Tax Court of Canada Judgments

Date: 20010428

Dockets: 2000-3677-EI, 2000-3678-CPP

BETWEEN:

CKUA RADIO FOUNDATION,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Rowe, D.J.T.C.C.

[1]            The appellant, CKUA Radio Foundation (CKUA) appealed from a decision issued by the Minister of National Revenue (the "Minister") dated May 5, 2000 wherein the Minister decided the employment of the worker - Gail Burton - with CKUA during the period from April 9, 1998 to February 1, 1999 constituted insurable employment because she had been employed under a contract of service pursuant to the provisions of paragraph 5(1)(a) of the Employment Insurance Act (the "Act").

[2]            The Minister also issued a letter - on May 5, 2000 - notifying the appellant that the Minister decided the employment of Gail Burton during said period was pensionable employment within the provisions of paragraph 6(1)(a) of the Canada Pension Plan (the "Plan"). The appellant appealed - 2000-3678(CPP) - from that decision and counsel for both parties agreed the result would follow the within appeal.

[3]            Wanda Bornn (Bornn) testified she is a resident of Edmonton, Alberta and is the President of Bornn Marketing Ltd. (BML). She stated her corporation - in May, 1998 - had entered into a contract with the appellant whereby it would provide her personal services to perform the function of Sales Manager. Prior to that, Bornn had been employed as a Sales Manager for a national ice-cream company and had also worked in the hotel convention industry. The contract between BML and CKUA required her to also manage and train sales representatives and to report to the Board of Directors. Bornn established the rate card - the document which sets the fees to be charged to advertisers - and began attending to all details relating to the sale of advertising, including responses to the CKUA website and other methods of promoting the station. All salespeople reported directly to Bornn. She explained that in the business of selling advertising - in this instance to be aired on radio - it is usual for people to be paid solely on a commission basis which accords with the well-known motto within the industry that "you eat what you kill". Since the sales representatives - also referred to as account executives - were paid only for the sales achieved, they were able to work out of their own homes, set their own hours and use their own methods for making calls and closing sales. In this way, they could write a proposal to an advertiser on a Saturday and choose to take Monday off to go skiing. In Bornn's experience in the sales industry - and in this specific case - the salespersons used their own computers, software and office equipment and there was also software available to them so they could access the CKUA database, as needed. All sales representatives entered into a written contract with the appellant but none were required - exclusively - to devote their total efforts to CKUA and they were able to work for other persons or entities. Bornn referred to an individual - Barry Holliday - from Calgary who worked as an account executive with CKUA but also sold advertising for a publishing company that targeted a market with a similar demographic to the appellant. She stated it was even possible for him to sell advertising on a radio station that was in direct competition with CKUA for a share of the listening audience. Bornn explained the procedure followed by the sales department required a sales representative to submit an order for advertising - referred to as a traffic order - to the appellant. The commission on advertising sales was paid at the rate of 20% for a normal sale but a sales representative - in some circumstances - could offer a "bonus week" to an advertiser in which case the appellant did not pay any commission on the value normally assigned to that extra period. Bornn stated the usual parameters for offering the additional advertising time were in the context of the sponsor having agreed to purchase 13 weeks of advertising. Bornn stated she is familiar with the details of the working relationship between Gail Burton and the appellant and - in her opinion - the usual methods used by other salespersons in carrying out the sale of advertising also applied to her. Copies of various Traffic/Sales orders were filed as Exhibit A-1 and one of them illustrated a situation where the advertiser - Calgary Co-op - prepaid the advertising account in the sum of $17,000 - and was granted a bonus week for each pre-paid quarter within the broadcast pattern. To record that transaction, there was a notation made - N/C - indicating no commission would be paid to the salesperson with respect to those bonus weeks. Bornn noted that the particular advertiser was located within Gail Burton's sales territory. Since she was fairly new to the job at that time, Bornn spoke with her concerning the creation of a program known as Community Calendar which was designed to serve as a vehicle for the sponsors' advertising spots. On one occasion, relating to the advertising purchased by Canada House, Burton exercised her discretion and granted some bonus spots in relation to a fund-raising activity. Bornn stated there was a geographic allocation of sales regions in order to define the rules and boundaries to prevent aggressive competition and to structure sales to the same market group. As a result, there were only four such regions - with an urban/ rural mix - created in the entire province of Alberta. Bornn stated she did exercise more control over the workers involved in selling advertising than she had been able to do in the ice-cream business where she discovered the contractors were independent to the point that she was unable to instruct them in the most efficient and profitable manner for delivering the product. In fact, some of them - during exceptionally hot weather when the demand for the product should have been at the peak - would choose to take the day off. Even in dealing with the CKUA sales representatives, Bornn stated she would provide Burton with a referral but could not - and did not - instruct her to call on any potential advertiser at a specific time and date. The city of Calgary was divided into two sales regions based on factors of geography, sales volume and location of existing advertising clients and in arriving at the decision, Bornn stated she relied on information and statistics obtained from the Calgary Chamber of Commerce. The division of territory permitted Burton - a single mother living in east Calgary - to make a day trip to Medicine Hat or Lethbridge and still return home the same night. Bornn referred to the contract - Exhibit A-2 - entered into between CKUA and Burton on April 9, 1998. The parties then entered into another contract - Exhibit A-3 - dated June 15, 1998 which was intended to replace the previous agreement and it then became the subject of an amendment - Exhibit A-4 - dated September 1, 1998. The working relationship between Burton and the appellant was terminated by means of the letter - Exhibit A-5 - dated February 1, 1999 sent by Bornn in her capacity as Executive Account Manager of CKUA to Burton informing her that her services were no longer required for the reasons stated therein. Bornn referred to the contract - Exhibit A-3 - and explained it had included a change to the sales territory serviced by Burton as well as containing a clause pertaining to commission earned in a situation where the advertiser had exchanged product for advertising time on the radio and the appropriate Goods and Services Tax (GST) was paid and the revenue recorded in the usual manner. Bornn pointed to paragraph 4 of said agreement where it was clearly set out that CKUA would have no obligation to provide any company benefits or to facilitate any otherwise mandatory deductions such as income tax, employment insurance premiums or Canada Pension Plan contributions. While no benefits were made available to Burton or other salespersons, regular employees of CKUA were entitled to participate in various benefit programs. All of the revenue earned by Burton pursuant to the contract with the appellant was commission income based on sales. There were no scheduled working hours set forth in the contract and no specific sales target in terms of dollars was established either within the agreement or verbally. The only reimbursement by CKUA for expenses incurred by Burton or other account executives was in connection with travel outside their designated sales territory or in the instance where Burton was reimbursed the cost of a civic luncheon because the General Manager (GM) of CKUA was unavailable and had requested her to attend on his behalf and represent CKUA. All other costs incurred to make sales - whether relating to automobile expenses, office equipment, telephones and other usual outlays - were the responsibility of each sales agent but CKUA paid Burton's membership in the Calgary Chamber of Commerce. In the event a salesperson wanted to solicit a sale from a business located outside his or her designated territory, then Bornn would have to give her approval prior to the call being made. A salesperson was able to hire an assistant at his or her own expense. Burton was able to offer certain rate reductions to customers but Bornn had the right to reject any such proposal because all traffic/sales orders crossed her desk. CKUA management had no idea who the advertisers were going to be until the orders were presented - by Bornn - to the department within CKUA responsible for actually creating the advertisement that would be heard on air. The salespeople were requested to provide information to Bornn - preferably on a weekly basis - but at least every two weeks. All sales were compensated on the basis of commission and 50% of the relevant amount was eligible to be paid once the contract with the advertiser had been signed and the balance was paid to the salesperson after the account had been paid in full by the client. In the event the client defaulted in payment, then the initial payment of commission - based on 50% of the total - had to be repaid by the account executive who had solicited the contract. Payments to sales representatives were made by the appellant prior to the 10^th day of the month following the period upon which the commissions were based. Bornn stated there was no probationary period in the contracts with account executives as the agreement provided for two weeks written notice prior to termination of the contract by either party. Bornn referred to the letter of termination - Exhibit A-5 - sent by her to Gail Burton on February 1, 1999. Bornn stated Burton had not produced any sales revenue for several months and she became concerned with the absence of progress. Burton had not come to CKUA with any general sales experience and had required more training and ongoing assistance than others involved in selling advertising for the appellant. Bornn stated it was usual for her to speak to Burton three or four times a week on the telephone as well as communicating by e-mail. Bornn referred to a letter - Exhibit A-6 - dated September 28, 1998 sent to her by Burton in which Burton had informed her the prospect list prepared on her home computer would not convert to the software being used at the CKUA office in Calgary. On July 23, 1998 Bornn wrote a letter - Exhibit A-7 - confirming her position - on contract - with CKUA as an account executive in order to provide information in support of Burton's application for a loan to purchase a car. Burton stated she received a telephone call from Mr. Williams, employed by Canada Customs and Revenue Agency (CCRA) and - during a lengthy conversation - he asked various questions concerning Burton's contract and other details concerning her remuneration. Bornn referred to a letter - Exhibit A-8 - dated October 23, 1998 sent by her to Burton and two other sales representatives setting out details of certain accounts receivable relating to advertising contracts. The sales representatives were involved in the collection process because their commissions were based on the clients actually paying the full amount of the advertising account to CKUA. Burton sent a letter - Exhibit A-9 - dated November 6, 1998, to Bornn concerning her commissions which - at that time - were paid to the sales representatives only as the revenue was taken into account - as earned income - by CKUA even if the entire amount had been paid in advance.

