Date: 19991029
Dockets: 98-124-UI; 98-21-CPP
BETWEEN:
CALABOGIE PEAKS (1983) INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
SOMERS, D.J.T.C.C.
[1] These appeals were heard in Ottawa, Canada, on October 5, 1999.
[2] The Appellant is appealing from a decision made by the Minister of National Revenue (the "Minister"), that the employment held by the workers with the Appellant, the Payor, during the years 1996 and 1997, was insurable and pensionable as the Workers were bound by a contract of service. The Minister assessed the Appellant for failure to remit employment insurance premiums in respect of Kristian Knight, Johnathan Lockhart, Tobias Lockhart, Kyle Miller, John Newdouf, Christopher Packham, Grant Smith, Brad Thompson, Ed Virgin and Kevin White.
[3] Paragraph 5(1)(a) of the Employment Insurance Act reads in part as follows:
"5.(1) Subject to subsection (2), insurable employment is
(a) employment in Canada by one or more employers, under any express or implied contract of service or apprenticeship, written or oral, whether the earnings of the employed person are received from the employer or some other person and whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise;
[...]"
[4] The burden of proof is on the Appellant. It must show on a balance of probabilities that the Minister erred in fact and in law in his decision. Each case stands on its own merits.
[5] In so assessing the Appellant, the Respondent relied on the following facts, which were admitted or denied:
"(a) the Appellant's business was incorporated in 1984; (admitted)
(b) the Appellant operates a ski resort with a year-round time share operation; (admitted)
(c) the Workers were retained as snowmaker; (admitted)
(d) the Workers were retained under a verbal agreement; (admitted)
(e) the Workers' rate of pay was between $9.00 to $12.00 per hour based on their experience and paid by cheque on a bi-weekly basis; (admitted)
(f) the Workers performed their services at the Appellant's place of business; (admitted)
(g) the Workers' hours of work were determined by the Appellant; (denied)
(h) the Workers were required to complete timecards and submit them to the Appellant's supervisor; (denied)
(i) the Workers' work was subject to supervision and inspection by the Appellant's team leader; (denied)
(j) the Workers were required to perform the services personally; (denied)
(k) the equipment required to make the snow was provided to the Workers by the Appellant; (denied)
(l) the Workers are not carrying on a business for themselves; (denied)
(m) the Workers were employed by the Appellant pursuant to a contract of service; (denied)
(n) the Appellant did not withhold employment insurance premiums from the Workers' remuneration." (admitted)
[6] The Appellant operates a ski resort with a year-round time share operation. The Workers were retained by verbal agreement, as snowmakers, and were paid by cheque on a bi-weekly basis between $9.00 to $12.00 per hour, based on their experience.
[7] The Workers performed their services on the ski slopes at the Appellant's place of business by using the Appellant's heavy equipment valued at approximately $500,000. However, the Workers had their own clothing and hand tools.
[8] At the beginning of their work and from time to time, the Workers were given the general instructions as to the work to be done. The Payor paid for the repairs to the heavy equipment and also paid the Workers for their time spent on doing such repairs. In answer to one of the questions, in the questionnaire dated October 1, 1997, Michael Murphy, Operations Manager and Secretary-Treasurer, the only witness at the hearing, said that the Workers kept time sheets which were given to the team leader who in turn submitted periodic invoices to the Payor.
[9] The Workers were supervised by the team leader who was Brad Thompson. No formal reporting was required, but the Workers updated the Payor on the progress of the job from time to time. The Workers worked irregular hours, depending on the temperature and the needs of the Payor. The witness stated that he did not know if the Workers worked exclusively for the Payor, but there was a good chance that the Payor was the only client.
[10] Case law consistently admits four basic factors in distinguishing a contract of service from a contract for services. The Federal Court of Appeal in the case of Wiebe Door Services Ltd. v. M.N.R. [1986] 3 F.C. 553, stated the following: "In determining whether there is a contract of service or a contract for services, one must examine the combined force of the whole scheme of operations." The four basic factors listed in this case are the following:
(a) extent of control exerted by the employer
(b) extent of integration
(c) ownership of tools required for work
(d) chance of profit and risk of loss.
[11] (a) Control
The Workers were given general instructions by the Payor at the beginning of their work and from time to time. The Workers would report to the team leader, Brad Thompson. Time sheets were required from the Workers. The Payor could dismiss a Worker if he did not attend to his duties. The degree of control varies according to the experience of the Worker. In this case, there was sufficient control to conclude that there was a contract of service.
[12] (b) Integration
The evidence shows that the Workers worked exclusively for the Payor. The Payor could not operate its business without the Workers performing their duties according to the needs of the Payor. The irregular hours of work performed depending on the temperature is not a determining factor. The evidence on this factor allows us to conclude that there was a contract of service.
[13] (c) Tools
The work was performed on the Payor's work site. The Payor supplied the major equipment, which was repaired by the Workers who were paid to do so. The small tools belonging to the Workers are not a major factor. Case law has allowed employees to use their own tools of lesser value without compromising their status as employees. The evidence on this factor leads us to believe that there was a contract of service.
[14] (d) Chance of profit and loss.
No evidence was produced to prove that the Workers made a profit or sustained a loss while performing services during the period in question. The Workers were paid on an hourly basis, even during the repairs to the heavy equipment. On the basis of that evidence there was a contract of service.
[15] Taking into consideration all of the circumstances, including the testimony, admissions and the documentary evidence, I am satisfied that the Appellant has failed in its onus of establishing that the Minister erred in arriving at the conclusion that there was a contract of service.
[16] The Workers were engaged by the Appellant in insurable and pensionable employment within the meaning of paragraph 5(1)(a) of the Employment Insurance Act.
[17] The appeals are dismissed and the assessments are confirmed.
Signed at Ottawa, Canada, this 29th day of October 1999.
"J.F. Somers"
D.J.T.C.C.