Date: 20020716
Dockets: 2001-3099-IT-I, 2001-3103-IT-I,
2001-3104-IT-I, 2001-3105-IT-I, 2001-3106-IT-I,
BETWEEN:
DONALD J. ANDERSON, ROBERT G. AUCKLAND,
HOWARD H. HARDER, WYATT D.A. PENNER, KEITH W. SCOTT,
Appellants,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Beaubier, J.T.C.C.
[1] By consent of the parties, these appeals pursuant to the Informal Procedure were heard jointly and on common evidence at Saskatoon, Saskatchewan on June 27 and 28, 2002. The Appellants called Douglas Kellan, Vice-President of Distribution Utility, Sask Energy Inc. ("Sask Energy") (the natural gas retail distributor in Saskatchewan); Randy Hahn, Executive Director, Transmission Operation, TransGas Limited ("TransGas") (a division of Sask Energy which deals with the high pressure pipeline transmission and storage of natural gas in Saskatchewan); the Appellants, Wyatt Penner and Howard Harder, District Mechanic Operators in Charge ("DMOs") employed by TransGas and the Appellants Donald Anderson, Robert Auckland and Keith Scott, Service Technicians employed by Sask Energy.
[2] The Appellants have appealed reassessments pursuant to paragraph 6(1)(a) of the Income Tax Act ("Act") on account of the use of their employers' corporate pickup trucks and, in Mr. Scott's case, a van, which were allegedly used for driving to and from home to their employer's office premises which the Respondent alleged was their place of work in the calendar year 1999.
[3] All of the Appellants are tradesman employed by Sask Energy and TransGas. They maintain, troubleshoot and repair all of the equipment involved in the transmission of natural gas from storage to the consumer.
[4] The dispute arises from the fact that their employers require all of these men to take their company vehicles home at the end of each work day and to drive from their homes to each place of work in the vehicle. The employers pay all of the expenses associated with the vehicles and for all of their tools and equipment. The tools and equipment include:
1. Instruments
CO tester
Combustible gas detector
Gas trac
Line locator
and others but the above are sensitive and some are battery powered.
2. Safety equipment
Ear muffs/hearing protection
Plastic repair kit
First aid kit
Various portable lights, and other equipment.
3. A great many hand tools including: wire, cutters, files, hammers, pliers, saws, screwdrivers, shovels, skippers, tape measures, threaders and many wrenches of various kinds.
4. Miscellaneous equipment including a jack, a propane tank and a stopcock greaser.
5. A fire extinguisher and a fire suit and various fittings and parts and, in the case of Transgas employees, a 35 pound post pounder.
The employees undertake the following services and expenses at their homes:
1. The cost of plugging the vehicles in to enable immediate starts in the winter.
2. The cost, time and trouble of carrying certain instruments (some of which are battery-powered) from the cab of the vehicle into their homes and storing them there at night in cold weather so that they will be operative for immediate use.
3. The cost, where applicable, of providing parking space for the vehicle at home.
The employees are not allowed to use the vehicles for personal use and only one, Mr. Auckland, admitted to an occasion of personal use of the vehicles.
[5] The pickup trucks have an extended cab with the rear seats removed so that the encased instruments which must be kept warm can be stored in a special tool box in the cab. The cab also contains a Fleetnet Radio which is portable so that the employees can carry it with them when out of the cab. The box of each pickup has a fitted tool box along each side and, usually, a tool box fitted behind the cab. The van operated by Mr. Scott is similarly equipped; he works in Regina and usually also carries several meters.
[6] The reassessments were essentially respecting benefits estimated by the Minister for:
1. Stand-by days that were also working days, when the vehicle was driven from home to "work", and
2. Other working days when the vehicle was driven from home to "work". "Work" was alleged by the Respondent to be the employer's premises where the employee had a desk work space.
The Replies each contained the Minister's figures and calculations respecting these allegations in paragraph 11, but these were not in the form of assumptions. They were alleged as a pleading in each Reply and then included by assumption (a). The actual days described in the Replies were generally confirmed by the Appellants' testimony, although Mr. Scott stated that he prepared the numbers adopted by the Minister without reference to his own or his employer's records. The others referred to their records. Thus, the Court accepts the number of days described in each Reply as correct. However, the descriptions of "Home to Office Days" and alleged "Personal Kilometres" are not accepted as correct descriptions or allegations. All of the witnesses' testimony is believed.
