Citation: 2011 TCC 146
Date: March 9, 2011
Dockets: 2010-2519(EI)
2010-3026(CPP)
BETWEEN:
VITA STEINER,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
PIZZA 73 INC. OP PIZZA 73,
Intervenor.
REASONS FOR JUDGMENT
Campbell J.
[1]
These appeals were
heard together on common evidence and result from decisions made by the Minister
of National Revenue (the “Minister”) pursuant to the Canada Pension Plan
(“CPP”) and the Employment Insurance Act (the “EI Act”).
Ms. Steiner is appealing the Minister’s decision that she was not employed
under a contract of service as an employee with the payor, Unit Nine 73 Inc.
(“Unit Nine”), or with the Intervenor, Pizza 73 Inc., formerly Pizza Pizza
Limited, for the period August 1, 2008 to August 21, 2009 (the “Period”). Pizza 73
Inc. and Manjit Pandher each own 50 per cent of the voting shares of Unit Nine.
Contrary to the Minister’s ruling, the Appellant is alleging that she was an
employee of, and not an independent contractor with, Unit Nine during the
relevant Period.
[2]
Unit Nine is an
incorporated company which operates a pickup and delivery pizza business as a
franchise store of Pizza 73 Inc.. Pizza 73 Inc. is headquartered out of the Province of Ontario. The Appellant worked as a pizza delivery
driver for Unit Nine from 2003 until her termination date on August 21, 2009.
When she was first hired, she was required to sign a “Carrier Agreement”
(Exhibit A-1), which described the Appellant as an independent contractor and
not as an employee of Unit Nine. Since this Carrier Agreement is short, I am
reproducing it as part of my Reasons:
PIZZA 73 CARRIER AGREEMENT
BETWEEN
UNIT: Vita Steiner______ and Vita
Steiner___________________
(Hereinafter referred to as (Hereinafter
referred to as “Carrier”
“Pizza 73” of the first part) of the
second part)
[…]
1. The Carrier shall provide his/her own vehicle at his/her
own expense.
2.
The Carrier shall at all times carry a valid
Driver’s License.
3.
The Carrier shall maintain automobile and
general public liability and property damage insurance to an amount which is
deemed reasonable (given the vehicle use) by his/her automobile insurance
company and the Provincial Government.
4.
The Carrier agrees to purchase pizza from Pizza
73 prior to delivery. It is the responsibility of the Carrier to receive
reimbursement from the customer as well as to collect the applicable delivery
charge. Pizza 73 does not pay the Carrier. Pizza 73, the customer and the
Carrier (acting as the Customer’s agent) will agree as to the delivery charges.
5.
The [C]arrier is not an employee of Pizza 73, has no duties or
responsibilities within any Pizza 73 operation and is therefore not eligible
for any employee benefits. The Carrier shall not hold himself out to any party
as being an employee of Pizza 73. As an independent contractor and proprietor
of his/her own business, the Carrier shall be personally responsible for any
and all Government remittances which may accrue from his/her income, i.e.
C.P.P., U.I.C., income taxes, Worker’s Compensation, etc. The Carrier shall
deal directly with all governmental authorities. Notwithstanding the foregoing,
the Carrier agrees that Pizza 73 shall collect and remit, on the Carrier’s
behalf, the Goods and Services Tax payable on the Carrier’s delivery charge.
6.
It is understood and agreed that Pizza 73 shall
not be liable for damages to any third party for bodily injuries or property
damage resulting from any accident involving the Carrier while delivering the
orders of Pizza 73. The Carrier hereby covenants and agrees with Pizza 73 to
indemnify and save harmless Pizza 73 of and from all claims and demands
howsoever arising caused by any acts of negligence or otherwise by the Carrier.
7.
It is agreed that this document embodies the
entire agreement of the parties and there are no other understandings or
agreements either verbal or written. Any alteration to this agreement shall be
written. This agreement shall be kept in strict confidence by each party.
[…]
[3]
According to the
Appellant, she was told it was an application form for the position of driver and
that “… it would take a while for it to go through…” (Transcript, page 16,
lines 23 to 24), but if she signed it, she would be hired that same day. In
response to questioning, under direct examination, respecting her knowledge
that the contract considered her an independent contractor as opposed to an employee,
she responded:
A No, I did not understand that.
Q Did Paul ever explain to you what you were
going to be doing under this agreement?
