The Dangers of Scapegoats

There are two stories in the Toronto Star today about allegations of criminal misconduct against employees.

The 'front page' on the online version is about Oshawa Hospital Foundation firing its CEO, Jim Szeman, and calling the police after a Star report prompted an investigation and "forensic accountants turned up serious money and charity management problems."

Reading the story, it seems like they've done their homework and they're pretty confident that there was mismanagement.  But I have enough experience with media to not take any of it at face value, and I'm particularly doubtful about the strength of the case when the only specific allegations in the story are...less than obvious misconduct.  There's an allegation of self-dealing, that the charity paid a company of his over three hundred thousand dollars...which seems like a lot of money until you realize that this was over a six year period and his annual salary with the charity is over two hundred grand...where it is "unclear" (to the Star) who else on the Board of Directors knew of the self-dealing arrangement.

Reading the news, I always assume that I'm not seeing all the facts.  So it could be that this fellow is a hardened fraudster and the employer's response is reasonable.  Or it could be that he was acting in a transparent manner, taking perks that the general public might not have much patience for in the wake of the e-Health scandal, and that the employer decided it would rather blame let Szeman take the fall than stand behind him.

If it's the latter, there could be real liability risk.

The second story is about a former low-level employee of Durham Region who was fired and charged with fraud.  More to the point, the story is about his acquittal.

Joel Nicholson was an employee with no legal training, in charge of collecting unpaid fines under the Provincial Offences Act.  Then, in 2002, his duties were expanded to include collecting from tenants in subsidized housing who owed rent arrears or money for damage caused.  And he built those debts into the same system he had for collecting other fines, seizing and garnishing assets and income.

Just one problem:  You can't do that.  There are certain actions that you have to take when dealing with residential tenants.  While they're in the rental unit, you need to go to the Landlord Tenant Board for an Order, which can then be converted into a Small Claims Court judgment, and enforced in the Small Claims enforcement process.  After they're out of the rental unit, such claims go directly to Small Claims Court.  The key is this:  You need to get a judgment before you can take enforcement action on a debt.

So Nicholson's actions in collecting these debts were deeply problematic, as was brought to light in 2009.  However, as the Court concluded, the mistakes were innocent on his part.  He didn't realize that he was doing anything wrong.  He didn't know that there was another process he had to use.  And it's not as if he was pocketing the proceeds.  And therefore, he was acquitted.

The story also notes that he is suing the employer in wrongful dismissal.  Likely a solid case, if this Court decision is any indicator.  (It isn't binding.  The burden of proof is different.  In order to convict him, the Crown needs to prove guilt "beyond a reasonable doubt".  To prove that he engaged in misconduct for the purpose of a wrongful dismissal suit, the employer only needs to establish it on a "balance of probabilities".  Accordingly, the fact that he was acquitted doesn't necessarily bar a Court from finding that he engaged in misconduct in a subsequent civil proceeding.)  The judge in the criminal proceeding seemed critical of the Region's managers for not spotting the "flagrant legal problems" in Nicholson's approach, and for failing to consult the Region's legal department.  If these criticisms were picked up by a judge in a wrongful dismissal case, then that could be very bad for the employer.

Where an employer makes allegations of cause which don't pan out, that usually amounts to a breach of the duty of good faith and fair dealing.  (Not always.  There is some case law suggesting that, if the allegations themselves are true and simply don't quite meet the threshold for cause, then there's no reason to think there's bad faith.  Similarly, one can easily imagine a circumstance in which an employer, having diligently investigated allegations of wrongdoing and reasonably, if incorrectly, concluding that the employee is guilty, might not have breached the duty of good faith and fair dealing.)  The more serious the allegations, the more serious the breach of the duty of good faith.  If they bring in the police and an unsuccessful criminal prosecution results, the employer's motives for calling the police will be closely scrutinized, as will their actions in making the police report.  Claims for malicious prosecution, negligent investigation, including aggravated and punitive damages, are easy to imagine in such contexts.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The Challenges of Human Rights

I've tried to write a policy-oriented human-rights entry a couple of times, and abandoned the attempts before.  The challenge is that I really am a centrist in this area.  Unlike many on the right, I believe in human rights.  I think that they are important to a fair and democratic society, and that their growth is a very positive thing for Canada.  However, unlike many on the left, I do understand the objections to an overly broad approach to human rights.  So I'm trying to strike a delicate balance.

