Date: 20010508
Dockets: 2000-4546-EI,
2000-4547-CPP
BETWEEN:
VRATISLAV KUSKA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SOUTHAM INC.
o/a THE KINGSTON-WHIG STANDARD,
Intervener.
Reasonsfor
Judgment
Hamlyn, J.T.C.C.
[1]
The Appellant appealed a ruling to the Respondent for the
determination of the question of whether or not the Appellant was
employed in insurable employment while engaged by The
Kingston-Whig Standard, Division of Hollinger Newspapers Limited
Partnership (the "Payer") during the period of
January 1, 1999 to November 19, 1999 within the meaning of
theEmployment Insurance Act (the
"Act").
[2]
By letter dated June 29, 2000, the Respondent informed the
Appellant and the Payer that it had been determined that the
Appellant was not employed under a contract of service and
therefore, not an employee of the Payer during the period in
question, pursuant to paragraph 5(1)(a) of the
Act.
[3]
The Appellant also appealed a ruling to the Respondent for the
determination of the question of whether or not the Appellant was
employed in pensionable employment while engaged by The
Kingston-Whig Standard during the period of January 1, 1999
to November 19, 1999 within the meaning of the Canada
Pension Plan (the "Plan").
[4]
By letter dated June 29, 2000, the Respondent informed the
Appellant and the Payer that it had been determined that the
Appellant was not employed under a contract of service and
therefore not an employee of the Payer during the period in
question, pursuant to paragraph 6(1)(a) of the
Plan.
THE APPELLANT'S NOTICE OF APPEAL
[5]
The Appellant's Notice of Appeal reads as follows:
I disagree with Revenue Canada's decision. Specifics of my
case, as described in my appeal to the Minister, were not
properly evaluated and ruling of Canada Customs and Revenue
Agency, Appeals Division on my appeal to the Minister was based
on facts, which may not apply to my specific case.
I was not given opportunity to explain, support and justify my
claims.
Answers to Employee or Self-Employed test based on Canada
Customs and Revenue Agency instructions in pamphlet RC4110(e)
1219, as related to my specific situation,
indicated clearly that I was an employee of The Kingston-Whig
Standard and not a "dealer" or "independent
contractor".
I responded to The Kingston-Whig Standard employment
offer, as advertised in the "Employment"
section of The Kingston-Whig Standard. I was hired as an
employee, status of "dealer" or "independent
contractor" was not mentioned during the hiring process. I
was treated during duration of my employment as an employee and
only after about one year since I started working for The
Kingston-Whig Standard I was gradually, on certain occasions,
informed that I am not an "employee", although I was
always treated as an employee by The Kingston-Whig Standard
employees and by The Kingston-Whig Standard customers.
In my opinion classification of "dealer" or
"independent contractor", on which the ruling of Canada
Customs and Revenue Agency, Appeals Division on my appeal to the
Minister was based, did not apply to my case as was, on several
occasions, indirectly admitted even by The Kingston-Whig Standard
representatives.
THE MINISTER'S POSITION
[6]
In making his decision, the Respondent relied on the following
assumptions of fact:
(a)
the Payer operates a business of a daily local newspaper;
(b)
the Appellant was hired to deliver newspapers in determined
territory;
(c)
more specifically, the Appellant's duties were to purchase
and resell newspapers and deliver them six mornings per week;
(d)
the Appellant was hired under a written agreement;
(e)
the Appellant's duties took an average of two hours a
day;
(f)
the Appellant was able to choose his hours of work with the only
restriction that the newspapers had to be delivered by 6:30 a.m.,
Monday to Friday and by 7:30 a.m. on Saturday;
(g)
the Appellant did not report to the Payer's place of business
since the newspapers were left at a drop-off location;
(h)
the Appellant was paid $0.1325 cents per paper sold and
delivered;
(i)
the Appellant also received extra money (4 to 10 cents) when
promotional flyers or catalogues had to be delivered on his
route;
(j)
the Appellant received a $10.00 bonus for each new
subscriber;
(k)
the Appellant received no compensation when no newspapers had to
be delivered on Sunday or for other reasons;
(l)
the Appellant maintained a record of payment for the customers
since some of them paid him directly but others paid the Payer.
