Date: 19991006
Docket: 98-898-UI, 98-899-UI, 98-135-CPP, 98-136-CPP
BETWEEN:
BLUES TRUCKING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Rowe, D.J.T.C.C.
[1]
On June 22, 1998 the Minister of National Revenue (the
"Minister") decided Terry Insley - the worker - was
employed in insurable employment with the appellant - Blues
Trucking Inc. (BTI) - during the period from November 25 to
December 29, 1997 by reason that Insley was employed under a
contract of service with BTI - the payor - pursuant to paragraph
5(1)(a) of the Employment Insurance Act. The
appellant appealed - 98-898(UI) - from that ruling. On June 22,
1998 the Minister also decided the appellant was liable to pay
Canada Pension Plan contributions on earnings paid to the worker
for the same period on the basis he was employed under a contract
of service pursuant to subsection 27(5) of the Canada Pension
Plan. The appellant appealed - 98-135(CPP) - from that
decision.
[2]
On June 22, 1998 the Minister decided Larry Hansford - the worker
- was employed in insurable employment with the appellant - Blues
Trucking Inc. (BTI) - during the period from July 29, 1997 to
January 15, 1998 by reason that Hansford was employed under a
contract of service with BTI - the payor - pursuant to paragraph
5(1)(a) of the Employment Insurance Act. The
appellant appealed - 98-899(UI) - from that ruling.
On June 22, 1998 the Minister also decided the appellant was
liable to pay Canada Pension Plan contributions on earnings paid
to the worker during the same period on the basis he was employed
under a contract of service pursuant to subsection 27(5) of the
Canada Pension Plan. The appellant appealed - 98-136(CPP)
- from that decision.
[3]
Counsel for the parties agreed the employment insurance appeals
would be heard together and the result - in each case - would
apply to the relevant Canada Pension Plan appeal.
[4]
Counsel for the parties agreed that a Book of Exhibits be filed
as Exhibit A-1 with tabs 1-12, inclusive and a reference to a tab
number will mean it refers to a document in Exhibit A-1.
[5]
Patricia Budnick testified she is a businesswoman residing in
Martensville, Saskatchewan and has been at all relevant times a
shareholder and director of BTI incorporated in May, 1996. Prior
to incorporation, she and her husband operated the same business
as a partnership. She stated BTI had a contract with Temorvil
Services (1974) Ltd. (Temor) to haul oil and water from various
sites. While there were other companies operating in the oil
industry around the Macklin, Saskatchewan area, BTI worked only
for Temor. The contract with Temor had been in writing prior to
1996 but thereafter the relationship continued on the same terms
as were in the formal agreement which contained a provision that
BTI would not compete with Temor for a certain length of time
following the end of their business relationship. BTI owned the
power units or tractors and Temor owned the trailers. Several oil
companies, including Wascana Energy Inc. (Wascana) had entered
into a contract with Temor to haul oil and water from tanks
located at various places and to haul the load to a collection
facility known as a battery. Once levels in a tank reached a
certain point then an employee of Wascana would call one of the
BTI drivers to haul either water or oil to the battery or to
another designated facility if a test performed on the oil
required it to be transported to a special battery. Patricia
Budnick stated the BTI drivers were required to meet
industry standards and had to hold a Class 1 license. In
addition, certain certificates were required which involved
passing certain safety courses relevant to oilfield work. BTI did
not pay for any of these courses and drivers were required to
become qualified on their own efforts. Insley entered into a
contract with BTI - Tab 7 - and Hansford signed an
identically worded agreement - Tab 6 - with BTI. Hansford - a
qualified mechanic - also did repairs for BTI. Budnick stated BTI
received two letters - both dated April 3, 1998 - (Tabs 1 and 2)
- advising that the Department of Human Resources Development had
requested a ruling from Revenue Canada on the insurability and
pensionability of each worker and the resultant ruling was that
each worker was considered to be an employee under a contract of
service with BTI. The appellant corporation requested a
determination pertaining to each worker and decisions were issued
by the Minister finding that each worker had been engaged in
insurable and pensionable employment. Budnick stated the only
employees of BTI - in her opinion - at the relevant time were
herself and her husband, Terry Budnick who held a Class 1 license
but no longer worked as a driver. BTI owned four tractor units
and they were operated 24 hours a day - 7 days a week. As a
result, each unit required two or three operators - working
different shifts - to ensure there was always a driver in charge
of a power unit. Operators were assigned to a particular tractor
but no scheduling of hours of work was done by BTI and hours were
not recorded as the concern of BTI was only with regard to
ensuring the contract between it and Temor was carried out.
