Witherell v. M.N.R., docket 2000-712-EI

Date: 20001112

Docket: 2000-712-EI

BETWEEN:

DR. WILLIAM WITHERELL,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Reasons for Judgment

Cain, D.J.T.C.C.

[1]            This is an appeal by the Appellant from a decision of the Respondent dated January 18, 2000 that the employment of Christine Benjamin (the "Independent Contractor") by the Appellant operating under the firm, name and style of Peninsula Dental Services for the period July 5, 1996 to January 26, 1999 (the "period in question") was insurable employment as the services provided by the Independent Contractor were performed under a contract of service and an employer-employee relationship was in effect.

[2]            The Respondent based his decision on the following assumptions:

"a)            the Appellant is a dentist;

b)             the Worker is a dental hygienist;

c)              the Worker was hired by the Appellant to work in his dental practice as 1 of 3 hygienists;

d)             the Worker did not bring a clientele to the Appellant's dental practice;

e)              the Worker shared the Appellant's client base with the other hygienists in the office;

f)              the Worker could not decide which hygienist would replace her if she had to miss an appointment;

g)             when rescheduling appointments, the office divided the work between the hygienists available at any time convenient to the client;

h)             the Worker did not have her own clients within the Appellant's dental practice;

i)               the Worker could not work in the Appellant's absence;

j)               the Appellant owned the tools used by the Worker in her duties;

k)              the Worker did not incur expenses in the performance of her duties;

l)               the Worker was paid by the piece on the basis of 50% of the net billing fee;

m)             the clients did not pay the Worker directly for her services;

n)             the Worker was supervised both by the Appellant and by his office manager;

o)             the Worker was not permitted to work for anyone else while she was engaged by the Appellant;

p)             the business was the Appellant's and not the Worker's;

q)             the Worker did not share in the chance of profit or the risk of loss of the Appellant's business;

r)              there was a contract of service between the Worker and the Appellant."

[3]            The Appellant, admitted assumptions a) to d) inclusive, j), l) and m) but denied all of the other assumptions.

[4]            The Appellant, who operated a dental clinic, engaged the Independent Contractor as a dental hygienist on or about July 5, 1996. They intended to and did enter into a relationship that they understood was a contract for services. That is admitted by both parties. That relationship continued until the end of the period in question.

[5]            In the Province of Newfoundland a dental hygienist is a trained professional who can by law only work when a dentist is present unless otherwise authorized.

[6]            The services of a dental hygienist and the dentist can complement each other, the dental hygienist removing harmful tartar from and generally cleaning the teeth followed by a physical examination by the dentist for any cavities or dental problems.

[7]            However, in Newfoundland dental hygienists are permitted to operate independently of dentists and the Independent Contractor is presently authorized and does perform her services without the presence of a dentist. This must be a recognition that dental hygienists are highly skilled, that their service is not necessarily integral to the practice of dentistry and that the presence of a dentist is not absolutely necessary to safeguard the health and welfare of the patient.

[8]            The Respondent does not adopt the position that a dentist and a dental hygienist cannot enter into a contract for services. He submits that notwithstanding the original intention of the parties, the Independent Contractor became an employee of the Appellant and that her employment was insurable employment for the purposes of the Employment Insurance Act (the "Act").

[9]            The Independent Contractor was attracted to work in the Appellant's clinic by certain undertakings and representations made by the Appellant which may be summarized as follows:

                -                she was assured that there would be sufficient client base to produce for her an income of approximately $70,000;

                -                that the clinic would provide her with the tools and equipment required to perform her work;

                -                that her client base would come from those patients at the clinic who were not presently being served by two other dental hygienists then at the clinic and that client base would be hers exclusively;

                -                that the other dental hygienists welcomed her addition to the staff;

                -                that she would be provided the necessary technical equipment to administer and control her client base;

                -                that a written contract confirming the above representations would be prepared and presented to her for her approval and signature.

[10]          In return, she would receive 50% of the net billing of fees charged for her service, the balance of 50% retained by the clinic to cover the cost of providing her with the initial client base, the tools and administrative equipment and the facilities in which to work. In addition she undertook to solicit new clients to add to her base by speaking at public gatherings and generally promoting the clinic.

[11]          The relationship of the Appellant and the Independent Contractor was not a happy one. While there is conflict in the evidence it is clear that some of the undertakings and representations made by the Appellant to the Independent Contractor were not delivered or complied with.

[12]          A portion of her client base came from clients then not served by the other hygienists, but the balance came from the client lists of the latter and they were not happy with the resulting reduction in their income. Clients from her base were transferred to other hygienists without her prior knowledge or approval [see assumptions e), f), g) and h)].

