A.L.D. Enterprises Inc. v. M.N.R.

A.L.D. Enterprises Inc. v. M.N.R.
Court (s) Database
Tax Court of Canada Judgments
Date
2007-02-16
Neutral citation
2007 TCC 71
File numbers
2006-149(EI)
Judges and Taxing Officers
Dwayne W. Rowe
Subjects
Canada Pension Plan
Employment Insurance Act
Decision Content
Dockets: 2006-149(EI)
2006-150(EI)
BETWEEN:
A.L.D. ENTERPRISES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeals heard on common evidence with the appeal of A.L.D. Enterprises Inc. (2006-151(CPP)) on October 16, 2006, at Ottawa, Canada
Before: The Honourable D.W. Rowe, Deputy Judge
Appearances:
Counsel for the Appellant:
Shelley J. «Kamin
Counsel for the Respondent:
Daniel Bourgeois
____________________________________________________________________
JUDGMENT
The appeals are allowed and the decisions of the Minister are varied in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 12th day of February 2007.
"D.W. Rowe"
Rowe, D.J.
Docket: 2006-151(CPP)
BETWEEN:
A.L.D. ENTERPRISES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
____________________________________________________________________
Appeal heard on common evidence with the appeals of A.L.D. Enterprises Inc. (2006-149(EI), 2006-150(EI)) on October 16, 2006, at Ottawa, Canada
Before: The Honourable D.W. Rowe, Deputy Judge
Appearances:
Counsel for the Appellant:
Shelley J. Kamin
Counsel for the Respondent:
Daniel Bourgeois
____________________________________________________________________
JUDGMENT
The appeal is allowed and the decision of the Minister is varied in accordance with the attached Reasons for Judgment.
Signed at Sidney, British Columbia, this 12th day of February 2007.
"D.W. Rowe"
Rowe, D.J.
Citation: 2007TCC71
Date: 20070212
Dockets: 2006-149(EI)
2006-150(EI)
2006-151(CPP)
BETWEEN:
A.L.D. ENTERPRISES INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Rowe, D.J.
[1] The appellant (ALD or payor) appealed from a decision – dated October 14, 2005 - issued by the Minister of National Revenue (the "Minister") wherein it was decided contributions to the Canada Pension Plan (the "Plan") and premiums pursuant to the Employment Insurance Act (the "Act") were payable on the earnings paid to Remi-Paul Bellemare (Bellemare) by ALD for the period from January 1, 2003 to December 15, 2004 because Bellemare was employed under a contract of service and – therefore – was an employee of ALD.
[2] ALD also appealed a decision of the Minister issued on October 14, 2005 wherein it was decided the employment of David Parks was insurable pursuant to the Act and also pensionable under the Plan for the period from January 1, 2003 to December 17, 2004 because he was an employee of ALD and even though related to the payor’s controlling shareholder, the Minister was satisfied he and ALD would have entered into a substantially similar contract of employment had they been dealing with each other at arm’s length.
[3] ALD also filed an appeal (2006-151(CPP)) from a separate decision – also dated October 14, 2005 – issued by the Minister with respect to David Parks pursuant to relevant provisions of the Plan.
[4] All decisions were issued by the Minister pursuant to subsection 93(3) of the Act and subsection 27.2(3) of the Plan.
[5] Counsel for the appellant and counsel for the respondent agreed the Employment Insurance (EI) appeals could proceed on common evidence and the Plan (CPP) appeal could follow the result.
[6] There was no issue arising from the finding by the Minister that notwithstanding the fact Parks and the shareholders of ALD were related; the Minister still considered him to have been insurable employment.
