Tuesday, May 24, 2011

Occupational Health and Safety not just for workers

Ontario's Occupational Health and Safety Act has some pretty rigourous obligations on employers. Generally, we regard the Act as being designed to protect workers from occupational injuries or illnesses. The employer is required to take such steps as may be necessary to provide a safe environment to work in, and the failure to do so can result in significant fines.

What about workplaces that are open to the public, though? Does the Occupational Health and Safety Act create obligations on an employer related to safety of customers and other members of the public?

The Divisional Court recently answered this question in the affirmative. In Blue Mountain Resorts Limited v. Ontario (Ministry of Labour and Ontario Labour Relations Board), the Court heard a judicial review application relating to the drowning of a guest in an unsupervised swimming pool in 2007. The question is whether or not this death triggered the employer's obligations to report the incident to a Ministry Inspector, and the Court held that it did. Even though no workers were present at the time of the incident, and the incident did not involve a worker, the language in the Act refers to the death or critical injury of any "person" in a workplace, not just workers. The whole Blue Mountain resort, it seems, is a workplace.

This reporting obligation, accordingly, is going to be triggered anytime there is any death or critical injury whatsoever in any workplace - i.e. in just about any place where commercial services are offered.


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.

Thursday, May 5, 2011

Reasonableness of Restrictive Covenants

An interesting case was just released from the Ontario Court of Appeal.

The case is Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344. Mason worked for Chem-Trend for 17 years, then was terminated, allegedly for cause. This case is not about whether or not there was cause; the wrongful dismissal case is a separate proceeding.

This decision deals with an application for a declaration on the enforceability of a restrictive covenant in Mason's contract, which he signed in 1992. The trial judge found that the clause was enforceable, and Mason appealed. The Court of Appeal allowed the appeal and found it unenforceable.

Here's the language of the clause:

3. I agree that if my employment is terminated for any reason by me or by the Company, I will not, for a period of one year following the termination, directly or indirectly, for my own account or as an employee or agent of any business entity, engage in any business or activity in competition with the Company by providing services or products to, or soliciting business from, any business entity which was a customer of the Company during the period in which I was an employee of the Company, or take any action that will cause the termination of the business relationship between the Company and any customer, or solicit for employment any person employed by the Company. [Emphasis added by the Court of Appeal.]
The main guts of Mason's argument is that he doesn't know all the company's customers, and so can't know who he isn't allowed to do business with. He argued that the clause was ambiguous. The trial judge disagreed and found that the language is, in fact, quite clear. The Court of Appeal agreed with that: There's nothing unambiguous about the language. To the extent that he can't know who he isn't allowed to do business with, that's a separate problem.

But it does affect reasonableness. Indeed, that becomes a significant problem: It is a global company which has a very large customer list. In order to avoid doing business with any of its customers in competition, Mason would have to simply not compete at all. Anywhere. For a year.

Even beyond that, there seems something rather unreasonable about saying to a departing employee that a customer from 17 years earlier is off-limits today, in light of the fact that the restrictive covenant was only effective for a year. As well, the scale of activities being limited is beyond what is appropriate in the circumstances (Mason was just a technical sales representative with a limited territory).

There is also an interesting discussion on the doctrine of clean hands. It's out of place: As the Court notes, equitable relief isn't being sought. Still, it's useful to note that the Court, when asked to determine the enforceability of the restrictive covenant, shouldn't hold it against the employee if he is already breaching the restrictive covenant. As Justice Gray put it, "[t]he fact that the applicant is engaging in activities that are arguably contrary to the restrictive covenant is of no moment. If the restrictive covenant is invalid, the applicant is free to engage in those activities. If it is valid, the respondent has remedies."


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.

Wednesday, May 4, 2011

Fraser v. Ontario - Is the pendulum about to swing back?

The Supreme Court of Canada last week released its decision in Fraser v. Ontario, which has been long-awaited in labour law circles, on the question of the extent of the Charter right to collective bargaining.

To highlight the importance of this decision, note that the decision involved fifteen interveners, 33 lawyers, and 9 judges releasing 4 sets of reasons in 369 paragraphs.

