Date: 19990114
Dockets: 97-407-UI; 97-408-UI
BETWEEN:
LIONEL ALLARD,
Appellant,
and
THE MINISTER OF NATIONAL REVENUE,
Respondent.
Appeals heard on December 8, 1998, at Winnipeg, Manitoba, by the Honourable Deputy Judge Michael H. Porter
Reasons for judgment
delivered orally from the bench
Porter, D.J.T.C.C.
[1] These appeals involve the separation of powers between the elected officers and the appointed officials of the Manitoba Metis Association Inc. (hereinafter referred to as "MMF". More specifically they involve a situation where the traditional lines of separation have been blurred or crossed.
[2] The appeals were heard on common evidence with the consent of the parties.
[3] The Appellant has appealed to this Court from the decisions of the Minister of National Revenue (the "Minister"), dated November 29, 1996, that he was not employed under a contract of service with either the Winnipeg Metis Association Inc. ("WMA") from October 21, 1993 to August 7, 1995 or the MMF from August 8, 1995 to May 10, 1996. The reason given in the initial ruling by the Director of Taxation was that as an elected official he was not an employee. That reasoning was continued in the decision of the Minister, as evidenced by the assumptions of fact set out in the Reply to the Notice of Appeal. In summary the Minister has taken the position that the elected position of Vice–President of MMF is one and the same as the Regional Administrator in a particular region and thus is not insurable employment under the Unemployment Insurance Act (the "Act"), which was in effect at the times in question.
[4] The position of the Appellant is that these two positions were not one and the same and that his respective appointments as Manager of WMA and Regional Manager of the Winnipeg region of MMF, were separate and apart from his election as Regional Vice–President of MMF for the Winnipeg region.
[5] The legal issues are quite clear and I believe there is common ground between the parties that election to an office does not, generally speaking, constitute employment under the Act, and further that election to the positions in question would not be covered by the Act or the regulations made thereunder. However, in my view, the issue is really a factual one, namely whether there was a separation between election to the position of Vice–President of MMF and appointment as Manager of the region, or whether the two went hand in glove.
[6] It is perhaps useful at the outset to review the organizational structure of the MMF. This in many ways mirrors the Canadian Constitution. It is governed by its own constitution and has been set up as a not for profit corporate body under the laws of the Province of Manitoba. It has approximately 35,000 members, all of those who are in good standing are entitled to vote in elections held every three years. The members at large throughout the Province elect the President directly, who then becomes the chief executive officer and chairperson of the Board of Directors. Ex officio a member of the Metis Women’s Association of Manitoba sits on the Board. Another 21 directors are elected to the Board from the regions. There are seven regions and each region elects a Vice-President who runs in particular for that office, plus two other directors. Thus each of the seven regions sends three persons to the Board of Directors, seven of whom are Vice–Presidents.
[7] Each region has also a regional executive, which consists of the same Vice-President and the two elected directors. They are responsible for setting policy in their regions. They thus wear two hats. On the MMF Board they consider and set policy with respect to matters on a provincial basis. Each of them serves on a portfolio which mirror regular government ministries. At the time in question there were 18 portfolios and the board members would be appointed from among their number to chair committees which carried these portfolios. In addition, the trio from each region would be responsible for setting policy in their own respective regions.
[8] For none of these functions were the members paid, save and except the President who was paid in his capacity as chief executive officer. The other positions involved strictly policy considerations and they went unpaid, but they were reimbursed for their out of pocket expenses.
[9] Comprised within the regions were local associations of MMF. Any nine or more members could create a local. There were many of them. Whilst the affairs of a region were handled by the Vice–President and the two other directors for that region, the locals were run by a Chairperson, Vice-Chairperson and a Secretary-Treasurer, elected from and by the local members.
[10] Under Article IX of the Constitution, the Board of Directors as a whole has the power to remove any officer, which I take to be the President, any of the seven Vice–Presidents or any member of the Board of Directors, for detrimental behaviour. In addition, members of a region may meet and remove a director or Vice–President whom they have elected. One might call this an example of the much debated recall system.
