Tuesday, 31 May 2016

HRTO Declines to Punish Employer who Breached Terms of Settlement

What is the penalty or punishment for failing to honour the terms of settlement entered into in an Ontario Human Rights case?

Like most things in law, the answer is “it depends.” However, as the case of Inman v. Seniors on Site, 2016 HRTO 723 (CanLII) demonstrates, sometimes people can break their word, break a written contract, and seemingly get away with it.

Facts

The case concerned an Application for Contravention of Settlement filed pursuant to section 45.9(3) of the Ontario Human Rights Code, R.S.O. 1990, c. H.19, (the “Code”), alleging a breach of settlement. In the Application, the applicant alleged that the respondent employer did not pay an installment of $9,000 in general damages by October 15, 2015, as required in Minutes of Settlement (the “Minutes”) that resolved an earlier application to the Human Rights Tribunal of Ontario. The applicant stated that the respondent had not made the payment as of the date she filed her Application.

The respondent filed a Response to an Application for Contravention of Settlement on November 2, 2015. The respondent acknowledged that it did not make the payment as required on October 15, 2015, because the respondent did not have sufficient funds to make the payment and did not wish to send a cheque in those circumstances. The respondent stated that it needed an additional week to receive payments from clients in order to pay the applicant. The respondent stated that it paid the funds to the applicant about a week late. The respondent stated that the applicant’s lawyer contacted the respondent’s former counsel shortly after October 15, 2015 to inquire about payment, but the respondent was not initially advised of the communication as counsel no longer acted for the respondent. On October 26, 2015, the respondent communicated with the applicant’s lawyer to explain the delay in payment and to advise that the applicant should receive the settlement funds shortly. The respondent noted that it paid the first installment of general damages to the applicant in September 2015; therefore, there was no reason to expect that the respondent would not comply with its obligations.

There was no dispute that the Minutes required the respondent to pay the applicant $18,000.00 in general damages via two installments of $9,000.00; one payment on September 15, 2015 and one payment on October 15, 2015. There was no dispute that the respondent paid the second installment late and the applicant received the second payment on or about October 28, 2015. The applicant’s evidence was that the respondent did not inform her that the second payment would be late and had to get her lawyer involved. The applicant stated that she hoped the matter was concluded with the settlement. The applicant stated that she felt the respondent was “thumbing their noses” at her by delaying the payment.

Submissions

Before making his decision Vice-Chair Douglas Sanderson summarized the submissions made by the parties as follows:

[4] The applicant relied on two decisions of the Tribunal that address remedies for breach of settlement: Archer v. Dobson, 2014 HRTO 1810 and Kim v. 1743766 Ontario Inc., 2015 HRTO 685. The applicant submitted that in Kim the Tribunal stated that a respondent’s financial situation does not excuse it from meeting its obligations under a binding settlement with an applicant. The applicant submitted that in Kim the Tribunal recognized that section 45.9(8) of the Code grants it broad remedial power to remedy contraventions of settlements, including for the emotional impact of a contravention. The applicant noted that in Archer, the Tribunal noted the wide range of awards in contravention of settlement cases. The applicant submitted that in this case the final settlement payment was delayed by approximately two weeks and that this delay caused her anxiety. The applicant submitted that, as a result, she was entitled to an award of $1,000.00 in compensation for the settlement breach.

[5] The respondent submitted that Kim and Archer were distinguishable on their facts, since in both cases the respondents failed to pay the required settlement funds at all. The respondent, however, did meet its obligation to the applicant shortly after the payment deadline. The respondent noted that in one of the cases cited in Archer, Xitimul v. Marriott Hotels of Canada, 2011 HRTO 1867, the Tribunal awarded a remedy of $150.00 when the respondent paid the settlement of $37,000.00 eleven days late.

Decision

Vice-Chair Sanderson dismissed the application. His reasons for doing so were as follows:

[6] The Tribunal’s remedial authority regarding a contravention of settlement is set out in section 45.9(8), which states:

(8) If, on an application under subsection (3), the Tribunal determines that a party has contravened the settlement, the Tribunal may make any order that it considers appropriate to remedy the contravention.

