The Appeal CommissionThe Workers Compensation Act of Manitoba

Preamble

The employer is appealing the decision made by the Workers Compensation Board ("WCB") that their firm was subject to the transfer of costs experience and rate of assessment. A hearing was held on June 14, 2017 to consider the employer's appeal.

Issue

Whether or not the employer is subject to the transfer of costs experience and rate of assessment.

Decision

That the employer is subject to the transfer of costs experience and rate of assessment.

Background

On June 25, 2014, the appellant (employer A) applied for registration with the WCB as an employer hiring workers in the roofing industry. On June 26, 2014, it was confirmed by the WCB that certain equipment and materials were purchased from another business (employer B) as of June 15, 2014 and that the owner of employer B was working for the new business entity.

Based on the information that this was a purchase of assets and that the business would conduct their business in the same industry, the WCB transferred the cost experience and rate of assessment from the predecessor (employer B) to the successor (employer A). On June 26, 2014, the WCB confirmed the registration and assigned employer B's rate of assessment for Industry Code 40403 "Roofing, Eaves", at $19.29/$100.

File records showed that the business transaction between employer B and employer A was carried out without securing a Disposition of Business Enterprise Certificate from the WCB. Therefore the past due debt of employer B was transferred to employer A. The outstanding levy owing from employer A was $10,052.98.

On November 21, 2014, the owner of employer A advised the WCB she was the sister-in-law of employer B's owner. She stated she took over the business name soon after the owner of employer B declared bankruptcy on July 31, 2014 and was not aware of her lawyer's obligation to obtain a Disposition of Business Enterprise Certificate. She did not purchase any of the firm's assets, receivables or equipment, saying that the owner of employer B disposed of the assets through a Bankruptcy Trustee but had bought his house to help him financially. The owner of employer B was an hourly paid employee but was not involved in the firm's day-to-day operations.

On June 16, 2015, employer A's legal representative wrote to the WCB, outlining the position that the owner of employer A and her corporation did not purchase or acquire any assets from employer B. The owner of employer A saw a business opportunity, incorporated her business on May 28, 2014 and began her own stand-alone business. The only connection to the previous business was to help her brother-in-law by employing him. The owner of employer B had no ownership interest in employer A's company. The legal representative concluded that subsection 81.1 of The Workers Compensation Act (the "Act") does not apply and there was no requirement that she obtain a subsection 81.1(2) certificate. His client was therefore not responsible for the debt of employer B nor was it appropriate or fair for his client's business to pay a rate of $19.29 or $15.58 per $100 which was assessed as against the poor debt payment of employer B.

On June 29, 2015, an Assessment Accounts Supervisor noted that employer A advised the WCB on June 26, 2014 that it had purchased the equipment, the client list, took over the employees and was operating the same as the previous owner effective June 15, 2014. In accordance with Policy 31.05.20, Transfer of Employer Cost Experience, the WCB had determined it was appropriate to transfer the experience and assessment rate. Based on subsection 81.1(4), it was indicated that employer A was responsible for the debt owing on the account of employer B. In an undated submission received September 21, 2015, the owner of employer A provided new information to support that the WCB based its decision on information that was either inaccurate or misinterpreted in regard to the purchase of assets. On October 19, 2015, the WCB asked employer A to "please provide our office with proof of whom or where you purchased assets from in order to start your business." In further correspondence dated July 25, 2016, the WCB asked employer A to "explain how you are not operating in substantially the same form as the predecessor employer."

On September 13, 2016, the owner of employer A appealed the cost experience of employer B being applied to employer A. The owner of employer A noted in her appeal that her company was started with equipment from their own garage. Roofing and exterior supplies were delivered to the site and no company truck was owned or registered by the company. The employees had their own vehicles for getting to the job sites. Customers were found through word of mouth. The owner of employer A also explained how the name of her company came about. In a decision dated September 29, 2016, the WCB Assessment Committee denied employer A's appeal as it concluded from its review of the account files for employer A and employer B, that employer A did purchase assets, employed one or more workers and continued to conduct the business in substantially the same manner as was the case with the predecessor.