A No. He just said I’ll be delivering pizzas
for him and his Pizza 73 because he’s the owner of the shop.
(Transcript, page 19, lines 3 to 7).
[4]
When the Appellant
commenced working for Unit Nine, she was paid $2.80 per pizza delivery. This
was increased to $3.50 per delivery in 2008, when she began questioning the
rate the drivers were being paid. The Appellant used her own vehicle for
deliveries and was responsible for vehicle expenses, including insurance and
repairs. She also used her own cell phone. Unit Nine provided the following
items: delivery bags which kept the pizza hot; the delivery box displaying the
corporate logo and artwork which contained the pizza being delivered to the
customer; and the debit and credit card machines for those customers preferring
those methods of payment.
[5]
The Appellant worked
specific shifts for Unit Nine. During her shifts, she delivered pizzas
exclusively for Unit Nine. She was required to be at the pizza shop at the
commencement of her shift until it ended. The calls for pizza purchases were
routed through a central call centre for Pizza 73 and then directed to the
pizza shop situated closest to the customer’s address for delivery. Rachhpal
Pandher (also referred to as “Paul” by the Appellant), whose spouse Manjit is
one of the 50 per cent owners of Unit Nine, has been manager of the pizza shop
for nineteen years. The orders were processed by Mr. Pandher when he received
them. He decided which delivery drivers delivered a particular order. He
testified that he followed the rule that the first driver present on a shift
received the first delivery. However, according to the Appellant’s evidence, if
Mr. Pandher was annoyed with her for some reason, he would reduce the number of
delivery orders she received in each shift. The drivers’ schedule was always
posted inside the pizza shop.
[6]
Mr. Pandher oversaw the
scheduling of the drivers’ shifts and stated that he would take into account
the drivers’ availability. According to the Appellant, however, her requests
for time off were not always granted and she was not able to easily book time
off. She gave as examples her inability to obtain time for attending weddings
and her daughter’s birthday. When Social Services apprehended her disabled
daughter, she requested and obtained a decrease in her shifts in 2009.
[7]
According to paragraph
4 of the Carrier Agreement, the carrier agreed to purchase the pizza from the
pizza shop prior to delivery. However, in actual fact, the Appellant was simply
given the pizzas to deliver and then went through a “cashing-out” process at
the end of the shift. The cost of the pizza to the customer included the price
of the product plus the delivery fee, as well as Goods and Services Tax (“GST”)
on both charges. The barcode, contained on each pizza order invoice, was
scanned into the store computer database. It contained the customer’s
particulars and the name of the driver that had been assigned to deliver that
order. When a driver cashed-out at the end of the shift, the cost of the
product and the GST was paid to Unit Nine and the driver retained the delivery
fee. When customers paid with debit or credit cards, they paid the shop, and
the delivery fee was paid by the shop to the driver. Although the drivers
generally provided their own monetary float, according to both the Appellant
and Mr. Pandher, he occasionally loaned the Appellant enough money to
cover her float when she requested it.
[8]
The Appellant testified
that the franchisor’s Pizza 73 - Driver Training Handbook (the “Handbook”) was
always posted on a wall of the drivers’ room inside the pizza shop, but was not
brought specifically to the drivers’ attention until 2007 or 2008 when Pizza 73
purchased the franchise. At that time, according to the Appellant, Mr. Pandher
specifically brought the manual, together with a video, to the attention of the
drivers. Mr. Pandher testified that the manual and video were always available
in the drivers’ room and that he expected the drivers to follow those
guidelines and procedures. It is clear, however, that he did not always enforce
those guidelines. For example, the manual states that the drivers are required
to wear Pizza 73 uniforms during their shifts. Mr. Pandher testified that
uniforms, including hats and jackets with the corporate logo, were available at
the shop but that the drivers never wore them. The Appellant, on
cross-examination, stated that she always wore a lapel pin which identified her
as a Pizza 73 delivery person even though the other drivers did not.
[9]
The manual also
contained a section on problem solving in which drivers were instructed on the particular
steps to be taken in instances such as: when customers were not at home or when
there was no answer; when customers were upset; when addresses could not be
located; when part of an order was missing; or when appropriate monetary change
could not be made. In some instances, the solution, suggested in the manual,
was for the driver to contact the shop manager for direction and advice. The
Appellant’s evidence was that she attempted to resolve customer issues herself,
but that she had to call the shop manager on some occasions. Mr. Pandher
testified that drivers were always free to contact the shop or a customer
service number provided in the Handbook in resolving delivery problems.
