Mister Coffee & Services Inc. v. Matthew Middleton and Ministry of Labour
1396-99-ES Mister Coffee & Services Inc., Applicant v. Matthew Middleton and, Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 61004451
BEFORE: D. L. Gee, Vice-Chair.
APPEARANCES: Robert Hale for the applicant; Matthew Middleton for the responding party; no one appearing for Ministry of Labour.
DECISION OF THE BOARD; September 7, 2000
1Further to the Board’s decision of March 17, 2000, a hearing with respect to this matter was held on Friday, September 1, 2000. The purpose of the hearing was to hear the parties’ evidence and submissions with respect to the gross profit and equipment costs relative to sales on the Kitchener Waterloo Health Centre (“Centre”) account during the three full months following its commencement of business and, in light of such figures, how much commission Mr. Middleton is entitled to receive.
2At the hearing, Mr. Hale, on behalf of the applicant, submit that the average gross profit for the three full months following the commencement of business on the Centre account was 44.5%. Mr. Middleton indicated that he did not dispute the applicant’s determination of gross profit.
3Mr. Hale provided the Board with a list of equipment that he asserts was put into the Centre account. The total value of such equipment is $11,522.
Mr. Middleton disputes that all of the equipment listed was installed and asserts that some of the equipment was used such that it should not be valued at its original cost.
Mr. Middleton listed the equipment that he recalled was required to set up the Centre account and revised his list after being reminded by Mr. Hale that there were two locations within the Centre and not only one. Mr. Middleton did not provide the Board with an estimate of the cost of the equipment that was installed.
4As between the evidence of Mr. Hale and Mr. Middleton with respect to the cost of the equipment installed, it is my determination that the evidence of Mr. Hale is to be preferred. As indicated above, Mr. Middleton had to be reminded by Mr. Hale that there are two Mister Coffee locations at the Centre. Accordingly, it appears that
Mr. Middleton does not have the best information about the account or what equipment went into it. This is not surprising given that Mr. Middleton’s responsibility was to secure the account and the responsibility for setting up the account lie elsewhere. In contrast, Mr. Hale had a list of equipment that he testified was installed in the Centre account. He testified that, even if the equipment was used, the company would have to purchase another piece of that equipment in order to maintain proper inventory. On balance, I am satisfied that the evidence provided by Mr. Hale to the Board with respect to the cost of the equipment installed at the Centre account is the more reliable. Thus, I accept that $11,522 in equipment was installed in the Centre.
5Based on equipment costs of $11,522, and sales of $4,606, $2,358 and $3,622 for the months of August, September and October respectively, equipment costs were 2.5, 4.8 and 3.1 times sales for the months of August, September and October.
6I turn then to the question of the quantum of commission Mr. Middleton is entitled to having regard to the gross profit of 44.5 per cent and equipment costs of 2.5 to 4.8 times costs for the Centre account. The document entered into between the applicant and Mr. Middleton (reproduced in full in the Board’s March 17, 2000 decision) states:
To gain full commission account must be at a 58% G.P. with equipment not to exceed 1.5 sales.
Clearly, gross profit is below 58 per cent and equipment costs exceed 1.5 sales.
7It was Mr. Hale’s submission that the document evidenced an intention on the parties’ behalf that Mr. Middleton would not be entitled to any commission unless the account reached an acceptable level of profitability. Mr. Hale testified that the company’s profit is in the range of six percent and that the company must maintain its margins in order to make any profit. Mr. Hale further testified that, had he thought that Mr. Middleton would be entitled to a commission when gross profit was as low as 44.5 per cent and equipment costs were as high as 4.8 times sales, he would have cut back on the account. Mr. Middleton made no submissions going to the issue of the quantum of commissions he should receive in light of the Centre account’s gross profit and equipment costs.
8The document executed by Mr. Middleton and the applicant indicates that, in order for Mr. Middleton to gain his “full” commission, the account must be at 58 per cent gross profit and equipment sales must not exceed 1.5 times months sales. By making reference to an entitlement to “full” commission when gross profit is less than 58 per cent and equipment costs exceed 1.5 times sales, the document suggests that
Mr. Middleton may be entitled to a “partial” commission if gross profit is more than 58 per cent and/or equipment costs exceed 1.5 times sales. The difficulty is determining how such partial commission would be calculated.
9In the Board’s view, if Mr. Middleton was entitled to a partial commission, it would be calculated by reducing his full commission by the percentage by which the gross profit was less than 58 per cent and/or the equipment costs exceeded 1.5 times sales. For example, if equipment costs were 2.25 times sales, or 50 per cent above the 1.5 times sales referred to in the document, Mr. Middleton would be entitled to 50 per cent of his commission. On this basis, once equipment costs reached double the 1.5 times sales referred to in the document, Mr. Middleton’s commission would be reduced to zero. In the present case, equipment costs are, at one point, 4.8 times sales, or in excess of three times the 1.5 sales referred to in the document. Thus, accepting that the document provided for Mr. Middleton receiving something less than his full commission, based on the equipment costs for the Centre account as they relate to sales, Mr. Middleton’s commission would be zero.
10Having regard to the foregoing and the determinations reached in the Board’s decision of March 17, 2000, this application is hereby granted. Order to Pay No. 53014 issued on July 21, 1999 is rescinded. I hereby direct that the monies paid by Mister Coffee & Services Inc. to the Director of Employment Standards in trust, plus interest, if any, accumulated thereon, be paid to Mister Coffee & Services Inc.
“D. L. Gee”
for the Board