The Ottawa Hospital Corporation v. The Queen

The Ottawa Hospital Corporation v. The Queen
Court (s) Database
Tax Court of Canada Judgments
Date
2010-01-29
Neutral citation
2010 TCC 53
File numbers
2005-4015(GST)G
Judges and Taxing Officers
Diane Campbell
Subjects
Part IX of the Excise Tax Act (GST)
Decision Content
Dockets: 2005-4015(GST)G
2006-511(GST)G
BETWEEN:
THE OTTAWA HOSPITAL CORPORATION,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard on October 20, 21 and 22, 2008
at Ottawa, Ontario
Before: The Honourable Justice Diane Campbell
Appearances:
Counsel for the Appellant:
Daniel Sandler
L. Michele Anderson
Counsel for the Respondent:
Ernest Wheeler
Michael Ezri
____________________________________________________________________
JUDGMENT
The appeals from the assessments made under Part IX of the Excise Tax Act, for the period from July 16, 2001 to September 30, 2002, dated February 13, 2004 and for the period from October 1, 2002 to October 31, 2003, dated August 8, 2005, respectively, are dismissed, with costs, in accordance with the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 29th day of January 2010.
“Diane Campbell”
Campbell J.
Citation: 2010 TCC 53
Date: 20100129
Dockets: 2005-4015(GST)G
2006-511(GST)G
BETWEEN:
THE OTTAWA HOSPITAL CORPORATION,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Campbell J.
Introduction:
[1] These appeals arise as a result of the failure and/or refusal of the Appellant, a public body, to meet the requirements placed on it to balance its budget. Following an operational review commissioned by the Minister of Health and Long Term Care (the “MHLTC”), temporary control over the Appellant was placed with a supervisor appointed by the Lieutenant Governor-in-Council for Ontario (the “LGIC”). This appeal focuses on whether the Appellant is entitled to a refund of Goods and Services Tax (“GST”) on the goods and services acquired by it in the course of its activities during this period, as well as a subsequent period of time.
[2] The Appellant is a public hospital governed by the Public Hospitals Act, R.S.O. 1990, c. P.40, as amended, (the “PHA”) and a corporation governed by the Corporations Act, R.S.O. 1990, c. C.38, as amended, for the Province. By Order‑in-Council No. 1704/2001 dated July 16, 2001, the LGIC, acting on the recommendation of the MHLTC, appointed Dennis Timbrell as supervisor of the Appellant. For the period of Mr. Timbrell’s appointment, July 16, 2001 to September 30, 2002 (the “Supervisor Period”), as well as a period subsequent to Mr. Timbrell’s appointment, October 1, 2002 to October 31, 2003 (the “Subsequent Period”), the Appellant applied for a rebate of 17% of the GST paid during those periods pursuant to subsection 261(1) of the Excise Tax Act (the “ETA”), R.S.C. 1985, c. E-15, on the basis that the GST amounts had been paid by mistake. The Appellant and certain other public service organizations are entitled to rebates for a portion of the GST which they have paid on some inputs pursuant to section 259 of the ETA. Initially, the Appellant claimed public sector rebates of 83% of the GST paid pursuant to subsection 259(3) of the ETA. The Appellant is now appealing the denial of GST claims for the 17% rebate for the Supervisor Period and the Subsequent Period.
[3] The Appellant, in claiming the GST rebate amounts, argued that it was either a part of, or an agent of, the Province of Ontario and, consequently, by virtue of section 125 of the Constitution Act, 1867, 30 & 31 Victoria, c. 3. (U.K.), it was immune from paying the remaining 17% of GST because of Crown immunity.
[4] The Appellant’s rebate applications were denied on the following basis:
(a) The Appellant was neither a part of, nor an agent of, the Province of Ontario;
(b) Even if the Appellant was a Crown agent, it did not have standing to file the rebate applications or to bring this appeal before the Court; and
(c) Even if the Appellant was a Crown agent, its immunity to this claim would be waived pursuant to the Reciprocal Taxation Agreement (the “RTA”) between the Province of Ontario and the Government of Canada. In addition, the Respondent argued that the Appellant would not be entitled to claim the rebates paid by mistake because subsection 262(2) of the ETA prohibits the Appellant from filing a second claim covering the same subject matter.
