EMPLOYMENT INSURANCE |
Yellow Cab Co. v. M.N.R.
A-378-01
2002 FCA 294, Sexton J.A., Malone J.A. dissenting
17/7/02
38 pp.
Judicial review of Tax Court's ruling, [2001] T.C.J. No. 338, relating to Employment Insurance Act (Act) and Employment Insurance Regulations (Regulations)--Yellow Cab Company Ltd. (Yellow Cab) assessed for employment insurance premiums for "owner-operator" and "lease- operators" on grounds they were employees--Tax Court holding owner-operator and lease-operators employees, obligating Yellow Cab for Employment Insurance Premiums --Issue whether owner-operator and lease-operators in insurable employment--Owner-operator's agreements with Yellow Cab stipulating purchase price, requiring owner- operator to bear all operating/maintenance expenses, allowing Yellow Cab to penalize owner-operator for breach of procedures--Lease-operators' agreements entitling lease- operators to revenues, giving them responsibility for running costs of taxicab, obligating them to comply with orders and directions from Yellow Cab and to use Yellow Cab's bookkeeping and fuel provision services, allowing Yellow Cab to fix monthly fees and to suspend or discharge drivers--Owner-operator, lease-right operators sometimes paying drivers for taxicabs and remitting income tax, Canadian Pension Plan and Employment Insurance premiums--Tax Court Judge holding owner-operator and lease-operators in insurable employment when personally driving taxicabs--Tax Court Judge holding drivers' assessment calculated on net revenue--Whether owner- operator and lease-operators owners or operators of business within meaning of Regulations, s. 6(e)--Regulations, s. 6(e) providing for inclusion of drivers of taxicabs unless person is (1) owner of more than 50 per cent of vehicle, (2) owner or operator of business, or (3) operator of public authority--Court applying test in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983: central question whether person engaged to perform services performing them as person in business or on own account--Lease-agreements conferring on Yellow Cab considerable control thus indicating lease-operators not owners or operators of business--Other consideration being who owns tools of trade, in this case being lease-operators, indicating lease-operators owners or operators of business--Other consideration risk of loss and chance of profit--In this case lease-operators' financial obligation to Yellow Cab fixed, but revenues variable indicating lease-operators owners or operators of business--Further consideration whether lease-operators hire own helpers--In this case lease-operators do hire, indicating owners or operators of business--Lease-operators, and by extension owner-operator, owners or operators of business and Tax Court Judge erring in considering only factor of control to exclusion of other factors--Court considering case law relating to Regulations, s. 6(e): Martin Service Station v. Minister of National Revenue, [1977] 2 S.C.R. 996; Abrahams v. Attorney General of Canada, [1983] 1 S.C.R. 2; Hills v. Canada (Attorney General), [1988] 1 S.C.R. 513--Case law expressing Parliament's intention to protect unemployed and Act interpreted liberally, cases not taking away from conclusion Regulations, s. 6(e) exempting owner or operator taxidrivers--Court considering cases with similar facts: Canada (Attorney General) v. Skyline Cabs (1982) Ltd. (1986), 11 C.C.E.L. 292 (F.C.A.); Checkmate Cabs Ltd. v. Canada (Minister of National Revenue--M.N.R.), [1998] T.C.J. No. 329 (QL); Mangat v. MNR, [2000] 4 C.T.C. 227 (F.C.A.)--Such cases not changing Court's conclusion-- Owner-operator and lease-operators owners or operators, not in insurable employment and exempt under Regulations, s. 6(e)--Not necessary to consider whether insurable earnings calculated on gross or net revenue basis but stating Tax Court Judge not erring in ordering calculation on net revenue basis--Application for judicial review allowed with costs--Dissent agreeing owner-operator and lease-operators owners or operators and earnings calculated on net revenue basis, but finding application of Sagaz, supra, factors not proper and favouring liberal interpretation of Act--Dissent favouring dismissing application for judicial review-- Employment Insurance Act, S.C. 1996, c. 23--Employment Insurance Regulations, SOR/96-332, s. 6(e).