[4]            Counsel for the respondent filed a Book of Exhibits - R-1 - tabbed 1-21, inclusive, and reference to a particular tab will indicate it is located within said Book.

[5]            In cross-examination by counsel for the respondent, Wanda Bornn stated the months of November and December, 1997, and January, 1998, were slow sales periods for Burton but there had also been a decline in preceding months. Ordinarily, the months of November and December are very busy and December is the highest billing month for advertising sales in the entire year. At page 4 of the documents at Tab 21, Bornn identified a sales projection table that had been produced by her, based on active clients but the sales were not placed into the appropriate monthly column until the payment had been taken into revenue by CKUA in accordance with established accounting procedures. At the beginning of each year, CKUA management held a meeting during which an amount of revenue was identified as being necessary to fund operations of the radio station for the year but there were no individual sales targets established for any of the account executives. Counsel referred Bornn to paragraph 3 in the contract - tab 1 (a duplicate of Exhibit A-2) in which there was mention of a bonus being based on sales in excess of sales targets "established by the CKUA Sales Manager". Counsel referred Bornn to Exhibit A-3 - a contract between Burton and CKUA dated June 15, 1998 and to Addendum Two in which there was a clause pertaining to the payment of a bonus in a sum to be calculated in accordance with a formula dependent on the amount of actual sales in excess of the annual sales target. Bornn stated she had only assumed the function of Sales Manager at some point in May, 1998 and had not been aware of that provision of the agreement until later on. Counsel also referred to Exhibit A-2 - dated April 9, 1998 - the first contract entered into between Bornn and CKUA - in which - at paragraph 2(a) - CKUA guaranteed a base salary of $2,000.00 per month together with a schedule of commissions, some of which were payment of a fee for servicing contracts already entered into with various advertisers as a result of the efforts of other CKUA employees or sales representatives. Bornn agreed that the guarantee had been present but was then removed when the next contract - Exhibit A-3 - was entered into by Burton and CKUA on June 15, 1998. Bornn was the sole shareholder in BML but when she wrote the letter - tab 6 - dated November 17, 1998 - to Burton, she was doing so in her capacity as Executive Account Manager of CKUA. She stated all the sales representatives were well aware that she was operating through her corporation while carrying out the function of Sales Manager and/or Executive Account Manager of the appellant. The letter to Burton - at tab 7 - dated November 23, 1998, was sent by Bornn in her capacity as Executive Account Manager, CKUA Radio Network. Bornn agreed she could have hired persons to assist her in carrying out the sales management functions, but - practically - could not have afforded the expense so that, although not required to do so by her contract with CKUA, she ended up performing those services personally. Bornn identified a memorandum - tab 11 - received from Dian Boisvert of the accounting department at CKUA concerning certain matters of policy. Bornn also identified a memorandum - tab 16 - that she had issued to various persons - including sales representatives - concerning creative copy backlog and agreed there was no indication she was acting through - or on behalf - of BML, her corporation. Similarly, the memorandum - tab 18 - sent by her to three account executives - including Burton - concerned an amended CKUA corporate advertising policy and - again - there was no reference to it being provided by her within the context of carrying out a business function of BML. Bornn stated it was customary for her to send these types of notes or memos and sign them in her personal capacity. Further, when she communicated with advertising clients, she identified herself as the Sales Manager of CKUA. When she wrote the letters - at tab 6 and tab 9 - to Burton, she used CKUA letterhead and signed her name in a manner indicating she was communicating in her role as Executive Account Manager. Bornn explained all sales representatives used CKUA letterhead when writing to clients since it was available for this purpose. The normal practice was for a sales representative to sign the letter and to indicate - by inserting the description below the signature - that he or she was acting as an Account Executive. Counsel referred Bornn to Burton's business card - Exhibit R-2 - which described her as an Account Executive - Calgary Region - for the CKUA Radio Network. The address listed thereon was the office space rented by the appellant within the Centre for Performing Arts where there was a studio and some space for announcers and sales representatives to use as an office or when meeting people, including potential advertisers. The business card also provided a toll free number as well as the fax number and the website and e-mail address of the appellant. Bornn stated the card had been designed after she had begun carrying out the function of Sales Manager but she had not been consulted in the process of creating the business card. Within the CKUA space in the Centre for Performing Arts, there were chairs, tables, a photocopying machine, a fax, various telephones and a computer containing a database, all of which were at the disposal of sales representatives. The same software - even though it would remain the property of CKUA - was available to be loaded onto the home computer of any account executive if he or she chose to do so. Burton used the computer at the CKUA office in connection with making her sales but that was never a requirement of her contract. The e-mail address was for the CKUA office in Calgary while the toll free number and the fax machine were connected to the appellant's Head Office in Edmonton. The letter - at tab 6 - was considered by Bornn to have been "disciplinary" in content and while there had been some changes in the territorial structure and commissions had been reduced, Bornn became concerned that Burton was not an effective "team player" within the context of the positive attitude which was a hallmark of CKUA during its long history of quality broadcasting in Alberta. Bornn stated the intent was not to integrate Burton into CKUA itself but to encourage her to understand that the sales force operated collectively in order to produce sales revenue required by the station. When the letter of termination - tab 9 - dated February 1, 1999 was sent by Bornn to Burton, the sales portfolio of Burton had been diminishing for some time. Bornn was referred to a document - Exhibit R-3 - entitled Personal Sales Targets - and she agreed it had been produced at a sales meeting but stated it was nothing more than estimates of sales amounts that could be achieved. At that point, Burton had already reached 62% of her goal, still several months prior to November, 1998. In the original contract - Exhibit A-2 - at paragraph 6 - there was provision for reimbursement of office expenses and for "reasonable and approved business-related travel expenses upon receipt of appropriate expense documentation". Bornn agreed that was so but pointed out that in the next contract - Exhibit A-3 - again in paragraph 6 - there was a new provision entitled: Business Expenses. Within that paragraph, there was a breakdown between the expenses to be borne by CKUA and the other costs that would be the sole responsibility of Burton in her role as an account executive. The requirement for Bornn to approve a sales call by an account executive within the assigned territory of another representative was considered necessary to protect the income source of that other person. Within the contract - Exhibit A-3 - dated June 15, 1998 - at clause b of Addendum One, schedule A - there was a requirement that Burton "submit proposed contracts to the CKUA Sales Manager for review and approval as per CKUA's established policies and procedures". Burton agreed the clause had been inserted in the agreement but stated there was no practical requirement for such stringent approval. However, the appellant had put into place established policies and procedures - as approved by the Canadian Radio-Television and Telecommunications Commission (CRTC) - as part of the process involved in the issuance of a license to CKUA. The rate card - establishing the amount to be charged for advertising - was prepared by Bornn. An example - Exhibit R-4 - comprised of three separate sheets - set out the various rates. Burton and other account executives had some leeway in order to close a sale, especially if a client was willing to pay in advance or by credit card, in which case a bonus week could be offered which essentially reduced the overall price of the advertising campaign. The bonus usually involved about 3% of the total cost but could - on occasion - range as high as 10% of the contract. There was a change in the billing and commission procedure relating to account executive contracts and that was the subject of a memorandum dated November 12, 1998, - tab 4 - signed by Ken Davis, at that time the Acting General Manager of CKUA. The commission rate - originally at 20% of the advertising contract - had earlier been reduced to 17% and - at tab 8 - Burton had signed an amendment to her contract whereby she agreed to accept a reduction from 10% to 7% relating to "contra" advertising where an advertiser exchanged - in whole or in part - product or service in return to advertising spots. CKUA established certain policies concerning advertising and these were set out in a document at tab 17. This statement of policy was sent by Bornn to the sales representatives together with a memorandum - tab 18. The memorandum - tab 19 - was generated by Bornn and included instructions to the sales representatives on the methods by which they were to complete the administrative aspect of the sales work in order to comply with the requirements of GST and also to adhere to regulations imposed by the CRTC. The memorandum - tab 20 - outlined the various territories and the material - at tab 21 - included spreadsheets used to calculate commissions for the account executives as well as various graphs and charts, all relating to advertising sales. Information was provided - in the form of a binder - to the sales representatives and additional material was sent from time to time for placement therein. The salespeople also kept notes of their activities during the week and this material was provided to Bornn during their weekly reporting so she could use the information in order to assess the progress of sales. If Bornn had not received the appropriate report within two weeks, she would telephone the individual and take the necessary steps - including issuing a reprimand - in order to obtain it.

