Tribunal : Law Society of Ontario Failed in its Duty to Accommodate Lawyer

In a recent decision of the Law Society Tribunal (“Tribunal”),-  Law Society of Ontario v. Burtt, 2018 ONLSTH 63 - panelist Larry Banack dismissed an application by the Law Society of Ontario (“LSO”) seeking a finding that one of its lawyer  licensees had committed professional misconduct.  Mr. Banack found that the lawyer’s alleged misconduct, i.e. his failure to cooperate with a Law Society investigation was the direct result of a disability and that the Law Society had not discharged its legal obligation to accommodate the lawyer’s disability to the point of undue hardship.

Interestingly, despite evidence that many lawyers who are the subjects of LSO’s disciplinary proceedings are suffering from a mental illness such as depression which can amount to a disability under the Ontario Human Rights Code (the “Code”), Mr. Banack found that the circumstances of this case were “highly unusual”.  His findings were largely based on the particular facts of the case, i.e. that the LSO knew that the lawyer was suffering from a disability that resulted in him “freezing” and therefore was unable to provide a written response to the LSO’s request for communication.

In this case, Mr. Burtt admitted that he had not responded in writing to the LSO.  However, Mr. Burtt asserted that he was not capable of providing written responses, as demanded by the LSO, by reason of a documented disability that caused him to “freeze” when confronted with the investigation.  The defence that was asserted by Mr. Burtt resulted from a previous discipline proceeding in 2015.  As a result of that proceeding, the LSO with the consent of Mr. Burtt, commissioned and received two psychological reports.  Those reports were contained in the LSO’s file and both reports concluded that Mr. Burtt was suffering from a psychological condition which negatively affected his ability to respond to the LSO within specified time frames. 

In the previous matter, Mr. Burtt had been reprimanded and ordered to comply with a psychiatric treatment plan which remained in effect up until the date of the hearing before Mr. Banack.  In making his finding against the LSO, Mr. Banack relied on testimony from an LSO investigator that not only had he not read the two psychological reports that were contained in the LSO’s file but had only learned of them on the morning of the hearing. 

The Code prohibits discrimination with respect to membership in a trade or occupational association on specified grounds, one of which is disability.  In a previous case – Law Society of Upper Canada v. Czernik (2010 ONLSHP 122) – the Tribunal held that:  “The Law Society and the Tribunal are subject to the Code and must apply the duty to accommodate where there is a proven disability at play.  A failure to fulfill professional obligations that is caused by a disability must be accommodated by the Law Society and the Panel”.      The LSO was required to accommodate Mr. Burt to the point of undue hardship.  Mr. Banack found that he was satisfied that the record before him was sufficient to make the findings as to the scope and content of the LSO’s duty to accommodate.  Not only did Mr. Burtt tell the LSO about the prior disciplinary proceedings and the psychological reports, the decisions were publicly available on CanLII and it was part of his LSO file. 

In addition, the information available to the LSO’s investigators from their own observations of Mr. Burtt, his conduct and his communications with them ought to have been enough to alert them to consider the existence of a condition which required accommodation.  Mr. Banack found that the difference in this case, as compared to many before the Tribunal, was that Mr. Burtt had responded to the LSO on a timely basis and as Mr. Banack found, was to be contrasted with the ‘typical” response of the licensees in similar circumstances which included evasion, denial, obfuscation and disregard of professional obligations.  In this unusual case, the investigators engaged with an apparently cooperative licensee in lengthy conversations in which he disclosed a prior proceeding and medical reports, offered promises of cooperation and did not seek to avoid or fail to communicate with them.  He simply failed to follow through on his commitments.

All of this should have alerted the LSO’s investigators that the situation called for alternative thinking which by any other name amounted to accommodation.  The issue then became one of whether the accommodation afforded by the LSO, i.e. providing additional time for Mr. Burtt to respond to it was sufficient in the circumstances.  Mr. Banack found that it was not.  He found that in the “highly unusual” circumstances of this licensee who was known to be suffering from a disability that resulted in freezing but engaged in protracted dialogue with the investigators, the burden was on the investigators to at least canvass what alternative approach might have fulfilled their objectives.  In other words, that was no engagement in the express thought process of inquiry concerning the need for or scope of accommodation that was required. 

In this case, it was impossible for Mr. Burtt to comply with the LSO’s requirement of written cooperation.  The LSO had alleged that Mr. Burtt “failed to cooperate with the Law Society investigation by failing to provide a prompt and complete response to written requests made by the Law Society’s investigators”.  Mr. Banack reviewed rule 7.1-1 of the Rules of Professional Conduct, and held that a requirement to respond in writing is not found in either the rules or the notice of application.  In other words, the LSO could have accommodated Mr. Burtt’s disability by allowing him to respond orally to their inquiries and to attend at his office to obtain the information that it needed.  He concluded that the LSO had failed to satisfy its onus of demonstrating what considerations, assessments and steps were undertaken to accommodate Mr. Burtt “to the point of undue hardship”.   

