Date: 20011116
Dockets: 2000-88(EI), 2000-89(CPP), 2000-92(EI),
2000-93(CPP), 2000-60(EI), 2000-61(CPP),
2000-116(EI), 2000-115(CPP)
BETWEEN:
EUGENE MARCOUX, ROUMEN MILEV,
MUKESH MIRCHANDANI, HUSSAM BAWA,
Appellants,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bowman, A.C.J.
[1] These appeals are from decisions by the Minister of
National Revenue that the appellants, all of whom are psychiatrists, were
employed in insurable and pensionable employment by four different Saskatchewan
District Health Boards (the "SDHBs") for the purpose of the Employment
Insurance Act and the Canada Pension Plan. The appeals of all four
appellants were heard together by Beaubier J. of this court. After hearing
the evidence and reserving judgment he concluded that the Minister's decisions
were correct and dismissed the appeals.
[2] The appellants appealed to the Federal Court of Appeal. In
a brief oral judgment delivered from the bench the Federal Court of Appeal
allowed the appeal, set aside the decision of Beaubier J. and referred the
matter back to the Tax Court of Canada for a redetermination by a different
judge. Desjardins J.A.,
speaking for a unanimous court, stated that the redetermination should be
by a different judge on
the basis of the record as constituted and any other evidence that the parties
may wish to tender.
[3] In light of their brevity the reasons for judgment by the
Federal Court of Appeal are reproduced in their entirety.
[1] We feel that this
application for judicial review of a decision of Beaubier J. of the Tax Court
of Canada must succeed.
[2] We find that Beaubier
J.T.C.C., at pages 15 and 16 of his reasons, quoted from Wiebe Door Services
Ltd. v. Minister of National Revenue (87 D.T.C. 5025 at 5027) a statement
from the Tax Court judge with respect to the integration test which was later
rejected by MacGuigan J.A. on behalf of the
Federal Court of Appeal.
[3] We are, therefore, not
satisfied that Beaubier J.T.C.C. properly directed himself in the law. There is
clear evidence of this error of law at page 16 of his reasons when he
stated:
[...] Without the
psychiatrists, the District clinic could not offer psychiatric services in the
premises.
[4] We are also comforted in
this view by his reference, in paragraph 8 of his decision, to the objective
perception of a patient or the public as a means of determining the legal
nature of the relationship between psychiatrists and the Board for whom they
were performing services. This is an irrelevant consideration that he took into
account and we are not sure that it did not affect or colour his decision.
[5] For these reasons, the
application for judicial review will be allowed with costs, the decision of the
Tax Court judge will be set aside and the matter will be referred back to the
Tax Court of Canada for a redetermination by a different judge on the basis of
the record as constituted and any other evidence that the parties may wish to
tender.
[4] An initial question has to do with the manner in which I am
to carry out the direction of the Federal Court of Appeal. I begin by asking
the question "What is the record as constituted"? The word record has
a variety of meanings depending on the context in which it is used. One
definition which appears with some frequency in American cases cited in Words
and Phrases (West Publishing Co.) is the following:
A record, in
judicial proceedings, is a precise history of the suit from its commencement to
its termination, including the conclusion of law thereon, drawn up by the
proper officer for the purpose of perpetuating the exact state of facts.
[5] In Rex v. Northumberland Compensation Appeal Tribunal,
Ex parte Shaw, [1952] 1 K.B. 338, Lord Denning said at
p. 352:
What, then, is the
record? It has been said to consist of all those documents which are kept by
the tribunal for a permanent memorial and testimony of their proceedings: see
Blackstone's Commentaries, Vol. III, at p. 24. But it must be noted that, whenever
there was any question as to what should, or should not be, included in the
record of any tribunal, the Court of King's Bench used to determine it. It did
it in this way: When the tribunal sent their record to the King's Bench in
answer to the writ of certiorari, this return was examined, and if it was
defective or incomplete it was quashed: see Apsley's case, Rex v.
Levermore, and Ashley's case, or, alternatively, the tribunal might
be ordered to complete it: Williams v. Bagot and Rex v.
Warnford. It appears that the Court of King's Bench always insisted that
the record should contain, or recite, the document or information which
initiated the proceedings and thus gave the tribunal its jurisdiction; and also
the document which contained their adjudication. Thus in the old days the
record sent up by the justices had, in the case of a conviction, to recite the
information in its precise terms; and in the case of an order which had been
decided by quarter sessions by way of appeal, the record had to set out the
order appealed from: see Anon. The record had also to set out the
adjudication, but it was never necessary to set out the reasons (see South
Cadbury (Inhabitants) v. Braddon, Somerset (Inhabitants)),
nor the evidence, save in the case of convictions. Following these cases, I
think the record must contain at least the document which initiates the
proceedings; the pleadings, if any; and the adjudication; but not the evidence,
nor the reasons, unless the tribunal chooses to incorporate them. If the tribunal
does state its reasons, and those reasons are wrong in law, certiorari lies to
quash the decision.