On December 2, 2016, employer A's legal representative appealed the Assessment Committee's decision to the Appeal Commission and an oral hearing was arranged.

Reasons

Applicable Legislation and Policy

Employer A has appealed a decision that it is responsible for the transfer of costs and rate of assessment from the predecessor owner of the business assets.

The Appeal Commission and its panels are bound by the provisions of The Workers Compensation Act (the "Act"), regulations, and policies passed by the WCB Board of Directors.

Subsection 60(2) of the Act provides:

Particular jurisdiction

60(2) Without hereby limiting the generality of subsection (1), it is declared that the exclusive jurisdiction of the board extends to determining

…

(r) whether an employer is a new employer or a successor employer for the purpose of determining the employer's experience;

WCB Policy 31.05.20, Transfer of Employer Costs Experience on Change of Ownership (the "Policy") provides that:

As a general principle, the cost experience will follow the business when all or part of a business changes ownership. The cost experience of the predecessor employer will be transferred to the successor employer and will be used to determine the assessment rate of the successor employer.

When the business ceases to operate through a change in ownership, the ongoing cost experience will be shared among employers in the Class.

1. When the change in ownership occurs through:

…

b) the sale of a substantial portion of the assets of an incorporated or unincorporated business, and the business continues to operate in substantially the same form; or,

…

 the cost experience will be transferred to the successor employer(s).

The Policy also has administrative guidelines which are relevant to the issue under appeal. The relevant sections are:

Sale of Assets 

• One firm has sold some form of assets to another. These assets can include equipment, vehicles, buildings, trade name, customer lists, etc.
• If the predecessor has ceased operations entirely, the experience and rate of assessment will transfer to the successor if the assets purchased are used to operate the business in “substantially the same form”. 
• If the predecessor has only sold a portion of their assets to the successor, both the experience and rate of assessment will be transferred if this portion of the predecessor’s operations were:

1. in a separate sub-group from their other operations, or

2. reported under an associated legal entity with independent experience rating, or

3. were in the same sub-group as their other operations but:

- had different cost centre(s) established for the assignment of claims pertaining to this aspect of the business, or

- both the successor and predecessor agree which claims pertain to the transferred portion of the business.

and the successor operates the business in “substantially the same form” (see below).

If the successor does not meet the criteria in 1, 2 or 3, but does operate in "substantially the same form" and has the same sub-group as the predecessor on their account, the rate of assessment will be transferred if the experience of the transferring portion can be clearly identified (i.e. claims associated with the transferring portion can be identified). Otherwise, the firm will receive the new business rate of the industry they are classified under…Consider the answers to all of the following questions when determining whether the successor is operating in “substantially the same form”:

 Have they continued selling the same goods and/or services to the same or similar customer base?

 When a firm that continues to sell the same product or offer the same services, this indicates they are operating a similar business.

 If the firm continues to have the same primary customer base, it is an indicator that they are operating a similar business.

 Have they adopted the same or similar business name?

A firm that continues to use the same or similar name to generate work would suggest the continuation of a similar business.

 Are the equipment, land and/or buildings purchased going to be used to produce the same product or service?

 Although the firm may be operating the same equipment, using the same processes and work from the same location, if the end product or service provided is not substantially the same, they may not be operating similarly.

 Are the same employees engaged to do the same type of work?

 Specialists, professionals and skilled trades doing the same work for both owners would indicate the continuation of a similar operation.  If different employees are engaged to do the same type of work, it may still indicate a continuation of the same business with different employees. Compare the occupations of workers.

 Did the business cease operating between the changes in ownership?

· Depending on the type of business, a break in operations can indicate a temporary suspension of the existing business, or it can reflect the closure of the existing business and the creation of a new business. Consider the length of the break as well as the type of industry involved. Some businesses can close for extended periods with no ill-effect to their customer base (e.g. restaurants), however others can lose substantial customers if closed for even a short period of time (e.g. manufacturers that make components for another manufacturer).

