Date: 19991006
Docket: 98-898-UI, 98-899-UI, 98-135-CPP, 98-136-CPP
BETWEEN:
BLUES TRUCKING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Rowe, D.J.T.C.C.
[1] On June 22, 1998 the Minister of National Revenue (the "Minister") decided Terry Insley - the worker - was employed in insurable employment with the appellant - Blues Trucking Inc. (BTI) - during the period from November 25 to December 29, 1997 by reason that Insley was employed under a contract of service with BTI - the payor - pursuant to paragraph 5(1)(a) of the Employment Insurance Act. The appellant appealed - 98-898(UI) - from that ruling. On June 22, 1998 the Minister also decided the appellant was liable to pay Canada Pension Plan contributions on earnings paid to the worker for the same period on the basis he was employed under a contract of service pursuant to subsection 27(5) of the Canada Pension Plan. The appellant appealed - 98-135(CPP) - from that decision.
[2] On June 22, 1998 the Minister decided Larry Hansford - the worker - was employed in insurable employment with the appellant - Blues Trucking Inc. (BTI) - during the period from July 29, 1997 to January 15, 1998 by reason that Hansford was employed under a contract of service with BTI - the payor - pursuant to paragraph 5(1)(a) of the Employment Insurance Act. The appellant appealed - 98-899(UI) - from that ruling. On June 22, 1998 the Minister also decided the appellant was liable to pay Canada Pension Plan contributions on earnings paid to the worker during the same period on the basis he was employed under a contract of service pursuant to subsection 27(5) of the Canada Pension Plan. The appellant appealed - 98-136(CPP) - from that decision.
[3] Counsel for the parties agreed the employment insurance appeals would be heard together and the result - in each case - would apply to the relevant Canada Pension Plan appeal.
[4] Counsel for the parties agreed that a Book of Exhibits be filed as Exhibit A-1 with tabs 1-12, inclusive and a reference to a tab number will mean it refers to a document in Exhibit A-1.
[5] Patricia Budnick testified she is a businesswoman residing in Martensville, Saskatchewan and has been at all relevant times a shareholder and director of BTI incorporated in May, 1996. Prior to incorporation, she and her husband operated the same business as a partnership. She stated BTI had a contract with Temorvil Services (1974) Ltd. (Temor) to haul oil and water from various sites. While there were other companies operating in the oil industry around the Macklin, Saskatchewan area, BTI worked only for Temor. The contract with Temor had been in writing prior to 1996 but thereafter the relationship continued on the same terms as were in the formal agreement which contained a provision that BTI would not compete with Temor for a certain length of time following the end of their business relationship. BTI owned the power units or tractors and Temor owned the trailers. Several oil companies, including Wascana Energy Inc. (Wascana) had entered into a contract with Temor to haul oil and water from tanks located at various places and to haul the load to a collection facility known as a battery. Once levels in a tank reached a certain point then an employee of Wascana would call one of the BTI drivers to haul either water or oil to the battery or to another designated facility if a test performed on the oil required it to be transported to a special battery. Patricia Budnick stated the BTI drivers were required to meet industry standards and had to hold a Class 1 license. In addition, certain certificates were required which involved passing certain safety courses relevant to oilfield work. BTI did not pay for any of these courses and drivers were required to become qualified on their own efforts. Insley entered into a contract with BTI - Tab 7 - and Hansford signed an identically worded agreement - Tab 6 - with BTI. Hansford - a qualified mechanic - also did repairs for BTI. Budnick stated BTI received two letters - both dated April 3, 1998 - (Tabs 1 and 2) - advising that the Department of Human Resources Development had requested a ruling from Revenue Canada on the insurability and pensionability of each worker and the resultant ruling was that each worker was considered to be an employee under a contract of service with BTI. The appellant corporation requested a determination pertaining to each worker and decisions were issued by the Minister finding that each worker had been engaged in insurable and pensionable employment. Budnick stated the only employees of BTI - in her opinion - at the relevant time were herself and her husband, Terry Budnick who held a Class 1 license but no longer worked as a driver. BTI owned four tractor units and they were operated 24 hours a day - 7 days a week. As a result, each unit required two or three operators - working different shifts - to ensure there was always a driver in charge of a power unit. Operators were assigned to a particular tractor but no scheduling of hours of work was done by BTI and hours were not recorded as the concern of BTI was only with regard to ensuring the contract between it and Temor was carried out. Hansford had extensive oilfield experience as a driver and a dispatcher. Temor had no dispatchers in the Macklin area and an oil company would post a list at the battery scheduling loads to be hauled. As an example of the method of operation, Budnick explained Wascana