Citation: 2008 TCC 570
Date: 20081016
Dockets: 2008-296(EI)
2008-297(EI)
2008-298(EI)
2008-299(EI)
2008-300(EI)
2008-301(EI)
2008-302(EI)
BETWEEN:
LES TRANSPORTS P.M. LEVERT INC.
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Lamarre J.
[1]
The Appellant has
appealed from decisions by the Minister of National Revenue (Minister)
that seven truck drivers hired by the Appellant in 2003, 2004
and 2005 were employees and not self-employed workers within the meaning
of paragraph 5(1)(a) of the Employment Insurance Act (EIA).
The workers concerned are Robert Geoffrey, Serge Levert, Rock Geoffrey, Sylvain
Chiasson, Normand Larocque, Michel Durocher and Jonathan Maillet.
[2]
André Levert is the Appellant's
sole shareholder and director. He has been a truck driver by trade for
38 years and, through the Appellant, has operated a [translation] "long-distance
courier transportation service" business for 15 years. For the past
eight years, his only client has been the Fedex Ground company (Fedex).
Fedex also does business with four other contractors in the Montréal region.
According to Mr. Levert, all these contractors have a structure similar to
that of the Appellant.
[3]
Mr. Levert
explained that Fedex first assigned to him the route between Montréal and
Plattsburgh in the United States, and then extended the route to Albany in the
United States. In order to drive this route, Mr. Levert was required to
provide a truck, the design of which was to be approved under Fedex's very
specific standards. For example, the truck was to carry the Fedex logo and have
the required dimensions. A truck could haul two trailers belonging to Fedex.
[4]
The Appellant was then
given other contracts and had to obtain additional trucks and find Fedex‑accredited
drivers to drive them. During the period in issue, the Appellant owned
four trucks that it leased from the Pensky company. Mr. Levert
therefore recruited a number of truck drivers, including the seven drivers
concerned in the instant case. Most of these drivers accepted contracts of two
or three days per week. In this way, Mr. Levert constituted his
own bank of drivers, which was necessary in order to provide drivers for each
route that the Appellant operated for Fedex. Some drivers worked under
contracts of five days per week.
[5]
Fedex posted the
available routes at a rate that it set. If the Appellant was interested in
obtaining a route offered, it had priority over the other bidders on the basis
of the seniority number assigned to its trucks. Mr. Levert estimated the
costs of subcontracting, fuel and truck leasing, and decided on that basis
whether to accept a route offered by Fedex. He then recruited the truck drivers
and offered them the route concerned. He offered them remuneration beforehand
on the basis of his cost estimate; the drivers each established their own rates
on the basis of their years of experience. The two parties reached an
agreement on pay. Mr. Levert explained that it could be more advantageous
for drivers to be self‑employed because they negotiated their income on
the basis of the kilometres driven, at a much higher rate than what other
companies could offer drivers who were employees with paid leave and all the
fringe benefits. As well, the drivers he hired could work for others if they
chose.
[6]
Before any negotiations
with a truck driver were entered into, the driver had to meet with Fedex
representatives in order to be accredited to drive for Fedex. Once all the
requirements were met (for example, driving test, personal record check,
possession of the required licence), the driver was registered on Fedex's list
of accredited drivers and Mr. Levert could enter into negotiations with
the driver to determine the route and the schedules that the driver agreed to
drive, as well as the driver's pay.
[7]
For routes between
Canada and the United States, Mr. Levert explained that, after the pay
based on kilometres driven was determined, he paid an additional $15
or $16 per hour for the time spent waiting at customs above and
beyond the first two hours. He stated that the truck drivers were paid
much less for the time spent waiting than for the kilometres driven and that,
as a result, they were well aware that their pay could fluctuate and be
lessened if more time was spent waiting at the border posts, a factor that
varied a great deal from one trip to the next. Similarly, drivers were not paid
for overtime resulting from the mechanical breakdown of a faulty truck.
