O’Regan v. Firestone Textiles Company, 2010 HRTO 502

Cathy O’Regan Applicant

-and-

Firestone Textiles Company, A Division of Bridgestone/Firestone Canada Inc., Lynda Ruffo and Bill Matetich Respondents

DECISION

Adjudicator: Mark Hart Date: March 5, 2010 Citation: 2010 HRTO 502 Indexed as: O’Regan v. Firestone Textiles

APPEARANCES BY

Cathy O’Regan, Applicant ) On her own behalf Firestone Textiles Company, A Division of Bridgestone/Firestone Canada Inc., Lynda Ruffo and Bill Matetich, Respondents ) Daniel McDonald, Counsel

1This is an Application dated May 28, 2009 and filed under section 53(5) of Part VI of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”). The underlying complaint in this matter was filed with the Ontario Human Rights Commission (the “Commission”) on February 1, 2008.

2A preliminary hearing in this matter took place on March 2, 2010 to determine the issue raised by the respondents that the Application should be dismissed as an abuse of process as a result of the Release signed by the applicant on January 15, 2008.

3In keeping with the expeditious manner in which s. 53 applications are to be conducted, at the conclusion of the hearing on March 2, 2010, I issued the following oral decision.

This is a preliminary request by the respondents for dismissal of the Application as an abuse of process based upon a release signed by the applicant on January 15, 2008.
The applicant was employed by the corporate respondent commencing in 1990 as a unionized production worker. She was promoted in 2002 to the position of Plant Trainer, which is a non-union position.
In the fall of 2007, the applicant went on an approved medical leave for a period of nine weeks, returning to work on November 26, 2007. Following her return to work, the applicant experienced issues with a manager who worked in her area, and raised these issues with her direct supervisor, the personal respondent Lynda Ruffo, in a letter dated December 9, 2007. In particular, the applicant alleged in that letter that she believed that she had experienced a pattern of repercussions as a result of taking medical leave.
On January 2, 2008, the applicant’s employment was terminated and she was offered a severance package consisting of a lump sum payment of approximately ten months of her annual salary, plus vacation entitlements, a bonus payment and an extension of her benefits, among other things. The total value of the severance package was estimated by the respondents to be approximately $42,000, which exceeds the applicant’s annual salary at the time.
In order to accept the severance package, the applicant was required to sign a release. She was given a period of 16 days, until January 18, 2008, to do this. The evidence of Ms. Russo is that she offered to continue payment of the applicant’s regular salary while the applicant considered whether to sign the release, with a concomitant deduction from the lump sum payment.
There is no dispute that the applicant sought and obtained legal advice regarding the proposed severance package, although she states that she did not pay for this advice. The applicant also received financial advice in relation to the severance package, which resulted in her decision to submit an authorization for $30,000 to be transferred directly into her RRSP.
There also is no dispute that the applicant contacted Ms. Ruffo at some point after receiving the proposed severance package, and asked whether the corporate respondent was willing to increase the amount offered and whether she could be given a letter of reference. Ms. Ruffo responded that the amount of the package would not be increased, but did agree to provide and did provide a reference letter.
There is no dispute that the applicant subsequently called Ms. Ruffo again to arrange a time to attend at the corporate respondent’s premises to sign the release, and she did so on January 15, 2008.
The severance package on its face states that it is “in full and final settlement of any and all claims which may arise from this action”, which is in reference to the termination of the applicant’s employment. The release document, which is styled as a Full and Final Release and Indemnity, states that in consideration of the payment of the monies provided under the severance package, the applicant releases and forever discharges the respondents from any and all actions, causes of action, claims and demands of any kind whatsoever by reason of or in any way relating to the applicant’s employment or the termination thereof. The release document goes on specifically to state that “this includes a release of any claim before any court, administrative tribunal or board under any statute or otherwise whatsoever”.
I find that this language is sufficient to encompass either a human rights complaint filed with the Commission under the former Code or an application to this Tribunal under the current Code: Kailani v. Securitas Canada, 2009 HRTO 1183.
The applicant has relied upon a Commission document entitled “Guide to Releases with respect to Human Rights Complaints” published by the Commission in May 2006, in support of her position. In this regard, and while I have considered this document, I note that this Guide was prepared by the Commission under the former Code in relation to the issue of whether a complaint was vexatious or filed in bad faith as a result of a pre-existing settlement, which is no longer an issue under the current legislation. Under the current legislation, the issue for this Tribunal is whether it would be an abuse of process to allow an application to proceed in light of a settlement or release: see Dube v. Rockhaven Recovery Ltd., 2009 HRTO 53.
