Citation: 2007TCC282
Date: 20070522
Dockets: 2006-1145(CPP)
2006-1146(EI)
BETWEEN:
ROBERT D'OVIDIO,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Rowe, D.J.
[1] The appellant – D’Ovidio - appealed from
decisions issued by the Minister of National Revenue (the "Minister")
on January 3, 2006, pursuant to the Employment Insurance Act (the
"Act") and the Canada Pension Plan (the "Plan"),
wherein the Minister decided the employment of D’Ovidio with The Sault Area
Hospitals as Chief of a Department during the period from January 1, 2002 to
August 31, 2003, was both insurable and pensionable because he was engaged
under a contract of service.
[2] The parties agreed both appeals could be
heard together.
[3] The appellant testified he is a radiologist
residing in Kelowna, British Columbia. He graduated from University of Toronto in 1981 and completed his speciality in radiology in 1987. He was at
McMaster University in Hamilton, Ontario
for 7 years and moved to Sault Ste. Marie, Ontario
in 1995 where he practiced as a hospital-based radiologist pursuant to a
fee-for-service basis and billed Ontario Health Insurance Program (OHIP)
through an internal mechanism of The Sault Area Hospitals (Sault Hospitals).
For most of the relevant period prior to an amalgamation of facilities, there
were two hospitals, the General Hospital and the Plummer
Memorial Hospital. The appellant received a cheque each
month from Sault Hospitals which varied according to the amount of work he had
performed in the preceding period that had been billed to – and paid by – OHIP.
Various procedures such as Computer Tomography (CT) scans, Magnetic Resonance
Imaging (MRI) and ultra-sound procedures, angiograms and biopsies were billed
at the scheduled OHIP rate. D’Ovidio stated he did not have any overhead
associated with his practice because all the equipment and machinery – worth
millions of dollars – was provided by Sault Hospitals which also employed all
the technologists and technicians required within the radiology department.
D’Ovidio stated it was standard procedure for other specialists such as
cardiologists or urologists to provide their services to Sault Hospitals under
a similar arrangement and that surgeons also needed to use expensive, high-tech
work areas – known as suites - within the hospital. The radiology suite was
near the emergency ward. The appellant stated he was free to work whatever
hours he chose and because Sault Hospitals radiology department was
chronically understaffed, he relied on temporary replacement physicians –
locums - to assume his responsibilities when absent. At maximum, there were
only 3 radiologists practising at Sault Hospitals and they took turns being on
call. The position of Chief of Diagnostic Imaging (CDI or Chief) became vacant
and the appellant decided to assume that function, in part because he could
exercise control over medical aspects of the Diagnostic Imaging (DI) department
in his role as Chief Radiologist. The department employed a Technical Manager –
Joe D’Angelo - who was responsible for day‑to‑day operations
pertaining to technicians, technologists and the equipment. The appellant was
in charge of medical programs, procedures, quality of service and liaison with
other physicians. Prior to accepting the position of CDI, he attended an
interview with members of the Board of Directors of Sault Hospitals. He assumed
duties as Chief in August and on September 1, 2000, he and Sault Hospitals
entered into a written agreement whereby D’Ovidio agreed to provide his
services as CDI in return for an “administrative fee” in the sum of $1,500 per
month, pursuant to paragraph 7.1 thereof. The term of the contract was 5 years
subject to early termination in accordance with the relevant clauses therein.
