WORKERS' COMPENSATION APPEALS TRIBUNAL

Transcription

1 WORKERS' COMPENSATION APPEALS TRIBUNAL DECISION NO. 79/94 This appeal was heard on January 31, 1994, by a Tribunal Panel consisting of: B.L. Cook : Vice-Chair, W.D. Jago : Member representative of employers, P.J. Thompson: Member representative of workers. Final submissions were received by the Panel in June THE APPEAL PROCEEDINGS The worker appeals a decision of Hearings Officer G.R. Harrison, dated October 20, In that decision, the Hearings Officer concluded that an Indian Band is not an industry under Schedule 1. On this basis, he found that the worker who is a status Indian, and who was employed by an Indian Band, was not entitled to benefits for an accident suffered by the worker in the course of his employment. The worker appeared and was represented by A. Asmus, a lawyer with the Sioux Lookout Community Legal Clinic. The employer was notified of the hearing but elected not to participate. At the conclusion of the hearing, the Board asked for further information and submissions from the Board, Mr. Asmus, and the Tribunal Counsel Office (TCO). Submissions were received from Mr. Asmus, E. Brown of the Board's Legal Department, and D. Revington of TCO. THE EVIDENCE The worker testified. The Case Description and three Addenda were marked as Exhibits #1 through #4. Exhibit #5 is the written submission of Mr. Asmus which the Panel received at the hearing. Exhibit #6 is the submission of the WCB, dated June 10, Exhibit #7 is the submission of Mr. Revington. Exhibit #8 is a package of materials provided by Mr. Asmus. THE NATURE OF THE CASE The worker is a status Indian who lives on a reserve. He suffered an accident while working for the Band Council, performing construction work. Operation of an Indian Band is not an industry listed in Schedule 1. The Board's view is that Indian Bands are not compulsorily covered under the Act. In the past, the Indian Band had applied for coverage under section 107. However, this coverage had lapsed at the time of the worker accident. The Board concluded that as the Indian Band was not required to have coverage and did not have voluntary coverage, the worker was not entitled to benefits under the Act. On behalf of the worker, Mr. Asmus submits that the Indian Band was engaged in the industry of construction at the time of the worker's injury. Construction is compulsorily covered under the Act.

2 He submits that the worker is entitled to benefits because the worker was working for an employer who was engaged in an industry which is compulsorily covered by the Act. The materials before the Panel referred to Indians and Indian Bands as well as First Peoples and First Nations. This decision refers to Indians and First Peoples and Indian Bands and First Nations respectively, interchangeably. THE PANEL'S REASONS (i) Facts which are not in dispute The Panel notes that the following are not in dispute, and we accept them as fact for the purposes of this appeal: 1. The worker suffered a personal injury by accident in the course of his employment on September 7, The worker was employed by the Indian Band on September 7, The worker is accordingly a "worker" and the Indian Band an "employer" within the meaning of section 1 of the Act. 3. The worker was doing construction work at the time of the accident. Specifically, he was involved in building a multipurpose general hall on the reserve which is operated by the Band. 4. The worker lives on the reserve and is a status Indian within the meaning of the Indian Act. 5. Operation of an Indian Band is not listed in Schedule 1. Construction, however, is listed in Schedule 1. (ii) The history of the employer's status with the Board The file materials in this case include the available records from the employer's firm file with the Board. These materials indicate that the employer first requested voluntary coverage under section 107 (section 90 at the time), in October Each year, the Board requires an employer to submit a statement of payroll. The statement sets out the actual payroll for the previous year and the estimated payroll for the next year. The statement is due in around February of each year. In 1984, the Band's statement was not returned until July. In November 1984, the Board was informed by the federal Canada Employment and Immigration Department that the Band had received funds for a specific construction project. The Band was instructed to keep a separate payroll for the project. In May 1985, the Board reminded the employer that its 1984 statement was past due. The statement was submitted in June. In January 1986, the Board advised the employer that its account was 2

