Citation: 2005TCC694
Date: 20051104
Dockets: 2004-4046(EI)
2004-4047(CPP)
BETWEEN:
ALIREZA NAGHASH,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent,
and
UNIVERSITY OF ALBERTA,
Intervenor.
REASONS FOR JUDGMENT
Rowe, D.J.
[1] The appellant, Dr. Alireza Naghash (Naghash) appeals from decisions
issued by the Minister of National Revenue (the “Minister”) on July 28, 2004
wherein the Minister decided the employment of Naghash with the University of
Alberta (U of A/payor) from July 31, 2001 to July 31, 2002 did not
constitute either insurable or pensionable employment pursuant to the
provisions of the Employment Insurance Act (“EIA”) and the Canada
Pension Plan (the “Plan”) because he was not engaged under a
contract of service and – therefore – was not an employee of U of A.
[2] All parties agreed the appeals could be heard together.
[3] At various times in several documents or during the course of
testimony, submissions or references to various websites, the term PDF was used
to denote both the Postdoctoral – sometimes spelled as Post Doctoral –
Fellowship and also the holder of that fellowship. For the purposes of these
reasons, I have elected to use PDF to describe the fellowship itself and Fellow
to refer to the recipient of the funding pursuant to said fellowship.
[4] The appellant testified he is employed as a Research Associate at U of
A. Referring to paragraph 10 of the Reply to the Notice of Appeal (Reply) filed
in appeal 2004-4046(EI), he agreed the following assumptions were correct:
(a) in March, 2001, the Appellant
was invited by the Payor to join the research group in the Department of
Chemical and Materials Engineering of the Payor as a Post Doctoral Fellow;
(b) the purpose of the Post
Doctoral Fellowship offered to the Appellant was to conduct a research project
in the field of fuel cells;
(c) the Post Doctoral Fellowship
offered to the Appellant was for a period of one year, being from July 31, 2001
to July 31, 2002, and was renewable for another year subject to the
satisfactory performance of the Appellant and the availability of research
funding;
(d) the Appellant accepted the
fellowship offer of the Payor;
[5] Naghash did not agree with the characterization of “stipend” as applied
to the sum of $28,000 per year paid to him by U of A or that it was applicable
only to his living expenses while conducting research for the payor, as stated
in subparagraph 10(e) of the Reply. At subparagraph 10(f) of said Reply,
the Minister made the following assumption:
(f) the Payor considers Post
Doctoral Fellows as individuals who are engaged in training and learning
opportunities, normally within five years from the completion of a doctoral
degree and 10 years from the completion of a MD, DDS or equivalent degree;
[6] The appellant did not agree that Fellows are engaged only in training
and learning opportunities but accepted that PDFs are normally for a limited
period of time (subparagraph 10(g)). The Minister assumed – at subparagraph
10(h) that:
(h) the primary purpose of the Post
Doctoral Fellowship received by the Appellant was to further the education and
training of the Appellant with the goal of enhancing his knowledge and
experience, rather than to benefit the Payor;
[7] The appellant disagreed with this statement but agreed that funding of
PDFs comes from a number of external organizations and is administered by the
payor, as stated in subparagraph 10(i). Naghash did not accept use of the term
“stipend” to define the payments he received from the payor and did not agree
that the amount of the fellowship received by him was determined by the funding
organization, as relied on by the Minister in subparagraphs 10(j) and 10(k),
respectively. Naghash agreed his research activities at U of A were overseen by
a Faculty Advisor who was a staff member of the payor (subparagraphs 10(l) and
10(m), respectively). Naghash stated he did not accept the conclusions of the
Minister – cast in the form of an assumption at subparagraph 10(n) - that “the relationship
of the Faculty Advisor with the Appellant was one of educator and student and
any control exerted by the Faculty Advisor over the Appellant was as a result
of that relationship;” or the assumption – at subparagraph 10(o) - that “the
Payor did not have the intent to engage the Appellant under a contract of
service.”
[8] Naghash stated that on January 15, 2001, he contacted a member of the U
of A academic staff with respect to a PDF and received a reply indicating U of
A was awaiting funding and – in the interim – requested him to provide a
reference letter. Naghash received an invitation letter – Exhibit A-1 – dated
March 14, 2001, signed by K.T. Chuang, Ph.D., Professor, and J.L. Luo, Ph.D.,
Associate Professor. The contents of the letter are as follows:
After carefully evaluating your academic
achievement and relevant research experience, we are pleased to invite you to
join our research group at University of Alberta in Edmonton, Canada as a Post Doctoral Fellow to
conduct a research project for a period of one, renewable for another one year
subject to satisfactory performance in your research and availability of
research funding.
We hope that you could start this project in
April, 2001 or soon after, depending upon when your visa is approved. Unless
you arrive at University of
Alberta before June 30, 2001, this invitation is null and void (due to the
project deadline). The research topic will be in the field of fuel cells as
discussed in our earlier e‑mail correspondence. We are also prepared to
offer you a stipend of $28,000 per year (Canadian funds) to cover your living
expenses while working at the University of Alberta.
Provided you plan to stay for at least one
full year, you should normally be able to obtain Alberta Health Care Insurance.
You will be advised by our Pension and Benefit's office of the procedures to
follow.
Please notify us in advance of your expected
date and time of arrival, airline, etc. We will then inform the Immigration
authorities at this end so as to assist in strealining admission procedures
when you arrive.