Employer's Position

Employer A was represented by legal counsel. The owner of Employer A, attended and provided evidence. As well, the owner of employer B attended as a witness. Counsel provided each of the panel members with a binder containing various documents for reference which was marked as an exhibit.

It should also be clarified that the owner of the corporation identified as employer A is the sister-in-law of the owner of the former corporation identified as employer B

Counsel for employer A began his submission by suggesting that the WCB decision to determine employer A to be the successor employer to employer B appeared to rely heavily upon the information inputted by a WCB employee on June 26, 2014 when the owner of employer A contacted the WCB to register her business. The owner of employer A alleges the information inputted by WCB was incorrect.

Employer A's counsel also stated that the information contained in employer B's personal bankruptcy Statement of Affairs stating that the owner of employer B sold assets of his former business to his sister-in-law for $10,000.00 was also incorrect.

Employer A's counsel stated:

So that’s kind of two critical features of the WCB’s decision, this June 26, 2014 note, and this reference in the bankruptcy of [employer B] that on its face, you know, when you see it, yes, on its face it’s very suggestive.

But when you hear the evidence, and when you hear these witnesses, and when you look at the documents, which is critical, showing where this money went and how it moved around, my submission is that you will see that there was no acquisition of this business at all.

What essentially occurred is, and the question that you will have for yourself to answer is, if a business begins with its own equipment, without a customer list, its own owner, its own owner responsible for employees, responsible for finding jobs, responsible for paying people, responsible for safety and finance, but it hires somebody from a different company, is that enough to transfer experience?

My answer will be no. And that goes too far, I think the legal terminology within the rubric of legislative interpretation is it’s overreaching.

Employer A's counsel called the first of two witnesses, the owner of employer A. The owner of employer A stated she was a full-time nurse who had an interest in home renovations. She and her spouse had been involved in several renovations which they had enjoyed doing. She confirmed her spouse was the brother of the owner of employer B.

The owner of employer A explained to the panel that her corporation was first incorporated in approximately June 2014. She explained that the current home that they resided in required exterior renovations and noted that there were other homes in her area that also required exterior renovation work.

She stated:

There was a lot of work to be done and I thought what better way than to actually enjoy it, but then to get paid for it as well. It was also going to be an opportunity for me to make a little extra money in addition to my work that I do as a nurse.

When asked what type of business she envisioned for her new company she stated:

Well, definitely roofing, because ours needed to be done, as did a few of our neighbors, but then also soffit and fascia required to be done as well. And then we were also kind of in an area where a lot of our exteriors required work as well.

So like siding and such, and I really enjoyed putting together all of those features, and that’s what the plan was, is that I would be doing that.

When asked by her counsel as to how her brother-in-law (employer B) became involved in her business, the owner of employer A stated:

Right. So I did know that [the owner of employer B] was without employment and he also had the experience of being a roofer for many years, so I had asked him if I was going to start this company, if he would be willing to work for myself and laid down the groundwork that the expectation would be that he would need to do the estimates, as he had the experience, and then he would need to be there with the crew on the roof because he had the knowledge of training and safety, and he was in agreement to that.

The witness also gave evidence to the panel as to how she came up with the name for her company and that she liked how the name she chose sounded and what it represented. The first word in the title of employer A's business was identical to the first word in the title of employer B's business. The second word in each title was different. Employer A's company title ended with the word 'Exteriors' while employer B's company title ended in the word 'Roofing'.

The owner of employer A told the panel that she obtained permission from the owner of employer B to use the name she had chosen because she was required to do so due to the similarities of both company titles. However, no money was exchanged as a result of employer B providing that permission.

The owner of employer A described her role in her new corporation as follows:

Okay. So my responsibilities were to complete all of the payroll. In addition to that, did the monthly taxation, I had a lady come into our home and she completed the books, so I arranged for her to come and do that as well.

Also, any employee that I was going to hire, I would go through their documents, and if so needed to be done, would also do the firing. In addition to that, also the annual taxations, the shareholder, I’m trying to remember the name of it, through …, the annual... shareholder returns, thank you, would complete those as well. So, and in addition to that, I also needed to set up materials through companies as well, where we would be actually getting our materials from.

