Mishich v. Loans Till Payday Inc., 2013 HRTO 991

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Marie Mishich

Applicant

-and-

Loans Till Payday Inc. / LTP Tracer Corporation

and Bruce Lewis

Respondents

DECISION

Adjudicator: Douglas Sanderson

Date: June 4, 2013

Citation: 2013 HRTO 991

Indexed as: Mishich v. Loans Till Payday Inc.

APPEARANCES

Marie Mishich, Applicant

Sharan Basran, Counsel

Bruce Lewis, Respondent

Lawrence Crackower, Counsel

Loans Till Payday Inc. / LTP Tracer Corporation, Respondent

No one appearing

1This is an Application filed under section 45.9(3) of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”), alleging that the respondents have contravened the terms of the settlement reached between the parties regarding an application to the Tribunal.

2In 2008 the applicant brought an application under section 34 of the Code against the respondents. That application was settled on February 4, 2009, and the terms of the minutes of settlement are as follows:

Loans Till Payday Inc. (“LTP”) shall pay the Applicant $11,500 characterized as general damages. LTP will pay $5,500 to the Applicant within 14 days of this settlement agreement and further $6,000 within 30 days of this settlement agreement by mailing a cheque to the Applicant’s home address.

The Applicant acknowledges that LTP has provided the Applicant with the letter of reference signed by Denise Tripp which includes positive comments regarding the quality of her work. Denise Tripp will be designated to respond to any inquiries regarding the Applicant and her employment and will make comments consistent with the contents of the letter of reference. No reference will be made to the allegations made by either party in this proceeding that preceded the cessation of employment, including claims of discrimination, allegations made in the proceeding respecting the Applicant’s work performance or the terms of this settlement. In the event that Ms Tripp ceases to be an employee of LTP, the employer will designate another individual who works in the human resources capacity to respond to inquiries.

The parties agree to maintain the strict confidentiality of these Minutes of Settlement with the exception that the parties may disclose them to their immediate families, legal and financial advisors, and as required by law.

The settlement does not constitute an admission of liability by the Respondent or withdrawal of the allegations by the Applicant.

The Applicant hereby releases the Respondents from any and all applications, claims, demands, complaints, or actions of any kind arising out of the events that gave rise to this application, including but not limited to claims under common law and Ontario Human Rights Code. The Applicant will not make any application, complaint or claim or bring any action against the Respondents and these Minutes of Settlement nay be raised as a complete bar to such application, claim or action.

The applicant shall withdraw the application and the respondents shall consent to the withdrawal.

3The applicant alleges that the respondents contravened the settlement in the following ways:

• the corporate respondent reported the funds were paid as income (i.e., they were not characterized as general damages) and the applicant was assessed $257.31 on the settlement funds by the Canada Revenue Agency;

• she never received the letter of reference; and

• the respondents did not comply with the agreed protocol to address inquiries regarding the applicant’s employment as a person by the name of Okana was rude and refused to answer questions when she responded to telephone inquiries posed by a potential employer.

4The applicant seeks the following remedies:

1. Payment of the amount assessed by the Canada Revenue Agency, i.e., $257.31, plus interest;

2. That the respondent provide the applicant with the letter of reference contemplated in paragraph 2 of the minutes of settlement and that the respondents further comply with the additional terms of paragraph 2 of the minutes of settlement; and,

3. $5,000.00 for the breach of the settlement.

5The individual respondent filed a Response, asserting, amongst other things, that the organizational respondents were in receivership and that the individual respondent has no connection or financial interest in the organizational respondents. In his Response, the individual respondent also stated that a Ms. P. received a telephone call in August 2011 seeking a reference regarding the applicant. Ms. P. responded to the request, as Ms. Tripp had left the organization, in a manner consistent with the requirements of the minutes of settlement.

6On January 10, 2012, the Tribunal was advised by the purchaser of certain assets that “a Receiver was appointed to undertaken [sic] the orderly sale of property and assets of [Timelycash Inc.] and [the respondent The LTP Tracer Corporation] (also known as the trade name Loans Till Payday) on June 6, 2011”. As a result of that information, the Tribunal issued a Case Assessment Direction directing the applicant to:

Advise the Tribunal and the respondent of her intentions with respect to the Application; and

If she intends to proceed with the Application, she must deliver to the respondent and file with the Tribunal written submissions in support of her position that she is entitled to continue with this Application.

