DECISION NUMBER 345 / 91 SUMMARY

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1 DECISION NUMBER 345 / 91 SUMMARY W was the owner of two companies, an outpost camping company and a commercial air service which transported clients to the camp sites. R was an employee of the camping company. He was also a personal friend of W and was being groomed by W to take over the company. W and R were killed when a float plane, owned by the air service company and piloted by W, crashed. The administrators of R's estate brought an action against the adminstrators of W's estate for damages resulting from alleged negligence of W as a pilot. The defendants applied to determine whether the right of action was taken away. R was an employee of the camping company. Although he performed some services for the air service compamy, these services were in the nature of strategic favours to further the interests of the camping company and were not indicative of an employment relationship with the air service company. R was in the course of employment at the time of the accident. The action was brought against the administrators of W, not against either of the companies. W was an executive officer of the two companies and did not have personal coverage. Pursuant to s. 14 of the pre-1990 Act, there was no right of action against W as an executive officer of the camping company. There was nothing about W's actions as a pilot to separate those actions from his actions as an executive officer. Even if W was acting as a worker in piloting the plane, he would still remain an executive officer. The right of action was taken away. The Panel noted that an action against the air service company and against W as executive officer of the air service company may have been possible. The air service company supplied a plane without supplying a worker to operate it and, therefore, would have come within s. 8(10) of the pre-1990 Act. [10 pages]

2 2 WORKERS COMPENSATION APPEALS TRIBUNAL DECISION NO. 345 / 91 IN THE MATTER OF an application pursuant to section 15 of the Workers' Compensation Act, R.S.O. 1980, c.539, as amended. AND IN THE MATTER OF an action commenced in the Ontario Court of Ontario, General Division, as Action No / 88. B E T W E E N: GEORGIA LYNN WYLLIE, WANDA ELLEN WYLLIE-PARSONS and SUSAN LYNN WYLLIE, administrators with will and executors of the Estate of KENNETH BRIAN WYLLIE Applicants in this application and Defendants in the Supreme Court of Ontario Action. - and - DIANA LOUISE ROBAN and RICHARD JAMES ROBAN, minors by their litigation guardian. LORRAINE ROBAN, WILLIAM DAVID ROBAN and LORRAINE ROBAN Respondents in this application and Plaintiffs in the Supreme Court of Ontario Action.

3 3 WORKERS' COMPENSATION APPEALS TRIBUNAL DECISION NO. 345 / 91 IN THE MATTER OF an application pursuant to section 15 of the Workers' Compensation Act. AND IN THE MATTER OF an action commencing in the Ontario Court of Ontario, Gener Division as Action No / 88. B E T W E E N: GEORGIA LYNN WYLLIE, WANDA ELLEN WYLLIE-PARSONS and SUSAN LYNN WYLLI administrators with the will and executo of the Estate of KENNETH BRIAN WYLL Applicants / Defendants - and - DIANA LOUISE ROBAN and RICHARD JAMES ROBAN, minors by the litigation guardian. LORRAINE ROBAN WILLIAM DAVID ROBAN and LORRAINE ROBAN Respondents / Plaintiffs WORKER S COMPENSATION ACT SECTION 15 APPLICATION

4 WORKERS COMPENSATION APPEALS TRIBUNAL DECISION NO. 345 / 91 This Section 15 Application was heard on May 15, 1991, by a Tribunal Panel consisting of: R.E. Hartman: Vice-Chairman, K.W. Preston: Member representative of employers, G. Drennan : Member representative of workers. Post-hearing matters were completed on June 7, THE SECTION 15 APPLICATION This is an application under section 15 by the administrators of the estate of Kenneth Wyllie. Action No / 88, Ontario Court, General Division, was brought against the administrators by the family of the late David Roban. Mr. Wyllie and Mr. Roban died, on July 25, 1987, when the float plane in which they were travelling crashed at Powell Lake in northern Ontario. The Applicants are seeking a declaration that the Plaintiffs' right to bring an action against the estate of Mr. Wyllie has been taken away by Part I of the Workers' Compensation Act. The Applicants were represented by R.J. Allen, counsel with Lane Allen. The Respondents were represented by L.A. Wright, counsel with Rachlin & Wolfson. Mr. Roban's widow, Lorraine Roban, attended as a witness. K. Kelertas of the Tribunal Counsel Office attended as an observer. THE EVIDENCE The following were filed as exhibits: Applicant's Section 15 Statement (Exhibit #1); Respondent's Section 15 Statement (Exhibit #2); letter dated May 9, 1991, from the Applicant to the Respondent, enclosing statutory declarations of Richard Trog and Richard Elstad (Exhibit #3); letter dated May 10, 1991, from the Applicant to the Tribunal, enclosing agreed statement of facts (Exhibit #4); letter dated June 20, 1988, from the WCB to the Applicant, regarding the employer's status (Exhibit #5); Employer's Statement of Payroll for WCB for 1986 (Exhibit #6); Applicant's Book of Authorities (Exhibit #7); Respondent's Book of Authorities (Exhibit #8); Factum of Applicants (Exhibit #9); letter dated December 14, 1987, to Lorraine Roban from the WCB (Exhibit #10); and an excerpt from the examination for discovery of Georgina Wyllie (Exhibit #11). The Panel gave the Respondent two weeks to respond to a factum (Exhibit #9) submitted by the Applicant at the hearing, and the Applicant was given a week to reply. These submissions were received and formed part of the record. Both parties wished to rely on an agreed statement of facts.

