Date: 20071122
Docket: T-1469-05
Citation: 2007 FC 1225
Ottawa, Ontario, the 22nd day of November 2007
Present:
The Honourable Mr.
Justice Shore
BETWEEN:
CP
SHIPS TRUCKING LTD.
(formerly known as
CAST TRANSPORT INC.)
Applicant
and
GUNTER M. KUNTZE
and
ENTREPRISE GUNTER M. KUNTZE & FILS
INC.
Respondents
REASONS FOR JUDGMENT AND JUDGMENT
SUMMARY
[1]
In Dynamex
Canada Inc. v. Mamona, 2003 FCA 248, [2003] F.C.J., No. 907 (QL), at
paragraph 52, Madam Justice Karen Sharlow quotes the judgment of the
Supreme Court in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.,
[2001] 2 S.C.R. 983, noting that “the terminology used
in his or her contract is not determinative . . . . Such a
contractual term cannot prevail if the evidence of the actual relationship between
the parties points to the opposite conclusion, as the referee found to be the
situation in this case”. In other words, what matters is the factual reality behind
appearances.
INTRODUCTION
[2]
The
applicant is applying for judicial review of the interlocutory arbitral award of
adjudicator Michel A. Goulet, who ruled that the respondent is a “person”
within the meaning of section 240 of the Canada Labour Code, R.S.C.,
1985, c. L-2 (Code) and that the tribunal had jurisdiction to hear and decide
the respondent’s unjust dismissal complaint.
FACTS
[3]
The
applicant, C.P. Ships Trucking Ltd. (formerly known as Cast Transport Inc.) is
a business under federal jurisdiction that ships certain types of goods, particularly
containers, to and from the port
of Montréal.
[4]
The
respondent, Gunter M. Kuntze, is the owner of a heavy vehicle used for the
transportation of goods.
[5]
The
defendant, Entreprise Gunter M. Kuntze et Fils Inc. (the Enterprise), is a business enterprise under provincial
jurisdiction, incorporated on April 19, 1999, in the province of Quebec. Mr. Kuntze is
the sole shareholder and director of the Enterprise.
[6]
The Enterprise is a party to a written
contract (Montréal Local Owner Contract) with C.P. Ships which is binding on
the parties since January 2001. (Applicant’s Record (AR), Exhibit P‑2,
page 27).
[7]
In this
contract, the Enterprise is described as [translation]
“Owner”, while C.P. Ships is described as the [translation] “Company”. C.P. Ships
retained the services of the Enterprise to pull trailers belonging to
C.P. Ships, using a vehicle which belonged to the Enterprise (AR, Adjudication Award, page 13).
[8]
On
December 23, 2003, C.P. Ships terminated the contract, claiming that Mr. Kuntze
was in serious breach of his obligations under said contract (AR, Exhibit P-7,
page 91).
[9]
On January 19, 2004, Mr. Kuntze filed a complaint
alleging that he had been unjustly dismissed. Mr. Goulet was appointed
adjudicator on September 22, 2004, to hear and decide the complaint brought
by Mr. Kuntze.
[10]
Before the
hearing on the merits of the complaint filed by Mr. Kuntze, the applicant raised
a preliminary argument concerning the admissibility of the complaint made by
Mr. Kuntze. More specifically, the applicant submits that Mr. Kuntze is
not a “person” within the meaning of section 240 of the Code because he
essentially offered his services through an incorporated company. On July 29, 2005, Mr. Goulet rendered an
interlocutory decision to the effect that Mr. Kuntze is a “person” and
that the tribunal therefore has jurisdiction to hear and decide the unjust
dismissal complaint. Mr. Goulet ordered the parties to continue the hearing on
the merits of the complaint.
[11]
On the
basis of the evidence submitted, particularly the obligations contained in the
contract (AR, Exhibit P-2, page 27), the code of professional conduct
(Respondent’s Record, Exhibit D-3, page 28) and the oral evidence,
the adjudicator concluded that the Enterprise or Mr. Kuntze is a “person” and that
he therefore had jurisdiction to [translation]
“decide the merits and the propriety of the company’s decision to dismiss the
complainant” (AR, Adjudication Award, page 17). He based his decision on evidence
concerning control, ownership of equipment, dispatching of transportation, conditions
governing the performance of the contract, monetary compensation, whether or
not the parties were dealing at arm’s length, legal subordination, integration
and disciplinary authority of the applicant.
