Spinazola v. M.N.R.

Spinazola v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-11-10 Neutral citation 2005 TCC 457 File numbers 2002-3645(EI) Judges and Taxing Officers Theodore E. Margeson Subjects Employment Insurance Act Decision Content Citation: 2005TCC457 Date: 20051110 Docket: 2002-3645(EI) BETWEEN: GINO SPINAZOLA, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent,. and 2182373 Nova Scotia Limited o/a Top Wholesale Books, Intervener. REASONS FOR JUDGMENT (Delivered orally from the Bench at Halifax, Nova Scotia on February 28, 2003) Margeson J. [1] The matter before the Court is whether or not the Appellant was engaged in insurable employment with the entity, 2182373 Nova Scotia Limited o/a Top Whole Books, the alleged payor, during the period in question, which was November 20, 2000 to June 15, 2001. [2] The Appellant referred to the case of Wiebe Door Services Ltd. v. Canada, [1986] 3 F.C. 553, in his testimony, and I can only point out that this is a ruling case on matters of whether people are engaged under contracts of service and are employees, or under contracts for services and consequently are independent contractors. The Appellant is correct that the factual situation in Wiebe Door differs from this particular case. [3] It is not necessary for this Court to define what the relationship was. It is only necessary for it to find whether or not the Appellant was an employee. Here the options are restricted to whether he was an employee or an independent contractor. [4] In a case of this nature, of course, credibility is always an issue and sometimes the Court is called upon to choose between the evidence of one and the evidence of the other. Here there is not a great deal of conflict, except on one particular issue and that is what the Appellant was told by one of the officers of the company, when in November of the year in issue Mr. Spinazola contacted him with respect to obtaining work. [5] The Appellant indicated that Mr. Tallon made it clear to him, or at least the Appellant was of the belief that he was going to be retained as an independent contractor for November, December, and that starting in January he would "go on the books" is the way he put it. However, what he thought Mr. Tallon was telling him that meant, and what Mr. Tallon thought that it meant were two different things. [6] The Court is not satisfied that the Appellant really did believe that Mr. Tallon had told him that he was going to be considered to be an independent contractor for November/December, and then would be considered to be an employee thereafter. On the basis of all of the evidence and considering the issue of credibility, the Court is satisfied that the only thing that Mr. Tallon told him in November/December was that he would give him all of the money that he was entitled to during that period. [7] The Appellant was having some problems with money and perhaps he was short of money. Mr. Tallon told him that he would not take any deductions for November and December. The Court is satisfied that he did not tell him that he would only be considered to be an independent contractor for November and December. [8] On the basis of the evidence and on the basis of all reasonable inferences the Court is entitled to draw from the evidence; neither Mr Tallon nor anybody else in authority told him that. [9] No contract was introduced into evidence but one was referred to by Mr. Tallon and it provided clearly that everyone signing them would be independent contractors. However, that is not evidence as against the Appellant because the Court is not satisfied that he signed one of them. [10] He merely said that he did not remember signing a contract like that. However, the Court is satisfied that it was made quite clear to the Appellant from the beginning that he was not going to be an employee, that he was going to be an independent contractor and that the only reason they were not making deductions before January was to assist him. [11] The Court is satisfied that after January the only reason that they made deductions was because they had received this bad advice from their accountant. [12] On the basis of that evidence the "payor" believed that it was wise to make deductions for CPP and EI, and there is no doubt that this was an advantage to the Appellant. The Court is satisfied that the deductions were made out of an abundance of caution, so that they would not be penalized down the road in the event of an unfavourable decision against them if the matter went to Court. [13] It is the Court's function to decide on the evidence whether workers are independent contractors or employees. Sometimes people use their best endeavours to form a relationship, which they believe is that of an independent contractor, but because of their subsequent actions they end up forming a relationship that turns out to be an employer/employee relationship. On the other hand some people enter into an agreement thinking they are employees and they act in such a way that there is no doubt that what they have created is not an employer/employee relationship, but an independent contractor situation. The beast that you create is not always the one that you believed you were creating. What the parties say is not conclusive but it has to be given some considerable weight. But when the evidence which is adduced contradicts their stated intentions such evidence is greatly diminished in value. [14] In this particular case there is no doubt what the payor thought. It always believed that all workers were independent contractors and not employees. It never used the term "employee". The only indicia of employer/employee relationship of any consequence would be the fact that it did deduct EI and CPP. In some cases that might be the determining factor. It is not here because there was a considerable amount of evidence as to how the parties treated each other and what the relationship was between them. [15] We must turn then to Wiebe Door, supra, to find out whether or not this was an employer/employee relationship or not. That is the issue. In doing that, as always, the Court must look at the four-in-one-test, the control test, the ownership of tools test, chance of profit and risk of loss test, the integration test and the terms and conditions of employment. [16] Looking firstly at the control test, the Court is satisfied here that the type of control that the alleged employer had over the alleged employee was very minimal. It is true that initially the Appellant followed a route suggested to him and shown to him by the alleged employer, but he could have varied from that and could have gone to other places if he wished. He was not told when to go there. He was not told how long to spend there. He was not told which stores to visit. He was entitled to eliminate stores from the original route suggested to him and he was entitled to add to the list as well. He drove there when he wanted to. [17] The Court is not satisfied that he was required to go into the office at any particular time to pick up his supplies or his goods, or that he had to report back at any particular time. Those decisions were entirely his own. When he was on the road he was entirely on his own. Nobody told him what to do or how to do his work. He was out there to sell products, obviously, and the more products he