[10]
To decide whether the
Appellant is an employee of Unit Nine or conducting her own business as an
independent contractor, the language used in the Carrier Agreement will not
necessarily be determinative. The contractual term at paragraph 5 of the
Carrier Agreement, stating that Ms. Steiner was an independent contractor and
not an employee, will only prevail if all of the circumstances of their actual working
relationship support the label given to the worker in the agreement. Such
labelling in a contract can only be upheld where it truly reflects the
intention, performance by and conduct of the parties as supported by the
evidence. Otherwise, it is meaningless and may, in some circumstances, be the
result of unequal bargaining positions in the workplace. It becomes even more
important to closely scrutinize the evidence when the contracting parties
testify as to very different perceptions of the nature of their working
relationship, that is, where the evidence suggests there is no common intention
respecting whether a worker is an employee or not. That was the case in these
appeals, where the Appellant indicated that she thought the Carrier Agreement
was an application form which she wanted to sign so that she could start work
on the date she signed it. The Carrier Agreement was not explained to her and
the evidence supports that she did not understand the nature or content of the
standard form contract which she signed. It was always the Appellant’s
intention to be an employee and that was her understanding of the relationship.
Although the Appellant’s evidence was a little disjointed at times, I found her
to be a credible witness. In her testimony, she alluded to instances where she requested
that Mr. Pandher sign her delivery invoices so she could file income tax
returns to prove she made deliveries. When asked if she had ever requested a T4
slip from Unit Nine, she stated that Mr. Pandher “…doesn’t believe in it.”
(Transcript, page 52, line 21). She also mentioned the need to obtain a
reference from Mr. Pandher.
[11]
At first blush, the initial
three paragraphs of the Carrier Agreement seem indicative of an independent
contractor relationship. The drivers had to provide their own vehicle for
deliveries and pay all associated vehicle expenses. However, the evidence of
both the Appellant and Mr. Pandher contradicts some of the content of paragraph
4 of the Carrier Agreement respecting the time of payment by the drivers for the
pizza product. An analysis of the evidence surrounding the totality of their
relationship must be reviewed in order to determine its true nature, and the
issue of whether the Appellant is an employee or, as the Carrier Agreement
states, an independent contractor.
[12]
The two leading cases
in this area of the law are Wiebe Door Services Ltd. v M.N.R. (1986), 87 D.T.C. 5025 (F.C.A.) [“Wiebe Door”] and
671122 Ontario Ltd. v Sagaz Industries Canada Inc., 2001 SCC 59, [2001]
S.C.J. No. 61 [“Sagaz”]. Wiebe Door establishes the well-known “four-in-one
test” to be considered in determining whether an individual is an employee or
independent contractor. These factors are control, ownership of tools, risk of
loss/chance of profit and integration. Each appeal dealing with this issue will
have its own unique set of facts, with some of the variables pointing in the
direction of employee and some in the opposite direction. The Wiebe Door
factors are not an exhaustive list and the Supreme Court of Canada recognized
that statement at paragraphs 46, 47 and 48 of Sagaz:
46 In my opinion, there is no one
conclusive test which can be universally applied to determine whether a person
is an employee or an independent contractor. Lord Denning stated in Stevenson
Jordan, supra, that it may be impossible to give a precise
definition of the distinction (p. 111) and, similarly, Fleming observed that
“no single test seems to yield an invariably clear and acceptable answer to the
many variables of ever changing employment relations . . .” (p. 416). Further,
I agree with MacGuigan J.A. in Wiebe Door, at p. 563, citing Atiyah, supra,
at p. 38, that what must always occur is a search for the total relationship of
the parties:
[I]t is exceedingly doubtful whether the search for a
formula in the nature of a single test for identifying a contract of service
any longer serves a useful purpose.... The most that can profitably be done is
to examine all the possible factors which have been referred to in these cases
as bearing on the nature of the relationship between the parties concerned. Clearly
not all of these factors will be relevant in all cases, or have the same weight
in all cases. Equally clearly no magic formula can be propounded for
determining which factors should, in any given case, be treated as the
determining ones.