The appellant stated he had negotiated that fee with the Chief Executive
Officer (CEO) and that amount - paid monthly – was included in the same cheque
as the one issued by Sault Hospitals for the amount of his entitlement from
OHIP for medical services rendered as a radiologist but the administrative fee
was shown separately on the accompanying itemized pay statement. There were no
deductions of any sort from the cheque and he did not receive a T4 slip from
Sault Hospitals. The written contract did not include any terms regarding the
frequency or hours of work. The appellant stated that in the course of carrying
on his radiology practice within the Sault Hospitals facility, he also
discussed matters – pursuant to his role as CDI - with Joe D’Angelo, Technical
Director. D’Ovidio stated that a normal working day involved this sort of
multi-tasking and he regarded the $1,500 monthly payment for serving as Chief
as a flat fee that was not based on any amount of time nor linked to the
provision of any particular services. In that role, he was not subject – per
se – to any performance review but Sault Hospitals had guidelines with
respect to turnaround times for X-rays and other diagnostic results that also
pertained to several other disciplines within the hospital. D’Ovidio stated he
understood he was required to perform – personally - his duties as Chief and
when a replacement radiologist assumed his medical practice on a temporary
basis that individual did not assume any of the responsibilities associated
with the CDI position and any issues arising in relation thereto during his
absence remaining unresolved pending his return. The appellant did not incur
any expenses in carrying out his role as Chief. He disagreed with the
assumption relied on by the Minister – at subparagraph 6. s) of the Reply to the
Notice of Appeal (the "Reply") that his duties as Chief were
essential to the day-to-day operations of Sault Hospitals because that aspect
was within the jurisdiction of the Technical Director and his staff. Instead,
the appellant – as Chief - dealt with issues such as the merit of adopting new
procedures and programs and evaluating the need for certain equipment and
personnel. In D’Ovidio’s experience, even without a CDI at Sault Hospital, life went on and the practising
radiologists continued their work albeit without a framework or a source of
direction to deal with medical issues or to liaise with other specialists. The
appellant stated that when entering into the agreements – initially oral, then
written – to perform duties as CDI, both he and the Board clearly intended that
he would do so as an independent contractor rather than as an employee and that
intent was expressed clearly at paragraph 16.1 of the contract. He was also
permitted under the terms of said contract – paragraph 13.1 – to provide his
services to others whether as a practitioner, teacher, consultant or
researcher. D’Ovidio stated he had always considered that he was in business
for himself not only as a radiologist but also when providing his services as
CDI. In his opinion, throughout the relevant period he had functioned
autonomously without obligation to attend meetings or to report to anyone. As a
radiologist, all his patients were referred to him by physicians within the
hospital system or from other medical practitioners who had seen those
individuals on an out-patient basis. He read the images that had been generated
by the technologists who operated the equipment. In addition to those duties,
he was also qualified – as an interventional radiologist - to perform biopsies
and to conduct angiography and barium examinations and to undertake procedures
required to drain a blocked kidney. The appellant left his radiology practice,
vacated his position as Chief of DI on August 31, 2003, and relocated to Kelowna.
[4] The appellant was cross-examined by Counsel
for the respondent. Concerning the nature of the position of CDI, D’Ovidio
stated that position had remained vacant until at least the end of 2006. He was
referred to paragraph 5 of the written agreement – Exhibit A-1 – and agreed that
he was entitled to retain 100% of the professional component of the fee payable
– by OHIP – for diagnostic services and Sault Hospitals was entitled to the
technical component thereof. The appellant did not invoice Sault Hospitals for
his services and did not charge any Goods and Services Tax (GST). The
appellant’s predecessor CDI had also received a monthly payment of $1,500.
D’Ovidio stated he was required by the wording of paragraph 11.1 of the written
agreement to indemnify and save harmless Sault Hospitals with respect to
any causes of actions, claims or demands made against that institution arising
out of any medical malpractice on his part. The appellant acknowledged that he
had completed, signed and returned the Questionnaire – Exhibit R-1 – dated
September 23, 2005. Counsel pointed out that at subparagraph 2. b. hereof,
he explained that he had control of day-to-day medical management of the
imaging department. D’Ovidio conceded that was so but added that the aspect of
control referred to had nothing to do with the operation of machines, equipment
and personnel since that was within the jurisdiction of the Technical Director.
The appellant stated he reviewed relevant studies pertaining to the quality of
imaging and related dependency on the operator and in that context he discussed
any quality issues with Joe D’Angelo and left it to him to rectify. D’Ovidio
agreed that if a radiologist acting a locum had not performed according to
professional standards he would have had to deal with that matter in his
capacity as Chief. Due to the chronic shortage of qualified radiologists in the
Sault area, the appellant attempted to recruit some from Toronto and also was consulted when radiologists were hired
to perform locums. The appellant and Joe D’Angelo created a locum pool because
D’Ovdio knew most of the radiologists as a result of having practised in the Toronto area. As CDI, the appellant attended meetings dealing
with medical issues within his field of expertise and matters involving other
departments. However, his attendance was not mandated and it was understood
that he would attend if and when he could. The appellant estimated that during
the relevant period he was not absent from Sault Hospitals more than two weeks
at any time. With respect to his obligations pursuant to paragraph 15.1 of the
written contract, D’Ovidio stated he did not have any designate and with
respect to duties to be carried out by the CDI, he was solely responsible.
