Citation: 2007TCC386
Date: 20070718
Dockets: 2006-2829(EI) and 2006-2830(CPP)
BETWEEN:
REED MARCOTTE,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Webb J.
[1]
This
case deals with the issue of whether Christopher English was an employee of the
Appellant or an independent contractor.
[2]
The
Appellant carried on his general contractor business as a sole proprietor and
would perform various tasks for clients. In particular, in 2005 he had a job
that required a person to do some landscaping work. He posted a listing on a
Human Resources and Development Canada (“HRDC”) job bank website for a general
labourer for landscaping work. Christopher English responded to that posting
and following a telephone discussion between Christopher English and the
Appellant, Christopher English started work the following morning at the job
site. While the Appellant indicated that it was his practice to hire workers as
independent contractors, the Appellant’s testimony in relation to the actual
discussions that he had with Christopher English at the time that he was
engaged, was sketchy.
[3]
The
question of whether an individual is an employee or an independent contractor
has been the subject of several cases. In 671122 Ontario Ltd. v.
Sagaz Industries Canada Inc., [2001] S.C.J. 61, 2001 S.C.C. 59, Major
J. of the Supreme Court of Canada stated as follows:
46 In my
opinion, there is no one conclusive test which can be universally applied to
determine whether a person is an employee or an independent contractor. Lord
Denning stated in Stevenson Jordan, supra, that it may be impossible to give a
precise definition of the distinction (p. 111) and, similarly, Fleming observed
that "no single test seems to yield an invariably clear and acceptable
answer to the many variables of ever changing employment relations ..."
(p. 416). Further, I agree with MacGuigan J.A. in Wiebe Door, at p. 563, citing
Atiyah, supra, at p. 38, that what must always occur is a search for the total
relationship of the parties:
[I]t is exceedingly doubtful whether the search for a
formula in the nature of a single test for identifying a contract of service
any longer serves a useful purpose.... The most that can profitably be done is
to examine all the possible factors which have been referred to in these cases
as bearing on the nature of the relationship between the parties concerned.
Clearly not all of these factors will be relevant in all cases, or have the
same weight in all cases. Equally clearly no magic formula can be propounded
for determining which factors should, in any given case, be treated as the
determining ones.
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
recent decisions of the Federal Court of Appeal the issue of the intent of the
parties has been addressed. In the recent decision of the Federal Court of
Appeal in Combined Insurance Co. of America v. M.N.R., 2007 FCA 60,
Nadon J.A. of the Federal Court of Appeal stated as follows:
35. In my view, the following principles emerge
from these decisions:
1. The relevant facts,
including the parties’ intent regarding the nature of their contractual
relationship, must be looked at in the light of the factors in Wiebe Door,
supra, and in the light of any factor which may prove to be relevant in the
particular circumstances of the case;
2. There is no predetermined way of applying
the relevant factors and their importance will depend on the circumstances and
the particular facts of the case.
Although as a general rule the control test is of special
importance, the tests developed in Wiebe Door and Sagaz, supra,
will nevertheless be useful in determining the real nature of his contract.
[5]
In
this particular case, there is a disagreement between the Appellant and Christopher
English with respect to their intent and whether Christopher English was
being hired as an employee or as an independent contractor.
[6]
The
Appellant testified that it was his practice to always have those who worked
for him sign an “agreement”. A copy of the “agreement” that was signed by
Christopher English was introduced as an exhibit. This “agreement” was dated
August 24, 2005, approximately two months after Christopher English started to
work for the Appellant. The entire “agreement” consists of one paragraph which
is as follows:
As a subcontractor of Reed
Marcotte Contracting you must be registered with the Workplace Safety and
Insurance Board (“WSIB”) with Personal Insurance. By signing this waiver
you are agreeing to take full responsibility for your health and safety at the
workplace.
[7]
I
find that Christopher English started to work for the Appellant in late June of
2005. At the time that he started there was no discussion of this particular
“agreement” being signed. This was not raised by the Appellant until the date
that it was signed (August 24, 2005) and was simply presented to the worker one
morning to sign. While there is a reference to the person signing being a
“subcontractor”, in my opinion if this document was to reflect the true
intention of both parties that Christopher English would be an independent
contractor and not an employee, then this document ought to have expressed this
in greater detail and ought to have been discussed and negotiated prior to
Christopher English starting to work for the Appellant. To introduce this
document approximately two months after Christopher English had commenced
work cannot be used to support the intention of both parties at the time that
Christopher English started working.