[9] The appellant described his academic achievements which included a
Bachelor of Science in Engineering, (Iran) Master degree in Engineering
Materials (Australia) and a Ph.D. in Chemical Engineering (Singapore,
supervised by Massachusetts Institute of Technology (MIT)), specializing in the
field of lithium batteries. He stated it was necessary to obtain an extension
from U of A because a delay in obtaining his visa to enter Canada
prevented him from meeting the June 30, 2001 deadline stated in the
letter. After arriving in Edmonton and reporting to U of A, he met with Professors
Chuang and Luo and was assigned certain tasks which permitted him to become
familiar with the equipment. After one month had passed, he began having
meetings every two weeks with Professors Chuang and Luo together with
three other individuals who were involved in the same research project. Naghash
stated he understood there were certain milestones to be attained and goals to
be achieved in order to satisfy the terms established by the funding agency and
that reports of progress were provided to the funding entity by the professor
who had applied for the grant. Dr. Chuang was the Faculty Advisor for the
project and during regular meetings with Chuang and Luo, the appellant stated
he received instructions as to certain methods to pursue in terms of research
techniques and – often – was told to perform a specific task in a particular
manner or was instructed to avoid utilizing a procedure. At the meetings which
lasted between one and two hours, Naghash stated he presented written material,
charts, graphs and made oral presentations concerning certain aspects of his
work. He worked alone in an area of the laboratory dedicated to his portion of
the research project. For his efforts, he received a monthly cheque in the sum
of $2,333.33 which he understood was based on a 35-hour work week. Naghash
stated he had no relationship with the funding agency and at one point ‑ about
March, 2002 - understood that Professor Chuang had requested a change in the
direction of the research. The fellowship ended on July 31, 2002, and was not
renewed. Naghash asked for a letter confirming his position and on July 15,
2002 a letter addressed, To Whom It May Concern – dated July 15, 2002 – was
written on U of A letterhead and signed by Fraser Forbes Professor and Chair.
The letter ‑ Exhibit A‑2 - confirmed the appellant was
currently working as a Fellow in the Department of Chemical and Materials
Engineering at the U of A. It stated the appellant was working under the
supervision of Dr. Chuang and had been granted a two-week leave of absence from
July 17 to July 31, 2002 so he could travel to Singapore. The appellant stated
he had worked at the University of
Singapore as a research engineer and had
been paid a monthly salary. Because he was a citizen of Iran, his wife
remained in Singapore while he was involved with the research project at U
of A. He stated he had not become familiar with the national EI and CPP schemes
until he had been at U of A for a few months. Even then, he did not discuss the
issue with Dr. Chuang but spoke with other Fellows and ascertained that – like
him - none was subject to any EI or CPP deductions from their remuneration,
although U of A contributed 50% of the premium cost for medical plan coverage.
The appellant stated he was familiar with two types of PDFs which he divided
into an External PDF and a Grant PDF in order to distinguish them in terms of
funding. A Fellow working under an External PDF will operate autonomously after
having obtained funding through personal efforts. As a result, Fellows in this
context are at liberty to do as they choose and report directly to the funding
entity, although they still must find a mentor within the appropriate faculty
who is willing to be associated with that project. The other category – the
Grant PDF – is characterized by work performed under the direct supervision
of a faculty member who is entitled to issue orders as to the manner and nature
of the tasks undertaken. Naghash stated that, in his view, these workers are
employed under a contract of service due to the control exercised by the
faculty member as compared with the External PDF where funding is paid every 6
months based on a budget submitted by the applicant during the funding process.
However, this PDF is available only to Canadian citizens and/or permanent
residents. Naghash stated that a Fellow at one university could obtain
sufficient funding for a project and then persuade another university to permit
the research project to be carried on at its facility since the cost - to it -
would be insignificant.
[10] In cross-examination by counsel for the respondent, the appellant
stated he contacted Simon Fraser University in Burnaby, British Columbia as
well as the Université of Montréal and St. Francis Xavier University with a
view to determining the manner in which they treated Fellows.
[11] (Counsel for the intervenor advised the Court U of A conceded some
Canadian Universities treat Grant PDFs as employees - as opposed to those
participating in a project funded as an External PDF - but the intervenor did
not make that distinction and Fellows in both categories were not considered to
be employees.)
[12] Continuing with his testimony, the appellant stated he began searching
for PDF opportunities while employed in Singapore. Once at U of A, he started working on a research
project in relation to the conversion of butane gas to a substance known as
butene in a process involving a structural change. However, the first two or
three weeks were devoted to becoming familiar with the laboratory and
equipment. Naghash stated he used his own knowledge and experience to carry out
his work and would not have accepted that particular PDF if it was merely for
training rather than to earn remuneration. Prior to accepting the PDF at U of
A, he had applied for other PDFs and also for professorial posts at various
educational institutions. In terms of working hours, the appellant stated he
worked late, if necessary, at various stages of the project. Sometimes, he was
called to the office of either Dr. Chuang or Dr. Luo where one or other would
assign a specific task and reports were submitted to both so the funding entity
could be informed of progress.
[13] Counsel for the intervenor cross-examined the appellant who agreed that
when he met with Dr. Chuang and/or Dr. Luo to report progress, in the course of
ensuing discussions, he was free to disagree with their suggestions and to
voice his opinions. Naghash stated that according to his understanding a Grant
PDF has no right to the intellectual property inherent in his research which –
in his case – was funded by a grant from National Science Engineering Research
Council (NSERC) but that an External PDF would own the results of any project
that had been carried out pursuant to funding obtained through the individual
efforts of that Fellow. He agreed an External PDF would probably permit the
Fellow to exercise a higher degree of autonomy than a Grant PDF, although the
nature of discussions of the science involved would probably be the same under
both regimes. Although the subject of his Ph.D. thesis was lithium-ion
batteries, Naghash stated he had some experience in the field of fuel cell
research. As for recording hours of work, the appellant stated he had never
filled out any time sheet in any of the positions occupied previously during
his academic/working career. Naghash stated he had discussed his work situation
with Dr. Stephen Bekhor, another Fellow working under similar circumstances at
U of A who had also filed an appeal with the Tax Court of Canada seeking a
reversal of the Minister’s determination that he was not an employee.