[11] The MMF receives core funding from the Federal Government. Budgets are prepared by the regions and submitted to the Federation and the funds are disbursed throughout the organization as may be warranted and decided by the Board. The Board has an executive director whom it appoints. That position is currently held by Donald Roulette, who gave evidence before me. I found his evidence most helpful and I had absolutely no reason to doubt any of it. Whilst not a highly educated man, he came across as being completely honest and reliable and as having a good grasp of constitutional principles. His mandate is to carry out the policies of the Board at the Federation level. He is clearly a paid employee and holds no elected office at this time although he has done so in the past.
[12] The Winnipeg region is perhaps the largest in the Province, certainly from a numbers point of view. It became involved in the purchase of property in the 1980’s. In order to accomplish that, it set up a corporate structure called the Winnipeg Metis Association Inc. This, it was agreed, was also a not for profit corporation, established under the laws of Manitoba. It is the present owner of the building in Winnipeg, which houses the offices of the region and leases space to MMF for its head office. The organizational structure of this corporation was not made clear to the Court. Nobody could apparently put their hands on any constitution. However, it seemed generally understood that it was administered by the Executive of the Region, that is by the Vice-President and the two regional directors. It was through this corporation that the Region ran its programs and financial affairs from 1993 to 1995. In 1995 things were changed and all financial affairs were thereafter handled at the head office of MMF, by way of line budgets which attributed to each region funds appropriated to it and expended on its behalf.
[13] Each of the regions also had an administrator. That person would be paid a salary, generally in the region of $36,000.00 per annum. His responsibility was to run the regional office, administer its programmes and carry out the policy of the executive. That person was paid by the region until the financial affairs of the regions were transferred to head offfice in 1995. Thereafter the payments came from that office directly.
[14] The Appellant in this case was, throughout the periods in question, the Administrator for the Winnipeg Region. He had also been elected Vice–President of the Winnipeg Region for those same periods of time. It is here that the crossover starts to occur. The position of the Minister was that he was elected to the position of administrator whereas the position of the Appellant, supported by Donald Roulette, was that he was appointed to this position by the Regional Executive after the election. How that position was filled and how it could be terminated is really the crux of this appeal. Perhaps what is confusing in this case is that the two positions were held by one person, quite improperly as will be seen.
[15] It is at this point that the excellent work done by MMF, in setting up a modern constitution with a clear separation of powers between those who are elected to make policy and those who are appointed to administer those policies, has come somewhat adrift. Article XV of the Constitution reads as follows:
"1. No elected officer of the Federation may do work for the Federation, either as an employee or by contract, other than the fulfillment of the obligations of his or her position within the Federation.
2. For greater clarigy, and not restricting the generality of the foregoing, no person who receives remuneration either by way of director's fees, nor as payment for the holding of any office within the Federation (i.e. President or Vice President) shall be considered an employee of the Federation. No person elected to office shall by reason only of having failed to be re-elected to such office be entitled to any further or other notice, or to any severance pay or other employee benefit."
[16] Clause 2 has been interpreted by Donald Roulette and others as meaning that a Vice-President might hold an administrative position in the organization for which he could and would be paid without being in contravention of clause 1 of the same article. He was of the opinion that such would not, as a result of that clause be considered as employment. Similarly, it was suggested that the only persons elected to the Board of Directors who could hold such an administrative position were the seven vice-presidents, by virtue of the same wording. If the Vice-President for the region did not take the regional administrative position then it went to a non-board member. Thus the practice developed of this administrative position being first offered to the Vice–President upon his election, and it seems that, generally speaking, they took up that position.
[17] With respect, I find that this is a misinterpretation of the Article of the constitution in question, which in my view does nothing more than to say that if the President, Vice-President or a Director receives remuneration as director’s fees (which generally speaking they did not) or for the holding of any office (which only the President did as no payment was made for the position of Vice–President per se) they would not be considered thereby as an employee of MMF. Thus upon failure to be re-elected they would have no claim for severance pay or for any wrongful dismissal. Clause 2 specifically says that it does not restrict the generality of clause 1 which is an absolute prohibition on any director whether he be President, Vice-President of regular director, from taking on any paid administrative position or entering into any contract with MMF. Clause 2 simply says that fees paid for the office they hold, that is President, Vice-President of director does not count as employment under clause 1. It does not entitle any of them to take up an administrative position in contravention of Clause 1 whilst they hold office. Any such appointment would clearly be in breach of this Article of the constitution. Had that prohibition been respected in this case, the issue before the Court would not have arisen.
