Date: 19990113
Docket: 97-1522-UI
BETWEEN:
GLENN V. CAMERON,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
AECOMETRIC CORPORATION,
Intervenor.
Reasons for judgment
Porter, D.J.T.C.C.
[1] This appeal was heard at Calgary, Alberta, on May 21, 1998.
[2] The Appellant Glenn Cameron ("Cameron") appeals the determination of the Minister of National Revenue (the "Minister") dated May 28, 1997 that his employment with Aecometric Corporation (the "Company") from February 23 to June 28, 1996, was not insurable employment under the Unemployment Insurance Act (hereinafter referred to as the "Act"). The reason given for the determination was that:
“It has been decided that this employment was not insurable or pensionable for the following reason: you were not engaged under a contract of services and, therefore, you were not an employee of Aecometric Corporation during the period in question.”
[3] The established facts reveal that Cameron had been an employee, vice-president and sales manager for the Company for several years before the period in question. The Company which manufactured and sold boilers, was principally owned and operated by his uncle, one Larry Anderson, from the Province of Ontario. The Appellant was in charge of sales for western Canada, the U.S.A. and Mexico. As a result of differences which occurred between the two of them, they had a meeting in Ontario on February 28, 1996. The corporation as Intervenor has taken the position, which was adopted by the Minister, that from that date Cameron was no longer an employee but rather he had become a commission sales agent working on his own behalf both for the Company and other corporations. The position of Cameron was that although Larry Anderson had wanted him to sign a contract changing his status, he never did, never agreed to this and simply continued his work as an employee in the same function until the end of July 1998. It was then that he received a letter from Jill Anderson, wife of Larry Anderson, who by that time had suffered a stroke. This letter he treated as effectively dismissing him as an employee.
[4] The issue then, is whether or not his status as an employee changed at the February meeting. The Court is not concerned as to whether or not there was any just cause for any dismissal, which is I understand the subject of other litigation, but rather to consider the question of whether or not his employment arrangement as an employee was terminated in February 1996, or any time thereafter during the relevant period.
The Law
[5] Whilst the Court might well keep one eye on the criteria established by the Federal Court of Appeal in deciding whether the working arrangement between Cameron and the Company was a contract of service and thus insurable employment or a contract for services and thus an independent contractor relationship, it seems to me that the situation at hand is more a question of fact than law. That question is to determine what transpired between Cameron and Larry Anderson at their February meeting. Prior to that time there had clearly been an employer/employee relationship. If that relationship was changed or terminated at the February meeting or thereafter, the Court would then consider the nature of the relationship over the ensuing months.
[6] 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, some of which have been cited by counsel, 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 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."
[7] 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.
[8] 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."
The Facts
[9] The sole witness to give evidence was Cameron. Whilst the Company was very ably represented by counsel at the hearing, it did not appear itself nor did Larry or Jill Anderson attend. Cameron was cross-examined vigorously by counsel on behalf of the Company.
[10] It is clear that up until February 1996, Cameron was considered an employee of the Company. However over the preceding months Larry Anderson had come into possession of information that Cameron was engaging in work for other corporations, who were potentially competitors. There was a certain amount of correspondence, faxes and telephone calls which passed between the two men. It is clear to the Court that Larry Anderson was wanting to terminate the employee relationship and substitute a contract for services based on commission for sales and not salary. He prepared a draft contract to this effect, entered as Exhibit A-5. He obviously felt some constraint as Cameron was family. However in February he insisted on a face to face meeting and Cameron went to Ontario for this purpose.
[11] I have in evidence only Cameron’s version of this meeting. He indicated that prior to the meeting he had taken legal advice, been told to agree to nothing and to get anything put to him by Anderson, in writing.