[6]            In re-examination, Bornn stated BML had been incorporated in January, 1996 and that all sales representatives received cheques - from CKUA - in payment of their earned commissions. Bornn explained that after a lengthy history of non-commercial broadcasting, CKUA had gone off the air on March 20, 1997. However, due to a massive effort to gain financial support from its dedicated audience, it returned to the air the following month, at which time it was operated by the newly-established, not-for-profit foundation which had also been registered as a charitable institution.

[7]            Barry Holliday testified he resides in Calgary and - as an account executive - began selling advertising for CKUA in September, 1999. He recalled having signed a contract similar to the one filed as Exhibit A-3. Prior to becoming a sales representative for CKUA, he had been selling advertising for a Calgary publisher and he informed Wanda Bornn that he wanted to retain those clients and to continue that arrangement even though he was now about to sell advertising for CKUA. Holliday explained that he was subject to a "clawback" which was triggered if the client had not paid the invoice after a period of 90-120 days. Because 50% of the commission on the sale had already been paid by CKUA, then if the account became a bad debt, the commission would be recovered from current commissions owed to him. Holliday worked almost exclusively from an office in his own home and paid all expenses related to making the sales calls, including outlays for the operation of his vehicle, computer equipment, software, promotional material and entertainment of clients. There was some leeway on the advertising rates and, if a client was likely to become a repeat advertiser, then a reduction of 3% to 10% could be offered in order to close the sale. Holliday stated the amount of time spent in a working day was irrelevant because remuneration was based solely on commissions flowing from sales. The method employed in the process was left to him and he solicited potential advertisers in whatever manner he deemed appropriate based on his 20 years experience in the advertising industry. On occasion, Bornn passed on some leads to him and he dealt with her as principal of the corporation - BML - which he understood to have entered into a contract with CKUA to carry out the function of Sales Manager. The only contact he had with officials at CKUA was when the GM would sit in on sales meetings.

[8]            In cross-examination, Holliday stated that his sales territory extended from Red Deer to Calgary.

[9]            Ken Regan testified he resides in Edmonton and has been the GM of CKUA Radio Network since February 1, 1999 when he took over the position from Ken Davis. Prior to that, he had worked as a journalist between 1982 and 1994. Since he was a journalist by training and by trade - working in both print and radio - including acting as a producer and legislative bureau chief, he had not gained any experience in the area of sales. CKUA had between 25-28 full-time employees, some part-time workers, together with 10 producers and account executives who functioned as independent contractors as well as people who volunteered their services to the station. Prior to Ken Regan becoming the GM, nearly all employees and contractors were reporting directly to that position. When the station returned to the air, it was due to the assistance of thousands of people in the province of Alberta who volunteered their expertise in many fields. CKUA was re-organized to operate within the foundation that had been established in 1995. The CRTC had granted a restrictive authority to sell advertising - a new undertaking - since CKUA had always been a non-commercial radio station. Regan stated CKUA management wanted to contract out the sales of advertising which would be directed by someone fulfilling the role of Sales Manager as they did not possess the knowledge to carry out that function. As a result, CKUA entered into a contract with BML whereby the corporation owned by Wanda Bornn would sell the advertising product. The contract with BML was in place when he took over as GM and, in a re-structuring process, he made it clear to all CKUA employees and independent contractors that they were to report directly to their managers in order to eliminate internal dissensions created by an earlier inefficient structure. He had never met Gail Burton and only became specifically aware of her situation when she was about to be terminated - as an account executive - by means of the letter drafted by Wanda Bornn who had showed it to him and explained the circumstances. His response was to advise Bornn that - as Sales Manager - it was her responsibility to make that decision. As a consequence of the termination of the working relationship, there were no legal actions ever commenced by Burton against CKUA. Regan stated he had never considered Burton to have been an employee of CKUA and was aware that all the other sales representatives had always conducted themselves on the basis they were providing services as independent contractors and all had signed agreements to that effect. In addition, CKUA had never received any advice to the contrary concerning these contractual arrangements. Regan explained that 70% of funding needed to operate CKUA is derived from donations sent in by listeners and supporters, 25% is obtained from the sale of advertising and the balance of 5% is derived from selling technical services. Initially, the faithful listeners of CKUA over several decades were aghast at the commercialization - even in a limited sense - of their beloved radio station and it was a slow process to make the new format acceptable to that audience. Even now, the goal is to return to a non-commercial status. Although CKUA had developed a policy concerning advertising, he did not provide any direction to any sales representatives. The environment at CKUA was described by Regan as being unique in the sense the station is an amalgam of public broadcasting/community radio and a limited commercial broadcaster. He was aware that many of the contracts used for selling advertising and some of the sales manuals had been culled from various sources, probably from several commercial stations. Regan stated he met with Burton - at her request - and they held a brief meeting at the Calgary airport where she explained her view of the circumstances surrounding her dismissal as an account executive. He agreed to review the situation and assured her that if an injustice had been done, then the decision would not be permitted to stand. During the meeting, no reference was made to her status - employee or independent contractor - but later on, he learned Burton was having a problem collecting employment insurance benefits. CKUA had an employee benefit plan which included a limited dental plan and Blue Cross but the producers and sales representatives - who had signed contracts with the station to provide their services - were not part of this benefit arrangement and were never considered to be part of the regular station staff. The employees - other than those involved in management - are members of a union that has a collective agreement with CKUA. Regan stated the advertising rates had been set by Bornn who also provided sales projections to the Board of Directors in the course of estimating needed revenue - and the source thereof - for another year of operations. In the event the sales projection is not attained, it creates a shortfall and, since the overall budget underwent a reduction of nearly 80% between the time it ceased to broadcast and when it returned to the air under the auspices of the newly-created foundation, the financial situation was precarious and under continuous scrutiny. The structure of the advertising sales mechanism was such that Burton - and other account executives - reported directly to Bornn and he did not become involved in the process other than to peruse sales information from time to time or to examine specific details of an advertising contract, as required. The CKUA office in Calgary was not staffed on a regular basis and the numerous telephone lines installed therein are capable of forwarding calls to the Edmonton office or to the home numbers of sales representatives. Regan stated he was aware that Barry Holliday was selling advertising for another entity and - at one time - had thought Burton was also selling for someone other than CKUA. He knew she could have hired an assistant and was free to set her own working hours.