[14] Dr. Karl Chuang, Ph.D. was called to the stand by counsel for the
intervenor. Chuang stated he is a Professor of Chemical Engineering in the
Faculty of Engineering at U of A. His specific area of expertise involves
catalytic processes and fuel cells and he is regarded as an expert in that
field. He has been at U of A since 1986 and first had a Fellow working pursuant
to a PDF in 1987. In his view, Fellows participate in a project not to assist
directly as much as to obtain additional training. On average, he supervises 4
or 5 Fellows per year who work on different aspects of the same project. He
stated Fellows want to be able to publish their findings because one of the
criteria by which they are judged is the number of scientific papers they have
produced. On the other hand, Research Associates are often used on projects
funded by corporations that do not want them to publish results and/or
conclusions drawn from research until some future date to be decided upon in
accordance with corporate strategy. Chuang stated he considers a PDF as a
vehicle for further training that prepares an individual to obtain employment
in his or her discipline. Chuang stated the source of funding varies and
includes federal and provincial governments and entities within the private
sector. The funding for the appellant’s PDF was provided by NSERC which
required High Quality Personnel (HQP) to be associated with the project before
it would provide necessary funding. Chuang stated Dr. Naghash worked in the
laboratory and communicated with him on a regular basis. He agreed there was no
need for the appellant to fill out time sheets or to conform with a daily
routine, per se. In his opinion, the appellant required additional
training in the field of chemical engineering. Because most graduates are
employed soon after completing their education, there are few grants offered in
the field of engineering and most applicants for PDFs are from overseas. Chuang
stated he would not draw a distinction between the so-called External PDFs and
the type offered to the appellant.
[15] In cross-examination by the appellant, Chuang agreed the grant from
NSERC was to fund “curiosity-driven” research, sometimes referred to as a
discovery grant. Chuang stated the purpose was to conduct inquiries during a
3-year period and there was no requirement to report progress to NSERC.
However, because new PDFs are offered each year and new Fellows arrive to
assume these positions, the term for any Fellow is limited – usually - to one
year. In order to qualify for a NSERC grant, U of A had to agree to train
students and to utilize all funds for the purpose of funding PDFs rather than
spending money to pay a salaried Research Associate as to do so could result in
a new application - for 5-year funding - to be looked upon with disfavour.
Chuang stated there was never any intention that U of A would pay EI premiums
or make CPP contributions in respect of a Fellow because NSERC merely grants a
specific sum in accordance with the terms of an application and the cost
associated with EI and CPP is not included in the budget. Chuang stated he has
not seen any NSERC grants that contain money for work‑related benefits
nor – in his experience – has the PDF of any Fellow ever been terminated prior
to the date set forth in the original acceptance letter.
[16] Jeffrey Goldberg, Ph.D testified he is a Professor and Associate Dean
of the Faculty of Graduate Studies and Research at U of A. In his position, he
is familiar with PDFs and the funding arrangements related thereto. At any
given time, U of A has about 300-400 persons as Fellows and a department within
the Faculty administers the PDFs. In his view, a PDF is a training exercise
that typically lasts from two to four years generally commencing immediately
after an individual has obtained a Ph.D. The purpose of the PDF is to permit an
individual to obtain additional experience utilizing advanced research
techniques and to publish papers preparatory to firming up a career path,
perhaps as a professor. Goldberg produced a document printed from the U of A
website on the subject “Policies Governing Postdoctoral Fellows” – Exhibit I-1 -
and stated it accurately reflects the policy of U of A that “[s]ince PDFs
are in training, they are considered by the University to be trainees rather
than employees.” Goldberg stated funds are held either by a funding agency -
such as NSERC – and may include U of A on occasion or the money may flow
directly from the funding source. Sometimes funds are held by U of A to
assist a professor who is the Principal Investigator according to the terms of
funding for a specific research project. Goldberg stated U of A does not
distinguish between the so-called External PDF’s who may have found their own
funding source and the type of grant offered to the appellant. As noted on the
highlighted portion of page 2 of the print-out ‑ Exhibit I-1 – all
Fellows working at the University under a PDF, both on and off campus, and
regardless of the source of funding are registered and administered through the
PDF office. The sixth page of the document deals with benefits available to
full-time Fellows and includes dental care, supplemental health care and an
assistant program for them and members of their family which is separate from
Alberta Health Care. Goldberg produced an Academic Appointment/Pay Action Form
– Exhibit I-2 - pertaining to the appellant and under the category “Employee
Attributes”, boxes had been checked to indicate Naghash was a full‑time
Postdoctoral Fellow who was paid $28,000 per annum and that Dr. Luo was the
designated Trustholder for the purposes of the funding source. Goldberg stated
U of A used this form as a matter of convenience and administrative efficiency
as it had no separate form to be used specifically in respect of Fellows receiving
funds through PDFs. He agreed the policy in respect of the status assigned
Fellows varies among universities in Canada and that many institutions do not
regard Fellows who obtained their own funding as employees since the resulting
project is considered to be an external PDF. However, there are several
universities in Canada – including McGill and University of Toronto – that
follow the same policy as U of A in that they regard Fellows as trainees.
[17] In cross-examination by the appellant, Goldberg agreed that a
Postdoctoral Fellowship is a name assigned to an award funded by a certain
entity and can include money provided by U of A. Goldberg agreed that a portion
of the policy document – Exhibit I-1 – on the fifth page thereof under the
category of Achievement - referred to a Fellow within the context of a Faculty
Member developing a clear understanding of certain matters “at the start of
employment”. Goldberg stated Fellows are not apprentices in the ordinary sense
that term is used and their conduct is governed by rules promulgated by U of A
under the Code of Student Behaviour.
[18] Counsel for the respondent did not call any witnesses and stated the
respondent was adopting the position advanced by the intervenor.
[19] The appellant submitted the evidence had established he was employed
with U of A under a contract of service and was engaged in both insurable and
pensionable employment.
[20] The position of the respondent and the intervenor was that the
intention of the parties at the outset was clear and ought to be determinative
of their relationship in the absence of compelling reasons permitting the Court
to arrive at a contrary conclusion. Both counsel submitted the circumstances
under which the appellant participated in the research project were within the
context of the clear terms of the PDF and did not constitute a contract of
service.
[21] All parties were aware the decision in the case of Stephen Bekhor
v. M.N.R., 2005TCC443 ‑ Dockets 2004-3299(EI) and
2004-3301(CPP) - also involving U of A - as intervenor - had been
reserved by Justice Lamarre Proulx. Accordingly, it was agreed any written
submissions would await the release of said decision and that arguments would
refer to said judgment. Depending on the result, each party would have the
opportunity to deal with the extent of the divergence – if any – from the
specific circumstances in that case to those in the within appeals in order to
persuade me to arrive at a different conclusion.