The "Human Rights Have Gone Too Far" Camp

On the one hand, let's look at the far-right, such as polemicist Ezra Levant, who argues that the 'human rights commissions' are out of control.  It's difficult to completely ignore the imprecision and overbreadth in Levant's language:  He generalizes human rights on the national stage based on his experience with the Alberta Human Rights Commission, and there are some very significant differences between systems, relevant to his objections.    He argues that Human Rights Commissions and Tribunals are "kangaroo courts", with unqualified adjudicators appointed by the government.  He also uses criminal language - referring to the initiation of the proceeding as being a 'charge', referring to the proceedings as 'prosecutions', findings of Code breaches as 'convictions', and awards of compensatory damages as 'fines' - all of which is incorrect and misleading, in an attempt to set up an argument that the government should bow out of these essentially civil disputes and let the Courts handle it.

There are no fewer than four massive problems with Levant's position that the Human Rights Commissions and Tribunals are unqualified bureaucrats expanding the interpretation of human rights unduly beyond what it can reasonably bear.

(1)  These are administrative tribunals.  I've blogged about administrative tribunals on several prior occasions, and the key thing here is that they are *everywhere*.  There are literally hundreds of them across the country, of different shapes and sizes, specifically designed to address certain types of disputes.  The point is to take the strain off of Courts, and provide a - hopefully - expedient avenue of recourse for these disputes.  Not to suggest that these processes are perfect - far from it - but neither are the Courts, and in specific contexts the flaws of administrative tribunals are preferable to the flaws of the Courts.  Many lawyers dislike administrative tribunals generally.  The objections Levant raises are common to many of these tribunals, but he treats the human rights processes as being uniquely appalling, and even has a prominent link on his web site seeking "donations" for his ongoing campaign against "the HRC".  And Levant's solution of handing off human rights disputes to the Courts would be catastrophic:  The vast majority of legitimate human rights complaints result in awards in the four-digit range or the low five-digit range.  The existence of such civil claims often create a tragic hole in the 'access to justice' coverage, because even a plaintiff who can afford to pay a lawyer to bring such a claim...won't and shouldn't, because they'll pay more to the lawyer than the claim is worth.

(2)  Human rights proceedings are almost always civil disputes between private parties.  The implication of 'prosecution' is that the 'bureaucrats' are starting these proceedings of their own initiative.  That is very seldom the case.  In most cases, the proceedings are initiated by people who feel that their rights under the Code have been violated; the mandate of the Human Rights Tribunals is to adjudicate these disputes.  This is not unlike the Landlord Tenant Board, adjudicating disputes between residential tenants and landlords.

(3)  Human Rights Tribunals are subject to judicial oversight.  If the Tribunal committed a reviewable error, including misinterpretation of the Code, then judicial review can be sought.  All Tribunals and Courts make mistakes from time to time, and so, outside of the Supreme Court of Canada, no judicial or quasi-judicial body is completely immune from appellate/judicial review.  (Some would argue that the expense of this is prohibitive.  Yes, Court is expensive.  That's a big reason we have the Tribunal in the first place.  Moreover, once you get to that level, one of Levant's key objections to the tribunal process, being the unavailability of cost sanctions, dissolves.)

(4)  Human rights do not exist at common law.  The judges I've talked to about the topic don't want jurisdiction to handle human rights disputes.  At the ground level, these are tricky issues, requiring expertise in terms of how the relationships triggering human rights disputes work.  This is why we don't use judges to adjudicate these decisions, but lawyers and other professionals experienced in labour relations and other Code-related areas.  Indeed, the Commissions and Tribunals simply interpret what the government enacts.  The government is free, subject to constitutional constraints, to change the language if they feel the intention behind it hasn't been correctly interpreted.

Many of Levant's criticisms are anecdotal in nature, taking examples which are on the fringe.  For example, he wrote in November 2010 of a pastor who had been "fined" - not so, it was a compensatory award to a complainant - for writing a letter to the editor "criticizing gay marriage" (which is a *very* mild way of characterizing the letter's contents).  Levant neglected to mention that the Tribunal's decision had, in fact, been reversed on judicial review, highlighting that it was, in fact, a borderline case.

That being said, I don't necessarily disagree with all of Levant's objections.  One of his most persuasive pitches is the one he makes against the anti-hate speech provisions contained in some - that's right, not all - of the human rights statutes in Canada.  That doesn't exist in Ontario, so it's not something I've developed a strong feeling about.  While I understand the policy motivations behind such a provision, I also understand Levant's objections on the basis of free speech, and I'm inclined to think that such a provision is unworkable.  There are clear lines that shouldn't be crossed in criminal legislation, and I think we can leave it there.

