FD: FD: DT:D DN: 211/88 STY: GREEN FOREST LUMBER LTD. et al. v. FORSTER et al and one other action PANEL: Newman; Cook; Apsey DDATE: ACT: 15;

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1 FD: FD: DT:D DN: 211/88 STY: GREEN FOREST LUMBER LTD. et al. v. FORSTER et al and one other action PANEL: Newman; Cook; Apsey DDATE: ACT: 15; 8(9) KEYW: Section 15 application; Independent operator; Worker (test) (organization test); Executive officer; Personal coverage; Dependant. DECON: 503/87I SCON: Family Law Act, 1986, S.O. 1986, c.4, s. 61(1) CCON: Re Butler Trucking Co. et al. and Brydges, 46 O.R. (2d) 686; Meyer v. W.C.B., Ont. C.A., March 25, 1988, unrep. SUM: Deceased worker drove truck owned by a partnership and leased to a company. Considering organization test, or even control test, worker was worker of both businesses. Both exercised control, he was hired by one and seconded to other, he was responsible to both and one supplemented wages paid by other. His activities were integral to operations of both businesses. President of company had applied for personal coverage and was considered a worker for all purposes. Other executive officer of company was not protected by Act. Right of action of worker's dependent spouse and children taken away against all except executive officer. No decision regarding right of action under Family Law Act, 1986 of other family members who were not dependants within meaning of Workers' Compensation Act in view of Court of Appeal decision in Meyer. PDCON: TYPE:15 DIST: IDATE: HDATE:21/03/88 TCO: KEYPER:P.D. McDowell; A. Weiss XREF: COMMENTS: TEXT:

2 B E T W E E N: B E T W E E N: WORKERS' COMPENSATION APPEALS TRIBUNAL DECISION NO. 211/88 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 pending in the Supreme Court of Ontario at Welland as Action No. 906/87. GREEN FOREST LUMBER LIMITED, JAMES H. MCCONNELL and RONALD SUMBLER Applicants (Defendants in the Supreme Court of Ontario action). - and - DONNA FORSTER, KEITH FORSTER, JEFFREY FORSTER, JO ANNE FORSTER, and CAROLYN TORCH Respondents (Plaintiffs in the Supreme Court of action). AND IN THE MATTER OF an action pending in the Supreme Court of Ontario at the City of Toronto as Action No /87 GREEN FOREST LUMBER LIMITED, JOHN SERENY, MICHAEL SERENY, JAMES H. MCCONNELL and RONALD SUMBLER Applicants (Defendants in the Supreme Court of Ontario action). - and - BRIAN WAYNE ZEILER and GLADYS ZEILER Respondents (Plaintiffs in the Supreme Court of Ontario action).

3 WORKERS' COMPENSATION APPEALS TRIBUNAL DECISION NO. 211/88 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 pending in the Supreme Court of Ontario at Welland as Action No. 906/87. B E T W E E N: GREEN FOREST LUMBER LIMITED, JAMES H. MCCONNELL and RONALD SUMBLER Applicants/Defendants - and - DONNA FORSTER, KEITH FORSTER, JEFFREY FORSTER, JO ANNE FORSTER, and CAROLYN TORCH Respondents/Plaintiffs AND IN THE MATTER OF an action pending in the Supreme Court of Ontario at the City of Toronto as Action No /87 B E T W E E N: GREEN FOREST LUMBER LIMITED, JOHN SERENY, MICHAEL SERENY, JAMES H. MCCONNELL and RONALD SUMBLER Applicants/Defendants - and - BRIAN WAYNE ZEILER and GLADYS ZEILER Respondents/Plaintiffs WORKERS' COMPENSATION APPEALS TRIBUNAL SECTION 15 APPLICATION

