Luo v. Dell Canada, 2010 HRTO 879

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Laura Luo

Applicant

-and-

Dell Canada Inc.

Respondent

DECISION

Adjudicator: Sheri D. Price

Date: April 23, 2010

Citation: 2010 HRTO 879

Indexed as: Luo v. Dell Canada

Appearances

Laura Luo, Applicant ) Michael Hassell, Counsel

Dell Canada Inc., Respondent ) Jeffrey Mitchell, Counsel

INTRODUCTION

1This Application, filed under section 34 of the Human Rights Code, R.S.O. 1990, c. H. 19, as amended, (the “Code”), alleges that the respondent discriminated against the applicant on the basis of sex by terminating her employment while she was pregnant, approximately one month before she was due to give birth.

2The respondent denies the applicant’s allegations. It maintains that the applicant’s termination was one of many due to company-wide restructuring. Moreover, the respondent requests the early dismissal of the Application on the basis that the applicant signed a full and final release with respect to the subject-matter of the Application. A conference call was convened to give the parties an opportunity to make oral submissions on the respondent’s request.

BACKGROUND

3In or around March 2005, the applicant began employment with the respondent as a member of the accounting team, within the respondent’s Finance Department.

4The applicant was employed pursuant to an employment agreement signed on March 7, 2005, which, among other things, stated that the respondent could terminate the applicant at any time by providing her with notice or pay in lieu of notice pursuant to the terms of the Employment Standards Act, 2000, S.O. 2000, c. 41, as amended (“ESA”).

5In 2008, the respondent underwent company-wide restructuring. There were a significant number of terminations in Canada as a result of that restructuring, including in the respondent’s Finance Department. On the accounting team, three of the 10 employees, one of whom was the applicant, were given notice of termination.

6The applicant was off work on sick leave due to complications with her high-risk pregnancy from January 30, 2008 to mid-May 2008, at which point she returned to work.

7On July 9, 2008, the respondent gave the applicant written notice that her employment was to be terminated on August 29, 2008. The applicant questioned whether her employment was being terminated because of her pregnancy, noting that she was notified of her termination the day after she discussed her maternity leave plans with her manager on July 8, 2008.

8By notifying the applicant of her August 29, 2008 termination on July 9, 2008, the respondent provided the applicant with approximately seven weeks’ working notice of termination. This exceeded the respondent’s statutory and contractual obligations (i.e. pursuant to the March 2005 Employment Agreement) to provide the applicant with three weeks’ notice or pay in lieu thereof pursuant to the ESA.

9Nonetheless, on July 9, 2008, at the time it gave the applicant notice of the termination of her employment, the respondent offered the applicant a settlement and compensation package. Among other things, the respondent offered the applicant a number of lump-sum payments, continuation of the applicant’s medical, dental and drug benefit coverage for a certain period of time, outplacement counseling, and extended access to the respondent’s Employee Assistance Program. The proposed settlement also included a requirement that the applicant execute a Final Release in favour of the respondent, which Final Release was attached to the July 9, 2008 settlement offer.

10As a result of negotiations between the applicant and the respondent in July 2008, the respondent agreed to increase the amount to be paid to the applicant pursuant to settlement offer.

11On August 29, 2008, and after obtaining independent legal advice, the applicant accepted the respondent’s amended offer and signed the Final Release. The applicant asserts that she decided to accept the employer’s offer and to sign the Final Release because she was concerned about the impact a legal battle would have on the health of her unborn baby.

12The Final Release which the applicant signed in favour of the respondent on August 29, 2008 includes a provision pursuant to which the applicant releases the respondent from:

any and all manner of actions, causes of action… loss or injury of every nature and kind whatsoever … arising out of … employment or termination of employment … or any claims under applicable …human rights ... legislation.

Pursuant to the terms of the Final Release, the applicant also:

undert[ook] to not initiate any claim or file any complaint under the terms of applicable federal or provincial legislation, including those pertaining to … human rights.

ANALYSIS AND DECISION

13Section 23(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, as amended (“SPPA”), provides that a tribunal may make such orders or give such directions in proceedings before it as it considers proper to prevent abuse of its processes. The Tribunal has held that filing a human rights application after signing a full and final release in respect of the subject-matter of the application may constitute an abuse of the Tribunal’s process and, where that is the case, such applications should be dismissed.

