REASONS
FOR JUDGMENT
Jorré J.
[1]
The appellant, Tagish Lake Gold Corp., appeals
from determinations made by the Minister of National Revenue, the respondent, that
Henry Siu
and Grace Jackson were engaged in insurable employment within the meaning
of the Employment Insurance Act, and pensionable employment within the
meaning of the Canada Pension Plan, at the appellant’s mine in Yukon during
the periods of April 19 to November 8, 2011 and April 19 to
October 19, 2011, respectively.
[2]
Mr. Siu was paid by the appellant to plan
the menu, purchase food, transport it to the mine, cook and clean up
afterwards. According to the evidence, he was a good cook. Ms. Jackson was
paid to do cleaning at the mine. Mr. Siu was Ms. Jackson’s husband.
[3]
The parties agree, and I am also of the view,
that there is nothing in the facts or the law which would result in a different
outcome to the appeals as between the employment insurance and Canada Pension Plan
determination. Accordingly, I will simply deal with the question of whether the
two individuals, the payees, were engaged in insurable employment. The outcome
for the purposes of the Canada Pension Plan will be the same as the
outcome for employment insurance purposes.
The Law
[4]
It is useful to begin by reviewing the general
principles applicable in distinguishing between a contract of employment and a contract for services.
Because both types of relationships are contractual, intention has a role to
play.
[5]
In 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc.,
the Supreme Court of Canada has established that there is no one conclusive
test to determine whether an individual is an employee or an independent
contractor:
47 . . . The central question is
whether the person who has been engaged to perform the services is performing
them as a person in business on his own account. In making this determination,
the level of control the employer has over the worker’s activities will always
be a factor. However, other factors to consider include whether the worker
provides his or her own equipment, whether the worker hires his or her own
helpers, the degree of financial risk taken by the worker, the degree of
responsibility for investment and management held by the worker, and the
worker’s opportunity for profit in the performance of his or her tasks.
[Emphasis added.]
[6]
More recently, in the decision 1392644
Ontario Inc. (Connor Homes) v. Canada (National Revenue), the Federal Court of Appeal reviews
the case law and the test for determining whether an individual is an employee
or an independent contractor. Justice Mainville, writing for the Court,
summarizes the analysis to be followed and sets out a two‑step process:
39 Under the first step, the subjective
intent of each party to the relationship must be ascertained. This can be
determined either by the written contractual relationship the parties have
entered into or by the actual behaviour of each party, such as invoices for
services rendered, registration for GST purposes and income tax filings as an
independent contractor.
40 The second step is to ascertain whether
an objective reality sustains the subjective intent of the parties. As noted by
Sharlow J.A. in TBT Personnel Services Inc. v. Canada, 2011 FCA 256, 422
N.R. 366 at para. 9, “it is also necessary to consider the Wiebe Door
factors to determine whether the facts are consistent with the parties’
expressed intention.” In other words, the subjective intent of the parties
cannot trump the reality of the relationship as ascertained through objective
facts. In this second step, the parties’ intent as well as the terms of the contract
may also be taken into account since they color the relationship. As noted in Royal
Winnipeg Ballet at para. 64, the relevant factors must be considered “in
the light of” the parties’ intent. However, that being stated, the second step
is an analysis of the pertinent facts for the purpose of determining whether
the test set out in Wiebe Door and Sagaz has been in fact met,
i.e. whether the legal effect of the relationship the parties have established
is one of independent contractor or of employer-employee.
41 The central question at issue remains
whether the person who has been engaged to perform the services is, in actual
fact, performing them as a person in business on his own account. As stated in
both Wiebe Door and Sagaz, in making this determination no
particular factor is dominant and there is no set formula. The factors to
consider will thus vary with the circumstances. Nevertheless, the specific
factors discussed in Wiebe Door and Sagaz will usually be
relevant, such as the level of control over the worker’s activities, whether
the worker provides his own equipment, hires his helpers, manages and assumes
financial risks, and has an opportunity of profit in the performance of his
tasks.
The Facts
[7]
With these principles in mind, let us turn to
the facts.
[8]
The only witness called was Peter Torn, the
appellant’s corporate secretary. He is employed at the corporate head office in
Vancouver, British Columbia.
[9]
The mine site where the work was done is
approximately an hour and a half drive from Whitehorse and is a general
exploration early-stage mine site. The exploration involves drilling.
[10]
The company had to obtain an exploration permit
from the Yukon government. Among other things, the permit imposes a number of
occupational health and safety requirements; it also restricts the maximum
number of workers permitted on the site to 50.