According to subparagraph 15.1 (d), the appellant was to “train medical
technologists that have been hired to assist in the Department.” D’Ovidio
explained that on occasion medical students observed procedures but Joe
D’Angelo - in his role as Technical Director - was responsible for training and
his input was limited to the circumstance where some new procedure required
particular instruction to be imparted to the technologist. During the relevant
period, Sault Hospitals was not affiliated with any medical school but interns
and residents were assigned to the radiology department from time to time. The
appellant stated he enjoyed that aspect of his role as Chief because he had
taught at McMaster University. He agreed he was under a contractual obligation –
subparagraph 15.1 (k) to provide adequate on-site coverage of the
department by qualified radiologists and Joe D’Angelo created a schedule and an
on-call rotation to meet that need. In the rare event that a report of a
diagnostic image took longer than normal, D’Angelo – who had particular
expertise as a former ultrasound technologist – investigated the matter.
D’Ovidio acknowledged that pursuant to paragraph 14.1 of the agreement, he was
subject to the authority of the President of Sault Hospitals and the Medical
Advisory Committee (MAC) which was responsible for setting medical standards in
the department. The appellant agreed that if the DI department had become
dysfunctional, the President and MAC would have needed to deal with the problem
since members of the Board were not medically trained and wanted to be assured
the radiology services were being delivered adequately. The appellant stated he
was not involved in any issues concerning termination of department personnel
and had no jurisdiction over these matters. Counsel referred the appellant to a
Medical Organization Structure chart – Exhibit R-2 – dated August, 2004 - for Sault Area Hospital. D’Ovidio stated that structure came into
effect following amalgamation and after he had relocated to Kelowna. During his time as Chief, he worked autonomously and
would have spoken with the Chief of Staff – Dr. Tait - prior to discussing any
matter with the President/ CEO. D’Ovidio stated Dr. Tait was an orthopaedic
surgeon carrying on his own practice while acting as Chief of Staff for Sault
Hospitals which served an area population of 110,000. The appellant agreed that
– as Chief – he had conducted talks and attended a conference in Toronto at the request of Sault Hospitals CEO but never had
any business cards printed identifying him as Chief of the DI department. He
also directed the Algoma Breast Cancer Program. He conceded the wording of
paragraphs 16.1 of the agreement seems to relate to his status as independent
contractor with respect to his provision of services as a radiologist – as
opposed to CDI – but added that the purpose of that agreement was to govern the
duties related to that specific role. D’Ovidio agreed he had to bear the cost
of malpractice insurance coverage and Sault Hospitals paid for all public
liability coverage covering both employees and medical staff of the radiology
department. The appellant stated the sum of $1,500 per month for serving as
Chief constituted a small percentage of his annual income.
[5] The appellant submitted he had carried out
his duties as Chief in accordance with the terms of the written contract which
clearly expressed the intention of the parties that he would be providing his
services as an independent contractor.
[6] Counsel for the respondent conceded the
intention of the appellant and Sault Hospitals was clear and that there
would have been less control than might otherwise be expected over his
performance because he was a highly-qualified, competent specialist. On
balance, counsel submitted the other factors weighed heavily in support of the
Minister’s decision that the appellant – in his role as CDI ‑ was an
employee of Sault Hospitals even though the Minister had acknowledged that the
appellant provided his services - as a hospital-based radiologist - as an
independent contractor.
[7] The Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz
Industries Canada Inc., [2001] 2 S.C.R. 983 – (Sagaz) dealt with a
case of vicarious liability and in the course of examining a variety of
relevant issues, the Court was also required to consider what constitutes an
independent contractor. The judgment of the Court was delivered by Major, J.
who reviewed the development of the jurisprudence in the context of the
significance of the difference between an employee and an independent
contractor as it affected the issue of vicarious liability. After referring to
the reasons of MacGuigan, J.A. in Wiebe Door Services Ltd. v. M.N.R.,
[1986] 2 C.T.C. 200 and the reference therein to the organization test of Lord
Denning - and to the synthesis of Cooke, J. in Market Investigations Ltd. v.
