Dynamex Canada Inc. v. Mamona, 2002 FCT 393

                                                                                                                                             Date: 20020409

                                                                                                                                       Docket: T-1729-00

                                                                                                                   Neutral Citation: 2002 FCT 393

BETWEEN:

                                                          DYNAMEX CANADA INC.

                                                                                                                                                        Applicant,

                                                                              - and -

                                                    ADELE VICTORIA MAMONA,

                                                   RANDOLPH WILLIAM HEPNER,

                                                           ROBERT PHILIP CYR and

                                            THE ATTORNEY GENERAL OF CANADA

                                                                                                                                                   Respondents.

                                                            REASONS FOR ORDER

KELEN J.:

[1]         This is an application under section 18.1 of the Federal Court Act R.S.C. 1985, c. F-7 for judicial review of the decision of J.F.R. Taylor, Q.C., Referee, under Part III of the Canada Labour Code, R.S.C., 1985 c. L-2, ("the Code") that the individual respondents were employees of the applicant, and ordering that funds held in trust be disbursed to the respondents.

[2]         The issues are: did the Referee have the jurisdiction under the Code to determine whether the respondents were employees of the applicant; and if so, is the decision of the Referee patently unreasonable.

FACTS

[3]         The applicant is a corporation in the delivery and courier business. The respondents were courier drivers for the applicant.

[4]         On April 16, 1997 the respondents filed a complaint against the applicant pursuant to s.251.1 of the Code, seeking to be paid for general holidays and vacation for 1997 through 1999 based on the respondents having the status of "employees" of the applicant company.

[5]         On August 20, 1998, an Inspector appointed under the Code notified the parties that an assessment had been completed and that an employee/employer relationship existed between the parties such that the complaints were admissible under the Code. The applicant did not seek judicial review of this decision, or otherwise object to the jurisdiction of the Inspector to determine that the respondents were employees.

[6]         On June 15, 1999, the Inspector issued an order requiring the applicant to remit certain amounts of money to the Receiver General on account for the respondents.

[7]         On June 30, 1999, the applicant appealed to a referee the payment order on the grounds that the respondents were independent contractors for the purposes of the Code. The applicant did not question the jurisdiction of the Referee to decide this question. A referee was appointed by the Minister of Labour pursuant to s.251.12(1) of the Code to hear and adjudicate on the appeal. Evidence and submissions were heard by the Referee during February and May 2000.

[8]         On August 9, 2000 the Referee rendered his decision, affirming the decision of the Inspector and finding that the respondents were employees of the applicant for the purposes of Part III of the Code, and were entitled to the payment of the amounts awarded by the Inspector. The Referee further ordered the funds be disbursed upon 30 days expiry from the receipt of the decision.

[9]         On September 15, 2000, the applicant filed an application for judicial review of the Referee's decision.

[10]       On July 16, 2001 the Attorney General of Canada was added as a respondent to this matter.

DECISION OF THE REFEREE

[11]       The August 9, 2000 decision of the Referee stated the issue in the matter as follows:

[...] was the Respondent an independent contractor, or was the Respondent an employee and, therefore, entitled to General Holiday and Annual Vacation Pay under Part III of the Canada Labour Code throughout 1997, 1998 and a portion of 1999.

In conclusion, the Referee writes:

I remain troubled by the fact that, in arriving at the conclusion (as I now do) that the Respondents were employees for the purposes of Part III of the Code, I am allowing them to ‘run with the hares and hunt with the hounds', since they all freely admit that they were fully aware that their contracts designated them as independent contractors and that, indeed, they were quite content with that category since it meant fewer deductions at source from their pay cheques. Nonetheless, I must base my decision upon the facts as I find them and, in the cases now under review, the scales come down on the side of employment rather than entrepreneurship [...]

ISSUES

[12]       Did the Referee have the jurisdiction to determine whether the respondents were employees of the applicant?

[13]       If the Referee has jurisdiction, is the decision of the Referee patently unreasonable?

