Ontario Public Service Employees Union (Tilden) v. The Crown in Right of Ontario (Ministry of Municipal Affairs and Housing), 2000 CanLII 20467

GSB # 2109/95, 2110/95, 2111/95, 2112/95

OPSEU # 96D046, 96D047, 96D048, 96D049

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Ontario Public Service Employees Union

(Tilden)

Grievor

• and -

The Crown in Right of Ontario

(Ministry of Municipal Affairs and Housing)

Employer

BEFORE Nimal Dissanayake Vice Chair

FOR THE Alick Ryder

GRIEVOR Counsel Ryder, Wright, Blair & Doyle Barristers & Solicitors

FOR THE Liane Brossard

EMPLOYER Counsel, Legal Services Branch Management Board Secretariat

HEARING January 6, 2000

DECISION

The Board issued its decision on this matter on October 19, 1998. The Board was reconvened at the parties request to deal with several disputes the parties had with regard to remedial issues.

At the hearing on January 6, 2000, the parties agreed to make submissions on the unions claim for damages under two particular heads and get a ruling, before dealing with other outstanding disputes. This decision deals with those issues.

Aggravated damages

In its decision dated October 19, 1998, the Board had concluded that the employer had contravened the collective agreement in the manner it laid off the grievor and subsequently applied the collective agreement with regard to surplus rights and job security. The union, inter alia, claims aggravated damages on the grounds that this was not merely a failure to properly apply the collective agreement, but a bad faith attempt by the employer to harm the grievor. The union sought to lead evidence to establish bad faith and make submissions that aggravated damages were warranted in the circumstances.

The employer denies any bad faith. It further argues that even if the allegations of bad faith alleged are established, the Board lacks jurisdiction to award aggravated damages in this particular case. As a preliminary matter, however, it is the employer’s position that at this stage the Board is in any event functus officio with regard to an allegation of bad faith. This decision deals with the ‘functus officio’ argument.

At p. 41 of its decision the Board summarized its conclusion as follows:

In support of the grievance the union targeted a number of positions in different classifications, as positions the grievor had entitlement to be either assigned to or displace into. Having reviewed the evidence the Board has concluded that

(1) The grievor was entitled to have been assigned to one of the ORC vacancies which were filled through a competition.

(2) The grievor had the qualifications and was entitled to displace the incumbent of a CP I position, who had less seniority than the grievor.

By failing to accord these entitlements to the grievor, the employer contravened the collective agreement.

At pp. 41-42 the Board went on to deal with the remedy as follows:

Remedy

The evidence is that under the redeployment process under article 20, the employer first exhausted any assignment opportunities before turning to consider displacement rights. Therefore, had the employer complied with the collective agreement, the grievor would have been assigned to one of the ORC positions. Therefore the appropriate remedy is to direct that the employer appoint the grievor to that position retroactively to the time when he should have been assigned and to compensate him for all losses. The Board so directs.

Of course, given the passage of time and the restructuring that has gone on within the ministry in that time, it is open to the parties, if they can so agree, to devise a remedy of their own as an alternative to the remedy ordered by the Board.

The Board remains seized with jurisdiction in the event the parties have any disagreement relating to the remedy.

In a nutshell, the dispute is as to whether the Board’s retention of jurisdiction at the end of its award, included jurisdiction to deal with the union’s present allegation of bad faith.

The Board notes that in his opening statement, Mr. Ryder mentioned several times that the employer had acted in bad faith towards the grievor. This is consistent with the fact that one of the four grievances before the Board specifically made an allegation of bad faith. At p. 3 of its award, the Board described the grievances before it as follows:

The four grievances before the Board are as follows:

(A) a grievance dated November 10, 1995 alleging that the grievor’s position was abolished in bad faith and in violation of articles A and 24.

(B) a grievance dated November 16, 1995 alleging that the employer breached article 24.21.14 by failing to include a performance review as part of the grievor’s employee portfolio and thereby denied the grievor an opportunity for placement in another position.

(C) a grievance dated November 16, 1995 alleging (1) Improper layoff (2) Failure to apply article 24 rights in a full and timely manner (3) Denial of the right to bump into positions occupied by employees with less seniority (4) Discrimination against the grievor because of his union activities and his exercise of rights under the collective agreement.

(D) a grievance dated November 16, 1995 claiming that the grievor was denied his right to a guaranteed job offer pursuant to article 24.17.1.