In dismissing the LSO’s application, Mr. Banack concluded that Mr. Burtt’s disability was the cause of his inability and failure to provide a written response to the investigator’s demands.  Mr. Burtt did not fail to comply with his regulatory obligations but only failed, by reason of his disability, to comply with the manner to which compliance was demanded. 

Regards,

Blair

Top Court Orders Transportation Agency to Consider Obese Passenger Complaint

Delta Airlines Inc. v. Gábor Lukács (2018 SCC 2)  This decision of the Supreme Court of Canada was released on January 19, 2018.

Dr. Gábor Lukács filed a complaint with the Canadian Transportation Agency (“Agency”) alleging that Delta Airlines Inc. (“Delta”) had applied discriminatory practices governing the carriage of obese persons.  The Agency dismissed the complaint on the basis that Dr. Lukács failed to meet the tests for private interest standing and public interest standing as developed by and for courts of civil jurisdiction.  The question was whether the Agency’s decision was reasonable.  Chief Justice McLachlin (Justices Wagner, Gascon, Cote, Brown and Rowe, concurring) concluded that it was not and remitted the matter to the Agency to reconsider whether to hear the complaint. 

Facts

Dr. Lukács’ complaint alleged discrimination on behalf of Delta’s obese passengers with respect to the air transportation regulations.  In support of his complaint, he attached an email from Delta in response to a passenger's negative experience of sitting next to another passenger who “required additional space”.  In the email Delta apologized and explained:  “Sometimes we ask the passenger to move to a location in the plane where there is more space.  If the flight is full we may ask the passenger to take a later flight.  We recommend that large passengers purchase additional seats so they can avoid being asked to rebook and so we can guarantee comfort for all.” 

On September 5, 2014, the Agency issued a letter decision in response to the complaint.  It stated:  “It is not clear to the Agency that on the basis of his position,  Dr. Lukács has an interest in Delta’s practices governing the carriage of obese persons.  As such, his standing in this matter is in question.”  The Agency called for submissions on the standing question.

In its ultimate decision, the Agency denied Dr. Lukács’ standing and dismissed the complaint.  It applied the tests for private interest standing and public interest standing as they have been developed by and for civil courts.  It found Dr. Lukács lacked private interest standing because he was not himself obese and so could not claim to be “aggrieved” or “affected” or have some other “sufficient interest”.  It then determined that he lacked public interest standing because his complaint did not challenge the constitutionality of legislation or the illegal exercise of administrative authority. 

The Federal Court of Appeal allowed Dr. Lukács’ appeal.  It held that a strict application of the law of standing as applied in the courts was inconsistent with the Agency’s enabling legislation.  Moreover, it was contrary to the Agency’s objective to refuse to examine a complaint based solely on whether a complainant had been directly affected or had public interest standing.  The Federal Court of Appeal directed the matter be returned to the Agency to determine otherwise than on the basis of standing.  

The Supreme Court of Canada held as follows.

The standard of review to be applied in this case is reasonableness.  Where an administrative body interprets its own statute and is required to exercise discretion under it, it is presumptively entitled to deference. 

However, in this case the Agency did not reasonably exercise its discretion to dismiss Dr. Lukács’ complaint.  A decision is reasonable if it is justifiable, transparent, and intelligible and falls within a range of possible, acceptable outcomes.  The Agency’s decision that Dr. Lukács lacked standing does not satisfy these requirements for two reasons:    

First, the Agency presumed public interest standing is available and then applied a test that can never be met.  Any valid complaint against an air carrier would impugn the terms and conditions established by a private company.  Such a complaint can never, by its very nature, be a challenge to the constitutionality of legislation or the illegality of administrative action.  This is not what parliament intended when they conferred a broad discretion on the Agency to decide whether to hear complaints.  The Agency did not maintain a flexible approach to the question and in doing so unreasonably fettered its discretion.   

Second, the total denial of public interest standing is inconsistent with a reasonable interpretation of the Agency’s legislative scheme.  Applying the test for private and public interest standing in the way the Agency did would preclude any public interest or representative group from ever having standing before the agency regardless of the content of its complaint.  In effect, only a person who was in herself targeted by the impugned policy could bring a complaint.  This is contrary to the scheme of the act.  Parliament has granted the Agency broad remedial authority and to allow the Agency to act to correct discriminatory terms and conditions before passengers actually experience harm.  To refuse a complaint based solely on the identity bringing it prevents the Agency from hearing potentially highly relevant complaints and hinders it ability to fill the statutory schemes objective. 

Justice Abella, writing for the dissenting judges (Justices Moldaver and Karakatsanis) held that there was no basis for interfering because the Agency’s mandate gave the Agency wide discretion in terms of power to process and resolve complaints.  The standing rules exist to enable a court or tribunal to economize and prioritize its resources.  Tribunals are not required to follow the same procedures the courts use.  Here the decision to deny Dr. Lukács’ complaint was reasonable in the circumstances.  He brought a complaint on no underlying facts, no  representative claimants and no argument.  His complaint was purely theoretical and his interest in the issue was academic.  Accordingly, the proposed suit did not constitute an effective and reasonable means of bringing the issue before the Agency.  It was therefore unnecessary to remit the matter back to the Agency.

