D & J Driveway Inc. v. Canada (Minister of National Revenue)

D & J Driveway Inc. v. Canada (Minister of National Revenue) Court (s) Database Federal Court of Appeal Decisions Date 2003-11-27 Neutral citation 2003 FCA 453 File numbers A-512-02 Notes Digest Decision Content Date: 20031127 Docket: A-512-02 Citation: 2003 FCA 453 CORAM: DÉCARY J.A. LÉTOURNEAU J.A. NADON J.A. BETWEEN: D & J DRIVEWAY INC. Applicant and THE MINISTER OF NATIONAL REVENUE Respondent Hearing held at Québec, Quebec, on November 24 and 27, 2003. Judgment rendered at Québec, Quebec, on November 27, 2003. REASONS FOR JUDGMENT OF THE COURT: LÉTOURNEAU J.A. Date: 20031127 Docket: A-512-02 Citation: 2003 FCA 453 CORAM: DÉCARY J.A. LÉTOURNEAU J.A. NADON J.A. BETWEEN: D & J DRIVEWAY INC. Applicant and THE MINISTER OF NATIONAL REVENUE Respondent REASONS FOR JUDGMENT OF THE COURT (Delivered from the bench at Québec, Quebec, on November 27, 2003) LÉTOURNEAU J.A. [1] The Court once again has to consider the difficult and elusive question of the insurability of employment. As is often the case, the question arises in a situation where the parties' intention is not set down in writing, and where it has not been determined, or was not the subject of questions to witnesses, at the hearing in the Tax Court of Canada. [2] It should be noted at the outset that the parties' stipulation as to the nature of their contractual relations is not necessarily conclusive and the Court which has to consider this matter may arrive at a contrary conclusion based on the evidence presented to it: Dynamex Canada Inc. v. Canada, [2003] 305 N.R. 295 (F.C.A.). However, that stipulation or an examination of the parties on the point may prove to be a helpful tool in interpreting the nature of the contract concluded between the participants. [3] The difficulty of answering the question in borderline cases is apparent from the decision at bar, made by a deputy judge of the Tax Court of Canada, and the decision in Sauvageau Pontiac Buick GMC Ltée v. Canada (Minister of National Revenue), [1996] T.C.J. No. 1383, in which Judge Archambault of that Court came to a diametrically opposite conclusion based on very similar facts. [4] For the reasons set out below, the Court considers that the deputy judge erred concerning the existence of a relationship of subordination between the applicant and the delivery service. He referred to the criteria developed in Wiebe Door Services Ltd. v. M.N.R., [1986] 3 F.C. 553 (F.C.A.), to assess whether such a relationship exists. His understanding of some of those criteria was erroneous and he incorrectly applied them to the facts of the case at bar. [5] The facts out of which the dispute arose are quite straightforward and can easily be summarized as follows. The applicant is a subsidiary of Dynamic Fiber Ltd. (Dynamic), which manufactures glass fibre bodies for trucks. [6] Dynamic orders trucks for customers and, once it gets the trucks, it proceeds to install the bodies. The applicant becomes involved when the work is complete. It handles the delivery of the trucks to their owners, who are generally car dealers. It operates a delivery service exclusively. It does so using as drivers students, retired persons or workers who have a job and are trying to earn additional income. [7] The drivers have no facilities at the applicant's premises. Their services are retained and provided on call. They are entirely free to refuse the offer made to them to drive a truck, for example, to Halifax, Québec or Montréal. Deliveries are made from Saint-Jacques in New Brunswick. The drivers receive a fixed amount which is determined in accordance with the distance to be travelled. [8] Drivers are recruited by word of mouth. They telephone the applicant or go to its office to offer their services. The latter keeps a list of these offers of service and, as already indicated, calls one or other of the individuals on the list when required. ABSENCE OF RELATIONSHIP OF SUBORDINATION [9] A contract of employment requires the existence of a relationship of subordination between the payer and the employees. The concept of control is the key test used in measuring the extent of the relationship. However, as our brother Décary J.A. said in Charbonneau v. Canada (Minister of National Revenue - M.N.R.), [1996] F.C.J. No. 1337, [1996] 207 N.R. 299, followed in Jaillet v. Canada (Minister of National Revenue - M.N.R.), 2002 FCA 394, control of the result and control of the worker should not be confused. At paragraph 10 of the decision, he wrote: It is indeed rare for a person to give out work and not to ensure that the work is performed in accordance with his or her requirements and at the locations agreed upon. Monitoring the result must not be confused with controlling the worker. [10] There is no question that the applicant controlled the results in the case at bar. It ensured that the trucks were delivered to the correct recipients at a convenient or agreed upon time; but that is where its control stopped. [11] In fact, drivers could agree or refuse to make a delivery when called by the