[8]
Mr. Levert
explained that he did not exercise any regular supervision. Once contracts were
entered into with individual truck drivers, the drivers made arrangements with
Fedex to haul parcels on the routes assigned to them by the Appellant. In this
way, the drivers were responsible for picking up parcels at the Fedex warehouse
and delivering them to the right destination within the time determined by
Fedex. If the drivers were stopped for too long at customs, experienced
mechanical difficulties or anticipated not being able to arrive on time for any
other reason, they contacted Fedex directly and Fedex then made the appropriate
arrangements As well, the drivers each had a Fedex uniform and identification
card.
[9]
In response to a
question by counsel for the Respondent, Mr. Levert stated that he signed
an initial contract with Fedex in 1994 and subsequently signed addenda.
However, these contracts were not adduced in evidence by the Appellant, who did
not believe it was necessary to do so. Counsel for the Respondent stated that
he had contacted a Fedex representative, who was unaware of the existence of
these contracts.
[10]
Sylvain Chiasson, one
of the workers concerned, testified. From 2000 until August 2003 he
worked as a truck driver for a transportation company called Liaison CAN‑US,
where he was a full-time employee. He met Mr. Levert during long waits at
the border posts between Canada and the United States for goods they were
hauling in their trailers to pass customs. At one point Mr. Levert
suggested that Mr. Chiasson contact him. As a result, in August 2003
Mr. Chiasson set up his own company and, through it, offered his services
as a truck driver to Mr. Levert. Mr. Chiasson agreed to drive the
route between Montréal and Albany that Mr. Levert had obtained from Fedex.
Mr. Chiasson drove that route for Mr. Levert five days per week, from
Monday to Friday. He arrived at the Fedex warehouse in Dorval, near Montréal,
at around 5:00 a.m. He took possession of the truck assigned to him, which
was leased by Mr. Levert. He also took possession of the trailer belonging
to Fedex, with all the contents that he was to haul to the destination. He was
required to fill out approximately 50 to 60 manifests (that is, customs
entry forms for the contents of the trailer). He usually left the warehouse no
earlier than around 7:00 a.m., drove to the destination, where he delivered the
trailers full of parcels, and returned to Montréal the same evening with the
empty trailers. If the time spent waiting at the border posts for the goods to
pass customs was excessively lengthy, he left his trailers at a Fedex warehouse
near the border (at Plattsburgh or at Champlain) and returned to Montréal.
Under Société de l’assurance-automobile du Québec (SAAQ) rules, truck
drivers may not drive more than 12 hours per day. Mr. Chiasson had
agreed with Mr. Levert on fixed pay of $0.35 per mile. The rate was
the same regardless of the time spent waiting at customs. If the wait exceeded
two hours, Mr. Chiasson asked Mr. Levert to pay him the hourly
rate ($15) that they had agreed upon.
[11]
In order to cover the
cost of fuel, Mr. Chiasson had a fuel credit card provided by Fedex; the
expenses charged to the card were ultimately paid by Mr. Levert, who
explained that Fedex deducted the cost of the fuel used for each truck from the
amounts paid to the Appellant. As well, Mr. Chiasson was equipped with a
cellular telephone that was provided with the truck by Mr. Levert.
[12]
If Mr. Chiasson wanted
to be replaced for any reason, he was responsible for finding a replacement
from the Fedex list of accredited truck drivers. If he did not find one, he
called upon Mr. Levert to replace him. Ultimately he could ask another
Fedex contractor, a competitor of Mr. Levert, to replace him. In that
case, even though Mr. Levert had been given priority by Fedex for the
route concerned, Mr. Levert lost the income associated with the route,
which was given to the contractor who agreed to replace Mr. Chiasson.
[13]
If Mr. Chiasson
was ill he could call the Fedex dispatcher directly, and the dispatcher would
find a replacement. Mr. Chiasson was not paid if he was ill.
[14]
If his truck had a mechanical
breakdown on his route, Mr. Chiasson was responsible for contacting either
the leasing company from which Mr. Levert leased the truck, or Fedex if
the problem had to do with the truck trailer. He was not paid for the time
spent waiting after a mechanical breakdown. He received the rate agreed upon
for the kilometres driven. Thus, the fewer kilometres he drove, the less he was
paid. He was not paid for any time spent waiting at customs, as a result of
mechanical breakdown, for the trailer to be loaded in Dorval, or at meal
breaks. He kept a travel log on which he indicated the kilometres driven and
which he regularly left for Mr. Levert in a mailbox assigned to Mr. Levert
at the Fedex warehouse.