Facts:
[5] The parties filed a Partial Agreed Statement of Facts and Issues, which I have attached as Schedule “A” to my Reasons for Judgment.
[6] By the Spring of 2001, it became apparent that the Appellant’s continued inability to remain within its budget required that the MHLTC implement the extreme measure of appointing a supervisor to oversee the Appellant’s Board of Trustees (the “Board”) and to implement a long-term recovery plan. Mr. Brian Patterson, the Chief of Staff for then MHLTC, Tony Clement, described this measure as “kind of the atomic bomb of control … It was the ultimate control of the Hospital was to eliminate the executive and the Board and take control of it yourself …” (Transcript, page 243). On June 29, 2001, correspondence was forwarded to the Board advising of the MHLTC’s decision to recommend to the LGIC that a supervisor be appointed pursuant to section 9 of the PHA. The appointment of a supervisor was recommended after the completion of an operational review of the Appellant by the Hay Group which contained 127 recommendations.
[7] On July 16, 2001, the MHLTC wrote to the Chair of the Board advising that he had recommended the appointment of a hospital supervisor and that pursuant to an Order-in-Council, Dennis Timbrell had been appointed. According to the Order‑in-Council, Mr. Timbrell had “the exclusive right to exercise all of the powers of the board, The Ottawa Hospital corporation and the members of the corporation” and the “exclusive right to exercise all the powers of the officers of The Ottawa Hospital” other than the Chief Executive Officer/President.
[8] Mr. Timbrell has a long history in politics, dating back to 1971, as well as with the Ontario health care system. He has held seven different ministerial portfolios and was Minister of Health from 1977 to 1982. During this period he oversaw legislative changes to the PHA in respect to the appointment of inspectors and supervisors of public hospitals.
[9] Mr. Timbrell’s Terms of Reference as Supervisor were as follows:
1. The Supervisor will review governance issues, including the functioning, composition and membership of the board.
2. The President and Chief Executive Officer of the hospital will continue to manage the day to day operations of the hospital. Acting as the board of the hospital, the Supervisor will provide direction to the senior management team as appropriate during the term of the involvement of the Supervisor.
3. The Supervisor will oversee the implement[at]ion [of] the MOHLTC approved recovery plan taking into account the recommendations contained in the Operational Review and in consultation with key internal and external stakeholders.
4. The Supervisor will fulfill all the responsibilities of the board, the corporation, its officers (other than the Chief Executive Officer/President) and members in governing the hospital in accordance with the Public Hospitals Act, its regulations and all other applicable legislation.
5. The Supervisor will create an appropriate advisory body and seek external resources as appropriate.
6. The Supervisor will liaise with the Assistant Deputy Minister, Health Care programs Division and the Regional Director, East Region.
7. The Supervisor will report to the Minister of Health and Long-Term Care.
(Tab 2, Joint Book of Documents)
[10] Mr. Timbrell described the financial circumstances of the Appellant at this time as “disastrous” with the hospital projecting a loss of approximately $250,000.00 per day in the face of “Having been bailed out the previous year to the tune of 30 or 40 million and the year before that as well.” (Transcript, page 96).
[11] Pursuant to his terms of reference, Mr. Timbrell appointed a small advisory group to identify the problems with the Appellant, as well as, the direction to be taken. In addition, he appointed sub-committees for governance, finance, quality and planning. However, Mr. Timbrell testified that at the end of the day he made the decisions and that “… for all intents and purposes [he] was the Board” (Transcript, page 125). Further, Mr. Timbrell testified that he was in constant and regular contact with the Chief of Staff, Mr. Patterson, who was “the eyes and ears of the Minister” (Transcript, page 154), throughout his appointment, including the monitoring phase, the implementation of the recovery plan and for the 2002‑2003 budget, together with the development of new hospital by-laws and the recruitment of a new hospital Board. Mr. Timbrell testified that ultimately, if the MHLTC disagreed with his suggestions, the MHLTC had the power to veto his proposals.
[12] Reporting by Mr. Timbrell to the MHLTC was conducted primarily through the MHLTC’s Chief of Staff, with most of those meetings being in the form of weekly telephone conversations. Actual contact with the MHLTC was minimal with three to five hours of face-to-face meetings over the duration of the 15 month period.
