WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 2366/07

Transcription

1 WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 2366/07 BEFORE: R. Nairn : Vice-Chair HEARING: October 23, 2007 at Ottawa Oral Post-hearing activity completed on January 8, 2008 DATE OF DECISION: May 15, 2008 NEUTRAL CITATION: 2008 ONWSIAT 1337 APPLICATION FOR ORDER REMOVING THE RIGHT TO SUE APPEARANCES: For the applicant(s): For the respondent(s): Interpreter: Mr. D. Law, Lawyer Mr. W. Simpson, Q.C., Lawyer None Workplace Safety and Insurance Appeals Tribunal Tribunal d appel de la sécurité professionnelle et de l assurance contre les accidents du travail 505 University Avenue 7 th Floor 505, avenue University, 7 e étage Toronto ON M5G 2P2 Toronto ON M5G 2P2

2 Decision No. 2366/07 REASONS (i) Introduction [1] This is an application under section 31 of the Workplace Safety and Insurance Act (the WSIA ) by the Defendants in an action filed in the Ontario Superior Court of Justice as Court file # [2] The following background information is provided in order to place this matter into its proper context: According to testimony provided at this hearing, in approximately 1999, the Applicant/Defendant Donald Foley and his partner K. H. purchased about 100 acres of land in Carp, Ontario. Legal ownership of the land rested in the corporate entity (and defendant) Taj Mahal Stables Inc. ( Taj Mahal ). Business carried out at this location was done under the name of Millennium Farms ( Millennium ) through a corporation entitled Ontario Ltd. According to testimony provided at this hearing, at the time of the events under consideration here, Millennium was growing wheat that would subsequently be baled, stored and sent to Florida. The site also had approximately 100 head of cattle. In the fall of 2000, Mr. Foley had an indoor arena built adjacent to his farm so that the horses he had on site, could run indoors during the winter. In approximately December 2000, Mr. Foley reached an agreement with a neighbour L.G. which allowed the latter to board some horses at Millennium and use the indoor arena. The Plaintiff/Respondent Arlys Boyd had previously worked with L.G. s horses at another farm. Ms. Boyd had had an arrangement with L.G. whereby she could board horses at L.G. s farm in exchange for performing work around the farm. Information on file suggests that the working relationship between L.G. and Ms. Boyd continued when L.G. began to use the facilities at Millennium. On January 2, 2001, Ms. Boyd fell from a ladder in the barn while trying to retrieve some hay to feed the horses. As a result of the fall, Ms. Boyd injured, among other things, her right elbow and right knee. On approximately May 20, 2004, Ms. Boyd (and her parents) issued a Statement of Claim requesting a variety of damages in relation to her fall. The list of defendants were Taj Mahal, the numbered company carrying on business as Millennium and Mr. Foley. Information provided by the WSIB (the Board ) and contained in Addendum No. 1 indicates that Taj Mahal was an active Schedule 1 employer from January 1, 2000 to December 31, The account s successor was the numbered company, operating as Millennium and it had WSIB coverage from January 1, According to the Board, that coverage was terminated as of June 30, 2003.

3 Page: 2 Decision No. 2366/07 (ii) The issue [3] The issue to be determined in this case is whether the Plaintiff s right of action is taken away pursuant to the provisions of the Workplace Safety and Insurance Act, [4] In order to be successful in this matter, the Applicant must establish that at the time of her fall, Ms. Boyd was a worker and was in the course of her employment with a Schedule 1 employer. (iii) The testimony of Mr. Foley [5] In his testimony, Mr. Foley confirmed that he and his partner, K.H., purchased the 100 acre farm in approximately 1999 and moved in together. Legal ownership of the farm was registered with Taj Mahal and K.H. was the sole shareholder of that company. [6] Mr. Foley moved into the farm with the idea of using it to grow hay which he would ship to Florida for use at horse tracks. The hay would be cut and stored in the barn until it was ready to be shipped by truck to Florida. Not long after taking ownership of the farm, Mr. Foley bought 30 or 40 head of beef cattle which were used to eat the hay that was unsuitable for shipment. [7] Mr. Foley also advised that K.H. liked horses and as a result, they boarded some of them in the barn as well. Mr. Foley described himself as the manager of Millennium and suggested it was K.H. who looked after the horses. There was also a full-time mechanic - B. B lived next door, and, according to Mr. Foley, was not on the payroll but was paid as an independent contractor. [8] According to Mr. Foley, in the fall of 2000, he had an arena built adjacent to his barn so that horses could be run indoors during the winter weather. Subsequently, he had a discussion with his neighbour, L.G., who advised that she had some horses that she would like to board at Millennium so that they could use the indoor arena. A deal was worked out whereby L.G. would board the horses and pay an amount, per horse, each month. Mr. Foley advised that after he and L.G. agreed on the price to be paid, it was K.H. who was actually responsible for dealing with the horses. [9] Mr. Foley had a vague recollection of meeting Ms. Boyd at Millennium. He recalled that she had some horses boarded at the location and believed she had come there with L.G. [10] In approximately December 2000, Mr. Foley and K.H. went to Florida to spend Christmas and New Year s Day. It was Mr. Foley s understanding that B and L.G. (along with Ms. Boyd) were left behind to run the farm. [11] Sometime later, Mr. Foley discovered that there had been an accident at the farm when Ms. Boyd had fallen from a ladder while trying to pitch down hay from an overhead loft to feed the horses. [12] Mr. Foley confirmed that Ms. Boyd was not on the farm s payroll and was never paid any money by Millennium. It was his understanding that she had an agreement with either K.H. or L.G. that she would be given cheaper rent on her horse boarding, if she helped keep the stables clean and fed the other horses. [13] According to Mr. Foley, in approximately March 2001, K.H. suffered the first of a series of strokes which left her hospitalized for a number of years. At that point, he had to take over more responsibility for the operation of the farm.

