WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 940/05

Transcription

1 WORKPLACE SAFETY AND INSURANCE APPEALS TRIBUNAL DECISION NO. 940/05 BEFORE: J.P. Moore: Vice-Chair HEARING: At Toronto on May 19, November15, and November16, Oral DATE OF DECISION: May 29, 2006 NEUTRAL CITATION: 2006 ONWSIAT 1178 APPLICATION: For an order removing the right to sue in Court File No Ontario Superior Court Of Justice Newmarket APPEARANCES: For the applicant(s): For the respondent(s): For additional party: Interpreter: V. Bulger, Lawyer A. Conte, Lawyer J.S. Hong, Lawyer N/A 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. 940/05 REASONS (i) Introduction [1] On August 20, 2003, the Respondent, V. Tolusic, was injured in a two-vehicle motor vehicle accident ( MVA ) that occurred in the State of Ohio in the United States of America. At the time of the accident, the worker was in the course of his employment, driving a motor vehicle on behalf of a company that was registered with the Board as a Schedule I employer. Throughout this decision, that company shall be referred to as D. Corp.. [2] The vehicle Mr. Tolusic was driving at the time was leased by him, privately. However, he drove the vehicle under licences that were in the name of D. Corp. He also drove under an umbrella insurance policy taken out by D. Corp. The cost of that policy was paid by Mr. Tolusic and other drivers who operated on behalf of D. Corp. [3] As a result of injuries sustained in the accident, Mr. Tolusic was disabled and began receiving Statutory Accident Benefits ( SABs ) from an insurance company that is the Applicant in these proceedings. [4] On December 1, 2003, the worker commenced a lawsuit against the operator and the owner of the other vehicle involved in the MVA of August 20, Both the operator and the owner of that vehicle were residents of Ontario at the time. The owner of the vehicle is a Schedule I employer registered with the Ontario Workplace Safety and Insurance Board. There is an issue as to the status of the operator of the other vehicle but, given the decision outlined below, that issue need not be addressed. [5] The insurance company from whom the worker is receiving SABs has brought this application and is supported in the application by the insurance company representing the owner of the other vehicle involved in the MVA in issue. The Applicants seek a declaration that the Respondent, Mr. Tolusic, was in the course of his employment for a Schedule I employer, D. Corp., at the time of the accident of August 20, 2003, and is, on the basis of that fact, precluded by section 28 of the Workplace Safety and Insurance Act from pursuing the lawsuit commenced on December 1, If such a declaration were made, it would also have an effect on the worker s entitlement to SABs. [6] At the outset of the hearing of this matter, the Parties agreed that the initial issue to be addressed by the Tribunal was the status of Mr. Tolusic. The Parties further agreed that there were secondary issues, the consideration of which would turn on the Tribunal s finding with respect to the status of Mr. Tolusic. Consideration of those matters was, therefore, deferred pending the Tribunal s ruling concerning the status of Mr. Tolusic. (ii) The issue [7] The issue addressed in this decision is whether the Respondent, Mr. Tolusic, was, at the time of his accident of August 20, 2003, a worker of a Schedule I employer or an independent operator.

3 Page: 2 Decision No. 940/05 (iii) The decision [8] Having reviewed the evidence and submissions presented to me, I am persuaded on a balance of probabilities that the worker was an independent operator under the Workplace Safety and Insurance Act and is not, therefore, precluded from pursuing the legal action commenced on December 1, (iv) Analysis (a) The Respondent s arrangement with D. Corp. [9] Mr. Tolusic s arrangement with D. Corp. was governed by a contract that is described by the following title: Owner-Operator Agreement. On May 26, 2003, Mr. Tolusic signed that agreement. The nature and content of that agreement is discussed in greater detail below. According to the evidence, all drivers who work in association with D. Corp. are required to sign such an agreement. [10] On that same date, the worker completed a single-page form. The form, entitled Owner- Operator New Start/Update Record ( New Start form ), indicated that the worker was operating a business known as Tola Delivery Service. The form also provided information regarding Mr. Tolusic s vehicle. [11] The form, which was prepared by D. Corp., contained a section that read: WSIB Coverage Provided by: The form then asked the applicant to select one of two boxes, one of which was entitled Owner- Operator, the other of which was D. Corp. s business name. On the form signed by Mr. Tolusic, there is an x in the box next to D. Corp. s business name. The significance of this form is discussed in greater detail below. [12] Witnesses testified at the hearing on behalf of D. Corp. These witnesses stated that D. Corp. s current arrangement with its Owner-Operators includes payment of WSIB premiums on behalf of the Owner-Operators. To that end, the company submits an annual payroll statement to the Board that separately indicates the total earnings of the company s employees and the total earnings of the company s Contractors. However, the totality of the earnings are processed by the Board as the earnings of workers in a Rate Group covering Courier Service Operations. [13] D. Corp. appears to have created a new account with the Board in At that time, the company was registered with the Board as a numbered company with a different business name. Its business operations were as a Messenger Service. The company name was changed in 1990, but the statement of payroll for 1990 indicated that the company was still a Messenger Service, whose workers were Owner-Operators. [14] During the early 1990s, D. Corp. and the Board engaged in a considerable amount of communication regarding the status of the company s drivers. At that time, most of the company s business involved deliveries intra-city. It appears from the Board file that, during the early 1990s, a number of Owner-Operators ( O-Os ) requested a declaration by the Board as to their status as workers. It also appears that the Board concluded that these individuals were