IMPUGNED DECISION
[12]
The
applicant alleges that the adjudicator made palpable errors in assessing the
facts and also erred in law in stating that [translation]
“the trucker’s incorporation was an inescapable precondition for carrying
out the shipment” because the “inescapable precondition” arose in 1994. (AR, Adjudication
Award, page 14)
[13]
In
addition, the applicant alleges that the adjudicator made another palpable
error in assessing the facts when he stated that [translation] “the owner was required to sign said contract,
and no negotiation took place” because, according to the applicant, the
evidence on this specific point shows that it was the respondent who solicited
a contract. (AR, Adjudication Award, page 14)
[14]
The adjudicator
decided that he had jurisdiction and [translation]
“came to the conclusion that the incorporated owner, the company or
Gunter M. Kuntze is a person who was dismissed by the company [C.P. Ships].
There is no doubt that the complainant Kuntze was in a situation of total
economic dependency and is indeed a person entitled to the right provided for
under section 240 of the CLC”. (AR, Adjudication Award, page 17)
ISSUES
[15]
The issues
raised in this application for judicial review are as follows:
(i)
Does adjudicator
Goulet have jurisdiction to hear and decide the complaint made by Mr. Kuntze because
he is a “person” within the meaning of section 240 of the Code, even though he
offers his trucking services through an incorporated company?
(ii)
Did adjudicator
Goulet render a correct decision on the question of law, that is, concerning
the determination of status as a “person” for the purposes of subsection 240(1)
of the Code?
(iii)
Did adjudicator
Goulet render a reasonable decision in the applying the relevant principles to
the facts of the case?
ANALYSIS
The legal framework of
arbitration under Part III of the Canada Labour Code
[16]
In this
case, adjudicator Goulet heard the respondent’s complaint under section 240
of the Code, which provides as follows:
|
Unjust
Dismissal
Complaint
to inspector for unjust dismissal
240. (1) Subject to
subsections (2) and 242(3.1), any person
(a) who has completed twelve
consecutive months of continuous employment by an employer, and
(b) who is not a member of a
group of employees subject to a collective agreement,
may
make a complaint in writing to an inspector if the employee has been
dismissed and considers the dismissal to be unjust.
|
Congédiement
injuste
Plainte
240. (1) Sous réserve des
paragraphes (2) et 242(3.1), toute personne qui se croit injustement
congédiée peut déposer une plainte écrite auprès d’un inspecteur si :
a) d’une part, elle travaille sans
interruption depuis au moins douze mois pour le même employeur;
b) d’autre part, elle ne fait
pas partie d’un groupe d’employés régis par une convention collective.
|
Standard of review
[17]
To establish
the standard of review applicable to a decision of an adjudicator appointed
under section 242 of the Code, it must be determined whether or not
Parliament intended that the issue in this case, namely, status as a “person”
for the purposes of section 240, be subject to an adjudicator’s
jurisdiction.
[18]
Sharlow J.A.
conducted a pragmatic and functional analysis to determine the standard of
review applicable to an adjudication award to the effect that persons hired as
independent contractors for a courier company were “employees” within the
meaning of Part III of the Code (Dynamex, supra).
[19]
At
paragraph 45 of Dynamex, supra, Sharlow J.A. concluded that “determination of the status of a person as an employee should be
reviewed on the standard of correctness . . . despite the privative clauses,
because it is a question of law . . . . However, the manner in which those
principles are applied to the facts, which is a question of mixed law and fact,
should be reviewed on the standard of reasonableness”.
[20]
In light
of the preceding, the Court submits that the standard of review applicable to
the adjudicator’s determination of the status of a person for the purposes of
subsection 240(1) of the Code is correctness, and that the standard to be
used when applying the principles to the facts is reasonableness simpliciter.
Assessment of the evidence
Introduction
[21]
The
applicant submits that Mr. Kuntze’s complaint cannot be heard or is not
arbitrable because Mr. Kuntze is not a “person” within the meaning of
section 240 of the Code, is not an employee and is an independent
contractor who offers his services as a truck driver through the respondent’s Enterprise.
[22]
The
applicant’s main argument concerned the adjudicator’s alleged errors in
assessing the facts with regard to the obligation to incorporate, its effects with
respect to lifting the corporate veil, and the solicitation of the contract,
which led him to make errors in law when applying subsection 240(1) of the
Code.