Grievance (A) above clearly makes an allegation of bad faith. However, immediately after describing the grievances as set out above, at pp. 3-4 the Board wrote as follows:

On the second day of hearing union counsel advised that he would not be relying on bad faith and discrimination as an independent cause of action, but would be relying on that evidence only in support of the allegation that the grievor’s substantive rights under the collective agreement were violated. Therefore, the union has in effect abandoned the grievance (A) above. The allegation that the employer had discriminated because of the grievor’s union activity and exercise of collective agreement rights was also not pursued during final submissions. In any event, the Board finds that the evidence before it does not substantiate any discrimination on the grounds of a prohibited ground nor any ill-will or bad faith on the part of the employer either in its decision to abolish and declare the grievor’s position surplus or in the manner it applied the surplus and job security rights under the collective agreement subsequently. Therefore, this arbitration is about whether the employer correctly applied the grievor’s collective agreement rights.

The Board, having made a finding that the union had in effect abandoned the grievance in which he alleged bad faith, also finds that ‘In any event ... the evidence before it does not substantiate ... any ill-will or bad faith on the part of the employer either in its decision to abolish and declare the grievor’s position surplus or in the manner it applied the surplus and job security rights under the collective agreement subsequently’. Clearly, based on the evidence that was adduced, the Board has already made a determination on the issue of bad faith. The union’s present endeavour would in effect be an attempt to have the Board reverse its decision by leading additional evidence on bad faith at this stage.

In the present case the union did not at any time purport to reserve a right to call further evidence to establish its allegation of bad faith. Nor did the Board intend to reserve jurisdiction in that regard. If it had so intended, it would have been extremely strange for the Board to make a finding that there was no bad faith.

In its decision the Board determined the employer’s liability. It awarded a specific remedy for the violations found. It retained jurisdiction only ‘in the event the parties have any disagreement relating to the remedy’, i.e. the remedy it had ordered in its decision. The attempt at this stage is to lead evidence relating to further employer conduct and liability, and not to determine the extent of the remedy ordered. The Board no longer has jurisdiction in that regard.

For the foregoing reasons, I uphold the employer’s objection to the Board’s jurisdiction to deal with the union’s claim for aggravated damages because the Board is functus officio.

Damages for losses resulting from liquidation of stock portfolio and RRSP

The union claims that upon the loss of the grievor’s employment, the family income of the grievor was significantly reduced. In order to find the required family income, the grievor withdrew some funds from his RRSP. In addition, he sold some stocks he had in his investment portfolio. The union states that it will prove that as a result of withdrawing the RRSP funds, there was a permanent reduction in the grievor’s RRSP account and further that he suffered adverse income tax consequences. He similarly claims that by selling his stocks at the time he did, the grievor suffered losses.

Counsel agrees that the test is one of reasonable foreseeability. He draws a parallel between foreseeability and the prudence of the grievor’s decision to withdraw funds form his RRSP and sell his stocks. He submits that the employer is entitled to expect that the grievor would act prudently in addressing the financial problems posed as a result of his layoff. As long as the grievor’s actions were prudent, they must be deemed to fall within the range of foreseeability for purposes of recovery of damages. Counsel submitted that the prudence of what the grievor did may only be understood in the factual context as a whole. Without accepting the facts, the employer was content to argue the issue of recoverability on the union’s version of facts.

The pertinent facts, assumed solely for the purposes of this argument, are as follows: The grievor is married with a son (13 years) and daughter (10 years). He owned the family residence and also owned 3 rental properties. The rental income from the 3 properties was approximately equal to the rental expenses including mortgages. He had a RRSP and 2 stock portfolios, one of which was for his children.

According to the union, prior to his layoff on November 15, 1995, the grievor’s annual household income was approximately $ 88,000.00, consisting of his salary of approximately $ 62,000.00, a net payment of $ 15,000-16,000 he received as a result of a grievance settlement and his wife’s salary of $ 35,460.00.

In the years 1996, 1997 and 1998 in the period between his layoff and his reinstatement, the grievor’s family income consisted of his wife’s salary and income from the grievor’s self-employment as a consulting Landscape Architect. Since his self-employment income averaged a negative $ 3,567.00 per year, that left his family with an annual income of approximately $ 31,900.00. Thus, according to the union, as a result of the grievor’s layoff, the family income fell from $ 88,000.00 to $ 31,900.00 per year.

Counsel urges the Board to consider the prudence of the grievor’s decision to withdraw funds from his RRSP and to sell some of his stocks, in light of this factual context. The grievor registered with the Unemployment Insurance Commission, and did a serious job search fulfilling his duty to mitigate. He started his own business as a consultant in the field of his expertise. When it still left a significant shortfall in the family income, he decided first to sell the riskiest of his assets, the stocks. Next he withdrew from his RRSP. Counsel takes the position that the evidence will be that the grievor was not in a position to obtain any bank loans, because as an unemployed person his credit rating was unfavourable. In any event, without a job, the grievor was not willing to incur debts. Counsel submits that it was very reasonable for the grievor to first turn to the stocks and RRSP rather than selling his rental properties. The rentals provided him tax advantages. Further real estate is not very liquid and it can take a long time before any funds are actually realized by a sale.