Hansford had extensive oilfield experience as a driver and a
dispatcher. Temor had no dispatchers in the Macklin area and an
oil company would post a list at the battery scheduling loads to
be hauled. As an example of the method of operation, Budnick
explained Wascana employees, after checking fluid levels at
various wells, would return to the battery and create a list of
wells requiring service without assigning any priority to the
sites. The BTI drivers would then consult the list and start to
haul from as many of the sites as could be serviced within a
12-hour shift. Another driver - assigned to that same tractor -
would take over and continue to haul from the locations set forth
on the list. A new list was issued each morning and Wascana
workers would check the wells every day. BTI did not supervise
the drivers and Patricia Budnick or her husband might not be in
the oilfield itself for two or three months unless required to
attend for some particular reason. Patricia Budnick stated Terry
Insley - who had responded to an advertisement placed by BTI -
had no oilfield experience but at the time this was not unusual
within the industry. Temor had contracts with corporations and
individuals operating under business or trade names and BTI had
entered into a contract with Kirwer Holdings Ltd. and another
corporation to operate BTI power units and invoices - Tab 10 -
were submitted by those limited companies to BTI. Patricia
Budnick referred to Tab 9 containing various invoices which had
been submitted to BTI by Hansford. These were issued once per
month and, pursuant to Schedule A of the contract, were based on
a percentage of gross revenue - usually 30% - earned by him
hauling certain loads using the BTI tractor while carrying out
the contract between BTI and Temor. At page 3 of Tab 9, Budnick
pointed to an invoice issued by BTI to Hansford in which BTI
charged him the sum of $180.00 - inclusive of GST - as a result
of BTI having to pay for the clean-up of a small oil spill -
which had been caused by Hansford - at a wellsite. Wascana had
hired a firm to clean up the spill and had charged the cost to
Temor which then passed the expense on to BTI and it, in turn,
deducted the amount from payment to Hansford. In addition,
Hansford billed BTI - at the rate of $16.00 per hour - for
mechanical work done by him on BTI equipment. He owned his own
tools and performed the work - at his choosing - entirely
according to his own timetable during periods when he was not
working as a driver. During one period, Hansford worked 23
consecutive days - as a driver - and if any driver wanted to take
time off then he would arrange to do so with the other drivers.
At the outset, all drivers were informed by either Patricia
Budnick or her husband that they were to arrange their own
schedules and for determining when they could take time off the
job and Terry Insley - who had inquired about days off - was
advised he had to deal with the other drivers. All operators were
specifically advised they were not going to be treated as
employees of BTI and none of the usual deductions would be taken
from their pay. The drivers were encouraged to register under the
provisions pertaining to Goods and Services Tax even though the
transporting of the oil and/or water was zero-rated for GST
purposes and Temor had provided a copy of a letter issued by
Revenue Canada to that effect (Tab 11). Any new drivers had to be
added specifically to the BTI insurance policy by way of special
endorsement. All operators on the tractor units had to perform
routine maintenance. Terry Budnick was qualified to do mechanical
work on the units. The invoices sent to BTI by Hansford were on
Temor letterhead because he had borrowed some blank time sheets
from Temor. On occasion, a tractor and trailer was required to be
on stand-by and BTI then charged an hourly rate to Temor which -
in turn - billed Wascana but the particular operator during that
shift still received only the agreed percentage of the total
revenue generated by the unit without regard to whether it was
generated by actual hauling or otherwise. Terry Insley - between
November 25 and December 29, 1997 also submitted invoices to BTI
(Tab 8). Insley had no experience and an agency of the
Saskatchewan government dealing with social services requested
BTI to pay an advance on salary and moving expenses to which
Patricia Budnick responded that he was not an employee. Patricia
Budnick stated while BTI did not pay any Workers'
Compensation Board premiums directly, Temor paid the relevant
levy and then deducted that amount from payment to BTI. The
operators did not belong to any union. On occasion - as shown by
documents at Tab 5 - certain drivers were charged for damage
caused by them to BTI equipment. The earnings of drivers varied
as some were more efficient and could haul more loads within the
same time period. Most of the operators owned their own tools,
safety equipment and special clothing. They had to do their own
oil changes - using the BTI shop - and BTI paid for all oil and
fuel costs. One of the tractor units was equipped with a cell
phone and someone from the BTI office could contact the driver
who would use the two-way radio installed in the tractor to pass
on a message to the appropriate person. Each tractor was equipped
with a radio so Wascana could be in contact and the operators
could then communicate with each other to determine whether or
not there would be any need to re-arrange the order of attendance
at the wellsites on the list provided by Wascana as sometimes
there might be a reason for one of the units to be behind
schedule on a particular day and it would need help from other
operators to finish the assigned hauls.
[6]
In cross-examination, Patricia Budnick stated the distance
between Saskatoon - the place of residence of herself and her
husband - was 250 kilometres from the municipality of Macklin.
However, Terry Budnick had an apartment in Macklin and BTI also
rented a shop in which to store tractor units not in service and
to use for making repairs. There was no office, as such, but
there was a telephone. The apartment was more economical than
renting motel rooms which, on occasion, were difficult to obtain
and her husband also used the apartment when he went snowmobiling
in the Macklin area. Terry Budnick, as a qualified mechanic,
often did repairs on BTI equipment that were beyond routine
maintenance. In the event one of the operators had a problem,
Terry Budnick would receive a call and if a mechanical difficulty
could not be resolved then the unit would be brought to the shop
in Macklin. In the event Terry Budnick did not wish to undertake
the necessary repairs to any unit, he would contact Hansford to
see if Hansford wanted to do the work but the priority of
Hansford was to haul the loads and sometimes he would be unable
to devote the time to the mechanical repair and the unit would
have to be taken into Saskatoon to an independent truck repair
facility. The drivers - Hansford and Insley - drove the same
tractor unit. Any calls charged to the cell phone assigned
to the truck that were discovered to be of a personal nature
would be charged back to the relevant person and an example of
that is found at Tab 8 where Insley was billed $20.00 for
telephone charges. Budnick stated Insley received an advance
after working only a few days and Hansford, on occasion, would
receive advances. In August 1997, Hansford received an advance of
$2,500.00 but the policy of BTI was never to advance funds in
excess of what an operator had earned to that point within a
payment period. The individual loads hauled by operators were
recorded in ticket books supplied by Temor and they were filled
in - in quintuplicate - in the manner required, by the drivers
for each load and two copies were left at the Wascana
wellsite. At the end of each month, each driver would turn in a
book and Temor would receive a copy and payment would be made to
BTI based on the details entered in each driver's book. There
was a metering system in effect at the wellsite and oil was
always hauled separately from water. The price for hauling the
oil was set by Wascana in the contract with Temor and that - in
turn - dictated the price to be paid by Temor to BTI and then to
the operators based on a percentage of the Temor payment. On
occasion, the price to haul oil and/or water was $1.80 per cubic
metre but other times the rate for hauling oil was higher and the
rates were set as a result of negotiation between Temor and BTI.