It's a shame that this message gets lost when Levant muddies the water with his polemicist rhetoric, crusading with equal vigour against the human rights processes generally and other applications of substantive human rights.

To give a lay perspective, let's look at my father.  My father is a retired police officer, and pretty far right, and we have some interesting conversations.  I've had clients whose workplaces had pretty flagrant human rights breaches...for example, a woman obligated to wear dresses - not pants - even when men performing similar job functions were fine in ripped jeans...and my dad's viewpoint on these cases is that, if these employees knew about the job conditions before going in, and agree to it, they shouldn't really complain about it afterward.  I respond with the question, "Okay, what if somebody agreed to work for $2/hour?  Should they not be able to complain about it afterwards?"  His response was, "Well, we have minimum wage laws, so that would be illegal."  He didn't recognize that human rights and employment standards are similar in the way they legislate over the freedom to contract.

There *are* legitimate human rights issues out there, major issues that the majority of Canadians would agree should be addressed. (Mind you, there are still surprising numbers of people who think that an employer should be able to fire an employee who gets pregnant, judging from public reaction to the Jessica Maciel case.)  There are also more marginal issues, that perhaps don't have the same clear-cut answers, such as Bill Cosby's right not to be harassed on the basis of race by Chris Rock at a comedy club.  And there are trickier questions as well where human rights obligations may conflict with other legal obligations such as occupational health and safety.  (See, for example, the recent decision in Loomba v. Home Depot.)

The Other Side:  Human Rights Breaches are Everywhere


I've mentioned Professor David Doorey before, as having a workplace law blog I follow and sometimes comment on.  He made a post a while back about the Starbucks employment application breaching the Human Rights Code by asking what high school the applicant attended and whether or not the applicant is available to work overtime.

Let's be clear:  There are certain questions which are clearly illegal.  Do you have kids?  How old are you?  Are you married?  What are your religious beliefs?  You can't ask these of a job applicant.  But these questions don't seem so inherently unreasonable.

Ontario Human Rights Commission literature backs him up on the 'high school' question.  And the logic seems to be that asking what school a person went to can reveal a great deal about their religious background, racial background, place of origin, etc.  The overtime question is seen as troublesome because people who have families are far less likely to be able to work overtime.

I have a hard time accepting such a broad interpretation of the Human Rights Code.  The high school question...well, if the fact that a question may reveal factors with a probable connection to a prohibited ground made the question itself illegal, then the result would be that just about any question would be illegal. Heck, the "name" field would likely be illegal.  These questions are clearly not proxies to pick up information to classify people on discriminatory grounds.  And if Microsoft were unable to distinguish between a Computer Science degree received from the University of Waterloo versus some less prestigious institution, that would strike me as being a commercially absurd result, extended the prohibited grounds to covering "where did you get your education"?  (And if an employer wants to see a transcript...well, you can just about forget that, no?)

The overtime question...is trickier.  Yes, people with kids are less likely to be able to work overtime.  Yes, that ends up being a discriminatory result if people are going to be treated differently on the basis of a "no" answer.  Yet the similar extension of this principle would be that it would be illegal to advertise positions for full-time only, or for certain hours.  Or to ask how much travel a potential employee is willing to do.  Again, where it doesn't seem to me that hours of availability are a clear proxy for a prohibited ground, I think that the commercial absurdity of the result is hard to justify.

Problems of Perception


One further difficulty is that people don't really understand what "human rights" means.  Even some very sophisticated people don't understand that it isn't just a venue for dealing with general unfairness.  It addresses unfairness on some very specific bases.  So people think "If I'm treated unfairly, it's a human rights matter", leading to frivolous and vexatious proceedings, leading to others criticizing the Tribunals for hearing such frivolous matters.

Let's be clear.  *Most* human rights applications seem to fall into one of three categories:

(1)  Not in the Tribunal's jurisdiction.  Whether because not based on a prohibited ground, not in an applicable social category, or because of some other jurisdictional bar, the proceeding gets shut down early because the Tribunal can't hear it.

(2)  A case with substantial personal importance and a bona fide human rights-based objection.  For instance, consider the mandatory retirement cases.  Clearly, there are some circumstances in which mandatory retirement might be justified.  That cannot be carte blanche for people to discriminate against the elderly.  Thus, a person facing mandatory retirement, win or lose, can't be faulted for arguing the case before the Human Rights Tribunal.