[22] The decision of Justice Lamarre Proulx in Bekhor, supra,
was released on July 15, 2005. At the close of the hearing in the within
appeal, I advised that upon receipt of a copy of said decision – each party had
30 days in which to respond. The appellant requested an extension until
September 15 - which was granted - and submitted numerous documents, materials
and extracts which I will discuss later in these reasons.
[23] In Bekhor, a ruling had been issued by Canada Customs and
Revenue Agency – as it then was – stating Bekhor held insurable employment. A
similar ruling was issued in the within appeals but – like the Bekhor ruling -
an appeal to the Minister resulted in a decision that the employment of the
appellant with U of A was neither insurable nor pensionable pursuant
to the provisions of the EIA and the Plan, respectively.
[24] At paragraphs 7 to 16, inclusive of her judgment, Justice Lamarre
Proulx recited these facts:
[7] The announcement
of a “Postdoctoral/Visiting Scientist Position in Space Physics” was produced
as Exhibit A-3. It stated that the Space Physics Group in the Department of
Physics at the University of Alberta was inviting applications for
postdoctoral and/or visiting scientist positions in magnetospheric physics.
[8] The
letter of offer dated September 13, 2002, was produced as Exhibit A‑2.
The letter, signed by professors Rankin and Marchand, reads as follows:
I am pleased to offer you a post-doctoral
fellowship in our department for a minimum period of two years, subject to a
satisfactory review after one year, and the availability of funds. You will
work under the guidance of Dr. R. Rankin, and Dr. R. Marchand of the
department of physics. With your background and interest in space plasmas, I
believe you will find this opportunity for further training to be very beneficial.
Your work will include the development of theories and models of magnetospheric
processes, and the use of models in the interpretation of data collected under
the Canadian Geospace Monitoring program. Please note that this position,
should you accept it, involves team work, in which an open exchange with other
members of the group will be required.
You will receive a stipend of $42,000.00 (Can.) per annum plus applicable benefits
normally given to postdoctoral fellows. If you plan to accept this offer
please advise us in writing by September 23, 2002.
It is my understanding that you are a
Canadian Citizen, and therefore exempt from the conditions that relate to
foreign nationals.
[9] The
contract between the Canadian Space Agency and the University
of Alberta was produced as Exhibit A-4. This contract was
signed on behalf of the University of Alberta by the principal investigator,
Robert Rankin, by the department chairman and by the faculty dean. It is
dated November 26, 2001.
[10] The contract
states, among other things, that the contractor shall prepare and submit,
quarterly, a progress report. This report must contain a description of the
progress accomplished on each task, with appropriate sketches, diagrams,
photographs, etc. Attached to the contract, there is an annex describing the
work to be done. That work was divided into 13 tasks. Another annex specifies
the milestones and the delivery schedule from August 1, 2001 to July 31, 2003.
[11] The appellant
produced as Exhibit A-8 a document regarding postdoctoral fellows (PDFs)
printed from the Queen’s University Website. This document states that PDFs are
considered to be employees of Queen’s University unless they receive their
funding from an external source. The policy document concerning postdoctoral
fellows at Simon Fraser
University was produced as Exhibit
A-9. Regarding the employment status of PDFs, this university follows the same
policy as Queen’s University. The same policy also appears to be followed at
the University of Ottawa
(Exhibit A-10).
[12] The policy document
governing postdoctoral fellows at the University of Alberta was produced as Exhibit I-1. The term
“postdoctoral fellows” is defined therein as follows:
"Postdoctoral Fellows"
(PDFs) refers to those individuals who are in training normally within five
years from the completion of a doctoral degree (including thesis defense) and
10 years from completion of a MD, DDS or equivalent. Since PDFs are in
training, they are considered by the University to be trainees rather than
employees.
[13] "Funding
Source" is defined as follows:
"Funding Source" refers to the source of funds for
the stipend and benefits of the PDF appointed under these Policies. The funds
are held by a "Funding Agency" which is either the University or
another institution or another agency (such as NSERC, SSHRC, AHFMR, CIHR or
Killam Fellowships) and may be in the form of grants, fellowships, scholarships
or contracts.
[14] Under the heading
“Introduction”, the document contains the following:
For PDFs in the sciences, the customary pattern is to seek to
broaden research expertise under the guidance of an established researcher.
For those in the humanities, the customary pattern is to embark on a new
research project with guidance from and in consultation with an experienced
faculty member. In all disciplines, an important objective is to strengthen
the publication record and cv, thereby building a reputation and
enhancing the chances of securing a more permanent faculty or research
position.
All PDFs working at the University, both on campus and off
campus, and regardless of the Funding Source, are registered and administered
through the PDF Office.
[15] Regarding termination, it is stated that a PDF
appointment may be terminated at any time for just cause on the recommendation
of the faculty member responsible for the PDF. The PDF would receive one
month’s notice for each year of service.
[16] The requisition
form to the accounting division for payment of the Appellant’s stipend was
produced as Exhibit I‑2. It is entitled Academic
Appointment/Pay Action Form. Dated October 22, 2002, it indicates that
this was a new appointment to a position as a postdoctoral fellow. The amount
to be paid was of $42,000 per annum, the Trust Holder’s name being Dr. R.
Rankin. The document was produced as Exhibit I‑2.
[25] It is apparent the circumstances of Bekhor’s PDF were substantially the
same as those applicable to Naghash in the within appeals. The point was made
there – as it was by the appellant before me – that precedents exist at some
Canadian universities for the status of employee to be accorded to PDF
recipients unless they receive funding from an external source. In Bekhor,
Dr. Jeffrey Goldberg testified and Justice Lamarre Proulx extracted certain
portions from the transcript of his testimony which she referred to in
paragraph 20 of her judgment, as follows:
[20] Respecting the
policy of some other universities as referred to in paragraph 5 of the
notice of appeal, Mr. Goldberg stated that it was true that the treatment
of postdoctoral fellows as either trainees or employees is not consistent
across the country (pages 26 to 29 of the transcript):
Q. Are the treatment of
Postdoctoral Fellows as being either trainees or employees, is that treatment
consistent across the country in your knowledge?
A. It’s not consistent across
the country. What’s consistent across the country is what a postdoc does in
their position, in their responsibilities and in their endeavour. But how the
universities choose to deal with this issue is inconsistent across the country.
