98-1104(UI)
BETWEEN:
BAY PUBLISHING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeal heard on May 12, 1999 at Victoria, British Columbia, by
the Honourable Judge R.D. Bell
Appearances
Agent for the Appellant: Evelyn Butler
Counsel for the Respondent: Charlotte Coombs
JUDGMENT
The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada this 9th day of November, 1999.
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J.T.C.C.
Date: 19991022
Docket: 98-1104(UI)
98-1105(UI)
98-1106(UI)
98-181(CPP)
98-182(CPP)
98-183(CPP)
BETWEEN:
BAY PUBLISHING LTD.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bell, J.T.C.C.
[1] The issue is whether the Appellant is liable under the Employment Insurance Act ("EIA") for employment insurance premiums and under the Canadian Pension Plan ("CPP") for CPP contributions. This will involve a determination of whether:
• Jody Unger ("Unger"), in respect of the period November 12, 1996 to July 1, 1997;
• Daphne Massey ("Massey"), in respect of the period March 15, 1997 to October 15, 1997; and
• Christopher Stephenson ("Stephenson"), in respect of the period July 21, 1997 to November 25, 1997
were in insurable employment with the Appellant as described in section 5 of the EIA and in pensionable employment as described in section 6 of the CPP.
FACTS:
[2] The Appellant was, during the period in question, a publishing company that sold advertising for local magazines. Its director was one Evelyn Butler ("Butler"). The Appellant entered into contracts with Unger, Massey and Stephenson, which contracts were designed to establish the relationship of independent contractor and not of employee between each of those persons and the Appellant. Among other things the agreement provided a confirmation of the relationship of
Independent-Contractors, not that of Employer-Employees
[3] The agreement provided that the "Sales Agent" would not be entitled to holiday pay, statutory holidays, CPP benefits or EIA benefits. It also provided that such agent would not engage in any activities competitive with the Appellant. It then provided for the payment of commissions with advances in respect of same at the commencement of the relationship. Another term of the agreement required the Sales Agent to follow the Appellant's procedures which were set forth in schedules to the agreement.
[4] The evidence of Butler was that agents were not required to be in the office if they did not wish to be there, could choose their own hours of work and clients to solicit, could choose when and where to work and to whom sales would be offered.
[5] Butler said that the Appellant provided office space, letterhead and business cards stating that the agents would provide their own vehicle, own their equipment and pay expenses such as telephones, computers, et cetera. She stated that they had an opportunity to make a profit if they were diligent but would lose commissions if the bill in respect of advertising sold was not paid within a certain time limit. She stated that they could take holidays when they liked, that they could determine how much they wanted to work, what expenses they incurred and that they could delegate or hire a person to deliver magazines, that being part of their procedure. She stated that she sold sixty to eighty percent of the advertising.
[6] Massey testified that she was expected to arrive at the office at 9:00 o'clock each morning, that she had a desk at the office and that no one else used that desk. She said that she had to make a request of Butler for time off and let her know what she would be doing. She also stated that she had to attend weekly sales meetings. She stated that at the staff meetings, Butler wanted forms filled out and that they had to be filed on a weekly basis. She said that anything signed by a client had to be approved by Butler before publication. She said also that the Appellant provided business cards, fax, telephone, postage meter, contracts, letterhead and paper. She said that Butler insisted that she hire a specific person, impliedly selected by Butler for assistance.
[7] Dianne Kennedy ("Kennedy") testified that she worked for the Appellant from March, 1995 until April, 1997. She said that she was the office manager, answered the telephone, looked after accounts receivable and bank deposits, photocopies and lay-outs and delivered them to the art director. She said that she was hired as an employee. She testified that the sales agents had their own desks, went out to clients, brought material back to the office and laid out ads. She stated that the agents did not have other jobs. She said that all workers had to give notice to Butler if they wanted holidays and that representatives were absolutely not free to hire replacement workers. She also stated that they were expected to call into the office several times a day or show up at the office. She concluded by saying that she was support staff for all the staff and that she did as much work for them as she did for Butler. On cross-examination she stated that she was fired by Butler.