The employer’s position is that even if all of the facts asserted by the union are established, no damages are recoverable with respect to these losses. Counsel’s position was that any such loss is too remote and not within the realm of reasonable foreseeability and further that the loss is merely speculative. Counsel submitted a number of decisions in support of her assertion that losses resulting from personal decisions by an employee unrelated to employment are not recoverable.

The parties appear to be agreed on two basic principles. First, they agree that the purpose of damages is as set out in the following passage from Re Canadian Johns Manville Co. Ltd., (1971) 1971 CanLII 1948 (ON LA), 22 L.A.C. 396 (Weiler) at pp. 397-8:

Stated in the abstract, the relevant principle is quite clear. The purpose of damages for breach of contract is not to punish but to compensate, and the function of compensation is to place the aggrieved party in a monetary position as near as possible to that in which he would have been had the contact been performed.

Second, the parties agree that, to be recoverable, the loss claimed must not be too remote, that is, it must be reasonably foreseeable. See Re Sheridan College of Applied Arts & Technology, (1998), 1998 CanLII 29980 (ON LA), 75 L.A.C. (4th) 201 (Schiff).

Thus the dispute boils down to whether the loss claimed here was reasonably foreseeable or too remote, and whether loss was merely speculative.

There was no dispute that the legal principles that govern the rights of recovery by an employee who is unjustly discharged also apply to an employee improperly laid-off. It has been held that a discharged employee is not limited to claiming damages for loss of his salary and wages. Thus in Lawson v. Dominion Securities Corp., (1977) 2 A.C.W.S. 259, the Ontario Court of Appeal stated:

The recovery of lost income is not limited to salary. In this case the appellant conceded that the pension plan benefits should also be included. Carey v. F. Drexel Co. Ltd., 1974 CanLII 1733 (BC SC), [1974] 4 W.W.R. 492 exemplifies the rule that other income items should be admitted including contractual profit-sharing, a share-purchase option, and many fringe benefits such as a company car, club membership, pension, disability and medical plans. Other cases have allowed compensation for lost commission, money paid on piece-work, tips, rent-free residence, board and lodging, luncheon vouchers, and the like: McGregor on Damages (13th edition) para. 885 at 595. However, discretionary items such as bonus or profit distribution are not normally allowed: Bardal v. Globe & Mail (The), 1960 CanLII 294 (ON HCJ), [1960] O.W.N. 253.

Employer counsel pointed out that all of the losses stated to be recoverable in Lawson are directly related to employment and not relating to personal assets or investments of the employee. In addition, the Board was provided with a number of decisions where the claims pertained to losses from transactions of a personal nature which the employee engaged in as a result of his loss of employment. In Re Canada Post Corporation, (1989) 1989 CanLII 9253 (CA LA), 6 L.A.C. (4th) 232 (T.A.B. Jolliffe), the grievor had claimed, Inter alia, that as a result of her discharge it became necessary for her to cash in approximately $ 3,000.00 worth of RRSP contributions to pay for a holiday she had taken prior to her discharge, and that this had left her in a taxable position with respect to those funds which she would not have otherwise incurred. It was submitted on her behalf that it was reasonably foreseeable that when terminated the grievor might well find herself in a situation where she would have to use her RRSP contributions, and that accordingly damages should be awarded to cover the tax consequences of taking the $ 3,000.00 into personal income. The employer took the position that the loss was both speculative and not a foreseeable consequence of the discharge. At p. 241 the Board held that the loss in question does not meet the foreseeability test and should not be considered a heading of damages.

In Allen v. Tandy Electronics Ltd., (1983) 2 C.C.E.L. the Ontario Supreme Court upheld a civil action for wrongful dismissal. The plaintiff claimed, inter alia, damages for losses resulting from his withdrawal of some RRSP funds to cover living expenses. At p. 146, Cromarty J. held as follows:

The plaintiff has also claimed damages because he withdrew from a number of R.R.S.P. funds a substantial sum to provide him with money with which to live while he had no salary. The claim is for the taxes on the collapsing of those funds.

In my opinion, it is only a prepayment of taxes which would eventually have to be paid and there is some loss of benefits and interest on tax free accumulations, but they are sufficiently remote that I do not think they can be allowed.