[6] This seems to have been Lord Denning's view in Baldwin
& Francis v. Patents Tribunal, [1959] 2 All E.R. 433 at
page 445.
[7] Lord Denning was, of course, dealing with certiorari
to quash for error on the face of the record. It would seem inconceivable that
error on the face of the record could be determined without seeing the order
and the reasons of the tribunal. It is there that the error would most likely
be seen.
[8] The meaning of record was discussed at some length by
Griffiths L.J. of the Queen's Bench Division in R v. Crown Court at
Knightsbridge, ex parte International Sporting Club (London) Ltd and
another, [1981] 3 All E.R. 417. He held, not surprisingly, that
in certiorari proceedings the record included not only the formal order
but the oral reasons of the court below. At pages 421-422 he said:
But before
the Divisional Court can exercise its supervisory jurisdiction it must be able to
see what the error of law is said to be. A document to which anyone would
naturally expect it to look must surely be that which records the reasons given
by the court or tribunal for its decision, in this case the transcript of Judge
Friend's judgment.
In the
collective experience of the members of this court and the very experienced
counsel appearing before us it has been the practice of the Divisional Court
under the presidency of successive Lord Chief Justices over the last four
decades to receive the reasons given by a court or tribunal for its decision
and if they show error of law to allow certiorari to go to quash the decision.
The court has regarded the reasons as part of the record. They are sometimes
referred to as a 'speaking order'.
[11] In Farrell v. Workmen's Compensation
Board, 26 D.L.R. (2d) 185 at pages 196 and 201, the
British Columbia Court of Appeal held that the "record" in a certiorari
proceeding did not include the evidence before the Board.
[12] It will be apparent from the above cases —
and they are only a sampling — that there is no consensus among courts
concerning what is meant by "record". However for purposes of a certiorari
proceeding the record may very well be the reasons but not the evidence. This
does not however answer the question what the Federal Court of Appeal meant
when it referred to "the record as constituted". I presume it meant
the transcript and the exhibits, because it refers to "any other evidence
that the parties may wish to tender". This phrase presupposes that the
record should include the evidence that is already before the court.
[13] The more difficult question is whether the
"record" in the context of the judgment of the Federal Court of
Appeal includes Beaubier J.'s reasons. One might state, perhaps overly
simplistically, that since it is Beaubier J.'s decision that is being
appealed from I should not look at it. The matter is, however, not susceptible
of so facile a solution.
[14] The Federal Court of Appeal has a certain
limited jurisdiction in applications for judicial review under section 28
of the Federal Court Act. Subsection 28(2) provides:
Sections 18
to 18.5, except subsection 18.4(2), apply, with such modifications as the
circumstances require, in respect of any matter within the jurisdiction of the
Court of Appeal under subsection (1) and, where they so apply, a reference to
the Trial Division shall be read as a reference to the Court of Appeal.
[16] Since the Federal Court of Appeal has power
to hear appeals from the Tax Court of Canada under paragraph 28(1)(l)
of the Federal Court Act it has the same powers as the Trial Division
and the same grounds of review on application to that court for judicial review
from other judgments. Subsections 18.1(3) and (4) set out those powers and
grounds:
(3) On an
application for judicial review, the Trial Division may
(a) order
a federal board, commission or other tribunal to do any act or thing it has
unlawfully failed or refused to do or has unreasonably delayed in doing; or
(b) declare
invalid or unlawful, or quash, set aside or set aside and refer back for
determination in accordance with such directions as it considers to be
appropriate, prohibit or restrain, a decision, order, act or proceeding of a
federal board, commission or other tribunal.
(4) The Trial
Division may grant relief under subsection (3) if it is satisfied that the
federal board, commission or other tribunal
(a) acted
without jurisdiction, acted beyond its jurisdiction or refused to exercise its
jurisdiction;
(b) failed
to observe a principle of natural justice, procedural fairness or other
procedure that it was required by law to observe;
(c) erred
in law in making a decision or an order, whether or not the error appears on
the face of the record;
(d) based
its decision or order on an erroneous finding of fact that it made in a
perverse or capricious manner or without regard for the material before it;
(e) acted,
or failed to act, by reason of fraud or perjured evidence; or
(f) acted
in any other way that was contrary to law.
[17] The
Federal Court of Appeal has referred the matter back to this court for
redetermination on the record as constituted and any other evidence that the
parties may wish to tender. I mention in passing that the only additional
evidence put in before me was tendered by the Crown. It was the testimony of an
income tax assessor who testified that the rules for deductibility of expenses
in computing income from a business were different from and broader than those
that applied in computing income from employment, in which the deductibility of
expenses is covered by section 8 of the Income Tax Act rather than
by general commercial principles which are implicit in section 9 by the
use of the word "profit". The statement is unquestionably true but it
is of little assistance in determining whether an individual is engaged under a
contract of service or a contract for services.