4 Page: 3 Decision No. 940/05 workers, although there are occasional indications in the file that some of the O-Os were considered to be independent operators by the Board. [15] In 1993, D. Corp. informed the Board that it was expanding its operation to include a newly formed trucking division, which would focus on international deliveries. D. Corp. apparently then entered into arrangements with O-Os who provided their own vehicles. The drivers were, however, covered by a collective agreement and, hence, determined by the Board to be workers under the governing legislation. [16] D. Corp. subsequently provided information to the Board indicating that only some of the O-Os were covered by a collective agreement, and submitted a formal request that certain O-Os be considered to be independent operators. The O-Os in question were asked to complete questionnaires. On December 16, 1993, D. Corp. submitted those questionnaires, along with the following letter: Further to your letter of December 1, 1993, please find enclosed our responses to the WCB questionnaire, co-signed by myself. In addition, I have also enclosed a list of our equipment [ ] All of the tractors move pin to pin between Toronto and Detroit, Cleveland, Chicago, New York, Hartford, Boston and Montreal. All other equipment moves inter-city, primarily within Ontario and between Ontario and the Great Lake States. A copy of our miles travelled by jurisdiction should be proof that we are not a local intra-city operation. All of our Owner-Operators work exclusively for [D. Corp.]. They spend an extreme amount of money for a fleet policy, which would be null and void if they ran for anyone else, including themselves. [17] On the basis of that information, the Board appears to have concluded that the drivers for D. Corp. were workers and not independent operators. [18] There were, however, continuing indications in the file that occasionally O-Os were considered to be independent operators by the Board. [19] In 1997, the Board conducted an audit of D. Corp. As a result of that audit, the Board divided D. Corp. s O-Os into two categories: those driving vehicles with loads of less than five tons, and those driving vehicles greater than five tons. For the former group, it was determined that the assessable earnings of the drivers would be 75% of their gross earnings; for the latter group, it was determined that their assessable earnings would be deemed at one-third of their gross earnings. [20] Mr. Tolusic was, at the time of his accident, in the latter group because he was an individual who was driving a vehicle of greater weight than five tons. In accordance with the Board s practice, such a person s assessable earnings were considered to be one-third of his gross earnings. The effect of that was that an O-O who was injured in the course of his work, and who claimed compensation benefits, was not compensated on the basis of his total loss but, rather, on the basis of one-third of his gross earnings. The Board s rationale for this was that two-thirds of the driver s gross earnings consisted of capital and maintenance expenses for the driver s equipment; only one-third was considered to be lost wages. How an injured driver would recover the cost of ongoing capital expenses in the absence of any earnings because of