employees, after checking fluid levels at various wells, would return to the battery and create a list of wells requiring service without assigning any priority to the sites. The BTI drivers would then consult the list and start to haul from as many of the sites as could be serviced within a 12-hour shift. Another driver - assigned to that same tractor - would take over and continue to haul from the locations set forth on the list. A new list was issued each morning and Wascana workers would check the wells every day. BTI did not supervise the drivers and Patricia Budnick or her husband might not be in the oilfield itself for two or three months unless required to attend for some particular reason. Patricia Budnick stated Terry Insley - who had responded to an advertisement placed by BTI - had no oilfield experience but at the time this was not unusual within the industry. Temor had contracts with corporations and individuals operating under business or trade names and BTI had entered into a contract with Kirwer Holdings Ltd. and another corporation to operate BTI power units and invoices - Tab 10 - were submitted by those limited companies to BTI. Patricia Budnick referred to Tab 9 containing various invoices which had been submitted to BTI by Hansford. These were issued once per month and, pursuant to Schedule A of the contract, were based on a percentage of gross revenue - usually 30% - earned by him hauling certain loads using the BTI tractor while carrying out the contract between BTI and Temor. At page 3 of Tab 9, Budnick pointed to an invoice issued by BTI to Hansford in which BTI charged him the sum of $180.00 - inclusive of GST - as a result of BTI having to pay for the clean-up of a small oil spill - which had been caused by Hansford - at a wellsite. Wascana had hired a firm to clean up the spill and had charged the cost to Temor which then passed the expense on to BTI and it, in turn, deducted the amount from payment to Hansford. In addition, Hansford billed BTI - at the rate of $16.00 per hour - for mechanical work done by him on BTI equipment. He owned his own tools and performed the work - at his choosing - entirely according to his own timetable during periods when he was not working as a driver. During one period, Hansford worked 23 consecutive days - as a driver - and if any driver wanted to take time off then he would arrange to do so with the other drivers. At the outset, all drivers were informed by either Patricia Budnick or her husband that they were to arrange their own schedules and for determining when they could take time off the job and Terry Insley - who had inquired about days off - was advised he had to deal with the other drivers. All operators were specifically advised they were not going to be treated as employees of BTI and none of the usual deductions would be taken from their pay. The drivers were encouraged to register under the provisions pertaining to Goods and Services Tax even though the transporting of the oil and/or water was zero-rated for GST purposes and Temor had provided a copy of a letter issued by Revenue Canada to that effect (Tab 11). Any new drivers had to be added specifically to the BTI insurance policy by way of special endorsement. All operators on the tractor units had to perform routine maintenance. Terry Budnick was qualified to do mechanical work on the units. The invoices sent to BTI by Hansford were on Temor letterhead because he had borrowed some blank time sheets from Temor. On occasion, a tractor and trailer was required to be on stand-by and BTI then charged an hourly rate to Temor which - in turn - billed Wascana but the particular operator during that shift still received only the agreed percentage of the total revenue generated by the unit without regard to whether it was generated by actual hauling or otherwise. Terry Insley - between November 25 and December 29, 1997 also submitted invoices to BTI (Tab 8). Insley had no experience and an agency of the Saskatchewan government dealing with social services requested BTI to pay an advance on salary and moving expenses to which Patricia Budnick responded that he was not an employee. Patricia Budnick stated while BTI did not pay any Workers' Compensation Board premiums directly, Temor paid the relevant levy and then deducted that amount from payment to BTI. The operators did not belong to any union. On occasion - as shown by documents at Tab 5 - certain drivers were charged for damage caused by them to BTI equipment. The earnings of drivers varied as some were more efficient and could haul more loads within the same time period. Most of the operators owned their own tools, safety equipment and special clothing. They had to do their own oil changes - using the BTI shop - and BTI paid for all oil and fuel costs. One of the tractor units was equipped with a cell phone and someone from the BTI office could contact the driver who would use the two-way radio installed in the tractor to pass on a message to the appropriate person. Each tractor was equipped with a radio so Wascana could be in contact and the operators could then communicate with each other to determine whether or not there would be any need to re-arrange the order of attendance at the wellsites on the list provided by Wascana as sometimes there might be a reason for one of the units to be behind schedule on a particular day and it would need help from other operators to finish the assigned hauls.