[18] Am I
entitled or obliged to take into account the reasons and the findings of fact
of Beaubier J.? I am not so presumptuous as to think that I am entitled to
sit in appeal on the judgment of Beaubier J., nor do I think that the
Federal Court of Appeal intended to confer such a power on me. Indeed it could
not.
[19] It follows that I may not ignore the findings of fact of Beaubier J.
It is obvious that the Federal Court of Appeal found no error of fact in the
judgment of Beaubier J. as envisaged by paragraph 18.1(4)(d).
I must assume therefore that its judgment is based on paragraph 18.1(4)(c).
If I were entitled to ignore Beaubier J.'s findings of fact it would mean
that I could substitute my findings of fact for those of Beaubier J. even
though his findings, after hearing the testimony of the witnesses, were based
on the evidence, were not based on no evidence and were not capricious or
perverse. If I could do that based on the evidence before Beaubier J. and
without rehearing all of the evidence it would be more than the Federal Court
of Appeal could do under section 28 of the Federal Court Act.
[20] In Chan
v. Canada (Minister of Employment and Immigration), [1994] F.C.J.
No. 685, Rothstein J., then a member of the Trial Division, said at
paragraph 26:
Subsection 18.1(3) does not vest me with the
jurisdiction to make findings of fact which the tribunal appealed from should
have made. The matter must be referred back for redetermination. In Xie v. The
Minister of Employment and Immigration, Court file A‑1573-92, a March 3,
1994 unreported decision [Please see [1994] F.C.J. No. 286], I expressed, at
page 9, the view that when referring a matter back, it may be possible, in an
appropriate case, to issue directions in the form of a "directed
verdict":
While the Court does have jurisdiction to refer
a matter back for redetermination in accordance with such directions as it
considers appropriate, it seems to me that the Court should only issue
directions to a tribunal in the nature of a directed verdict, where the case is
straightforward and the decision of the Court on the judicial review would be
dispositive of the matter before the tribunal. While such cases undoubtedly
will arise, as a general rule, the Court should leave to tribunals, with their
expertise in the matters over which they have jurisdiction, the right to make
decisions on the merits based on the evidence before them.
[23] The
Federal Court of Appeal in Canada (Attorney General) v. Jencan Ltd. (C.A.),
[1998] 1 F.C. 187 said at paragraphs 54 and 55:
54 Subsection 18.1(3) does not vest this Court with
the jurisdiction to make the decision that the Deputy Tax Court Judge ought to
have made. Rather, the matter must be referred back for redetermination. See
Nuttall v. Canada (Minister of National Revenue – M.N.R.); Thibaudeau v.
M.N.R.; and Chan v. Minister of Employment and Immigration. While this Court
may refer the matter back with specific directions as to disposition, this
approach must be limited to the most straightforward of cases. In Xie v.
Minister of Employment and Immigration, Rothstein J. stated:
While the court does have jurisdiction to refer
a matter back for redetermination in accordance with such directions as it
considers appropriate, it seems to me that the court should only issue
directions to a tribunal in the nature of a directed verdict, where the case is
straightforward and the decision of the court on the judicial review would be
dispositive of the matter before the tribunal. While such cases undoubtedly
will arise, as a general rule, the court should leave to tribunals, with their
expertise in the matters over which they have jurisdiction, the right to make
decisions on the merits based on the evidence before them.
55 This is not a case where the evidence on record
is so clear that the only possible conclusion is that the worker and the
respondent should be deemed to be at arm's length, or where the sole issue to
be decided is a pure question of law which will be dispositive of the case.
Sitting in judicial review, I am unable to say that the Minister's
determination under subparagraph 3(2)(c)(ii) that the worker and the respondent
would not have entered into a substantially similar contract of service was, or
was not, supportable on the evidence before the Deputy Tax Court Judge. This is
a question that the Deputy Tax Court Judge ought to have answered when he found
that some of the Minister's assumptions of fact had been disproved by the
evidence. Accordingly, I would allow the application for judicial review, set
aside the decision of the Deputy Tax Court Judge, and I would refer the matter
back to the Tax Court of Canada for a new hearing before a different judge in a
manner consistent with these reasons.
[25] Here
the Federal Court of Appeal has referred the matter back to this court for
redetermination on the record as constituted and any other evidence the parties
may which to tender, and without any specific direction of the type envisaged
by Rothstein J.
[26] I am
not to re-hear the case. I am to redetermine it on the record. The Federal
Court of Appeal does not have the power, on the basis of the record, to
substitute its findings of fact for those of the trial judge. I do not believe
that it seeks to confer on me a power that it does not itself possess.
[27] I
must therefore determine on the record what the legal result would be if I
excise from my thinking what the Federal Court of Appeal evidently thought were
errors of law in the judgment of Beaubier J.
[28] Beaubier J.'s errors of
law, according to the Federal Court of Appeal, are the following.
