Smith v. Peel Regional Police Services Board, 2010 HRTO 905

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Lana Smith

Complainant

-and-

Peel Regional Police Services Board

Respondent

INTERIM DECISION

Adjudicator: Jennifer Scott

Date: April 26, 2010

Citation: 2010 HRTO 905

Indexed as: Smith v. Peel Regional Police Services Board

APPEARANCES BY

Lana Smith, Applicant ) On Her Own Behalf

Peel Regional Police Services Board, ) Lauri Reesor,

Respondent ) Counsel

BACKGROUND

1The complainant, Lana Smith, was a police constable with the Peel Regional Police Services Board (the “respondent” or the “Board”) between 1989 and March 17, 2003. On August 10, 2004, she filed a complaint under the Human Rights Code, R.S.O. 1990, c. H.19 (the “Code”) alleging the respondent infringed her right to equal treatment in employment because of her race, colour and sex, and engaged in reprisals contrary to the Code.

2On July 29, 2008, the Commission decided to refer to the Tribunal only that part of the complaint which related to alleged discrimination and reprisals after the complainant left her employment with the respondent in March 2003 (the “Complaint”). The Complaint was referred to the Tribunal on August 8, 2008.

3On November 27, 2009, the Commission requested an order from the Tribunal acknowledging its withdrawal from the proceeding. That order was subsequently granted.

4This Interim Decision deals with the respondent’s Request for an order dismissing the Complaint because of an alleged settlement between the parties. The respondent argues it would be an abuse of the Tribunal’s processes to hear the Complaint because of the settlement.

5A hearing was held on March 18, 2010 to deal with the respondent’s Request for an order. An agreed statement of facts was filed by the parties. The respondent did not call any evidence in support of the Request other than the agreed statement of facts.

THE FACTS

6The relevant facts, for the purpose of the Request, deal solely with the question of whether a binding settlement exists between the parties.

7On July 20, 2009, the complainant spoke to Commission counsel about settling her Complaint. During this conversation, the complainant verbally agreed to settle her Complaint for the payment of a sum of money (the “Monetary Compensation”) by the respondent.

8By way of an e-mail message on July 22, 2009 from Commission counsel to the complainant, counsel confirmed the complainant’s agreement on July 20, 2009 to settle her complaint for the payment of the Monetary Compensation. Commission counsel advised the complainant that the respondent had made an offer to pay the Monetary Compensation. Commission counsel further advised the complainant that he would take steps to resolve the matter with the respondent.

9During the evening of July 22, 2009, the complainant sent an e-mail message to Commission counsel confirming their conversation on July 20, 2009.

10On August 18, 2009, Commission counsel and respondent’s counsel agreed on draft minutes of settlement. The minutes of settlement included terms regarding:

(a) the payment of the Monetary Compensation;

(b) the provision of a systemic remedy;

(c) the language of the release;

(d) the fact that the parties acknowledged the settlement was not an admission of liability by the respondent (in fact liability was denied) and the complainant did not retract any allegations;

(e) the confidentiality of the settlement; and

(f) an acknowledgement by the complainant that she had the opportunity to obtain independent advice.

11The minutes of settlement also required ratification and approval of the Board. The relevant term in the agreement is set out below:

The parties agree that this settlement will not be effective unless ratified and approved by the Regional Municipality of Police Services Board.

12In an e-mail communication on August 18, 2009, respondent’s counsel advised Commission counsel that the Board required signed minutes of settlement by the complainant prior to being able to seek ratification from the Board and process payment of the Monetary Compensation.

13On August 18, 2009, Commission counsel advised the Tribunal that the parties had arrived at a resolution of the Complaint and that the required forms would be provided within a month.

14On August 19, 2009, the complainant advised Commission counsel that she had reviewed the minutes of settlement and did not agree with its terms. She advised Commission counsel that she would not give up her fight to stop the discriminating behaviours of the respondent. She advised further that she would not, at that time, sign the agreement.

