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.