There is much to be said about this decision. Many of the debates raised could be parsed in detail; I could write a full-length paper on the nuances of the distinction between ‘freedoms’ and ‘rights’ that Rothstein and Charron attempt to raise and the majority dismisses. But in this entry I will focus on the broad strokes of the decision.

A Brief History of Labour Relations under the Charter

Traditionally, the ‘standard’ labour relations regime follows what we call the ‘Wagner’ model: If the majority of employees in a bargaining unit support a union, that union gets the exclusive right to represent all employees in the bargaining unit in negotiations with the employer. There are certain exclusions from the Wagner model, including a traditional exclusion for agricultural workers in Ontario.

There were a series of early Charter cases where the Unions tried to raise “freedom of association” (s.2(d)) to challenge limitations on labour relations regimes. The Courts rejected these arguments: Freedom of association had nothing to do with forming unions.

Then the facts changed. In the 1990’s, Ontario’s Rae government removed the exclusion for agricultural workers. This was short-lived, and was reinstated by the subsequent Harris government. This was challenged in a case referred to as Dunmore, and the Supreme Court overturned its own prior jurisprudence, finding that s.2(d) of the Charter did, in fact, protect against government interference with people’s formations of employee associations and unions.

Remember: The Charter of Rights and Freedoms is a constitutional document which limits the powers of government. All the jurisdiction before Dunmore was clear that it could not be used to compel positive government action. Freedom of speech doesn't obligate the government to provide me with a soapbox; it just means that the government can't shut down my blog without good reason. Dunmore expressly maintained that proposition. However, the Supreme Court decided – rightly or wrongly – that the exclusion of agricultural workers in fact created a ‘chilling effect’, delegitimizing attempts by agricultural workers to organize into unions, making it harder for them to do so than if there was no labour relations protection at all. Accordingly, the exclusion was unconstitutional.

So the Ontario government enacted the Agricultural Employees Protection Act (“AEPA”), which gave employees the right to form associations and make representations to the employer. The employer is obligated to listen to and acknowledge receipt of those representations. That’s it.

So when a group of mushroom farm employees in Leamington were thoroughly ignored by their employer, Rol-Land Farms, they brought a constitutional challenge to the AEPA, saying it still didn’t give them a meaningful right to organize. This was the Fraser case. It went before Justice Farley, who held that there was no constitutionally protected right to collective bargaining in good faith, and that the AEPA had been enacted in accordance with the Supreme Court’s requirements in Dunmore.

Fraser appealed to the Ontario Court of Appeal. But before it was heard, things got interesting.

The appeal was delayed pending disposition of the Health Services case from B.C. at the Supreme Court: The government of British Columbia had legislated around and over the terms of various health care sector collective agreements, and the question became whether or not this violated s.2(d). The Supreme Court found that it did, and that there was a right to collectively bargain in good faith.

If that sounds weird, it should. I have the freedom of speech. That doesn’t compel others to listen. I have freedom of religion. That doesn’t compel you to provide me with a church. Yet saying that there’s a ‘right’ to have good faith collective bargaining suggests that the Charter itself requires employers to bargain in good faith with me. But, generally, it doesn’t: The Charter doesn’t affect private actors.

It makes some sense that the B.C. government might not be able to legislate over existing collective agreements. It kind of undermines the purpose and function of the employee association, and is clearly positive governmental action subject to Charter scrutiny.

But to go a step further and say that the Charter actually requires governments to legislate an obligation for employers to bargain in good faith…well, that is something different. And that is what the Fraser case became about: Basically a question of “Is that really what the Supreme Court said in Health Services?”

My Two Cents: The 2008 Hicks Morley Moot

It was around this time, in my third year of law school, that I participated in the Hicks Morley moot at Queen’s. Frequently, a moot involves addressing an issue answered by the Court of Appeal with a strong dissent. The appellant has to distill and argue the dissenting judge’s argument, and the respondent has to distill and argue the majority argument. This moot was more interesting, however, as the moot was of the appeal from Justice Farley’s decision, post-Health Services. A shift in the law meant that the moot was treading entirely new ground, that Justice Farley's conclusions of law were outdated and that we were looking at a fully novel legal question.

