Sanjay Gandhi v. La Suhaag Indian Restaurant & Bar Ltd., 2000 CanLII 13276

Sanjay Gandhi v. La Suhaag Indian Restaurant & Bar Ltd. and Ministry of Labour

File No.: 1023-98-ES Date: March 13, 2000

Before: Christopher J. Albertyn, Adjudicator/Referee.

Appearances: Mark Klaiman, Sanjay Gandhi, Barkat Ismail, Prtipal Aujla and Jashvant Chauhan for the applicant; Bryan P. Stokes, S. Gauci, Joe Sekhon and Mr. Sharma for La Suhaag Indian Restaurant & Bar Ltd.; Karima Chatur for the Ministry of Labour.

Decision

1This is an employee appeal under section 68 of the Employment Standards Act, R.S.O. 1990, c. E.14, as amended (“the Act”) against the refusal by an Employment Standards Officer to issue an Order to Pay in the applicant's favour. Given that both employer and employee were represented by counsel at the hearing and the issue in the case turns on disputes of fact, the Ministry was permitted to withdraw from the matter.

2The applicant claims he is entitled to payment of 8 weeks salary for work done during the period March to April 1997, plus 4% vacation pay. That amounts to $6,840.

3The applicant is a restaurateur and real estate broker. He was a founding shareholder and investor in the responding party (“the business”). The concept for the business was to create a banquet hall and restaurant which could cater large events primarily for members of the Indian community. A large investment was required. The banquet hall opened its doors on November 7, 1996. Business was extremely slow and there were financial difficulties. There were amounts owing to contractors who had erected the building. Additional funds were needed. Two new investors put money into the business, one being Mr. Stephen Gauci.

4By February 1997 the applicant, although the President and Managing Director of the business, was concerned about his investment and he wanted to recover his capital. He had invested $150,000. An agreement was reached between him, Mr. Gauci and Mr. Sharma, an original investor. They would acquire his shares (as they had the shares of the other investors). The agreement was negotiated during February 1997 and concluded in writing on February 27, 1997.

5The applicant received $100,000 on February 27, 1997. He was given a cheque in the sum of $80,000 payable in April 1997 in respect of the balance of the amount due to him for his share in the business. He made a capital gain of $30,000 on the transaction. He resigned as Director and President of the business, effective from February 27, 1997.

6The dispute in this matter concerns what arrangement was reached as regards the applicant’s relationship with the business after February 27, 1997. It is clear that he had some involvement with the business after he resigned as a director and after he disposed of his shares, until about the end of April 1997. The dispute concerns the precise nature of that involvement.

7Until February 27, 1997 the business had paid two full-time employees: the applicant and Mr. Sekhon. The applicant was in charge of the banqueting side of the business (he was there to promote the use of the banquet hall and to negotiate the terms of its use, among other related duties). Mr. Sekhon was in charge of the kitchen. The applicant was paid $750 per week, Mr. Sekhon $500. Payment to them was erratic and mostly in arrears when funds were available, given the financial difficulties the business faced.

8There are two competing versions of the basis of the applicant’s relationship with the business after February 27, 1997. The applicant says the arrangement reached was that he would continue to receive $750 a week and he would be employed for a further year until Mr. Sekhon was trained to manage the operation. Mr. Gauci says that the applicant’s employment ended on February 27, with his other responsibilities in the business. A commission arrangement was arrived at, under which the applicant could continue to solicit and arrange banquets, on a casual basis, for which he would be paid $1 for each person up to 300, and $0.50 for each person over 300, attending a function arranged through his agency. The commission was to be payable on contracts approved by the business. I assume that contracts which the business fulfilled, and were paid for, were approved.

9So, the factual dispute is whether the applicant worked for a salary of $750 per week for the 8 weeks from the end of February until late April, when he says he ceased working for the business; or whether he worked on commission.

10The evidence was contradictory. There were seven witnesses in all. Of them Mr. Sekhon impressed me most. He had little interest in the matter and he gave his evidence dispassionately and, in my view, entirely honestly. I was also impressed by Mr. Gauci’s evidence. Although he has a clear interest in the matter, as a co-owner of the business (with Mr. Sharma), I gained the impression that he told the truth. He made reasonable concessions and answered thoughtfully. For example, he initially issued incorrect T4 slips to the applicant in respect of his earnings in 1996 and 1997. He explained how the errors occurred and how he was able eventually to correct them.

11Leaving aside, for the moment, the applicant’s testimony, his witnesses, besides Mr. Ismail, were generally not believable. Mr. Aryal, who was the cook in the kitchen of the banquet hall during March and April 1997, says the applicant was at the banquet hall virtually all the time during that period. This evidence is contradicted by Mr. Sekhon and, to a large extent, by the applicant himself. I accept that the applicant was engaged in the business as his principal activity during the period from November 1996 to April 1997, but he was not at the business all of the time. He was frequently away, coming and going as he felt was necessary. During the early period he was involved in buying fittings for the interior of the hall. He made two lengthy trips to India to buy suitable accoutrements. His contact with the business declined in the period after February 1997, although I accept that he was still active soliciting banqueting events and negotiating the terms of contracts with potential users of the facility. I am somewhat skeptical of the amount of off-site soliciting the applicant was required, or able, to do. As Mr. Sekhon points out, the nature of the business is not one that requires much off-site solicitation. As he says, one cannot really go house to house asking if someone might want to put on an event for 300 people. If people are interested to hold a banquet event, they contact the business. The applicant would have followed up on calls made to the business, to negotiate the terms of the banqueting contracts.