[7] The Respondent assessed under paragraph 6(1)(a) of the Act which reads:
6. (1) There shall be included in computing the income of a taxpayer for a taxation year as income from an office or employment such of the following amounts as are applicable:
(a) the value of board, lodging and other benefits of any kind whatever received or enjoyed by the taxpayer in the year in respect of, in the course of, or by virtue of an office or employment, except any benefit
(i) derived from the contributions of the taxpayer's employer to or under a registered pension plan, group sickness or accident insurance plan, private health services plan, supplementary unemployment benefit plan, deferred profit sharing plan or group term life insurance policy,
(ii) under a retirement compensation arrangement, an employee benefit plan or an employee trust,
(iii) that was a benefit in respect of the use of an automobile,
(iv) derived from counselling services in respect of
(A) the mental or physical health of the taxpayer or an individual related to the taxpayer, other than a benefit attributable to an outlay or expense to which paragraph 18(1)(l) applies, or
(B) the re-employment or retirement of the taxpayer, or
(v) under a salary deferral arrangement, except to the extent that the benefit is included under this paragraph because of subsection (11);.
[8] It should be noted that none of the vehicles are "automobiles" as that is defined under section 248 of the Act. None of them could seat more than two people, and the second seat appears to have been left in so that apprentices could be trained by the Appellants who always worked alone with only their vehicles, equipment and radios. They could call for other DMOs or Service Technicians for help if they, in their discretion, felt they needed them. That assistance would be supplied on demand.
[9] Thus the question is whether the Appellants received or enjoyed a benefit in respect of, in the course of, or by virtue of their employment in the form of driving their very job-specific equipped vehicles to and from their homes in 1999.
[10] In assessing, the Minister did not allege a benefit when the Appellants went directly from their homes to a job site, rather than to the premises where their desks were located. The assessments were respecting those regular working days when the Appellants drove from their homes to the premises where their desks were located. But the Minister did assess for those same days when the Appellants were also on stand-by. In addition, all of the Appellants were subject at all times to being called to work for emergencies which occurred when the men on stand-by needed more help. Although the Appellants could refuse to attend an emergency, none who was asked ever had.
[11] These Appellants are the men that make the gas distribution system in Saskatchewan work. There may be engineers, lawyers, vice-presidents, managers, bill collectors, personnel staff, stenographers, clerks, parts men and others who are employed in great numbers, but all of them could leave work for days or weeks and the system would operate. If these men ceased to work for a day, one or more customers or even towns or cities would be without natural gas to heat their homes or provide other services. At temperatures of 30 º and 40 º below or when natural gas or carbon monoxide leaks occur, a failure to provide their services can mean life or death to consumers. Sask Energy has 320,000 customers who are serviced with natural gas and 64,000 kilometres of gas pipeline. TransGas operates the compressor stations from the gas fields that dehydrate the gas and compress it to 850 to 1000 pounds of pressure into TransGas pipelines that range from 20 inches to 4 inches in diameter. These pipelines carry the natural gas to Sask Energy outlets that reduce the pressure for their pipelines and retail service to as low as 4 pounds. The Hatton compressor station, where Mr. Harder works from his Maple Creek home, is 16 acres in size. TransGas employs about 80 DMOs. Sask Energy employs about twice that many Service Technicians in 44 districts in Saskatchewan.
[12] Each employer requests these employees to take that employer's vehicles home with them. When the employees are on stand-by they must live within 15 minutes of their designated work station from the moment they are called - this includes the time for getting up, cleaning up, dressing, taking their home-stored instruments to their vehicle and driving to that station. All of the Appellants complied with that rule. However, they are not called to their work stations or places when on stand-by. Rather they are telephoned by a 24 hour clerk staffed service and directed to go to the location where the emergency exists. Once there, he determines the problem and deals with it. If the stand-by Appellant can't deal with the problem himself, he calls out other fellow DMOs or Service Technicians on an emergency basis to help him. Examples were given such as:
1. Pipeline blow outs when two men are required to turn off valves which are 20 miles apart.
2. The complete loss of natural gas service in 1999 to the Town of Ituna at a temperature of - 20 or 30 º when air mixed accidentally into the natural gas pipeline and the system had to be bled, monitors reset and all pilot lights relit. This required over 20 Service Technicians to attend (including Mr. Anderson from Yorkton).
3. The complete loss of natural gas service to the Town of Chaplin in 1999 when the wind chill temperature was - 70 º where 20 Service Technicians also attended and had to go house to house to restore heat (including Mr. Auckland from Moose Jaw).
4. The breaking of a 17 inch cylinder at the Hatton compressor station which required replacement and repair of the engine (among the DMOs was Mr. Harder, the DMO in charge from Maple Creek).
In some rural areas the calls per man on stand-by are as few as three every three months. In Saskatoon and Regina there are often three per stand-by shift. In rural areas the stand-by shifts for both companies are generally about one week in every three. In both Saskatoon and Regina the Sask Energy stand-by shifts are for one day in every 14 with a second stand-by man also on call as a back-up.
