WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL

Transcription

1 2004 ONWSIAT 2252 WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 1562/02 [1] This right to sue application was heard in Toronto on November 7, 2002, by a Panel consisting of: N.A. Ross : Vice-Chair, M. Meslin : Member representative of employers, R.W. Briggs : Member representative of workers. THE RIGHT TO SUE APPLICATION [2] This is an application under section 17 of the pre-1997 Workers Compensation Act by Metform International Ltd, defendant in an action filed in the Ontario Superior Court of Justice as Action Nos. 98-CV , 98-CV A and 98-CV B. [3] Stephen A. Mullings of the law firm, Dutton, Brock, MacIntyre & Collier, represented the Applicant, Metform International Ltd. who is the Defendant in the action. The Respondents Domenico Congiusti and Luana Posata who are Plaintiffs in the action were represented by Peter Bird, lawyer. The other parties in the civil action are the Defendants: Caradon Limited/ Caradon Limitee represented by Douglas O. Smith of the law firm Borden, Ladner, Gervais; and Belrock Construction Limited, represented by Mark L.J. Edwards of the law firm Beard, Winter. Gregory L. Chang of the law firm Bougadis, Chang, represented Protosteel Industries Ltd in the Third Party Action. THE RECORD [4] The Panel considered the following documentary evidence: 1. Applicant s Section 17 Statement (Exhibit #1). 2. The Applicant s Exhibit Brief (Exhibit #2) 3. The Applicant s Transcript Brief (Exhibit #3) 4. The Applicant s Brief of Authorities (Exhibit #4) 5. The Applicant s Pleadings Brief (Exhibit #5) 6. The Respondent s Section 17 Statement (Exhibit #6) 7. The Respondent s Documentary Evidence Brief (Exhibit #7) 8. The Respondent s Brief of Authorities (Exhibit #8) [5] The Panel also heard oral evidence from Domenico and Vince Congiusti. Mr. Mullings and Mr. Bird made submissions at the hearing.

2 Page: 2 Decision No. 1562/02 THE ISSUES [6] The Applicant seeks a determination that, at the time of the accident of the plaintiff Domenico Congiusti (hereinafter the Plaintiff ), which occurred on August 21,1996, he was a worker within the meaning of the pre 1997 Workers Compensation Act (hereinafter referred to as the Act ) and accordingly his right of action is taken away under Part I of the Act. The Respondents take the position that the Plaintiff was an executive officer of ProtoSteel Industries Ltd. at the time of the accident and, therefore his right of action is not taken away by the Act. THE REASONS (i) Background (a) The Civil Action [7] There is no dispute that the Plaintiff was in the course of his employment at the time of the accident. [8] There is also no dispute that Metform International Ltd, Belrock Construction Limited, Caradon Limited/Caradon Limitee and ProtoSteel Industries Ltd were all Schedule 1 employers under the Act at the time of the accident. [9] Metform International Ltd (hereinafter referred to as Metform ) is a business that designs and builds machinery for the metal roll forming industry. Its facility was constructed by the Defendant, Belrock Construction Ltd and completed in April In July 1996, Metform then contracted the same company to perform further construction on this facility, namely reinforcing the roof of the facility and installing a skylight. This work was then subcontracted to the Third Party Protosteel Industries Ltd. The Defendant Caradon Limited/Caradon Limitee is the manufacturer of the ladder used by the Plaintiff at the time of the accident. [10] On August 21, 1996, the Plaintiff was injured while performing work on the premises of Metform. The work involved reinforcing a roof for the installation of a skylight. The Plaintiff was using a ladder, borrowed from Metform, and a forklift to fashion a makeshift scaffold in order to climb on the roof. While climbing the scaffold to perform the installation, the ladder buckled and broke. The worker then fell from the roof to the concrete floor at a height of approximately 30 feet. [11] On August 26, 1996, a Form 7 (Employer s Report of Injury) was filed with the Board respecting this accident. The Form 7 indicated the plaintiff s occupation at the time of injury, namely that of a welder and described the accident as follows: The worker fell off a ladder approx ft. high and broke left hand wrist 7 pelvic bone in half as well as broke 2 discs. [12] Subsequently the Board established a claim for the Plaintiff. The Plaintiff, however, later contacted the Board advising that he did not want to pursue this claim. According to the Board Memo #7, dated December 17, 1996, a copy of which was included in Exhibit #2, the worker indicated that he did not want to pursue the claim as his lawyer advised him to make a claim through his private insurance. The Board then informed the worker that according to section 18

