IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

[1]           The Defendant, Joy Allan, is a midwife and the sole proprietor of Cheam Midwifery located here in the Fraser Valley. The Claimant, Winifred Angus, is a midwife who began to provide midwifery services for Cheam in August of 2016. Ms. Angus worked with Cheam until January 14, 2018, a total of about one and a half years.

[2]           Ms. Angus was terminated without notice on January 14, 2018 because she had redirected from Cheam to herself between $19,033.17 and $26,985.36 in Medical Services Plan billings. Ms. Angus claims she had to redirect the billings because Cheam had not paid a top up payment due January 1, 2018, and she had no confidence further monies owed to her would be paid.

[3]           Ms. Allan alleges the missed payment was through inadvertence, as her office manager neglected to remit MSP billings in mid-December of 2017. She submits it was Ms. Angus who fundamentally breached the contract by redirecting the MSP billings.

[4]           Ms. Allan asserts that there was a full agreement between the parties - including the payment structure - based on oral understandings, emails and texts, and the conduct of the parties. Ms. Angus was paid based on the shifts she actually worked in a month. Her monthly pay was based on her percentage of all midwife shifts worked in a month and the fees received for patients who had an expected date of delivery that month.

[5]           Conversely, Ms. Angus submits that no contractual terms existed, at least as to the matter of transferring out of the Cheam practice. In particular, there was no agreement on a payment structure for her services to Cheam patients who had an expected delivery date after her termination on January 14, 2018.

[6]           Ms. Angus claims she is owed $28,831.38, plus prejudgment interest, for midwifery care provided in November and December of 2017 and the first 2 weeks of January, 2018, even if the expected delivery date of the January patients was in a later month. That sum takes into account monies she personally received from the redirection of MSP billings. Alternatively, if Ms. Angus were not to be paid for care provided to patients with an expected delivery date after January 14th of 2018, her claim is reduced to $5,733.59 plus prejudgment interest.

[7]           Ms. Allan maintains that she owes Ms. Angus nothing, and by way of counterclaim Ms. Angus owes her $11,253.51 plus prejudgment interest as a result of wrongfully converting Cheam MSP billings into her own name.

[8]           The moral of the story here is that parties should have clearly written and executed contracts for these sorts of services. This is especially so given the amounts involved here. I realize there was a draft unexecuted contract in the exhibits, but that draft did not reflect the Cheam payment model.

[9]           I do want to thank counsel and the parties for their written closing submissions. The various payment systems for midwifery services are complicated - to say the least -and the closing submissions in this case focussed on the most germane issues about the purported compensation structure, or lack thereof. My Reasons were delayed because of an unexpected illness.

[10]        It is important to differentiate between how a particular midwife may bill Medical Services Plan and how Ms. Angus was compensated by Cheam in this case. MSP does not dictate how midwives are paid in a shared practice.

[11]        It is common ground that all the midwives in Cheam assigned their MSP billings to Cheam, and then Cheam submitted bimonthly on behalf of all midwives for MSP billings at the end of a particular phase of service.

[12]        It is also common ground that Cheam operated its midwifery practice on a shared care model. A patient would receive care from whichever midwife was working in the clinic on the day the patient had an appointment. Similarly, a midwife on call would care for any patient that went into labour.

[13]        Generally, Cheam paid each midwife based on the percentage of work she did in the month of the patient’s expected date of delivery for the fees for a full course of care for that patient. In other words, even though Cheam billed MSP for care provided to a patient when each phase ended (such as first trimester), the midwife was not paid any of the fees for that patient until after that patient’s expected date of delivery month. As such, a midwife received payment for a combination of both the services she personally provided and services she did not personally provide.

[14]        In construing the contractual terms in this case, I am to take a purposive approach. Parties are entitled to reach their own bargains, but where 2 interpretations are possible, the more reasonable option usually accords with the intention of the parties. I will say that the Cheam payment structure, though complicated, cannot be said to be wholly unreasonable. Indeed, Ms. Angus has ultimately conceded that the above payment structure was in place in this case. She now mainly takes issue with this payment structure being applied upon her departure in January of 2018.

