Citation: 2009 TCC 192
Date: 20090409
Dockets: 2008-2509(CPP)
2008-2510(CPP)
BETWEEN:
GILPIN FURNITURE AND
FUNERAL SERVICE LIMITED,
ROBERT GILPIN,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
(Delivered orally from the Bench on February 25, 2009, in London, Ontario
and modified for clarity and accuracy.)
Boyle J.
[1]
The issue in these
appeals is whether Gilpin Furniture and Funeral Service Limited and Robert Gilpin
were in a relationship of pensionable employment for Canada Pension Plan purposes
in 2006 through 2008 in respect of his work in the funeral home business.
[2]
Gilpin Furniture and
Funeral Service is wholly owned by Ron Gilpin, Robert Gilpin’s
father. The company operates a furniture business and several funeral homes in
small towns in South Western Ontario. In addition, the company owns several
parcels of real estate. The company had formerly owned and operated the local ambulance
service as well until that was taken over by the county. Robert Gilpin had
worked in the ambulance business while the family owned it and is still
employed full-time by the county as a paramedic.
[3]
Before I go further and
while I still have Ron Gilpin’s attention, I must make two preliminary
remarks: First, you would be very well advised to be paying more attention to
your bookkeeping and recordkeeping than you testified to this morning. You are
running a successful series of businesses. You should be paying more attention
to the structuring and to the paperwork than you say you are. If not, I really
fear you may find yourself in more significant difficulties with the tax system
than you are today. If you have not, I would urge you to consider getting good knowledgeable
professional help to review what you are doing and advise you how things might
be done better to save you at least greater grief and perhaps money.
[4]
Second, Mr. Gilpin,
I must say that your personal remarks about the Department of Justice lawyer,
however well intentioned and positive, have no place in a courtroom and they
never did. If I failed to express my concern clearly at the time, I apologize
to Ms. Halpape.
[5]
Returning to today’s
CPP issue, the company operates three funeral homes in Forest, Thedford and
Grand Bend, Ontario. Ron Gilpin is 65 years old and lives in Grand Bend
where he operates the company’s funeral home in that town. He also operates a
funeral home and furniture business in Thedford. The company’s main funeral
home is the one in Forest. The evidence is that it is operated on a
day to day basis virtually entirely by his son Robert Gilpin with some
assistance from his wife.
[6]
Ron Gilpin said he
did not really do anything with respect to the Forest funeral home and that his
son did everything, including ordering the caskets and maintaining the supplies,
marketing the Forest business to the local community, as well as picking up
bodies, cleaning and embalming corpses, et cetera. The phone for the funeral
home in Forest is in Robert’s house. Robert decided what expenses should be
incurred and these were paid for by the company.
[7]
Robert was a full-time
paramedic. While seemingly successful, these are small town funeral homes. The Forest business had to be worked around Robert’s paramedic
employment schedule. There were other employees of the company who took care of
things in his absence. With respect to the Forest funeral home, those employees
were under Robert’s direction.
[8]
Robert Gilpin was
paid $2,000 per month by the company to operate the Forest
funeral home. There was no written agreement, there were no set hours, no
maximum hours, no overtime, no vacation pay, and seemingly, no obligation to
help out in the company’s other funeral homes or its furniture business if
things were slow in Forest. The minimum hours per week were the 15 required by Ontario law to maintain his funeral director’s licence.
[9]
Business levels at the
Forest funeral home obviously depended upon and fluctuated with the number of
local deaths and with Robert Gilpin’s success or lack thereof in marketing
the Gilpin goodwill to the elderly and to surviving family members within his
community.
[10]
Robert had worked in
this way for a long number of years. For the years 2003 through 2005, the
company had withheld taxes and CPP and had issued T4s to Robert. Ron Gilpin
explained that was intended only to ensure Robert had the correct information
to pay his taxes and that it has now become apparent he or his wife had used
the wrong form and taken the wrong approach.
[11]
Ron Gilpin testified
that he and his son had both intended for the relationship to be one of
independent contractor, not of employment. Robert had a well paying full-time employment
and had his CPP and presumably EI coverage fully in place and paid for through
that job.
[12]
There is no written
agreement governing this relationship. Ron Gilpin testified he viewed
their relationship as something like a partnership where his son was
responsible for the Forest funeral home. Robert Gilpin was not
present to testify. I was not asked to draw any adverse inference from his
absence.
[13]
The issue of employee
versus independent contractor for purposes of the definition of pensionable
employment is to be resolved by determining whether the individual is truly
operating a business on his own account. This is the question set out by the
British court in its 1968 Market Investigations, Ltd. v. Minister of Social
Security decision, [1968] 3 All E.R. 732 (Q.B.D.), approved by
our Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., [1986]
3 F.C. 553, and adopted by the Supreme Court of Canada in 671122
Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59,
[2001] 2 S.C.R. 983. This question is to be decided having regard to
all of the relevant circumstances and having regard to a number of criteria or useful
guidelines, including: (1), the intent of the parties; (2), control over the
work; (3), ownership of tools; (4), chance of profit and risk of loss; and (5),
what has been referred to as the business integration, association or
entrepreneur criteria.