[13] Mr. Kellan described the Service Technicians' work schedule. He did not refer to paperwork. Rather he stated that they maintain, service, and repair the Sask Energy pipelines and services to homes and business. They respond to calls respecting natural gas smells and carbon monoxide occurrences. They are called out by individuals and by Fire Departments wherever these occur. In addition, Fire Departments call them to fires to turn off natural gas services at the fire sites. Mr. Hahn described the DMOs work schedule and he did not refer to paperwork either. Rather he stated that the DMOs operate and maintain TransGas' pipeline systems and compressors. Their ordinary duties of maintenance include weed control, painting various ground outlets and signage. Both sets of Appellants do line finding for the public doing construction or other digging. Dramatic examples of what the Appellants do in the ordinary work day included Mr. Anderson's description of being called to correct a carbon monoxide situation in a restaurant in which 11 people became sick and ambulances were called (but not the Fire Department), and Mr. Scott describing how he and another Service Technician were working together on a repair job on a 15 pound pressure service system when fire burst out at the other workman's area and went up and set Mr. Scott afire. He was saved when the other Service Technician dragged him out, still afire. Routine occurrences were described by Mr. Harder as including getting a 35 pound post pounder out of his truck to pound in sign posts or fence posts along a pipeline, or stopping a construction job as he drove varying routes to his shift at Hatton and discovered a construction crew doing excavations within a foot of a TranGas pipeline, or, in a different environment, Mr. Scott carrying 6 gas meters in his van for replacement purposes because the new aluminium gas meters crack when they are struck and have to be replaced at consumers' premises. The routine call outs for Service Technicians are odour or pilot-light-out calls to residences.
[14] But the bottom line is that, while all except one of the Appellants has an individual desk (not an office), and the one remaining can use a long counter with others, even their usual reports are not written up at the desks. They are written up in their vehicles after each call or incident. Mr. Scott does everything at his home and only uses his desk for the storage of paper copies. No one, including the corporate officers, expected the Appellants to be at their desks. Rather, they were expected to be in their vehicles. Their vehicles are their work places. They receive calls and directions on the radios in their vehicles. All of their tools and instruments must be there. They do their work from their vehicles. They call for help with radios that belong in their vehicles. Even when Mr. Harder is at Hatton, repairs to the 16 acre compressor station are done with the tools in his vehicle and not by returning to the office premises there for more equipment. Their employers want them to take the vehicles home because in an emergency call, they respond quickly with the vehicle which has all that they need.
[15] Mr. Scott said it best when, in cross-examination, he stated "Work starts when I get in the van". The vehicles are the Appellants' workplace, whether they are paid or not. That is why their employers want them to take them home. The desk or premises at which they are allegedly stationed is superfluous to their needs to carry out their employment in a modern high-tech industry. Each, with his company vehicle, is self sufficient and their employers designed it that way and chose men who can carry out their jobs that way.
[16] The vehicles, tools, and instruments (which are all owned by the employers and are requested by the employers to be taken home by the employees, but cannot be used for personal use), are the employers' place of business in this case. Once in the vehicle, the employees were on the job: they were in the employers' premises and business place and could be called there on the employers' radio in the vehicle and directed to go anywhere their employer desired. The evidence is that they all responded to such directions by their employers. While it is clear that their work involved public safety, the Appellants' actions were all done at the direction of their employers. This included taking the vehicles to and from work, taking the instruments into their homes, plugging the vehicles in during cold months for instant responses and providing parking for the vehicle.
[17] The question then becomes - what is the benefit to the employees? In the Court's view there was none. If they were on stand-by they were required to respond to their employers' directions. If they were not on stand-by, but they were in the vehicle going to or from home and the radio was called in the vehicle, they would naturally answer it. If the employer was calling, it was in respect to the employer's business, while they were in the employer's premises, ready to go, and with all the necessary tools. They would have difficulty refusing
to accept directions from the employer even when going home. They could not refuse if they were leaving home. The evidence is that none of the Appellants ever refused to respond to an emergency, which is the kind of call they would get if they were going home. Even though the Appellants had the right to refuse in the latter circumstance, the evidence is that they never have refused. From a practical point of view, they never would refuse - an emergency for the Appellants is or could easily become a life and death situation for them if they were asking for help or for others if another DMO or Service Technician or someone else was calling for help. They would not refuse directions from their employers in such circumstances.
[18] Once in the vehicle, they were in the control of the employers. At that point, the benefit was entirely the employers'. That is why the employers asked the Appellants to take the vehicles. For these reasons, the Court finds that the employees received no benefit from the use of these vehicles.
[19] For these reasons, the appeals are allowed. Each Appellant is granted a full set of costs pursuant to the tariff for the Informal Procedure, including costs of a hearing for two full days consisting of four one-half days for each Appellant.
Signed at Saskatoon, Saskatchewan, this 16th day of July, 2002.
"D. W. Beaubier"
J.T.C.C.