[15]        The number of clinic and call shifts were tabulated for the month, and each midwife was compensated based on the percentage of shifts she worked in the month multiplied by the total fees for the patients with an expected delivery date that month. Some of the monthly percentage breakdowns are at Tab 8 of Exhibit 1. Again, even though Cheam billed MSP for care provided after each phase ended, the midwife was not paid any of the fees collected for that patient until after the patient’s expected delivery month.

[16]        This compensation model may be more easily understood by first examining the MSP billing system for midwifery services, and then examining how Cheam shared the revenue in a shared practice. In so far as MSP is concerned, midwifery services are billed for 5 phases: first trimester, second trimester, third trimester, labour and delivery, and postpartum. MSP requires that the billings be submitted within 90 days following the date of service.

[17]        The MSP fee schedule provides that if a patient transfers out of a midwife’s care part way through a phase of care, then the midwife is entitled to 60% of the fee for that phase, a transfer out fee. The next midwife receiving the patient into her care may bill 40% of the fee for that phase, a transfer in fee. Of course, this schedule for transferring in or out is one established by MSP and does not necessarily govern what Cheam did in a shared practice.

[18]        As explained above, Cheam paid each midwife based on the percentage of work she did in a month of the patient’s expected date of delivery for the fees for the full course of care for that patient. Specifically, Cheam’s payment structure was as follows:

[19]        For example, if a midwife worked 50% of the shifts in December and the total MSP billings from all midwives for December for full course of care was $36,000, then the midwife would receive $4000 on December 15^th, $3000 on December 31^st, and on January 31^st she would receive $11,000 (50% of $36,000 = $18,000 - $7000 draws = $11,000).

[20]        In short, Cheam paid its midwives based on the percentage of shifts worked. Payments were not made on a fee for service basis.

[21]        As stated above, there was no written contract between Ms. Angus and Ms. Allan doing business as Cheam Midwifery. A written contract is the preferred business practice.

[22]        However, a contract can be based on oral agreement, email and text exchanges, and even the conduct of the parties over the course of the one and a half years the parties shared in the midwifery practice. As ruled in Trentham v. Archital Luxfer [1993] 1 Lloyd’s Rep. 25 (C.A.), some contracts are concluded purely by conduct, as a result of performance by one or both parties. Even section 8 of our Sales of Goods Act, RSBC, 1996, c.410 allows a contract for sale of goods to be implied by the conduct of the parties.

[23]        In closing argument, counsel for Ms. Angus has essentially conceded that Ms. Angus accepted the Cheam payment structure as described above for the usual course of care of Cheam patients. The area of dispute now is the payment structure upon transferring out of the Cheam practice, and I address that issue under the second issue below.

[24]        After carefully reviewing all the evidence, I do conclude that there was a contract between the parties with a general payment structure as described above. I appreciate that Ms. Angus had many questions and misgivings about the payment structure, but she generally understood the payment structure and at least implicitly agreed to it over the 18 months.

[25]        My conclusions are based on evidence such as the text messages between Ms. Angus, Ms. Allan and another midwife, Ms. McCarrell, as early as October of 2016 (Exhibit1, Tab 19). There, Ms. Angus writes this text:

[26]        Ms. Angus clearly understands the payment system by this juncture, but she has questions about its fairness. Moreover, she received payment in accordance with that system. Although my role is to ascertain the terms of the contract, I will say that later in this text sequence Ms. Allan provides some justification for the billing structure when she says:

[27]        Matters obviously deteriorated between the parties when the Cheam office manager neglected to remit the MSP billings in mid-December of 2017. Still, Ms. Angus says in an email dated January 2, 2018 that “I very much understand the MSP billing system and the payment structure you are using. I understand it well enough to know that there should be funds in your business account from those previous billings…(my emphasis)”. A day later Ms. Angus writes in an email that she has never been happy with the billing system used by Ms. Allan, and she is understandably concerned about getting paid. However, Ms. Angus’ unhappiness with the Cheam payment system does not mean there was no agreement to use such a payment system.

[28]        Beyond the emails and texts, Ms. Angus had agreed to the Cheam payment system by her conduct. For one year and a half, she accepted the payments as made, with minor rectifications, and she had some opportunity to see the printed spread sheets and to review the Cheam Google drive, where the monthly payment spread sheets showing all payments to midwives were kept.