14The respondent submits that the applicant voluntarily and with full knowledge of all of the relevant facts entered into a full and final settlement of any and all claims arising in respect of her employment or the termination of that employment. The applicant had ample time to consider the respondent’s settlement offer before ultimately accepting it on August 29, 2008, after obtaining independent legal advice. The respondent submits that according to the clear wording of the Final Release she signed, the applicant released the respondent from human rights claims. The respondent submits that the Application thus constitutes an abuse of the Tribunal’s processes and ought not to be permitted to proceed. The respondent submits that if the Tribunal finds that the Application is not an abuse of process, and permits it to proceed, the applicant ought to be required to repay all of the monies she received from the respondent pursuant to the settlement, as a condition of being permitted to proceed.

15The applicant acknowledges that there are compelling public policy reasons for upholding releases, as a general proposition. However, the applicant posits three arguments in support of her position that it would not be an abuse of the Tribunal’s process to permit her Application to proceed. First, the applicant argues that the wording of the Final Release she signed, even if given legal effect, does not bar her from bringing the instant Application. Alternatively, if the strict wording of the Release would otherwise prevent the applicant from pursuing her Application, the applicant submits that she ought not to be held to the strict terms of the Release because she entered into it for Code-related reasons. Moreover, the applicant submits that she ought not to be bound by the strict wording of the Release because she was misled as the circumstances surrounding the termination of her employment when she decided to enter into the Release.

16The applicant also submitted that the letter of reference she received from the respondent upon the termination of her employment was insufficient in that it did not adequately reflect her position with the respondent. She suggested that the letter was part of the consideration she was to receive for the Final Release.

17The respondent pointed out that it had no obligation pursuant to the parties’ written settlement agreement to provide any reference letter to the applicant and the reference letter was therefore not part of the consideration for the August 29, 2008 Final Release. During oral submissions, the applicant conceded this was a minor point and did not seriously pursue the argument that the settlement agreement and Final Release should be set aside because of the content of the letter of reference.

18The applicant asks the Tribunal to dispose of the respondent’s request for early dismissal in the same manner as the adjudicator in Bielman v. Casino Niagara, 20 09 HRTO 123. In Bielman, the Tribunal decided to hear the case on the merits, notwithstanding the existence of a release, and to decide the significance of the release, if any, upon the conclusion of the hearing. There, the adjudicator found that the evidence required to determine the respondent’s request for early dismissal because of the release would have been “the same as the evidence required to decide the case on the merits”. (at par.12)

Whether Legal Effect of Release is to Bar Application

19The applicant submits that the respondent knew that the applicant was pregnant at the time it terminated her employment and knew also that the applicant was upset about being terminated while pregnant. In light of these circumstances, the applicant contends that the language in the “boilerplate” Final Release she signed in favour of the respondent does not specifically refer to the Code and is not strong or clearly worded enough to have been intended to prevent the applicant from bringing an Application under the Code.

20The applicant also submits that the settlement agreement and release do not specifically contemplate the resolution of the applicant’s human rights issues, for example, by paying the applicant a sum of money specifically to resolve alleged human rights violations. Accordingly, the applicant submits that her human rights issues have never been settled and she is not barred her from pursing her claims under the Code. In support of her argument, the applicant relies upon the Ontario Human Rights Commission’s Guide to Releases with respect to Human Rights Complaints and the Commission’s recommendations for release language which is “preferable” to that contained in standard form releases.

21In Better Beef Ltd. v. MacLean, (2006), 2006 CanLII 17930 (ON SCDC), 80 O.R. (3d) 689, at paras. 46-48, the Divisional Court confirmed the well-established principle that where “the literal and ordinary meaning of the release” demonstrates a clear intention on the part of the parties to fully and finally release the respondent from all claims, it should not be easily disturbed. I fully accept that proposition. It is trite law that where two parties have freely entered into the terms of a written agreement, they are bound to the clear and unambiguous terms of that agreement, absent exceptional circumstances.

22Pursuant to the terms of the Release, the applicant clearly and unambiguously releases the respondent from “any and all” causes of actions for “loss or injury of every nature and kind whatsoever”, including “claims” under “human rights legislation.” The applicant also undertook not to “initiate any claim or file any complaint” against the respondent “under the terms of applicable … provincial legislation, including those pertaining to … human rights.” Although the Release may not refer to the Code by name, it certainly does describe the Code when it refers to “provincial legislation … pertaining to … human rights”.

23The fact that the agreement does not identify the applicant as pregnant or attribute a portion of the settlement monies specifically to the resolution of alleged human rights violations does not detract from the plain wording of the agreement. The legal effect of the Release is to prevent the applicant from pursuing her Application before the Tribunal, unless there are circumstances which mean that the applicant ought not be bound by the Release. I now turn to the applicant’s arguments in this regard.