RESPONDENT'S SUBMISSIONS:
[8] Butler said, without referring specifically to Wiebe Door Services Ltd.[1] that respecting the control test, the agents dressed as they saw fit, charged what they saw fit, were given business cards for convenience to establish assurance in the market place, paid for their own vehicles and their lunches, that the Appellant did not offer training but simply offered instruction and did not call meetings.
[9] With respect to risk, Butler said that the agents were paid on a commission basis and would lose the commission if the account was not paid in ninety days. She submitted that their earnings were contingent on what they did and that there was no ceiling. She stated that if she offered to supply some things she was simply helping the agents out. She said that they would let her know when they took time off. She referred to a common sense test and asked how she could control someone that she didn't see most of the day. She made brief mention only of the tools test and the integration test.
[10] Respondent's counsel submitted that the agreement in each case was not prepared by the agent, that there was a non-competition clause in the agreement and that a commission would be paid only if all procedures were followed. She stated that with respect to control, there was a certain amount of training, the payor had first call on the agents' time, that they were expected to be in the office between 9:00 a.m. and 5:00 p.m., that they didn't feel free to work elsewhere without approval, the example of one witness being her desire to work as a waitress. She submitted that the workers did not feel free to send a sales replacement, there being a problem even with respect to who could deliver magazines. She stated that the Appellant could terminate the relationship, that the agents were required to wear proper business attire and that time sheets were required in two cases.
[11] With respect to tools and ownership thereof, counsel submitted that all agents made calls from the office, that telephones were provided, that business cards were provided, sales contracts were provided and that invoices were provided. She stated that the secretary typed letters for these agents on the Appellant's letterhead. She also said that they had use of fax, photocopies, desk, office space, kits and brochures, pens and postage.
[12] With respect to profit and risk of loss, counsel stated that there was little risk if any and that the agents had little say in what to charge. She stated that with Butler selling sixty to eighty percent of the ads there was little room left for the workers to earn more. She submitted that the only risk of loss was if payment had not been made in ninety days and that in that case the Appellant would suffer the most.
ANALYSIS AND CONCLUSION:
[13] Section 5(1) of the EIA defines insurable employment, subject to subsection 2, as employment in Canada by one or more employees, under any express or implied contract of service ... written or oral, whether the earnings are calculated by time or by the piece, or partly by time and partly by the piece, or otherwise.[2]
[14] Section 6 of the CPP defines pensionable employment to include employment in Canada that is not excepted employment.[3]
[15] Both parties referred to a number of cases which are of little, if any, use in the determination of this matter. This case clearly appeared to be the result of strained, if not hostile, relations between Butler and the agents. Although not all three of the agents appeared to give evidence, the testimony of Massey and of Kennedy, the employee, have persuaded me that, on balance, the agents were not independent contractors. It is difficult for workers to be categorized as independent contractors when a substantial measure of control over their efforts is exercised. The term "independent contractor" presents an image of someone who is in business for himself or herself and who is available to various parties for the performance of their services for a fee. This is not always the situation but an independent contractor working with only one party must have a substantial measure of independence from the control and direction of that party in order to establish and maintain that categorization. The Appellant has failed in this case to meet the onus of establishing such relationship with Unger, Massey and Stephenson. The result is that they were in insurable employment under the EIA and within pensionable employment under the CPP.
[16] Accordingly, the appeal is dismissed.
Signed at Ottawa, Canada this 9th day of November, 1999.
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J.T.C.C.
COURT FILE NO.: 98-1104(UI); 98-1105(UI); 98-1106(UI);
98-181(CPP); 98-182(CPP); 98-183(CPP)
STYLE OF CAUSE: Bay Publishing Ltd. v. M.N.R.
PLACE OF HEARING: Victoria, British Columbia
DATE OF HEARING: May 12, 1999
REASONS FOR JUDGMENT BY: The Honourable Judge R.D. Bell
DATE OF JUDGMENT: November 9, 1999
APPEARANCES:
Agent for the Appellant: Evelyn Butler
Counsel for the Respondent: Charlotte Coombs
COUNSEL OF RECORD:
For the Appellant:
Name:
Firm:
For the Respondent: Morris Rosenberg
Deputy Attorney General of Canada
Ottawa, Canada