Date: 19981123
Dockets: 98-264-UI; 98-265-UI; 98-266-UI; 98-267-UI;
98-268-UI; 98-269-UI; 98-270-UI; 98-271-UI; 98-272-UI; 98-273-UI;
98-274-UI
BETWEEN:
CLAUDE BELLAVANCE, RAYMOND BERGERON, PATRICE COULOMBE, LOUIS
COURTY, ARMAND DUCLOS, ESTATE OF AURÈLE JOUBERT
REPRESENTED BY LAURETTE SAVOIE JOUBERT, ALLAIN LEBEL, PATRICE
LEBEL, ALLAIN PAQUET, YVON PATENAUDE, ROMAIN PELLETIER,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Reasons for Judgment
Cuddihy, D.J.T.C.C.
[1] These appeals were heard on common evidence at
Campbellton, New Brunswick, on October 19, 1998.
I- The Appeals
[2] The appellants are instituting appeals from
11 decisions by the Minister of National Revenue (the
"Minister") dated February 19 and 23, 1998
according to which the employment of
Claude Bellavance from July 10, 1995 to
March 7, 1996 and from June 17, 1996 to
February 28, 1997, the employment of
Raymond Bergeron from June 23 to
November 2, 1995 and from November 28, 1995 to
March 7, 1996, the employment of
Patrice Coulombe from July 10, 1995 to
March 7, 1996 and from June 17 to October 23,
1996, the employment of Louis Courty from
June 23, 1995 to March 8, 1996, the employment of
Armand Duclos from November 21, 1994 to
February 10, 1995, from July 10, 1995 to March 9,
1996 and from June 17, 1996 to February 28, 1997, the
employment of Aurèle Joubert from July 10
to November 7, 1995, from November 22, 1995 to
March 7, 1996, from June 17 to October 23, 1996
and from November 18, 1996 to February 28, 1997, the
employment of Allain Lebel from November 18,
1996 to February 28, 1997, the employment of
Patrice Lebel from June 7, 1995 to March 7,
1996, the employment of Allain Paquet from
July 10, 1995 to March 7, 1996, from June 17 to
October 23, 1996 and from November 18, 1996 to
February 27, 1997, the employment of
Yvon Patenaude from July 10, 1995 to
March 7, 1996 and from June 17 to October 23,
1996, the employment of Romain Pelletier from
July 10, 1995 to March 7, 1996 and from June 17 to
October 23, 1996 with Camionneurs de Restigouche Ouest Inc.
(the "payer") were not insurable within the meaning of
the Unemployment Insurance Act (the
"Act") — now the Employment Insurance
Act — since there existed between the appellants and
the payer, during those periods, no contract of service within
the meaning of paragraph 3(1)(a) of the old
Act and paragraph 5(1)(a) of the new
Act.
II- Summary of Facts
[3] In paragraph 4 of his Replies to the Notices of
Appeal, the respondent set out the facts on which he based his
decisions. Those facts form part of this judgment as though
herein cited at length.
[4] Louis Courty, Allain Paquet, Patrice Lebel
and Allain Lebel testified in support of the appeals. It was
admitted that if Claude Bellavance, Raymond Bergeron,
Patrice Coulombe, Armand Duclos, Laurette Joubert,
Yvon Patenaude and Romain Pelletier had been heard as
witnesses, their testimony would have been similar to that of
those who did testify.
[5] The appellants are all truck drivers and owned their
trucks, either individually or through a corporation in which
they were either majority or minority shareholders.
[6] Deniso Lebel Inc. ("Groupe Lebel") is a company
which has operated a lumber mill in Kedgwick, New Brunswick,
since 1991.
[7] When Groupe Lebel took over the operation of the Kedgwick
mill in 1991, it did not want to do business with the appellants
individually with respect to the transport of timber, but rather
wanted to negotiate with a single entity. Labour relations were
difficult from 1991 until November 9, 1993, when a
collective agreement was signed between Groupe Lebel and the
Communications, Energy and Paperworkers Union of Canada,
Local 108N (Exhibit A-1).
[8] On October 28, 1993, the payer was incorporated in
the province of New Brunswick and its shareholders were all the
appellants except for Allain Lebel. Creating the payer
enabled the appellants to obtain a timber transportation contract
with Groupe Lebel.