COURT FILE NO.: 2001-3099(IT)I; 2001-3103(IT)I;
2001-3104(IT)I; 2001-3105(IT)I; and
2001-3106(IT)I
STYLE OF CAUSE: Donald J. Anderson v. The Queen
Robert G. Auckland v. The Queen
Howard H. Harder v. The Queen
Wyatt D.A. Penner v. The Queen
Keith W. Scott v. The Queen
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: June 27 and 28, 2002
REASONS FOR JUDGMENT BY: The Honourable Judge D.W. Beaubier
DATE OF JUDGMENT: July 16, 2002
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Elaine Lee
COUNSEL OF RECORD:
For the Appellant:
Name: Michel Bourque and Curtis Stewart
Firm: Bennett Jones
Calgary, Alberta
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2001-3099(IT)I
BETWEEN:
DONALD J. ANDERSON,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeals of
Robert G. Auckland (2001-3103(IT)I), Howard H. Harder (2001-3104(IT)I),
Wyatt D.A. Penner (2001-3105(IT)I) and Keith W. Scott (2001-3106(IT)I)
on June 27, 2002 at Saskatoon, Saskatchewan by
the Honourable Judge D.W. Beaubier
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Elaine Lee
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 1999 taxation year is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Costs are awarded to the Appellant pursuant to the tariff for the Informal Procedure, including costs of a hearing for two full days consisting of four one-half days.
Signed at Saskatoon, Saskatchewan, this 16th day of July, 2002.
|
"D. W. Beaubier" |
J.T.C.C.
2001-3103(IT)I
BETWEEN:
ROBERT G. AUCKLAND,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeals of
Donald J. Anderson (2001-3099(IT)I), Howard H. Harder (2001-3104(IT)I),
Wyatt D.A. Penner (2001-3105(IT)I) and Keith W. Scott (2001-3106(IT)I)
on June 27, 2002 at Saskatoon, Saskatchewan by
the Honourable Judge D.W. Beaubier
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Elaine Lee
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 1999 taxation year is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Costs are awarded to the Appellant pursuant to the tariff for the Informal Procedure, including costs of a hearing for two full days consisting of four one-half days.
Signed at Saskatoon, Saskatchewan this 16th day of July, 2002.
|
"D. W. Beaubier" |
J.T.C.C.
2001-3104(IT)I
BETWEEN:
HOWARD H. HARDER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeals of
Donald J. Anderson (2001-3099(IT)I), Robert G. Auckland (2001-3103(IT)I),
Wyatt D.A. Penner (2001-3105(IT)I) and Keith W. Scott (2001-3106(IT)I)
on June 27, 2002 at Saskatoon, Saskatchewan by
the Honourable Judge D.W. Beaubier
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Elaine Lee
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 1999 taxation year is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Costs are awarded to the Appellant pursuant to the tariff for the Informal Procedure, including costs of a hearing for two full days consisting of four one-half days.
Signed at Saskatoon, Saskatchewan, this 16th day of July, 2002.
|
"D. W. Beaubier" |
J.T.C.C.
2001-3105(IT)I
BETWEEN:
WYATT D.A. PENNER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeals of
Donald J. Anderson (2001-3099(IT)I), Robert G. Auckland (2001-3103(IT)I),
Howard H. Harder (2001-3104(IT)I) and Keith W. Scott (2001-3106(IT)I) on June 27, 2002 at Saskatoon, Saskatchewan by
the Honourable Judge D.W. Beaubier
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Elaine Lee
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 1999 taxation year is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Costs are awarded to the Appellant pursuant to the tariff for the Informal Procedure, including costs of a hearing for two full days consisting of four one-half days.
Signed at Saskatoon, Saskatchewan, this 16th day of July, 2002.
|
"D. W. Beaubier" |
J.T.C.C.
2001-3106(IT)I
BETWEEN:
KEITH W. SCOTT,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Appeal heard on common evidence with the appeals of
Donald J. Anderson (2001-3099(IT)I), Robert G. Auckland (2001-3103(IT)I),
Howard H. Harder (2001-3104(IT)I) and Wyatt D.A. Penner (2001-3105(IT)I)
on June 27, 2002 at Saskatoon, Saskatchewan by
the Honourable Judge D.W. Beaubier
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Elaine Lee
JUDGMENT
The appeal from the reassessment made under the Income Tax Act for the 1999 taxation year is allowed, and the reassessment is referred back to the Minister of National Revenue for reconsideration and reassessment in accordance with the attached Reasons for Judgment.
Costs are awarded to the Appellant pursuant to the tariff for the Informal Procedure, including costs of a hearing for two full days consisting of four one-half days.
Signed at Saskatoon, Saskatchewan, this 16th day of July, 2002.
|
"D. W. Beaubier" |
J.T.C.C.