The Supreme Court is about to release its decision on an application for leave to appeal on a somewhat interesting case. My guess is that leave to appeal will be denied, but it draws attention to something that I don't often deal with in this blog.
Most of my entries deal with dismissals from non-unionized Provincially regulated employers. Because that's what most wrongful dismissal cases are. The primary recourse is a wrongful dismissal action before the Courts, though in the right (or wrong) facts one might consider an application to the Human Rights Tribunal, or a complaint to the Ministry of Labour. A lawyer should be consulted before picking one avenue or another.
However, in the Federal sphere, the decision is different, because of unique provisions of the Canada Labour Code. (I discussed this difference last October.) In general, an employer is entitled to dismiss anyone, at any time, for almost any reason, provided that - without just cause - the employee is entitled to "notice". If I'm an employer, I might wake up one morning, say "I feel like firing somebody", and have my employees draw straws. Whomever gets the short straw gets fired on contractual notice. For Federally-regulated employers, however, that may not be the case. And, where the preconditions for an "unjust dismissal" are satisfied, even reinstatement is on the table.
That isn't generally a major issue. Most Federally-regulated employers are large companies, with sophisticated HR practices, etc. Banks. Telecommunications companies. Aviation. There are exceptions, however, including some logistics companies, among others.
In the case in question Gravel v. Telus, Mr. Gravel was dismissed from his position within Telus. He made two complaints, including unjust dismissal and wage recovery. The inspector allowed (in part) his wage recovery complaint, but concluded that the unjust dismissal was a "layoff", so the complaint could not be considered.* However, the adjudication panel reversed the wage recovery order, and upheld the "layoff" decision. That conclusion was affirmed on judicial review to the Federal Court, and on appeal to the Federal Court of Appeal.
At all stages, Mr. Gravel has been self-represented. This was remarked upon by the Federal Court of Appeal: "It can only be deplored that at no time did the appellant have the benefit of representation by attorney, particularly at the crucial stage of the hearing before the adjudicator/referee."**
The observation is important. At this level, the fight is about "standard of review". An administrative decision-maker made a decision, and is generally entitled to deference. The Federal Court saw no reason to interfere with the decision, and the Federal Court of Appeal agreed. Now, the application for leave to appeal to the SCC essentially has to be based on an allegation that the lower Courts got the standard of review wrong. Unlikely.
Still, while I haven't been able to read the decision of the inspector or of the panel, Gravel's case seems not to have been baseless, at least at the outset. There is correspondence from the employer to the inspector stating that the dismissal was for "performance and competency reasons following a corporate restructuring", and other emails referred to an intention to "replace" him. The interpretation of the former quotation can certainly be argued either way: If there's a corporate restructuring which eliminates a position, the "unjust dismissal" complaint process isn't available. So the employer might opt not to go to extra lengths to find a new place for this employee, because of performance and competency concerns. And that's legitimate. On the other hand, the fact that they cite performance and competency as part of the justification for the termination suggests, perhaps, a different primacy of motivation. The emails suggesting that they were looking to 'replace' him necessarily imply that his job functions were still being continued, notwithstanding the corporate restructuring, and that the restructuring may have been a means to an end.
Those were arguments to be made before the panel, however. It can be very difficult to get a Court to revisit evidentiary points, because hearings are complex matters with significant evidence, and at the end of the day the finder of fact has to fit everything together given the whole context of the matters in question. It goes with a high degree of deference, and the Courts will not interfere lightly.
*****
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.
*****
FOOTNOTES
*The Panel considered in detail the difference in definition between certain words in the CLC: "congédiement", which they translate as "dismissal" and "licenciement" which they translate as "layoff". The English version of the CLC, however, often uses "termination of employment" (or a similar 'termination' phrase) where the French version uses "licenciement". I think the semantics are unimportant, though I dislike that particular distinction. The decision turns on an interpretation of a s.242(3.1)(a), that an adjudicator has no jurisdiction to consider a complaint where "that person has been laid off because of lack of work or because of the discontinuance of a function." (French: "le plaignant a été licencié en raison du manque de travail ou de la suppression d’un poste".) This shouldn't turn on an essentially empty distinction between 'dismissal', 'termination of employment', and 'layoff', but rather on the specific characteristics of the dismissal/termination/layoff being described - namely, the reasons for it.
**The misuse of the term "attorney" is a pet peeve of mine. In Canada, we don't follow the U.S. convention of calling all lawyers "attorneys". As it turns out, it is something of a fair translation from the French version of the decision, which used the term "procureur", which does translate to attorney, in the simple sense of being a representative or proxy. I don't know the conventions in French Canada - whether or not it is common to call lawyers 'procureurs' - but based on the literal translation I would think that the terms 'avocat' or 'plaideur' might have been preferable.
Tuesday, September 25, 2012
Friday, September 21, 2012
Should Human Rights Tribunals be able to award punitive damages?
There's a recent case out of the British Columbia Human Rights Tribunal, Kooner-Rilcof v. BNA Smart Payments, which was the subject of an entry in Moneyville.
Ms. Kooner-Rilcof worked as the VP Sales (Western Canada) for BNA Smart Payments, an Ontario-based business. She started with the company in early June, 2009. On September 15, 2010, she called the company's president to notify him that she was pregnant and would be starting her leave in December or January.
The next day, the President called her to tell her that she was dismissed, and would receive two weeks pay in lieu of notice.
The company's story was that the B.C. market hadn't been performing well, and they had already planned, two weeks earlier, to close down their B.C. operations and dismiss the employee, and that they decided it was better to get it over with sooner than later in light of her approaching leave. The Tribunal concluded that the pregnancy was at least a factor in the decision, and therefore the termination breached the Code.
The Tribunal denied the employee's claims for legal costs and mental distress damages, but awarded $8000 in damages for injury to dignity, feelings, and self-respect, and a further two weeks' pay in lieu of notice, for a total of four weeks' pay in lieu of notice.
Sorry...WHAT??
I'm not a British Columbia lawyer, but I do know that B.C. law is in many respects very similar to Ontario's. The common law doctrines governing both are essentially identical, and the statutory provisions governing employment standards and human rights are quite similar.
On the one hand, when the Tribunal characterizes the $8000 award as being at the 'high end' of the range, I'll take its word for it. However, the award of only an additional two weeks in lieu of notice seems untenable and deeply unjust. The employee was asking for a total of four months, reflecting the time until her maternity leave would begin.
The Tribunal's decision in terms of quantum is not entirely clear, but it appears to be premised on the contract and other business realities.
The Employment Contract
The contract between the employee and the employer characterized the employment relationship as being "at will", allowing her to be terminated without notice. At-will employment is a common phenomenon in the United States, but for almost all employment relationships in Canada, an 'at-will' term of employment is completely unenforceable, and a purported 'at-will' employee will, in fact, be entitled to "reasonable notice" of termination.
The Tribunal, however, gives no indication that it is alive to the problematic nature of the "at-will" language. Indeed, the language appears to be considered relevant, though not determinative.
She might have been fired anyways
The Tribunal appears to accept that the company was engaged in legitimate cost-cutting measures, and she may have been terminated at some point in the near-future regardless.
She was courting other employers
Two months before her termination, she had told a prospective employer that, because of her pregnancy, it wasn't the right time to be looking at other employment. But for her pregnancy, therefore, she may have resigned anyways.
My Thoughts
Unless there's something I'm really missing here - some narrow exception in the B.C. ESA which would provide for at-will employment in her context, or some such thing - this analysis seems obviously wrong.
The seminal case for the unenforceability of an "at-will" clause in Canada is Machtinger v. HOJ Industries, a 1992 decision from the Supreme Court of Canada. This is exceptionally well-established and uncontroversial law in Canada. Perhaps more importantly, the Supreme Court expressly rejected the argument (which the Ontario Court of Appeal had accepted) that the contract evidenced an intention by the parties to limit the notice payable as much as possible, and therefore only the statutory minimums should be payable: The Supreme Court concluded, in a decision which continues to shred employment contracts across the country, that the failure of a termination clause to adhere at least to the statutory minimums renders that clause completely void, as if it were not part of the contract at all.
I will grant that a termination clause not being enforced by reason of the Human Rights Code has different analytical dimensions: It is not generally the case that the provision would have been void ab initio (from the beginning) but rather that a termination even on notice can be unlawful if it is for reasons prohibited under the Code, meaning that the scale of damages is not necessarily limited to contractual notice entitlements. (This is most obvious when you think about an employee on a contractual probationary period being fired because the employer discovered that the employee is of a particular religion, or sexual orientation, or place of origin, etc. The contractual right to fire without notice does not disentitle the employee to a remedy for a Code breach.)
The compensation principle means that it is appropriate to look at a "but for" analysis. But for the breach of the employee's Code rights, what would the employee have received? If an adjudicator is convinced that the employment relationship would have come to an end in any event, that can factor into the analysis. (That the employee may have resigned if she wasn't pregnant is beyond irrelevant: The question isn't "but for her pregnancy", but rather "but for the discriminatory termination".)
However, if I am right to assume that the "at-will" language is void, then dismissing her without notice would have been a breach of contract; the Tribunal is wrong to adjudge her remedies based on the prospect of the employer embarking on a course of action for which it has no legal or contractual justification.
The Punitive Damages Question
This is dealt with summarily by the Tribunal, and it doesn't appear that the complainant was asking for punitive damages, but it bears some commentary.
The Tribunal noted that relief for injury to dignity, feelings, and self-respect "is not granted as a punitive measure against a respondent, but as monetary compensation for the psychological injury suffered by a victim of discrimination."
This is true - no doubt about it. Human Rights Tribunals have jurisdiction to award compensatory damages, including for injury to dignity, feelings, and self-respect, but the ones with which I am familiar have no jurisdiction whatsoever to award punitive damages.
And maybe they should.
Let's be clear here: There are a lot of more nuanced human rights cases, where an action may be undertaken in good faith but with discriminatory results, or where a well-meaning act may inadvertently breach a Code right. Consider, for example, a fitness requirement which indirectly discriminates against women, or an interviewer innocently (and with no discriminatory intentions) asking prohibited questions like "Do you have any children?" In such cases, punishment may not be appropriate.
But there are still far too many cases where employees are terminated because they become pregnant, or for other blatantly discriminatory reasons. An $8000 hit for injury to feelings, dignity, and self-respect is relatively trivial. (In Ontario, an applicant might get more, but the difference isn't particularly significant.) It does not send a much-needed message to employers that this conduct is unacceptable. Indeed, in the overall calculation, this employer is better off having fought and lost at the Human Rights Tribunal than it likely would have been had it fought a wrongful dismissal action in Court.
I occasionally see blatant discrimination in my work. Dismissals for becoming pregnant, for making a sexual harassment complaint, discriminatory dress codes, etc. Whenever I see these incidents, I am shocked that they are still occurring in 21st-century Canada. But the law often responds to these infractions with a gentle touch, looking to the innocent employee to prove significant damages, and not punishing the employer based on the objective severity of its misconduct.
*****
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.
Ms. Kooner-Rilcof worked as the VP Sales (Western Canada) for BNA Smart Payments, an Ontario-based business. She started with the company in early June, 2009. On September 15, 2010, she called the company's president to notify him that she was pregnant and would be starting her leave in December or January.
The next day, the President called her to tell her that she was dismissed, and would receive two weeks pay in lieu of notice.
The company's story was that the B.C. market hadn't been performing well, and they had already planned, two weeks earlier, to close down their B.C. operations and dismiss the employee, and that they decided it was better to get it over with sooner than later in light of her approaching leave. The Tribunal concluded that the pregnancy was at least a factor in the decision, and therefore the termination breached the Code.
The Tribunal denied the employee's claims for legal costs and mental distress damages, but awarded $8000 in damages for injury to dignity, feelings, and self-respect, and a further two weeks' pay in lieu of notice, for a total of four weeks' pay in lieu of notice.
Sorry...WHAT??
I'm not a British Columbia lawyer, but I do know that B.C. law is in many respects very similar to Ontario's. The common law doctrines governing both are essentially identical, and the statutory provisions governing employment standards and human rights are quite similar.
