GSB# 2018-1213

UNION# 2018-0663-0001

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Ontario Public Service Employees Union (Hookimaw)

Union

• and -

The Crown in Right of Ontario (Ministry of Government and Consumer Services)

Employer

BEFORE

Reva Devins

Arbitrator

FOR THE UNION

Alison Nielsen-Jones Ontario Public Service Employees Union Grievance Officer

FOR THE EMPLOYER

Andrew Lynes Treasury Board Secretariat Legal Services Branch Counsel

HEARING BY TELECONFERENCE

November 22 and December 3, 2018

DECISION

1The parties entered into Minutes of Settlement (“MOS”) on September 24, 2018 in full and final resolution of grievances filed by the Grievor in this matter. The Union now requests a declaration that the Employer has breached the MOS and seeks damages, payable to the Grievor, for that breach. The Employer disputes that a breach has occurred and, in the alternative, submits that if it has breached the MOS it was a minor, technical breach that does not warrant the remedy requested.

Background

2The terms of the MOS were subject to a confidentiality clause and the parties agreed that I should restrict my recitation of the terms of the MOS to the bare minimum required to explain my decision.

Terms of the MOS

3The MOS provided that a certain amount of monies would be paid to the Grievor. Paragraph 1 further provided that: “The Employer agrees to make best efforts to pay this amount as soon as possible, but in any event within sixty (60) days of the date of this settlement.”

4The MOS also included the following standard clauses:

1. Paragraph 11: The Parties agree that this settlement constitutes the entire agreement between the Parties and supersedes any and all prior oral or written agreements, arrangements and understandings between them.

2. Paragraph 15: The Parties agree that Arbitrator Reva Devins of the Grievance Settlement Board shall be seized with jurisdiction if any disputes regarding the implementation, enforcement or interpretation of this settlement should arise.

Implementation of the MOS

5The Grievor had been unemployed for some time and had a number of bills that were outstanding, including payment of the mortgage on her home. She was therefore very anxious to receive payment of the monies owing and the Union followed up with the Employer on her behalf on the following occasions:

1. October 15, 2018: The Union contacted the Employer to determine whether a cheque would be mailed to the Grievor or whether she would receive payment by direct deposit;

2. October 29: Counsel for the Employer responded, advising that the payment will be by cheque and asking for confirmation of the Grievor’s mailing address;

3. October 30: Union confirmed the Grievor’s address;

4. November 7: Union called again, enquiring about the status of payment;

5. November 8: Counsel for the Employer advised he will follow up with the Employer;

6. November 21: No further information was provided to the Union and the Union requested a conference call with the Arbitrator;

6A conference call with the Board was convened on November 22nd, at which time the Employer advised that the cheque had been sent by courier the day before and it anticipated that it would arrive the following week. The Employer agreed to provide the Union with the tracking number for the delivery and to provide the Grievor with a letter that she could show her creditors, acknowledging that any delay was the Employer’s fault.

7The Employer described their efforts to comply with the terms of the MOS as follows:

1. After the MOS was signed, the first priority for the Employer was to execute another term of the settlement, which was completed by October 3rd;

2. The payment form to initiate payment to the Grievor was completed mid to late October. Unfortunately, an error was made on the form, which delayed the process;

3. The Employer considered whether the Grievor could be paid by direct deposit, however, the Grievor would have to complete additional paperwork as she was no longer an employee and the Employer therefore decided to send a cheque by mail;

4. There was an additional delay in November due to the strike at Canada Post. The Employer investigated whether the rotating strikes would affect delivery and looked into other delivery options, however, the Grievor’s remote location in Moosenee limited their options. Purolater, their normal courier, did not deliver in Moosenee, but handed it off to Canada Post for final delivery. The cost of other delivery options was prohibitive.

5. The Employer decided to use Purolater and called them on November 20th, the cheque was picked up on November 21st and delivered on November 27th, 4 days after the outside date set out in the MOS.

Submissions:

8The Union stated that the timing of payment was extremely important to the Grievor. She had been unemployed for a period of time and had been the sole income earner in her household. She had already accrued a number of debts by the time that the MOS was executed and was anxious to settle these accounts. Consequently, the Union requested and the Employer agreed to the unusual term that the Employer would make best efforts to pay the agreed amount “as soon as possible, but in any event within sixty (60) days.” The Union argued that the Employer breached both components of paragraph 1: they did not make best efforts to pay as soon as possible, nor did they meet the hard deadline of payment within 60 days.