applicant, which certainly is not characteristic of a person bound by a contract of employment. They had no premises at the applicant's place of business and were not required to be available there. They only went there to take possession of the truck they had agreed to deliver. [12] Additionally, the duties assumed by the drivers were quite simple and specific: delivering the truck to the address indicated. No control was exercised over the way in which they carried out their duties. "The distinguishing feature of a contract of service" (now a contract of employment), Pratte J. wrote in Gallant v. M.N.R., [1989] F.C.J. No. 330, "is not the control actually exercised by the employer over his employee but the power the employer has to control the way the employee performs his duties." In the case at bar, this control over the actual performance of the duties did not exist. [13] In short, as in Sauvageau Pontiac Buick GMC Ltée, supra, the Court is satisfied that there was not a sufficient relationship of subordination between the applicant and the drivers for it to conclude that a contract of employment existed. It is important to guard against a reflex of thinking solely of a business corporation or an organized commercial undertaking when one is dealing with work which is done or services which are provided other than under a contract of employment. The examples of electrical, plumbing or building contractors immediately spring to mind in such a context. However, there is a whole range of services which are offered under a contract for services. In fact, article 2098 of the Civil Code of Quebec was very careful to place on an equal footing a "contract of enterprise" and a "contract for services" and to describe as a "contractor" the person who performs a contract of enterprise and as a "provider of services" the person who carries out a contract for services. In the case of either of these contracts, the contractor and the provider of services give an undertaking to another person, the customer, to perform work or provide a service for a price which the customer undertakes to pay them. Article 2099 C.C.Q. states that the contractor, like the provider of services, is free to choose the means of performing the contract and no relationship of subordination exists in respect of such performance. [14] In the case at bar, the work to be done involved delivering a vehicle to a customer and the driver was not subject to any control in the performance of his delivery duties. Apart from the freedom to refuse a delivery offer, the drivers were not in any way dependent on the applicant to obtain work. At most they ran the risk, like the electrical contractor for example, of not having their services used again if the services provided or the work performed was inadequate. [15] We feel it is legally incorrect to conclude that a relationship of subordination existed, and that there was consequently a contract of employment, when the relationship between the parties involved sporadic calls for the services of persons who were not in any way bound to provide them and could refuse them as they saw fit. Concluding that a contract of employment existed in such circumstances is also not without serious and burdensome practical consequences for a payer, especially as more often than not such a conclusion and the resulting assessment for fringe benefits, such as income tax, employment insurance and pension plan, which the payer must pay are retroactive in nature. The payer becomes liable not only for his share but, with a right of recovery, for what the employee has not paid. [16] Our conclusion that no relationship of subordination existed is sufficient to allow the instant application, since the existence of such a relationship is the essential feature of the contract of employment. [17] For these reasons, the application for judicial review will be allowed, the decision of the Tax Court of Canada deputy judge quashed and the matter referred back to the Chief Justice, or to a judge appointed by him, to be again decided on the basis that for the period at issue the employment was not insurable employment or employment giving rise to pension entitlement. [18] A copy of these reasons will be filed in case A-513-02 in support of the judgment rendered in that case. The applicant will be entitled to only one set of costs, but to disbursements in each of the two cases. "Gilles Létourneau" J.A. Certified true translation Suzanne M. Gauthier, C. Tr., LL.L. FEDERAL COURT OF APPEAL SOLICITORS OF RECORD FILE: A-512-02 STYLE OF CAUSE: D & J DRIVEWAY v. THE MINISTER OF NATIONAL REVENUE PLACE OF HEARING: QUÉBEC, QUEBEC DATE OF HEARING: NOVEMBER 24 and 27, 2003 CORAM: DÉCARY J.A. LÉTOURNEAU J.A. NADON J.A. REASONS FOR JUDGMENT OF THE COURT: LÉTOURNEAU J.A. DATE OF REASONS: NOVEMBER 27, 2003 APPEARANCES: Lyne Thériault and Marie-Hélène Montminy FOR THE APPLICANT Martin Gentile and Alain Gareau FOR THE RESPONDENT SOLICITORS OF RECORD: Pouliot, L'Écuyer FOR THE APPLICANT Sainte-Foy, Quebec Department of Justice - Canada FOR THE RESPONDENT Montréal, Quebec