[12] He said that at the meeting he was confronted with various complaints including his relationship with other corporations which he explained. They also discussed travel expenses and the work that he was actually doing. He said he was told of Larry Anderson’s wish to have him change his employment to a sales agent, working strictly on commission. He testified that he told Larry Anderson to put it in writing, as his lawyer had instructed him to do. It is clear that he signed nothing at the meeting, otherwise I am sure it would have been produced and put to him. He said that he received the written contract through the mail in April 1996. It was strongly suggested to him that it was given to him at the meeting but he denied this.
[13] I note that the contract signed on behalf of the Company is dated February 1, 1996, albeit the meeting took place on February 28.
[14] Cameron said in evidence that he felt after the meeting that his employment had not been terminated and that he was simply going to consider that contract when it was sent to him. In the meantime he felt that he was working for the Company in the same function as before.
[15] It is significant in my mind that over the ensuing months he received pay cheques for his regular salary from which the usual statutory deductions were made. These amounts were reduced in May by 25% and in June by 50%, consistent with the fax sent to him on February 6, 1996 ( Exhibit A-3) and with the terms of the written contract ( Exhibit A-5). Cameron maintained that he never agreed to these reductions.
[16] I am inclined to believe the evidence of Cameron on these points, that he agreed to nothing, that he was not fired and that he continued on in his same function. Although he was vague to the point of frustration on many matters he was firm on these points. His evidence is furthermore corroborated in my view by the letter of July 25, 1996, from Jill Anderson (Exhibit A-6). She states in that letter :
“I think we have come to an impasse where you will have to make a firm decision.”
[17] This indicates to me that no firm decision had yet been taken. She also refers in the same letter to the written agreement being sent to Cameron in April which is what he maintained. She further said that the agreement is dated February 1, 1996, “as per the verbal agreement by telephone between Larry and yourself”. However, I find that there never was such an agreement, but simply a unilateral expression by Larry that he wished to change things as from that date.
[18] Mrs. Anderson also said in the letter:
“To date we have paid your salary as if you had confirmed this agreement.”
[19] Again this indicates to me that in fact he had not theretofore confirmed the agreement, and that in fact there was no agreement.
[20] Finally she went on to say in that letter:
“ We did not wish to break the contact (sic read contract) till you had finalized your decision so consequently could not make an announcement one way or the other.” ( as to whether he may or may not be staying with the Company.)
[21] This also makes it clear to me that whilst wanting Cameron to switch to a sales agent or leave the Company altogether, the decision up to this point had been left with him and the prior working relationship had not been altered.
[22] Another item of evidence which leads me to this conclusion is the Record of Employment, which was not completed until October 25, 1996. If his employment had been terminated in February as the Company maintains, then surely that document would have been produced and sent at that time or shortly after. On the contrary there is nothing to indicate any termination of the employment in February, as suggested by the Company. There was a great deal of pressure applied to Cameron to change the working arrangement and sign the form of contract. The evidence is clear however, in my mind, that in fact it was not changed until he accepted the July letter as a constructive dismissal. By that time he was only being paid one half of his salary, if that, and was clamouring for some expenses to do his job which were not being paid.
Conclusion
[23] After listening to the evidence of Cameron and reviewing the various documents which were entered in evidence, I am firmly of the view that his employment with the Company continued to be a contract of service throughout the period in question. I accept his evidence, corroborated as it is on the main points by the documentary evidence. I do not consider it necessary to consider the Wiebe Door criteria to any great extent. Although clearly Cameron was being pushed out of the door, so to speak, by the end of the period, there was no significant change in his working conditions which would lead me to the view, separate and apart from the meeting, that there was a de facto change from a contract of service to a contract for services. In my opinion he remained an employee throughout. Any additional work he did for other corporations, which appeared to be minimal as far as I can ascertain, was nothing more than a certain amount of moonlighting and did not detract from his primary employment.
[24] In the event the appeal is allowed and the decision of the Minister is vacated.
Signed at Calgary, Alberta, this 13th day of January 1999.
" Michael H. Porter "
D.J.T.C.C.