5 The Panel had excerpts from transcripts of Examinations for Discovery of Lorraine Roban and Georgina Wyllie, as well as statutory declarations from Richard Elstad and Richard Trog regarding their knowledge of relevant events on July 25, As well, the Panel had a transcript of an interview with Ron Masarro, who was at Powell Lake on July 25, It became apparent to the Panel that the best evidence on certain critical issues would be the oral evidence of Lorraine Roban, the widow of Mr. Roban, who was present, along with excerpts from her Examination for Discovery regarding events on the date of the accident. The Panel heard sworn evidence from Mrs. Roban, who was questioned by both representatives and the Panel. 2 THE NATURE OF THE CASE The late Kenneth Brian Wyllie ("Wyllie") was owner and president of Kashabowie Outposts Limited ("KOL") and Shebandowan Air Limited ("SAL"). KOL was not reporting to the Board at the time of the accident. KOL last reported to the Board, and Wyllie last had personal coverage, in SAL reported to the Board at the relevant time as a Schedule 1 employer. Wyllie and David Roban ("Roban") were personal friends for many years and it was accepted that Wyllie was grooming Roban to take over KOL. KOL was in the business of operating outpost campsites in northwestern Ontario. Prior to their fatal accident, Roban entered into discussions with Wyllie regarding acquiring an ownership interest in KOL but no formal agreement was reached. The only contract in existence at the time of the accident was an employment contract between Roban and KOL. He was employed as a manager of, and was paid a salary by, KOL. This employment contract set out the terms of remuneration and duties and referred to Roban having a first right of refusal to purchase KOL in the event of the death of Wyllie. It also stated that Roban was to "aid SAL in any way possible to assure a smooth flow of people and aircraft and to help clean and repair aircraft where applicable." SAL, a commercial air service, transported clients of KOL to various camp sites which were otherwise inaccessible. Both KOL and SAL were based at Kashabowie Lake where both the late Wyllie and Roban lived. The Applicants argue that section 8(9) applies and Wyllie, as a Schedule 1 executive officer of both SAL and KOL, cannot be sued by Roban. The Respondents argue that they are not bringing an action against either KOL or SAL for any negligence of these legal entities. Nor, they argue, are they bringing an action against Wyllie as executive officer of either entity. They state the action is against Wyllie for his negligence as a pilot. The issue before the Panel is whether Roban's right to bring an action against Wyllie was taken away by section 8(9) of the Act.

6 3 THE PANEL'S REASONS (i) Events of July 25, 1987 The Panel had the following information before it with respect to the events on July 25, Roban and Wyllie and their families lived about 60 miles northwest of Thunder Bay, on Kashabowie Lake, at the KOL site ("Kashabowie"). KOL's business was seasonal, from spring to fall. In the winter, the business of KOL was promoted by the attendance of Roban or Wyllie at various sports and recreation shows. Roban's duties during the tourist season included inspecting the outpost camps, ensuring the adequacy of their supplies and equipment, and attending to the needs of guests using the outpost camps. There were no set hours of work. According to the testimony of Mrs. Roban, and the statements of Richard Elstad and Richard Trog, Roban greeted guests coming in to the KOL site. He would then make them comfortable and make arrangements for their flights to outpost camps at various points in the area. For this purpose, a number of pilots bunked at Kashabowie. [The pilots were usually employees of SAL. SAL owned the planes used. On occasion, charter flights would be arranged through Ignace Airways Limited, another carrier in the vicinity.] Roban was to waken the pilots in the early morning hours for the flights to the outpost camps. The aircraft were largely bush or float planes and Roban would assist as needed with their docking and departure. On July 25, 1987, a flight departed early in the morning from Kashabowie to a site at Bemar Lake. Later, but still early in the morning, a second flight departed from the KOL site to Bemar. This flight was unusual, according to the testimony of Mrs. Roban, in that Wyllie personally flew the SAL plane instead of one of his pilots, and took Roban, as well as Richard Elstad and his son, who were guests and friends of Roban. Another guest, Richard Trog, had been flown out earlier. According to the statements of both Richard Trog and Richard Elstad, Roban checked out the cabins and equipment upon arriving at Bemar Lake, and discussed the removal of a tree which had fallen on a building. According to Richard Trog, Wyllie and Roban then flew out of the Bemar Lake camp "after telling us they were going to visit another camp". The testimony of Mrs. Roban, both at the hearing and on Examination for Discovery, was that Roban told her he was going to Bemar Lake because Wyllie wanted him to "check the camp". She stated that such a trip was not usual in the middle of a season. She recalled on Examination for Discovery that: I was getting breakfast ready and he phoned me from downstairs and said "I am going to Bemar" and I says "well I thought you were coming to eat breakfast". "I know but Brian wants me to go to Bemar." and I said "Well do you really have to go, is it important?" He said "Brian wants me to go check the camp". At the hearing, Mrs. Roban stated that Wyllie's character was such