3 in arrears. At the same time, Ontario Hydro asked for a "certificate of clearance" presumably because it was involved in a project on the reserve, and wanted to ensure that it would not have compensation liabilities. The certificate was refused until the Band paid its arrears. In 1986, the employer submitted its statement on time. In July of that year, the Board instructed the Band to keep a separate payroll with respect to a specific construction project funded by the federal government. In June 1987, the Board advised the employer that the statement for that year had not been submitted. The employer sent the form in July, but the Board had already cancelled coverage effective August Coverage was reinstated in November In 1988 and 1989, the statement was submitted on time. On July 16, 1990, the Board sent a form letter to the employer, indicating that the statement for 1990 had not been received. The letter states that a replacement form was included, which was to be returned within 14 days "if you wish to ensure continuous coverage under the Workers' Compensation Act". The letter states: "If coverage is discontinued through your failure to submit payroll information, you should notify your workers that they are no longer receiving protection under the Workers' Compensation Act." Subsequent documentation indicates that coverage was discontinued as of August 22, There is no documentation which indicates that this was formally communicated to the employer at the time. The next communication followed the worker's accident of September 7, In November, the employer faxed payroll statements for the years 1990 and The employer asked to have its coverage reinstated from the time when coverage was discontinued by the Board. The Board did not agree to do this. Instead, it sent the employer a new application form. When this was returned, coverage resumed, but only effective December 9, (iii) Does the Workers' Compensation Act apply at all? Since the First Nations come under federal as opposed to provincial jurisdiction, there appeared to be a preliminary question in this case concerning whether the Workers' Compensation Act applies at all. This question has been dealt with in an Alberta case. The case is Auger v. Alberta (Workers' Compensation Board) (1989) 61 D.L.R. (4th) (Alta. Q.B.). This decision was affirmed by the Alberta Court of Appeal (1990) 73 D.L.R. 360, and leave to appeal to the Supreme Court of Canada was dismissed 86 D.L.R. (4th) (viii). We will refer to Auger later in this decision as it happens to deal with a number of germane points. On the jurisdictional question, Holmes, J., speaking for the Court, noted that section 88 of the Indian Act, R.S.C. 1985, C. I-5, reads as follows: 3

4 88 Subject to the terms of any treaty and any other Act of Parliament, all laws of general application from time to time in force in any province are applicable to and in respect of Indians in the province, except to the extent that those laws are inconsistent with this Act or any order, rule, regulation or by-law made thereunder, and except to the extent that those laws make provision for any matter for which provision is made by or under this Act. Holmes, J. found that the Workers' Compensation Act of Alberta was a "law of general application. The Court also concluded that the Act did not conflict with section 87 of the Indian Act, which exempts the property of Indians on reserve lands from taxation. After reviewing the case law, Holmes, J. observed: "in the case of assessments levied under the Workers' Compensation Act of Alberta, the funds raised are in the nature of insurance moneys used solely to administer and pay workers compensation claims and have no connection with the general revenue funds of the province. On this basis, assessments levied under the Workers' Compensation Act were held not to be a form of taxation. The Act was accordingly found not to conflict with section 87 of the Indian Act. The Panel adopts the reasoning of Auger, and concludes that the Workers' Compensation Act of Ontario is a law of general application which applies to Ontario First Nations. (iv) The coverage scheme under the Ontario Act Section 139 states: 139 This Part applies only to the industries mentioned in Schedules 1 and 2 and to such industries as are added to them under the authority of this Part and to employments therein, and applies to any employment by or under the Crown in right of Ontario, including any employment by any permanent board or commission appointed by the Crown in right of Ontario. "Industry" is defined in section 1(1) as: "industry" includes an establishment, undertaking, trade, business or service and, where domestics are employed, includes a household; Section 103 establishes how industries are added to the Schedules: 103(1) Subject to the approval of the Lieutenant Governor in Council, the Board may by regulation, (a) rearrange any of the classes for the time being included in Schedule 1, and withdraw from any class any industry included in it and transfer it wholly or partly to any other class or form it into a separate class, or exclude it from the operation of this Part; (b) establish other classes including any of the industries that are for the time being included in Schedule 2, or are not included in any of the classes in Schedule 1; 4