[23]
Therefore,
the adjudicator had no jurisdiction to hear the complaint and decide whether or
not the dismissal of the respondent, Mr. Kuntze, was unjust.
[24]
Mr. Kuntze
notes that, in his decision dated July 29, 2005, the adjudicator did not act
without jurisdiction, exceed his jurisdiction or retain a jurisdiction he did
not have under the provisions of the Code.
[25]
In
addition, Mr. Kuntze points out that the two arguments or submissions made by
the applicant concerning incorporation and the contract were not supported by
the evidence adduced before the adjudicator.
Law
[26]
Part III of
the Code does not define the term “employee”, nor does it define the term “person”.
[27]
In Dynamex,
supra, the Federal Court of Appeal stated that it is “correct” for a
decision-maker hearing a matter under Part III to disregard or rely very little
on the definition of “dependant contractor” in paragraph 3(c) and
contained in Part I of the Code and to use common law criteria in
determining status as an “employee”. (Dynamex, supra,
paragraph 49).
[28]
In the
case at bar, the adjudicator specifically stated that the word “person” in
section 240 of the Code did not allow him to simply apply the definitions
of “employee” given elsewhere in the Code:
[translation]
Because section 240 in Part III of the
Code grants a person, as opposed to an employee, the right to bring a
complaint, it must be acknowledged that persons other than employees may have
this right, which is granted to “any person”.
Since there is nothing to indicate that
the word “person” excludes a legal person, it must be concluded that this right
is extended to legal and physical persons alike. In section 240, Parliament
presumably used the word “person” instead of “employee”, which is most commonly
used, because it intended to include persons other than those who are employees
within the ordinary meaning of the word and within the meaning of the
definitions found in the Code at sections 3.1 and 122.
(AR, Adjudication
Award, page 12.)
[29]
Consequently,
when he determined that the word “person” included a [translation] “larger category of persons” than the word “employee”
within the meaning of Part III, which is qualified as a “person” within
the meaning of subsection 240(1) of the Code, the adjudicator was not only
reasonable but correct, as he applied the relevant common law criteria to the
determination of status as an “employee” and reasonably interpreted the
evidence adduced before him.
Application of the facts to
the law
[30]
If we
ignore the effect of the respondent’s incorporation, the issue is whether or
not the complainant is an “employee” within the meaning of Part III and
qualifies as a “person” within the meaning of subsection 240(1) of the
Code.
[31]
The
applicant retained the respondent’s services as a driver sometime around the
month of January 2001.
[32]
On
December 23, 2003, the applicant sent following notice to the respondent:
Based upon the events of the 11th,
12th, and 13th of December 2003, we are terminating our
contract with your company (Ent. Gunther & Fils). You are in violation of
article 3(c) of the present contract. In addition, you indulged in the use of
obscene language against your dispatcher Chantal Provencher.
It is your responsibility to remove all
our company logo’s from your tractor, as well as return all company property,
such as the shift lock, company identification card, Port of Montreal identification card, etc. We also take
this opportunity to inform you that your tractor is no longer covered under the
company insurance policy.
(AR, Exhibit P-7, page 91.)
[33]
There is
in fact a contract entitled [translation]
“Montréal Local Owner Contract” which was binding on the applicant and the
respondent “Enterprise”. (AR, Exhibit P-2,
page 27).
[34]
Mr. Kuntze
is the sole shareholder and director of the company “Entreprise Gunter M. Kuntze
& Fils Inc.”.
[35]
Under the
contract, the [translation] “owner” (the [translation] “truck
owner-operator”, that is, the incorporated company) is required to supply a
heavy vehicle (a [translation] “tractor”) to pull trailers
belonging to the applicant corporation.