[9] The work obtained by the appellants through the payer was
to transport rough timber, logs and pulp from forest sites to the
mill in Kedgwick for Groupe Lebel.
[10] The payer first negotiated a timber transportation
contract with Groupe Lebel. Two examples of this type of contract
were submitted to the Court (Exhibits A-3 and
A-4). In those contracts, the payer is described as a
contractor. The contracts set out the parties'
obligations.
[11] Once a year, the payer negotiated with Groupe Lebel the
price for transporting timber from the forest to the Kedgwick
mill. The price was determined on the basis of the distance
travelled and the number of cubic meters of timber delivered to
the mill by the appellants (see Exhibit A-3,
Schedule A). In addition to this amount, for the 1995-1996
year (Exhibit A-3), for example, the payer received
$0.20 per cubic meter for its administrative expenses and the
appellants' fringe benefits.
[12] The payer's administrative expenses were for the
accountant who kept the payroll, recorded the truck drivers'
hours, saw that the money was distributed to the appellants,
prepared the financial statements and filed the income tax
returns (Exhibit I-1).
[13] The appellants' fringe benefits included union dues,
disability insurance premiums, unemployment insurance premiums,
health and group insurance premiums and contributions to a
retirement savings plan and to the Canada Pension Plan.
[14] The payer then negotiated with each appellant
individually a rental contract for the truck driven by him. For
the purposes of this judgment, the contract between the payer and
the appellant Louis Courty was entered in evidence
(Exhibit A-6). This document forms part of this
judgment as though cited at length herein. The contract set no
rental.
[15] In short, Groupe Lebel remitted to the payer all the
money from the deliveries made by each appellant truck driver.
The payer subsequently issued two cheques for each
appellant: one was for the hours worked by the truck driver
multiplied by the hourly rate provided for in the collective
agreement (Exhibit A-1) and the other represented the
balance owed to the owner truck drivers for the use of their
trucks.
[16] The owner truck drivers were responsible for all expenses
associated with the use of their trucks such as gasoline,
repairs, depreciation, liability insurance and so on.
[17] The payer owned no trucks or other timber transportation
equipment.
[18] The payer issued all the appellants' records of
employment.
[19] III - The Law and Analysis
(i) Definitions from the Unemployment Insurance
Act
"employment"
"employment" means the act of employing or the state
of being employed.
"insurable employment "
3(1) Insurable employment is employment that is not
included in excepted employment and 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;
. . .
[20] The burden of proof is on the appellants.
[21] In Sylvie Desroches v. M.N.R.
(A-1470-92), the Federal Court of Appeal indicated
the function of a Tax Court of Canada judge, and I
quote:
. . . However, in the final analysis, as this Court
held in Attorney General of Canada v. Jacques Doucet, it
is the Minister's determination which is at issue, namely
that the employment was not insurable because the applicant and
the payer were not bound by a contract of service. The function
of the Tax Court of Canada judge extended to considering the
record and the evidence in its entirety. Accordingly
Marceau J.A., speaking for the Court, said the following in
Doucet:
The judge had the power and duty to consider any point of fact
or law that had to be decided in order for him to rule on the
validity of that determination. This is assumed by s. 70(2)
of the Act and s. 71(1) of the Act so provides immediately
afterwards . . .
The trial judge could go as far as deciding that there was no
contract between the parties.
[22] If there is any doubt as to the proper interpretation,
the benefit of that doubt must go to the taxpayer and there is
nothing to prevent a taxpayer from taking advantage of a social
measure as long as the requirements of the Act are met. In
Attorney General of Canada v. Ludger Rousselle,
124 N.R. 339, a decision dated October 31, 1990,
Hugessen J.A. stated at pages 340-41:
I do not think it is an exaggeration to say, in light of these
facts, that if the respondents did hold employment this was
clearly "convenience" employment, the sole purpose of
which was to enable them to qualify for unemployment insurance
benefits. These circumstances certainly do not necessarily
prevent the employment from being insurable, but they imposed on
the Tax Court of Canada a duty to look at the contracts in
question with particular care; it is apparent that the
motivation of the respondents was the desire to take advantage of
the provisions of social legislation rather than to participate
in the ordinary operation of the economic forces of the market
place.
[My emphasis.]
[23] Is the contract a contract of service or a contract for
services?
