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Citation: 2009 TCC 640
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Date: 20091224
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Dockets: 2009-911(EI)
2009-912(CPP)
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BETWEEN:
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A & T TIRE & WHEEL LIMITED,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent,
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and
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JUSTIN BUNN,
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Intervener.
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REASONS FOR JUDGMENT
Weisman
D.J.
[1] When he was eighteen years of age, Justin Bunn (“Justin”) dropped
out of high school and went to work for A & T Tire and Wheel Limited (the “Appellant”)
which was in the business of selling, installing, and repairing wheels and
tires. Justin worked on the Appellant’s premises from August 29, 2006 into
September of 2008. The relationship ended abruptly when Justin telephoned the
Appellant’s offices one morning and informed them that he was not coming in to
work any more.
[2] The Respondent Minister of National Revenue (the “Minister”) concluded
that Justin was employed by the Appellant under a contract of service during
the period under review, and assessed the Appellant for outstanding
unemployment insurance premiums and Canada Pension Plan contributions
accordingly. The Appellant now appeals those assessments on the grounds that,
at all material times Justin was an independent contractor. Justin has
intervened in the proceedings.
[3] When Justin first reported for work, he had no prior experience in
working with tires. As a matter of fact, he did not then know what a wrench
was. He was offered automobile repair shops in high school, but chose to skip
the classes. Accordingly, his working time was originally occupied with
cleaning up the Appellant’s shop, sweeping the floors, clearing snow, painting
the premises, taking out the garbage, and sorting tires.
[4] The Appellant’s President, Mr. Dan Smith (“Smith”), and its manager,
Mr. Michael Young (“Young”), found Justin to be a likeable and
hard-working youngster, so they embarked upon an on-the-job training program
whereby Justin would learn the trade by observing the Appellant’s experienced
workers, and by receiving practical tips from Smith and Young.
[5] After a month or so, Justin progressed to the point where he became
adept at grinding wheel rims and installing tires on motor vehicles. At no time
during his two year association with the Appellant, however, was he ever entrusted
with the more complicated, delicate, or heavier tasks involved in working on
tires with chrome rims, reverse mounts, heavy construction equipment tires, or
those on “high profile” vehicles which could cost as much as $5,000.00 apiece.
[6] In order to resolve the issue before the Court, the total
relationship of the parties and the combined force of the whole scheme of
operations must be considered.
To this end, the evidence in this matter must be subjected to the four‑in‑one
test laid down as points of reference
by Lord Wright in Montreal City and adopted by MacGuigan J.A. in Wiebe Door.
The four guidelines are the payer’s right to control the worker, and whether
the worker is therefore in a position of subordination; whether the
worker or the payer owns the tools required to fulfil the worker’s function; and
the worker’s chance of profit; and risk of loss in his or her dealings with the
payer.
Right to Control:
[7] In this regard, the Appellant raises two legal issues, either of
which could potentially lead to the conclusion that Justin was an independent
contractor during the period under review. First, the Appellant alleges that Justin
had the right to hire helpers and assistants. This is relevant because of the
following trenchant assertion by MacKenna J. in Ready Mixed Concrete (South
East) Ltd. v. Minister of Pensions and National Insurance:
Freedom to do a job either by one’s own hands or by
another’s is inconsistent with a contract of service …
The problem with the
Appellant’s position is that the evidence establishes that this supposed right
was never communicated to Justin by the Appellant; was not part of the contract
that defined their working relationship; and was fanciful in any event as Justin
could hardly afford to hire helpers out of the minimal $8.00-$10.00 per hour he
was paid to perform his various tasks.
[8] The second argument is that Justin had the right to decline or
refuse assigned tasks, which would indicate that his relationship with the
Appellant was one of independence and not subordination. There is evidence that
Justin refused to load scrap tires on a trailer he thought was contaminated by
mould; to work on a coffee truck driven by a person he disliked; and to perform
functions he did not feel competent enough to do.
[9] There are three decisions by the Federal Court of Appeal that deal
with a closely‑related concept. First, in Precision Gutters Ltd. v.
M.N.R. (“Precision Gutters”)
the Court says:
In my view, the ability to negotiate the terms of a
contract entails a chance of profit and risk of loss in the same way that
allowing an individual the right to accept or decline to take a job entails a
chance of profit and risk of loss.
[10] Second, D & J Driveway
involved truck drivers who were on call and were
entirely free to refuse offers made to them from time to time to drive delivery
trucks to various distant destinations. So far as the legal effect of this
right is concerned, the Court says:
In fact, drivers could agree or refuse to make a
delivery when called upon by the applicant, which certainly is not
characteristic of a person bound by a contract of employment.