[36]
In
addition, under that contract:
(i)
Mr. Kuntze
promised to supply and make available a 1990 Kenworth road vehicle (article 7
of the contract);
(ii)
Mr. Kuntze
was responsible for all direct or indirect costs and charges related to the
performance of his obligations, especially any [translation]
“employment-related
costs”, income tax, permits, registration, periodic maintenance and repairs, as
well as all operating expenses for his equipment (articles 6, 12 and 14 of
the contract);
(iii)
The
contract could not be assigned or transferred, except by the [translation] “company”,
that is, the applicant (article 4 of the contract);
(iv)
Mr. Kuntze
was not guaranteed any volume of goods to ship, as dispatching was at the sole
discretion of the applicant (article 5 of the contract);
(v)
Mr. Kuntze
had to operate his vehicles strictly for his own benefit or for that of the
applicant and for no other purposes (article 8 of the contract);
(vi)
Mr. Kuntze
had to submit to safety inspections required by the applicant (article 9
of the contract);
(vii)
Mr. Kuntze
had to apply symbols, signage, decals, stickers or other types of
identification of the applicant to his truck at the applicant’s expense (article 30
of the contract) and replace or remove this material at his own expense (articles 10
and 31 of the contract);
(viii)
The
applicant made available to Mr. Kuntz and installed in his truck the radio and
tracking equipment required for the performance of his obligations (article 11
of the contract);
(ix)
Mr. Kuntze
was liable for all negligently caused damage to the equipment supplied by the
applicant (article 13 of the contract);
(x)
Mr. Kuntze
had to obtain authorization from the applicant if he intended to have his truck
driven by someone other than himself (article 15 of the contract);
(xi)
Mr. Kuntze
acknowledged that he was not an employee, partner or an agent of the applicant
(articles 16 and 17 of the contract);
(xii)
Mr. Kuntze
agreed to recognize and indemnify the applicant against any claim made against it
following a breach of a condition in a bill of lading or delivery order while
the goods were in the possession of Mr. Kuntze (article 20 of the contract);
(xiii)
The work
was to be performed in accordance with the applicant’s terms and conditions
(article 21 of the contract);
(xiv)
The applicant
had total discretion to take control, at the expense of Mr. Kuntze, of any shipment
it considered to be in breach of the terms and conditions of the contract (article 23
of the contract);
(xv)
The
applicant was entitled to deduct all legal expenses incurred in connection with
any proceedings served on it in connection with a claim against Mr. Kuntze (article 24
of the contract);
(xvi)
The
applicant contracted appropriate insurance coverage in Mr. Kuntze’s name, and Mr. Kuntze
was responsible for paying any deductible (articles 25 and 26 of the contract);
(xvii)
Mr. Kuntze
agreed to indemnify the applicant against all expenses incurred by it for any
violations or offences under the law (article 28 of the contract);
(xviii)
Mr. Kuntze
had to advise the applicant of any accident, event, claim or offence, as
required under the applicant’s policies, procedures and operations manual (article 29
of the contract);
(xix)
Mr. Kuntze
consented to be bound by all of the applicant’s regulations, and these
regulations were deemed to form part of the contract (article 34 of the
contract);
(xx)
The
applicant was to reimburse Mr. Kuntze, on presentation of supporting
documentation, for all tolls and for all permits required by the applicant
(article 22 of the contract);
(xxi)
The
applicant could cancel the contract without notice (a) if Mr. Kuntze did not
respect the terms and conditions set out in the contract, operations manual and
regulations, (b) because of use or consumption of alcohol, drugs or other
chemical products or because of his negligence, (c) if Mr. Kuntze repeatedly
failed to respect the pickup or delivery schedule for goods or repeatedly
failed to obey instructions given by the applicant’s dispatcher, (d) if Mr.
Kuntze did not behave politely or civilly with the applicant’s clients, or (e) if
the respondent’s accident record exceeded the limits established by the
applicant (article 3 of the contract);
(xxii)
Once his
expenses were deducted, Mr. Kuntze was to keep the amount paid to him for the
performance of his work, according to the rates unilaterally determined by the
applicant (article 22 of the contract).
(Respondent’s Record, paragraph 49, pages 120-122).
[37]
The
obligations in the contract were described by adjudicator Goulet as being a true
contract of adhesion, not only because it was not negotiated, but also because
the contract represented a series of strict obligations for Mr. Kuntze and
unilateral rights for the applicant.
[38]
In
addition, the adjudicator noted that the incorporation of Mr. Kuntze’s Enterprise was a mandatory condition for
transporting the applicant’s goods.
[39]
Starting
in January 2001, Mr. Kuntze rendered exclusive services to the applicant. He was
the only person authorized to drive his truck and was the only person who did drive
it in practice.