[24] In Hennick[1], Desjardins J.A. of the Federal Court of Appeal
wrote as follows, and I quote:
While this test is well known, it might be useful at the
outset to emphasize that in his analysis of both
Lord Wright's fourfold test (control, ownership of the
tools, chance of profit, risk of loss) and of
Lord Denning's organization or integration test,
MacGuigan J.A. in Wiebe Door Services Ltd., stressed
all along that what remains of the essence is the search for the
total relationship of the parties. He first quoted at length
Lord Wright in Montreal v. Montreal Locomotive Works
Ltd.[2]
In earlier cases a single test, such as the presence or
absence of control, was often relied on to determine whether the
case was one of master and servant, mostly in order to decide
issues of tortious liability on the part of the master or
superior. In the more complex conditions of modern industry, more
complicated tests have often to be applied. It has been suggested
that a fourfold test would in some cases be more appropriate, a
complex involving (1) control; (2) ownership of the
tools; (3) chance of profit; (4) risk of loss. Control
in itself is not always conclusive. Thus the master of a
chartered vessel is generally the employee of the shipowner
though the charterer can direct the employment of the vessel.
Again the law often limits the employer's right to interfere
with the employee's conduct, as also do trade union
regulations. In many cases the question can only be settled by
examining the whole of the various elements which constitute the
relationship between the parties. In this way it is in some cases
possible to decide the issue by raising as the crucial question
whose business is it, or in other words by asking whether the
party is carrying on the business, in the sense of carrying it on
for himself or on his own behalf and not merely for a
superior.
[Emphasis in text.]
[25] MacGuigan J.A. then added the following:[3]
. . . I interpret Lord Wright's test
not as the fourfold one it is often described as being but rather
as a four-in-one test, with emphasis always retained on what
Lord Wright, supra, calls "the combined force of
the whole scheme of operations," even while the
usefulness of the four subordinate criteria is acknowledged.
. . .
What must always remain of the essence is the search for
the total relationship of the parties. . . .
Of course, the organization test of Lord Denning and
others produces entirely acceptable results when properly
applied, that is, when the question of organization or
integration is approached from the persona of the
"employee" and not from that of the
"employer", because it is always too easy from the
superior perspective of the larger enterprise to assume that
every contributing cause is so arranged purely for the
convenience of the larger entity. We must keep in mind that it
was with respect to the business of the employee that
Lord Wright addressed the question "Whose business is
it?"
[Emphasis in text.]
[26] What was the total relationship of the parties? What was
the combined force of the whole scheme of operations?
[27] The criteria to be considered were reiterated by the
Federal Court of Appeal in Attorney General of Canada v.
Normand Charbonneau (A-831-95), a decision
dated September 20, 1996. Décary J.A. wrote as
follows at page 2 in particular:
The tests laid down by this Court in Wiebe Door Services
Ltd. v. M.N.R.[4]— on the one hand, the degree of control, the
ownership of the tools of work, the chance of profit and risk of
loss, and on the other, integration — are not the
ingredients of a magic formula. They are guidelines which it will
generally be useful to consider, but not to the point of
jeopardizing the ultimate objective of the exercise, which is to
determine the overall relationship between the parties. The issue
is always, once it has been determined that there is a genuine
contract, whether there is a relationship of subordination
between the parties such that there is a contract of employment
(art. 2085 of the Civil Code of Québec) or,
whether there is not, rather, such a degree of autonomy that
there is a contract of enterprise or for services (art. 2098
of the Code). In other words, we must not pay so much attention
to the trees that we lose sight of the forest — a
particularly apt image in this case. The parts must give way to
the whole.
[28] Each case stands on its own merits. The appellants had to
show on the balance of evidence that the Minister's decisions
were incorrect. Subsections 70(2) and 71(1) of the
Unemployment Insurance Act confer broad remedial powers on
the Tax Court of Canada. These powers enable the Tax Court of
Canada to decide any case on the facts and to reverse, affirm or
vary the Minister's determination.[5]
Analysis
[29] It must be determined whether the appellants provided
their services as employees of the payer or as contractors with
Groupe Lebel. Four criteria are to be considered for the purpose
of distinguishing between a contract of employment and a contract
for services.
Chance of profit and risk of loss
[30] According to the evidence, the payer represented the
appellants and negotiated with Groupe Lebel
(Exhibits A-3 and A-4) the delivery cost per
cubic meter of timber and an additional amount of $0.20 or $0.22
per cubic meter to cover the payer's administrative expenses
and the appellants' fringe benefits. Each truck owner was
paid on the basis of the number of cubic meters of timber
delivered. In actual fact, the appellants negotiated a
transportation contract with Groupe Lebel through the payer.