7In a Case Assessment Direction, dated May 15, 2012, the Tribunal stated that the relationship between the respondents Loans Till Payday Inc. and LTP Tracer Corporation had not been explained by any of the interested parties. The Tribunal further noted that it had been advised that LTP Tracer Corporation was subject to a court appointed receiver, as of June 6, 2011. However, the Tribunal pointed out that, at that point, the materials before it did not establish that either of the organizational respondents were subject to receivership orders and therefore it was unable to conclude that proceedings against either organizational respondent were stayed, as is normally the case when a receiver is appointed. The Tribunal therefore directed the respondents to file submissions and documents to support their position that the Application should not proceed.

8On May 22, 2012, the Tribunal received correspondence from counsel for the Receiver which advised that the respondent Loans Till Payday Inc. (“LTP”) was amalgamated with six other corporations on October 1, 2009 to form Timely Cash Inc. As a result, the respondents to the Application became Timely Cash Inc., LTP Tracer Corporation and Bruce Lewis. This correspondence also included a copy of the receivership order of the Honourable Mr. Justice Morawetz confirming that both corporate respondents were subject to a court ordered stay of all proceedings including this Application.

9On June 12, 2012, the Tribunal received written submissions from counsel for the applicant in support of the applicant’s position that the application be allowed to continue. Amongst other things, the applicant submitted that LTP was not placed in receivership and therefore proceedings against it were not stayed, and that the Applicant could proceed as against Mr. Best and Ms. P. in their personal capacities. The applicant requested certain information regarding Ms. P., including the correct spelling of her name.

10In a Case Assessment Direction dated September 28, 2012, the Tribunal directed that a preliminary hearing, in-person, be scheduled to determine whether, in light of the terms of the Minutes of Settlement and the court ordered stay of proceedings the application can proceed against the named respondents or Ms. P. In particular, the Tribunal directed the parties to be prepared to address the following issues:

• Whether the application for breach of settlement can proceed against Ms. Polianskai who was not a party to either the original application or the settlement;

• Whether the application should proceed as against Mr. Lewis, and in particular whether the Applicant has not alleged that he has done anything to breach his obligations under the Minutes of Settlement; and

• Whether the court ordered stay of proceedings applies to the named corporate respondent, and if so, whether the application can proceed in light of that conclusion.

11The preliminary hearing took place on March 6, 2013, in Toronto. At the outset of the hearing, the applicant conceded that the court ordered stay applies to the organizational respondent, and, as a result, the Application could not proceed against the organizational respondents in light of the stay. Accordingly, the Application is dismissed as against the organizational respondents.

Submissions

12The applicant acknowledged that Ms. P. was not a party to either the original application or the minutes of settlement that resolved it. The applicant noted, however, that the Tribunal derives jurisdiction from the Code and that, in this case, the Code authorizes the Tribunal to add parties to a contravention application who are not parties to the settlement on which such application is based. In this regard, the applicant referred to sections 45.9 (1) and 45.9 (6), which state as follows:

45.9 (1) If a settlement of an application made under section 34 or 35 is agreed to in writing and signed by the parties, the settlement is binding on the parties.

(6) Subject to the Tribunal rules, the parties to an application under subsection (3) are the following:

1. The parties to the settlement.

2. Any other person or the Commission, if they are added as a party by the Tribunal.

13The applicant submitted that the clear meaning of section 45.9(6) is that the Tribunal may add a person as a party to a contravention application regardless of whether that person was a signatory to the settlement in question. The applicant submitted that section 45.9(6) is a departure from common law principles regarding contracts and amounts to a special regime under the Code intended to further the policy goal of ensuring the enforcement of settlements.

14The applicant noted that the Tribunal has not yet rendered any decisions interpreting section 45.9(6). The applicant submitted, however, that in Glover v. 571566 Ontario Inc., 2011 HRTO 1563, the Tribunal permitted the applicant to proceed against individual respondents, although the organizational respondent was bankrupt. The applicant submitted that the Tribunal noted, in obiter, that section 45.9(6) may allow the Tribunal to make orders against individuals who were not parties to the original settlement.

