Checkmate Cabs Ltd. c. M.R.N., docket 97-1193-UI

Date: 19980430

Docket: 97-1193-UI

BETWEEN:

CHECKMATE CABS LIMITED,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent

and

JENNIFER SANTO,

Intervener.

Reasons for Judgment

Beaubier, J.T.C.C.

[1] This appeal was heard at Kelowna, British Columbia on April 20, 1998. The Appellant called Lloyd Zudel, its president; Paul Bulmer, a driver; and Ken Lowry, an owner, as witnesses. The Respondent did not call any witnesses. The Appellant ("C.C.") has appealed a decision dated March 20, 1997 that it "is considered to be a deemed employer" under the Unemployment Insurance Act for the calendar years 1995 and 1996 of "drivers" who did not own taxicabs dispatched by the Appellant, but drove the taxicabs.

[2] The evidence is that C.C. owns one handicap van and dispatches twelve taxicabs owned by other individuals and corporations in Kelowna, British Columbia and did so in 1995 and 1996. The owners operate their own taxicabs for 12 hour shifts each day. On the alternate daily 12 hour shift, each owner rents that taxicab to a driver for $60.00 per shift plus the tank filled with gas at the end of that shift. It is these drivers that are deemed to be employees of C.C.

[3] C.C.'s van is used by the owners and drivers to service calls by handicapped customers. To do so they park their taxicab, drive the van on the call, return the van and resume the use of that taxicab.

[4] The owners contract with C.C. for dispatch, zoning and other services for the price of $360 per week. All of the amounts are 1998 figures; in 1995 and 1996, the figures were slightly lower, but the other arrangements were identical. C.C. kept a list of about 100 drivers who were qualified and fully licensed to drive taxicabs for the owners. The list was compiled by C.C. from approved applicants to drive taxicabs. However, the owners contracted individually with each driver. Both the drivers and owners complied in general with a set of standards ("Policy and Procedures Manual", Exhibit R-1) created and written by C.C. Legally, and in practice, C.C. could only enforce it with the owners by withdrawing its dispatch contract. Legally, and in practice, each owner dealt individually with each driver with which that owner contracted. On the evidence, each owner contracted with a driver for each shift. Therefore an owner simply did not lease a taxicab to that driver and that terminated the driver if a driver was not satisfactory.

[5] On the evidence, the drivers were not employees of C.C. or owners under the tests described in Weibe Door Services v. M.N.R., 87 DTC 5025. Each driver was an independent contractor with an owner. Each driver was required to be, and was, a G.S.T. registrant in business for himself. Each driver's contract was with an owner, not with C.C. The drivers merely had to comply with the rules set out in Exhibit R-1. Those rules were enforced on a driver by each owner who contracted with a driver. Thus the drivers were not employees of C.C. The decision appealed from is clear. The drivers were found to be "deemed" employees of C.C. under the Unemployment Insurance Act. It is a question of law as to whether that decision is correct.

[6] Subsection 17(1) of the Premium Regulations reads:

The owner, proprietor or operator of a business or public authority that employs a person in employment described in paragraph 12(e) of the Unemployment Insurance Regulations shall, for the purposes of maintaining records, calculating insurable earnings and paying premiums under the Act and these Regulations, be deemed to be employer of every such person whose employment is included in insurable employment by virtue of that paragraph.

Paragraph 12(e) of the Unemployment Insurance Regulations reads:

Employment in any of the following employments, unless it is excepted employment under subsection 3(2) of the Act or excepted from insurable employment by any other provision of these Regulations, is included in insurable employment:

...

(e) employment of a person as a driver of any taxi, commercial bus, school bus or any other vehicle that is used by a business or public authority for carrying passengers, where that person is not the owner of the vehicle or the proprietor or operator of the business or public authority;

...

[7] In Canada v. Skyline Cabs (1982) Ltd., (F.C.A.) [1986] F.C.J. No. 335, MacGuigan J. found that the word "employment" as used in these regulations is so extensive as to apply to drivers who leased taxicabs under very similar terms from Skyline Cabs (1982) Ltd. In this case the difference is that the drivers lease from the owners. C.C. is not an owner. It is a dispatcher. There is no privity of any kind of contract between a driver and C.C. Rather C.C.'s contracts are with the owners. Nonetheless C.C. is the person assessed for premiums as a deemed employer of each driver who had a contract with an owner.

[8] Thus, the question is whether C.C. is, in the words of regulation 17(1), an "operator of a business ... that employs a person in employment described in paragraph 12(e) of the Unemployment Insurance Regulations."

[9] It is not. C.C. operates a business which contracts with each owner. Each owner operates a business which contracts with each driver. It may be that each owner can be deemed to employ a driver under the decision in Skyline. However, there is no contract of any kind between C.C. and a driver. Therefore C.C. cannot be deemed to be an employer of any of the drivers in question.

[10] The appeal is allowed and the decision of the Minister of National Revenue is vacated in accordance with these reasons.

Signed at Ottawa, Canada this 30th day of April 1998.

"D.W. Beaubier"

J.T.C.C.