Date: 20010508
Dockets: 2000-4546-EI,
2000-4547-CPP
BETWEEN:
VRATISLAV KUSKA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SOUTHAM INC.
o/a THE KINGSTON-WHIG STANDARD,
Intervener.
Reasonsfor Judgment
Hamlyn, J.T.C.C.
[1] The Appellant appealed a ruling to the Respondent for the determination of the question of whether or not the Appellant was employed in insurable employment while engaged by The Kingston-Whig Standard, Division of Hollinger Newspapers Limited Partnership (the "Payer") during the period of January 1, 1999 to November 19, 1999 within the meaning of theEmployment Insurance Act (the "Act").
[2] By letter dated June 29, 2000, the Respondent informed the Appellant and the Payer that it had been determined that the Appellant was not employed under a contract of service and therefore, not an employee of the Payer during the period in question, pursuant to paragraph 5(1)(a) of the Act.
[3] The Appellant also appealed a ruling to the Respondent for the determination of the question of whether or not the Appellant was employed in pensionable employment while engaged by The Kingston-Whig Standard during the period of January 1, 1999 to November 19, 1999 within the meaning of the Canada Pension Plan (the "Plan").
[4] By letter dated June 29, 2000, the Respondent informed the Appellant and the Payer that it had been determined that the Appellant was not employed under a contract of service and therefore not an employee of the Payer during the period in question, pursuant to paragraph 6(1)(a) of the Plan.
THE APPELLANT'S NOTICE OF APPEAL
[5] The Appellant's Notice of Appeal reads as follows:
I disagree with Revenue Canada's decision. Specifics of my case, as described in my appeal to the Minister, were not properly evaluated and ruling of Canada Customs and Revenue Agency, Appeals Division on my appeal to the Minister was based on facts, which may not apply to my specific case.
I was not given opportunity to explain, support and justify my claims.
Answers to Employee or Self-Employed test based on Canada Customs and Revenue Agency instructions in pamphlet RC4110(e) 1219, as related to my specific situation, indicated clearly that I was an employee of The Kingston-Whig Standard and not a "dealer" or "independent contractor".
I responded to The Kingston-Whig Standard employment offer, as advertised in the "Employment" section of The Kingston-Whig Standard. I was hired as an employee, status of "dealer" or "independent contractor" was not mentioned during the hiring process. I was treated during duration of my employment as an employee and only after about one year since I started working for The Kingston-Whig Standard I was gradually, on certain occasions, informed that I am not an "employee", although I was always treated as an employee by The Kingston-Whig Standard employees and by The Kingston-Whig Standard customers.
In my opinion classification of "dealer" or "independent contractor", on which the ruling of Canada Customs and Revenue Agency, Appeals Division on my appeal to the Minister was based, did not apply to my case as was, on several occasions, indirectly admitted even by The Kingston-Whig Standard representatives.
THE MINISTER'S POSITION
[6] In making his decision, the Respondent relied on the following assumptions of fact:
(a) the Payer operates a business of a daily local newspaper;
(b) the Appellant was hired to deliver newspapers in determined territory;
(c) more specifically, the Appellant's duties were to purchase and resell newspapers and deliver them six mornings per week;
(d) the Appellant was hired under a written agreement;
(e) the Appellant's duties took an average of two hours a day;
(f) the Appellant was able to choose his hours of work with the only restriction that the newspapers had to be delivered by 6:30 a.m., Monday to Friday and by 7:30 a.m. on Saturday;
(g) the Appellant did not report to the Payer's place of business since the newspapers were left at a drop-off location;
(h) the Appellant was paid $0.1325 cents per paper sold and delivered;
(i) the Appellant also received extra money (4 to 10 cents) when promotional flyers or catalogues had to be delivered on his route;
(j) the Appellant received a $10.00 bonus for each new subscriber;
(k) the Appellant received no compensation when no newspapers had to be delivered on Sunday or for other reasons;
(l) the Appellant maintained a record of payment for the customers since some of them paid him directly but others paid the Payer. When the payments were received by the Payer, the Payer simply passed along the Appellant's profit monthly, through direct deposit;
(m) the Appellant did not have to perform his services personally;
(n) the Appellant was responsible for the salary of helper;
(o) the Appellant was required to use his own vehicle and was responsible for his car expenses;
(p) the Appellant was covered by the "Independent Distributor Accident Insurance" and premiums were paid totally by the Appellant;
(q) the Appellant was not supervised by the Payer;
(r) the Appellant was not trained by the Payer;
(s) the Appellant was responsible for resolving any complaints from subscribers;
(t) there was no contract of service between the Appellant and the Payer.