5 Page: 4 Decision No. 940/05 injury was apparently considered by the Board to be a matter outside the scope of compensation coverage. [21] From 1997 onward, D. Corp. began the payroll reporting I described above: earnings for employees declared separately from earnings for contractors. That was the status of the O-Os for D. Corp. at the time of the Mr. Tolusic s injury. (b) The status of Mr. Tolusic [22] Mr. Tolusic testified that, at the time he entered into his arrangement with D. Corp., and at the time of his accident, he considered himself to be an independent operator. He testified that he had driven for a number of other companies prior to 2003 and had done so as an independent operator. He stated that, in each of these arrangements, he brought his truck and his labour to the arrangement, while the companies provided licences and arranged deliveries for the drivers. [23] After he was injured, Mr. Tolusic did not file a claim for compensation benefits with the Board, although D. Corp. did file a Form 7 with the Board. Instead, Mr. Tolusic requested benefits under the insurance plan covering his vehicle. In his application for those benefits, Mr. Tolusic confirmed that he did not file a claim for compensation benefits and that he was self-employed. [24] Mr. Tolusic further stated that, although the New Start form he completed on May 26, 2003 referred to WSIB coverage provided by D. Corp., he did not consider himself to be covered by the WSIB. He stated that when he was informed by his insurance company that he had a right to claim compensation benefits, he chose not to do so because, in his view, he had not paid for such coverage. [25] Section 2 of the Workplace Safety and Insurance Act defines a worker in the following terms: worker means a person who has entered into or is employed under a contract of service or apprenticeship and includes the following: [ ] 9. A person deemed to be a worker of an employer by a direction or order of the Board. 10. A person deemed to be a worker under section 12. [26] Section 12 of the Act stipulates that an independent operator or a sole proprietor carrying on a Schedule I business may apply for optional coverage under the insurance plan. [27] Subsection 12(1) stipulates: 12(1) Upon application, the Board may declare that any of the following persons is deemed to be a worker to whom the insurance plan applies. [ ] Independent operators and sole proprietors are then listed as eligible applicants for optional coverage.

6 Page: 5 Decision No. 940/05 [28] Noting that definition, and the submissions of the parties in the present case, to make a declaration that Mr. Tolusic was a worker under the Act requires making one of the following three alternative findings: 1. Mr. Tolusic entered into a contract of service ; 2. Mr. Tolusic opted into the insurance plan, pursuant to section 12; 3. Mr. Tolusic was deemed to be a worker of a Schedule I employer by a direction or order of the Board. (c) Did Mr. Tolusic enter into a contract of service with D Corp.? [29] I am not persuaded that Mr. Tolusic had a contract of service with D. Corp. when he was injured on August 20, [30] As I noted above, section 2 of the WSIA defines a worker as: a person who has entered into or is employed under a contract of service. A contract of service is generally considered a contract under which a person agrees to perform tasks as directed by an employer. [31] Conversely, an independent operator is a person who does not operate under a contract of service. An independent operator is, in general, a person who enters into a contract for services a contract to provide services as specified by the terms of the contract. [32] The test for deciding whether a person is party to a contract of service or to a contract for services has been addressed in a number of Tribunal decisions that have considered the question of a person s status as a worker or an independent operator. [33] Having reviewed those decisions, I make the following observations regarding them. [34] 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. [35] (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.)

7 Page: 6 Decision No. 940/05 [36] 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). [37] My third observation is that a number of Tribunal decisions have emphasized 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.) [38] 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 worker 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. [39] 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: 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);

8 Page: 7 Decision No. 940/ size of the consideration or payments; 11. degree of integration. [40] Board policy regarding workers and independent operators is set out in Document No of the Board s Operational Policy Manual. The criteria for determining whether a person is a worker or an independent operator, set out in that policy document, generally reflect the criteria noted above from the Tribunal case law. [41] The Board s policy criteria, as they apply to the trucking industry, have been reduced to five features that are set out in a questionnaire that an owner-operator of a truck can complete if he or she wishes to have the Board make a determination regarding his or her status under the Act. Recent Tribunal decisions have relied on those criteria in determining whether an individual in a particular case is a worker or an independent operator. It is these criteria to which I give particular attention in the reasoning below. [42] There are a number of Tribunal decisions that address the question of whether the owneroperator of a truck is an independent operator. Because such individuals frequently operate their trucks exclusively for one transportation company, characterization of the owner-operator s status can be difficult. Generally, Tribunal decisions have focused on the business reality of the relationship in light of all the circumstances. No single criterion is determinative. [43] Having said that, however, my reading of the Tribunal decisions in this area suggests to me that considerable weight will be given to the extent of an individual s capital investment. If an owner-operator has made a substantial capital investment, that fact is strongly suggestive of an entrepreneurial character not found in an employment contract. [44] Similarly, Tribunal decisions place considerable emphasis on the stated intention of the parties in an arrangement between an independent operator and a trucking company. I note, for example, discussion in the Tribunal s Decision No. 585/92, at pages 10-11, regarding the importance of respecting the intention of the parties insofar as that stated intention is not determined to be a sham by the other circumstances of the case. [45] My reading of the Tribunal cases in this area suggests to me that the panels in those cases have attempted to ascertain the prevailing character of the business relationship between the parties whose status is in issue. In those cases where the evidence has established a substantial capital investment and a clear intention to have an independent arrangement, Tribunal panels have found that an employment contract had not been created. [46] On the other hand, in those cases where panels have found an employment contract existed, they have done so because they were not persuaded that there was a true capital investment on the part of the owner-operator (see, e.g., Decision No. 1079/01) or that the stated intention of the parties was not supported by the prevailing character of the arrangement (see, e.g., Decisions No. 891/95 and 1443/97). [47] Capital investment and the stated intention of the parties are two of the five criteria set out in the Board s questionnaire for determining an owner-operator s status.

