Citation: 2012 TCC 392
Date: 20121108
Docket: 2011-2961(CPP)
BETWEEN:
SURINDER HAYER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Campbell J.
[1]
The Appellant has
appealed from the decision of the Minister of National Revenue (the “Minister”)
pursuant to a Notice of Assessment dated April 14, 2011 which assessed the
Appellant with respect to Canada Pension Plan contributions for the
2009, 2010 and 2011 taxation years. The Minister determined that these Canada
Pension Plan contributions were payable in connection with services
provided to the Appellant by a number of workers who were taxi cab drivers.
The Issue
[2]
The issue is whether
these workers were employed by the Appellant in pensionable employment for the
purposes of the Canada Pension Plan during these taxation years. The
underlying question for my determination is whether the workers were engaged by
the Appellant as employees or as independent contractors.
[3]
I have only the
pensionable contributions before me in this appeal, as the insurable earnings
are covered under the special provisions of paragraph 6(e) of the Employment
Insurance Regulations relating to taxi cab drivers and were not appealed.
There are no similar provisions contained in the Canada Pension Plan.
[4]
I heard evidence from
the Appellant to the effect that she operated a proprietorship under her name
but that, in actual fact, she knew very little about the business operations as
the day-to-day activities were handled by her husband, Kewal S. Hayer. Consequently,
the husband provided most of the evidence respecting the business activities.
[5]
Mr. Hayer testified
that he operated a taxi cab business since 2000 but that, in 2007, he merged
with Kelowna Cabs. He pays Kelowna Cabs a monthly amount for dues and insurance
and, in return, Kelowna Cabs provides the dispatch services to its fifty-eight
shareholders, of which the Appellant is one such shareholder. Shareholders have
a varying number of cabs but the Appellant operates two. Kelowna Cabs screens
the drivers and ensures that they have the necessary chauffeur permits and city
licenses required by the City of Kelowna to operate taxi cabs.
[6]
Each driver is
identified by a specific identification number and Mr. Hayer explained
that Kelowna Cabs, through its computer system, can track each driver’s route,
how much money they are making and how fast they are travelling. The Appellant
could compare the information kept on the Kelowna Cabs’ dispatch system to the
trip sheets provided by the drivers.
[7]
The Appellant generally
engaged six drivers and the shifts were for ten hours. Each driver completed
trip sheets, which tracked the details of the passengers in that cab. These
sheets were supplied by the Appellant and kept in the cab, together with
envelopes, pens, calculator and staples. The drivers were also responsible to
include the fares owed to the Appellant in respect to the cash or credit card
receipts in these envelopes with the trip sheets, which were delivered to the
Appellant at the end of each shift. The total fares were split on a forty/sixty
per cent basis with forty per cent being retained by the drivers, which
included HST.
[8]
The Appellant supplied
the vehicles which the workers drove. These vehicles were equipped with GPS
systems and credit card machines. Mr. Hayer testified that the drivers were not
told where to locate the cabs within the City of Kelowna during their shift,
except to the extent that he ensured that special events were covered and the
scheduling of drivers to cover the airport. The Appellant paid the required
yearly airport fee which entitled its cabs to use the airport taxi stand.
[9]
The Appellant had the
drivers sign a two-page contract entitled “Driver Operator Agreement” (the
“Agreement”) in which the drivers agreed to observe the rules of Kelowna Cabs
and to pay the Appellant at a rate of sixty per cent of all gross earnings. The
Agreement contained a clause that the drivers would be responsible for CPP
contributions in respect to their earnings.
[10]
The Respondent relied
on the evidence of a former driver, Gilles Laferriere, who had worked for a
two-year period for the Appellant, together with the Appeals Officer and the
Trust Examiner. The former cab driver testified that, although the Appellant
kept referring to him as an independent contractor, he was treated as an
employee and believed himself to be an employee. He stated that Mr. Hayer
provided him with his shift schedule without an opportunity of his input on
availability. Although Mr. Hayer did not direct him to any particular location
in Kelowna during his schedule, he was told when he had to cover the airport.
He also stated that, if the cab had to be in a garage for repairs during his
shift, Mr. Hayer paid him $10 an hour while waiting for the vehicle to be
repaired. Vehicle maintenance and repair were the responsibility of Mr. Hayer,
as well as fuel costs. He stated that Mr. Hayer provided him with a gas card to
a specific station that he used during his shifts. He did supply one item and
that was a cell phone. The business cards that were kept in the cab were
supplied by Kelowna Cabs and contained their logo. These business cards were
used as the customer receipts.
