Citation: 2007TCC477
Date: 20070817
Dockets: 2006-274(EI)
2006-277(CPP)
BETWEEN:
WAYNE DERKSEN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
Dockets: 2006-373(EI)
2006-374(CPP)
AND BETWEEN:
DALE DERKSEN,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Sheridan, J.
[1] The
Appellants,
Dale and Wayne Derksen, are appealing the
respective decisions of the Minister of National Revenue that they worked as
independent contractors. Their appeals were heard together, although there are
slight differences in their circumstances that will be noted below where
applicable.
[2] Most of the facts are
not in dispute and are essentially those set out in the Minister's assumptions
in the reply to Dale's notice of appeal:
(a) the
Payor [Thermal Tek Insulation Contracting Inc. ("Thermal Tek")] was in
the business of supplying and installing insulation and vapour barriers;
(b) the
Appellant's duties included installing insulation and vapour barriers;
(c) the Appellant[s] … entered into a written sub-contract with
the Payor, on January 21, 2004, which included the following:
(i) the
Appellant was called the sub-contractor,
(ii) the
Appellant shall provide services in accordance with an attached purchase
order,
(iii) the
Appellant is required to work in accordance with industry standards
and correct any deficiencies at their own expense,
(iv) the
Appellant is required to provide its own tools and vehicle,
(v) the Appellant may engage agents or
other sub-contractors, and
(vi) the
Appellant agrees it is not an employee and the Payor shall not be required
to pay remittances;
(d) the original intent of the Appellant and the Payor was for
the Appellant to be self-employed;
(e) the
Appellant performed his services at the Payor's job sites;
(f) the Appellant was paid by piece work including $.10 per
insulation batt installed of $.09 for poly;
(g) the
Appellant submitted invoices to the Payor;
(h) the Payor's normal business hours were 8:00AM to 5:00PM,
Monday to Friday;
(i) the Appellant's hours of work were dependent on
the jobs to be completed and the weather;
(j) the
Appellant did not record his hours or submit timesheets;
(k) the
Payor did not supervise the Appellant;
(l) the
Payor did not assign work to the Appellant;
(m) the Payor
offered jobs to the Appellant;
(n) the
Appellant had the power to accept or refuse work;
(o) the
Payor did not instruct the Appellant on how to perform his duties;
(p) the
Appellant was not required to attend meetings;
(q) the Appellant did not prepare
reports;
(r) the
Appellant was not paid to correct his errors;
(s) the Payor did not provide training
for the Appellant;
(t) the
Appellant could hire his own helpers or replace himself;
(u) the
Appellant had the freedom to work for others while performing services for
the Payor;
(v) the Payor did not
provide the Appellant with a guarantee of work;
(w) the Payor provided materials required
including caulking, insulation, staples, tape and poly;
(x) the
Appellant provided his own tools including hand tools, ladders, saw horses,
planks, compressor, air stapler and vehicle;
(y) the
Appellant incurred expenses for tools and vehicle expenses;
(z)
the Appellant operated under a trade name "Dales (sic) Insulators";
[Note: not included in Wayne's assumptions.]
(aa)
the Appellant declared business income on his income tax returns prior
to the period under review; [Note: not included in Wayne's assumptions.]
(bb) the
Appellant charged the Payor GST, and
(cc) the
Appellant was treated differently than the Payor's employees.
[3] The insurability and
pensionability of Dale and Wayne's work became an issue after Dale was injured
and applied for employment insurance benefits. The four-fold test for the
determination of whether a worker is an employee or an independent contractor
was developed in Wiebe Door Services Ltd. v. The Minister of National Revenue[5] and applied by the Supreme Court of Canada in 671122
Ontario Ltd. v. Sagaz Industries Canada Inc.[6]:
[47] Although there is no universal test to determine whether a
person is an employee or an independent contractor, I agree with MacGuigan J.A.
that a persuasive approach to the issue is that taken by Cooke J. in Market
Investigations, supra. 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.
[48] It
bears repeating that the above factors constitute a non-exhaustive list, and
there is no set formula as to their application. The relative weight of each
will depend on the particular facts and circumstances of the case.
[4] In addition to the
consideration of control, ownership of tools, chance of profit and risk of loss
and the degree of integration, the Court may also take into account the
intentions of the parties[7]. The jurisprudence of the common law is clear that no
one factor has precedence; rather, they are intended to provide a framework for
analysis of the particular facts of each case.
