Citation: 2013 TCC 108
Date: 20130416
Dockets: 2011-4111(CPP)
2011-4112(EI)
BETWEEN:
YORK
REGION SLEEP DISORDERS
CENTRE INCORPORATED,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Bocock J.
I. Nature
of Appeal
[1]
These two appeals, one
in respect of the Employment Insurance Act (the “Act”) and the
other under the Canada Pension Plan (the “Plan”), again place before
the Court the well litigated question of whether ancillary health care providers
are employees or independent contractors.
II. Facts
a)
Summary of
Agreed Facts
[2]
The following relevant
facts were not in dispute:
i)
The Appellant is a for
profit business which operates a sleep disorder monitoring, analysis and
treatment centre (“Sleep Clinic”).
ii)
The monitoring
activities include undertaking controlled studies of patients during sleep and
recording various data collected through electroencephalograms, electrocardiograms
and related vital, bodily measurements (“Sleep Studies”).
iii)
The analysis occurring
after and distinctly from the Sleep Studies, tabulates, scores and qualifies
the data using standardized data and statistical analysis (“Scoring”).
iv)
Polysomnographic technologists
(“PSGTs”) are specially trained to execute Sleep Studies and Scoring as sleep
specialists (“Sleep Specialists”).
v)
Sleep Specialists may
attain additional professional health care accreditation through further
education, study and periodic re-qualification which allows a successful
student to become a registered Polysomnographic technologist (“RPSGT”).
vi)
All of the nine workers
in issue (the “Workers” or “Worker”) at the Sleep Clinic were PSGTs (or Sleep
Specialists).
vii)
Six of the Workers were
RPSGTs.
viii)
The Minister assessed
the facts related to a sample of five Workers and determined that the sample Workers
were employees and their employment was both insurable under paragraph 5(1)(a)
of the Act and paragraph 6(1)(a) of the Plan for
the 2008 and 2009 taxation years (the “Relevant Period”).
ix)
The Sleep Clinic is an
independent health facility regulated under provincial legislation which
requires the creation or establishment of certain designated individuals and
committees in order to ensure quality treatment and compliance with
professional standards.
x)
The Sleep Clinic is
professionally overseen by the College of Physicians and Surgeons of Ontario
(“CPSO”) which mandates compliance with a standards guide.
xi)
In turn, in order to
ensure its compliance with the standards guide the Clinic promulgated and
requires all staff (including the Workers) to adhere to a Policies and
Procedure Manual (“Manual”).
xii)
All staff perform their
duties under legislation, standards guides and Manual, are considered technical
staff and are overseen by the Quality Advisor/Medical Director (“Medical
Director”) and the Manager/Technical Director (“Technical Director”) of the
Clinic. The Workers have no written contracts.
xiii)
The Workers all provide
less the usual “full-time” hours per week. Those workers providing full-time
hours were classified and treated as employees (“Full-Time Employees”) by the
Appellant.
b) Testimony at Trial
[3]
Two witnesses testified
on behalf of the Appellant: Mr. Ilya Dumov, the Technical Director and Mr.
Haris Sabanadzovic, a Worker at the Clinic. For the Respondent Mr. Elvin Mopera
and Mr. Yan Fai Chow, both Workers, testified as adverse witnesses.
[4]
Although there were
minor differences in some testimony during the Hearing, by and large,
consistency prevailed. All witnesses were definitive that the intention of the
parties, admittedly not reflected in a written agreement, was that the business
relationship was one of independent contractor an not that of employee. As to
concurrent examples, in other sleep centres there was evidence that Workers
were treated as both employees and independent contractors.
[5]
Additionally, the factual
findings of the Court from testimony, identified below by those headings (consistently
chosen by counsel during the course of questioning both in direct and
cross-examination and corresponding to the four in one factors referenced below)
may be summarized as follows.
i) Control
a) Scheduling of Hours and Work
[6]
The Workers would
provide their schedule preferences for the nights and days for Sleep Studies
and Scoring. Generally, Sleep Studies were conducted during the night-time.
This was determined by the human condition. Patients who worked shift work
would occasionally undergo Sleep Studies during the daytime. When a Worker
attended during a daytime work period, he or she was required to conduct a severe
Sleep Study (where a patient suffered from urgent sleep apnoea or similar
affliction). Scoring could be undertaken at any time. Factually, most Workers
consistently worked the same preferred scheduled days each month. If during an
evening Sleep Study patients cancelled or failed to attend, the Workers were
allowed to determine among themselves who would leave. Full-Time Employees, if
any were present, stayed and engaged in Appellant assigned administrative
duties. Workers were required to attend monthly staff meetings where updated
policies, staff changes and procedures were discussed.
b) Reimbursement of Expenses
[7]
Generally, all Workers
bore all expenses of service delivery whereas the Full-Time Employees received
some allowances in the form of the provision of uniforms and the like. The occasional
provision by the Appellant of “free of charge” continuing medical training to
the Workers did occur.
c) Payment of Workers
[8]
Generally, Workers were
paid by a formula directly related to a uniform amount calculated on the basis
of a fixed work shift per evening for Sleep Studies. Scoring was paid on the
basis of piece work. Each month, a Worker would complete an Invoice-Time Sheet,
which during the Relevant Period, required Workers to complete information
under the headings: “Employee Name”, “Hours”, “Hourly Rate” and “Total”.
