[OFFICIAL ENGLISH TRANSLATION]
Date: 20001120
Docket: 1999-2841(EI)
BETWEEN:
IMMEUBLES JEAN LACAILLE INC.
o/a DAN'S PIZZERIA,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Somers, D.J.T.C.C.
[1] This appeal was heard at
Sherbrooke, Quebec, on November 8, 2000.
[2] By notice of assessment dated
September 30, 1998, the Minister of National Revenue (the
"Minister") assessed the appellant for 1997 and 1998 for unpaid
employee and employer employment insurance premiums for 26
employees (the "workers") and related interest. The assessment
was as follows:
|
For 1997
|
|
|
employment insurance
|
=
|
$ 7,619.11
|
|
penalty
|
=
|
$ 00.00
|
|
interest
|
=
|
$ 482.92
|
|
|
|
|
|
For 1998
|
|
|
|
employment insurance
|
=
|
$ 4,849.92
|
|
penalty
|
=
|
$ 00.00
|
|
interest
|
=
|
$ 150.23
|
|
|
|
|
|
for a total of
|
|
$13,102.18
|
[3] On April 20, 1999, the Minister
informed the appellant that it had been determined that the
assessments would be confirmed on the ground that the workers
held insurable employment because there was an employer-employee
relationship between the appellant and the workers.
[4] Paragraph 5(1)(a) of the
Employment Insurance Act reads as follows:
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;
...
[5] The burden of proof is on the
appellant. It has to show on the balance of evidence that the
Minister's decision is unfounded in fact and in law. Each
case stands on its own merits.
[6] In making his decision, the
Minister relied on the following facts, which were either
admitted or denied:
[TRANSLATION]
(a) the appellant
operated under the trade name Dan's Pizzeria; (admitted)
(b) the appellant
was in the restaurant business; (admitted)
(c) the appellant
offered a home delivery service; (admitted)
(d)
the appellant hired drivers; (denied)
(e)
the drivers were controlled by the appellant; (denied)
(f)
the appellant set the drivers' work schedule; (denied)
(g)
the drivers had to follow the schedule and report at the time set
by the manager; (denied)
(h)
the drivers had to inform the appellant's manager whether they
were going to be absent from work and give a reason for their
absence; (denied)
(i)
the appellant's manager assigned the work to the drivers;
(denied)
(j)
the drivers took turns making deliveries; (admitted)
(k)
the drivers had to return to the restaurant between deliveries;
(denied)
(l)
the drivers could not be absent during their shifts; (denied)
(m)
the drivers had to obey the instructions of the appellant's
manager during their entire shift; (denied)
(n)
between deliveries, the drivers had to perform tasks for the
appellant, such as filling the refrigerators with soft drinks,
assembling cardboard boxes for the deliveries and taking out the
restaurant's garbage; (denied)
(o)
the drivers could not refuse to make a delivery; (denied)
(p)
the drivers used their own vehicles to make deliveries;
(admitted)
(q)
the drivers' pay was determined by the appellant alone;
(denied)
(r)
the drivers received $1.80 for a delivery in Sherbrooke, $2.50
for a delivery in Rock Forest and $5.00 for a delivery for which
the bill was over $100.00." (admitted)
[7] The appellant operated a
restaurant under the name Dan's Pizzeria as well as offering a
home delivery service. The appellant was able to accommodate 350
people in a dining room located in the business's building.
Deliveries brought in $618,400.90 in sales revenues for the
period from August 1999 to July 2000. According to Jean Lacaille,
those figures can be compared to the turnover for the periods at
issue. The revenues in question constitute 25% of total revenues.
According to the evidence, the appellant's business was doing
quite well.
[8] To offer its clients this home
delivery service, the appellant had to call on a certain number
of drivers, who were hired through a newspaper ad. An employee of
the company, Yvan Poulin, managed that client service. As the
dispatcher, Mr. Poulin set the drivers' work schedule. Seniority
had an influence on the choice of drivers, especially during the
busy period, when three or four drivers were needed. However, it
was not essential for that method to be used.
[9] The drivers could fill in for one
another without the dispatcher's consent. A driver's friend could
fill in for him on occasion. A driver could also have a friend to
help him but at no charge to the appellant. The drivers could
leave work without notifying the dispatcher. However, the drivers
decided among themselves which of them would remain at the
appellant's disposal as required. The drivers had to make sure
the home delivery service was adequately covered. The number of
drivers who had to remain on site was determined by how busy it
was. There was some flexibility in how the work was assigned as
long as a certain number of drivers were available. One driver
testified that the dispatcher would telephone him and tell him it
was his turn. If the driver could not go there, he was obligated
to find a replacement. The driver in question stated that he had
to deliver the pizza within a certain time. He said there were
seven or eight drivers who worked full time, from 30 to 50 hours
a week. There might have been approximately 15 drivers in
total.
[10] The dispatcher said he chose the
drivers on the basis of seniority or efficiency. The dispatcher
broke off his contractual relations with drivers if they were not
efficient. The drivers could work for a competitor as long as
they were available for the appellant.
[11] The drivers received $1.80 for a
delivery in Sherbrooke, $2.50 for a delivery in Rock Forest and
$3.00 for a delivery for which the bill was more then $100.00.
The drivers would occasionally perform other tasks for the
appellant if they so wished. Drivers provided their own vehicles
for the deliveries, at their own expense. If a driver could not
get to work because his vehicle had broken down, he was not paid.