[7] In Glover v. 571566 Ontario Inc., 2011 HRTO 1563, the Tribunal concluded that settlement of an application before the Tribunal is no different than settlement of any other legal proceeding and, accordingly, the common law of contracts provided the appropriate principles to apply when determining a remedy under section 45.9(8). See also Keating v. 2229884 Ontario Inc., 2015 HRTO 1677. As noted in Glover, the remedy for breach of contract will generally be the enforcement of the contract and damages arising from the breach or damages that may reasonably been contemplated by the parties (see paragraphs 35 and 36). What is reasonably foreseeable to the parties must be determined on a case by case basis, but in my view it will generally be foreseeable that an applicant will suffer financial and emotional distress where the breach of settlement is protracted, as in Archer and Kim. I agree, however, with the decision in Glover that a breach of settlement per se does not give rise to an award of monetary compensation. The Tribunal has also recognized that a minor delay in meeting settlement terms may be a de minimus breach of the minutes of settlement that does not warrant the award of compensation. See Adorgloh v. Sentrex Communications, 2010 HRTO 2524 .

[8] In this case, the applicant received the final payment required under the Minutes 13 days after the payment was due and five days after she filed this Application, which I find to be a breach of the terms of settlement. In my opinion, however, the delay was minor. The applicant presented no evidence indicating that it was foreseeable that she would incur losses as a result of such a minor delay. Although the applicant stated that she felt anxious and slighted because of the delay, she provided no evidence of actual emotional or financial distress. In these circumstances, the delay experienced by the applicant amounts to a de minimus breach of the parties’ settlement that does not warrant an award of compensation.

Commentary

In law school one learns a number of legal maxims in Latin. One of those maxims is “de minimis non curat lex”, which means “the law does not concern itself with trifles.” According to Wikipedia, Queen Christina of Sweden (r. 1633–1654) favoured the similar Latin adage, aquila non captat muscas (the eagle does not catch flies.) So what does all that mean? It means that sometimes the law will not care about minor transgressions of the law, or of contracts.

Now, I agree that not all breaches of Minutes of Settlement warrant an award of damages, but the problem in this case was that by the time the applicant filed her application, which was a full ten days after the date on which she was supposed to receive her settlement payment, she had not heard from the respondent, she had no indication of when the money might be coming, and as a result she incurred the expense of having her lawyer follow-up to see what was going on.

One of the problems with the Human Rights Tribunal is, as I have argued before (see Costs and the Human Rights Tribunal of Ontario), that it does not have the power to award a successful party a portion of her incurred legal fees. If the Tribunal had the power to award legal fees, then perhaps things may have turned out differently for the applicant in this case.

Was the decision correct? Given that I was counsel to the applicant, except on the hearing itself which was argued by my colleague, Brent Craswell, it is probably best that I simply say that one wishes things had turned out differently.

Takeaways for Employees with Labour Pains

It is hard not to feel defeated when reading a decision like Inman. Ms. Inman made an application to the Tribunal alleging that her rights had been violated, she settled her case in good faith, then the employer failed to live up to the terms of the deal. If a deal is a deal, shouldn’t a breach of contract be punished?

The law is complicated and comes with a host of fancy legal sayings. Sometimes things do not work out the way we want them to.

To that end, and as ironic as this message may now sound, it is always prudent to seek professional legal advice before undertaking any sort of legal proceeding. Although the applicant was not successful on this application, she did receive her settlement monies after filing the application, which was a goal in itself – and, because the HRTO lacks the ability to award legal costs, she was not ordered to pay the respondent employer anything even though her application was dismissed.

If you are an individual looking for assistance with respect to your workplace issue or the enforcement of a contract or settlement reached with your employer, the professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

Takeaways for Employers with Labour Pains

The takeaway for employers is that if you have reached a deal with an employee and, for some reason, are unable to satisfy the terms of settlement as originally agreed, you may be granted some respite from your breach, depending on how quickly you remedy that breach.

The same is not to suggest that employers should breach their contracts as a matter of course. Every set of circumstances will be different and a small change in the facts can result in a big change in the result.

If you are an employer and you need assistance with a case in which you are involved, the professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

Contact Me

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

Sean Bawden, publisher of Labour Pains, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He has also taught Trial Advocacy for Paralegals and Small Claims Court Practice at Algonquin College in Ottawa.



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