[10]          Counsel for the respondent did not cross-examine.

[11]          Sharon Lynne Cross testified she has worked as a traffic coordinator at CKUA since November, 1994. Her job is to look after the client advertising contracts and to log them for the announcers. The copywriters produced the copy and the producers created the commercials. She met Gail Burton on one occasion and was aware of the concept of an account executive being able to offer bonus weeks.

[12]          Counsel for the respondent did not cross-examine.

[13]          Gail Burton testified that, while living in Calgary, she began working as an account executive for CKUA on March 17, 1998. She was unemployed at the time and was at home listening to the station at which she had earlier provided her services as a volunteer. She heard a message inviting interested persons to apply for a sales position and she sent in an application. Later, she received a telephone call from Ken Davis - the GM - and he came to Calgary and interviewed her. Davis requested that she explain why she believed she was suitable for the position and also provided some details about the nature of the sales position. She understood it involved prospecting new accounts and servicing existing clients. Davis later telephoned and offered her the job which she accepted. The written contract - Exhibit A-2 - was entered into on April 9, 1998 but she actually started working on March 17, 1998 and clause 8a of the contract set out the effective date of March 16, 1998, following which the agreement was to be in force for a period of three months. The next contract - Exhibit A-3 - was signed by her on June 15, 1998 but it no longer contained a guaranteed salary of $2,000.00 per month and - pursuant to clause 8b - was to be in effect for a further period of three months. The first contract covered the entire city of Calgary and other communities in central and southern Alberta, as set out in Addendum Three. The next document Burton signed was the amendment - at tab 3 - dated September 1, 1998 in which she agreed that the commissions payable by CKUA would be reduced and the contract would be extended through August 31, 1999. All other terms of the existing contract were to remain unchanged. Burton stated there was also a change in policy regarding payment of commissions - tab 4 - as well as a different method for taking revenue into account - tab 5 - which affected the timing of payment of commissions to the sales executives. There was a further revision of commission structure relating to sales termed as contras and the payment was reduced from 10% to 7%, to which she signified her consent by signing - on November 23, 1998, the amendment - at tab 8 - of said contract. Burton stated she felt as though there had been no real choice other than to accept the reduction in commission payable as it had been expressed as a policy of CKUA management. She also received a memorandum - tab 10 - from Bornn advising her - as well as the other account executives - not to accept prizes and certificates in return for advertising unless they were in addition to an existing contract. Burton recalled receiving the memorandum - tab 11 - dated January 8, 1999, from Bornn which was provided to the sales representatives at a meeting. She stated she had regarded the document as a written instruction concerning various matters relating to sales. She also received other written communications - tabs 16, 17, 18, 19, and 20 - on a variety of topics pertaining to creative copy backlog, the suitability of certain businesses as advertisers, further details of corporate advertising policy and advice that her existing territory had been divided into two regions. As a result, Carrie Roslinsky moved to Calgary from Edmonton and began working a portion of the city forming part of the new territory. Burton stated she was not in agreement with this amendment to the territory, especially because she had added to the client base that had existed when she first took on the role of account executive and did not approve of those new advertisers being added to the roster serviced by Roslinsky. Burton stated relevant details concerning her actual clients and prospects were loaded into the database on the computer at the CKUA office in downtown Calgary and she had never bothered to place that information into her home computer. Throughout her working relationship with CKUA, Burton stated she had never been aware that any of her advertising clients were unhappy with her services nor did anyone ever advise her that any complaints had been made. The sheet containing personal sales targets - Exhibit R-3 - was prepared following group discussion and, while the sum of $250,000 - pertaining to her - was not specifically established, that number was regarded as a goal to be strived for during the current fiscal year and she was - at the time of the meeting - already at the 62% mark. Her remuneration was calculated from information contained in regular reports submitted by her to Bornn. The rate cards were provided by Bornn and the account executives were aware they could offer a discount of 3% to 10% as an incentive to a customer. Upon receiving the letter - tab 6 - dated November 17, 1998, from Bornn, Burton stated she was upset and decided to respond by sending a lengthy reply - tab 7 - which she wrote on CKUA letterhead obtained from the Calgary office. She used the same stationery to write to her clients. When she received her letter of termination - tab 9 - dated February 1, 1999, she disagreed with the reasons stated therein but agreed she had not provided reports to Bornn for December, 1998 and January, 1999. She also acknowledged that her advertising sales had declined for the preceding three or four months prior to that time because she had not properly planned for the impact of the flood of advertising undertaken by businesses in the month of December by targeting them early in the fall when there was still some money available in their advertising budgets. Burton attended sales meetings in Red Deer and Banff and was reimbursed for any trip outside her sales territory. Bornn permitted her to retain one client from her former territory and Burton stated she was aware Bornn's permission was required prior to attempting to sell to any businesses in another territory. The business card - Exhibit R-2 - was prepared by CKUA and she used it while canvassing potential advertisers. She devoted all of her working time to CKUA and went to the downtown office nearly every day where she used the office equipment, machines and the computer. Although she did not pay a lot of attention to her status at the time, she always felt as though she was an employee, despite having signed various contracts in which she had agreed - with CKUA - to provide her services in her capacity as an independent contractor. The only expenses incurred by her were for car expenses and parking and she was able to set her own hours. Since she had never worked as an independent contractor earlier in her career, it seemed to her as though the account executive position at CKUA was very much like other jobs she had held where she had been an employee. While working for the appellant, she had always reported directly to Bornn.