[13] The Appellant’s CEO, Dr. J. Kitts, testified that Mr. Timbrell never provided him with instructions regarding goods and services purchased on behalf of the Appellant. On cross-examination, Dr. Kitts stated that standing orders and other supply and utility contracts that pre-dated the Supervisor Period were unaffected by the appointment of Mr. Timbrell as supervisor.
[14] Mr. Timbrell remained in charge of the Appellant for almost 15 months. Immediately following Mr. Timbrell’s termination by Order-in-Council No. 1675/2002 on September 30, 2002, a new Board of Trustees, appointed by Mr. Timbrell, operated the hospital for just over a year.
[15] On an ongoing basis, the Appellant made applications pursuant to subsection 259(3) of the ETA for public service body (“PSB”) rebates of GST equal to 83% of the GST paid in the period in respect of its purchases of taxable goods and services. These applications were assessed and paid to the Appellant. On December 1, 2003 and January 19, 2004, the Appellant made two applications for further GST rebates pursuant to subsection 261(1) of the ETA, one for the Supervisor Period in the amount of $1,704,984.55 and one for the Subsequent Period in the amount of $1,582,291.00. Both of these applications requested an additional 17% rebate of GST paid during the relevant periods. The Appellant’s rebate applications for both the Supervisor Period and the Subsequent Period were denied.
[16] The Appellant has conceded that its claim for the period July 16, 2001 to November 30, 2001 is statute barred under subsection 261(3) of the ETA.
[17] The following are the issues to be decided in this appeal:
(i) Whether the Appellant was part of, or an agent of, the Crown during the Supervisor Period;
(ii) Whether the Appellant was part of, or an agent of, the Crown during the Subsequent Period;
(iii) If the Appellant was a part of, or an agent of, the Crown during the Supervisor Period and/or the Subsequent Period, whether it had standing to file the Rebate Applications that are the subject of these appeals and whether it has standing to appeal to the Tax Court of Canada in respect of a claim for Crown immunity;
(iv) If the Appellant was a part of, or an agent of, the Crown during the Supervisor Period and/or the Subsequent Period, whether its immunity from federal tax under section 125 of the Constitution Act, 1867 was waived pursuant to a reciprocal taxation agreement entered into between the Government of Canada, represented by the federal Minister of Finance, and the Government of Ontario, represented by Ontario’s Minister of Finance, effective July 1, 2000; and
(v) Whether the Appellant is precluded by sections 262, 297, 299 and 306 and subsection 301(1.1) of the ETA from claiming the rebates of GST paid by mistake.
Crown Agency:
[18] (i) Whether the Appellant was part of, or an agent of, the Crown during the Supervisor Period; and
(ii) Whether the Appellant was part of, or an agent of, the Crown during the Subsequent Period.
The Appellant’s Position:
[19] The Appellant argued that although it was not an agent of the Crown by virtue of a statute, at common law it was part of, or an agent of, the Crown, the MHLTC, during both the Supervisor Period and the Subsequent Period. The Appellant relied on R. v. Eldorado Nuclear Ltd., [1983] 2 S.C.R. 551, to argue that agency is established by looking to the control test and that this test is based on the degree of control that the Crown is legally entitled to exercise (de jure control) and not on the degree of control that is in fact exercised (de facto control).
[20] The Appellant’s position is that the powers given to the MHLTC under the PHA are extensive. These powers can be exercised over the Appellant even in periods where no supervisor is appointed. Once a supervisor is appointed, the MHLTC and/or the LGIC have the ability to exercise complete control over the Appellant through the office of the hospital supervisor. Consequently, the powers bestowed upon the MHLTC under the provisions of the PHA, combined with the ability to appoint and exercise complete authority over a hospital supervisor, make the Appellant an agent of the Crown both during the Supervisor Period and the Subsequent Period.