Whether Applicant should not be bound to Release because she signed it for Code-related reasons

24The applicant contends that she ought not to be bound by the terms of the Final Release because she entered into the settlement for “Code-related reasons”. In support of this proposition, she relies upon the Tribunal’s decisions in Dube v Rockhaven Recovery, 2009 HRTO 53 (Can LII) and Ababio v. Humber River Regional Hospital, 2009 HRTO 286 (Can LII), as well as Bielman, supra.

25In Dube, the Tribunal found that it would be an abuse of process to permit an Application to continue where the applicant had signed a release and had not raised any Code-related issues “which may have prevented him from understanding the issues or the documents he was signing” (at par. 11, and as referred to in Bielman, supra, at par 11). In Ababio, at par. 23, the adjudicator stated as an aside that the Tribunal may consider whether there are Code-related issues which “forced the applicant” into the settlement, while noting that the applicant had not advanced any connection between her disability and the settlement into which she entered.

26Having considered the applicant’s submissions in this regard, I must reject the proposition that where someone chooses to enter into a release for “Code-related reasons” that, in and of itself, is some separate basis upon which the Tribunal to set the release aside. A settlement agreement which includes a release is a contract between parties and binding as such. Like any contract, it may be void if it was not entered into voluntarily. This might be the case, for example, where someone demonstrates that she entered into an agreement while lacking the mental capacity to do so. It might also be the case where someone demonstrates that she was forced to enter an agreement under duress, and therefore did not truly consent to it at all. This is what I take the adjudicators in Dube and Ababio to have been referring when they mention the possibility of Code-related issues preventing applicants from understanding or forcing them into settlement agreements.

Mental capacity

27In this case, the applicant does not suggest that she lacked mental capacity to enter into the Final Release. After mulling the matter over for seven weeks (all of which time she continued to fulfill her responsibilities at work), the applicant ultimately decided to accept the employer’s settlement offer, including the Final Release, because that is what she thought best at the time. The appilcant sought and obtained legal advice that the employer’s offer was a good one in the circumstances; and that it even if the respondent had terminated the applicant on the basis of her pregnancy, it would be difficult to prove. Considering the advice she received, the applicant’s decision to accept the respondent’s offer was a rational one. Certainly, there is absolutely nothing to suggest that the applicant’s high-risk pregnancy prevented her from understanding the agreement, which is what would be required to void the settlement agreement and Final Release due to the applicant’s lack of mental capacity.

Duress

28When the applicant contends that she was forced to enter into the settlement agreement because of Code-related reasons (i.e. pregnancy), she seems to be arguing that she signed the Final Release under duress and, for that reason, ought not to be held to its terms.

29Where “duress” is put forward as the basis for vitiating a settlement agreement, the party claiming distress is really stating that he or she entered the agreement against his or her own free will. Black’s Law Dictionary, 8th ed. (St. Paul, MN: Thomson West, 1999), gives the following as one of the definitions of “duress”:

Broadly, a threat of harm made to compel a person to do something against his or her will or judgment, especially a wrongful threat made by one person to compel a manifestation of seeming assent by another person to a transaction without real volition.

30In this case, the applicant argues that she was pregnant and vulnerable at the time she signed the Final Release. However, in order to find that the applicant is not bound by the Final Release, she would have to do more than show that she was vulnerable at the time she signed it. She would have to establish that was forced to sign the agreement, that she did not have a choice.

31In this case, the applicant freely chose to accept the employer’s offer and the payments associated with that offer after obtaining legal advice and thinking about her decision for seven weeks. The applicant argues that she had to accept the offer because she was worried about the impact the stress of a legal battle would have on her unborn child. However, the applicant’s choice was not between accepting the employer’s offer on the one hand and a stressful legal battle which threatened her unborn child on the other. The applicant could have chosen not to accept the employer’s offer, received her seven weeks’ working notice (which exceeded her statutory and contractual entitlements) and preserved her rights to pursue legal action at a later time. In fact, the applicant did pursue legal action at a later time, when she filed her Application with the Tribunal, five months after the termination of her employment and four months after the birth of her child.

32A finding of duress would entail finding that the respondent threatened the applicant with some kind of harm if she did not enter into the agreement. The respondent did not do this. It merely offered the applicant a financial incentive to resolve any employment-related disputes that might have existed between them. There is no basis upon which to conclude that the applicant entered the agreement under duress.

33In addition to the fact that there is no legal basis upon which to set aside the parties’ agreement on the basis of duress, there are compelling public policy and human rights reasons for rejecting the applicant’s argument that she was forced to enter into the agreement because of her pregnancy. If the applicant’s contention were accepted, almost every agreement with a pregnant woman could be set aside on the basis of duress. Perversely, this would actually have the effect of disadvantaging pregnant women who wished to resolve employment-related and human rights claims, since respondents would be very reluctant to enter into settlements which could be so easily set aside.