47 Although there is no universal
test to determine whether a person is an employee or an independent contractor,
I agree with MacGuigan J.A. that a persuasive approach to the issue is that
taken by Cooke J. in Market Investigations, supra. The central question
is whether the person who has been engaged to perform the services is
performing them as a person in business on his own account. In making this
determination, the level of control the employer has over the worker's
activities will always be a factor. However, other factors to consider include
whether the worker provides his or her own equipment, whether the worker hires
his or her own helpers, the degree of financial risk taken by the worker, the
degree of responsibility for investment and management held by the worker, and
the worker's opportunity for profit in the performance of his or her tasks.
48 It bears repeating
that the above factors constitute a non-exhaustive list, and there is no set
formula as to their application. The relative weight of each will depend on the
particular facts and circumstances of the case.
[13]
There is no one
conclusive test that can be easily applied in making such a determination.
There is no magical formula. One does the best one can do by objectively
reviewing all of the evidence within the four-in-one test, tempered with a
common-sense approach to the economic realities of the parties’ working
relationship and their respective bargaining positions, in determining whether
each set of facts is more consistent with a conclusion that a worker is an
employee or an independent contractor. Even where the parties have a stated
common intention, the Courts must still determine if the relevant circumstances
respecting their working relationships are consistent with what those parties
have labelled it.
[14]
Nadon J.A. of the
Federal Court of Appeal, in reviewing recent case law in this area, summarized
the following principles at paragraph 35 of Combined Insurance Company of America v M.N.R., 2007 FCA 60, [2007] F.C.J. No. 124:
[35] In my view, the
following principles emerge from these decisions:
1. The
relevant facts, including the parties’ intent regarding the nature of their
contractual relationship, must be looked at in the light of the factors in Wiebe
Door, supra, and in the light of any factor which may prove to be relevant
in the particular circumstances of the case;
2. There
is no predetermined way of applying the relevant factors and their importance
will depend on the circumstances and the particular facts of the case.
Although as a general rule
the control test is of special importance, the tests developed in Wiebe Door
and Sagaz, supra, will nevertheless be useful in determining the
real nature of the contract.
[15]
Generally, one associates
employees with those who devote their full attention and apply their abilities
in one work environment for one individual/corporation or possibly for several such
entities where individuals are working several part-time jobs. That latter
scenario is, in fact, the reality of many who hold several jobs as employees in
today’s market. Independent contractors, on the other hand, offer their
expertise/services at all times to anyone in the general public that is interested
in hiring them or paying them for those services. Although not necessarily the
case, they often provide services to a number of different individuals or
corporations for a specific time period. When they complete the services they
were contracted to do, they move on, looking for their next contract. In most
cases, such individuals will be identified by a business name and address
separate from the individual that is paying them to complete the task.
[16]
Employment
relationships usually include a high degree of control by an employer over the
worker, that is, control over the “where, when and how” of the performance of
the work activities. The right to direct the worker in a manner that is
dictated by the employer is one of the hallmarks of an employer/employee
relationship.
[17]
In these appeals, the
facts support that Unit Nine controlled the Appellant in her delivery
activities. Unit Nine established the hours and the shifts for the drivers and
they were expected to adhere to those. While it is true that the Appellant
could make a request for a day off, she testified as to several instances where
her request was not granted. However, this is no different than any other
employer/employee relationship where an employee is free to request time off
and if it is granted, the schedule is established around that request. Although
she was given a reduced number of shifts in 2009, as per her request, it was
entirely at Unit Nine’s discretion. She was also permitted to forego deliveries
where the pizzas contained seafood, to which she testified that she could have
a severe allergic reaction. She made this request to Mr. Pandher and he
acquiesced. It was a request based on medical reasons and she stated she wore a
MedicAlert bracelet. Common sense dictates that no employer will force a worker
to handle a product which could have severe health consequences. The fact that
she was not given seafood products to handle does not give weight to an
independent contractor status. In respect to her deliveries to apartment
buildings and hotels, the evidence was contradictory and inconclusive, with the
Appellant stating that she did, in fact, make those deliveries and Mr. Pandher
testifying that she did not because she was often accompanied by her disabled
daughter when she did deliveries.