5 (c) add to any of the classes for the time being included in Schedule 1 any industry that is not included in any of such classes; (d) exclude any trade, employment, occupation, calling, avocation or service from any industry for the time being included under this Part or at any time brought under this Part. In this case, we are concerned with Regulation 951, which was the applicable regulation in effect at the time of the worker's accident. It has since been replaced by Regulation 1102 (R.R.O. 1990). Regulation 951 includes Schedule 1 and Schedule 2. We are primarily concerned with Schedule 1 in this case. Schedule 1 sets out an array of industries which includes most of the industries which are undertaken in Ontario. It does not, however, include all industries. In addition to the industries which are not included in Schedule 1 because they are not listed in the Schedule, section 2 of Regulation 951 explicitly excludes five industries: The following industries are excluded from the operation of Part I of the Act. 1. Barbering and shoe-shining establishments. 2. Educational work, veterinary work and dentistry. 3. Funeral directing and embalming. 4. The business of a photographer. 5. Taxidermy. Section 3 excludes certain workers of the fire department of the City of Toronto. An employer who operates an industry which is excluded, either explicitly under the Regulation, or by virtue of non-inclusion in Schedule 1, may apply to have all or part of its operations included under Schedule 1 pursuant to section 107: 107 The Board may, upon the application of an employer, add to Schedule 1, for such time and upon such terms and conditions as the Board may determine, any industry or part of an industry, or department of work or service, of such employer. Operational Policy Document # sets out the "terms and conditions" respecting voluntary coverage. It provides that: The Board may cancel coverage for an employer if: - the annual payroll statement is not received on time; - an overdue assessment is not paid after 2 reminder notices have been sent. 5

6 In either case, the Board sends a registered letter to the firm advising that coverage is being cancelled. Cancellation is automatic 15 days from the date of the letter if the employer has not returned the payroll statement. The Regulations and Board policies contemplate that in some circumstances, an employer may operate more than one industry. Section 7 of the Regulation deals with the situation of employers who carry on operations partly in Schedule 1 and partly not in Schedule 1: The payroll of workers engaged in operations carried on partly as an industry under Schedule 1 and partly as an industry not under Schedule 1 shall be rated and dealt with by the Board as if all the operations were under Schedule 1. Section 5(1) of Regulation 951 provides that: 5(1) For the purpose of determining and fixing the percentage, rate or sum to be assessed and levied upon employers, an industry, including its various operations, shall be regarded as a unit. Section 5(2) provides that: (v) 5(2)(d) building-construction work, excluding ordinary wear and tear repair work, ordinarily done by employers in Class 24, where the yearly payroll exceeds $1,000, shall be segregated and separately rated; The Board's position regarding the operation of an Indian Band The Board's position in this matter is stated by the Hearings Officer in the following terms: The position of the Board is that operation of a reservation by an Indian band council is not compulsorily covered under the Act. Coverage is available on a voluntary basis, and over the years applications have been accepted by the Board to extend this protection to Indian band councils. These applications apply to all operations on the reserve. The procedure followed is that the council completes an application form, submits an estimate of payroll, and provides payment of its assessment. All employees of the council in receipt of wages would receive the protection of the Act, provided coverage had been requested and was accepted by the Board. The work performed by employees of the band council would normally include road maintenance, building repairs, caretaking and other activities which form part of the operations of an Indian reserve. These activities, when performed on the reservation, by workers employed by the Indian band council, are not carried on as a separate business or trade, and are considered incidental to the operations of the Indian reserve. The operation of an Indian reserve is not considered an industry automatically covered under the Act. 6