Hansford and Insley received a fixed percentage of gross revenue,
which was unrelated to the price of oil in the world market.
During the duration of any contract between Wascana and Temor -
and then Temor and BTI - the price was agreed upon at the outset
and any increase in the price of oil did not lead to any increase
in the amount charged for hauling either oil or water from the
wellsites. The contracts between Wascana and Temor usually had a
two-year term. Patricia Budnick stated a main battery site
owned by Wascana might have 15 or 20 employees. The list of
wells needing product hauled would be posted on the bulletin
board at the battery, probably each morning but the list was
never-ending in the sense it was continuously added to, on a
daily basis, as the need arose. The drivers worked out an
arrangement between themselves as to scheduling work hours and
the location where they would meet to change over driving duties
and that changeover might well occur at a satellite battery of
Wascana in a secluded location in the bush. Hansford had been
employed earlier in his career as a dispatcher for Temor.
Patricia Budnick stated she was not particularly aware of the
extent of engaging drivers - as independent contractors - within
the industry but BTI paid a higher percentage of gross revenue -
30% - to its drivers instead of 24% which was common for other
companies in the same business. In response to whether or not she
agreed with certain assumptions set forth in paragraph 4 of the
Reply to Notice of Appeal (common to both appeals) Budnick agreed
with subparagraphs (b), (c), and (d) as follows:
"(b)
Wascana Energy Inc. ("Wascana") is a company that owns
and operates an oil field named Plumber Lake, which is located in
the Province of Saskatchewan;
(c)
during the period in question, Temor Oil Services (1974) Ltd.
("Temor") had a contract with Wascana to haul oil and
water from the tanks located at Plumber Lake;
(d)
Temor owns and provides the tankers for hauling the oil and
water;"
She disagreed with the assumption that each unit had been
assigned three drivers as some units were operated by only two
persons. Similarly, there was no specific 12-hour shift nor
a 7 to 10-day working cycle as, on occasion, a driver might work
15 hours in a day and the other driver only 9. Between the period
July 29, 1997 to January 15, 1998, Hansford's earnings varied
between $2,000 and $4,000 per month. In early December, 1997, BTI
became dissatisfied with Hansford's work as a driver and the
corporation terminated his services but he continued to do
mechanical work at the BTI shop - from time to time - for about 4
weeks and the last day on which he provided services to BTI was
January 15, 1998. Budnick stated there was not any "shortage
of work" as stated by Hansford in his application (Exhibit
R-1) - dated February 12, 1998 - for unemployment insurance
benefits. Budnick agreed Hansford's duties included hooking
up hoses and loading and unloading the necessary product being
hauled and that he was not permitted to take the tractor home
with him, primarily because it was being used 24 hours a day.
Budnick disagreed with the assumption of the Minister at
subparagraph 4(l) that there is any industry standard relating to
payment for the type of work done by Hansford and Insley.
Further, while it was true the workers were paid monthly - by
cheque - their work was not - in any way - assigned by Temor as
it would not have any idea where the drivers were on a particular
day or at any hour. There was never any requirement for a driver
to report to the Plumber Lake oilfield site each morning - or
ever - nor did Temor ever assign any driver to adhere to a
specific route or schedule as assumed by the Minister at
subparagraphs 4(o) and (p) respectively. Certainly, Budnick
stated, it was in the best interest of each driver to utilize the
most efficient and practical route and BTI expected the drivers
to do that without any need for instruction on that point. The
drivers were required to record the loads on tickets and the
number of loads were used to determine the amount of payment to
the driver. The Minister's assumption in subparagraph 4(r)
that all replacement drivers had to be screened by Temor was not
correct as the only requirement concerning new drivers was that
they were sufficiently qualified so as to be added to BTI's
insurance coverage and that involved some verification of
qualifications and background checks. There was never any
notification by Temor to BTI about the unsuitability of any
driver. Budnick agreed that a driver could not work for any other
company while using the BTI tractor and that BTI had the right to
inspect and supervise the work of any driver but there was never
any requirement for a driver to bring a tractor unit to the BTI
shop at pre-arranged times as assumed by the Minister in
subparagraph 4(v). The drivers performed routine maintenance each
day and fluid levels were checked. The drivers had access to the
BTI shop and the tractors were owned by BTI and all expenses
pertaining to the operation of those units were paid by BTI
except for damages to equipment caused by an operator or for the
cost of cleaning up oil spills at the wellsites.
