Fransen Engineering Ltd. v. M.N.R., docket 96-2424-UI

Date:19971126

Docket: 96-2424-UI

BETWEEN:

FRANSEN ENGINEERING LTD.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Teskey, J.T.C.C.

[1] The Appellant appeals from a determination by the Minister of National Revenue (the "Minister") where she determined that Karl Bedley (the "worker") was employed in insurable employment pursuant to the Unemployment Insurance Act (the "Act") during the period August 17, 1995 to January 17, 1996.

Facts

[2] When the Minister made her determination, she relied upon a series of assumed facts. The Appellant takes no issues with those facts contained in subparagraph (a) to (c) and (e) to (j) which read:

(a) the Appellant is an incorporated company which is in the consulting engineering business and operates out of an office located at 210-3031 Viking Way, Richmond, B.C.;

(b) the Worker submitted a resume to the Appellant and on or about August 17, 1995 the Appellant offered and the Worker accepted, a position with the Appellant as a computer aided draftsperson;

(c) the Worker did computer aided drafting for the Appellant with respect to various industrial projects of the Appellant;

...

(e) the Worker was free to choose his starting and ending time each day;

(f) the Worker was provided his workload throughout the day by Kevin Coles, an employee of the Appellant and the supervisor of computer aided drafting;

(g) the Worker was required to complete and submit time sheets to the Appellant on a bi-monthly basis;

(h) the Worker was paid at a rate of $23.00 per hour bi-monthly;

(i) the Appellant provided the Worker with all the computer and office equipment the Worker needed to perform the drafting services;

(j) the Worker had no investment or interest in the Appellant's business and was not related to any shareholders of the Appellant;

[3] The Worker was hired to do computer assisted drafting for a specific project. The Appellant had deadlines and as long as the worker was performing satisfactory drafting within the allotted time frame, the Appellant was not concerned when the work was being performed.

[4] The worker signed an acknowledgement that, other than worker's compensation, there would be no benefits.

[5] The worker billed the Appellant's business promptly for his hours of work, submitted his GST number and collected GST from the Appellant on all his invoices.

[6] The worker was assigned to work on a specific project, which he worked on till completion. On completion, he was asked if he wanted to work on another project. He was free to reject this and if it was accepted, then he did that project till it was concluded. The Appellant did not assign different projects to be worked on from day-to-day. He was not treated like the other employees. The Appellant did have several full time computer draftspersons.

[7] It is general practice in the professional engineering field to maintain employees to enable it to do the regular workload of the firm. Also, it is general practice when a peak period of work arrives to hire independent contractors for services on specific projects. These people are not subject to the restraints the employees work under, nor do they get the employee benefits. For the most part, the worker herein was without supervision.

Analysis

[8] MacGuigan, J.A. of the Federal Court of Appeal, in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025, when dealing with what was considered four tests, namely control, ownership of tools, chance of profit or risk of loss and integration, described the tests "not as a fourfold but as a four-in-one test", with emphasis on "the combined force of the whole scheme of operations".

[9] MacGuigan, J.A. said, at page 5030:

Of course, the organization test of Lord Denning and others produces entirely acceptable results when properly applied, that is, when the question of organization or integration is approached from the persona of the "employee" and not from that of the "employer," because it is always too easy from the superior perspective of the larger enterprise to assume that every contributing cause is so arranged purely for the convenience of the larger entity. We must keep in mind that it was with respect to the business of the employee that Lord Wright addressed the question "Whose business is it?"

[10] Then he went on to say on the same page:

Perhaps the best synthesis found in the authorities is that of Cooke J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732, 738-9:

The observations of Lord Wright, of Denning L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes," then the contract is a contract for services. If the answer is "no" then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him.

[11] The Federal Court of Appeal in Moose Jaw Kinsmen Flying Fins Inc. v. M.N.R., 88 DTC 6099 said at page 6100:

... like MacGuigan J. we view the tests as being useful subordinates in weighing all of the facts relating to the operations of the Applicant. That is now the preferable and proper approach for the very good reason that in a given case, and this may well be one of them, one or more of the tests can have little or no applicability. To formulate a decision then, the overall evidence must be considered taking into account those of the tests which may be applicable and giving to all the evidence the weight which the circumstances may dictate.

[12] In regards to the written contract (Exhibit A-1) that the Appellant signed and the general custom in the trade, in this appeal, after considering these facts, I have decided to attach to them some weight. The Federal Court of Appeal in Standing v. M.N.R. [1992] F.C.J. No. 890, released September 29, 1992 said:

... Regardless of what may have been the Tax Court's appreciation of the Wiebe Door test, what was crucial to it in the end was the parties own post facto characterization of the relationship as that of employer/employee. 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. The Tax Court should have undertaken an analysis of the facts while having regard to that test which, indeed, was reaffirmed in Moose Jaw Kinsmen Flying Fins Inc. v. The Minister of National Revenue ...

[13] The question whether a worker is an employee or an independent contractor is a question of law. The test as described by MacGuigan, J.A. in Wiebe Door Services Ltd., and as further discussed by the Federal Court of Appeal in Moose Jaw Kinsmen Flying Fins Inc. must be applied to all the terms of the contract. In some instances, what the parties have declared as to what they consider to be their contractual relationship and/or the custom in that particular business, may well be a factor that tips the decision one way or another. I believe on the facts before me that this is such an instance.

[14] When I apply the four-in-one test as set out in Wiebe Door Services Ltd. as discussed in Moose Jaw Kinsmen Flying Fins Inc. and looking at all the facts before me and interpreting the contract as a whole, I conclude that the worker was not an employee but an independent contractor. Therefore, the appeal is allowed.

Signed at Ottawa, Canada, this 26th day of November 1997.

"Gordon Teskey"

J.T.C.C.