[11]
Some of the requirements are pursuant to the Yukon Occupational Health and Safety Act which applies to anyone on the mine site.
[12]
The person in charge of the site for day-to-day
operations was the project manager, Mark Greasley.
[13]
The exploration work is seasonal because they
cannot carry out the work when there is snow and ice. Sometime in February, they
will start with a skeleton crew; however, the actual drilling season is
relatively short and can only start towards the end of May or early June and
continues until late September or early October. After that, there will again
be a skeleton crew until sometime in November.
[14]
The camp includes a dormitory for 50 people.
There is also a mess hall with kitchen facilities. The camp also has facilities
for first aid, for the storage and repair of equipment, as well as facilities
for the geological work.
[15]
In early April 2011, Mr. Siu came to the mine
site looking for work. He met with Mr. Greasley and discussed
possible opportunities.
[16]
It is Mr. Torn’s understanding that Mr. Siu
and Mr. Greasley reached a verbal agreement that Mr. Siu would be
engaged by the appellant as a consultant and that Mr. Siu would be an
independent contractor. It is Mr. Torn’s
further understanding that they negotiated the rate of pay and that the rate of
pay was based on Mr. Siu being an independent contractor.
[17]
One factor of importance to the company, because
of the various health and safety requirements, was that Mr. Siu had a
first aid certificate.
[18]
Based on the verbal agreement, a written
agreement was prepared in Vancouver and Mr. Torn signed on behalf of the
company. The agreement was filed as Exhibit A-1.
[19]
Mr. Torn stated that it was the company’s
intention that the agreement with Mr. Siu be that of an independent
contractor.
[20]
During the busier period, there could be up to
two or three cooks and up to four or five cleaners simultaneously under
contract to the appellant to do work at the mine. They were all hired under the
same kind of arrangement as Mr. Siu and Ms. Jackson.
Intention
Mr. Siu’s Contract
[21]
The contract appears to be a standard form;
parts of the form do not appear to have been adapted to the specific context of
the agreement with Mr. Siu. Clause 1 provides that “the company hereby engages the consultant to work as a cook
and camp/safety/first aid worker”.
In clause 2.1, it refers to these services as more specifically set out in
schedule “A”. Schedule “A” says:
Services and obligations to be provided by
the consultant to the company:
1. complete health & safety, cooking and camp operation services
on the project site for the company;
2. be and act safety conscious; and
3. complete related duties as required by
the company.
[22]
Clause 2.2 says:
The consultant shall at all times be an
independent contractor and not the servant or agent of the company. No
partnerships, joint venture or agency will be created or will be deemed to be
created by this agreement or by any action of the parties under this agreement.
[23]
Clause 3.1 sets out that Mr. Siu is to be paid
$26.29 per hour minus workers’ compensation board fees and that the consultant
will be responsible for income taxes, employment insurance and pension
payments. Clause 3.2 sets out that the company will pay the consultants $0.60
per kilometre for any business use by the consultant of his vehicle. In order
to be paid, the consultant must submit daily time sheets to a company
representative who is to review and approve the time sheets (clause 3.3).
[24]
There are other provisions regarding
confidentiality and termination for cause. I would note two of the specific
provisions about termination for cause. I would note clauses 4.1 a) and f)
which provide that the company may terminate the agreement without notice if
the consultant fails to carry out his duties under the agreement in a competent
and professional manner and if the consultant fails to follow reasonable and
lawful directions from the company.
[25]
Certainly, clause 2.2 of the contract states
that the intention is to set up an independent contractor relationship.
[26]
However, the description of the services to be
provided is rather general and vague for a contract for services where one
would usually expect a more detailed description of the services to be rendered.
In particular, I note bullet three in schedule “A” that says the consultant is
to provide related duties as required by the company. Usually, in a contract
for services, one would expect that, if additional services not set out in the
agreement are to be provided, they would be subject to negotiation by the
parties, not to unilateral instructions by one party with no adjustment to the
contract. The choice of the word “duties” is
also surprising.
[27]
While the terminology “independent
contractor” is used, when read as a whole, especially the generality of
the services to be provided, the contract is not clearly a contract for
services nor is it clearly a contract of employment.
Ms. Jackson’s Contract
[28]
Ms. Jackson came out to the mine on the same day
as Mr. Siu. It is Mr. Torn’s understanding that Ms. Jackson and Mr.
Greasley came to a verbal agreement that she would also be retained as a
consultant and that she would be an independent contractor. As with Mr. Siu,
they also negotiated a per hour rate for Ms. Jackson.
