Date:
20010723
Dockets:
2000-975-CPP,
2000-976-EI
BETWEEN:
RANDY REBER,
Appellant,
and
THE MINISTER OF
NATIONAL REVENUE,
Respondent.
Reasons for
Judgment
Porter,
D.J.T.C.C.
Introduction
[1] These appeals were heard on common evidence by consent of
the parties on the 2nd of November 2000 at Calgary,
Alberta.
[2] The Appellant has appealed from the decisions of the
Minister of National Revenue (the "Minister") dated the
September 7, 1999 that his employment with Scuka Enterprises Ltd.
(the "Company") from November 2, 1998 to December 31,
1998 and with Scuka Enterprises (Alberta) Ltd. (also called the
"Company") from January 1, 1999 to March 11, 1999 was
both insurable under the Employment Insurance Act
(the "EI Act") and pensionable under the
Canada Pension Plan (the Plan") for the
following reason:
It has
been decided that this employment was insurable/pensionable for
the following reason: you were employed under a contract of
service and therefore you were Scuka Enterprises [(Alberta)]
Ltd.'s employee.
The
decisions were said to be issued pursuant to section 93 of the
EI Act and section 27.2 of the Plan and were based upon
paragraph 5(1)(a) of the EI Act and 6(1)(a)
of the Plan respectively.
[3] The material facts reveal that the Appellant was a
journeyman tower crane operator and a journeyman crane operator.
He was engaged by the company to erect, operate, maintain and
dismantle a crane on a hotel building site in the Lethbridge area
over the periods in question. He maintained that he was
engaged as an independent contractor under a contract
for services. The Minister has decided to the
contrary that he was an employee operating under a contract
of service. That is the issue between the
parties.
[4] The manner in which the Court should go about deciding
whether any particular working arrangement is a contract
of service and thus an employer/employee
relationship or a contract for services and thus an
independent contractor relationship, has been clearly laid out by
the Federal Court of Appeal in Wiebe Door Services Ltd. v.
M.N.R., 87 DTC 5025. The test to be applied has been
further explained by that Court in Moose Jaw Kinsmen Flying
Fins Inc. v. M.N.R., 88 DTC 6099. There are,
following these cases, numerous decisions of this Court, which
demonstrate how these appellate guidelines have been
applied. In the Moose Jaw Kinsmen Flying Fins
Inc. case, above, the Federal Court of Appeal said
this:
[Analysis]
The
definitive authority on this issue in the context of the Act, is
the decision of this Court in Wiebe Door Services Ltd. v. The
Minister of National Revenue, 87 DTC 5025. MacGuigan J.
speaking on behalf of the Court, analyzed Canadian, English and
American authorities, and, in particular, referred to the four
tests, for making such a determination enunciated by Lord Wright
in City of Montreal v. Montreal Locomotive Works
Ltd., [1974] 1 D.L.R. 161 at 169-70. He concluded at
page 5028 that:
Taken thus in
context, Lord Wright's fourfold test [control, ownership of
tools, chance of profit, risk of loss] is a general, indeed an
overarching test, which involves "examining the whole of the
various elements which constitute the relationship between the
parties". In his own use of the test to determine the
character of the relationship in the Montreal Locomotive Works
case itself, Lord Wright combines and integrates the four tests
in order to seek out the meaning of the whole
transaction.
At page
5029 he said:
... I
interpret Lord Wright's test not as the fourfold one it is
often described as being but rather as a four-in-one test with
emphasis always retained on what Lord Wright, supra, calls
"the combined force of the whole scheme of
operations," even while the usefulness of the four
subordinate criteria is acknowledged.
At page
5030 he had this to say:
What must
always remain of the essence is the search for the total
relationship of the parties.
He also observed
"there is no escape for the trial judge, when confronted
with such a problem, from carefully weighing all the
facts."
... like
MacGuigan J. we view the tests as being useful subordinates in
weighing all of the facts relating to the operations of the
Applicant. That is now the preferable and proper approach
for the very good reason that in a given case, and this may well
be one of them, one or more of the tests can have little or no
applicability. To formulate a decision then, the overall
evidence must be considered taking into account those of the
tests which may be applicable and giving to all the evidence the
weight which the circumstances may dictate.