The Respondent’s Position:
[21] The Appellant cannot be an integral part of, or an agent of, the Crown. It has a separate corporate existence and governance from the Ministry of Health and Long Term Care (the “Ministry”). Neither the Ministry of Health and Long Term Care Act, R.S.O. 1990 c. M.26 (the “MOHLTCA”) nor the PHA designate the Appellant as a part of the Ministry. The Respondent pointed to a number of provisions in the MOHLTCA and the PHA that are incompatible with a finding that the Appellant is part of the Ministry: the Ministry’s business is conducted by employees appointed under Ontario’s Public Service Act, R.S.O. 1990, c. P.47, but the Appellant’s staff are not; where the government intends for a hospital to be part of the Ministry, it does so expressly; the primary functions of each are different; the Ministry’s business plans describe hospitals as independent corporations run by independent boards; the Ministry has no reversionary interest in the Appellant’s property; and the Order-in-Council appointing the supervisor did not change the Appellant’s legal status. Therefore, there is no statutory support to conclude that the Appellant is a part of the Crown. The Respondent relied on the test set out by the Supreme Court of Canada in Halifax (City) v. Halifax Harbour Commissioner, [1935] S.C.R. 215, to support its position that the Appellant was not a Crown agent at common law when the control test factors were applied. The Appellant never held itself out to be an agent and was not an agent when acquiring goods and services. In operating the hospital, it carried on its own business, owned its own property and had its own employees throughout.
Analysis – Crown Agency:
[22] A public body may either be expressly designated to be an agent of the Crown by statute or treated as an agent at common law because it satisfies the common law control test when various factors are considered. The Appellant in these appeals does not claim that it was a statutory Crown agent (paragraph 18, Appellant’s Memorandum of Fact and Law). The Supreme Court in the Halifax Harbour Commissioner case discussed the test for determining whether a public body will be treated as an agent of the Crown at common law. The Court looked at the “… nature of the powers and duties of the respondents …” (page 226).
[23] The Supreme Court revisited this test in Westeel-Rosco Ltd. v. South Saskatchewan Hospital Centre, [1977] 2 S.C.R. 238, and stated at pages 249‑250:
Whether or not a particular body is an agent of the Crown depends upon the nature and degree of control which the Crown exercises over it. …
[24] The Court goes on at page 250 to quote R. v. Ontario Labour Relations Board, Ex p. Ontario Food Terminal Board, (1963), 38 D.L.R. (2d) 530:
It is not possible for me to formulate a comprehensive and accurate test applicable in all cases to determine with certainty whether or not an entity is a Crown agent. The answer to that question depends in part upon the nature of the functions performed and for whose benefit the service is rendered. It depends in part upon the nature and extent of the powers entrusted to it. It depends mainly upon the nature and degree of control exercisable or retained by the Crown.
[25] This test has been summarized by Professors Hogg and Monahan in Liability of the Crown, 3rd Edition, Carswell, 2000, at page 334, as follows:
… If the corporation is controlled by a Minister (or cabinet) in much the same way as a government department is controlled, then the corporation is an agent of the Crown. If, on the other hand, the corporation is largely free of ministerial control, then it is not an agent of the Crown.
[26] The test was similarly summarized by the Supreme Court of Canada in Eldorado Nuclear, at pages 573-574, in the following manner:
… At common law the question whether a person is an agent or servant of the Crown depends on the degree of control which the Crown, through its ministers, can exercise over the performance of his or its duties. The greater control, the more likely it is that the person will be recognized as a Crown agent. Where a person, human or corporate, exercises substantial discretion, independent of ministerial control, the common law denies Crown agency status. The question is not how much independence the person has in fact, but how much he can assert by reason of the terms of appointment and nature of the official: Bank voor Handel en Scheepvaart N.V. v. Administrator of Hungarian Property, [1954] A.C. 584 at pp. 616-17, and see Hogg, Liability of the Crown, 1971, p. 207. …
[27] Ultimately the essential element in the control test is de jure control as opposed to de facto control. Consequently, the relevant degree of control is that which the Minister is legally entitled to exercise over the particular body or institution and not the degree of control that is in actual fact exercised. The Court in Eldorado Nuclear stated at page 574:
The position at common law is not that those under de jure control are entitled to Crown immunity, but rather that immunity extends to those acting on behalf of the Crown … Nevertheless, it does indicate that the de jure test applies only in the absence of specific language indicating the body acts on behalf of or as an agent of the Crown. …
[28] According to Professors Hogg and Monahan in Liability of the Crown, the question will be resolved by examining the body’s empowering statute and will not involve an assessment of the actual relationship between the particular body and the government (page 336).