ANALYSIS

(1)                 Jurisdiction of the Referee

[14]       It is trite law before this Court that the standard of review in dealing with questions of jurisdiction in matters such as the case at bar is that of correctness.

[15]       The Canada Labour Code is intended to settle labour disputes in the federal jurisdiction. The scheme of the Code calls for determinations to be made by inspectors and upon appeal, reviewed by referees. The referee, appointed under section 251.12(1) of the Code, is intended to be a person with the experience and expertise to settle particular disputes. In this case, the particular dispute was whether the respondents were employees or independent contractors, from which flowed liability for holiday and vacation pay. Under section 251.12(4) the referee "may make any order that is necessary to give effect to referee's decision". Therefore the referee has broad powers under the Code to decide the labour dispute to which he has been appointed.

[16]       In considering whether the Referee has the jurisdiction to decide whether the respondents are employees, this Court follows the Supreme Court of Canada decision in U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048. This landmark decision held that the Court must apply a "functional and pragmatic approach" to determine whether the preliminary question, in this case, whether the respondents are or are not employees, was intended by the legislature, expressly or by implication, to be a question within the jurisdiction conferred on the Tribunal, the referee in this case.

[17]       The respondent, the Attorney General of Canada, submits that the Referee has the implicit jurisdiction under the Code to decide the issue, and refers to the Supreme Court of Canada case of Bell Canada v. Canada (C.R.T.C.), [1989] 1 S.C.R. 1722, [1989] S.C.J. No. 68 (S.C.C.). As per Gonthier J. at paragraph 50:

The powers of any administrative tribunal must of course be stated in its enabling statute but they may also exist by necessary implication from the wording of the act, its structure and its purpose. Although courts must refrain from unduly broadening the powers of such regulatory authorities through judicial law-making, they must also avoid sterilizing these powers through overly technical interpretations of enabling statutes.

[18]       Certain powers flow naturally from the jurisdiction and purpose of an administrative body has been in shown in such cases as British Columbia Telephone Co. v. Shaw Cable Systems (B.C.) Ltd., [1995] 2 S.C.R. 739, [1995] S.C.J. No. 54 (S.C.C.) at paragraph 39, and in Aéroports de Montréal v. Canada (Minister of Labour) [1995] F.C.J. No. 909 (F.C.T.D.) where Tremblay-Lamer J. writes at paragraph 14:

¶ ¶ 37[...] In Bell Canada [supra] the Supreme Court acknowledged that the lower tribunal had the powers implicitly deriving from its enabling Act.

[19]       This line of reasoning is relevant to the case at bar. A referee under the Code unable to determine whether a person is an employee would be unable to fulfill a purpose of the statute itself.

[20]       I am satisfied, upon reviewing the Code and the jurisprudence, that the Referee was intended by the legislature to have jurisdiction to answer this preliminary question. Accordingly, I find that the Referee acted within his jurisdiction in deciding whether the respondents were employees, and this Court will not intervene unless the Referee has erred in a patently unreasonable manner. As Decary, J.A. held in Canada Post Corporation v. Pollard, [1994] 1 F.C. 652, at page 66:

The patently unreasonable test is a severe one [...] a very strict one [...] It sets a high standard of review; it is not enough that the decision of the Tribunal is wrong in the eyes of the Court; it must, in order to be patently unreasonable, be found by the

Court to be clearly irrational, that is to say evidently not in accordance with reason

[...] or not sustainable on any reasonable interpretation of the facts or the law [...]. The severity of the test requires the Courts to adopt a posture of deference to the decision of the Tribunal [...]. Deference is particularly suited in labour disputes [...] although, the degree of deference will vary depending on whether the Tribunal falls toward the lower or the upper end of the spectrum of those administrative Tribunals charged with policy deliberations to which the Courts should defer [...].

