Date: 20001127
Dockets: 2000-652-EI, 2000-653-CPP
BETWEEN:
SLOOT CONSTRUCTION - DESIGN LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
Dockets: 2000-1160-EI, 2000-1161-CPP
KEITH MURPHY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
MacLatchy, D.J.T.C.C.
[1] These appeals were heard on November 2, 2000 at London, Ontario. It was agreed that the four appeals be heard on common evidence.
[2] Keith Murphy (the "Worker") appealed a ruling to the Minister of National Revenue (the "Minister") for the determination of the question of whether or not he was employed in insurable and pensionable employment, while engaged by Sloot Construction - Design Limited (the "Appellant") for the period from July 1, 1997 to February 20, 1999, within the meaning of the Employment Insurance Act (the "Act") and the Canada Pension Plan (the "Plan").
[3] By letter dated December 23, 1999, the Minister informed the Worker and the Appellant that it had been determined that the Worker's engagement with the Appellant, during the period in question, was insurable and pensionable employment for the reason that the Worker was employed pursuant to a contract of service.
[4] In reaching his decision, the Respondent relied on certain assumptions, some of which accepted by the Appellant as correct and others rejected by him, as follows.
[5] The Appellant is a business involved in construction, renovations and interior finishing. Mr. Dominic Sloot, the president and only shareholder of the Appellant, was the first to give evidence and explained to this Court how he conducted his business of the company. He would approach a client or would be approached by a client who required construction or renovation and invited to bid on the particular undertaking. For his own purposes, Mr. Sloot would prepare a list of trades that he would need for the project if he was successful in his bid. He would then contact others in those particular trades to see if they would be available to work on such a project and, if so, to submit a quote for their portion of the project. Mr. Sloot stated he had lists of people in each of the trades required by him, and having received bids, he would prepare his estimate of costs and submit a bid to his client. When and if accepted, he would then select the trades persons he felt gave the best quotation to him and firm-up a contract pursuant to their bid previously made. Under Mr. Sloot's carpentry and trimmers list was the Worker, Keith Murphy. The Worker would submit, on request, an estimate of the number of hours he would need to perform his function on a particular project. He would submit the quote and, if accepted, he would enter into an agreement with Mr. Sloot to do his portion of the project in the number of hours quoted at a price per hour, previously quoted. Exhibit A-1 supported this evidence.
[6] The Worker is an experienced carpenter and trimmer and during the period in question was charging his time at an hourly rate of $15.00. When he gave his evidence, the Worker stated he was operating his own business and submitted bids for jobs to Mr. Sloot as evidenced by Exhibit A-1. His usual practice was that he would prepare his bid with Mr. Sloot based on his own estimate of the time it would take him to perform his part of the project but not including materials which were to be provided by Mr. Sloot at a cost less than the Worker could provide them because of volume discounts, etc.
[7] On one occasion only, Mr. Sloot and the Worker agreed that the latter was paid gas mileage for a particular job in Darnia, Ontario which was some distance from the Worker's home-base in London, Ontario. Mr. Sloot further stated that he would reimburse other subcontractors for mileage on jobs distant from London, it was his practice to do so.
[8] The Worker provided his own hand tools, as in usual in the trade. He expanded on this area saying he had a well-equipped van containing not only the hand tools but much more including table saws, mitre saws, concrete drills and a compressor for fastening devices. He also had a small workshop in his basement for fabricating cabinets and other items peculiar to his business.
[9] The parties agreed that the Worker did not work for the Appellant during 1997 but only commenced performing his work for the Appellant during 1998. The Worker stated that he did collect employment insurance benefits the early part of 1998 as he had been previously employed and was eligible. When he commenced his relationship with the Appellant, he did state the hours of work he performed for the Appellant on his entitlement cards required by the employment department.
[10] All parties agreed that the clients were those of the Appellant. The nature of contract bidding on construction projects dictated this; unless the subcontractor, in this case the Worker, is known by the client, he would not be called upon to submit his bid for a project. He would only hear of the project through the Appellant.
[11] The question to be answered by this Court is whether there was an employer/employee relationship between the Appellant and the Worker.