[29] He
quoted from the first Tax Court's judgment in Wiebe Door Services v. Canada,
the passage cited in the Federal Court of Appeal's judgment in that case
(87 DTC 5025) in which the Tax Court referred to the integration
test. That is true. However immediately after that quotation he cited at length
the decision of MacGuigan J.A. in Wiebe Door in which he also discussed integration as simply one part of the
"four-in-one test".
[30] After
quoting at length from MacGuigan J.A., Beaubier J. said at
pages 18-19:
The quotation from Khan stating that "clearly
superintendence and control cannot be the decisive test when one is dealing
with a professional man" is a crucial problem in this case. That is why
each psychiatrist indemnifies the District against malpractice in his contract.
[7] On
the evidence, when one of the Appellants was working under his sessional
contract he worked, except when working in a jail, in facilities operated by
the Payor. His appointments were made by the staff of the Payor. His assistant
staff was paid by or through the Payor. Like an hourly worker, his recorded
hours of work were remunerated by the Payor. While they did not say so, the
references by the psychiatrists to the fact that they wanted other staff
available when seeing patients, whether they be psychiatrists or other persons,
relates to the current problems of liability and complaints that seem to
pervade various professions; nonetheless this need means that District clinic
staff of one kind or another have to be available when patients are seen.
[8] Looked
at objectively, by a patient or some other person in the community, the
psychiatrists, when working pursuant to their sessional contracts, appeared to
be employed as part of the clinic business and their work was done as an
integral part of the clinic business. They were not performing these services
as persons in business on their own account. Rather they were performing them
as integral staff of the clinics who were their Payors. Therefore, the appeals
are dismissed.
[31] Was
his error in law in quoting from the Tax Court judgment in Wiebe Door
without explicitly stating that he was contrasting it with what
MacGuigan J.A. said and whose judgment he was clearly following and
relying on? I shall try to avoid whatever error he committed by saying with
reference to the quotation by Beaubier J. from the decision of the Tax
Court: "The Tax Court judge in Wiebe Door obviously placed undue
reliance on the integration test, which has been relegated to an insignificant
rôle, as is evident from the judgment of MacGuigan J.A."
[32] I
think that was what Beaubier J. was saying, but evidently he did not say
it explicitly enough.
[33] The
next error said by the Federal Court of Appeal to have been committed by
Beaubier J. was when he said
Without the psychiatrists, the District clinic could not
offer psychiatric services in the premises.
(he said "in their premises" but this is not material).
[34] This,
according to the Federal Court of Appeal is "clear evidence of this error
in law". The Federal Court of Appeal did not indicate how what is clearly
a statement of fact — and one that is certainly supported by the evidence —
constitutes an error of law. What I presume they are saying is that in making
this statement of fact Beaubier J. must have been thinking of the
integration test . If I say "a veterinary clinic cannot function without
veterinarians", I am stating the obvious. I am not stating a conclusion of
law and I am certainly not indicating anything about whether the veterinarians
that work at the clinic are employees or independent contractors.
[35] The third and last error of
law found by the Federal Court of Appeal appears in paragraph 4 of the
Federal Court of Appeal's reasons:
[4] We are also comforted in
this view by his reference, in paragraph 8 of his decision, to the objective
perception of a patient or the public as a means of determining the legal
nature of the relationship between psychiatrists and the Board for whom they
were performing services. This is an irrelevant consideration that he took into
account and we are not sure that it did not affect or colour his decision.
[36] I agree that how a member of
the public visiting the clinic might see the relationship — assuming he or she
gave it a moment's thought, which I doubt — is nihil ad rem. Whether
this consideration influenced Beaubier J. is something that I need not
determine. It is, however, an easy enough matter simply to ignore the
observation.
[37] I
have read the reasons for judgment of Beaubier J. and the transcript. The
case was fully and expertly reargued before me by senior and experienced counsel.
With the possible exception of the comment about how the public might perceive
the relationship — an observation that is both conjectural and irrelevant — there is nothing in the
reasons for judgment of Beaubier J. that is not supported by the evidence.
[38] What I think the Federal Court of Appeal
meant me to do was to redetermine the legal result, based on the record as
constituted, and any further evidence that the parties choose to tender but not
to substitute my findings of fact for those of Beaubier J.
[39] Not substituting my findings of fact for
those of Beaubier J. presents no particular problem for me because I agree
with them.
[40] Beaubier J. framed his
findings of fact around the assumptions contained in the Minister's Replies to
the Notices of Appeal. This is a sound practice in tax and other appeals to
this court where the initial onus rests on the appellant to
"demolish" the Minister's assumptions in the assessment. In Hickman
Motors Ltd.
v. Canada, [1997] 2 S.C.R. 336, Madam Justice L'Heureux-Dubé summarized the
law with regard to the onus of proof in tax litigation, speaking for the
majority of the Supreme Court of Canada she stated at paragraph 92:
It is trite law that in
taxation the standard of proof is the civil balance of probabilities: Dobieco
Ltd. v. Minister of National Revenue, [1966] S.C.R. 95, and that within
balance of probabilities, there can be varying degrees of proof required in
order to discharge the onus, depending on the subject matter: Continental
Insurance Co. v. Dalton Cartage Co., [1982] 1 S.C.R. 164; Pallan v.
