Citation: 2008 TCC 488
Date: 20080925
Docket: 2008-1067(EI)
BETWEEN:
STÉPHANE TRUDEL,
Appellant,
and
MINISTER OF NATIONAL REVENUE,
Respondent.
[OFFICIAL ENGLISH
TRANSLATION]
REASONS FOR JUDGMENT
Tardif J.
[1]
This appeal is in
regard to the insurable nature of the work carried out from January 1, 2006, to
July 26, 2007, by the Appellant for the company doing business under the
corporate name 9102-6864 Québec inc.
[2]
The
Respondent found that the work in question was carried out pursuant to a
contract of service, in accordance with the provisions of paragraph 5(1)(a)
of the Employment Insurance
Act (the “Act”). The
Appellant is contesting this finding and claims he was working as a
self-employed worker and was therefore not subject to the provisions of the
Act.
[3]
In
making his decision, The Minister of National Revenue (the “Minister”) relied
on the following facts:
[TRANSLATION]
(a)
the Payor was incorporated on March 29, 2001;
(b)
the Payor runs a roadside assistance and towing
company on behalf of the CAA in the West Island and in St-Laurent;
(c)
the Payor started his business with 14 or 15 tow
trucks;
(d)
the Payor had sales of approximately $700,000;
(e)
Leslie Andradi was the sole holder of the voting
shares in the Payor;
(f)
the Appellant has worked for the Payor since
November 2004 as a tow- truck driver;
(g)
the Appellant provides services to the Payor by
means of a verbal agreement;
(h)
the Appellant drove a tow truck belonging to the
Payor;
(i)
the Appellant kept the tow truck 6 days of the
week;
(j)
the Payor was responsible for the costs related
to the operation of the tow truck, such as mechanical repairs, the licence
plates, insurance and gas;
(k)
the Appellant worked Monday to Saturday, 12
hours per day, from midnight until noon;
(l)
the Appellant was directly connected to CAA
Québec through a computer installed in the tow truck;
(m)
the Appellant received instructions regarding
where to go from the CAA dispatcher through the computer;
(n)
the Payor provided a CAA uniform to the
Appellant;
(o)
the Appellant worked exclusively for the Payor
and could not refuse service calls;
(p)
the Appellant had to personally provide services
to the Payor and could not be replaced by another individual;
(q)
the Appellant received approximately $7.00 per
call but the amount varied on a number of occasions;
(r)
the Appellant was paid every 2 weeks and no
deductions were made;
(s)
the Appellant was not entitled to paid vacation
and had no benefits;
(t)
if the Appellant was absent (due to illness),
the Appellant had to advise the CAA dispatcher and, if necessary, the CAA
picked up the tow truck;
(u)
during the period in issue, the Appellant was
still providing services to the Payor under the control and supervision of the
Payor;
[4]
Represented by Alain
Caron, the Appellant admitted, after being sworn in, that certain facts listed
in paragraph 5 of the Reply to the Notice of Appeal were accurate: (g), (h),
(i), (k), (l), (m), (q), (r) and (s). He ignored paragraphs (a), (b),
(c), (d) and (e), and he denied paragraphs (j), (n), (o), (p), (t), and (u).
[5]
He then described the
manner in which he carried out his duties. He repeatedly referred to the owner
of the tow trucks as “the boss”. He also spoke about his pay and identified
himself as an employee. I therefore made the Appellant aware of the fact,
during the hearing, that his vocabulary or the manner in which he expressed
himself validated the correctness of the Minister’s decision that he was
contesting in his appeal.
[6]
The Appellant continued
his testimony by explaining that he filled out a report or detailed summary of
all the calls on which he indicated the location, time, kilometrage, the amount
collected, etc.
[7]
Copies of the reports
were submitted to the owner of the tow trucks, 9102-6864 Québec inc.; the
Appellant received 50% of the total billed minus the taxes, which were paid in
full over and above the 50%. The reports in question served only as a
breakdown of the receipts.
[8]
The Appellant owned
several pieces of equipment necessary to the work—only the motor vehicle (tow
truck) was the property of the company, which collected 50% of the bill plus
the taxes on the full amount.
[9]
The Appellant wore a
uniform provided by the CAA (“Canadian Automobile Association”), which took
care of the liability insurance on payment of a $50 deductible.
[10]
The CAA also provided
the Appellant with the mandatory training required for accreditation.
[11]
The Appellant estimated
that calls from the CAA represented 85% of his work volume and that the
remaining 15% came from the owner of the tow trucks or other clients who
contacted the Appellant.
[12]
The Appellant had no
interest in keeping exact records as the way his remuneration was paid never
varied; it was always the same formula, 50-50, the exception being the taxes
that were paid in full to the company.
[13]
He explained that his
interest was in answering as many tow calls as possible and the way to get the
most amount of work was through the CAA, which, due to their large membership,
yielded a lot of work.