[8]
As
well, in my opinion, the circumstances surrounding the hiring of Christopher
English by the Appellant are also relevant. Since the position that was posted
on the HRDC job bank website was for a general labourer for landscaping, any
person responding to that would expect to be responding to a posting for a job,
i.e., an employment relationship. This expectation combined with a lack of
clear discussion between the Appellant and Christopher English at the time that
Christopher English was engaged, in my opinion, leads to a conclusion that
there was no mutual intent of the parties for Christopher English to be an
independent contractor.
[9]
In
the absence of a mutual intent it is still necessary to look at the other
factors as listed by the Federal Court of Appeal in Wiebe Door Services Ltd.
v. M.N.R., [1986] 3 F.C. 553, (1986) 70 N.R. 214, 87 DTC 5025,
and the Supreme Court of Canada in the Sagaz case referred to
above.
Control
[10]
Christopher
English was hired as a general labourer for landscaping. The main job that he
worked at initially was the job in Eganville. The hours that he worked were
determined by the nature of the work. He understood that since it was
landscaping work he would work for as many hours as possible. The tasks that he
would perform would be assigned to him from time to time by the Appellant.
While the Appellant testified that it was usually the client of the Appellant
that would assign the work, Christopher English testified that he had little,
if any, contact with the ultimate client. I accept the testimony of Christopher
English as the Appellant indicated that he was dealing with several workers and
several times it was not clear whether he was talking about his relationship
with other workers or Christopher English in particular. Since Christopher
English’s recollection with respect to his dealings with the Appellant was more
specific, I accept the testimony of Christopher English.
[11]
Christopher
English also testified, and I accept his testimony, that it was his
understanding that while he was working for the Appellant he was not permitted
to work for anyone else.
[12]
Therefore
I find that in relation to the control factor, the control factor supports an
employer/employee relationship rather than that of an independent contractor.
Ownership of Equipment
[13]
Christopher
English testified, and I accept his testimony, that he did not provide any of
his own tools. The tools that he used were either provided by the Appellant or
by the client of the Appellant. Therefore this factor would suggest an
employer-employee relationship and not that of an independent contractor.
Whether the Worker Hires His or Her
Own Helpers
[14]
Christopher
English was hired as a general labourer for landscaping and did not hire any
helpers. Although the Appellant testified that Christopher English was free to
hire any other person to do his job, this did not happen. As a result this
factor is neutral.
Degree of Financial Risk /
Opportunity for Profit
[15]
In
this particular case Christopher English was hired as a general labourer for
landscaping and paid by the hour. The Appellant insisted that he submit
invoices showing the number of hours that he worked. The position of the
Appellant was that this confirmed that he must have been an independent
contractor. However, the submission of the documents by Christopher English did
not necessarily mean that he was an independent contractor. This would not have
been any different than an employee who would submit his time sheet showing the
number of hours that the employee worked.
[16]
The
Appellant indicated that if the worker did not do a job correctly then the
worker would have to fix the problem on their own time. However, this again
does not necessarily mean that the relationship was that of an independent
contractor. If an employee were to perform a task incorrectly, an employer may
also require the employee to fix the problem on their own time.
[17]
The
only expenses that the Appellant incurred in relation to this work were
expenses that an employee would incur – the cost of work clothing, travelling
to and from work and any meals that were not provided.
[18]
As a
result, since Christopher English was simply paid a fixed amount per hour for
the number of hours that he worked and since he did not incur any expenses
other than those expenses that an employee would incur, the degree of financial
risk that he took in this relationship was more akin to that taken by an
employee than that taken by an independent contractor.
[19]
As
noted, the only opportunity for profit was based on the number of hours worked
by Christopher English. This is consistent with an employer/employee
relationship rather than that of an independent contractor. This is no different
than an employee whose paycheque is based on the number of hours that the
employee works and therefore employees who are willing to work longer hours
will obviously be paid more than those who are not.
The Degree of Responsibility for
Investment and Management Held by the Worker
[20]
The
degree of responsibility for investment and management held by the worker would
indicate that the relationship in this case was that of an employer/employee
relationship rather than that of an independent contractor. As noted above, the
worker was simply hired as a general labourer for landscaping and performed the
tasks that were assigned to him and was not responsible for any investment or
management duties.
Conclusion
[21]
In
light of all of the factors and, in particular, the circumstances surrounding
the engagement of the worker by posting the job on the HRDC website with
limited discussions of the nature of the relationship between the Appellant and
Christopher English, I find that in this situation Christopher English was an
employee of the Appellant and therefore engaged by the Appellant in insurable
employment within the meaning of paragraph 5(1)(a) of the Employment Insurance
Act and pensionable employment within the meaning of paragraph 6(1)(a)
of the Canada Pension Plan.
[21] As a result the
appeal is dismissed, without costs.
Signed at Halifax,
Nova Scotia, this 18th day of July 2007.
"Wyman W. Webb"
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