Q. So, by inconsistent, you
presumably mean that some universities do treat Postdoctoral Fellows as
employees and others do not?
A. Some universities choose
to treat Postdoctoral Fellows who are funded through their supervisor’s
research grants as employees. No university treats postdocs who are funded
directly by their own funding from a funding organization as employees because
those Federal agencies don’t allow you to treat them as employees, they want
them to be considered trainees. So, only further the category of stipend that
come, that flows through the supervisor’s research grant. Some universities
choose to call that an employee situation.
Q. You know, can you advise
the Court what certain of those universities that do treat indirectly funded
PDFs as employees, can you advise who some those universities are?
A. The examples that came to
mind that are Simon-Fraser and Queen’s, I think that’s accurate because I’ve
looked at some of their documentation earlier in the weekend.
Q. Are there other
universities that like the University of Alberta do not treat any PDFs as employees?
A. Yes, it’s my understanding
that there are several.
Q. Do you know the names of
any?
A. As far as I know, I think
Université de Montréal right now is one of them. I think the University of Calgary is one of them but I’m not sure that they’ve resolved the issue. In fact,
I wish I had been advised because we hold in our postdoc Office a table which
really distinguishes several that do this model and several that do the other
model. So, I don’t want to be inaccurate so, I don’t want to put forward any
names but, or more names, but there are more, there are several in those
models.
Q. Doctor Goldberg, to your
knowledge, has any kind of Court or similar authority ordered the University
of Alberta to treat PDFs as employees?
A. Can you repeat the
question, please?
Q. To your knowledge, has any
kind of Court or similar authority ordered the University of Alberta to treat
PDFs, Postdoctoral Fellows, as employees?
A. No, not to my knowledge.
Q. Doctor Goldberg, which
would be the more common type of PDF funding, funding directly to the PDF from
the external agency or funding through a research grant that had been awarded
to a University Professor?
A. My educated guess would
be, it would be a fifty-fifty (50-50) type split. I don’t know exactly the
answer to that but of the greater than three hundred (300) and close to four
hundred (400) postdocs on campus, I think there will be a large number in
either those categories.
[26] In the Bekhor appeal, Dr. Rankin, a professor in the Department
of Physics in the Faculty of Sciences at U of A testified Dr. Bekhor was a
Fellow who had been recruited by himself and Dr. Marchand to work on a
scientific project under the general terms of a contract awarded to him and
Marchand by the Canadian Space Agency. The objective – according to the
testimony of Rankin “was to provide a general description of progress against
the overall objectives of the contract which were to investigate space weather
processes affecting the near outer space environment surrounding the earth.”
[27] Commencing at paragraph 26 of her reasons, Justice Lamarre Proulx
analyzed the facts and the relevant jurisprudence prior to arriving at her
conclusion at paragraph 40. Because of the similarity in facts and in the
submissions made, I am reproducing this portion of the judgment as follows:
[26] The question at
issue is not whether the agreement between the parties is a contract of
employment or a contract for services (employee versus independent contractor
status), but whether it is a contract of employment or an agreement of
financial assistance regarding continuing studies (employee versus student or
postgraduate student status).
[27] I will deal first
with the policy of other universities regarding postdoctoral fellowships. It
would appear from certain exhibits produced by the Appellant - and this was
confirmed by Dr. Goldberg in his testimony reproduced at paragraph 19 of these
reasons - that some universities may consider a postgraduate trainee in a work
situation similar to the Appellant’s as being in an employment situation. I do
not want by my conclusion in the case at bar to imply that these universities are
wrong in law. I consider it to be a legal situation in which the intent of the
parties when entering the contract is determinative.
[28] In this regard, I
wish to refer to the decision of the Federal Court of Appeal in Ambulance St‑Jean
v. Canada (M.N.R.), [2004] F.C.J. No. 1680 (Q.L.) at paragraph 3:
3 Although the stated intent of the parties or their
mutual understanding are not necessarily determinative of the nature of their
relationship, they are, however, entitled to considerable weight in the absence
of evidence to the contrary, such as a behaviour which betrays or contradicts
the said intent or understanding. Where the parties "have freely elected
to come together in separate business arrangements rather than one side
arbitrarily and artificially imposing that upon the other, so that in fact it
is a sham, parties should be left to their choice and that choice should be
respected by the authorities". We agree with this statement of Porter D.T.
C.J. in Krakiwsky v. Canada (Minister of National Revenue -
M.N.R.), 2003 T.C.J. No. 364.
[29] I must examine not
only the terms and conditions of the work activity but also the stated intent
of the parties as evidenced by their writings and their conduct.
[30] Dr. Goldberg, the
associate dean of graduate studies, testified that the University of Alberta does not consider the
positions of postdoctoral fellows as being employment but rather sees them as
training and consider the stipends as being not salaries but financial
assistance to older students. This statement is corroborated by the
announcement advertising the position, the policy document printed from the
University’s Web site, the letter of offer and the exchange of correspondence
between Dr. Rankin, the Appellant and the team members.
[31] In this regard, I
will cite an e-mail dated March 13, 2003, from Dr. Rankin to the team
members. (This document is part of Exhibit I‑5). In my view, this
e-mail describes well the context of a university research program kept alive
by the determination and work of the professors for the benefit of young
postdoctoral scientists. The document also shows the importance of keeping the
trust of outside sources interested in promoting research in Canadian
universities in their particular fields of endeavour.
CSA [Canadian Space Agency]
has just asked me to prepare a progress report on your activities for the
period from January 1st, 2003 to March 31st, 2003. This must be
submitted around April 1st, 2003. Please keep this date firmly in mind, as
I will ask you to send me written material by no later than March 31st.
It is worth summarizing the
situation at present. The contract that pays you terminates on July 31st,
2003. At that time, I will have submitted a new proposal for continued funding.
You may have heard that CSA did not receive from the federal budget any new
(additional) funding beyond current levels. This means that we must fully
justify any funding beyond July 31st, 2003. For me to do this, I should
ideally have 2 to 3 papers to report from each of you by way of publications or
articles submitted (Steven excepted, as he has only been here a few months).