7 that he always wanted to have company with him, "even just for a walk down the road". However, on the date of the accident, she did not assume that Wyllie was flying the plane as it was normal to use SAL pilots for such flights. She said she expected her husband back in half an hour for breakfast. The flight was 20 minutes, round trip. She stated she was not aware of any problem at the Bemar Lake camp. These were usually reported to her at Kashabowie by pilots or clients. She would know of it, she said, probably before her husband. She felt that if a problem at Bemar had been the reason for the trip, Roban would have said this, rather than "Brian asked me". As to the events after Wyllie's and Roban's departure from Bemar Lake, the Panel had only the transcript of a taped interview with Ron Masarro, by an articling student of the Applicant's representative, in the summer of Ron Masarro was the owner and operator of a fly-in tourist camp on Powell Lake. Apparently, there were no other campsites on the lake. Mr. Masarro had occasion to do some business with Wyllie in that he had used SAL to transport clients into Powell Lake for five to ten years. Asked whether it was usual to see Wyllie during the tourist season, he stated: 4 Oh he'd occasionally come down throughout the summer, not very often, but you know just come down and visit or something, you know once in a while. It wouldn't be, it wouldn't be more than a couple of times in a whole year. Asked if he had any idea why Wyllie would be coming in on July 25, 1987, he responded: My recollection from what [others] said, I guess he was just coming down for coffee... Like I couldn't figure why he was coming there, because you know there was no scheduled flight that morning there...

8 5 (ii) Who was Roban's employer? On the information before it, the Panel concludes that the employment relationship which existed between Roban and Wyllie, over and above their relationship as friends and neighbours, was as president (Wyllie) and manager (Roban) of KOL. It was the KOL contract which brought Roban to Kashabowie. With respect to Roban's relationship with SAL, the testimony of Mrs. Roban was that it was not usual to have helpers dock the planes. Roban would only do it if he was there. She said that before Roban came to Kashabowie, Wyllie had to get up at 4:00 a.m. to waken the pilots and "pump the floats". She said he did not want to continue doing this and that is why it was put in Roban's contract with KOL. She said that there was no contract between Roban and SAL and no pay was received from SAL for any services. KOL needed SAL's services in order to transport clients to outpost camps. SAL and KOL were both owned by Wyllie, a friend of Roban's and the owner of KOL, a business Roban hoped to get a share in. That Roban performed certain services set out in that contract for SAL is not enough to conclude that Roban was an employee of SAL. In the Panel's view, the extra services Roban provided were gratuitous. There was no remuneration in the conventional sense, and they were more in the nature of strategic favours to further KOL's interests than evidence of an employer / employee relationship with SAL. KOL was carrying on business as an industry covered by Schedule 1 of the Act. The fact that a compulsorily covered employer did not report to the Board does not preclude a finding under section 8 that Roban was a Schedule 1 employee and KOL, a Schedule 1 employer. The Panel finds that Roban was an employee of KOL. (iii) Was Roban in the course of his employment with KOL at the time of the injury? The Panel concludes that while there is some ambiguity as to the primary purpose of the trip from Kashabowie to Bemar Lake, the evidence we have is that Roban said he was going to "check the camp" at Bemar Lake. This was clearly part of his duties with KOL. That the accident happened on the return trip did not take him out of the course of his employment. Both in terms of time and geography, the stop at Powell Lake was a very slight deviation from the most direct route back. The pilot of the plane was also his employer, the President of KOL. There is nothing before us about the departure to Powell Lake which would take Roban out of the course of his employment with KOL at the time of the happening of the injury on July 25, (iv) Does Part I of the Act apply to take away Roban's right to sue Wyllie?