[15]
Mr. Chiasson had no
paid leave or sick days and no fringe benefits such as disability insurance and
drug or other insurance plans. He made his own contributions to the Quebec
Pension Plan (QPP); no one made contributions on his behalf to Quebec's workers'
compensation board (CSST).
[16]
If there were any
complaints about Mr. Chiasson, they were made to Fedex, which would
contact him; Fedex would decide whether to keep him on its list.
[17]
In May 2004,
Mr. Chiasson decided to return to work for Liaison CAN‑US. At that
time he wound up his company. He explained that he no longer wanted to drive
only Fedex routes because too much time was spent waiting at customs. He
preferred to return to work for Liaison CAN‑US, which was less
demanding. He no longer wanted to deal with bookkeeping, and preferred to
receive a fixed wage. He received two weeks' paid leave, wage insurance,
drug insurance and dental care insurance; the routes he drove for Liaison CAN‑US
were shorter. As well, the time spent waiting at customs was much shorter than
with Fedex because he was hauling a much narrower range of goods and thus had
to fill out far fewer manifests. He worked for Liaison CAN‑US
five days per week from 6:00 a.m. to 6:00 p.m.. If he was unable
to drive, he was not responsible for finding a replacement; his employer did
so. He was paid for sick days. In February 2005, he agreed to take another
contract with Mr. Levert for Fedex, driving on Friday evenings only, on
the route between Montréal and Syracuse in New York State. At that time he was
paid $260 for the route. That route suited him because Fedex did not always deliver
parcels on the weekend and Mr. Chiasson had no set time at which he was
required to reach the destination. During that time he was still employed by
Liaison CAN‑US.
[18]
Robert Geoffrey,
another truck driver who worked with Mr. Levert, stated that he was hired to
drive the route between Saint‑Hubert and Kingston, Ontario. He considered
himself to be self-employed; in addition to his contract with Mr. Levert,
he could work for any of the other contractors doing business with Fedex. He did
not often have to be replaced, but, when that happened, he called another
driver who was registered on Fedex's list. That other driver, too, could work
for a Fedex contractor other than Mr. Levert, which had happened.
[19]
Mr. Geoffrey drove
the night route. He arrived at the Fedex warehouse at 10:00 p.m.,
left at 10:30 p.m., and was back the following morning by 5:00 a.m. He
took the truck provided by Mr. Levert and drove the Fedex trailer to the
destination. His truck was equipped with a cellular telephone provided by
Mr. Levert. It could happen that Fedex would ask him to drive longer
distances; he could accept or decline these requests at his discretion. Most
often he accepted them, because they gave him more kilometres and more money.
For the route between Saint‑Hubert and Kingston, he negotiated pay of
$875 for a five‑day week. If he drove longer distances, he received $0.40
per mile. Since he did not drive to the United States, there was no time
spent waiting at customs. Any leave and absences were at his own expense.
[20]
If there was a mechanical
breakdown on the road and Mr. Geoffrey anticipated a delivery delay, he
called Fedex directly. He hardly ever dealt with Mr. Levert, except to drop
off his travel log in the mailbox assigned to Mr. Levert at the Fedex
warehouse.
[21]
With regard to
complaints, on one occasion Mr. Geoffrey forgot to put a lock on the Fedex
truck trailer during a trailer transfer in Kingston. Fedex contacted him
directly to inform him of this omission, in order to ensure parcel security.
[22]
Mr. Geoffrey gave Fedex
a copy of his log, indicating the kilometres and the hours driven, as well as
his fuel receipts.
[23]
Mr. Geoffrey left
a list of the routes driven for Mr. Levert in the latter's mailbox at the
Fedex warehouse, in order to be paid by Mr. Levert. Mr. Geoffrey was paid
by cheque each week.
[24]
The other workers did
not testify. The parties agreed that these workers' testimony would largely
repeat what had already been stated by the three witnesses.
