Harris v. M.N.R.

Harris v. M.N.R. Court (s) Database Tax Court of Canada Judgments Date 2005-10-27 Neutral citation 2005 TCC 700 File numbers 2005-591(EI) Judges and Taxing Officers William E. MacLatchy Subjects Canada Pension Plan Decision Content Docket: 2005-591(EI) BETWEEN: WILLIAM HARRIS, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and JIM BOOKER op. FENCE FACTORY, Intervener. ____________________________________________________________________ Appeal heard on common evidence with the appeal of William Harris (2005-592(CPP)) on October 4, 2005 at Toronto, Ontario Before: The Honourable W.E. MacLatchy, Deputy Judge Appearances: For the Appellant: The Appellant himself Counsel for the Respondent: Aleksandrs Zemdegs Counsel for the Intervener: Michael D. Stahr ____________________________________________________________________ JUDGMENT The appeal is allowed and the decision of the Minister is varied in accordance with the attached Reasons for Judgment. Signed at Toronto, Ontario, this 27th day of October 2005. "W.E. MacLatchy" MacLatchy, D.J. Citation: 2005TCC700 Date: 20051027 Dockets: 2005-591(EI) 2005-592(CPP) BETWEEN: WILLIAM HARRIS, Appellant, and THE MINISTER OF NATIONAL REVENUE, Respondent, and JIM BOOKER, op. FENCE FACTORY, Intervener. REASONS FOR JUDGMENT MacLatchy, D.J. [1] These appeals were heard on common evidence on October 4, 2005 at Toronto, Ontario. [2] The Appellant requested a ruling to determine whether he was employed under a contract of service, while engaged by Jim Booker op. Fence Factory, the Payor, for the period from January 1 to July 31, 2003, within the meaning of the Employment Insurance Act (the "Act") and the Canada Pension Plan (the "Plan"). The Rulings Officer, from the Scarborough Tax Services Office, ruled that the Appellant's employment was insurable and pensionable. [3] The Payor did not agree and therefore appealed the ruling to the Minister of National Revenue (the "Minister"). After review, the Minister by letter dated November 15, 2004, informed the Appellant and the Payor that it had been determined that the Appellant's engagement with the Payor, during the period in question, was not insurable nor pensionable employment for the reason that the Appellant was not employed pursuant to a contract of service. [4] The Appellant appeared and gave his evidence on his own with the assistance of the Court. The Appellant is relatively unsophisticated and had little knowledge of the Court procedure but was prepared to give his best recollection of what occurred when he worked for the Payor who operates a sole proprietorship known as Fence Factory. [5] Using the assumptions relied on by the Minister as stated in paragraphs 5 of the Replies to the Notices of Appeal, the Appellant agreed that many were correct but gave his explanation when he felt the Minister had been misinformed. Apparently, the Appellant had been considered an employee prior to the year 2003 and he had been contributing to EI and CPP as required. The Payor had asked him to get a GST number at the end of 2002 even though he was advised it would not be necessary if he made less than $30,000 a year. But notwithstanding this advice, the Payor insisted and the Appellant complied. [6] Nothing changed in the relationship between the Appellant and the Payor during the period in question except that he charged GST on the Appellant's hour sheets he submitted to the Payor in order to receive payment for his work. The Payor negotiated with a client for the construction of a fence and then would instruct the Appellant to build the fence accordingly and would pay him for his hours worked on the job. The Appellant's hourly rate was raised by the Payor at his discretion and the Appellant received payment when he submitted the invoice which was a time sheet for the hours worked. [7] The tests, as established by the various decisions of the Federal Court of Appeal in, amongst others, Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025 and of the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983, must be applied to determine if the Appellant was employed pursuant to a contract of service or a contract for services. [8] The Appellant stated that during the winter months he performed snowploughing work and was further employed by Blue Mountain Welding and Machine Shop at their location. When the spring came he built fences for the Payor at an agreed hourly rate. He would attend daily to find out from the Payor what job he was to go to and be shown the style and design of the fence to be constructed. From time to time, the Payor would attend to the job to ensure the fence was being put up as instructed and to approve of the finished project. If changes or repairs had to be made, the Appellant was paid for the extra