0303-98-ES John A. Eversley, Robert Salna and Barry Morton, Applicants v. Ministry of Labour, Responding Party.
Employment Practices Branch File No. 41005465
BEFORE: D. L. Gee, Vice-Chair.
APPEARANCES: John Eversley and Barry H. Morton on their own behalf; Murray Klein for the Ministry of Labour.
DECISION OF THE BOARD; October 18, 2000
This matter is an appeal of Director Order to Pay No. D04605 issued on April 1, 1998. Director Order to Pay No. D04605 is an Order to Pay issued to Mr. John Eversley. This appeal, however, was filed on behalf of John Eversley, Robert Salna and Barry Morton. The hearings with respect to this matter proceeded on the basis that a Director Order to Pay had been issued to each of the three applicants in the same form as the Director Order to Pay issued to Mr. Eversley. The Director Order to Pay issued to Mr. Eversley is for wages and vacation pay owing to Nelson Hudes, a former employee of Mosport Park Limited ("MPL").
The Employment Standards Officer investigating Mr. Hudes' claim issued orders to pay to both MPL and Mosport Park Entertainment Corporation ("MPEC") on the basis that MPEC is the parent company of MPL. Neither order to pay has been paid nor has either corporation filed an application for review.
The corporation profile report for MPL indicates that Mr. Eversley was a director of such corporation at the relevant times. Mr. Morton and Mr. Salna were not directors of MPL. They were, however, along with Mr. Eversley and two other individuals, directors of MPEC at the relevant times.
The relevant provisions of the Act are as follows:
(1) Where, before or after this Act comes into force, associated or related activities, businesses, works, trades, occupations, professions, projects or undertakings are or were carried on by or through more than one corporation, individual, firm, syndicate or association, or any combination thereof, and a person is or was an employee of any of such corporations, individuals, firms, syndicates or associations, or any combination thereof, such corporations, individuals, firms, syndicates or associations, or any combination thereof, shall be treated as one employer for the purposes of this Act, if the intent or effect of the arrangement is to defeat, either directly or indirectly, the true intent and purpose of this Act.
(2) The corporations, individuals, firms, syndicates or associations treated as one employer shall be jointly and severally liable for any contravention of this Act and the regulations.
58.20 (1) The directors of an employer are jointly and severally liable for wages as provided in this Part if,
(b) an employment standards officer has made an order that the employer is liable for wages, unless the amount set out in the order has been paid or the employer has applied to have it reviewed;
There is no provision in the Act granting the Board the discretion to relieve a director of his or her liability for any reason.
This matter came on for hearing on August 21, 2000. Mr. Salna did not appear at the hearings held in connection with this matter. Mr. Eversley and Mr. Morton appeared on their own behalf.
Mr. Eversley and Mr. Morton both gave oral testimony and filed documentary evidence with the Board. The Ministry of Labour filed documentary evidence with the Board. As a result of the evidence and submissions made to the Board by Messrs. Eversley and Morton, it was apparent that they did not appreciate the impact of section 12 of the Act. When questioned as to their position on the section 12 issue, Mr. Eversley and Morton advised the Board that they were not familiar with section 12. As a result, the hearing was adjourned in order to give Messrs. Eversley and Morton an opportunity to review section 12 of the Act and consider what submissions they wished to make to the Board on its applicability to the facts in issue.
The hearing reconvened on October 16, 2000. At the commencement of the hearing, Mr. Eversley and Mr. Morton withdrew a submission made on the previous day of hearing to the effect that Mr. Hudes' entitlement herein was dealt with in the context of a larger debt owing my Mr. Hudes' to his employer. Mr. Eversley concedes that the corporation profile report for MPL lists him as being a director, however, Mr. Eversley asserts that this was done without his knowledge or consent. Both Mr. Eversley and Mr. Morton concede that they were directors of MPEC but assert that they were truly "outside" directors. Mr. Eversley asserts that he joined the Board of Directors in an attempt to save a failing company. Mr. Morton asserts that he joined the Board of Directors purely to organize race events, he had no involvement in the corporation's operations. Neither Mr. Eversley nor Mr. Morton received any compensation for serving on the Board of Directors. No submissions were made with respect to the section 12 issue.
Reasons
No evidence was presented by Messrs. Eversley and Morton nor were any submissions made going to the issue of whether MPL and MPEC should, pursuant to section 12 of the Act, be treated as one employer. On that basis alone, it is my determination that the application for review of the officer's finding that MPL and MPEC should be treated as one employer for the purposes of the Act, must fail. In the alternative, I am satisfied, based on the facts before me, that MPL and MPEC are associated or related businesses carried on through more than one corporation and that the intent or the effect of the arrangement is to defeat the true intent or purpose of the Act such that it is appropriate for them to be treated one employer.
The documentary evidence filed reveals the following facts that are relevant to the section 12 issue. MPEC is the parent company of MPL. Mr. Hudes was employed by MPL for approximately 14 years. While employed by MPL, Mr. Hudes received loans totaling $109,424.76. On December 5, 1995, Mr. Hudes was sent a letter bearing the reference line "Mosport Park Limited" in which he was asked to confirm that, as of the date of the letter, he owed "the company" $109,424.76. Mr. Hudes signed the letter indicating that he was in agreement. In April 1997, MPL was experiencing financial problems. In an effort to assist, MPEC proposed to either issue a number of shares of MPEC to the creditors of MPL or have MPEC settle the debt owing by payment to the creditor, by MPEC, of 50% of the amount owing. Mr. Hudes' employment with MPL was terminated on or about October 5, 1996. On January 30, 1997, Mr. Hudes was provided with a letter of reference stating that he was employed by MPL on letterhead that had "THE MOSPORT PARK ENTERTAINMENT CORPORATION" written across the bottom, followed by a list of all of the "Mosport" companies, of which MPL is one. On August 18, 2000, MPEC commenced a legal proceeding against Mr. Hudes. In the Statement of Claim, it is asserted that the $109.424.76 referred to above was loaned to Mr. Hudes by MPEC.
I turn then to the issue of Mr. Eversley and Mr. Morton's liability. As indicated above, it is conceded that Mr. Eversley was a director of MPL and that both Mr. Eversley and Mr. Morton were directors of MPEC. Section 58.20(b) of the Act provides that directors are jointly and severally liable for wages where an order to pay has been issued to the employer unless the employer has paid the amount set out in the order or applied to have it reviewed. In the instant case, an order to pay was issued to MPL and MPEC. The amount set out in such order to pay has not been paid nor has an application for review been filed. Thus, pursuant to the provisions of the Act, Mr. Eversley and Mr. Morton are liable for wages owing to Mr. Hudes.
Mr. Salna did not appear at the hearings with respect to this matter and accordingly I have no basis on which to amend or rescind a Director Order to Pay issued to Mr. Salna.
Determination
For the foregoing reasons, I hereby affirm Director Order to Pay No. 04605 issued on April 1, 1998.
The application for review filed on behalf of Messrs. Eversley, Morton and Salna is dismissed.
"D. L. Gee"
for the Board