|
Citation: 2003TCC429
|
|
Date: 20030619
|
|
Docket: 2002-3444(EI)
|
|
BETWEEN:
|
|
KHUSHPRIT S. MALOKA,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent.
|
REASONS FOR JUDGMENT
Lamarre,
J.T.C.C.
[1] This
is an appeal from a determination by the Minister of National Revenue
("Minister") that, during the period from September 9, 1997 to May
18, 2001, Thageel Alshammari ("Worker") was employed by the appellant
in insurable employment within the meaning of paragraph 6(e) of the Employment
Insurance Regulations ("EIR"). In making his decision, the
Minister relied on the assumptions of fact set out in paragraph 4 of the Reply
to the Notice of Appeal, which read as follows:
(a) the Appellant
owns a taxi cab and a license for the Ottawa area; (admitted)
(b) the Appellant
drives his taxi for Blue Line Co. Limited; (admitted)
(c) the Appellant
paid $436.00 per month to Blue Line Co. Limited for their dispatching services,
the right to use Blue Line sign and other services; (admitted)
(d) the Appellant
is responsible for the car maintenance and the insurance coverage; (admitted)
(e) the Worker
was a taxi driver; (admitted)
(f) the Worker
paid to the Appellant $300.00 per week for the cab lease; (admitted)
(g) the Worker
does not own more than 50% of the vehicle; (admitted)
(h) the Worker is
not the operator or owner of the business; (denied)
[2] The
evidence disclosed that the appellant owns one vehicle with a taxi plate, a
meter and a CD radio. The appellant pays Blue Line Co. Limited for its
dispatching services and the right to use the Blue Line sign and for other
services. During the period at issue, he rented his taxicab, including all the
Blue Line services, to the Worker, who held a taxi driver's licence. The Worker
had to pass an examination with Blue Line in order to be able to drive the
appellant's cab under the Blue Line name. It is also my understanding that the
Worker could not let someone else drive the cab as a taxi driver without Blue
Line's and the insurance company's approval.
[3] The
appellant and the Worker shared the cab on the basis of one 12-hour shift each
every day. During their respective shifts, each was independent. Each charged
his own clients and remitted goods and services tax ("GST") to the
government individually. The vehicle was insured by the appellant and the
Worker was covered by the appellant's insurance. However, if the Worker had a car
accident and the insurance premiums subsequently rose, the Worker would assume
the extra charge; the Worker would also be responsible for paying the
deductible. In addition, the Worker paid for the gas, washing the car,
windshield washer fluid and anything else used for the taxicab during his
12-hour shift. Furthermore, if the vehicle was damaged by a client during the
Worker's shift, it was the Worker who was responsible for collecting from the
delinquent client the fine set by the relevant city by-law and for paying the
extra cost for repairs to the vehicle. Both the appellant and the Worker were
covered by a union contract through Blue Line, which collected the union dues
from the appellant who in turn charged the Worker for his part of those dues.
[4] If
a client made a complaint to Blue Line, the latter would communicate directly
with either the appellant or the Worker, depending on which of the two had been
immediately involved with the client.
[5] As
to the shifts, the Worker and the appellant had agreed thereon without giving
any notice to Blue Line. Furthermore, each of them was at liberty to work the
number of hours he wished during his shift. The Worker did not have to report
to anyone and collected his money directly from the clients. He was also free
to work at any taxi stand in the City of Ottawa or to use the vehicle for his
personal affairs during his shift. The dress code is set by a city by-law and
each taxi driver is personally responsible for following the rules in that
regard.
[6] The
issue is whether, during the relevant period the Worker held insurable
employment within the meaning of paragraph 6(e) of the EIR. That
paragraph reads as follows:
6. Employment in any
of the following employments, unless it is excluded from insurable employment
by any provision of these Regulations, is included in insurable employment:
. . .
(e) employment of a person
as a driver of a taxi, commercial bus, school bus or any other vehicle that is
used by a business or public authority for carrying passengers, where the
person is not the owner of more than 50 per cent of the vehicle or the owner or
operator of the business or the operator of the public authority.
[7] It
is clear in the present case that the Worker was not the owner of the vehicle
he used for carrying passengers. The question which remains is whether he was
the owner or operator of the business that used the vehicle rented from the
appellant for carrying passengers.
