I think that's the old law, the new laws (C-36) allow sex workers to get accommodations, buy ads, hire security, etc. It also allows them to group together in associations and cooperatives. An agency would fall into that category.
The old law was worded imprecisely to handle pimping, but it could've easily been misconstrued to include family members of a sex worker as "living off the avails". I don't think it was ever actually misconstrued that way in real life, but the courts were persuaded by the hypotheticals and thus struck down the old laws because of these problems. Pimping is now more directly handled by the human trafficking laws, so the "living off the avails" laws are no longer needed.
About the only thing made still illegal by C-36 is the purchase of said services. Legal to sell it, illegal to buy it. That made sense in some lawmaker's mind, I assume.
The spas have found a way to operate within this new law. In fact, they found a way to thrive under it. They are obviously fulfilling a need. I don't see how their services are all that different than what an agency would've done too. Yet, spas are thriving, agencies are virtually extinct.