Citation: 2007TCC614
Date: 20071015
Docket: 2006-3131(EI)
2006-3134(CPP)
BETWEEN:
NUMA TECHNOLOGIES CORPORATION,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Beaubier,
D.J.
[1] These appeals were heard together on common evidence at Saskatoon,
Saskatchewan on October 9, 2007. Bernard Lau, a director of the Appellant,
testified for the Appellant. The Respondent called the alleged employee, Robert Nesdole
(“the Worker”).
[2] Paragraphs 10
and 11 of the Reply to Notice of Appeal in file 2006-3131(EI) set out the facts
in dispute. They read:
10. In response to the appeal, the
Minister decided that the Worker was employed under a contract of service with
the Appellant for the period June 20, 2005 to March 17, 2006.
11. In so deciding as the Minister
did, the Minister relied on the following assumptions of fact:
(a) the Appellant was in the
information technology business;
(b) the Worker was
hired as a sales person and his duties included marketing and selling the
Appellant’s products and services, programming and online work for the Appellant’s
clients;
(c) the Worker and
the Appellant entered into a written “contract employment agreement” which
included the following:
(i) the
Worker agrees to represent and sell the Appellant’s IT products and services,
(ii) the
Worker agrees to promptly communicate all leads and orders to the Appellant,
(iii) the
Worker agrees to inform the sales manager of all problems within the sales
territory,
(iv) in
no event shall the Worker represent a competitive company,
(v) the
Worker agrees to telephone the Appellant with reasonable frequency to discuss
sales within the territory,
(vi) the
Appellant agrees to pay the Worker a monthly fee of $1,600.00,
(vii) the
Appellant agrees to provide the Worker with business cards, brochures, catalogs
and product samples, and
(viii) the
Appellant agrees to set minimum monthly quotas;
(d) the Worker
earned a set wage of $1,600.00 per month;
(e) the Worker
could also earn a commission if his sales exceeded a set monthly quota;
(f) the Appellant
determined the Worker’s wage rates;
(g) the Appellant
determined the prices of the products and services;
(h) the Appellant
paid the Worker on a regular monthly basis;
(i) the
Appellant’s business hours were normally 9:00 AM and 5:00 PM, Monday to Friday;
(j) the Worker
normally worked during the Appellant’s business hours;
(k) the Appellant
provided the Worker with direction and instruction;
(l) the Appellant
exercised control over the Worker with regards to pricing;
(m) the Appellant
instructed the Worker on where to solicit clients;
(n) the Appellant
normally provided the Worker with a client list;
(o) the Worker was
required to promptly report to the Appellant regarding orders;
(p) the Worker
required the Appellant’s approval for any deals or proposals;
(q) the Worker
provided reports to the Appellant;
(r) the Worker
represented the Appellant while performing his services;
(s) the Worker
could not work for a competitor while performing services for the Appellant;
(t) the Worker
could not replace himself;
(u) the Appellant
provided the Worker with a work location including a desk, phone, computer
printer, fax and office supplies;
(v) the Appellant
provided the Worker with business cards, brochures, catalogues and product
samples;
(w) the Worker
provided his own vehicle;
(x) the Worker
incurred vehicle expenses;
(y) expenses
incurred by the Worker were comparable to employment expenses;
(z) the Worker did
not have a chance of profit or risk of loss;
(aa) the Worker’s
intent was to be an employee while performing services for the Appellant;
(bb) the Worker did
not have a trade or business name;
(cc) the Worker did
not charge the Appellant GST, and
(dd) the Worker was
not in business for himself while performing services for the Appellant.
[3] All except the
assumptions commented on were either established in evidence or were not
refuted. The comments, by subparagraphs, are:
11(c) The written “contract” was signed, but its terms and
conditions were never adhered to by either party. Both have it somewhere but
neither thought to bring a signed copy to the hearing.
11(c)(v) This is true, but the worker was in the
Appellant’s office every day that he worked.
11(c)(vi) This was specified in their written “Contract
Employment Agreement” (Exhibit R-1). But the worker never sold enough to
qualify for the minimum $1,600 guaranteed, if his commissions were calculated.