Minister of Social Security, [1968] 3 All E.R. 732 - Major, J. - at
paragraph 47 of his reasons stated:
Although there
is no universal test to determine whether a person is an employee or an
independent contractor, I agree with MacGuigan J.A. that a persuasive
approach to the issue is that taken by Cooke J. in Market Investigations,
supra. The central question is whether the person who has been engaged to
perform the services is performing them as a person in business on his own
account. In making this determination, the level of control the employer has
over the worker's activities will always be a factor. However, other factors to
consider include whether the worker provides his or her own equipment, whether
the worker hires his or her own helpers, the degree of financial risk taken by
the worker, the degree of responsibility for investment and management held by
the worker, and the worker's opportunity for profit in the performance of his
or her tasks.
It bears
repeating that the above factors constitute a non-exhaustive list, and there is
no set formula as to their application. The relative weight of each will depend
on the particular facts and circumstances of the case.
[8] In several recent cases including Wolf
v. Canada, [2002] DTC 6853, The
Royal Winnipeg Ballet v. The Minister of National Revenue, [2006] DTC 6323. (RWB), Vida Wellness
Corporation DBA Vida Wellness Spa v. M.N.R., [2006] T.C.C. No 534,
2005-1677(EI) and City
Water International Inc. v. Canada
(Minister of National Revenue – M.N.R.), [2006] F.C.J. No 1653, the mutual intent of
the parties was clear. Both intended that the person providing the services
would be doing so as an independent contractor and not as an employee. That is
the situation in the within appeals.
[9] In the RWB, supra, case the issue was whether the dancers performing for that
world-renowned ballet company were employees or independent contractors. The
Ballet Company was supported in its position by Canadian Actors’ Equity
Association (CAEA) as the bargaining agent for the dancers. In the course of
deciding the dancers were not employees of the Ballet Company, at paragraphs 60‑64,
inclusive of her reasons Sharlow, J. A. – referring to the decision in Wolf,
supra, stated :
[60] Décary,
J.A. was not saying that the legal nature of a particular relationship is
always what the parties say it is. He was referring particularly to Articles
1425 and 1426 of the Civil Code of Quebec, which state principles of the
law of contract that are also present in the common law. One principle is that
in interpreting a contract, what is sought is the common intention of the
parties rather than the adherence to the literal meaning of the words.
Another principle is that in interpreting a contract, the circumstances in
which it was formed, the interpretation which has already been given to it by
the parties or which it may have received, and usage, are all taken into
account. The inescapable conclusion is that the evidence of the parties'
understanding of their contract must always be examined and given appropriate
weight.
[61] I
emphasize, again, that this does not mean that the parties' declaration as to
the legal character of their contract is determinative. Nor does it mean that
the parties' statements as to what they intended to do must result in a finding
that their intention has been realized. To paraphrase Desjardins, J.A. (from
paragraph 71 of the lead judgment in Wolf), if it is established that
the terms of the contract, considered in the appropriate factual context, do
not reflect the legal relationship that the parties profess to have intended,
then their stated intention will be disregarded.
[62] It is
common for a dispute to arise as to whether the contractual intention professed
by one party is shared by the other. Particularly in appeals under the Canada
Pension Plan and the Employment Insurance Act, the parties may
present conflicting evidence as to what they intended their legal relationship
to be. Such a dispute typically arises when an individual is engaged to provide
services and signs a form of agreement presented by an employer, in which she
is stated to be an independent contractor. The employer may have included that
clause in the agreement in order to avoid creating an employment relationship.
The individual may later assert that she was an employee. She may testify that
she felt coerced into signifying her consent to the written form of the
contract because of financial need or other circumstances. Or, she may testify
that she believed, despite signing a contract containing such language, that
she would be treated like others who were clearly employees. Although the court
in such a case may conclude, based on the Wiebe Door factors, that the
individual is an employee, that does not mean that the intention of the parties
is irrelevant. Indeed, their common intention as to most of the terms of their
contract is probably not in dispute. It means only that a stipulation in a
contract as to the legal nature of the relationship created by the contract
cannot be determinative.
