Date: 20010726
Dockets:
2000-5066-EI,
2000-5068-CPP
BETWEEN:
RICCI MANUFACTURING
LTD.,
Appellant,
and
THE MINISTER OF
NATIONAL REVENUE,
Respondent.
Reasonsfor
Judgment
MacLatchy,
D.J.T.C.C.
[1]
These appeals were heard on common evidence on June 26, 2001 at
Toronto, Ontario.
[2]
The Appellant appealed a ruling to the Minister of National
Revenue (the "Minister") for the determination of the
question of whether or not the Workers identified in Appendix A
attached to the Reply to the Notice of Appeal were employed in
insurable and pensionable employment while engaged by the
Appellant for the respective periods identified in the said
Appendix A, within the meaning of the Employment Insurance
Act (the "Act") and the Canada Pension
Plan (the "Plan").
[3]
By letter dated June 30, 2000 the Minister informed the Appellant
that it had been determined that the engagement of the Workers by
the Appellant, during the periods in question, was both insurable
and pensionable employment for the reason that the Workers were
employed pursuant to contracts of service.
[4]
It was mutually agreed by the parties that the Appellant is a
Canadian controlled private corporation owned by Chi Chuen Cheng
and his wife, Wai Mui Fung, each owning 50% of the
Appellant's outstanding shares. Further, the Appellant
manufactured sports wear and golf shirts receiving work orders
for the manufacture of garments from its customers and provided
the Workers with employment. The Appellant's customers
provided the cut materials and specifications for the manufacture
of the garments and the Appellant was responsible for meeting the
quotas, deadlines and quality standards of the customers. The
Workers hired by the Appellant were sewing machine operators who
sewed the pieces of cloth together to create clothing for the
Appellant's customers. The Workers were paid bi-weekly by
cheque, based on a flat rate per piece produced as set by the
Appellant, the work being performed on the Appellant's
premises, that included plant with work stations each supplied
with a sewing machine and all the necessary tools and materials
needed by the Workers. The Appellant coordinated the day-to-day
operation of the plant and set the plant rules, scheduling access
to the sewing machines as well as the general administration of
the plant including the allocation of work and quality review.
The Workers were experienced operators who needed little direct
supervision but the Appellant retained the right to control and
supervise the work of the Workers. The Workers were not required
to own, maintain or insure the machinery or facilities used in
the performance of their services.
[5]
The question to be answered by this Court is whether or not the
Workers were engaged pursuant to contracts of service and were in
an employer/employee relationship or were engaged under contracts
for services and were independent contractors.
[6]
Using the guidance of the Federal Court of Appeal's
decision given in Wiebe Door Services Ltd. and M.N.R., 87
DTC 5025, the four-fold test should be addressed using the
evidence adduced. Further, examination of the overall
relationship existing between the Appellant and the Workers is
required.
Control
[7]
The Appellant owned the premises where the work was performed,
set the hours of access to the machines required by the Workers,
set the factory standards and insured the building and machines
and provided liability coverage on the building and machinery.
The president of the Appellant answered a questionnaire, as
requested, and stated the Workers could substitute other workers
to perform their duties but not without the
knowledge and approval of the Appellant: this is control. The
Workers could not perform other work on the premises other than
that assigned by the Appellant. The Workers were to follow the
routines and methods that are standard to the industry and must
meet the deadlines set by the Appellant. Although little control
or supervision was required with the Workers as they were all
experienced and seasoned Workers, such control was clearly
retained by the Appellant.
Tools
[8]
The major tool required by the Workers to perform their function
was owned by the Appellant, located in its plant and insured and
maintained by the Appellant. The Workers could use their own
scissors, tape measures, masks and ear protectors but these items
were also available at the Appellant's plant. The sewing
machine was the important tool used and the most expensive to own
and maintain.
Chance of
profit and risk of loss
[9]
The only improvement in "take home pay" for the
Workers was possible only if he or she worked faster and for
longer hours. Also, if the Appellant suffered a loss, it did not
fall on the Workers. Profits and losses in the business were
those of the Appellant. The Appellant paid for liability
insurance because it would be responsible for injury and/or
accidents, not the Workers.
Integration
[10]
Whose business is it? Clearly, it was the business of the
Appellant. It provided the materials, specifications and other
requirements of its customers in order that the Workers could
perform their services. The Appellant owned and operated the
business and the Workers merely performed their duties as
directed by the Appellant.
[11]
The Appellant may have thought the Workers were some type of
independent contractors, but the facts presented proved
otherwise. To determine the relationship existing, it is
necessary to look at the tests above together with examination of
the whole scheme that existed between the Appellant and the
Workers.
[12]
On balance, the evidence presented to this Court supports the
argument that the Workers were employed pursuant to contracts of
service and their employment is both insurable and
pensionable.
[13]
The appeals are dismissed and the decision of the Minister is
hereby confirmed.
Signed at Toronto, Ontario, this 26th day of
July 2001.
"W.E. MacLatchy"
D.J.T.C.C.
COURT FILE
NO.:
2000-5066(EI)
STYLE OF
CAUSE:
Ricci Manufacturing Ltd. and M.N.R.
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
June 26, 2001
REASONS FOR JUDGMENT
BY: Honourable Deputy Judge W.E.
MacLatchy
DATE OF
JUDGMENT:
July 26, 2001
APPEARANCES:
Agent for the
Appellant:
Steve Lau
Counsel for the
Respondent:
Scott Simser
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
2000-5068(CPP)
STYLE OF
CAUSE:
Ricci Manufacturing Ltd. and M.N.R.
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
June 26, 2001
REASONS FOR JUDGMENT
BY: Honourable Deputy Judge W.E.
MacLatchy
DATE OF
JUDGMENT:
July 26, 2001
APPEARANCES:
Agent for the
Appellant:
Steve Lau
Counsel for the
Respondent:
Scott Simser
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-5066(EI)
BETWEEN:
RICCI MANUFACTURING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the
appeal of Ricci Manufacturing Ltd. (2000-5068(CPP)) on
June 26, 2001 at Toronto, Ontario, by
the Honourable Deputy Judge W.E.
MacLatchy
Appearances
Agent for the
Appellant:
Steve Lau
Counsel for the
Respondent:
Scott Simser
JUDGMENT
The appeal is dismissed and the decision of the Minister is
confirmed in accordance with the attached Reasons for
Judgment.
Signed at Toronto,
Ontario, this 26th day of July 2001.
D.J.T.C.C.
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