M.N.R., 90 D.T.C. 1102 (T.C.C.), at p. 1106. The Minister, in
making assessments, proceeds on assumptions (Bayridge Estates Ltd. v. M.N.R.,
59 D.T.C. 1098 (Ex. Ct.), at p. 1101) and the initial onus is on the
taxpayer to "demolish" the Minister's assumptions in the assessment
(Johnston v. Minister of National Revenue, [1948] S.C.R. 486; Kennedy
v. M.N.R., 73 D.T.C. 5359 (F.C.A.), at p. 5361). The initial burden is
only to "demolish" the exact assumptions made by the Minister but
no more: First Fund Genesis Corp. v. The Queen, 90 D.T.C. 6337
(F.C.T.D.), at p. 6340.
[Bold emphasis added]
[41] I believe that it is helpful to briefly
reiterate the relevant findings of fact of Beaubier J., which are based on
the evidence on which I am relying on for the purpose of this judgment:
1. By
statute the province of Saskatchewan is divided into health service districts.
SDHBs administer all provincially funded public health services in the
districts, including the psychiatric services provided by the appellants.
2. Each
of the appellants contracted with a SDHB to supply psychiatric services to
patients (the "Sessional Contracts").
3. Two
of the appellants were recruited from abroad and public funds paid their
transportation to Saskatchewan on the condition that they work for the SDHB for
five years or reimburse the SDHB for their relocation costs.
4. The
two appellants who were recruited from abroad were required to provide an
undertaking that they had contracts for employment in Canada for five years
when they applied for landed immigrant status.
5. The
Sessional Contracts provided that all statutory payments including income tax,
Canada Pension and GST were the responsibility of the appellants.
6. The
Sessional Contracts provided that the appellants work a set number of four-hour
time blocks (the "Sessional Units") per year. However the evidence at
trial indicated that each appellant responded to demand or worked the number of
Sessional Units they desired and billed the SDHBs accordingly.
7. The
appellants were each paid a set fee per Sessional Unit, plus a fee for standby
duty. The rate of the set fee varied among the appellants. The rate was not
based on performance. The rates related to the individual appellant's
negotiation skills and the demand in the particular SDHB.
8. Each
of the appellants billed their SDHB monthly and was paid monthly.
9. The
SDHBs provided fully furnished offices, clinic staff and supplies at no cost to
the appellants (the "SDHB Clinics").
10. The
appellants' appointments with SDHB patients were booked by the clinic staff. If
a patient requested a particular psychiatrist the staff made the appointment as
requested. However, each appellant controlled the hours in which they saw
patients.
11. If a
SDHB patient did not show up for a scheduled appointment the appellants were
nevertheless paid for the time booked. This was not the case under the fee for
service contracts with the SDHBs. Under the fee for service contracts a
psychiatrist was not paid if a patient missed an appointment.
12. The
appellants did not work set hours from 8:30 a.m. to 5:00 p.m., Monday through
Friday as set out in the Sessional Contracts. The appellants worked on weekends
or in the evenings. Some of them devoted time during the week to other areas of
their practice including fee for service work. Some of the appellants did
locums elsewhere in the province, in other parts of Canada or abroad during the
term of their contracts with the SDHBs.
13. The
appellants did not see fee for service and other private patients in the SDHB
Clinics.
14. The
districts did not have first call on the appellants' time. Each appellant
allocated their time between treating SDHB patients, their other areas of
practice and personal interests as they saw fit.
15. The
appellants arranged for replacement doctors to work in the SDHB Clinics, when
necessary. However the replacement doctors billed the SDHBs directly.
16. The
SDHBs did not provide any direction to the appellants on:
a. how SDHB patients
should be treated;
b. how
much time should be spent with each SDHB patient; or
c. how many SDHB
patients each appellant should treat.
17. The
appellants were not supervised or disciplined by the SDHBs. Like all
psychiatrists in the province they were monitored by the Saskatchewan College
of Physicians and Surgeons.
18. The
appellants were reimbursed for some expenses. They were however not reimbursed
for their cars, parking, cellular phones, travel between the District Clinics
and the hospitals and jails where they also treated SDHB patients. Liability
insurance, licence fees and continuing medical education required to maintain
their licences were the responsibility of the appellants.
[42] The Minister assumed that the appellants did
not have a "chance of profit or risk of loss". This is a mixed
question of fact and law. The statement was accepted as correct by
Beaubier J. although he acknowledged that if any of the appellants failed
to bill sufficient Sessional Units the unreimbursed expenses could result in a
business loss for a particular year. Given the relatively small amount of
expenses for which the appellants were not reimbursed compared to the amounts
that they billed the SDHBs the risk of loss from this activity was minimal and
more theoretical than real. The total expenses claimed by some of the
appellants were in large measure attributable to the fee for service business
carried on by them independently of the work they did under contract with the
various SDHBs.