[6] In cross-examination, Patricia Budnick stated the distance between Saskatoon - the place of residence of herself and her husband - was 250 kilometres from the municipality of Macklin. However, Terry Budnick had an apartment in Macklin and BTI also rented a shop in which to store tractor units not in service and to use for making repairs. There was no office, as such, but there was a telephone. The apartment was more economical than renting motel rooms which, on occasion, were difficult to obtain and her husband also used the apartment when he went snowmobiling in the Macklin area. Terry Budnick, as a qualified mechanic, often did repairs on BTI equipment that were beyond routine maintenance. In the event one of the operators had a problem, Terry Budnick would receive a call and if a mechanical difficulty could not be resolved then the unit would be brought to the shop in Macklin. In the event Terry Budnick did not wish to undertake the necessary repairs to any unit, he would contact Hansford to see if Hansford wanted to do the work but the priority of Hansford was to haul the loads and sometimes he would be unable to devote the time to the mechanical repair and the unit would have to be taken into Saskatoon to an independent truck repair facility. The drivers - Hansford and Insley - drove the same tractor unit. Any calls charged to the cell phone assigned to the truck that were discovered to be of a personal nature would be charged back to the relevant person and an example of that is found at Tab 8 where Insley was billed $20.00 for telephone charges. Budnick stated Insley received an advance after working only a few days and Hansford, on occasion, would receive advances. In August 1997, Hansford received an advance of $2,500.00 but the policy of BTI was never to advance funds in excess of what an operator had earned to that point within a payment period. The individual loads hauled by operators were recorded in ticket books supplied by Temor and they were filled in - in quintuplicate - in the manner required, by the drivers for each load and two copies were left at the Wascana wellsite. At the end of each month, each driver would turn in a book and Temor would receive a copy and payment would be made to BTI based on the details entered in each driver's book. There was a metering system in effect at the wellsite and oil was always hauled separately from water. The price for hauling the oil was set by Wascana in the contract with Temor and that - in turn - dictated the price to be paid by Temor to BTI and then to the operators based on a percentage of the Temor payment. On occasion, the price to haul oil and/or water was $1.80 per cubic metre but other times the rate for hauling oil was higher and the rates were set as a result of negotiation between Temor and BTI. Hansford and Insley received a fixed percentage of gross revenue, which was unrelated to the price of oil in the world market. During the duration of any contract between Wascana and Temor - and then Temor and BTI - the price was agreed upon at the outset and any increase in the price of oil did not lead to any increase in the amount charged for hauling either oil or water from the wellsites. The contracts between Wascana and Temor usually had a two-year term. Patricia Budnick stated a main battery site owned by Wascana might have 15 or 20 employees. The list of wells needing product hauled would be posted on the bulletin board at the battery, probably each morning but the list was never-ending in the sense it was continuously added to, on a daily basis, as the need arose. The drivers worked out an arrangement between themselves as to scheduling work hours and the location where they would meet to change over driving duties and that changeover might well occur at a satellite battery of Wascana in a secluded location in the bush. Hansford had been employed earlier in his career as a dispatcher for Temor. Patricia Budnick stated she was not particularly aware of the extent of engaging drivers - as independent contractors - within the industry but BTI paid a higher percentage of gross revenue - 30% - to its drivers instead of 24% which was common for other companies in the same business. In response to whether or not she agreed with certain assumptions set forth in paragraph 4 of the Reply to Notice of Appeal (common to both appeals) Budnick agreed with subparagraphs (b), (c), and (d) as follows:
"(b) Wascana Energy Inc. ("Wascana") is a company that owns and operates an oil field named Plumber Lake, which is located in the Province of Saskatchewan;
(c) during the period in question, Temor Oil Services (1974) Ltd. ("Temor") had a contract with Wascana to haul oil and water from the tanks located at Plumber Lake;
(d) Temor owns and provides the tankers for hauling the oil and water;"
She disagreed with the assumption that each unit had been assigned three drivers as some units were operated by only two persons. Similarly, there was no specific 12-hour shift nor a 7 to 10-day working cycle as, on occasion, a driver might work 15 hours in a day and the other driver only 9. Between the period July 29, 1997 to January 15, 1998, Hansford's earnings varied between $2,000 and $4,000 per month. In early December, 1997, BTI became dissatisfied with Hansford's work as a driver and the corporation terminated his services but he continued to do mechanical work at the BTI shop - from time to time - for about 4 weeks and the last day on which he provided services to BTI was January 15, 1998. Budnick stated there was not any "shortage of work" as stated by Hansford in his application (Exhibit R-1) - dated February 12, 1998 - for unemployment insurance benefits. Budnick agreed Hansford's duties included hooking up hoses and loading and unloading the necessary product being hauled and that he was not permitted to take the tractor home with him, primarily because it was being used 24 hours a day. Budnick disagreed with the assumption of the Minister at subparagraph 4(l) that there is any industry standard relating to payment for the type of work done by Hansford and Insley. Further, while it was true the workers were paid monthly - by cheque - their work was not - in any way - assigned by Temor as it would not have any idea where the drivers were on a particular day or at any hour. There was never any requirement for a driver to report to the Plumber Lake oilfield site each morning - or ever - nor did Temor ever assign any driver to adhere to a specific route or schedule as assumed by the Minister at subparagraphs 4(o) and (p) respectively. Certainly, Budnick stated, it was in the best interest of each driver to utilize the most efficient and practical route and BTI expected the drivers to do that without any need for instruction on that point. The drivers were required to record the loads on tickets and the number of loads were used to determine the amount of payment to the driver. The Minister's assumption in subparagraph 4(r) that all replacement drivers had to be screened by Temor was not correct as the only requirement concerning new drivers was that they were sufficiently qualified so as to be added to BTI's insurance coverage and that involved some verification of qualifications and background checks. There was never any notification by Temor to BTI about the unsuitability of any driver. Budnick agreed that a driver could not work for any other company while using the BTI tractor and that BTI had the right to inspect and supervise the work of any driver but there was never any requirement for a driver to bring a tractor unit to the BTI shop at pre-arranged times as assumed by the Minister in subparagraph 4(v). The drivers performed routine maintenance each day and fluid levels were checked. The drivers had access to the BTI shop and the tractors were owned by BTI and all expenses pertaining to the operation of those units were paid by BTI except for damages to equipment caused by an operator or for the cost of cleaning up oil spills at the wellsites.