On the one hand, when the Tribunal characterizes the $8000 award as being at the 'high end' of the range, I'll take its word for it. However, the award of only an additional two weeks in lieu of notice seems untenable and deeply unjust. The employee was asking for a total of four months, reflecting the time until her maternity leave would begin.
The Tribunal's decision in terms of quantum is not entirely clear, but it appears to be premised on the contract and other business realities.
The Employment Contract
The contract between the employee and the employer characterized the employment relationship as being "at will", allowing her to be terminated without notice. At-will employment is a common phenomenon in the United States, but for almost all employment relationships in Canada, an 'at-will' term of employment is completely unenforceable, and a purported 'at-will' employee will, in fact, be entitled to "reasonable notice" of termination.
The Tribunal, however, gives no indication that it is alive to the problematic nature of the "at-will" language. Indeed, the language appears to be considered relevant, though not determinative.
"An employment contract does not place either party above the law, and especially not above a statute such as the Human Rights Code. However, in the exercise of discretion on a principled basis, the Complainant's employment contract can be a factor in the measurement of her claim."Further, she was "never assured of any measure of continued employment".
She might have been fired anyways
The Tribunal appears to accept that the company was engaged in legitimate cost-cutting measures, and she may have been terminated at some point in the near-future regardless.
She was courting other employers
Two months before her termination, she had told a prospective employer that, because of her pregnancy, it wasn't the right time to be looking at other employment. But for her pregnancy, therefore, she may have resigned anyways.
My Thoughts
Unless there's something I'm really missing here - some narrow exception in the B.C. ESA which would provide for at-will employment in her context, or some such thing - this analysis seems obviously wrong.
The seminal case for the unenforceability of an "at-will" clause in Canada is Machtinger v. HOJ Industries, a 1992 decision from the Supreme Court of Canada. This is exceptionally well-established and uncontroversial law in Canada. Perhaps more importantly, the Supreme Court expressly rejected the argument (which the Ontario Court of Appeal had accepted) that the contract evidenced an intention by the parties to limit the notice payable as much as possible, and therefore only the statutory minimums should be payable: The Supreme Court concluded, in a decision which continues to shred employment contracts across the country, that the failure of a termination clause to adhere at least to the statutory minimums renders that clause completely void, as if it were not part of the contract at all.
I will grant that a termination clause not being enforced by reason of the Human Rights Code has different analytical dimensions: It is not generally the case that the provision would have been void ab initio (from the beginning) but rather that a termination even on notice can be unlawful if it is for reasons prohibited under the Code, meaning that the scale of damages is not necessarily limited to contractual notice entitlements. (This is most obvious when you think about an employee on a contractual probationary period being fired because the employer discovered that the employee is of a particular religion, or sexual orientation, or place of origin, etc. The contractual right to fire without notice does not disentitle the employee to a remedy for a Code breach.)
The compensation principle means that it is appropriate to look at a "but for" analysis. But for the breach of the employee's Code rights, what would the employee have received? If an adjudicator is convinced that the employment relationship would have come to an end in any event, that can factor into the analysis. (That the employee may have resigned if she wasn't pregnant is beyond irrelevant: The question isn't "but for her pregnancy", but rather "but for the discriminatory termination".)
However, if I am right to assume that the "at-will" language is void, then dismissing her without notice would have been a breach of contract; the Tribunal is wrong to adjudge her remedies based on the prospect of the employer embarking on a course of action for which it has no legal or contractual justification.
The Punitive Damages Question
This is dealt with summarily by the Tribunal, and it doesn't appear that the complainant was asking for punitive damages, but it bears some commentary.
The Tribunal noted that relief for injury to dignity, feelings, and self-respect "is not granted as a punitive measure against a respondent, but as monetary compensation for the psychological injury suffered by a victim of discrimination."
This is true - no doubt about it. Human Rights Tribunals have jurisdiction to award compensatory damages, including for injury to dignity, feelings, and self-respect, but the ones with which I am familiar have no jurisdiction whatsoever to award punitive damages.
And maybe they should.
Let's be clear here: There are a lot of more nuanced human rights cases, where an action may be undertaken in good faith but with discriminatory results, or where a well-meaning act may inadvertently breach a Code right. Consider, for example, a fitness requirement which indirectly discriminates against women, or an interviewer innocently (and with no discriminatory intentions) asking prohibited questions like "Do you have any children?" In such cases, punishment may not be appropriate.
But there are still far too many cases where employees are terminated because they become pregnant, or for other blatantly discriminatory reasons. An $8000 hit for injury to feelings, dignity, and self-respect is relatively trivial. (In Ontario, an applicant might get more, but the difference isn't particularly significant.) It does not send a much-needed message to employers that this conduct is unacceptable. Indeed, in the overall calculation, this employer is better off having fought and lost at the Human Rights Tribunal than it likely would have been had it fought a wrongful dismissal action in Court.
I occasionally see blatant discrimination in my work. Dismissals for becoming pregnant, for making a sexual harassment complaint, discriminatory dress codes, etc. Whenever I see these incidents, I am shocked that they are still occurring in 21st-century Canada. But the law often responds to these infractions with a gentle touch, looking to the innocent employee to prove significant damages, and not punishing the employer based on the objective severity of its misconduct.
*****
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, September 20, 2012
Where Working Notice Fails
Thanks go to Professor Doorey for posting about this case, Dechene v. Dr. Khurrum Ashraf Dentistry, recently released by the Divisional Court, involving an employee who received the statutory minimum working notice and immediately left, then sued for wrongful dismissal. Deputy Judge Winny allowed the claim, and the decision was upheld at the Divisional Court.
The Facts
Ms. Dechene was a dental hygienist, working part-time, up to 32 hours per week. The employer had a human resources consultant who put a new non-negotiable contract to her which would require the employee to recognize the employer's "absolute right" to require her to work up to 48 hours per week. She refused to sign the contract, despite the consultant saying that if she didn't sign, he would advise the employer to fire her. She felt that the employer valued her contribution, and would make his own decision.
The next morning, the employer delivered a termination letter, providing five weeks of working notice. The employee was distraught, and unable to continue with her duties, and went home immediately. She called the next day to offer to work through the five weeks, but the employer had already replaced her.
The Issues
(1) Deputy Judge Winny found that the non-negotiable contract constituted a constructive dismissal.
(2) In the alternative, he concluded that dismissal on only five weeks' notice was a breach of contract, constituting wrongful dismissal. He found that she was entitled, at common law, to pay in lieu of six months' notice.
(3) He also rejected the contention by the employer that, by leaving work, she had repudiated the employment contract herself.
The employer appealed, arguing that there was no constructive dismissal, and that her failure to work the five weeks of actual notice was a repudiation of the contract disentitling her to reasonable notice, or alternatively that her entitlements should be reduced by the five weeks, on what the employer argued should be only a four month notice period.
The Divisional Court's Findings
The employer succeeded on the 'constructive dismissal' point, but lost on the rest, so ultimately lost the appeal in all material aspects.
In my humble opinion, the Divisional Court got this one exactly right. Or so close as makes no difference.
The Framework
Constructive Dismissal
Let's start with the "constructive dismissal" argument. A constructive dismissal is a unilateral change by the employer to a fundamental term of employment. If the employer had unilaterally said, "From now on, you're working up to 48 hours per week", that would have been a constructive dismissal.
But the employer didn't do that. Instead, the employer proposed a new term. The employee rejected it. So the terms of employment are unchanged, no unilateral change has been imposed, and no constructive dismissal has occurred.
Wrongful Dismissal
An employment contract, at common law, contains an implied obligation upon the employer to terminate only on "reasonable notice". On the facts, it is evident that five weeks does not constitute "reasonable notice", and therefore delivery of a five week notice constitutes a breach of contract. That gives her the right to sue for damages occasioned by the breach of contract - which would, at face value, be the time frame from the end of the actual notice period to the end of the reasonable notice period. That is where the employer's alternative argument (that the notice period should be reduced by five weeks) originates.
The Employee's "Resignation"
The Divisional Court dealt with this in a relatively summary manner, and largely looked at whether or not the employer's conduct was 'reasonable' in the circumstances. Though the question isn't really framed in terms of resignation, it seems to me that, if it isn't actually a resignation issue, it is something indistinguishably similar. There is a lot of jurisprudence on resignation - what makes a resignation effective, when it can be rescinded, etc. - but the Divisional Court here simply said that her departure "did not exemplify an intention on her part to repudiate the employment relationship."
On the facts, largely for reasons I'll touch on below, this is an eminently reasonable conclusion, and under the well-established jurisprudence on resignations means that she cannot be taken to have resigned.
The Divisional Court felt that the employer acted 'precipitously' by so quickly moving to replace her. I might argue that this is too mild a characterization, and I might argue that the failure to permit her to come into work the next day constituted a further wrongful dismissal (which is how I would get to the conclusion that she is entitled to pay in lieu of the full notice period).
The Reasonable Notice Period
The Deputy Judge's conclusion that she was entitled to six months seems to me, off the top of my head, to be quite appropriate. Appellate Courts tend to give deference on that question, unless there is an error in principle, and dislike fine tuning which amounts to "unwarranted tinkering".
Lessons Learned
This case absolutely does *not* stand for the proposition that, if an employee gets a working notice of termination which falls short of his or her common law or contractual entitlements, that employee can immediately go home and sue for the whole notice period.
What it means is that employers have to approach these matters with some caution.
To some extent, I find this decision vindicating. In these difficult economic times, I have had several employer clients who wanted to dismiss a long-service employee for business reasons, but could not afford the onerous requirements of 'pay in lieu of reasonable notice', in the sense of paying an employee for work not being performed. Thus, increasingly, I have been asked to assist in dismissals of employees on provision of working notice.
My advice to employers in such scenarios, while varying based on the specific circumstances, always entails a bit of a soft touch, including the recognition that receiving a notice of termination can be very stressful. I have advised employers to provide the notice at the end of the day, or alternatively to offer the employee the rest of the shift off, with pay, on the clear understanding of "See you tomorrow".
Working notice is in some ways different from dismissals without notice - you don't need to worry about the employee collecting their belongings, or cutting off their remote network access, or securing their company property - but in some ways the obligations are just as onerous or moreso compared to a dismissal without notice. The stress reaction still may exist, and needs to be managed even more carefully, because the employment relationship still needs to be maintained, and if the employer takes actions which make that impossible, liabilities may be incurred. So ensuring the availability of EAPs, taxi chits, etc., are still important.
HR Consultants versus Employment Lawyers
The case is also a cautionary tale on relying too heavily on HR Consultants. They can be very helpful, within the limits of their expertise, but it is not unusual to find an HR Consultant who misapprehends the ESA or who does not understand common law obligations, or the finer nuances of employment law. When it comes to hiring and firing, there is simply no replacement for a competent lawyer. That can result in significant liabilities.
This case is a perfect example of the "a stitch in time" approach to legal services.
Consider this: If the employer had hired an employment lawyer prior to the termination, the lawyer would have told the employer (a) that 5 weeks is insufficient, and that actual obligations will be more in the area of 4-6 months; (b) that working notice can be provided for the whole common law notice period, but a good assessment of that notice period is essential up front, and (c) that if the employee quits in response, that measures should be taken to ensure that the resignation can be relied upon before actually taking steps in reliance. That would likely come at a cost in the low four-digits, depending on the lawyer.
Then it would have been open to the employer to simply offer her six months actual notice, and keep her working through the time for which she had to be paid. Instead of having to pay for legal fees associated with (a) a Small Claims Court trial and (b) a Divisional Court appeal, plus $25,000 in wages through the entire notice period during which it was paying somebody else to do her job, and contributions to the employee's legal fees.
There's no question that the employer's legal fees would be into the five digit range (exactly how far, I'm not going to guess), and the contribution to the employee's legal fees could conceivable be into the five digit range as well.