I was happily arguing the government side, and dealing with the s.2(d) issue. The structure of my argument was essentially this: The suggestion of a carte blanche proposition that everyone is entitled under the Charter to a Wagner-esque labour relations scheme is simply wrong, and is a misstatement of Dunmore and Health Services.

Quite the contrary; Dunmore was clearly a very narrow decision, expressly decided on the very unique factual situation where the existing legislation was shown to actually, in fact, have a chilling effect on organizing campaigns. Quite expressly, Dunmore would have permitted the legislature to scrap labour relations protections altogether. (Political suicide, certainly, but well within their constitutional powers.) The Supreme Court in Health Services referred to Dunmore as supporting the proposition that affirmative state action could be required in narrow circumstances where there was an evidentiary foundation to support the proposition that the government’s actions themselves were responsible for the impossibility of meaningful association.

Health Services should be interpreted similarly narrowly. “The Charter applies only to state action. One form of state action is the passage of legislation. In this case, the legislature of British Columbia has passed legislation applying to relations between health care sector employers and the unions accredited to those employers.” (Paragraph 88.) Health Services does not purport to reverse or modify the general rule that the Charter cannot force positive government action, but adopts the general rule subject to the narrow nuanced exception in Dunmore.

Read in that context, the Court’s more sweeping statements regarding the contents of the right to collectively bargain (such as “The parties have a duty to engage in meaningful dialogue and they must be willing to exchange and explain their positions. They must make a reasonable effort to arrive at an acceptable contract” at paragraph 101) must be read simply as explaining the content of meaningful association and simply cannot be read as imposing large-scale affirmative obligations on government (or private actors) to ensure widespread meaningful association.

So the only question is whether or not the AEPA creates the same chilling effect as the statute in Dunmore did, and I argued that there was not (or, at least, was not yet) the evidentiary foundation to support the existence of such a chill. Justice Farley had not made the factual findings necessary to ground such a claim, and had in fact noted that it was too soon to tell what the effects of the AEPA were.

Eventually, the Ontario Court of Appeal essentially found that Dunmore plus Health Services equals an affirmative obligation for legislatures to enact comprehensive labour protections for all, subject to s.1 of the Charter, and accordingly the AEPA was unconstitutional.

The SCC Decision

The Court was divided here: Of nine judges, there was a majority decision by five of them, two sets of concurring reasons (sort of…really dissenting) by three of them, and a lone dissent from Justice Abella. Justice Abella was the only one arguing that the appeal should be dismissed and the AEPA found unconstitutional…but the other 8 essentially had a very important 5-3 split.

Let’s start with the concurring reasons. Justice Deschamps argued that Health Services should be interpreted narrowly, and that it is difficult to begin imposing affirmative obligations on government on the basis of the Dunmore analysis; these cases are about economic inequality, but the courts have always refused to recognize economic inequality as a s.15 (anti-discrimination) ground, and the Dunmore analysis was a convoluted sidestep to allow that continued refusal. Justice Deschamps would prefer to open up the s.15 analysis and resort to the ‘omission’ analysis in Vriend v. Alberta. (Alberta couldn't exclude sexual orientation as a ground of protection in its Human Rights legislation.)

Justices Rothstein and Charron argued that Dunmore and Health Services were wrongly decided, that they broke with established jurisprudence and are unworkable and undesirable and should be reversed.

The majority, however, rejected these arguments. Health Services is still good law, did not constitute a break from existing jurisprudence, and should not be overturned without good reason. It is too soon to tell if it is, indeed, unworkable.

The majority essentially said that a full-blown Wagner model is not necessary, but the legislative regime is required to give all necessary protections to ensure a meaningful right to collective bargaining. They looked at the AEPA and decided to read in an obligation on the employer to consider proposals in good faith.

Sections 5(6) and (7) are critical. They provide that the employer shall listen to oral representations, and read written representations, and acknowledge having read them. They do not expressly refer to a requirement that the employer consider employee representations in good faith. Nor do they rule it out. By implication, they include such a requirement.

The argument for such an interpretation is three-fold: (1) A statute should be interpreted in such a way as to give effect to its purposes, and there’s not much purpose in telling an employer to listen to a proposal if they aren’t being required to consider it; (2) a statute is presumed to intend to comply with the Charter; and (3) the Minister said that the government of Ontario intends to meet its obligations to grant meaningful freedom of association.