hours worked whether the Payor had received payment from his client or not. The Appellant was paid after filing his invoice time sheets with the Payor, which occurred from time to time and not on any regular basis. It appeared to be a very loose arrangement between the parties but one that seemed to suit both. [9] The question of control would appear to be in favour of an employer/employee relationship. Supervision was not constantly required over the Appellant because he was experienced at his work but the finished product was always inspected to ensure compliance with the Payor's initial instructions. The Payor could end the relationship at any time and did so in July, 2003. The particular job was arranged by the Payor who then instructed the Appellant to perform the work. Their relationship appeared to end by misadventure or mistake. The Appellant then started to work for himself. [10] The test concerning the tools of the parties also appears to be in favour of an employer/employee relationship. The Appellant had his tools that he valued at about $3,000 which included small items for his everyday use. The Payor had much greater equipment valued at about $18,000 which included heavier and more specialized tools that the Appellant had complete access to for the work to be performed, namely a truck and a tractor with a trailer used regularly by the Appellant on the various jobs allocated to him. Such equipment was used to pick up the fence materials and to do necessary grading for the fence installations. [11] The construction of the fences were for clients of the Payor and the Appellant did not benefit in the profit or loss on the particular job. The Appellant's rate of pay and hours needed to perform a particular construction were estimated by the Payor and the Appellant was expected to perform within that hourly structure or he would have to justify the extra hours to the Payor. [12] The Payor admitted he would pay the Appellant for a job even though he had not yet been paid for such himself and if he was never paid, he would sue the client but still pay the Appellant. [13] The question of integration is a little more complex. During the time period in question, the Appellant worked for his brother when he was available and took on a project of his own offered to him by the Payor which ultimately led to the severance of their relationship. The Payor held the Appellant out as one of his employees and had business cards indicating the Appellant was his manager. If needed, the Appellant could hire a helper who would be paid by the Payor. [14] The whole of the relationship between the parties must be examined to attempt to determine if the Appellant was an employee of the Payor or not. The intention of the parties is part of that examination. The Appellant understood his position as being one of subservience to the Payor in that the Payor obtained the work to be performed by him, set the price of the job and then set the hourly rate to be paid to him for the job. The Appellant did as he was told and although not continually being supervised, his work was always subject to inspection and final approval by the Payor. The Appellant did not feel he was on his own until their relationship ended in July, 2003. The Payor must have considered the Appellant as an employee because he identified him as manager on a business card notwithstanding that his testimony was that he wanted the Appellant to be an independent contractor and instructed him to get a GST number. It appeared to be the Payor's intention that the Appellant become an independent contractor and not that of the Appellant's. [15] Based on the evidence presented and the careful examination of the whole relationship between the Appellant and the Payor, this Court finds that the Appellant was engaged by the Payor pursuant to a contract of service and that an employer/employee relationship existed between them. [16] The appeals are allowed and the decision of the Minister is varied accordingly. Signed at Toronto, Ontario, this 27th day of October 2005. "W.E. MacLatchy" MacLatchy, D.J. CITATION: 2005TCC700 COURT FILE NO.: 2005-591(EI) and 2005-592(CPP) STYLE OF CAUSE: William Harris and M.N.R. Jim Booker op. Fence Factory PLACE OF HEARING: Toronto, Ontario DATE OF HEARING: October 4, 2005 REASONS FOR JUDGEMENT BY: The Honourable W.E. MacLatchy, Deputy Judge DATE OF JUDGMENT: October 27, 2005 APPEARANCES: For the Appellant: The Appellant himself Counsel for the Respondent: Aleksandrs Zemdegs Counsel for the Intervenor: Michael D. Stahr COUNSEL OF RECORD: For the Appellant: Name: Firm: For the Respondent: John H. Sims, Q.C. Deputy Attorney General of Canada Ottawa, Ontario For the Intervenor: Name: Michael D. Stahr Firm: Baulke Augaitis Stahr, LLP Collingwood, Ontario