[7] Ms. Shelley Kamin - counsel for the appellant filed – as Exhibit A-1 – an Agreed Summary of Facts, (Summary) signed by her and Daniel Bourgeois, counsel for the respondent. The first portion of the Summary – Part A - is entitled: "Facts in Notice of Appeal Admitted by Respondent". The contents of paragraphs 1‑20 thereof read as follows :
1. The Appellant at all material times carried on business year-round primarily transporting and hauling dairy products for its client, Dairyland. The products were picked up in Brampton, Ontario and delivered to the main distribution depot in Ottawa, or picked up in Trois Rivières and delivered to Brampton. The Appellant also transported and hauled some fruit juice products between Montreal and Brampton. [All NAPs, para. 1]
2. The sole shareholders and the directors of the Appellant at all material times were André and Wendy Dupuis. Mr. and Mrs. Dupuis controlled the day‑to‑day operations of the Appellant and made the major business decisions, including obtaining clients, engaging independent contractors, hiring and firing employees, signing contracts, and deciding on the direction of the business. Mr. Parks is the brother of Wendy Dupuis. [All NAPs, para. 2]
3. All trucks displayed the name of the Appellant. The refrigerated trailers that were hauled by the trucks displayed the name of either the Appellant or Dairyland. [All NAPs, para. 3]
4. The Appellant at all material times engaged drivers to drive the trucks. [All NAPs, para. 4]
5. David Parks and Rémi-Paul Bellemare (the "Workers") were engaged and paid by the Appellant, and performed services for the Appellant. [All NAPs, para. 6]
6. Each of the Workers was responsible for obtaining and maintaining the main tool of his trade, namely, a Z-endorsed Class A driver's licence. [All NAPs, para. 7(c)]
7. The Workers' only reporting requirement was pursuant to the Hours of Work Regulations under the Highway Traffic Act (Ontario). Under those regulations all truck drivers, whether independent contractors or employees, are required to prepare daily logs, and forward the logs and supporting documents to the motor vehicle owner (i.e., the Appellant). The regulations also require the motor vehicle owner to keep all of the daily logs and supporting documents for six months at the owner's principal place of business. [All NAPs, para. 7(d)]
8. The Workers had certain delivery deadlines because they were transporting perishable goods. However, within those product-determined deadlines, the Workers determined the manner in which they would make each delivery: their own schedule, which routes to take, meal times, and rest periods. [All NAPs, para. 7(e)]
9. Each of the Workers was paid by the Appellant based on work performed, that is, pick-ups and deliveries that he did. The Appellant made payment only following receipt of an invoice from each of the Workers. Each of the Workers issued his invoices at irregular intervals and for varying amounts, depending on the work he performed. If he did not work, for whatever reason, he was not paid. [All NAPs, para. 7(i)]
10. The Workers were not reimbursed by the Appellant for meals or any of their other expenses. The Appellant was responsible for paying for fuel and maintenance for the truck and/or trailer, and liability insurance on the loads was carried by the Appellant. [All NAPs, para. 7(g)]
11. The Workers were not entitled to any vacation, statutory holiday, sick leave, disability pension or other benefits from the Appellant. The Appellant did not deduct employment insurance ("EI"), CPP contributions or income tax from the Worker's remuneration. The Workers did not receive T4 slips. [All NAPs, para. 7(i)]
12. The CRA's Ottawa Tax Services Office determined that Mr. Parks was in insurable employment with the Appellant under the Employment Insurance Act during the period from January 1, 2003 to December 17, 2004. The CRA's decision concerning Mr. Parks was rendered in Employment Insurance Legislation ruling number CE0433 5114 7304[sic] and ruling number CE0434 9075 8398[sic], dated December 17, 2004. [All NAPs, para. 9]
13. The CRA's Ottawa Tax Services Office also determined that Mr. Bellemare was in insurable employment with the Appellant during the period from January 1, 2003 to December 15, 2004. The CRA's decision concerning Mr. Bellemare was rendered in Employment Insurance Legislation ruling number CE0434 9080 32894 and ruling number CE0433 5114 6210, dated December 17, 2004. [All NAPs, para. 10]
14. The rulings mentioned above pertained only to the issue of insurable employment under the Employment Insurance Act, and did not address the issue of pensionable employment under the CPP. [CPP NAP, para. 11]
