Citation: 2008 TCC 671
Date: 20081210
Docket: 2007-780(EI)
BETWEEN:
CARRIER SEKANI TRIBAL COUNCIL,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
REASONS FOR JUDGMENT
Jorré J.
The Issue
[1]
The issue in this
appeal is whether Tribal Chief Harry Pierre was employed in insurable
employment within the meaning of the Employment Insurance Act by the
Carrier Sekani Tribal Council, the Appellant, during the period from
July 9, 2003 to July 28, 2006.
The Facts
[2]
The Carrier Sekani
Tribal Council, hereinafter the “Council”, is a body incorporated under the Society
Act of British Columbia. It is not a band under the Indian Act.
[3]
The Council’s members
are either members of certain specific Indian bands (hereinafter the specified
bands) or are persons of Carrier and Sekani ancestry.
[4]
Broadly, the Council
has two types of functions. First, it has what might be broadly described as
political and representational functions. Secondly, it provides technical
assistance to its members by employing qualified persons who can assist the specified
bands in areas such as treaty negotiations, water systems or roads. One
consequence is that the members benefit from the ability of the Council to
achieve economies of scale and scope, thereby increasing the effectiveness of
their efforts as compared to a situation where the members had not come
together.
[5]
The purposes of the
Society are set out in section 2 of the Society’s Constitution:
2. The purposes of the Society are:
A. To preserve and promote the Native heritage and
identity of the Carrier and Sekani people of North Central British Columbia.
B. To improve the social and economic independence
of the Carrier and Sekani people.
C. To achieve just resolution of the land claims and
aboriginal rights issues of the Carrier and Sekani people.
D. To promote and improve communications between
members of the Society and other Native communities in British Columbia and Canada.
E. To promote better understanding between native
people and the general public.
F. To advance and improve the standard of living of
the Sekani and Carrier people.
G. To promote self-government for Carrier and Sekani
people.
It should be noted that the Constitution constitutes,
in effect, in the terminology of the Society Act, the bylaws of the Council.
Many provisions of the Constitution are the same as the bylaws in
Schedule B of the Society Act.
[6]
Section 25 of the
Constitution provides that there shall be the following directors:
a) the Tribal Chief and
Vice Tribal Chief, known as the officers,
b) a director appointed
by each of the specified bands whose members are members of the Society,
c) a director to
represent members of Carrier and Sekani ancestry who are not members of the
specified bands.
The Board of Directors of the Council is often
referred to as the Council of Chiefs. In practice the Directors in category b)
above are the Chiefs of the specified bands.
[7]
The Tribal Chief and
Vice Tribal Chief are elected at large by all the members. According to the
Constitution, their term is one year and there is an election at each annual
general meeting of the members.
However, testimony at trial kept referring to Chief Pierre having a three-year
term and there is one document where, notwithstanding the Constitution, the Directors
approve his successor, Chief Luggi, having a three‑year term.
[8]
The members may by
special resolution remove an officer before the end of his term and elect a
successor to complete the term.
A special resolution requires a 75% vote.
[9]
Subsection 24(2) of the
Society Act states:
24(2) Subject to this Act and the constitution and
bylaws of the society, the directors
(a) must manage, or supervise the management
of, the affairs of the society, and
(b) may exercise all of the powers of the society.
[Emphasis added.]
[10]
Section 24 of the Constitution
states:
24(1) The directors may exercise all the powers
and do all the acts and things that the Society may exercise and do, and which
are not by these bylaws or by statute or otherwise lawfully directed or
required to be exercised or done by the Society in general meeting, but
subject, nevertheless to
(a) all laws affecting the Society;
(b) these bylaws; and
(c) rules, not being inconsistent with these
bylaws, which are made from time to time by the Society in general meeting.
(2) No rule, made by the Society in general meeting
invalidates a prior act of the directors that would have been valid if that
rule had not been made.
[11]
Sections 40 to 43 of
the Constitution set out duties of the Tribal Chief, Vice Tribal Chief and
General Manager. Section 40 sets out that:
40(1) The Tribal Chief shall preside at all
meetings of the Society and of the directors.
(2) The Tribal Chief is the political leader and
spokesperson of the Society.