[14]          In cross-examination by counsel for the appellant, Gail Burton stated she had been a volunteer at CKUA and was aware - through media reports - that the station was encountering difficulties, including a shortage of money and so she donated some of her time to host events or to assist in any manner requested. When she became an account executive, there was an advertising account from Chevron - valued at $50,000 per year - that she took over from the former representative. Prior to becoming a sales representative for CKUA, she had been employed - on salary - by the City of Calgary and part of her job involved the purchase of radio advertising. Earlier, she also had some acquired retail sales experience. The first contract - Exhibit A-2 - was not signed until April 9, 1998. She did not seek formal legal advice with regard to signing any of the contracts and amendments thereto, but did inquire of her former brother-in-law - a lawyer - about the effect of the revisions to the commission structure. She was aware that in paragraph 4 of both agreements - Exhibit A-2 and Exhibit A-3 - there was reference to her providing her services as an "independent contractor" and she understood she would not receive any employee company benefits nor would any of the usual deductions be taken from her pay cheques. At no time during her working relationship with the appellant, did she ever inquire about the absence of deductions from the payment of commissions. After being terminated by CKUA, the following month she found a job and worked until December, 1999, in a position involving production of advertising. As a consequence of that new employment, Burton stated she qualified for employment insurance benefits and when she completed the appropriate form in support of the claim, she described her work - as an account executive for CKUA - as being in the category of self-employment. Later, an official from CCRA interviewed her and asked questions concerning details of her work situation which she considered somewhat peculiar since she had never intended that her work at CKUA would be included in the pool of employable hours upon which to base a claim for future employment insurance benefits. In terms of her working conditions at CKUA, Burton stated she attempted to return home each day by 3:00 p.m. and was aware she could have worked from her residence but "did not mind going down to the office". Another sales representative was frequently at the downtown office and Burton preferred to work from that location. In the event she had been required to be absent from work for only a day or two, Burton stated she would not have informed Bornn. The income from selling advertising for CKUA - in the sum of $24,443.79 - was her sole income during the relevant period. She paid her own car expenses and telephone costs. As for not submitting reports - to Bornn - in December, 1998, Burton explained there was nothing significant to report as there had been very few sales. She realized she had misjudged the planning for the holiday season and would have done better the following year. On one occasion, an existing client had been exhibiting signs of a desire to cut back on advertising and Burton contacted Ken Davis - the GM - who came to Calgary and discussed the advertising program - in person - with a manager of that business. Another time, a customer was reluctant to renew an advertising contract and wanted to meet the Sales Manager, Wanda Bornn. Burton was aware that Bornn provided her services to CKUA through her corporation, BML. As for granting discounts to clients, initially she would seek approval from Bornn. Burton stated a "Blues Bar" had gone bankrupt leaving an outstanding account owing to CKUA for some advertising she had sold. Notwithstanding that default, she still received full commission for that sale and no return of any part of the commission was ever demanded by CKUA. After her work as a sales representative had been terminated, she did not issue any legal action against the appellant because she is a devoted fan of CKUA and its commitment to provide quality radio programming.

[15]          James Willows testified he is a CPP/EI Coverage Officer at CCRA. In handling the particular file which became the subject of the within appeal, he spoke to Gail Burton, Dian Boisvert and Wanda Bornn. He also examined various documents including the various contracts signed by Burton. He had access to cancelled cheques paid to Burton and reviewed the letter - tab 9 - terminating Burton's working relationship. The ruling report - tab 12 - was prepared by him and - at page 11 - he tabulated all of the cheques received by Burton from CKUA during the relevant period. Willows stated he had understood - from Bornn - that Burton could have sold advertising for another company during the same sales call but not if it was to be broadcast on another radio station.

[16]          In cross-examination, Willows stated he wrote the letter - Exhibit A-10 - dated February 9, 2000, by which he communicated his ruling, and referred therein to the requirement - of Burton - to provide Bornn with reports. He also decided that she was required to perform the services personally and could not have hired a substitute. He also ascertained there had been training provided to her. He took into account there had been an advertising client that had gone bankrupt while owing money to CKUA and that Burton had still received her full commission on the sale. He had not been aware of any so-called "clawback" provision but it would not - in any event - have changed his opinion as to the status of Burton. After issuing the ruling, Willows stated he referred the matter to payroll audit and it was that department which was later responsible for certain assessments having been issued against the appellant involving other workers. In carrying out his function, Willows stated he had never considered Bornn - acting as Sales Manager - to have been an employee of CKUA.

[17]          Counsel for the appellant submitted that Burton was free to work for other entities while selling advertising for CKUA, could set her own hours and was free to work in accordance with her own methods. She had signed various contracts which clearly set out her status and was under no compulsion to do so. Both parties - in good faith - entered into a contractual arrangement in which they believed they were dealing with each other on the basis of Burton providing her services as an independent contractor and they subsequently acted in conformity with that accord. Counsel pointed out that Burton paid her own expenses associated with the selling process and had resisted the division of her territory because it was seen by her to have a negative impact on her ability to generate sales income. While CKUA - as the broadcaster - was essential to the overall process, counsel submitted the evidence established that Burton was carrying on business on her own account and was not an employee of the appellant.

[18]          Counsel for the respondent submitted the first contract signed by Burton contained a guaranteed salary during a period that one usually would associate with a probationary term. Counsel referred to various items of correspondence directed to Burton indicating she was considered an integral part of the CKUA structure and the exchange of communication between Bornn and Burton was consistent with that of an employer/employee relationship. Pursuant to paragraph 7 of each contract signed by Burton and CKUA, there was a simple mechanism for terminating the contract and it did not require elaborate reasons to be given, as might be prudent when discharging an employee for cause. Overall, in counsel's view of the evidence, the circumstances of the working relationship were such that the Minister was correct to decide that Burton was an employee engaged in insurable employment with CKUA during the relevant period.

[19]          In Wiebe Door Services Ltd. v. M.N.R. [1986] 2 C.T.C. 200, the Federal Court of Appeal approved subjecting the evidence to the following tests, with the admonition that the tests be regarded as a four-in-one test with emphasis on the combined force of the whole scheme of operations. The tests are:

                1. The control test

                2. Ownership of tools

                3. Chance of profit or risk of loss

                4. The integration test

               

Control:

[20]          Gail Burton received some initial training and - because she had not come from a background in advertising sales - required more ongoing assistance than others who were experienced salespeople. Bornn communicated with her frequently and Burton also attended sales meetings and participated in planning sessions concerning, inter alia, the preparation of sales projections. Initially, Burton sought permission from Bornn to offer discounts to existing and/or potential advertising clients and both Davis - the GM - and Bornn - acting as Sales Manager - went to Calgary in order to meet with an existing client for the purpose of persuading that advertiser to renew a contract and - on another occasion - to convince a business to advertise on CKUA. Both of these advertisers spent a considerable amount of money and the amount earned by those accounts made up a significant part of CKUA revenue. When one examines the letter - tab 6 - dated November 17, 1998 - sent by Bornn to Burton - the contents thereof constitute a form of censure or reprimand directed to Burton for apparently having become drawn into "station politics". There is also reference to "negativity", "rumours" and "mistrust and destruction within a working environment" as well as an admonition to refrain from participating in "gossip". Burton replied to that communication by sending a lengthy letter - tab 7 - in which she attempted to be conciliatory and at one point was moved to assure Bornn that her authority was not being challenged by Burton nor was she about to participate in any manner concerning the issue of the position of General Manager. The memorandum - tab 16 - dated October 1, 1998, sent by Bornn to Burton and other account executives contains a list of instructions in which certain procedures were to be undertaken by named individuals. The 5-page communication - tab 19 - dealt with a variety of topics, including instructions pertaining to the efficient manner of completing documentation required by CKUA creative and accounting departments. In regard to the specific process of making sales, there were instructions issued on subjects such as paying attention to lead time, the need to obtain backgrounder sheets from the client, methods of communicating with an advertiser and advice to account executives stating that "the utmost importance" be attached to the matter of the traffic/sales order because it had to be completed comprehensively and contain proper information in a manner acceptable to Bornn. There was a gray binder provided to Burton and the other sales representatives in which updated promotional material, rate card revisions and other updates could be inserted. The letter of termination - tab 9 - referred to Burton's failure to file reports as requested by Bornn as well as a failure to meet certain standards necessary for the growth of a viable sales portfolio caused - presumably - by a lack of the "skill sets" required to achieve that end. Certainly, Addendum One, Schedule A, clause b of Exhibit A-3 - required Burton to provide weekly sales reports to the CKUA Sales Manager and to submit proposed contracts to her for review and approval in accordance with the appellant's established policies and procedures. Within clause a of that Addendum, the Sales Manager had the right to redefine the sales territory at any time and there was reference to protection of sales within that designated territory. The point is, that when one steps back and observes the conduct of Bornn - as the designated agent of CKUA - it is difficult to accept that the appellant was dealing with Burton as an independent provider of services rather than as an employee who was expected to conform to policies and procedures within a hierarchical model, including a clear requirement to be subordinate to the directions of Bornn. The working hours were not established by CKUA but - through receipt of weekly reports to Bornn - the appellant was able to monitor ongoing efforts - by Burton and others - to make sales and to gauge the progress - or lack thereof - in proceeding towards the dollar volume needed to maintain the current level of operations. In this sense, and acknowledging the nature of the sales profession, this test leans toward defining Burton's status as that of an employee.

Tools:

[21]          While it is true Burton could have worked at home in the same manner as another account executive - Holliday - she chose not to do so and CKUA did not object to her using the downtown office space together with all of the related equipment, including the computer and database. For anyone involved in attempting to make sales within a widespread territory, a vehicle and a telephone are extremely important tools and these were owned by Burton. In my opinion, this test is neutral when examined in this strict context but it still forms part of the overall analysis required by the four-in-one test.

Chance of profit or risk of loss:

[22]          Burton was paid on a commission basis in the same manner as many salespeople including those who are clearly working as employees. She was responsible for the major expenses associated with her work and could increase her income by selling more advertising and by doing so without compromising her commission base by offering too many bonus weeks or in accepting goods or services under the category of contra which was subject to a commission of only 10%, later reduced to 7%. In addition, there was a clear understanding set forth in the contract - Exhibit A-3 - at paragraph 2d - that Burton would share in any loss in the event an advertising account was considered - by CKUA - to have become an uncollectible debt, in which event, that amount of commission attributable to the debt would be deducted from future commissions. However, the evidence was that a client of Burton had gone bankrupt and had not paid the outstanding advertising account to CKUA but she had not been deducted any amount from her remuneration as a consequence. I regard it as significant that the initial contract with Burton - Exhibit A-2 - having a three-month term - provided her with a guarantee of $2,000.00 per month. The next contract did not contain any such provision but one would not ordinarily expect an independent contractor to begin providing services pursuant to a guarantee - as opposed to a retainer - since that impacts on the very question of chance of profit or risk of loss. Thereafter, the commissions were reduced as a matter of policy and I accept the evidence of Burton that she felt there was very little choice but to accept the new base rate for commissions if she wanted to continue working as an account executive. Her territory had been divided earlier - and despite her protests - that had been the decision made by Bornn, as she was entitled to do under the terms of the contract. Burton had no investment in a real entrepreneurial sense and if sales were poor - as they were towards the end of her tenure - then her income was reduced but that is not the same as actually running the risk of being out-of-pocket as a consequence of having agreed to deliver a specific service or product to another in exchange for a certain price. Burton was paid to attend meetings held outside her territory and her membership in the Chamber of Commerce was paid by CKUA. Her expenses in connection with attending a luncheon - at which she substituted for the GM of CKUA - were paid by the appellant. While earning money on a commission basis is not the same as piece work - in the sense that the efforts expended in the production of more widgets brings more money - there is still a direct relationship between the amount of the sales - as approved by Bornn - and the remuneration paid which was based upon a strict formula that was amended twice. The result of the analysis relating to this test leads me to conclude - on balance - that it favours a characterization of employee.

Integration:

[23]          This test is one of the most difficult to apply. At page 206 of his judgment in Wiebe, supra, MacGuigan, J.A. stated:

"Of course, the organization test of Lord Denning and others produces entirely acceptable results when properly applied, that is, when the question of organization or integration is approached from the persona of the "employee" and not from that of the "employer," because it is always too easy from the superior perspective of the larger enterprise to assume that every contributing cause is so arranged purely for the convenience of the larger entity. We must keep in mind that it was with respect to the business of the employee that Lord Wright addressed the question "Whose business is it?"

Perhaps the best synthesis found in the authorities is that of Cooke, J. in Market Investigations, Ltd. v. Minister of Social Security, [1968] 3 All. E.R. 732 at 738-39:

The observations of Lord Wright, of Denning L.J., and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: "Is the person who has engaged himself to perform these services performing them as a person in business on his own account?" If the answer to that question is "yes," then the contract is a contract for services. If the answer is "no" then the contract is a contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. The application of the general test may be easier in a case where the person who engages himself to perform the services does so in the course of an already established business of his own; but this factor is not decisive, and a person who engages himself to perform services for another may well be an independent contractor even though he has not entered into the contract in the course of an existing business carried on by him.

There is no escape for the trial judge, when confronted with such a problem, from carefully weighing all of the relevant factors, as outlined by Cooke, J."

[24]          In the within appeal, there is no question that the appellant - with a license to operate a radio network and the ability to broadcast advertisements pursuant to regulations established by the CRTC - was the mechanism that ultimately produced the revenue. Advertisers are not about to pay for publicity unless it is aired on the station owned by the appellant - in accordance with established policies and procedures - after the commercial forming the substance of the transaction has been created by the traffic, creative and production departments of CKUA. The evidence establishes that the appellant - when it gained permission to air commercials on a limited basis - did not have personnel who were experienced in sales since the entire history of the radio station had been as a commercial-free broadcaster. As a result, the decision was taken by the management of the appellant to farm out - to Wanda Bornn and her corporation - the entire sales and marketing function and to retain her services as the Sales Manager. In that sense, one can appreciate the intent of the appellant was to separate that novel function of selling advertising from the remainder of the operations, especially since the commercial content was producing only 25% of the revenue needed to operate in any given year. However, BML - Bornn's corporation - did not enter into contracts with Burton and the other account executives. Burton's contracts were with the appellant. Bornn - acting as the appellant's Sales Manager - organized the sales force and supervised their efforts as well as approving the individual advertising contracts to ensure they met with the existing policies of CKUA in that regard. The business card - Exhibit R-2 - designed by CKUA employees for use by Burton clearly represents her to be an account executive but the information provided therein is almost exclusively devoted to directing interested parties to the CKUA infrastructure whether in Edmonton or Calgary. There would be no need for advertisers or potential clients to be aware of the precise characterization of the working relationship between Burton and the appellant as their concern would only be that she was authorized to sell advertising which would be broadcast on the appellant's radio network. Unlike her colleague - Holliday - Burton did not handle any advertising sales for another entity and she worked - for the most part - out of the CKUA office in Calgary from which place she made many of her calls and also arranged to meet clients at that location. Had Burton been acting throughout as a separate entity - as purported by Bornn through her corporation - there would not have been the need for the extent of control and supervision and insistence in specific detail in following set procedures; instead it would have been more attuned to the achievement of a specific result without being concerned about the nuts and bolts of the process. Of course, any vendor of a product utilizing any sort of sales mechanism is going to monitor progress and will institute action in the event problems occur in the area of achieving expected results but that should be expected to occur on a lateral or horizontal basis from entity to entity rather than from the top downwards in circumstances where there is a strong essence of subordination permeating the working relationship. Burton took over an existing territory in which advertisers had contracts with CKUA. Like most salespeople, she was left alone to search for gold but at least she had been directed to the known producing vein and was not expected to prospect entirely on her own. However, the advertising rates were established by Bornn and were the subject of a published rate card. Other sales representatives - such as Holliday - may well have been acting in such a manner that they were operating a business on their own account without the extent of control applied to Burton and - apparently - that issue will be grist for another mill. The fact that Burton could offer a bonus week - in certain circumstances - is no more indicative of the status of independent contractor than the example where a store owner instructs clerks that - to close a sale - a reluctant customer can be offered a discount ranging up to 15%. On balance, I choose to regard this test - pertaining to integration - as favouring the status of employee.