15. The Respondent, by the Assessments dated March 1, 2005, assessed the Appellant's 2003, 2004 and 2005 taxation years for EI premiums and CPP contributions payable by the Appellant, on the basis that the Workers were in insurable employment with the Appellant under the Employment Insurance Act and in pensionable employment under the CPP. [CPP NAP, para. 12; EI NAPs, para. 11]
16. The Assessment for the 2003 taxation year identified the amounts payable as federal and provincial tax. The Assessment for 2005 assessed EI premiums and CPP contributions payable by the Appellant with respect to Mr. Parks, even though the period covered by the rulings did not extend to the 2005 taxation year. [CPP NAP, para. 13; EI NAPs, para.12]
17. The Appellant on March 16, 2005 made appeals to the Respondent from the above-mentioned rulings under section 91 of the Employment Insurance Act. [CPP NAP, para. 14; EI NAPs, para. 13]
18. In addition, the Appellant on May 27, 2005 made appeals to the Respondent from the Assessments for the 2004 and 2005 taxation years under section 27.1 of the CPP and section 92 of the Employment Insurance Act, and served the Respondent with a Notice of Objection under the Income Tax Act to the Assessment for the 2003 taxation year. [CPP NAP, para. 15; EI NAPs, para. 14]
19. The Respondent decided that the Workers were in insurable and pensionable employment with the Appellant, and those decisions were communicated to the Appellant on October 14, 2005. The Respondent purported to deal with the Appellant's appeal of a ruling on whether CPP contributions were payable, even though there was no such ruling and the Appellant had not filed any such appeal. [CPP NAP, para.16; EI NAPs, para. 15]
20. To date, the Respondent has not formally notified the Appellant of the Respondent's decision on the reconsideration of the Assessments. [CPP NAP, para. 17; EI NAPs, para. 16]
[8] In Part B of the Summary, the respondent denied the allegation in the Notices of Appeal that ALD was a client of the workers.
[9] Part C of the Summary set out – in paragraphs 1-11, inclusive – facts contained in the Notice(s) of Appeal of which the respondent had no knowledge.
[10] Part D of said Summary set out – in paragraphs 1-5, inclusive – assumptions of fact relied on the respondent in the Replies to the Notices of Appeal which were denied by the appellant. These are as follows:
1. The Workers were required to meet deadlines and timeframes imposed by the Appellant to meet the needs of the Appellant's customers. [CPP and Parks Reply, para. 15(h); Bellemare Reply, para. 15(g)]
2. The Workers' rates of pay were based on kilometres driven and charged a flat rate for going depot to depot. [CPP Reply, para. 15(i)]
3. Mr. Bellemare's rate of pay was based on kilometres driven (0.245/km). [Bellemare Reply, para. 15(h)]
4. The Workers did not have the right to hire helpers without the Appellant's consent. [CPP Reply, para. 15(y); Parks and Bellemare Replies, para. 15(x)]
5. The Workers had to provide their services personally. [CPP Reply, para. 15(aa); Parks and Bellemare Replies, para. 15(z)]
[11] David Parks testified he resides in Ottawa and has driven a truck for ALD – on and off – for 6 or 7 years. He described himself as an independent contractor and stated he had discussed that matter with his brother-in-law André (Andy) Dupuis, who controlled the operations of that company. Parks stated he wanted to be an independent contractor rather than an employee and had provided certain construction services to ALD in his capacity as a private contractor. He had also done similar work for other customers in 2003 and sent them invoices for his work which were included in the bundle of invoices – filed as Exhibit A-2 – pertaining to his truck driving services provided to ALD. Parks referred to invoice #6 – in said bundle – issued to a customer for $1,230.00 - based on an hourly rate of $15 - for performing certain construction work. Parks was registered pursuant to the Goods and Services Tax (GST) provisions of the Excise Tax Act and charged GST in the sum of $86.10 with respect to his services and sought reimbursement for the cost of materials supplied to the job. Parks also referred to invoice #7 – in which he charged a customer the sum of $1,346.05 for materials purchased as well as a flat rate of $750.00 for performance of the work, together with GST. Parks stated he had provided his services - as a building contractor - to ALD pertaining to an addition to the company office in the Dupuis residence and sent an invoice - #9 – dated 10/06/2003 - in which he charged a total of $1,900.00 for labour together with an amount to reimburse him for materials purchased. Again, GST was collected by Parks on the amount attributable to his labour. Parks stated the finished job cost less than he had estimated at the outset and so discounted the labour portion of the invoice by $400.00. Parks was referred to invoice #14 – issued to another customer – dated 28/10/2003 - in which he charged the sum of $400 for his services and added the correct amount - $28.00 – for GST. With respect to providing his services to ALD as a truck driver, Parks stated he had an informal arrangement with Dupuis whereby he perused a list of trips offered by ALD to various locations, some of which he refused, including Trois Rivières, Québec, because his ability to speak French was limited. Parks stated he did not drive truck for other companies in 2004 but when he chose to drive a particular trip, was able to take a relative or friend along for the ride. Parks stated he did not have an office in the premises occupied by ALD and did not have to report to anyone at ALD either before or after a trip. Ontario legislation required him to complete a Driver’s Daily Log (log) pertaining to the trips driven and he left the relevant documents in the truck. Several examples of the daily log sheets were filed as Exhibit A-3. He purchased his own log book and submitted the completed forms to ALD so it could forward them to the appropriate Ministry of the Ontario government. In order to drive a particular route, Parks picked up the Volvo tractor and 3-axle trailer – owned by ALD - at one of two locations. ALD was in the business of hauling finished milk products for its main client, Saputo Foods Ltd. (Saputo) that used the trade name Dairyland. Parks estimated the value of the combined tractor-trailer unit as about $200,000. He held a Z-endorsed Class A driver’s licence which was necessary in order to operate that type of vehicle and equipment. In order to obtain that licence, he had to pass appropriate examinations and road tests and there was a mandatory application for renewal after a certain period for which a medical examination was required. He was responsible for all costs associated with obtaining and maintaining the proper licence. Within the bundle of invoices at Exhibit A-2, there were several issued by Parks to ALD with respect to driving certain distances between named geographical locations on specific dates. Parks stated he charged ALD the sum of 20 cents a kilometre plus a separate charge of $10 for participating in any loading or unloading of product at a particular location. Parks referred to an invoice – Exhibit A-4 – submitted by him to ALD in which he charged 20 cents per kilometre for various trips as well as several separate charges of $10 for delivery. The invoice – dated 02/04/2004 - in the sum of $4,274.22 - included GST - and that amount was paid by ALD in the form of cheque - dated April 3, 2004 - as evidenced by the photocopy at the bottom of the second page of said Exhibit. Parks filed - as Exhibit A-5 – copies of his GST returns for 2003, including therein revenue generated from his building renovation activities, and also for 2004, in which year all the revenue generated was derived from driving truck for ALD. Parks stated he paid his own meal expenses, and purchased work boots, cell phone, safety equipment and small tools that were needed from time to time during trips. Parks recalled there had been a Canada Customs and Revenue Agency (CCRA) payroll audit of ALD, subsequent to which he and Dupuis entered into an agreement – Exhibit A-6 – which, although undated, he believed was signed at some point in 2003 or 2004, at the request of Dupuis. Earlier, there had been no written agreement pertaining to the supply of his services to ALD as a truck driver during various periods since the mid-1990s. In Park’s view, the written agreement merely set out what had always been the arrangement between himself and Dupuis – on behalf of ALD – throughout their relationship, whether he was driving a truck or doing renovation/construction work. Parks stated he had received a demand from CCRA to file tax returns for certain years and on May 19, 2006, filed his return of income for 2003 – Exhibit A-7 – on the basis it was business income and included Schedule 8 pertaining to CPP contributions on self-employment and other earnings. Within said tax return, he filed a Statement of Business Activities in which he claimed certain items – including meals and entertainment in the sum of $2,760.00 - for a total business expense of $7,497.51. With respect to his 2004 taxation year, Parks had filed a tax return – Exhibit A-8 – on April 30, 2005 - in which he reported the sum of $42,104.60 as business income, all of which was derived from driving for ALD. In the Statement of Business Activities, he claimed total expenses in the sum of $6,117.50 including the sum of $110 relating to the cost of renewing his driver’s licence and a total of $6,007.50 representing the allowable 50% portion of total meal expenditure. Parks identified assessments for his 2003 and 2004 taxation years issued by the Minister, copies of which were filed as Exhibit A-9.