Regards,

Blair

Alberta Court of Appeal Closely Examines Employer's Privilege Claims

The Alberta Court of Appeal recently released its decision in Alberta v. Suncor Energy Inc., 2017 ABCA 221.  The court upheld the importance of lawyer-client and litigation privileges, holding that they play a "central role" in the Canadian justice system,.  However, where an employee had been fatally injured, the court took a closer look at the factual basis for the employer's claims of privilege over documents that formed part of its investigation into the death. 

 

On April 20, 2014, an employee of Suncor Energy Inc. (“Suncor”) was fatally injured at a worksite near Fort McMurray, Alberta.  The Alberta Occupational Health and Safety (“OHS”) officers issued a stop-work order that day.  Immediately after the accident, anticipating litigation, Suncor began an internal investigation and threw a privilege blanket over all information relating to the investigation.  Legal counsel for Suncor directed the investigation team to segregate all documents and to endorse all material as “privileged and confidential”. 

 

The Suncor investigation team interviewed witnesses, recorded statements and collected photographs.  On May 5, 2014, OHS issued a demand under relevant section of the Alberta Occupational Health and Safety Act (the “Act”) for Suncor to provide copies of the witness statements, as well as employees’ names and contact information.  Suncor replied and provided the names and contact information of employees but asserted privilege over the witness statements collected by its investigation team.   Later, nearly a year after Suncor had provided OHS with a copy of its report on the accident, OHS issued another demand for information and copies of witness statements, notes, records, photos and other documents collected by Suncor.   Suncor claimed privilege over certain documents and information.  OHS issued an administrative penalty against Suncor.

 

The province of Albert filed an originating application seeking an order that Suncor provide the refused materials and allow OHS to interview Suncor’s internal investigators or at least provide further particulars about the claims of privilege.  At the return of the application, the judge held that the dominant purpose of Suncor’s internal investigation was in contemplation of litigation and upheld its claim for privilege on that basis.  The judge ordered Suncor to meet with a referee who would assess the claims of privilege and provide recommendations to the court. 

 

Alberta appealed that decision to the Alberta Court of Appeal. 

 

The Alberta Court of Appeal concluded that the application judge had erred in finding that the dominant purpose of Suncor’s investigation was in contemplation of litigation so as to clothe all material “created and/or collected” during the investigation with legal privilege.  However, it also held that the judge had not erred in invoking the referee process under the Alberta Rules of Court. 

The Court of Appeal held that the relevant sections of the Act did not preclude claims of privilege.  After the application judge's decision was issued, the Supreme Court of Canada clarified the law pertaining to lawyer-client privilege and litigation privilege in Lizotte v. Aviva Insurance Company of Canada and in Albert (Information and Privacy Commission) v. University of Calgary.   Those decisions confirmed the central role of legal privilege in the justice system as well as the legal and policy reasons behind why privilege must be protected.  The Supreme Court held that both litigation privilege and lawyer-client privilege “cannot be abrogated by inference and that clear, explicit and unequivocal language is required in order to lift it”.

 

Lawyer-client privilege attaches to confidential communications between a client and a legal advisor that are connected to giving or seeking legal advice.  The communication does not have to be in contemplation of litigation and the privilege is of permanent duration. 

 

Litigation privilege attaches to documents created for the dominant purpose of litigation.  This includes any document created for the dominant purpose of preparing for related litigation that “remains pending or may reasonably be apprehended”.  The object of this inquiry is the purpose for which the document was created or came into existence as distinct from the purpose for which it may have been collected or put to use.   

 

Accordingly, the Court of Appeal held that if legal privilege does not cover particular records or information, and the requirements of the Act apply to those records or information, the question of whether the Act operates to override any aspect of privilege disappears.  Once the procedure for assessing the contested materials is complete, records or information sifted out of the scope of privilege will be subject to consideration under the correct legal interpretation of the Act.

 

In this case, the appeal judges found that the application judge had erred in finding that the dominant purpose of the investigation was in contemplation of litigation and that Suncor created and/or collected documents and material with the dominant purpose that they would assist in any litigation.   It held that a referee appointed under the Alberta Rules of Court must focus on the dominant purpose for creating each document as opposed to the purpose for its collection. 

 

Suncor could not simply by having legal counsel declare that an investigation had been commenced, throw a blanket over all materials “created and/or collected during the internal investigation” so as to clothe them with lawyer-client or litigation privilege.  The Court of Appeal held that where a workplace accident has occurred and the employer has statutory duties under the Act and simultaneously undertakes an internal investigation claiming legal privilege over all materials derived as part of that investigation, an inquiry is properly directed to a referee under the Alberta Rules of Court to determine the dominant purpose for the creation of each document.

Regards,

Blair

 

Law Society Ordered to Pay $1.3 Million in Costs

Law Society of Upper Canada v. DeMerchant, 2017 ONLSTA 5

 

In this case, the Appeal Division of Ontario's Law Society Tribunal, ordered the Law Society of Upper Canada (“LSUC”) to pay $650,000 each to Beth DeMerchant and Darren Sukonick, two lawyers at Torys LLP who were successful in defending themselves against professional misconduct allegations brought by the LSUC.  The LSUC had alleged that the lawyers had acted in a conflict of interest while working on the sale of Conrad Black’s Hollinger Group of Companies.  Both lawyers have since retired from the practice of law.