[12] This Court was directed to apply the four-in-one test recommended by the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025. The tests to be considered include control, ownership of tools, possibility of profit and risk of loss and integration. These tests are helpful but not exhaustive and the whole of the relationship existing between the Appellant and the Worker must be assessed.
Control:
[13] The evidence brought forward indicated that the Appellant was the prime contractor and it would subcontract with others to perform their skills on the particular project. By the nature of the type of construction and renovations performed by the Appellant, there was generally a time to have the overall project completed and certain hours within which the construction should or could take place - all of which are dictated by the client and would form part of the accepted contract. Time became very important to all connected with the project. To ensure a schedule was followed and the project proceeded as the client directed, the Appellant had a supervisor on the job. He appeared to act as a coordinator to ensure the overall contract be completed on time. If the Worker's bid was accepted by the Appellant and a contract entered into between them, then it was the Worker's responsibility to perform his part of the contract within the time parameters set by the client. This is a type of control but not one imposed by the Appellant on the Worker but imposed by reason of the terms of the contract that was mutually agreed. The same holds true for the location of the work as the job site was part of the contract. The Appellant did not concern itself with the manner in which the job was performed by the Worker nor did it direct how the work should be performed. The Appellant expected the job to be performed by the Worker in accordance with the standard set by its knowledge of previous work performed. The Appellant did not hire nor could it fire the Worker but only follow the contract terms as agreed. The Appellant paid no benefits to the Worker, did not keep track of the hours worked and paid the agreed contract price to the Worker on completion of his work pursuant to an invoice submitted which included provision for GST. There did not appear to be the control exerted by an employer on an employee.
Tools:
[14] By the nature of the carpentry trade and the construction business it was expected that a carpenter would have his own hand tools. The Worker had such tools but had many others that he would bring to the job site in his own van. He had what he required to perform his part of the contract arrangement.
Profit and loss:
[15] Both witnesses, Mr. Sloot and the Worker, gave evidence that once the contract price was agreed upon, based on the number of hours the Worker estimated the job would take, that is what would be billed by invoice to the Appellant. However, if the Worker could complete the job in less time, he would be paid the agreed sum. This was his ability to profit beyond his hourly rate as agreed. In a like fashion, he would be subject to a loss if it took longer than he agreed to complete his work. The Worker said he controlled his hourly rate, which he set himself. If he set his rate too high he would not get his bids for particular projects accepted for he would be under bid by another competing carpenter. The Worker could work when he wanted unless restricted by the client to certain times so long as his portion of the overall contract was completed as agreed. The Worker further testified that he did work for others and submitted copies of invoices to others, as shown in Exhibit A-2.
Integration:
[16] This is a difficult concept to apply in a specialized industry such as construction where many separate skills are needed and which cannot be satisfactorily supervised. The electricity, heating and cooling, plumbing, etc. and all the other specialities needed are performed by persons who have specific knowledge in those fields. Many of these specialities can be done by employees yet not be, but minimally, supervised. Likewise, and more frequently, their services are performed by contractors who run their own businesses.
[17] In this instance, the Appellant requires many trades to perform its function. It is the business of the Appellant to do a construction job for a client and it requires workers to perform on its behalf. Yet, each one of the specialities can be operated by individuals who carry on their own businesses. These subcontractors are operating pursuant to contracts for services and their work is not insurable. They are in business for themselves.
[18] The Worker is attempting to run his own business and is subject to the joys and sorrows of what that may entail. Having examined all the evidence and reading the jurisprudence relative to the issue before it, this Court concludes that the worker can operate separately from the Appellant and can be in his own business.
[19] The Respondent referred this Court to the decision of the Federal Court of Appeal in M.N.R. v. Emily Standing 147 N.R. 238 to support its conclusion that it is not necessarily determinative of the relationship between parties by their mere declaration that they are operating pursuant to a contract for services. In these particular circumstances, both the Appellant and the Worker determined that they were not operating as employer/employee, and the evidence submitted supports that argument.
[20] On examination of the whole of their relationships, this Court has determined that the Worker was a subcontractor and not an employee and that the employment was not insurable under the "Act" nor pensionable under the "Plan".
[21] The appeals are allowed and the decision of the Minister is varied on the basis that the Worker's employment was not insurable nor pensionable.