When the payments were received by the Payer, the Payer simply
passed along the Appellant's profit monthly, through direct
deposit;
(m) the
Appellant did not have to perform his services personally;
(n)
the Appellant was responsible for the salary of helper;
(o)
the Appellant was required to use his own vehicle and was
responsible for his car expenses;
(p)
the Appellant was covered by the "Independent Distributor
Accident Insurance" and premiums were paid totally by the
Appellant;
(q)
the Appellant was not supervised by the Payer;
(r)
the Appellant was not trained by the Payer;
(s)
the Appellant was responsible for resolving any complaints from
subscribers;
(t)
there was no contract of service between the Appellant and the
Payer.
THE INTERVENER'S SUBMISSION
[7]
The Intervener in relation to both appeals filed an intervention
on the submission the services were performed by the Appellant as
an independent contractor as opposed to an employee.
THE INTERVENER'S FACT SUMMARY
FROM THE FILED NOTICE OF
INTERVENTION
[8]
The Appellant and Intervener entered into an adult independent
sales contract on or about February 13, 1998.
[9]
The adult independent sales contract between the Intervener and
the Appellant specifies that the Appellant is an independent
contractor.
[10] The
contract between the Appellant and the Intervener contains,
inter alia, the following provisions:
(a)
the contractor may engage others to carry out the
contractor's responsibilities;
(b)
the contractor is free to deliver other publications and products
for other organizations;
(c)
the contractor will supply, maintain and operate at his expense
and risk all vehicles and equipment necessary to carry out the
contractor's responsibilities;
(d)
all payments made by the newspaper to the contractor shall be
made without statutory deductions in respect of income tax,
pension plan, employment insurance, workers' compensation and
the Ontario employers health tax.
[11] The
Appellant provided delivery services to the Intervener pursuant
to the adult independent sales contract from February 28, 1998 to
November 19, 1999.
[12] The
Intervener wholesales papers to the carriers including the
Appellant, and they in turn retail the papers to their
subscribers.
[13] The
Intervener provides no benefits at all for the carriers such as
health insurance, pensions or insurance.
[14] There are
no controls at all over the manner in which the newspapers are to
be delivered. The only guideline is that they are to be delivered
before 6:30 a.m. on weekdays and before 7:30 a.m. on
Saturdays.
[15] If the
carriers do not collect from the subscribers, then they incur a
loss.
SIGNIFICANT EVIDENCE
[16] The
Appellant responded to an advertisement placed in the employment
section of The Kingston-Whig Standard by The Kingston-Whig
Standard for adult carriers to earn extra income for early
morning delivery routes.
[17] The
Appellant was hired by The Kingston-Whig Standard to deliver
newspapers and was assigned a route.
[18] The
Appellant, an intelligent individual who described himself as a
writer, maintained he was not hired under a written agreement and
he did not accept the terms of any purported agreement.
[19] When
presented with Exhibit I-1, The Kingston-Whig Standard Adult
Independent Sales Contract dated February 13, 1998, the Appellant
identified his signature. This evidence adduced in
cross-examination raises serious issues of credibility in
relation to the Appellant's evidence-in-chief.
[20] The
Appellant stated he was closely supervised by the Payer and that
in the course of the engagement there was generated between his
home and The Kingston-Whig Standard a steady two-way stream of
communication of written messages, faxes and telephone calls.
[21] The
evidence of The Kingston-Whig Standard Reader and Sales Service
Manager was to the effect the carriers, including the Appellant,
carried on their delivery activity within set time guidelines and
collection procedures that were laid out by The Kingston-Whig
Standard for the carriers. In relation to this Appellant, the
Reader and Sales Service Manager said the Appellant, in the way
he carried out his duties, generated faxes, messages and
telephone calls on a continuing, frequent basis.
ANALYSIS
[22] In
general, the evidence indicates the route of the Appellant was
carried out generally in accordance with the Adult Independent
Sales Contract. However, the methods of the Appellant in carrying
out the contract and his approach to The Kingston-Whig Standard
created a high maintenance relationship between the parties. A
replacement carrier arrangement between the Payer and the
Appellant lead to a contractual breakdown with the Payer
discharging the Appellant from the contract.
THE ANAYLYSIS TO DETERMINE IF A
CONTRACT
OF SERVICE OR A CONTRACT FOR SERVICE
EXISTS
[23] Control
and supervision, the key question: Who had the right to control
the worker and the right to direct the worker?