THE INTERVENER'S SUBMISSION
[7] The Intervener in relation to both appeals filed an intervention on the submission the services were performed by the Appellant as an independent contractor as opposed to an employee.
THE INTERVENER'S FACT SUMMARY
FROM THE FILED NOTICE OF INTERVENTION
[8] The Appellant and Intervener entered into an adult independent sales contract on or about February 13, 1998.
[9] The adult independent sales contract between the Intervener and the Appellant specifies that the Appellant is an independent contractor.
[10] The contract between the Appellant and the Intervener contains, inter alia, the following provisions:
(a) the contractor may engage others to carry out the contractor's responsibilities;
(b) the contractor is free to deliver other publications and products for other organizations;
(c) the contractor will supply, maintain and operate at his expense and risk all vehicles and equipment necessary to carry out the contractor's responsibilities;
(d) all payments made by the newspaper to the contractor shall be made without statutory deductions in respect of income tax, pension plan, employment insurance, workers' compensation and the Ontario employers health tax.
[11] The Appellant provided delivery services to the Intervener pursuant to the adult independent sales contract from February 28, 1998 to November 19, 1999.
[12] The Intervener wholesales papers to the carriers including the Appellant, and they in turn retail the papers to their subscribers.
[13] The Intervener provides no benefits at all for the carriers such as health insurance, pensions or insurance.
[14] There are no controls at all over the manner in which the newspapers are to be delivered. The only guideline is that they are to be delivered before 6:30 a.m. on weekdays and before 7:30 a.m. on Saturdays.
[15] If the carriers do not collect from the subscribers, then they incur a loss.
SIGNIFICANT EVIDENCE
[16] The Appellant responded to an advertisement placed in the employment section of The Kingston-Whig Standard by The Kingston-Whig Standard for adult carriers to earn extra income for early morning delivery routes.
[17] The Appellant was hired by The Kingston-Whig Standard to deliver newspapers and was assigned a route.
[18] The Appellant, an intelligent individual who described himself as a writer, maintained he was not hired under a written agreement and he did not accept the terms of any purported agreement.
[19] When presented with Exhibit I-1, The Kingston-Whig Standard Adult Independent Sales Contract dated February 13, 1998, the Appellant identified his signature. This evidence adduced in cross-examination raises serious issues of credibility in relation to the Appellant's evidence-in-chief.
[20] The Appellant stated he was closely supervised by the Payer and that in the course of the engagement there was generated between his home and The Kingston-Whig Standard a steady two-way stream of communication of written messages, faxes and telephone calls.
[21] The evidence of The Kingston-Whig Standard Reader and Sales Service Manager was to the effect the carriers, including the Appellant, carried on their delivery activity within set time guidelines and collection procedures that were laid out by The Kingston-Whig Standard for the carriers. In relation to this Appellant, the Reader and Sales Service Manager said the Appellant, in the way he carried out his duties, generated faxes, messages and telephone calls on a continuing, frequent basis.
ANALYSIS
[22] In general, the evidence indicates the route of the Appellant was carried out generally in accordance with the Adult Independent Sales Contract. However, the methods of the Appellant in carrying out the contract and his approach to The Kingston-Whig Standard created a high maintenance relationship between the parties. A replacement carrier arrangement between the Payer and the Appellant lead to a contractual breakdown with the Payer discharging the Appellant from the contract.
THE ANAYLYSIS TO DETERMINE IF A CONTRACT
OF SERVICE OR A CONTRACT FOR SERVICE EXISTS
[23] Control and supervision, the key question: Who had the right to control the worker and the right to direct the worker?
[24] The Appellant controlled when and how he did the work subject to the Payer's delivery, collection and carrier replacement requirements and guidelines. The Appellant was not required to do the work personally. He could substitute his replacement at his own expense. If he used a replacement supplied by the Payer, the replacement cost to the Appellant was high. I have found the relationship between the Appellant and the Payer was at a high maintenance level. This high level of maintenance including a carrier replacement problem caused the interaction between the Appellant and the Payer to be strained and that eventually lead to a breakdown in the contractual relationship.