4 WORKERS' COMPENSATION APPEALS TRIBUNAL DECISION NO. 211/88 This Section 15 Application was heard on March 21, 1988, by: E. Newman : Panel Chairman, B. Cook : Tribunal Member representative of workers, R.H. Apsey: Tribunal Member representative of employers. THE SECTION 15 APPLICATION On January 9, 1985, Randy Forster was killed in a traffic accident. His spouse, Gladys Zeiler, and other individuals entitled to do so under the Family Law Act, brought civil actions arising out of that accident. The Defendants in both actions bring this application under section 15 of the Workers' Compensation Act. The Defendants seek an order that at the time of this accident, Randy Forster was a worker, acting in the course of his employment, and that therefore the actions are prohibited by Part 1 of the Workers' Compensation Act. The Applicants are represented by P.D. McDowell, of Osler, Hoskins. The Respondents are represented by A. Weiss of Gluckstein, Neinstein. Counsel advised that although the other Plaintiffs were not represented on this application, information from their solicitor was that they were content to be bound by the ruling of this Panel. THE EVIDENCE The Panel heard testimony from James H. McConnell, and from Julian Filanowski. The following documents were marked as exhibits: Exhibit #1: Applicant's Section 15 Statement; Exhibit #2: Applicant's Book of Authorities; Exhibit #3: Applicant's Supplementary Section 15 Statement; Exhibit #4: Respondent's Section 15 Statement; Exhibit #5: Respondent's Book of Authorities; Exhibit #6: Contract dated May 12, 1984, between Jim McConnell and Green Forest Lumber Limited; Exhibit #7: Photocopy of search performed with the Registrar of Motor Vehicles, December 24, 1986;

6 Exhibit #8: Package of Workers' Compensation Board policies and procedures; Exhibit #9: Excerpt from Workers' Compensation Board employer file of Green Forest Lumber Limited; Exhibit #10: Excerpt from Workers' Compensation Board claim file of Randy Forster; Exhibit #11: Application for employment dated October 15, Exhibit A : Post-hearing submission dated March 25, 1988, from P.D. McDowell regarding the status of Michael Sereny. THE NATURE OF THE CASE There is no dispute that at the time of the fatal accident, Randy Forster was in the course of performing his work. What is in dispute is the nature of the relationship between Randy Forster and some of the Defendants. With respect to the Defendants Green Forest Lumber Limited, James McConnell and Ronald Sumbler, the question is whether or not Randy Forster's relationship with them was one of worker, or independent operator. If either of these Defendants is found to be the employer of Randy Forster at the time of the accident, the right of action against that party is one which is prohibited by the Workers' Compensation Act. If Randy Forster was a worker acting in the course of his employment, by whom was he employed? What is the status of John Sereny and Michael Sereny, who were employed by that company? Were they co-workers or executive officers? THE PANEL S REASON James McConnell and Ronald Sumbler began a small business in They bought a tractor-trailer, and arranged for a driver to work with them. The tractor-trailer and driver were "leased out" to customers. McConnell and Sumbler did not incorporate their small business, but carried on business in partnership, under the name "J & R Trucking". Neither McConnell nor Sumbler were sophisticated businessmen, and McConnell explained that for convenience sake, the business of the partnership was conducted in McConnell's name. The Panel is satisfied that documents which were executed in McConnell's name represent the interests of the partnership, J & R Trucking. In May 1984, Green Forest Lumber Ltd. ("Green Forest") became the only customer of J & R Trucking. A contract was signed between Jim McConnell and Green Forest which set out the details of the arrangement. The Panel is satisfied that the arrangement may be summarized as follows: 1. J & R Trucking leased the tractor-trailer to Green Forest. 2. Ownership of the motor vehicle remained with J & R Trucking, but title was transferred to Green Forest during the term of the contract. This

7 arrangement facilitated provincial and state licensing requirements, and insurance procedures. 3. J & R Trucking invited applications for a driver. Randy Forster heard about the opening, and applied to J & R Trucking for the position. Forster was screened and approved by J & R Trucking, who recommended to Green Forest that they consider his application. Forster completed an application for employment with Green Forest, who approved him as a driver. 4. Payment under the contract consisted of the following arrangement: (a) Green Forest paid J & R Trucking 91 cents per mile that the truck travelled; (b) Green Forest paid the first $ of that sum directly to Randy Forster. The balance was paid to J & R Trucking. (c) J & R Trucking had a separate arrangement with Randy Forster, by which it augmented his income by paying 20 cents for every mile he drove. 5. J & R Trucking was to maintain the vehicle in good working order. Green Forest insured it and arranged for all licensing requirements to be satisfied. The Panel heard evidence about the relationship which Randy Forster had with J & R Trucking, and with Green Forest. Much of this evidence concerned the degree of control which each of these entities exerted or could exert over Randy Forster. That evidence, for example, revealed that both entities screened and approved Forster for the job, both had the ability to and did in practice direct his comings and goings, and both had the ability to terminate their respective arrangements if Forster's performance had not been good. Ms. McDowell argued that the evidence supported a conclusion that Forster was a worker, employed by both J & R Trucking and Green Forest. Mr. Weiss argued that Forster was an independent operator, whose arrangement with either Green Forest or J & R Trucking failed to comply with the usual criteria of employment. It has been stated in a number of the previously published decisions of the Appeals Tribunal that for purposes of determining whether or not an individual is a worker or an independent operator, it is more consistent with the intent of the Workers' Compensation Act to apply an "organizational test" rather than a "control test". Rather than asking to what degree either entity controlled the daily activities of this individual, the question is to what extent Forster's performance of work was or was not integral to the operation of each business. This Panel agrees that the organizational test is the appropriate analysis in workers' compensation situations. But on the facts before us, we point out that even if the narrower control test were appropriate, we would be satisfied that Forster was the worker of both Green Forest and J & R Trucking.