15On September 3, 2009, a pre-hearing teleconference took place with the Tribunal. The complainant advised the Tribunal her only difficulty with the minutes of settlement related to the paragraph stating there was no admission of liability on the part of the respondent and no retraction of allegations by the complainant. At the end of the teleconference, the complainant agreed to sign the minutes of settlement. The complainant’s agreement to sign the minutes of settlement was confirmed by the Tribunal in correspondence, dated September 3, 2009.

16On September 15, 2009, the complainant wrote to the Tribunal and indicated she would not sign the minutes of settlement as she wanted to proceed with her Complaint.

17The minutes of settlement have not been signed by the complainant or the respondent.

18There are two issues before the Tribunal:

(a) is there a settlement between the parties; and

(b) if so, is it an abuse of the Tribunal’s processes to hear the Complaint?

19The respondent argues there was a settlement between the parties on July 22, 2009. Alternatively, the respondent argues there was a settlement between the parties on September 3, 2009.

ANALYSIS

July 22, 2009

20In order to have a binding settlement agreement, there must be an offer, acceptance and consideration. The respondent argues there was a valid settlement on July 22, 2009 when the essential terms of the settlement were agreed upon between the parties, that being, the payment of the Monetary Compensation in exchange for a full and final release.

21The e-mail communications on July 20 and 22, 2009 between Commission counsel and the complainant confirm the complainant’s agreement to settle the complaint for the payment of the Monetary Compensation. There is no mention of a release in either of these communications.

22The complainant received draft minutes of settlement on August 18 or 19, 2009. These minutes contain terms in addition to the payment of the Monetary Compensation, including the terms of the release.

23On August 19, 2009, the complainant advised Commission counsel that she did not agree with the settlement terms.

24The respondent argues the additional terms in the minutes of settlement are merely “boiler-plate” provisions found in standard settlement agreements. I do not agree. The minutes contain substantive provisions including a systemic remedy, the requirement of confidentiality and the terms of the release.

25The respondent argues further that the Commission, in agreeing to the terms of the minutes of settlement, was acting on behalf of the complainant. The Commission is a separate party in these proceedings. Commission counsel does not and cannot act on behalf of the complainant. While the complainant’s interests may be the similar to the Commission’s, Commission counsel does not represent her. There is no evidence before me that Commission counsel at any time represented that he was acting for the complainant in the settlement negotiations.

26I find that, as at July 22, 2009, the only settlement offer made by the complainant was to settle her complaint for the payment of the Monetary Compensation with no further terms. The respondent did not accept this offer. The draft minutes of settlement include substantive terms in addition to the Monetary Compensation. The complainant did not accept these terms. As such, there was no agreement to settle the complaint on July 22, 2009.

September 3, 2009

27On September 3, 2009, a pre-hearing teleconference took place with a Vice-chair of the Tribunal to discuss the issue of settlement. At that time, the complainant indicated that her objection to the draft minutes of settlement was the provision stating she did not retract her allegations and the respondent did not admit liability (in fact, liability was expressly denied). At the end of the teleconference, the complainant agreed to sign the minutes.

28The complainant did not sign the minutes after the teleconference on September 3, 2009 and advised the Tribunal on September 15, 2009 that she would not sign the agreement.

29The issue before the Tribunal is whether a binding contract was created on September 3, 2009 when the complainant verbally agreed to sign the minutes of settlement.

30The law is clear that a binding agreement can exist when the parties agree on all of the essential terms to be incorporated into a formal document with the intention that their agreement shall become binding. The fact that a formal written document is not signed does not alter the binding nature of the original contract. However, when the original contract is incomplete because the essential terms have not been agreed upon; or the contract is too general to be valid and is dependent on the making of a formal contract; or the understanding or intention of the parties is that their legal obligations are to be deferred until a formal contract has been approved and executed, the original agreement cannot constitute an enforceable contract. In these circumstances, the “execution of the contemplated formal document is not intended only as a solemn record or memorial of an already complete and binding contract but is essential to the formation of the contract itself.” See Bawitko Investments Ltd. v. Kernals Popcorn Ltd. (1991), 1991 CanLII 2734 (ON CA), 79 D.L.R. (4th) 97 (Ont. C.A.) at pp. 103-104; Andrews v. Lundrigan, 2009 ONCA 160.