If a driver was absent too often, the dispatcher would begin to
reconsider. The drivers had no holidays. However, the appellant
had previously given holidays to about ten drivers at the union's
request.
[12] Counsel for the appellant submitted to
this Court case law and doctrine fundamentally drawn from City
of Montreal v. Montreal Locomotive Works Ltd., [1947] 1
D.L.R. 161. This Court is relying on a more recent decision by
the Federal Court of Appeal in Wiebe Door Services Ltd. v.
M.R.N., [1986] 3 F.C. 553. That decision refers to
the statements in principle set out in City of Montreal v.
Montreal Locomotive Works Ltd.
[13] In Québec (Sous-ministre du
Revenu) c. Pétroles Veltra (1979) ltée, [1991]
R.D.F.Q. 1 (res.), [1991] R.L. 489 (C.A.), J.E. 91-595,
D.F.Q.E. 91F-16, Vallerand J.A. states as follows:
[TRANSLATION]
...
Staff or self-employed, worker or contractor, employee or not:
a great deal of ink will continue to flow in legal circles over
the differences between them! Especially since they often vary
according to the legislation to which the notions apply.
...
[14] One principle that must be noted in
distinguishing between a contract of service and a contract for
services is to examine the whole of the various elements which
constitute the relationship between the parties. The courts have
consistently held that there are four basic elements that
distinguish a contract of service from a contract for
services:
1.
The degree or absence of control exercised by the employer;
2.
Ownership of the tools necessary for the work;
3.
Chance of profit or risk of loss;
4.
Degree of integration of the employee's work into the employer's
business.
Degree or absence of control exercised by the
employer
[15] The degree of control may vary from one
case to the next. In this appeal, the appellant, through the
dispatcher, hires workers through an ad. The dispatcher chooses
or retains the services of a worker depending on the worker's
availability or efficiency. If the driver is not efficient, he is
dismissed. The dispatcher makes sure he has three or four drivers
available at the same time and as required. He chooses the
drivers on the basis of their seniority and their efficiency.
When he calls a driver he tells him [translation] "It's
your turn". Although the drivers can fill in for one another
without going through the dispatcher, they must make sure that
someone is there to make the deliveries. It must be acknowledged
that the working conditions are flexible. The case law refers to
degree or absence of control. It cannot be concluded that there
is an absence of control. The dispatcher has a degree of control
over the drivers and they must be available at the restaurant for
the appellant's needs.
Ownership of the tools necessary for the work
[16] Drivers provide their own vehicles and
pay to maintain them. The amounts paid to the drivers for making
deliveries, as they are set by the appellant, must cover the
costs of operating the vehicle. Although the evidence is silent
on this fact, it is normal for the costs of operating the vehicle
to be included in the amounts paid. That basic element is not a
decisive element in distinguishing between a contract of service
and a contract for services.
Chance of profit or risk of loss
[17] The drivers have not made any
investment to perform the work other than the cost of purchasing
and maintaining a vehicle. The risk of loss was minimal and
depended only on the condition of the vehicle. Thus, there is no
chance of profit or risk of loss.
Degree of integration of employee's work into the
employer's business
[18] The drivers' work was part of the
operation of the appellant's business. Home delivery accounted
for a substantial portion of the restaurant's turnover,
approximately $600,000 per year, or 25% of total revenues.
That percentage represents more than mere additional revenue.
That portion of the service was more than an accessory to the
appellant's business. The clientele was that of the appellant,
not of the driver. The drivers were available on a rotating basis
at the appellant's place of business. The drivers' work was
essential to the operations of the home delivery service. Without
the drivers' participation, the appellant could not offer the
home delivery service since the workers were an integral part of
the operations of the appellant's business.
[19] It is the whole of the various elements
that must be considered in concluding that there was an
employer-employee relationship between the appellant and the
workers.
[20] The appeal is dismissed.
Signed at Ottawa, Canada, this 20th day of November 2000.
D.J.T.C.C.
Translation certified true
on this 7th day of June 2003.
Sophie Debbané, Revisor
Case law cited by the appellant
· Khan c.
Québec (Sous-ministre du Revenu), C.Q. Montréal
500-02-056209-971 and 500-02-077664-998, 2000-07-10, AZ-50078244,
D.F.Q.E. 2000F-60, Armando Aznar J.
·
Québec (Sous-ministre du Revenu) c. Pétroles
Veltra (1979) ltée,[1991] R.D.F.Q. 1 (res.), [1991]
R.L. 489 (C.A.), J.E. 91-595, D.F.Q.E. 91F-16
Case law cited by the respondent
· 872538
Ontario Inc. v. Canada (Minister of National Revenue -
M.N.R.), [1993] T.C.J. No. 46.
· 872538
Ontario Inc. v. Canada (Minister of National Revenue -
M.N.R.), [1994] F.C.J. No. 235.
· Cerasoli
(Lugi's Pizza) v. Canada (Minister of National Revenue -
M.N.R.), [1997] T.C.J. No. 858.
· City of
Montreal v. Montreal Locomotive Works Ltd., [1947] 1 D.L.R.
161.
· Family
Pizza Inc. v. Canada, [1997] T.C.J. No. 123.
· Wiebe
Door Services Ltd. v. M.N.R., [1986]
3 F.C. 553.
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