sold the more money he made. [18] On the control test, the Court is satisfied that there is very little indication that the alleged payor had any degree of control over the Appellant. He controlled himself. [19] With respect to the ownership of tools, the Court is satisfied that the basic tools of the trade in this particular case were owned and controlled by the Appellant himself. [20] What were the tools of the trade here? The stock in trade was owned by the payor but this stock was consigned by the payor to the Appellant who became entirely responsible for it after that period of time. If he lost any stock or it was damaged or if he did not give them back or did not get paid for them, he was responsible for the cost. [21] The Appellant was entitled to receive cheques in his own name for payment. He may not have but he was entitled to. He was also able to receive cheques in the name of the company and he was able to receive cash. He had a great deal of control over himself there as well. He even had to pay a service charge to the payor if he accepted cheques from the customers which turned out to be bad. [22] Insofar as the tools of the trade were concerned, the more important one was the car, which belonged to the Appellant and the stock which was consigned to him. He had control over it and had responsibility for it. [23] With respect to chance of profit and risk of loss, even if the Court gives to the evidence of the Appellant within the most liberal interpretation, it is satisfied after listening to him and listening to the other witnesses that he did have a chance of profit. He did not deny that. There was a chance of profit. The more he sold, the more he made. The higher the price he received for the goods, the more money he made. [24] There was also a risk of loss for him. If he had to spend three days down in Cape Breton or somewhere, and not sell a book, he had to pay for his motel, he had to pay for his gas, he had to pay for the repairs on the car and the more expenses he had the less profit he made. So it is clear that there was a chance of profit and risk of a loss. [25] The fact that the payor gave a suggested retail price for the goods is not conclusive of anything. It does not indicate any greater degree of control over the Appellant by the alleged payor because he could disregard it. [26] The integration test is a separate test. The Court must ask itself "when the worker was doing the work, was he engaged on behalf of himself or was he engaged on behalf of the alleged employer?" [27] In this particular case, the Court is satisfied that the worker was engaged in his own enterprise. His enterprise was to sell the goods which were consigned to him. It is true that these goods were consigned to him by the alleged employer, but the business that the worker was in was the business of selling the products, collecting money for it, and making a profit from it. That was his business. He was in business on his own account. It was not the business of the employer that he was involved in. [28] At the end of the day the answers to all of the questions point clearly to an independent contractor situation or contract for services, rather than an employer/employee relationship or contract of service. [29] The Appellant said that he considered himself to be an employee. The Court is not satisfied that he really did consider himself to be an employee. On the basis of all of the evidence that has come forward, the Court is satisfied that it should have been quite clear to the worker that he was considered, at least by the payor, to be an independent contractor and not an employee and he did nothing to dispel that position. [30] With respect to control, the Appellant said that there was a fair amount of control by the employer but the Court is satisfied that there was very little control by the employer over him and it does not agree with the Appellant on that matter. [31] Of further significance is the manner of payment. He was paid by commissions. There is no question about that, and not much was made of that. That is another indication that there was not an employer/employee relationship as usually an employee does not get paid by commissions. He can, but he normally does not. [32] With respect to profit and loss, the Appellant said that generally you could have a profit, but he never had a loss. That may very well be so, he might have been a very good salesman, and he may never have incurred a loss, but he certainly stood the chance of having a loss. If he did not sell any goods down in Cape Breton, after a four day trip or three day trip he had to pay his hotel, he had to pay his meals, he had to pay other expenses, he certainly would stand the chance of having a loss. Fortunately for him he did not, apparently. [33] On the integration test, he considered that he was a part of the business. The Court does not agree. The business that was of concern here was really the business of selling the books which was his own enterprise. [34] He said, "At the end of the day, I was under the impression that I was an employee". If he were under that impression, the Court is satisfied that there was nothing that the alleged employer said to him that would lead him to be under such an impression and if he were under that impression it was not a correct impression. He believed that appeal should be allowed. [35] Counsel for the Respondent said that the impression might have been that the Appellant was an employee, but that was wrong. There was no disagreement about what he did and how it was performed. In other words, what he did and how he did it were at the complete instigation of the Appellant himself and not by the company, the alleged employer. [36] Counsel argued, "The payor did not control the hours of work, he did not control the manner of work. That was all up to the Appellant". The Court is in agreement with that submission. [37] With respect to profit and loss, counsel said, "there was a chance of profit; there was a risk of loss. Look at the expenses that he had to incur, the car, the material that he had to pay for, the payment for the loss of the product, if he lost it or for bad cheques". There was a chance of profit and risk of loss. [38] With respect to ownership of tools, counsel said again, "The car was the most important thing. He had his own car, he had to make his own promotions, he had to pay for them, he had to pay for some material. He was self-employed". [39] The intervener did not wish to argue and accepted the argument made by the Respondent. [40] Those are the arguments, that is the evidence. The Court is satisfied beyond any doubt that the appeal should be dismissed and the Minister's decision upheld. Signed at Ottawa, Canada this 10th day of November 2005. "T. E. Margeson" Margeson J. CITATION: 2005TCC457 COURT FILE NO.: 2002-3645(EI) STYLE OF CAUSE: Gino Spinazola v. The Minister of National Revenue v. 2182373 Nova Scotia Limited o/a Top Wholesale Books PLACE OF HEARING: Halifax, Nova Scotia DATE OF HEARING: February 28, 2003 REASONS FOR JUDGMENT BY: The Honourable Justice T. E. Margeson DATE OF JUDGMENT: November 10, 2005 APPEARANCES: For the Appellant: The Appellant himself Counsel for the Respondent: Dominique Gallant Agent for the Intervener: James Daniel Tallon COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Ontario