9 Consistent with a control test analysis, the Panel concludes that both J & R Trucking and Green Forest exerted control over this individual consistent with the role of employer. Forster was first the employee of J & R Trucking, and then seconded by Green Forest to work for them. The worker remained responsible, as an employee, to both entities. One supplemented the wages paid by the other. Jointly, J & R Trucking and Green Forest participated in an arrangement which resulted in the employment of Randy Forster. They were both his employers. On the broader organizational test, it becomes very clear that Forster was not an independent operator. J & R Trucking was in the business of leasing a truck and driver. Green Forest was in the business of distributing lumber, and the majority of its clients required that lumber be delivered. In our view, the activities of Randy Forster, as driver, were integral to the operations of both businesses. The evidence revealed that for income tax purposes, Randy Forster submitted tax returns claiming that his status was that of an independent operator. There is no evidence that the structure was questioned or challenged by Revenue Canada. As has been said in previously published decisions of the Appeals Tribunal, and particularly in Decision No. 503/87I, one may be an independent operator for income tax purposes, but a worker for workers' compensation purposes. Mr. Weiss accurately pointed out that Forster's position with Green Forest was different from the position of the drivers who were directly employed only by Green Forest. Green Forest owned some of its own vehicles, and hired drivers to operate those vehicles. Mr. Weiss drew the Panel's attention to the differences between the payment arrangements and benefits received by these drivers, and drivers hired under brokerage arrangements such as that in place with J & R Trucking. The Panel recognizes the different categories of drivers employed by Green Forest, but does not conclude that these differences are sufficiently weighty to lead to the conclusion that Forster was an independent operator. The Panel concludes that at the time of the happening of the accident, Randy Forster was a worker, acting in the course of his employment. Green Forest was a Schedule 1 employer, and was the employer of Randy Forster. It was not disputed that J & R Trucking failed to report to the Board, but was nonetheless, a Schedule 1 employer. J & R Trucking was also the employer of Randy Forster. The Panel therefore concludes that the actions against Green Forest Lumber Limited, John H. McConnell and Ronald Sumbler, are prohibited by Part 1 of the Act. The status of Michael Sereny & John Sereny What of John Sereny and Michael Sereny? These individuals, also named as Defendants, were employed by Green Forest Lumber Limited. It is alleged the statement of claim in Action No /87 that John Sereny and Michael Sereny were, at all material times, officers and directors of Green Forest Lumber Ltd. This allegation is admitted in the Statement of Defence.