*****
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 Facts
Ms. Dechene was a dental hygienist, working part-time, up to 32 hours per week. The employer had a human resources consultant who put a new non-negotiable contract to her which would require the employee to recognize the employer's "absolute right" to require her to work up to 48 hours per week. She refused to sign the contract, despite the consultant saying that if she didn't sign, he would advise the employer to fire her. She felt that the employer valued her contribution, and would make his own decision.
The next morning, the employer delivered a termination letter, providing five weeks of working notice. The employee was distraught, and unable to continue with her duties, and went home immediately. She called the next day to offer to work through the five weeks, but the employer had already replaced her.
The Issues
(1) Deputy Judge Winny found that the non-negotiable contract constituted a constructive dismissal.
(2) In the alternative, he concluded that dismissal on only five weeks' notice was a breach of contract, constituting wrongful dismissal. He found that she was entitled, at common law, to pay in lieu of six months' notice.
(3) He also rejected the contention by the employer that, by leaving work, she had repudiated the employment contract herself.
The employer appealed, arguing that there was no constructive dismissal, and that her failure to work the five weeks of actual notice was a repudiation of the contract disentitling her to reasonable notice, or alternatively that her entitlements should be reduced by the five weeks, on what the employer argued should be only a four month notice period.
The Divisional Court's Findings
The employer succeeded on the 'constructive dismissal' point, but lost on the rest, so ultimately lost the appeal in all material aspects.
In my humble opinion, the Divisional Court got this one exactly right. Or so close as makes no difference.
The Framework
Constructive Dismissal
Let's start with the "constructive dismissal" argument. A constructive dismissal is a unilateral change by the employer to a fundamental term of employment. If the employer had unilaterally said, "From now on, you're working up to 48 hours per week", that would have been a constructive dismissal.
But the employer didn't do that. Instead, the employer proposed a new term. The employee rejected it. So the terms of employment are unchanged, no unilateral change has been imposed, and no constructive dismissal has occurred.
Wrongful Dismissal
An employment contract, at common law, contains an implied obligation upon the employer to terminate only on "reasonable notice". On the facts, it is evident that five weeks does not constitute "reasonable notice", and therefore delivery of a five week notice constitutes a breach of contract. That gives her the right to sue for damages occasioned by the breach of contract - which would, at face value, be the time frame from the end of the actual notice period to the end of the reasonable notice period. That is where the employer's alternative argument (that the notice period should be reduced by five weeks) originates.
The Employee's "Resignation"
The Divisional Court dealt with this in a relatively summary manner, and largely looked at whether or not the employer's conduct was 'reasonable' in the circumstances. Though the question isn't really framed in terms of resignation, it seems to me that, if it isn't actually a resignation issue, it is something indistinguishably similar. There is a lot of jurisprudence on resignation - what makes a resignation effective, when it can be rescinded, etc. - but the Divisional Court here simply said that her departure "did not exemplify an intention on her part to repudiate the employment relationship."
On the facts, largely for reasons I'll touch on below, this is an eminently reasonable conclusion, and under the well-established jurisprudence on resignations means that she cannot be taken to have resigned.
The Divisional Court felt that the employer acted 'precipitously' by so quickly moving to replace her. I might argue that this is too mild a characterization, and I might argue that the failure to permit her to come into work the next day constituted a further wrongful dismissal (which is how I would get to the conclusion that she is entitled to pay in lieu of the full notice period).
The Reasonable Notice Period
The Deputy Judge's conclusion that she was entitled to six months seems to me, off the top of my head, to be quite appropriate. Appellate Courts tend to give deference on that question, unless there is an error in principle, and dislike fine tuning which amounts to "unwarranted tinkering".
Lessons Learned
This case absolutely does *not* stand for the proposition that, if an employee gets a working notice of termination which falls short of his or her common law or contractual entitlements, that employee can immediately go home and sue for the whole notice period.
What it means is that employers have to approach these matters with some caution.
To some extent, I find this decision vindicating. In these difficult economic times, I have had several employer clients who wanted to dismiss a long-service employee for business reasons, but could not afford the onerous requirements of 'pay in lieu of reasonable notice', in the sense of paying an employee for work not being performed. Thus, increasingly, I have been asked to assist in dismissals of employees on provision of working notice.
My advice to employers in such scenarios, while varying based on the specific circumstances, always entails a bit of a soft touch, including the recognition that receiving a notice of termination can be very stressful. I have advised employers to provide the notice at the end of the day, or alternatively to offer the employee the rest of the shift off, with pay, on the clear understanding of "See you tomorrow".
Working notice is in some ways different from dismissals without notice - you don't need to worry about the employee collecting their belongings, or cutting off their remote network access, or securing their company property - but in some ways the obligations are just as onerous or moreso compared to a dismissal without notice. The stress reaction still may exist, and needs to be managed even more carefully, because the employment relationship still needs to be maintained, and if the employer takes actions which make that impossible, liabilities may be incurred. So ensuring the availability of EAPs, taxi chits, etc., are still important.
HR Consultants versus Employment Lawyers
The case is also a cautionary tale on relying too heavily on HR Consultants. They can be very helpful, within the limits of their expertise, but it is not unusual to find an HR Consultant who misapprehends the ESA or who does not understand common law obligations, or the finer nuances of employment law. When it comes to hiring and firing, there is simply no replacement for a competent lawyer. That can result in significant liabilities.
This case is a perfect example of the "a stitch in time" approach to legal services.
Consider this: If the employer had hired an employment lawyer prior to the termination, the lawyer would have told the employer (a) that 5 weeks is insufficient, and that actual obligations will be more in the area of 4-6 months; (b) that working notice can be provided for the whole common law notice period, but a good assessment of that notice period is essential up front, and (c) that if the employee quits in response, that measures should be taken to ensure that the resignation can be relied upon before actually taking steps in reliance. That would likely come at a cost in the low four-digits, depending on the lawyer.
Then it would have been open to the employer to simply offer her six months actual notice, and keep her working through the time for which she had to be paid. Instead of having to pay for legal fees associated with (a) a Small Claims Court trial and (b) a Divisional Court appeal, plus $25,000 in wages through the entire notice period during which it was paying somebody else to do her job, and contributions to the employee's legal fees.
There's no question that the employer's legal fees would be into the five digit range (exactly how far, I'm not going to guess), and the contribution to the employee's legal fees could conceivable be into the five digit range as well.
*****
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, September 17, 2012
Bill C-7, Senate Reform in Canada, and the Constitution
The Senate has always been a little bit controversial in Canada.
The news now is that Harper is planning to bring a Supreme Court Reference regarding his most recent plans for Senate Reform, Bill C-7.
Background: What's this whole "Senate" thing, anyways?
The Senate is part of the Federal Parliament, and is technically very similar to the House of Commons in terms of its role in the legislative process. All bills, before becoming law, must be passed by the Senate. Technically, therefore, the Senate has a veto on any legislation passed by the House of Commons.
Essentially, its members are appointed for life terms by the Prime Minister (well, the Governor General, but on the Prime Minister's advice). It is highly undemocratic, and patronage appointments are pretty much par for the course. As a result, there isn't much appetite in the public sphere for the Senate to exercise its power, so the Senate has generally maintained a very limited role - it may delay legislation, but it never - er, almost never - actually rejects a statute that has passed the House of Commons. Thus, it serves as a "sober second thought", and retains vestigial powers of an age long past, with minimal impact on actual Canadian governance. Kind of like the Monarchy.
Prime Minister Harper has long been a critic of this status quo. He believes that we should have a 'triple-E' Senate (Effective, Elected, Equal), like the U.S. The undemocratic nature of the Senate was something he criticized significantly while in opposition, and since becoming Prime Minister he has floated a number of Senate reform ideas. Of course, in the mean time, he has continued the tradition of making patronage appointments to the Senate, achieving a Conservative majority in that house. The Senate made major headlines in late 2010 when it killed Bill C-311, a climate change bill which had made it through the House of Commons despite being opposed by Harper's minority government. This was unprecedented, but the Conservative government - unable to openly laud the Senate - deflected blame to the opposition for not supporting their earlier Senate reform efforts, including the Minister of State (Democratic Reform) writing letters to the editors of major news media to that effect.
An NDP MP, Bruce Hyer, claimed that he had been told by Conservative Senators that the order to kill Bill C-311 had come from the Prime Minister's office. While the PMO technically has no power over the Senate - there is no mechanism for holding a rogue Senator accountable - it is not beyond imagination that he would have some influence there, having appointed a majority of the current Senators himself. It also bears noting that it is not uncommon for a Senator to resign to run for another office (i.e. the House of Commons) and then to be re-appointed to the Senate if unsuccessful.
Now that Harper has his majority, and he can finally implement the Senate reform that the opposition held up for so long, right?
Well, maybe not.
What's So Hard About Senate Reform?
Enter constitutional considerations. Much of the structure of the Senate was defined constitutionally in the Constitution Act, 1867. In 1982, the Trudeau government 'patriated' the Constitution - brought it home and amended it, rather than leaving it with the British Parliament as had historically been the case, and the new constitution came with an amendment formula.
To amend the constitution, there are a number of amendment formulas in the constitution itself: The general formula requires that the amendment pass the House of Commons and the Senate, and at least 7 of the Provincial legislatures with at least 50% the national population (the "7/50" formula). A referendum is not expressly required, but would be conventional. (For those who are curious, no, it is not strictly necessary that the Senators vote themselves out of their jobs - there is a proviso in the amendment formula permitting the House of Commons to vote on the matter again, at least 180 days after the first vote, and to bypass the Senate entirely if they haven't passed it. Sober second thought, remember?)
The 7/50 formula has proven to be a high threshold. Amendments made it through in 1983 regarding aboriginal rights, but the Meech Lake and Charlottetown accords crashed and burned catastrophically, and in general it has been widely accepted since then that constitutional reform will require a consensus which is virtually impossible to achieve. Before Quebec will agree to any amendment, not having consented to the 1982 patriation in the first place, it will require an amendment to address other Quebec concerns. And Quebec isn't alone. Every Province will have conditions, turning simple negotiations into a monstrous negotiation of how to define the country altogether.
Minor sidebar: On the up side, our constitution isn't interpreted as a stagnant creature in the way that the U.S. constitution is - the U.S. Courts look to the intentions of the founding fathers, and thus end up getting tied up with 18th-century notions of governance and social values. We used to go that way - in the "Persons" case in the 1920s (querying whether or not a woman is a "person" for the purpose of eligibility to serve on the Senate), the Supreme Court of Canada concluded that the drafters of the Canadian constitution considered the answer to be No. Fortunately, in those days there was an appeal to the Judicial Committee of the Privy Council (i.e. the British House of Lords), and they reversed the decision in October 1929, famously characterizing the Canadian constitution as a "living tree" - a metaphor which continues to arise in the jurisprudence to this day.
In order to meaningfully change the Senate, therefore, two things are required: Elections, and term limits. (They need to be appointed by the people, and to periodically account to their constituents.) Elections may not strictly require constitutional reform - nothing in the constitution dictates how the Prime Minister must appoint Senators, so there's no reason why the Prime Minister couldn't say "Let's have an election" and exercise his powers of appointment in accordance with the will of the electorate. A little bit informal and non-binding, and it has been tried with some effect, but my real problem is that, without term limits, it's a half-measure. And there is simply no way to impose term limits without constitutional reform, as the constitution expressly gives Senators job security up to age 75, unless they resign or are otherwise disqualified for specific reasons set out in the constitution.
Term limits, therefore, will require constitutional reform. And Bill C-7 does purport to amend the Constitution. So the next question is this: Does the 7/50 formula need to be satisfied?
Getting Even Deeper Into The Mess
The Federal government argues No, that the amendment falls within the scope of s.44 of the Constitution Act, 1982, which permits Parliament to amend the Constitution "in relation to the executive government of Canada or the Senate and the House of Commons."
I'll concede that it is less than obvious to me what this means. But this isn't the first time the Supreme Court has been asked this question: In 1979, in the Upper House Reference, the Supreme Court interpreted similar language and concluded that "it is not open to Parliament to make alterations which would affect the fundamental features, or essential characteristics, given to the Senate as a means of ensuring regional and provincial representation in the federal legislative process" without getting approval of the Provinces.