If I may comment personally, I find this argument to be disingenuous. Firstly, the majority is picking and choosing its principles of statutory interpretation. The legislature’s word choice is important, and had they intended to impose good faith obligations such as in the Labour Relations Act, they would have used similar language. The fact that the legislature only requires the employer to “acknowledge” the representations has meaning, which the majority is ignoring. In fact, it seems that the majority is finding ambiguity where none exists: The language simply does not bear the interpretation given to it by the majority. No reasonable person would look at the language and suggest that it actually creates an obligation on the employer to bargain in good faith. Rather, the obligations it places on the employer are quite explicit, unambiguous, and minimal.

Further, the ‘obligations’ the Minister promised to meet were the ones set out in Dunmore – his language is quite express – and this predated Health Services. It cannot be the case that this rather puffed up statement of intention to comply with the Charter gives the Courts carte blanche to read in whatever remedial language they like.

The Minister also said that the AEPA was not intended to “extend collective bargaining to agricultural workers”, but the majority chose to interpret their way around that.

According to the majority, ultimately, the AEPA (“correctly interpreted”) protects the right to have employee submissions considered in good faith, and therefore is constitutional. The majority further notes, as I argued, that the AEPA has not been fully tested to see if the protection it gives to freedom of association is ‘meaningful’.

My Analysis

I smell change on the wind again. Ten years after Dunmore, the pendulum has just hit its apex on the swing towards labour. This is a weak majority decision by the Supreme Court, with certain irrationalities in the decision that makes the whole thing smell a little of horsetrading (and makes the whole thing rather bad law), and the next few judges to retire will have their replacements appointed by Mr. Harper, meaning that they likely won’t be labour-friendly, for better or for worse.

I mentioned irrationalities: The suggestion that Health Services does not break from established jurisprudence is revisionist. It is said to hold true to Dunmore (which was, itself, a massive break from established jurisprudence), but in fact was a significant expansion from Dunmore. Indeed, this decision interprets Health Services quite broadly, finding that there is a carte blanche obligation on governments to impose labour relations regimes which protect good faith bargaining.

I would also object to the fact that the majority seems to presuppose, without the necessary analysis, the unconstitutionality of the AEPA in the absence of the language being read in.

No, seriously, step back and look at the second rationale for reading in a good faith obligation: Legislation should be presumed to be intended to comply with the Charter. Therefore, we will interpret the language in such a way as to comply with s.2(d), rendering it unnecessary to proceed with a s.1 analysis.

But without a s.1 analysis, how can you say that the alternative interpretation would be unconstitutional? In fairness, of course, the s.1 analysis wouldn't have saved the alternate interpretation.

Yet the decision isn’t fully labour-friendly. Ultimately, the UFCW lost. They were going for a full-blown Wagner scheme, and they didn’t get it. They now get to go the employer and say “See, you have to consider these representations in good faith”…then when the employer comes back and says “Okay, we’ve considered them carefully, and decided that we are not prepared to agree to them; now go away”, their only recourse is to a novel and untested administrative tribunal process. The Court is not prepared to dictate how the substantive s.2(d) rights must be addressed, which gives the government some flexibility.

So this decision is an expansion on labour rights, but a tempered one, like when Vikings Rage pauses near the top of its highest swing before coming back crashing down the other way.

Also, the expansion itself may carry the Dunmore doctrine beyond the weight it can reasonably support. It goes from the Court telling the government “You can’t legislate contrary to the Charter” to the Court dictating public policy. This is so deeply at odds with the history of Charter jurisprudence that it cannot hold. Particularly in light of the door being left open for future arguments about ‘unworkability’, I think we will see those arguments being made into the future, and I think the Courts will scale the doctrine back over time.

Any thoughts from readers? Where will s.2(d) go next?

And a further question: I would invite perspectives on whether or not the expansion of s.2(d) opens up the door to challenges to the Rand formula.


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.