[40]
In the
performance of his duties, Mr. Kuntze had to report to the applicant’s
dispatcher, who gave him his instructions.
[41]
Mr. Kuntze
reported on his activities, parked his truck where permitted by the applicant,
respected the work schedules given to him, accounted for his time and received
compensation as determined by the applicant.
[42]
In
addition, like all employees, Mr. Kuntze was subject to a code of professional
conduct, which specified the following, among other things:
(i)
Work in
compliance with all current and future regulations and procedures established by
the applicant;
(ii)
Refrain
from entering into competition with the respondent;
(iii)
Refrain
from disclosing confidential information;
(iv)
Be
available for a medical examination, take a course in hazardous materials every
three years and draft accident reports or any other report required by the
applicant;
(v)
Keep all
required documentation up to date (hours of service, mechanical inspections and
hazardous materials);
(vi)
Abide by company
policies concerning drugs and alcohol;
(vii)
Make
deliveries at the time specified by the dispatcher;
(viii)
Dress appropriately;
(ix)
Refrain
from using vulgar language with other employees;
(x)
Obey the
maximum speed limit tolerated by the applicant (100 km/h);
(xi)
Refrain
from carrying any passengers in the truck;
(xii)
Refrain
from carrying any goods not authorized by the applicant;
(xiii)
Give at least
30 minutes’ notice of any expected delay;
(xiv)
Advise the
dispatcher in case of sick leave;
(xv)
Contact
the dispatcher every day before 10:00 a.m. to confirm the driver’s
availability, failing which he would be deemed to be on the list of departures
(presumed availability);
(xvi)
Advise the
dispatcher when waiting time at a client’s place is longer than two hours.
(Respondent’s Record at paragraph 55, page 123).
[43]
An breach
of the code of professional conduct may lead to disciplinary measures which may
include a permanent withdrawal of authorization to operate a vehicle for the
applicant.
[44]
In this
contract, the applicant expressed itself more as an employer than as a party to
a contract of enterprise, insofar as its powers included the possibility of
terminating the contract with the Enterprise
and Mr. Kuntze.
[45]
In
addition, the applicant had broad general authority over management and
discipline. The contract clauses, particularly paragraph 3(c), as well as
the reasons for dismissal alleged by the applicant in its letter dated December
23, 2003, show that [translation] “company
management definitively exercised authority belonging to an employer” (AR, Adjudication
Award, page 17).
[46]
As regards
the ownership of tools, Mr. Kuntze could use only his own tractor on trips for
the applicant, had to use the applicant’s insurance plan, could not develop his
own goodwill, had to display the applicant’s logo, was the only person
authorized to make any trips and had to park his truck where authorized by the
applicant.
[47]
In
addition, the analysis shows that the control and dependency of Mr. Kuntze were
obvious. The above-mentioned contract, which was totally to the applicant’s
advantage, was scrupulously applied: Mr. Kuntze reported in to the dispatcher
every day, logged his activities, followed the work schedules given to him,
accounted for his time, was subject to the same code of professional conduct as
for all employees, and was subject to the employer’s disciplinary authority, as
appears from the contract, the code of professional conduct and the dismissal
letter.
[48]
In terms
of the chances of profit and risks of loss, the ability turning a profit did
not depend on Mr. Kuntze’s ability to negotiate a price, his “profit” being
nothing more than compensation on a fee-for-service, piecework or per-mile
basis, as Mr. Kuntze had no control over the number of trips he could
make, other than confirming his availability, and the applicant was entirely
responsible for any losses, since it was the applicant that developed its
clientele and dispatched trips on the basis of its capacity to develop its
transportation business.
[49]
In Stanley
v. Road Link Transport Ltd. (1987), 17 C.C.E.L. 176, adjudicator
Pyle had to rule on an objection made by the employer to the effect that the
employee who complained of unfair dismissal was not his employee, but an
independent contractor.
[50]
In that
case, as in the case at bar, the complainant was a truck owner-operator who was
constituted as a “registered business” and a party to a written contract under
the terms of which he was required to, among other things, supply his own truck
to perform the contract and use it according to the conditions specified in
that contract.
[51]
Although adjudicator
Pyle was of the opinion that the word “person” included the term “dependent
contractor”, he nevertheless applied the common law test to the case in
question.