[29] Like many areas of the law, this is fraught with uncertainties. The line between those bodies that will be considered Crown agents at common law and those that will not is anything but precise. There is “some uncertainty over just what degree of governmental control will be sufficient to create Crown agent status” (Crown Agent Status, by Robert Flannigan, Canadian Bar Review, (1988) 67 Can. Bar Rev. 229 at page 231). However, at pages 573-574 of Eldorado Nuclear, J. Dickson stated:
… Where a person, human or corporate, exercises substantial discretion, independent of ministerial control, the common law denies Crown agency status. …
The previously referred to article, Crown Agent Status, relies on the reasoning in Eldorado Nuclear and at page 249 draws the line as follows:
… This would appear to suggest that anything less than substantial discretion will result in a Crown agent characterization. In other words, any significant government control, even though it could not be said to be substantial control, would be sufficient to establish a Crown agency. If that is so, the precise degree of control required is significant control …
[30] Tracing the application of the control test prior to the Halifax Harbour Commissioner case requires a step back in time to the case of Fox v. Government of Newfoundland, [1898] A.C. 667, where the Privy Council considered whether balances in the books of a bank to the credit of various local boards administering education in the Colony were debts to which Crown priority applied. The educational board was found not to be a Crown agent because the board had independent discretion as to the application and expenditure of its resources.
[31] The Privy Council reached a similar decision in Metropolitan Meat Industry Board v. Sheedy, [1927] A.C. 899. Despite the fact that the Governor-in-Council appointed board members and could veto certain board actions, the Metropolitan Meat Industry Board (“MMIB”) was nevertheless held not to be a Crown agent. At page 905, the Court stated:
… They are a body with discretionary powers of their own. Even if a Minister of the Crown has power to interfere with them, there is nothing in the statute which makes the acts of administration his as distinguished from theirs. …
The Court focused on the fact that the act constituting the MMIB conferred wide powers on the board and these powers could be exercised at the board’s own discretion, without consulting Crown representatives. The Court listed those board powers as including the ability of the MMIB to acquire land, construct abattoirs and works, sell cattle and meat and lease property. The Court also noted that the MMIB did not pay its receipts into the general revenues of the State.
[32] Similarly, in Tamlin v. Hannaford, [1950] 1 K.B. 18, Lord Denning held that the British Transport Commission was not a Crown agent because its servants were not civil servants, the property was not that of the Crown and the exercise of control by the Minister of Transport was insufficient to meet the requisite standard.
[33] The Exchequer Court in University of Toronto v. Minister of National Revenue, (1950) 50 D.T.C. 738 (Ex. Ct.), also utilized the control test in considering whether the governors of the University of Toronto were an agent of the Crown so as to exempt the monies passing to this body from succession taxes. Pursuant to the University Act, R.S.O. 1937, c. 372, the board, as the governing body of the University of Toronto, had the power to appoint servants and hire employees, to fix student fees, regulate and manage residences and dining halls, invest money, purchase and erect buildings with approval of the LGIC, administer its property and endowments and to receive income and make expenditures. The appeal was dismissed and the Board of Governors could not claim an exemption as an agent of the Province of Ontario. The LGIC’s powers were primarily of a financial nature, but they did not operate to restrict the governors’ independence when they were conducting the affairs of the university.
[34] In applying the control test in Westeel-Rosco, the Supreme Court first examined the relevant act constituting the appellant in that case, the South Saskatchewan Hospital Centre Act, R.S.S. 1965, c. 254. The Court, at pages 251‑252, noted that the hospital board was “endowed with wide powers for the construction and administration of the [South Saskatchewan] Hospital”. Those provisions included: the ability, with the permission of the LGIC, to purchase, lease and sell land and construct or acquire other buildings; to enter into agreements to operate hospital facilities and management; to receive funds from the Crown; to make rules relating to the operation and management of the hospital; to borrow money; to allow the Legislature to appropriate funds for hospital maintenance and board expenses; and to have the hospital audited and to have the hospital report on its finances to the Minister of Public Health. The Court at page 253 concluded:
… the powers with which the Board is endowed are far removed from those of a Crown agency which is subject at every turn to the control of the Crown in executing its powers as was the case with the Halifax Harbour Commissioners …
The Supreme Court concluded that the powers of the hospital board were “more analogous to those of the Metropolitan Meat Industry Board”, which was held not to be a Crown agent. It should be noted, however, that at the time of the Westeel‑Rosco decision, the Province of Saskatchewan had no legislation providing for the appointment of a supervisor.