Applicant was Misled as to the Circumstances surrounding her Layoff

34The applicant also argues that the Final Release should be set aside and she should be permitted to proceed with her Application because she was misled as to the circumstances surrounding her layoff at the time she entered into a settlement agreement with the respondent. Specifically, the applicant submits that after signing the Final Release, she discovered that, of the three individuals on the accounting team whose employment was terminated by the respondent, only the two pregnant employees were ultimately let go; and the one non-pregnant employee was retained.

35Where one party to an agreement deliberately misleads another party and thereby induces him or her into entering an agreement, the agreement may be set aside on the basis of the fraudulent misrepresentation. In a recent decision, Wedderburn v. Air Liquide Canada, 2010 HRTO 691, I relied upon the Ontario Court of Appeal’s decision in 1018429 Ontario Inc. v. Fea Investments Ltd., 1999 CanLII 1741 (ON CA), 179 D.L.R. (4th) 268 at par. 51, in which the Court cited as authoritative Professor Fridman’s description of fraudulent misrepresentation in The Law of Contract, 3rd ed. (1994) at p. 294:

A fraudulent misrepresentation is one which is made with knowledge that it is untrue and with the intent to deceive. It may even constitute a term of the contract. Whether it does or not is immaterial, since fraud gives rise to effects in the law of contract and the law of tort. A contract resulting from a fraudulent misrepresentation may be avoided by the victim of the fraud. In such instances the apparent consent by the innocent party to the contract and its terms, is not a real consent. Whether or not the effect of such fraud is to induce a mistake (which might render the contract void), the consent of the innocent party may be revoked at his option.

36In essence, the applicant argues that she was induced into the settlement agreement with the respondent because of the respondent’s fraudulent misrepresentation that it was terminating a non-pregnant employee as well as two pregnant employees on the accounting team. The applicant submits that the fact that a non-pregnant employee was also given notice of termination by the respondent influenced the legal advice she received prior to accepting the employer’s offer that it would be difficult for her to prove discrimination. The applicant submits that when the respondent subsequently rescinded that employee’s termination, it revealed that the decision to terminate the applicant had been based on her pregnancy all along.

37The respondent gave the applicant notice of termination in July 2008. Prior to that, in April 2008, it had given two other employees on its accounting team notice of termination. One of them was pregnant and the other was not. The non-pregnant employee’s termination was to have taken effect in July 2008 (at which point the applicant continued to be employed). In July, however, the non-pregnant employee’s termination was postponed until November 2008 so that she could assist with an audit. Then, in November 2008, another of the respondent’s employees took a voluntary separation package and left the respondent’s employ. That created a vacancy and the non-pregnant employee was retained. This occurred more than two months after the applicant’s employment had been terminated and the applicant had signed the Final Release.

38The respondent submits that it did not intentionally deceive the applicant into signing the Release. The respondent submits that the information which was communicated to the applicant with respect to the planned terminations on the accounting team was true and accurate at the time it was communicated to her. It continued to be true until November 2008, when unexpected events led to the non-pregnant employee being retained by the respondent.

39After careful consideration of the parties’ submissions, I can only conclude that the situation evolved and the facts changed after the applicant decided to accept the respondent’s settlement offer. There is nothing before me to suggest that the respondent knowingly misled the applicant into the settlement. The applicant does not assert facts which, if true, could give rise to such a finding. The mere fact that the respondent issued layoff notices to three individuals and then revoked one of the notices is not sufficient to persuade me that the respondent dishonestly induced the applicant into entering the settlement agreement, particularly where the respondent has an innocent explanation for the revocation of one of the notices.

Terms of Agreement prevent applicant from proceeding before Tribunal

40Pursuant to the terms of the settlement agreement and Final Release signed by the applicant, the applicant clearly agrees not to initiate any legal proceedings against the respondent, including Applications under the Code.

41Unlike Bielman, it is neither necessary nor appropriate, in this case, to require the respondent to participate in a hearing on the merits when it is clear as a preliminary matter that the Final Release is binding on the applicant. In fact, requiring respondents to participate in full hearings on claims they have fully and finally settled is precisely one of the types of mischief which the abuse of process provisions of the SPPA seek to avoid.

42I have found that the applicant freely entered into a full and final release with the respondent in respect of claims under the Code. The applicant has not presented any basis upon which to permit her to resile from her agreement and it is binding. It would be an abuse of the Tribunal’s process to permit the Application to proceed. The Application is dismissed.