Fragiskos v. Mutual Insurance Company, 2016 HRTO 217

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Michael Fragiskos Applicant

-and-

Mutual Insurance Company Respondent

DECISION

Adjudicator: Douglas Sanderson Date: February 19, 2016 Citation: 2016 HRTO 217 Indexed as: Fragiskos v. Mutual Insurance Company

WRITTEN SUBMISSIONS

Michael Fragiskos, Applicant Terri Semanyk, Counsel

Economical Mutual Insurance Company, Respondent Seann McAleese, Counsel

1This is an Application filed under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”), alleging discrimination with respect to employment because of disability. The respondent filed a Response in which it requested dismissal of the Application because the applicant signed a full and final release in favour of the respondent.

2In light of the respondent’s request for dismissal, the Tribunal scheduled a half day preliminary hearing to determine whether the Application should be dismissed because allowing it to proceed, despite the release executed by the applicant, would amount to an abuse of process. The Tribunal held the preliminary hearing by teleconference on January 19, 2016.

The Hearing

3There was no dispute that the applicant signed a release in favour of the respondent. During the hearing, the applicant gave his account of the events leading up to the execution of the release, as follows:

1. The respondent dismissed the applicant on January 29, 2015 and presented a termination package to him;
2. The applicant contacted a lawyer after visiting a severance pay calculation website. The lawyer suggested that the applicant deal with a paralegal;
3. The applicant retained a paralegal on February 6, 2015;
4. The paralegal advised that the applicant may have human rights claim, but also that he should seek a reference letter for the respondent and the severance funds offered to him.
5. The applicant negotiated a letter of reference with the respondent
6. The paralegal advised the applicant to sign the release and that he would file a human rights complaint on his behalf after he received the settlement funds. The paralegal did not explain the release;
7. The applicant signed the release, but did not read it, and sent to the respondent on February 24, 2015;
8. The applicant spoke with a family member who is a lawyer the next day and was advised to rescind the release, which he attempted to do by sending a facsimile to the respondent on February 25, 2015;
9. The respondent did not accept the applicant’s attempt to rescind or cancel the release and deposited the settlement funds in his bank account.

Submissions

4The applicant acknowledged that he received the payments specified in the respondent’s severance offer to him, but submitted that in Manning v. Toronto (City), 2015 HRTO 1715 the Tribunal found that receipt of consideration is not necessarily determinative. The applicant also submitted that the terms of the settlement provided that he was to receive career counselling services, but had not been contacted by the service provider as promised. In his written submissions, the applicant noted that the severance package was open for acceptance until February 12, 2015, but the settlement was not concluded until February 24, 2015. The applicant also submitted in his written submissions that the executed release and settlement amounted to an offer from the applicant and that it was not binding until the respondent accepted it. The applicant submitted that he withdrew the offer before it was accepted. The applicant submitted that in light of the applicant’s immediate action to rescind the release he ought to be entitled to proceed before the Tribunal and that the respondent’s failure to accept rescission of the release was unfair. The applicant submitted that in Pritchard v. Ontario (Human Rights Comm.), 1999 CanLII 15058, 35 CHRR 39 (ON SC) the court stated that insufficient consideration is a factor to consider when considering whether a complaint should be allowed to proceed. The applicant submitted that in light of the remedies the applicant seeks in his human rights Application, the consideration offered in the severance package was inadequate.

5The respondent submitted that the issue regarding the release is straightforward. The respondent noted that the applicant was its employee for less than a year. The severance accepted by the applicant in exchange for the release was three times his entitlements under the Employment Standards Act, 2000. The applicant signed the release nearly a month later and therefore had ample opportunity to consider and receive advice about the respondent’s offer, including the release. The respondent submitted that the applicant actually did seek legal advice from a paralegal who devised a strategy to extract a severance payment from the respondent and then proceed with a human rights claim. The respondent submitted that the deadline for accepting the severance package was clearly extended, as the parties negotiated a letter of reference for the applicant. The respondent submitted that the applicant may have received poor legal advice, but that the remedy for poor legal advice is not to allow him to proceed despite signing a release, but to complain to the Law Society of Upper Canada. The respondent noted that the applicant describes himself as an intelligent, capable and well educated person. The respondent submitted that, given this description, he had the ability to understand the settlement documents presented to him.

6The respondent submitted that the offer of career counselling service remains open to the applicant, regardless of the outcome of this Application, and that it appears that the applicant was not contacted regarding these services out of inadvertence. The respondent submitted that the applicant did not raise this issue until the respondent sought to rely on the release. In any event, the respondent submitted that the Tribunal has found that failure to perform a term of a settlement does not entitle a party to rescind a settlement. Rather the remedy is to enforce the terms of the settlement. See Glover v. 571566 Ontario Inc., 2011 HRTO 1563.