[35] More recently, in Toronto District School Board v. Canada, [2009] T.C.J. No. 25, C. Miller J. considered a situation involving the appointment of a supervisor under the Education Act, R.S.O. 1990, c. E.2, for Ontario to oversee the Toronto District School Board (the “TDSB”). C. Miller J. focused on whether GST was a tax on lands or property belonging to the Province of Ontario; in other words, whether the province became the owner of the TDSB’s property. The Court held that, although TDSB was an agent of the Crown during the vesting order period, TDSB’s authority as a Crown agent under the Education Act did not extend to make the property, including TDSB’s funds used to acquire property and services, the property of the province. Consequently, C. Miller J. concluded that TDSB became a Crown agent in order to subject its affairs to control by the province, but not to divest itself of all its property.
[36] The Federal Court of Appeal upheld this decision ([2009] F.C.J. No. 1422) based on the fact that the TDSB was not acting as a common law or statutory Crown agent.
[37] The Toronto District School Board decisions of both the Tax Court and Federal Court of Appeal merit further discussion as I requested counsel for both parties to present written submissions on this appeal subsequent to the Federal Court of Appeal rendering its decision. However, I intend firstly to provide my reasons for concluding that the Appellant’s principal argument that it is not part of, or an agent of, the Crown must fail.
[38] A finding that a body is a common law Crown agent is made only in exceptional cases after a rigorous application of the relevant test. As Lord Denning stated in Tamlin v. Hannaford, at page 25:
… When Parliament intends that a new corporation should act on behalf of the Crown, it as a rule says so expressly …
This is particularly applicable in the Province of Ontario where provincial legislation is replete with statutes that establish bodies and then expressly designate them as Crown agencies.
[39] There are a number of factors in this appeal that militate against a finding of the control essential to concluding that an agency relationship existed at common law. The Appellant is established pursuant to the PHA. There is no statutory provision, in either the MOHLTCA or the PHA, which designates the Appellant as part of the Ministry. Furthermore, as the Respondent pointed out, where the Ministry wishes to include separate entities, such as District Health Councils or psychiatric hospitals, as part of the Ministry, it expressly states that intention (Reciprocal Taxation Agreement, Joint Book of Documents, Tab 21). As noted in Tamlin v. Hannaford, at page 25, in the:
… absence of any such express provision [designating the body a Crown agent by statute], the proper inference, in the case, at any rate, of a commercial corporation, is that it acts on its own behalf, even though it is controlled by a government department.
Therefore, if the Appellant is to be a Crown agent, the Crown must be found to exercise the requisite degree of control over the Appellant at common law.
[40] As explained by Mr. Timbrell, in testifying respecting the origin of the current hospital system, historically hospitals such as the Appellant were viewed as autonomous and somewhat independent of government. The enactment of supervisory legislation and its implementation at the Appellant’s facilities did not constitute a change to this role for the Appellant. The supervisory legislation was described as an incremental change of a rarely invoked power. The roles of the Appellant and the Ministry are very different in nature. The Appellant does not carry on the business of the Ministry but rather the Ministry has delegated to the Appellant the authority to deliver health care to the Ottawa region as its own business (Cross-examination of Mr. Patterson; direct examination of J. McKinley).
[41] The Appellant argued that the Ministry is legally entitled to exercise a high degree of control over the Appellant even in periods when a hospital supervisor has not been appointed. To support this position, the Appellant argued that the MHLTC’s approval was required to amalgamate; to add additional buildings and facilities; to sell, lease, mortgage or dispose of land; to continue to run as a hospital; and to dissolve. In addition, most of the financial assistance upon which the Appellant relied came from the Ministry and the Ministry could appoint provincial hospital representatives to the Appellant’s Board. However, many of these factors are the same factors considered in the Westeel-Rosco decision (the power to continue to operate and the ability to sell, lease and add additional buildings with Crown approval) where the Supreme Court held that the hospital board was not a Crown agent. In contrast to the facts in Westeel-Rosco, the Appellant is not subject to an annual audit and the Board is not regularly appointed by the LGIC. While these two factors would indicate an even greater degree of control over the body in question, the Court rejected the argument that the hospital board was a Crown agent in that case.
