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Citation: 2003TCC856
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Date: 20031125
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Docket: 2003-916(EI) and 2003-918(CPP)
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BETWEEN:
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DeWINTER ENTERPRISES (1996) LTD.,
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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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REASONS FOR JUDGMENT
McArthur J.
[1] This
is an appeal from the decision of the Minister of National Revenue that Brian
Baker was employed in insurable employment with the Appellant from November 16,
2001 to May 1, 2002. The position of the Appellant is that Brian Baker was
operating his own business and was not an employee. The problem arises because
the Appellant was assessed for employment insurance premiums in respect of
Brian Baker who was driving a taxicab.
[2] The
Respondent submits that Brian Baker was employed in insurable employment under
a contract of service pursuant to paragraph 5(1)(a) of the Employment
Insurance Act.
[3] The
Appellant corporation is owned equally by Ron and Lynn DeWinter. Ron DeWinter
was the only witness. The Appellant operates a taxi business in Dawson Creek,
British Columbia, about 500 miles northeast of Prince George. The Appellant
employed six dispatchers. Brian Baker leased and drove a taxi owned by the
Appellant in 12-hour dayshifts, according to the Appellant's schedule and
dispatcher's assigned calls. He did not miss work during the period. If he had,
the Appellant would look for someone else to drive Mr. Baker's assigned car. He
was expected to advise t he Appellant if and when he was not available so that
the car could be leased to someone else. He could drive whenever he wanted to,
but was expected to advise the Appellant when he was not leasing a car.
[4] He
signed a waiver agreeing to be responsible for his own costs: Canada Pension
Plan contributions, Employment Insurance premiums and to pay 50 per
cent per working shift, for the rental of one of the Appellant's cars and for
dispatching privileges. Brian Baker paid for his own gasoline. In the waiver
contract, he acknowledged that he was self-employed. He had his own personal
Class 4 license and a chauffeur's permit that allowed him to drive any legal
taxi.
[5] At
the end of each daily shift, Brian Baker paid out to the Appellant
50 per cent of his gross receipts for that day. This paid for the car
lease, the dispatching services and charge slip collections. He was not present
in Court.
[6] Mr.
DeWinter described Mr. Baker as a "very sweet 70-year old man whom he
liked very much". Mr. Baker injured himself lifting his house and was unable to continue driving a
taxi. The waiver contract referred to, reads as follows:
Date: November 16, 2001
WAIVER
As a lease/operator for DeWinter
Enterprises (1996) Ltd. DBA/Yellow Cabs – AC Taxi, Dawson Creek, B.C., I fully
understand and agree that I am self‑employed and that I am responsible
for the following costs:
1) To pay to the
company 50% of my gross earnings per working shift for dispatch fees,
vehicle rental fees.
2) To pay the fuel cost and
car wash cost after every shift worked.
3) To register for GST
number and to pay required GST taxes.
4) To register
with Workers' Compensation Board and to pay required premiums, also, employment
insurance Canada Pension costs.
I ACCEPT THE ABOVE TERMS
Print Name: Brian
Baker
Signature: "Brian
Baker"
[7] Counsel for the Respondent referred
to 671122 Ontario Ltd. v. Sagaz Industries
and the four-in-one test set out in Weibe Door Services Ltd. v. M.N.R. and Montreal v.
Montreal Locomotive Works Ltd.
referred to with approval by the Supreme Court of Canada in Sagaz.
[8] There
have been many taxi driver cases before this Court. Each stands on its own
particular facts. Sagaz indicates that the tests of control, ownership
of tools, risk of profit or loss be used in determining the important question:
whose business was it?
[9] Counsel
for the Respondent very fairly provided the decision of the Federal Court of
Appeal in Yellow Cab Company Ltd. v. M.N.R.
While he attempted to distinguish the facts in Yellow Cab, I find it
similar to the present facts and, for the following reasons, find that Brian
Baker was closer to being an independent contractor than an employee. In Yellow
Cab the issue was, as in the present case, whether a cab lease-operator was
operator of his own business.