(3)  A case with deeply unacceptable conduct by the respondent, if perhaps not a great deal of direct personal importance.  A good friend of mine and law school classmate is visually impaired, and uses a service animal.  (The dog has quite the character, too. Very quiet, never made much noise or disrupt classes, but would occasionally snore or snort at times that were very appropriate to the lecture material.)  I noticed a case a while back in the Tribunal's jurisprudence involving her being excluded from a store because of a "no animals" policy.  I doubt my friend was put to great hardship by the exclusion - no doubt she took her business somewhere else.  Yet I don't think she's seeking a big payout - really, if you look at the value of her time on an hourly basis, the award she'll probably get from the Tribunal at the end of the process will be less for her time than she could have billed on client matters.  It's the principle of the thing, and it's an important principle.  Most establishments permit service animals simply because it is a well-known law that they are obligated to.  If we didn't hold people to this obligation, then they would stop, and that *would* generate hardship.

While imperfect, as are all things human, the Human Rights Tribunals serve important policy objectives.  We need to scrutinize them, and decide carefully the form and substance of our human rights, but abandoning them would be a tragic mistake.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Dismissed CEO Wins Awkward Partial Summary Judgment Motion

There is a recent judgment in the Hinke v. Thermal Energy International Inc. case, by Justice Ray, on a motion for partial summary judgment.

Put briefly, Hinke founded TEI in 1991 and was its principal until he brought it public in 1994, and continued on as its President and CEO.  In 2004, he recruited Timothy Angus into a senior position, and while conducting his due diligence prior to accepting the position, Angus discovered a letter from the TSX-V asking to review certain transactions, which had been received a few weeks earlier but not produced to the Board of Directors. Angus produced the letter to the Board, Hinke resigned as President in February 2005, and Angus became President and CEO.

Hinke's position with the company at this point seems unclear.  His existing contract was set to expire on June 25, 2005, which would have triggered certain severance entitlements, etc.  On June 5, 2005, Hinke and TEI agreed to enter a new employment agreement, and then they went about discussing some of its terms.  It had not yet been finalized when Hinke's employment was terminated, allegedly for cause, on June 23, 2005.

Hinke then sued for wrongful dismissal, among other things, and TEI counterclaimed alleging oppression, breach of fiduciary duties, and negligence.

It should be a simple matter of two arguments about the same facts.  If the facts underlying TEI's claim are warranted, then that probably constitutes just cause, right?  Well, maybe not.  Simply put, while there were disciplinary letters leading up to June, including some threatening termination, the Court concluded that entering a new agreement on June 5 was inconsistent with an intention to terminate Hinke's employment for cause.  In effect, by entering into a new agreement, TEI undermined any case for just cause it was attempting to build.

The Court therefore held TEI to proving just cause based on conduct after June 5, which is a tall order considering how little time had passed since then.

This motion related only to the wrongful dismissal elements of the claim, and was successful.  The remainder of the claim, however, along with the full counterclaim remain outstanding.  (This judgment, however, has been stayed pending disposition of the other issues.)

My Thoughts

The dimensions of an eventual trial have been shifted.  This is a brilliant tactical move, because it shifts the stakes significantly.  The defence is no longer able to challenge the wrongful dismissal allegations, but its allegations of misconduct are limited to proving its own counterclaim now (and damages are often difficult to establish) and the consequences of failing could potentially have brutal consequences in terms of moral damages for breaching the duty of good faith and fair dealing.  This could press a settlement of the other issues.

However, if they don't settle, then think about the trial that results.  Among other things, Hinke is likely to make the same pitch that succeeded here - if his actions were really oppressive and breached his fiduciary duties, then the company would not have entered into the June 5 agreement.  It may not be as strong a pitch, in context, but if it fails, and if the counterclaim does succeed, then we will be left with the Courts saying that the employer was entitled to hold him to account for all that misconduct, but they were not entitled to fire him on a for cause basis.  There's an inconsistency there.

Here's where the inconsistency becomes worse:  In employment law, there is a doctrine referred to as "after-acquired cause".  (See the Lake Ontario Portland Cement case.)  In a nutshell, when an employee is terminated on a for cause basis, and the employer later discovers the full breadth of the misconduct - or even entirely new areas of misconduct - the employer is entitled to rely on those in support of allegations of just cause.  And condonation falls off the rails in these cases, too:  An employer can't be said to have condoned what they didn't know about.  So the possible trouble with the Court's finding that the employer was limited to relying on misconduct from June 5 to June 23 is this:  The employer is also entitled to rely on any misconduct, regardless of when it occurred, that they discovered after June 5, and even after June 23.  (Note:  For all I know, it is entirely possible that the employer may have known the full particulars of the misconduct alleged prior to June 5, in which case this issue wouldn't arise.  While it seems unlikely, that very possibility may justify the Court's decision if it wasn't disposed of in the employer's evidence:  There's an obligation in summary judgment motions to "lead trump or risk losing".  It may be a defect with the employer's case, or it may be a defect in how the employer led its case.)