[52]
The
following excerpts are from pages 190 and 191 of the decision:
. . . If I were to apply the tests such
as those set out by Lord Wright in Montreal v. Montreal Locomotive Works
Ltd., [1946] 3 W.W.R. 748, [1947] 1 D.L.R. 161 (P.C.), I would have
difficulty in concluding that Mr. Stanley had any significant degree of control
over his operations. He owned the tractor but for all practical intents and
purposes he surrendered that equipment to Road Link. Any chance he retained for
the possibility of profit, or loss, in the sense of applying his
entrepreneurial skills, is simply not apparent in the evidence adduced in these
proceedings.
If I were to apply the general
test described as the “organization test” and set out by Denning L.J. in Stevenson
Jordan & Harrison Ltd. v. Macdonald & Evans, [1952] 1 T.L.R. 101,
69 R.P.C. 10 (C.A.), I would find, on the basis of the evidence before me, that
Mr. Stanley was under a contract of service, was employed as a part of the
business of Road Link and his work was done as an integral part of the
business, I would not find that he was under a contract for services where
[work], although done for the business, was not integrated into it but only
accessory to it. Mr. Stanley was required to afford to Road Link the complete
use of his tractor in the general conduct of its business. Further, he was
required to paint his tractor so as to identify it with Road Link, to wear a
Road Link uniform and he was treated as an employee for the purposes of the
rules and regulations, as well as for the purposes of a comprehensive health
and welfare plan.
[53]
In Masters
v. Bekins Moving & Storage (Canada) Ltd., [2000] C.L.A.D. No. 702, the
complainant was also a trucker who became the owner of his truck for a trucking
company.
[54]
Having
signed a non-negotiated contract as an independent contractor, the complainant
performed his functions exclusively for the employer.
[55]
The
employer insured the goods delivered by the complainant, gave him his
assignments and obliged him to abide by its policies and procedures, including
ones concerning mechanical inspections, display of the employer’s name on the
truck and the code of discipline.
[56]
Regarding
the general purpose of labour legislation, adjudicator Love stated the
following at paragraph 57: “A major purpose
of employment standards legislation such as the Code, is to ensure that those
persons, in a position of economic dependency are not exploited by those with economic
power” (Masters,
supra).
[57]
In raising
the legislative anomaly caused by granting protection under Part I of the
Code while depriving him of his recourse for unfair dismissal under Part III
of the Code, the adjudicator analyzed the complainant’s relationship with the
employer from the standpoint of the common law.
[58]
The adjudicator
wrote the following at paragraph 82:
In my view the only
opportunity for profit and loss in this case is whether Masters was called in
to work by Bekins. He did not perform work for others, and under the terms of
the contract could not perform work for others given that he had the use of a
“branded truck” (cl. 1(b)), and was restricted by contract (cl. 17(b)) from
using that truck to provide moving services in competition with the Bekins.
Masters work was completely integrated into the business of Bekins, and was
integral to the business of Bekins. While he had some “interest” in the tools,
namely the truck, a company controlled by Rosenberg had an interest
in the truck, and repossession of the truck was taken by Bekins or ABC, after
the contract was terminated by Rosenberg.
[59]
In ruling
that the complainant was a “person” within the meaning of subsection 240(1)
of the Code, the adjudicator concluded as follows at paragraph 84:
In my view there is a strong
dependency of Masters on Bekins, he performed the tasks usually performed by an
employee, the lack of opportunity for profit and loss, and the high degree of
control, all support a finding that Masters was an employee of Bekins, and a
person to whom s. 240 of the Code applies.
[60]
In Dynamex,
supra, it was decided that persons hired as independent contractors for
a courier company were “employees” within the meaning of Part III of the
Code for a claim other than a dismissal complaint, according to the common law
criteria applicable to the definition of “employee”.
[61]
In this
case, the claimants decided to claim payment of annual leave and statutory
holidays, alleging that they were employees and not independent contractors.
[62]
The adjudicator
agreed. The employer’s application for judicial review was dismissed by both the
Trial Division and the Federal Court of Appeal, and the application for leave
to appeal to the Supreme Court was dismissed.
[63]
Writing
for the Federal Court of Appeal, Sharlow J.A. noted at paragraph 49
of Dynamex, supra, that “the adjudicator
concluded that a person is an employee for purposes of Part III only if he
or she is an employee under common law principles. This aspect of the Adjudication
Award has not been challenged, and in any event it seems to me to be correct”.