[29]        In summary, there was a binding contract between the parties. Offer and acceptance can be implied from the oral dealings, emails and texts, and the conduct of the parties. The parties had generally agreed to the Cheam payment structure and shared care model as described above.

[30]        Ms. Angus takes the position that there was no term of the agreement between the parties establishing how she would be paid for services to Cheam patients who delivered after she was terminated in January of 2018. She is asserting a claim in quantum meruit. Ms. Angus claims she should be paid for services she provided to patients before Cheam terminated her contract but whose expected date of delivery was after her termination on January 14, 2018.

[31]        Ms. Allan argues that quantum meruit does not apply, and Ms. Angus is owed nothing outside of the agreed upon regular Cheam payment structure. Again, that regular payment structure is based on the percentage of shifts worked in a month multiplied by the total fees for the patients with an expected date of delivery that month.

[32]        Before delving into these positions, it is important to recognize that there was a slightly different payment structure in place when midwives transferred into the Cheam practice. It could be considered an “onboarding“ agreement. Ms. Angus was paid a transfer-in fee for patients who had received care from Cheam before she joined the practice in August of 2016. As an example, if a patient completed the second trimester in August of 2016, Ms. Angus received credit for 40% of that second phase and all of the third, fourth and fifth phases when her share of billings was calculated in the patient’s expected date of delivery month. Ms. Angus’ share was not based on the usual full course of care.

[33]        As Ms. Allan wrote in an email to Ms. Angus dated October 18, 2016:

[34]        Ms. Angus submits that because there was a transferring in fee, there should likewise be a form of transferring out fee where she gets credit for care provided to Cheam patients even if the expected delivery date is after her departure.

[35]        Ms. Allan argues that a transfer in fee does not mean there is automatically a transfer out fee. I must agree. The parties certainly never agreed on a transfer out fee. Moreover, other midwives who left Cheam were not paid any form of transfer out fee, and Ms. Angus ultimately had access to the spreadsheets showing payments to all midwives. An employee named Janelle received no residual payments after she left in August of 2016, and Ms. McCarrell likewise received no residual payments when she left in January of 2017. Janelle was a locum so her remuneration was different, but the point remains that there was no precedent for a different transferring out payment system.

[36]        Ms. Angus asserts that there was no specific agreement about the terms of payment on departure, and that quantum meruit ought to apply. Quantum meruit claims are typically of two types: restitutionary or contractual. A restitutionary quantum meruit claim operates in the absence of a contract, so I do not need to dwell on that concept in this case. I have found that there was a contract between the parties.

[37]        A contractual quantum meruit claim is an appropriate cause of action where a valid contract exists between the parties for the provision of goods or services, but the terms of remuneration have not been provided. It is really a principle of contract interpretation or construction. See Infinity Steel Inc. v. B. & C. Steel Erectors Inc., [2011] BCJ No. 774(BC Court of Appeal).

[38]        Ms. Angus submits that upon her departure, Cheam received monies from MSP for midwifery services provided to Cheam patients by Ms. Angus. Ms. Angus was deprived of payment for those services, and there was no juristic reason for Ms. Allan to be enriched by these payments. Ms. Angus also maintains that she had no specific discussions or agreements with Ms. Allan about how she would be paid for patients who expected to deliver after her termination.

[39]        Based on my review of all the evidence, I conclude that Ms. Angus has no quantum meruit claim for services she provided to patients who had expected delivery dates after she departed Cheam. As I have already found, there was a valid contract between the parties and it provided for a method of determining remuneration. There was no specific or separate agreement on transferring out, so the usual compensation system applied.

[40]        Throughout the one and a half years Ms. Angus was with Cheam, the parties followed a shared care model and patients were not allocated to a particular midwife. At times, Ms. Angus may have believed the Cheam payment system to be inequitable or difficult to implement, but she understood the system and had abided by it for 18 months. She was aware that if a midwife worked no shifts in a month, she received no payment that month.

[41]        The cases of Malik(Estate of) v. State Petroleum Corporation, 2009 BCCA 505(CANLII) and Noh v. Plaza 88 Developments Ltd.,2011 BCCA 461 are distinguishable from the case at bar. Those cases involved one-time finder fees for large developments, not a course of conduct over one and a half years.