15The applicant submitted that information made available through Mr. Lewis's Response and the first report of the receiver regarding the organizational respondents suggested that Ms. P. held a management position for the organizational respondents and was designated by the respondents to answer questions about the applicant’s employment following the departure of Ms. Tripp. The applicant submitted that Ms. P. was accordingly responsible for providing the reference. The applicant submitted that a number of factual matters regarding Ms. P.’s actions are disputed or are unclear.

16Similarly, the applicant submitted that the facts regarding Mr. Lewis’ involvement are not clear. The applicant conceded that Mr. Lewis has no personal obligations under the minutes of settlement. The applicant submitted, however, that he is legally responsible by virtue of being a signatory to the minutes of settlement. The applicant noted that Mr. Lewis is identified in the Response to the original application as the sole shareholder and president of the former organizational respondents and was therefore the “ultimate directing mind” of those companies. The applicant submitted that Mr. Lewis was the only person within the organizational respondents who was aware of the minutes of settlement. Consequently, the applicant submitted that he was responsible for implementing the agreement and to the extent he fails to do so he is personally responsible for any breach of the settlement.

17The applicant stated that at this stage of the proceedings the applicant is not privy to details of the respondents’ operations at the material time. Consequently, the applicant submitted that a hearing on the merits is required to resolve the factual disputes involved. The applicant further submitted that without cross-examination of Mr. Lewis and Ms. P. the Tribunal cannot conclude that there is no basis for personal liability.

The Respondent

18The respondent agreed that the Tribunal is bound to enforce settlements, but submitted that the applicant sought to rewrite the minutes of settlement. In that regard, the respondent submitted that only LTP had any performance obligations under the settlement and that the other respondents, including Mr. Lewis, were not jointly and severally responsible for LTP's obligations. The respondent noted that the applicant was represented by counsel during the negotiation of settlement and suggested that the issue of joint and several responsibility may have been a point of negotiation.

19The respondent submitted that there is no evidence that Ms. P. is aware of these proceedings or that the applicant exhausted avenues for delivering the Application to her. The respondent submitted that the Tribunal cannot add Ms. P. as a party to the Application without being satisfied that she has received the Application, as a matter of natural justice.

Reply

20The applicant acknowledged that she has not been able to locate Ms. P., which is why the applicant requested production of contact information for her. The applicant agreed that the Tribunal could not add Ms. P. as a party until she has notice of the proceeding. The applicant noted that she was not suggesting Ms. P. should be added as a respondent at this time. Rather, the applicant's position was that she was addressing the issues raised by the Tribunal in the Case Assessment Direction of September 28, 2012. The applicant submitted that the possibility of Ms. P.'s involvement should not be foreclosed at this time.

Analysis and Decision

Adding Ms. P.

21At issue is the interpretation of the second paragraph of section 45.9(6), set out above. The applicant rightly noted that the Tribunal has not yet interpreted this section. The applicant referred to the Tribunal's decision in Glover, in which the Tribunal made obiter comments to the effect that section 45.9(6) may permit the Tribunal to make orders against individuals who are not parties to a settlement, who are added as parties to an application pursuant to that section.

22The applicant submitted that the language of section 45.9(6) indicates that the Tribunal may add individuals who were not parties to a settlement of an application under section 45.9(3). The applicant submitted that section 45.9(6) allows the Tribunal to go beyond the common law of contract and is intended to give the Tribunal broad powers to ensure the enforcement of settlements, which she suggested was a laudable policy objective.

23In Glover, the Tribunal considered the principles to be applied when fashioning a remedy for the contravention of the settlement, pursuant to 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.

24Accordingly, section 45.9(8) appears to grant the Tribunal broad remedial authority to remedy contraventions to settlements that is not limited to the remedies available under the common law, including granting general damages for breach of a settlement. In Glover, however, 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 contract provided the appropriate principles to apply when determining a remedy under section 45.9(8).