7 In response to the Panel's request for further information, Ms. Brown of the Board's Legal Department, noted that the relevant Regulation was substantially amended as of January 1, As noted earlier, as the accident in this case occurred in 1991, we are concerned with the Regulation as it read prior to that time. Ms. Brown advises that prior to January 1, 1993, the Board's view was that "the nature of the overall activity of the employer, not the various component parts, determine the "industry" of the employer." With respect to Indian Bands, the overall activity is the operation of an Indian Band. Operation of an Indian Band is not an industry listed in Schedule 1. The Board appears to agree that some of the operations which a Band may undertake are compulsorily covered. In particular, the Board distinguishes between activities undertaken on the reserve and activities undertaken off the reserve. If the Band engages in activities off the reserve, those activities are not considered to be ancillary to the operation of the reserve, and must be reported to the Board. The Hearings Officer discusses this in reference to the example of logging: The operation of a reservation by an Indian band council is not considered an industry automatically covered under schedule I of the Act. Industries such as logging by an Indian band council on a reservation are not compulsorily covered, however, logging performed off a reservation by an Indian band council would be considered an industry compulsorily covered, and should be reported to the Board. In essence then, the Board considers that an Indian Band as employer is in the business of "operating an Indian reserve". This operation has a number of ancillary operations. These include construction and logging on the reserve. If the Band engages in operations such as logging off the reserve, the Board considers that such operations are not ancillary to the operation of a reserve. Such operations are considered to be separate and compulsorily covered, if they fall within the industries listed in Schedule 1. (vi) Auger v. Alberta (WCB) There is a court case which arose in Alberta which is of considerable relevance to this case. The case is Auger v. Alberta (WCB), which we referred to earlier, regarding the jurisdictional issue. Auger was a treaty status Indian who was injured while employed by Crier, another status Indian who was fulfilling a construction contract on the reserve where both were employed. The Court does not seem to have distinguished between Crier as a contractor and the Band Council. Pursuant to Schedule "A" of Alta. REG. 427/81, A Regulation passed pursuant to the Alberta Workers' Compensation Act, a number of industries were exempt from the application of the Act. The industries exempted included: "any industry carried on by an Indian Band on a Reserve". The Panel notes that this Alberta Regulation is similar to section 2 of Regulation 951, mentioned earlier. While in Ontario only five specific industries were excluded, in Alberta, the list was longer, and included Indian Bands. 7

8 Like the Ontario legislation, an employer who was exempt from the operation of the Alberta Act, could apply for coverage on a voluntary basis. The Court heard evidence that many Bands made such application. Auger's employer, however, had not. After his injury, Auger applied for benefits from the Alberta WCB and the claim was rejected on the basis that his employer was exempt from the application of the Act. Auger then applied for judicial review of that decision. At the Court of Queen's Bench, Holmes, J. observed that the reason that the Indian Bands had been exempted from the operation of the Act was related to sections 89 and 90 of the Indian Act: The evidence established that the board has experienced considerable difficulty in collecting arrears from Indian employers, a situation directly attributable to the fact the board's ordinary powers of collection are seriously circumscribed by the provisions of ss. 89 and 90 of the Indian Act: 89(1) Subject to this Act, the real and personal property of an Indian or a band situated on a reserve is not subject to charge, pledge, mortgage, attachment, levy, seizure, distress or execution in favour or at the instance of any person other than an Indian. 90(1) For the purposes of sections 87 and 89, personal property that was: (a) purchased by Her Majesty with Indian moneys or moneys appropriated by Parliament for the use and benefit of Indians or bands, or (b) given to Indians or to a band under a treaty or agreement between a band and Her Majesty, shall be deemed always to be situated on a reserve. Aside from the statutory restriction on access to reserve lands by non-indians the evidence established that the protection granted to Indians and Indian bands by ss. 89 and 90 of the Indian Act has made collection of delinquent workers' compensation accounts on reserves virtually impossible. While the evidence did indicate the Sampson Band may have substantial off-reserve exigible assets there was no evidence that the same could be said for other Indian bands or for Indians generally in the province. The Court found it significant that all workers' compensation assessments are paid by employers. Holmes, J. noted: Consequently, if the board has a serious problem collecting assessments levied against employers in any particular industry, the impact of such 8