[13]          The client base of the Independent Contractor in the first year produced only half of the projected income of $70,000. She subsequently reached the $75,000 level when the staff of hygienists was reduced to two in the final year of the period in question.

[14]          A promised computer needed to administer and control her client base was not initially provided and she was required to rely on front office staff and run back and forth from her operatory to regulate that base with great inconvenience to herself. However, the Independent Contractor was not familiar with the operation of computers and there is no evidence that she took steps to familiarize herself with such operation. Provision of a computer at the outset would not have immediately helped her.

[15]          No written contract was presented to her until late in the period in question.

[16]          The Independent Contractor was not supervised by the Appellant or the Office Manager as suggested in assumption n) but their failure to comply with the terms and conditions of her engagement severely limited her ability to both work and earn reasonable income until well into the period in question.

[17]          There is no evidence that the Independent Contractor was prohibited from working with another clinic while engaged by the Appellant as suggested in assumption o). The Independent Contractor testified that she was reluctant to do so and she was probably well advised. That would probably have been a condition of any written contract but that in itself would not have made it a contract of service.

[18]          The terms and conditions under which the Independent Contractor was hired were breached but those breaches could not turn the original relationship into a contract of service. Those breaches were all actionable at the instance of the Independent Contractor and she should have pursued that remedy if she was dissatisfied.

[19]          The Independent Contractor was passive from the outset of the relationship. She should have insisted in having the terms and conditions of the relationship reduced to writing, especially when it became clear that her arrival on the scene was not welcomed by the other dental hygienists working on the premises. She admitted that she did not have sufficient knowledge of computer operation and she should have sought training immediately to put her into a position to demand a computer so as to have greater control of her client base.

[20]          In addition as her engagement continued she should have insisted that the other verbal assurances given her were kept and on failure sought legal advice. It is clear from the evidence that the Independent Contractor was reluctant to challenge either the Appellant or his confederate, the Office Manager. That reluctance caused her actionable financial loss.

[21]          The Independent Contractor was not required to provide the tools with which she performed her service. However, the Appellant retained 50% of the fees earned by her for the facilities and equipment provided and presumably a measure of profit.

[22]          She was her own boss. She could be instructed what to do but not how to do it. Once the dental hygienist complement in the clinic was reduced to two, the Independent Contractor was freed from most of the obstruction and interference of the Appellant and the Office Manager and was able to realize the income originally represented as available to her. Her client base was clearly established at this time and it was hers.

[23]          It was her business and that business was not integral to the success of the Appellant's business but only an accessory thereto.

[24]          Considering these constituent elements and following the test set down in Wiebe Door Services Ltd. v. The Minister of National Revenue [1986] 3 C.F. 553 of weighing all of the factors that affected the relationship, the verbal contract entered into between the Appellant and the Independent Contractor was a contract for services and remained so during the tenure of the engagement notwithstanding the interference of the Appellant.

[25]          The appeal is allowed and the decision of the Minister is vacated.

Signed at Rothesay, New Brunswick, this 12th day of November 2000.

"Murray F. Cain"

D.J.T.C.C.

COURT FILE NO.:                                                 2000-712(EI)

STYLE OF CAUSE:                                               Dr. William Witherell and M.N.R.

PLACE OF HEARING:                                         St. John's, Newfoundland

DATE OF HEARING:                                           August 25, 2000

REASONS FOR JUDGMENT BY:      The Honourable Deputy Judge M.F. Cain

DATE OF JUDGMENT:                                       November 12, 2000

APPEARANCES:

Counsel for the Appellant: Keith Morgan

Counsel for the Respondent:              John O'Callaghan

COUNSEL OF RECORD:

For the Appellant:                

Name:                      Keith Morgan

Firm:                        Brown Fitzgerald Morgan

                                                St. John's, Newfoundland

For the Respondent:                             Morris Rosenberg

                                                                                Deputy Attorney General of Canada

                                                                                                Ottawa, Canada

2000-712(EI)

BETWEEN:

DR. WILLIAM WITHERELL,

Appellant,

and

THE MINISTER OF NATIONAL REVENUE,

Respondent.

Appeal heard on August 25, 2000 at St. John's, Newfoundland, by

the Honourable Deputy Judge Murray F. Cain

Appearances

Counsel for the Appellant:                             Keith Morgan

Counsel for the Respondent:                         John O'Callaghan

JUDGMENT

          The appeal is allowed and the decision by the Minister is vacated in accordance with the attached Reasons for Judgment.

Signed at Rothesay, New Brunswick, this 12th day of November 2000.

"Murray F. Cain"

D.J.T.C.C.