Analysis
[25]
Counsel for the Appellant
and counsel for the Respondent agreed that, under the rules governing contracts
in the province of Quebec, reference must be made to the Civil Code of
Québec (C.C.Q.). In 9041‑6868 Québec Inc. v. Canada
(Minister of National Revenue), 2005 FCA 334, the Federal Court
of Appeal emphasized the importance of the true nature of the contractual
arrangement between the parties at paragraphs 7, 8 and 9, as follows:
[7] In other words, it
is the Civil Code of Québec that determines what rules apply to a
contract entered into in Quebec. Those rules are found in, inter alia,
the provisions of the Code dealing with contracts in general (arts. 1377 C.C.Q.
and seq.) and the provisions dealing with the “contract of employment”
(arts. 2085 to 2097 C.C.Q.) and the “contract of enterprise or for
services” (arts. 2098 to 2129 C.C.Q.). Articles 1378, 1425,
1426, 2085, 2098 and 2099 C.C.Q. are of most relevance for the
purposes of this case:
|
1378.
A contract is an agreement of wills by which one or several persons obligate
themselves to one or several other persons to perform a prestation.
.
. .
1425.
The common intention of the parties rather than adherence to the literal
meaning of the words shall be sought in interpreting a contract.
1426.
In interpreting a contract, the nature of the contract, the circumstances in
which it was formed, the interpretation which has already been given to it by
the parties or which it may have received, and usage, are all taken into
account.
.
. .
1440.
A contract has effect only between the contracting parties; it does not affect
third persons, except where provided by law.
.
. .
2085.
A contract of employment is a contract by which a person, the employee,
undertakes for a limited period to do work for remuneration, according to the
instructions and under the direction or control of another person, the
employer.
.
. .
2098.
A contract of enterprise or for services is a contract by which a person, the
contractor or the provider of services, as the case may be, undertakes to
carry out physical or intellectual work for another person, the client or to
provide a service, for a price which the client binds himself to pay.
2099.
The contractor and the provider of services is free to choose the means of
performing the contract and no relationship of subordination exists between
the contractor or the provider of services and the client in respect of such
performance.
|
|
1378.
Le contrat est un accord de volonté, par lequel une ou plusieurs personnes
s'obligent envers une ou plusieurs autres à exécuter une prestation.
.
. .
1425.
Dans l'interprétation du contrat, on doit rechercher quelle a été la commune
intention des parties plutôt que de s'arrêter au sens littéral des termes
utilisés.
1426.
On tient compte, dans l'interprétation du contrat, de sa nature, des
circonstances dans lesquelles il a été conclu, de l'interprétation que les
parties lui ont déjà donnée ou qu'il peut avoir reçue, ainsi que des usages.
.
. .
1440.
Le contrat n'a d'effet qu'entre les parties contractantes; il n'en a point
quant aux tiers, excepté dans les cas prévus par la loi.
.
. .
2085.
Le contrat de travail est celui par lequel une personne, le salarié,
s'oblige, pour un temps limité et moyennant rémunération, à effectuer un
travail sous la direction ou le control d'une autre personne, l'employeur.
.
. .
2098.
Le contrat d'entreprise ou de service est celui par lequel une personne ,
selon le cas l'entrepreneur ou le prestataire de services, s'engage envers
une autre personne, le client, à réaliser un ouvrage matériel ou intellectuel
ou à fournir un service moyennant un prix que le client s'oblige à lui payer.
2099.
L'entrepreneur ou le prestataire de services a le libre choix des moyens
d'exécution du contrat et il n'existe entre lui et le client aucun lien de
subordination quant à son exécution.
|
[8] We must keep in mind that
the role of the Tax Court of Canada judge is to determine, from the facts,
whether the allegations relied on by the Minister are correct, and if so,
whether the true nature of the contractual arrangement between the parties can
be characterized, in law, as employment. The proceedings before the Tax Court
of Canada are not, properly speaking, a contractual dispute between the two
parties to a contract. They are administrative proceedings between a third
party, the Minister of National Revenue, and one of the parties, even if one of
those parties may ultimately wish to adopt the Minister’s position.