[25]          In this field of jurisprudence, it is difficult to apply the results in other cases even where the facts appear to be very similar. It does not require many points of difference - in some or all of the areas concerning the tests to be applied - before the cumulative or multiplier effect leads to a different result. There are cases in which door-to-door sellers of long-distance service have been held to be independent contractors. One of these is the case of Ivanov v. M.N.R., T.C.J. 8646,wherein I referred to the case of 740944 Alberta Ltd. v. M.N.R., T.C.J. 8428, (1999-1868(EI) and 1999-1869(CPP)). In that instance, Porter D.J.T.C.C. dealt with the situation of an individual who had been selling long-distance services for a marketing entity owned by the numbered company. In that instance, the Minister had issued a decision that the worker had been an employee engaged in insurable and pensionable service. In the 740944 case, Judge Porter held the worker had not been providing services pursuant to a contract of service but had been functioning as an independent contractor. Some of the matters considered by Judge Porter in the course of his analysis are as follows:

-                there was an agreement entered into by the worker and the company whereby both parties intended the worker would be an independent contractor and, there being no clear evidence they functioned differently in the course of the working relationship, that deference should be given to the intentions of the parties at the time of signing;

-                if salespersons wanted to do well, it was beneficial for them to attend the sales meetings where they could be updated on programs and services for sale;

-                people had a choice of territory and whether they worked or not on a given day was up to them;

-                there was no requirement the salespeople had to be in the office at any appointed time;

-                the sales personnel paid for their own transportation to make the calls door-to-door;

-                there was the opportunity for profit if they organized themselves in an efficient manner and there was the risk of loss if they incurred expenses but did not generate any commission revenue from sales;

-                the salespeople were not integral to the business of the appellant corporation in that they could choose to work for other organizations so long as when they were standing at the door of a potential customer they did not offer long distance services of any provider except AT & T;

-           each salesperson was operating their own mini-business in whatever manner they saw fit;

[26]          In a recent decision of mine - Randy Fatt v. M.N.R. 2000-3591(EI) - dated April 12, 2001, I found the appellant to have been an independent contractor while selling pay phone locations for which he was compensated on a commission basis at a flat rate per phone placement. The appellant paid his own expenses for cellular telephone and car expenses. The payor provided no tools, equipment or office space and very little in the way of promotional or sales-related material. The reporting requirements were undertaken mainly as a basis for receiving compensation which was dependent on the number of sales completed as listed on the appropriate sheet. Throughout, there was a marked absence of control and the main office of the company was located in Vancouver while the selling territory of the appellant was in Alberta. It was a new venture without any established guidelines or business base and the marketing tool employed was a British Columbia corporation that through its Sales Manager - a former co-worker of the appellant - engaged the appellant's services due to his proven abilities as an experienced career salesman willing to develop a customer base for a new concept in the placement of pay phones within a newly de-regulated industry.

[27]          In the case of Frontier Business Centre Ltd. v. M.N.R. (97-1106(UI) and 97-124(CPP))- a judgment of the Honourable Judge Bowman, as he then was, Tax Court of Canada, dated May 20, 1998, two salesmen were found to have been working as independent contractors while selling new and used farm equipment. Judge Bowman found they had no fixed hours, worked out of their homes and were not required to meet any sales quotas or even to sell anything. In fact, they were discouraged from attending at the payor's office since he wanted to make the sale himself and not have to pay a commission. They paid all their own expenses - initially - and then received reimbursement only in accordance with the commission split - 30% of the net profit - once a sale had been completed. They were free to hire other people, for which they paid, and chose what sales would be attempted. A significant difference between those facts and the situation in the within appeal is that those salesmen were able to choose the price they would charge for the equipment and had full discretion as to the amount they would allow on a trade-in which would directly impact on their share of the net profit. Judge Bowman found there was no control over their income-generating activity nor were there any assigned territories. In addition, he held they were not integrated into the organization even though their services - overall - had an effect on the profit of Frontier Business Centre Ltd.

[28]          In the case of Charbonneau v. Canada (Minister of National Revenue -M.N.R.), [1996] F.C.J. No. 1337, the Federal Court of Appeal dealt with the issue whether or not a log skidder was an employee or independent contractor. The judgment of the Court was delivered by Décary, J.A. who stated at page 1:

                "Contract of employment or contract of enterprise? This, once again, is the question that arises in this case, the issue in which is whether the respondent, the owner and operator of a skidder, was engaged in insurable employment for the purposes of the application of paragraph 3(1)(a) of the Unemployment Insurance Act.

                Two preliminary observations must be made.

                The tests laid down by this Court in Wiebe Door Services Ltd. v. M.N.R. - on the one hand, the degree of control, the ownership of the tools of work, the chance of profit and risk of loss, and on the other, integration - are not the ingredients of a magic formula. They are guidelines which it will generally be useful to consider, but not to the point of jeopardizing the ultimate objective of the exercise, which is to determine the overall relationship between the parties. The issue is always, once it has been determined that there is a genuine contract, whether there is a relationship of subordination between the parties such that there is a contract of employment (art. 2085 of the Civil Code of Québec) or, whether there is not, rather, such a degree of autonomy that there is a contract of enterprise or for services (art. 2098 of the Code). In other words, we must not pay so much attention to the trees that we lose sight of the forest - a particularly apt image in this case. The parts must give way to the whole.

                Moreover, while the determination of the legal nature of the contractual relationship will turn on the facts of each case, nonetheless in cases that are substantially the same on the facts the corresponding judgments should be substantially the same in law. As well, when this Court has already ruled as to the nature of a certain type of contract, there is no need thereafter to repeat the exercise in its entirety: unless there are genuinely significant differences in the facts, the Minister and the Tax Court of Canada should not disregard the solution adopted by this Court."

