Date: 20010723
Dockets: 2000-975-CPP,
2000-976-EI
BETWEEN:
RANDY REBER,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Porter, D.J.T.C.C.
Introduction
[1] These appeals were heard on common evidence by consent of the parties on the 2nd of November 2000 at Calgary, Alberta.
[2] The Appellant has appealed from the decisions of the Minister of National Revenue (the "Minister") dated the September 7, 1999 that his employment with Scuka Enterprises Ltd. (the "Company") from November 2, 1998 to December 31, 1998 and with Scuka Enterprises (Alberta) Ltd. (also called the "Company") from January 1, 1999 to March 11, 1999 was both insurable under the Employment Insurance Act (the "EI Act") and pensionable under the Canada Pension Plan (the Plan") for the following reason:
It has been decided that this employment was insurable/pensionable for the following reason: you were employed under a contract of service and therefore you were Scuka Enterprises [(Alberta)] Ltd.'s employee.
The decisions were said to be issued pursuant to section 93 of the EI Act and section 27.2 of the Plan and were based upon paragraph 5(1)(a) of the EI Act and 6(1)(a) of the Plan respectively.
[3] The material facts reveal that the Appellant was a journeyman tower crane operator and a journeyman crane operator. He was engaged by the company to erect, operate, maintain and dismantle a crane on a hotel building site in the Lethbridge area over the periods in question. He maintained that he was engaged as an independent contractor under a contract for services. The Minister has decided to the contrary that he was an employee operating under a contract of service. That is the issue between the parties.
The Law
[4] The manner in which the Court should go about deciding whether any particular working arrangement is a contract of service and thus an employer/employee relationship or a contract for services and thus an independent contractor relationship, has been clearly laid out by the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025. The test to be applied has been further explained by that Court in Moose Jaw Kinsmen Flying Fins Inc. v. M.N.R., 88 DTC 6099. There are, following these cases, numerous decisions of this Court, which demonstrate how these appellate guidelines have been applied. In the Moose Jaw Kinsmen Flying Fins Inc. case, above, the Federal Court of Appeal said this:
[Analysis]
The definitive authority on this issue in the context of the Act, is the decision of this Court in Wiebe Door Services Ltd. v. The Minister of National Revenue, 87 DTC 5025. MacGuigan J. speaking on behalf of the Court, analyzed Canadian, English and American authorities, and, in particular, referred to the four tests, for making such a determination enunciated by Lord Wright in City of Montreal v. Montreal Locomotive Works Ltd., [1974] 1 D.L.R. 161 at 169-70. He concluded at page 5028 that:
Taken thus in context, Lord Wright's fourfold test [control, ownership of tools, chance of profit, risk of loss] is a general, indeed an overarching test, which involves "examining the whole of the various elements which constitute the relationship between the parties". In his own use of the test to determine the character of the relationship in the Montreal Locomotive Works case itself, Lord Wright combines and integrates the four tests in order to seek out the meaning of the whole transaction.
At page 5029 he said:
... I interpret Lord Wright's test not as the fourfold one it is often described as being but rather as a four-in-one test with emphasis always retained on what Lord Wright, supra, calls "the combined force of the whole scheme of operations," even while the usefulness of the four subordinate criteria is acknowledged.
At page 5030 he had this to say:
What must always remain of the essence is the search for the total relationship of the parties.
He also observed "there is no escape for the trial judge, when confronted with such a problem, from carefully weighing all the facts."
... 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.
[5] The nature of the tests referred to by the Court can be summarized as follows:
a) The degree or absence of control exercised by the alleged employer;
b) Ownership of tools;
c) Chance of profit and risk of loss;
d) Integration of the alleged employee's work into the alleged employer's business.
[6] I also take note of the further words of MacGuigan J., in the Wiebe case, above, where he approved the approach taken in the English courts:
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.