[9] The
contract on which the Minister relies, or which a party seeks to set up against
the Minister, is indeed a juridical fact that the Minister may not ignore, even
if the contract does not affect the Minister (art. 1440 C.C.Q.;
Baudouin and Jobin, Les Obligations, Éditions Yvon Blais 1998,
5th edition, p. 377). However, this does not mean that the Minister
may not argue that, on the facts, the contract is not what it seems to be, was
not performed as provided by its terms or does not reflect the true
relationship created between the parties. The Minister, and the Tax Court of
Canada in turn, may, as provided by articles 1425 and 1426 of the Civil
Code of Québec, look for that true relationship in the nature of the
contract, the circumstances in which it was formed, the interpretation which
has already been given to it by the parties or which it may have received, and
usage. The circumstances in which the contract was formed include the
legitimate stated intention of the parties, an important factor that has been
cited by this Court in numerous decisions (see Wolf v. Canada (C.A.),
[2002] 4 FC 396, paras. 119 and 122; A.G. Canada
v. Les Productions Bibi et Zoé Inc., 2004 FCA 54; Le Livreur
Plus Inc. v. M.N.R., 2004 FCA 68; Poulin v. Canada (M.N.R.),
2003 FCA 50; Tremblay v. Canada (M.N.R.),
2004 FCA 175).
[26]
Farther on, the Court
noted that in Quebec civil law the definition of a contract of employment emphasizes
direction or control of the employee. The Court wrote as follows, at
paragraphs 11 and 12:
[11] There are three characteristic constituent elements of a “contract
of employment” in Quebec law: the performance of work, remuneration and a
relationship of subordination. That last element is the source of the most
litigation. For a comprehensive definition of it, I would refer to what was
said by Robert P. Gagnon in Le droit du travail du Québec, Éditions
Yvon Blais, 2003, 5th edition, at pages 66 and 67:
[TRANSLATION]:
90-- A distinguishing factor -- The most significant
characteristic of an employment contract is the employee’s subordination to the
person for whom he or she works. This is the element that distinguishes a
contract of employment from other onerous contracts in which work is performed
for the benefit of another for a price, e.g. a contract of enterprise or for
services governed by articles 2098 and seq. C.C.Q. Thus, while
article 2099 C.C.Q. provides that the contractor or provider of services
remains “free to choose the means of performing the contract” and that “no
relationship of subordination exists between the contractor or the provider of
services and the client in respect of such performance,” it is a characteristic
of an employment contract, subject to its terms, that the employee personally
perform the agreed upon work under the direction of the employer and within the
framework established by the employer.
91 -- Factual assessment -- Subordination is
ascertained from the facts. In this respect, the courts have always refused to
accept the characterization of the contract by the parties... .
92 -- Concept -- Historically,
the civil law initially developed a “strict” or “classical” concept of legal
subordination that was used for the purpose of applying the principle that a
master is civilly liable for damage caused by his servant in the performance of
his duties (article 1054 C.C.L.C.; article 1463 C.C.Q.).
This classical legal subordination was characterized by the employer’s direct
control over the employee’s performance of the work, in terms of the work and
the way it was performed. This concept was gradually relaxed, giving rise to
the concept of legal subordination in the broad sense. The reason for this is
that the diversification and specialization of occupations and work methods
often made it unrealistic for an employer to be able to dictate or even
directly supervise the performance of the work. Consequently, subordination
came to include the ability of the person who became recognized as the employer
to determine the work to be performed, and to control and monitor the
performance. Viewed from the reverse perspective, an employee is a person who
agrees to integrate into the operational structure of a business so that the business
can benefit from the employee’s work. In practice, one looks for a certain
number of indicia of the ability to control (and these indicia can vary
depending on the context): mandatory presence at a workplace; a somewhat
regular assignment of work; the imposition of rules of conduct or behaviour; an
obligation to provide activity reports; control over the quantity or quality of
the services, etc. The fact that a person works at home does not mean that he
or she cannot be integrated into a business in this way. (Emphasis added)
[12] It is worth noting that in Quebec civil law, the definition of a
contract of employment itself stresses “direction or control”
(art. 2085 C.C.Q.), which makes control the actual purpose of the exercise
and therefore much more than a mere indicator of organization …
[27]
In Combined
Insurance Co. of America v. Canada (Minister of National Revenue),
[2007] F.C.J. No. 124 (QL), a case heard in the province of
Quebec, the Federal Court of Appeal wrote as follows:
28 In subsequent decisions, this
Court has reiterated the importance to be given to the parties’ intent, as a
contract represents the will of the parties to the contract: see D & J
Driveway v. The Minister of National Revenue, 2003 FCA 453, Poulin v. The
Minister of National Revenue, 2003 FCA 50. In Le Livreur Plus
Inc. v. Canada, F.C.J. No. 267, at paragraph 17, Mr.