3 Page: 3 Decision No. 1562/02 of the Act, he could not forego his entitlement to benefits to make a claim through his private insurance and that he was considered to have had a work-related accident that was covered under the Act. With the exception of the first cheque he received from the Board, dated September 3, 1996, he did not cash any further cheques received in respect of this claim. [13] The Plaintiff in his testimony before the Panel suggested that one of his concerns over accepting benefits from the Board was the impact it would have on his entitlement to benefits under his private disability insurance. [14] The Plaintiff then commenced his action in the Ontario Superior Court of Justice on June 19, 1998, against the Defendants, Metform, Belrock Construction, and Caradon Limited, referred to above, which is the subject of the present right to sue application. (b) The Plaintiff as an Executive Officer [15] ProtoSteel Industries Ltd. (hereinafter referred to as the company ) was incorporated on March 29, The Plaintiff is listed as Vice President Administration for the company in the Form 1 under the Corporations Information Act, dated November 24, 1992, a copy of which is included in Exhibit #2. [16] There are also copies of correspondence, included in Exhibit #7, from Patrick DiMonte, counsel for the company, dated February 19 and May 1, 1991, confirming the instructions of the company s president to include, among others, the Plaintiff as an executive officer in the corporation. This correspondence indicates the Plaintiff s title as Vice President-Administration as well as indicating that, pursuant to the corporate minutes dated February 5, 1990, the Plaintiff was approved to receive a management salary bonus. [17] In the examination for Discovery of the Plaintiff, held on November 18 and 19, 1999, a copy of the transcript of which was included in Exhibit #3, the worker was asked about his status in the company, to which he replied as follows: Q. What is your position with ProtoSteel? A. Well, I was told I was vice president. Q. You were told. A. Yes Q. When were you told that? A. Well, I grew up with the business, so--- Q. But you haven t been vice president--- A.---that s that s--- Q. You haven t been vice president since you were a kid? Were you? A. I don t know. Q. You don t know? A. No

4 Page: 4 Decision No. 1562/02 [18] The Plaintiff was also uncertain as to when the company was purchased and who in fact put up the money for the purchase. When he was asked about the status of his family members who were also named as executive officers in the corporate documentation, the Plaintiff was unable to state the position in the company of any of these family members. [19] The Plaintiff explained that as Vice President, he had signing authority. The decisionmaking was made by himself, his father Michele and his brother Vince. He was, however, unclear as to whether he in fact had purchasing power for the company or whether it was his brother Vince, with the Plaintiff giving his input. When asked whether he was in charge of insurance matters for purchases for the corporation, the Plaintiff replied as follows: A. That s right. Insurance matters. Q. Are you in charge of the insurance? A. No. Was I? I was. [20] In his testimony before the Panel, the Plaintiff stated that his family purchased the company in the early 1980s. He became a Vice President in 1990 when he was 21 years old. His brother Vince Congiusti is president though his father, Michele Congiusti, is the sole director of the corporation. The Plaintiff stated that he had his own office and that he and his brother, who was 11 years older, made most of the decisions for the company. [21] The Plaintiff also testified that he was always involved with the office of the company, checking invoices, purchasing, and addressing customer complaints. He explained that his brother Vince Congiusti did not have strong English language skills and hence relied on the Plaintiff to proofread contracts. [22] He explained that he had more duties at the time of this hearing than he did at the time of the Examination for Discovery about three years before, including having a line of credit for the purposes of the corporation as well as dealings with the bank. When asked about the proportion of his time dedicated to his different roles in the company, he estimated that 80% of his work was in the field while 20% was in the office. [23] The Panel then heard testimony from the Plaintiff s brother, Vince Congiusti. He explained that the family purchased the company in October 1983 with his father Michele Congiusti putting in most of the money and the other family members making contributions towards the purchase. Michele Congiusti then retired in 1988 at which time Vince Congiusti was appointed as president of the company. He also stated that the main decision to purchase the building in was made by himself and the Plaintiff. He also explained that due to his own poor English language skills, he relies on the Plaintiff to assist him with respect to contracts and banking for the corporation. (c) The Plaintiff as an Employee [24] The Plaintiff stated that he started working for the company taking measurements at a job site and doing work, which he described as secretarial in nature. This led to doing work around the shop like washing windows and sweeping. He then he moved to more involved labour using machinery, like cutting metal and grinding. He then moved on to performing jobs on specific sites at the time of the 1996 accident.