[7] In re-examination, Patricia Budnick stated that when a changeover occurred in the operation of a particular tractor unit - often in the "middle of nowhere" - it was done by agreement between the drivers and Wascana would be totally unaware of that switch in drivers. Further, Temor was never aware of any scheduling and there was not any fixed number of loads that would be hauled in a particular day. Budnick referred to a document summarizing loads hauled by Hansford - Exhibit A-2 - and pointed out that if only three loads had been hauled on a particular date it would not have occupied an entire day. She stated BTI had been advised by Hansford when speaking to her husband, Terry Budnick, that he had applied for employment insurance benefits based on his previous employment as a dispatcher at Temor and had never regarded himself as having been in an employment relationship with BTI.
[8] Counsel for the appellant submitted the most important factor to be considered was the absence of control by the appellant over the work being performed by the workers either as to the manner of the hours during which the services were provided. Often, the drivers had no contact with the appellant and the management at BTI would not be aware at any given time which workers were carrying out services relating to the contract entered into between BTI and Temor. Further, counsel submitted, the present appeals differed on the facts from those cases where workers had - in effect - been loaned out to another entity and had agreed that day-to-day management would be undertaken by the recipient of those services provided by that worker. As submitted by counsel, the issue of tools was of little relevance and a chance of profit was present because workers were paid on a percentage of gross revenue and they could increase their pay by operating in an efficient manner. As to the other side of the coin - the loss potential - counsel pointed to the evidence where drivers had been held liable by the appellant for damage caused by them to equipment or for the cost of cleaning up an oil spill at a wellsite. In counsel's view of the evidence, the workers were not integrated into the business of the appellant in a manner that would lead to the conclusion that BTI would be out of business without those services and that the worker, Hansford, had abundant experience in the oil industry and was quite capable of carrying on business on his own account. With respect to Hansford, counsel submitted the evidence on the point of the mechanical work performed by him for BTI was clearly separate from the services provided by him as a truck driver and, upon all the appropriate tests, the monies earned by the worker in that context flowed from work done by him in his capacity as an independent contractor.
[9] Counsel for the respondent submitted that while control by the appellant over the workers was not strict or regularly exercised in a supervisory sense, BTI still had the power to control the manner in which the work was carried out by them. The only relevant tools were the tractor units, which were owned by BTI. The trailers were owned by Temor and the drivers had small hand tools. Counsel pointed out the workers were paid a fixed percentage of revenue earned by the particular unit during times when they operated that tractor hauling loads. All expenses pertaining to the operation of the tractor units were paid by the appellant and there was no chance of loss occurring to the workers. Further, counsel submitted the whole of the evidence clearly established the business was that of the appellant and the drivers were merely employees of that enterprise and provided services under a contract of service.
[10] In Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025, the Federal Court of Appeal approved subjecting the evidence to the following tests, with the admonition that the tests be regarded as a four-in-one test with emphasis on the combined force of the whole scheme of operations. The tests are:
1. The Control Test
2. Ownership of Tools
3. Chance of Profit or Risk of Loss
4. The Integration Test
[11] In the within appeals, the evidence revealed there was little control by the appellant over day-to-day activities of the workers. They were able to operate according to a schedule posted by Wascana at the battery and were able to determine the most efficient method for servicing as many sites as possible within a particular block of time. The changeover of drivers on the tractors - arranged between themselves - was done as a consequence of an arrangement borne of practicality and taking into account the personal requirements for free days or a shortened work day of the two or - in some cases - three-man team assigned to a power unit. The contract between the appellant and Temor and the working relationship involving BTI drivers and Wascana did not impact on the issue of control as the Minister erroneously assumed as set forth in the Reply. From the standpoint of the appellant all it was interested in - as set out in a clause of the agreement it entered into - separately - with both workers - was "the results obtained under this Contract for Service; the manner and means of conducting the Work are under the sole control of the Contractor". The clause continued as follows, "However, the Work must meet the approval of Blues and shall be subject to Blues general right of inspection and supervision". Certainly, the facts in the within appeals on the issue of control are not like those in the case - before me - of Camion Holdings Inc. v. M.N.R. [1999] T.C.J. No. 311 (under appeal to Federal Court of Canada). In Camion, at paragraph 9 on page 8, I commented:
"If an employer loans out an employee to another person or entity or -in fancier terms - pursuant to a secondment, permits the worker to perform services for another and agrees day-to-day management of that person can be undertaken by the recipient of the service, that, without a whole lot more, does not mean the employer is still not exercising control."
[12] With regard to the ownership of tools, the tractor units were owned by BTI and the trailers were owned by Temor which BTI - pursuant to its contract with Temor - was able to use for hauling the products. Any other tools including safety equipment and clothing were for the personal use and convenience of the drivers and were not connected to any production of revenue, which was derived from hauling either oil or water from a wellsite to a battery.