In carrying out the analysis, the Court looked at the fact that the Senate is essentially modelled on the House of Lords, and concluded that making the Senate wholly or partially elected would change its fundamental features. Indeed, this is expressly reflected in the language of the constitution: You can only change the "powers of the Senate and the method of selecting Senators" by using the 7/50 formula. The same express language applies to changes to regional representation. This is important, and I'll come back to it later.
But Bill C-7 doesn't run awry there. The method of selecting Senators - i.e. by appointment - isn't being changed. It creates an election process by which candidates are proposed for appointment. So, technically, it's still probably okay there. The central question remains: What about term limits?
There is a cogent argument to be made that term limits may change the fundamental features of the Senate: The House of Lords follows something of an 'independence model' like the judiciary itself - not elected, not subject to any external authority. A Senator can vote his conscience, because he can't be removed, and this renders him immune to external political pressures. Under the 1979 interpretation, I'd probably be inclined to bet on that argument. Term limits - with or without elections - subject Senators to influence by the popular ideas of the moment, fundamentally shifting it away from the House of Lords model. However, in 2012, I'm not so confident that the 'unaccountable' nature of the House of Lords will be a very persuasive model to the Supreme Court.
So the ultimate answer to the "term limits" question is maybe.
Assuming we *can*, does that mean we *should*?
First of all, let me be clear that I have a bit of an 'all or nothing' attitude towards Senate reform. Without elections, term limits would be absolutely awful. Without term limits, elections would be dangerous. Either one would serve to improve the optics of the Senate to the point that the Senate may feel empowered to start exercising real power more often, but neither one, alone, would make the Senate truly accountable.
Bill C-7 proposes 9-year terms. It is easy to imagine a scenario, therefore, where one party dominates the Senate, and the other party dominates the House of Commons. Consent of both houses is needed to any proposed law, and we all know how well the parties get along now.
This will make our overall system much closer to that of the U.S. Their Senators are elected for 6-year terms. Their House of Representatives is fully up for re-election every two years. And the President, of course, every 4. They call it "checks and balances", but it is often criticized from abroad as creating stalemates. A new law may originate in a Democrat-dominated House, and have to pass a Republican-dominated Senate, and still have to get through the Presidential veto of whatever party the President of the day might be.
Whether or not we want two equal houses is a very significant question. What is the point, from a democratic perspective? The "House of Lords" model means it should be insulated from the opinions of the masses, but...well, for all of democracy's flaws, I would rather a government which is more accountable to the people, not less.
But there's a further hitch: Regional representation. Of the 105 Senators, Ontario and Quebec each have 24 (incidentally putting Ontario and Quebec, respectively, as the third and fourth LEAST represented Provinces by population), Nova Scotia and New Brunswick each have 10, PEI has 4, the Territories each have 1, and every other Province (being everything west of Ontario, and Newfoundland) each have 6.
Break it down by population, and it starkly favours the East. New Brunswick, with only about 750,000 people, has 10 Senators. B.C., with more than 4.5 million, and Alberta, with just under 4 million, each have 6.
Think about it this way:
Western Canada (B.C. to Manitoba): Population 10.6 million, 24 Senators.
Ontario: Population 13.5 million, 24 Senators.
Quebec: Population 8 million, 24 Senators.
Eastern Canada (Nfld, NS, NB, PEI): Population 2.3 million, 30 Senators.
Hard to understand, really. In the U.S., regional representation is kind of the raison d'etre of the second House - ensuring that Wyoming's half million have an equal voice in one house to California's 37 million - but the distribution in the Canadian Senate just seems skewed. And remember, this can't be changed without satisfying the 7/50 formula.
Stephane Dion has made some potent criticisms of Bill C-7, feeling firstly that the legislative gridlock we often see south of the border is not something we should model in Canada. Secondly, he points out the representation problem. Ontario being underrepresented by population isn't necessarily a problem (there is, perhaps, a certain logic to it), but this would heavily exacerbate problems of Western alienation. One would think that this would concern Harper, who has himself appeared to flirt with Alberta separatism. But Dion points out that Harper stated in 2006 that his Senate reform goal was to "force the provinces and others to, at some point in the future, seriously address other questions (...) such as the distribution of seats...."
Makes sense. Senate reform will actually threaten national unity until and unless we can come together and make a 7/50 amendment happen.
This is another part of what I mean when I say that I'm 'all or nothing'. It doesn't make sense to me to implement Senate reform to the extent that we can without doing it all the way, the way we want. Without fixing the representation problem, any power the Upper House achieves will be at the expense of national unity, and so we can't really say that we gain any benefits by a triple-E Senate.
Quite frankly, I don't so much mind the status quo, Bill C-311 fiasco aside, but I think that if there's a reform to be made, abolition would be the way to go. We've done okay with just one House, and the disadvantages of a second House are not insignificant.
The news now is that Harper is planning to bring a Supreme Court Reference regarding his most recent plans for Senate Reform, Bill C-7.
Background: What's this whole "Senate" thing, anyways?
The Senate is part of the Federal Parliament, and is technically very similar to the House of Commons in terms of its role in the legislative process. All bills, before becoming law, must be passed by the Senate. Technically, therefore, the Senate has a veto on any legislation passed by the House of Commons.
Essentially, its members are appointed for life terms by the Prime Minister (well, the Governor General, but on the Prime Minister's advice). It is highly undemocratic, and patronage appointments are pretty much par for the course. As a result, there isn't much appetite in the public sphere for the Senate to exercise its power, so the Senate has generally maintained a very limited role - it may delay legislation, but it never - er, almost never - actually rejects a statute that has passed the House of Commons. Thus, it serves as a "sober second thought", and retains vestigial powers of an age long past, with minimal impact on actual Canadian governance. Kind of like the Monarchy.
Prime Minister Harper has long been a critic of this status quo. He believes that we should have a 'triple-E' Senate (Effective, Elected, Equal), like the U.S. The undemocratic nature of the Senate was something he criticized significantly while in opposition, and since becoming Prime Minister he has floated a number of Senate reform ideas. Of course, in the mean time, he has continued the tradition of making patronage appointments to the Senate, achieving a Conservative majority in that house. The Senate made major headlines in late 2010 when it killed Bill C-311, a climate change bill which had made it through the House of Commons despite being opposed by Harper's minority government. This was unprecedented, but the Conservative government - unable to openly laud the Senate - deflected blame to the opposition for not supporting their earlier Senate reform efforts, including the Minister of State (Democratic Reform) writing letters to the editors of major news media to that effect.
An NDP MP, Bruce Hyer, claimed that he had been told by Conservative Senators that the order to kill Bill C-311 had come from the Prime Minister's office. While the PMO technically has no power over the Senate - there is no mechanism for holding a rogue Senator accountable - it is not beyond imagination that he would have some influence there, having appointed a majority of the current Senators himself. It also bears noting that it is not uncommon for a Senator to resign to run for another office (i.e. the House of Commons) and then to be re-appointed to the Senate if unsuccessful.
Now that Harper has his majority, and he can finally implement the Senate reform that the opposition held up for so long, right?
Well, maybe not.
What's So Hard About Senate Reform?
Enter constitutional considerations. Much of the structure of the Senate was defined constitutionally in the Constitution Act, 1867. In 1982, the Trudeau government 'patriated' the Constitution - brought it home and amended it, rather than leaving it with the British Parliament as had historically been the case, and the new constitution came with an amendment formula.
To amend the constitution, there are a number of amendment formulas in the constitution itself: The general formula requires that the amendment pass the House of Commons and the Senate, and at least 7 of the Provincial legislatures with at least 50% the national population (the "7/50" formula). A referendum is not expressly required, but would be conventional. (For those who are curious, no, it is not strictly necessary that the Senators vote themselves out of their jobs - there is a proviso in the amendment formula permitting the House of Commons to vote on the matter again, at least 180 days after the first vote, and to bypass the Senate entirely if they haven't passed it. Sober second thought, remember?)
The 7/50 formula has proven to be a high threshold. Amendments made it through in 1983 regarding aboriginal rights, but the Meech Lake and Charlottetown accords crashed and burned catastrophically, and in general it has been widely accepted since then that constitutional reform will require a consensus which is virtually impossible to achieve. Before Quebec will agree to any amendment, not having consented to the 1982 patriation in the first place, it will require an amendment to address other Quebec concerns. And Quebec isn't alone. Every Province will have conditions, turning simple negotiations into a monstrous negotiation of how to define the country altogether.
Minor sidebar: On the up side, our constitution isn't interpreted as a stagnant creature in the way that the U.S. constitution is - the U.S. Courts look to the intentions of the founding fathers, and thus end up getting tied up with 18th-century notions of governance and social values. We used to go that way - in the "Persons" case in the 1920s (querying whether or not a woman is a "person" for the purpose of eligibility to serve on the Senate), the Supreme Court of Canada concluded that the drafters of the Canadian constitution considered the answer to be No. Fortunately, in those days there was an appeal to the Judicial Committee of the Privy Council (i.e. the British House of Lords), and they reversed the decision in October 1929, famously characterizing the Canadian constitution as a "living tree" - a metaphor which continues to arise in the jurisprudence to this day.
In order to meaningfully change the Senate, therefore, two things are required: Elections, and term limits. (They need to be appointed by the people, and to periodically account to their constituents.) Elections may not strictly require constitutional reform - nothing in the constitution dictates how the Prime Minister must appoint Senators, so there's no reason why the Prime Minister couldn't say "Let's have an election" and exercise his powers of appointment in accordance with the will of the electorate. A little bit informal and non-binding, and it has been tried with some effect, but my real problem is that, without term limits, it's a half-measure. And there is simply no way to impose term limits without constitutional reform, as the constitution expressly gives Senators job security up to age 75, unless they resign or are otherwise disqualified for specific reasons set out in the constitution.
Term limits, therefore, will require constitutional reform. And Bill C-7 does purport to amend the Constitution. So the next question is this: Does the 7/50 formula need to be satisfied?
Getting Even Deeper Into The Mess
The Federal government argues No, that the amendment falls within the scope of s.44 of the Constitution Act, 1982, which permits Parliament to amend the Constitution "in relation to the executive government of Canada or the Senate and the House of Commons."
I'll concede that it is less than obvious to me what this means. But this isn't the first time the Supreme Court has been asked this question: In 1979, in the Upper House Reference, the Supreme Court interpreted similar language and concluded that "it is not open to Parliament to make alterations which would affect the fundamental features, or essential characteristics, given to the Senate as a means of ensuring regional and provincial representation in the federal legislative process" without getting approval of the Provinces.
In carrying out the analysis, the Court looked at the fact that the Senate is essentially modelled on the House of Lords, and concluded that making the Senate wholly or partially elected would change its fundamental features. Indeed, this is expressly reflected in the language of the constitution: You can only change the "powers of the Senate and the method of selecting Senators" by using the 7/50 formula. The same express language applies to changes to regional representation. This is important, and I'll come back to it later.
But Bill C-7 doesn't run awry there. The method of selecting Senators - i.e. by appointment - isn't being changed. It creates an election process by which candidates are proposed for appointment. So, technically, it's still probably okay there. The central question remains: What about term limits?
There is a cogent argument to be made that term limits may change the fundamental features of the Senate: The House of Lords follows something of an 'independence model' like the judiciary itself - not elected, not subject to any external authority. A Senator can vote his conscience, because he can't be removed, and this renders him immune to external political pressures. Under the 1979 interpretation, I'd probably be inclined to bet on that argument. Term limits - with or without elections - subject Senators to influence by the popular ideas of the moment, fundamentally shifting it away from the House of Lords model. However, in 2012, I'm not so confident that the 'unaccountable' nature of the House of Lords will be a very persuasive model to the Supreme Court.
So the ultimate answer to the "term limits" question is maybe.
Assuming we *can*, does that mean we *should*?