[7]
In re-examination, Patricia Budnick stated that when a changeover
occurred in the operation of a particular tractor unit - often in
the "middle of nowhere" - it was done by agreement
between the drivers and Wascana would be totally unaware of that
switch in drivers. Further, Temor was never aware of any
scheduling and there was not any fixed number of loads that would
be hauled in a particular day. Budnick referred to a document
summarizing loads hauled by Hansford - Exhibit A-2 -
and pointed out that if only three loads had been hauled on a
particular date it would not have occupied an entire day. She
stated BTI had been advised by Hansford when speaking to her
husband, Terry Budnick, that he had applied for employment
insurance benefits based on his previous employment as a
dispatcher at Temor and had never regarded himself as having been
in an employment relationship with BTI.
[8]
Counsel for the appellant submitted the most important factor to
be considered was the absence of control by the appellant over
the work being performed by the workers either as to the manner
of the hours during which the services were provided. Often, the
drivers had no contact with the appellant and the management at
BTI would not be aware at any given time which workers were
carrying out services relating to the contract entered into
between BTI and Temor. Further, counsel submitted, the present
appeals differed on the facts from those cases where workers had
- in effect - been loaned out to another entity and had agreed
that day-to-day management would be undertaken by the recipient
of those services provided by that worker. As submitted by
counsel, the issue of tools was of little relevance and a chance
of profit was present because workers were paid on a percentage
of gross revenue and they could increase their pay by operating
in an efficient manner. As to the other side of the coin - the
loss potential - counsel pointed to the evidence where drivers
had been held liable by the appellant for damage caused by them
to equipment or for the cost of cleaning up an oil spill at a
wellsite. In counsel's view of the evidence, the workers were
not integrated into the business of the appellant in a manner
that would lead to the conclusion that BTI would be out of
business without those services and that the worker, Hansford,
had abundant experience in the oil industry and was quite capable
of carrying on business on his own account. With respect to
Hansford, counsel submitted the evidence on the point of the
mechanical work performed by him for BTI was clearly separate
from the services provided by him as a truck driver and, upon all
the appropriate tests, the monies earned by the worker in that
context flowed from work done by him in his capacity as an
independent contractor.
[9]
Counsel for the respondent submitted that while control by the
appellant over the workers was not strict or regularly exercised
in a supervisory sense, BTI still had the power to control the
manner in which the work was carried out by them. The only
relevant tools were the tractor units, which were owned by BTI.
The trailers were owned by Temor and the drivers had small hand
tools. Counsel pointed out the workers were paid a fixed
percentage of revenue earned by the particular unit during times
when they operated that tractor hauling loads. All expenses
pertaining to the operation of the tractor units were paid by the
appellant and there was no chance of loss occurring to the
workers. Further, counsel submitted the whole of the evidence
clearly established the business was that of the appellant and
the drivers were merely employees of that enterprise and provided
services under a contract of service.
[10] In
Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025, the
Federal Court of Appeal approved subjecting the evidence to the
following tests, with the admonition that the tests be regarded
as a four-in-one test with emphasis on the combined force of the
whole scheme of operations. The tests are:
1. The Control Test
2. Ownership of Tools
3. Chance of Profit or Risk of Loss
4. The Integration Test
[11] In the
within appeals, the evidence revealed there was little control by
the appellant over day-to-day activities of the workers. They
were able to operate according to a schedule posted by Wascana at
the battery and were able to determine the most efficient method
for servicing as many sites as possible within a particular block
of time. The changeover of drivers on the tractors - arranged
between themselves - was done as a consequence of an arrangement
borne of practicality and taking into account the personal
requirements for free days or a shortened work day of the two or
- in some cases - three-man team assigned to a power unit.
The contract between the appellant and Temor and the working
relationship involving BTI drivers and Wascana did not impact on
the issue of control as the Minister erroneously assumed as set
forth in the Reply. From the standpoint of the appellant all it
was interested in - as set out in a clause of the agreement it
entered into - separately - with both workers - was
"the results obtained under this Contract for Service; the
manner and means of conducting the Work are under the sole
control of the Contractor". The clause continued as follows,
"However, the Work must meet the approval of Blues and shall
be subject to Blues general right of inspection and
supervision". Certainly, the facts in the within appeals on
the issue of control are not like those in the case - before me -
of Camion Holdings Inc. v. M.N.R. [1999] T.C.J. No. 311
(under appeal to Federal Court of Canada). In Camion, at
paragraph 9 on page 8, I commented:
"If an employer loans out an employee to another person
or entity or -in fancier terms - pursuant to a secondment,
permits the worker to perform services for another and agrees
day-to-day management of that person can be undertaken by the
recipient of the service, that, without a whole lot more, does
not mean the employer is still not exercising control."
[12] With
regard to the ownership of tools, the tractor units were owned by
BTI and the trailers were owned by Temor which BTI - pursuant to
its contract with Temor - was able to use for hauling the
products. Any other tools including safety equipment and clothing
were for the personal use and convenience of the drivers and were
not connected to any production of revenue, which was derived
from hauling either oil or water from a wellsite to a
battery.