[18] Nevertheless it has arisen, and I must now consider the manner in which the Appellant in particular came to hold the position of Administrator to the Winnipeg Region. The practice appeared to be, as given in evidence by Donald Roulette and the Appellant, that upon election to the Regional Executive the other two directors would meet with the Vice President and offer to him the position of Regional Administrator. There were examples given in evidence where that person did not take it and an outsider was appointed. There were also examples given where they did not take the position immediately, as there was already a person holding the position. What was clear to me, however, was that although generally the newly elected Vice-President did take up the administrative position, there was a process in between their election as Vice-President and their appointment to the position. Presumably they would decline to be involved in the decision making process of the executive on this matter, as they would otherwise clearly be in a conflict of interest situation. The other two members of the executive thus had to come to a meeting of the minds to appoint that person to the position. Furthermore, it is clear that those same two directors would also have the authority to dismiss that person from the position of administrator. They determined what he would be paid and were in a majority to decide what policies he would implement or administer in the region.
[19] The function of the Administrator was clearly different from that of the function of Vice-President and Director. As Administrator he was charged with the responsibility of running the regional office, hiring and firing and supervising office staff, administering housing education and child welfare programmes and the like. The office in Winnipeg was open each weekday from 8:30 a.m. to 4:30 p.m. Whilst the Appellant might take off his administrator’s hat from time to time and put on his Director’s/Vice-President’s hat, nonetheless his duties and responsibilities in each case were different. It is true that he made reports generally to head office on his administrative functions rather than to the regional executive, but I gleaned from the evidence that this was more a requirement of the ongoing funding of the programmes being administered. The Regional Executive it seemed to me, had the ongoing authority to supervise and dismiss the Appellant from his administrative position, if cause arose.
[20] In fact that did happen. When in 1993 all the Board resigned and an interim Board took over, the Appellant was let go from his administrative position. This was separate and apart from his own resignation from the Board. In 1996 similarly, when a Receiver was appointed to manage the financial affairs of MMF, his position as Regional Administrator was terminated by the Receiver. However he continued on as Vice-President until the next election. These are examples of how the two positions were treated differently and of how one was not dependent upon the other.
Conclusion
[21]In conclusion, I am of the view that although the Appellant should not have held both the elected position of Vice-President and the appointed position of Regional Administrator, any more than a Minister of the Crown could also hold the position of Deputy Minister, and that such was contrary to the terms of MMF constitution, in fact he did so and the two hats he wore were distinct and separate. One was not dependent on the other. Although generally speaking elected Vice-Presidents were being appointed to these administrative positions, the intervening process of selection and appointment did not make such automatic. The assumptions of the Minister, set out in the Reply to the Notice of Appeal, are incorrect where they assert that the position of Regional Administrator was part of the duties of a Vice-President. They were not. The evidence is clear on that point. The Minister is further incorrect when he asserts that Vice-Presidents were paid administrative positions with an annual salary. They were not. The administrative position carrrying with it the salary, was a separately appointed position which had nothing to do directly with the fact of being elected Vice-President. It was merely incidental that the practice arose of offering the position to persons being so elected. The constitution of WMA did not contain a provision that the person elected as a Vice-President automatically assumed the role of the Regional Administrator and the Minister was wrong in asserting that it did. Again, the Appellant could be fired by the regional executive in his capacity of Regional Administrator and the Minister was wrong to assert that he could not be discharged. Lastly, it was incorrect for the Minister to assert that the Regional Administrator had to give up his position if he was not successful in a subsequent election. Under the election by-laws any person holding a paid position with MMF had to take a leave of absence before he could run for election. However, if the person chose not to run for election then he could, and in one example given in evidence did, continue on as a Regional Administrator after the election.
[22] I am of the view that nothing hinged on the fact that over a two-year period the salary of the Appellant was paid by WMA and thereafter by MMF directly. This was simply an accounting procedure and nothing relating to the tenure of the position depended upon that.
[23] In conclusion I find that the Appellant was in fact employed, even though he should not have been, throughout the two periods in question, in insurable employment within the meaning of that term under the Act. He was employed by way of a contract of service. He was not elected to the position of Regional Administrator. The appeals are accordingly allowed and the decisions of the Minister vacated.
Signed at Calgary, Alberta, this 14th day of January 1999.
"Michael H. Porter"
D.J.T.C.C.