[63] What is
unusual in this case is that there is no written agreement that purports to
characterize the legal relationship between the dancers and the RWB, but at the
same time there is no dispute between the parties as to what they believe that
relationship to be. The evidence is that the RWB, the CAEA and the dancers all
believed that the dancers were self-employed, and that they acted accordingly.
The dispute as to the legal relationship between the dancers and the RWB arises
because a third party (the Minister), who has a legitimate interest in a
correct determination of that legal relationship, whishes to assert that the
evidence of the parties as to their common understanding should be disregarded
because it is not consistent with the objective facts.
[64] In these
circumstances, it seems to me wrong in principle to set aside, as worthy of no
weight, the uncontradicted evidence of the parties as to their common
understanding of their legal relationship, even if that evidence cannot be
conclusive. The judge should have considered the Wiebe Door factors in
the light of this uncontradicted evidence and asked himself whether, on
balance, the facts were consistent with the conclusion that the dancers were
self-employed, as the parties understood to be the case, or were more
consistent with the conclusion that the dancers were employees. Failing to take
that approach led the judge to an incorrect conclusion.
[10] In City Water International Inc. v.
Canada (Minister of National Revenue – M.N.R.), [2006] FCA 350, the Federal
Court of Appeal considered the appeal from the finding by the Tax Court of
Canada that the City Water workers were employees. The judgment of the Court
was delivered by Malone J.A. who set out the facts -at paragraphs 5 to 12,
inclusive of his reasons – as follows:
II. Factual Background
[5] City Water is in the business of selling
and renting water purification units (the Units) to businesses and residences.
The Canada Revenue Agency issued a notice of assessment to City Water in
respect of its 2002 and 2003 taxation years, assessing on the basis that
certain of its workers were engaged in insurable and pensionable employment.
[6] City Water provides its customers with
two separate services: the initial installation of Units and their ongoing
service and maintenance. This appeal relates only to workers who service and
maintain the Units (Service Workers). Service Workers were engaged under oral
contracts wherein the terms of their relationship was outlined by City Water
management and agreed to by each worker before work was commenced. City Water
made it clear at the outset that the Service Workers would be engaged in a
self-employed contract position.
[7] Service Workers performed both regular
and emergency service calls to City Water customers. For regular service calls,
they were provided with a list of clients who would require such service within
the upcoming 30 days and were then free to schedule those calls at any time
during that period. They had flexibility to plan their routes, to perform the
service at their own convenience, and were not required to fulfill a fixed
number of assignments in any given day or week. With respect to emergency
calls, these calls were required to be done as soon as possible. Service
Workers who performed emergency services were paid extra.
[8] No representative of City Water came to
the customer's premises to supervise or inspect the services performed by the
Service Workers.
[9] As agreed at the outset of their
engagement, there was no vacation, overtime or sick pay, no benefits and no
deductions at source. Service Workers were required to provide invoices and
justify work done, hours expended and expenses claimed and were paid by the
hour at various rates. They were not required to attend at the offices of City
Water on a daily basis. Monthly meetings were held in Toronto in order to inform Service Workers
about new products, to provide payment for work done and to allocate
assignments for the upcoming month. Attendance was not mandatory.
[10] Service Workers were required to have
only a screwdriver and a wrench. City Water provided them with other
necessities such as a pail, sponge, towels, water testing pills, gloves,
sanitizers, glass cleaner, replacement filters, a plastic filter wrench, and a
meter to test the water for its metal content.
[11] Service Workers also provided their own
vehicle or bicycle if working in the downtown Toronto core. Many drove extensive distances in
the Greater Toronto Area and elsewhere to provide services. They incurred the
cost of insurance and maintenance of their vehicles or bicycles and were
reimbursed for certain expenses, such as the cost of gasoline and parking, and
received a monthly car allowance for driving in excess of 100 kilometres.
[12] In the City of Toronto, the workers were given a $200.00
monthly incentive bonus to avoid recall work, which was reduced by $50.00 for
each recall until the $200.00 was exhausted.