[14]
More recent decisions
of the Federal Court of Appeal highlight the particular importance of the
parties’ intentions and the control over the work considerations in such
determinations. These Federal Court of Appeal cases are Royal Winnipeg
Ballet v. Canada, 2006 FCA 87, [2007] 1 F.C.R. 35,
Combined Insurance Co. of America v. Canada, 2007 FCA 60, [2007] F.C.J. No. 124 (QL), and
City Water International Inc. v. Canada, 2006 FCA 350, [2006] F.C.J. No. 1653
(QL). Helpful decisions of the Tax Court on this issue can be found in Vida
Wellness Corp. (c.o.b. Vida Wellness Spa) v. Canada, 2006 TCC 534,
[2006] T.C.J. No. 570 (QL), which discusses Royal Winnipeg
Ballet and the former Chief Justice's reasons in Lang v. Canada,
2007 TCC 547, 2007 D.T.C. 1754.
I. The intention of the parties
[15]
I accept
Mr. Ron Gilpin’s testimony that both he and his son intended the
relationship to be that of contractor in the years in question. He has provided
a credible explanation for the T4s having been issued in some earlier years
than those under appeal. In argument, Crown counsel first conceded that the
father and son’s intentions were not to be employer and employee. However, she
later reverted to the position that the evidence of intention was not entirely
clear and could be described as grey. I agree that it is not a case of black
and white evidence on this point, but I find on a balance of probabilities that
the parties intended the relationship to be a contract for services,
independent contractor, not a contract of service, employment, in the years in question.
[16]
I was not told of any provincial
regulatory or other reason that would preclude a licensed funeral director
working as an independent contractor and not an employee, nor do I find that
the parties did anything necessarily inconsistent with their relationship being
that of independent contractor.
II. Control of the work done by Robert Gilpin
[17]
The importance of the
control of the work consideration has been described by my colleague, Justice
Webb, in several decisions, as such that unless the application of it and the other
Wiebe Door considerations to the Gilpins’ particular facts more strongly indicate an employment relationship
than in the case of Royal Winnipeg Ballet,
the Gilpins, intending to have an independent contractor relationship in the years in question,
did have one.
[18]
In this case, all of Robert Gilpin’s
work for the company was in respect of the Forest funeral home. Robert was himself in complete charge
of the day-to-day operations of that location. He was responsible for himself and for the success
of the Forest home, which was the company’s principal funeral home. It appears he marketed it in
the community as and when he wished. He met with potential customers and responded to inquiries,
agreed to or declined potential new business, set fees and entered into contracts with the
customers. He controlled when and how much he chose to work. It all had to be worked around his
personal schedule as an employed paramedic/ambulance personnel for the local government.
[19]
The evidence in this case is clear that the
amount of control that the company had over the worker was less than the amount of control that the
Royal Winnipeg Ballet had over its dancers as set out in the Royal Winnipeg Ballet
court decision.
[20]
Robert Gilpin
operated the Forest funeral home with almost complete autonomy
on a day-to-day basis. My consideration of the extent of control over the work
inclines in favour of independent contractor status, not of an employment
relationship.
III. Ownership of tools of the trade
[21]
In this case all the
equipment and supplies needed by Robert Gilpin to provide the services
were provided by the company. While they were purchased by Robert, they were
paid for by the company. I find the consideration of ownership of tools of the
trade is entirely consistent with an employment relationship. However, that is
not to say it is necessarily inconsistent with an independent contractor relationship.
IV. Chance of profit and risk of loss
[22]
In this case,
Mr. Robert Gilpin was always paid the same $2,000 per month. Against
that he appears to have incurred little, if any, expenses. This fact could be
consistent with either employment or independent contractor status. The
Gilpins’ particular circumstances appear to be more a reflection of their non-arm’s
length relationship as father and son in a family-owned business than a helpful
indicator pointing towards or away from a contract of service or contract for
services. I therefore do not regard it as relevant or helpful in this
case.
V. Conclusion
[23]
In these circumstances,
I find Robert Gilpin was not in pensionable employment with Gilpin
Furniture and Funeral Service in providing his funeral director and funeral
home management services to that company. Each of the intent and control considerations
leans in favour of independent contractor status. Independent contractor status
was not prohibited, nor did the parties do anything inconsistent with the
relationship being the desired independent contractor relationship.
[24]
For these reasons, I
will be allowing these appeals and vacating the Minister’s decisions.
Signed at Ottawa, Canada, this 9th day of April 2009.
"Patrick Boyle"
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