The Court then
adds:
We feel it is legally incorrect to conclude that a
relationship of subordination existed, and that there was consequently a
contract of employment, when the relationship between the parties involved
sporadic calls for the services of persons who were not in any way bound to
provide them and could refuse them as they saw fit.
[11] Finally, in Le Livreur Plus the Court recounts:
Together with the right to refuse or decline offers of
services, these are factors which this Court has regarded as indicating a
contract of enterprise or for services rather than one of employment.
[12] What is not established by this line of
authorities is whether the principles enunciated therein are equally applicable
to cases where a worker accepts a working relationship with a payer, but
declines or refuses to perform a task within that relationship, when so duly
directed. In this regard, two relevant cases have been brought to my attention.
In 821743 Ontario Inc. (c.o.b. Midas Muffler) v. M.N.R. the Court dealt
with the status of mechanics who were given the option of being independent
contractors or employees; were free to work elsewhere and remove their tools
for that purpose; set their own schedules; decide the volume of work they
wanted to do; and, of importance for our purposes, had the right not to work
for a certain customer if they so chose. Unfortunately, this case is not
particularly helpful since the Court found that the mechanics were independent
contractors, based on the clear common intention of the parties to form such a
relationship, and because it doubted the payer’s credibility.
[13] The fact that the mechanics had the right not
to work for a certain customer if they so chose, does not seem to form part of
the Court’s ratio decidendi. In addition, these peripatetic mechanics,
that were free to work for others sporadically and then return to the
appellant, had a considerably different working relationship with their payer
than did Justin who was steadily engaged by the Appellant for over two years.
[14] In my view, a worker who refuses to perform an
assigned task within a working relationship is distinguishable from a worker
who refuses an offer of a working relationship in the first place. The latter
is indicative of independence, while the former resonates with the oft-cited
case of Hennick v. M.N.R. (“Hennick”) This
case involved a teacher at The Royal Conservatory of Music (the “Conservatory”)
who was a free spirit in that she had carried on her work without respect or
consideration for the structure created by the Conservatory. Specifically, she
had not fulfilled the minimum teaching time requirement stipulated in the
operative collective agreement.
[15] The trial Judge found the teacher to be an
independent contractor because the Conservatory could not control her. In
reversing that decision, the Court of Appeal said:
… what is relevant is not so much the actual
exercise of control as the right to exercise a control.
More importantly,
the Court also found as follows:
It is obvious that the status of a person cannot
depend on her character as an individual. The test to be followed is an
objective one which is determined on the facts of each case by weighing the
relevant factors.
[16] I find that once a working relationship is
agreed upon, control issues arising within the context of that relationship,
such as the worker’s refusal to perform an assigned task, do not indicate that
he or she was an independent contractor. An insubordinate worker can still be
in a subordinate relationship with his or her payer.
[17] In any event, I am not satisfied that Justin
had the alleged right of refusal. He denies the coffee truck allegation, and
was prudent to decline to put his health at risk by working in a mouldy
environment. Further, Smith admitted that he would not permit Justin to attempt
tasks which he was not qualified to do. Finally, when Justin was asked what
would happen if he was assigned a task and, like Melville’s Bartleby, the
Scrivener, he simply stated “I would prefer not to”, Justin replied: “If I
just refused, I’d probably get fired”.
[18] So far as the right to control is concerned, Smith, who was occupied
with other business interests at the time, brought in Young as General Manager
of the Appellant’s operations “to ensure that all is done the way I want it to
be done”, which meant safely and properly “so that things don’t happen if they
are not watched”. Smith’s mantra, “Don’t put it on a customer’s car if you
wouldn’t put it on your mom’s car”, exemplifies the exacting standards he
expected of his workers.
[19] The above analysis satisfies me that both Smith and Young had the
right to direct and control both what tasks the callow Justin did, and how he
did them.
[20] In sum, I find that Justin was not a highly
skilled or professional worker; that the Appellant had the right to direct and
control not only what Justin did, but how he did it; that he was in a
subordinate position to the Appellant; that if Justin declined or refused to
perform a task within his working relationship with the Appellant, he would be
fired; and that there was no agreement between the parties that he could hire
helpers. The control point of reference accordingly indicates that Justin was
an employee.
Ownership of
Tools:
[21] The second Wiebe Door guideline is the
ownership of tools. Smith testified that Justin possessed the tools that it was
usual for a tire repairer/installer to own, namely tire pressure and tread
depth gauges. He further indicated that all workers were encouraged to bring
their own tools so they would not persist in damaging or losing the
Appellant’s. On the other hand, he admitted that the customers were lined up at
8:00 a.m. when the shop opened, and that whenever necessary, the Appellant
would provide any and all required tools since “The work had to be done”.
Justin credibly testified that he owned no tools save for his safety boots, and
that all the tools he used were duly supplied by the Appellant. The tools
factor accordingly indicates that Justin was an employee.