10 If Michael Sereny and John Sereny were executive officers or directors of the corporation, the Workers' Compensation Act which existed at the time of this accident did not provide for them protection from civil action. At hearing it became apparent that the admission contained in the statement of defense in Action No /87 was less than accurate. The Panel did not consider itself bound by the content of the pleadings and the civil action, and considered the evidence regarding the status of these Defendants at the time of the accident. John Sereny We are satisfied that in January 1985, John Sereny was president of Green Forest. We are also satisfied that at the time of the accident, John Sereny enjoyed protection of the Workers' Compensation Act, because of an election that he had executed in favour of personal coverage. In the view of this Panel, once such an election is made, where it is validly made, and for so long as it remains in effect, it renders the executive officer a worker for all purposes of the Act. We conclude that at the time of the happening of the accident, John Sereny was a worker for workers' compensation purposes. It follows that the right of action against him is prohibited by Part 1 of the Act. Michael Sereny Exhibit A, the post-hearing submission from Mr. McDowell provided the following information, which was not disputed: On August 16, 1984, Michael Sereny was appointed secretary and a director of Green Forest. He first appeared on the payroll of Green Forest on January 9, He did not, however, elect in favour of personal coverage under the Workers' Compensation Act until January 1, At the time of the accident therefore, on January 9, 1985, Michael Sereny was an executive officer of Green Forest, and the protection which shields John Sereny from civil action does not apply to Michael Sereny. This Panel is not empowered with jurisdiction to determine the relative merits of the action against Michael Sereny. We have jurisdiction only to determine whether the Workers' Compensation Act prohibits the right of action. We are satisfied that the pre-april 1985 Act did not protect executive officers from civil action, and that the action against Michael Sereny is not one which is prohibited by the Act. The Family Law Act Claims In this application we are dealing with two separate actions. The "Zeiler" action is brought by the dependants of the deceased - his spouse and infant son. The "Forster" action is brought by other members of his family - his mother and father, brothers and sisters.

11 At the hearing of this matter, that Mr. Neinstein represented the Plaintiffs Gladys Zeiler and Brian Wayne Zeiler. It was not disputed that they were dependants of the deceased, within the meaning of the Workers' Compensation Act. According to the generally accepted line of thought as established in the case of Re Butler Trucking Co. et al. and Brydes et al., (1984) 46 O.R. (2d) 686, it was agreed that if Randy Forster would have had no action against the Defendants, the dependant claimants who bring derivative actions under the Family Law Act would have no claim. It was also pointed out at the outset of the hearing that although the Plaintiffs in the Forster action were not represented at this hearing, that they, through their counsel, had authorized Mr. Weiss to advise the Panel that they agreed to be bound by the ruling of the Appeals Tribunal. It was assumed that the same result would come to their lawsuit as would come to that asserted by the Plaintiffs in the Zeiler action. Since the hearing of this matter, the decision of the Court of Appeal in Meyer et al. v Workers' Compensation Board et al., was brought to the attention of the Panel. It raises the question of whether the Family Law Act claims of persons who are not "dependants" within the meaning of the Workers' Compensation Act are affected by that Act. Due to the release of the Meyer decision and the desirability of considering the point in greater detail, the Panel will not make a ruling regarding the status of the Forster action. Should the parties wish to have the matter determined, they may contact the Tribunal Counsel Office within 30 days of the release of this decision to make arrangements for the delivery of written submissions on point. For this purpose the Panel will remain seized of the matter. A copy of the Meyer decision is attached as Appendix 1 to this decision. THE DECISION 1. The right of action of Brian Wayne Zeiler and Gladys Zeiler against Green Forest Lumber Ltd. is one the right to bring which has been taken away by Part 1 of the Workers' Compensation Act. 2. The right of action of Brian Wayne Zeiler and Gladys Zeiler against James McConnell and Ronald Sumbler is one which is taken away by Part 1 of the Workers' Compensation Act. 3. The right of action of Brian Wayne Zeiler and Gladys Zeiler against John Sereny is one which has been taken away by Part 1 of the Workers' Compensation Act. 4. The right of action of Brian Wayne Zeiler and Gladys Zeiler against Michael Sereny is not one which is taken away by the Act.

12 5. In accordance with section 8(9) of the Workers' Compensation Act, the Panel is satisfied that the accident suffered by Randy Forster resulted in injury for which benefits are payable under the Act. Brian Wayne Zeiler, the son of the deceased and Gladys Zeiler, spouse of the deceased, who stands in loco parentis to the infant, may pursue a claim for benefits at the Workers' Compensation Board. 6. Decision is reserved in respect of the status of Action no. 906/87. DATED at Toronto, this 4TH day of JUNE, SIGNED: E. Newman, B. Cook, R.H. Apsey.