[5] The nature of the tests referred to by the Court can be
summarized as follows:
a) The degree or absence of
control exercised by the alleged employer;
b) Ownership of tools;
c) Chance of profit and risk
of loss;
d) Integration of the
alleged employee's work into the alleged employer's
business.
[6] I also take note of the further words of MacGuigan J., in
the Wiebe case, above, where he approved the approach
taken in the English courts:
Perhaps
the best synthesis found in the authorities is that of Cooke J.
in Market Investigations, Ltd. v. Minister of Social
Security, [1968] 3 All E.R. 732, 738-9:
The
observations of Lord Wright, of Denning L.J., and of the judges
of the Supreme Court in the U.S.A. suggest that the fundamental
test to be applied is this: "Is the person who has engaged
himself to perform these services performing them as a person in
business on his own account?" If the answer to that question
is "yes", then the contract is a contract for
services. If the answer is "no" then the contract
is a contract of service. No exhaustive list has been
compiled and perhaps no exhaustive list can be compiled of
considerations which are relevant in determining that question,
nor can strict rules be laid down as to the relative weight which
the various considerations should carry in particular
cases. The most that can be said is that control will no
doubt always have to be considered, although it can no longer be
regarded as the sole determining factor; and that factors, which
may be of importance, are such matters as whether the man
performing the services provides his own equipment, whether he
hires his own helpers, what degree of financial risk be taken,
what degree of responsibility for investment and management he
has, and whether and how far he has an opportunity of profiting
from sound management in the performance of his task. The
application of the general test may be easier in a case where the
person who engages himself to perform the services does so in the
course of an already established business of his own; but this
factor is not decisive, and a person who engages himself to
perform services for another may well be an independent
contractor even though he has not entered into the contract in
the course of an existing business carried on by him.
[7] To this I would add the words of Décary, J.A. in
Charbonneau v. Canada (M.N.R.) [1996] F.C.J. No.
1337, where speaking for the Federal Court of Appeal he said
this:
The tests laid down by
this Court ... are not the ingredients of a magic formula.
They are guidelines which it will generally be useful to
consider, but not to the point of jeopardizing the ultimate
objective of the exercise, which is to determine the overall
relationship between the parties. The issue is always, once
it has been determined that there is a genuine contract, whether
there is a relationship of subordination between the parties such
that there is a contract of employment ... or, whether there is
..., such a degree of autonomy that there is a contract of
enterprise or for services. ... In other words, we must not pay
so much attention to the trees that we lose sight of the forest.
... The parts must give way to the whole.
[8] In the case of Vulcain Alarme Inc. v. The Minister of
National Revenue, (1999) 249 N.R. 1 in which the Federal
Court of Appeal revisited the issue. Létourneau J.A. said
this:
...
These tests derived from case law are important, but it should be
remembered that they cannot be allowed to compromise the ultimate
purpose of the exercise, to establish in general the relationship
between the parties. This exercise involves determining
whether a relationship of subordination exists between the
parties such that the Court must conclude that there was a
contract of employment within the meaning of art. 2085 of the
Civil Code of Quebec, or whether instead there was between
them the degree of independence which characterises a contract of
enterprise or for services....
He also
said later in the same Judgment:
A
contractor who, for example, works on site on a subcontract does
not serve his customers but those of the payer, that is the
general contractor who has retained his services. The fact
that Mr. Blouin had to report to the plaintiff's premises once a
month to get his service sheets and so to learn the list of
customers requiring service, and consequently the places where
his services would be provided, does not make him an
employee. A contractor performing work for a business has
to know the places where services are required and their
frequency just as an employee does under a contract of
employment. Priority in performance of the work required of
a worker is not the apanage of a contract of employment.
Contractors or subcontractors are also often approached by
various influential customers who force them to set priorities in
providing their services or to comply with the customers'
requirements.
And:
...
Although Mr. Blouin's income was calculated on an hourly basis,
the number of hours of work were determined by the number of
service sheets he received from the plaintiff. Mr. Blouin
and his company thus had no guaranteed income. Unlike the
technicians working as employees within the plaintiff's business,
whose weekly salary was constant, Mr. Blouin's income fluctuated
with the service calls. In fact, towards the end of his
contract with the plaintiff Mr. Blouin was no longer doing the
equivalent of forty hours a month as he was receiving few service
sheets.
Further,
Mr. Blouin, who used his own vehicle for work, had to pay the
losses resulting from an accident in which he was involved and
obtain another vehicle.