[7] To this I would add the words of Décary, J.A. in Charbonneau v. Canada (M.N.R.) [1996] F.C.J. No. 1337, where speaking for the Federal Court of Appeal he said this:
The tests laid down by this Court ... are not the ingredients of a magic formula. They are guidelines which it will generally be useful to consider, but not to the point of jeopardizing the ultimate objective of the exercise, which is to determine the overall relationship between the parties. The issue is always, once it has been determined that there is a genuine contract, whether there is a relationship of subordination between the parties such that there is a contract of employment ... or, whether there is ..., such a degree of autonomy that there is a contract of enterprise or for services. ... In other words, we must not pay so much attention to the trees that we lose sight of the forest. ... The parts must give way to the whole.
[8] In the case of Vulcain Alarme Inc. v. The Minister of National Revenue, (1999) 249 N.R. 1 in which the Federal Court of Appeal revisited the issue. Létourneau J.A. said this:
... These tests derived from case law are important, but it should be remembered that they cannot be allowed to compromise the ultimate purpose of the exercise, to establish in general the relationship between the parties. This exercise involves determining whether a relationship of subordination exists between the parties such that the Court must conclude that there was a contract of employment within the meaning of art. 2085 of the Civil Code of Quebec, or whether instead there was between them the degree of independence which characterises a contract of enterprise or for services....
He also said later in the same Judgment:
A contractor who, for example, works on site on a subcontract does not serve his customers but those of the payer, that is the general contractor who has retained his services. The fact that Mr. Blouin had to report to the plaintiff's premises once a month to get his service sheets and so to learn the list of customers requiring service, and consequently the places where his services would be provided, does not make him an employee. A contractor performing work for a business has to know the places where services are required and their frequency just as an employee does under a contract of employment. Priority in performance of the work required of a worker is not the apanage of a contract of employment. Contractors or subcontractors are also often approached by various influential customers who force them to set priorities in providing their services or to comply with the customers' requirements.
And:
... Although Mr. Blouin's income was calculated on an hourly basis, the number of hours of work were determined by the number of service sheets he received from the plaintiff. Mr. Blouin and his company thus had no guaranteed income. Unlike the technicians working as employees within the plaintiff's business, whose weekly salary was constant, Mr. Blouin's income fluctuated with the service calls. In fact, towards the end of his contract with the plaintiff Mr. Blouin was no longer doing the equivalent of forty hours a month as he was receiving few service sheets.
Further, Mr. Blouin, who used his own vehicle for work, had to pay the losses resulting from an accident in which he was involved and obtain another vehicle.
The Facts
[9] The Minister was said in the Replies to the Notices of Appeal to admit the following facts from the Notice of Appeal:
(i) During the period in question, the payor's name was Scuka Enterprises Ltd. (November 2, 1998 to December 31, 1998);
(ii) The Appellant provided his services as a qualified crane operator for the construction site in Lethbridge, Alberta.
(iii) The Appellant personally performed the service, but was not limited to performing the service himself.
(iv) The payor advised the Appellant when he was required on site.
(v) The Appellant provided tools to service the tower crane.
(vi) The Appellant determined when repairs to the crane were necessary and arranged for those repairs.
(vii) During the period from January 1, 1999 to March 1, 1999 the name of the payor was Scuka Enterprises (Alberta) Ltd.
[10] In deciding as he did, the Minister was said in the Replies to the Notice of Appeal, to have relied upon the following assumptions of fact:
(a) the facts as admitted above;
(b) the Appellant was not related to the Payer;
(c) the Payer is a general contrator for the construction of buildings;
(d) the Payer's business is not seasonal;
(e) the Appellant did not have an investment or financial interest in the Payer;
(f) the Appellant provided services to the Payer for one project, the construction of the Ramada Inn in Lethbridge, Alberta;
(g) the Appellant's duties included:
(i) the erection of the crane;
(ii) checking and signing off of the engineering design for the crane base;
(iii) inspecting location for erection;
(iv) supervising the unloading and building of the crane;
(v) crane operation (planning and hoisting of lifts);
(vi) crane maintenance consisting of daily adjustments and inspections and weekly and monthly inspections;
(vii) dismantling of the crane by supervising and assisting in dismantling and loading of the crane;
(h) the Appellant is a journeyman tower crane operator and journeyman crane operator;
(i) the Appellant possesses a Journeyman Tower Crane Certificate and a Journeyman Crane Operator Certificate;
(j) the Appellant did not perform the services as a union worker;
(k) for the period November 2, 1998 to December 31, 1998 the Appellant was remunerated through Scuka Enterprises Ltd.;
(l) for the period January 1, 1999 to March 11, 1999 the Appellant was remunerated through Scuka Enterprises (Alberta) Ltd.;
(m) the Appellant was paid an hourly rate of $36.00;
(n) the Appellant was paid bi-weekly;
(o) the Appellant was paid by cheque;
(p) the Appellant submitted invoices to the Payer;
(q) the Appellant received the following payments in 1998 and 1999:
Date of Period Amount Date Paid Cheque No.