[5] The principal of
Thermal Tek, Mr. Wes Sass, was called by the Respondent. I found his evidence
entirely credible.
[6] Dale and Wayne
represented themselves and testified at the hearing. They had obviously put a
lot of effort into researching the principles governing the determination of a
worker's status. It was their submission that the evidence supported a finding
that they had worked as employees for Thermal Tek. Despite the vigour of their
argument, for the reasons set out below, I am not persuaded that they have met
the evidentiary onus of proving wrong the assumptions upon which the Minister
based his conclusion that they were independent contractors.
[7] Although they
provided additional details or clarifications, Dale and Wayne essentially admitted
the Minister’s assumed facts. In particular, they admitted signing the contract
dated January 21, 2004
and that "in the beginning", they believed, like Mr. Sass, that they
were taking on the work offered by Thermal Tek as independent contractors. Wayne testified
that he had signed the contract "under duress"; by this he meant that
he believed if he did not sign it, he would not get the work. Such a concern in
itself (especially when not voiced until long after the fact) falls far short
of proof of "duress" in the legal sense of the word.
[8] The Appellants’ evidence
was entirely consistent with that of Mr. Sass that they negotiated with him the
price for each installation job offered; they were free to accept or reject
projects; they could (and did) work for others, including Thermal Tek's
competitors; they set their own hours, subject only to the externally imposed
deadlines of the construction industry; they were not "assigned" work
by Thermal Tek, but rather performed the work to the customers' specifications
as set out in the purchase orders.
Upon completion of their work, they submitted invoices, without which they would
not have received payment; long before the periods in question, they were GST
registrants and in Dale's case, GST was collected and remitted in respect of
the work done on Thermal Tek jobs. The fact that "Dale's Insulators"
was not technically a registered business name does not in itself preclude a
finding that Dale was in business for himself.
[9] Dale and Wayne were
unsupervised in their work. Mr. Sass described their skill and experience in
the insulation field as "among the best in the city". As such, they
were completely capable of doing the work on their own, a fact which
undoubtedly made their services attractive. Dale’s own testimony was that although
Thermal Tek's site supervisor, Trevor, could critique their work, they were not
obligated to act upon his suggestions. In addition to his supervisory duties, Trevor
performed the same sort of insulation work as Dale and Wayne. I accept the
evidence of Mr. Sass that there, however, the similarity ended. Unlike Dale and
Wayne, Trevor was required to report to Mr. Sass, he was paid a flat annual
salary and worked fixed hours, he could not take time off without permission, and
his tools and a vehicle were supplied by Thermal Tek.
[10] Dale, on the other
hand, provided his own tools and had a major investment in his air stapler and
compressor and truck. The materials provided by Thermal Tek such as the
insulation itself, caulking, tape and "poly" were not "tools"
per se as they were costed back to the customer.
[11] I accept Dale and Wayne's
evidence that Thermal Tek paid Workers' Compensation premiums on their behalf
and they were assigned a WCB number. However, this was a provincial statutory
requirement without which a worker would not be allowed on a job site. Compliance
with this provision is not determinative of the nature of the working
relationship between the Appellants and Thermal Tek.
[12] Taken as a whole, the
evidence satisfies me that Dale was working on his own behalf as an independent
contractor in the insulation business.
[13] As Wayne quite
correctly pointed out at the hearing, although their cases were heard together,
each must be decided on its own merits. Wayne's situation was slightly different from Dale's in
that he did not have his own tools; those he used, however, were supplied by
Dale not Thermal Tek. Similarly, he was approached about taking on Thermal Tek
projects not by Mr. Sass, but by his brother who had his own insulating
business which might lead to the conclusion that he was, if anyone’s, Dale’s
employee. That conclusion, however, is not supported by the evidence: Dale was
very clear in his testimony that he did not want employees in his business because
he did not want to take on the obligation of remitting employee deductions.
Given the closeness of their working relationship, I have no reason to think Wayne was
unaware of his brother's views on that subject. While it is true that he did not
have a business name, that fact and his lack of tools, when weighed against the
other evidence, are not sufficient to convert his status from independent
contractor to employee. Accordingly, I am satisfied that Wayne was also working
as an independent contractor for Thermal Tek during the period in question.
[14] The appeals are
dismissed and the decisions of the Minister are confirmed.
Signed
at Ottawa, Canada, this 17th day of August, 2007.
"G.A. Sheridan"
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