The
Facts
[9] The Minister was said in the Replies to the Notices of
Appeal to admit the following facts from the Notice of
Appeal:
(i) During the period in
question, the payor's name was Scuka Enterprises Ltd. (November
2, 1998 to December 31, 1998);
(ii) The Appellant provided
his services as a qualified crane operator for the construction
site in Lethbridge, Alberta.
(iii) The Appellant personally
performed the service, but was not limited to performing the
service himself.
(iv) The payor advised the
Appellant when he was required on site.
(v) The Appellant provided tools to
service the tower crane.
(vi) The Appellant determined when
repairs to the crane were necessary and arranged for those
repairs.
(vii) During the period from January 1,
1999 to March 1, 1999 the name of the payor was Scuka Enterprises
(Alberta) Ltd.
[10] In
deciding as he did, the Minister was said in the Replies to the
Notice of Appeal, to have relied upon the following assumptions
of fact:
(a) the facts as
admitted above;
(b) the Appellant
was not related to the Payer;
(c) the Payer is
a general contrator for the construction of buildings;
(d) the
Payer's business is not seasonal;
(e) the Appellant
did not have an investment or financial interest in the
Payer;
(f) the
Appellant provided services to the Payer for one project, the
construction of the Ramada Inn in Lethbridge, Alberta;
(g) the
Appellant's duties included:
(i) the erection
of the crane;
(ii)
checking and signing off of the engineering design for the crane
base;
(iii) inspecting location for
erection;
(iv) supervising the
unloading and building of the crane;
(v) crane operation
(planning and hoisting of lifts);
(vi) crane maintenance
consisting of daily adjustments and inspections and weekly and
monthly inspections;
(vii) dismantling of
the crane by supervising and assisting in dismantling and loading
of the crane;
(h) the Appellant
is a journeyman tower crane operator and journeyman crane
operator;
(i) the
Appellant possesses a Journeyman Tower Crane Certificate and a
Journeyman Crane Operator Certificate;
(j) the
Appellant did not perform the services as a union
worker;
(k) for the
period November 2, 1998 to December 31, 1998 the Appellant was
remunerated through Scuka Enterprises Ltd.;
(l) for the
period January 1, 1999 to March 11, 1999 the Appellant was
remunerated through Scuka Enterprises (Alberta) Ltd.;
(m) the Appellant was
paid an hourly rate of $36.00;
(n) the Appellant
was paid bi-weekly;
(o) the Appellant
was paid by cheque;
(p) the Appellant
submitted invoices to the Payer;
(q) the Appellant
received the following payments in 1998 and 1999:
Date
of
Period
Amount
Date Paid Cheque
No.
Invoice
Nov 17,
1998 Nov
2-15
$3,852.00
Nov 19, 1998
3498
Dec 2,
1998
Nov
15-30
4,086.00
Dec 9,
1998
3528
Dec 21,
1998 Dec
1-15
3,960.00
Dec 21,
1998
3549
Jan 3,
1999
Dec
16-31
2,880.00
Jan 6,
1999
3570
Jan 17,
1999
Jan
1-15
3,492.00
Jan 20,
1999
53
Feb 2,
1999
Jan
16-31
4,266.00
Feb 2,
1999
57
Feb 16,
1999 Feb
1-15
3,528.00
Feb 17,
1999
72
March 3,
1999 Feb
16-28
3,132.00
March 4, 1999 78
March 12,
1999 Mar
1-11
3,186.00
March 15, 1999 90
(r) the Appellant
did not have set hours of work;
(s) the Payer
would notify the Appellant when he was required;
(t) the
Appellant would remain on the job site until duties for the day
were completed;
(u) the Appellant
and the Payer did not have a written contract;
(v) the Payer did
not have other workers that performed the same services as the
Appellant;
(w) Worker's
compensation insurance was carried by the Payer;
(x) the Appellant
did not incur expenses in the performance of his duties but did
incur expenses for motor vehicle, telephone and miscellaneous
expenses;
(y) the Payer had
first right to the Appellant's services;
(z) the
Payer's site supervisor monitored the Appellant's
work;
(aa) the Payer's site
supervisor checked the quality of the Appellant's
work;
(bb) the Payer's site
supervisor had the authority for the final say on the
project;
(cc) the Payer supplied,
owned and insured the crane;
(dd) the Payer provided the
Appellant with the workers required to assemble and disassemble
the crane;
(ee) the crane is worth
approximately $80,000;
(ff) parts for
the crane, lifting slings, oil and grease were supplied by the
Payer;
(gg) the Appellant did not
charge the Payer GST.