In McKim v. Atlantic Motors Ltd., (1985) 1985 CanLII 5836 (NS SC), 12 C.C.E.L. 18, the Nova Scotia Supreme Court had allowed an action for wrongful dismissal. The plaintiff had moved from New Brunswick to Nova Scotia in order to accept the employment from which he was terminated, and had purchased a house. His claim included recovery of carrying charges on the house during the notice period, as well as the capital loss resulting from the sale of the house. In denying damages for the capital loss, the Court at p. 20 held:

While having little difficulty in holding that carrying charges with regard to the newly purchased home during the period of reasonable notice are damages flowing from the breach of contract and therefore properly allowable, I have grave doubts that any capital loss is also recoverable as flowing from the breach of the employment contract. Whether this employee purchased or rented a home in the new area of employment was solely at his own option or choice. It had nothing to do with his employment per se.

The only decision from this Board, filed as authority was Re Sysiuk, 195/89 (Keller), an unanimous decision by the panel. The issue in dispute was set out as follows:

The parties are unable to agree on whether the grievor is to be compensated for his inability to make the maximum allowable pension contribution. In other words, his maximum allowable pension contribution in 1990 is reduced because of events the previous year and he therefore will pay a greater amount of income tax. He seeks compensation for the additional taxes paid resulting from his inability to contribute the maximum RRSP amount.

The argument on behalf of the grievor is that the grievor is entitled to be ‘made whole’. That means that he would have, but for the action of the employer, been able to make full pension contributions thus gaining the maximum tax advantage. He requires compensation to be put into the position he would have been prior to the actions of the employer.

The employer characterizes the issue as one of remoteness of damages. Counsel agrees with the make-whole principle but submits that the compensation sought by the grievor was not reasonably within the contemplation of the parties and thus too remote.

The Board referred to Allen v. Tandy Electronics Ltd., (supra) and also noted that in Kilby v. Oxford Warehousing Ltd., 1 C.C.E.C. 217 (High Court of Justice) ‘a claim for loss of investment income on the collapse of an R.R.S.P. was disallowed in the case of a wrongful dismissal because that item of damage was not within the contemplation of the parties when the employment contract was entered into.’

The Board went on to hold:

Although neither case is on all fours with the instant case, they clearly lend support to the proposition of the employer with regard to the claim of the grievor. The Board does not take issue with the notion of making the grievor whole. However, there is no principle that does not have some limitations. In our view the nature of the compensation sought by the grievor is entirely too remote to be considered part of what has been customarily understood to be a make-whole award and its payment is not ordered by the Board. To the extent that this was the issue to determined, the grievance is denied.

The Board noted that the facts in Re Sysiuk were not on all fours with the court cases cited therein, yet held that the principle was applicable. In contrast, the facts in the instant case are very similar, if not identical, to the facts in Re Canada Post Corporation (supra) and Allen v. Tandy Electronics Ltd., (supra). Faced with these cases, as well as this Board’s own decision in Re Sysiuk, union counsel did not attempt to distinguish the facts of this case. He nevertheless submitted that I ought not follow the result in those cases. Counsel took the position that unlike at the time those cases were decided, in the present day most educated white-collar workers contribute to a RRSP. It is also not uncommon for such employees to own some stocks as an investment. Therefore, it was reasonable for the employer to expect that the grievor would own such assets and that he may have to turn to those when his income from employment ceased. In other words, counsel’s position was that while this kind of loss may not have been reasonably foreseeable in the past, that was no longer the case.

The Board agrees that the prudence of the employee action is one of many factors relevant to the issue of foreseeability. But prudence alone does not necessarily make such action reasonably foreseeable. The Board cannot agree with the temporal distinction drawn by the union. Most of the prior decisions under consideration were decided in 1989. The employer conduct that resulted in the claimed losses occurred in 1995, a mere six years after those decisions. There is simply no basis to conclude that in that period there has been such a dramatic change in what may be reasonably foreseeable, as counsel suggests. The Board cannot take judicial notice, or otherwise conclude that most educated white-collar full-time employees in the civil service who contribute to a pension plan through employment, also contribute to a RRSP and own a portfolio of stocks. I agree with the previous decisions that losses resulting from personal decisions with regard to a RRSP or stocks are too remote and are not recoverable. As this Board held in Re Sysiuk, the ‘make whole’ principle of remedy does not make such losses recoverable.

While that is sufficient to dispose of this issue, I also agree with employer counsel that the claimed loss with regard to the sale of stocks is entirely speculative. The Board cannot imagine how any expert can state with any degree of certainty what the future would have held for those stocks, had the grievor not sold them at the time he did. Would their value have appreciated, depreciated or remained unchanged? One can only speculate on the answer. I heard no explanation from the union why the employer’s argument in this regard was not meritorious.

It follows that the union’s claim for damages under these heads fail.

The Board will reconvene as scheduled to deal with any other disputes between the parties on the remedy pursuant to the Board’s initial award.

Dated this 17th day of January 2000 at Hamilton, Ontario