[29]
The agreement is reflected in the “Consulting Agreement”. The
agreement provides in clause 1 that “the company hereby
engages the consultant to work as camp attendant.” In clause 2.1, it
refers to these services as more specifically set out in schedule “A”. Schedule “A” says:
Services and obligations to be provided by
the consultant to the company:
1. complete camp operation services on the project site for the
company;
2. be and act safety conscious; and
3. complete
related duties as required by the company.
[30]
The agreement provided that Ms. Jackson was to
be paid $23.79 per hour.
[31]
Apart from the difference in the rate of pay and
the different services to be provided, the contract is quite similar to that
with Mr. Siu. For the same reasons as in the case of Mr. Siu, I conclude that
the contract itself is not clearly a contract for services nor is it clearly a
contract of employment.
Other Indications of
Intent
[32]
There is no evidence and there were no
assumptions made by the Minister with respect to how Mr. Siu or Ms. Jackson
filed their tax returns.
[33]
Apart from Mr. Torn’s hearsay evidence, and apart from the fact that
Mr. Siu and Ms. Jackson signed the contracts, there is no evidence and
there were no assumptions made with respect to the intention of Mr. Siu and
Ms. Jackson.
[34]
The evidence was quite clear that the company
wanted Mr. Siu and Ms. Jackson to be independent contractors.
[35]
No amounts were withheld for income tax,
employment insurance or the Canada Pension Plan. This is consistent with the
appellant’s stated intention and would certainly indicate to Mr. Siu and Ms.
Jackson that they were not being treated as employees.
The Objective Reality
[36]
Mr. Siu worked very intensely during the period
in question. In the period in question, there were 204 days and he worked on
133 days. On the days he worked, he averaged slightly more than 11.8 hours per
day; to put that in perspective, that is equivalent to an 82 and ¾ hour work
week every week he worked.
[37]
Ms. Jackson was also working very intensively during
the period. On the basis of Exhibit A-5, one can see that she worked for the
company from April 19 to October 30, 2011. There were 194 days in this period;
of those 194 days, she worked on 137 days and did not work on 57 days. On the
days that she worked, she averaged 10.35 hours of work per day; put differently,
she averaged a 72.4 hour workweek during weeks she worked.
[38]
Mr. Siu and Ms. Jackson’s residence was about
four hours away from the mine site by car.
Tools/Investments
[39]
While Mr. Siu and Ms. Jackson used their own
clothes and footwear, their work was performed entirely on the appellant's
premises using the appellant's tools, equipment and supplies. The appellant
maintained the equipment.
[40]
When Mr. Siu went to pick up food, he sometimes
used his own vehicle and he sometimes used a vehicle belonging to the company. There is no suggestion in the
evidence before me that Mr. Siu’s vehicle was specially acquired for the
purpose of the work as opposed to simply being the motor vehicle that he owned.
Chance of Profit
[41]
Both Mr. Siu and Ms. Jackson were paid by the hour and were
reimbursed per kilometer for any use of their vehicle for the business of the
appellant. They had no expenses that they had to pay for.
[42]
If they worked longer hours, they could earn
more; if they work shorter hours, they would earn less.
[43]
This is consistent with either the contract of
employment or a contract for services. However, generally, but not always, a
person in their own business does have an opportunity to increase their profit
if they can find a way of performing their service more efficiently or using
equipment they have invested in more efficiently; that is not the case here.
Risk of Loss
[44]
Given that Mr. Siu and Ms. Jackson were paid by
the hour and had no expenses, they had no risk of loss.
Helpers
[45]
Neither Mr. Siu nor Ms. Jackson hired any
helpers. It is clear from Mr. Torn’s testimony that they could not hire
persons to do the work in their place; only persons who contracted with the appellant
could do the work. What they could do, according to Mr. Torn, was reach an
agreement with the other cooks or cleaners that they would be away and someone
else would be there to cook or to clean.
When such arrangements were made, it was the appellant who paid the person who
worked.
Control
[46]
In the case of Mr. Siu, the Minister assumed, inter
alia, that:
1. the
appellant determined the mealtimes;
2. Mr.
Siu was responsible for determining when to shop and what the menu for each
meal should be;
3. the
worker was not free to work for others at the same time as he was working at
the mine;
4. the
worker was required to record his time in the appellant's logbook;
5.
the worker was required to attend safety meetings with the appellant every
morning at 7:00 a.m.;
6.
the worker was not free to take time off without the appellant's prior
approval; and
7. the worker was not supervised; however, he did report to
Mr. Greasley, the camp manager.