Invoice
Nov 17, 1998 Nov 2-15 $3,852.00 Nov 19, 1998 3498
Dec 2, 1998 Nov 15-30 4,086.00 Dec 9, 1998 3528
Dec 21, 1998 Dec 1-15 3,960.00 Dec 21, 1998 3549
Jan 3, 1999 Dec 16-31 2,880.00 Jan 6, 1999 3570
Jan 17, 1999 Jan 1-15 3,492.00 Jan 20, 1999 53
Feb 2, 1999 Jan 16-31 4,266.00 Feb 2, 1999 57
Feb 16, 1999 Feb 1-15 3,528.00 Feb 17, 1999 72
March 3, 1999 Feb 16-28 3,132.00 March 4, 1999 78
March 12, 1999 Mar 1-11 3,186.00 March 15, 1999 90
(r) the Appellant did not have set hours of work;
(s) the Payer would notify the Appellant when he was required;
(t) the Appellant would remain on the job site until duties for the day were completed;
(u) the Appellant and the Payer did not have a written contract;
(v) the Payer did not have other workers that performed the same services as the Appellant;
(w) Worker's compensation insurance was carried by the Payer;
(x) the Appellant did not incur expenses in the performance of his duties but did incur expenses for motor vehicle, telephone and miscellaneous expenses;
(y) the Payer had first right to the Appellant's services;
(z) the Payer's site supervisor monitored the Appellant's work;
(aa) the Payer's site supervisor checked the quality of the Appellant's work;
(bb) the Payer's site supervisor had the authority for the final say on the project;
(cc) the Payer supplied, owned and insured the crane;
(dd) the Payer provided the Appellant with the workers required to assemble and disassemble the crane;
(ee) the crane is worth approximately $80,000;
(ff) parts for the crane, lifting slings, oil and grease were supplied by the Payer;
(gg) the Appellant did not charge the Payer GST.
[11] The Appellant gave evidence on his own behalf. He agreed with all of the assumptions of fact, save and except items (s), (t), (v), (y), (z), (bb), (dd) and (ff).
[12] With respect to items (s) and (t), the Appellant was quite adamant in asserting that whilst the company would let him know when his services were needed on site, he himself would decide whether it was safe to operate the crane in the prevailing weather conditions or safe for any other reason.
[13] With respect to item (v), the Minister was correct in asserting that the company did not have other workers who performed the same services as the Appellant. He, however, had arranged with a friend of his to work "back up" on the crane if, for any reason, he himself could not work. In fact, that never occurred.
[14] With regard to item (y), the Appellant was of the view that he could leave the job whenever he chose and the crane would close down. It is clear, however, that he would have had to make arrangements for down-time with the site supervisor beforehand or in the alternative, find a replacement operator.
[15] With respect to item (z), the evidence revealed that the Appellant had certain skills, reflected in his holding 2 journeyman's certificates, which clearly the site supervisor would not have. Thus, the Appellant, once engaged, was responsible to ensure both that the crane was put together in a safe way and that thereafter it was operated safely. His decision, for instance, that it would be unsafe to operate because of high winds would be final. Nonetheless, he had to liaise with the site supervisor or his delegates on the use to which the crane would be put on a daily basis. Thus, the supervisor would call for what he needed before the construction and when he needed it and the Appellant would then fill those requirements within the bounds of his own professional competence. To this extent, how he performed his work was monitored by the supervisor who would expect his requirements to be met, subject to the safety issues, which were in the exclusive domain of the Appellant. If, however, the Appellant had not met the needs of the project, he would have been let go and another operator brought in.