The Law
[11]
The leading case in
this area is the Supreme Court decision in Sagaz Industries (more
accurately known as 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.,
2001 SCC 59). Justice Majors stated that there is no one conclusive test that
can be applied to easily determine whether a worker is an employee or an independent
contractor. As he suggested at paragraph 46 of those Reasons, the totality of
the parties’ relationship must be reviewed. At paragraph 47, Justice Majors
confirmed the continued use of the Wiebe Door factors of control, tools,
profit and loss and, in addition, he formulated the central question to be
asked as follows: whether a person who has been engaged to perform the services
is performing them as a person in business or on his own account (see Wiebe
Door Services v. Minister of National Revenue (1986), 87 D.T.C. 5025
(F.C.A.)). The weight to be given to each of the Wiebe Door factors will
depend on the facts and evidence in each particular appeal and one or more
factors in the end may have a neutral impact.
[12]
In more recent
decisions, courts have also looked at the intention of the parties. Intention
will be a factor that should be considered in the total work relationship,
provided the parties have a meeting of minds and a shared and common view of
their relationship. If this is not present, intent will not be a factor to
consider. In this appeal, the parties did not share a common intention. The
driver viewed himself as an employee, while the Appellant believed the drivers
to be independent contractors. Therefore, intention is not a factor. Even the
Agreements did not contain a clause that specifically referred to the drivers
as either employees or independent contractors. Instead, the party heading to
the Agreement referred to the Appellant as the “owner” and the worker as the
“driver”.
[13]
I heard testimony from
only one worker, although a number had been engaged throughout the years under
appeal. According to the Trust Examiner, the identity of many of the workers
was difficult to ascertain because they were identified in some cases only by a
first name and not all of them had Social Insurance Number information
attached. Where the examiner had addresses or SIN information, she attempted to
match names through the Canada Revenue Agency computer system.
[14]
The Appeals Officer
testified that she spoke to a driver who is since deceased. According to her testimony
and the contemporaneous notes that she took, that deceased worker confirmed to
her much of the evidence given by the driver called by the Respondent. This
deceased worker confirmed to the Appeals Officer that Mr. Hayer provided
the vehicles and trip sheets, a percentage of the fare money had to be
submitted to the Appellant, that he was subject to the Appellant’s shift
schedule, that he received forty per cent of the gross fares, that he was
responsible for remitting GST/HST on this percentage and that he was directed
to the locations in Kelowna where he would complete his shift. I believe this
type of evidence, although secondhand, meets the test of reliability and
necessity. Its impact is dependent on the relative weight which I may
ultimately decide to give it. However, although it supports the evidence of the
one driver, I have concluded that I have sufficient and reliable evidence from
the witnesses before me to conclude that these drivers were, in fact, employees
and not independent contractors.
Control
[15]
The evidence of both
the Appellant’s husband and the driver was that the shifts were scheduled by
the Appellant and those shifts dictated the hours and time of day that the
driver would be available and working. In fact, Mr. Hayer testified that a
driver had to work the full ten hour shift and had no choice to work fewer
hours on that shift. Although the drivers had some control over the areas
within Kelowna where they would spend their shift, the evidence was that the
Appellant did schedule drivers on an alternate basis to cover the airport and
to cover special events. According to the driver, if he was scheduled to be in
the Westbank area, he was prohibited from being within the City of Kelowna itself.
[16]
According to Mr. Hayer,
he viewed the drivers as having complete autonomy over their shifts because
they decided their pick ups and drop offs and, ultimately, how much money they would
make. However, he also testified that he had the ability to track their
movements throughout a shift by comparing their trip sheets with the
computer-generated tracking system of driver identification numbers which
Kelowna Cabs performed. This could be done to ascertain why one driver was
bringing in fewer fares than the others. Even though Mr. Hayer stated that he
did this comparison only once when there was a complaint, it clearly
demonstrates that the Appellant had the ultimate “right” to control the drivers
using this method. It is the “right to control” those drivers, as opposed to
the actual control that was exerted, that is of significance. While a dress
code was implemented by Kelowna Cabs, the Appellant required the drivers to
adhere to it. Mr. Hayer and the worker both agreed that the drivers were
prohibited from working for rival companies while engaged by the Appellant.