[11] The Appellant gave evidence on his own behalf. He agreed
with all of the assumptions of fact, save and except items (s),
(t), (v), (y), (z), (bb), (dd) and (ff).
[12] With respect to items (s) and (t), the Appellant was quite
adamant in asserting that whilst the company would let him know
when his services were needed on site, he himself would decide
whether it was safe to operate the crane in the prevailing
weather conditions or safe for any other reason.
[13] With respect to item (v), the Minister was correct in
asserting that the company did not have other workers who
performed the same services as the Appellant. He, however, had
arranged with a friend of his to work "back up" on the
crane if, for any reason, he himself could not work. In fact,
that never occurred.
[14] With regard to item (y), the Appellant was of the view that
he could leave the job whenever he chose and the crane would
close down. It is clear, however, that he would have had to make
arrangements for down-time with the site supervisor beforehand or
in the alternative, find a replacement operator.
[15] With respect to item (z), the evidence revealed that the
Appellant had certain skills, reflected in his holding 2
journeyman's certificates, which clearly the site supervisor
would not have. Thus, the Appellant, once engaged, was
responsible to ensure both that the crane was put together in a
safe way and that thereafter it was operated safely. His
decision, for instance, that it would be unsafe to operate
because of high winds would be final. Nonetheless, he had to
liaise with the site supervisor or his delegates on the use to
which the crane would be put on a daily basis. Thus, the
supervisor would call for what he needed before the construction
and when he needed it and the Appellant would then fill those
requirements within the bounds of his own professional
competence. To this extent, how he performed his work was
monitored by the supervisor who would expect his requirements to
be met, subject to the safety issues, which were in the exclusive
domain of the Appellant. If, however, the Appellant had not met
the needs of the project, he would have been let go and another
operator brought in.
[16] This leads to the question of the final say, which the
Minister asserted in item (bb) rested with the site supervisor.
It is clear from the evidence that this would not extend into
safety issues. If, however, there were two loads to be lifted,
then subject to safety issues, the site supervisor, on the
evidence, had the authority to say which went first. It was the
same with respect to the days worked on the site, time off or
anything else.
[17] With respect to item (dd), the Appellant took issue with
the assumption of fact made by the Minister that the Company
provided the workers to assemble or disassemble the crane. In
fact, it seems the Appellant selected these people but they were
paid by the Company. The Appellant did not engage them himself as
employees or subcontractors. They were only taken on by him on
behalf of the Company. Thus, in my view, the Minister was correct
in his assumption.
[18] With respect to item (ff), it is clear from the evidence
that all the major parts for the crane were supplied by the
Company as assumed by the Minister. However, it is true that the
Appellant on one occasion supplied some brake pads, of a value of
$15.00, out of his own pocket. There was no evidence about
lifting slings or oil and grease.
[19] It
is clear from the evidence generally that the Appellant had the
expertise on the site, around all matters relating to the crane.
The contractor had not apparently used a crane beforehand and
thus relied to a great extent on the expertise of the Appellant.
The latter oversaw the construction of the crane from the ground
up and had to sign off on the engineering papers. He had some
special tools for torquing the special bolts on the crane, which
he had borrowed from a friend for a fee of $40.00, which he paid
himself. He used them to torque these bolts to special standards.
He kept a log book in this respect. Others who were engaged by
the company actually lifted up parts of the crane and put them in
place under his direction and he would then finalize the bolting
together of the pieces.
[20] It
was apparent that in addition to the torquing tools which he
brought to the job, the Appellant also owned some electrical
calibrating machines of a value of $150.00 and his own basic
wrenches, screwdrivers, pliers and grease gun.
[21] The Appellant said that this was the first time he had
taken on a non-union job, branching out and doing something on
his own, and that he was wanting to start up his own business. He
had no business license. He said that he called his business
Hooker Enterprises. However, he had done nothing formal in this
respect. He carried no insurance. That was basically his
evidence.
Application of the 4 Part Test to the
Evidence
[22] The law is clear that it is not the name given to any
particular working relationship, that is all important, but
rather the Court must look at the substance of the arrangement.