[13] On the
issue of chance of profit or risk of loss the evidence does not
establish any real possibility for the workers to increase their
earnings in the sense this test is used. The amount per cubic
metre was fixed during the term of the contract between Wascana
and Temor and also in the contract between Temor and BTI and then
between BTI and the drivers. The drivers received a set
percentage of the gross revenue earned by the tractor and trailer
during the time it was operated by them. Hansford - the more
experienced operator - received 30% and Insley was paid 28% of
the gross revenue generated by his efforts during a monthly pay
period. The daily list of wells to be serviced was posted by an
employee of Wascana and was never-ending in the sense the trucks
worked 24 hours a day, 7 days a week and were only stopped
for servicing or in the event of mechanical troubles or some
other unforeseen event. There was no direct evidence before me
that would permit me to quantify the amount of increased revenue
to be generated by a driver in the event certain routes or
techniques had been utilized by them during the relevant periods.
It would be expected of any person performing the particular
hauling jobs involved in the within appeals to use the most
efficient and safe route from one point to another without being
motivated to do so by any factor or influence other than through
a combination of common sense and experience. The fact that BTI
purported to have the right to deduct the cost of certain damage
to equipment and/or the amount paid to a third party to clean up
an oil spill does not transform the relationship with the drivers
to that of independent contractor. It is more likely the
deduction was prohibited by the relevant provincial labour
legislation which does not allow employers to deduct the cost of
mistakes or breakage from paycheques of employees. The fact that
Temor charged BTI for the cost of cleaning up the small spill or
for other minor damage at a wellsite does not mean BTI could pass
on that cost to the drivers unless the relationship was the same
as the one between Temor and BTI and the drivers were dealing
with BTI on the basis of being an independent contractor.
[14] As for
the integration test, in the case of David T. McDonald Co.
Ltd. v. M.N.R., 92 DTC 1917, Mogan, T.C.C.J. was considering
whether an individual was an employee of a corporation or if his
relationship was that of an independent contractor. At page 1922,
the Honourable Judge Mogan stated:
"In Wiebe Door, MacGuigan, J. cited with approval at page
5030 the Market Investigations case in which the question
is asked: "Is the person who has engaged himself to perform
these services performing them as a person in business on his own
account?" To answer that question, one must consider whether
the person has the capacity to engage in the particular business
on his own account. If he has experience, knowledge and goodwill
in the business, it is easier to conclude that he has the
capacity to engage in the business on his own account and that he
is not simply an incorporated employee. This is particularly true
when the person has no prior employment connection with the party
who benefits from his services. But if he has no experience,
knowledge or goodwill in the business and offers only personal
skills not related to the business, it is more difficult to
conclude that he has the capacity to engage in the business on
his own account; and it would probably be more reasonable to
regard him as an employee of the party who benefits from his
services."
[15] In the
within appeals, the worker, Insley, had no experience at all in
the oil industry and, at the time he was hired by BTI, was
without funds to the point where a social services agency of a
department of the provincial government contacted BTI's
office with a view to obtaining an advance of pay and a moving
allowance to assist him. It is difficult to see how Insley would
be operating a business on his own account when the only asset he
possessed - relating to the ability to carry out the work - was
the appropriate class of operator's license. The appellant
had been in business since 1996 and, prior to incorporation, the
Budnicks had carried on the same activity under a partnership.
They were highly qualified and experienced individuals who were
able to secure contracts within the industry and to maintain a
relationship with Temor which - in turn - was able to obtain
contracts with oil companies such as Wascana. Given the vagaries
of the oil business and the boom-and-bust cycles common to
the industry, it required experience, capital, organization and
the appropriate equipment in order to satisfy the requirements of
the companies benefiting from the hauling of the oil and/or water
from the various wells.
[16] The
worker, Hansford, was an experienced individual who had worked as
a dispatcher for Temor and was very familiar with the methods
used to transport the product from the wellsites to the battery.
He was an individual who required little or no supervision and
was also a qualified mechanic. It would be reasonable to infer
from the evidence that Hansford would regard himself as a driver
assigned to a particular tractor, hired to haul product according
to standard practice within the industry and as a person who was
entitled only to receive a set percentage of the gross revenue
earned by the BTI tractor during his time at the wheel. From an
objective viewpoint, would an ordinary person - after looking at
the relevant facts and the entire scheme of operations -
reasonably conclude - looking at the situation through
Hansford's eyes - that he was providing a service to the
appellant on his own account or would the facts surrounding the
entire operation lead to the conclusion that he was "driving
truck for Blues Trucking - the outfit that does the hauling for
Temor and Wascana". Because any new driver had to meet the
specific requirements of the insurance company handling coverage
for BTI - to the point where a special endorsement had to be
added to the policy in order to cover any additional driver -
there was no real ability for any driver to hire a substitute or
replacement and to have the ability to retain the difference
between an amount paid to that person and the entitlement to a
fixed percentage of the gross revenue of the tractor unit so as
to create the opportunity for profit. The management of BTI
rarely visited the field because the operations flowed smoothly
and telephone and radio communications between the office and the
tractors permitted resolution of many problems without further
effort by either Patricia or Terry Budnick. The product had to be
hauled on a daily basis in order for BTI to earn revenue pursuant
to its contract with Temor and the services of the drivers were
crucial to that end. The fact that little or no control is
visibly exercised over experienced workers functioning within the
confines of a tried-and-tested system in accord with industry
practice does not mean a worker is out there on his own account
in the context of a personal entrepreneurial venture.