Invoice-Time Sheets were approved by the Technical Director. From time to time,
during the Relevant Period both Workers and Full-Time Employees used the same
Invoice-Time Sheets. Some evidence suggested vacation pay was occasionally
claimed by the Workers. In later years, after the Relevant Period, invoices
became more refined, referenced Sleep Study numbers and left incomplete information
under the “Hourly Rate” column.
d) Supervision
[9]
A Worker conducting
Sleep Studies would direct any inquiries to the Technical Director or
supervising physician. This was consistent with the professional standards and
the Manual. Ultimately, if problems arose, no disciplinary action would be
taken, but problems were relayed to the Worker. If problems persisted, a Worker’s
contract would simply have been terminated. No Worker or Full-Time Employee was
ever terminated or disciplined during the Sleep Clinic’s history. Generally, whether
a Sleep Study or Scoring was conducted by a Worker or Full-Time Employee, all
final reports needed to be approved and signed by a medical doctor. Work was
never refused by Workers. The critical motivation cited by Workers in working
less than full-time hours was the potential ability to gain other work with
other sleep clinics and centres, which some did. Workers never arranged the
provision of a Sleep Study directly with a patient. Annual evaluations with
Workers were conducted. Rate increases or discussion of same emanated from these
annual reviews.
ii)
Ability to Hire
Replacement Workers
[10]
If a Worker needed to
cancel a regularly scheduled Sleep Study, he or she would contact the Sleep
Clinic. No evidence was adduced to suggest Workers replaced themselves, either
by contacting another Worker directly or by sub-contracting with another Sleep
Specialist. The Technical Director confirmed that from the Appellant’s
perspective direct replacement with another Sleep Specialist by the Worker was
not acceptable and had not occurred.
iii) Tools
[11]
Aside from the Worker’s
uniforms (medical scrubs), all other tools, computers, software and medical
equipment were supplied by the Appellant. No access to software or data files
was permitted or occurred remotely by the Workers. There was no charge to the
Workers for the use, rent or repair of equipment or for use of the premises.
iv) Risk of Loss and Investment
[12]
Testimony consistently
revealed that no Worker had any investment, financial exposure or operational
liability related to the operation of the Sleep Clinic or Worker activity
undertaken there. None had any capital investment or debt advanced to any
related business or to the Sleep Clinic.
v) Opportunity to Profit
[13]
None of the Workers who
testified had a distinct business name, business identification number,
business cards or referenced activity marketing their skills. Collectively,
from the testimony, the sole opportunity to profit for the Workers was the
ability to work for the other service providers within the field because of the
less than full-time hours worked at the Sleep Clinic.
III. Submissions of Counsel and Minister’s
Assumptions
[14]
Although not always
greatly of assistance in these matters, certain of the Minister’s assumptions
of fact contained in the Replies to both matters bear repeating. Of relevance
are the following:
Control
(r)
on a monthly basis, the Workers advised the
Appellant of the nights they were prepared to work at the sleep clinic;
(s)
the Appellant created a monthly work schedule
for the clinic;
(t)
the Appellant did not guarantee a certain number
of shifts per month for any of the Workers;
(u)
most of the Workers worked between 8 to 10
nights each month at the Appellant’s sleep clinic;
(v)
each shift was 10 hours in duration;
(w)
the Workers were not normally supervised
directly while monitoring patients during the sleep studies;
(x)
the Workers were supervised by the Appellant’s [Technical
Director], who oversaw the work that they performed;
(y)
the Appellant provided the Workers with training
on how to perform their duties;
(z)
the Workers were required to comply with the
Appellant’s policies, procedures and protocols;
(aa)
the Appellant implemented quality control
procedures to ensure the Workers were performing their services properly;
(bb)
the sleep studies were reviewed by the Appellant
and the Workers were asked to make any necessary corrections;
(cc)
the Workers prepared detailed reports in
accordance with the Appellant’s established policies and procedures;
(dd)
the Workers were trained by the Appellant on the
use of the Appellant’s software;
(ee)
the sleep study reports prepared by the Workers
were signed by the physicians;
Provision
of Tools and Equipment
(ff)
the Workers usually performed their services at
the Appellant’s premises;
(gg)
the Appellant provided the Workers with the tools
and equipment required to conduct the sleep studies including electromyogram,
electroencephalogram, Electro-oculogram, electrocardiogram, nasal air flow
sensor, audio/video equipment, and snore microphones, at no cost to the
Workers;
(hh)
the Workers did not provide any of the tools and
