|
Citation: 2003TCC883
|
|
Date: 20031208
|
|
Docket: 2003-633(EI)
|
|
BETWEEN:
|
|
MESSAGERIE VDL INC.,
|
|
Appellant,
|
|
and
|
|
|
|
THE MINISTER OF NATIONAL REVENUE,
|
|
Respondent.
|
REASONS FOR JUDGMENT
Dussault J.
[1] The
Appellant was assessed for unpaid employment insurance premiums for 2000 and
2001 for the following workers: Jules Bourdon, Patrick Breault,
Gilles Contré, Jacques Dauphin, Roland Dubreuil, Johanne
Ducharme, Jacques Lapierre and Gérard Martineau (the Workers).
[2] The
details for the premiums are:
|
Year
|
EI premium
|
Penalty
|
Interest
|
Total
|
|
2000
|
$1,380.38
|
$88.03
|
$149
|
$1,617.41
|
|
2001
|
$4,643.37
|
$414.38
|
$43
|
$5,101.25
|
[3] Further
to the Appellant's opposition, the assessment for 2000 was confirmed and the
assessment for 2001 was reduced by removing the assessments and the penalties
and interest for Gérard Martineau, who was not considered bound to the
Appellant under a contract for services, contrary to the other workers
mentioned.
[4] In
assessing the Appellant, the Minister of National Revenue (the Minister) relied
on the following presumptions of fact, found at subparagraphs 6(a) to (p) of
the Reply to the Notice of Appeal (the Reply). These state:
[translation]
(a) Since 1993, the Appellant has
been operating a mail transportation service.
(b) Luc Desmarais is the Appellant's
sole shareholder.
(c) The Appellant's main client is
Canada Post.
(d) The Appellant covers the
Lanaudière territory.
(e) In 2000 and 2001, the
Appellant's total sales figure was around $200,000.
(f) The Appellant's assets are five
leased/purchased trucks.
(g) The Appellant has four different
routes for Canada Post; it picks up the mail at the Joliette post office and
delivers it to various post offices in the region and then, at the end of the
day, picks up the mail in these post offices and brings it to Joliette.
(h) To carry out the delivery and
collection of mail, the Appellant hires drivers (Workers), generally retirees.
(i) The Workers use the Appellant's
trucks to deliver the mail; they keep the truck outside working hours,
including weekends (except in the case of Patrick Breault, who brought the
truck back at the end of his day).
(j) The Workers were to go to the
post office around 6:00 a.m. to pick up the mail and then deliver it to various
offices; they did the same route in reverse, starting at 4:00 p.m. and brought
the collected mail to the Joliette post office.
(k) The Workers' hours of work
varied from week to week, but they generally carried out 30 hours per week; the
schedule was "cut" because they usually worked three hours in the
morning and three hours in the afternoon.
(l) The Workers used the
Appellant's trucks, and the Appellant paid for gas and all maintenance and
repair costs.
(m) The Workers could find
replacements with the Appellant's prior permission; Luc Desmarais often carried
out the replacements himself.
(n) The Appellant, not the Workers,
was responsible to Canada Post for the mail delivery.
(o) All the Workers received between
$300 and $350 a week; they were paid by cheque, once a month.
(p) In 2001, Gérard Martineau
worked for his own company (Distribution Mel-Pat inc.) not the Appellant.
[5] All
the facts in this paragraph are admitted except at subparagraph (c), because
the Appellant claims that Canada Post is not his main client. However, no
evidence was submitted on this subject.
[6] Jacques Dauphin,
Gérard Martineau and Luc Desmarais testified briefly for the
Appellant.
[7] Mr.
Dauphin stated that his job was to deliver mail six hours a day and that his
hours of work, from 5:15 a.m. to 8:15 a.m. and from 4:15 p.m. to 7:15 p.m.,
were determined by Canada Post and the Appellant.
[8] Mr.
Martineau stated that the Appellant hired him to deliver mail for Canada Post,
that he provided his time and the Appellant provided all that was needed to
carry out the work.
[9] Mr.