[12]
Further information
regarding the role of the Tribal Chief is found in a document entitled “Draft
1” CSTC, IAS Committee – Job Description update June 1, 1999. It is useful to
set out the entire document:
Position: Tribal Chief
Reports to:
Reports to the Council of Chiefs.
Reports to the membership on a consistent basis on political
matters.
Supervises:
Education Programs
First Nation Education Director at CNC
Dakehl Education Instructor
Qualifications:
Elected position, Good knowledge of Carrier Sekani communities,
Member of a Carrier Sekani Tribal Council member nation. Experience in dealing
with Carrier Sekani political issues. Nominated and elected by Individual
Members of Carrier Sekani Tribal Council as per Carrier Sekani Tribal Council
Bylaws.
Purpose of the position:
·
Political leader and spokesperson of the
Society.
·
Protect and promote the Native heritage and
identity of the Carrier and Sekani people of North Central British Columbia.
·
To improve the Social and Economic independence
of the Carrier and Sekani people.
·
To assist in achieving just resolution of the
Land Claims and Aboriginal rights issues of Carrier and Sekani people.
·
To promote and improve the communications
between members of the Society and other Native communities in British Columbia and Canada.
·
To promote better understanding between Native
people and the general public.
·
To advance and improve the standard of living of
the Carrier and Sekani people.
·
To promote self-government of the Carrier and
Sekani people.
·
Acts as Main political spokesperson of the
Carrier Sekani Tribal Council.
·
Presides at all official meetings of the Council
of Chiefs.
·
Acts as the main Carrier Sekani Tribal Council
contact person for non‑aboriginal government agencies and other First
Nations.
·
Facilitates meetings with non-government
agencies on behalf of individual member Bands.
Duties:
·
Ensure the Council of Chiefs meet regularly on a
quarterly basis to discuss Society business.
·
Calls emergency Council of Chiefs meetings or
conference calls when necessary.
·
Ensures that all political decisions are taken
action upon.
·
Makes political decisions on an emergency basis
on behalf of the Board of Directors and advises as soon as possible.
·
Ensures that any constitutional and tabled
issues are followed up at a Special Assembly
·
for the membership and to report on program
deliveries.
·
Participates in meetings as required/requested.
·
The Tribal Chief may appoint other Directors to
attend functions on his/her behalf.
·
Negotiates for funding on behalf of the Carrier
Sekani Tribal Council administration along with the General Manager.
·
Maintain positive communication with the Bands.
·
May travel to communities, when necessary, to
listen to Bands’ political concerns.
·
Liaise with governments, agencies and other
Native organizations for political concerns.
·
Maintain communication with the media.
·
Act as moderator and chair grievance meetings in
political matters when requested by
·
member Bands or others.
·
To make quarterly reports on expenditures
approved by the Committee/ Directors.
[Emphasis added.]
[13]
Chief Pierre worked
full-time for the Council. He was elected to the position by the members of the
Society and subsequently lost the position when he was defeated in an election.
The other Directors were also Chiefs of the specified bands who had to fulfill
their responsibilities as Chiefs of those bands.
They devoted only part of their time to the Council. The Board met monthly.
[14]
His normal work week
was 35 hours and he was not normally paid overtime. At one point he took
on so much that the Directors agreed, exceptionally, to pay overtime.
[15]
The Council deducted EI
and CPP premiums. Chief Pierre also participated in the pension plan.
[16]
The Vice Chief and
other Directors were not paid.
[17]
There was no written
contract of employment.
[18]
The General Manager
reported to the Tribal Chief.
Chief Pierre had an executive assistant that he was able to select although, in
general, the ultimate approval for hiring must come from the Board of Directors.
[19]
Chief Pierre was
provided with his office and equipment by the Council.
[20]
It is quite clear that
Chief Pierre had no chance of profit or risk of loss and that his activities
were fully integrated into those of the Council.
[21]
He chaired the meeting
of the Directors and also reported to them at the monthly meetings of the
Board.
[22]
The Chief’s signing
authority is limited to $10,000 and requires a signature by a second authorized
person. Anything above $10,000 would have to be approved by the Board.
