1591-99-ES Lincoln W. North, Applicant v. Lincoln North & Company Limited and Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 32005401
BEFORE: Anthony Brown, Vice‑Chair.
APPEARANCES: Lincoln North on his own behalf; no one appearing for Lincoln North & Company Limited; Karen Northey for the Ministry of Labour
DECISION OF THE BOARD; April 10, 2000
1This is an application pursuant to the Employment Standards Act (the “Act”) for review of a refusal by an Employment Standards Officer to make an order to pay.
2A hearing was scheduled for March 30, 2000. The responding party, Lincoln North & Company Limited, (“the company”) did not appear by 10:00 a.m. This company has filed for bankruptcy and its trustee is Richter & Partners Inc. Although the trustee was not directly informed in writing of the date of the hearing, the Board is satisfied that it was aware of the hearing. Mr. North informed the Board that he had spoken with Renee Schwarz, an employee of Richter & Partners Inc., on the day prior to the hearing and she was aware that it had been scheduled. Furthermore, Mr. North produced a copy of a letter dated March 13, 2000 from Richter & Partners Inc. to Mr. North which states the following:
“Bettina Rontsch advised earlier this morning that a meeting is scheduled with you for March 30, 2000. We recommended to Bettina that you postpone this meeting until such time as we collect the federal tax refund, which we expect will be within the next month or so. The provincial tax refund has already been collected. Once we have collected the tax refunds we will be in a position to determine the amount of dividents, if any, that you may receive from the Company’s bankruptcy estate.”
3Bettina Rentsch is the former principal of the bankrupt company. Although this letter refers to a “meeting” scheduled on March 30, 2000, Mr. North states that the letter was in fact referring to the hearing before the Board. As such, it confirms that both Bettina Rentsch and the trustee in bankruptcy were aware of the hearing date, and the Board therefore decided to proceed with the hearing despite their absence.
4Lincoln North submits that he sold his company, Lincoln North & Company Limited in 1991, after which he stayed on as an employee. The company rents office space in a building owned by Norcor Investments Limited, a company owned by Mr. North and his wife.
5In sworn testimony, Mr. North explained that, in 1998, the company started to experience serious financial difficulties and it eventually declared bankruptcy. Mr. North forgave certain debts owed to him or to Norcor Investments by Lincoln North & Company Limited. However, he asserts that the company owes him wages for two pay periods ending October 1 and 15, 1998, amounting to $2,869.72
6Mr. North stated that he worked as an arbitrator of commercial (real estate) disputes and, when not busy as an arbitrator, did real estate appraisals. By 1998, the arbitration work had dried up, and he was doing appraisals. By mid-1998 he was gradually phasing-out of working altogether and he intended to retire at the end of 1998. The company had about eight employees. Clients needing arbitration services would call the company and it would then assign Mr. North.
7In 1998, Mr. North’s base salary was $36,000. However, he could also earn “production” salary. Production salary consisted of 50% of his billings. He would be paid the greater of his production salary or his base salary. In this application, he is not claiming production salary. He is claiming wages calculated on his base salary.
8Mr. North stated that that he was not an independent contractor. He admitted that he worked under limited supervision. However, this was due to the nature of his work as an arbitrator and appraiser, and his level of expertise in these fields. He stated that he was paid his base salary regardless of how much work he did. He did not pay his own expenses or GST. He did not use his own tools and equipment. He was required to report on his work to his employer. He was not employed on a limited term contract. He worked exclusively for the company. He was paid on a regular basis by means of a paycheque. The company had a mandatory benefits plan. There was no contract between him and the company to the effect that he was an independent contractor. Mr. North stated that, although he was the “honorary chairman” of the company, he was not a director or officer after he sold the company in 1991.
9Mr. North produced a copy of a Memorandum of Understanding between Lincoln North & Company Limited, Mr. North and Mr. North’s two companies (Norcor Investments Limited and Westmount Mortgage Consultants Ltd.) This Memorandum sets out the series of debts owed by Lincoln North & Company Limited to Mr. North or to his companies. In this agreement a signficant sum of “production” is forgiven. Mr. North explained that this “production” sum refers to several years’ worth of “overage” over his base salary, ie. his excess billings.
10Mr. North submits that, in view of the above, the employment standards officer was wrong in finding that he was an independent contractor. Mr. North submits that given the nature of his work as a arbitrator and appraiser, which requires little daily supervision by an employer, and given all the other facts pertaining to his relationship with the company, the Board should find that he was an employee and is therefore entitled to wages owed.
11The Ministry of Labour submits that Mr. North had a unique arrangement with his former company and that the wages allegedly owed are intertwined with all the other financial dealings between the two. The Ministry asserts that the package of debts forgiven by Mr. North included any salary owed to him. The Ministry also notes that Mr. North continued to be paid after mid-1998, even though services were not actually being performed.
Decision
12Based on the uncontroverted evidence of the applicant, the Board is satisfied that he was an employee of the responding party Lincoln North & Company Limited. The fact that he required little supervision or training by the company merely reflects his own expertise in the field and the nature of the work being performed. There is no evidence of a written contract to work as an independent contractor. Mr. North was required to write arbitration decisions and appraisal reports and he may have worked on these at his home. But there is no evidence that he was running a business from his own premises, or that he was working for anyone other than the company. His base salary was assured regardless of his billings.
13The relationship between Mr. North and his former company was somewhat unusual. For instance, Mr. North and his companies forgave Lincoln North & Company Limited a significant amount of debt, some of which was “production” pay. But Mr. North is adamant that he never forgave base salary owed to him in 1998. He states that this salary should have been paid in October, 1998, within six months of when he filed his claim. The Board has no evidence to the contrary. Nor does the Board have evidence contradicting the amount of wages claimed by the applicant.
Disposition
14The responding party, Lincoln North & Company Limited is hereby ordered to pay the applicant wages owing in the amount of $2,869.72. The amount owing is to be paid with interest accruing to the date of this decision. An Employment Standards Office is requested to assist the parties to determine the amount of accrued interest should either party request such assistance of the Employment Standards Branch of the Ministry of Labour, in writing.
“Anthony Brown”
for the Board