Date: 20000926
Dockets: 1999-2248-EI, 1999-2249-CPP
BETWEEN:
MASTECH QUANTUM INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Weisman, D.J.T.C.C.
[1]
These are appeals from a determination by the Respondent that
Glenn Wallace was in insurable and pensionable employment
while managing computer systems at Dofasco Inc.
("Dofasco") from January 1, 1996 to January 14,
1998.
[2]
This matter calls into question the interpretation of paragraph
6.(g) of the Employment Insurance Regulations[1] and paragraph
34.(1) of the Canada Pension Plan Regulations[2], which provide as
follows:
"6. Employment in any of the following employments,
unless it is excluded from insurable employment by any provision
of these Regulations, is included in insurable employment:
...
(g) employment of a person who is placed in that
employment by a placement or employment agency to perform
services for and under the direction and control of a client of
the agency, where that person is remunerated by the agency for
the performance of those services.
34.(1) Where any individual is
placed by a placement or employment agency in employment with or
for performance of services for a client of the agency and the
terms or conditions on which the employment or services are
performed and the remuneration thereof is paid constitute a
contract of service or are analogous to a contract of service,
the employment or performance of services is included in
pensionable employment and the agency or the client, whichever
pays the remuneration to the individual, shall, for the purposes
of maintaining records and filing returns and paying, deducting
and remitting contributions payable by and in respect of the
individual under the Act and these Regulations, be deemed to be
the employer of the individual."
[3]
It is not disputed that Wallace was placed in employment at
Dofasco by Silverside Computer Systems Inc., the Appellant's
predecessor, on terms and conditions which are analogous to a
contract of service, that Silverside was a placement or
employment agency, and that Dofasco was a client of that
agency.
[4]
At issue is whether Silverside placed Wallace under the direction
and control of Dofasco, and whether Wallace was remunerated by
Silverside.
The direction and control issue:
[5]
The Appellant argues that there is no evidence of any intent on
the part of Silverside to place Wallace under the direction and
control of Dofasco. It points to the governing Agreement between
Dofasco and Silverside dated August 27, 1996 which provides
inter alia: "The Client will be responsible for
designating the nature of the services to be performed by a
Subcontractor, and verifying that the result achieved by a
Subcontractor is satisfactory; it being understood that a
Subcontractor has the sole and absolute discretion as to the
manner in which the services are to be performed".
[6]
The Appellant also contends that Wallace was uniquely skilled in
managing the archaic computer system then utilized by Dofasco to
control its oxygen steel making furnaces. There was accordingly
no one at Dofasco who could direct and control the manner in
which he performed his services.
[7]
Wallace testified on behalf of the Respondent. He described the
extreme dangers inherent in a steel making operation. If any of
his computer systems failed, hot liquid steel could escape, and
injury and death result. As a consequence, he was subject to a
variety of directions and controls by the safety-conscious
Dofasco.
[8]
Dofasco has three support teams which share two managers in
common. Wallace is one of six members on team one which is
involved in steel making. The other five members are full-time
employees of Dofasco. Wallace has an office at Dofasco where he
is required to wear steel boots, safety glasses, and long-sleeved
shirts for his own protection. He reports to three different
individuals and his work is overseen by the previously mentioned
two managers, that he refers to as his "bosses". There
is a list of people who must be consulted on all major decisions.
He is apt to receive calls at home 24 hours per day,
seven days per week. The quality of his work is subject to
inspection by his team, his managers, and his client. The
division of Dofasco known as Information Systems is his client,
Steelmaking the business unit of Dofasco he works for. He
described a variety of meetings that he is obliged to attend at
Dofasco. They included safety meetings, project meetings, and
client status meetings.
[9]
One of Wallace's main functions at Dofasco is to produce
status reports for the main computer systems he manages. These
reports define what he worked on in the last 30 days, any
problems, actions and requests, together with his plans for the
next 30 days. If questions arise, his client consults his bosses
who go over the reports with him. It is his position that
everything he does is controlled by Dofasco. In his words:
"I work on what they say I work on. I meet their
demands."
[10] In my
view, one must distinguish the manner in which Wallace performed
the services he was uniquely qualified to perform, and which
could not therefore be directed and controlled by Dofasco, from
the conditions under which Wallace worked and the direction and
control exercised over him by Dofasco as part of a team involved
in a large, dangerous and multi-faceted operation.
[11] While no
one at Dofasco was competent to direct and control the exercise
of Wallace's computer expertise, the evidence is that he was
deeply enmeshed in the interstices of a large and complicated
bureaucracy at Dofasco. As a member of a team overseen by
managers, within the Steelmaking business unit, servicing
Information Systems as a client, he was just as much under
Dofasco's direction and control as were any of its employees.