[11] At paragraphs 13 to 15, inclusive, Malone
J.A., referred to the decision of the Tax Court stating:
III. Decision of the Judge
[13] On the issue of control, the Judge held
that City Water exercised little or no supervision or control over the Service
Workers. However, he held that this factor should not bear the weight it would
in other cases, because the lack of control, in his view, is a function of the
simplicity of the task at hand. On the issue of tools, the Judge held that a
vehicle was not required since three workers did service work by bicycle,
rather than by vehicle. As a result, he determined that City Water provided the
bulk of the tools used by the Service Workers.
[14] The Judge then considered the Service
Workers' chance of profit. He relied on this Court's decision in Hennick v.
Canada (M.N.R)(1995) [1995] F.C.J. No. 294, 53 A.C.W.S. (3d) 1134 (F.C.A.)
and held that hourly earnings, whether longer or shorter, are not profits.
Thus, the workers had no chance of profit insofar as their service and
maintenance work was concerned. Lastly, the Judge concluded that since they had
virtually no expenses, they had no risk of loss.
[15] In his findings of fact, the Judge held
that it was the intent of the parties that all the workers be independent
contractors. In this regard, he mentioned the decision of this Court in Wolf
v. Canada (C.A.), [2002] 4 F.C. 396, whereby Noël J.A. held that when a
contract is generally entered into and is performed in accordance with its
terms, the intention of the parties cannot be disregarded. However, it does not
appear that he actually took the parties' intention into account when arriving
at his final conclusion. Ultimately, the Judge determined that during the
period in issue, to the extent that the workers performed service and
maintenance functions, income so earned was income from employment.
[12] Referring to the issue of control, Malone
J.A. in paragraphs 18 and 19 commented:
[18] A contract of employment
requires the existence of a relationship of subordination between the employer
and the employee. The concept of control is the key determinant used to
characterize that relationship (see D&J Driveway Inc. v. Canada (Minister of National Revenue),
[2003] F.C.J. No. 1784, 2003 F.C.A
453). City Water also referred the panel to Livreur Plus Inc. v. Canada (Minister of National Revenue), [2004] F.C.J. No. 267, 2004
FCA 68, where this Court applied the Wiebe Door test to determine
whether the employment of two workers was insurable under the EIA. In
considering the control component of the test, Létourneau J.A. stated at
paragraph 19:
... the Court should not confuse
control over the result or quality of the work with control over its
performance by the worker responsible for doing it ... As our colleague Décary
J.A. said in Charbonneau v. Canada (Minister of National Revenue - M.N.R.),
[1996] F.C.J. No. 1337, "It is indeed rare for a person to give out
work and not to ensure that the work is performed in accordance with his or her
requirements and at the locations agreed upon. Monitoring the result must not
be confused with controlling the worker."
In other words, controlling the quality
of work is not the same as controlling its performance by the worker hired to
do it.
[19] In my analysis, the simplicity of the
task can have no bearing on control and should not be considered in determining
whether a degree of subordination exists. As such, the Judge made a legal error
in concluding that the control factor should bear little weight because of the
simplicity of the tasks conducted by the Service Workers. In the present case,
City Water attracted the customers but left the actual performance of the
service function to the Service Workers without any supervision. Accordingly,
control here clearly points to a contract for services.
[13] In that case, the City Water workers had
provided their own vehicles which were not only essential to the job but
constituted a major investment and Malone J.A. held this favoured a finding
that they were providing their services as independent contractors. With
respect to the matter of opportunity for profit, degree of financial risk,
continued at paragraphs 24 to 26, inclusive as follows:
[24] On the present facts, in my
analysis, the chance of profit was entirely City Water's. The Service Workers
were guaranteed an hourly wage and were subject to an incentive bonus. While it
is true that the workers could earn more if they worked more hours, the
jurisprudence is clear that that does not constitute a chance of profit (see Hennick at paragraph 14). While they may have had an
incentive to work harder and get paid an extra $200, this is not the same as
the commercial risk of running a business (see Page v. Canada
(Minister of National Revenue), [2004] T.C.J. No. 131, 2004 TCC 211 at
paragraph 38). Therefore, I would agree with the Judge when he found that the
workers had no chance of profit, which points to a contract of service.
4. Degree
of Financial Risk
[25] Since I have determined that
on the evidence the Service Workers required a vehicle, I must also determine
whether they faced a risk of loss of any kind. The evidence shows that the
Service Workers were reimbursed for several expenses, including gasoline,
parking and a cell phone. They were also given a monthly car allowance. Most
importantly, they did not have any risk of bad debt as they were paid whether
or not the customer paid City Water.