[16] This leads to the question of the final say, which the Minister asserted in item (bb) rested with the site supervisor. It is clear from the evidence that this would not extend into safety issues. If, however, there were two loads to be lifted, then subject to safety issues, the site supervisor, on the evidence, had the authority to say which went first. It was the same with respect to the days worked on the site, time off or anything else.
[17] With respect to item (dd), the Appellant took issue with the assumption of fact made by the Minister that the Company provided the workers to assemble or disassemble the crane. In fact, it seems the Appellant selected these people but they were paid by the Company. The Appellant did not engage them himself as employees or subcontractors. They were only taken on by him on behalf of the Company. Thus, in my view, the Minister was correct in his assumption.
[18] With respect to item (ff), it is clear from the evidence that all the major parts for the crane were supplied by the Company as assumed by the Minister. However, it is true that the Appellant on one occasion supplied some brake pads, of a value of $15.00, out of his own pocket. There was no evidence about lifting slings or oil and grease.
[19] It is clear from the evidence generally that the Appellant had the expertise on the site, around all matters relating to the crane. The contractor had not apparently used a crane beforehand and thus relied to a great extent on the expertise of the Appellant. The latter oversaw the construction of the crane from the ground up and had to sign off on the engineering papers. He had some special tools for torquing the special bolts on the crane, which he had borrowed from a friend for a fee of $40.00, which he paid himself. He used them to torque these bolts to special standards. He kept a log book in this respect. Others who were engaged by the company actually lifted up parts of the crane and put them in place under his direction and he would then finalize the bolting together of the pieces.
[20] It was apparent that in addition to the torquing tools which he brought to the job, the Appellant also owned some electrical calibrating machines of a value of $150.00 and his own basic wrenches, screwdrivers, pliers and grease gun.
[21] The Appellant said that this was the first time he had taken on a non-union job, branching out and doing something on his own, and that he was wanting to start up his own business. He had no business license. He said that he called his business Hooker Enterprises. However, he had done nothing formal in this respect. He carried no insurance. That was basically his evidence.
Application of the 4 Part Test to the Evidence
[22] The law is clear that it is not the name given to any particular working relationship, that is all important, but rather the Court must look at the substance of the arrangement. If the parties decide to call their arrangement by any particular name, the Court should no doubt give due deference to their choice, if the evidence reveals no reason to derogate from that choice. If, however, the true substance of the arrangement does not accord with the title put upon it by the parties, then it is the substance which the Court must look. In this case, I note that there is no clear evidence of any title put upon the arrangement by the parties themselves. The contract was one of $36.00 per hour for work performed. It was an oral contract and nothing was reduced to writing. The Appellant had put his own title upon the arrangement, that of independent contractor.
[23] Control: I remind myself that it is not the actual control exercised by a payor that is so important in these situations as the right to control. The more qualified and professional any particular worker is with respect to his field of work, the less likely he or she is to be actually controlled on a day by day basis. However, it is the right to control that work that to which the Court must look.
[24] It is clear here that the Appellant had considerable say in how the crane was operated. He could close the crane down for safety reasons any time he chose. I doubt that he could have closed it down, very long, for any other reason. The Company had considerable say through the site supervisor as to what went up and down by crane in any particular day. In addition, if the Company wished to shut the crane down for any amount of time, it could have done so and the Appellant would have had no say.
[25] Thus, it seems to me that the Company had a considerable amount of control reserved unto itself in this situation and superimposed onto that was an element of 'say' reserved to the Appellant within his professional realm. On the whole, I tend to view this aspect of the test as balancing towards an employee situation.
[26] Tools and Equipment: The crane itself was provided by the Company. That was the major operating piece of equipment. Clearly, if the Appellant came on site with his own crane, he would likely be operating his own business. However, he did not. He brought some tools which he rented or borrowed from a friend for $40.00, some electrical calibrating equipment upon which he placed a value of $150.00, and he had some wrenches, pliers and screwdrivers. This would be no different from any truck driver or carpenter carrying out regular employment duties. The Appellant had no significant investment in any tools or equipment to enable him to carry out this work. Clearly, the Company did have a significant investment.
[27] In my view, this aspect of the test points far more clearly to a contract of service than a contract for services with an independent contractor.