9 losses falls on the other employers in that industry and has a deleterious effect on the integrity of the fund from which all benefits are paid. Under these circumstances, the Court concluded: [T]he legislature has not been unreasonable in its reluctance to extend compulsory coverage to Indian and band employers operating on reserves. The Court then dealt with the definition of "industry" in the Alberta legislation, and specifically with the question of whether that term should be considered narrowly with regard to specific kinds of industries, or whether it should be considered broadly so that it could cover the operation of an Indian Band. The trial court held that the term industry should be interpreted broadly and thus held that operation of an Indian Band is an industry. The Alberta legislation defines "industry" as: an establishment, undertaking, trade or other business, whether it is carried on in conjunction with other occupations or separately. Finally, the trial court addressed the question of whether the Regulation excluding Indian Bands from compulsory coverage violated the Canadian Charter of Rights. As the Charter issue was not expressly argued in this case by the worker, it is not necessary to review the Court's view of this matter in detail. Suffice it to say that the Court found that the exemption did not violate section 15(1) of the Charter. Of some interest and possible relevance here, however, is that the Court went on to consider whether, if it was wrong on this question, any infringement of section 15(1) was saved by section 1 (i.e. whether the infringement is reasonable and justified in a free and democratic society). Holmes, J. found that any infringement of section 15(1) caused by the exemption was saved by section 1. The primary reason for this was that purpose underlying the exemption was the reasonable purpose of protecting the integrity of the Accident Fund. Moreover, he noted that there were alternative remedies available. In particular, a Band could apply for voluntary coverage. He observed that it would be possible for the federal government to require Bands to seek voluntary coverage as a condition of grant moneys. Finally, he indicated that in his view, the Government of Canada had the option of deeming Indian Band employees to be workers under the Government Employees Compensation Act. On appeal, the Court of Appeal reviewed the decision of the lower court in some detail. The Court of Appeal upheld the trial judge's decision tht "industry" should not be interpreted restrictively as referring only to specific kinds of industry. The Court found that it was not necessary to decide whether there was discrimination under section 15(1) of the Charter, since the legislation was in any event saved by section 1. Leave to appeal to the Supreme Court of Canada was denied. (vii) The submissions of Mr. Asmus and Mr. Revington On behalf of the worker, Mr. Asmus submits that there is a critical distinction between "employer" and "industry". He notes that Schedule 1 is a list of industries, not of employers. The Schedule, the Regulations and the Board's policies contemplate that an employer may operate more 9

10 than one industry. In Mr. Asmus' submission, if an employer operates an industry which is listed in Schedule 1, then the workers of that employer who are engaged in that industry are covered under the Act. Mr. Asmus agrees that section 69(2) gives the Board the power to determine whether an industry or part of an industry falls within the classes in Schedule 1. However, he submits that the Board cannot do so arbitrarily. He notes that while the Board has the authority to exclude any "trade, employment, occupation, calling, avocation or service", under section 103(2), it can only do so by regulation. He suggests that the Board cannot do by practice something which it can only legally do by regulation. As there has been no regulation exempting Indian Bands from the operation of Part 1 of the Act, the Act applies to Indian Bands. On behalf of the Tribunal Counsel Office, Mr. Revington notes that the definition of "industry" in section 1 of the Act is very broad. Section 1(1) defines "industry" as: "industry" includes an establishment, undertaking, trade, business or service and, where domestics are employed, includes a household; Mr. Revington submits that under this definition, an Indian Band could be both an employer and an industry in itself. As well, he submits that a Band could be an industry, and as well, carry on an industry separate from being an Indian Band. He suggests that such separate industry could include operations off the reserve or on the reserve. Mr. Revington notes that "construction" is an industry in Schedule 1. An employer who is engaged in "construction" is required to have coverage. Mr. Revington notes that a question in this case may be whether the Indian Band is required to have coverage when it is engaged in construction, even though it may not be required to have coverage for other parts of its operations. Mr. Revington refers to the Board's policies concerning employers who operate two industries, one of which is compulsorily covered and the other not. Operational Policy Document # provides that if the two parts are "intermingled", the employees in both parts must be covered. However, if the two parts are "clearly divided" or there is a separate payroll for each part, the two parts may be separately assessed. The policy considers, as an example, the case of a bowling alley (which is not compulsorily covered) which has a restaurant (which is compulsorily covered) as part of the business. If the employer keeps separate payrolls for the bowling alley and the restaurant, the two parts can be assessed differently. Otherwise, both parts would be assessed at the restaurant rate. Mr. Revington questions whether this policy has been applied in this case. In this case, it appears to him that the employer may be carrying on at least one industry - construction - which is compulsorily covered under the Act. As such, it would appear that the employer might be compulsorily covered with respect to that part of its operations. (viii) The Panel's conclusions (a) The Board's characterization of an Indian Band as an "industry" 10