[12] Parks was cross-examined by counsel for the respondent and stated he spoke to Dupuis or someone else at the ALD office about once a week in order to discuss the trips available during the forthcoming week such as carrying loads of cheese to Toronto and hauling certain cargo on the return trip. Parks stated each trip took one or more days to complete. Usually, he hauled empty cases to Brampton, Ontario and picked up a full load of dairy products for distribution to vendors in other centres according to a fixed schedule. Parks was an experienced driver and chose his routes accordingly but acknowledged that once he accepted a trip or series of trips he was required to conform with the deadlines and other requirements pertaining to delivery of his loads. In addition to his own cell phone which he used for business purposes, the ALD trucks were equipped with a communication device. Parks agreed the daily log had to be completed by him and submitted to ALD and that failure to comply with Ontario regulations could cause a problem for the company. Parks was referred to the daily log sheets in Exhibit A-3 – and explained the graph therein was designed so a driver could record off-duty time other than in a sleeper or berth within the tractor, off-duty time spent in a sleeper or berth as well as actual driving time. Another entry recorded on-duty time spent at tasks other than driving such as loading, unloading, inspecting the vehicle or completing necessary paperwork. Parks stated he drove full-time for ALD in 2004 and provincial regulations permitted him to drive a maximum of 60 hours in a 7‑day period. With respect to the remuneration paid to him by ALD, Parks stated he chose the sum of 20 cents per kilometre as a rate that was reasonable and within the range paid by transport companies to drivers within the industry. In 2004, Parks did not bother searching out any other work – including construction jobs - since he had enough driving assignments from ALD. Even though he took others along with him on some trips, Parks agreed he had to drive the tractor personally. Although a clause in the agreement – Exhibit A-6 – required Parks to indemnify and save harmless ALD from any and all claims arising out of the performance of his duties, he had not taken out any liability insurance coverage. He stated he considered himself responsible for his load barring damage or loss due to unforeseen events. On some routes, it required 5 or 6 stops to off-load product and he charged $10.00 for each occurrence when he submitted an invoice to ALD.
[13] Remi-Paul Bellemare (Bellemare) testified he resides in Orleans, Ontario and started driving for ALD in 2003. Earlier, he had driven a truck for one of ALD’s competitors on the basis he was an independent contractor. When he spoke with Andy Dupuis about driving for ALD, he made it clear he wanted to be an independent contractor rather than an employee because he preferred the freedom he believed to be inherent in that status. After starting work with ALD, Bellemare phoned Dupuis each Sunday and was advised of the routes available for the forthcoming week. Bellemare stated he refused – once - to take a trip because he was too tired. He considered he was free – at all times in 2003 and 2004 – to have driven for other companies but had no need to do so. In his opinion, ALD had better equipment than other transport companies. On two occasions, he allowed his father – an experienced, duly licenced truck driver – to drive the tractor/trailer unit for part of the trip and did not reimburse him except for buying lunch. Other times, without prior permission from ALD management, Parks took his wife and also his uncle on some trips. Bellemare stated if he accepted a trip or series of trips, he left his home and drove to Perth where he picked up the truck and trailer which were parked at a truck dealership lot. He charged ALD a flat fee in order to cover the cost of gas while traveling to and from Perth to pick up and drop off the truck. He left his driver’s log in the truck or in a special box at a location in Toronto. In the course of carrying out his duties, he did not deal with customers directly in terms of presenting invoices or collecting payments. He owned his own safety books and some hand tools. ALD owned the truck and trailer. Bellemare stated he was the holder of a Z-endorsed, Class A licence, renewable every 5 years at a cost of $40 plus a fee