[8] On
applying the test set out by the Supreme Court of Canada in 671122 Ontario
Limited v. Sagaz Industries Canada Inc., [2001] S.C.J. No. 61 (Q.L.), it is
clear in my view that the Worker was the owner of his own business. That test
is summarized in paragraphs 47 and 48 of Sagaz as follows:
Although there is no universal test
to determine whether a person is an employee or an independent contractor . . .
[t]he 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.
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.
[9] Although
there was a certain degree of control exercised by Blue Line, through the
appellant, over the Worker (for example the Worker had to pass an examination
to be able to drive the appellant's taxicab under the Blue Line name and the
Worker could not let someone else operate the cab as a taxi driver without Blue
Line's approval), that control was very limited. On his shift, the Worker alone
was responsible for observing the relevant city by-laws and he ran the risk of
losing his permit if he failed to comply therewith. He was driving the cab at
his own convenience during his shift. He paid a weekly rental fee to the
appellant for the use of the taxicab and all the services provided by Blue
Line. Although he did not pay directly for the insurance coverage on the car,
it seems obvious that he was charged for it via the rental fee, and the Worker
had to pay all extra insurance charges ensuing from an accident during his
shift.
[10] Considering the relative weight of each factor referred to by the
Supreme Court of Canada in Sagaz, I conclude that the Worker was in
business on his own account.
[11] However, in Martin Service Station v. M.N.R., [1977] 2 S.C.R.
996, the Supreme Court of Canada addressed the question of whether the
provisions of the former Unemployment Insurance Act of 1955 ("UI
Act of 1955") as amended, which authorized the Unemployment Insurance
Commission to make regulations to include in insurable employment
self-employment or employment not under a contract of service, were ultra
vires the Parliament of Canada. The impugned provision was Regulation 64B
of the Unemployment Insurance Regulations which was adopted under the
authority of paragraph 26(1)(d) of the UI Act of 1955.
[12] Regulation 64B read in part as follows:
64B. (1) Except for employment that
is excepted employment, the employment of every person who
a) is employed in
driving any taxi, commercial bus, school bus or other vehicle that is used by a
business or public authority for carrying passengers, and
b) is not the owner of
the vehicle or the proprietor or operator of the business or public authority that
uses the vehicles for carrying passengers,
shall be included in insurable
employment notwithstanding that such employment may be self-employment or
employment not under a contract of service.
[13] In addressing this constitutional issue, Beetz J. said the following
at pages 1004-1005:
. . . But, even leaving out of
account any possible intention to evade the Acts, if conditions become such
that those who have a contract of employment to perform a given type of work
find themselves unemployed, it is most likely that those who perform the same
type of work, although they be self-employed, will also find themselves out of
work because of the same conditions. It is mainly to protect the latter against
this risk of unavailability of work and involuntary idleness that the Acts are
extended. Whether they be self-employed or employed under a contract of
service, taxi drivers and bus drivers for instance are exposed to the risk of
being deprived of work. This risk is, in my opinion, an insurable one, at least
under a scheme of compulsory public insurance which was never expected to
function on a strict actuarial basis provided it generally conformed to the
nature of an insurance scheme, including protection against risk and a system
of contributions.
[14] Relying on the Martin Service Station case, the Federal Court
of Appeal, in Canada (Attorney General) v. Skyline Cabs (1982) Ltd.,
[1986] F.C.J. No. 335 (Q.L.), viewed it to be settled law that the word
"employment" in paragraph 12(e) (now paragraph 6(e) of
the EIR, adopted under the authority of the Employment Insurance Act)
of the Unemployment Insurance Regulations, adopted under the authority
of the Unemployment Insurance Act, 1971 and replacing former
Regulation 64B, is to be interpreted not in the narrower sense of a contract of
service but in the broader sense of an "activity" or
"occupation".
[15] Those comments led Malone J.A. to state the following in his
dissenting reasons in Yellow Cab Co. v. Canada, [2002] F.C.J. No. 1062
(Q.L.), at paragraphs 76 and 79:
¶76 . . . As this Court noted in
Canada (A.G.) v. Skyline Cabs (1986), 70 N.R. 210, what is now paragraph 6(e)
operates to extend the conventional meaning of "employment."
Paragraph 6(e), and the other provisions in section 6 which deem certain occupations
to be insurable employment, operate to extend the benefits of employment
insurance to those persons who would, under a more traditional analysis, fall
outside the definition of employment. For this reason, hairdressers, taxi
drivers, trainees/apprentices and persons under contract with an employment
agency, to name a few, are included in insurable employment notwithstanding
that under a traditional employee/independent contractor analysis, they would
most often be considered independent contractors. It is noteworthy that the
common law factors, namely those in Sagaz, supra, are utilized in those
situations where a deeming provision such as paragraph 6(e) is not applicable.