25While the Tribunal has not previously considered section 45.9(6) with respect to applications under section 45.9(3), it has on several occasions ruled regarding its power to add parties to applications under section 34. In Smyth v. Toronto Police Services Board, 2009 HRTO 1513, the Tribunal held that it should consider the following three questions when determining a request to add a respondent to an application under section 34:

(1) Are there allegations made that could support a finding that the proposed respondent violated the Code?

(2) If the proposed respondent is an individual and an organization is also named, is there a compelling reason to include him or her as a respondent?

(3) Would it be fair, in all the circumstances, to add the proposed respondent?

26For the purposes of an application under section 45.9(3), these questions can be recast as follows:

(1) Are there allegations made that could support a finding that the proposed respondent acted in a manner inconsistent with the terms of settlement?

(2) Is there a compelling reason to include him or her as a respondent?

(3) Would it be fair, in all the circumstances, to add the proposed respondent?

27Clearly, there must be an allegation that could sustain a finding that the proposed respondent did something inconsistent with or interfering with the execution of the settlement terms. In an application under section 45.9(3), the second question in my view involves an examination of why a non-party to a settlement should share (or assume) with the responsibility for a contravention of the settlement with the actual parties to it. In an application under section 34 of the Code, a proposed respondent may have joint responsibility with the already named respondent(s) and if it appears that the named respondent(s) may not be able to take responsibility for a breach of the Code or satisfy any order the Tribunal may make, then it is reasonable to add the proposed party. In a section 34 application, such orders come prior to any determination of liability. However, in an application under section 45.9(3), the parties have agreed who the parties to their settlement are and their respective obligations. Accordingly, the fact that the party to the settlement is unable to meet its obligations under the settlement will in my view generally not be a compelling reason to require a stranger to the settlement to remedy any contravention, absent a compelling reason for holding such a stranger responsible for the contravention. At the third stage, the Tribunal may consider such factors as the effect on the hearing process of adding the proposed respondent, the reasons the proposed respondent was not named in the contravention application or response and prejudice to other parties.

28The applicant submitted that Ms. P. responded rudely and refused to answer questions when an employer considering the applicant for employment called to get a reference. Accordingly, there are allegations that could support a finding that Ms. P. did not follow the reference protocol in the minutes of settlement.

29However, I find that there are no compelling reasons to require Ms. P. to share or assume responsibility for any contravention of the settlement. The applicant submitted that Ms. P. was a directing mind of the corporate respondents, charged with implementing the protocol regarding verbal references for the applicant and therefore can be held personally liable for the alleged failure to follow this protocol. The circumstances in which the directing minds, e.g., officers or employees, of a corporate entity may be held personally liable for acts carried out in a corporate name are well-established in the common law. I agree with the Tribunal's analysis in Glover to the effect that interpretation of minutes of settlement should be done having regard to the common law. The Ontario Court of Appeal has said on several occasions that, absent fraud or dishonesty, officers and employees should not be held personally liable when acting within the scope of their employment. For example in Scotia McLeod v. People's Jewellers Ltd., 26 O.R. (3d) 481, 1995 CanLII 1301 (C.A.), the Court of Appeal made the following well-known statement:

The decided cases in which employees and officers of companies have been found personally liable for actions ostensibly carried out under a corporate name are fact-specific. In the absence of findings of fraud, deceit, dishonesty or want of authority on the part of employees or officers, they are also rare. Those cases in which the corporate veil has been pierced usually involve transactions where the use of the corporate structure was a sham from the outset or was an afterthought to a deal which had gone sour…. Absent allegations which fit within the categories described above, officers or employees of limited companies are protected from personal liability unless it can be shown that their actions are themselves tortious or exhibit a separate identity or interest from that of the company so as to make the act or conduct complained of their own.

None of the conduct alleged against the respondent directors falls within the broad categories I have outlined above. Their exposure, if there is any, is narrowly focussed on their formal decision making in the name of Peoples. A corporation may be liable for contracts that its directors or officers have caused it to sign, or for representations those officers or directors have made in its name, but this is because a corporation can only operate through human agency, that is, through its so-called "directing mind"…. To hold the directors of Peoples' personally liable, there must be some activity on their part that takes them out of the role of directing minds of the corporation.