of $75 to pay for the requisite medical examination. He was referred to an invoice - dated 3/04/04 – Exhibit A-10 – which he prepared and faxed from his home to the ALD office. He charged for several trips, amounting to $1,876.98, and added GST in the sum of $131.39. He quoted his GST number on the invoice and received total payment of $2,008.37 in the form of a cheque from ALD dated April 2, 04, a photocopy of which was included on the bottom of the same sheet. According to said invoice, he made 2 trips to CTR (Trois Rivières) – 4 to Brampton directly from Ottawa - 2 to Cornwall and a return trip from Perth to Trois Rivières. Although not specifically itemized thereon, he also charged an amount for gas used to travel from his home to and from Perth. Bellemare stated the invoice – Exhibit A-10 – was typical to others that he issued every two weeks. The invoice form had not been provided by ALD nor did Dupuis dictate the manner in which it was to be completed. Bellemare stated he submitted GST returns for 2003 - Exhibit A-11 – and 2004 – Exhibit A-12 - to CCRA on a quarterly basis. For those years, all the GST reported by Bellemare was collected from ALD. Bellemare identified an undated agreement – Exhibit A-13 – as the document he and Dupuis signed in April, 2004. Bellemare stated he presented the concept to Dupuis who – later – handed him with the written document entitled Independent Contractor Agreement. Bellemare stated he considered the agreement merely confirmed and ratified the existing relationship between him and ALD. He stated the decision of the Minister is incorrect in that he did not drive for ALD until December 15, 2004. Instead, at the end of October, 2004, he severed his relationship and accepted a driving job – as an employee – with an Ottawa company that did not involve out-of-town trips. In his new position, he has to wear a uniform, reports every day to the office and receives his pay every two weeks – by automatic deposit – less source deductions. In preparing his own income tax returns for the 2003 and 2004 taxation years using certain tax preparation software, he did not report revenue earned from ALD as business income but as “other employment income” on the relevant line in those returns. Later, he had discussions with certain officials at CCRA to explain the situation and provided details of his working relationship with ALD. Later, he received notices – Exhibit A-14 – for reassessments of those taxation years based on his assertion he had earned the reported income as a self-employed person in the context of business income. During his discussions with CCRA officials, he had disclosed the ruling by the Minister that he had been an employee of ALD during the relevant period.
[14] In cross-examination, Bellemare agreed that once he accepted a particular trip, he had to abide by the delivery schedule. He stated Dupuis was aware his father was a duly qualified truck driver and although he thought he could have hired another driver to complete a route – if necessary – that situation never arose and there had been no need to discuss that subject with Dupuis. He agreed that a publication – Trucking News – contained information concerning rates paid per kilometre to drivers. In the course of submitting invoices to ALD, Bellemare used the round number of $200 for an Ottawa -Toronto return trip plus a $25 delivery charge. Bellemare stated the $200 amount had a reference to the distance driven and thought it was based on a rate of approximately 25 cents per kilometre. At the outset, he had been informed by Dupuis of the geographical locations he would be visiting in the course of his duties and – using the per kilometre rate - calculated sums to be expressed as round numbers when submitting an invoice for driving between various places. In the beginning, Bellemare advised Dupuis he would charge a fee of $15 for every trip from Ottawa to Perth – about 100 kilometres – to pick up a truck and to return home after completing the trip. Bellemare stated he thought the status of employee while providing his services to ALD might have left him “trapped” in the event ALD lost the contract with its major – or perhaps, only - client, Saputo.
[15] In re-direct examination, Bellemare stated he knew an audit of ALD had been performed by CCRA in 2004 but is certain he signed the agreement ‑ Exhibit A-13 – before he stopped working for ALD at the end of October, 2004.