 

The legal saga lasted 11 years and ended with the Appeal Division of the Tribunal finding that the hearing should never have taken the nearly 140 days that it took.  The Tribunal found the Law Society bore the lion’s share of responsibility for its length.  The LSUC’s definition of the issues, its approach to examination and its lack of focus on the legal test for conflicts of interest were the largest factors in a hearing whose time and costs were grossly disproportionate to the issues at stake.   In the end the Appeal Division found that approximately 110 hearing days were wasted and were not necessary. 

 

The LSUC first learned of an issue between Torys and Hollinger International Inc. from a Globe and Mail article in 2005.  It instituted an investigation into the lawyers' professional conduct.  The allegations included that the lawyers may have acted in a conflict of interest. 

 

In November of 2008, the LSUC concluded that there had been a conflict of interest which impacted the lawyers' ability to represent the legal interests of their clients.  The LSUC’s Proceeding Authorization Committee (“PAC”) then authorized an application for professional misconduct against the lawyers.

 

A hearing panel of the LSUC tribunal held that the proceedings were not unwarranted and that there was a significant public interest in the issues and that it was appropriate for the LSUC to conduct an investigation. 

 

These findings were overturned by the Appeal Division in part.   It held that there were multiple issues that both individually and combined warranted PAC’s decision to commence the application.  There was no evidence of bad faith nor was the application doomed to fail. 

 

However, the Appeal Division criticized the LSUC harshly on the conduct of the hearing. 

 

It held that typically allegations of conflict of interest would, if proven, likely have led to no more of a short suspension.  The LSUC attempted to prove that the lawyers’ conflict had manifested itself in misjudgments in their work for the corporations that resulted from preferences for the interests of executives of the corporations.  The theory of the LSUC's case was that the lawyers should have taken steps when working on the transactions to protect the public companies from exploitation by the executives.  These were serious allegations but importantly did not form part of the legal test for conflict of interest.

 

The hearing started on April 26, 2010 and completed on December 13, 2012, after nearly 140 days of hearing.  The hearing panel found that after the lawyers had presented their expert evidence about general practice in the corporate bar, the proceedings became unwarranted and the LSUC should have re-evaluated its case. 

 

On appeal, the Appeal Division found that continuing after the lawyers’ expert evidence was not the fundamental problem.  A valid legal theory of conflict of interest continued to exist but the problems with the case and how the LSUC conducted the hearings started long before that.

 

The Appeal Division found that the time taken by the LSUC to present its case was unprecedented in the history of LSUC discipline proceedings.  It began with a four day opening statement, conducted cross-examinations of the lawyers for more than 40 hearing days.  It found that the LSUC had acted unreasonably and caused costs to be wasted throughout the hearing by disregarding the need for the proceedings to be proportionate to the issues at stake in their seriousness; failing to focus its evidence in cross-examination on the test for conflict of interest; conducting argumentative cross-examinations of unprecedented length and detail that added little to the analysis and were not justified by the issues at stake in the case; and taking issue with detailed aspects of the lawyers’ work in a complex and specialized area of practice with no expert or other evidentiary support.

 

The tribunal held that it was important to explicitly acknowledge in its reasons the stress the proceedings had put on the lawyers given the pall that hung over their careers for longer than it should have, the months they spent in the hearing room dealing with these allegations and the evident strain of so many days on the witness stand under cross-examination. 

 

In addition, it found that the LSUC had wasted costs without reasonable cause throughout the hearing.  Its conduct at the hearing was entirely disproportionate to what was at stake.  The LSUC did not focus on the key elements of the test for conflict of interest.  Cross-examinations focused on unimportant details, were repetitive and argumentative.

 

In calculating the costs, the Appeal Division found that the lawyers should be awarded costs of approximately 110 hearing days.  Counsel representing the lawyers had practiced for over 20 years and the hourly rate for lawyers with that level of experience under the LSUC’s current tariff was $350.  This resulted in an award of $650,000 each (as opposed to the $1.8 million that they were seeking).   The LSUC also awarded the lawyers costs of the appeal of $17,500.

 

In March of 2017, the lawyers commenced an action against the LSUC claiming over $2 million in damages for misfeasance in public office, negligent investigation, abuse of process, malicious prosecution and libel.  There will be much to follow on this case.  

Regards,

Blair

 

SCC - Litigation Privilege and Solicitor-Client Privilege Are Substantive Rights

The Supreme Court of Canada released two decisions last week dealing with the issue of privilege:  (1)  Lizotte v. Aviva Insurance Company of Canada 2016 SCC 52 which dealt with the issue of litigation privilege; and (2)  Alberta (Information and Privacy Commissioner) v. University of Calgary 2016 SCC 53 which dealt with the issue of solicitor-client privilege. 

 

In both cases, the court clearly emphasized the importance of both privileges as “substantive rights that are fundamental to the proper functioning of our legal system”.