While his bosses at Dofasco could not directly terminate his
services, a complaint to Silverside could achieve the same
result.
[12] I am
unable to accept that Wallace was placed at Dofasco by Silverside
free of anyone's direction and control. On the contrary, I
find that Wallace was placed by Silverside at Dofasco under the
direction and control of that client of the agency.
The remuneration issue:
[13] Mr. Mike
Leacy, the Managing Director of the Appellant, testified on its
behalf. During the period under review, Silverside was one of the
Appellant's wholly-owned subsidiaries. For treasury
reasons, it was decided to centralize the payroll function for
all of the Appellant's subsidiaries, in its offices in
Montreal, Quebec. Accordingly, at all material times,
Wallace's remuneration was paid neither by Silverside nor by
Dofasco, but by the Appellant.
[14] Paragraph
6.(g) of the Employment Insurance Regulations
applies where the person who is placed in employment by a
placement or employment agency is remunerated by that agency.
Paragraph 34.(1) of the Canada Pension Plan Regulations
applies where such a person's remuneration is paid either by
the agency or its client. It is therefore the Appellant's
position that Wallace was not in insurable or pensionable
employment within the meaning of either of these
Regulations.
[15] The
Minister of National Revenue argues that this is an overly
technical interpretation of the Regulations which can lead
to results not intended by Parliament. Placement or employment
agencies can avoid the application of these Regulations by
the simple expedient of arranging for someone other than
themselves or their clients to pay the remuneration of the
individuals they place in employment. I am invited to find the
Regulations applicable where remuneration is paid by an
agent of the placement or employment agency or by someone on its
behalf.
[16] The
Appellant replies that had Parliament intended words such as
"directly or indirectly" to be part of the
Regulations, it would have included them.
[17] In my
view, the Appellant's argument is persuasive. One does not
have to look far for an example. Paragraph 5.(1)(a) of the
Employment Insurance Act[3] itself provides as follows:
"5(1) Subject to
subsection (2), insurable employment is
(a) employment in Canada by one or more employers, under
any express or implied contract of service or apprenticeship,
written or oral, whether the earnings of the employed person are
received from the employer or some other person and whether the
earnings are calculated by time or by the piece, or partly by
time and partly by the piece, or otherwise;"
[18] The maxim
expressio unius est exclusio alterius is applicable:
"An implied exclusion argument lies whenever there is
reason to believe that if the legislature had meant to include a
particular thing within the ambit of its legislation, it would
have referred to that thing expressly. Because of this
expectation, the legislature's failure to mention the thing
becomes grounds for inferring that it was deliberately
excluded.[4]"
[19] Since
Wallace was not remunerated by Silverside or by Dofasco during
the period under review, I find that he was not in insurable and
pensionable employment within the meaning of the
Regulations.
[20] If this
result is not in accord with the intent of Parliament, that is
for Parliament to redress, and not the courts.
[21] The
appeals are allowed.
Signed at Toronto, Ontario, this 26th day of September
2000.
"N. Weisman"
D.J.T.C.C.
COURT FILE
NO.:
1999-2248(EI)
STYLE OF
CAUSE:
Mastech Quantum Inc. and M.N.R.
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
August 30, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge N. Weisman
DATE OF
JUDGMENT:
September 26, 2000
APPEARANCES:
Counsel for the Appellant: Martin Sorensen
Jacques Bernier
Counsel for the
Respondent:
Kelly Smith-Wayland
COUNSEL OF RECORD:
For the
Appellant:
Name:
Jacques Bernier
Firm:
Bennett Jones
Toronto, Ontario
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE
NO.:
1999-2249(CPP)
STYLE OF
CAUSE:
Mastech Quantum Inc. and M.N.R.
PLACE OF
HEARING:
Toronto, Ontario
DATE OF
HEARING:
August 30, 2000
REASONS FOR JUDGMENT BY: the
Honourable Deputy Judge N. Weisman
DATE OF
JUDGMENT:
September 26, 2000
APPEARANCES:
Counsel for the Appellant: Martin Sorensen
Jacques Bernier
Counsel for the
Respondent:
Kelly Smith-Wayland
COUNSEL OF RECORD:
For the
Appellant:
Name:
Jacques Bernier
Firm:
Bennett Jones
Toronto, Ontario
For the
Respondent:
Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
1999-2248(EI)
BETWEEN:
MASTECH QUANTUM INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal
of Mastech Quantum Inc. (1999-2249(CPP)) on
August 30, 2000, at Toronto, Ontario, by
the Honourable Deputy Judge N. Weisman
Appearances
Counsel for the
Appellant:
Martin Sorensen
Jacques Bernier
Counsel for the
Respondent:
Kelly Smith-Wayland
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 26th day of September
2000.
D.J.T.C.C.
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