Luc Desmarais is the Appellant's sole shareholder. He stated that on the
advice of his accountant, sub-contracts were usually signed with self-employed
workers. For example, the contract with Jacques Dauphin was submitted to
evidence (Exhibit A-1).
[10] This contract is reproduced as follows, with the pre-printed parts in
regular font and the handwritten parts in italics:
[translation]
CONTRACT
BETWEEN
1st party MESSAGERIE
V.D.L. INC., company incorporated in accordance with Part 1A of the
Companies Act of Québec, with head office at: 688 Roussin Pl. JOLIETTE,
hereinafter called the Company
and
2nd party Name: Jacques
Dauphin
Address:
S.I.N.:
Hereinafter called the Subcontractor
The two parties agree as follows:
1. The Subcontractor
shall have full responsibility of: Canada Post deliveries for the Rawdon
route.
2. For this purpose, the
Company shall provide the following services: Time, availability, fuel,
verifications for the Ford F-450 1994 model trucks.
3. Wages to be paid for
casual help and occasional agent's fees with clients will be the
Subcontractor's responsibility.
4. This agreement is
cancellable at any time by either party upon a five-day notice. Renewable at
the beginning of each month.
5. The Subcontractor
shall receive $330.00 dollars per week for carrying out the duties
described at #1.
6. The Subcontractor
takes full responsibility for his work and the related benefits. This agreement
automatically releases the Company from all employer's responsibilities such as
vacation, contributions to various source deduction programs for the Québec
Pension Plan, Unemployment Insurance, the RAMQ, CSST, etc.
|
Signed at Joliette
|
this January 7, 1997.
|
|
Luc Desmarais
|
Jacques Dauphin
|
|
President of the Company
|
Subcontractor
|
[11] First, paragraph 1 violates paragraph 17.1 of the contract the
Appellant signed with Canada Post, under the terms of which the Appellant is
wholly responsible for the execution of service if it hires subcontractors
(Exhibit I-3). At any rate, they must be actual subcontractors.
[12] Second, regarding paragraph 3, it was not shown that the workers
hired anyone to carry out their work, except for the replacements the Appellant
authorized and paid. There is also no evidence to show that the Workers had to
pay agent's fees to anyone, let alone that they had clients. They distribute
bags of mail they collected at the Joliette post office to local post offices
and returned bags of mail collected in the local post offices to the Joliette
post office.
[13] The evidence shows that the Workers were paid hourly, according to the
time required to cover a delivery route. The time required is verified upon
departure by Luc Desmarais and the Worker during a one-week period. The
schedules are established according to Canada Post's requirements and the
Appellant provides and pays for absolutely everything required to carry out the
Workers' duties.
[14] In his Notice of Appeal, the Appellant challenges the assessments on
the sole ground that it was independent subcontractors who operated their own
company and not employees. However, during the hearing, the Appellant also
challenged the assessments claiming they were too high (Exhibit I-1).
[15] First, the Appellant claims that there should not be any assessment
for Gérard Martineau for 2001 because the Appellant had a contract with a
company he incorporated. This is recognized by the Respondent and according to
the Reply, the assessment for 2001 was reduced accordingly.
[16] The second point regarding the amount of the assessment is the amount
used to calculate the Appellant's unpaid 2001 contribution for
Jacques Dauphin (Exhibit I-1). According to Luc Desmarais, the
contribution was established using earnings of $35,190 with 55% allegedly being
paid to Mr. Dauphin's spouse as a subcontractor distributing mail on a rural
route.
[17] On one hand, as I mentioned, this point is not at all raised in the
Notice of Appeal. On the other, no document, for example Mr. Dauphin's income
tax report or that of his spouse or even proof of payment by the Appellant, was
submitted as evidence in support of this claim.
[18] As for the issue of whether the Workers were really self-employed
workers operating their own company rather than the Appellant's employees,
counsel for the Respondent stated that the applicable principles were expressed
by the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries
Canada Inc., 2001 SCC 59, [2001] 2
S.C.R. 983, [2001] S.C.J. No. 61 (Q.L.), ("Sagaz"). In that decision, the Supreme Court of Canada refers to the
decision by the Federal Court of Appeal, Wiebe Door Services Ltd. v. M.N.R.