[16] André Dupuis testified he is a businessman residing in Perth, Ontario. He and his wife – Wendy – own and control ALD. Prior to 2003 and 2004, the business operated 4 trucks that hauled milk, juice and cheese for Saputo. In 2003, ALD had 5 drivers and in 2004 operated with 4 drivers - as independent contractors – plus two others – not Parks and Bellemare – who had the status of employee. Dupuis identified a T-4 Summary for 2004 – Exhibit A-15 – in which 5 employees were named, including himself and Wendy. Dupuis stated that in his experience over many years, he had better results from hiring drivers as independent contractors rather than as employees even though the independent drivers could refuse trips and thereby dictate the days they wanted to work. In the past, employees had left their jobs without warning and sometimes abused equipment. In his opinion, it was not possible to take remedial action against an employee whereas an independent contractor could be pursued for damage caused by negligence in the performance of contractual duties. In terms of discipline, an employee had to be dealt with in a particular manner whereas work could be withheld from an independent contractor in the event performance was not satisfactory. Dupuis stated he did not know why Parks and Bellemare were chosen for purposes of the ruling issued subsequent to the CCRA audit since other drivers were operating under independent contractor status and had performed their work in the same manner. Dupuis stated Saputo was the only client of ALD and there was no written contract with that company nor any guarantee of ongoing work. With respect to the issue of driver’s logs, Dupuis stated the logs must be submitted to the appropriate government department within a timely manner or the drivers may lose their licence and ALD could be fined and subjected to demerit points which – if enough are accumulated – could lead to cancellation of an operating licence by the Minister of Transport. Dupuis stated time is a critical factor concerning delivery of products from Brampton to the Saputo facility in Ottawa. There was no need for a driver to report to the ALD office and once Dupuis was told by Parks he was taking a 5-week holiday and would not be available to drive any trips. Dupuis characterized that as an announcement – based on courtesy - by an independent contractor rather than a request to take time off that one would expect from an employee. Parks and Bellemare and other independent drivers did not need to attend any ALD staff meetings. ALD owned one tractor and leased 5 others. The tractors can cost up to $150,000 and the trailers – mostly leased - were valued between $70,000 and $90,000 but ALD owned some less expensive trailers. Dupuis stated he drives a truck and has worked in that capacity since 1991 when he bought a truck and thereafter delivered dairy products for a company before starting – in 1998 - to haul for Saputo. Dupuis stated it is common within the trucking industry for drivers to be hired as independent contractors and that had been the basis upon which Bellemare had provided services to another trucking company before starting to drive for ALD. No training was provided to either Parks or Bellemare. The written agreement with Parks – Exhibit A-6 – and with Bellemare – Exhibit A-13 – were both signed sometime in 2004 after the CCRA audit. Dupuis stated he considered Parks and Bellemare were free to drive for other transport companies hauling various products and in the event one or both had left on short notice, he had a back-up plan whereby Saputo could have provided drivers for a short term until replacements were found. Dupuis was referred to the ALD financial statement – Exhibit A-16 – for the year ended December 31, 2004. It also contained comparative figures for 2003 in a separate column. In 2003, under the heading “ Subcontractors”, ALD paid the sum of $177,078 to drivers and in 2004, the expense noted under that category was $221,684. Dupuis stated this expense was incurred in respect of the services of 5 drivers. The financial statement showed an expense in the sum of $207,333 for “Wages and Benefits” incurred in respect of a total of 5 employees including 2 drivers, himself, his wife and his son. ALD had purchased jackets for all drivers with the company logo on the front. Currently, Saputo provides the jackets. Dupuis pointed out the net profit of ALD is relatively small and that the trucking business provided employment for himself – as a driver in 2003 and 2004 - and for his wife and their son. The drivers who held the status of employees in 2003 and 2004 were paid every 2 weeks and were entitled to vacation pay. Source deductions were made from their cheques and they were paid without the need to submit any invoices. Dupuis identified three Notices of Assessment – Exhibit A-17 - issued by CCRA to ALD with respect to amounts owing for various items including EI premiums and CPP contributions for employees.
[17] In cross-examination by counsel for the respondent, Dupuis stated he scheduled the loads on the basis of supplying the needs of Saputo as it required a trucking company to transport products from Brampton to Ottawa several times each week as well as to haul loads to Trois Rivières on a regular basis. Dupuis explained that in the course of making the necessary trips, Parks would be away from Ottawa for several days within a week. A list of trips or runs was prepared for Parks and for Bellemare and in the event one or other could not make a trip there were other drivers who could have been contracted to fill in. Dupuis stated that Parks is his brother-in-law and has been driving for ALD – on and off - for 15 years. Other independent contractor drivers have been with the company for 8 years and 6 years. Dupuis noted that group of drivers seemed to “enjoy the freedom” resulting from that status as opposed to being an employee. Parks preferred to charge on a per kilometre basis while Bellemare invoiced a flat rate for trips which was based – mainly – on the total distance driven between various points within a certain period. Dupuis agreed drivers did not have the right to hire someone to drive a route for them without obtaining permission from ALD but all drivers could bring a friend or relative on a trip. Dupuis stated Parks left Ottawa on Sunday, returned on Wednesday, left that night on another trip, and returned Saturday morning. Each truck was equipped with a combination telephone walkie‑talkie.