Justice Létourneau wrote for the Court:
17. What the parties stipulate
as to the nature of their contractual relations is not necessarily conclusive,
and the Court may arrive at a different conclusion based on the evidence before
it: D & J Driveway Inc. v. The Minister of National Revenue, 2003 FCA 453. However, if there is no unambiguous
evidence to the contrary, the Court should duly take the parties' stated
intention into account: Mayne Nickless Transport Inc. v.
The Minister of National Revenue, 97‑1416‑UI,
February 26, 1999 (T.C.C.). Essentially, the question is
as to the true nature of the relations between the parties. Thus, their sincerely
expressed intention is still an important point to consider in determining the
actual overall relationship the parties have had between themselves in a
constantly changing working world: see Wolf v. Canada,
[2002] 4 F.C. 396 (F.C.A.); Attorney General of Canada
v. Les Productions Bibi et Zoé Inc., 2004 FCA 54.
[Emphasis added]
29 More recently, in Royal Winnipeg Ballet v. Canada
(M.N.R.), 2006 FCA 87, March 2, 2006, this Court had to
determine whether three dancers hired by the Royal Winnipeg Ballet (RWB) were
employees or independent contractors. A majority of the Court (Mr. Justice
Evans dissenting) found that the dancers were not RWB employees.
…
32 Further, although Madam
Justice Sharlow was of the view that as in most cases the control test required
special attention, she nevertheless found that the control exercised by the RWB
over its dancers was not inconsistent with the parties’ intention to regard
them as independent contractors. At paragraph 66 of her reasons she said:
[66] The control factor in this
case, as in most cases, requires particular attention. It seems to me that
while the degree of control exercised by the RWB over the work of the dancers
is extensive, it is no more than is needed to stage a series of ballets over a
well planned season of performances. If the RWB
were to stage a ballet using guest artists in all principal roles, the RWB’s
control over the guest artists would be the same as if each role were performed
by a dancer engaged for the season. If it is accepted (as it must be), that a
guest artist may accept a role with the RWB without becoming its employee, then
the element of control must be consistent with the guest artist being an
independent contractor. Therefore, the elements of control in this case
cannot reasonably be considered to be inconsistent with the parties’
understanding that the dancers were independent contractors.
[Emphasis added]
…
34 To
conclude this review of the applicable case law, I refer to the comments made
by Mr. Justice Létourneau in Le Livreur Plus Inc. v. Canada, supra.
After having determined that the question on which the Court had to rule was
always that of the true nature of the relationship between the parties, Mr.
Justice Létourneau stated at paragraph 18 of his reasons, regarding the
relevance of the test in Wiebe Door, supra:
[18] In these circumstances, the tests
mentioned in Wiebe Door Services Ltd. v. M.N.R., 87 D.T.C. 5025,
namely the degree of control, ownership of the work tools, the chance of profit
and risk of loss, and finally integration, are only points of reference:
Charbonneau v. Canada (Minister of National Revenue - M.N.R.) (1996),
207 N.R. 299, paragraph 3. Where a real contract exists, the
Court must determine whether there is between the parties a relationship of
subordination which is characteristic of a contract of employment, or whether
there is instead a degree of independence which indicates a contract of
enterprise: ibid.
[Emphasis added]
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.
[Original emphasis]
[28]
In the instant case, it
is clear from the testimony of Mr. Levert and the other two truck
drivers that they entered into an agreement under which they were considered to
be self-employed workers. The truck drivers reported their income as self‑employed
workers on their income tax returns, and made their own contributions to
the QPP. Neither the Appellant nor Fedex paid these workers' contributions
to the CSST. These workers had no fringe benefits, were not paid if they
did not work and had negotiated their remuneration on the basis of their
expertise, in accordance with the rules of the market. This fact in itself
distinguishes the present situation from that in Truck Holdings Inc. v.