[24] The
Appellant controlled when and how he did the work subject to the
Payer's delivery, collection and carrier replacement
requirements and guidelines. The Appellant was not required to do
the work personally. He could substitute his replacement at his
own expense. If he used a replacement supplied by the Payer, the
replacement cost to the Appellant was high. I have found the
relationship between the Appellant and the Payer was at a high
maintenance level. This high level of maintenance including a
carrier replacement problem caused the interaction between the
Appellant and the Payer to be strained and that eventually lead
to a breakdown in the contractual relationship.
[25] Ownership
of tools: Generally, if the employer supplies the tools, it
indicates control over the worker. The Appellant was provided by
the Payer with a delivery bag and customer collection cards and a
ring book. The Appellant provided all other supplies including a
delivery cart. He kept his records in his own computer and used
his own fax services to communicate with the Payer. If the
Appellant had chosen a motorized vehicle to pick up and deliver
his papers, that was his own choice and at his own cost. The
Appellant chose to pick up and deliver by walking.
[26] Profits
and losses: That is, the opportunity of profit and the risk of
losses based on the notion that in an employer-employee
relationship, an employee does not generally incur expenses and
does not bear any financial risk and has no chance of a profit.
The Appellant was paid a fee for each paper sold and delivered.
The Appellant by seeking out new subscribers was also paid $10.00
for each new subscriber.
[27] If the
Appellant failed to collect from subscribers he suffered losses.
The collection process was the responsibility of the Appellant
and if he managed it well he profited directly by its success.
The Payer did place certain requirements as to when collections
could be made.
[28]
Organization or integration test: That is, the analysis to
determine the ultimate question - whose business is it? It is
necessary to look and examine more than the surface
relationship.
[29] The
Appellant, in his operation of the paper route, was in business
for himself. When the papers were delivered and how the papers
were delivered was the Appellant's choice as long as the
Payer's delivery guidelines were followed. The contract
from the outset delineated a contract for service relationship
and the Appellant, notwithstanding his opening denial of entering
into the contract, entered into and signed the contract Exhibit
I-1 and understood it was a contract for services. The
Appellant's later position, after Exhibit I-1's entry
in evidence, was that the actual operation was the contract was
not the same as the contract entered into has not been
established. I conclude a contract for services was the basis of
the intrinsic contractual relationship in intent, form and
operation. The high level of interaction did not change the
relationship.
[30] While the
Appellant had to comply with the Payer's guidelines and
directives, The Kingston-Whig Standard had no control over the
Appellant's hours or whom he may have engaged to assist him.
Within The Kingston-Whig Standard's directives the Appellant
had a choice of how he performed the contract. The combined force
of all the elements is that the Appellant was in business for
himself wherein he contracted to sell and deliver the
Payer's newspapers.
DECISION
[31] The
Appellant was engaged with the Payer under a contract for
services. The appeals are dismissed.
Signed at Ottawa, Canada, this 8th day of May 2001.
"D. Hamlyn"
J.T.C.C.
COURT FILE
NO.:
2000-4546(EI)
2000-4547(CPP)
STYLE OF
CAUSE:
Vratislav Kuska and The Minister
of National Revenue and Southam Inc.
o/a The Kingston-Whig Standard
PLACE OF
HEARING:
Kingston, Ontario
DATE OF
HEARING:
May 1, 2001
REASONS FOR JUDGMENT
BY:
The Honourable Judge D. Hamlyn
DATE OF
JUDGMENT:
May 8, 2001
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Jade Boucher
Counsel for the
Intervener:
J. Michael Hickey
COUNSEL OF RECORD:
For the
Appellant:
Name:
Firm:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervener:
Name:
J. Michael Hickey
Firm:
Hickey & Hickey
2000-4546(EI)
BETWEEN:
VRATISLAV KUSKA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SOUTHAM INC.
o/a THE KINGSTON-WHIG STANDARD,
Intervener.
Appeal heard on common evidence with the appeal
of Vratislav Kuska (2000-4547(CPP)) on May 1, 2001 at
Kingston, Ontario, by
the Honourable Judge D. Hamlyn
Appearances
For the
Appellant:
The Appellant himself
Counsel for the Respondent: Jade
Boucher
Counsel for the
Intervener: J. Michael
Hickey
JUDGMENT
The
appeals are dismissed and the decision of the Minister is
confirmed.
Signed at Ottawa, Canada, this 8th day of May 2001.
J.T.C.C.
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