[43] Although Beaubier J. did not specifically mention this in his
findings of fact, the evidence establishes that although the appellants did not
receive work related benefits of the type that a public servant on salary would
receive, such as membership fees, licensing fees, medical and disability
benefits and paid leave, they received a pay component in lieu of such
benefits. In the case, for example, of Dr. Milev the additional amount was
between $10,000 and $15,000.
[44] The leading case in Canada dealing with the
question whether a worker is an employee or an independent contractor is the
Federal Court of Appeal decision in Wiebe Door. In Wiebe Door,
the Tax Court judge employed a four-part test to determine that the appellant
was engaged in insurable employment. The four-part test used by the Tax Court
judge involved analyzing the evidence using the following four factors to
determine whether the employee in question was working under a contract for
services or a contract of service, the former indicating they were engaged in
insurable employment:
1. the degree or absence of control, exercised
by the alleged employer;
2. ownership of tools;
3. chance of profit and risk of loss; and
4. integration
of the alleged employee's work into the alleged employer's business.
[45] The appellant in Wiebe Door alleged
that use of the integration test was an error of law unless the alleged
employee was a highly skilled professional. In Wiebe Door the Federal
Court of Appeal took the opportunity to reconsider the elements of the four-part
test. MacGuigan J.A., speaking for a unanimous court, approved the test set out
by Lord Wright in Montreal v. Montreal Locomotive Works Ltd. et al
[1947] 1 D.L.R. 161 (P.C.), which included the elements of control, ownership
of tools, and chance of profit and risk of loss, stating at page 5028:
Perhaps the earliest important
attempt to deal with these problems was the development of the entrepreneur
test by William O. (later Justice) Douglas, Vicarious Liability and the
Administration of Risk (1928-9), 38 Yale L.J. 584, which posited four
differentiating earmarks of the entrepreneur: control, ownership, losses, and
profits. It was essentially this test which was applied by Lord Wright in Montreal
v. Montreal Locomotive Works Ltd. et al., [1947] 1 D.L.R. 161,
169-70:
In earlier cases
a single test, such as the presence or absence of control, was often relied on
to determine whether the case was one of master and servant, mostly in order to
decide issues of tortious liability on the part of the master or superior. In
the more complex conditions of modern industry, more complicated tests have
often to be applied. It has been suggested that a fourfold test would in some
cases be more appropriate, a complex involving (1) control; (2) ownership of
the tools; (3) chance of profit; (4) risk of loss. Control in itself is not
always conclusive. Thus the master of a chartered vessel is generally the
employee of the shipowner though the charterer can direct the employment of the
vessel. Again the law often limits the employer's right to interfere with the
employee's conduct, as also do trade union regulations. In many cases the
question can only be settled by examining the whole of the various elements
which constitute the relationship between the parties. In this way it is in
some cases possible to decide the issue by raising as the crucial question
whose business is it, or in other words by asking whether the party is carrying
on the business, in the sense of carrying it on for himself or on his own
behalf and not merely for a superior. ...
Taken thus in context, Lord
Wright's fourfold test is a general, indeed an overarching test, which involves
"examining the whole of the various elements which constitute the
relationship between the parties." In his own use of the test to determine
the character of the relationship in the Montreal Locomotive Works case
itself, Lord Wright combines and integrates the four tests in order to seek out
the meaning of the whole transaction.
[46] MacGuigan J.A. went on to consider the
"integration test" which was first set forward by Denning L.J. in Stevenson,
Jordan and Harrison, Ltd. v. MacDonald and Evans, [1952] 1 T.L.R.
101, where he stated at page 111:
One feature which seems to run
through all the instances is that, under a contract of service, a man is
employed as part of the business, and his work is done as an integral part of
the business; whereas under a contract for services, his work, although done for
the business, is not integrated into it but is only accessory to it.
[47] MacGuigan J.A. made
an analysis of the judicial consideration of and academic commentary on the
integration test. He concluded at page 5030:
Of course, the organization
test of Lord Denning and others produces entirely acceptable results when
properly applied, that is, when the question of organization or integration is
approached from the persona of the "employee" and not from that of
the "employer," because it is always too easy from the superior
perspective of the larger enterprise to assume that every contributing cause is
so arranged purely for the convenience of the larger entity. We must keep in
mind that it was with respect to the business of the employee that Lord Wright
addressed the question "Whose business is it?"