. . .
¶79 Given this context,
the application of the Sagaz factors is, in my analysis, improper. Such an
application to the definition of "operator of a business" would
sterilize paragraph 6(e), so as to deny benefits to taxi drivers who resemble
independent contractors; the very situation that 6(e) was created to address.
[16] On the other hand, Sexton J.A., speaking for the majority in Yellow
Cab Co., analysed as follows Beetz J.'s comments in Martin
Service Station, supra:
¶38 Justice Beetz
indicated that individuals, even if found not to be under a contract of
service, can yet be deemed to be insurable employees. However, it should be
remembered that this statement was addressed to the argument that it was ultra
vires for Parliament to pass such legislation. The case holds that it is intra
vires for Parliament to legislate so as to allow the Commission, pursuant to s.
5(4)(c), to deem persons not employed under a contract of service to be in
insurable employment. Section 6(e) of the Regulations does exactly that, it
deems some taxidrivers to be in insurable employment.
¶39 This does not mean,
as the Respondent contends, that s. 6(e) "was enacted to include in
insurable employment the services of taxidrivers operating as independent
contractors" nor does it mean that the Commission has deemed all
taxidrivers to be in insurable employment. To the contrary, s. 6(e) expressly
excludes taxidrivers that own or operate their own business from being deemed
to be in insurable employment.
[Emphasis added.]
¶40 While it is true that
the Supreme Court in Martin favoured a liberal interpretation of the Act,
Martin is of limited application to the present case because it dealt with
regular taxidrivers, not persons in the position of the lease‑operators
or owner-operators and the issue as to who was the operator of the business was
not present in Martin. Martin simply stands for the assertion that s. 6(e) is
constitutionally valid notwithstanding that it can apply to taxidrivers who are
not engaged in a contract of service. However, as I mentioned above, this
does not mean that s. 6(e) transforms taxidrivers who own or operate their own
business into employees. To the contrary, s. 6(e) expressly exempts such
people.
[Emphasis added.]
¶41 On our facts, Matharu
and the lease-operators are the owners or operators of the business. Clearly,
pursuant to s. 5(4)(c) of the Act, the Commission could create regulations so
that these individuals would be deemed to be employees. However, pursuant to
s. 6(e) of the Regulations, it is equally clear that the Commission has chosen
not to do so by indicating that where taxidrivers are the operators of the
business, they will not be considered to be included in "insurable
employment".
[Emphasis added.]
¶42 In Abrahams v.
Attorney General of Canada, [1983] 1 S.C.R. 2, Wilson J. stated at 10 that
"[s]ince the overall purpose of the Act is to make benefits available to
the unemployed, I would favour a liberal interpretation... ." Later,
in Hills v. Canada (Attorney General), [1988] 1 S.C.R. 513, the majority of the
Supreme Court of Canada adopted this view and noted at paragraph 37 that
"[t]here is no doubt that legislation relating to unemployment, when first
enacted in England and later in Canada, had a social objective", and at
paragraph 40 that
The basic thrust of the original
Act remained constant through the years. Its numerous amendments were designed
to expand qualifying conditions and increase benefits and contributions in
order to eliminate inequities, to promote employment opportunities and to
co-ordinate other social assistance programs. The shift, if any, was rather
from the main protection objective to the labour market objective.
¶43 The above cases
clearly express that it was Parliament's intention to protect the unemployed
and that the Act must be interpreted liberally. However, none of these cases take
away from the conclusion I have reached. A finding that the Act is to be
applied liberally, cannot be used to contradict the plain meaning of s. 6(e).
[Emphasis added.]
[17] In Skyline Cabs, supra, Skyline held a
taxicab broker's licence and rented its vehicles to drivers for a fee that
included access to a dispatch service. The Federal Court of Appeal held that
even though the drivers leased vehicles from Skyline without a contract
of service, they were nonetheless in insurable employment. In MacGuigan J.'s
view, the facts in that case established a sufficient degree of participation
by Skyline in the carrying of passengers by the taxis to be caught by
the former paragraph 12(e) of the Unemployment Insurance Regulations (now
paragraph 6(e) of the EIR). He said the following at page 5:
The sum total of these
facts may not be sufficient to establish the existence of a contract of service
between the drivers and the respondent, but in my opinion irrefutably
establishes a sufficient degree of participation by the respondent in the
carrying of the passengers by the taxis. If such a full degree of participation
by the respondent in the carriage of passengers were not enough to establish
that the taxis may be said to be used by it as part of its business, it seems
to me that the policy of the statute to protect taxi drivers against the
"risk of unavailability of work and involuntary idleness", as
expressed by the Supreme Court of Canada in the Martin case, supra, would not
be implemented.