[29]          Returning to the within appeal, the first contract - Exhibit A-2 - had a term of three months. The next agreement - Exhibit A-3 - was effective for another three-month period. Then, by an amendment to said contract - tab 3 - dated September 1, 1998 - the term of the contract was extended through August 31, 1999. It was this document which reduced the commission structure. The short duration of the first two contracts and the guaranteed income provided for in the first agreement smack of a probationary period usually applicable to a new employee rather than a commercial arrangement with another business entity. If the agreement provides for termination upon two weeks written notice - without having to provide reasons - then what is the point of the two back-to-back three-month contracts except within the context of providing training and supervision and using that period to assess the individual's ability to sell the appellant's product. Also, it seems to me that if a business has entered into an arrangement with an independent contractor to provide a service - payment for which is based solely on commission - and there are others involved in the same process, there would be little need for providing advice and direction to this so-called entrepreneur. Instead, another independent contractor could be added to the pool of revenue producers without the need to terminate the services of any one of them. The appellant created territorial boundaries in a reasonable attempt to protect that region from other salespeople and to preserve the potential for earning a decent income stream. That is laudable but it does not accord with the dog-eat-dog culture that is supposed to be the hallmark of the radio advertising business, as expressed by Bornn.

[30]          It is apparent the parties intended the appellant would be functioning as an independent sales contractor and they basically carried out the terms of said agreement. As for the effect to be given to the agreements - Exhibits A-2 and A-3 - it is clear what the parties thought their relationship was will not change the facts. In the case of Minister of National Revenue v. Emily Standing, 147 N.R. 238, Stone, J.A. at pages 239-240 stated:

"...There is no foundation in the case law for the proposition that such a relationship may exist merely because the parties choose to describe it to be so regardless of the surrounding circumstances when weighed in the light of the Wiebe Door test ..."

[31]          For the most part, the parties conducted themselves throughout their working relationship in accordance with the terms of the contracts entered into between them from time to time. Burton did not ever intend to hold herself out - to CCRA - as an employee of the appellant during the relevant period and was willing to allow herself to be regarded - by CKUA - as an independent contractor even though she had never functioned in that role earlier in her working life. While at CKUA, she doubted there was very much difference between the actual conditions under which she functioned on a day-to-day basis - when compared with earlier positions where she had been a salaried employee - except she knew she was paid on a commission basis and would not be participating in any employee dental or medical plans. From the perspective of Gail Burton, it is not reasonable to conclude that she regarded herself as carrying on business on her own account when working as a sales representative within the overall organization and business structure established by the appellant to sell advertising in order to generate revenue for the station. Burton was not an auxiliary motor engaged in producing revenue for CKUA, she was an integral part of the appellant's main engine. It appears the General Manager of the appellant - Ken Regan - shared Burton's view of her working relationship since he took it upon himself to meet with her in Calgary to discuss her termination and listened to the reasons offered by her while seeking a review of that decision. He informed Burton that he would inquire into the matter and ensure no injustice had been carried out and, if the decision had not been proper, he would intervene to make it right. That conduct is not consistent with what one would normally expect to see when dealing with the termination of a business relationship entered into with an independent contractor. It is apparent that CKUA was fairly new to the commercial aspect of broadcasting and it appears as though the touchy-feely, friendly, community-based concept - so beloved by its devoted fans and staunch defenders for decades - survived the transition.

[32]          I caution any reader to avoid regarding these reasons as representing a useable template capable of being applied to other sales representatives working under contract for CKUA during the same period, as it will not take much of a turn on the facts to permit a different result. That is regrettable in one sense because the distinctions are often so fine they are lost in the details. The jurisprudence - in my view - can be fairly criticized as being too fact-driven and, therefore, not particularly useful to those researching a specific scenario in the hope of discovering some solid foundation upon which to base a course of conduct relevant to the provision of services. Unfortunately, unless and until there is some major modification to the legislation or a dramatic revision in the jurisprudence undertaken at the appellate level, there is no escape for the trial judge and even if there were, someone would track him or her down and demand a resolution to the conundrum created by different views of the specific mutual undertaking that created the working relationship at issue. But, one has to make a decision in accordance with the facts - as found - and then apply the relevant jurisprudence. Often, the discharge of the burden of proof is accomplished by the smallest of margins. Other times - as in the within appeal - despite having presented a strong case, an appellant will fall short of the mark.

[33]          Taking into account the evidence and applying the jurisprudence in the manner directed, I cannot disagree with the finding of the Minister that Gail Burton was employed in insurable employment with the appellant during the relevant period. As a result, the appeal is hereby dismissed.

[34]          As agreed at the outset, the result in appeal 2000-3678(CPP) is governed by the above disposition so that it is also dismissed.

Signed at Sidney, British Columbia, this 28th day of April 2001.

"D.W. Rowe"

D.J.T.C.C.

COURT FILE NO.:                                                 2000-3677(EI)

STYLE OF CAUSE:                                               CKUA Radio Foundation and M.N.R.

PLACE OF HEARING:                                         Edmonton, Alberta

DATE OF HEARING:                                           February 15 and 16, 2001

REASONS FOR JUDGMENT BY:                      the Honourable Deputy Judge D.W. Rowe

DATE OF JUDGMENT:                                       April 28, 2001

APPEARANCES:

Counsel for the Appellant:                                  Samy F. Salloum

Counsel for the Respondent:                              Louis A.T. Williams

COUNSEL OF RECORD:

For the Appellant:                

Name:                                                                      Samy F. Salloum

Firm:                                                                        Samy F. Salloum Professional Corporation

                                                                                Edmonton, Alberta

For the Respondent:                                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                Ottawa, CanadaCOURT FILE NO.:                                     2000-3678(CPP)

STYLE OF CAUSE:                                               CKUA Radio Foundation and M.N.R.

PLACE OF HEARING:                                         Edmonton, Alberta

DATE OF HEARING:                                           February 15 and 16, 2001

REASONS FOR JUDGMENT BY:                      the Honourable Deputy Judge D.W. Rowe

DATE OF JUDGMENT:                                       April 28, 2001

APPEARANCES:

Counsel for the Appellant:                                  Samy F. Salloum

Counsel for the Respondent:                              Louis A.T. Williams

COUNSEL OF RECORD:

For the Appellant:                

Name:                                                                      Samy F. Salloum

Firm:                                                                        Samy F. Salloum Professional Corporation

                                                                                Edmonton, Alberta

For the Respondent:                                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                Ottawa, Canada

2000-3677(EI)

BETWEEN:

CKUA RADIO FOUNDATION,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeal of CKUA Radio Foundation (2000-3678(CPP)) on February 15 and 16, 2001 at Edmonton, Alberta, by

the Honourable Deputy Judge D.W. Rowe

Appearances

Counsel for the Appellant:                    Samy F. Salloum

Counsel for the Respondent:                Louis A.T. Williams

JUDGMENT

          The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.

Signed at Sidney, British Columbia, this 28th day of April 2001.

"D.W. Rowe"

J.T.C.C.

2000-3678(CPP)

BETWEEN:

CKUA RADIO FOUNDATION,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on common evidence with the appeal of CKUA Radio Foundation (2000-3677(EI)) on February 15 and 16, 2001 at Edmonton, Alberta, by

the Honourable Deputy Judge D.W. Rowe

Appearances

Counsel for the Appellant:                    Samy F. Salloum

Counsel for the Respondent:                Louis A.T. Williams

JUDGMENT

          The appeal is dismissed and the decision of the Minister is confirmed in accordance with the attached Reasons for Judgment.

Signed at Sidney, British Columbia, this 28th day of April 2001.

"D.W. Rowe"

J.T.C.C.