31The complainant argues that because the minutes of settlement were subject to ratification and approval by the Board, there is no enforceable contract until that approval is obtained.

32The respondent argues Board approval and ratification is a condition subsequent that does not affect the binding nature of the agreement that was created on September 3, 2009. The respondent states Board approval, like court approval, does not alter the contractual obligations of the parties.

33The difficulty with the respondent’s argument is that court approval is very different from obtaining approval and ratification from the actual party to the contract. In the former case, the parties sign their contract which is then approved (or not) by the court. The parties’ obligations crystallize when they sign the contract. The agreement is suspended in operation until the court approves its terms, but in the interim, the parties are bound by it. If the court does not approve the contract, it becomes invalid.

34In this case, there is an explicit term in the agreement that it is not effective unless ratified and approved by the respondent Board. No ratification has taken place because the complainant did not sign the agreement. This is reflected in the e-mail by respondent’s counsel on August 18, 2009 where she advised Commission counsel the agreement could not be ratified until the complainant signed the minutes of settlement.

35I find the execution of the minutes of settlement by the respondent is not merely the formal recording of an already binding contract, it is essential to the formation of the contract itself. It is the act which connotes approval and ratification. In contractual terms, it is a true condition precedent – an external condition upon which the existence of the contract depends. There is no contract until this condition has been satisfied. See Fridman, The Law of Contract In Canada, Thomson Canada Ltd. (Scarborough: 1999) at p. 459.

36The course of conduct by both parties supports this finding. The complainant did not sign the agreement and without her signature, the agreement was not presented to the respondent Board for approval and ratification. Under the express terms of the contract, without ratification, the agreement is not in effect. It is therefore not surprising that neither party has followed through with their obligations under the contract.

37The respondent argues that while the Board has a veto power on the settlement, it does not mean that a settlement does not exist. This argument contradicts the express wording of the agreement. The agreement does not talk about a veto power; it states expressly there is no agreement without Board ratification.

38The respondent argues further that the Chief of Police gave counsel instructions to settle on July 29, 2009 and the respondent was contractually bound on that date. I do not accept this argument for several reasons: (a) there is no evidence from the Chief of Police; (b) this was prior to the drafting of the settlement terms and I have found no settlement existed at that time; and (c) it contradicts the express wording of the minutes of settlement which states the contract is not effective unless approved and ratified by the Board.

39Finally, the respondent argues that, in the normal course, the Board receives fully signed minutes of settlement before ratification. There is no evidence before me regarding this standard practice. In any event, there is only one signature line for the respondent on the minutes of settlement. The minutes have not been drafted to allow a representative of the Board to sign the agreement (and presumably be bound) and an additional signature line to indicate Board approval. It does not make sense that the Board, in one capacity, could agree to the contractual terms and in a different capacity, refuse to approve the agreement.

40While I understand the need for Board ratification and approval of settlement agreements, the necessary consequence of requiring such a term is that a settlement does not exist until it is ratified. When the respondent required this term, the agreement became contingent upon this formality taking place.

41For an agreement to be in effect on September 3, 2009, both parties must be equally bound to the terms of the contract, not just the complainant. The express terms of the agreement did not allow the respondent to be bound on this date.

42I therefore find there is no binding agreement between the parties. The agreement clearly states it is not in effect until approved and ratified by the Board. This did not occur on September 3, 2009 and has not occurred thereafter.

43The question remains as to whether the Board can now approve and ratify the minutes of settlement. I do not think so. The complainant clearly revoked her agreement to settle her Complaint on September 15, 2009. There is no offer to settle that can now be accepted by the Board.

44In light of my finding that there is no settlement between the parties, there is no need for me to decide whether it would be an abuse of the Tribunal’s processes to hear this Complaint.

45The hearing of the Complaint will proceed.