 

In the Lizotte case, in the course of an inquiry into a claims adjustor, the assistant syndic of the Chambre de l’assurance de dommages (the "syndic”) asked an insurer to send her a complete copy of its claim file with respect to one of its insured.  The syndic based her request on section 337 of the Act respecting the distribution of financial products and services (“Act”).  In response, the insurer produced some documents but withheld others alleging that they were protected by either solicitor-client privilege or litigation privilege.

 

At a hearing, the syndic conceded that solicitor-client privilege could be asserted against her and therefore the issue before the court was limited to litigation privilege.  The Superior Court of Quebec concluded that litigation privilege cannot be abrogated absent an express provision and that the provision in the Act was not "express" in that sense.

 

The syndic’s appeal was dismissed by the Quebec Court of Appeal and further appeal to the Supreme Court of Canada was dismissed.  In an unanimous decision, the court held that litigation privilege is a common law rule that gives rise to an immunity from disclosure for documents and communications whose dominant purpose is preparation for litigation.  Litigation privilege differs from solicitor-client privilege in that litigation privilege is to ensure the efficacy of the adversarial process .  The purpose of solicitor-client privilege is to protect a relationship.  Solicitor-client privilege is permanent whereas litigation privilege is temporary and lapses when the litigation ends.  In addition, litigation privilege applies to unrepresented parties and to non-confidential documents.  

 

However, the court held that litigation privilege is a class privilege and gives rise to a presumption of inadmissibility for a class of communications – namely those whose dominant purpose is preparation for litigation.  Exceptions to litigation privilege include those relating to public safety, to the innocence of the accused and to criminal communications.  However, because it is a class privilege it has nothing to do with balancing competing interests on a case by case basis.   

 

In this case, none of the exceptions applied.  The court held that there is a robust line of authority according to which a party should not be denied the right to claim litigation privilege without clear and explicit legislative language to that effect.  Litigation privilege therefore cannot be abrogated by inference and the Act did not apply to do so. 

 

In the second case, in the context of a constructive dismissal claim, a delegate of the Information and Privacy Commissioner of Alberta ordered the production of records over which the University of Calgary had claimed solicitor-client privilege.  The delegate was acting in accordance with the Office of the Commissioner’s solicitor-client privilege adjudication protocol and issued a notice to produce the records.  Under section 56(3) of the Freedom of Information and Protection of Privacy Act (“Privacy Act”), a public body was required to produce required records to the Commissioner “despite…any privilege of the law of evidence”.  The University sought judicial review of the decision which upheld the Commissioner’s decision but on appeal to the Alberta Court of Appeal, it was found that “any privilege of the law of evidence” as used in the Privacy Act did not refer to solicitor-client privilege.  

 

The Supreme Court of Canada dismissed the appeal in three separate, partially concurring reasons.  In the first set of reasons written by Justice Côté (Justices Moldaver, Karakatsanis, Wagner and Gascon concurring), the court held that whether the relevant section of the Privacy Act allows a review of documents over which solicitor-client privilege is claimed is a question of central importance to the legal system as a whole and outside the Commissioner’s specialized area of expertise.  Therefore, the applicable standard of review was correctness for both the decision that the Commission had the authority to require production of the records over which solicitor-client privilege was asserted and for the decision to issue the notice to produce the records. 

 

The majority held that the phrase “any privilege of the law of evidence” does not require a public body to produce to the Commissioner documents over which the solicitor-client privilege is claimed.  Solicitor-client privilege is no longer merely a privilege of the law of evidence but a substantive right that is fundamental to the proper functioning of our legal system.

 

In separate concurring reasons Justice Cromwell held that the grammatical and ordinary meaning of the words “any privilege of the law of evidence” includes solicitor-client privilege.  Solicitor-client privilege is both an evidentiary privilege and a substantive principle and it was the evidentiary privilege that was at issue here. 

 

He held that in this case even though the Commissioner had the authority to compel production for review of records over which solicitor-client privilege was asserted and assuming, without deciding, that the correctness standard of review applied, she made a reviewable error to order production in the face of the evidence submitted in relation to the claim of privilege.  The University’s claim of privilege complied with the requirements of Alberta civil litigation practice at the time, and it was a reviewable error for the Commissioner’s delegate to impose a more onerous standard on the University in relation to its assertion of privilege than that applicable in civil litigation before the courts.

 

Justice Abella in further separate but concurring reasons held that that standard of review in this case should be reasonableness in accordance with the Supreme Court’s prior decisions.  However, she held that the Commissioner’s decision to order disclosure was unreasonable.  The Commissioner should have exercised her discretion in a manner that interfered with solicitor-client privilege only to the extent absolutely necessary to achieve the ends sought by her enabling legislation.  In ordering disclosure, she did not sufficiently take into account the fact that the University provided adequate justification for solicitor-client privilege particularly in light of the laws and practices applicable in the civil litigation context in Alberta. 