Finally, the driver, if unavailable, could not hire his replacement, as that
was solely the Appellant’s decision. This factor supports the relationship as
being one of employer/employee.
Tools
[17]
The main asset is the
vehicle. The Appellant supplied the vehicle equipped with the GPS system, the
trip sheets, calculator and so forth. The drivers did not rent or lease the use
of the vehicles. According to the driver, he used his personal cell phone to
contact customers and the Appellant, but the driver supplied nothing else
except for his personal licensing to drive a cab. In addition, the Appellant
paid for maintenance, repairs and insurance. Even the fuel was supplied by the
Appellant through a gas card for specific gas stations, chosen by the Appellant.
Clearly, this factor points strongly to an employer/employee relationship.
Profit/Loss
[18]
The drivers had very
little opportunity to earn additional profit. The split of sixty/forty per cent
was established by the Appellant. The evidence did not disclose any negotiation
in this regard and, in fact, Mr. Hayer testified that all of the drivers earned
roughly the same. I agree with the Respondent’s submission that working on a
commission basis is not the ultimate test. Because the shifts were pre-established
and, on some occasions, the location, the drivers’ opportunity to profit was
minimal. The evidence, viewed as a whole in this respect, points again, on a
balance of probabilities, to an employer/employee relationship, particularly in
light of the fact that the drivers were required to provide their services
exclusively to the Appellant. As well, the drivers had minimal, if in fact any,
potential for loss as even any fuel price increases were borne solely by the
Appellant. The drivers had no investment and were not responsible for any of
the expenses. Even when the vehicle was in a garage for repairs, if it was
during a driver’s shift, the Appellant paid $10 hourly to cover lost fares
during that shift due to down time of the cab. Again, this factor supports my
conclusion that the parties’ relationship was one of employer/employee.
[19]
The Respondent
submitted a number of cases in her Book of Authorities and the Appellant relied,
to a large extent, on the Reasons of Justice Boyle in Labrash v. M.N.R.,
2010 TCC 399, [2010] T.C.J. No. 309. Although the Appellant argued that the
facts before me were on point with Labrash, there are some important
differences that must be noted. Firstly, Justice Boyle concluded that the
parties in Labrash had a common understanding of their relationship.
Consequently, he accorded considerable weight to this factor. In the present
appeal, there was no common understanding and, therefore, I viewed this factor
as neutral. In addition, and most importantly, the drivers in the Labrash
case were not prohibited from driving for other companies whereas, in the
present appeal, they were required to drive exclusively for the Appellant.
Finally, it appears from the Labrash Reasons that the drivers exercised
greater flexibility in their shifts as they could decide to work later or on a
scheduled night shift and could sign up in advance for particular shifts.
[20]
The decision of Justice
Woods in 1022239 Ontario v. M.N.R., 2004 TCC 615, [2004] T.C.J. No. 455,
where she concluded that the cab drivers were independent contractors in
respect to pensionable earnings, can also be distinguished on the basis that
the drivers exercised much greater control over their shifts and were not
instructed where to drive.
Summary
[21]
In summary, applying
the factors approved by the Supreme Court of Canada in Sagaz Industries,
I conclude that all of the factors, to a greater or lesser extent, support that
the drivers were engaged as employees and not as independent contractors.
Although the Appellant seemed to be asserting that it was Kelowna Cabs that
implemented rules and regulations regarding the drivers, the Appellant was a
shareholder of Kelowna Cabs. The Agreements were between the Appellant and the
drivers and the drivers were engaged to perform certain services under the
umbrella of the existing and established regulations of Kelowna Cabs.
[22]
When I ask the central
question posed by Justice Major in Sagaz Industries, “Whose business is
this?” I must conclude that it is the business of the Appellant. The drivers had
little control, supplied no tools, had no investment and very little
opportunity for profit or risk of loss. From the perspective of a driver, the
business belongs to the Appellant and ultimately, when a driver left or was
terminated, he took nothing with him, including any portion of the goodwill.
[23]
For these reasons, the
appeal is dismissed, without costs.
Signed at Ottawa, Canada, this 8th day of November 2012.
“Diane Campbell”
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