[42]        From my review of the evidence, Ms. Angus was attempting to dictate new terms into the contract once she lost faith that she was going to be paid in a timely manner. In her email dated January 3, 2018, she states:

[43]        Ms. Angus clearly understands the current payment system but has lost trust in it. Her loss of trust is somewhat understandable as Cheam had insufficient funds to pay her what she was owed. Nevertheless, she is trying to unilaterally change the terms of an existing contract.

[44]        I make a couple of further comments. First, in some quite dated text messages between Ms. Angus, Ms. Allan and Ms. McCarrell, Ms. Angus asks ”Does this mean if someone leaves they get paid out for first trimesters for the following 7-8 months then?” Ms. Allan responds:

[45]        Secondly, Ms. Angus believes it is unfair for her not to receive any share of the MSP billings for her services to patients in their first, second or third trimesters who will be delivering after her departure. However, under the Cheam shared care model of payment, Ms. Angus herself had been receiving payment from MSP billings generated by other midwives who had earlier left Cheam.

[46]        In summary, Ms. Angus cannot make a quantum meruit claim for services she provided to Cheam patients with an expected delivery date after her departure. She is entitled to remuneration for her final months based on the agreed upon payment structure in place at Cheam.

[47]        After carefully reviewing the evidence, I find that both parties breached the existing contract.

[48]        First, Ms. Allan and Cheam Midwifery breached the contract by not complying with the payment provisions of the contract. Ms. Angus was not paid the full top up payment due on January 1, 2018. The office manager simply forgot to submit the MSP billings on December 14, 2017, causing a shortage in the account. It appears that Cheam did not have a line of credit or reserves to deal with the shortfall.

[49]        Secondly, Ms. Angus breached the contract by taking steps to have the MSP billings directed to herself instead of Cheam. She had lost confidence that Cheam would meet its financial obligations, and she believed there should have been plenty of money in Cheam’s account to cover the shortage which occurred in early 2018. Ms. Angus has admitted to the redirection of MSP billings, and this act was a deliberate breach of the contract.

[50]        When Ms. Allan learned of the redirection of the MSP billings, she ultimately decided to terminate her contract with Ms. Angus without notice on January 14, 2018. Cheam could not carry out its payment system once Ms. Angus had redirected some of the MSP billings.

[51]        In this case, the old adage “two wrongs do not make a right” applies. The non-payment by Cheam did not give Ms. Angus the right to unilaterally redirect MSP billings.

[52]        Of course, a breach of contract may occur whether it is accidental or deliberate. I am of the view that the Cheam non-payment breach was one of inadvertence, and it may have been rectified in relatively short order. However, by then, trust between the parties was lost.

[53]        In summary, both parties breached the contract, and both are entitled to damages as a result of the respective breaches.

[54]        I have decided that both parties are entitled to damages as a result of breaches committed by the other. The purpose of contractual damages is to place the innocent party in the position that party would have occupied had the contract been carried out.

[55]        Ms. Allan did not comply with the accepted Cheam payment structure, so Ms. Angus is entitled certain damages for the shifts she worked and was not paid. First, she is entitled to monies for the work she did in November and December of 2017. Ms. Angus was paid certain advances for billings for patients with expected dates of delivery in those 2 months, but not all monies owing.

[56]        Ms. Angus has calculated that she is owed $6,645.39 for November of 2017 ($18,645.39 in pay less a $12,000 draw) and $8,927.97 for December of 2017 ($15,927.97 in pay less a $7000 draw), for a total of $15,573.36 for the 2 months.

[57]        Ms. Allan submits that the above calculations are incorrect because they are based on schedules for those months rather than the actual shifts worked in those months.  Actual shifts worked can be found at Exhibit 1, Tab 15. I accept that Tab 15 is the most accurate evidence of shifts actually worked. That Tab shows that Ms. Angus worked roughly 51% of the shifts in November and December rather than roughly 53% and 55% respectively.

[58]        Accordingly, Ms. Angus is owed $2,985.83 for November of 2017, being $14,985.83 in pay less a $12,000 draw. She is owed $7,939.17 for December of 2017, being $14,939.17 in pay less a $7000 draw. The total owed to Ms. Angus for November and December of 2017 is $10,925.00.