One other interesting point:  The Court notes that the employer's defence did not claim setoff - i.e. they're counterclaiming for damages, but they didn't lead those same allegations in the defence as a way of saying "Even if the plaintiff's claim is legitimate, we still don't owe him money because he owes us all this".  It's understandable to do so in such a case, because of the natural inclination to think that the success of the claim and counterclaim, on the facts, would be mutually exclusive.  However, such a pleading of setoff likely would have blocked a partial summary judgment motion with such a limited scope as this one.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Back to Basics: Constructive Dismissal

I frequently refer to constructive dismissal, such as in my recent post about McMillan v. Selectrucks.  I often talk about it in a fairly cursory way, but I feel it's important to occasional address more basic questions.

What is Constructive Dismissal?

Constructive dismissal is a term that most people have heard of, a general idea that, if the employer does something wrong, they can quit and still demand a package.  It's a term that's thrown about pretty casually in some contexts, yet people are rightly reluctant to give up secure employment on the basis of some simplistic sense of an abstract legal principle.  The result is that I, and lawyers like me, get lots of calls from employees saying, "My employer did x, have I been constructively dismissed?"

The essence of constructive dismissal, and part of what makes the doctrine very weak in many cases, is that it is an extension of wrongful dismissal.  Wrongful dismissal damages are not a windfall.  You don't get rich by suing in wrongful dismissal.  Indeed, in many cases the entitlements are quite limited, and so it seems a poor trade to lose one's job in exchange for wrongful dismissal damages.  The appeal of constructive dismissal, of getting paid to walk away, quickly loses its glamour in light of the bleak future of unemployment in an uncertain economy.

So, if you have been constructively dismissed, you are entitled to treat yourself as having been terminated by the employer.  Sort of.  There are all sorts of exceptions and qualifications to address, but let's look to the legal definition first:  A constructive dismissal results when the employer unilaterally makes a fundamental or substantial change to the terms of an employee's contract.

Whether or not the change is unilateral is pretty straightforward:  If you agree to the change, it isn't unilateral.  Whether a change can be characterized as fundamental or substantial...is trickier.

In the jurisprudence, there are really two different types of constructive dismissal.  There's the constructive dismissal where the employer actually changes the employee's duties, functions, title, compensation, or some other aspect of the terms of employment (the "demotion" cases), and then there are the Shah-type cases, where an employee quit to escape harassment or an otherwise poisoned work environment.

It is largely a matter of scale.  The employer is entitled to make certain changes to the terms of an employee's contract, and that includes reductions in pay...to a certain extent.  When the change is large enough to be said to be a 'fundamental' change, then it can be characterized as constructive dismissal.  Where an employee is demoted, with a loss of prestige, that too can be a constructive dismissal, depending on the significance of the change.

The McMillan case shows how even the Shah-type cases are a matter of scale:  Even if you can show that you have been treated unfairly by the employer, and this led you to leave, that will not necessarily make out a case for constructive dismissal.

There are also the 'discipline' cases, which can be a hybrid of the two types.  Sometimes, it's discipline being imposed as part of a campaign of harassment, making it a Shah-type case.  Other times, the discipline itself can exceed employer authority.

This is a mistake I've seen unionized employers make with their non-union staff members, applying the same disciplinary process to them, including unpaid suspensions.  The way the jurisprudence sits on unpaid suspensions was set out by the late Justice Echlin in Carscallen v. FRI Corporation, upheld by the Court of Appeal:  Unless there is an express contractual right to do so (as there usually is in collective agreements, but seldom in individual contracts of employment), an employer has no inherent right to impose unpaid suspensions in disciplinary matters, unless the misconduct rises to the level of "just cause".  In other words, if the employer would be justified in firing the employee without notice, then it can forbear and instead issue an unpaid suspension instead.  Otherwise, it will be a breach of contract, and possibly generate a constructive dismissal.

The Difficulty of Mitigation

When your employment is terminated and you want pay in lieu of notice, you're obligated to try to mitigate your loss by seeking replacement employment.  There is a line of cases dealing with demotions or pay cuts establishing that, where the demotion isn't the result of a soured relationship, an employee can be expected to accept the new position with the same employer in mitigation of the loss generated by the constructive dismissal.