9 Page: 8 Decision No. 940/05 [48] With respect to capital investment, the questionnaire requires that the owner-operator pay for the truck and a majority of the equipment or other related property. That particular criterion also requires that the equipment in question be obtained or financed through noncompany sources. [49] The criterion in the Board s questionnaire that reflects the intention of the parties requires that the owner-operator and the Principal explicitly state that the relationship between them is one of a contract for service and not that of an employer and employee. [50] On the evidence presented to me, I am persuaded, on a balance of probabilities, that these two criteria have been met in the present case. [51] In my view, the intention of the parties is fully demonstrated by the Owner-Operator Agreement entered into by Mr. Tolusic when he began his arrangement with D. Corp. The agreement stipulates that the O-O must provide motor vehicle equipment of a certain quality, but that the expense of meeting D. Corp. s requirements was to be borne by the O-Os. The O-Os were also responsible for providing fully competent drivers, at the O-Os expense. There was a restriction in the contract about turning down shipments, but it appears only to have applied to O-Os servicing a special expedited service. Under the contract, the O-Os were responsible for all expenses associated with operating the vehicle, including the payment of wages to drivers hired by the O-Os. The O-Os were responsible for any damage or liability for which the company might be liable as a result of the actions of the O-Os. They were also required to obtain appropriate insurance, either through the company fleet policy or their own policy. If they obtained coverage through the company policy, they were expected to pay for it themselves. [52] The O-Os were subject to a reduction in their payments if they failed to complete paperwork properly, and were responsible for any Customs fines or other forms of financial loss suffered by the company. The contract was terminable with 15 days notice, or without notice in certain circumstances. [53] The contract contained an exclusivity clause, limiting an O-O s ability to enter into an agreement with any customer of D. Corp., either during the course of the O-O s contract with D. Corp., or for six months thereafter. [54] If an O-O was incapacitated, or the O-O vehicle was inoperable, it was the O-O s responsibility to provide either a replacement driver or a replacement vehicle at the O-O s own expense. [55] The agreement also contained a number of conduct rules. [56] Finally, I note the following clauses from the contract: The sole relationship between the Parties hereto is that of Principal and Owner-Operator, and nothing else herein shall be deemed to create another relationship including, without limiting the generality of the foregoing, relationship of employer and employee, agency, partnership, association or joint venture. (Paragraph 3.07).