Monday, May 2, 2011

Malicious Prosecution and Wrongful Dismissal

An employer always needs to be careful when accusing employees of misconduct, but an additional level of caution needs to be exercised when the alleged misconduct has criminal dimensions, and - as a new case from the Ontario Court of Appeal, Pate v. Galway-Cavendish (Township), 2011 ONCA 329, makes clear - an employer must be especially careful and diligent when reporting alleged employee misconduct to the police.

This is not the first cautionary tale. In a recent post about Canac Kitchens, I alluded to the Correia case in which the employer investigated thefts then mixed up two employees with similar names and reported the wrong one to the police.

This new Pate case, however, is interesting for a number of reasons.

Mr. Pate was the Chief Building Official for the Township of Galway and Cavendish for 9 years before it amalgamated to form the Township of Galway-Cavendish and Harvey on December 31st, 1998. He was relegated to a Building Inspector position and reported to Chief Building Official John Beaven. No, this isn't a constructive dismissal case. This arrangement didn't last long.

On March 26th, 1999, Mr. Pate was told of apparent 'discrepancies' relating to permit fees paid to him but not remitted. He was not given an opportunity to respond, but was told that, if he resigned, the matter would not be reported to the police. He did not resign, so he was fired and charged criminally.

In December 2002, following a trial lasting four days over the course of a year, he was acquitted, and he sued in December 2003 in wrongful dismissal and malicious prosecution. (A caution about limitations: Following amendments to the Limitations Act effective January 1st 2004, there would be a solid argument today to be made that the wrongful dismissal claim was brought too late.)

So the obvious questions are these: On what basis was he accused, and on what basis was he acquitted?

Well, Mr. Beaven was a retired staff sergeant from what was then known as the Metropolitan Toronto Police Service, and conducted his own investigation into certain irregularities - records of remittances missing, essentially - and prepared statements for the police relating to alleged theft of fees relating to six properties.

The trouble is that there were other explanations for the irregularities. In one case, the records were kept under a different name because the fees had been paid by the property owner's son-in-law. Mr. Pate noted this in his journal. However, on termination, Mr. Pate's journal was seized by Mr. Beaven, and was not provided to the police. In other cases, property owners had paid fees at a municipal satellite office which moved in 1998, during which move many files were lost. Municipal officials were well aware of the missing files, but police were not told.

One of the irregularities had even come to the Township's attention in 1995, whereupon it was investigated and the Township concluded that there was no wrongdoing. Of course, the police were not told about this.

Remember the effect on the employee, and the timeline. He was fired in March 1999, charged with theft in or around April 1999, and only had the charges finally dealt with in December 2002, nearly four years later. One can imagine the toll it would take on his professional life, and as well it seems that his marriage fell apart in that time.

The parties agreed on a reasonable notice period of 12 months, but argued about the entitlement to aggravated damages, punitive damages, and whether or not the employer was liable for "malicious prosecution". The trial judge dismissed the malicious prosecution claim, but awarded aggravated and punitive damages on the wrongful dismissal claim.

Malicious prosecution is a hard claim to make, but the trial judge found that this was a close case, then proceeded to refuse the claim...but made a couple of mistakes in doing so. He set the bar too high, finding that the necessary intention of the employer would have to have been to pervert the administration of justice, and also found that the employer did not 'initiate' the prosecution...failing to fully consider the effects of its failure to disclose the material exculpatory facts in its possession. To top it all off, the trial judge did find malice in the wrongful dismissal context, so the conclusion that there was no evidence of malice in the malicious prosecution context is inconsistent.

The other issue on the appeal was the quantum of punitive damages: The judge awarded $25,000, essentially saying that the principle of proportionality prevented him from awarding more. The Court of Appeal found that the reasons the judge provided for limited himself were inadequate.

So we're more than twelve years past the termination date, and the Court of Appeal sent the matter back for a new trial on those two issues.

The lesson for employers is simple: When referring a matter to the police, make sure you're certain of your reasons for doing so, and make sure you disclose everything to the police.

Also, I should highlight that the "Resign and we won't call the police" bit is most certainly not conduct the Court would look kindly upon. As a lawyer, I am prohibited by the Rules of Professional Conduct from threatening criminal proceedings to secure a civil advantage. It smells like blackmail, and that's how the Courts are likely to see it.


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.