Having found that the release is sufficient to encompass a human rights complaint or application, the issue before me is whether there is any proper basis at law to justify setting aside the release.
One issue raised by the applicant is the issue of emotional and/or economic duress. While I accept that in the right circumstances, duress can form a proper basis at law to overturn a release or settlement agreement, I agree with the decision in Kailani, supra, that “the test for whether a person has signed a settlement under duress is high”, requiring an unlawful threat or coercion or subjection to improper pressure which overcomes a person’s will.
The applicant has tendered medical evidence before me to support that at various times in the period both preceding and after the termination of her employment, she experienced mental health issues for which she either sought or received treatment. However, I have no medical evidence before me to support that at the time she signed the release, the applicant felt that she was being subjected to such intense pressure that it effectively overcame her will. In fact, the applicant’s conduct following the January 2, 2008 termination meeting and presentation of the proposed severance package is consistent with a person rationally exercising her will in deciding whether to accept the settlement. She sought and obtained legal and financial advice, she requested improvements to the proposed package, she took much of the time allotted to her to consider the proposed package, and she arranged to return to the corporate respondent’s premises to sign the release.
With regard to the issue of economic duress, the applicant has raised the fact that at the time, she was living alone and carrying a significant mortgage on her house and could not afford to wait to receive a severance payment. While I acknowledge that there is stress associated with such a situation, it is not materially different from the situation faced by many employees when they lose their employment and is not sufficient to establish economic duress.
As a result, I find that the applicant has not established duress sufficient to warrant setting aside the release.
The applicant also takes the position that there was no consideration under the proposed severance package for her giving up her human rights. In evidence, Ms. Ruffo confirmed that there was no separate allocation under the proposed severance package to compensate the applicant for any human rights violation, but that it was contemplated that the signing of the release would include a release of any potential human rights claims.
In my view, it is not this Tribunal’s role to parse a settlement agreement to see whether all potential claims for compensation have been satisfied. It is sufficient to note that the proposed severance package was far in excess of the applicant’s statutory entitlements under the Employment Standards Act. In addition, depending upon when the applicant secured alternate employment, the settlement may also have been in excess of her common law entitlements for wrongful dismissal. In my view, that is more than adequate to establish that the applicant received sufficient consideration in exchange for the signing of the release so as not to bring the validity of the release into question.
Finally, the applicant has alleged that the respondents misrepresented the reason for the termination of her employment as a reason to support her ability to maintain this Application. In the proposed severance package, the applicant was informed that her employment was being terminated due to a “reduction in force”. After signing the release and receiving payment of the settlement funds, the applicant discovered that a contract employee had been hired on a full-time basis in the department where she had worked. The applicant takes the position that she accepted the proposed severance package on the basis of the representation that her termination was due to a reduction in force, and that this representation turned out to be false. From the applicant’s evidence, it appears that it was this discovery that prompted her to file her human rights complaint in February 2008.
It is well-established at common law that in certain limited circumstances, a false representation can have the effect of invalidating a signed legal document: see Corfax Benefit Systems Ltd. v. Fiducie Desjardins Inc., (1997) 37 O.R.(2d) 50. However, there are certain elements that must be proven in order to establish this result, including that the representations were made by the respondents, that they were false in fact, that they were known or should have been known to be false, and that they induced the applicant to enter into the agreement to her prejudice. It is not clear to me on the evidence that all of these required elements have been satisfied by the applicant.
However, there is a fifth required element, which is that within a reasonable time after discovery of the falsity, the applicant elected to void the agreement and accordingly repudiated it. On this element, there is no dispute that the applicant did not ever elect to void or repudiate the agreement, which would have required her to return the settlement monies that she received from the respondents. As a result, I find that the applicant has not satisfied the required elements to establish a false representation by the respondents sufficient to justify overturning the release.
As a result, I find that the applicant has not established before me a proper legal basis to justify overturning the release, and I accordingly find that it would be an abuse of process to allow this Application to proceed in light of the signed release.
The Application accordingly is dismissed.

4As a result, the Application is dismissed.

Dated at Toronto, this 5th day of March, 2010.

“Signed by”

Mark Hart Vice-chair