Revenue was mainly based on the number of trips and the number of
cubic meters of timber delivered. It is agreed that the
appellants spent many hours transporting the timber, but revenue
was mainly determined by the quantity delivered and the number of
trips. If no deliveries were made, the payer was paid
nothing.
[31] The truck driver owners thus did not know their actual
incomes until the end of the season. The appellants furthermore
did not receive their first income payment until they had
transported timber for two weeks without remuneration, which
was characterized at the hearing as "two weeks of back
time". Groupe Lebel sent the money for the first week of
deliveries to the payer at the end of the third week of work. The
revenue from two weeks of deliveries was thus withheld by
Groupe Lebel and remitted to the payer at the end of the
transportation period with all the agreed-upon adjustments having
been made.
[32] The appellants submitted their hours to the payer so that
their accountant could prepare the two pay cheques. One of the
cheques represented the number of hours worked multiplied by the
hourly rate agreed upon in the collective agreement, while the
second was to pay for the use of the driver's truck.
[33] The appellants' remuneration was split, which shows
that all profits and losses were the truck drivers'. Neither
the payer nor Groupe Lebel bore for the appellants the costliest
risks under the overall agreement set out in the contracts. The
profit lay in the total remuneration paid to the owner truck
drivers by means of the two cheques.
Control
[34] Groupe Lebel's needs were dictated by the necessity
of having at its disposal the owners' trucks and qualified
drivers to operate them.
[35] The truck drivers had an obligation to take part in the
delivery of timber under the contract between the payer and
Groupe Lebel (Exhibits A-3 and A-4), but the
operation of the trucks was controlled solely by the drivers. It
is agreed that Groupe Lebel's foreman indicated the places
where the wood was to be loaded and to which it was to be
transported. It is also agreed that the truck drivers had an
obligation to act in Groupe Lebel's best interests and, in
keeping with the practice and rules of their profession, to
ensure that the service provided was in accordance with the
contract. These express or implied obligations arising from the
contract do not identify it as a contract of service, but
demonstrate the mutual dependence of the parties resulting from
the contract's very existence (Exhibits A-3 and
A-4).
Ownership of the tools
[36] Under the contracts between the payer and the truck
drivers (Exhibit A-6), the drivers were responsible
for all their vehicle expenses and no rental was set.
[37] All the appellants except Allain Lebel owned their
trucks either individually or through a corporation of which they
were the shareholders. Allain Lebel was the only minority
shareholder, and he held 23 percent of Yellow Work
Ltd./Ltée., which owned the truck he drove.
Allain Lebel was thus, strictly speaking, able to share in
that company's profits and losses.
[38] The payer owned no trucks or other pieces of
equipment.
Integration
[39] The truck drivers' work was indirectly integrated
into the payer's business in that the payer was created to
enable the appellants to work with their trucks, thus ensuring
that Groupe Lebel did not have to own trucks or handle the
administration of the truck drivers' incomes. The truck
drivers' work in transporting timber to the mill was
indirectly integrated into Groupe Lebel's operations.
Conclusion
[40] The payer was a corporation which negotiated with Groupe
Lebel on the appellants' behalf in order to obtain and set
the conditions of the timber transportation contract. Each
appellant negotiated a truck leasing contract with the payer
without determining a specific rental. Groupe Lebel remitted all
money from the truck drivers' work to the payer, which
distributed it to the appellants. There was no real relationship
of subordination between the payer and the appellants. The
appellants were thus not the payer's employees, but rather
performed a transportation contract which had been entered into
with Groupe Lebel. All these circumstances show that there was no
employer-employee relationship between the payer and the
appellants.
[41] In closing, I appreciated the determination demonstrated
by the appellants, who presented their viewpoint in a sensible,
frank and dignified manner. I unfortunately cannot accept their
arguments.
IV- Decision
[42] The appeals are dismissed and the Minister's
decisions are affirmed.
Signed at Dorval, Quebec, this 23rd day of November 1998.
"S. Cuddihy"
D.J.T.C.C.
[OFFICIAL ENGLISH TRANSLATION]
Translation certified true on this 30th day of June
1999.
Erich Klein, Revisor
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