Hebdo Mag Inc. v. M.N.R., docket 98-1149-UI

Date: 20000620

Docket: 98-1149-UI

BETWEEN:

HEBDO MAG INC.,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent,

and

JOCELYNE PARIS,

Intervener.

Reasons for Judgment

Lamarre Proulx, J.T.C.C.

[1]            This is an appeal and an intervention with respect to a decision of the Minister of National Revenue (the “Minister”) thatJocelyne Paris held insurable employment from January 1, 1996, to September 24, 1997.

[2]            The appeal and the intervention were to have been heard together with the appellant's appeal No. 1999-3422(EI) concerning three workers who did not intervene in the proceedings. At the start of the hearing, counsel for the respondent informed the Court that the respondent had given a consent to judgement in that case and was now of the view that the workers in question were self-employed workers.

[3]            With respect to this appeal and intervention, the respondent decided not to make any representations in support of his decision from which the appeal and intervention arose. The legal debate is therefore between the intervener and the appellant.

[4]            The facts on which the Minister relied in making his decision are set out in paragraph 5 of the Reply to the Notice of Appeal (the “Reply”) as follows:

                [TRANSLATION]

(a)            the appellant operates a printing plant and a business specializing in advertising, whose publications include the magazines Auto Hebdo and Magazine Immobilier;

(b)            during the period at issue, the intervener sold real estate advertising in the Trois-Rivières area;

(c)            she was given training by the payer during which she was paid;

(d)            she had a specific territory that was limited to Trois-Rivières and surrounding area, within a radius of 50 km;

(e)            the payer provided her with a list of clients;

(f)             she usually worked in the payer's office;

(g)            once every two weeks, she visited the real estate agents on Wednesday afternoon and worked at her home on Thursday afternoon and all day Friday;

(h)            she had no predetermined hours of work;

(i)             she was supposed to work according to the payer's instructions;

(j)             she had sales objectives and deadlines to meet and had to prepare a sales report every two weeks;

(k)            she handled collections for her clients' accounts;

(l)             she paid her own transportation costs;

(m)           the payer provided an office and equipment and paid for supplies;

(n)            she was given a non-refundable advance of $400 a week against her commission;

(o)            she was compensated at the rate of 7 percent of sales made.

[5]            The appellant admitted all the facts in paragraph 5.

[6]            With respect to paragraph (a), the intervener worked forMagazine Immobilier. The workers involved in appeal No. 1999-3422(EI) worked for Auto Hebdo or Moto Hebdo.

[7]            With respect to paragraph (c), the intervener was given one day's training on two occasions. The first time, she was paid $80. On both occasions, her meals were paid for. The purpose of the training was to show her how to complete the documents necessary to the business, including the purchase orders, advertising agreements and production sheets.

[8]            The intervener explained that she worked as an advertising specialist for the magazine Immobilier Hebdo from September 1, 1993, to September 24, 1997. The period in issue is from January 1, 1996, to September 24, 1997.

[9]            The intervener's business cards were paid for by the appellant. The telephone and fax numbers and the address shown on the cards are those of the Hebdo Mag office in Trois-Rivières.

[10]          Every other week, the intervener contacted the real estate agencies. She would ask the receptionist to make a multi-party call to inform all the agents that they should place their advertising orders. She went to those agencies to collect the orders. The intervener went to see the agents in Shawinigan or Victoriaville and met them at the usual snack bar. She used her own car and paid for her gas.

[11]          The purchase orders and layout instructions for the printing had to be received every two weeks, on Monday morning, at the appellant's head office in Montréal. The intervener sent them by bus on Saturday or Sunday at the appellant's expense. In order to complete the layout instruction sheets and purchase orders, during the week the magazine went to press, she worked at home on Thursday afternoon and on Friday.

[12]          The purchase orders were used by the appellant to prepare the invoices. During the week when the intervener did not have to compile the advertising orders and complete the layout instruction sheets, she received from the Montréal head office the computerized lists of the commissions to be paid and of the past due accounts, documents entitled [TRANSLATION] “Age of accounts (receivable) Active Client”. These documents were sent to her since, as stated in paragraph 5(o) of the Reply and as the evidence showed, in addition to the $400 she received as a non-refundable advance on her commission, the intervener was entitled to a 7 percent commission on the paid accounts. The intervener could handle the collection of past due accounts.