These must be in direct relation to the contract milestones, and not based on
your prior existence at previous institutions. The reason this is so important,
is that the loose milestones set in the contract can only be justified through
evidence of publications. For comparison, the average faculty member, with a
full teaching load (3 courses) and administration duties, is expected to
publish 2-3 papers annually.
There is some latitude here,
as for most of you, you are working in a new area in which it takes time (of
order 1 year) to gain full experience. I will make that point in the new
proposal that I will prepare in the next 2 months or so. However, in the future,
you should really aim for a publication rate at the level set for faculty
members. This will be important for your future careers as well.
In the new proposal, I will
ask for increased salaries, but this is always contingent upon our success in
delivering on broad contract milestones.
[32] In this e-mail the
term “salaries” is used. It may also have been used in a few other letters just
as the term “employer” was used once or twice as well. This cannot, however, be
determinative of the nature of the relationship between the researchers and
their team leader. I find much more indicative the actual content of the
e-mail. It talks about loose milestones or broad contract milestones in
relation to which the research has to be conducted. The work involves tasks
that are far from being specific and required to be done on a daily basis. A
progress report is requested after three months of individual and team
research. There is much latitude given the researchers. The e-mail adds that
the papers to be submitted must show the results of research done in relation
to the contract milestones and not of previous research. This shows that the
intent of the University’s program is to stimulate research and develop the
capabilities of the researchers, thereby fulfilling the University’s teaching
and training mandate.
[33] I find that the
above-quoted e-mail supports the position of the Intervener that postdoctoral
fellows at the University of Alberta have the status of trainees and not
employees. I would draw the same conclusion from the whole of the evidence
adduced, including the evidence given by the Appellant.
[34] The Appellant
stated that Dr. Marchand and Dr. Rankin exercised control over him as
employers. Dr. Marchand did not testify nor did the Appellant’s former
colleagues at the University. Dr. Rankin testified at the request of the
Intervener. From my reading of the exchange of correspondence between the
Appellant and Dr. Rankin and the other documents mentioned in these reasons, I
find that their relationship was one not of an employer and employee but of
director of a research program and researcher, that is, professor and student.
[35] On a research team,
the team leader is in charge. The trainees are subordinates of the team leader.
They are subordinates because they need and want guidance. That is why the
trainees in this particular instance had accepted their positions. It was
stated in the letter of offer (Exhibit A-2) that "[y]ou will work under
the guidance of Dr. R. Rankin and Dr. R. Marchand of the department
of physics."
[36] The postdoctoral
fellows were expected to work on the research project. They received their
stipends for that work. However by thus working and receiving guidance, they
also learned. The Appellant testified that he saw Dr. Marchand on a
regular basis, nearly daily, and that he received guidance from him.
[37] The same letter
(Exhibit A-2) stated: "You will receive a stipend of $42,000.00 (Can.) per
annum plus applicable benefits normally given to postdoctoral fellows."
The Appellant had inquired as to the nature of those benefits and was provided
with the information requested. He did not at that time ask for the employment
insurance benefit. He did not even inquire as to whether he would be covered by
the employment insurance plan. The information given on the University’s Web
site is clear. There is no evidence that the Appellant was looking for
insurable employment or that he was misled as to the nature of the agreement.
[38] The Appellant also
raised the point of the termination clause mentioned in paragraph 15 of these
reasons. It cannot but be found normal that in a matter of an agreement
respecting financial assistance there be a possibility of ending the agreement
for just cause.
[39] For all these
reasons, I conclude that the relationship of the Appellant with the University of Alberta was one of advanced
student and professor, not one of employee and employer. The stipend received
was in the nature of financial assistance provided to a learning postdoctoral
fellow, not remuneration for services rendered by an employee to an employer.
[40] The appeal must be
dismissed.
[28] In written argument, counsel for the respondent submitted the evidence
was clear the appellant had accepted a PDF pursuant to which he was paid a
stipend of $28,000 per year to cover living expenses and that the posting on
the U of A website stated the PDF was a training position and Fellows would not
be treated as trainees and not as employees. Counsel referred to 5 decisions,
including Bekhor, supra, involving facts similar to those in the
within appeals and noted that in every instance the courts held the Fellows
were not employees. Counsel submitted the reasoning in Bekhor -
particularly with respect to the clear intention of both parties at the outset
– and the earlier jurisprudence supported the view there had not been an
employer-employee relationship between the appellant and U of A.
[29] Counsel for the intervenor’s written submissions were limited to the
sole issue whether the decision in Bekhor should be adopted with respect
to the within appeals. The intervenor submitted the decision was reached in
contemplation of similar arguments raised by the appellant herein in both his
pleadings and submissions and that Naghash had been in communication and received
advice from the appellant Bekhor. U of A was an Intervenor in the Bekhor
case and counsel submitted the same arguments had been raised by Dr. Bekhor,
namely, that he was an employee of U of A. Counsel submitted the evidence in
the within appeals did not differ in any meaningful or significant way from the
circumstances of the appellant in Bekhor and that this decision should
be followed particularly in view of the discussion therein on the issue of the
intention of the parties.
[30] Dr. Naghash submitted written arguments in which he devoted a great
deal of time to producing a variety of documents and materials for the purpose
of establishing that the majority of Canadian universities consider Fellows
working under a PDF to be employees. He seemed to be under the impression that
documents not introduced at the hearing of the appeals could be entered as
exhibits at this stage for the purpose of being relied upon in furtherance of
some proposition. I have ignored much of this material except for some
information he obtained from university websites which in the context of
today’s technology and information retrieval falls within the area of judicial
notice in that it is readily accessible and – depending on the source and the
purpose of the posting – is probably reliable. The appellant pointed out he was
required to attend meetings with Dr. Chuang and Dr. Luo in order to report
progress and to receive instructions regarding specific tasks or techniques to
be utilized in the course of the research. According to the appellant’s view of
the evidence, the direction of the work was not directed by mutual consensus
but was conducted in accord with the research priorities of the two supervising
professors. The appellant submitted lengthy arguments concerning the indicia of
employment within the context of determining whether a worker was an employee
or independent contractor and also seemed to suggest that he was an apprentice
within the meaning of the EIA and therefore an employee of U of A. He
submitted the issue of intent is not determinative of the relationship between
the parties and that the presence of a training component does not preclude the
existence of an employer-employee relationship between the worker and the payor
since nearly all employment contains some degree of education. He conceded he
was unaware of the existence of EI and CPP programs at the time of accepting
the PDF at U of A but submitted that does not mean he is somehow exempted from
the application of that legislation. The appellant submitted U of A was out of
step with the majority of Canadian universities who treated Fellows receiving
payment from a Grant PDF as employees and that an Interpretation Bulletin
(IT-75R4) dealing with the subject of education and training – in section 30 –
states, “…if that work is performed by the student assistant under the specific
direction of a researcher or co-researcher and it is done primarily for
financial gain, an employee-employer relationship is considered to exist.”