Canada (Minister of National Revenue), [1999] T.C.J. No. 311 (QL), affirmed
by [2000] F.C.J. No. 863 (QL), cited by counsel for the Respondent.
[29]
Once the contract was
entered into, the truck drivers accepted the terms of the contract imposed by
Fedex. They agreed to haul the Fedex truck trailers from one location to
another within a predetermined time. This situation is no different from that
of a construction contractor who agrees to perform a contract within a
predetermined time. The truck drivers assumed the risks associated with their
duties. If they were unable to drive the route, or were delayed on the route as
a result of a mechanical breakdown or excessively long waits at the border
posts, they themselves contacted Fedex. In these situations, their pay was
reduced as a result of factors beyond their control. The Appellant assumed none
of these risks: it was not responsible for paying the drivers for the time
lost. The drivers alone assumed these risks. The Appellant was paid by Fedex,
paid the drivers only on the basis of the established kilometrage and, under
the agreement entered into with them, paid a lower rate for the time spent waiting.
The drivers did not report to the Appellant. The Appellant simply paid them for
the routes driven.
[30]
With regard to Fedex,
once the security check qualifying a truck driver was completed, Fedex
exercised no more control over the driver than did the Appellant. Fedex gave a
mandate to the Appellant, which subcontracted with workers whom Fedex had
already accredited. These drivers took charge of the truck trailers and hauled
them to the right destination on routes they themselves chose. If there were
problems on the way, the drivers simply notified Fedex, which looked after
solving the problems. Fedex did not exercise actual control over the workers.
Regardless of who did the driving, what counted for Fedex was that the parcels
arrived at the right destination and on time. Thus the workers had an
obligation in terms of results. Once Fedex qualified the workers to carry out
the duties, it allowed them to do so in the same way as work is entrusted to
any independent contractor who is qualified to do it, in any field. As the
Federal Court of Appeal wrote in Le Livreur Plus Inc. v. Canada
(Minister of National Revenue), [2004] F.C.J. No. 267 (QL):
19 Having said that, in terms of
control the Court should not confuse control over the result or quality of the
work with control over its performance by the worker responsible for doing it: Vulcain
Alarme Inc. v. The Minister of National Revenue, A‑376‑98,
May 11, 1999, paragraph 10, (F.C.A.); D & J Driveway Inc.
v. The Minister of National Revenue, supra, at paragraph 9. As
our colleague Décary J.A. said in Charbonneau v. Canada (Minister
of National Revenue -M.N.R.), supra, followed in Jaillet
v. Canada (Minister of National Revenue - M.N.R.),
2002 FCA 394, “It is indeed rare for a person to give out work and
not to ensure that the work is performed in accordance with his or her
requirements and at the locations agreed upon. Monitoring the result must not
be confused with controlling the worker”.
20 I agree with the applicant's
arguments. A subcontractor is not a person who is free from all restraint,
working as he likes, doing as he pleases, without the slightest concern for his
fellow contractors and third parties. He is not a dilettante with a cavalier,
or even disrespectful, whimsical or irresponsible, attitude. He works within a
defined framework but does so independently and outside of the business of the
general contractor. The subcontract often assumes a rigid stance dictated by
the general contractor's obligations: a person has to take it or leave it.
However, its nature is not thereby altered, and the general contractor does not
lose his right of monitoring the results and the quality of the work, since he
is wholly and solely responsible to his customers.
…
24 Counsel for the respondent
mentioned a number of facts in support of her argument that the applicant
exercised such control over its two workers that the only conclusion could be
that a relationship of subordination existed between the parties. To begin
with, she strongly emphasized the fact that the delivery persons were subject
to obligatory hours of availability, each worked in a defined territory and
they could not alter the work schedule without the applicant's authorization.
25 With respect, I do
not think that these three first points are conclusive in determining the
nature of the overall relationship between the parties or suffice to change the
nature of what they stated in the contract. The reason is quite simple. Under
its contract of enterprise, the applicant assumed specific obligations of time
and space toward its customers, the pharmacies. As appears from the contract
governing their relations, specific times and places for collecting and
delivering medication were agreed on between the applicant and the pharmacies.