First of all, let me be clear that I have a bit of an 'all or nothing' attitude towards Senate reform. Without elections, term limits would be absolutely awful. Without term limits, elections would be dangerous. Either one would serve to improve the optics of the Senate to the point that the Senate may feel empowered to start exercising real power more often, but neither one, alone, would make the Senate truly accountable.
Bill C-7 proposes 9-year terms. It is easy to imagine a scenario, therefore, where one party dominates the Senate, and the other party dominates the House of Commons. Consent of both houses is needed to any proposed law, and we all know how well the parties get along now.
This will make our overall system much closer to that of the U.S. Their Senators are elected for 6-year terms. Their House of Representatives is fully up for re-election every two years. And the President, of course, every 4. They call it "checks and balances", but it is often criticized from abroad as creating stalemates. A new law may originate in a Democrat-dominated House, and have to pass a Republican-dominated Senate, and still have to get through the Presidential veto of whatever party the President of the day might be.
Whether or not we want two equal houses is a very significant question. What is the point, from a democratic perspective? The "House of Lords" model means it should be insulated from the opinions of the masses, but...well, for all of democracy's flaws, I would rather a government which is more accountable to the people, not less.
But there's a further hitch: Regional representation. Of the 105 Senators, Ontario and Quebec each have 24 (incidentally putting Ontario and Quebec, respectively, as the third and fourth LEAST represented Provinces by population), Nova Scotia and New Brunswick each have 10, PEI has 4, the Territories each have 1, and every other Province (being everything west of Ontario, and Newfoundland) each have 6.
Break it down by population, and it starkly favours the East. New Brunswick, with only about 750,000 people, has 10 Senators. B.C., with more than 4.5 million, and Alberta, with just under 4 million, each have 6.
Think about it this way:
Western Canada (B.C. to Manitoba): Population 10.6 million, 24 Senators.
Ontario: Population 13.5 million, 24 Senators.
Quebec: Population 8 million, 24 Senators.
Eastern Canada (Nfld, NS, NB, PEI): Population 2.3 million, 30 Senators.
Hard to understand, really. In the U.S., regional representation is kind of the raison d'etre of the second House - ensuring that Wyoming's half million have an equal voice in one house to California's 37 million - but the distribution in the Canadian Senate just seems skewed. And remember, this can't be changed without satisfying the 7/50 formula.
Stephane Dion has made some potent criticisms of Bill C-7, feeling firstly that the legislative gridlock we often see south of the border is not something we should model in Canada. Secondly, he points out the representation problem. Ontario being underrepresented by population isn't necessarily a problem (there is, perhaps, a certain logic to it), but this would heavily exacerbate problems of Western alienation. One would think that this would concern Harper, who has himself appeared to flirt with Alberta separatism. But Dion points out that Harper stated in 2006 that his Senate reform goal was to "force the provinces and others to, at some point in the future, seriously address other questions (...) such as the distribution of seats...."
Makes sense. Senate reform will actually threaten national unity until and unless we can come together and make a 7/50 amendment happen.
This is another part of what I mean when I say that I'm 'all or nothing'. It doesn't make sense to me to implement Senate reform to the extent that we can without doing it all the way, the way we want. Without fixing the representation problem, any power the Upper House achieves will be at the expense of national unity, and so we can't really say that we gain any benefits by a triple-E Senate.
Quite frankly, I don't so much mind the status quo, Bill C-311 fiasco aside, but I think that if there's a reform to be made, abolition would be the way to go. We've done okay with just one House, and the disadvantages of a second House are not insignificant.
Friday, September 14, 2012
How to Quit Your Job
First off, let me disclaim this by saying that this isn't about constructive dismissal - I'm not talking about scenarios where you quit in response to actions by the employer which effectively breach your contract, such that you can claim to have been constructively dismissed. That's an entirely different analysis, with many other considerations. In this entry, I'm discussing a normal, genuine, and voluntary resignation.
Notice
There are myths abound about "two weeks' notice". Firstly, many people believe that it is just a courtesy. It is not just a courtesy; notice of resignation will almost always be required as an implied or express term of an employment contract. Secondly, many people believe that two weeks is enough. That is not true either, or at least, not always true.
So, first things first, check your contract. Often, a contract will fix an amount of notice that the employee has to provide. In that case, it's easy. If you don't have a written contract, however, or it doesn't speak to notice of resignation, that doesn't mean you don't have to provide notice.
The common law implied obligation to give "reasonable notice" is one that cuts both ways. When your employer fires you without just cause, they have to give you notice, or else compensate you on the basis of it. Likewise, when you resign, you have to give the employer notice, and in the absence of a contractual provision specifying a notice period, that notice has to be "reasonable".
It doesn't often happen, but if the employer can quantify a loss because you left without notice, the employer can sue you for those losses.
So some things to think about: How hard will you be to replace? To bring a replacement up to speed on your work? If you work in a front-line retail role, or something else where a replacement should be easily found or other people should be easily scheduled to cover your shifts, then two weeks (or potentially even less), should be enough. On the other hand, if you're managing several complex projects, requiring a specialized skill set, and requiring detailed familiarity with the employer's processes and the files themselves, then it will likely be longer.
Statutory Notice
I include this as an afterthought, because it's rare. But there are circumstances where the Employment Standards Act requires specific notice.
If your employer is engaged in a mass layoff, and your employer has given notice of termination to at least 50 employees at the same establishment in a four week period, then the employees must give notice if they wish to resign earlier - one week's notice if they have less than two years of service; two weeks' notice otherwise.
As well, there are notice provisions regarding statutory leaves, including that, if you're not coming back after parental leave, you have to give at least 4 weeks' notice.
And there's one which, while not a strict requirement, is a good idea: When an employee has received notice of termination and is entitled to statutory severance pay, and the employee wants to leave before the end of the statutory notice period, the employee can preserve the right to statutory severance by providing at least two weeks' notice. (I have had this arise in context of a long-service employee who obtained new employment very promptly after being terminated. Remember: Statutory severance isn't subject to mitigation. So by ensuring that the employee gave two weeks' notice, this person got a soft landing going to a new employer immediately, and also got the statutory severance pay as a windfall.)
Process
Now that we know to give notice, how should you give the notice? Well, the obvious answer is "in writing". And make sure you keep a copy for your records. There are a lot of common sense things to be said here about not burning bridges, etc., but I won't go into that.
What I will point out is that many employers may waive the notice period. It is not at all uncommon that an employer, when receiving notice, will say, "Don't worry about coming into work through the rest of the notice period", and escort you out of the building. (The escort is a funny piece of paranoia, but so be it.) In general, they still pay you out for those weeks. Be ready for it. Try to have your personal effects and workspace organized before giving notice in the first place - you may not have your x weeks to actually clean up.
Along the same lines, don't count on it. Don't accept a new job to start September 1, then give your notice on August 30 figuring that you'll be sent home. If it doesn't work out that way, you could be in a bind. (I've seen it happen.) Give your x weeks' notice with x clear weeks before your new start date. Consider discussing a revised start date if your notice gets waived (for a windfall), or just enjoy your x weeks of paid 'funemployment', as I've heard it called.
Also, if there are things that are important to keep from your work computer, make sure you copy them before giving notice. Personal emails, records, etc. You may be locked out of your computer immediately upon giving notice. However, and this is important, make sure not to take proprietary or confidential information. That's what often lands employees in a lot of hot water. Copy what's yours, but if you start going into copying what isn't yours - oh, maybe these blueprints I've been working on here will help me get a job with the competition - then you're basically asking to get sued.
Also, you need to remember that the other things you're receiving - health benefits, cell phone, etc. - may not continue long after you give notice. While they strictly ought to be continued until at least the end of the notice period you've given, there's no harm in being cautious and getting your prescriptions refilled on the company drug plan before announcing that you're leaving.
Similarly with bonuses. I've been asked before: I want to put in my notice at the start of the month, but there's a big bonus coming up partway through the month. Am I still entitled to it? That's a nuanced area of law, and the answer is always going to be "maybe", perhaps weighted more to one side or another, and so, if you can avoid it, don't take the chance. Wait, if possible, until after you have the cheque before you put in your notice. Even if you are entitled to it either way, it's still better to have it first than to have to fight for it.
(For this reason, you might occasionally hear about seemingly-random mass migrations from large companies. Suddenly, for no apparent reason, a company gets a spike in resignations - that is usually because they have just paid out a bonus. The employees had, at some point or another, decided to leave, but didn't want to risk losing their bonus, so stuck it out just long enough to get the cheque.)
*****
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.
Notice
There are myths abound about "two weeks' notice". Firstly, many people believe that it is just a courtesy. It is not just a courtesy; notice of resignation will almost always be required as an implied or express term of an employment contract. Secondly, many people believe that two weeks is enough. That is not true either, or at least, not always true.
So, first things first, check your contract. Often, a contract will fix an amount of notice that the employee has to provide. In that case, it's easy. If you don't have a written contract, however, or it doesn't speak to notice of resignation, that doesn't mean you don't have to provide notice.
The common law implied obligation to give "reasonable notice" is one that cuts both ways. When your employer fires you without just cause, they have to give you notice, or else compensate you on the basis of it. Likewise, when you resign, you have to give the employer notice, and in the absence of a contractual provision specifying a notice period, that notice has to be "reasonable".
It doesn't often happen, but if the employer can quantify a loss because you left without notice, the employer can sue you for those losses.
So some things to think about: How hard will you be to replace? To bring a replacement up to speed on your work? If you work in a front-line retail role, or something else where a replacement should be easily found or other people should be easily scheduled to cover your shifts, then two weeks (or potentially even less), should be enough. On the other hand, if you're managing several complex projects, requiring a specialized skill set, and requiring detailed familiarity with the employer's processes and the files themselves, then it will likely be longer.
Statutory Notice
I include this as an afterthought, because it's rare. But there are circumstances where the Employment Standards Act requires specific notice.
If your employer is engaged in a mass layoff, and your employer has given notice of termination to at least 50 employees at the same establishment in a four week period, then the employees must give notice if they wish to resign earlier - one week's notice if they have less than two years of service; two weeks' notice otherwise.
As well, there are notice provisions regarding statutory leaves, including that, if you're not coming back after parental leave, you have to give at least 4 weeks' notice.
And there's one which, while not a strict requirement, is a good idea: When an employee has received notice of termination and is entitled to statutory severance pay, and the employee wants to leave before the end of the statutory notice period, the employee can preserve the right to statutory severance by providing at least two weeks' notice. (I have had this arise in context of a long-service employee who obtained new employment very promptly after being terminated. Remember: Statutory severance isn't subject to mitigation. So by ensuring that the employee gave two weeks' notice, this person got a soft landing going to a new employer immediately, and also got the statutory severance pay as a windfall.)
Process
Now that we know to give notice, how should you give the notice? Well, the obvious answer is "in writing". And make sure you keep a copy for your records. There are a lot of common sense things to be said here about not burning bridges, etc., but I won't go into that.
What I will point out is that many employers may waive the notice period. It is not at all uncommon that an employer, when receiving notice, will say, "Don't worry about coming into work through the rest of the notice period", and escort you out of the building. (The escort is a funny piece of paranoia, but so be it.) In general, they still pay you out for those weeks. Be ready for it. Try to have your personal effects and workspace organized before giving notice in the first place - you may not have your x weeks to actually clean up.
Along the same lines, don't count on it. Don't accept a new job to start September 1, then give your notice on August 30 figuring that you'll be sent home. If it doesn't work out that way, you could be in a bind. (I've seen it happen.) Give your x weeks' notice with x clear weeks before your new start date. Consider discussing a revised start date if your notice gets waived (for a windfall), or just enjoy your x weeks of paid 'funemployment', as I've heard it called.
Also, if there are things that are important to keep from your work computer, make sure you copy them before giving notice. Personal emails, records, etc. You may be locked out of your computer immediately upon giving notice. However, and this is important, make sure not to take proprietary or confidential information. That's what often lands employees in a lot of hot water. Copy what's yours, but if you start going into copying what isn't yours - oh, maybe these blueprints I've been working on here will help me get a job with the competition - then you're basically asking to get sued.