[23]
The current Tribal
Chief of the Council, David Luggi, testified that there are similarities
between his current position and that of being the Chief of an Indian band.
Chief Luggi has been the Chief of the Stellat’en First Nation.
[24]
Chief Luggi defeated
Chief Pierre in the 2006 elections for the Tribal Chief position. He paid his
own expenses during the election campaign.
Analysis
[25]
The Notice of Appeal
appeared to raise an issue under section 15 of the Charter. At the opening
of the hearing the Appellant stated that it would not pursue such an argument.
[26]
The Notice of Appeal
raised an alternative argument that Chief Pierre was specifically included by
reason of subparagraph 6(f)(i) of the Employment Insurance
Regulations. Again the Appellant did not pursue this argument.
[27]
The only question is
whether Chief Pierre was an employee as opposed to someone holding an office
who is not an employee.
[28]
There is absolutely no
doubt that Chief Pierre was not an independent contractor. He worked
full-time for the Council, had no chance of profit or loss, used tools provided
by the Council and was not only fully integrated into the Council’s activities
but he also played a crucial role in those activities.
[29]
While there is much
case law on the issue of whether an individual is an employee or an independent
contractor there is much less on when the holder of an office is or is not an
employee. Indeed, the term “office” is one of several different meanings.
[30]
The evidence amounts to
this:
a) Chief Pierre was, to use
generic terminology, both Chairman of the Board of Directors of a non-profit
organization and also the Chief Executive Officer (CEO) of the organization. One
of his key roles was that of spokesperson.
b) The posts of Chairman
and CEO are always filled by one person pursuant to the bylaws of the
organization.
c) Pursuant to the bylaws,
this person is elected to the position for a one‑year term by a vote of
all the members. Although it is not clear on what legal basis this was done it
appears that the Board may have converted the one-year term into a three-year
term. Only the members may remove the Chairman/CEO, the Tribal Chief.
d) Under the Society Act
and the bylaws the Directors must either “manage or supervise the
management of . . .” the organization.
[31]
It is well established
that the directors of an incorporated entity are not employees. It is also
clear that an individual can function in more than one capacity in relation to
that entity. Thus an owner can also be an employee and a director can also be
an employee provided that the two distinct roles are clearly established.
[32]
There is no question
that Chief Pierre occupied two distinct roles. As Chairman of the Board, he was
not an employee. There remains the question whether, as CEO, he was or not an
employee.
[33]
The Respondent’s key
argument on this issue was that the control test was not met, particularly
because the Board had no way to compel the Chief to follow its directions.
Notably, the Board could not dismiss him if he failed to comply with its
direction.
[34]
Insofar as Chief Pierre
was acting as Chairman of the Board, I agree that the Board had no control over
Chief Pierre. They could not tell him how to vote, for example. For this he was
accountable to the members as a whole.
[35]
There is also no
question that under the bylaws the Board did not have the power to dismiss
Chief Pierre.
[36]
However, when Chief
Pierre was acting as CEO, the law of British Columbia
clearly gave the Board the power to direct Chief Pierre’s actions whenever he
was outside his director’s role.
[37]
There was no evidence
that Chief Pierre failed to comply with any direction provided by the Board in
matters where he was not acting as a Board member.
[38]
While Chief Pierre no
doubt had a fair amount of latitude in his CEO functions, that is no different
from the situation of most CEOs in relation to their board. Given that the key
is the potential power to control, whether or not it is exercised, there would
be little doubt that Chief Pierre acting as CEO was an employee if the Board
had had the power to hire and to dismiss the Chief.
[39]
Acting as CEO, I do not
see how the fact that Chief Pierre obtained his position by election, by
itself, effects the control the Board has. If the Board could have
dismissed him from the CEO role clearly it would have control. The critical
question thus amounts to this:
Is the absence of the power by the Board to
dismiss the Chief, by itself, reason to conclude that Chief Pierre, when
acting as CEO, was not under the control of the Society and therefore not an
employee in circumstances where the applicable law does give the Board the
power to direct the Chief when he is acting as CEO?
[40]
The Board, not the
members, controlled the Chief’s remuneration.
The Board could also exert pressure on the Chief in a number of other ways such
as the control of budgets or its ability to direct other employees.