[64]
Sharlow J.A.
went on to note that in analyzing the evidence on the basis of common law
principles:
[50] . . . The referee recognized that some facts favoured the conclusion that
the claimants were employees, and some facts favoured the opposite conclusion.
He concluded that, on balance, the claimants were employees. At that stage of
the analysis, the referee was engaged in determining a question of mixed fact
and law, and his decision should stand if it is reasonably supported by the
evidence.
[65]
In
addition, she underlined the apparent contradiction in the facts, which the
referee dealt with in the following terms:
[51] .
. .
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 hare 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 paycheques.
Nonetheless, I must base my decision on 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. The effect of my present ruling upon other payroll
deduction questions is not within the mandate of this reference.
At paragraph 52 of Dynamex, supra, the
judgment of the Supreme Court of Canada in Sagaz, supra, was cited, with
Sharlow J.A. noting that “in determining whether a
person is an employee or an independent contractor, the terminology used in his
or her contract is not determinative . . . . Such a contractual term cannot
prevail if the evidence of the actual relationship between the parties points
to the opposite conclusion, as the referee found to be the situation in this
case”. In other words, it is the factual reality underneath
appearances that matters.
[66]
In the
case at bar, as in Dynamex, supra, the adjudicator correctly identified
and applied the relevant legal rule and applied the facts to the law in a
reasonable manner.
[67]
Because
there is no doubting that an “employee” is a “person” within the meaning of
subsection 240(1) of the Code, we must now ask whether or not the mere
fact of being incorporated causes the respondent to lose status as an “employee”
or as a “person”.
The effect of incorporation
[68]
The issue
is whether incorporation by the respondent affects his status as an “employee”
or as a “person” within the meaning of Part III.
[69]
In Transport
Damaco International Ltée (1991), 84 di 84, the Canada Labour Relations
Board dealt with the argument regarding the incorporation of truck
owner-operators as follows:
It is true
that, in corporate law, it is recognized that corporations have a legal
personality distinct from the persons who incorporated them and that the latter
can only be directly sought out in very exceptional circumstances. When this is
done, it is called “lifting the corporate veil.” The common law courts only
allow this veil to be lifted in cases of fraud or where it is clearly
established that the incorporation is used in order to attempt to circumvent
the provisions of a law.
But in
labour law, the objectives are not the same. In any case, not the labour law
that this administrative tribunal, the Canada Labour Relations Board, must
apply, that is, the Canada Labour Code.
The Board
is obliged to ensure that the right to unionize is available to any person who
is an employee within the meaning of the Code. Because the concepts regarding
dependent contractors are specifically set forth in the Code, the Board
believes that it has and is intended to have the legal authority to lift the
corporate veil in order to uncover the particulars that will allow it to
determine the degree of economic dependence facing these incorporated
contractors. It is in this regard that the grounds for lifting the corporate
veil go beyond those found in other legislation, namely fraud or an attempt to
circumvent the provisions of a law.
The Board
could stop there. Of course, in a case where the Board is faced with examining
this issue, as in this case, the Board may sometimes uncover situations that
come close to being attempts to circumvent the provisions of the law it must
apply, through incorporation or otherwise, and that might bear some similarity
to fraud; a company that turns out not to be really managed by itself, a
company that has been imposed upon someone in order to block an application for
certification, a company that is not really a company when faced, for example,
with the requirements of the OHSC. While all this is not the main purpose of
this Board, its discoveries in this direction can only add additional elements
to the assessment that it makes of the economically dependent nature of the
incorporated contractors which, within the meaning of the Code, makes employees
of them.
[70]
In Côté
(9069-0462 Québec Inc.) v. Far-Nic Transport Inc., [2002] D.A.T.C. No. 583,
the complainant, an incorporated truck owner-operator was dismissed following a
refusal make a trip.
[71]
As in the
case at bar, Far-Nic Transport raised an objection to the adjudicator’s
jurisdiction, arguing that the complainant’s remedy was not available to him
under subsection 240(1) of the Code.
[72]
Having
signed a transportation sub-contract with the employer, which the adjudicator characterized
as a contract of adhesion, the complainant nevertheless had to display the
symbols, logos or identification of Far-Nic Transport on his tractor.
