In mid-December, Justice Paul Perell released an interesting
decision involving wage claims made by post-doctoral fellows at
Sunnybrook Hospital (Pasian v Academic Clinicians'
Management Services, 2013 ONSC 7787).
The plaintiff class is comprised of former post-doctoral fellows
who worked at Sunnybrook Hospital between 2005 and 2008. The
fellows were paid a stipend for their fellowship. The class members
alleged that their fellowship stipends were free of all income
taxes and deductions. The payment of the stipend and other payroll
functions were administered by Academic Clinicians' Management
Services—effectively a back-office for physicians and
physician groups at Sunnybrook. The physicians or physician
groups—not ACMS—entered into employment agreements with
In 2000, as a result of a CRA ruling, ACMS paid the fellowship
stipend to the fellows and withheld only income tax (not CPP and EI
premiums). In 2006, ACMS changed its practice and stopped
withholding income tax as well unless a fellow requested the
withholding. In 2007, CRA ruled that ACMS should have withheld CPP
and EI. ACMS decided to also withhold income tax. Eventually, ACMS
decided to enter into employment agreement with the fellows
The plaintiffs argued that ACMS was their employer all along and
should re-pay them for any withholdings (though, in most cases, CRA
has not re-assessed the fellows' income and, as such, there
were no withholdings) on the basis that there was an implied
contractual term between the fellows and ACMS that their stipend
would be free of income tax.
The plaintiff class moved to certify the action as a class
proceeding; ACMS moved to dismiss the action on summary judgment.
ACMS was successful on both motions: the action was dismissed and,
in any event, Justice Perell wouldn't have certified the
The decision is instructive for two reasons:
Class actions often seem to turn on the common issues criterion
of section 5(1) of the Class Proceedings Act. Enterprising
plaintiffs' counsel can usually amend the pleading to state the
cause of action better or amend the class definition or find a
better representative plaintiff, right up the certification
hearing. So it's no surprise that battleground is whether the
legal and factual issues are common or individual. This decision is
a great example though of how common issues and the preferable
procedure criterion go together. Though Justice Perell found that
there were common issues, he also found that the essential issues
are purely individual.
Though it was probably unexpected by the parties, Justice
Perell has rewritten the law, at least slightly, on common
employers. Courts in Ontario and British Columbia have held that different legal
entities may all be an individual's employer at law where there
is an element of "common control". Justice Perell would
have found that ACMS was the fellows' employer even without
this element. In his view, the test for public sector employers is
whether the legal entity is a constant in all of the possible
For employment lawyers and public sector employers especially,
this decision and any appeal should be carefully watched as it may
upend the typical understanding of the common employer
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