Regards,

Blair

Supreme Court Unwilling to Reject Canada Labour Code's Unjust Dismissal Scheme

The Supreme Court of Canada recently released its decision Wilson v. Atomic Energy of Canada Ltd. 2016 SCC29.  This case involved the question of whether an  federally regulated employer could terminate the employment of a non-unionized employee without just cause.

 

In this case, the appellant Joseph Wilson worked for Atomic Energy of Canada Ltd. (“AECL”) for 4½ years until he was dismissed in November of 2009.  He had a clean disciplinary record.  Wilson filed an unjust dismissal complaint under the Canada Labour Code (the “Code”) claiming that his dismissal was in reprisal for having filed a complaint of improper procurement practices on the part of AECL.  AECL said Wilson was terminated on a non-cause basis and was provided with a generous dismissal package.

 

A labour adjudicator was appointed to hear the complaint.  AECL sought a preliminary ruling on whether a dismissal without cause, together with a severance package, meant that the dismissal was just.  The adjudicator concluded that an employer could not resort to severance payments, no matter how generous, to avoid a determination under the Code about whether the dismissal was unjust.  Because AECL did not rely on any cause to fire him, Wilson’s complaint was allowed. 

 

On appeal to the Federal Court of Canada, a judge found that the adjudicator’s decision was unreasonable because in his view nothing in the Code prevented employers from dismissing non-unionized employees without cause.   The Federal Court of Appeal agreed but reviewed the issue on a standard of correctness. 

 

The appeal was heard by the Supreme Court of Canada.  In a 6 to 3 decision, the court held that the appeal should be allowed and that the adjudicator’s decision should be restored. 

 

The 6 judges of the majority wrote three separate reasons for their decision. 

 

Justice Abella wrote that at common law, a non-unionized employee could be dismissed without cause if he or she was given reasonable notice or pay in lieu of notice.  However, in 1978, Parliament added a series of provisions to Part III of the Code, i.e. an "unjust dismissal" scheme which consisted of protections like those available to employees covered by a collective agreement and which applied to non-unionized employees who had completed 12 consecutive months of continuous employment.  A dismissed employee could ask the employer for a written statement setting out the reasons for the dismissal.  The employer was required to provide the statement within 15 days.  If an adjudicator determined that the dismissal was unjust, he or she had broad authority to grant an appropriate remedy including requiring the employer to pay the person compensation or to reinstate the person. 

 

Both Wilson and AECL accepted that the standard of review of the adjudicator’s reasons was “reasonableness” because he was interpreting a statute within his expertise.  Applying that standard, Justice Abella found that the adjudicator’s decision was reasonable and consistent with the approach overwhelmingly applied to the unjust dismissal sections of the Code since they were enacted.  It made no sense, as the Federal Court of Appeal had done, to attempt to “calibrate” reasonableness by applying a potentially indeterminate number of varying degrees of deference within it.  Such an approach unduly complicated an area of law in need of greater simplicity.

 

Justice Abella then provided what she called "general comments" on the need for greater simplicity with respect to the standards of review of the decisions of administrative bodies.  However, Justices McLachlin, Karakatsanis, Wagner and Gascon, held that although Justice Abella’s efforts to stimulate a discussion on how to clarify or simplify the standard of review jurisprudence was appreciated, it was unnecessary to endorse any particular proposal to redraw the current standard of review framework at this time. 

 

In separate reasons, Justice Cromwell agreed that the standard of review in the case was reasonableness and that the adjudicator’s decision was reasonable but held that reasonableness is a single standard and must be assessed in the context of the particular type of decision making involving all relevant factors.  He held that the standard of review jurisprudence does not need yet another overhaul and he disagreed with the approach developed by Justice Abella in obiter. 

 

Justices Moldaver, Cote and Brown dissented.   They held in a dissenting opinion written by Justice Moldaver, that in the specific context of this case, a correctness review was justified.

The respondent's case was valiantly argued by my colleagues Ronald Snyder and Eugene Derenyi.

Regards,

Blair

 

Supreme Court Enlarges Public Interest Powers of Provincial Securities Commissions

Patricia McLean served as a director of Hucamp Mines Ltd., a reporting issuer registered in Ontario under the Ontario Securities Act, from March of 1996 to June of 2001.   Beginning in July of 2001, McLean began cooperating with the Ontario Securities Commission ("OSC") in respect of certain possible improper actions at Hucamp.  Although the OSC announced in July of 2005 that it would hold a hearing under its public interest powers to sanction McLean and others for their alleged misconduct at Hucamp, McLean did not enter into a settlement agreement with the OSC until September 8, 2008.  In the settlement agreement, McLean consented to the making of an order against her which barred her for 5 years from trading in securities, with some exceptions, and banned her for 10 years from acting as an officer or director of certain entities registered under the Ontario Securities Act.  

It was not until 15 months latter - January 14, 2010 - that the executive director of the British Columbia Securities Commission notified McLean that he was applying to that commission for a "public interest" order against her in British Columbia.   The BC Commission relied on McLean's settlement agreement with the OSC in bringing the proceeding.  However, section 159 of the BC Securities Act provides that all proceedings under that Act "must not be commenced more than 6 years after the date of the events that gave rise to the proceedings".   The BC Commission issued an order adopting the same prohibitions that were set out in the OSC's order.  In doing so, it interpreted that "the event" that had triggered the 6 year limitation period was McLean's entering into a settlement agreement with the OSC and not the misconduct that occurred in 2001 or earlier.  The BC Court of Appeal applied a correctness standard of review and upheld the commissions implied decision.  