[73]
While working
exclusively for Far-Nic Transport, the complainant had to be available to make
the required trips, respect the conditions for performance of work, log his trips
and account for his time.
[74]
Adjudicator
Rodrigue Blouin determined that the complainant:
[translation]
[27] . . . is a person
who, under the guise of an incorporated company, personally carries out
transportation services on behalf of the respondent. He is the owner-operator
of a tractor truck who performs work for the respondent, in this case, the
delivery of trailers. He performs his work in compliance with the respondent’s
instructions, and his activities and actions are controlled by the respondent. For
all intents and purposes, he receives remuneration, as he cannot capitalize in
any way. The complainant is simply a person described in subsection 240(1),
as he has a legal relationship of personal dependency with the respondent in
every respect.
[75]
He
concluded as follows:
[translation]
[10] In
short, a comparative examination of these provisions shows that Part III
concerns “any” person, while Parts I and II only concern certain categories of
persons, in this case, the employee who is equated with a dependant contractor,
on the one hand, and the sole employee, on the other. This conclusion is inevitable
because of the rule of interpretation to the effect that Parliament does not
speak gratuitously. The definitions are different.
[11] Accordingly,
it is clear that the expression “any person” used in Part III includes not
only an employee and a dependent contractor, but also any other person who is
integrated into the enterprise of the supplier of work for the purposes of
performing the allotted work.
[76]
In Transport
Damaco, supra, the Canada Labour Relations Board underlined the
fundamental distinctions between an employer-employee work relationship and
that of a dependent contractor to determine whether or not an incorporated truck
owner-operator could nevertheless benefit from the provisions of Part III of
the Code.
The right
of ownership implies the exclusive and unlimited right over a property, the
right to possess it, to use it, to enjoy it and to dispose of it in one's
absolute discretion. There is no point in restating in this regard all
restrictions on the right of ownership of the alleged independent drivers,
incorporated or not, bound to Damaco through their work tool, their tractor,
which restrictions emerge from the evidence in this case.
.
. .
The
right to use it is limited in many ways. They can only use it to make trips for
Damaco. The tractors are limited to Damaco's exclusive use and in the name of
that company without exception. They cannot develop any personal customer base.
They cannot affix signs indicating the identity of their own legal entity if
incorporated or their personal identity if not incorporated. Only Damaco's
colours and emblems are to be displayed on the tractors.
.
. .
How
can it be contended that they enjoy their tractors when they are bound by a
clause under which they cannot refuse any type of load, any kind of trip?
They
cannot have any other driver of their choice drive them. That choice is subject
to the express consent of Damaco.
They
cannot choose their own route to deliver a cargo. They cannot buy fuel where
they please.
They
cannot insure their property with the insurer of their choice.
All
dealings with the Transport Commission are handled by Damaco. All licences are
the property of Damaco.
In
several cases, the accounting for the incorporated truckers is done by Damaco.
Several incorporations were done by Damaco agents: notaries and accountants.
Under
the heading of control, their dependence is obvious . . . .
(Transport Damaco, supra, page 117.)
[77]
For all
these reasons, the Court is of the opinion that the incorporation of Mr. Kuntze
does not cause him to lose status as an “employee” or even as a “person”.
CONCLUSION
[78]
The adjudicator
rendered a correct decision on the question of law, that is, concerning the
determination of status as a “person” for the purposes of subsection 240(1) of
the Code, in particular by making findings of fact and conclusions of law which
meet the common law tests established by case law with regard to the determination
of “employee” status.
[79]
The adjudicator
rendered a reasonable decision in applying the legal principles to the facts of
the case, in particular by making reasonable findings of fact in connection
with the conditions under which the respondent performed his duties and by
ruling that the fact of being incorporated did not make Mr. Kuntze lose status
as an “employee” or as a “person”.
[80]
Accordingly,
the adjudicator has jurisdiction to hear and decide the complaint brought by
Mr. Kuntze because he is a “person” within the meaning of section 240 of
the Code, even though he rendered trucking services through a corporation.
JUDGMENT
THE COURT ORDERS that
1. This application for judicial review be
dismissed;
2. The matter be returned to the adjudicator so that
he hear the case on the merits and dispose of the complaint filed under
subsection 240(1) of the Canada Labour Code by the respondent,
Gunter M. Kuntze.
“Michel M.J. Shore”
Certified
true translation
Michael
Palles
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