Perhaps the best synthesis
found in the authorities is that of Cooke J. in Market Investigations, Ltd.
v. Minister of Social Security, [1968] 3 All E.R. 732, 738-9.3
The observations
of Lord Wright, of Denning L.J., and of the judges of the Supreme Court in the
U.S.A. suggest that the fundamental test to be applied is this: "Is the
person who has engaged himself to perform these services performing them as a
person in business on his own account?" If the answer to that question is
"yes," then the contract is a contract for services. If the answer is
"no" then the contract is a contract of service. No exhaustive list
has been compiled and perhaps no exhaustive list can be compiled of considerations
which are relevant in determining that question, nor can strict rules be laid
down as to the relative weight which the various considerations should carry in
particular cases. The most that can be said is that control will no doubt
always have to be considered, although it can no longer be regarded as the sole
determining factor; and that factors, which may be of importance, are such
matters as whether the man performing the services provides his own equipment,
whether he hires his own helpers, what degree of financial risk be taken, what
degree of responsibility for investment and management he has, and whether and
how far he has an opportunity of profiting from sound management in the
performance of his task. The application of the general test may be easier in a
case where the person who engages himself to perform the services does so in
the course of an already established business of his own; but this factor is
not decisive, and a person who engages himself to perform services for another
may well be an independent contractor even though he has not entered into the
contract in the course of an existing business carried on by him.
_________________________
3 This test has been widely
cited. For example, it was referred to by all three Court of Appeal judges in Ferguson
v. John Dawson & Partners (Contractors) Ltd., [1976] 3 All E. R. 817,
and the two majority judges, supra, at pp. 824, 831, each described it
as "very helpful."
[48] In Wiebe Door, the Federal Court of
Appeal determined that the Tax Court judge had erroneously applied the
integration test and accordingly they set aside the judgment. In the present
case, if I understand the Federal Court of Appeal's judgment correctly, they
considered that Beaubier J. may have placed undue emphasis on the
integration test, which evidently the Federal Court of Appeal considered to be
an error of law.
[49] The question now is does the integration
test continue to be one part of the four-in-one test in Wiebe Door. It
is, as MacGuigan J.A. implied in Wiebe Door, a rather unhelpful
test and one that is at best difficult to apply in cases of this type. An
independent contractor may be as integral a part of someone else's business as
a person who is unquestionably an employee. I used the example of a veterinary
clinic above. The veterinarians are unquestionably an integral part of the
clinic's business, but they could as easily be independent contractors as
employees. No doubt the integration or organization test had a useful role in
the evolution of the law relating to the liability of hospitals for negligent
acts of doctors but it has outlived its usefulness. I take it from the decision
of the Federal Court of Appeal in this case that any reliance upon the
integration test is an error in law. The relegation of the integration (or organization)
test to an insignificant role is a welcome and long overdue development in this
area of the law.
[50] This trend is evident in the United Kingdom
as well. In the 1992 Fourth Edition Reissue of Halsbury's Laws of England,
Volume 16, paragraph 3 contains the following passage.
3. Characteristics
of the relationship. There is no single test for determining
whether a person is an employee; the test that used to be considered
sufficient, that is to say the control test, can no longer be considered sufficient,
especially in the case of the employment of highly skilled individuals, and is
now only one of the particular factors which may assist a court or tribunal in
deciding the point. The question whether the person was integrated into the
enterprise or remained apart from and independent of it has been suggested as
an appropriate test, but is likewise only one of the relevant factors, for the
modern approach is to balance all of those factors in deciding on the overall
classification of the individual. This may sometimes produce a fine balance
with strong factors for and against employed status.
The factors
relevant in a particular case may include, in addition to control and
integration: the method of payment; any obligation to work only for that employer;
stipulations as to hours; overtime, holidays etc; arrangements for payment of
income tax and national insurance contributions; how the contract may be
terminated; whether the individual may delegate work; who provides tools and
equipment; and who, ultimately, bears the risk of loss and the chance of
profit. In some cases the nature of the work itself may be an important
consideration.
The way in
which the parties themselves treat the contract and the way in which they
describe and operate it is not decisive; and a court or tribunal must consider
the categorisation of the person in question objectively. Thus a person could
have been described as self-employed during the currency of the engagement but
upon its termination claim to have been in fact an employee for the purpose of
claiming unfair dismissal, though such a course of action would have
unfortunate taxation implications.
In a case
of what is frequently referred to as 'atypical employment', such as temporary
or casual work, sporadic work or homeworking, it may be appropriate, when
deciding upon the employment status of an individual subject to such a regime,
to consider whether there is sufficient mutuality of obligations to justify a
finding that there was a contract of employment.
[54] I shall not reproduce the two pages of footnotes. What they establish
is that none of the so-called "traditional" tests can be taken as
determinative and that a variety of factors, including the four mentioned in Wiebe
Door must be considered in the context of the totality of the relationship.
[55] Ownership of tools is a test that may be
useful when dealing with certain types of employee but it is not particularly
helpful in the 21st century where highly trained professional employees may
provide their own tools, such as computers, yet they are nonetheless employees.
Psychiatrists traditionally have no or, in any event, few tools.
[56] The same observations are true of the
control test. Where we are dealing with professionals such as doctors or
lawyers the control test is not meaningful. In the case of psychiatrists the
doctor patient relationship is such that it would be impossible to find any
element of control regardless of the relationship.
[57] So far I have said that the integration or
organization test should not be used, and that the ownership of tools or
control tests are of little or no assistance. What then is left? The chance of
profit or risk of loss part of the four-in-one test may be of some assistance.