[13] On the issue of chance of profit or risk of loss the evidence does not establish any real possibility for the workers to increase their earnings in the sense this test is used. The amount per cubic metre was fixed during the term of the contract between Wascana and Temor and also in the contract between Temor and BTI and then between BTI and the drivers. The drivers received a set percentage of the gross revenue earned by the tractor and trailer during the time it was operated by them. Hansford - the more experienced operator - received 30% and Insley was paid 28% of the gross revenue generated by his efforts during a monthly pay period. The daily list of wells to be serviced was posted by an employee of Wascana and was never-ending in the sense the trucks worked 24 hours a day, 7 days a week and were only stopped for servicing or in the event of mechanical troubles or some other unforeseen event. There was no direct evidence before me that would permit me to quantify the amount of increased revenue to be generated by a driver in the event certain routes or techniques had been utilized by them during the relevant periods. It would be expected of any person performing the particular hauling jobs involved in the within appeals to use the most efficient and safe route from one point to another without being motivated to do so by any factor or influence other than through a combination of common sense and experience. The fact that BTI purported to have the right to deduct the cost of certain damage to equipment and/or the amount paid to a third party to clean up an oil spill does not transform the relationship with the drivers to that of independent contractor. It is more likely the deduction was prohibited by the relevant provincial labour legislation which does not allow employers to deduct the cost of mistakes or breakage from paycheques of employees. The fact that Temor charged BTI for the cost of cleaning up the small spill or for other minor damage at a wellsite does not mean BTI could pass on that cost to the drivers unless the relationship was the same as the one between Temor and BTI and the drivers were dealing with BTI on the basis of being an independent contractor.
[14] As for the integration test, in the case of David T. McDonald Co. Ltd. v. M.N.R., 92 DTC 1917, Mogan, T.C.C.J. was considering whether an individual was an employee of a corporation or if his relationship was that of an independent contractor. At page 1922, the Honourable Judge Mogan stated:
"In Wiebe Door, MacGuigan, J. cited with approval at page 5030 the Market Investigations case in which the question is asked: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" To answer that question, one must consider whether the person has the capacity to engage in the particular business on his own account. If he has experience, knowledge and goodwill in the business, it is easier to conclude that he has the capacity to engage in the business on his own account and that he is not simply an incorporated employee. This is particularly true when the person has no prior employment connection with the party who benefits from his services. But if he has no experience, knowledge or goodwill in the business and offers only personal skills not related to the business, it is more difficult to conclude that he has the capacity to engage in the business on his own account; and it would probably be more reasonable to regard him as an employee of the party who benefits from his services."
[15] In the within appeals, the worker, Insley, had no experience at all in the oil industry and, at the time he was hired by BTI, was without funds to the point where a social services agency of a department of the provincial government contacted BTI's office with a view to obtaining an advance of pay and a moving allowance to assist him. It is difficult to see how Insley would be operating a business on his own account when the only asset he possessed - relating to the ability to carry out the work - was the appropriate class of operator's license. The appellant had been in business since 1996 and, prior to incorporation, the Budnicks had carried on the same activity under a partnership. They were highly qualified and experienced individuals who were able to secure contracts within the industry and to maintain a relationship with Temor which - in turn - was able to obtain contracts with oil companies such as Wascana. Given the vagaries of the oil business and the boom-and-bust cycles common to the industry, it required experience, capital, organization and the appropriate equipment in order to satisfy the requirements of the companies benefiting from the hauling of the oil and/or water from the various wells.
[16] The worker, Hansford, was an experienced individual who had worked as a dispatcher for Temor and was very familiar with the methods used to transport the product from the wellsites to the battery. He was an individual who required little or no supervision and was also a qualified mechanic. It would be reasonable to infer from the evidence that Hansford would regard himself as a driver assigned to a particular tractor, hired to haul product according to standard practice within the industry and as a person who was entitled only to receive a set percentage of the gross revenue earned by the BTI tractor during his time at the wheel. From an objective viewpoint, would an ordinary person - after looking at the relevant facts and the entire scheme of operations - reasonably conclude - looking at the situation through Hansford's eyes - that he was providing a service to the appellant on his own account or would the facts surrounding the entire operation lead to the conclusion that he was "driving truck for Blues Trucking - the outfit that does the hauling for Temor and Wascana". Because any new driver had to meet the specific requirements of the insurance company handling coverage for BTI - to the point where a special endorsement had to be added to the policy in order to cover any additional driver - there was no real ability for any driver to hire a substitute or replacement and to have the ability to retain the difference between an amount paid to that person and the entitlement to a fixed percentage of the gross revenue of the tractor unit so as to create the opportunity for profit. The management of BTI rarely visited the field because the operations flowed smoothly and telephone and radio communications between the office and the tractors permitted resolution of many problems without further effort by either Patricia or Terry Budnick. The product had to be hauled on a daily basis in order for BTI to earn revenue pursuant to its contract with Temor and the services of the drivers were crucial to that end. The fact that little or no control is visibly exercised over experienced workers functioning within the confines of a tried-and-tested system in accord with industry practice does not mean a worker is out there on his own account in the context of a personal entrepreneurial venture.
[17] What the parties thought their relationship was will not change the facts. In the case of The Minister of National Revenue v. Emily Standing, 147 N.R. 238, Stone J.A. at pages 239-240 stated:
"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."
