Date: 20001127
Dockets: 2000-652-EI, 2000-653-CPP
BETWEEN:
SLOOT CONSTRUCTION - DESIGN LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Dockets: 2000-1160-EI, 2000-1161-CPP
KEITH MURPHY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
MacLatchy, D.J.T.C.C.
[1]
These appeals were heard on November 2, 2000 at London, Ontario.
It was agreed that the four appeals be heard on common
evidence.
[2]
Keith Murphy (the "Worker") appealed a ruling to the
Minister of National Revenue (the "Minister") for the
determination of the question of whether or not he was employed
in insurable and pensionable employment, while engaged by Sloot
Construction - Design Limited (the "Appellant")
for the period from July 1, 1997 to February 20, 1999,
within the meaning of the Employment Insurance Act
(the "Act") and the Canada Pension
Plan (the "Plan").
[3]
By letter dated December 23, 1999, the Minister informed the
Worker and the Appellant that it had been determined that the
Worker's engagement with the Appellant, during the period
in question, was insurable and pensionable employment for the
reason that the Worker was employed pursuant to a contract of
service.
[4]
In reaching his decision, the Respondent relied on certain
assumptions, some of which accepted by the Appellant as correct
and others rejected by him, as follows.
[5]
The Appellant is a business involved in construction, renovations
and interior finishing. Mr. Dominic Sloot, the president and only
shareholder of the Appellant, was the first to give evidence and
explained to this Court how he conducted his business of the
company. He would approach a client or would be approached by a
client who required construction or renovation and invited to bid
on the particular undertaking. For his own purposes, Mr. Sloot
would prepare a list of trades that he would need for the project
if he was successful in his bid. He would then contact others in
those particular trades to see if they would be available to work
on such a project and, if so, to submit a quote for their portion
of the project. Mr. Sloot stated he had lists of people in each
of the trades required by him, and having received bids, he would
prepare his estimate of costs and submit a bid to his client.
When and if accepted, he would then select the trades persons he
felt gave the best quotation to him and firm-up a contract
pursuant to their bid previously made. Under Mr. Sloot's
carpentry and trimmers list was the Worker, Keith Murphy. The
Worker would submit, on request, an estimate of the number of
hours he would need to perform his function on a particular
project. He would submit the quote and, if accepted, he would
enter into an agreement with Mr. Sloot to do his portion of the
project in the number of hours quoted at a price per hour,
previously quoted. Exhibit A-1 supported this evidence.
[6]
The Worker is an experienced carpenter and trimmer and during the
period in question was charging his time at an hourly rate of
$15.00. When he gave his evidence, the Worker stated he was
operating his own business and submitted bids for jobs to Mr.
Sloot as evidenced by Exhibit A-1. His usual practice was that he
would prepare his bid with Mr. Sloot based on his own estimate of
the time it would take him to perform his part of the project but
not including materials which were to be provided by Mr. Sloot at
a cost less than the Worker could provide them because of volume
discounts, etc.
[7]
On one occasion only, Mr. Sloot and the Worker agreed that the
latter was paid gas mileage for a particular job in Darnia,
Ontario which was some distance from the Worker's home-base
in London, Ontario. Mr. Sloot further stated that he would
reimburse other subcontractors for mileage on jobs distant from
London, it was his practice to do so.
[8]
The Worker provided his own hand tools, as in usual in the trade.
He expanded on this area saying he had a well-equipped van
containing not only the hand tools but much more including table
saws, mitre saws, concrete drills and a compressor for fastening
devices. He also had a small workshop in his basement for
fabricating cabinets and other items peculiar to his
business.
[9]
The parties agreed that the Worker did not work for the Appellant
during 1997 but only commenced performing his work for the
Appellant during 1998. The Worker stated that he did collect
employment insurance benefits the early part of 1998 as he had
been previously employed and was eligible. When he commenced his
relationship with the Appellant, he did state the hours of work
he performed for the Appellant on his entitlement cards required
by the employment department.