5 Page: 5 Decision No. 1562/02 [25] The worker stated that he received both a weekly wage from the company as well as a cheque from the company for dividends or bonuses. In the examination, when asked whether he was both an employee and an executive officer, this was his reply: Q. You were an employee correct? A. I was an employee, sure. Q. Right were you also an officer, a director and a shareholder? A. Yes I was. [26] About a year and a half prior to the accident the Plaintiff had been off work, due to another accident, where he injured his foot when steel tubes fell on the unprotected part of his boot. The Plaintiff explained that this foot injury prevented him from returning to work since by that time his job had changed again so that he was already doing more structural installation. [27] He received disability benefits through a private insurer for this injury for a period of about a year or so. He could not recall whether this insurance was group or individual insurance though he stated that it was likely that premiums for this policy were deducted from his pay cheque. [28] The Plaintiff stated that August 21, 1996, which was the date of the accident, was the very day that he had returned to work after the prior accident. At that time, he was already a welder. He had some fear about returning to work and asked his brother for more miscellaneous work rather than the structural work he had done prior to the previous accident. [29] His brother then assigned him to do the job of installing the skylight. The Plaintiff described this job as standard and that he would not have been supervised. He took with him a ladder and a welding machine to perform this job. He used a truck to transport this equipment to the site. He explained that at the time of the accident he was wearing safety boots as well as a full body harness while he was on the roof, and gloves, though he did not have safety goggles as they were not required for this job. [30] He explained that his actual job on the site was to reinforce the opening to be used as the skylight. This involved going on the roof, taking measurements, then going down to get materials to bring back up on the roof and then do some welding between the joists. He stated that this was not the first time that he had performed such a job and had done so on at least a few occasions. [31] He stated that initially he asked for another ladder where he could rest while working on the joists on the other side. However, the other ladder that was provided was far too short. He then suggested that this ladder be hoisted on a forklift so that it would be at about the same height as the other ladder from which he was working. The accident then occurred when the other ladder provided by Metform gave way. (ii) Law and policy [32] Since the worker was injured 1996, the pre-1997 Workers Compensation Act is applicable to this appeal. All statutory references in this decision are to the pre-1997 Act, as amended, unless otherwise stated.

6 Page: 6 Decision No. 1562/02 [33] Worker is defined by the Act as follows: 1(1)(z) "worker" includes a person who has entered into or is employed under a contract of service or apprenticeship, written or oral, express or implied, whether by way of manual labour or otherwise, and includes, (i) a learner, (ii) a member of a municipal volunteer fire brigade or a municipal volunteer ambulance brigade, (iii) a person deemed to be a worker of an employer by a direction or order of the Board, (iv) a person summoned to assist in controlling or extinguishing a fire by an authority empowered to do so, (v) a person who assists in any search and rescue operation at the request of and under the direction of a member of the Ontario Provincial Police Force, (vi) a person who assists in connection with an emergency that has been declared to exist by the head of council of a municipality or the Premier of Ontario, (vii) an auxiliary member of a police force, but does not include an outworker, an executive officer of a corporation, or a person whose employment is of a casual nature and who is employed otherwise than for the purposes of the employer's industry. [34] Executive officer is defined in Operational Policy Manual Document # Personal Coverage as follows: An executive officer is anyone holding the position of chair or vice-chair of a board of directors president, vice-president, secretary, treasurer, or director in a limited company general manager or manager, or other designated position as an officer through by-law or resolution of the directors, or appointment by the Crown. Appointments of an officer by by-law or resolution of the directors must be recorded in the minute book of the company. Notwithstanding the above, the Board reserves the right to determine who is an executive officer. When in doubt, the Board considers the nature of the company s business the manner in which the work of the company is distributed among the officers, and whether the individual has a voice in the policies of the company. [35] Operational Policy Manual, Document # titled Who Can Obtain Optional Insurance? with an application date of January 1, 2004, largely reiterates the general principle set out in the earlier policy, respecting determining executive officer status. This policy states the following:

7 Page: 7 Decision No. 1562/02 Proof of executive officer status The appointment of an executive officer must be verifiable through appropriate and current documentation such that 1. The name of the executive officer must be recorded in the employer's minute book and 2. The status of executive officer can be verified in other documents that the WSIB may review including resolutions by the board of directors, corporate by-laws, or public records filed with other government authorities. Notwithstanding the above, the WSIB reserves the right to determine who is an executive officer by examining factors related to the individual's role and responsibilities. Specifically, the WSIB will review the substance of the relationship between the individual and organization to consider relevant factors, for instance, if the individual has been delegated the authority to act independently on behalf of the organization is responsible for the overall direction and control of the company's operations or financial affairs exercises a broad scope of authority to make decisions or formulate policies for the organization as a whole, rather than authority that is strictly limited to a specific branch or division has the ability to bind the organization. [36] The relevant section of the Act relating to the limits to rights of actions states: 10(9) No employer in Schedule 1 and no worker of an employer in Schedule 1 or dependant of such worker has a right of action for damages against any employer in Schedule 1 or any executive officer or any director or any worker of such employer, for an injury for which benefits are payable under this Act, where the workers of both employers were in the course of their employment at the time of the happening of the injury, but, in any case where the Board is satisfied that the accident giving rise to the injury was caused by the negligence of some other employer or employers in Schedule 1 or their workers, the Board may direct that the benefits awarded in any such case or a proportion of them shall be charged against the class or group to which such other employer or employers belong and to the accident cost record of such individual employer or employers. (iii) Conclusions [37] The sole issue in this application is whether the Plaintiff was an executive officer or a worker under the Act at the time of the accident. If he were an executive officer then section 10(9) of the Act does not bar his civil action against the Defendants hereinabove named. If he were a worker, however, section 10(9) would take away this right action. [38] The corporate records list the Plaintiff as a Vice President of the company. From the evidence, it also appears that the Plaintiff likely may have received dividends and bonuses from the company with this title. The evidence for the most part however, persuades the Panel that the Plaintiff s role in the company was as an employee rather than as an executive officer. [39] While being named an officer of the corporate records may be determinative of executive officer, even Board policy suggests that, this, in and of itself, is not absolute and other factors may be considered in determining this status. OPM Document # , for example, states the following:

8 Page: 8 Decision No. 1562/02 Appointments of an officer by by-law or resolution of the directors must be recorded in the minute book of the company. Notwithstanding the above, the Board reserves the right to determine who is an executive officer. When in doubt, the Board considers the nature of the company s business the manner in which the work of the company is distributed among the officers, and whether the individual has a voice in the policies of the company. [40] The Plaintiff s testimony at the Examination for Discovery cited above suggests that the worker had no direct knowledge that he was an executive officer in the company, not being aware when he was appointed nor the designation of the other executive officers named in the corporate records. [41] According to the Plaintiff, he had signing authority for the company and he assisted his brother Vince Congiusti, who is currently the President of the company with respect to contracts and banking for the company. It is also possible that from time to time the Plaintiff may have had some supervisory capacity in the construction projects undertaken by the company. [42] The evidence, however, does not provide any clear indication that the Plaintiff was in fact a directing mind of the corporation. On the contrary, the evidence strongly suggests that, at the time of the accident, the worker in fact did not act as an executive officer for the company, and he likely was not aware of the legal implications of this status. [43] In the Panel s view, it was Vince Congiusti, who was the real decision-maker for the company. The Plaintiff in assisting his brother matters relating to the business of the company, at most acted in an occasional advisory capacity. [44] The Plaintiff in his evidence consistently demonstrated an uncertainty not only as to when he was appointed an executive officer but also what responsibilities this title entailed, such as, for example, his uncertainty as to whether he had responsibility with respect to insurance matters for the corporation. [45] While the Plaintiff may have had his own office and carried on some corporate functions, he conceded that the majority of the work that he performed for the company was in the field. Also, although not determinative in all cases, the Panel cannot ignore in this case that the Plaintiff in fact did file a claim with the Board. This, along with the other evidence is, in the Panel s view, consistent with the worker s statement at the Examination, and his own perception that he was an employee of the company. [46] The Panel reviewed the authorities cited by the Respondents, namely Decisions Nos. 2383/99, 711/91, 475/97 and 7/94 as well as Decision No. 170/90 (1990) 14 W.C.A.T.R The Panel in that case decided that an executive officer does not lose his status under the Act if he performs duties normally performed by a worker. Yet, in the view of this Panel, the facts in this case are clearly distinguishable. In all those cases, there was no question that the party in question in fact was aware of his status as an executive officer as well as being a directing mind of the corporation. As stated above, the Panel in this case finds that the Plaintiff was not a directing mind in the company.