[31] Paragraph 5(1)(a) of the EIA states:
(a) employment in Canada by one or more employers,
under any express or implied contract of service or apprenticeship, written or
oral, whether the earnings of the employed person are received from the
employer or some other person whether the earnings are calculated by time or by
the piece, or partly by time and partly by the piece, or otherwise;
[32] The definition of “employment” in section 2 of the Plan is:
“employment” means the performance of services under an express
or implied contract of service or apprenticeship, and includes the tenure of an
office;
[33] First, I will deal with the suggestion by the appellant that his PDF
was somehow equivalent to that of an apprentice within an apprenticeship. In my
view, those terms have a specific application to the trades or to technicians
and/or technologists. The Canadian Oxford Paperback Dictionary, Oxford
University Press, defines “apprentice” as:
1. a person who is learning a trade by being employed in it
for an agreed period, usu. (usually) at lower wages than is normal for
that trade; 2 – beginner, a novice;
[34] The relevant definition of “trade” in said dictionary is:
2. a skilled handicraft esp. (especially) requiring an
apprenticeship.
In both instances the italics are mine.
[35] The facts in the within appeals are that the appellant applied for and
received a PDF to join a research group headed by Drs. Chuang and Luo. He was
already a Ph.D and was not pursuing a specific additional designation nor was
he embarking on a course of action designed to hone his plumbing or welding
skills. Clearly, he did not fall within the definition of apprentice or
apprenticeship as contemplated by the relevant legislation. This aspect was
canvassed by Teskey T.C.J. in the case of Ontario Cancer Institute v. Canada
(Minister of National Revenue – M.N.R.),
[1993] T.C.J. No. 430 and - after referring to several dictionary
definitions – at paragraph 41 of his reasons stated:
[41] I am not prepared to describe this
post-doctoral training as an apprenticeship, to do so would be stretching the
definition out of its normal common meaning. The indefinite period of time is
not dictated by the amount of training received by the trainee but by the job
market. If there are no jobs available, the trainee simply carries on doing
post‑doctoral research until one is obtained. This is why the period is
anywhere from two to five years.
[36] Second, whether the appellant was an independent contractor as opposed
to providing his services pursuant to a contract of service is not an issue and
an analysis of the usual indicia to make that determination is not warranted
for the purpose of deciding these appeals.
[37] An issue to be decided is whether there is sufficient reason that I
should not adopt the decision of Justice Lamarre Proulx in Bekhor,
supra, particularly in light of other relevant jurisprudence.
Earlier in his reasons in Ontario Cancer Institute ‑ at paragraph
36 – Judge Teskey stated:
[36] Considering all the facts before me
and disregarding the intention of the parties (I find that both Gauci and OCI
intended the contract not to be an employment contract of service) I am
satisfied that the contract was not an employment contract of service. It was a
contract for education and training for an indefinite period of time. She was
paid a stipend in order to pay living expenses. All trainees at OCT had at the
very least a MD or Ph.D. Without a stipend of some sort, only the very rich
could attain the necessary training.
[38] In Sunnybrook Hospital v. Canada (Minister of National Revenue -
M.N.R.), [1994] T.C.J. No. 1061, O’Connor T.C.J. decided that a medical
doctor performing research at a hospital was not an employee and that the
stipend paid was to cover living expenses. In the course of his reasons, Judge O’Connor
noted at paragraph 13:
[13] In the current situation, with
respect to the job market and requirements for training, few, if any,
individuals within the scientific field go directly from acquiring a Ph.D. to
an assistant professorship. There is almost always a period of post-doctoral
research and training.
[14] When grant money comes in to
Sunnybrook, that portion which is for the payment of the stipends to fellows is
set aside, and designated by the grant number. There are no deductions for any
reason barring an administrative error. The stipends are meant to cover living
expenses.
[15] Dr. Yuan and Dr. Johnston dealt
with various problems as colleagues. Dr. Johnston discussed the best
approach to a given problem and together they formulated experiments and
decisions based on their mutual intellectual capabilities. Fellows differ from
technicians who do not contribute intellectually to the decisions but rather
take instructions daily from the fellows and scientists.
[39] In the case of Benabdallah v. Canada (Minister of National Revenue ‑ M.N.R.,
[1997] T.C.J. No. 1180, Tardif T.C.J. held the appellant with a Ph.D in
science was not engaged in insurable employment with the Université de Montréal
while receiving funds distributed to her from a grant. At paragraph 10 of his
reasons, Tardif, T.C.J. stated:
[10] A grant differs from a salary in a
number of ways. First of all, it is in theory not negotiable. A grant is
generally a sort of incentive to continue one's studies. There is no correlation
between the amount of the grant and the significance of the studies for which
it is given. A grant generally constitutes minimum financial support, and it is
given only if strict conditions are met; there is little or no room for
negotiation, unlike in the case of a salary, to which adjustments can be made.
[40] The appellant seems to have equated the requirement to pay income tax
on his stipend as conclusive proof of his status of employee. Not so; he paid
tax because either paragraph 56(1)(n) or paragraph 56(1)(o) of
the ITA required him to do so on the basis the remuneration was a
fellowship or – less likely - a research grant. Dr. Naghash met with Dr.
