Businessman Scott Henderson has been found guilty of failing to make contributions to a pension plan for employees and failure to provide information as requested by the Superintendent of Pensions.
Magistrate Margaret Ramsay-Hale delivered her judgment 4 January and set 11 January for sentencing. The main reason for the adjournment was to assess the amount of money owed.
The matter first came to court in November 2005, when guilty pleas were entered on behalf of two companies with which Henderson was associated.
Office Pavilion was charged for failing to make contributions between August 2002 and August 2005.
Cayman Flooring and Kitchen Specialists was charged for the period from December 2002 until June 2005.
Charges against Henderson personally were put to him in July 2006. He pleaded not guilty and trial continued at intervals into December.
Charges of not paying pension contributions for employees of Cayman Flooring referred to the period between January 2001 and December 2002.
There was no issue that these payments were not made, Magistrate Margaret Ramsay-Hale said in her judgment. The question was whether Henderson was liable personally.
The Crown’s case, argued by Solicitor General Cheryll Richards, was that Henderson was the mind and management of Cayman Flooring. Company directors Gene Thompson and the late Norberg Thompson installed Henderson as president at his request pursuant to the sale of the business to him.
The defence, argued by Attorney Clyde Allen, was that Henderson at all times acted on behalf of the company and under the direction of Norberg Thompson, who was the controlling mind of the company.
The Crown said Henderson was properly charged as the manager of the company and the magistrate agreed.
She quoted the National Pensions Law, which requires an employer to provide a pension plan or make contributions to a plan for each employee.
She then referred to the Labour Law for the definition of employer: any person who has entered into or stands ready to enter into a contract of employment with an employee, and includes any agent, representative or manager who is placed in authority over an employee.
The manager of a company may be liable, but it has to be a specific type of manager. The magistrate cited a UK case and said she agreed that the law only intends to fix with criminal liability the persons with real authority – the real decision makers, not underlings.
She reviewed the evidence of employees and director Gene Thompson that showed Henderson to be the decision-maker.
Henderson said he was an employee with no contract and no salary. He said it was Mr. Norberg who told him what to pay. He cited an occasion when Mr. Norberg told him to pay the bank $20,000 even though Henderson told him that would mean they couldn’t meet the payroll.
He said Mr. Norberg did not tell him not to pay the pension contributions, but by telling him to pay the bank and the rent, it effectively made it impossible to pay the pension fund.
Henderson told the court that the cash flow situation forced him to make decisions where to apply the funds. His first priority was to keep the company afloat so there eventually would be money to pay pensions.
The magistrate said the situation evolved into robbing Peter to pay Paul and the evidence was overwhelming that Henderson was the one in the governing role.
The company was not insolvent; it had a cash flow problem. Not having enough cash on hand to pay is not an excuse, she said.
There was a deliberate decision to defer pension payments until such time the defendant could improve the company’s cash position. The danger with that approach, the magistrate said, was that the time never came.
Mr. Allen had also argued that the Crown could have charged the company instead of the individual.
The magistrate said the fact that they could have charged the company but did not, did not preclude charging the manager alone.