11 In our view, the first issue in this case concerns the Board's characterization of the operation of an Indian Band as an "industry". We note that this issue relates to an area where the Board is given considerable statutory discretion (sections 103, 106 and 107). Decisions of the Tribunal have tended to adopt a standard of reasonableness in cases relating to the classification of industries. For example, in Decision No. 588/89I, a Panel noted: In this Panel's view, although we are not bound by WCB policy and/or the Board's interpretation of its Act and regulations we should give them careful consideration. For the reasons set out in Decision No. 46/87 a panel's decision to interpret scheduled industries differently from the Board should be strongly founded. Decision No. 46/87 indicates that a panel ought to interfere with an assessment decision under section 75(2) [now numbered 69(2)] only when the Board has acted unreasonably or has relied on an unsupportable definition - one that bears no relationship to the classifications. Decision No. 214/93I (1993), 27 W.C.A.T.R. 192, is another case which dealt with an appeal concerning the Board's policies respecting employer assessments. The decision concludes that a standard of reasonableness is appropriate with respect to the Board's policies about assessment matters. A standard of correctness is appropriate with respect to the application of those policies in a particular case. This Panel adopts the reasoning of these decisions. In this case, we agree with Mr. Revington that the definition of "industry" in section 1(1) of the Act is very broad: "industry" includes an establishment, undertaking, trade, business or service and, where domestics are employed, includes a household; In our view, the operation of an Indian Band very reasonably falls under this definition. We note that this was also the view of the Alberta Court of Queen's Bench in considering similar language in Auger. The decision of the trial judge was upheld by the Alberta Court of Appeal, with leave to appeal to the Supreme Court of Canada denied. Accordingly, we conclude that the employer in this case was primarily engaged in the industry of operating an Indian Band. We note that some "industries" embrace a number of other "industries" listed in Schedule 1. For example, the operation of a mine is clearly an industry which is listed in Schedule 1. Operating a mine will typically include a number of associated or ancillary activities such as construction, and possibly some logging. These other activities could be considered separate industries under Schedule 1. In this case, the Board has indicated that it views the operation of an Indian Band as analogous to the operation of a municipality. Considering the similarity of the respective responsibilities and obligations of Indian Bands and municipal councils, the Panel agrees that this is reasonable. Operating a 11

12 municipality clearly involves a number of activities which could be considered as "industries" if viewed separately. A municipality may, for example, be involved in construction and logging in addition to matters relating to government, by-law enforcement, provision of social services, garbage collection and the like. The status of municipalities is specifically dealt with under section 1(3): 1(3) The exercise and performance of the powers and duties of, (a) a municipal corporation; (b) a public utilities commission or any other commission or any board having the management and conduct of any work or service owned by or operated for a municipal corporation except a hospital board; (c) a public library board; (d) the board of trustees of a police village; and (e) a school board, shall for the purposes of Part I be deemed the trade or business of the corporation, commission, board, board of trustees or school board. Schedule 2 includes: "Any trade or business within the meaning of subsection 1(3) of the Act." Thus, the operation of a municipality is an industry which is not in Schedule 1 (although the majority of municipalities have applied to come under Schedule 1 rather than Schedule 2). It is an industry which includes as part of that industry a number of other "industries". In "multiple-industry" cases, the Board's approach is to look at the predominant activity. Other activities or "industries" are considered as a part of the predominant activity if they are ancillary to it. Applying this approach to the operation of an Indian Band, it is our view that running an Indian Band would reasonably include activities such as construction of buildings for the common good, in addition to the variety of clerical and administrative functions performed by the Band Council. The problem which this case raises is how to treat a situation where the predominant activity industry is not in Schedule 1 but where ancillary parts of the predominant activity are in Schedule 1. Specifically, in this case, if the predominant activity is operating an Indian Band, which is not in Schedule 1, does that mean that all activities which are ancillary to the operation of the Indian Band are also excluded? It appears that the Board does not necessarily treat all such situations in the same way. In general, the Board requires that the ancillary operations be covered. Indeed, as Mr. Revington notes, if the payroll of the ancillary operation is not kept separately from the payroll of the overall operation, the overall operation may be brought into Schedule 1, even though it would otherwise not be part of Schedule 1. 12