McLean appealed to the Supreme Court of Canada.  The court dismissed her appeal.  

Justice Moldaver, writing for the majority of the court, held that that issue before the court was whether "the event" that triggered the 6 year limitation period, was the underlying misconduct that gave rise to McLean's settlement agreement with the OSC or the settlement agreement itself.  

Justice Moldaver found that in reviewing the ordinary meaning, the context and the purpose of the relevant provisions of the BC Securities Act, the Commission's conclusion that the event giving rise to the proceeding was McLean's settlement agreement was reasonably supported. 

He further held that the appropriate standard of review of the Commission's decision was "reasonableness", not correctness as the BC Court of Appeal had held.  Justice Moldaver held that both parties, i.e. the Commission and McLean, had proposed reasonable interpretations of the British Columbia Securities Act.  However, under the reasonableness review, the courts will defer to any reasonable interpretation adopted by an administrative decision maker, even if other reasonable interpretations may exist.  Because the Commission'`s interpretation was not shown to be an unreasonable one, there was no basis to interfere on judicial review. 

Justice Moldaver held that the modern approach to judicial review recognizes that courts may not be as qualified as an administrative tribunal to interpret that tribunal's home statute.  In particular, the resolution of unclear language in a home statute is usually best left to the administrative tribunal because the tribunal is presumed to be in the best position to weigh the policy considerations often involved in choosing between multiple reasonable interpretations of such language. 

Allowing secondary jurisdictions (British Columbia in this case) to wait until the conclusion of a primary proceeding (the OSC proceeding) obviates the need for parallel and duplicative proceedings that will overburden securities commissions and the targets of proceedings.  The Commission's interpretation of its statute therefore furthered the legislative goal of improving inter-jurisdictional cooperation between provinces and territories.

Finally, Justice Moldaver found that although the Commission's interpretation significantly extended the duration of time for which a person might be subject to regulatory action, of itself, that was not offensive to the purpose of limitation periods.  Limitation periods are always driven by policy choices in an attempt to balance the interests of the parties.  The Commission's interpretation struck a reasonable balance between facilitation of inter-provincial cooperation and the underlying purposes of limitation periods.  

Regards,

Blair

Court Rules That Bikers Can Operate Strip Joints

The Ontario Court of Appeal recently considered whether being a member of a motorcycle club that is recognized as a criminal organization, is sufficient to disentitle a person from holding a liquor licence in Ontario.

 

Robert Barletta is a "full patch" member of the Hells Angels.  He is a founding member of the London, Ontario chapter of the Hells Angels and was its President for at least 5 years.  Mr. Barletta has no record of criminal convictions or infractions of the Liquor Licence Act ("Act").   Since 2001 he has owned and operated a well known strip joint in London called Famous Flesh Gordon's and has done so since 2001. 

 

In 2010, the Registrar of the Alcohol and Gaming Commission of Ontario ("Commission") applied to the Board of the Commission to revoke Mr. Barletta's liquor licence for Flesh Gordon's.  The sole issue before the Board was whether Mr. Barletta's membership in the Hells Angels was in itself sufficient to strip him of the privilege of holding a liquor licence. The Hells Angels meet the definition of a "criminal organization" under the Criminal Code.

 

The Board concluded that membership in the biker gang was not enough to revoke Mr. Barletta's liquor licence. The Divisional Court dismissed the Registrar's appeal from the Board's decision.  The Registrar appealed to the Court of Appeal. 

 

The Court of Appeal allowed the Registrar's appeal and referred the application back to the Board to be dealt with in accordance with its reasons.

 

There were 3 issues before the Court of Appeal.

 

First Issue - Did the Board Apply the Proper Standard of Proof?

 

The standard of proof provided by the Act is that of "reasonable grounds for belief":

 

The Act provided that an applicant is entitled to be issued a liquor licence unless his past or present conduct affords reasonable grounds for belief that he will not carry on business in accordance with the law and with honesty and integrity.

 

"Reasonable grounds for belief" is a lower standard of proof than "balance of probabilities".  The Supreme Court of Canada has held the reasonable grounds to believe" standard requires something more than mere suspicion, but less than the standard applicable in civil matters of proof on the balance of probabilities.  In essence, reasonable grounds will exist where there is an objective basis for the belief which is based on compelling and credible information.  

 

The Court of Appeal held that there was no doubt that the Board had applied a higher standard of proof than the Act called for.  Requiring proof on the balance of probabilities, rather than on reasonable grounds to believe, was an error of law.   Moreover, it was an error on a question of law of general importance to the legal system, one which is outside the area of expertise of the Board as an administrative decision maker.  Accordingly, the Board's choice of standard proof cannot attract any deference by the Court of Appeal.

 

Second Issue - Did the Board Apply the Test Called for by the Act?