4 Page: 3 Decision No. 2366/07 [14] Mr. Foley recalled that Ms. Boyd s horses stayed at Millennium for a few months after the accident until Ms. Boyd came and took them away. He did not report the incident to the WSIB, thinking that it was not necessary to do so. [15] Under questioning from Mr. Simpson, Mr. Foley acknowledged that he did not have much interest in the operation of the horse business at his farm and was not involved in the day to day dealings of that aspect of the operation. He understood that the details were the result of arrangements made between K.H., L.G. and Ms. Boyd. He acknowledged being unaware of the exact details of those arrangements. [16] Mr. Foley advised that he met Ms. Boyd before he left for Florida in December 2000 but did not know much about her, other than the fact she had some horses. He reiterated that while he had agreed with L.G. that she could board horses in his facility, he had no particular knowledge as to whose horses she may have brought with her. He indicated that B was generally responsible for the hay and cattle operations and would not deal with the horse operations, other than to pitch down hay. [17] Mr. Foley also indicated that he had little knowledge of any dealings his company may have had with the WSIB since these were all handled by his accountant P.B.. [18] When asked about the size of the operation at Millennium, Mr. Foley indicated that he would earn roughly $7,000 a week, for 40 weeks, sending hay to Florida. He could sell about 50 calves a year for $500 each and the 6 to 10 horses boarded in the barn might each bring in up to $500 a month. (iv) The testimony of Ms. Boyd [19] Ms. Boyd testified that around the time of her accident, she had been a nursing student at a local community college. In an effort to earn some income, she had worked as a trainer of horses and also taught people, mostly children, how to ride. Initially, she worked in this capacity at a farm owned by L.G., whom she had known since the age of 16. [20] Ms. Boyd started working with L.G. in about April 2000 and they had an agreement whereby Ms. Boyd would get a reduced rate for boarding her horses if she helped to clean the stalls and feed the other horses. [21] Later in 2000, L.G. advised that she had made an arrangement whereby she would be managing a farm that had an indoor arena. Ms. Boyd indicated that she had never spoken with Mr. Foley or K.H. and that all of her knowledge of the facility was gained through L.G. Ms. Boyd advised that when the switch was made to Millennium, she continued with the same arrangement and while the board there was slightly more expensive (about $500 a month for each of her horses) there were more horses she had to take care of. Ms. Boyd estimated that about ten horses moved to Millennium from L.G. s farm. She testified that at Millennium, she also made money from teaching riding lessons. L.G. would charge the customers and then would forward payment along to Ms. Boyd. [22] Ms. Boyd testified that it was generally B s responsibility to pitch the hay down to feed the horses. Under questioning from Mr. Law, she advised that the date of accident was the first day that B had not taken hay down for the horses. As a result, after a request from L.G., she climbed up a ladder to get the hay and subsequently fell to the ground, sustaining a variety of injuries. She testified that she continues to experience the effects of these injuries.

