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Citation: 2005TCC146
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Date: 20050121
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Docket: 2003-4675(EI)
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BETWEEN:
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ROBERT CHAGNON s/n MORODI ENR.,
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Appellant,
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and
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THE MINISTER OF NATIONAL REVENUE,
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Respondent,
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and
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MICHEL PERREAULT,
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Intervener.
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[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Deputy
Judge Savoie:
[1] This
appeal was heard in Montréal,
Quebec, on November 22, 2004.
[2] The
issue is the insurability of the employment of worker
Michel Perreault while in the appellant's service from
September 2, 1999, to August 6, 2003 ("the period
in issue"). By letter dated December 9, 2003, the Minister of
National Revenue ("the Minister") notified the appellant of his
decision that the worker held insurable employment.
[3] The
Minister relied on the following assumptions of fact in making his decision:
[TRANSLATION]
(a) The appellant operates a business that delivers grocery orders
to homes; (admitted in part)
(b) the appellant is the sole proprietor of the business, which
operates under the business name Mirodi Enr.; (admitted)
(c) the appellant has two delivery trucks the total value of which
is $10,000–$15,000; (admitted in part)
(d) the appellant's main customer is Supermarché
Pierre Chagnon Inc., which is operated under the IGA banner; (admitted)
(e) the appellant operates his business from Monday to Sunday
during the IGA supermarket's delivery hours; (denied)
(f) the appellant hires two delivery persons to drive his trucks;
(denied)
(g) the worker was hired as a delivery person for the appellant;
(denied)
(h) the worker was on the road delivering grocery orders and collecting
the cost of delivered orders; (denied)
(i) to get paid, the worker had to give the appellant the
detachable portion of the bill for the deliveries he made; (denied)
(j) the worker generally worked on Tuesdays and Wednesdays
(10:30 a.m. to 6 p.m.), Thursdays and Fridays
(10:30 a.m. to 8:00 p.m.) and Saturdays (10:30 to
4:00 p.m.) for a total of more than 40 hours per week; (denied)
(k) the appellant provided the worker with a delivery truck (Dodge
Van) and assumed all costs associated with its operation; (admitted)
(l) the worker had no expenses to incur and carrying out his
duties for the appellant; (denied)
(m) the appellant's pay was $1.10 per delivery made; (admitted)
(n) the worker was paid weekly; (admitted) and
(o) the appellant's main customer belonged to the appellant's
delivery business, not to the worker. (admitted.)
[4] The
evidence disclosed that the appellant owns Mirodi Enr. He operates a
business from his home office in Longueuil. Its activities consist of
delivering food and other products from certain supermarkets, chiefly
Supermarché Pierre Chagnon Inc., which belongs to his father and does business
under the IGA banner. Supermarché Pierre Chagnon Inc. is open seven days a
week, 24 hours a day.
[5] The
appellant finds delivery persons by placing classified advertisements in the
newspaper. The delivery persons are paid by the piece each week on a regular
basis. They receive no regular wages with source deductions.
[6] At
the time of hiring, the appellant requires his delivery persons to provide a
certificate confirming their status as independent contractors. He also
requires that they produce a valid driver's licence at that time.
[7] Based
on the evidence, the working hours are set by mutual agreement between the
delivery persons. The delivery persons do not have to punch in or out.
They are not assigned a work schedule. Working hours are based on the
opening hours of the appellant's main customer, Supermarché Pierre Chagnon Inc.
[8] The
appellant has three delivery persons to run his deliveries. It was established
that he does not require his delivery persons to work exclusively for him. The
evidence showed that the appellant does not tell his delivery persons how to do
their jobs. They do their deliveries based on priorities they set themselves.
[9] The
delivery persons are paid every Thursday at the appellant’s office when the
appellant receives the coupons confirming the deliveries. The coupons are
accounted for and the delivery persons are paid $1.10 per delivery.
[10] It was established that the delivery persons have no guaranteed pay
and obtain no minimum wage from the appellant. Sometimes certain delivery
persons collect money upon making a home delivery, but this is a very
occasional occurrence. Each delivery person's remuneration is based on the
number of deliveries made. If the appellant pays a delivery person who has
not done the deliveries, the matter is settled between the delivery persons
involved.
[11] It was established that the appellant does not replace delivery
persons who are unable to work. Each delivery person is entitled to get someone
to replace him, provided the replacement has a valid driver's licence and a
certificate establishing his or her self‑employed status.
Delivery persons occasionally get tips and are entitled to keep them. At
the hearing, the appellant said that has nothing to do with these tips; they
belong to the delivery persons.
[12] The appellant supplies two trucks. The remaining work tools, which
include a calculator, a uniform, a sack and a notebook, are supplied by the
workers themselves. It was acknowledged at the hearing that a delivery person
can use his own truck if necessary.
