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Docket: 2003-1041(EI)
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BETWEEN:
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DAVID M. MAGLADRY,
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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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____________________________________________________________________
Appeal heard on common evidence with the appeal of
David M. Magladry (2003-1042(CPP)), on October 1, 2003 at Ottawa,
Ontario.
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Before: The
Honourable Justice Gerald J. Rip
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Appearances:
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Counsel for the
Appellant:
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Alan Riddell
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Counsel for the
Respondent:
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Joanna Hill
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____________________________________________________________________
JUDGMENT
The appeal pursuant to subsection 103(1) of
the Employment Insurance Act ("Act") is allowed and the
decision of the Minister, on the appeal made to him under section 91 of that Act,
is vacated.
Signed at Ottawa, Canada, this 6th day of
November, 2003.
Rip,
J.
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Citation: 2003TCC827
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Date: 20031106
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Docket: 2003-1041(EI)
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BETWEEN:
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DAVID M. MAGLADRY,
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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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Docket: 2003-1042(CPP)
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AND BETWEEN:
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DAVID M. MAGLADRY,
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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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REASONS FOR JUDGMENT
Rip, J.
[1] David Magladry appeals the
determinations and rulings of the Minister of National Revenue
("Minister") pursuant to the Employment Insurance Act ("Act")
and the Canada Pension Plan ("Plan"),
respectively, that the employment of Raoul Budavari and various other Workers
(collectively the "Workers") during the period from October 15, 2001
to February 18, 2002, and between the years 2000, 2001 and 2002,
constituted both insurable employment under the Act and pensionable
employment under the Plan. The appellant submits that at all material
times the Workers were self-employed independent contractors.
[2] Mr. Magladry testified
that he is the sole proprietor of
"David Magladry Productions" ("Productions"), a
stage and museum lighting design business in Ottawa, Ontario. Productions has
been in the business of stage and museum lighting design for 15 years.
[3] For the last 12 years the
Canadian Museum of Civilization Corporation ("CMCC") has been a
principal client of Mr. Magladry. CMCC contracted with Productions to
design, install and tear down lighting for various exhibitions, and
productions. In order to fulfill certain aspects of the contract Workers needed
to be retained for particular exhibits and productions. Mr. Magladry stated
that CMCC would determine the number of Workers required and Mr. Magladry would
then contact the Workers from his roster of 20 to 30 technicians. The
contacted Workers were free to accept or decline to work at the CMCC; Workers
who declined were not penalized. If a Worker who accepted work was unable to
continue to work the Worker would contact the booking agent at CMCC, who would
in turn find a replacement Worker.
[4] Mr. Magladry stated that
the Workers worked without supervision from him and with very little
supervision from the CMCC. The Workers would not report to Mr. Magladry and he
was rarely, if ever, at the exhibits or projects. The instructions received
from CMCC were general instructions in regards to what, not how, work needed to
be completed. CMCC staff would assign roles to the Workers and require that the
Workers follow a dress code. Usually Workers needed to be dressed in all black,
but with high-end jobs CMCC requested the Workers to wear suits and on occasion
tuxedoes; CMCC would pay for the rental of tuxedoes. Mr. Magladry testified
that he did not pay for any of these items of clothing, nor did he reimburse
the Workers for any items. Mr. Magladry stated that CMCC had the control to
terminate a worker.
[5] Mr. Magladry testified
that the Workers did not work exclusively for Productions but worked for
various other competitors. The Workers were paid on the 1st and 16th
of each month. The Workers received an hourly wage and occasionally a flat rate
was negotiated. The Workers had to fill out two time sheets, one for CMCC and
one for Productions. CMCC and Productions reviewed the time sheets and the
Workers were paid accordingly. The tools used by the Workers consisted of a
flashlight, wrench and knife, all owned by the Workers. Additional equipment
was provided by CMCC on an as needed basis.
[6] In cross-examination Mr. Magladry
stated that he drafted the time sheets used by the Workers. He determined how
and when the Workers were paid. Mr. Magladry testified that he would bring
the cheques to the CMCC and he would place them in a cage in the hallway. Mr.
Magladry stated that CMCC set the hourly wage for the Workers, CMCC informed
him that the wage should be $16 per hour and that Productions could not
charge more than $20 per hour for each worker. Workers were guaranteed a
minimum of four hours work for each day they were called. Mr. Magladry
testified that CMCC wanted him to provide the Workers with certain guidelines.