Also, you need to remember that the other things you're receiving - health benefits, cell phone, etc. - may not continue long after you give notice. While they strictly ought to be continued until at least the end of the notice period you've given, there's no harm in being cautious and getting your prescriptions refilled on the company drug plan before announcing that you're leaving.
Similarly with bonuses. I've been asked before: I want to put in my notice at the start of the month, but there's a big bonus coming up partway through the month. Am I still entitled to it? That's a nuanced area of law, and the answer is always going to be "maybe", perhaps weighted more to one side or another, and so, if you can avoid it, don't take the chance. Wait, if possible, until after you have the cheque before you put in your notice. Even if you are entitled to it either way, it's still better to have it first than to have to fight for it.
(For this reason, you might occasionally hear about seemingly-random mass migrations from large companies. Suddenly, for no apparent reason, a company gets a spike in resignations - that is usually because they have just paid out a bonus. The employees had, at some point or another, decided to leave, but didn't want to risk losing their bonus, so stuck it out just long enough to get the cheque.)
*****
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.
Wednesday, September 12, 2012
Ontario Bill 115 versus Charter s.2(d): Can the government force terms on teachers?
For those of you who haven't been paying attention, there's big news in Ontario's education system.
Teachers' collective agreements have been up for negotiation. The Ontario government managed to broker a deal with OECTA - my understanding is that OECTA didn't put up too much of a fight, but insisted on including a "me too" clause, that if the government agreed to more favourable terms for other teachers, OECTA would get the benefit of those terms as well - but played hardball with those who wouldn't meet their terms. For several weeks, they threatened to enact legislation which would override any collective agreements and freeze teachers' salaries.
And now they've gone and done exactly that.
It's problematic legislation, from a constitutional perspective. The government is using its legislative powers to dictate terms of what would ordinarily be contractual in nature - some of the media reports refer to it as "imposing a new contract", but in my view that's an improper characterization. A contract is, by definition, something to which its parties have agreed.
The government insists that it gave the unions an opportunity to bargain, but the unions either walked away from the table or failed to reach collective agreements.
Even to whatever extent that characterization might be fair, it creates a bit of a false choice: Choose to agree to the pay freeze, or choose not to agree to it, and have it imposed upon you anyways.
The Supreme Court of Canada: B.C. Health Services and Fraser
The reason it's really problematic is the B.C. Health Services case from the Supreme Court. The British Columbia government did something very similar at the start of 2002, legislating over the collective agreements in its health sector. More than five years later, the Supreme Court decided the issue, finding that there is a constitutional right to good faith collective bargaining.
So...pretty much fatal to the Province's position, no?
Well, probably. Maybe. If...
You see, the law isn't a static thing. Reading the B.C. Health Services decision, one would easily conclude that Bill 115 is unconstitutional, violating s.2(d) of the Charter of Rights and Freedoms.
But then we come to last year's decision in the Fraser case - my commentary here - dealing with a statute which required an employer to receive and respond to employee association proposals. In four sets of reasons, 8 of 9 judges concluded that this was constitutional, but the reasons varied. The majority concluded that a good faith obligation could be (and should be) read into the language, and that was sufficient. No particular bargaining process is guaranteed by s.2(d).
But Justice Deschamps argued for a narrow interpretation of B.C. Health Services, and Justices Rothstein and Charron argued that B.C. Health Services was unworkable and the precedent should be overturned. The majority's response to the latter is that it was "premature" to conclude that the decision was unworkable.
In other words, B.C. Health Services is not perpetually bulletproof.
The Ontario Court of Appeal: Mounted Police Association of Ontario and Association of Justice Counsel
Then we come to the last few months in Ontario, with two major decisions from the Ontario Court of Appeal. First, we have the Mounted Police Association of Ontario case - my commentary here - where the Mounties sought the right to unionize. The Court of Appeal elaborated on the Supreme Court's decision in Fraser dealing with 'derivative rights', that the right to collective bargaining is guaranteed only as a derivative of the right to meaningful association, and is therefore limited in scope. The employer had a model in place that allowed a collective of employees to make representations, which were heard and responded to in good faith, and that was enough.
Then, last month, the Ontario Court of Appeal released its decision in the Association of Justice Counsel case, dealing with a federal law which prohibited salary increases above a certain level for government lawyers, among others. The Court of Appeal looked at the process, and concluded that there had been good faith collective bargaining, notwithstanding that an agreement was not concluded and ultimately the main issues in contention were disposed of by legislation.
It was around the time this decision was released that the Ontario Liberals started threatening to impose terms. Not likely a coincidence; they're relying on this decision to justify their actions.
Still, we don't know what, if anything, the Supreme Court will do with the MPAO and AJC cases, and Bill 115 would take this doctrine to the next level. The MPAO case, I believe, was probably rightly decided, in light of Fraser. But it seems to me that the AJC case is more difficult: It hinges on the notion that it is only necessary that some good faith bargaining occur, and that once there has been some good faith bargaining, all bets are off.
I find that hard to rationalize. You have a right to be heard and considered in good faith...and if their good faith evaluation doesn't lead them to accept your proposal, they can squish you like a bug. It rather undermines the necessity of good faith in the first place, if these negotiations all take place under the spectre of legislative intervention. If you and I go into negotiations knowing that, if the negotiations break down, you'll get everything you want...who holds all the cards? What incentive do you have to make concessions? It makes little sense.
Fraser guaranteed a process that involved the employers listening to and considering employee representations in good faith. In the absence of good faith, there was a statutory mechanism to seek recourse, the effectiveness of which is essentially untested. There is no obligation on the employer to act on the employee representations, but it seems unlikely to me that the Supreme Court's interpretation of the statute actually permits them to completely disregard the representations after making their response.
So imagine the employee association makes a proposal for additional breaks. The employer looks at the proposal, costs it out, determines that it isn't viable at this time, and tells the association so. Then, the following week, a more spiteful manager comes back from vacation, sees the proposal and decides to reduce break times as a retaliation for the employees having the gall to ask for more. Under the AJC analysis, this is fine - the employer met its constitutional obligation, and now good faith goes out the window.
No, I don't think Fraser cut off the employer's obligations there. It seems to me that good faith bargaining, by definition, means that - even if the employer is able to unilaterally impose terms - the decision-making processes leading to significantly changed terms and conditions of employment must include consideration of employee representations.
Perhaps more importantly, the AJC case deals with cases with fixed limits for compensation increases. It creates a framework within which negotiations can still occur. It may be a fact-based question as to whether or not it renders the collective bargaining process meaningless - it seems that one of the AJC's priorities was to close a salary gap between federal and provincial lawyers, and this clearly made that goal impossible.
In a case like Bill 115, though, the government is essentially replacing the need for a collective agreement. It's setting the terms. While I think the AJC decision is vulnerable at the Supreme Court, Bill 115 is even more vulnerable.
Additional Thoughts
I dislike such heavy-handed labour policy as what we are seeing now from the Provincial government, and what we've been seeing from the Federal government for a while. The trouble is that I actually agree with Justices Rothstein and Charron: B.C. Health Services has some deep problems. Yet heavy-handed union-busting policy choices are more likely to attract negative attention from the Courts - if the government is acting in such a way, the Courts may feel more obligated to step in to protect against such tactics. The precedent in B.C. Health Services is less likely to be done away with when governments continue to demonstrate good reasons that it should be maintained.
*****
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, September 6, 2012
Does Bankruptcy Clear Your ETR Debt?
This is an issue that has gotten a bit of media attention, and it's looking like it will soon get some judicial attention as well.
Most of my readers will know that the 407 ETR, part of the legacy of the Mike Harris regime, is a private toll highway. As most modern toll highways, it has photographic and electronic tolling systems - they track your entry and exit from the highway (via electronic transponder or photographs of your plates) - and send you a bill for your use of the highway.
If you don't pay the bill, they get to tell the Registrar of Motor Vehicles not to renew your license plates. And, following some litigation in early years in which the government tried to rein in control of the ETR, the ETR established a pretty unqualified right to do so.
So the interesting question is this: Can the ETR continue to insist that the Registrar refuse to renew the license plates of a discharged bankrupt?
Before we move on, let me give a 30-second crash course on bankruptcy for beginners:
Bankruptcy is a process designed to give people buried in insurmountable debt 'a fresh start'. Basically, when you apply for bankruptcy, the Courts make you satisfy your creditors to the extent that you're able for a period of time, and then you get a 'discharge'. Nearly all debts (with some exceptions) are cleared by the discharge - the discharge prevents your creditors from chasing after your assets moving forward. They can't sue you, they can't get a judgment, and they can't take enforcement actions based on pre-bankruptcy debts.
That's a pretty oversimplified view of bankruptcy, but it gets you what you need to know here.
Let's look at the Matthew Moore case, as an example of what has been happening. Mr. Moore made an assignment in bankruptcy in November 2007. His debts included a $35,000 debt to the ETR.
On June 21, 2011, Moore received an absolute discharge from bankruptcy. Figuring this cleared his debts, he then went to renew his plates. But he couldn't. The ETR takes the position that, even though it can't sue Moore for the money, it is still entitled to force the Registrar to refuse to renew plates until the debt is paid.
How Does the ETR Justify This?
The ETR's web site explains its position on the point. Notwithstanding the ETR's implication therein that the matter is settled law, nothing could be further from the truth. The only case I've even heard of where the question was judicially considered is the Moore case, and the Moore case is (sort of) subject to appeal, which I'll explain below.
The ETR calls itself an "open access highway", and says that, "[u]nlike other service providers, 407 ETR does not have the opportunity or ability to screen or examine the credit-worthiness of its customers until after they have used the highway....unlike other companies that can refuse to provide service, cancel credit or turn off utilities to those who fail to pay, plate denial is the only effective remedy available to 407 ETR."
In my view, there are several problems with this analysis. It is arguable whether or not the ETR is unable to deny services, and in any event if it is so unable this inability arises as a matter of contract. There are certainly other remedies available to it, but the plate denial remedy is more cost-effective - all the ETR has to do is engage plate denial, and then it can sit back and wait for the debtor to come, cash in hand. Most importantly, it is not alone in not being able to choose its debtors. And finally, if there's a conflict with the Bankruptcy and Insolvency Act ("the BIA"), the BIA takes precedence over anything the Province can legislate or contract for anyways.
Open Access Highway
This phrase, 'open access highway', doesn't really have any significance in law, and it's a little misleading for the 407 to refer to itself as such. There is a term, "controlled-access highway", which refers to highways which have controlled points of access, and includes all 400-series highways, including the 407. What the 407 means by "open access" is that it doesn't place physical barriers blocking or restricting vehicles from using the access ramps.
That's a business model, though, and not a legal barrier. Nothing in the Highway 407 Act prevents the construction of physical toll booths. It's a good business model, too - for the handful of delinquent accounts it can't collect on, the administration of the electronic toll system is quite cost-effective and permits effective collection for huge numbers of tolls. It is not the case that the legislature came in with a law saying "You can't block people from accessing the highway."
Furthermore, as a private occupier of land, there is no law preventing the ETR from issuing Notices of Trespass to non-paying users, prohibiting such people from using the ETR, and enforcing remedies under the Trespass to Property Act.
Of course, it's never quite that simple. The ETR contracted with the Ontario government to lease the land, and the lease imposes certain requirements on the ETR regarding the provision of service. The electronic toll system is expressly set out in the schedules to the contract, and the contract itself provides for "barrier free access" for use by "all members of the public", without requiring pre-payment or prior notification by users.
So, obviously it would be breaching the contract by changing its business model in respect of the toll system. And there may be an argument to be had about whether or not the contract permits it to prohibit use by people with delinquent accounts - I'm not familiar with all the ins and outs of the contract, but from what I have seen I think the Province would have a hard time arguing that the ETR is not entitled to do so.
But at the end of the day, it's all kind of moot. This is a contract, entered into by the ETR, voluntarily, with its landlord, which happens to be the government. If I contract with my landlord to offer services to all people, regardless of creditworthiness, I can hardly complain later about my inability to screen credit.