equipment needed to complete the work;
Subcontracting work and hiring assistants
(ii)
the Workers were required to perform their
services personally;
(jj)
the Workers could not subcontract their work or
hire assistants;
(kk)
the Workers were responsible for finding a
replacement worker in they were unable to work a scheduled shift;
(ll)
replacement Workers were approved and paid by
the Appellant;
Chance
of Profit and Risk of Loss
(mm)
the Workers were remunerated by the hour;
(nn)
the rates of pay were determined by the
Appellant and varied between $18 and $25 per hour, depending on a Worker’s
experience;
(oo)
the Workers recorded the hours worked each shift
on a combined invoice and timesheet that was developed by the Appellant;
(pp)
the Workers were paid on the 15th and
30th day of each month;
(qq)
the Appellant did not provide the Workers with
any benefits;
(rr)
the Workers did not incur any expenses
personally in performing their services for the Appellant;
(ss)
some of the Workers performed similar services
for other sleep clinics, for which they received employment income and T4
slips;
Intention
(tt)
the Workers did not have their own clients; the
clients were those of the Appellant;
(uu)
none of the Workers, with the exception of
Mohammad Ali and Haris Sabanadzovic, had a business number from the Canada
Revenue Agency;
(vv)
none of the Workers had a registered business
style;
(ww)
the Workers did not manage their own staff;
(xx)
most of the Workers reported the earnings they
received from the Appellant as business income on their personal income tax
returns; and
Other
Relevant Information
(yy)
the Appellant considered sleep specialists, that
provided their services on a regular, full-time basis, to be employees of the
sleep clinic.
a) Summary of Counsels’ Argument
[15]
Although there was
marked consistency of facts, by contrast, submissions of counsel as to the
weight, application and interpretation of those facts were dramatically
divergent.
i) Appellant
[16]
Generally, Appellant’s
counsel submitted that emphasis must be given to the clearly expressed direct
intention of the parties, borne out by direct testimony which provided that the
arrangement was one of service recipient and independent contractor. This, in
turn, was embodied in the unwritten, but nonetheless lucid, contract for
services. This clear intent should not be ignored, but enhanced through the
actions of some of the Workers in consistently classifying the payments as
business income, seeking other jobs without the Sleep Clinic’s consent and the
method and bases of the calculation of payment.
ii) Respondent
[17]
The Respondent stated
that the Workers simply could not be said to be in business for themselves. The
sole business present was that of the Clinic. The only difference between the Workers
and employees at the Clinic was that of part-time versus full-time status,
respectively. Moreover, intention was not clear, but muddled in this case since
there was no written contract or other objective evidence. Accordingly, an
analysis of the criteria of the four in one test required. Such an analysis
would reveal that the only difference between the Workers and the Clinics’
full-time employees was simply the quantum of the hours of work.
IV. Analysis
a) Analysis of Leading Authorities
[18]
Reconciliation of the
concept of common intention regarding the worker/service recipient relationship
with the Wiebe Door Services Ltd. v. The Minister of National Revenue, 87 DTC 5025, four in one factors is most currently and appropriately stated in the
Federal Court of Appeal decision in TBT Personnel Services Inc. v. Canada,
2011 FCA 256, 343 DLR (4th) 100. The leading common authorities
cited by both counsel in argument are cited in TBT Personnel Services Inc.
[19]
Particularly instructive
are the following excerpts from TBT Personnel Services Inc. which
confront squarely the sequencing of analysis to be applied by a trial judge in
balancing common intention with the four in one factors;
9 In Wolf
v. Canada, 2002 FCA 96, [2002] 4 F.C. 396 (C.A.), and Royal Winnipeg
Ballet v. Canada (Minister of National Revenue - M.N.R.), 2006 FCA 87,
[2007] 1 F.C.R. 35, this Court added that where there is evidence that the
parties had a common intention as to the legal relationship between them, it is
necessary to consider that evidence, but it is also necessary to consider the Wiebe
Door factors to determine whether the facts are consistent with the
parties’ expressed intention.
35 Such
intention clauses are relevant but not conclusive. The Wiebe Door
factors must also be considered to determine whether the contractual intention
suggested by the intention clauses is consistent with the remaining contractual
terms and the manner in which the contractual relationship operated in fact.
[…]
[20]
There exist many
decisions of this Court reaching back many decades relating to various allied
or ancillary health care providers on the issue of employee versus independent
contractor. Counsel for both parties cited many of such cases related to dental
hygienists and others concerning dieticians, social workers and legal assistants.