9In the Union’s submission, the appropriate remedy is a declaration that the MOS was breached, to hold the Employer accountable, and damages of $1000 to make the Grievor whole. After the MOS was executed, the Grievor advised her creditors that she anticipated being able to pay them in 4-6 weeks, which she believed was the likely time when she would receive payment. She obtained some casual employment and received a small loan from her mother, however, she did not earn enough to satisfy all of her obligations. The delay was consequently extremely stressful for her and her family. In these circumstances, the Union maintains that a monetary award of damages is appropriate.

10The Union referred to the general remedial principles set out by the Board in OPSEU (Hunt) v. Ministry of the Attorney General, (2012) GSB# 2001-0534 (Abramsky), to the effect that the Grievor should be made whole. The Union also submitted that the Board has recognised the need to honour and enforce the terms of settlements in OPSEU (Young) v. Ministry of the Attorney General, (2004) GSB# 2001-0660 (Abramsky), including the payment of damages for failure to pay on time, where appropriate, in OPSEU (Bateman et al) v. Ministry of Community Safety and Correctional Services, (2016) GSB# 2001-0660 (Johnston).

11The Employer submitted that it had not in fact breached the MOS. Counsel argued that the Employer had made best efforts to pay the amount owing as soon as possible, however, intervening events, such as an honest mistake and the postal strike, resulted in the cheque not being sent until November 22nd. In the Employer’s submission, it also complied with its obligation to pay the amount owing by remitting it to a courier for delivery within 60 days.

12The Employer took the position that the language of the MOS cannot be interpreted literally, but must be interpreted in accordance with what was in the contemplation of the parties. On that basis, it submitted that “pay” should be interpreted as when the employer either remits by direct deposit or sends a cheque. Counsel relied on OPSEU (Gilchrist) v. NDM (2015), GSB # 2010-1064 (Kirkwood); OPSEU (Posthumous) v. MOH (20180, GSB # 2015-2940 (Harris); and Zarich v. Operative Plasterers’, [2008] O.L.R.D. No. 1162 (Silverman) to support its position.

13In the alternative, the Employer submitted that if it did breach the MOS by paying the Grievor after the 60-day deadline had passed, it was merely a technical, minor breach and no further remedy is warranted. The Employer maintained that it only missed the deadline by 4 days and again relied on Zarich, supra, for the proposition that this amounts to a minor technical breach.

14In the further alternative, Counsel argued that if a remedy was warranted, it should be limited to the payment of interest in accordance with the rules for Pre-Judgement interest under the Courts of Justice Act. It submitted that damages for this kind of breach lends itself to quantification and proof of actual losses incurred by the Grievor. $1000, as requested by the Union, would put the Grievor in a better position than she would have been if the breach had not occurred and would be punitive, going well beyond making the Grievor whole.

15The Employer acknowledged that deterrence was a relevant factor for the Board to consider, however, in this case it maintained that it had acted in good faith and so the deterrence factor was negligible. Lastly, counsel argued that granting the request for damages would not be conducive to good labour relations and would not be a wise use of the Board’s resources: Hunt, supra; Gilchrist, supra.

16In reply, the Union allowed that certain delays are acceptable, including those arising from an honest mistake. In this case, however, a delay of approximately one month before the necessary paperwork was submitted by the Employer does not conform with its representation that it would make best efforts to pay the Grievor as soon as possible.

17The Union also suggested that the dicta in Posthumous, supra, to the effect that the language be interpreted in light of the intent of the parties, favours the Union’s position. The parties’ intent was clear: the Employer should pay the Grievor as quickly as possible and “in any event” no later than 60 days from the date of the settlement. This provision clearly indicates that the parties would not accept a delay beyond 60 days and should be interpreted as setting a hard limit for payment to the Grievor. Lastly, in the Union’s submission, Zarich is inconsistent with the way in which these parties understand payment deadlines will operate, as confirmed by the Board in Bateman et al.

Analysis and Order

18Two issues arise in this case: has the Employer breached the MOS and, if so, what is the appropriate remedy?

19The alleged breach of the MOS arises from an agreement to pay the Grievor a certain amount of money with the assurance that the Employer would “make best efforts to pay this amount as soon as possible” and “in any event within sixty (60) days of the date of this settlement.” Unlike many settlements, the parties in this case did not merely require the employer to make best or reasonable efforts to pay within a prescribed period of time. The Employer expressly committed to try to pay as soon as it could and to pay the Grievor by or before the stated deadline. I regard this commitment as incorporating two distinct promises, each of which required some action by the Employer. Having considered the submissions of the parties and all of the surrounding circumstances, I am not persuaded that the Employer met either commitment.

20The Employer says that it made best efforts to pay the Grievor, but that external factors conspired against it: it focussed first on fulfilling another element of the agreement, then an honest error was made and thereafter, that the strike at Canada Post caused further delays, forcing them to search for an alternative delivery method to the Grievor’s remote location.

