Citation: 2007 FCA 33
CORAM: LÉTOURNEAU J.A.
THE MINISTER OF NATIONAL REVENUE
REASONS FOR JUDGMENT
 This is an appeal against a decision of a judge of the Tax Court of Canada (judge) which upheld the Minister of National Revenue’s (minister) determination that eleven individuals who performed work for the appellant were engaged in insurable and pensionable employment contracts of service, rather than as independent contractors under contracts for services.
 The appellant is a drywaller, much of whose work comes from a single construction company. When he has more work than he can handle, he engages other drywallers to work on the jobs.
 The appellant submits that the judge misapplied the criteria for determining insurable employment to the facts of the case. In so doing, he made a palpable and overriding error that warrants the intervention of this Court.
 The judge analyzed the business relationship of the drywallers with the appellant on the basis of four factors approved by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.,  2 S.C.R. 983, i.e. direction and control, ownership of tools and opportunity for profit and risk of loss. On the basis of his assessment of these factors he addressed what has been called the “central question” in cases of this nature: were the drywallers performing their services as individuals in business on their own account? See Sagaz, supra, at para. 47.
 The contracts between the parties were oral contracts. At the hearing, no evidence was provided as to the intention of the appellant and the individuals regarding their business relationship. However, the four criteria analyzed by the judge are relevant and helpful in ascertaining the intent of the parties to the contract and the legal nature of their relationship. As the judge recognized, the four factors are not exhaustive.
Direction and control
 The appellant submits that the judge gave no weight to the issue of direction and control of the appellant over the individuals who worked for him. In the appellant’s view, all the facts submitted to the judge showed a lack of direction and control.
 The judge properly defined control as “the right to direct the manner of doing the work, as opposed to whether that right was exercised by the Appellant”: see paragraph 14 of his reasons. He was of the view that the right to control and direct the manner of doing the work was not a factor upon which he could put much emphasis because the evidence failed to address the existence of the right: see paragraphs 14 and 20 of his reasons.
 In assessing the insurability of a given employment, the minister assumes the existence of a number of facts gathered from the workers and the business by investigators. The burden is on the party who opposes the minister’s decision to rebut these facts: see Le Livreur Plus Inc. v. The minister of National Revenue and Laganière, 2004 FCA 68, at paragraph 12. In this case, as in all others of the same nature, control of the activities of the workers is usually a fact relied upon by the minister: see, for example, the letters sent by the minister to the appellant on January 29, 2004 alleging control over the workers, Appeal Book, volume 2, pages 120 to 141. The Notice of Appeal filed by the appellant denies the existence of control over the activities of the workers: see Appeal Book, volume 1, page 9, paragraph 38. The Reply to the Notice of Appeal, although not as consistent in form and substance as it should be, states control as an assumption of fact: see Appeal Book, volume 1, pages 15, 17, 18 and 20.
 The conclusion of the judge that the evidence failed to address the right of the appellant to control and direct the manner of doing the work is supported by the record. In these circumstances, given that the appellant failed to rebut the asserted presumption of control, the fact of such control is deemed proven.
Ownership of tools
 The judge considered the ownership of tools in this case and concluded that this fact was of no assistance in the present instance: see paragraph 17 of his reasons. He was of the view that the investment by the workers was minimal, i.e. about $1,000.00. In addition, the evidence revealed that the appellant or the builder provided many other things, tools and other necessary supplies to the workers. There was also evidence that drywallers who worked as employees, not independent contractors, on union jobs also normally used their own tools.
 While it is true, as the appellant pointed out, that the fact that others might provide tools to the workers does not necessary entail that these workers are employees (see Capri Interiors Ltd. v. Canada (Minister of National Revenue – M.N.R.), 2004 TCC 23; Precision Gutters Ltd. v. Canada (Minister of National Revenue – M.N.R.), 2002 FCA 207), I do not believe that, in this case, the ownership of tools and the circumstances surrounding that ownership carry sufficient weight to overcome the finding relating to direction and control. I can see no basis on which I can conclude that the judge committed an overriding and palpable error in giving little weight to this factor.
Opportunity for profit and risk of loss
 The judge stressed the importance of this factor in determining the relationship between the appellant and the workers: see paragraph 18 of his reasons. Of the eleven workers, only two were paid on a piecework basis and, therefore, could earn more if they did more work or worked faster. It is also true, as the judge noted, that employees paid by the hour could also earn more if they worked more hours: ibidem.
 The difficulty in applying this factor comes from the fact that paragraph 5(1)(a) of the Employment Insurance Act, S.C. 1996, ch. 23 also recognizes as insurable employment an employment under a contract of service where the earnings are calculated by the piece or partly by the hour and partly by the piece. The provision reads:
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;
Sens de « emploi assurable »
5. (1) Sous réserve du paragraphe (2), est un emploi assurable :
a) l’emploi exercé au Canada pour un ou plusieurs employeurs, aux termes d’un contrat de louage de services ou d’apprentissage exprès ou facile, écrit ou verbal, que l’employé reçoive sa rémunération de l’employeur ou d’une autre personne et que la rémunération soit calculée soit au temps ou aux pièces, soit en partie au temps et en partie aux pièces, soit de toute autre manière;
 It is therefore not sufficient to simply look at the fact that the earnings are calculated by the piece and that, as a result, these earnings can be more substantial than if they were calculated by the hour. This fact has to be assessed in the broader context of all the other circumstances and conditions relating to the performance of the contract. Otherwise, the process involves an element of circularity: paragraph 5(1)(a) admits of the possibility that a contract of service can exist where the earnings are calculated by the piece and the very fact that the earnings are paid by the piece is used to determine whether the contract is a contract of service.
 The judge looked at all the circumstances surrounding the performance of the contract when he considered the fact that two workers were paid by the piece: see paragraphs 18 to 21 of his reasons. There was evidence on the record to support his conclusion that the opportunity for profit and risk of loss in this case did not militate in favor of the conclusion that the workers were independent businessmen. I cannot find in this conclusion, and in his assessment of this factor, a palpable and overriding error.
 Counsel for the appellant relied heavily upon the decision of this Court in Precision Gutters Ltd., supra, where a number of installers of building gutters were found to be independent contractors. That case is distinguishable on three grounds.
 First, the Tax Court judge applied the wrong test in that case: see paragraphs 13 to 15 of the reasons. As a result, this Court needed to apply the proper test to the facts. No deference was then due to the decision of the Tax Court.
 In addition, the judge of the Tax Court found that the control test favored characterizing the installers as independent contractors. Our Court did not disagree with that finding: see paragraph 22 of the reasons. Here, the control test favors a characterization as employees.
 Finally, that case did not involve piecework and earnings by the piece. Rather, the work was performed under a contract whose price was negotiated 20%-30% of the time. Our Court found that the ability to negotiate the terms of the contract entailed a chance of profit and a risk of loss.
 For these reasons, I would dismiss the appeal with costs.
J. Edgar Sexton J.A.”
John M. Evans J.A.”