[18] Counsel for the appellant submitted the evidence demonstrated clearly the intention of Parks, Bellemare and Dupuis – on behalf of ALD – was that the working relationship would be that of independent contractor rather than employee. Counsel pointed to a lack of control over the manner and method of providing the driving services and noted the only form of reporting was the requirement that a driver’s daily log be maintained in order to comply with provincial and/or federal regulations. The drivers incurred expenses in the course of carrying out their task, owned their own tools and safety equipment and had the right to choose whether to take a particular trip or series of trips. Counsel submitted the parties intention to structure the working relationship was confirmed by the manner in which they conducted their affairs throughout the relevant period. In her view, the fact Parks performed other services for ALD during 2003 – and earlier – as a contractor/renovator on the basis he was operating his own business, was significant in that it corroborated the existence of an intention between him and Dupuis that there was never an employer-employee relationship existing between Parks and ALD no matter what services were provided by Parks.
[19] Counsel for the respondent submitted it was obvious the main tools – tractor and trailer – were expensive pieces of equipment and were owned or leased by ALD. He conceded the drivers wanted to be accorded the status of independent contractors but when one applies the tests referred to in the relevant jurisprudence, it becomes apparent each was functioning in a manner completely consistent with a worker who is an employee. Although there was no control in the usual, supervisory sense, there were deadlines that had to be met and the trips – once assigned – were specific and had to be carried out personally by the named driver. Counsel acknowledged that a driver could refuse work but that was not done in order to generate more revenue by driving for a competitor of ALD and overall there was no opportunity for profit by hiring someone to drive the trip at a cheaper rate nor was there any risk of loss nor any need to manage helpers. In counsel’s view of the evidence, there was little to support a finding that the drivers were operating a business and the only conclusion to be drawn is that both Parks and Bellemare were truck drivers who provided ALD with their skills, each pursuant to a contract of service.
[20] The Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983 – (Sagaz) dealt with a case of vicarious liability and in the course of examining a variety of relevant issues, the Court was also required to consider what constitutes an independent contractor. The judgment of the Court was delivered by Major, J. who reviewed the development of the jurisprudence in the context of the significance of the difference between an employee and an independent contractor as it affected the issue of vicarious liability. After referring to the reasons of MacGuigan, J.A. in Wiebe Door Services Ltd. v. M.N.R., [1986] 2 C.T.C. 200 and the reference therein to the organization test of Lord Denning - and to the synthesis of Cooke, J. in Market Investigations Ltd. v. Minister of Social Security, [1968] 3 All E.R. 732 - Major, J. at paragraphs 45 to 48, inclusive, of his judgment stated:
Finally, there is a test that has emerged that relates to the enterprise itself. Flannigan, ... ("Enterprise control: The servant‑independent contractor distinction" (1987), 37 U.T.L.J. 25, at p. 29) sets out the "enterprise test" at p. 30 which provides that the employer should be vicariously liable because (1) he controls the activities of the worker; (2) he is in a position to reduce the risk of loss; (3) he benefits from the activities of the worker; (4) the true cost of a product or service ought to be borne by the enterprise offering it. According to Flannigan, each justification deals with regulating the risk-taking of the employer and, as such, control is always the critical element because the ability to control the enterprise is what enables the employer to take risks. An "enterprise risk test" also emerged in La Forest J.'s dissent on cross-appeal in London Drugs where he stated at p. 339 that "[v]icarious liability has the broader function of transferring to the enterprise itself the risks created by the activity performed by its agents".
In my opinion, there is no one conclusive test which can be universally applied to determine whether a person is an employee or an independent contractor. Lord Denning stated in Stevenson Jordan, ... ([1952] 1 The Times L.R. 101) that it may be impossible to give a precise definition of the distinction (p. 111) and, similarly, Fleming observed that "no single test seems to yield an invariably clear and acceptable answer to the many variables of ever changing employment relations..." (p. 416) Further, I agree with MacGuigan J.A. in Wiebe Door, at p. 563, citing Atiyah, ...(Vicarious Liability in the Law of Torts. London: Butterworths, 1967) at p. 38, that what must always occur is a search for the total relationship of the parties:
[I]t 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 be 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.
Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. 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.