[14]
He explained that gas
expenses were his responsibility, despite some equivocation when his file was
analyzed. The appeals officer seemed to be under the impression that the
company paid the gas bills by means of a gas credit card issued to the
Appellant and that the Appellant was using.
[15]
When asked to explain,
the Appellant acknowledged that he had said this, that he had such a card, but
he added that the money spent on gas was subtracted from the 50% to which he
was entitled under the verbal agreement. The gas expenses were always the
responsibility of the Appellant.
[16]
Other than the cost of
gas that the Appellant was responsible for, he was also responsible for any
damages he caused. When damages resulted from a towing service order by the
CAA, the company was responsible for damages, except for a $50 deductible.
[17]
When they resulted from
a towing service described as private, that is, for non-CAA members, he was
personally responsible for damages, adding: [TRANSLATION] “This is normal as
I’m the one who would have caused the damages”.
[18]
He then gave the
example of a windshield he had to replace, which cost him more than $300.
[19]
He explained that he
always had to be available in order to maximize his income. He confirmed that
he had the right to refuse a call and that he in fact had already refused to
take a call that would have required him to make a long trip since the gas
expense would have considerably reduced his profit.
[20]
He also said that he
could have called in a replacement, provided that person was CAA-accredited.
He did not reference the tow-truck owner on this issue.
[21]
From the outset, the
Appellant’s representative, Mr. Caron, explained that the Appellant could not
be a salaried worker as no company could survive economically if it had to pay
such an employee an hourly wage.
[22]
He explained that the
region included a certain number of tow trucks available at all times in order
to meet demand—emergency calls—within a reasonable amount of time, around half
an hour, regardless of where the call comes from.
[23]
Just like the
Appellant, his representative did not seem to understand the difference between
a contract of service and a contract for services.
[24]
With respect to
insurability, each file is a particular case and, unfortunately, there is no
miracle formula for a quick and foolproof way of deciding a dispute based on
the facts that the parties submitted as evidence.
[25]
The case at bar is not
easy to decide as the parties presented solid arguments that effectively
supported their respective positions.
[26]
With respect to the
decision being appealed, I accept among other things the elements mentioned by
the appeals officer, Brian Carter:
[TRANSLATION]
(VI) Analysis of inconsistency or contradiction in the
particulars:
There is no inconsistency or contradiction in the particulars
between the Worker and the Payor.
(VII) SUMMARY:
In Quebec, contracts of employment (contracts of
service) and contracts for service are under the jurisdiction of the Civil
Code of Québec.
During the period in issue, it is not clear whether the Payor
considered the Worker as a self-employed worker or as an employee. The Worker
considered himself an employee.
Pursuant to the Code, a contract of employment must meet the
following three criteria:
(1)
Performance of work:
There is no doubt that the Worker provided towing services for the
Payor. He worked midnight until noon Monday through Saturday. The Payor
provided all the equipment used by the Worker.
(2)
Remuneration:
The Worker was paid $7.00 for each towing service call. He was paid
by cheque every two weeks, without any source deductions being made.
(3)
Subordination:
The Payor supplied a tow truck to the Worker free of charge. The
tow truck was the property of the Payor. The Worker worked Monday through
Saturday, so 6 days per week, 12 hours per day, from midnight to noon. The
Payor provided a CAA uniform for the Worker (at the Payor’s expense). The
Worker could not refuse service calls. The Worker worked exclusively for the
Payor. The Worker could not be replaced by another individual. The Worker, if
he was sick, had to communicate with the CAA dispatcher and Mr. Andradi (Payor)
to let them know he would be absent. If the Payor needed the tow truck, he
sent someone to pick it up from the Worker.
We conclude that is a contract of employment.
Paragraph 5(1)(a) of the Act:
We are of the opinion that Stéphane Trudel had insurable employment.
There was a contract of service between the Worker and Payor during
the period in issue.
(VII) Precedent, legal opinion, etc.:
9041‑6868 Québec Inc. (Tambeau) v. Canada (Minister of
National Revenue)
2005 FCA 334
(VIII) Recommendation:
We recommend that the departmental
notifications stipulate that Stéphane Trudel insurable employment pursuant to
paragraph 5(1)(a) of the Employment Insurance Act when he was
working for 9102-6864 Québec inc. during the period in question.
[27]
However, the evidence
shows that the gas was paid for by the Appellant, which led the appeals officer
to say that, had he known that, he might not have made the same decision.
[28]
Moreover, at the
hearing, the Appellant made statements that contradicted the contentions
accepted by the Minister, namely, that he was not able to refuse service calls
and that he did not bill the Payor for the costs incurred in using the tow
truck.
[29]
The Payor provided the
Appellant with a tow truck free of charge and the uniform was provided by the
CAA. These are important facts that did not appear in the initial analysis.
