss:

[15] The Worker made a percentage of the business earned by his vehicle during his shift. The Appellant set the 40% rate and deducted from that amount the gas used by the Worker, health benefit contributions and any damage done to the vehicle or that of a client. Supposedly, the Worker could increase his income by being aggressive and looking for extra business. He would only receive the same 40% of that business and the amount of such "founds" would not be significant. He could work longer hours and increase his income but not share in any meaningful profit from the business venture. Any profit made by the Appellant from the operation of the business was that of the Appellant. The Worker could not share in the business venture as he was not a part owner or investor in the business. He would suffer loss if he were negligent using the property of the Appellant or its clients. This was not connected to the business venture. If the towing business suffered a business loss it would not impact on the Worker except to the extent of his being without employment should the Appellant close down its operation. The Worker did his job and was not carrying on his own business from which he could control his profit nor suffer loss therefrom.

4. Integration test:

[16] This is now less easy to apply in a more complicated society. Whose business is it? Drivers were needed by the Appellant to operate its business and were an integral part of that business, but this is now a difficult test to apply. Where is the line between being needed to operate a business and being an integral part thereof?

[17] The Appellant and the Worker can call their relationship by any name they wish but that does not necessarily create that relationship. In the case of Minister of National Revenue v. Standing, 147 N.R. 238, the Federal Court of Appeal stated at pages 239-240:

"...There is no foundation in the case law for the proposition that such a relationship may exist merely because the parties choose to describe it to be so regardless of the surrounding circumstances when weighed in the light of the Wiebe Door test."

[18] This Court must look at the whole scheme of arrangement in light of the evidence before it, not just a particular part thereof. In this instance, the business was that of the Appellant. The Worker was only a part of it. the Worker was not operating his own business: he had no clientele of his own; he had no other customers; he did not advertise his own business and seek employment with others. No matter how artfully the Appellant may have tried to be with his driver agreement, he did not create the Worker to be a subcontractor. This is true with this Worker only. It could well be that other workers might well be subcontractors. Each determination is made on the evidence that is brought forward. This Court, on this set of circumstances, with these individuals, has decided that the Worker was engaged pursuant to a contract of service and his employment is insurable.

[19] The appeal is dismissed and the decision of the Respondent is confirmed.

Signed at Toronto, Ontario, this 11th day of August 2000.

"W.E. MacLatchy"

D.J.T.C.C.