[59]        Secondly, Ms. Angus is entitled to monies for the work she did in January of 2018, based on the usual Cheam payment structure. As discussed above, Ms. Angus is not entitled to a quantum meruit claim which could have added over $23,000 to the amount owed to her for midwife care provided to patients with later expected delivery dates.

[60]        Ms. Angus argues that even under the Cheam payment structure she is owed $9,997.70 for her work between January 1 to 14 of 2018. For that period, the total MSP billings less the usual fee were $22,217.11, and Ms. Angus worked 45% of the shifts.

[61]        Ms. Allan submits that the above figures are inflated, and Ms. Angus’ share ought to be based on the percentage of shifts worked over the entire month of January. This amounts to 20% of the MSP fees of $33,132.60 for the entire month (less a MSP fee of $192.17), which equals $6,434.35.

[62]        Ms. Angus was terminated on January 14, 2018. In my view, her percentage of shifts worked should only relate to the period she actually worked, just as the MSP billings she used cover only the period she actually worked. I accept that Ms. Angus is owed $9997.70 for January 1 to 14, 2018, less her monthly overhead.

[63]        Ms. Allan says the monthly overhead fee of $1,627.50 ($1,550 plus tax) for January 2018 should not be prorated. Again, Ms. Angus only worked half the month and only got half the benefit of the overhead, so the overhead fee should be prorated to $813.50, leaving $9,184.20 owing for January 2018.

[64]        Consequently, Ms. Angus is owed $10,925 for her work in November and December of 2017, and $9,184.20 for her work in January of 2018. The total she is owed under the Cheam payment system is $20,109.20.

[65]        However, I now turn to Ms. Allan’s counterclaim for damages arising out of the redirection of MSP billings by Ms. Angus. Ms. Angus concedes that she received a total of $19,033.27 for billings redirected from Cheam and that amount should be offset against her claim.

[66]        At Tab 12 of Exhibit 1, one can clearly see that Ms. Angus received the following sums from MSP: $14,644.82 on January 15, 2018, $2019.93 on January 31, 2018, and $2,368.52 on February 15, 2018. She admits to no other MSP billings being redirected to her.

[67]        Ms. Allan maintains that there is a much larger discrepancy between what Cheam is owed from MSP and what Ms. Angus concedes she received from MSP. There are documents at Tab 17 of Exhibit 1 showing that Cheam billed $38,888.58 to MSP on January 15, 2018, but only $11,903.22 was paid, leaving a $26,985.36 difference. This discrepancy does not necessarily mean that Ms. Angus received more redirected MSP billings than she disclosed. For example, MSP may have withheld payments for some time.

[68]        I am not satisfied on a balance of probabilities that Ms. Angus redirected any more than $19,033.27 in MSP billings. I do accept the submission from counsel for Ms. Angus that an adjustment should be made for certain patient services for which neither part likely received payment. Some $1500 should be added to the amount owing from Ms. Angus to Ms. Allan respecting the counterclaim.

[69]        In summary, Ms. Angus is owed $20,109.20 for unpaid services. Ms. Allan is owed $20,533.27 in redirected MSP monies.

[70]        There was a binding contract between Ms. Allan and Ms. Angus concerning the Cheam payment structure and shared care model. Except for transferring in, Ms. Angus was paid based on the percentage of shifts she worked in a month multiplied by the course of care billings for patients with an expected date of delivery that month. The payment structure of this contract applied when Ms. Angus was terminated, and she has no claim in quantum meruit for services provided to patients with an expected date of delivery after her departure.

[71]        Both parties breached the contract. Ms. Allan breached the contract by not making the payment due January 1, 2018, and Ms. Angus breached by redirecting MSP billings to herself.

[72]        Ms. Angus is entitled to damages in the sum of $20,109.20 for unpaid services, and Ms. Allan is entitled to damages in the amount of $20,533.27 for redirected MSP payments. These sums are so close that I am simply going to dismiss all claims on both sides.

[73]        Neither party is entitled to costs. Ms. Allan should have developed a written contract for Cheam Midwifery from the outset, and she should have had reserves or a line of credit in place to avoid any missed payments. Ms. Angus should not have unilaterally redirected MSP billings when she had lost trust In Cheam.

[74]        The Notice of Claim is dismissed. The Counterclaim is dismissed. Each party shall bear their own costs.