[26] Based on this record, I
would agree with the Judge that there was no risk of loss to the Service
Workers, notwithstanding the fact that they had to maintain insurance on their
respective vehicles. This factor points to a finding that the Service Workers
were engaged in a contract of employment.
[14] Malone J.A. stated at paragraphs 27 and 28:
5. Other
Factors
[27] In
balancing the above factors, the result of the inquiry is not obvious.
Therefore, it is necessary to determine what weight should be given to the
intention of City Water and the Service Workers at the time of their initial
engagement.
[28] If it can be established
that the terms of the contract, considered in the appropriate factual context,
reflect the legal relationship that the parties intended, then their stated
intention cannot be disregarded (see Royal Winnipeg Ballet
v. Canada (Minister of National Revenue, [2006] F.C.J. No. 339, 2006
FCA 87, at paragraph 61). Royal Winnipeg was not
decided at the time the Judge rendered his decision.
[15] In the course of concluding that the
workers were not employees of City Water, Malone J.A. summarized as follows:
[30] Thus, the parties' intention
will only be given weight if the contract properly reflects the legal relationship between
the parties (see Royal Winnipeg at paragraph 81). In
this case, there is no written agreement that purports to characterize the
legal relationship between the Service Workers and City Water; however, there
is no dispute between the parties as to what they believe that relationship to
be. The evidence is that both parties believed that the workers were
self-employed and each acted accordingly.
[31] In my analysis, since the
relevant factors yield no clear result, greater emphasis should have been
placed on the parties' intention by the Judge in this case. The Judge was
required to consider the factors in light of the uncontradicted evidence, and
to ask himself whether, on balance, the facts were consistent with the
conclusion that the workers were persons in business on their own account' (see
Sagaz supra at paragraph 3), or were more consistent
with the conclusion that the workers were employees. In failing to do this, he
made a palpable and overriding error on a question of mixed law and fact. Had
he conducted that analysis, in my view, he could only have concluded that City
Water was not the employer of the Service Workers.
[16] Returning to the facts in the within
appeal, following an examination of all of the evidence, the intention of the
parties – as noted earlier – is clear. A perusal of the entire written contract
supports the finding that both D’Ovidio and Sault Hospitals intended him to be
an independent contractor when serving as CDI in return for a monthly
administrative fee of $1,500, although it omitted to state that intent
expressly as it had done when dealing the provision of his services as a
radiologist throughout the remainder of that agreement.
[17] I will examine the facts in relation to the indicia
set forth in the judgment of Major, J. in Sagaz.
Level of control:
[18] The appellant was a highly-qualified radiologist and as a specialist in
his field would not require supervision. Pursuant to the terms of the written
agreement, he was required to perform certain specified services and to serve
on various committees and to engage in research as time and facilities would
permit. In that contract, the appellant undertook to perform such clinical and
other administrative functions as were required for the proper functioning of
the department. The evidence disclosed there was no need for D’Ovidio to report
to any person in authority at Sault Hospitals and it was understood that he
would attend any meetings or conferences and participate in other activities
enumerated in paragraph 15.1 of the contract when not otherwise occupied in
carrying out his main function as a radiologist. The organization chart –
Exhibit R-2 – was not in existence during the relevant period and the Chief of
Staff during the appellant’s tenure was a surgeon with an active practice. Just
as there is no authority to reduce the importance of the control test when the
nature of the work is simple, there is no basis for doing so when the work is
complex and specialized. Often, the appellant carried out his duties as Chief
contemporaneously with his own professional hospital-based radiology practice
and – in a notional sense – switched hats from time to time as required in the
course of a busy schedule. As a practicing radiologist, he had to deal with
other physicians who had referred patients or were seeking consultations and
then – as CDI – interacted with many of these same colleagues in order to fulfill
his mandate. In the event Sault Hospitals wished to dispense with his services
as Chief whether in response to a notice of complaint or otherwise, that
institution was bound by the terms of the written contract in that respect
including the duty to participate in an arbitration proceeding.