13 This approach is consistent with the general thrust of Regulation 951. Section 7, for example specifically provides: The payroll of workers engaged in operations carried on partly as an industry under Schedule 1 and partly as an industry not under Schedule 1 shall be rated and dealt with by the Board as if all the operations were under Schedule 1. Section 5 states that the several operations in an industry shall be regarded as a unit and should not generally be given a separate assessment. However, the exceptions to this include construction [section 5(2)(d)], other than wear and tear repair work, where the payroll for such work exceeds $1,000. With respect to some industries, however, such as the operation of an Indian Band, the Board takes a different approach. In effect, it views the entire industry together with its ancillary parts, as one industry. In our view, the Act gives the Board the power to do this. Section 69(2) provides in part: 69(2) Without limiting the generality of subsection (1), such exclusive jurisdiction includes the power of determining, (a) whether any industry or any part, branch or department of any industry falls within any of the classes for the time being included in Schedule 1, and, if so, which of them; (b) whether any industry or any part, branch or department of any industry falls within any of the classes for the time being included in Schedule 2, and, if so, which of them; (c) whether any part of any such industry constitutes a part, branch or department of an industry within the meaning of this Part; The powers which the Board is given in respect to determining whether any industry or part of an industry falls under Schedule 1 are quite broad. In our view, they are sufficiently broad to allow the Board to determine that an ancillary part of one industry is compulsorily covered while a similar ancillary part of another industry is not compulsorily covered. However, the Panel agrees with Mr. Asmus that the Board is not permitted to exercise such powers in an arbitrary fashion. The fact that the Board characterizes construction activities done by Indian Bands differently than it might characterize such activity if it were done ancillary to a different industry raises the question of arbitrariness. However, as the discussion in Auger makes clear, the First Nations have a legal status which is significantly different in many respects than the status of other employers. In our view, it is quite reasonable for the Board to consider this status in the exercise of its powers under section 69(2). In particular, it seems reasonable for the Board not to require compulsory coverage for a part of the 13

14 industry of operating an Indian Band if the consequence of that determination would be that the Board would be required to pay benefits without the legal authority to collect assessments. Such a practice would not be consistent with the Board's responsibility, under section 101, to maintain the integrity of the Accident Fund. We also note that the Board's approach to Indian Bands accords with the general policy of advancing First Nation self-government. With respect to the sections of Regulation 951, which deal with operations in more than one industry, it appears to the Panel that those sections are only applicable if a determination is made that the employer is operating more than one industry or operating "partly as an industry under Schedule 1 and partly as an industry not under Schedule 1", to quote section 7. If it is determined that the employer is operating only one industry, and that industry is not in Schedule 1, then the section does not apply. Similarly, section 5 of the Regulation can be seen to apply only to deal with the payroll of the industry. It too does not apply if the industry itself is not in Schedule 1. In summary on this point, the Panel concludes that the Board has reasonably characterized the operation of an Indian Band as an "industry". The Board has the power to consider the various parts of an industry and to determine whether those parts fall under Schedule 1 and whether the parts are separate industries. While there may initially be an appearance of arbitrariness with respect to the Board's determinations regarding Indian Bands, in consideration of the special legal status of First Nations under the Indian Act, the Board's determinations are not arbitrary and are reasonable. It is also, as we have noted, an approach which is similar to the approach taken by the Alberta Board. That approach was found to be reasonable and justifiable by the Alberta Court of Appeal, with leave to appeal to the Supreme Court of Canada denied. (b) The employer's application coverage in this case The second issue in this case concerns the application of section 107, which concerns voluntary or application coverage of industries not in Schedule 1. As we have seen, Operational Policy Document # provides that the Board may cancel application coverage for an employer if: the annual payroll statement is not received on time; an overdue assessment is not paid after 2 reminder notices have been sent. In either case, the Board sends a registered letter to the firm advising that coverage is being cancelled. Cancellation is automatic 15 days from the date of the letter if the employer has not returned the payroll statement. The policy then states: When an employer's coverage has been cancelled, either by the firm or by the Board, accepting a further request for coverage is at the discretion of the Board. 14