[47]
In the case of Ms. Jackson, the Minister
assumed, inter alia, that:
1. the
appellant determined her hours of work;
2. she
was required to attend safety meetings with the appellant every morning at 7:00
a.m.;
3. she
was not free to take time off work without the appellant's prior approval;
4. she
was required to record her hours of work in the appellant's logbook; and
5. she was supervised by the manager who inspected her work.
[48]
Mr. Torn testified that no one told Mr. Siu:
what to buy, how much he could spend on groceries, what his priorities were or
when to work.
He also testified that Mr. Siu was free to take breaks at his discretion and
come and go as he wished without requiring permission to take time off. Mr. Siu
did have to attend the safety meetings at 7:00 a.m. The safety meetings
lasted from 10 to 30 minutes.
[49]
Mr. Torn also testified that Mr. Siu had to
submit time sheets to the on-site accountant who would then prepare Mr. Siu’s
invoice to the company. Mr. Greasley would have to approve the time.
[50]
He also testified that at one point, in respect
of the period late July/early August, Mr. Siu told others at the mine that he
was going to work elsewhere for a while. The Minister admitted that Mr. Siu
provided his services to at least one other payor during the 2011 tax year.
[51]
With respect to Ms Jackson, Mr. Torn testified
that no one told her: where to clean on a daily basis, what her priorities
were, how to clean or what tools or supplies to use. Ms. Jackson was
responsible for maintaining the inventory. No one oversaw her and she was free
to come and go when she wished.
She was also free to work elsewhere.
[52]
Ms. Jackson was obliged to attend 7:00 a.m. safety
meetings.
[53]
Like Mr. Siu, Ms. Jackson also provided to the
on-site accountant her hours and the accountant prepared her invoices. Mr. Greasley would have to
approve the time.
[54]
Mr. Siu and Ms. Jackson did not receive
statutory holiday pay or overtime; they were not provided with any health or
dental benefits or any pension plan. They did not receive any form of bonus
[55]
According to Mr. Siu’s last invoice, he received a payment of $1472.24
which is described as “Termination paid”. The
amount is shown as 56 hours times Mr. Siu’s rate of pay. Ms. Jackson received
no similar amount.
[56]
The appellant did not provide Mr. Siu or Ms.
Jackson with any training.
[57]
In cross-examination, Mr. Torn agreed that there
were customary hours for serving meals at the camp and that while there was no
specific budget for groceries, the amount that could be spent was limited to a
reasonable amount. The reasonable amount would be determined by the manager,
Mr. Greasley, and by the on-site accountant.
[58]
He also agreed in cross-examination that the
time during which cleaning could be performed was constrained by a pattern of
camp activities. For example, rooms had to be cleaned at times when they were
not being used. He did not know how quality was verified and also admitted that
while the cleaners would divide the work up among themselves, someone would
have to have some overarching responsibility for what was cleaned.
[59]
I have difficulty accepting that the appellant
exercised as little control as Mr. Torn suggested, especially in the way he described
the work of the cooks and the cleaners in direct examination. In direct
examination, it almost seemed as if having been hired to provide meals or to
cook, the cooks and cleaners worked with almost no interaction with the
appellant, apart from attendance at safety meetings.
[60]
While this general description was attenuated in
cross-examination where it became clear that the cooks and cleaners were not
quite as free as suggested in direct examination, I cannot accept that there
was as little interaction as suggested even after cross-examination. My first
reason for this conclusion is that even where one is dealing with independent
contractors, those contractors need some specific direction as to what is expected,
especially when the contracts are as vague as they are here with respect to
specifics.
[61]
My second reason for this conclusion is the fact
that at the busiest times, according to the evidence, there were up to three
cooks under contract simultaneously, and up to five cleaners under contract
simultaneously.
[62]
While three cooks or five cleaners, whether
employees or independent contractors, may well be able to agree most of the
time on who will do what and who will work when, there will be times when agreement
cannot be reached and when someone will have to give direction. There will also
be times when there is more to do than can be done in a fixed period of time
and, again, someone will have to give direction as to the order of priorities.
[63]
While I am satisfied that a cook or a cleaner
could choose to not work a given period if he or she were able to ensure that
other cooks or cleaners could cover for him, I do not accept that if the person
were unable to do so, they would be able to take that time off without
consequences such as their contract being terminated.
[64]
I cannot see who else, other than the appellant,
could be the person to give direction when needed.