21While I recognise that there were a number of impediments to speedy delivery, the Employer has not provided details of any measures it took to try to pay ‘as soon as possible’. It appears that the Employer simply proceeded as usual and essentially ignored the first component of its commitment, which was to pay the grievor before the deadline, if possible. Based on my review of the action taken by the Employer, it made no discernible effort to expedite payment.

22The Employer admitted that no steps were taken to initiate payment for a number of weeks. Counsel maintained that the Employer fulfilled another element of the MOS as its first priority. I do not regard this as a satisfactory explanation. Fulfilling one aspect of the settlement does not excuse a party from implementing the remaining terms. In any event, the first element was completed within several days of the MOS being signed and the Employer has not explained why it took a further number of weeks before it proceeded to file the paperwork required to initiate payment.

23Similarly, the Employer explained that payment was delayed by innocent errors and external factors, such as the postal strike. While these events may have had an impact on the extent of the delay, they shed no light on the actions that the Employer did or did not take to expedite payment. Despite the delay already caused by their error, it took the Employer another few weeks to identify how it would effect payment, even though it would have been long aware of the remote location for the delivery and the fact that there was a disruption in normal delivery due to rotating strikes. In light of its own action, and inaction, the Employer has not demonstrated that it made best efforts to pay the Grievor as soon as possible.

24Furthermore, I am not satisfied that it met its obligation to “pay the Grievor … within 60 days”. The Employer relies on a decision of the Ontario Labour Relations Board in Zarich, supra, in which that Board found as follows:

10 The applicant says that he did not receive the December 31, 2007 payment until January 4, 2008. He also complains about the late payment of amounts paid to his then counsel. The Settlement provides that the amounts "shall be paid". I am of the view that that was complied with by the money having been sent by the date specified rather than received by that date. However, if I am incorrect in that and if in fact the money was to be "received" by Mr. Zarich (which is not specifically the wording of the Settlement) then it was two days late. December 31, 2007 was a Monday. Tuesday was the New Year's Day holiday. The money was received on a Friday. The Board is of the view that even if the payments were late by two days, that is so minor and technical as to not be significant. It is not a circumstance that would lead the Board to expend time and resources inquiring into. Mr. Zarich was to be paid the amounts of money which the Settlement required and this was done consistent with the intent and purpose of the Settlement. I therefore find that the timing of the payments complied with the Settlement.

25As a general matter, I am not persuaded by the reasoning in Zarich. I would interpret a commitment to “pay” in accordance with common commercial practice. That is, a debt is paid, not when the cheque goes in the mail, but when the sum is received, in full and in a currency or by a method that is accessible to the payee.

26In any event, I accept the Employer’s submission that the language of the agreement ought to be interpreted in light of what the parties intended and what they would have contemplated at the time the settlement was drafted. Bearing that in mind, I have serious reservations that the reasoning in Zarich applies in this case or at this Board.

27In this instance, the parties underlined the importance of prompt payment when they not only specified an absolute deadline but also agreed that the Employer would try to pay the amount owing before the deadline, if possible. In these circumstances, I do not think the parties intended that mere initiation of delivery by the Employer was sufficient. The Union and the Grievor were looking for certainty, and that certainty can only be understood as a guarantee of when the Grievor would be paid, that is, when she would actually receive payment. In my view, this interpretation recognises that the means of delivery are entirely within the control of the Employer and is consistent with the accepted understanding at this Board: Bateman, supra.

28Furthermore, I do not think that this was merely a technical or minor breach. There was an absolute deadline that the Employer missed and that breach had real consequences. While the parties themselves may take differing views on the relative importance of the various clauses in a settlement, the execution of all of the clauses, in accordance with their terms, is vital to the effective resolution of the dispute and the integrity of the settlement process.

29It is readily apparent in this case that the promise to pay within a certain timeframe was an extremely important term of the agreement. The Grievor was unemployed and under significant pressure to pay her outstanding debts. The parties went to great lengths to ensure that payment was expedited and included a hard date by which payment was to be completed. The Union followed up several times, reinforcing the significance of timely payment. Despite all of these signals, the Employer failed to take any discernible steps to pay before the deadline and then handed the cheque over to a courier in full knowledge that it would not reach the Grievor before the deadline. Although the cheque arrived less than a week later, the delay caused considerable anxiety for the Grievor. I find that the breach had a real and significant impact on the Grievor and that it was not just a technical or minor breach of the agreement.