[18] In the case of F.G. Lister Transportation Inc. v. M.N.R., 96-2163(UI), unreported, dated June 23, 1998, I dealt with the case of long-haul truck drivers and found they were employees working pursuant to a contract of service. Because most of these cases can turn on an apparent slight difference in facts, in the Lister decision, at paragraph 13, I commented as follows:
"I now find myself in the position of being required to point out the differences in the facts in the within appeal and those in two other decisions issued by me in which I held the drivers were independent contractors. In the case of Lee (c.o.b. D & A Transport) v. M.N.R. [1995] T.C.J. No. 426 I held the driver of a long-haul transport truck to have been an independent contractor. In that case, the driver had registered his business for purposes of the Goods and Services Tax, maintained a business bank account and had filed income tax returns on the basis of being self-employed. In Lee, the appellant had earlier been an employee of the payor and had agreed to alter the working relationship and there was clear evidence he could have hired another driver to work for him on long-hauls thereby generating a profit. As well, in Lee, it came down to choosing between two versions of circumstances surrounding a working relationship and the choice did not favour the worker. I also held the tools of the trade were the personal skills of the driver as a qualified person capable of hauling a loaded trailer over long distances. That finding was in the context of the driver operating a business under the trade name, Rick's Driving Services, having a bank account under that name and otherwise doing business with third parties on that basis. Income tax returns had been filed on the basis the worker was a self-employed person.
In another decision of mine, Metro Towing Ltd. v. M.N.R. [1991] T.C.J. No. 717, I found a tow-truck driver to have been an independent contractor. In that case, while there was a high degree of control over the worker, he had leased the vehicle and all of the equipment needed to carry out his task and bore all of the costs, including insurance, relating thereto. That driver also had a substantial risk of loss arising from the operation of that vehicle in the event he was not able to generate sufficient gross revenues which fluctuated on a monthly basis, as did, to a lesser extent, his costs of operation. In that case, like Lee, supra, the worker had earlier been on the regular payroll and had decided to enter into a new arrangement whereby he was the lessor of a truck and certain equipment and would be entitled to receive 30% of gross towing revenue arising from jobs which were dispatched by Metro Towing Ltd. The evidence in the Metro Towing Ltd. appeal disclosed that other tow-truck drivers operated through a limited company or a partnership arrangement.
In the case of Summit Gourmet Foods Inc. v. M.N.R. 97-470(UI), a decision of The Honourable Judge Mogan, T.C.C., dated November 24, 1997, Judge Mogan considered the status of a person - Freeman Walters, the intervenor - who drove a truck for the appellant, a corporation carrying on business as a supplier to pizza restaurants. Judge Mogan held the driver to have been an employee engaged in insurable employment and, at page 5 and following, stated:
"On control, I regard that test as marginally favouring employment and not independent contractor even though counsel for the Appellant stressed that Freeman was not told the way to do his work. I accept that. On the other hand, he was assigned trips; he could arrange the order of delivery and the date but they had to be delivered within a week, and he had to call in to the Appellant's office each morning. This was brought out in Freeman's testimony. He said: "Every person operating a truck has to report in, and I specifically did. I had to call in every morning to say where I was going so that they would know where I would be that day, and whether there were additional orders that had come in from customers which I might have to fill out of the extra product I was carrying". There was an opportunity for the Appellant to call evidence in reply to contradict that bald statement by Freeman but it failed to do so. On a common sense basis, I believe the statement.
Eric described a freezer truck which Freeman used costing between $70,000 and $80,000. When a company sends a person out in its truck of that value, it wants to know not only where the truck is day-by-day but also, when there are established customers to be serviced, it wants to know in a timely manner whether the customers are being serviced because they are the lifeline of a business. I cannot believe that a person in Freeman's position would not be required to report in daily on where he went and what he had serviced and whether there were fresh orders.
The fact that Freeman could arrange the order in which he would service these customers, or that he could arrange the time when he started on a trip does give him some freedom from control but, on balance, I would say that although he was not under the hand of the Appellant, they knew on a daily basis where he was, what he was doing and what customers he had serviced. Therefore, on the test of control, I find that there is more of an indication of the type of control one finds in employment than the simple direction which is given to an independent contractor.
With regard to the test of ownership of tools, it is very strongly in favour of employment and not an independent contractor. The only relevant tools for this kind of work were the truck and the dolly, both of which were owned by the Appellant. Counsel for the Appellant brought to my attention a similar case in Saskatchewan, where Mr. Justice Kyle of the Court of Queen's Bench said:
...To draw a parallel between the ownership of tools in the case of a tradesman and the hotel and equipment therein in a case such as this appears to be stretching the logic of the Montreal Locomotive case beyond reason.
I would agree with that statement. I think that an $80,000 truck was never in the minds of those learned Judges half a century ago who laid down these early tests and talked about ownership of tools. In my view, they were talking about tradesmen's tools like a carpenter's hammer and saw. The fact is, however, that in a more sophisticated society, this truck was the only vehicle through which the service was performed. The driver's licence that was held by Freeman was a pre-qualification to his engagement with the Appellant; and he could not be engaged if he did not have a driver's licence. I do not regard his driver's licence as a tool. I look at the only thing that Freeman used to perform the services and it was a very expensive and sophisticated piece of equipment. Therefore, the test of ownership of tools favours employment.