[42] In Townsville Hospitals Board v. Townsville City Council, (1982) 149 CLR 282, a decision of the High Court of Australia, the issue was whether a hospital board enjoys Crown immunity in constructing a building on Crown land. The Court held that, although the hospital board was subject to stringent controls in relation to the construction of the building, it nonetheless retained independent discretion to decide whether to engage in such work and therefore this meant that the board was independent of the Crown. At paragraph 15, the Court stated the following:
15. It has more than once been said in this Court that "there is evidence of a strong tendency to regard a statutory corporation formed to carry on public functions as distinct from the Crown unless parliament has by express provision given it the character of a servant of the Crown": Launceston Corporation v. Hydro-Electric Commission [1959] HCA 12; (1959) 100 CLR 654, at p 662 ; State Electricity Commission (Vict.) v. City of South Melbourne [1968] HCA 49; (1968) 118 CLR 504, at p 510 . All persons should prima facie be regarded as equal before the law, and no statutory body should be accorded special privileges and immunities unless it clearly appears that it was the intention of the legislature to confer them. It is not difficult for the legislature to provide in express terms that a corporation shall have the privileges and immunities of the Crown, and where it does not do so it should not readily be concluded that it had that intention. The Hospitals Act does not expressly provide that a board shall have the privileges and immunities of the Crown when engaging in building operations, and in my opinion it does not impliedly so provide. The fact that a number of Ministerial approvals must be obtained if the Board needs to borrow or raise money or make financial arrangements for the purposes of a proposed work does not indicate that the Board in carrying out the work is acting for the Crown. The Board cannot be directed to do the work, and if it does borrow or raise money for the purpose, the Board and not the Crown is liable in case of default. Although in some respects a hospitals board is subject to stricter controls than those which governed the statutory bodies in Metropolitan Meat Industry Board v. Sheedy (1972) AC 899 ; Grain Elevators Board (Vict.) v. Dunmunkle Corporation [1946] HCA 13; (1946) 73 CLR 70 and the Gladstone Town Council v. Gladstone Harbour Board (1964) QdR 505 , there is in my opinion no ground of distinction between the present case and those cases. (at p292)
Although this is the view of the Court with respect to Australian law, it appears consistent with the Canadian approach.
[43] The Appellant argued that it was a Crown agent during the Supervisor Period because the hospital supervisor, Mr. Timbrell, exercised all of the powers of the Board, reported to and took direction from the MHLTC and was obligated to carry out the Minister’s directions. These powers are granted to the supervisor pursuant to the PHA. However, as the Respondent noted, there is nothing in the PHA that makes the supervisor’s acts those of the MHLTC, and to the contrary, those remain the acts of the hospital for whose board the supervisor acts as per subsection 9(5) of the PHA (Respondent’s Written Submissions, page 19). The proposition of not adopting the acts of the body was referenced in the Metropolitan Meat Industry Board case where the Court stated at page 905:
… Even if a Minister of the Crown has power to interfere with [the acts], there is nothing in the statute which makes the acts of administration his as distinguished from theirs. …
The Federal Court of Appeal in Toronto District School Board also made reference to this fact.