(2)                 Decision of the Referee

[21]       Since this decision is within the jurisdiction of the referee, the privative clauses in subparagraphs 251.12(b) and (7) of the Code with respect to the referee's decision mean that this Court will not intervene unless the referee's decision is patently unreasonable, as per Pinard, J. at paragraph 9 of Autocar Connaisseur Inc. v Canada (Minister of Labour), [1997] F.C.J. No. 1363 (F.C.T.D.), affirmed at the Federal Court of Appeal (2000), 266 N.R. 323 (F.C.A.).

[22]       The Federal Court of Appeal in Wolf v. Canada, [2002] F.C.J. No. 375, 2002 FCA 96 (F.C.A.) reviewed the jurisprudence which distinguishes between an employee/employer relationship, and an independent contractor relationship. The Referee applied this jurisprudence and considered the fourfold test of: control; ownership of tools; chance of profit; and risk of loss.    The Referee also considered the control test set out by the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C.R. 553 (F.C.A.), and the "organization test" or the "integration test" used by Denning L.J. (as he then was) in Stevenson Jordan and Harrison Ltd. v. MacDonald and Evans, [1952] 1 T.L.R. 101 (C.A.).

[23]       Many tests are available in determining whether an employee/employer relationship exists. Major J. in the decision of for the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] S.C.J. No. 61, 2001 SCC 59">2001 SCC 59 (S.C.C.) discusses the various tests available before concluding:

¶ ¶ 47 Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. [ in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553 (F.C.A.), a case Major J. refers to

as having "thoroughly reviewed the relevant case law" on the issue of independent contractors and employees] that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. The 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.

[24]       There is no set formula as to how the different tests are to be applied or the relative weight which each test will have on the facts and circumstances. In this case, the Referee embarked on an investigation and conducted a detailed analysis. He considered all of the factors traditionally developed by the case law, and applied the correct legal tests.

[25]       The Referee's 49-page decision is a careful and intelligent analysis of the situation of the respondents' relationship in their work for the applicant Dynamex. The Referee specifically considered the following criteria in his decision:

·                        chance of profit;

·                        risk of loss;

·                        ownership of tools;

·                        exclusivity; control;

·                        right to delegate; and,

·                        "whose business is it?".

[26]       The Referee found the following elements particularly compelling in establishing the existence of an employee/employer relationship:

·                        reliance of the drivers upon the company's dispatcher to obtain work;

·                        the allotment of designated delivery routes or territories to the drivers;

·                        the compulsory group insurance plan;

·                        Dynamex's power to discipline the drivers;

·                        the requirement for the company's approval of a substitute driver; and,

·                        the lack of opportunity to enlarge the scope of the drivers' business.

[27]       It is evident from the decision that factors favouring all parties were taken into account by the Referee in the course of his decision.

[28]       In view of the fact that there are two strong privative clauses restricting judicial review of the Referee's decision in this case, and in view of the foregoing conclusion that the legislation intended the Referee to have the power to determine whether or not the respondents were employees as part of the Referee's jurisdiction, this Court will not intervene unless the Referee's decision is patently unreasonable, which means clearly and obviously irrational. That is far from the case.

[29]       Accordingly, even if the Court did not agree with the decision, and even if the decision was contrary to jurisprudence before the Tax Court that the courier industry is normally made up of independent contractors, not employees of the courier company, the Referee's decision in this case and on this set of facts is not patently unreasonable.

SUBSIDIARY ARGUMENT

[30]       On a subsidiary argument, the applicant submitted that the vacation pay ought not be based on the actual amounts paid to the respondents since the courier's overhead expenses ought not be the subject of vacation pay. This matter was before the Referee. It was not referred to in the decision. It is not patently unreasonable that the vacation pay be based on the actual amounts paid to the respondents, since the amounts paid to the respondents represent the value of their services, including the tools of their trade. The overhead expenses of the couriers does not disappear when the couriers take a vacation or holiday.

[31]       Accordingly, this application for judicial review is denied.

        (signed) Michael A. Kelen

____________________________                              JUDGE                

OTTAWA, ONTARIO

April 9, 2002