In other words, you might be entitled to treat yourself as having been dismissed by your employer, yet your employer may still be entitled to expect you to stay in the job nonetheless.  (In a previous blog, I wrote of this disconnect and called it "Unconstructive Dismissal".  Just to clarify terminology, there's not actually such a thing called "unconstructive dismissal"...that was just ironic wordplay on my part.)  So there have been cases where the Court has found that a constructive dismissal had occurred, and yet the Court also found that the employee should have stayed in the job as mitigation while seeking a new job, with the result that the employee had few if any entitlements.

(In a case that turns around the same concept, an employee whose pay was cut significantly actually stayed in the job and sued the employer for the salary to be topped up through what would have been the notice period.)

There was one case that went to the Supreme Court, Evans v. Teamsters, which was similar, though not strictly a constructive dismissal case:  The employee had actually been dismissed, and was offered another position on a contract basis through the notice period when he came back with a lawyer's letter.  The Court felt that refusing the job was a failure to mitigate.

I feel that this doctrine needs to be refined, for two reasons.  Firstly, mitigation is usually fairly employee-friendly:  Employees are not generally required to take the first job that comes along, but are entitled to hold out for a job that is close to being as good as the old job.  Outside of these "employment with the same employer" cases, I know of no other case that holds that an employee should accept another position on a temporary basis while seeking replacement employment.

Secondly, this disconnect is the result of having two different standards for what should essentially be the same thing.  In my view, if the changes in the employment relationship are not so significant as to make the resulting job 'not equivalent' for the purposes of mitigation, then it can't be constructive dismissal.  Conversely, if the changes are significant enough to constitute constructive dismissal, then the job can't be close enough to expect the employee to accept it in mitigation.  Still, that's my own view, and does not reflect the current state of the law.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Stranger than Fiction, Volume II

Here's a fun little case that was released earlier this year, about a fellow suing OLG because he didn't win enough:  Tal v. Ontario Lottery Corporation.

Now, to be clear, this is not the class-action suit that was attempted on behalf of problem gamblers alleging a failure to take appropriate measures to exclude them from casinos.  That issue is not one to be treated with levity.  The Tal case, on the other hand...well, it could be argued that it wasn't treated with enough levity.

In a nutshell, here's what happened:  Mr. Tal bought a ticket for Lotto 6/49, and matched four of six numbers.  This case was about how much that entitled him to.

Smaller winners have prizes in fixed amounts:  People who match 2/6 + Bonus would get $5.  3/6 got $10.  However, beyond that, prizes were defined with reference to the total prize pool.  They create a "Pools Fund", and 9% of it is allocated to 4/6 winners, to be divided up amongst all the people who matched 4/6.

In the particular draw that Mr. Tal matched 4/6, 9% of the prize pool was just over 1.3 million dollars.  Not bad, but the trouble is that there were more than 20,000 tickets that matched 4/6, with whom Mr. Tal had to share the 1.3 million, with the result that he was paid $66.90.

Mr. Tal, unhappy with his winnings, argued that he shouldn't have to share, but should get the entire 9% of the Pools Fund.

And yes, he actually sued OLG, taking that position.  OLG brought a motion for summary judgment, and the result decision by Justice Stinson, linked above, is perhaps the longest and detailed way of saying "That's absurd" that I've ever seen.

Other Cases Involving the Same Plaintiff

Mr. Tal, not surprisingly, was self-represented in this proceeding.  Figuring that this couldn't have been his first introduction to the Courts, I checked my legal databases for decisions involving him.  And found quite a lot.  The only other one on CanLII is Tal v. Koor, relating to Mr. Tal fighting against the setting aside of a default judgment.  Said Justice Campbell:

 Mr. Tal remains of the view that he is entitled to utilize to his advantage those specifics of the Rules of Civil Procedure that he chooses, without regard to the other obligations on a party mandated by the Rules.
...
 It is indeed unfortunate that some self-represented litigants think that by reading the Rules of Civil Procedure, they can achieve a result that ignores the overall purpose of the Rules as set out in Rule 1.04, and the discretion that will likely be exercised by judges and masters to achieve that end.

In another database, I found another case, in fact more recent than the OLG case (though one week before the Court hit him with a costs order in excess of $17,000 in the OLG case), in which he tried to sue the OMB for denying him standing to participate in a hearing.  Also summarily dismissed.

Then there's last year's decision in Tal v. Usher (appears related to the Koor case), relating to an eviction of Mr. Tal in 2007.  His action was dismissed as frivolous and vexatious.