[28] Profit and Loss: The Appellant was able to earn more money, the more hours he worked. That in itself is not considered profit in the sense of this aspect of the test. He stood to lose nothing in the entrepreneurial sense had no capital or investment at risk and in the course of his work, he did not stand to lose money. He carried no insurance. Whilst if he had been negligent in carrying out his duties, he might have been sued, he would no doubt have been sued in an employee capacity whereby the Company itself would be liable for his negligence. There was absolutely nothing in the evidence to suggest that the Appellant stood to make a profit or suffer a loss in any entrepreneurial sense. This aspect of the test clearly, in my view, points to an employee situation working under a contract of service.
[29] Integration: Lastly, one must look at the situation in order to see whose business it was. Clearly, the Company was in business for itself. It was in the contracting business, building a hotel. The question must be looked at, however, from the point of view of the Appellant. He was operating a crane. Was he doing so as part of his business or was this work part and parcel of the business of the Company? Clearly, it could go either way, depending on the circumstances. The Company had not operated with a crane previously. It had no experience in that field. The Appellant clearly did have experience in this field and that was the reason that the Company engaged him. There is no evidence to suggest that the Appellant had ever worked other than as an employee doing his work previously. In fact, the evidence was that he had always worked as an employee. Whilst there can always be a first time for anything, there is nothing to suggest that the way in which the Appellant went about his work on this project was any different to the way he had always gone about it beforehand. He worked as a crane operator and there was nothing in the evidence to suggest that he had on this project done anything to move his work into an entrepreneurial situation, whereby one can say that he was in business for himself. It seems to me that his business was totally integrated and reliant upon the business of the Company. This aspect of the test quite clearly, in my view, points to a situation of a contract of service.
Conclusion
[30] When I look not just at the individual trees, which all indicate a contract of service in this situation, but also to the forest as a whole, I see nothing but an employee, albeit a highly skilled one, working for an employer. In my view, the Minister was correct in arriving at the decisions which he did, and the appeal is accordingly dismissed.
Signed at Calgary, Alberta, this 23rd day of July 2001.
|
"Michael H. Porter" |
D.J.T.C.C.
COURT FILE NO.: 2000-975(CPP)
STYLE OF CAUSE: Randy Reber and M.N.R.
PLACE OF HEARING: Calgary, Alberta
DATE OF HEARING: November 2, 2000
REASONS FOR JUDGMENT BY: Honourable Deputy Judge Michael H. Porter
DATE OF JUDGMENT: July 23, 2001
APPEARANCES:
Agent for the Appellant: Ronald Peterson
Counsel for the Respondent: Gwen Mah
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE NO.: 2000-976(EI)
STYLE OF CAUSE: Randy Reber and M.N.R.
PLACE OF HEARING: Calgary, Alberta
DATE OF HEARING: November 2, 2000
REASONS FOR JUDGMENT BY: Honourable Deputy Judge Michael H. Porter
DATE OF JUDGMENT: July 23, 2001
APPEARANCES:
Agent for the Appellant: Ronald Peterson
Counsel for the Respondent: Gwen Mah
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-975(CPP)
BETWEEN:
RANDY REBER,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Randy Reber (2000-976(EI)) on November 2, 2000 at Calgary, Alberta, by
the Honourable Deputy Judge Michael H. Porter
Appearances
Agent for the Appellant: Ronald Peterson
Counsel for the Respondent: Gwen Mah
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Calgary, Alberta, this 23rd day of July 2001.
|
"Michael H. Porter" |
D.J.T.C.C.
2000-976(EI)
BETWEEN:
RANDY REBER,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeal of Randy Reber (2000-975(CPP)) on November 2, 2000 at Calgary, Alberta, by
the Honourable Deputy Judge Michael H. Porter
Appearances
Agent for the Appellant: Ronald Peterson
Counsel for the Respondent: Gwen Mah
JUDGMENT
The appeal is dismissedand the decision of the Minister is confirmed. in accordance with the attached Reasons for Judgment.
Signed at Calgary, Alberta, this 23rd day of July 2001.
|
"Michael H. Porter" |
D.J.T.C.C.