By virtue of their sheer number and fact scenario based outcomes, the
summarized law and directed process of the more recent and binding authority of
TBT Personnel Services Inc. are preferred by this Court. Its reconciliation
of intention with the four in one factors resolves, clarifies and articulates
an overall analytical process to be undertaken by a trial Court in deciding
this now somewhat classic issue.
[21]
As further
justification for this reliance stands the case of 3868478 Canada Inc. v. Minister
of National Revenue, 2006 TCC 444, [2006] T.C.J. No. 334, wherein Chief
Justice Bowman recounted throughout his decision the number and variety of
decisions concerning dental hygienists and states resolutely that none can be
precedent sitting on the issue, since each differs factually:
20 I
have devoted more time to this than I might otherwise have done because of the
apparent differences between members of this court on the question of dental
hygienists particularly with respect to the role of the integration test. Each
case turns on its own facts. […]
[22]
Consistent with the
former Chief Justice’s view regarding the value as precedent of cases decided
at such a fine resolution of factual examination, this Court has deliberately not
referenced the ultimate decision 3868478 Canada Inc. Therefore, the
facts in this case (part of which include the intention of the parties)
analyzed in the context of the four in one factors will determine the Court’s
decision.
b) Analysis
of Intention as Reflected by Relationships in Fact
[23]
The question remains, does
an analysis of the factors reveal or even maintain the intention of the parties
in this case based upon the manner in which the legal relationship operated in
fact? That answer, although more important perhaps, proves somewhat more
difficult to find in cases like this where there is no written agreement.
[24]
On the issue of
control, supervision is somewhat opaque because of the overlay of the
professional and regulatory obligations which would apply in any instance.
However, the Workers’ required attendance at staff meetings, completion of the
Appellant supplied Invoice-Time Sheets (presented at the Hearing on a cursory,
sample basis only) and the general tenor of the relationship -- reflected in
all of scheduling, payment, no ability to conduct professional evaluative
analysis of Sleep Study results at a remote location, absence of business expenses
and direct supervision while on site -- indicate an employee rather than an
independent contractor relationship.
[25]
As with most medical
and ancillary health service positions, the issue of tools is not particularly
determinative; however the lack of any payment of rent or user fees, no
obligation to repair borrowed or used equipment and the inability to conduct evaluative
work on one’s own computer gravitate towards an employee/employer relationship.
[26]
As to replacement
workers, there was no ability by the Worker to direct hire or sub-contract a
qualified professional and pay such person directly at the Worker’s discretion.
Alternatively, there was no evidence of a roster of pre-approved
sub-contractors from whom the Worker could, without Appellant approval, choose
a replacement Sleep Specialist.
[27]
On the issue of
assumption of risk, no evidence was adduced to suggest any financial
investment, indemnification provision or direct liability by the Worker since
it appears no direct professional/patient relationship, accountability or nexus
existed. Such facts suggest an employee/employer relationship.
[28]
As to the issue of opportunity
to profit, aside from an ability to work more hours and thereby generate more
income (whether for the Appellant or another sleep disorder entity), there were
no costs to be minimized, profits to be maximized or opportunities to be exploited.
In short, the proportion of profit and loss from the Workers’ efforts could not
be varied through exploitation of variable costs, sub-contracted wage rates,
service improvements or innovation. Factually, on the basis of the evidence,
all such benefits, if pursued, would have accrued exclusively to the Appellant’s
business. Factually, only the Appellant controlled and manipulated these inputs
of production (in this present case, services) related to the delivery of the
service constituting the business or parts thereof provided at or in respect of
the Sleep Studies or Scoring. These inputs were the essential variables of
business which afforded profit or loss in this case. The Workers had no
opportunity to exploit any of them to their respective benefit or gain.
V. Summary and Decision
[29]
The Appellant and
Workers were consistently clear in direct testimony that they were mutually
seized of a common intention and goal to establish and maintain an independent
contractor and service recipient relationship. However, whatever interpretation
may be placed upon that adamant, subjective intention of the parties to the
relationship; the operational reality, manifested in the objective findings of
fact, ought to support or at least compliment such an intention.
[30]
In the present case,
these factual findings by the Court reflect an operational relationship which:
i)
does not disprove in
any meaningful way, if at all, the Minister’s factual assumptions;
ii)
does not buttress
factually the assertion that a subjective common intention of independently
operating businesses was present; and
iii)
fails to establish the
presence of an operation or undertaking which could remotely be described as a distinct,
collateral or even subordinate enterprise (to that of the Sleep Clinic) owned
and/or operated by any Worker.
[31]
These three
conclusions, based upon the factual findings applied to the four in one
factors, instinctively lead the Court to the overall decision that the Workers
were employees under part-time contracts of service and were not independent
contractors in business on their own account.
[32]
The appeals are
therefore dismissed.
Signed at Ottawa, Canada, this 16th day
of April 2013.
“R.S. Bocock”
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