These guidelines covered such areas as work attire, no drug use, meal breaks
and security check at the CMCC. Mr. Magladry conceded that he provided shirts
with the "David Magladry" logo to some of the Workers and that
approximately 4 to 5 Workers wore the shirts.
[7] Mr. Denis Daganais
testified that he has been working for the appellant from 1996 to 2002. He was
a booking agent at the CMCC from 1998 to 1999. He stated that an employee of
CMCC, Mark, would make a request for Workers and Mark would provide the start
and finish times. Mr. Daganais testified that during his time with the
appellant he worked for various other companies, as did other Workers. He stated
that there was no supervision of the Workers by Productions; however, the CMCC
curator would give directions. He testified that limited training was provided
on the initiative of CMCC. Mr. Daganais stated that he had the opportunity to
make a profit by negotiating a flat rate with the appellant. On
cross-examination Mr. Daganais conceded that a worker could not receive payment
for a replacement worker.
[8] Bill Sibitt, a witness for
the respondent, testified that his work at the CMCC was his primary source of
income in 2002. He stated that he has been self‑employed with other
companies. He did not negotiate with the appellant deductions from his pay
cheque. He stated that from 1999 to 2003 he received a flat rate once and at
all other times he was paid at an hourly rate.
[9] Counsel referred me to the reasons for
judgment, among others, of the Supreme Court of Canada in 671122 Ontario
Ltd. v. Sagaz Industries Canada Inc.
Major J. agreed with MacGuigan J.A. in Wiebe Door Services Ltd. v. Minister
of National Revenue,
that in considering the various tests to determine if an employer-employee
relationship exists, one must always search for the total relationship of the
parties. The various test are referred to as (1) control; (2) ownership of
tools; (3) chance of profit; and (4) risk of loss. A further test, the
integration test, has also been applied. This test asks the question “is the
person who has engaged himself to perform the services performing them as a
person in business on his own account?”
Control
[10] Respondent's counsel argued that the
Workers were subject to a degree of control and supervision. The Workers were
paid by the appellant, the appellant established when and how the Workers would
be paid. The Workers were required to prepare two time sheets, and were
required to wear clothing as instructed by the appellant. Further, the
appellant added his own additional guidelines to the CMCC's guidelines and
the Workers had to perform the services personally and could not hire others to
complete the work.
[11] The evidence does not lead to the
conclusion that a sufficient element of control existed. It appears that there
were general guidelines the Workers had to follow; however, once at the CMCC's
site, the Workers were not supervised by Mr. Magladry. Further, he did not
have the right to control the Workers once they were at the CMCC's site; the
Workers were controlled by employees of CMCC.
Ownership of Tools
[12] The evidence does reveal, and the Minister
does not deny, that the Workers supplied their own small tools, and that the
clients supplied the heavy equipment and other needed supplies.
Chance of Profit or Risk of Loss
[13] Respondent's counsel argued
that the Workers received payment from the appellant in the amount of $16 to $20
per hour and that therefore there was no particular risk of loss. In addition
the appellant had an agreement with the Workers that he would guarantee them
four hours of work.
[14] The set hourly wage is not
fatal. Although there was a set hourly wage the hours themselves were not set.
A project at CMCC could extend beyond the additional hours, be shorter than
expected or be cancelled. In addition, the Workers had no job security, no
union protection, and no hope for promotion; in this regard the profit and the
risk factors were theirs.
Integration
[15] The evidence shows that Workers are not an
essential or integral part of the appellant's business, but appear to be
complementary. The evidence shows that the Workers were free to refuse work and
occasionally did so. The evidence is that the Workers were not compelled to
exclusively work for the appellant. The Workers were temporary and once the
project was completed the Workers were released from their jobs. The Workers
would not stay with Productions or a client of Productions unless another
project was under way. If there were no projects, then they had to seek other
work in the market place.
[16] An examination of the total relationship of
the appellant and the Workers describes a relationship not of an employer and
its employees but of a person and independent contractors. Each Worker engaged
him or herself to perform services for Productions even though he or she may
not have entered into the contract in the course of an existing business being carried
on by that person.
[17] The appeals are allowed and the decision of
the Minister, on the appeals made to him, are vacated.
Signed at Ottawa, Canada, this 6th day of November, 2003.
Rip,
J.
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