Date: 20100223
Docket: A-109-09
Citation: 2010 FCA
58
CORAM: NOËL J.A.
PELLETIER
J.A.
TRUDEL J.A.
BETWEEN:
MANSHIP
HOLDINGS LTD.
Appellant
and
HER
MAJESTY THE QUEEN
Respondent
Heard at Fredericton, New Brunswick, on February
22, 2010.
Judgment delivered at Fredericton, New Brunswick, on February
23, 2010.
REASONS FOR JUDGMENT BY: NOËL
J.A.
CONCURRED
IN BY: PELLETIER
J.A.
TRUDEL J.A.
Date: 20100223
Docket: A-109-09
Citation: 2010 FCA 58
CORAM: NOËL
J.A.
PELLETIER J.A.
TRUDEL
J.A.
BETWEEN:
MANSHIP HOLDINGS LTD.
Appellant
and
HER MAJESTY THE QUEEN
Respondent
REASONS FOR JUDGMENT
NOËL J.A.
[1]
I can see no error in
the Tax Court judge’s conclusion that the appellant was providing a single
supply of services to its customers who paid for a massage and that it was thus
obliged to collect and remit HST on the entire amount received from its
customers.
[2]
The fact that the
masseuses were independent contractors rather than employees does not preclude
a finding that they performed their services on behalf of the appellant. The
question in this regard is whether the masseuses, as self-employed persons,
supplied their services in their own name or as agents of the appellant? If the
services were provided as agents, the appellant is the sole provider of these services
and is responsible for the collection and remittance of the HST on the full
amount paid by the customers.
[3]
The relevant facts
are set out by the Tax Court judge in the course of his reasons. The following
are worth highlighting.
[4]
The appellant operates
massage parlours at different locations in New Brunswick and Nova Scotia offering massage services performed by
on site masseuses (reasons, paras. 2 and 11). The rates for the massage were
set by the appellant and were inclusive of HST: $70.00 for an half hour;
$120.00 for an hour and $150.00 for a “Turkish bath”. The appellant would keep
half the rate charged and the masseuses would get the other half (reasons,
para. 5). The masseuses were prohibited from charging more, although they could
agree to reduce their half share (reasons, paras. 15 and 21).
[5]
Once a customer had
chosen the service to be provided, payment was made in cash and the money was
handed by the masseuses over to the on site manager. In 2002 time cards were
introduced. The appellant would collect its flat rate on the basis of those
time cards (reasons, para. 15). The appellant calculated the HST on the total
rate charged for the massage and paid it out of its half of the fees collected
(reasons, para. 5).
[6]
This monetary
arrangement between the appellant and the masseuses supports the conclusion
that the masseuses, when providing their services within the appellant’s
premises, were acting for the appellant rather than in their own name.
Significantly, they had no say in the determination of the rate set by the
appellant for the services which they performed as self-employed persons and
were not at liberty to charge more than the set rate. The appellant, as the
person responsible for the payment of the HST, had to be aware of the amounts
actually paid for the services. These are clear indications that the masseuses
were not acting in their own name.
[7]
Equally significant
is the Tax Court judge’s finding that the parlours were single purpose
facilities (reasons, para. 35):
... customers would not come to the appellant were it not for the massage
services being offered. From a business standpoint, the appellant supplies a
massage parlour service, one element of which is to provide the premises.
It
follows that from a customer’s perspective, the contractual relationship was
with the appellant and not the masseuses. This is consistent with the view that
the masseuses were not acting in their own name but for the appellant.
[8]
It is also worth
emphasizing that for HST purposes, the appellant and the masseuses were acting
on the basis that the masseuses were engaged pursuant to a contract of
services, a relationship from which agency naturally flows. The fact that the
masseuses were found to be self-employed alters the capacity in which they rendered
their services, but it does not alter the fact that these services were
rendered in the course of the appellant’s business.
[9]
Finally, the case of Spearmint
Rhino Ventures (UK) Limited v. The Commissioners for H.M. Revenue and Customs,
[2007] EWHC 613 (Ch) is of no assistance for the appellant since it deals with
a different factual situation. In this respect, I need only point out that the
dancers in that case did not operate in a single purpose facility.
[10]
In my view, the Tax
Court Judge correctly held that the appellant was providing a single supply of
services to its customers and as such was responsible for the collection and
remittance of the HST on the entire amount received from the customers.
[11]
I would dismiss the
appeal with costs.
"Marc Noël"
“I
agree
J.D.
Denis Pelletier”
“I
agree
Johanne
Trudel”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-109-09
(APPEAL
FROM A JUDGMENT OF THE HONOURABLE JUSTICE ANGERS OF TAX COURT OF CANADA DATED FEBRUARY 3, 2009, FILE NO. 2006-3027(GST)G.)
STYLE OF CAUSE: MANSHIP
HOLDINGS LTD. v. HER MAJESTY THE QUEEN
PLACE OF HEARING: Fredericton, New Brunswick
DATE OF HEARING: February 22, 2010
REASONS FOR JUDGMENT BY: Noël J.A.
CONCURRED IN BY: Pelletier J.A.
Trudel J.A.
DATED: February 23, 2010
APPEARANCES:
|
D. Andrew Rouse
|
FOR THE APPELLANT
|
|
Catherine
M.G. McIntyre
|
FOR THE RESPONDENT
|
SOLICITORS
OF RECORD:
|
D. Andrew Rouse,
Fredericton, New
Brunswick
|
FOR THE APPELLANT
|
|
John H. Sims,
Q.C.
Deputy Attorney General of Canada
|
FOR THE RESPONDENT
|
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