On the chance of profit and risk of loss, I find that also favours employment because there was virtually no risk of loss. There was a chance of compensation because all Freeman had to do was complete the round trip and he would receive the amount that had been settled between himself and the Appellant in Exhibit A-1. Compensation in this context is not profit. Counsel for the Appellant argued that it was possible for Freeman to incur a loss because, on the surplus product that he carried, he could say: "I will buy some of that and resell it for profit on my own". If he had committed to that kind of arrangement, he could buy the product at the point of departure on the trip; let us say 10 cases of completed pizza, and take a chance on selling them either on this trip, and make money by the trading in pizza product. That opportunity may have been available to him, but I draw the inference that the extra product was not there just for the trading and commercial activities of the driver. It was also there as backup product for the needs of established customers who might, in the course of the trip, decide that they needed more than the order destined for them at the time of departure of the truck."
[19] The foregoing observations and reference to the Summit Gourmet Foods, supra, case are relevant to the within appeals.
[20] In the case of Information Communication Services (ICS) Inc. v. M.N.R. - 97-839(UI) and 97-841(UI) - I held the drivers of vehicles involved in a delivery service within a specified industry were independent contractors. In that case, the drivers owned their owned vehicles, there was very little control over their daily activity and there was a chance of profit and risk of loss. Most important, however, in the ICS case was the body of evidence leading to the conclusion the workers were operating a business on their own account including registration for GST, filing income tax returns on the basis of being a self-employed person and hiring replacement drivers to handle the assigned route. Another significant factor in that case was the purported employer did not have any corporate establishment or presence in the area where the services were being performed and had to rely on third party common carriers to transport product from Vancouver to Nanaimo on Vancouver Island where the drivers then proceeded to carry on with delivery of the parcels to the intended recipients. There was also the opportunity for the drivers to charge a fee for delivery of items between customers of ICS on the route without any involvement, whatsoever, of ICS.
[21] As counsel for the appellant commented during submissions, it is extremely difficult for experienced practitioners, let alone business persons and ordinary people seeking to earn a living, to be able to wade through the complexities of an intended working relationship so as to be confident of the true characterization surrounding the provision of services. Often, the reality of the workplace or well-known custom within a particular industry will not mesh with the jurisprudence on the subject. In an era of corporate downsizing, the proliferation of in-home businesses, the common practice of people working three or four part-time jobs - possibly in addition to running a small business - and the startling growth of e-commerce in which jurisdictional boundaries are blurred or even non-existent, we can recognize that the day-to-day practicality of earning a living has outstripped the capacity of existing legislative provisions and judicial interpretation to encompass - comfortably - the explosion of technological and cultural change within the workplace. There are dozens of myths floating around the marketplace - equivalent to the ubiquitous "urban legends" - which do not assist in clarifying the overall situation between payor and recipient. Although each case will turn on its own set of facts, Revenue Canada has produced an excellent brochure in an attempt to assist individuals in proceeding with the process of weighing all of the relevant factors surrounding the relationship and assigning certain values and priorities to particular aspects pertaining to the provision of services. In the end, there is still no escaping the fact it will depend on the judgment in a particular case and I doubt any legislative amendments would be of much assistance unless there was provision for the ability of persons in a working relationship to engage in an opting-out process for a limited period under certain specified conditions.
[22] In the case of Hesketh v. M.N.R. 96-2520(UI), I commented:
"The reality of the modern workplace is that people often have a mixture of income-producing activities arranged in a variety of permutations and combinations. Some have a full-time job and one or more part-time jobs and others have five or six part-time or casual, non-repeating, sources of income, all of which are on the basis of being an employee. Still others are an employee - either full time or part time at one or more jobs - and also operate a business or provide a service as an entrepreneur. In recognition of the changing workplace, Parliament enacted the Employment Insurance Act which was assented to on June 20, 1996. Under the new legislation, the insurance system is changed from one based on weeks of work - with a weekly minimum and maximum on insurance coverage - to a system based on total earnings and total hours worked in which every dollar earned, from the first hour on the job, is counted. The intent was to move to a system which is more compatible with the current labour market. The rules for determining status of an individual within a working relationship, however, remain the same. It is extremely confusing for persons - whether employers or employees - to know where they stand in situations where it is not a simple black-and-white case of categorizing the services provided. There is a natural tendency to look at the overall income earned during a year and to assign a status to a working relationship based on the amount of revenue generated from providing that particular service."
[23] The above reference is applicable to the situation in the within appeals as it relates to the worker, Hansford, and his activities providing services as a mechanic quite apart from his role as a driver. The evidence reveals that Hansford would only perform mechanical work on the tractors or other equipment of BTI when he was not otherwise occupied in driving a tractor unit while hauling product and that, if he chose to accept a particular repair job, he carried out the work using his own tools. He worked at his own pace and there was no supervision over this aspect of his endeavor. The rate for the mechanical work done by Hansford was set by him at $16.00 per hour and he billed the appropriate number of hours attributed to various repair jobs on the same invoice he used to calculate the cubic metres of oil and/or water hauled by him during the relevant pay period. The drivers looked after routine maintenance on the truck and Terry Budnick of BTI was also a qualified mechanic. On occasion when Budnick did not choose to perform the work and Hansford declined to accept the repair job on a particular tractor, that unit would be taken to Saskatoon to a commercial garage. The worker, Hansford, was not integrated into the operations of BTI with regard to the provision, by him - from time to time - of his services in the form of specialized expertise as a mechanic. There would have been no real chance of profit or risk of loss in Hansford providing the mechanical services as a sideline to his full-time occupation as a driver. Taking all of the factors set forth in Wiebe (supra), into consideration, I find the provision of mechanical services by Hansford to BTI - although carried out in the BTI shop - to have been done by him on his own account and not as an employee of BTI under a contract of service. His services as a driver were terminated after the first week of December, 1997 and, thereafter, he performed mechanical work for three or four weeks. The final invoice submitted by Hansford appears as the last entry at Tab 9 and is dated February 5, 1998 in which he billed for 143 hours shop time. The collection of invoices contained in Tab 9 and the evidence as a whole is not sufficient for me to make a specific finding as to the amount earned by Hansford during the period July 29, 1997 to January 15, 1998 in his capacity as a mechanic on his own account. That amount would be capable of calculation based on the relevant records of BTI and counsel for the parties should be able to determine the sum representing payment by BTI to Hansford for the mechanical work. Or, using another method to arrive at the same result, to calculate the earnings of Hansford during the period above noted attributable - only - to his services as a driver of a tractor unit for BTI so that the Minister could calculate the insurable earnings of Hansford as it pertains to his income flowing from the contract of service as a driver.