[25] Ownership of tools: Generally, if the employer supplies the tools, it indicates control over the worker. The Appellant was provided by the Payer with a delivery bag and customer collection cards and a ring book. The Appellant provided all other supplies including a delivery cart. He kept his records in his own computer and used his own fax services to communicate with the Payer. If the Appellant had chosen a motorized vehicle to pick up and deliver his papers, that was his own choice and at his own cost. The Appellant chose to pick up and deliver by walking.
[26] Profits and losses: That is, the opportunity of profit and the risk of losses based on the notion that in an employer-employee relationship, an employee does not generally incur expenses and does not bear any financial risk and has no chance of a profit. The Appellant was paid a fee for each paper sold and delivered. The Appellant by seeking out new subscribers was also paid $10.00 for each new subscriber.
[27] If the Appellant failed to collect from subscribers he suffered losses. The collection process was the responsibility of the Appellant and if he managed it well he profited directly by its success. The Payer did place certain requirements as to when collections could be made.
[28] Organization or integration test: That is, the analysis to determine the ultimate question - whose business is it? It is necessary to look and examine more than the surface relationship.
[29] The Appellant, in his operation of the paper route, was in business for himself. When the papers were delivered and how the papers were delivered was the Appellant's choice as long as the Payer's delivery guidelines were followed. The contract from the outset delineated a contract for service relationship and the Appellant, notwithstanding his opening denial of entering into the contract, entered into and signed the contract Exhibit I-1 and understood it was a contract for services. The Appellant's later position, after Exhibit I-1's entry in evidence, was that the actual operation was the contract was not the same as the contract entered into has not been established. I conclude a contract for services was the basis of the intrinsic contractual relationship in intent, form and operation. The high level of interaction did not change the relationship.
[30] While the Appellant had to comply with the Payer's guidelines and directives, The Kingston-Whig Standard had no control over the Appellant's hours or whom he may have engaged to assist him. Within The Kingston-Whig Standard's directives the Appellant had a choice of how he performed the contract. The combined force of all the elements is that the Appellant was in business for himself wherein he contracted to sell and deliver the Payer's newspapers.
DECISION
[31] The Appellant was engaged with the Payer under a contract for services. The appeals are dismissed.
Signed at Ottawa, Canada, this 8th day of May 2001.
"D. Hamlyn"
J.T.C.C.
COURT FILE NO.: 2000-4546(EI)
2000-4547(CPP)
STYLE OF CAUSE: Vratislav Kuska and The Minister
of National Revenue and Southam Inc.
o/a The Kingston-Whig Standard
PLACE OF HEARING: Kingston, Ontario
DATE OF HEARING: May 1, 2001
REASONS FOR JUDGMENT BY: The Honourable Judge D. Hamlyn
DATE OF JUDGMENT: May 8, 2001
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Jade Boucher
Counsel for the Intervener: J. Michael Hickey
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
For the Intervener:
Name: J. Michael Hickey
Firm: Hickey & Hickey
2000-4546(EI)
BETWEEN:
VRATISLAV KUSKA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SOUTHAM INC.
o/a THE KINGSTON-WHIG STANDARD,
Intervener.
Appeal heard on common evidence with the appeal of Vratislav Kuska (2000-4547(CPP)) on May 1, 2001 at Kingston, Ontario, by
the Honourable Judge D. Hamlyn
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Jade Boucher
Counsel for the Intervener: J. Michael Hickey
JUDGMENT
The appeals are dismissed and the decision of the Minister is confirmed.
Signed at Ottawa, Canada, this 8th day of May 2001.
|
"D. Hamlyn" |
J.T.C.C.
2000-4547(CPP)
BETWEEN:
VRATISLAV KUSKA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
SOUTHAM INC.
o/a THE KINGSTON-WHIG STANDARD,
Intervener.
Appeal heard on common evidence with the appeal of Vratislav Kuska (2000-4546(EI)) on May 1, 2001 at Kingston, Ontario, by
the Honourable Judge D. Hamlyn
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Jade Boucher
Counsel for the Intervener: J. Michael Hickey
JUDGMENT
The appeals are dismissed and the decision of the Minister is confirmed.
Signed at Ottawa, Canada, this 8th day of May 2001.
|
"D. Hamlyn" |
J.T.C.C.