[10] All
parties agreed that the clients were those of the Appellant. The
nature of contract bidding on construction projects dictated
this; unless the subcontractor, in this case the Worker, is known
by the client, he would not be called upon to submit his bid for
a project. He would only hear of the project through the
Appellant.
[11] The
question to be answered by this Court is whether there was an
employer/employee relationship between the Appellant and the
Worker.
[12] This
Court was directed to apply the four-in-one test recommended by
the Federal Court of Appeal in Wiebe Door Services Ltd. v.
M.N.R., 87 DTC 5025. The tests to be considered include
control, ownership of tools, possibility of profit and risk of
loss and integration. These tests are helpful but not exhaustive
and the whole of the relationship existing between the Appellant
and the Worker must be assessed.
Control:
[13] The
evidence brought forward indicated that the Appellant was the
prime contractor and it would subcontract with others to perform
their skills on the particular project. By the nature of the type
of construction and renovations performed by the Appellant, there
was generally a time to have the overall project completed and
certain hours within which the construction should or could take
place - all of which are dictated by the client and would
form part of the accepted contract. Time became very important to
all connected with the project. To ensure a schedule was followed
and the project proceeded as the client directed, the Appellant
had a supervisor on the job. He appeared to act as a coordinator
to ensure the overall contract be completed on time. If the
Worker's bid was accepted by the Appellant and a contract
entered into between them, then it was the Worker's
responsibility to perform his part of the contract within the
time parameters set by the client. This is a type of control but
not one imposed by the Appellant on the Worker but imposed by
reason of the terms of the contract that was mutually agreed. The
same holds true for the location of the work as the job site was
part of the contract. The Appellant did not concern itself with
the manner in which the job was performed by the Worker nor did
it direct how the work should be performed. The Appellant
expected the job to be performed by the Worker in accordance with
the standard set by its knowledge of previous work performed. The
Appellant did not hire nor could it fire the Worker but only
follow the contract terms as agreed. The Appellant paid no
benefits to the Worker, did not keep track of the hours worked
and paid the agreed contract price to the Worker on completion of
his work pursuant to an invoice submitted which included
provision for GST. There did not appear to be the control exerted
by an employer on an employee.
Tools:
[14] By the
nature of the carpentry trade and the construction business it
was expected that a carpenter would have his own hand tools. The
Worker had such tools but had many others that he would bring to
the job site in his own van. He had what he required to perform
his part of the contract arrangement.
Profit and loss:
[15] Both
witnesses, Mr. Sloot and the Worker, gave evidence that once the
contract price was agreed upon, based on the number of hours the
Worker estimated the job would take, that is what would be billed
by invoice to the Appellant. However, if the Worker could
complete the job in less time, he would be paid the agreed sum.
This was his ability to profit beyond his hourly rate as agreed.
In a like fashion, he would be subject to a loss if it took
longer than he agreed to complete his work. The Worker said he
controlled his hourly rate, which he set himself. If he set his
rate too high he would not get his bids for particular projects
accepted for he would be under bid by another competing
carpenter. The Worker could work when he wanted unless restricted
by the client to certain times so long as his portion of the
overall contract was completed as agreed. The Worker further
testified that he did work for others and submitted copies of
invoices to others, as shown in Exhibit A-2.
Integration:
[16] This is a
difficult concept to apply in a specialized industry such as
construction where many separate skills are needed and which
cannot be satisfactorily supervised. The electricity, heating and
cooling, plumbing, etc. and all the other specialities needed are
performed by persons who have specific knowledge in those fields.
Many of these specialities can be done by employees yet not be,
but minimally, supervised. Likewise, and more frequently, their
services are performed by contractors who run their own
businesses.
[17] In this
instance, the Appellant requires many trades to perform its
function. It is the business of the Appellant to do a
construction job for a client and it requires workers to perform
on its behalf. Yet, each one of the specialities can be operated
by individuals who carry on their own businesses. These
subcontractors are operating pursuant to contracts for services
and their work is not insurable. They are in business for
themselves.