And then in addition to that any further equipment or supplies that we might need, I also sought credit through [retail store] as well, so that way it would be smooth.

The owner of employer A then went on to advise the panel that another one of her responsibilities was to ensure that her brother-in-law (the owner of employer B) was directing her employees in safe working practices.

The owner of employer A stated that her company employed approximately a dozen workers and that her brother-in-law (owner of employer B) was responsible to ensure that the employees were properly trained.

She also advised the panel that, in addition to her brother-in-law, there was one other employee she had hired who had worked for her brother-in-law's former company (employer B) prior to his bankruptcy. All the other employees she had employed had not worked for her brother-in-law's former company. The owner of employer A stated that she found and hired these workers at local job banks.

The owner of employer A stated that with respect to equipment, she and her spouse had tools for their home renovations which were used but that the workers usually provided their own tools.

When asked to describe the type of work her company provided, the owner of employer A stated:

So we did do roofing, soffit and fascia work. Some were claims from insurance companies. We happened to live in [neighborhood of Winnipeg] which has a lot of issues with hail, so we were having a lot of neighbors around us who did experience that, so there was a lot of opportunity to work specifically with the roofing, soffit and fascia.

But as I said, I also had interest in exterior design, so we were, or I was doing the design work for the siding.

The owner of employer A stated that it was her idea to do the roofing, siding and design related work. She stated that over the lifespan of the business (two seasons) that her company did approximately 60 "jobs," and of those 60 "jobs," about 25% of them incorporated her design element, skill.

With respect to advertising, the owner of employer A stated to the panel there was none and that business was obtained through "word of mouth." The owner of employer A stated that she did not request nor did she receive a customer list from her brother-in-law (owner of employer B).

The owner of employer A then provided the panel with information about when she applied to register her company with the WCB. In the on-line form that she filled out, she indicated "no" in response to the question asking if she had purchased all or part of an existing business.

She stated that she did not purchase any equipment from any other individual in order to start up her company, nor did she purchase the shares of any other existing business. She had not purchased any land or other kind of real property of any other business, nor had she acquired any customer lists, assets, equipment, vehicles or intellectual property of any other business.

The owner of employer A then reviewed the WCB account notes dated June 26, 2014. She recounted the discussion she had with the WCB worker on that date. She said that she had advised the WCB representative that she had hired her brother-in-law (owner of employer B) but she had never told the WCB representative that she had purchased an account or a business with a WCB account, nor had she "purchased all equipment, client list and took over the workers," contrary to what is stated in the WCB document. She did not share with the WCB employee that her company was still operating as a roofing company; generally, any information on the documents making reference to employer A purchasing or otherwise taking over the company owned by employer B she advised the panel was incorrect.

The owner of employer A also stated that she did not purchase a truck and four trailers from her brother-in-law (owner of employer B) contrary to the Statement of Affairs filled out by her brother-in-law's bankruptcy trustee. She stated that her brother-in-law, because he was bankrupt, had no bank account. Her brother-in-law had made an arrangement with a friend to have him purchase the truck and four trailers from her brother-in-law. All she did was deposit the money provided by the friend to her brother-in-law for the truck and trailers purchase, and issued a cheque to the bankruptcy trustee to cover the cost of purchase of the truck and trailers.

The owner of employer A said that her business was eventually shut down and that was her sole decision to do so.

The second witness on behalf of employer A was her brother-in-law, who had owned a separate corporation (employer B).

The owner of employer B began by providing the panel with his background in the roofing industry and confirming that he was the sole owner of his company prior his bankruptcy in 2014. He stated that his sister-in-law was never involved in his former business.

The owner of employer B stated that he never kept client lists. His company did have assets such as trucks, trailers and tools. He stated that his business had stopped operating in the spring of 2014.

