Date: 20000526
Dockets: 1999-4633-EI; 1999-4634-CPP; 1999-4639-EI;
1999-4640-CPP
BETWEEN:
VALERIE M. SAUNDERS O/A V.M.S. MANAGEMENT,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
AND
CAMP WABIKON INC.,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
VALERIE M. SAUNDERS O/A V.M.S. MANAGEMENT,
Intervenor.
Reasons for Judgment
Weisman, D.J.T.C.C.
[1] Valerie M. Saunders ("Saunders") and Camp
Wabikon Inc., (the "Camp") both appeal against the
Respondent's determination that Saunders was in insurable and
pensionable employment within the meaning of paragraph
5(1)(a) of the Employment Insurance Act[1] and paragraph
6(1)(a) of the Canada Pension Plan[2], while engaged by the
Camp between the first of January 1998 and the 20th of April
1999.
[2] The Camp is in the business of providing summer camping
experiences for children from 6 to 17 years of age, who are
brought to Temagami, Ontario from all over the world.
[3] Saunders is in the business of managing the production of
artistic events. She registered the name "V.M.S.
Management" in 1987 for this purpose. She arranges North
American tours for European jazz bands. She has managed such
projects for both profit and non-profit organizations such as the
Hospital for Sick Children. She is required, in the course of her
duties, to advertise in foreign newspapers, organize
transportation, collect gate receipts and pay all expenses. She
advertises her business, has business cards and business
telephone and fax lines. She has a fiscal year end, a G.S.T.
number, a bookkeeper and an accountant. Her office is in her home
and is equipped with modern computers.
[4] Saunders has lengthy credentials in the field of public
relations and business administration. From 1980 to 1984 she was
employed by the Royal Conservatory of Music in Toronto as manager
of public relations. From 1984 to 1987 she worked as an
independent contractor with classical radio station CFMX. She was
there involved in public relations, arts promotion, and arts
management. It was her responsibility to ensure that published
materials and budgets were prepared in a professional manner,
that advertising was effectively done, and that the station was
well administered. She owned and operated a gift store from 1987
to 1989.
[5] In 1989, Saunders started producing the Camp's
advertising materials. Using the same skills acquired in her
previous projects, she became increasingly involved in the
Camp's business administration, production of staff contracts
and camper guides, sales promotion, advertising and public
relations.
[6] In 1996, Saunders and the Camp formalized their
relationship by written agreement. Saunders was assured an annual
income of $35,000 payable in 12 equal monthly installments,
on invoice. In addition, she was given four weeks vacation
(non-cumulative) and was expected to work 35 hours per week on
the average. Her primary functions were to manage camper records,
camper solicitation, and camper transportation. She looked upon
her involvement with the camp as a summer long project similar to
her ongoing arts projects.
[7] The question is whether Saunders' work for the Camp
was part of her business activities in managing arts projects, or
whether she was employed under a contract of service with the
Camp, and carried on business in the arts in her spare time.
[8] The resolution of this question requires the application
of the four-in-one test laid down in Wiebe Door Services Ltd.
v. M.N.R.[3] as
follows:
Control:
[9] The written agreement between the parties required
Saunders to "devote the equivalent time allotment to that of
a full-time job, i.e. five days per week-eight hours per
day". Saunders agreed to keep accurate records of her
accumulated hours so she could be compensated for extra time, and
charged towards her non-cumulative four-week annual vacation
leave. There was to be an annual performance review.
[10] Because of the 1997-1998 recession, Camp revenues
diminished. By further agreement the parties agreed to reduce
Saunders time by 40 hours through the expedient of her no longer
working Fridays. Her monthly fee was reduced accordingly. Monthly
meetings between the parties were also called for.
[11] In addition to her primary responsibilities in managing
camper records, solicitation and transportation, Saunders did all
camp advertising, and ran the camp office in the summer when the
proprietors were in Temagami. She answered the telephone, hired
and paid summer students, collected outstanding accounts,
deposited cheques and answered the mail. She was provided with
the key to the Camp office which was situated in the residence of
its proprietors. She also served as a Director of the charitable
foundation established by the Camp to assist indigent children.
The timing of her duties was dictated more by the necessities of
the camping business than by the Camp. Advertising and
information brochures had to be ready in time for the upcoming
camping season.
[12] As to whether Saunders had to perform her service
personally, Marcello Bernardo, the Camp Director, testified
that it was essential for those dealing with campers and their
parents to be knowledgeable about Camp affairs and be able to
inspire a feeling of calm and assurance. As a result, only he,
his wife, and Saunders were entrusted with this
responsibility.
[13] On the evidence, I am satisfied that Saunders had to
perform all her essential functions for the Camp personally, that
the nature and extent of those duties went well beyond that which
would be expected of an independent contractor, and that the
amount of control exercised by the Camp over her hours,
vacations, and performance, involved a degree of subordination
which was commensurate with her being an employee.
Tools:
[14] Saunders had computer equipment in her own home which she
used for her arts projects, as well as for Camp purposes. She
also utilized the computer and other equipment at the Camp's
offices. She used her own vehicle to attend local trade shows,
and the Camp van for those out of town. The tools factor
accordingly produces equivocal results.
Profit and loss:
[15] Saunders had a chance of profit and risk of loss in
connection with her arts projects if revenues either exceeded or
fell below expenses. She had no such opportunity in her
relationship with the Camp. Her income was fixed and she was
reimbursed all her camp-related expenditures save for her
automobile. She had to perform her duties for the Camp
personally, and could not work for any other camp for reasons of
confidentiality. The profit and loss factor indicates that
Saunders was an employee.
Integration/Organization:
[16] If Saunders integrated the Camp's needs into her
business this tends to show that she was an independent
contractor. If she integrated her functions into the Camp's
business this indicates that she was an employee. Saunders did
perform some specialized functions for the Camp similar to those
involved in her arts projects, particularly her graphic
production, advertising both here and in Europe, and her
organization of transportation. She also, however, ran the Camp
office in the summer months and performed the many functions
previously described, not normally reserved to an independent
contractor.
[17] In this regard a comparison of her sources of income is
illuminating. In 1998, the primary year under review, her gross
annual income from all arts projects was some $6,608.54. Her
remuneration from the Camp was $30,690.28. The total expenses
claimed in her Statement of Profit and Loss for income tax
purposes was $30,128.55. Of this, $9,292.53 were automobile
expenses, $1,387.75 for meals and entertainment, $1,899.93 for
office expenses and $3,224.41 for utilities.
[18] While I can understand Saunders' desire to deduct
these expenses from some source of income for income tax
purposes, an examination of the functions she performed for the
Camp, and a comparison of her arts and Camp incomes lead to the
conclusion that she integrated her function into the Camp's
needs, and was its employee.
[19] Although Saunders' business as an independent
contractor in managing arts projects was pre-existing and bona
fide, the application of the four-in-one test in Wiebe
Door leads to the conclusion that she was employed by the
Camp under a contract of service during the period in question,
and was in insurable and pensionable employment accordingly.
[20] The appeals are dismissed.
Signed at Toronto, Ontario, this 26th day of May 2000.
"N. Weisman"
D.J.T.C.C.
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