[18] The
Worker is attempting to run his own business and is subject to
the joys and sorrows of what that may entail. Having examined all
the evidence and reading the jurisprudence relative to the issue
before it, this Court concludes that the worker can operate
separately from the Appellant and can be in his own business.
[19] The
Respondent referred this Court to the decision of the Federal
Court of Appeal in M.N.R. v. Emily Standing 147 N.R. 238
to support its conclusion that it is not necessarily
determinative of the relationship between parties by their mere
declaration that they are operating pursuant to a contract for
services. In these particular circumstances, both the Appellant
and the Worker determined that they were not operating as
employer/employee, and the evidence submitted supports that
argument.
[20] On
examination of the whole of their relationships, this Court has
determined that the Worker was a subcontractor and not an
employee and that the employment was not insurable under the
"Act" nor pensionable under the
"Plan".
[21] The
appeals are allowed and the decision of the Minister is varied on
the basis that the Worker's employment was not insurable
nor pensionable.
Signed at Toronto, Ontario, this 27th day of November
2000.
"W.E. MacLatchy"
D.J.T.C.C.
COURT FILE
NO.:
2000-652(EI)
STYLE OF
CAUSE:
Sloot Construction - Design Limited
and M.N.R.
PLACE OF
HEARING:
London, Ontario
DATE OF
HEARING:
November 2, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge W.E. MacLatchy
DATE OF
JUDGMENT:
November 27, 2000
APPEARANCES:
Agent for the
Appellant:
Dominic R. Sloot
Counsel for the
Respondent:
Jade Boucher
COUNSEL OF RECORD:
For the
Appellant:
Name:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
2000-653(CPP)
STYLE OF
CAUSE:
Sloot Construction - Design Limited
and M.N.R.
PLACE OF
HEARING:
London, Ontario
DATE OF
HEARING:
November 2, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge W.E. MacLatchy
DATE OF
JUDGMENT:
November 27, 2000
APPEARANCES:
Agent for the
Appellant:
Dominic R. Sloot
Counsel for the
Respondent:
Jade Boucher
COUNSEL OF RECORD:
For the
Appellant:
Name:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
2000-1160(EI)
STYLE OF
CAUSE:
Keith Murphy and M.N.R.
PLACE OF
HEARING:
London, Ontario
DATE OF
HEARING:
November 2, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge W.E. MacLatchy
DATE OF
JUDGMENT:
November 27, 2000
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Jade Boucher
COUNSEL OF RECORD:
For the
Appellant:
Name:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
2000-1161(CPP)
STYLE OF
CAUSE:
Keith Murphy and M.N.R.
PLACE OF
HEARING:
London, Ontario
DATE OF
HEARING:
November 2, 2000
REASONS FOR JUDGMENT BY: Honourable
Deputy Judge W.E. MacLatchy
DATE OF
JUDGMENT:
November 27, 2000
APPEARANCES:
For the
Appellant:
The Appellant himself
Counsel for the
Respondent:
Jade Boucher
COUNSEL OF RECORD:
For the
Appellant:
Name:
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-652(EI)
BETWEEN:
SLOOT CONSTRUCTION - DESIGN LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the
appeals of Sloot Construction - Design Limited
(2000-653(CPP)) and Keith Murphy (2000-1160(EI) and
2000-1161(CPP)) on November 2, 2000 at London, Ontario, by
the Honourable Deputy Judge W.E. MacLatchy
Appearances
Agent for the
Appellant:
Dominic R. Sloot
Counsel for the Respondent: Jade
Boucher
JUDGMENT
The appeal is allowed and the decision of the Minister is
varied in accordance with the attached Reasons for Judgment.
Signed at Toronto, Ontario, this 27th day of November
2000.
D.J.T.C.C.
Email this Content