Date: 19980727
Dockets: 97-673-UI; 97-890-UI; 97-891-UI; 97-892-UI;
97-1025-UI
BETWEEN:
BJ KANE ELECTRIC LTD., MICHEL PORTUGAISE,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Lamarre, J.T.C.C.
[1]
These are appeals from determinations by the Minister of National
Revenue (the "Minister") of a question under section 61
of the Unemployment Insurance Act (the "UI
Act") and under section 91 of the Employment
Insurance Act (the "Act"). These
determinations were to the effect that the four workers listed
below, while employed by BJ Kane Electric Ltd. (the
"appellant") for the periods referred to below, held
insurable employment pursuant to paragraph 3(1)(a) of the
UI Act and pursuant to paragraph 5(1)(a) of
the Act. All these appeals were heard on common
evidence.
The workers and the periods in issue are the following:
|
Appeals
97-673(UI)
97-890(UI)
97-891(UI)
97-892(UI)
97-1025(UI)
|
Workers
Lance Larocque
Donald Downer
Gerald MacDonald
Michel Portugaise
|
Periods
May 1, 1996 to December 31, 1996
April 1, 1996 to April 30, 1996
April 1, 1996 to April 30, 1996
January 1, 1995 to December 31, 1995
|
[2]
In making his determinations, the Minister relied on the
assumptions of fact set out in paragraph 4 of the replies to the
notices of appeal, which are identical in each of the appeals
except for the periods in issue. For more convenience, I will
reproduce only the assumptions of fact found in appeal
#97-673(UI). They read as follows:
(a)
the Appellant operates a business involved in electrical
installations and repairs;
(b)
the worker was hired by the Appellant as an electrician;
(c)
the worker performed services for the Appellant's
clients;
(d)
the worker was paid on a hourly basis by the Appellant;
(e)
all supplies and materials required to perform the electrical
installations and repairs were provided by the Appellant to the
worker, at no cost to the worker;
(f)*
the
Appellant provided the worker with a vehicle;
(g)
the worker could not realise a profit or a loss as a result of
performing the services for the Appellant;
(h)
the worker's work was subject to inspection and approval by
the Appellant;
(i)**
in 1994 and 1995
the worker reported his income as employment income;
(j)**
in 1994 and 1995 the worker did not report any
self-employed income;
(k)**
in 1994 and 1995 the worker has collected unemployment insurance
based on employment income;
(l)
the worker was an integral part of the Appellant's operation
since the Appellant is an electrical contractor and the worker
was hired as an electrician;
(m) the
worker did not represent, advertise or promote himself as a
self-employed individual;
(n)
the worker was employed by the Appellant pursuant to a contract
of service.
[3]
Mr. Brian Kane and his wife Mrs. Heather Kane who are the sole
shareholders of the appellant testified. They admitted only
subparagraphs 4(a), (d) and (f) above. They denied all the other
allegations. No one else testified.
[4]
During the periods in issue, the appellant just started to
operate an electrical business. Mr. Kane who is himself a
certified electrician had previously worked for ten years for an
electrical company.
[5]
The appellant contracted with the workers when it had entered
into a contract with Business Depot. As Mr. Kane could not
perform the contract himself he did approach the workers. No
written contract was signed. In the case of Lance Larocque,
an agreement was entered into with him, as proprietor of
Alexandre Electric. A Certificate of Indemnification was filed as
part of Exhibit A-1. It is signed by Mr. Larocque and dated May
17, 1996. It reads as follows:
Certificate of Indemnification
This is to certify that I/we Alexandre Electric have entered
into a contractual arrangement with Kane Electric Ltd. whereby
I/we will be performing specific work for Kane Electric and will
be paid for this work upon satisfactory completion of all or, if
agreed to, upon completion of specific phases of the work.
I/we will not be operating as employees of Kane Electric and
they will not withhold Income Tax, Canada Pension or Employment
Insurance from any amounts being paid for the work.
The work will be performed on a work site and I/we will be
responsible to Kane for completion of the work according to
specifications determined by them. The work will not be performed
under direct supervision of any employee of Kane Electric, but
will be subject to inspection and approval by Kane Electric.
I/we are operating as an independent contractor and will not
be covered by any general liability insurance of Kane Electric.
I/we will provide our own general contractor's liability
insurance and Worker's Compensation Insurance.
Signed this 17th day of May 1996.
_____L Larocque_____
[6]
The workers were paid on an hourly basis at a rate that could
vary between $16 to $20 an hour. They were all licensed
electricians and the remuneration was established according to
what was paid in the industry. They were paid weekly according to
the number of hours they had worked.
[7]
The appellant's office was located in the Kane's
residence. No worker had to report there. Every day, the workers
were going directly on the job site assigned by Mr. Kane. Mr.
Kane said that he was usually in contact with the general
supervisor and that he was on site two or three times a week.
Otherwise, he was working on other projects.
[8]
The work schedule was determined by the timetable given by the
client. Mr. Kane said that he did not check at what time the
workers started to work and at what time they finished. There
were no scheduled hours. The workers only had to tell Mr. Kane
how many hours they had worked in order to get paid.