12I accept Mr. Ismail’s evidence. He was a customer of the business. The applicant acted for the business in the conclusion of a banqueting contract with him. I will deal with the evidence of the other witnesses for the applicant below.

13I am doubtful of the applicant’s evidence because he exaggerated what he did for the business (e.g. he claimed he opened the banquet hall every day, although he made clear that he was frequently away from the business and Mr. Sekhon claimed, which I find to be more probable, that he opened and closed the business every day; he claimed he supervised everything, when the kitchen, the waiting staff and other functions were supervised by Mr. Sekhon). He contradicted himself (e.g. he claimed in his evidence-in-chief that Mr. Sharma was never at the banquet hall and yet conceded in cross-examination that he was there at times, even taking messages of potential leads which he followed up).

14The mainstay of the business during the period of operation relevant to this case was Mr. Sekhon. He opened the premises every day, remained there all day and locked them at the end of the day.

15In summary, therefore, on this aspect, I accept the applicant’s explanation that, however sporadically, he continued to work for the business after February 1997 and until April 1997. He generated banqueting events and negotiated contracts for them during this period.

16The applicant’s version of what occurred on February 27, 1997 is that he, Mr. Gauci and Mr. Sharma returned to the banquet hall after signing the various documents needed to cease his responsibilities as a director and as President of the business and to effect the transfer of his shares to them. He had been paid $100,000 as part of the amount due to him in respect of the transfer of his interest in the business. There was a mood of levity and celebration at a task well done. On the applicant’s version, Mr. Aujla, formerly an investor in the business, happened to arrive at the banquet hall just then and to remain for some 15 to 20 minutes. He had no particular purpose being there, he just popped in. In attendance too, close by, was Mr. Chauhan, who occasionally assisted his wife to clean the banquet hall. She was employed as a cleaner by the business. He was not so employed, but sometimes he would come to assist her. Mr. Chauhan happened to be standing on a carpet near to the gathering of Mr. Sharma, Mr. Gauci, the applicant and Mr. Aujla, picking rubbish off the carpet in anticipation of vacuuming, so he says. According to the applicant, Mr. Sharma asked him to stay on to help Mr. Sekhon learn the job, on the same terms as before ($750 a week), for a period of one year. The applicant says he agreed. Mr. Aujla could remember virtually nothing concerning the meeting besides who was there and the critical information that the applicant was to be employed for a period of one year on the same terms as previously. When cross-examined, Mr. Aujla admitted to being a partner of Mr. Gauci in two large property ventures unrelated to the business, over which there is now litigation between them in the courts.

17Like Mr. Aujla, Mr. Chauhan remembers only the critical contractual facts that the applicant was to be employed on the same terms as previously, for one year. He remembers nothing else about the evening, besides who was present at the table where the matter was discussed.

18I find both Mr. Aujla’s and Mr. Chauhan’s evidence to be entirely improbable. Their recollection of the core, and none of the penumbra, of what happened is in itself suspicious and the convenience of their sudden presence at the critical moment of the discussion is just not believable. Mr. Aujla’s current litigation with Mr. Gauci, which emerged in cross-examination, means that he is not impartial to this matter.

19The one year period referred to in the applicant’s evidence and in that of his two witnesses, who allegedly heard the deal allegedly struck on February 27, 1997, is relevant in only one respect. Under the terms of the applicant’s sale of his shares to Mr. Gauci and Mr. Sharma he had an entitlement to purchase the shares back within a period of one year, on a basis set out in the share transfer agreement.

20Mr. Gauci has no particular recollection of what transpired after the meeting at the lawyer’s office when the relationship between the applicant and the business was severed. He says it is possible he went to the banquet hall for a drink with Mr. Sharma and the applicant, but he cannot remember. He is quite clear though that no contractual arrangements which bound the business financially to the applicant were concluded then. Mr. Sharma was not called to deal with the applicant’s allegations.