Indeed, there is case law online about this same individual going back to 1983 (Re Silver Elms Holdings, relating to a corporation owned by Mr. Tal), in which the Court notes the following:

Although a stranger to the action in the strict sense of the term, Tal was at all material times the president, the sole director and the governing mind of Silver Elm and he had, from the vantage point of the practical immunity of an insolvent company from the discipline of costs, made a practice of defending actions where he had no real defence, of launching appeals and, as illustrated in this hearing, of greatly lengthening trials without ultimately producing a case with any merit.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Bank Manager not really a "Manager"

The majority of my blog entries revolve around Provincially-regulated matters.  You often see me discussing the effects of Ontario employment statutes.  Yet that isn't the only legal regime at work in Ontario.  A handful of industries are Federally regulated instead, such as banking, telecommunications, and interprovincial transportation.  (Federal government employees are also, naturally, Federally regulated, but they fall into a different framework from most private sector employees as well.  I have enough experience with Federally regulated employees - both private and public sector - to be comfortable with the frameworks, but they are quite complicated.)

The Canada Labour Code is a rather massive labour/employment statute in the Federal sphere, covering similar subject matter to several Ontario statutes (such as employment standards, labour relations, and occupational health and safety).

But there is one rather unique feature of the Canada Labour Code, found in Division XIV (Unjust Dismissal):  With certain limitations, non-unionized employees can seek reinstatement to their positions when unfairly dismissed.  There is no Provincial equivalent.  (Rather, reinstatement in the Provincial non-union context is a remedy restricted to very select circumstances to illegal - not just unfair - reasons for terminations.)

Division XIV has its own complaint process, that people can use instead of Court.  (Court proceedings are still available to non-union employees, and the same common law principles apply as in the Provincial context.  But you can't get reinstatement that way.)

There are several prerequisites to getting into the Division XIV adjudication:

(1)  You work for a Federally regulated undertaking;

(2)  You are not a member of a bargaining unit (i.e. unionized);

(3)  You have been terminated after more than 12 months of service;

(4)  There is not another recourse mechanism in another Act of Parliament (as there would be for, say, public sector employees);

(5)  The termination was for reasons other than a shortage of work or discontinuance of the job function; and

(6)  You are not a "manager".

The first five are pretty straightforward, but the sixth is trickier, for several reasons.  Firstly, the exception isn't built into Division XIV, but is in a different part of the Code.  (To put this in context, Division XIV starts at s.240; the managerial exception is buried in s.167.)  This makes it easily missed by people who are not familiar with the Code.  Another difficulty is that "manager" is not actually defined in the Code.

This brings us to a recent decision in Roda v. Bank of Montreal, by Referee John Stout, in a matter referred to adjudication under Division XIV.  Mr. Roda was a branch manager at a BMO branch, and was dismissed.  He brought a complaint under Division XIV, and BMO argued that, as a manager, Division XIV recourse was not available to him.  So Referee Stout had to decide whether or not he had jurisdiction to hear the case on its merits, determining whether or not Mr. Roda was a "manager" within the meaning of the Canada Labour Code.  In a detailed analysis, he concluded that Mr. Roda's decision-making powers and any discretion he had were very limited, and he was kept on a tight leash by the bank, and accordingly was not really a "manager" despite his title.

If this decision holds up, it is likely to have repercussions across the banking industry.  There are a number of prominent judicial decisions involving dismissal of bank managers, and in my own practice I have dealt with dismissed bank managers from time to time as well.  From my observations, there doesn't seem to be a great deal of variation in how the big banks treat their managers, neither in the length of the leash nor the tendency to hold the branch manager accountable for anything that goes wrong nonetheless.  Accordingly, most (though not all) terminations of branch managers are based on allegations of cause, which occasionally get upheld in Court.  In most cases, the worst case scenario for the bank is that it may be required to provide pay in lieu of notice.  However, this decision could curtail the bank's right to terminate managers on a not-for-cause basis, with the result that most dismissed branch managers will be entitled to seek a reinstatement remedy.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

Truck Salesman was not Constructively Dismissed

The Court recently released its decision in McMillan v. Selectrucks.  Mr. McMillan worked for Selectrucks as a salesman from 2004 to 2007, at which point he gave two weeks' notice.  Selectrucks sent him home immediately and paid him out the two weeks' notice he had given.  (This is a common practice for many employers.)  Mr. McMillan started another job within two weeks.

McMillan developed a strong customer base and was successful in his role.  Then, a fellow salesman (Mr. Kenny) was promoted to a managerial role over him.  It is not uncommon that such a change in reporting structure can foment such conflict as to make the continued employment relationship untenable, generating a constructive dismissal.  Mr. McMillan contended, unsuccessfully, that this is what happened in this instance.