9 6 The Defendant in this case is neither KOL nor SAL. It is the estate of Wyllie. Can Wyllie's estate, standing in his stead, be sued? The Respondents argue that they are bringing an action against Wyllie in his personal capacity as pilot, a capacity they argue is not covered by the corporate veil of either SAL or KOL. Roban's death created a right to claim dependants' benefits under section 36. Section 8(1) gives Roban's dependants an option to sue or claim benefits where an accident occurs "under such circumstances as entitle [Roban or his dependants]...to an action against some person other than [Roban's] employer, or an executive officer... thereof". "Person" includes an individual or corporate entity. The protection from civil liability of Schedule 1 employers who are not the direct employer of the person suing them comes about only through the application of section 8(9). Section 8(9) does not provide protection for all Schedule 1 employers or executive officers in all situations. The operative circumstance in section 8(9) requires their Schedule 1 workers to be in the course of their employment at the relevant time given the injury to the person bringing the action who must also be in the course of employment. (a) Wyllie as executive officer of KOL Under section 14, Roban cannot sue KOL, his employer, or its executive officers. The information before the Panel from the WCB is that Wyllie, as an executive officer, had not elected personal coverage under section 11 at the time of the accident. As an executive officer of KOL, Wyllie cannot be sued by KOL's worker, Roban. (b) Wyllie as pilot vs. Wyllie as worker or executive officer of SAL The dependents of Roban wish to bring an action against Wyllie as an individual, not as part of a corporate entity, for alleged negligence in piloting the bush plane which crashed on July 25, Can this be done on the facts of this case? Can this pilot's actions be interpreted as separate from that of the President of KOL, the worker's employer? The Panel heard arguments from the Applicant about the general reluctance of the judiciary to lift the corporate veil. The legal concept of separate entities is generally respected, except when to do so would yield a result "too flagrantly opposed to justice" to be upheld (see Decision No 304). The Panel in Decision No. 170 / 90 concluded that the requirement of the Tribunal to make decisions on the "real merits and justice" of the case without being bound by strict legal precedent precluded too blind an adherence to form. That said, on the information before it, the Panel cannot conclude that there is anything about Wyllie's actions as pilot which was intended to have been made a separate legal entity. In this sense, the Panel need not determine the question of lifting the corporate

10 7 veil as none has descended. The Panel considered whether this case is really one where an executive officer is temporarily performing the duties of a worker, i.e. Wyllie standing in for his SAL pilots, as an executive officer of a small business might perform a worker's duties for a short period to meet an exigency. Even if Wyllie had been acting as a worker, he would remain an executive officer (see WCAT Decision No. 170 / 90). Section 8(9) uses both "executive officer" and "worker". Under the Act, the former can be deemed to be the latter if an election is made under section 11. None was made by Wyllie. Wyllie remained an executive officer of SAL. Therefore SAL supplied the plane without a worker to operate it. By virtue of section 8(10), section 8(9) would not apply to actions against SAL or its executive officers. However, the action is against Wyllie personally in this case, not against SAL or its executive officer. The Panel does not accept, as a general principle, that persons who are executive officers of a corporate entity are immune from any and all liability, when acting as individuals. There may be fact situations in which it would be possible to distinguish between a person's executive officer capacity and private capacity. This is not such a case. The facts which we have accepted for the purpose of determining Roban's status are that the trip out and back was work-related and the deviation, for a purpose unknown, was too slight to change that status. Using the analogy of an employer and worker travelling together to a work-related event in a conveyance controlled by the employer, the Panel concludes that it can make no distinction, on the facts of this case, between Wyllie as driver and Roban as passenger. THE DECISION The application is allowed. Section 14 applies to take away the right of Roban's family members to bring an action against Wyllie, as executive officer of KOL, and accordingly the estate of Wyllie. DATED at Toronto, this 18th day of March, SIGNED: R.E. Hartman, K.W. Preston, G. Drennan.

FD: FD: DT:D DN: 613/90I2 STY:Barton v. Air Ontario Inc. PANEL: Moore; Jackson; Apsey DDATE: ACT: KEYW: Right to sue; In the course of

FD: FD: DT:D DN: 613/90I2 STY:Barton v. Air Ontario Inc. PANEL: Moore; Jackson; Apsey DDATE: 091092 ACT: KEYW: Right to sue; In the course of employment (travelling); Jurisdiction, Tribunal (right to sue)