[13] Liability in the event of a motor vehicle accident causing injury or
damage is covered by the appellant's insurance. However, at the hearing, the
appellant said that a driver could be sued, though this has never happened.
[14] The evidence discloses that the worker has had a certificate
establishing his self‑employed status since 2002. It also shows that any
complaints made about a worker following a delivery would be settled by the
appellant's main customer, the IGS supermarket, of which the appellant was also
the manager according to his testimony.
[15] The evidence discloses that the delivery persons set their own
schedules based on the store's opening hours. They would arrange their
schedules by mutual consultation. If they could not agree on their schedules,
the appellant would find another delivery person rather than settle the
dispute. The appellant does not require his delivery persons to wear a uniform.
[16] As for the worker, it was established that he reported for work at
about 8:30 a.m., depending on his availability and the supermarket's
hours. The supermarket required deliveries to begin at approximately
10:30 a.m., so the delivery person reported there in advance of that
time to load his truck.
[17] The appellant said that the delivery persons could refuse to make
certain deliveries if they wished. The worker used his own cellular phone but
the appellant did not require his delivery persons to be equipped with one.
[18] It was established that the delivery person could run deliveries
elsewhere if he wished, even with the appellant's truck.
[19] The worker Michel Perreault testified at the hearing. He has been
working for the appellant for more than four years. He confirmed that he could
set his own schedule and grocery delivery priorities. He specified that when he
shared delivery tasks with another delivery person, this was a mutual
arrangement in which the appellant did not intervene.
[20] At the hearing, the worker stated that he considered himself a self‑employed
worker and that he actually identified himself as such on his tax return.
[21] The Employment Insurance Act (the Act) defines insurable
employment as follows in subsection 5(1):
5.(1) Subject to subsection (2),
insurable employment is
(a) employment in
Canada by one or more employers, under any express or implied contract of
service or apprenticeship, written or oral, whether the earnings of the
employed person are received from the employer or some other person and whether
the earnings are calculated by time or by the piece, or partly by time and
partly by the piece, or otherwise;
[22] This is an appropriate point to reproduce an excerpt from Wiebe
Door Services Ltd. v. Canada (Minister of National Revenue), [1986]
3 F.C. 553, where the following was held:
Case law has
established a series of tests to determine whether a contract is one of service
or for the provision of services. While not exhaustive the following are four
tests most commonly referred to:
(a) The degree
or absence of control, exercised by the alleged employer.
(b) Ownership
of tools
(c) Chance
of profit and risks of loss.
(d) Integration
of the alleged employee's work into the alleged employer's business.
[23] The evidence shows that the appellant exercised no control. In this
regard, the worker corroborated the comments made by the appellant, who
established that the delivery persons set their own working hours and adjusted
their arrival at work based on the supermarket's opening hours. It was also
established that the delivery persons determined their own deadlines and
priorities by mutual agreement. In addition, the evidence showed that a
delivery person could have himself replaced as the need arose without notifying
the appellant. When this occurred, the appellant paid the worker, and the
worker paid his replacement.
[24] In Wolf v. Canada (Minister of National Revenue), [2002]
4 F.C. 396, the Federal Court of Appeal has considered the question
whether a taxpayer was an employee or an independent contractor. The Court held
that the key distinction between an employment contract, and a contract of
enterprise or for services, lies with the element of subordination or control.
The Court added that the completion bonus, the absence of health insurance and
pension plan, and the risk factors favoured the status of independent
contractor and that the parties' intention is an important consideration. In
the instant case, it was established on a preponderance of the evidence that
the parties' intention was clear. The worker considered himself an independent
contractor and the appellant, his employer, shared this view. In fact, the
appellant demanded a certificate of registration as a self‑employed
worker at the time of hiring.
[25] In Le Livreur Plus Inc., 2004 FCA 68, the Federal Court of
Appeal considered a similar problem and held as follows:
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.
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.
[26] As for the integration test, when one asks whom the business belongs
to from the perspective of the worker, the facts indicate that this factor is
neutral. The worker does make deliveries based on tasks assigned by the
appellant's business, but he enjoys considerable flexibility in performing the
work and acts like a small business owner in that he sets his own schedules,
deadlines and delivery priorities and determines the quality of his delivery
work which earns him tips. An analysis of the evidence on this factor leads me
to a neutral result.
[27] Having analysed the evidence in view of the above factors, I find that
the worker's working conditions were more like those of a self‑employed
person. The agreement between the parties, as formed and later confirmed
by the appellant and the worker, constitute persuasive support for this
finding.
[28] Consequently, this Court finds that the worker did not hold insurable
employment within the meaning of the Act.
[29] The appeal is accordingly allowed and the
Minister's decision is vacated.
Signed at
Grand Barachois, New Brunswick,
this 21st day of January 2005.
Deputy Judge Savoie
Translation certified true
on this 6th day of April 2005.
Jacques Deschênes, Translator
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