[17] What the
parties thought their relationship was will not change the facts.
In the case of The Minister of National Revenue v. Emily
Standing, 147 N.R. 238, Stone J.A. at pages 239-240
stated:
"There is no foundation in the case law for the
proposition that such a relationship may exist merely because the
parties choose to describe it to be so regardless of the
surrounding circumstances when weighed in the light of the
Wiebe Door test."
[18] In the
case of F.G. Lister Transportation Inc. v. M.N.R.,
96-2163(UI), unreported, dated June 23, 1998, I dealt with the
case of long-haul truck drivers and found they were employees
working pursuant to a contract of service. Because most of these
cases can turn on an apparent slight difference in facts, in the
Lister decision, at paragraph 13, I commented as
follows:
"I now find myself in the position of being required to
point out the differences in the facts in the within appeal and
those in two other decisions issued by me in which I held the
drivers were independent contractors. In the case of Lee
(c.o.b. D & A Transport) v. M.N.R. [1995] T.C.J. No.
426 I held the driver of a long-haul transport truck to
have been an independent contractor. In that case, the driver had
registered his business for purposes of the Goods and Services
Tax, maintained a business bank account and had filed income tax
returns on the basis of being self-employed. In Lee, the
appellant had earlier been an employee of the payor and had
agreed to alter the working relationship and there was clear
evidence he could have hired another driver to work for him on
long-hauls thereby generating a profit. As well, in Lee,
it came down to choosing between two versions of circumstances
surrounding a working relationship and the choice did not favour
the worker. I also held the tools of the trade were the personal
skills of the driver as a qualified person capable of hauling a
loaded trailer over long distances. That finding was in the
context of the driver operating a business under the trade name,
Rick's Driving Services, having a bank account under that
name and otherwise doing business with third parties on that
basis. Income tax returns had been filed on the basis the worker
was a self-employed person.
In another decision of mine, Metro Towing Ltd. v. M.N.R.
[1991] T.C.J. No. 717, I found a tow-truck driver to have been an
independent contractor. In that case, while there was a high
degree of control over the worker, he had leased the vehicle and
all of the equipment needed to carry out his task and bore
all of the costs, including insurance, relating thereto. That
driver also had a substantial risk of loss arising from the
operation of that vehicle in the event he was not able to
generate sufficient gross revenues which fluctuated on a monthly
basis, as did, to a lesser extent, his costs of operation. In
that case, like Lee, supra, the worker had earlier
been on the regular payroll and had decided to enter into a new
arrangement whereby he was the lessor of a truck and certain
equipment and would be entitled to receive 30% of gross towing
revenue arising from jobs which were dispatched by Metro Towing
Ltd. The evidence in the Metro Towing Ltd. appeal
disclosed that other tow-truck drivers operated through a limited
company or a partnership arrangement.
In the case of Summit Gourmet Foods Inc. v. M.N.R.
97-470(UI), a decision of The Honourable Judge Mogan,
T.C.C., dated November 24, 1997, Judge Mogan considered the
status of a person - Freeman Walters, the intervenor - who drove
a truck for the appellant, a corporation carrying on business as
a supplier to pizza restaurants. Judge Mogan held the driver to
have been an employee engaged in insurable employment and, at
page 5 and following, stated:
"On control, I regard that test as marginally favouring
employment and not independent contractor even though counsel for
the Appellant stressed that Freeman was not told the way to do
his work. I accept that. On the other hand, he was assigned
trips; he could arrange the order of delivery and the date but
they had to be delivered within a week, and he had to call in to
the Appellant's office each morning. This was brought out
in Freeman's testimony. He said: "Every person
operating a truck has to report in, and I specifically did. I had
to call in every morning to say where I was going so that they
would know where I would be that day, and whether there were
additional orders that had come in from customers which I might
have to fill out of the extra product I was carrying".
There was an opportunity for the Appellant to call evidence in
reply to contradict that bald statement by Freeman but it failed
to do so. On a common sense basis, I believe the statement.
Eric described a freezer truck which Freeman used costing
between $70,000 and $80,000. When a company sends a person out in
its truck of that value, it wants to know not only where the
truck is day-by-day but also, when there are established
customers to be serviced, it wants to know in a timely manner
whether the customers are being serviced because they are the
lifeline of a business. I cannot believe that a person in
Freeman's position would not be required to report in daily
on where he went and what he had serviced and whether there were
fresh orders.
The fact that Freeman could arrange the order in which he
would service these customers, or that he could arrange the time
when he started on a trip does give him some freedom from control
but, on balance, I would say that although he was not under the
hand of the Appellant, they knew on a daily basis where he was,
what he was doing and what customers he had serviced. Therefore,
on the test of control, I find that there is more of an
indication of the type of control one finds in employment than
the simple direction which is given to an independent
contractor.
With regard to the test of ownership of tools, it is very
strongly in favour of employment and not an independent
contractor. The only relevant tools for this kind of work were
the truck and the dolly, both of which were owned by the
Appellant. Counsel for the Appellant brought to my attention a
similar case in Saskatchewan, where Mr. Justice Kyle of the Court
of Queen's Bench said:
...To draw a parallel between the ownership of tools in the
case of a tradesman and the hotel and equipment therein in a case
such as this appears to be stretching the logic of the
Montreal Locomotive case beyond reason.