10 Page: 9 Decision No. 940/05 It is the intent of the Parties hereto that the Owner-Operator is an Independent Contractor only, and neither the Owner-Operator nor his/her employees and/or agents are employees of the Company. (Paragraph 14.01). [57] In my opinion, what that agreement establishes clearly is that the intent of the Parties was to create a relationship between two independent contractors. The language is quite explicit in that regard. The stipulations in the contract also establish quite explicitly that the O-Os are financially separate from D. Corp. and have full responsibility for all capital and maintenance expenses associated with their engagement with D. Corp. D. Corp. provides no benefits, with the exception of an optional fleet insurance policy coverage, for which the drivers are, nonetheless, expected to reimburse D. Corp. [58] Consequently, I am persuaded that, in the present case, the agreement entered into by Mr. Tolusic and D. Corp. in May 2003 fully supports the stated intention of the parties that their arrangement be one between independent operators and not one between an employer and a worker. [59] With respect to the second of the Board s criteria, capital investment, I am persuaded that the worker s capital investment was a significant one and one that squarely provided him with an opportunity for profit or a risk of loss. There is no indication in the O-O agreement he entered into with D. Corp. that D. Corp. would in any way assist Mr. Tolusic with the capital costs associated with his operation, or with any of the maintenance costs associated with the business. The contract is clear in stipulating that Mr. Tolusic bore a wide variety of financial responsibilities under the contract, including the cost of providing and maintaining a vehicle, providing and maintaining substitute drivers or substitute vehicle, as well as all fuel and insurance costs. Other than the costs of vehicle identification, I am unable to find any indication that D. Corp. had any risk of loss arising out of the operation of Mr. Tolusic s vehicle. [60] And, of course, Mr. Tolusic s ability to drive and maintain his vehicle in an efficient manner, and to manage the expenses associated with the cost of operating his business, provided him with an opportunity to profit from his arrangement with D. Corp. The payments he received from D. Corp. went far beyond compensation in the form of wages but included what was intended to be compensation for the entire costs of operating Mr. Tolusic s business, including the costs of purchasing and maintaining his vehicle. [61] I am persuaded, therefore, that Mr. Tolusic made a significant capital investment in his business and had a significant opportunity for profit and risk of loss in the operation of that business. [62] The third criterion in the Board s questionnaire involves market mobility. Mr. Bulger placed considerable emphasis on the exclusivity clause in the contract between Mr. Tolusic and D. Corp. However, in my view, the presence of such an exclusivity clause in the contract is a reflection of the reality of the industry in which, for practical reasons, owners of a truck enter into exclusive relationships with delivery companies. This phenomenon was discussed generally above (para. 37) where I noted Tribunal decisions that have found that two parties can have an exclusive relationship with each other and not have an employment relationship:

11 Page: 10 Decision No. 940/05 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. [63] In my view, Mr. Tolusic s exclusive relationship with D. Corp. reflected a mutually beneficial interdependent relationship in which Mr. Tolusic still retained a status separate from the operations of D. Corp. [64] That reasoning also applies to the aspects of the contract that appeared to assert significant control over the O-O s conduct. As was noted by Mr. Bulger, the contract contains extensive rules and regulations regarding how a driver was to conduct himself or herself, and how the driver s vehicle was to be marked. [65] However, in my opinion, the control stipulated by the contract in the present case had little or nothing to do with the manner in which Mr. Tolusic carried on his business but focused primarily on the manner in which Mr. Tolusic represented the interests of D. Corp. The controls were, in essence, public relations controls that did not go to the heart of the manner in which Mr. Tolusic conducted his business. [66] Finally, I note for the sake of completeness, that Mr. Tolusic s arrangement with D. Corp. was not governed by a Union contract. [67] Mr. Bulger cited and relied on a prior Tribunal decision, Decision No. 108/01 (July 30, 2002), a decision that in his view was essentially identical to the present case. [68] I note, first of all, that, while the facts in that case may have borne a significant resemblance to the facts in the present case, a Tribunal Panel or Vice-Chair must base a decision on the Panel or Vice-Chair s interpretation of the evidence before them. [69] Mr. Bulger relied, in particular, on the Panel s findings of fact in that decision, at paragraph 76. The Panel reviewed the circumstances of a driver and concluded that the indicia of the arrangement suggested that the driver was, in reality, a worker and not an independent operator. However, an important distinction between that case and the present case is that the individual whose status was discussed in that paragraph was, himself, of the view that he was a worker and not an independent operator. [70] At paragraph 55, the Panel noted the following submission from Counsel representing that individual: Mr. Collyer also questioned the evidentiary value, which could be placed on the terms of the Owner/Operator Agreement, noting it had been made clear to Mr. Holt that if he did not sign it, he could not continue to work for Can-Am. In his view, this was not a freely negotiated agreement but rather a take it or leave it proposition. [71] In the present case, Mr. Tolusic testified that he was and expected to be treated as an independent operator by D. Corp., in accordance with the terms of the contract and in accordance with his experience within the trucking industry. [72] Weighing all of the circumstances of this case, I am persuaded that the prevailing arrangement between Mr. Tolusic and D. Corp. was that of an independent operator and a