[13]          When the magazine arrived, the intervener took the photographs back to the real estate agents and at the same time brought them the number of copies they wanted. She was not responsible for distribution as there was another person in charge of that.

[14]          In the appellant's office in Trois-Rivières, a room was reserved for the intervener. The intervener did not have keys to the office, but she did have the keys to that room, which she kept locked when she was not there. The intervener explained that that was her workplace. She received her clients there on occasion. That was where the mail was brought to her. When she was not there, there was a basket by her door where people in the office or clients could leave messages for her. She was reimbursed for the stamps she used.

[15]          The intervener explained that there was an office manager, a person in charge of distribution and a receptionist. The intervener said that, if she was sick, she notified the office manager. The weekly amount she received was not cut. She was not often sick. She never once had to have someone replace her. The intervener maintained that she had paid vacation, but added that she had not taken much vacation. She said she took a week in 1996. She also produced an exhibit showing that she had a paid week off during the Christmas holiday period when the magazine was not published.

[16]          Her work consisted in calling real estate agents, picking up the photographs and information needed for the advertisements, doing the layouts and sending everything to Montréal. She had to check the accounts and handle collections. On cross-examination, she acknowledged that she was the one who planned her work and determined how it would be done. No one with the appellant determined when she should meet her clients or how she should communicate with them. She determined the method for contacting the clients. She was not allowed to work for the appellant's competitors. According to the intervener, she did not have the financial resources to hire staff. She had no set work schedule. She was the one who determined her hours. Usually, she arrived at the office at 9:00 a.m. and left at about 4:30 p.m. At noon, she always went home for lunch.

[17]          The rates were determined by the appellant. When she began working for the appellant, the person the intervener replaced gave her the client list. The intervener could add clients to the list.

[18]          The intervener also produced as Exhibit Int-13 a budget estimate concerning advertising sales for Trois-Rivières. She maintained that this was an objective she was asked to meet. She said that she reached her objective every year.

[19]          Jean-François Auclair testified for the appellant. He has worked for the appellant since July 1995 as sales director for eastern Quebec. He explained that the appellant's administrative staff is on salary, while advertising sales are handled by agents who are self-employed.

[20]          He stated that there was no written or oral contract between the appellant and the intervener. The intervener was not entitled to vacation leave or sick leave. She did not receive any fringe benefits. She was given no instructions concerning how she was to do her work. There was no requirement to come to the office. She could have had herself replaced. On cross-examination, he confirmed that the intervener received $400 per week throughout the year, that is, for 52 weeks. He did not seem very familiar with the document produced as Exhibit Int-1, the [TRANSLATION] "Advertising agreement", which seemed to require the signature of the advertising specialist and the approval of the sales director on the appellant's behalf. An express condition of that agreement was that [TRANSLATION] “[a]ll orders shall be subject to approval by Hebdo Mag”.

[21]          Mr. Auclair explained that the appellant sends out the invoices. The only collection that can be done by the intervener is for past due accounts. He stated that the appellant did not provide the advertising specialists with training in advertising. The only training that was given, which he would prefer to call information, was as to how to complete the purchase order forms prepared by Hebdo Mag and the layout instruction sheets required for the printing.

Parties' positions

[22]          Counsel for the intervener said that his client had limited leeway. Her work was governed by the written procedures. The appellant paid the intervener $400 a week; this was certainly done in return for something, namely performing work under a contract of service. The tools were provided by the payer. The intervener paid for her own gas, but that is not a deciding factor. She was given directions regarding the geographical boundaries of her territory, and with respect to people, prices and deadlines. The client list belonged to the appellant.