If the parties decide to call their arrangement by any particular
name, the Court should no doubt give due deference to their
choice, if the evidence reveals no reason to derogate from that
choice. If, however, the true substance of the arrangement does
not accord with the title put upon it by the parties, then it is
the substance which the Court must look. In this case, I note
that there is no clear evidence of any title put upon the
arrangement by the parties themselves. The contract was one of
$36.00 per hour for work performed. It was an oral contract and
nothing was reduced to writing. The Appellant had put his own
title upon the arrangement, that of independent
contractor.
[23] Control: I remind
myself that it is not the actual control exercised by a payor
that is so important in these situations as the right to control.
The more qualified and professional any particular worker is with
respect to his field of work, the less likely he or she is to be
actually controlled on a day by day basis. However, it is the
right to control that work that to which the Court must
look.
[24] It
is clear here that the Appellant had considerable say in how the
crane was operated. He could close the crane down for safety
reasons any time he chose. I doubt that he could have closed it
down, very long, for any other reason. The Company had
considerable say through the site supervisor as to what went up
and down by crane in any particular day. In addition, if the
Company wished to shut the crane down for any amount of time, it
could have done so and the Appellant would have had no
say.
[25] Thus, it seems to me that the Company had a considerable
amount of control reserved unto itself in this situation and
superimposed onto that was an element of 'say' reserved to
the Appellant within his professional realm. On the whole, I tend
to view this aspect of the test as balancing towards an employee
situation.
[26] Tools and Equipment: The crane itself was provided by the Company. That was the
major operating piece of equipment. Clearly, if the Appellant
came on site with his own crane, he would likely be operating his
own business. However, he did not. He brought some tools which he
rented or borrowed from a friend for $40.00, some electrical
calibrating equipment upon which he placed a value of $150.00,
and he had some wrenches, pliers and screwdrivers. This would be
no different from any truck driver or carpenter carrying out
regular employment duties. The Appellant had no significant
investment in any tools or equipment to enable him to carry out
this work. Clearly, the Company did have a significant
investment.
[27] In
my view, this aspect of the test points far more clearly to a
contract of service than a contract
for services with an independent
contractor.
[28] Profit and Loss: The Appellant was able to earn more money, the more hours
he worked. That in itself is not considered profit in the
sense of this aspect of the test. He stood to lose nothing in the
entrepreneurial sense had no capital or investment at risk and in
the course of his work, he did not stand to lose money. He
carried no insurance. Whilst if he had been negligent in carrying
out his duties, he might have been sued, he would no doubt have
been sued in an employee capacity whereby the Company itself
would be liable for his negligence. There was absolutely nothing
in the evidence to suggest that the Appellant stood to make a
profit or suffer a loss in any entrepreneurial sense. This aspect
of the test clearly, in my view, points to an employee situation
working under a contract of service.
[29] Integration: Lastly, one must look at the situation in order to see
whose business it was. Clearly, the Company was in business for
itself. It was in the contracting business, building a hotel. The
question must be looked at, however, from the point of view of
the Appellant. He was operating a crane. Was he doing so as part
of his business or was this work part and parcel of the business
of the Company? Clearly, it could go either way, depending on the
circumstances. The Company had not operated with a crane
previously. It had no experience in that field. The Appellant
clearly did have experience in this field and that was the reason
that the Company engaged him. There is no evidence to suggest
that the Appellant had ever worked other than as an employee
doing his work previously. In fact, the evidence was that he had
always worked as an employee. Whilst there can always be a first
time for anything, there is nothing to suggest that the way in
which the Appellant went about his work on this project was any
different to the way he had always gone about it beforehand. He
worked as a crane operator and there was nothing in the evidence
to suggest that he had on this project done anything to move his
work into an entrepreneurial situation, whereby one can say that
he was in business for himself. It seems to me that his business
was totally integrated and reliant upon the business of the
Company. This aspect of the test quite clearly, in my view,
points to a situation of a contract of
service.
Conclusion
[30] When I look not just at the individual trees, which all
indicate a contract of service in this situation, but also to the
forest as a whole, I see nothing but an employee, albeit a highly
skilled one, working for an employer. In my view, the Minister
was correct in arriving at the decisions which he did, and the
appeal is accordingly dismissed.
Signed at Calgary,
Alberta, this 23rd day of July 2001.
D.J.T.C.C.
Email this Content