("Wiebe Door") [1986] 3 F.C. 553, in which MacGuigan J.
noted the following four elements: (1) control; (2) ownership of the work
instruments; (3) possibility of profit; and (4) risk of loss, while noting that
the criterion of control is not always conclusive in itself. These elements
were applied by Lord Wright in Montréal v. Montréal Locomotive
Works Ltd., [1947] 1 D.L.R. 161 (C.P.).
[19] As Major J. noted at paragraph 44 of Sagaz (supra), in Wiebe
Door (supra), MacGuigan J. recognized that the best summary of the
issue was by Cooke J. in Market Investigations, Ltd. v. Minister of Social
Security, [1968] 3 All E.R. 732 (Q.B.D.), when he stated, at pages 737 and
738:
The observations of Lord Wright, of Denning LJ and of
the judges of the Supreme Court in the USA suggest that the fundamental test to
be applied is this: "Is the person who has engaged himself to perform
these services performing them as a person in business on his own account?"
If the answer to that question is "yes", then the contract is a
contract for services. If the answer is "no" then the contract is a
contract of service. No exhaustive list has been compiled and perhaps no
exhaustive list can be compiled of considerations which are relevant in
determining that question, nor can strict rules be laid down as to the relative
weight which the various considerations should carry in particular cases. The
most that can be said is that control will no doubt always have to be
considered, although it can no longer be regarded as the sole determining
factor; and that factors, which may be of importance, are such matters as
whether the man performing the services provides his own equipment, whether he
hires his own helpers, what degree of financial risk takes, what degree of
responsibility for investment and management he has, and whether and how far he
has an opportunity of profiting from sound management in the performance of his
task. [Emphasis added]
[20] In Wiebe Door (supra), MacGuigan J. also acknowledges
the use of the criterion of "organization"
or "integration" insomuch as it is applied properly, or taken
from the point of view of the "employee" and not the
"employer." An analysis of this element normally results in an answer
to the question of whose company it is.
[21] Also, in Sagaz (supra), at paragraph 46, Major J. shares
the opinion expressed by MacGuigan J. in Wiebe Door (supra), when
he states at page 563, citing the author P.S. Atiyah (Vicarious Liability in
the Law of Torts. London: Butterworths, 1967 p. 38) "that what must
always occur is a search for the total relationship of the parties."
[22] Major J. repeats part of the quotation from Atiyah's work in the same
paragraph as follows:
It is exceedingly doubtful whether the search for a
formula in the nature of a single test for identifying a contract of service
any longer serves a useful purpose…The most that can profitably done is to
examine all the possible factors which have been referred to in these cases as
bearing on the nature of the relationship between the parties concerned.
Clearly not all of these factors will be relevant in all cases, or have the
same weight in all cases. Equally clearly, no magic formula can be propounded
for determining which factors should, in any given case, be treated as the
determining ones.
[23] Despite the contract signed between the Appellant and the Workers, I
find that they were not each operating their own company. They were employees
of the Appellant, who established their mail delivery schedule in various post
offices and who paid them based on the number of hours required to carry out
this task; the hours were verified at the departure for a given route by Luc
Desmarais accompanied by the Worker.
[24] The Appellant provided the truck used to carry out this task. The
Appellant also paid for gas and maintenance and repair costs for the trucks. To
Canada Post, the Appellant was solely responsible for the mail delivery and
therefore had the power to control the Workers' execution of the task.
[25] The Workers received a set pay with no possibility of profit. They did
not have a risk of loss and had no expenses or any agent's fees to pay to carry
out their duties.
[26] Lastly, I feel we can say the Workers' duty was strictly carried out
within the framework of postal service managed by Canada Post, in accordance
with a pre-established schedule; this service was the Appellant's to provide
and therefore it had full responsibility under the terms of the agreement
signed with Canada Post.
[27] As a result of the above, the appeals are dismissed.
Signed at Ottawa, Canada, this 8th day of
December 2003.
Dussault
J.
Translation
certified true
on this 26th day of
February 2009.
Elizabeth Tan,
Translator
Email this Content