Chuang and Dr. Luo on a regular basis in relation to the work being done by him
in the context of the research project. I am satisfied on the evidence that
Naghash was primarily engaged in a learning process. Despite being the holder
of a Ph. D, his thesis had been in the field of lithium-ion batteries and he
had limited experience in the field of fuel cell research. In the opinion of
Dr. Chuang, the appellant needed to gain additional experience in the
field of chemical engineering and was afforded the opportunity to do so by
participating in the research project involving conversion of butane to butene.
The overall project was part of what Dr. Chuang referred to as curiosity-driven
research and there was no foreseeable profit or gain to be harvested from that
pursuit nor any requirements to report specific ongoing progress. It seems odd
to many of us who graduated from university forty years ago that individuals
who have obtained a Ph.D after perhaps 7 years of undergraduate study are now
compelled – or nearly so – to participate in various forms of postdoctoral
programs in order to become eligible for suitable employment that pays a
reasonable salary. However, that seems to be a fact of modern academic life and
many universities in Canada have adopted the approach that recipients of funding
through a PDF – usually a Grant PDF - should be treated as employees rather
than merely as students. The appellant’s current position at U of A is
that of Research Associate and he earns $40,000 per annum. It may be
advantageous for the purpose of achieving consistency to have a Canada‑wide
policy in respect of PDFs but that is a matter for the educational institutions
or ‑ perhaps – the federal government if it decides to amend
existing legislation to include Fellows and other recipients of similar funding
within the definitions of insurable and pensionable employment. I accept that
several well‑known Canadian universities distinguish between External
PDFs and Grant PDFs whereby the former are regarded as independent contractors
and the latter as employees.
[41] The appellant testified he had no knowledge of the EI or CPP programs
when he contacted U of A and expressed interest in the PDF. However, in the
course of his research from accessing the website he ought to have been aware
that U of A considered Fellows to be in training and – therefore – trainees
rather than employees. The appellant pointed out he was referred to as an
employee in the Academic Action Form – Exhibit I-2 - and that the letter –
Exhibit A-2 – written at his request stated he was “currently working as a
Post-Doctoral Fellow at the University of Alberta.” According to Naghash, those references
are confirmatory of his status as employee. I disagree. As Dr. Goldberg
testified, there is no special form to use for paying Fellows except for the
space provided to insert details with respect to the Trustholder of the funds
which in the appellant’s case was Dr. Luo. As for the To Whom It May Concern
letter – signed by Professor Fraser on U of A letterhead - it merely states the
obvious which was that Dr. Naghash was currently working as a Fellow. The letter
dated March 14, 2001 – Exhibit A-1 – signed by both Dr. Chuang and Dr. Luo
constituted an invitation to Dr. Naghash to “join our research group at
University of Alberta in Edmonton, Canada as a Post Doctoral Fellow to conduct
a research project for a period of one year, renewable for another year subject
to satisfactory performance in your research and availability of funding.” The
letter went on to indicate the research topic was in the field of fuel cells as
the parties had discussed earlier in their e-mail correspondence. The letter
also stated that U of A was “prepared to offer you a stipend of $28,000 per
year (Canadian Funds) to cover your living expenses while working at the University of Alberta.”
[42] The definition of “stipend” in the Canadian Oxford Paperback dictionary
includes the following:
1 a salary or fixed regular sum paid for the services of a
teacher, public official, or clergyman.
2. any fixed regular payment, such as an allowance or
scholarship.
[43] Although some Fellows may be called upon to teach and thereby form part
of the academic staff, that was not the situation in the within appeals and it
was apparent the appellant would be participating - for a limited period - in a
research project devoted to discovery rather than to produce a specific result.
[44] As part of the jurisprudence concerning the often difficult task of
determining whether a worker is an independent contractor or an employee, Stone
J.A. issued this admonition in the case of Minister of National Revenue v. Emily
Standing, [1992] F.C.J. No. 890 Stone, J.A. when he 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 ...
[45] Adapting that statement for use within the context of the within
appeals, one could not permit parties jointly - nor one party unilaterally - to
label a relationship educator-trainee if the evidence did not support that
characterization particularly if there was bad faith or coercion present in the
circumstances and the affixing of that label to the relationship was rooted in
an ulterior motive. None of those considerations apply here. A characterization
in accord with a declaration of the status of a Fellow receiving funding
pursuant to a specific PDF and expressed clearly by U of A ‑ inter
alia, on its website - is reasonable, particularly when the overall
circumstances support that characterization and subsequent conduct of the parties
is confirmatory.
[46] Some confusion arises with regard to the nature of decisions issued in
respect to cases heard under the Informal Procedure of the Tax Court of Canada
and it stems from the wording of section 18.28 of the Tax Court of Canada
Act which reads:
A judgment on an appeal referred to in section 18 shall not be
treated as a precedent for any other case.
[47] However, section 18 only applies in respect of appeals under the ITA
whereas the within appeals under the EIA and the Plan are
governed by the provisions of section 18.29 of the Tax Court of Canada
Act which dictates they are to be heard under the Informal Procedure Rules.
As a result, the decisions referred to in these reasons do have precedential
value. I am not restricted by section 18.28 - a legislative oddity at its
inception - that currently qualifies as a full-blown anachronism. I support the
view that judges of the Tax Court should strive, to the extent possible, to
achieve consistency as expressed in the decision in Long v. The Queen, [1998]
1 C.T.C. 2835. Unless there are compelling reasons to the contrary, it is
desirable for decisions of a court to follow a consistent path. The evidence
adduced in the within appeals does not dissuade me from adopting the reasoning ‑ and
the result – of the decision of Justice Lamarre Proulx in Bekhor,
supra. Apart from the importance of adhering to the principle of stare
decisis, had I been the first to encounter this issue in the context of the
within appeals I would have arrived at the same conclusion.
[48] I have not been persuaded by the appellant that the decisions issued by
the Minister were incorrect and they are hereby confirmed. Both appeals are
hereby dismissed.
[49] I have been informed by counsel for the respondent and counsel for the
intervenor that the Bekhor decision has been appealed. However,
rather than waiting for the decision of the Federal Court of Appeal, I
considered it best to issue these reasons so the appellant could evaluate his
position in the context of the appeal by Dr. Bekhor.
Signed at Sidney, British Columbia, this 4th day of November 2005.
D.W. Rowe
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