[30]
Mr. Carter even blamed
the Appellant for not bringing certain facts to his attention. I obviously do
not accept such a criticism, as it is the responsibility of the appeals officer
to conduct the investigation and obtain all relevant facts.
[31]
Persons under
investigation as in this case do not possess the reflexes or knowledge required
in order to identify determinative factors, especially if a legal expert does
not represent them.
[32]
The current case
illustrates this point: the Appellant filed a Notice of Appeal to argue that he
carried out his duties as a self-employed worker, and not as a salaried
employee, but he defined himself as an employee with a boss. If he were taken
at his word, his statement would be a fatal blow to the merits of his appeal.
[33]
This manner of
expressing himself shows that, in the mind of a non-expert, the distinction
between work carried out under the terms of a contract of service and work
carried out as a self-employed worker is neither clear nor evident.
[34]
Other than certain
facts validating the Respondent’s contention, I also accept the fact that the
Appellant was not a registrant for the purposes of the GST and QST, which
probably explains why the full amount of taxes was paid to the owner of the tow
truck.
[35]
With respect to the
Appellant’s position, I am rejecting his main argument, that the method of
remuneration necessarily means that he was a self-employed worker.
[36]
In fact, a salaried
worker can do a job according to the terms of a contract of service without
being paid an hourly wage.
[37]
Even though the hourly
wage is the most common method of paying a worker, the formula based on a
percentage or the number of units produced, the mixed formula, the repayment of
a debt, and so on, are other means of paying someone. As a result, the manner
in which the Appellant was paid meets the remuneration criterion. With respect
to the performance of work, the evidence admits of no doubt; it is not
debatable.
[38]
Finally, the
determinative factor, the subordination relationship, is proven by the amount
of authority the Payor had over the person carrying out the work.
[39]
In this case, it has
been established that the Appellant had tremendous autonomy. He could refuse a
call. He was responsible for the most significant input in terms of receipts:
the gas expenses. He was responsible for the damages caused for non-CAA member
towing services.
[40]
For CAA members,
damages were covered subject to a $50 deductible that the Appellant was
responsible for covering. The uniforms were paid for, not by 9102-6864 Québec
inc., but by the CAA. Training was provided by the CAA and not by 9102-6864
Québec inc.
[41]
In light of the
evidence, it is clear that three entities participated directly in the
execution of the Appellant’s work.
[42]
The company 9102-6864
Québec inc. owned the tow trucks and clearly sought the highest revenues
possible for the use of the tow trucks.
[43]
The Appellant made his
money based on the calls he took. Finally, the CAA was looking to obtain the
best service from persons who matched its reputation at the best price
possible. To do so, the CAA trained tow truck drivers, provided them with
uniforms, and sent them calls through a call centre that chose which tow truck
would answer the call based on location.
[44]
Each party had its own
interest and, as the facts demonstrate, the three entities were directly
involved. The reason both the Appellant and tow-truck owner had work was
because of what the CAA sent their way. Without the CAA, the Appellant would
not have gotten work and, without the Appellant, who is CAA-accredited, the
tow-truck owner would not have been able to cover the territory assigned by the
CAA.
[45]
Neither the owner of
the tow truck driven by the Appellant nor the CAA representative testified. The
Appellant testified and explained issues that were misinterpreted or distorted
by the appeals officer.
[46]
In a credible manner,
the Appellant confirmed he had to pay for the gas to use the tow truck. He
also said that he was responsible for any damages that ensued, providing an
example of a $300 disbursement.
[47]
The training was the
responsibility of the CAA, which also provided the uniforms.
[48]
He stated that he could
refuse to take a call and the he could do all the towing he wanted to without
any intervention by the tow-truck owner. When it was a private client, the
Appellant had the power to set the towing price. While he could service his
own clients, he was subject to the same agreement that bound him to the owner
of the tow truck with respect to the cost of using the vehicle.
[49]
Contrary to what was
accepted by the appeals officer, the tow truck was used for a clearly defined
consideration, which is entirely consistent with commercial practices in this
area.
[50]
Based on a 50-50 split,
the tow-truck owner’s only interest is to maximize revenues. The drivers’
interests are to be selective as they are responsible for the operational
expenses, which can reduce or cancel out their share of revenue to which they
are entitled to under the agreement.
[51]
For these reasons, I am
of the opinion that the balance of evidence is in favour of the Appellant’s
position. This is not a case where the conclusion is clear, but the terms of
the agreement binding the Appellant and the company 9102-6864 Québec inc. lead
us to conclude that the agreement was not an employment contract but a lease
agreement where the Appellant was the lessee of the tow truck he was using.
Signed at Ottawa, Canada, this 25th day of
September 2008.
“Alain Tardif”
Translation
certified true
on this 14th day
of November 2008.
Bella
Lewkowicz, Translator
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