Signed at Toronto, Ontario, this 27th day of November 2000.
"W.E. MacLatchy"
D.J.T.C.C.
COURT FILE NO.: 2000-652(EI)
STYLE OF CAUSE: Sloot Construction - Design Limited
and M.N.R.
PLACE OF HEARING: London, Ontario
DATE OF HEARING: November 2, 2000
REASONS FOR JUDGMENT BY: Honourable Deputy Judge W.E. MacLatchy
DATE OF JUDGMENT: November 27, 2000
APPEARANCES:
Agent for the Appellant: Dominic R. Sloot
Counsel for the Respondent: Jade Boucher
COUNSEL OF RECORD:
For the Appellant:
Name:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE NO.: 2000-653(CPP)
STYLE OF CAUSE: Sloot Construction - Design Limited
and M.N.R.
PLACE OF HEARING: London, Ontario
DATE OF HEARING: November 2, 2000
REASONS FOR JUDGMENT BY: Honourable Deputy Judge W.E. MacLatchy
DATE OF JUDGMENT: November 27, 2000
APPEARANCES:
Agent for the Appellant: Dominic R. Sloot
Counsel for the Respondent: Jade Boucher
COUNSEL OF RECORD:
For the Appellant:
Name:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE NO.: 2000-1160(EI)
STYLE OF CAUSE: Keith Murphy and M.N.R.
PLACE OF HEARING: London, Ontario
DATE OF HEARING: November 2, 2000
REASONS FOR JUDGMENT BY: Honourable Deputy Judge W.E. MacLatchy
DATE OF JUDGMENT: November 27, 2000
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Jade Boucher
COUNSEL OF RECORD:
For the Appellant:
Name:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
COURT FILE NO.: 2000-1161(CPP)
STYLE OF CAUSE: Keith Murphy and M.N.R.
PLACE OF HEARING: London, Ontario
DATE OF HEARING: November 2, 2000
REASONS FOR JUDGMENT BY: Honourable Deputy Judge W.E. MacLatchy
DATE OF JUDGMENT: November 27, 2000
APPEARANCES:
For the Appellant: The Appellant himself
Counsel for the Respondent: Jade Boucher
COUNSEL OF RECORD:
For the Appellant:
Name:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada
2000-652(EI)
BETWEEN:
SLOOT CONSTRUCTION - DESIGN LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Sloot Construction - Design Limited (2000-653(CPP)) and Keith Murphy (2000-1160(EI) and 2000-1161(CPP)) on November 2, 2000 at London, Ontario, by
the Honourable Deputy Judge W.E. MacLatchy
Appearances
Agent for the Appellant: Dominic R. Sloot
Counsel for the Respondent: Jade Boucher
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 November 2000.
|
"W.E. MacLatchy" |
D.J.T.C.C.
2000-653(CPP)
BETWEEN:
SLOOT CONSTRUCTION - DESIGN LIMITED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Sloot Construction - Design Limited (2000-652(EI)) and Keith Murphy (2000-1160(EI) and 2000-1161(CPP)) on November 2, 2000 at London, Ontario, by
the Honourable Deputy Judge W.E. MacLatchy
Appearances
Agent for the Appellant: Dominic R. Sloot
Counsel for the Respondent: Jade Boucher
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 November 2000.
|
"W.E. MacLatchy" |
D.J.T.C.C.
2000-1160(EI)
BETWEEN:
KEITH MURPHY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Sloot Construction - Design Limited (2000-652(EI) and 2000-653(CPP)) and Keith Murphy (2000-1161(CPP)) on November 2, 2000 at London, Ontario, by
the Honourable Deputy Judge W.E. MacLatchy
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Jade Boucher
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 November 2000.
|
"W.E. MacLatchy" |
D.J.T.C.C.
2000-1161(CPP)
BETWEEN:
KEITH MURPHY,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on common evidence with the appeals of Sloot Construction - Design Limited (2000-652(EI) and 2000-653(CPP)) and Keith Murphy (2000-1160(EI)) on November 2, 2000 at London, Ontario, by
the Honourable Deputy Judge W.E. MacLatchy
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Jade Boucher
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 November 2000.
|
"W.E. MacLatchy" |
D.J.T.C.C.