[9]
The workers were responsible for the work performed and according
to the witnesses they had the responsibility to correct any
deficiencies at their own cost. This fact seemed to be
corroborated by Mr. Lance Larocque in his written answers (made
on January 27, 1997) to a questionnaire sent to him by Revenue
Canada on December 16, 1996 and which are part of Exhibit
A-1.
[10] The
workers provided their own material except for large power tools
that were rented by the appellant and charged back to the client.
The appellant also provided a van occasionally to the workers.
The value of Alexandre Electric's tools was approximately
$900 as of December 1996 (see answers to questionnaire referred
to above).
[11] Although
it did not happen, it seems that the workers could have worked
for other contractors as long as their obligation to complete
their contract with the appellant in a defined time frame was
respected.
[12] Mr. Kane
testified that during the periods in issue, he did not have the
financial resources to hire employees. When the appellant was
given the Business Depot contract, Mr. Kane hired electricians at
the standard rate in the industry without any other compensation
(this is corroborated in the answers given by Lance Larocque to
the questionnaire referred to above) as he needed some help only
for short time periods. Now that his business has grown up, he
owns more powerful tools and has a few employees one of whom is
an electrician who is also paid on an hourly basis ($20 an
hour).
Analysis
[13] The
question I must consider is whether, during the periods in issue,
the workers were employed by the appellant under a contract of
service pursuant to paragraph 3(1)(a) of the
UI Act and paragraph 5(1)(a) of the
Act. To make this determination, the tests adopted in
Wiebe Door Services Ltd. v. M.N.R.,[1] namely control, ownership of
tools, chance of profit and risk of loss as well as the test of
integration or organization, i.e. whether the workers worked for
their own business or for the appellant's, must be analyzed
in order to define the total relationship between the
parties.
[14] First, I
have to say that I only heard the appellant's version which
of course might tend to be self-serving evidence. However, the
appellant filed in evidence, under Exhibit A-1, some documents
signed by one worker, Mr. Lance Larocque, who was not
present at the hearing, that are aimed at corroborating the
appellant's version. I must say however that upon the
objection raised by the agent for the respondent to the filing of
these documents in evidence, I accepted them but I do not intend
to rely heavily on these documents in my analysis, as Mr.
Larocque was not present to be cross-examined. Furthermore, one
of the appeals has been introduced by another worker,
Mr. Michel Portugaise. His notice of appeal also discloses
facts favourable to the appellant's version as Mr.
Portugaise pretends that he was not an employee during the period
in issue. However, the latter did not appear before me.
[15] Bearing
in mind that the appellant's own ex post facto
characterization of the relationship with the workers is not
determinative of the issue, I will now try to give to all the
evidence before me the weight which the circumstances may dictate
in order to decide if the workers were employees of the appellant
(see Standing v. M.N.R., [1992] F.C.J. No. 890 (FCA)).
[16] So far as
the control exercised by the appellant over the work done by the
workers is concerned, even if Mr. Kane did not closely supervise
the work done by the workers, he pointed out that he was going on
site two or three times a week to check the work done. He also
said that he regularly kept in touch with the general supervisor
on site. It was also admitted by Mr. and Mrs. Kane that the
appellant was liable for the overall performance of the contract
to the client. It was the appellant who entered into an agreement
with the client and in the end it was the appellant who had to
deliver the results. It is true that the two witnesses testified,
and Mr. Lance Larocque seems to corroborate it in
Exhibit A-1, that the workers had the responsibility to correct
defective work at their own cost. However no specific evidence
was brought on this particular point. I am not satisfied that
such situation ever happened and if so I am not convinced that
the workers did assume the cost of their own repairs.
[17] As for
the work schedule, Mr. Kane testified that the workers had no
scheduled hours. However, they were scheduled by the time frame
given by the client. The appellant was responsible to the client
to have the work done within a certain period of time. In this
sense, he surely had an eye on the time schedule of the workers
for each particular contract. Furthermore, the workers had to
report the number of hours they had worked in order to be paid. I
therefore conclude that the appellant did control the work
schedule of the workers.
[18] With
regard to equipment, the workers provided their hand tools as all
electricians do, whether they are employees or independent
contractors. The more powerful tools were rented by the
appellant.
[19] As for
remuneration, each worker was regularly paid a fixed hourly rate
that was determined when he was first hired. No other benefits
were paid. The evidence did not reveal that the workers were in a
position to earn a profit. In fact, it is the appellant who had
the chance to make a profit out of the contracts it had in each
year. In addition, I am not satisfied that the workers ran any
risk of incurring a loss. If any, I am not convinced that they
would have been borne by the workers, while for the appellant it
is obvious it would as it was responsible to the client for the
work done.
[20] As to the
integration of the workers' activities into the
appellant's business, I am not satisfied from the evidence
that the workers were working for their own business. It is the
appellant who provided the work for the whole period. The workers
did not work for anyone else during that time. The appellant did
not convince me that the workers were performing their work as
persons that were in business for themselves.
[21] Taking
all of these various features into account, I am of the view that
the appellant has not established, on a balance of probabilities,
that the workers were not employed under a contract of service
during the periods in issue and accordingly the workers'
employment were insurable under the UI Act and
under the Act.
[22] The
appeals are therefore dismissed and the Minister's
determinations are affirmed.
Signed at Ottawa, Canada, July 27, 1998.
"Lucie Lamarre"
J.T.C.C.
Email this Content