[18]
Other than to submit
requests for time off to Mr. Pandher for his consideration, the Appellant had
no control over her schedule and the hours she worked. The evidence does not
support that she had any ability to accept or decline particular deliveries
over others, except with Mr. Pandher’s permission, as in the example of her
shellfish allergy. She had no input into the amount of the delivery fee. This
was established by Unit Nine and that fee was included as part of Unit Nine’s
total cost of their pizza product and passed on to the customer. In fact, the
evidence of the Appellant was that she started deliveries in 2003 for $2.80 per
pizza and had to request that Mr. Pandher consider an increase to those fees in
2007 or 2008. Independent contractors establish their own fees for their
services and this fact, again, points strongly to the Appellant being an
employee insofar as the control factor is concerned.
[19]
This was not a case
where the Appellant purchased the pizza at the commencement of each delivery,
as paragraph 4 of the Carrier Agreement states. She was given the delivery and
collected the price from the customer, returning the money collected in respect
to all her deliveries at the end of her shift. She followed a prescribed
“cashing-out” procedure, established by Unit Nine, where all of her deliveries
were tracked on the computer database. Also contrary to paragraph 4 of this agreement,
the evidence supports that the delivery fee was established solely by Unit Nine
and not by agreement among “Pizza 73, the customer and the Carrier (acting as
the customer’s agent).” When customers paid for the product by debit or credit
card, Unit Nine paid those delivery fees to her at the end of the Appellant’s
shift.
[20]
When the Appellant
worked her scheduled shift, she worked exclusively for Unit Nine. The
Respondent argued that Unit Nine did not dictate to the Appellant that she
could not work doing deliveries for another company when she was not working
for the payor. In my opinion, this proposition establishes nothing in respect
to control. Many employees hold down two or more jobs and as long as they are
working exclusively for that employer when required to do so, it has a neutral
influence on the control factor when a worker secures and works additional
shifts for someone in his free time.
[21]
The Appellant did not
invoice Unit Nine as independent contractors would be expected to do to receive
remuneration. She made deliveries to customers of Unit Nine. They were not
her customers. She had to present herself at the premises of Unit Nine at the
commencement of each shift and had to remain there throughout her shift even
when not delivering. A room for the delivery drivers was provided by Unit Nine
and that room was located within the pizza shop. She worked consistently for
Unit Nine from 2003 to 2009, as one would expect employees to do. The Appellant
had to perform her services for Unit Nine personally. Mr. Pandher
controlled who the shop’s drivers would be on any given day and assigned them
the sequence for deliveries. The Appellant was told when to arrive for her
shift, given a delivery, told where to take that delivery, told what to charge
for the delivery and the product and instructed to return to the shop premises
after the delivery. The Appellant’s evidence was that the number of deliveries
she received per shift could, in fact, be reduced in favour of the other
drivers if Mr. Pandher was so inclined. Although the Appellant testified
that she attempted to deal with customer problems personally, she did contact Unit
Nine on a number of occasions to receive direction and guidance. The Appellant
could not accept cheques that had not been pre-authorized by Unit Nine. If
customers were unhappy with the service, they complained to Unit Nine or the
head office of the franchisor but not to the Appellant. The Appellant did not
have a GST number. When it was charged and collected from the customer, it was Unit Nine
that controlled this aspect of the arrangement.
[22]
Case law has
established that an important consideration in the control test is the “right
to control” a worker, rather than the “actual control” that is exerted over
that worker. Mr. Pandher testified, in direct examination, that the drivers’ Handbook
was always available to the Appellant and, at page 89 of the transcript, lines
15 to 23, the following exchange occurred:
CITATION: 2011 TCC 146
COURT FILE NOS.: 2010-2519(EI)
2010-3026(CPP)
STYLE OF CAUSE: VITA STEINER AND THE MINISTER OF NATIONAL REVENUE AND
PIZZA 73 INC. OP PIZZA 73
PLACE OF HEARING: Edmonton, Ontario
DATE OF HEARING: February 10, 2011
REASONS FOR JUDGMENT BY: The
Honourable Justice Diane Campbell
DATE OF JUDGMENT: March 9, 2011
APPEARANCES:
|
Counsel for the
Appellant:
|
Michael A. Power
|
|
Counsel for the
Respondent:
|
Mary Softley
|
|
Counsel for the
Intervenor:
|
Dane Zobell
|
COUNSEL OF RECORD:
For the Appellant:
Name: Michael A. Power
Firm:
For the
Respondent: Myles J. Kirvan
Deputy
Attorney General of Canada
Ottawa,
Canada
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