[23]          Counsel for the appellant said that the agreement between the appellant and the intervener was for the sale of advertising. The intervener received a fixed amount per week and a commission. She had to travel in performing her work. That travel was at her own expense. Her automobile expenses were not reimbursed. Having to complete forms in a certain way and to meet deadlines does not mean there was the type of control that exists under a contract of employment. The intervener was not given directions concerning the manner in which her duties were to be performed. There was not a minimum number of hours she had to work. She determined how many hours she would devote to her duties. She planned her work. There was no personal exclusivity with respect to the services she provided; she could have had someone replace her. With regard to the objectives, it was she who wrote the word [TRANSLATION] “objective” on the document. Her earnings depended on her own efforts. With regard to collecting past due accounts, it was in her interest to do so since her commissions were paid on the basis of the accounts that had been settled.

[24]          Counsel for the intervener answered that the appellant's commission did not amount to much compared to the amount paid to her every week. The parameters were tight and there was little latitude for profits and losses. With respect to control, the legal test consists in determining whether there was a right to control, not whether control was in fact exercised. Counsel concluded that the intervener was an employee on salary and commission.

[25]          Counsel for the intervener referred to two decisions of this Court: Whitney Elizabeth Gleason v. M.N.R., dated May 9, 1984, and Club Automobile du Québec Inc. v. M.N.R., dated May 5, 1983. Those cases have to do with the distinction between self-employed workers and employees, but they are based primarily on the concept of the integration of the worker's work into the payer's business. In both cases the work was held to be employment because it was essential to the payer's business. However, these decisions were rendered before the decision of the Federal Court of Appeal in Wiebe Door Services Ltd. v. M.N.R., 87 DTC 5025, which laid down the principles regarding the integration of the worker's work into the business. Wiebe Door explains that the matter of whether a particular person is an employee cannot be resolved by a determination that the work performed by that person is essential to the payer's business, because the answer would always be affirmative. Instead, it must be determined, by having regard to the organization of the worker's work and to the chance of profit and risk of loss, whether the worker is carrying on a business or holds employment.

Conclusion

[26]          I will first analyse the evidence relating to the intervener's work situation at the appellant's local office in Trois-Rivières. The evidence did not reveal a relationship of subordination between the office manager and the intervener. The intervener was her own manager. She did not indicate that she received directions from the office manager. She did not testify that she reported to anyone with respect to her work. The intervener was wholly responsible for the specified services she was to provide. When she had completed her duties, she was not assigned others. She was not given one task to do in place of another. When she was not on the premises, her office was locked. She was the only one who had access to it. The picture presented by the description of the intervener's daily work is that she performed her activities independently. She was not subject to directions from anyone at the local office.

[27]          Was she supervised by someone in the Montréal head office? Every week, the intervener was given a $400 advance for her services, which consisted in the sale of advertising contracts. This weekly payment of a specific amount of money and of commission at the predetermined rate is necessarily based on an agreement between the appellant and the intervener. It was therefore strange to hear Mr. Auclair say that there was no contract between the appellant and the intervener. There was an agreement. The question is: was it a contract of employment or a contract for services?

[28]          The appellant required the intervener to complete her reports in a certain manner. That does not create a relationship of subordination. The great majority of consultants must adhere to a particular format in preparing their reports. The manner in which she went about obtaining the advertising contracts was up to the intervener. She was given no directions in that regard. She had complete discretion as to how she operated with respect to, inter alia, real estate agents, meeting places and her hours of work. She had to do her work within the geographical boundaries assigned to her by the appellant so as not to encroach on the territories of the other advertising specialists. This restriction sets the parameters of the services to be provided. It does not determine how they are to be provided.

[29]          With regard to the appellant's head office in Montréal, I am of the view that the evidence did not show that the appellant exercised an employer's control over the intervener through that office. I am also of the view that it was not, as counsel for the intervener suggested, a case of control that was not but could have been exercised. In other words, there was no relationship of subordination between the appellant and the intervener.

[30]          I therefore find that the agreement between the appellant and the intervener was a contract for services. Consequently, the appellant's appeal is allowed, the intervener's intervention is dismissed and the Minister's decision is reversed.

Signed at Ottawa, Canada, this 20th day of June 2000.

"Louise Lamarre Proulx"

J.T.C.C.

[OFFICIAL ENGLISH TRANSLATION]