Other Remedies
The BIA gives remedies to creditors. They aren't perfect, but they're there. If a person isn't bankrupt, a court action can be used to enforce rights. For the ETR to say that it has no remedies other than plate denial is simply untrue.
The ETR is not Unique
The ETR's claim to be different is rooted in the fact that it cannot pre-select its debtors. There is a term for this: "Involuntary creditor". (Again, of course, noting that I'm not sure the ETR really is an involuntary creditor. I would say that it is somewhat more akin to a gas station, or any other industry where the custom is to provide the service prior to asking for payment.)
There are a number of kinds of involuntary creditors. Tax authorities, tort victims, and others who had no opportunity to vet who owes them money. In general, these debts are not protected against bankruptcy.
Many intentional tort debts are not discharged. Debts arising from fraud, theft, intentional bodily harm or sexual assault, for example, are not discharged. However, most other tort debts do get discharged. So if somebody negligently causes me a serious and permanent injury, and then becomes bankrupt, I will not have any remedies beyond what I get through the bankruptcy process itself.
As involuntary creditors go, who is more sympathetic? The paraplegic who was injured by the bankrupt's negligence? Or the corporation whose highway was driven upon?
The BIA is Federal Legislation
There's a matter of paramountcy to consider here. The Provincial legislature cannot legislate over Federal legislation like the BIA. Whether or not there is an operational conflict can be argued: Whether or not the plate denial mechanism falls within the scope of the BIA (thus making it impossible to engage after a discharge) can be questioned.
But ultimately, that's the question. Whether or not the 407 can or can't block access to people, whether or not it is an involuntary creditor, whether or not it has other remedies, the sole question is whether or not the recourse to plate denial is prohibited by operation of a BIA discharge.
The jurisprudence on comparable issues is mixed, and there is case law suggesting that the purpose of the licence suspension is the material question: If you're using a licence suspension to prevent a bad driver from driving, that's fine. If you're using it as an enforcement mechanism to collect on a debt, then to permit that to proceed notwithstanding an assignment in bankruptcy would usurp the power of the bankruptcy court.
What's happening now?
A number of legal challenges are outstanding, but the most promising regards the Moore case. Mr. Moore originally got an order from the bankruptcy court, but the ETR set that aside and obtained an order to the contrary in the Superior Court. Moore was going to appeal, and the Superintendent of Bankruptcy was going to intervene, but at the eleventh hour Moore and the ETR settled...which the ETR figured would kill the matter, leaving them with an unchallenged precedent saying that bankruptcy didn't block their plate denial remedy.
However, the Superintendent of Bankruptcy is proceeding with the appeal nonetheless. Earlier this week, the Court of Appeal decided a preliminary issue as to whether or not the Superintendent has standing to bring the appeal. The Court concluded that the Superintendent may bring the appeal 'with leave', and granted leave. Which means that there will likely be a Court of Appeal showdown on the merits, between the Superintendent of Bankruptcy and the ETR.
Should be interesting.
*****
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.
Most of my readers will know that the 407 ETR, part of the legacy of the Mike Harris regime, is a private toll highway. As most modern toll highways, it has photographic and electronic tolling systems - they track your entry and exit from the highway (via electronic transponder or photographs of your plates) - and send you a bill for your use of the highway.
If you don't pay the bill, they get to tell the Registrar of Motor Vehicles not to renew your license plates. And, following some litigation in early years in which the government tried to rein in control of the ETR, the ETR established a pretty unqualified right to do so.
So the interesting question is this: Can the ETR continue to insist that the Registrar refuse to renew the license plates of a discharged bankrupt?
Before we move on, let me give a 30-second crash course on bankruptcy for beginners:
Bankruptcy is a process designed to give people buried in insurmountable debt 'a fresh start'. Basically, when you apply for bankruptcy, the Courts make you satisfy your creditors to the extent that you're able for a period of time, and then you get a 'discharge'. Nearly all debts (with some exceptions) are cleared by the discharge - the discharge prevents your creditors from chasing after your assets moving forward. They can't sue you, they can't get a judgment, and they can't take enforcement actions based on pre-bankruptcy debts.
That's a pretty oversimplified view of bankruptcy, but it gets you what you need to know here.
Let's look at the Matthew Moore case, as an example of what has been happening. Mr. Moore made an assignment in bankruptcy in November 2007. His debts included a $35,000 debt to the ETR.
On June 21, 2011, Moore received an absolute discharge from bankruptcy. Figuring this cleared his debts, he then went to renew his plates. But he couldn't. The ETR takes the position that, even though it can't sue Moore for the money, it is still entitled to force the Registrar to refuse to renew plates until the debt is paid.
How Does the ETR Justify This?
The ETR's web site explains its position on the point. Notwithstanding the ETR's implication therein that the matter is settled law, nothing could be further from the truth. The only case I've even heard of where the question was judicially considered is the Moore case, and the Moore case is (sort of) subject to appeal, which I'll explain below.
The ETR calls itself an "open access highway", and says that, "[u]nlike other service providers, 407 ETR does not have the opportunity or ability to screen or examine the credit-worthiness of its customers until after they have used the highway....unlike other companies that can refuse to provide service, cancel credit or turn off utilities to those who fail to pay, plate denial is the only effective remedy available to 407 ETR."
In my view, there are several problems with this analysis. It is arguable whether or not the ETR is unable to deny services, and in any event if it is so unable this inability arises as a matter of contract. There are certainly other remedies available to it, but the plate denial remedy is more cost-effective - all the ETR has to do is engage plate denial, and then it can sit back and wait for the debtor to come, cash in hand. Most importantly, it is not alone in not being able to choose its debtors. And finally, if there's a conflict with the Bankruptcy and Insolvency Act ("the BIA"), the BIA takes precedence over anything the Province can legislate or contract for anyways.
Open Access Highway
This phrase, 'open access highway', doesn't really have any significance in law, and it's a little misleading for the 407 to refer to itself as such. There is a term, "controlled-access highway", which refers to highways which have controlled points of access, and includes all 400-series highways, including the 407. What the 407 means by "open access" is that it doesn't place physical barriers blocking or restricting vehicles from using the access ramps.
That's a business model, though, and not a legal barrier. Nothing in the Highway 407 Act prevents the construction of physical toll booths. It's a good business model, too - for the handful of delinquent accounts it can't collect on, the administration of the electronic toll system is quite cost-effective and permits effective collection for huge numbers of tolls. It is not the case that the legislature came in with a law saying "You can't block people from accessing the highway."
Furthermore, as a private occupier of land, there is no law preventing the ETR from issuing Notices of Trespass to non-paying users, prohibiting such people from using the ETR, and enforcing remedies under the Trespass to Property Act.
Of course, it's never quite that simple. The ETR contracted with the Ontario government to lease the land, and the lease imposes certain requirements on the ETR regarding the provision of service. The electronic toll system is expressly set out in the schedules to the contract, and the contract itself provides for "barrier free access" for use by "all members of the public", without requiring pre-payment or prior notification by users.
So, obviously it would be breaching the contract by changing its business model in respect of the toll system. And there may be an argument to be had about whether or not the contract permits it to prohibit use by people with delinquent accounts - I'm not familiar with all the ins and outs of the contract, but from what I have seen I think the Province would have a hard time arguing that the ETR is not entitled to do so.
But at the end of the day, it's all kind of moot. This is a contract, entered into by the ETR, voluntarily, with its landlord, which happens to be the government. If I contract with my landlord to offer services to all people, regardless of creditworthiness, I can hardly complain later about my inability to screen credit.
Other Remedies
The BIA gives remedies to creditors. They aren't perfect, but they're there. If a person isn't bankrupt, a court action can be used to enforce rights. For the ETR to say that it has no remedies other than plate denial is simply untrue.
The ETR is not Unique
The ETR's claim to be different is rooted in the fact that it cannot pre-select its debtors. There is a term for this: "Involuntary creditor". (Again, of course, noting that I'm not sure the ETR really is an involuntary creditor. I would say that it is somewhat more akin to a gas station, or any other industry where the custom is to provide the service prior to asking for payment.)
There are a number of kinds of involuntary creditors. Tax authorities, tort victims, and others who had no opportunity to vet who owes them money. In general, these debts are not protected against bankruptcy.
Many intentional tort debts are not discharged. Debts arising from fraud, theft, intentional bodily harm or sexual assault, for example, are not discharged. However, most other tort debts do get discharged. So if somebody negligently causes me a serious and permanent injury, and then becomes bankrupt, I will not have any remedies beyond what I get through the bankruptcy process itself.
As involuntary creditors go, who is more sympathetic? The paraplegic who was injured by the bankrupt's negligence? Or the corporation whose highway was driven upon?
The BIA is Federal Legislation
There's a matter of paramountcy to consider here. The Provincial legislature cannot legislate over Federal legislation like the BIA. Whether or not there is an operational conflict can be argued: Whether or not the plate denial mechanism falls within the scope of the BIA (thus making it impossible to engage after a discharge) can be questioned.
But ultimately, that's the question. Whether or not the 407 can or can't block access to people, whether or not it is an involuntary creditor, whether or not it has other remedies, the sole question is whether or not the recourse to plate denial is prohibited by operation of a BIA discharge.
The jurisprudence on comparable issues is mixed, and there is case law suggesting that the purpose of the licence suspension is the material question: If you're using a licence suspension to prevent a bad driver from driving, that's fine. If you're using it as an enforcement mechanism to collect on a debt, then to permit that to proceed notwithstanding an assignment in bankruptcy would usurp the power of the bankruptcy court.
What's happening now?
A number of legal challenges are outstanding, but the most promising regards the Moore case. Mr. Moore originally got an order from the bankruptcy court, but the ETR set that aside and obtained an order to the contrary in the Superior Court. Moore was going to appeal, and the Superintendent of Bankruptcy was going to intervene, but at the eleventh hour Moore and the ETR settled...which the ETR figured would kill the matter, leaving them with an unchallenged precedent saying that bankruptcy didn't block their plate denial remedy.
However, the Superintendent of Bankruptcy is proceeding with the appeal nonetheless. Earlier this week, the Court of Appeal decided a preliminary issue as to whether or not the Superintendent has standing to bring the appeal. The Court concluded that the Superintendent may bring the appeal 'with leave', and granted leave. Which means that there will likely be a Court of Appeal showdown on the merits, between the Superintendent of Bankruptcy and the ETR.
Should be interesting.
*****
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, September 5, 2012
Stranger than Fiction: Will Ford Escape?
Today, Toronto Mayor Rob Ford is fighting in a hearing to keep his job, over a $3150 issue.
What Happened?
Mayor Ford runs a football charity. A worthy cause, no question. However, there was some issue as to donations, in the amount of $3150, by lobbyists. City Council's Code of Conduct has strict regulations regarding fundraising (to prevent the possibility or perception of influence-peddling), and the allegation was that Ford had raised those funds in breach of those regulations. So, in 2010, Council ordered Ford to personally repay the donors of that money.
This past February, the matter came up again, because Ford still hadn't repaid the money. However, Ford delivered a speech defending his charity, and then participated in a successful vote to reverse the previous order.
What's the Problem?
Let's be clear: This case is not about the propriety of Ford's fundraising. The issue here is that a Provincial law, the Municipal Conflict of Interest Act (the "MCIA") prohibits municipal office-holders from participating in discussions or votes in which they have a financial interest.
For a breach, unless it's inadvertent or an "error in judgment", there's a mandatory penalty of removal from office.
So the allegation here is that Ford, by participating in the discussion and then the vote on whether or not he should have to repay the money, violated the MCIA, and therefore should be removed from office.
What is his Defence?
Ford has a prominent lawyer, Alan Lenczner, defending him. Lenczner has crafted a clever defence, which is being billed in the media as a "four-pronged" defence. The four prongs are that the MCIA does not cover breaches of the Code of Conduct; that Council didn't have the power to order Ford to pay back the money; that the sum was too insignificant to amount to a real conflict of interest; or that it was an "error in judgment".