13 APPENDIX 1 FILE NOS. 621/86 622/86 COURT OF APPEAL FOR ONTARIO RE: MICHAEL JOHN McDERMOTT ET AL. and WAYCON INTERNATIONAL TRUCKS LTD. ET AL. and SOUTHWESTERN ONTARIO WELDING SUPPLIES LTD. ET AL. * * * ELAINE MEYER, ANTONIA MEYER, GERRY MEYER and WAYCON INTERNATIONAL TRUCKS LTD. ET AL. and SOUTHWESTERN ONTARIO WELDING SUPPLIES LTD. ET AL. BEFORE: HOULDEN, MORDEN AND ROBINS JJ.A. COUNSEL: MARY ANNE SANDERSON FOR THE APPELLANT, McDERMOTT J.F. O'BRIEN FOR THE APPELLANT, MEYER MAURICE KEEBLE FOR THE RESPONDENT, SOUTHWESTERN ONTARIO WELDING SUPPLIES LTD. N.C. BROWN, Q.C. FOR THE RESPONDENT WAYCON INTERNATIONAL TRUCKS LTD. WM. JENKINS, Q.C. FOR THE RESPONDENT, RENTWAY CANADA LTD. J.G. COWAN FOR THE RESPONDENT, WORKERS' COMPENSATION BOARD HEARD: MARCH 21 and 22, E N D O R S E M E N T There is no dispute with respect to the test of judicial review which must be applied in this case. The court may only interfere with the Board's decisions in question if they are "patently unreasonable". Our function is not to decide whether the Board's interpretation is correct or incorrect in the sense that we agree or disagree with it. The interpretations placed by the Board in each of these matters on ss. 8(9) and (11) of the Workers' Compensation Act were ones that these provisions could reasonably bear and we cannot say they were patently unreasonable. Particularly, we cannot say that the result in each case was unreasonable because, in our view, it accords with the intent of the Act. We would observe that in an earlier decision of the Board (Silver v Workers' Compensation Board), which was in terms identical to those in the proceedings before us, the same interpretations were held not to be patently unreasonable by the Divisional Court on February 16, 1984, one month before the decisions in these

14 proceedings. In the light of the limited scope of the court's power on judicial review we cannot accede to the Board's request to express our opinion on the correct meaning of the provisions in question. Our decision, of course, does not preclude the Board from adopting other interpretations of the subsections, as it appears that it has in decisions rendered after the ones before us. With respect to each of these appeals the Board's decisions implicitly hold that the deceased's parents, in each case (John Franklin McDermott and Beatrice Ann McDermott, in the McDermott proceeding, and Antonia Meyer and Gerry Meyer, in the Meyer proceeding) are not entitled to recover damages in these action under s. 60 of the Family Law Reform Act. It is not disputed that none of them are "dependants" within the meaning of this term in the Workers' Compensation Act. Accordingly, since no provision in Part I of the Act takes away their right to bring an action, the Board did not have jurisdiction under s. 15 of the Act to determine whether their right to bring the action was taken away by Part I. On this particular point we respectfully disagree with the decision of the Divisional Court in Re Butler Trucking Co. et al. v Brydges et al. (1984) 46 O.R. (2d) 686. None of the decisions referred to directly or indirectly in Butler were concerned with the rights of persons who were not employees or dependants under the Act. We note that before us counsel for the Board submitted that the Board did not have the jurisdiction, in the circumstances of this case, to decide the question. We wish to make it clear that we have decided the jurisdictional question only and not the substantive question itself of the entitlement of these persons to make claims under s. 60 of the Family Law Reform Act. We are not to be taken as questioning the correctness of the Butler decision on this issue or expressing any opinion on the question. In the result, the McDermott appeal is dismissed, except that the decision of the Board is restricted to all claims except those of John Franklin McDermott and Beatrice Ann McDermott, and the order of the Divisional Court is amended accordingly. There will be no order as to costs. In the Meyer appeal, the appeal is dismissed, except that the decision of the Board is restricted to the action of Elaine Meyer and the order of the Divisional Court is amended accordingly. There will be no order as to costs.

FD: ACN=4836 ACC=R FD: DT:D DN: 816/87 STY:Pritchett et al. v. O'Sullivan et al. PANEL: Thomas; Robillard; Preston DDATE: ACT: 15, 8(9),

FD: ACN=4836 ACC=R FD: DT:D DN: 816/87 STY:Pritchett et al. v. O'Sullivan et al. PANEL: Thomas; Robillard; Preston DDATE: 021087 ACT: 15, 8(9), 8(10), 8(11) KEYW: Right to sue; Supplier of motor vehicle,