7The respondent submitted that Manning was distinguishable, as the applicant in that case was represented by a union that purported to settle a grievance on the applicant’s behalf. The settlement was reached over the applicant’s objections who complained of duress throughout the process. In this case, the applicant negotiated with the respondent and signed the release himself. The respondent noted that in Pritchard, the actual finding of the Court on judicial review was that the Human Rights Commission had closed its mind to the issue of duress and did not make a finding of duress.

Analysis and Decision

Abuse of Process

8The Code does not explicitly bar Applications where an applicant has executed a release in favour of the respondents. See Bielman v. Casino Niagara, 2009 HRTO 123. Section 23(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, however, provides that the Tribunal may make such orders or give such direction in proceedings before it as it considers proper to prevent abuse of its processes. The Tribunal has found on a number of occasions that filing a human rights Application after executing a full and final release can amount to an abuse of process and dismissed the applications in question. See for example Shams v. Genivar Inc., 2012 HRTO 163, and Perricone v. Fabco Plastics Wholesale, 2010 HRTO 1655.

9First, it is necessary to consider whether language used in the release encompassed claims under the Code. The release language contained in the first paragraph released the respondent from a broad range of claims, which would include claims under the Code and, in any event, the applicant agreed in the second paragraph that he had no Code claims arising out of his employment or the termination of his employment and would not file a human rights complaint. I find therefore that the release covered claims under the Code.

10In Pritchard, above, the Court set out factors for determining whether a release should be set aside. Pritchard was decided under section 34 of the old Code, which invoked bad faith rather than abuse of process, and concerned access to the since repealed investigative procedure of the Ontario Human Rights Commission rather than the right to an oral hearing before the Tribunal. However, the Tribunal has found that the Pritchard factors can be useful in determining whether it would be an abuse of process to proceed with a hearing on the merits: Douse v. Hallmark Canada, 2009 HRTO 1254. The Pritchard factors look to (1) whether the party fully understood the significance of the release; (2) whether the party received sufficient and fair consideration for signing the release; (3) evidence of economic pressure; and (4) evidence of psychological or emotional pressure amounting to duress.

11The Ontario Court of Appeal described the elements of duress in a recent case, Taber v. Paris Boutique & Bridal Inc. (Paris Boutique), 2010 ONCA 157, at para. 9:

[N]ot all pressure, economic or otherwise, can constitute duress sufficient to carry these legal consequences. It must have two elements: it must be pressure that the law regards as illegitimate; and it must be applied to such a degree as to amount to “a coercion of the will” of the party relying on the concept. See: Stott v. Merit Investment Corp., 1988 CanLII 192 (ON CA), 63 O.R. (2nd) 545 (Ont. C.A.), at para. 89. In Stott, the court held that in order for economic duress to be found, the party whom is being illegitimately pressured must be put in position where he has no “realistic alternative” but to submit.

12I find that none of the Pritchard factors, or any other factors that might warrant overriding the language of the release, have been established in this case.

13First, I do not accept that the applicant made an offer to the respondent that he was free to withdraw before it was accepted. Rather, the applicant accepted the respondent’s offer by signing the release, which created a binding contract between the parties. In my view, the respondent obviously extended the deadline for acceptance of its severance offer by negotiating with the applicant. The applicant seemed to attach significant weight to the fact that he purported to rescind or cancel the release very shortly after he executed it. Applicant’s counsel pointed to no authority supporting the proposition that a party is entitled to rescind or withdraw from a contract if they act quickly to do so. In the circumstances of this case, I find this to be an irrelevant consideration.

14The applicant does describe himself to be an intelligent, well educated person, which was apparent in his remarks during the hearing. The applicant had nearly a month to read and consider the release the respondent presented to him, but he chose not to read the document, for whatever reason. Had he done so, there is no reason to believe that he would not have appreciated that signing the release would have prevented him from pursuing a human rights claim. Of course, the applicant relied on the advice of the paralegal he retained and signed the document without reading it. In my view, neither the applicant’s poor judgement nor his paralegal’s poor advice provide a proper basis for allowing him to proceed with this Application.

15The employer offered the applicant pay in lieu of notice in excess of his entitlement the Employment Standards Act, 2000 in exchange for a release, which is a common arrangement. The applicant accepted this offer. In the release, the applicant agreed not to pursue a claim under the Code against the respondent. In these circumstances, I find no merit in the applicant’s submission that this consideration was inadequate.

16In my view, allowing this Application to proceed despite the release he executed in the respondent’s favour would amount to an abuse of process. The Application is dismissed.