The owner of employer B further stated that when he was considering bankruptcy in the spring of 2014, he consulted with a bankruptcy trustee. He reviewed the Statement of Affairs prepared by his bankruptcy trustee and advised the panel that he did not sell a used truck and four used trailers to a corporation owned by his sister-in-law as stated in the document his bankruptcy trustee prepared. He did not receive any payment from his sister-in-law for anything from his former corporation. The owner of employer B stated that the owner of employer A did not pay his corporation for any customer lists, equipment, vehicles, trailers, advertising materials or computer programs.

With respect to the issue of the purchase of the truck and trailers for $10,000, the owner of employer B stated that he received the money from a friend for the purchase of that equipment and that he gave it to his sister-in-law (the owner of employer A) to "put through her business account." The owner of employer B stated that his sister-in-law, in turn, wrote a cheque for the same amount to the bankruptcy trustee.

When asked by counsel if the owner of employer B knew why there was a notation in the Statement of Affairs filled out by his bankruptcy trustee stating that the truck and trailer were sold to his sister-in-law, the owner of employer B stated:

I’m not sure. I really am not sure, because that’s not what I said. I don’t know if there was a misunderstanding between me and [the bankruptcy trustee], that’s my assumption, because nothing was sold to [owner of employer A] at all.

The owner of employer B stated that his employment with employer A came about when his sister-in-law started talking about starting up her own company doing designing, exterior work, roofing and siding.

The owner of employer B told the panel that only he and one other worker came from his former company to his sister-in-law's new company. He described his role in employer A's company as being "Supervising, taking care of safety issues and installations at times." He reported to his sister-in-law with respect to safety and training or any of his supervising roles. The owner of employer B stated he was paid an hourly rate from his sister-in-law's company.

The owner of employer B stated that his sister-in-law would decide which jobs would be taken, who would be hired and which employee would be fired. He stated that outside of safety and training and the work on the actual physical roof, he had no other business decision making function in the corporation owned by his sister-in-law.

The owner of employer B stated to the panel that he did not sell his company to his sister-in-law.

With respect to the truck and trailers formerly owned by his company, the owner of employer B told the panel that the truck was scrapped and that the trailers were eventually sold off by him.

Counsel for employer A summarized their argument that there was no transfer or sale of a business in this instance by stating:

The evidence is very clear, documentary and otherwise, viva voce, that these were two separate businesses. This was clearly not a share purchase transaction. This was clearly not an asset transaction or asset sale, as it’s sometimes referred to.

There were no customer lists that were delivered, and there was no advertising which could be construed as a party trading on goodwill.

And I make that comment because the utilization of the word [the first word in the title of both companies], combined with Exteriors, and having an employee, [employer B], who as you heard had quite a bit of experience roofing, are the only two relatable items as between [the two companies].

Counsel said that the owner of employer A was clearly only one person (the sister-in-law). He also stated that the evidence established that the criteria outlined in the administrative guidelines for WCB Policy 31.05.20 was not met.

In conclusion, counsel for employer A stated:

[The owner of employer A] started her own business and took on her own obligations, the buck stopped with her, and for those reasons, and for the evidence that’s before you that I think is very clear, the cost experience transfer was not appropriately undertaken by the WCB, and that you have the jurisdiction to reverse it, and to grant this appeal on that basis.

Analysis

In order for the appellant employer's appeal to be successful, the panel must find that the corporation identified as employer A was not the successor employer of the former corporation identified as employer B. The panel is not able to make that finding.

It is the panel's decision that, on the balance of probabilities, employer A is the successor employer of employer B for the reasons that follow.

The panel is bound by the Policy in considering this issue. The panel is not formally bound to follow the attached administrative guidelines, but finds them to provide a reasonable and appropriate framework for our analysis. The Policy and administrative guidelines collectively outline when the cost experience and rate of assessment will transfer between two firms.

The panel has carefully reviewed the criteria set out in the Policy and the administrative guidelines and applied those to the information contained in the file and provided to the panel in the employer's presentation.