12 Page: 11 Decision No. 940/05 principal, rather than that of a worker and an employer. Consequently, I find that Mr. Tolusic was an independent operator when he was injured on August 20, [73] Having so determined, I must now consider whether Mr. Tolusic was a worker under the Act, by virtue of the deeming provisions in section 12 or by a direction of the Board. (d) Is Mr. Tolusic a deemed worker pursuant to section 12 of the Act? [74] The Applicant called witnesses who testified regarding the WSIB coverage provided by D. Corp. to its contractors. The witnesses acknowledged that the contractors were seen as independent operators and not workers. Nonetheless, these latter individuals were provided with WSIB coverage as a benefit. The witnesses were unaware of the early history regarding D. Corp. s attempts to have the status of the O-Os clarified by the Board. [75] With respect to the New Start form, signed by Mr. Tolusic on May 26, 2003, one of the witnesses stated that she could not recall actually discussing WSIB coverage with Mr. Tolusic. However, she also stated that it was her practice to provide each new O-O with information regarding the terms of the contract. She stated that this discussion included WSIB coverage. [76] I note, in this regard, that the contract entered into by Mr. Tolusic on May 26, 2003, described as the Owner-Operator Agreement, contains no reference to WSIB coverage. As I noted above, the only apparent reference to such coverage is in the New Start form, which Mr. Tolusic signed on May 26, 2003, and in which there was a notation in the corner of the form indicating that WSIB coverage was provided by D. Corp. [77] Mr. Bulger submitted that, when Mr. Tolusic entered into his contract with D. Corp., he knew or ought to have known that he was effectively applying for optional coverage under the insurance plan, a fact that he argued was confirmed by the New Start form signed by Mr. Tolusic on May 26, Mr. Bulger submitted that, by signing this form, Mr. Tolusic effectively applied for optional coverage pursuant to subsection 12(1) of the Act, coverage that was subsequently paid for by D. Corp. as a benefit. [78] Subsection 12(1) stipulates that, where an independent operator makes an application for optional coverage, the Board may declare such a person to be a deemed worker. The subsection implies that there must, in fact, be an application for coverage. The inference I draw from the subsection is that the application must be made by the independent operator and it must result in an explicit declaration by the Board that the individual will be considered to be a worker. In my view, that implies that the independent operator must be aware of and consent to any such application. [79] That interpretation is supported, in my opinion, by subsection 12(2), which stipulates that a company may apply to the Board for a declaration that an executive officer is deemed to be a worker. The application can be made by the company itself, but the Board will not make a declaration unless the executive officer consents to the application. [80] The consent element is not referred to in subsection 12(1), likely because the application under subsection 12(2) is made by someone other than the executive officer. Hence, the executive officer s consent would be necessary. Under subsection 12(1), it appears that the

13 Page: 12 Decision No. 940/05 application must be made by the independent operator himself or herself. However, in my view, reading subsections 12(1) and (2) together, awareness of and consent to an application would be a sine qua non for a declaration by the Board that an individual has optional coverage as a deemed worker. I note, in this regard, Tribunal Decision No. 226/89, in which a truck driver, who was found to be an independent operator, was nonetheless also found to be a deemed worker, because the company he worked with was remitting payment to the Board and the trucker was aware of this fact. That awareness constituted an election on the worker s part under section 12. In another such case, Decision No. 602/94, a Tribunal Panel found that a worker had optional coverage by virtue of having consented to the deduction of money for compensation benefits. [81] In the present case, I am not persuaded that the worker was aware of and consented to compensation coverage. [82] The worker testified that he had never previously had compensation coverage and did not believe that such coverage was available when he entered into his contract with D. Corp. I note again, in this regard, that there is no reference to compensation coverage in the lengthy Owner- Operator Agreement signed by the worker. In my opinion, the terse reference to WSIB coverage in the New Start form signed by the worker when he began his arrangement with D. Corp. does not constitute a consent by the worker to be deemed a worker under the Insurance Plan. In my view, the fact that the worker signed that form does not constitute persuasive evidence of awareness and consent. [83] As I stated earlier, the Insurance Plan coverage provided to D. Corp. s contractors, if they drove a vehicle of greater than five tons, was limited to one-third of their gross earnings. Hence, an O-O who was injured in the course of his work received compensation that reflected only one-third of his actual loss. That was the portion of the loss that the Board felt was attributable to lost wages. The remainder was, in the Board s view, attributable to lost capital and maintenance costs. However, those losses are nonetheless real losses for the O-O, particularly if he must continue to pay for ongoing costs related to ownership and maintenance of his vehicle. In light of that significant consequence, the merits and justice of the case would require that the evidence on the worker s consent be of substantial weight. [84] In my opinion, the documentation and information that was provided to Mr. Tolusic provided no information about the nature and effect of the compensation coverage Mr. Tolusic was purportedly accepting. At most, it can be said that there was a non-specific indication that WSIB coverage may have been available through D. Corp. In my view, there was no clear indication given to Mr. Tolusic that, by virtue of entering into his O-O agreement, he became a worker of D. Corp. for the purposes of Insurance Plan coverage. In my view, there was no application by Mr. Tolusic for a declaration of optional coverage by the Board. Mr. Tolusic is not, therefore, a deemed worker pursuant to subsection 12(1) of the Act. (e) Is Mr. Tolusic a deemed worker by direction of the Board? [85] Mr. Bulger submitted, on this issue, that, even if the agreement Mr. Tolusic entered into with D. Corp. described him as an independent operator, all O-Os who worked with D. Corp. had previously been declared by the Board to be workers and not independent operators. Hence, any