Prong One: The MCIA doesn't apply
The first prong doesn't seem to attack the core of what this case is about - that's the February vote, not the allegedly improper fundraising and failure to repay the money.
Prong Two: No power to order repayment
The second prong, however, is more interesting. Whether or not Council had the power to order repayment of the money, to my mind, is somewhat moot: Council did so order. This order would be subject to an application for judicial review, if Council was exceeding its jurisdiction, and there was no such judicial review. However, there`s a related corollary, that Council had no ability to enforce the order. That there was no mechanism by which Ford could be compelled to pay the money.
And therefore, if Ford`s pocketbook was already safe from the clutches of Council, he obviously didn't have a pecuniary interest in the vote.
There are, however, two problems with this argument. Firstly, it's overly technical and hypothetical - it seems difficult to explain Ford's participation in the discussion and vote if he actually believed that Council had no teeth to enforce the order. It seems that this is an invention by a lawyer after the fact, to go in and say, "Well, yeah, it looked like he was voting in his own interest, and he may even have believed he was voting in his own interest, but he really wasn't."
If Ford had been shot down, and Council regularly repeated it's order for him to repay the monies, would he eventually have paid it? Maybe - not doing so may have cost too much political capital. So even if Council didn't have the power to compel payment, it is not so clear that Ford's bank account isn't up $3150 because of that vote.
Perhaps more importantly, it isn't so clear that the Council lacks the teeth to enforce such a measure. It is arguable whether or not that order falls within Council's mandate under the Code of Conduct itself, and the City of Toronto Act does not authorize an order to reimburse third parties in such a situation...but it does provide other enforcement mechanisms, including a suspension of pay for up to 90 days. Part of the motion Ford voted on was that Council would take no further action on the matter. So maybe Council can't force him to pay $3150 to a third party, but they're more than entitled to take $43,200 out of his pay. Looks like teeth to me.
Prong Three: The Sum is Too Small
This looks, at a glance, like a really tenuous argument, but it may not be. There's actually an exception in the MCIA for an interest "which is so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member".
For example, when Mel Lastman was mayor, and Council was criticizing and taking on the police "True Blue" campaign, and True Blue retained Goodmans, a law firm of which Dale Lastman (Mel's son) was a partner, the Court - on an unchallenged application which Mel initiated proactively - concluded that the interest was too remote or insignificant to be regarded as likely to influence him.
To Rob Ford, three grand isn't a lot of money. This is true. He makes over $170,000 per year, and is quite wealthy to begin with.
Still, the interest is not at all remote, and not really all that small. The vote itself was specifically on whether or not to continue to go after Ford for the money, and even though we aren't talking about a fortune, it's simply untenable to argue that the fact that it is his own pocketbook "cannot reasonably be regarded as likely to influence" him.
It's a week's wages for him, and given how significantly elections are affected by relatively modest differences in taxation, I'd say it's a pretty sure bet that most people are influenced by what happens to a week's wages. And if you put a lot of weight on Ford's independent wealth, then the conclusion is that, if you're rich, you can vote to put more money in your pocket. Which seems odd.
Prong Four: It was an Error in Judgment
This is trickier, because the phrase "error in judgment" is one so utterly defined by judicial interpretation. This isn't a defence, but if this succeeds then he isn't subject to automatic removal from office. Still, the Courts have recognized that pretty much every offence - even the most serious crime - can be said to involve an error in judgment, but the meaning of the phrase per the MCIA is somewhat narrower.
You seldom if ever see a case where an 'error in judgment' is found where 'inadvertence' is not also found.
The central difficulty with this argument, however, is one which Clayton Ruby pointed out effectively: That Rob Ford is unrepentant, not sorry that he participated in the vote, and still doesn't regard the matter as a conflict of interest.
Indeed, Rob Ford has been quoted as saying on the stand that "there's no interest in the city. This is just my personal issue. This does not benefit the city in any way. So this is, to me, not a conflict of interest."
He doesn't see how matters related to compliance with Council's Code of Conduct are of any benefit to the City. That is somewhat disturbing in its own right, but it cements one conclusion: He voted on it, and he voted the way he did, in his official capacity as an office holder, because and only because of his personal interest in the matter. This seems to undermine all his other arguments - i.e. that he had no personal interest, and that his personal interest was so small that it couldn't have influenced him.
If he came back and said "I wasn't thinking about it in those terms at the time, but I can see now why it might be seen as inappropriate", that might justify a finding of "error in judgment" (and wouldn't interfere with his ex post facto defence that the Council has no teeth, either). But this...?
Conclusion
Considering the nature of the facts, removal from office seems like an overly harsh response. In advocacy courses, law students are often taught that the way to win is by making the judge want your side to win, and then presenting viable legal arguments of how to get there. Lenczner's arguments may arguably be viable, and I wouldn't be surprised if they succeed, because there's fundamentally a solid point: Should the elected mayor of a major city be removed from office by the Courts because of a tenuous issue regarding a modest amount of money?
Still, I think that, by arguing that the vote had nothing to do with the city's interests, and only to do with his interests, and by still failing to see what's wrong with casting a vote as mayor in favour of his own personal interests, Ford may be undermining that fundamentally solid point. We have a legal right to expect our public office holders not to vote to advance their own personal interests, and when a public office holder doesn't see what's wrong with doing just that, that would seem to illustrate the very purposes of the MCIA's automatic removal from office.
*****
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.
What Happened?
Mayor Ford runs a football charity. A worthy cause, no question. However, there was some issue as to donations, in the amount of $3150, by lobbyists. City Council's Code of Conduct has strict regulations regarding fundraising (to prevent the possibility or perception of influence-peddling), and the allegation was that Ford had raised those funds in breach of those regulations. So, in 2010, Council ordered Ford to personally repay the donors of that money.
This past February, the matter came up again, because Ford still hadn't repaid the money. However, Ford delivered a speech defending his charity, and then participated in a successful vote to reverse the previous order.
What's the Problem?
Let's be clear: This case is not about the propriety of Ford's fundraising. The issue here is that a Provincial law, the Municipal Conflict of Interest Act (the "MCIA") prohibits municipal office-holders from participating in discussions or votes in which they have a financial interest.
For a breach, unless it's inadvertent or an "error in judgment", there's a mandatory penalty of removal from office.
So the allegation here is that Ford, by participating in the discussion and then the vote on whether or not he should have to repay the money, violated the MCIA, and therefore should be removed from office.
What is his Defence?
Ford has a prominent lawyer, Alan Lenczner, defending him. Lenczner has crafted a clever defence, which is being billed in the media as a "four-pronged" defence. The four prongs are that the MCIA does not cover breaches of the Code of Conduct; that Council didn't have the power to order Ford to pay back the money; that the sum was too insignificant to amount to a real conflict of interest; or that it was an "error in judgment".
Prong One: The MCIA doesn't apply
The first prong doesn't seem to attack the core of what this case is about - that's the February vote, not the allegedly improper fundraising and failure to repay the money.
Prong Two: No power to order repayment
The second prong, however, is more interesting. Whether or not Council had the power to order repayment of the money, to my mind, is somewhat moot: Council did so order. This order would be subject to an application for judicial review, if Council was exceeding its jurisdiction, and there was no such judicial review. However, there`s a related corollary, that Council had no ability to enforce the order. That there was no mechanism by which Ford could be compelled to pay the money.
And therefore, if Ford`s pocketbook was already safe from the clutches of Council, he obviously didn't have a pecuniary interest in the vote.
There are, however, two problems with this argument. Firstly, it's overly technical and hypothetical - it seems difficult to explain Ford's participation in the discussion and vote if he actually believed that Council had no teeth to enforce the order. It seems that this is an invention by a lawyer after the fact, to go in and say, "Well, yeah, it looked like he was voting in his own interest, and he may even have believed he was voting in his own interest, but he really wasn't."
If Ford had been shot down, and Council regularly repeated it's order for him to repay the monies, would he eventually have paid it? Maybe - not doing so may have cost too much political capital. So even if Council didn't have the power to compel payment, it is not so clear that Ford's bank account isn't up $3150 because of that vote.
Perhaps more importantly, it isn't so clear that the Council lacks the teeth to enforce such a measure. It is arguable whether or not that order falls within Council's mandate under the Code of Conduct itself, and the City of Toronto Act does not authorize an order to reimburse third parties in such a situation...but it does provide other enforcement mechanisms, including a suspension of pay for up to 90 days. Part of the motion Ford voted on was that Council would take no further action on the matter. So maybe Council can't force him to pay $3150 to a third party, but they're more than entitled to take $43,200 out of his pay. Looks like teeth to me.
Prong Three: The Sum is Too Small
This looks, at a glance, like a really tenuous argument, but it may not be. There's actually an exception in the MCIA for an interest "which is so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member".
For example, when Mel Lastman was mayor, and Council was criticizing and taking on the police "True Blue" campaign, and True Blue retained Goodmans, a law firm of which Dale Lastman (Mel's son) was a partner, the Court - on an unchallenged application which Mel initiated proactively - concluded that the interest was too remote or insignificant to be regarded as likely to influence him.
To Rob Ford, three grand isn't a lot of money. This is true. He makes over $170,000 per year, and is quite wealthy to begin with.
Still, the interest is not at all remote, and not really all that small. The vote itself was specifically on whether or not to continue to go after Ford for the money, and even though we aren't talking about a fortune, it's simply untenable to argue that the fact that it is his own pocketbook "cannot reasonably be regarded as likely to influence" him.
It's a week's wages for him, and given how significantly elections are affected by relatively modest differences in taxation, I'd say it's a pretty sure bet that most people are influenced by what happens to a week's wages. And if you put a lot of weight on Ford's independent wealth, then the conclusion is that, if you're rich, you can vote to put more money in your pocket. Which seems odd.
Prong Four: It was an Error in Judgment
This is trickier, because the phrase "error in judgment" is one so utterly defined by judicial interpretation. This isn't a defence, but if this succeeds then he isn't subject to automatic removal from office. Still, the Courts have recognized that pretty much every offence - even the most serious crime - can be said to involve an error in judgment, but the meaning of the phrase per the MCIA is somewhat narrower.
You seldom if ever see a case where an 'error in judgment' is found where 'inadvertence' is not also found.
The central difficulty with this argument, however, is one which Clayton Ruby pointed out effectively: That Rob Ford is unrepentant, not sorry that he participated in the vote, and still doesn't regard the matter as a conflict of interest.
Indeed, Rob Ford has been quoted as saying on the stand that "there's no interest in the city. This is just my personal issue. This does not benefit the city in any way. So this is, to me, not a conflict of interest."
He doesn't see how matters related to compliance with Council's Code of Conduct are of any benefit to the City. That is somewhat disturbing in its own right, but it cements one conclusion: He voted on it, and he voted the way he did, in his official capacity as an office holder, because and only because of his personal interest in the matter. This seems to undermine all his other arguments - i.e. that he had no personal interest, and that his personal interest was so small that it couldn't have influenced him.
If he came back and said "I wasn't thinking about it in those terms at the time, but I can see now why it might be seen as inappropriate", that might justify a finding of "error in judgment" (and wouldn't interfere with his ex post facto defence that the Council has no teeth, either). But this...?
Conclusion
Considering the nature of the facts, removal from office seems like an overly harsh response. In advocacy courses, law students are often taught that the way to win is by making the judge want your side to win, and then presenting viable legal arguments of how to get there. Lenczner's arguments may arguably be viable, and I wouldn't be surprised if they succeed, because there's fundamentally a solid point: Should the elected mayor of a major city be removed from office by the Courts because of a tenuous issue regarding a modest amount of money?
Still, I think that, by arguing that the vote had nothing to do with the city's interests, and only to do with his interests, and by still failing to see what's wrong with casting a vote as mayor in favour of his own personal interests, Ford may be undermining that fundamentally solid point. We have a legal right to expect our public office holders not to vote to advance their own personal interests, and when a public office holder doesn't see what's wrong with doing just that, that would seem to illustrate the very purposes of the MCIA's automatic removal from office.
*****
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.
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