[65]
As a result, on the issue of control, I must
give less weight to Mr. Torn’s evidence. His evidence is probably a
reflection of the fact that most of the time he worked in Vancouver and was at
the mine site on limited occasions. There was more direction given that his
evidence would suggest.
[66]
Given that there are up to three cooks and up to
five cleaners under contract at the same time, and given that there is no
mechanism suggested by the evidence whereby independent contractors would know
exactly what services are to be provided when or by which they could determine
who was to provide what when, I am satisfied that the appellant had the power
to control the work as needed.
[67]
However, I must deal with one peculiarity in the
case of Mr. Siu. The Minister assumed that he “was
not supervised, however he did report to Mr. Greasley, the camp manager.”
The Minister also admitted that “the appellant did not
supervise [Mr. Siu] or control how his services were performed or provided.”
[68]
It is clear from the other assumptions made by
the Minister that the Minister assumed certain elements of control such as the
assumed requirement to obtain permission before taking time off. Given that, I
do not read the assumption that Mr. Siu was not supervised as meaning that
there was no control of any sort; it is a statement that he was not watched
over on an ongoing basis in the performance of his duties. I also note that
that would be consistent with the admission that no control was exercised as to
how the services were performed or provided; this admission leaves open whether
control could be exercised and does not cover control of what work is to
be done when.
[69]
What is the effect of the admissions? It narrows
the scope of the control that could be found to have actually been exercised
based on the other evidence.
Other factors
[70]
Both Mr. Siu and Ms. Jackson generally stayed overnight
at the camp where they were provided with room and board during the period
where they were working.
[71]
There is nothing in the evidence to suggest that
Ms. Jackson was at the relevant time in the business of supplying cleaning
services to a variety of customers. With one possible exception, there is
nothing to suggest that Mr. Siu was providing cooking services to a variety of
customers; in the case of the one possible exception, we do not know if Mr. Siu
was an employee or an independent contractor.
Analysis
[72]
Turning first to intent, the contract is less
than clear cut either way. While we have the stated intent of the company, we
have only limited evidence of the intent of Mr. Siu and Ms. Jackson. Given that
limited evidence of the intent of the two workers, given the absence of any
assumption as to what status they considered themselves to have, and given that
there is no evidence to suggest that they disputed the failure to withhold
income tax, employment insurance premiums or Canada Pension Plan premiums, I
conclude that Mr. Siu and Ms. Jackson accepted the arrangement proposed by
the appellant, an arrangement that they be independent contractors.
[73]
I now turn to the second step, the objective
reality.
[74]
There are three factors which point towards a contract
of employment: the two workers provided no significant tools, they could not
hire helpers and they had no chance of loss.
[75]
As to the chance of profit, while they could
earn more by working more, this is as indicative of employment as of a contract
for services. They could not increase their profitability by being more
efficient.
[76]
As to control, in the case of Ms. Jackson, I am
satisfied that the appellant had the power to control her work.
[77]
The result in the case of Ms. Jackson is that
the totality of the factors clearly point to a contract of employment.
[78]
The situation with respect to Mr. Siu is more
complicated because of the Minister’s pleadings, especially the admission that
the appellant did not control how his services were performed or provided.
[79]
However, at most, this means that the control
test is of no help in this case.
This is for the reasons set out by MacGuigan J.A. in Wiebe Door in a
passage quoted by the Supreme court of Canada in paragraph 38 of 671122
Ontario Ltd. v. Sagaz Industries Canada Inc.
38 This criterion has been criticized as
wearing “an air of deceptive simplicity” (Atiyah, supra, at p. 41). The
main problems are set out by MacGuigan J.A. in Wiebe Door, supra,
at pp. 558-59:
A principal inadequacy [with the control
test] is its apparent dependence on the exact terms in which the task in
question is contracted for: where the contract contains detailed specifications
and conditions, which would be the normal expectation in a contract with an
independent contractor, the control may even be greater than where it is to be
exercised by direction on the job, as would be the normal expectation in a
contract with a servant, but a literal application of the test might find the
actual control to be less. In addition, the test has broken down completely
in relation to highly skilled and professional workers, who possess skills far
beyond the ability of their employers to direct.
[Emphasis
added.]
[80]
It is as a result of these problems with the
traditional control test that the law has moved to the wider examination of all
the factors in determining whether or not there is a contract of employment.
[81]
As a result, even if the pleadings forced me to
conclude that control was entirely an neutral factor, the factors
still point overall to Mr. Siu being in a contract of employment.
Conclusion
[82]
As a result, the appeals will be dismissed.
Signed at Ottawa, Ontario, this 31st day of December 2014.
“Gaston
Jorré”
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