15 Operational Policy Document # deals with reinstatement of a firm account which has been closed. It provides that when the Board reinstates or "revives" a closed account, "the employer also assumes the accident and assessment record which form part of the file." Similarly, if there is an outstanding balance owing to the Board when the account is closed, that amount must be paid upon reinstatement. These policies, in our view, are generally reasonable and in accordance with section 107, which allows the Board to establish "terms and conditions" for application coverage. As discussed above, while a standard of review of reasonableness is appropriate with respect to the policy itself, the application of the policy in a particular case is subject to a standard of "correctness". Moreover, section 4(4) of the Act applies. It requires that any claim be determined "in accordance with the real merits and justice of the case". In this case, it appears to the Panel that the cancellation of the employer's coverage may not have been done in accordance with the Board's policy. In particular, the policy states that the Board shall send a letter to the employer confirming that the coverage has been cancelled. There is no indication in the employer's firm file that this occurred. All that appears to have happened is that the employer was sent a reminder notice and a second payroll statement. The Panel notes that the cancellation of workers' compensation coverage can have very important consequences. This is particularly so when the employer in question is engaged in potentially hazardous operations. Given the wide variety of activities which are now undertaken by Indian Bands, it would appear to the Panel that the Board should take a pro-active approach with such employers. The Board could take steps to encourage First Nation employers to obtain coverage and to follow up and provide such administrative assistance as is necessary to assist councils. In November 1991, the employer applied to have its coverage reinstated. It submitted payroll statements covering the time since the last statement had been submitted. It appears that the employer was prepared to submit the appropriate assessments to cover its outstanding balance and coverage from the time when the Board closed the file. The Board did not allow the employer to reinstate its coverage. Rather, it required the employer to apply anew under section 107. In our view, the only reason for this was the intervening accident to the worker. Had it not been for that accident, the Board would likely have applied its policies respecting reinstatement of the account. This would have resulted in retroactive restoration of coverage, provided that the employer paid the necessary back assessments. In our view, the Board ought to have reinstated the employer's coverage, providing that the employer submitted the required back assessments. We conclude that if the employer submits the necessary funds to cover the period 1990 and 1991, the employer's coverage under section 107, should be reinstated from August 22, 1990, when it was discontinued by the Board. 15

16 When this has been done, the worker will be a worker who was employed by an employer in Schedule 1 at the time of his work related accident. His claim may then be adjudicated by the Board on that basis. THE DECISION The worker's appeal is allowed. The Panel concludes that the Board has reasonably characterized the operation of an Indian Band as an "industry". The Board's policies respecting cancellation and reinstatement of application coverage under section 107 of the Act are generally reasonable. However, in this case, it is not clear that those policies were correctly applied. Providing that the employer submits the required assessments, the Board is directed to reinstate the employer's coverage under section 107 from August 22, 1990, the date that it was discontinued. When this has been done, the worker will be a worker who was employed by an employer in Schedule 1 at the time of his work related accident. His claim may then be adjudicated by the Board on that basis. DATED at Toronto, this 3rd day of May, SIGNED: B.L. Cook, W.D. Jago, P.J. Thompson 16