9 Page: 9 Decision No. 1562/02 [47] The Panel notes Decision No. 70/94 which provided the following analysis with respect to the question of what constitutes an executive officer under the Act: An executive officer cannot necessarily be imbued with the same responsibility or authority as a director of a corporation although this can happen. A director of the corporation is generally understood to be its directing mind. An executive officer can be something less than that, but not subservient as to be an employee. An executive officer must have a reasonable degree of responsibility, not only for the portion of the corporation for which he or she is responsible, but for the entity as a whole. He or she must have some working knowledge of the legal and financial status of the corporation, and must share in some of the responsibility for the overall direction and health of the corporation. The definition of the term worker under the Act is broad and inclusive. Nevertheless, executive officers have been specifically excluded from the definition because they presumably truly represent the mind of the employer. The definition does not expressly exclude managerial or supervisory staff not formally designated as executive officers. Such employees can be workers under the Act. It must therefore have been intended that the exclusion of executive officers from the definition of worker was deliberately narrow to ensure compensation coverage for supervisory employees with very senior responsibility. The Board s policy indicates that in most cases a decision as to whether a person is an executive officer will be based on their designation as such on corporate documentation. In our view, this determination must be made with a view of ensuring that the exemption for executive officers is interpreted in keeping with the broad definition of worker, and be limited to the senior managerial staff carrying out executive duties. [48] The Panel in Decision No. 1435/97 applied this analysis in finding that a plaintiff in a civil action was in fact a worker despite being named as an executive officer in the corporate records, noting from the worker s testimony that she in fact did not have any decision-making power nor was she aware of the financial aspects of the business of the company. According to the Panel in that case, the mere designation of a party as an executive officer, even if legally legitimate, does not necessarily bring a party within the ambit of the definition of executive officer under the Act. [49] Decision No. 1864/02, which cited Decision No. 1435/97, also suggests that there is an alternate line of Tribunal decisions respecting the status of executive officers. This decision states the following: In Decision No. 2383/99, submitted by the respondents, it was held that once there is a finding that an executive officer was legitimately listed as such in the corporate records, and that such designation was not a sham or a fraud, it is not necessary to go further and consider the actual nature of the person s duties. Other Tribunal decisions have held that to be an executive officer must signify that one is, to some extent, a directing mind of the company. [50] The Panel finds on the basis of the evidence that the Plaintiff did not have independent decision-making authority and that, at the most advised the president of the company in some decisions rendered on behalf of the company. Nor was the Plaintiff significantly conversant in either the financial or corporate dealings of the company, nor did he have any powers that would have made him a directing mind of the corporation such that he can be considered to be an

10 Page: 10 Decision No. 1562/02 executive officer at the time of the accident, for the purposes of the Act. The evidence is clear that the Plaintiff s main functions for the company, namely performing fieldwork at its construction sites, suggest that he was a worker rather than an executive officer. [51] The Panel finds that the Plaintiff was a worker under the Act at the time of the accident and therefore his right of action is taken away by the Act. THE DECISION [52] The application is allowed. [53] The right of action of the Plaintiffs against the Defendants named herein is taken away by the Act. DATED: November 1, 2004 SIGNED: N.A. Ross, M. Meslin, R.W. Briggs