21Despite the absence of Mr. Sharma and the adverse inference which I should draw from his absence, I am not persuaded by the applicant and his witnesses, Mr. Aujla and Mr. Chauhan. Mr. Sekhon needed no training to take over the functions which the applicant was doing. He would negotiate contracts with prospective users of the hall. Mr. Sekhon has done that since the applicant left, in addition to his other responsibilities, without any apparent difficulty. The applicant was paid off all that was owed to him in salary by cheque dated February 28, 1997. The relationship with him was over. Although Mr. Sekhon was not told of the basis of the applicant’s continued involvement with the business he heard that some commission arrangement had been reached and he understood that the applicant was leaving. He was taking the responsibilities which were previously held by the applicant and he would be paid more. The terms of the applicant’s severance from the business were set out in written agreements prepared by the business’s lawyer. All of these facts support the account given by Mr. Gauci as to what the continuing arrangement would be - the applicant was employed on a casual basis (the arrangement did not have to be put in writing as the other terms of his severance were): any business he brought to the banquet hall would result in the payment of a commission to him on an agreed basis. This, as Mr. Gauci testified, was negotiated in the period leading up to the signing of the various documents on February 27, 1997. Consistent with these conclusions, the applicant remained involved, on the basis averred by Mr. Gauci, until he was paid the balance of $80,000 due to him in April 1997.

22There was little business generated in the early stages. Only five or six events were held in the whole period from November 1996 until April 1997. Mr. Gauci’s explanation for the commission arrangement with the applicant after February 27, 1997 is that the applicant was out of the business, paid off, and the business could not afford more than one full-time salary. Mr. Sekhon was to continue in the business, with added responsibility. The amount of business being generated did not warrant the employment of the applicant as well. Mr. Gauci and Mr. Sharma were prepared to have the applicant continue generating business, using the facilities of the banquet hall for that purpose, but they were not going to have the business continue paying a salary to him. That is why, he says, the commission arrangement was reached.

23This evidence is corroborated by Mr. Sekhon. He says his responsibilities increased after the applicant was bought out of the business. His understanding was that the applicant was leaving the business, the applicant told him so; he himself was given additional responsibilities and he effectively became the manager of the business. His salary increased from $500 to $700 a week, although, as before, he was not paid punctually. He was paid when the business had the money to pay him. Over the course of the 1997 tax year, he earned $700 per week.

24There is further corroboration of Mr. Gauci’s explanation. Although the applicant was paid erratically during the period November 1996 to February 1997, on February 28, 1997 he was paid all the amounts owing to him in respect of his $750 a week salary. He received no salary after that date. He says he complained repeatedly to Mr. Sharma, who was not called to testify, of not receiving his salary. I doubt this, although there was no evidence to contradict it.

25Mr. Gauci’s explanation for the applicant’s continued interest in the business after February 1997 is the fact that the applicant was owed a further capital amount of $80,000, which was payable in April. Business was extremely slow and there was significant concern as to the viability of the operation. In Mr. Gauci’s view, the applicant would have been keen to generate banqueting events during this period in order to sustain the business, at least until he was paid the capital balance owing to him. When he got the $80,000 owed to him, he cut his ties with the business.

26The applicant’s explanation for his employment coming to an end in April 1997, is that Mr. Gauci and Mr. Sharma came to him and said they could not continue to pay for two full-time employees (him and Mr. Sekhon) and they asked if he would be prepared to leave. (By then the applicant had not been paid anything for his work for the period from February 27, 1997 onwards). To accommodate Mr. Gauci and Mr. Sharma, realizing their financial difficulties, the applicant says he agreed to leave. His departure happened to coincide with his receiving the balance of the capital amount owing to him for his shares in the business. If the applicant is to be believed, he had a fixed term contract for one year, he was meant to be paid $750 a week for a job which was entirely within his own discretion, he had not been paid any of it, yet, at the request of Mr. Gauci and Mr. Sharma he was willing to give it up so as to accommodate them.

27I find Mr. Gauci’s explanation to be the more probable as to the reason for the applicant’s departure in April 1997. Furthermore, for all of the above reasons, I find Mr. Gauci’s explanation of what occurred to be the more plausible. I find therefore that the applicant was not employed on a salaried basis during the period of March to April 1997. He is therefore not entitled to the 8 weeks salary and vacation pay he claims.

28The Employment Standards Officer who investigated this matter found as I have done. There is one aspect, though, which was overlooked. It is clear that the applicant generated some banqueting contracts for the business during March and April 1997. He is entitled to receive the commission due to him in respect thereof. The business admits this. Mr. Gauci says payment of the commission was not made because the applicant never asked for it. That is an unsatisfactory explanation. The commission should now be paid to the applicant.

29I gather from Mr. Gauci’s and Mr. Sekhon’s evidence that it will be relatively easy to ascertain what contracts were concluded through the agency of the applicant in March and April 1997 and to calculate the amount due to him in commission. The applicant is entitled to suitable production to determine the matter.

Disposition

30The appeal against the order of the Employment Standards Officer is dismissed, subject to what follows.

31The business is directed to produce copies of all contracts between the business and customers concluded through the applicant’s agency during March and April 1997, for perusal by the applicant’s counsel. The business is directed to calculate and pay to the applicant the amounts due in commission in respect of those contracts, on the basis of the commission arrangement which I have described. The calculation is to be made on the actual numbers of people who attended the relevant events, in respect of whom eventual payment for the event was made.

32I remain seized to deal with the amount of the commission owing by the business to the applicant if the parties are unable to resolve the matter themselves. They are encouraged to do so.