These obligations are contained in part in the subcontract with the delivery
persons. The specific nature of the duties and availability to carry them out
are not the characteristic features of a contract of employment. A contractor
who hires the services of subcontractors to perform all or part of the duties
it has undertaken to perform for its customers in accordance with a schedule
will identify and define what they have to do and ensure that they are
available to do it: Charbonneau v. Canada (Minister of National Revenue
- M.N.R.), supra; Vulcain Alarme Inc. v. The Minister of National
Revenue, supra, at paragraph 4. Otherwise, on this basis, one would have to
conclude that the applicant itself was an employee of the pharmacies, since it
had to be available to serve them at the agreed times and on the agreed
schedule.
26 The respondent submitted that
there was also evidence of control exercised by the applicant over its delivery
persons, first, in the obligation they had to file delivery reports. To that
should be added the fact that the applicant checked with the pharmacies to
ensure that the goods were indeed collected and delivered as agreed and to
their satisfaction.
27 These two aspects relied on by
the respondent are only evidence of control by the applicant of the result, a
result for which it was responsible to its customers. It was established that
the delivery reports were required for billing the applicant's customers so it
could be paid, and by the applicant for paying its delivery persons, some of
whom were paid by the volume of deliveries: see the contracts between the
applicant and the pharmacies and the contracts between the applicant and the
two delivery persons; see also the testimony in the record by the applicant in
case A‑664‑02, pages 77, 85 to 87, 97 to 98, 108,
120 to 121, 151 to 152 and 157. Billing is still necessary in a
contract of enterprise; and the creation of a procedure and system for billing
does not as such indicate the existence of a relationship of subordination: see
Vulcain Alarme Inc. v. The Minister of National Revenue, supra,
at paragraphs 4 to 6.
[31]
Thus, even though Fedex
had strict requirements with regard to the trucks provided by the Appellant and
the drivers' personal records, the case law quoted above has established that
this type of control is not incompatible with the status of a self‑employed
worker (see also DHL Express (Canada) Ltd. v. M.N.R.,
2005 TCC 178, cited by counsel for the Appellant).
[32]
With reference to
certain factors relied upon in 9041-6868 Québec Inc., supra, in
establishing whether control was exercised over the workers, it cannot be said
in the instant case that presence at a work place was required. The truck
drivers could have themselves replaced at any time without obtaining prior
agreement from the Appellant, or from Fedex, provided that the replacement
driver was registered on Fedex's list of accredited drivers. The drivers could
even call upon a contractor, other than the Appellant, that did business with
Fedex. With regard to the more or less regular assignment of work, the drivers
accepted a particular route. If they were asked to drive farther or to drive
another route, they were entirely free to accept or to decline. Neither the Appellant
nor Fedex could impose this work on them. With regard to rules of conduct or
behaviour, the workers practically never saw Mr. Levert; they carried out
their duties under the agreement previously entered into with him. If there
were any complaints, Fedex communicated directly with the driver. At worst, the
driver was taken off the list, which can happen to any professionals whose
conduct or behaviour in performing their duties is undesirable.
[33]
With regard to the
forms regularly submitted by the truck drivers to Fedex and to the Appellant,
these forms were for pay purposes only.
[34]
It is true that the
truck drivers did not incur many expenses beyond their meals on the road, since
they did not own the trucks or pay for insurance or fuel. In my opinion,
however, this factor alone does not affect the agreement between the parties, under
which both parties considered the drivers to be self-employed workers.
[35]
Since each case stands
on its own merits, in the instant case I am of the opinion that the Appellant
has established, on a balance of probabilities, that the seven workers concerned
in this case were not employees but self-employed workers.
Decision
[36]
The appeals are
allowed, and the decisions by the Minister are referred back to the Minister
for reconsideration and redetermination on the ground that the
seven workers concerned were not hired under a contract of service within
the meaning of paragraph 5(1)(a) of the EIA.
Signed at Ottawa,
Canada, this 16th day of October 2008.
"Lucie Lamarre"
Translation
certified true
on this 4th day of
December 2008.
Brian McCordick,
Translator
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