[41]
The Appellant and
Respondent provided me with a number of authorities.
[42]
It is clear from Sagaz
and Wiebe Door that one must look at the totality of the factors. Many
of the factors used in those cases do not have any application here. Both an
employee and a non-employee holder of an office will have their tools provided
to them and both will have no risk of loss or chance of profit. Clearly control
is the most important factor. To a limited extent the integration test may be
relevant. A non-employee office holder is likely to be relatively less
integrated into the entity than an employee. For example, directors control an
incorporated entity but they are not part of the day-to-day operation; a
typical CEO is part of the day-to-day operation.
[43]
I have two general
observations about the Respondent’s authorities. First, many of the
Respondent’s authorities relate to Chiefs of Indian bands under the Indian
Act and not to the head of a private non-profit organization. Second, to
the extent the authorities support the proposition that a director, as such, is
not an employee, I agree.
[44]
I want to focus on
those cases cited by the Respondent with respect to persons exercising CEO-like
functions as did Chief Pierre.
[45]
A case with
similarities to this one is Flamand v. M.N.R..
Flamand was elected as Vice-President of the Manitoba Metis Federation, an
incorporated body, and although he was free from day-to-day control, he was
accountable to the Board of Directors. In Flamand, “[t]he Appellant's
duties were to lobby governments, sit‑in on numerous boards, attend
meetings of the Board, and monitor government programs”. He also supervised
seven employees.
[46]
As I understand the
decision in Flamand, it was that “. . . the employment of the Appellant
would be insurable were it not for sections 3(1)(d) and 4(1)(g)
of the . . .” Unemployment Insurance Act. Put another way
the finding appears to be that the Appellant was an employee at common law but
for those sections (which sections seem to be similar but not identical with
paragraphs 5(1)(e) and 5(4)(g) of the Employment Insurance Act).
The judgment then went on to hold that the individual was not insurable because
he did not fall within any regulation enacted.
[47]
The effect of
paragraphs 5(1)(e) and 5(4)(g) of the current Employment
Insurance Act is to extend the notion of insurable employment not to limit
it. As a result given that Flamand found that the Appellant was an
employee of the Manitoba Metis Federation under the common law tests, it
supports the conclusion that Chief Pierre was an employee in this case.
[48]
The appeal of Many
Grey Horses v. M.N.R. involved a band councillor who also had
administrative duties. That case appears to me to be different in a material
respect from the facts here. First, given the statement that “. . . the
Appellant was the chairperson of the Committee of Council that ran the Lands
Department”, it is not clear to me that the Appellant in Many Grey Horses
had a separate job as an employee. It appears that although the Appellant was
involved in day-to-day management issues more than one would usually expect a
Board member to be, the Appellant in that case did so in her capacity as a
director who was chairperson of the Subcommittee of the Council that ran the
Lands Department and not in any other capacity.
[49]
The case of McKay v.
M.N.R. involves a band councillor who was also hired by the band through
the Chief as manager of capital projects. He received $4,000 per year as a band
councillor and $36,000 per year as manager of capital projects. The Court found
that there was little if any control over the Appellant as manager of capital
projects and that he only held this position because he was a band councillor. Given
the finding that the Board had little control, if any, that case is not
comparable to this one.
[50]
In Myers v. M.N.R.,
the Appellant was a Band Chief who appeared to carry out functions that went
beyond his role as a councillor. In Christopher v. M.N.R., the Band Chief
automatically became CEO, a distinct position.
[51]
In Myers and Christopher,
the Band Council could not dismiss the Chiefs. Also there is nothing in the
reasons of those cases that indicates that the Band Council could direct the
Chiefs’ activities in the same way as the Board of Directors in this case could
direct Chief Pierre, acting as CEO, pursuant to subsection 24(2) of the Society
Act. Again the situation in those cases is not comparable to this one.
[52]
In this case the Board
clearly had the power to control Chief Pierre acting as CEO and the control
test is met with the result that there was a contract of employment.
[53]
It is interesting to
compare this with the law relating to wrongful dismissal which reaches a
comparable result through a slightly different analysis. In Ferguson v.