[18] It is to be noted that in Yellow Cab, supra, Sexton
J.A. downplays the importance of the decision in Skyline Cabs as, in his
view, MacGuigan J. emphasized the factor of control whereas a more recent
analysis of other factors in defining "independent operators" has
been provided by the Supreme Court of Canada in Sagaz. Sexton J.A. goes
on to say in Yellow Cab at paragraph 49:
. . . As noted, the central
question is "whether the person who has been engaged to perform the
services is performing them as a person in business on their own account"
(Sagaz) and the answer to that question depends on the "total relationship
of the parties" (Wiebe).
[19] In any event, in Skyline Cabs, MacGuigan J. said that if
Skyline had merely owned automobiles which were equipped to operate as
taxicabs and which were offered for rent to licensed taxicab drivers at a set
rental fee, he would not have considered that the taxis were used by Skyline
for carrying passengers as required by former paragraph 12(e) of the
Unemployment Insurance Regulations (now paragraph 6(e) of the EIR).
Skyline was the holder of a taxicab broker's licence; its rental fee to
the drivers included access to a dispatch service. Skyline enforced a
dress and grooming code for its drivers. It forced drivers to keep the cars clean
by way of a coded warning system that could include withdrawal of radio
dispatch service and even repossession of the vehicle. Skyline also
obliged its drivers to accept payment by valid credit cards or approved charge
slips and paid the drivers after deduction of a service fee.
[20] Here, with the exception of the dispatch service that was included in
the rental fee, none of the other above-mentioned facts present in Skyline
Cabs occurred or have been shown to have existed in the actual relationship
between the appellant and the Worker.
[21] Indeed, I find the situation here much different than that in Skyline
Cabs or even that in Mangat v. Canada, [1997] T.C.J. No. 1247
(Q.L.), confirmed by [2000] F.C.J. No. 1464 (F.C.A.) (Q.L.) and referred to by counsel
for the respondent. In the latter case, Mangat was found to be in the business
of owning and maintaining taxicabs which he leased to taxi drivers at a price
that included dispatch services. The essential question raised by the Court of
Appeal in that case was whether it was Mangat, as owner of the taxis,
who employed people as drivers, or whether it was the taxi dispatch company
that fulfilled that role. There was no issue with respect to the insurability
of the taxi drivers and Mangat was not himself a taxi driver.
[22] In the present case, I do not find that the appellant is in the
business of owning taxicabs that are leased to taxi drivers for carrying
passengers. The appellant owns one single taxicab that he uses to carry
passengers under Blue Line's banner in order to earn his own living. He
made an agreement with one taxi driver, the Worker, to share the operation of
the taxicab on a fifty-fifty basis. Although the Worker did not own the
vehicle, he rented it, assuming all the risks associated therewith, to run his
own business of carrying passengers during his shift. He did not have to report
to anyone and Blue Line dealt directly with the Worker in the event that there
were any problems during his shift. The Worker bore all the financial risks
associated with the business of carrying passengers during his shift and he
alone was in a position to gain a profit or suffer a loss from the operation of
his taxicab business.
[23] As Sexton J.A. stated in Yellow Cab, supra, paragraph
6(e) of the EIR expressly excludes taxi drivers who own or
operate their own business from being deemed to be in insurable employment. It
is my opinion that here the Worker was as much in the business of carrying
passengers on his own account as was the appellant. I do not think that it can
be said that the Worker was working for the appellant's business just because
the appellant made the decision to share the cost of operating his taxicab with
the Worker. In my view, each was independently using the same taxicab in his own
business for carrying passengers. I therefore conclude that paragraph 6(e)
of the EIR does not apply here to deem the Worker to have held insurable
employment with the appellant.
[24] Consequently, the appeal is allowed and the decision of the Minister is
varied on the basis that the Worker was not employed by the appellant in
insurable employment during the period from September 9, 1997 to May 18, 2001.
Signed at Ottawa, Canada, this 19th day of
June 2003.
J.T.C.C.
Email this Content