Chance of
Profit:
[22] Justin was paid at an hourly rate as aforesaid.
This rate increased as did his proficiency. There was talk of eventually
putting him in charge of a proposed used tire sales division. Counsel for the
Appellant argued that all these possibilities of increased earnings and
advancement constituted a chance of profit. In my view, however, employees are
equally eligible for precisely such incentives. Moreover, the Court in Hennick points out that
any profits made by the business belonged to the Appellant; and that Justin’s
opportunity to increase his earnings by working longer hours, or by receiving
raises in pay, does not a chance of profit make.
[23] Smith was under the impression that Justin was
carrying on business on his own account after hours, using the Appellant’s
premises and equipment. The evidence, however, is that Justin did only minor
tire repairs for a few friends and relations, free of charge. The chance of
profit guideline therefore also indicates that Justin was an employee during
the period under review.
Risk of Loss:
[24] Justin had to purchase his own safety boots,
and was also financially responsible for any damages occasioned on the job due
to his fault or negligence. He had to rectify his errors on his own time although
all necessary parts were supplied by the Appellant. In actual fact, in over two
years of working with the Appellant, Justin was never charged for any such loss,
damage, or deficiency. I therefore find that Justin’s risk of loss was more
theoretical than real and that this factor also indicates that he was employed
under a contract of service.
Total
Relationship:
[25] The Wiebe Door tests are but points of
reference, guidelines, or useful subordinates to help courts ascertain the true
nature of the total relationship of the parties as aforesaid. The four factors
involved will vary in weight according to the particular facts of each case. In the matter
before me, all four guidelines indicate that Justin was an employee under a
contract of service during the period under review. I would afford increased
weight to the absence of a chance of profit or a risk of loss since, in my
view, these factors constitute the very essence of a business venture. Recall,
for example, the legal definition of a partnership which describes two or more
persons carrying on business in common with a view to profit. In City Water
International Inc. v. M.N.R.,
however, the Federal Court of Appeal found the workers involved to be
independent contractors even though they had neither a chance of profit nor a
risk of loss in their working relationship with the payer. Since the Wiebe
Door tests produced inconclusive results, the Court gave effect to the
mutual intention of the parties.
[26] I have not dealt with the intention of the parties
in the matter before me for two reasons: first, the Wiebe Door tests do
produce conclusive results,
and second, I am not satisfied that the parties were ad idem regarding
Justin’s status. When he was hired, Justin did not know the difference between
an employee and an independent contractor. He went home and had his layman
father explain the distinction as best he could.
[27] Of all the evidence adduced during this
hearing, there were only two facts that tended to indicate that Justin was an
independent contractor. He had to rectify his errors on his own time as
aforesaid,
and he could negotiate his rate of pay.
[28] In these matters the burden is upon the
Appellant to demolish the assumptions contained in the Minister’s Reply to the
Notice of Appeal.
Assumption 10(h) proved inaccurate in that the Appellant had no formal
training program. Justin learned by on-the-job observation and experience, and
by receiving helpful hints from the more seasoned mechanics, as well as from
Smith and Young. Assumption (j) is incorrect as the evidence indicates that
Justin enjoyed some flexibility in his work schedule, although there is strong
evidence that the customers were lined up at 8:00 a.m. with their faulty tires,
and that the workers had to be there to service them. Assumption (k) was not
demolished. While the experienced mechanics might have attended to work orders
as they came in, I was not satisfied that this process applied to Justin who
was told what to do by Young so far as his cleaning, painting and sorting
duties were concerned, and how to do it whenever customers’ tires were
involved. Assumption (o) was successfully demolished. Justin admitted that he
knew he could negotiate his rate of pay, but did not bother. The evidence
regarding assumption (s) was that Justin would work longer than the normal
business hours in busy times, and fewer hours in slow times. The evidence also
did not support assumption (x). Wearing the company apparel was not mandatory.
Assumption (y) was erroneous. Justin had to rectify his errors on his own time.
Assumption (cc) ignores the safety boots that Justin had to supply. While the
Appellant has succeeded in demolishing some of the Minister’s assumptions, the
remaining ones are more than sufficient to support the Minister’s findings.
[29] I have investigated all the facts with the
parties and the witnesses called on behalf of the Appellant and the Intervener
to testify under oath for the first time, and while there were new facts found,
they primarily supported the Minister’s decision. In addition, with minor
exceptions, there was nothing to indicate that the facts inferred or relied
upon by the Minister were unreal or were incorrectly assessed or misunderstood,
having regard to the context in which they occurred. The Minister’s conclusions
are objectively reasonable.
I can find no business that Justin was in on his own account.
[30] In the result, the
Minister’s decisions are confirmed and the appeals are dismissed.
Signed at Toronto,
Ontario, this 24th day of December 2009.
Weisman
D.J.
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