Under the Sale of Assets criteria in the administrative guidelines, if one firm has sold some form of assets to another, the following requirements must be met in order for the cost experience and rate of assessment to transfer to the successor employer:

• The predecessor employer has ceased operations entirely

• The assets purchased are used to operate the business in "substantially the same form"

The panel finds that the owner of employer A purchased assets from the owner of employer B; namely a pick-up truck and four trailers. The panel does not accept that these pieces of equipment were purchased by another individual and not used by employer A's business. This is supported by the information provided by employer B's bankruptcy trustee's Statement of Affairs dated July 30, 2014 which states in response to the question on Page 4:

'B' WITHIN THE 12 MONTHS PRIOR TO THE DATE OF THE INITIAL BANKRUPTCY EVENT, HAVE YOU, EITHER IN CANADA OR ELSEWHERE:...

9A. Sold or disposed of any of your property? YES

13. If you answered YES to any of questions 9, 10 and 12, provide details:

9A: In July, 2014 I sold a 1992 Chevrolet Crew Cab and four used trailers to a corporation owned by my sister-in-law for $10,000.00. The values established based on the advice from a local auction company and the funds were paid to the trustee.

In addition to this information, the panel relies on Employer A's financial statements from June 1, 2014 to December 31, 2014 which, under "Property, Plant and Equipment" lists equipment, trucks and trailers with a total cost $10,250.00, an accumulated total amortization of $954.00 for a net (value) for the seven months that employer A was in business in 2014 of $9,299.00. When the owner of employer A was specifically asked by the panel why these items were listed in her financial statement if she did not own them, she responded that she did this to keep track of the financial transaction. The panel does not accept this explanation as truthful, especially since the owner of employer A applied amortization (depreciation) to these assets.

The owner of employer B also confirmed to the panel that all the vehicles remained registered to him after the alleged sale and further that at various points in time he had insured the trailers under his name and ultimately sold the trailers. The owner of employer B also stated that he made arrangements for the truck to be disposed of at the scrapyard. In the panel's view, the third party may well have loaned money to the brother-in-law, but the evidence, specifically the Statement of Affairs and Company A's financial records, clearly establish that he, and later his sister-in-law retained the assets.

It was without dispute that Employer B had ceased operating as a business entirely, this was confirmed by the information contained in the file as well as the evidences of both witnesses.

The panel further finds that the type of service the new business (employer A) provided was "substantively the same" as the service provided by the previous business (employer B). The evidence confirmed that both businesses were essentially the same - installation of shingles, soffits, eaves-troughing and siding.

The owner of employer A asserted that the types of services offered were broader than the original roofing business, and included soffits and design work. However, on questioning from the panel, the owner of employer B indicated that while he did roofing work, one of his employees could also do soffit work and had done so with company B. The evidence disclosed that the second employee was brought over to employer A, offering the same services.

The owner of employer A described her role as providing exterior design work for the siding her company installed and that this additional service distinguished her company from her brother-in-law's former company.

She stated:

It was a service that [employer B] did not provide, was the consultation on the design, and it was something that I was, I felt I was good at, putting the colours together, helping the client to develop the front of their home.

The panel does not accept that an additional service such as assisting customers with choosing the colour and type of material that was to be installed as home siding distinguishes employer A from employer B. The evidence from the owner of employer A was that she only provided the "exterior design" to approximately 25% of the company's clients. However, on further questioning from the panel, the owner of employer A confirmed that she did not charge for her design services; customers paid only for the actual work done to their homes. The panel also notes that the evidence on questioning of both owners confirms that while working for employer B, the brother-in-law was considered to be the expert in quoting projects and that the owner of employer A always accepted his recommendations.

The administrative guidelines also provide a number of questions to determine whether a successor employer is operating in "substantially the same form."

Have they continued selling the same goods and/or services to the same or similar customer base?

The panel finds that, for the reasons previously stated, employer A provided the same services as employer B. This criteria has been met.

Have they adopted the same or similar business name?

The first word of both company titles is identical. The second word of the name of company A is 'Exteriors' while the second word for company B is 'Roofing'.

The panel finds the business names are similar enough to conclude that the intent of the parties was to make the company names as similar as possible. This is supported by the fact that the owner of employer A needed to obtain approval from the owner of employer B before she could incorporate under her proposed name because the two names were identified as being so similar.