I would agree with that statement. I think that an $80,000
truck was never in the minds of those learned Judges half a
century ago who laid down these early tests and talked about
ownership of tools. In my view, they were talking about
tradesmen's tools like a carpenter's hammer and saw.
The fact is, however, that in a more sophisticated society, this
truck was the only vehicle through which the service was
performed. The driver's licence that was held by Freeman
was a pre-qualification to his engagement with the Appellant; and
he could not be engaged if he did not have a driver's
licence. I do not regard his driver's licence as a tool. I
look at the only thing that Freeman used to perform the services
and it was a very expensive and sophisticated piece of equipment.
Therefore, the test of ownership of tools favours employment.
On the chance of profit and risk of loss, I find that also
favours employment because there was virtually no risk of loss.
There was a chance of compensation because all Freeman had to do
was complete the round trip and he would receive the amount that
had been settled between himself and the Appellant in Exhibit
A-1. Compensation in this context is not profit. Counsel for the
Appellant argued that it was possible for Freeman to incur a loss
because, on the surplus product that he carried, he could say:
"I will buy some of that and resell it for profit on my
own". If he had committed to that kind of arrangement, he
could buy the product at the point of departure on the trip; let
us say 10 cases of completed pizza, and take a chance on selling
them either on this trip, and make money by the trading in pizza
product. That opportunity may have been available to him, but I
draw the inference that the extra product was not there just for
the trading and commercial activities of the driver. It was also
there as backup product for the needs of established customers
who might, in the course of the trip, decide that they needed
more than the order destined for them at the time of departure of
the truck."
[19] The
foregoing observations and reference to the Summit Gourmet
Foods, supra, case are relevant to the within appeals.
[20] In the
case of Information Communication Services (ICS) Inc. v.
M.N.R. - 97-839(UI) and 97-841(UI) - I held the drivers of
vehicles involved in a delivery service within a specified
industry were independent contractors. In that case, the drivers
owned their owned vehicles, there was very little control over
their daily activity and there was a chance of profit and risk of
loss. Most important, however, in the ICS case was the
body of evidence leading to the conclusion the workers were
operating a business on their own account including registration
for GST, filing income tax returns on the basis of being a
self-employed person and hiring replacement drivers to handle the
assigned route. Another significant factor in that case was the
purported employer did not have any corporate establishment or
presence in the area where the services were being performed and
had to rely on third party common carriers to transport product
from Vancouver to Nanaimo on Vancouver Island where the drivers
then proceeded to carry on with delivery of the parcels to the
intended recipients. There was also the opportunity for the
drivers to charge a fee for delivery of items between customers
of ICS on the route without any involvement, whatsoever, of
ICS.
[21] As
counsel for the appellant commented during submissions, it is
extremely difficult for experienced practitioners, let alone
business persons and ordinary people seeking to earn a living, to
be able to wade through the complexities of an intended working
relationship so as to be confident of the true characterization
surrounding the provision of services. Often, the reality of the
workplace or well-known custom within a particular industry
will not mesh with the jurisprudence on the subject. In an era of
corporate downsizing, the proliferation of in-home businesses,
the common practice of people working three or four part-time
jobs - possibly in addition to running a small business - and the
startling growth of e-commerce in which jurisdictional boundaries
are blurred or even non-existent, we can recognize that the
day-to-day practicality of earning a living has outstripped the
capacity of existing legislative provisions and judicial
interpretation to encompass - comfortably - the explosion of
technological and cultural change within the workplace. There are
dozens of myths floating around the marketplace - equivalent to
the ubiquitous "urban legends" - which do not assist in
clarifying the overall situation between payor and recipient.
Although each case will turn on its own set of facts, Revenue
Canada has produced an excellent brochure in an attempt to assist
individuals in proceeding with the process of weighing all of the
relevant factors surrounding the relationship and assigning
certain values and priorities to particular aspects pertaining to
the provision of services. In the end, there is still no escaping
the fact it will depend on the judgment in a particular case and
I doubt any legislative amendments would be of much assistance
unless there was provision for the ability of persons in a
working relationship to engage in an opting-out process for a
limited period under certain specified conditions.
[22] In the
case of Hesketh v. M.N.R. 96-2520(UI), I commented:
"The reality of the modern workplace is that people often
have a mixture of income-producing activities arranged in a
variety of permutations and combinations. Some have a full-time
job and one or more part-time jobs and others have five or six
part-time or casual, non-repeating, sources of income, all of
which are on the basis of being an employee. Still others are an
employee - either full time or part time at one or more jobs -
and also operate a business or provide a service as an
entrepreneur. In recognition of the changing workplace,
Parliament enacted the Employment Insurance Act which was
assented to on June 20, 1996. Under the new legislation, the
insurance system is changed from one based on weeks of work -
with a weekly minimum and maximum on insurance coverage - to a
system based on total earnings and total hours worked in which
every dollar earned, from the first hour on the job, is counted.
The intent was to move to a system which is more compatible with
the current labour market. The rules for determining status of an
individual within a working relationship, however, remain the
same. It is extremely confusing for persons - whether employers
or employees - to know where they stand in situations where it is
not a simple black-and-white case of categorizing the services
provided. There is a natural tendency to look at the overall
income earned during a year and to assign a status to a working
relationship based on the amount of revenue generated from
providing that particular service."