[24] On the evidence, it is apparent Hansford and Insley while engaged in driving a tractor unit for BTI - during the relevant period - were providing a service as employees pursuant to a contract of service. An examination of the entire scheme of operations does not lead to any other conclusion.
[25] The within appeal in regards to Terry Insley is dismissed as is appeal 98-135(CPP).
[26] The within appeal in regards to Larry Hansford is allowed - as is appeal 98-136(CPP) - and the respective decisions issued pursuant to the Employment Insurance Act and the Canada Pension Plan are varied, to find, as follows:
the worker, between July 29 and December 7, 1997 provided services as a driver to Blues Trucking Inc. under a contract of service and was therefore engaged in insurable and pensionable employment. However, the services, as a mechanic, provided by the worker to Blues Trucking Inc. during the period July 29, 1997 to January 15, 1998 were pursuant to a contract for services and to that extent did not constitute insurable or pensionable employment.
Signed at Sidney, British Columbia, this 6th day of October 1999.
"D.W. Rowe"
D.J.T.C.C.
COURT FILE NO.: 98-898(UI)
STYLE OF CAUSE: Blues Trucking Inc. and M.N.R.
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: July 29, 1999
REASONS FOR JUDGMENT BY: The Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
COUNSEL OF RECORD:
For the Appellant:
Name: Curtis Stewart
Firm: MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE NO.: 98-899(UI)
STYLE OF CAUSE: Blues Trucking Inc. and M.N.R.
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: July 29, 1999
REASONS FOR JUDGMENT BY: The Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
COUNSEL OF RECORD:
For the Appellant:
Name: Curtis Stewart
Firm: MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE NO.: 98-135(CPP)
STYLE OF CAUSE: Blues Trucking Inc. and M.N.R.
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: July 29, 1999
REASONS FOR JUDGMENT BY: The Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
COUNSEL OF RECORD:
For the Appellant:
Name: Curtis Stewart
Firm: MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, CanadaCOURT FILE NO.: 98-136(CPP)
STYLE OF CAUSE: Blues Trucking Inc. and M.N.R.
PLACE OF HEARING: Saskatoon, Saskatchewan
DATE OF HEARING: July 29, 1999
REASONS FOR JUDGMENT BY: The Honourable Deputy Judge D.W. Rowe
DATE OF JUDGMENT: October 6, 1999
APPEARANCES:
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
COUNSEL OF RECORD:
For the Appellant:
Name: Curtis Stewart
Firm: MacPherson, Leslie & Tyerman
Saskatoon, Saskatchewan
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
98-898(UI)
BETWEEN:
BLUES TRUCKING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Blues Trucking Inc. (98-899(UI), 98-135(CPP) and 98-136(CPP)) on July 29, 1999 at Saskatoon, Saskatchewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 6th day of October 1999.
|
"D.W. Rowe" |
D.J.T.C.C.
98-899(UI)
BETWEEN:
BLUES TRUCKING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Blues Trucking Inc. (98-898(UI), 98-135(CPP) and 98-136(CPP)) on July 29, 1999 at Saskatoon, Saskatchewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
JUDGMENT
The appeal is allowed and the decision of the Minister is varied in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 6th day of October 1999.
|
"D.W. Rowe" |
D.J.T.C.C.
98-135(CPP)
BETWEEN:
BLUES TRUCKING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Blues Trucking Inc. (98-136(CPP), 98-898(UI) and 98-899(UI)) on July 29, 1999 at Saskatoon, Saskatchewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 6th day of October 1999.
|
"D.W. Rowe" |
D.J.T.C.C.
98-136(CPP)
BETWEEN:
BLUES TRUCKING INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Blues Trucking Inc. (98-135(CPP), 98-898(UI) and 98-899(UI)) on July 29, 1999 at Saskatoon, Saskatchewan, by
the Honourable Deputy Judge D.W. Rowe
Appearances
Counsel for the Appellant: Curtis Stewart
Counsel for the Respondent: Gordon Berscheid
JUDGMENT
The appeal is allowed and the decision of the Minister is varied in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 6th day of October 1999.
|
"D.W. Rowe" |
D.J.T.C.C.