There was a good deal of discussion in this court and before the motions judge regarding what conduct of the directors would be sufficient to cause the directors to shed their identity with the corporation and expose themselves to personal liability for the corporation's alleged wrongdoing…. I do not think this type of discussion is useful when there are no allegations whatsoever as to the personal conduct of the directors qua directors.

30See also Budd v. Gentra Inc., (1998), 1998 CanLII 5811 (ON CA), 111 O.A.C. 288 (C.A.); Normart Management Ltd. v. West Hill Redevelopment Co. Ltd., (1998), 1998 CanLII 2447 (ON CA), 37 O.R. (3d) 97 (C.A.); ADGA Systems International Ltd. v. Valcom Ltd., (1999), 1999 CanLII 1527 (ON CA), 43 O.R. (3d) 101 (C.A.), leave to appeal to S.C.C. ref’d [1999] S.C.C.A. No. 124; and Xerox Canada Finance Inc. (Canaplan Leasing) v. Wilson's Industrial Auctioneers Ltd., (1999), 1999 CanLII 18667 (ON CA), 122 O.A.C. 97 (C.A.).

31The former corporate respondent, like any other organization, can conduct its affairs only through its officers and employees. Accordingly, the applicant's assertion that Ms. P., assuming she was indeed a “directing mind” of LTP, became legally responsible for the alleged breaches to the minutes of settlement because it fell to her in the course of her employment duties to execute its terms is not correct. The applicant provided no indication of the types of behaviour, fraud, deceit etc., required to hold Ms. P. personally liable for LTP's obligations under the minutes of settlement.

32I agree that enforcing settlements of applications to the Tribunal is an important objective, as the Tribunal recognized in Saunders v. Toronto Standard Condominium Corp. No. 1571, 2010 HRTO 2516 at paragraph 51. The Tribunal recognized the importance of settlements in human rights disputes and the finality of such settlements in particular in Dunn v. Sault Ste. Marie (City), 2008 HRTO 149. The Tribunal must be careful, in my view, that it does not ignore or effectively rewrite the terms of a settlement in an effort to provide a remedy for a party where events subsequent to the settlement, such as the bankruptcy of a respondent, render execution of the settlement impossible. In my view, such a practice would undermine the finality and certainty of settlements and would be a disincentive to negotiated resolutions. Such a practice may also encourage parties to be less diligent in negotiating the terms of settlements, in the belief that should execution of settlement terms become difficult or impossible, the Tribunal will add another party to make good the entitlements under the settlement.

33In the circumstances, there is no need to address the third question.

Should the Application Continue Against Mr. Lewis?

34There is no dispute that Mr. Lewis was a party to the minutes of settlement and is a proper party to this Application. However, the Tribunal raised the question of whether the Application should proceed against him because he was not responsible, under the terms of the minutes of settlement, for the terms the applicant alleges were breached. The applicant submitted that Mr. Lewis was liable for the contravention of the settlement because he was a party to it. This submission is contrary to the clear terms of the minutes of settlement, which make LTP exclusively responsible for the payment of the settlement funds and implementation of the reference protocol. There is no term requiring any respondent to provide a letter of reference, since the applicant expressly acknowledged receiving a letter of reference in the minutes. The parties could have agreed to make the obligations under the minutes of settlement joint and several among the respondents to the original application, but did not, for whatever reasons.

35As with Ms. P., the applicant also submitted that Mr. Lewis is responsible for the alleged contraventions of the minutes of settlement because he was a directing mind of LTP, which does not appear to be disputed. As noted above, the jurisprudence established by the Court of Appeal indicates that a directing mind of a corporate entity will be responsible for the acts carried out in the course of his or her duties only where there is evidence of dishonesty, deceit, fraud or that the corporation was a sham. The applicant pointed to no such evidence and, as a result, I find there is no proper basis on which to continue the Application against Mr. Lewis.

36The applicant submitted that she should have the opportunity to cross-examine Ms. P. and Mr. Lewis at a hearing to determine whether they bear personal liability for the alleged contraventions of the settlement. In my view, it would be inappropriate to allow the applicant to proceed on such a speculative basis.

37The Application is dismissed.