[23] The above
reference is applicable to the situation in the within appeals as
it relates to the worker, Hansford, and his activities providing
services as a mechanic quite apart from his role as a driver. The
evidence reveals that Hansford would only perform mechanical work
on the tractors or other equipment of BTI when he was not
otherwise occupied in driving a tractor unit while hauling
product and that, if he chose to accept a particular repair job,
he carried out the work using his own tools. He worked at his own
pace and there was no supervision over this aspect of his
endeavor. The rate for the mechanical work done by Hansford was
set by him at $16.00 per hour and he billed the appropriate
number of hours attributed to various repair jobs on the same
invoice he used to calculate the cubic metres of oil and/or water
hauled by him during the relevant pay period. The drivers looked
after routine maintenance on the truck and Terry Budnick of BTI
was also a qualified mechanic. On occasion when Budnick did not
choose to perform the work and Hansford declined to accept the
repair job on a particular tractor, that unit would be taken to
Saskatoon to a commercial garage. The worker, Hansford, was not
integrated into the operations of BTI with regard to the
provision, by him - from time to time - of his services in the
form of specialized expertise as a mechanic. There would have
been no real chance of profit or risk of loss in Hansford
providing the mechanical services as a sideline to his full-time
occupation as a driver. Taking all of the factors set forth in
Wiebe (supra), into consideration, I find the provision of
mechanical services by Hansford to BTI - although carried out in
the BTI shop - to have been done by him on his own account and
not as an employee of BTI under a contract of service. His
services as a driver were terminated after the first week of
December, 1997 and, thereafter, he performed mechanical work for
three or four weeks. The final invoice submitted by Hansford
appears as the last entry at Tab 9 and is dated February 5, 1998
in which he billed for 143 hours shop time. The collection of
invoices contained in Tab 9 and the evidence as a whole is not
sufficient for me to make a specific finding as to the amount
earned by Hansford during the period July 29, 1997 to January 15,
1998 in his capacity as a mechanic on his own account. That
amount would be capable of calculation based on the relevant
records of BTI and counsel for the parties should be able to
determine the sum representing payment by BTI to Hansford for the
mechanical work. Or, using another method to arrive at the same
result, to calculate the earnings of Hansford during the period
above noted attributable - only - to
his services as a driver of a tractor unit for BTI so that the
Minister could calculate the insurable earnings of Hansford as it
pertains to his income flowing from the contract of service as a
driver.
[24] On the
evidence, it is apparent Hansford and Insley while engaged in
driving a tractor unit for BTI - during the relevant period -
were providing a service as employees pursuant to a contract of
service. An examination of the entire scheme of operations does
not lead to any other conclusion.
[25] The
within appeal in regards to Terry Insley is dismissed as is
appeal 98-135(CPP).
[26] The
within appeal in regards to Larry Hansford is allowed - as is
appeal 98-136(CPP) - and the respective decisions issued
pursuant to the Employment Insurance Act and the Canada
Pension Plan are varied, to find, as follows:
the worker, between July 29 and December 7, 1997 provided
services as a driver to Blues Trucking Inc. under a contract of
service and was therefore engaged in insurable and pensionable
employment. However, the services, as a mechanic, provided by the
worker to Blues Trucking Inc. during the period July 29, 1997 to
January 15, 1998 were pursuant to a contract for services and to
that extent did not constitute insurable or pensionable
employment.
Signed at Sidney, British Columbia, this 6th day of October
1999.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE
NO.:
98-898(UI)
STYLE OF
CAUSE:
Blues Trucking Inc. and M.N.R.
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
July 29, 1999
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the
Respondent:
Gordon Berscheid
COUNSEL OF RECORD:
For the
Appellant:
Name:
Curtis Stewart
Firm:
MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE
NO.:
98-899(UI)
STYLE OF
CAUSE:
Blues Trucking Inc. and M.N.R.
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
July 29, 1999
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the
Respondent:
Gordon Berscheid
COUNSEL OF RECORD:
For the
Appellant:
Name:
Curtis Stewart
Firm:
MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
98-135(CPP)
STYLE OF
CAUSE:
Blues Trucking Inc. and M.N.R.
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
July 29, 1999
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the
Respondent:
Gordon Berscheid
COUNSEL OF RECORD:
For the
Appellant:
Name:
Curtis Stewart
Firm:
MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE
NO.:
98-136(CPP)
STYLE OF
CAUSE:
Blues Trucking Inc. and M.N.R.
PLACE OF
HEARING:
Saskatoon, Saskatchewan
DATE OF
HEARING:
July 29, 1999
REASONS FOR JUDGMENT BY: The
Honourable Deputy Judge D.W. Rowe
DATE OF
JUDGMENT:
October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the
Respondent:
Gordon Berscheid
COUNSEL OF RECORD:
For the
Appellant:
Name:
Curtis Stewart
Firm:
MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
98-898(UI)
BETWEEN:
BLUES TRUCKING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the
appeals of Blues Trucking Inc. (98-899(UI),
98-135(CPP) and 98-136(CPP)) on July 29, 1999 at Saskatoon,
Saskatchewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the
Appellant:
Curtis Stewart
Counsel for the
Respondent:
Gordon Berscheid
JUDGMENT
The
appeal is dismissed and the decision of the Minister is confirmed
in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 6th day of October
1999.
D.J.T.C.C.
Email this Content