[10] Applying the tests to the present facts, I find the following:
(i) Control
Brian Baker was
a lease-operator. He leased a car with a meter and sign from the Appellant on a
daily basis. He also paid for dispatching services, which included the
privilege of being assigned customers of the Appellant. He also had first right
to his own clients who asked for him specifically. Theoretically, he could
drive all day without the dispatcher. He had a chauffeur's driver permit, which
assured provincial authorities that he had the driving skills necessary to
operate a taxicab. His driving skills and demeanour were such that he was never
monitored while driving throughout the entire period. He had the freedom to
drive on the days he felt like working. While Mr. Baker could not assign his
driving duties to others without Mr. DeWinter's consent, he could have
someone else drive the cab if he wanted to. In Yellow Cab, paragraph 25,
Sexton J. stated the following:
25 For example,
the lease-operators are obligated to comply with all orders or directions to
the lease-operators with respect to dispatch services and the general operation
of the taxicabs; the lease-operators are obligated to diligently operate the taxicab
on a continuous basis; and the lease-operators are obligated to use Yellow
Cab's bookkeeping and fuel provision services. Yellow Cab can order the
suspension or discharge of drivers in breach of any rules or regulations of
Yellow Cab or of any municipality or other regulatory body. The taxicab may
only be driven by the lease-operator or by a driver approved by Yellow Cab.
These facts tend to evidence such a degree of control by Yellow Cab as to
favour indicating that the lease operators were employees.
These thoughts also apply to the present
case but balanced with the preceding paragraph, I find this test inconclusive.
ii) Ownership of tools
Mr. Baker under the lease owned the daily
right to operate a fully equipped taxicab. While he may have been assigned a
different car daily, he had the exclusive use of it for the day on the terms
and conditions stated. I find this test favours the Appellant. I do not see the
distinction between a daily and a monthly lease.
(iii) Risk of loss and chance of profit
The daily
financial obligation of Mr. Baker fluctuated with the business he undertook.
The harder he worked the more he made. Mr. Baker had to pay for his own fuel.
His revenues were variable dependent on his skill and efforts. This favours the
conclusion that Mr. Baker operated his own business. Sexton J. continued at
paragraphs 30 and 31.
30 As Major
J. stated in Sagaz, "the relative weight of each [of the above
factors] will depend on the particular facts and circumstances of the
case". On our facts, I consider that the chance of profit, the relative
degree of financial risk and the ability of the lease-operators to
"operate their own business" to be the most important. These factors
all militate against a finding that the lease‑operators are employees of
Yellow Cab.
31 Referring
back to the central question articulated by Major J. in Sagaz, I
conclude that the lease-operators are in business on their own account. I also
find that Hamlyn J. erred in considering only the factor of control to the
exclusion of other relevant factors. The lease-operators are in the business of
providing taxicabs to the public and therefore are the operators of the taxicab
business within the meaning of s. 6(e). Meanwhile, Yellow Cab is in the
business of providing administrative services to the taxicab business including
providing taxicab support services in the form of dispatching, bookkeeping,
branding and marketing.
This applies equally to the present
situation.
[11] I cannot ignore the clear language of the waiver. Mr. Baker
acknowledged that he was self-employed and in effect leasing the car and paying
for dispatching. I agree with the following comments of Judge Bell in Sara
Consulting and Promotions Inc. v. M.N.R.
which applies equally to the present facts:
... in the absence of clear and
credible evidence that the description of a relationship is other than as
agreed between arm's length parties, the description agreed upon by those
parties must stand. There is no such clear and credible evidence in this case.
Obviously, I draw an adverse influence from the fact that Mr. Baker did
not give evidence. Mr. DeWinter expected to cross-examine him. His evidence may
have been detrimental to the Respondent's position. I realize that Dawson Creek
is a long expensive trip to Prince George. Mr. DeWinter had to make it and he
did not make the determination that Mr. Baker was an employee which
necessitated his appearance. Although it does not affect my decision,
Mr. DeWinter indicated that having to pay employment insurance premiums
and other employee benefits would put him and his wife and corporation into
bankruptcy.
[12] For these reasons, I find that Mr. Baker was in business on his own
account.
[13] The appeal is allowed on the basis that Brian
Baker was not employed in insurable employment within the meaning of
paragraph 5(1)(a) of the Act; and also was not employed in
pensionable employment within the meaning of paragraph 6(1)(a) of
the Plan.
Signed at Ottawa, Canada, this 25th day of
November, 2003.
McArthur
J.
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