As a result, he was paid between $1,200 and $1,500 per month, depending on his
earned commissions.
11(c)(vii) This was the agreement, but none of this
occurred.
11(d) The worker never earned or received this
“wage”.
11(n) Sometimes he was given a client list; at
other times, he was given a section of telephone book Yellow Pages.
11(t) Both said the Worker could replace
himself, subject to the replacement knowing the product line. The product line
was all new technology and had to be learned “hands on” because the Appellant
had no product brochures. Practically speaking, only an experienced worker of
the Appellant could replace Mr. Nesdole.
11(v) This never happened.
11(y) This is not true. The Worker was to telephone
small businesses and to go out in Saskatoon and sell the Applicant’s technological services. One
was advertising time on a website; the others all required technological input
from the Appellant’s staff. All required the Worker to go to the small business
premises to sell the services. This was in his own vehicle, at his own expense.
11(x),
(j) and (k) The Worker’s sales
record was poor. Because of the vehicle costs he did have a chance of profit or
a risk of loss. On the evidence, the Worker was not a self-starting salesman or
broker. He came into the office to start work between 9:00 a.m. and
10:00 a.m. and left between 3:00 p.m. and 4:00 p.m.. He had to be told where to
reach clients and then handed a telephone book. The Appellant’s staff worked
from 9:00 a.m. until 5:00 p.m., as strict minimal daily hours. There is no
evidence that the Appellant was ever reprimanded for his own hourly conduct. He
testified that, as a courtesy, he would telephone the Appellant on days that he
was not coming in.
11(aa) ,
(cc) and (dd) The Worker says
he intended to be an employee. The Appellant intended him to be a contractor.
He never earned enough to exceed $30,000 per year.
[4] Based upon the
material before the Court, the following must be determined:
1. Control
The
Worker was not controlled like an employee. He did not work the hours of the
Appellant’s employees and he was not reprimanded for his hours or for his time
at the premises or his performance. There is no evidence that he was shown how
to sell or directed beyond being given an occasional prospect list or the
Yellow Pages. These were up to him; he was paid commissions based on his
production.
2. Tools
The
only tools the Worker had were a form of computer that could bring up the
Appellant’s website and his own car. There is no evidence as to the ownership
of the computer. The Court finds that the tools were contributed equally. The
Worker did not even have cards from the Appellant. He held himself out to the
public as an IT consultant, and not as an employee of the Appellant.
3. Integration
The
Worker did not sell competitive products of the Appellant. But Mr. Lau is
believed when he testified that the Worker had the right to sell other non-competitive
IT products or services. The Worker was also a graduate student working towards
his M.A. degree. In this respect, the unsigned Exhibit R-1 was not adhered to
by the parties – on the crucial points the two of them did things together contrary
to this alleged “agreement”. Both agree that something like it or that it was
signed by the two of them. Exhibit A-1 is merely a self-serving document
drawn up by Mr. Lau after the EI investigation began.
4. Chance
of Profit/Risk of Loss
Based
upon what the parties did and their intentions during the Period, the Worker
had a real chance of profit and a risk of loss. He was free to perform his
business activities as he chose and he did so. His vehicle expenses and
depreciation were real and out of his pocket. He went out and solicited
customers or not. He came into the office or communicated with it when and as he
chose, without reprimand. He was paid per sale on a commission basis. But the
sales had to be successful. If a refund was required, the Worker’s commission
was reduced or lost to him.
[5] On these facts,
was the Worker in business for himself? He appeared in the Appellant’s premises
almost daily. He was not directed or controlled like an employee. He supplied
his own car which was a major tool. He had a genuine risk of profit or loss. He
was not integrated into the Appellant’s operation the way that its employees
were.
[6] In the
particular facts of this appeal, the Worker was in business for himself.
[7] The appeals are
allowed. The assessments are referred back to the Minister of National Revenue
for reconsideration and reassessment and the determinations are varied in
accordance with these Reasons.
Signed at Toronto, Ontario this 15th
day of October, 2007.
Beaubier,
D.J.
Email this Content