I do not think the psychiatrists have any significant chance of profit or risk
of loss. They could perhaps increase their income by working longer hours, but
this is limited. Their risk of loss is minimal. The SDHBs provided all support
staff and the facilities in which the psychiatrists worked. The support staff
booked the SDHB patients' appointments and the doctors were paid regardless of
whether the patient attended the appointment or not. Doctors who contracted
under a fee for service arrangement were not paid for missed appointments.
[58] In Chernesky
(c.o.b. Nipawin Help Centre) v. Canada,
[2000] T.C.J. No. 704, Rip J. concluded that a group of
physicians employed by a medical clinic were carrying on business on their own
account and were therefore employed by the clinic under a contract for services
and not engaged in insurable employment. In Chernesky the Minister cited
Beaubier J.'s decision in the present case and asserted that the
physicians in Chernesky were engaged in analogous employment to
that of the appellants in the present case. As such the Minister contended that
the physicians in Chernesky were working under a
contract of service. Rip J. distinguished the employment situation of the
physicians in Chernesky from
that of the appellants in the present case, stating at paragraphs 31 and
33:
31 Counsel for the respondent
argued that the facts in the appeals at bar are similar to those in the appeal
of Mirchandani et al. v. M.N.R., a decision of Beaubier T.C.J. In Mirchandani,
contract psychiatrists were hired to work at the clinics operated by their
local Health Districts in Saskatchewan. The psychiatrists operated in a similar
manner in terms of the work schedule, performing their services at clinics,
making hospital rounds and providing on-call services; they were subject to a small
degree of control by their payor, as in the appeal at bar. The payor provided
all the tools, equipment and staff in the clinic with the Health Districts
providing the same in the hospitals. The psychiatrists were required to provide
their own vehicle and malpractice insurance and were paid no benefits. The
method of remuneration differed from the facts at bar in that the psychiatrists
were paid on the basis of four-hour blocks of time, the number of which varied
significantly from psychiatrist to psychiatrist, rather than a guaranteed
minimum salary. Judge Beaubier determined that the psychiatrists were
employees.
...
33 In the case at bar, unlike
Mirchandani, supra, one third of all fees billed by the Workers was used by the
clinic to pay expenses of the clinic. The Workers are, in fact, helping to pay
the expenses of running the Centre. In Mirchandani the psychiatrists were paid
a fixed remuneration for a four-hour block of time and were paid whether or not
the patients ultimately attended at a session. In the case at bar the Workers'
pay was calculated on the basis of a fee for service. If a patient did not show
up at an appointment, I would infer that the Worker did not get paid.
[59] I agree with Rip J.'s conclusion that
the failure to contribute to the expenses of running an office, fixed remuneration for a four-hour block of time
and payment regardless of whether or not the patients attended appointments
distinguishes the employment situation of the appellants in the present case
from the physicians in Chernesky. I also believe that these
factors are important in determining whether the appellants in the present case
were employed under a contract of service or a contract for services.
[60] If one steps back from a minute examination
of the four-in-one test and asks what is the "combined force of the whole
scheme of operations", to use Lord Wright's phrase as quoted by
MacGuigan J.A., it is impossible to conclude that the psychiatrists who
were working for the different health districts were in business on their own
account. They were skilled employees, providing medical assistance to patients
on behalf of their employers, the respective SDHBs, under a contract of
service. They provided their services in their employer's premises and their
employer provided all support staff, furniture and any other equipment needed.
The appellants were paid a fixed remuneration for a four-hour block of time and
were paid for appointments regardless of whether the patients attended the
appointments or not.
[61] One additional point merits comment. Beaubier J. set out the
contract of Dr. Milev and the Regional District Health Board. It appears
that this was substantially representative of all the similar contracts signed
by the appellants. He did not state what effect, if any, the wording of the
contract had on his conclusion. The law is clear that the manner in which the
parties describe the relationship is not determinative. Nonetheless the terms
of the contract cannot be entirely ignored. They form part of the overall
picture in characterizing "the combined force of the whole scheme of the
operations". No single clause in the contract can be said to predominate
or to tip the scales incontrovertibly in either direction. It is true that
clause 4 states that the physician will be responsible for statutory
payments, such as income tax. This is not inconsistent with a contract for
services, but it is a very slight indicator and should not be permitted to
overshadow everything else. The other clauses, such as the provision for the
number of Sessional Units and the rate of remuneration are more consistent with
an employment relationship. I mention the contract to indicate that I am not
ignoring it but I would not wish to leave the impression that it weighs
particularly heavily in my conclusion.
[62] I agree with the conclusion reached by
Beaubier J. but have expanded somewhat on the reasons without relying upon
those portions of his reasons that the Federal Court of Appeal saw as errors of
law.
[63] The appeals are dismissed.
Signed at Ottawa, Canada, this 16th day of November 2001.
A.C.J.
Email this Content