His arguments included several factors:

(1)  Mr. Kenny breached company policy by permitting alcohol consumption in the workplace, and this made Mr. McMillan uncomfortable because he has had alcoholics in his family.  The Court did not accept that such conduct by Mr. Kenny would really affect the contractual relationship with Mr. McMillan.

(2)  Mr. Kenny gave preferential treatment to another employee by assisting him to develop a client base, thus hurting Mr. McMillan's earning potential.  Perhaps true, yet in context it was evident that Mr. Kenny usually assisted new salespeople (and this other employee was new to the sales role) - and that had included Mr. McMillan when he started - to develop a client base.  Ultimately, given that Mr. McMillan's earnings were still increasing, it was pretty clear that Mr. Kenny wasn't seriously undercutting Mr. McMillan's earnings, even if he was perhaps showing favouritism to this other employee.

(3)  Mr. McMillan accused Mr. Kenny of abusive and improper treatment.  The Court dealt with most of these as being symptomatic of a difference in style - Mr. McMillan was accustomed to a more civil atmosphere in car dealerships, and was unaccustomed to the 'macho' atmosphere in a commercial truck dealership:  The Court ultimately seems pretty accepting of Mr. Kenny's "rough" management style in context.

I also note that the employer made an argument that Mr. McMillan's failure to complain should bar allegations of constructive dismissal, whereas Mr. McMillan explained that he was afraid of reprisals if he had gone over Mr. Kenny's head.  The Court embarks on a thorough analysis of that issue: The fear of reprisals is understandable, and it is a matter of common sense that an employee should not complain lightly about their manager.  That being said, if Mr. Kenny's conduct was already making the employment relationship intolerable, there was little to be lost by doing so.  (I have had occasions to give employee clients exactly the same advice.  While employees are often more afraid to complain than they are to simply quit, if the alternative is quitting then there is absolutely nothing to be lost by pursuing a complaint first.  If they get recourse, then that is great.  If not, then they're in the same position, except with perhaps a somewhat stronger constructive dismissal argument).

However, in the full context of a small work environment in which Mr. McMillan was an outsider, the Court concluded that it was understandable that he hadn't complained, and this wasn't a full bar to a constructive dismissal claim.  I note that these events all took place prior to Bill 168, and I wonder how that Bill would change the analysis.

There was more serious misconduct.  Mr. Kenny brushed off Mr. McMillan's concerns about not getting proper statutory holiday pay, and then was upset when Mr. McMillan did go over Mr. Kenny's head.  However, with no evidence of actual reprisal (perhaps just a souring of the relationship), it was hard to say that it constituted constructive dismissal.

Worse, Mr. Kenny once took Mr. McMillan in "a bearhug or a headlock", after Mr. McMillan understandably said something unflattering about the Habs.  It was horseplay, but unwelcome horseplay, and therefore an assault.  The Court is highly critical of this behaviour:  "it is hard to imagine a professional work environment where that would be appropriate.  These people were not adolescent boys in the schoolyard."

Yet, given the full context, including the fact that it was not close to the time of Mr. McMillan's resignation, and that Mr. McMillan could not be said to fear further violence, this assault did not create a constructive dismissal despite its seriousness.

None of the conduct could be said to go to the heart of the employment contract, so there was no constructive dismissal.  While the relationship may have soured, giving rise to Mr. McMillan's decision to find employment elsewhere, none of Mr. Kenny's conduct repudiated the contract.

My Thoughts

I very much like Justice Corbett's analysis in this case.  The one aspect that cause me concern is that there is, perhaps, too much casual acceptance of otherwise inappropriate conduct as being acceptable machismo in the context of the specific work environment.  Where an employer dismisses an employee for just cause, it is a defence for the employee to respond that the alleged misconduct was "condoned" by the employer, that it was common practice within the workplace.  So if there's a culture that condones profanity, it's hard to fire an employee for swearing.  Yet this decision seems to apply the principle in reverse:  It was acceptable to treat Mr. McMillan in harsh and unprofessional ways because it was common in the culture of the workplace?  The subtext is that an employer can expect its employees to grow thicker skins, depending on the culture of the workplace.  Especially in light of Bill 168, that is clearly not true now, but I don't really think it was true then, either.

Yet, at the end of the day, the conclusion that Mr. McMillan was nonetheless very successful in his position, and that the overall tension between him and his manager did not amount to a constructive dismissal, appears to be well-supported on the facts.

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This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.