British Columbia Nurses’ Union,
the plaintiff, a registered nurse, was elected to the office of President. She
was a member of and presided at the Council. She was also subject to direction
from the Council:
23 The defendant Union is a trade union certified under the
Labour Relations Code, R.S.B.C. 1996, c. 244, to represent nurses employed at
hospitals, facilities and in the community through British
Columbia.
24 The plaintiff, Catherine Anne Ferguson is a nurse and is a
member of the Union.
25 The British Columbia Nurses Union's Constitution provides for the election of officers.
26 The President's term of office is two years. Under the
Constitution no individual can hold office for more than two consecutive terms.
The President is the only full-time elected position.
27 Under the Constitution, the Union is governed by an annual Convention, but between Conventions the
business is conducted by the Council which is comprised of 28 members. The
Council is required to meet not less than four times each year (Article 8.01).
The Council is the governing body of the Union when the Convention is not in
session (Article 9.01).
28 Council determines the compensation package of the
President.
29 Article 5 of the Constitution describes the duties of the
Union officers. Section 5.01 says that the duties of the President include
these:
a. to preside at the Conventions of the Unions,
meetings of Council and meetings of the Executive Committee.
b. to interpret Union activities and policies to
others.
c. to be a signing officer.
d. to perform other duties which may, from time
to time, be assigned by the Council.
e. to be an ex-officio member of all other
Committees, except the Nominating Committee.
f. to be a Director of the BCNU Holding Society.
g. to be a Member of CFNU's National Executive
Board.
[emphasis added]
30 The Council, prior to the plaintiff's first election,
passed a motion adopting a document called "Roles and Functions
1995". This document describes in point form the various roles and
functions of the Council, the President, the Chief Operating Officer and
others. This document also says that the Council "approves [the]
President's terms and conditions of employment and remuneration".
31 The terms of the President's compensation and the Roles
and Functions 1995 document were attached to the nomination forms in 1998 when
the plaintiff first ran for president. Candidates were accordingly informed
that the President "reports to Council and accepts direction from Council".
32 In terms of the President's role, the roles and functions
document provides that the President reports to Council and accepts direction
from Council, presides at meetings of Council as well as at the annual
Convention, recommends policies and actions for decision by Council and ensures
Council gets complete, relevant, and timely information for decision making.
The President's role also includes leading and providing vision to the Union, determining action on urgent and
important issues between Council meetings, acting as the chief spokesperson
with the media and maintaining external relationships required in the
achievement of Union objectives. These are only examples of the many roles and
functions of the President.
[54]
The British Columbia Supreme
Court held that she was an employee applying a three-part test elaborated in
earlier case law.
The Court stated:
68 How does the three part test of the power of selection,
control and termination apply in this case?
69 The selection process here was similar to that in Hokanson.
The plaintiff was elected as President by the entire membership of the Union.
The selection process in Hokanson was said to be with the defendant
because of the membership's right to vote on the person who would be the
business agent. In that respect the selection process here is the same.
70 While I think, as in Hokanson, this aspect of the
test was satisfied, if the other aspects of the test were not satisfied, the
plaintiff would only be an elected office holder, not an employee, and would not
be able to maintain a wrongful dismissal action as an employee. But I agree
with Hokanson that the fact a person is an elected officer does not mean
that he is not also an employee who is capable of maintaining a wrongful
dismissal action.
71 Control is the probably the most important and significant
factor. In Hokanson the element of control was satisfied in that the
plaintiff was subject to the direction of the business manager. Spencer J.
found that there was control over the way that the business representative
carried out his functions. He said that the business representative came under
the direction of the business manager as provided by the constitution and that
he undertook to conform to the constitution which in turn governed the local.
72 The defendant argues that there was no control and
suggests that this was recognized by the plaintiff in her discovery evidence
when she testified as to the lack of restrictions on her public speaking, her
own determination of her working hours and where she worked, and that, although
she received direction, it was up to her to decide how to carry out those
directions. The previous President understood that as President, she was
answerable to Council, who could direct her accordingly.
73 Geoff England, in Individual Employment Law, (Toronto: Irwin Law, 2000) at 14, refers to
the control aspect of the various tests as being a significant degree of
control:
They all require a minimum degree of control over the where and when
of employment. This makes sense as the hallmark of the employment relationship
is the subordination of the employee to the authority of the employer.