5 Page: 4 Decision No. 2366/07 [23] Ms. Boyd was in hospital for about ten days and within a month or two, came to move her horses from Millennium to her parents home. [24] Under questioning from Mr. Law, Ms. Boyd acknowledged that the business relationships in this industry were often informal, particularly if one was familiar with the person with whom they were dealing, as was the case with her and L.G. As evidenced by her claim for lost wages in her court action, the worker acknowledged that she had anticipated being able to continue making money at Millennium had it not been for the accident. She also confirmed that she never called the WSIB after her accident but was advised by her representatives that they had done so. She had been informed that she could not make a claim for benefits. (v) Analysis [25] In reaching my decision, I have had the benefit of reviewing the comprehensive written submissions provided by both representatives. [26] Section 2(1) of the Workplace Safety and Insurance Act, 1997, provides that an independent operator is a person who carries on an industry set out in Schedule 1 or Schedule 2 of the Act and who does not employ any workers for that purpose. A worker is defined to include 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. [27] Board Operational Policy Manual (OPM) Document # entitled Workers and Independent Operators provides: General A contract of service or employer-employee relationship is one where a worker agrees to work for an employer (payer), on a full or part time basis, in return for wages or a salary. The employer has the right to control what work is performed, where, when and how the work is to be performed. ( ) A contract for service, or a business relationship, is one where a person agrees to perform specific work in return for payment. The employer does not necessarily control the manner in which the work is done, or the times and places the work is performed. ( ) Organizational Test The organizational test recognizes features of control, ownership of tools/equipment, chance of profit/risk of loss, and whether the person is part of the employer s organization or operating their own separate business. [28] The policy also lists a number of characteristics which are considered by Adjudicators in determining whether an individual is a worker or an independent operator. Those topics include instructions, training/supervision, personal service, hours of work, full-time work, order or sequence of work, method of payment, licences, serving the public and status with other government agencies. [29] The test for deciding whether a person is a party to a contract of service or a contract for service, has been addressed in a number of Tribunal decisions. In Decision No. 1146/02, the Vice-Chair, after reviewing the case law on the issue, concluded:

6 Page: 5 Decision No. 2366/07 My first observation is that many of those decisions have relied, either directly, or indirectly through cited cases, on a statement of law found in a 1968 English case, Market Investigations Ltd. v. Minister of Social Security (1968) 3 All E.R. 732 at : The observations of Lord Wright, of Denning L.J. and of the judges of the Supreme Court in the U.S.A. suggest that the fundamental test to be applied is this: Is the person who has engaged himself to perform these services performing them as a person in business on his own account? If the answer to that question is yes, then the contract is a contract for services. If the answer is no, then the contract is a contract of service. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors, which may be of importance, are such matters as whether the man performing the services provides his own equipment, whether he hires his own helpers, what degree of financial risk be taken, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task. (For examples of reliance on this statement of principle, see the Tribunal s Decisions No. 860/88, 940/88, 522/91, 422/93, 395/94, and 564/96.) My second observation regarding prior Tribunal decisions is that the factors cited in the Market Investigations case are to be considered in the light of the stated intention of the parties to a contract in question. Hence, according to these Tribunal decisions, the intention of the parties will be given significant weight, subject to the qualification that the stated intention of the parties must be consistent with and supported by objective factors. (For examples, see Decisions No. 522/91, 659/91, 422/93, 543/93, 395/94, and 472/94). My third observation is that a number of Tribunal decisions have emphasised that two parties can have an exclusive relationship with each other and still not have an employment relationship. Those cases have emphasized the distinction between the integration of one party into the operations of the other, in contrast to an interdependent relationship that mutually benefits both parties. (See, for example, Decisions No. 773/89, 921/89, 381/91, 522/91, and 585/92.) Out of these principles has evolved a test referred to as the Business Reality or Hybrid test. The leading case in the development of this test was Decision No. 921/89, 14 W.C.A.T.R At page 225, the Panel, in that decision, offered the following reasoning for the development of this particular test: The actual name applied to the test, whether integration test, organization test, hybrid test or business reality is not important. What is important is that parties have an idea of the factors to be considered by the Appeals Tribunal in determining status as a worker or independent operator. By referring to these factors, parties may themselves develop a sense of the character or reality of the business relationship and thus make a realistic assessment of the situation. It is the opinion of this Panel that the factors enumerated in this decision assist in this goal to a greater extent than merely asking whether the work is integral to the overall business operation. The question to be asked is, What is the true nature of the service relationship between the parties, having regard to all relevant factors impacting on that relationship? The resulting analysis, based on business reality, should lead to a decision in accordance with the real merits and justice of the case. The Panel, in that decision, proposed 11 factors that might be considered in determining the nature of the relationship between two parties to a service contract. They are:

7 Page: 6 Decision No. 2366/07 1. ownership of equipment used in the work or business; 2. the form of compensation paid to the worker or independent operator (i.e., whether a fixed rate is agreed to or a variable remuneration with an attendant prospect of profit or risk of loss); 3. business indicia; 4. evidence of coordinational control as to where and when the work is performed; 5. the intention of the parties often evidenced by an agency agreement, employment agreement, contract for service, contract of service or limited term contract; 6. business or government records which reflect upon the status of the parties; 7. the economic or business market; 8. the existence of the same or very similar services supplied to an employer by a person or persons who are classified as workers under the Act; 9. substitute service (i.e. the right to hire others); 10. size of the consideration or payments; 11. degree of integration. [30] While there is no written contract in this case which might be used as a starting point in determining Ms. Boyd s status, I agree with the reasoning of the Vice-Chair in Decision No. 1146/02 that the question to be asked is what is the true nature of the service relationship between the parties, having regard to all relevant factors impacting on that relationship?. [31] After reviewing all of material before me, I am satisfied that at the time of her injury, Ms. Boyd was engaged in an oral contract of service to another party, for which she received remuneration. That remuneration was the savings she received by not having to pay for boarding her horses at Millennium. According to Ms. Boyd s testimony, this was a saving of about $1000 a month for her two horses. In exchange for this saving, she performed various services around the stables. [32] It does not appear to be disputed that no money actually changed hands between Ms. Boyd and Millennium. A number of Tribunal decisions have held however, that remuneration is not limited to taxable income. For example in Decision No. 1874/03, the Vice-Chair held that the definition of earnings in the WSIA is broad and includes any remuneration capable of being estimated in terms of money. Neither the WSIA nor Board policy limited earnings to taxable income. The Vice-Chair decided, in that case, that it was appropriate to include the market value of an apartment provided to the worker, in her earnings basis. Similarly, in Decision No. 893/95I, the Panel concluded that an individual was receiving remuneration even though she was banking the hours she worked on the day of the accident. The Panel was satisfied that there is no requirement that money be paid in order for there to be a contract of service. The banking of time was consideration which was part of the contract of service. In this application, I am satisfied that the worker was receiving a benefit which was capable of being estimated in terms of money about $1000 a month. In addition, as she indicated in her testimony, Ms. Boyd also benefited from being able to earn extra money by teaching riding lessons at Millennium.

8 Page: 7 Decision No. 2366/07 [33] In addition to the fact that Ms. Boyd received remuneration for her services, there is no evidence that she invested in any tools or equipment, that she incurred any expenses, that she had any risk of profit or loss in the operation or that she was responsible for bringing in customers. It is also clear from the worker s testimony, as noted by Mr. Law, that Ms. Boyd did not conduct herself as a self-employed person but rather, by her own evidence, took direction from and serviced the customers of another party. [34] Being satisfied that Ms. Boyd was a worker at the time of her accident, it must also be determined, as Mr. Law suggests, who the employer was. In her testimony, Ms. Boyd acknowledged that business arrangements in this particular field are often very informal, with nothing being committed to paper. This case is complicated by the fact that there are no written contracts between any of Mr. Foley, Millennium, L.G. or Ms. Boyd. There are no records to definitively establish who worked for who, nor was I referred to any documentation which proved who paid who. Unfortunately, L.G. was not called as a witness on behalf of the Respondent, to establish that she, and not Millennium, was employing Ms. Boyd. Taking these factors into account and after reviewing the material before me, I am satisfied that it was Millennium which was the employer. In reaching that conclusion, I have taken particular note of the fact that, in exchange for her labour, the worker was given the right to board horses at Millennium and at the time of her accident, she was on the Millennium premises, attempting to take care of the horses as she had agreed. In addition, at the time she was injured, Ms. Boyd was taking direction from L.G., who had entered into an agreement with Mr. Foley to manage the horse operations at Millennium. [35] Finally, as noted earlier, the Board has confirmed that at the time of the accident, Taj Mahal was an active Schedule 1 employer. While there has been some suggestion in the submissions that the horse riding/training portion of the employer s operations ought to be treated differently than the compulsorily covered farming operation, I agree with Mr. Law s submission that until an employer takes the positive step of achieving segregation of a particular business activity, the entirety of the business is captured within the compulsorily-insured status (see for example OPM Document # which provides that the payroll of workers who are engaged in an operation that is carried on partly as an industry under Schedule 1 and partly as an industry not under Schedule 1 is classified as if the entire operation were in Schedule 1 ). [36] In summary, I am satisfied that at the time she was injured on January 2, 2001, Ms. Boyd was an employee of the Applicant, a Schedule 1 employer. In exchange for the right to board her horses with the Applicant, she performed tasks around the farm which benefited the Applicant. She was injured on the Applicant s premises while performing one of these tasks. In light of the above, the Respondent s right of action is taken away.

9 Page: 8 Decision No. 2366/07 DISPOSITION [37] The application is granted. [38] Ms. Boyd s right of action is taken away. DATED: May 15, 2008 SIGNED: R. Nairn