The panel finds that this criteria has been met.

Are the equipment, land and/or buildings purchased going to be used to produce the same product or service?

For the reasons already stated the panel finds that the equipment (truck and four trailers) purchased by employer A from employer B were to be used to provide the same service.

The panel finds that this criteria has been met.

Are the same employees engaged to do the same type of work?

Based on the evidence provided at the hearing, the panel finds that the staff employed by employer A consisted of two skilled trades' workers; employer A's brother-in-law and another skilled trades worker who was also originally employed by employer B up until the time that he filed for bankruptcy. Employer A's brother-in-law performed all supervisory duties on site, prepared quotes and ordered the materials. The owner of employer A described her other employees as unskilled laborers that she would find at job banks.

The panel finds that this criteria has been met.

Did the business cease operating between the changes in ownership?

A stated previously stated, employer B's company ceased operation at approximately the same time as Employer A's company commenced operation. The panel does not accept this as being a coincidence given the timelines.

The owners of both corporations were known to each as they were related. The owner of employer A was married to the owner of employer B's brother.

Further, the evidence provided at the hearing confirms that on her first day of business (July 1, 2014), employer A's bank statements show that her company received payments that totaled approximately $14,837. The panel does not accept that these payments were the result of work that was provided by employer A on that day.

The panel notes that while the brother-in-law was employed by employer A, he maintained the sole contact number from his previous company. The brother-in-law stated that when he received calls requesting work be provided by his former company, he would refer those calls to employer A. As a result, Employer A was receiving customer referrals from employer B.

The panel further accepts the information compiled by the WCB on June 25, 2014 that the owner of employer A had stated that she had taken over the business formerly owned by employer B. The panel further notes that the owner of employer A did not endeavor to clarify the issue of whether or not she was taking over employer B's company when the WCB sent out notice dated June 26, 2014 of her being the successor owner.

That notice stated, in part:

Since you have taken over another business, we have transferred the previous owner's classification and rate assessment to your registration. As well, we have transferred claims history for the last five years from the previous owner's account. Any costs associated with this history, along with current claims you may have, will be outlined in the Firm Experience Statement. The claims cost attached to your business will influence your future rate of assessment.

The file also includes a notation dated July 2, 2014 whereby it is noted that the owner of employer A contacted the WCB to add her home phone number to the WCB file. The note also states "had discussion on work injuries and WCB, fines and penalties for late payment vs payroll deduction." The panel notes that even though the owner of employer A was in contact with the WCB after receiving the June 26, 2014 correspondence from the WCB, she does not clarify or correct any of the information contained in the correspondence that she now disputes.

The panel notes that it is not until after employer A received correspondence from the WCB dated September 5, 2014 advising of the outstanding levy of $10,052.98 that the owner of employer A responds to the WCB disputing that her company was the successor employer to employer B.

The panel finds that this criteria has been met.

The panel also finds that, upon review of all the evidence provided by the two witnesses, and our comparisons with the earlier evidence on file, both their testimonies lacked credibility when responding to the questions put to them by the panel.

The panel therefore finds the administrative guidelines criteria relating to whether a successor employer is operating in "substantially the same form" have been met. As a result, the panel determines employer A is operating in substantially the same form as employer B and therefore finds that employer A is the successor employer to employer B. The WCB is entitled to transfer the costs experience and rate of assessment of employer B to employer A.

In the alternative, the panel considered the criteria in the administrative guidelines for employers who are assigned to the same subgroup. There is no dispute that both employer A and employer B are assigned to the same subgroup of 40403-Roofing, Eaves as outlined in the June 26, 2014 WCB correspondence to the owner of employer A. As the panel has determined both employers operate in the same subgroup, the panel could also rely on the questions included in the administrative guidelines to determine whether or not employer A was operating in "substantially the same form" as employer B.

For all the foregoing reasons, the employer's appeal is denied

Panel Members

M. Kernaghan - Presiding Officer
(on behalf of the panel)

Signed at Winnipeg this 17th day of July, 2017