74 Is there control here and what is the extent of it?
75 Although there is no written contract, the Constitution of
the Union provides the hierarchical framework within which the office of
President exists. The Constitution provides that the Council, between
Conventions, is the governing body of the Union. While the President presides over the meetings of both of these
bodies and interprets Union activities and policies to others, the President
performs "such other duties which may, from time to time, be assigned to
it by Council". The Council is also required to report on its stewardship
at the Convention and the Council appoints the Chief Operating Officer.
76 The nature of the Council's control is not specific but
the essential point I think is that the Council is the governing body and has
the authority to direct the duties of the President, even though the President
has some flexibility in how she carries out those duties. Although there are
some areas where the President has some autonomy and may determine action on an
urgent basis, on an overall basis she reports to Council and accepts direction
from them.
77 Because of the level of the plaintiff's position there is
not the same direct and obvious control as there was of the union agent in Hokanson
but by the same token there does not appear to be the same autonomy that you
would expect in an elected corporate director, for example. That is probably
because of the nature of the defendant Union. The governance of the Union when it is not in Convention is the
Council, not the President.
78 The defendant says that the President may be answerable to
the Council but that does not mean that she is answerable to the defendant
Union. I disagree. The governing body of the Union is the Council when it is not in Convention. Any control exercised
by Council is, in essence, delegated by the Union as prescribed by the
Constitution.
79 I find that there is a significant degree of control.
80 The next element relates to the question of termination.
The defendant argues that there was no right of termination and that this
factor weighs heavily against a finding of an employment relationship. The
defendant also submits, parenthetically, that such a finding is often used as a
mechanism to provide a measure of protection to "employees" through
the doctrines of wrongful and constructive dismissal and reasonable notice. The
defendant says that there is no such need to expand the concept of employment
to include a Union office holder since there is already ample protection for
such individuals. Under the Union Constitution, an office holder can only be
removed through the complaint process, and this process incorporates an
entitlement to notice and is subject to the rules of natural justice.
81 The only ability to terminate the President during her
fixed term is if a complaint results in the termination of her membership in
the Union. This
is similar to Hokanson where the constitution provided a mechanism for
removal for cause. Under Article 24, the discipline could involve removal of
the plaintiff's Union card which would have the effect of her being removed as
President.
82 Does the fact that there are there are procedures that
require a hearing and proof of offences suggest that the plaintiff may not be
an employee? Does this lack of vulnerability suggest that there is not an
employment relationship? It might be argued that the mechanism in the
Constitution for removal of membership is at least as consistent with the
plaintiff simply being an office holder as it is with being an indicator of
employment.
83 Upon a consideration of all the evidence, I find this
element to be satisfied. I find that the defendant, under the Constitution, had
the right to terminate the plaintiff by removing her status as a Union member
through the complaint process.
84 In considering the weight to be given to this factor in
determining if there is a employment contract here, it is important to place it
in the proper context. The plaintiff does not allege breach of a contract that
could be terminated on reasonable notice. The plaintiff held the office of
President for a fixed term. She says that it was a term of her employment contract
that the defendant would not create an intolerable working situation. That is
the term of her employment she alleges was breached.
[Emphasis added.]
[55]
Clearly if Chief Pierre
had been suing the Appellant for wrongful dismissal in the courts of British Columbia, the facts here would justify a finding that he was
an employee when acting as CEO.
[56]
It is clear from the
evidence that the time at Board meetings would only have been part of Chief
Pierre’s work. Even allowing for preparation as Chairman of the Board, the majority
of his time was spent on his functions as CEO.
[57]
To conclude, Chief
Pierre was an employee under the common law of employment and accordingly held
insurable employment. Consequently, the appeal is allowed and the Minister’s
decision is varied on the basis that Chief Pierre held insurable employment
from July 9, 2003 to July 28, 2006.
[58]
Finally, I wish to
commend the agent for the Appellant, Jason Morgan, and the counsel for the
Respondent, Pavanjit Mahil, for their presentation of the case.
Signed at Ottawa, Canada, this 10th
day of December 2008.
"Gaston Jorré"
Email this Content