[44] While the control test focuses on the amount of control that can be exercised and not what was exercised, for completeness I will review the actual control exercised during the Supervisor Period. Mr. Timbrell, as supervisor, had substantial discretion in respect to the Appellant’s operation. Aside from the fact that he was appointed by the Ministry and continued to brief the Ministry throughout, he received few, if any, specific instructions to perform or carry out any particular act. In fact, when invited on cross-examination to explain how the MHLTC more closely controlled the hospital during this Period, Mr. Timbrell referred only to the attempts to re-start funding for capital projects (Transcript, page 192). To the extent that the hospital received instructions from the Ministry during the periods under appeal, those instructions were no different than the kinds of instruction provided to other hospitals not under supervision (Discovery Read‑Ins of J. Kitts, q. 52-53). The Appellant’s Board was not appointed by the LGIC. Even when the supervisor appointed the new Board, he exercised his own discretion in the selection process. In fact, Mr. Timbrell refused to commit to a Francophone quota when he selected the new Board (J. Kitts, q. 162-163). Both before and after the period in dispute, the Board would have retained substantial discretion in determining how the hospital would operate. The hospital’s financial reporting remained unchanged during the periods under appeal and was not consolidated with the financial statements of the province (Direct examination and cross-examination of J. McKinley). The Appellant’s employees were not public servants and were not bound by provincial public service statutes (Direct examination of J. McKinley and cross-examination of J. Kitts). At all times, the Appellant maintained its separate corporate status. The Appellant was not required to obtain ministerial approval to pass by-laws. In fact, the requirement to have such approval was removed as part of the legislation that allowed supervisors to exercise the powers of a hospital board. The power to amend by-laws rested with the Board and not the Minister (Direct examination of D. Timbrell; by-law Tab 15, section 12.1, Joint Book of Documents).
[45] In Eldridge v. British Columbia (A.G.), [1997] 3 S.C.R. 624, the Court held that a B.C. hospital was subject to the Charter of Rights and Freedoms, but only in respect to the actual delivery of health care services and not in respect to the internal management of the hospital. This case is instructive because the B.C. Hospital Act (R.S.B.C. 1996, c. 200) contained provisions which are as restrictive as, or perhaps more restrictive than, the provisions contained in the PHA. For example, the Lieutenant Governor-in-Council in Eldridge appointed 14 of the 16 board members and could have a representative on the board, all by‑laws had to be approved before becoming effective and the Minister could compel the passage of by-laws.
[46] In summary, the Appellant is not a Crown agent. It carries on its own business, that is, the operation of the hospital. It does not carry on the business of the Ministry. It has broad discretion in carrying out its mandate, owns its own property, employs its own staff and makes its own decisions. It enjoys relatively more autonomy than other bodies which have nevertheless been held by the Courts not to be Crown agents. Since the hospital board is not a Crown agent, then it is not possible for the supervisor to be an agent where he is subject to the same degree of control. The fact that the PHA provisions require that the supervisor report to the MHLTC or to carry out the MHLTC’s directions under subsections 9(9) and 9(11), respectively, does not change the result.
[47] Even if it could be said that the Appellant was an agent of the Crown for some purposes, it acted on its own account with respect to its internal management and procurement of goods and supplies. This approach is consistent with the decisions in Cloutier v. Science Council of Canada, [1995] O.J. No. 4893 (Div. Ct.) and Ontario Realty Corp. v. P. Gabriele & Sons Ltd., [2000] O.J. No. 3270 (Sup. Ct.). In Cloutier, at paragraphs 48-51, it was held that where a person, even a Crown agent, enters into an arrangement (in that case an employment relationship) in its own name, it does not carry with it all the prerogative rights and immunities of the Crown. In such cases, the Courts examine the relevant statutory and factual framework to determine in what capacity the body in question is acting. The facts before me in these appeals, together with the statutory provisions, support that suppliers provided goods and services to the Appellant and not to the Crown. For example, the lands and property of the Appellant, including taxable supplies purchased during the periods in dispute, were at all times vested in the Appellant and not the Crown. The Appellant never held itself out or represented to third parties, such as suppliers, that it was a Crown agent. It never completed GST exemption forms when purchasing taxable supplies. The evidence was that the Appellant had pre-existing standing orders for the routine procurement of supplies. The procurement procedures did not change when Mr. Timbrell was appointed and supplies continued to be procured under those agreements. Those standing orders were arrangements of the Appellant to acquire goods and services on its own account. This conclusion is consistent with the decision in Ontario Realty Corp., where the plaintiff was held to be an agent of the Crown for the purposes of contracting, in part, because it held itself out as being exempt from the payment of GST. Further, Mr. Timbrell never reported back to the Ministry concerning the routine procurement of goods and services during the meetings and he did not receive instructions from the Ministry in respect to the procurement of goods and services. The Appellant is not an agent for the purpose of procuring goods and services as it never held itself out as an agent, it received no instructions of any kind from the Ministry with respect to procurement and it provided no feedback to the Ministry regarding procurement.
[48] With respect to the Appellant’s argument