30I recognise that there were some sources of delay that were either beyond the Employer’s control, such as the postal strike, or were the result of innocent errors. Nonetheless, most of the delay has not been accounted for by the Employer. It was unable to explain why it took a month before payment was initiated. In fact, it was unable to provide an exact date when action was taken. The Employer was equally unable to explain why it took 2-3 weeks to figure out how to deliver the cheque in light of the postal disruption. There was no suggestion that the Employer’s delay was malicious, however, it did demonstrate a cavalier approach to following through on its commitment.

31What then is the appropriate remedy in this case? In particular, should there be an order of damages, payable to the Grievor? The Board has consistently confirmed the importance with which it views its role in preserving the sanctity of settlements. Moreover, it has been clear that it considers deterrence to be an appropriate consideration in fashioning a remedy.

32Vice Chair Abramsky considered the appropriate remedy for breach of a confidentiality clause in Young, supra. She concluded that the Grievor had breached the terms of the settlement and ordered her to repay the damages that she received in the amount of $1000. In arriving at her conclusion, Vice Chair Abramsky commented on the role of the Board in enforcing settlements as follows (at p. 17):

There is no dispute between the parties regarding the importance of settlement agreements. The GSB has repeatedly emphasized the importance of settlement agreements to effective labour relations between the parties. As set forth in OPSEU (Landry-King) and Ministry of Community and Social Services, GSB No. 1593/84 (Knopf) at p. 8-9:

The Board wishes to do everything possible to foster and honour settlements reached by the parties. Once settlements are achieved, parties must feel confident that they can rely upon them. Otherwise, there would be no incentive for the parties to even attempt to settle matters. ...

In OPSEU (Union Grievance) and Ministry of Natural Resources/Management Board of Cabinet, GSB No. 1526/91, 1294/92 (Kaplan) at p. 31, the Board referred to the [s]anctity of [s]ettlements”, stating that “it is absolutely essential that the Board give effect to final settlements reached by the parties.”

33Vice Chair Abramsky ultimately concluded, at p. 28, that “(f)or settlements to work, parties must be sure that all of the terms will be honoured and enforced. This is equally true for employers, unions and grievors.” She then went on to explicitly consider the need for deterrence and expressed her concern that a declaration, absent any other consequence for the breach of an important term of the settlement, could be regarded as an ineffective remedy.

34The union subsequently asked Vice Chair Johnston to order a similar remedy in Bateman et al., supra. The employer had failed to pay the grievor within the period prescribed in the minutes of settlement and the union sought both a declaration and payment of $1000 as damages for the grievor. Vice Chair Johnston declined to order damages, however, she did so on the following basis:

In my view, if you agree to a time frame for certain actions, you are bound by that time frame. Neither counsel was aware of a case in which the union had taken the position it was now taking before me. Although union counsel asserted that the employer has missed the deadline for payment in the past, the union has not ever sought damages or compensation for breach of contract. Therefore as this appears to be the first time that a remedy has been sought, it seems appropriate to me to put the employer on notice that the next time it fails to pay in accordance with the agreed to MOS there could be consequences. Obviously the consequences will be dependent on the facts.

35The Union suggested that now is the time and this is the appropriate case in which damages should be ordered. The Employer resisted, suggesting that if a breach was found, that interest, in accordance with the Pre-Judgment interest rules in the Courts of Justice Act would be sufficient to compensate the Grievor for her losses.

36It is my view that this is an appropriate case in which damages should be awarded. The Employer specifically agreed to pay the grievor as soon as possible and no later than a prescribed date. It failed to act in a manner that was consistent with expediting payment and it missed the deadline, despite numerous reminders from the Union that this component of the agreement was very important to the Grievor.

37In the circumstances of this case, I am not satisfied that a declaration alone, or a declaration and an order for interest would have a sufficient deterrent effect, nor would either such disposition adequately recognise the extreme emotional stress that the situation created for the Grievor. A commitment to pay by a certain date or a promise to pay as soon as possible cannot be viewed as a mere guideline or aspirational goal. It is a serious commitment and non compliance with such a commitment must have consequences. If there are no consequences in a case such as this, the integrity of the settlement is undermined. As the Board has noted on many occasions, it is imperative that the sanctity of settlements is respected.

38The Grievor in this case relied on the Employer’s assurance regarding timely payment and was deeply distressed by the failure to honour that commitment. In light of the importance of the terms of the settlement to the Grievor, the failure of the employer to comply with those terms and the impact that it had on the grievor, I declare that the Employer breached the MOS and order the Employer to pay the Grievor damages in the amount of $750.

39I will remain seized in the event that an issue arises with respect to the implementation of this decision or further issues arise regarding the interpretation or implementation of the MOS.