14 Page: 13 Decision No. 940/05 individual who entered into an agreement with D. Corp. became a worker by virtue of the Board s previous determinations regarding the status of D. Corp. s drivers. Such a person would be a worker as defined in paragraph 9 of the definition of worker: a person deemed to be a worker of an employer by a direction or order of the Board. [86] Subsequent to the hearing of this application, I asked the Tribunal Counsel Office to obtain information from the Board regarding that definition of worker. In a letter dated January 9, 2006, S. Hewitt, a Legal Policy Analyst for the Board, wrote: Under the definition of worker in section 2(1) of the WSIB Act, it states in part: 9. A person deemed to be a worker of an employer by a direction or order of the Board. The Board does not deem people to be workers and this provision is not currently in use. Therefore, there are no Board policies or practices to provide to the Tribunal. [87] However, in response to this information, Mr. Bulger submitted that, although the Board may have no current practice of deeming independent operators to be workers, they have done so in the past. He cited Decision No. 288/90 (July 10, 1992), in which a Tribunal Panel found that a Board policy, deeming so-called Owner-Operators in the logging industry to be workers, was a reasonable exercise of the Board s discretion. The Panel concluded, at page 20, that the Board s policy reflected the process contemplated by the definition now found in clause 9 of the definition of worker in the current Act. The Panel stated: In our opinion, that specific deeming provision appears to contemplate situations where the protection of workers in the province [ ] will require that the Board deem a person to be a worker who would not otherwise fall within the definition. On its face, the expanded definition could include a person who might normally be characterized as an independent operator under the common law or the application of a business reality test. It appears to this Panel that the deeming contemplated by the paragraph would create substantive rights in favour of any person deemed to be a worker of an employer. [88] In the present case, however, it appears very clear that the Board did not exercise the statutory power to deem Mr. Tolusic to be a worker and confirmed that fact in its letter of January 9, 2006 from Ms. Hewitt. Accordingly, the ambit of the Board s power under this provision need not be considered. Rather, it appears that the Board made a factual determination that the drivers who worked with D Corp. were not independent operators but workers of D. Corp. The Board did not, therefore, deem people who were otherwise properly characterized as independent operators to be workers, but found that people who claimed to be independent operators were, in fact, workers. In my view, that is a significant distinction. The latter determination is subject to the test of correctness. Hence, in the context of a particular worker s proceeding, any such determination must be correct. And, in my opinion, to the extent that the Board s determinations in the mid-1990s about the structure of D. Corp. remained valid in 2003, that determination would be considered incorrect with respect to Mr. Tolusic. As I have indicated above, I am persuaded that Mr. Tolusic was, at the time he entered into his contract with D. Corp., an independent operator and not a worker of D. Corp. In the particular circumstances of this case, Mr. Tolusic entered into a relationship with D. Corp. as in independent owner-operator and his status was not changed by the action of either D. Corp. or the Board.

15 Page: 14 Decision No. 940/05 [89] For all these reasons, therefore, I find that Mr. Tolusic was an independent operator at the time of his injury on August 20, 2003, and was not a worker in fact or in law. Consequently, his rights to pursue litigation regarding that accident are not barred by the Workplace Safety and Insurance Act.

16 Page: 15 Decision No. 940/05 DISPOSITION [90] The application is denied. The Respondent, Mr. Tolusic, was an independent operator and not a worker at the time of his accident on August 20, As such, Mr. Tolusic is not a person who is entitled to benefits under the insurance plan. [91] The right of Mr. Tolusic to pursue litigation for that accident is not barred by the Workplace Safety and Insurance Act. [92] Having made that determination, all other secondary issues that may have arisen in this application, particularly regarding the status of the Defendants, need not be addressed. DATED: May 29, 2006 SIGNED: J.P. Moore