Provision of equipment and/or helpers
[19] The preamble to the written contract expresses the intent of Sault
Hospitals to engage the services of the appellant as CDI. However, much of the
contract deals with the terms of the relationship of D’Ovidio – and other
radiologists – to Sault Hospital and
the mechanisms that will govern the supply of their services and receipt of
payment therefore. Curiously, paragraph 15.1 – dealing with the duties of
D’Ovidio – presumably as Chief – permits him to carry out the subsequently
enumerated duties through a designate. The appellant stated the actual
circumstances did not afford that opportunity and when absent, the duties of
Chief were not performed by anyone and matters were not dealt with until he
returned. The equipment required in the DI department costs millions of
dollars. As a practicing radiologist providing his services to Sault Hospitals
as an independent contractor on a fee-for-service basis, he did not own his own
tools or equipment and this same expensive infrastructure was required in order
that he could serve as Chief. The nature of the task to be performed precludes
ownership on the part of the supplier of the service except – perhaps – in the
situation where a private clinic is owned by radiologists who have deep pockets
and a friendly banker and can purchase that sort of equipment and machinery.
Degree of financial risk and responsibility for
investment and management
[20] There was no financial risk involved since Sault Hospitals carried the
necessary public liability insurance to cover any actions against D’Ovidio that
might arise in the course of his duties as Chief. He was not required to make
any investment of capital to earn the sum of $1,500 per month.
Opportunity for profit in the performance of tasks
[21] As noted above, the appellant’s administrative fee was $1,500 per month
regardless of the time spent in carrying out his duties as Chief. However,
since he was totally in charge of that aspect of his role, he was at liberty to
devote more time to satisfying the needs of Sault Hospitals in terms of meeting
all contractual commitments as a radiologist. Each time he elected to perform a
service for a fee that would be billed – through Sault Hospitals – to OHIP,
rather than spend that block of time working in his capacity as Chief for the
fixed monthly sum, he had the ability to increase his professional income. In
the course of negotiating that monthly payment, the appellant must have been
satisfied that the combination of the services provided to Sault Hospitals as a
medical practitioner and administrative department Chief was profitable from
his perspective in terms of time available to devote to both pursuits.
[22] It is worth noting that the position of CDI was not essential because
that post remained vacant for more than 3 years after the appellant left the
Sault. The nature of the work performed by the appellant as Chief was so
thoroughly and inextricably bound up with his ongoing work as a practicing
radiologist supplying his services to Sault Hospital that it is unreasonable to
separate the two functions in the sense that as a medical practitioner he was
an independent contractor but was an employee when carrying out his duties as
Chief. The monthly fee paid to the appellant was not an honorarium in the
proper sense of that word but it was not a salary within the entire context of
the agreement. The best way to describe the payment is to defer to the language
of the contract which identifies the monthly payment as an “administrative fee”
paid in compensation for his duties as Chief. From the perspective of the
appellant, he did not receive any holiday pay or any benefits attributable to
that revenue and he had never considered that service to have been delivered in
the context of any employment relationship with Sault Hospitals. He received
the administrative fee together with the amount of his entitlement from the
OHIP payment for the appropriate billing period. As a result, the appellant had
no reason to regard himself as an employee even for the limited purpose of
serving as Chief. As he testified, the within matter probably arose as a
consequence of a payroll audit by CCRA which led to a subsequent ruling and
confirmation by the Minister that he was an employee.
[23] In my opinion, the intent of the parties is significant in view of the
fact the other relevant factors are incapable of yielding an obvious result
when considered as a whole in the context of all relevant circumstances
pertaining to the subject working relationship. The appellant and Sault
Hospitals wanted him to be an independent contractor both as a radiologist and
as CDI – although that could have been expressed more elegantly in the contract
– and they acted accordingly throughout the course of the working relationship.
[24] Taking into account the whole of the evidence and applying the relevant
jurisprudence, I am satisfied the appellant did not provide his services as CDI
to Sault Hospitals during the relevant period pursuant to a contract of service
and ‑ therefore – was not an employee engaged in either insurable or
pensionable service.
[25] Both appeals are allowed and the decisions issued pursuant to the Act
and the Plan are hereby varied to reflect that finding.
Signed at Sidney, British Columbia, this 22nd day of May, 2007.
"D.W. Rowe"
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