 

The Act provides that an applicant is entitled to be issued a liquor license except if "the past or present conduct of the person affords reasonable grounds for belief that the applicant will not carry on business in accordance with the law and with integrity and honesty." 

 

The Court of Appeal found that the Board had misconstrued this test by limiting its examination of Mr. Barletta's conduct to his conduct in operating Flesh Gordon's.  The Court of Appeal held that there was no such limiting language in the Act.  The words of the Act are not limited to conduct in operating a strip joint or in any other way.  In addition, there was no requirement that Mr. Barletta must have engaged in past criminal activity.  The Court of Appeal held that past conduct that was not criminal could also provide necessary grounds for belief.  Finally, the Court of Appeal held that the Board can look beyond Mr. Barletta's past or present observation of the regulatory laws for his strip joint.  The requirement that he carry on business in the future in accordance with law and with integrity and honesty is not limited to complying with the regulatory laws applicable to licenced establishments.  

 

Third Issue - Was Revocation the Only Reasonable Conclusion that the Board Could Have Reached?

 

The Court of Appeal held that revocation of the licence for Flesh Gordon's was not the only possible result of the application.  There was no doubt that the evidence about the Hells Angels as a criminal organization however, it was a fact that while he was a member, Mr. Barletta had apparently acted lawfully, with honesty and integrity and operated the strip joint properly for almost 10 years.  Accordingly, the court held that the proper remedy in the appeal was to remit the Registrar's application to revoke Mr. Barletta's license back to the Board for reconsideration in accordance with the court's reasons.  

 

Regards,

 

Blair

Supreme Court Restricts Random Drug and Alcohol Testing of Unionized Employees

Irving Pulp & Paper Limited operates a craft paper mill in Saint John, New Brunswick. In the 15 year period between 1991 and 2006, Irving had no formal policy with respect to alcohol and drug use at the mill. In 2006, it unilaterally adopted a "Policy On Alcohol And Other Drug Use" under the management rights clause of the collective agreement with its workers' union  (Communications, Energy and Paperworkers Union of Canada, Local 30) but without any negotiations with the union. The policy imposed drug or alcohol testing for employees holding positions designated by Irving as "safety sensitive".

The policy contained a random alcohol testing component, whereby 10 per cent of the employees in safety sensitive positions were to be randomly selected for unannounced breathalyser testing over the course of a year. A positive test for alcohol attracted significant disciplinary action, including dismissal. Failure to submit to testing was grounds for immediate dismissal.

One of the employees randomly tested was Perley Day, a member of the Union. Mr. Day was a teetotaler who had not had a drink since 1979. His breathalyser test revealed a blood alcohol level of zero. The Union filed a grievance on his behalf challenging only the random alcohol testing aspect of the policy. The Union did not challenge the rest of the policy which required employees to be subject to mandatory testing if there was reasonable cause to suspect alcohol or other drug use in the workplace.

There were only 8 documented incidents of alcohol consumption or impairment at the workplace over a 15 year period, from April 1991 to January 2006. By December of 2008 (when the arbitration was heard), the testing policy had been in effect for 22 months and not a single employee had tested positively in either a random test or a test for reasonable cause.

The absence of evidence of any real risk related to alcohol led a majority of a labour arbitration board to conclude that there was little benefit to Irving in maintaining the random testing policy. The board measured the employer's interest in random alcohol testing as a workplace safety measure against the harm to the privacy interest of the employees.  The board allowed the grievance and concluded that random testing was unjustified.

On judicial review, a New Brunswick court set aside the board's award as unreasonable because of the dangerousness of the workplace. The New Brunswick Court of Appeal dismissed the union's appeal.

By a 6 - 3 majority, the Supreme Court of Canada allowed the union's appeal. Justice Abella, writing for the majority, held as follows:

The scope of management's unilateral rule-making authority under a collective agreement is that any rule or policy unilaterally imposed by an employer, and not subsequently agreed to by the union, must be consistent with the collective agreement and be reasonable. Under a balancing of interests and the collective bargaining tenet that an employee can only be disciplined for reasonable cause, an employer can impose a rule with disciplinary consequences only if the need for the rule outweighs the harmful impact on the employee's privacy rights. For example, an employer can test an individual employee if there is reasonable cause to believe that the employee was impaired while on duty. However, a unilaterally imposed policy of mandatory random testing is an unjustified affront to the dignity and privacy of employees unless there is evidence of enhanced safety risks such as evidence of a general problem with substance abuse in the workplace.

In this case, the expected safety gains to the employer ranged from uncertain to minimal while the impact on employee privacy was severe. The number of alcohol related incidents in the 15 year period did not reflect the requisite problem with workplace alcohol use. Consequently, the employer had not demonstrated the requisite safety concerns that would justify universal, random testing. As a result, the employer exceeded the scope of its rights under the collective agreement.

Justice Abella held that the applicable standard for reviewing the decision of the labour arbitrator is reasonableness. She held that the board's decision "must be approached as an organic whole, not as a line by line treasure hunt for error". In this case, based on the findings of fact and the relevant jurisprudence, the decision was a reasonable one.

Regards,

Blair