0129-00-ES Frank Baker, Applicant v. International Wallcoverings Inc. and Ministry of Labour, Responding Parties.
Employment Practices Branch File No. 40010927
BEFORE: Anthony Brown, Vice-Chair.
APPEARANCES: M. Kate Stephenson for the applicant; Linda Plumpton and Gila Bell International Wallcoverings Inc. and Jeremy Warning for the Ministry of Labour.
DECISION OF THE BOARD; June 5, 2001
This is an application for review under the Employment Standards Act (“the Act”) of a refusal by an Employment Standards Officer to make an order to pay. The applicant seeks three months’ wages in the amount of $40,000.00
The parties filed an agreed statement of facts that reads as follows:
AGREED STATEMENT OF FACTS
(May 10, 2001)
Frank Baker Sr. commenced employment with International Paint (“IP”) in 1954. Over the years he held various positions in Canada and abroad, and in 1972 he founded International Wallcoverings Ltd. (“IW”) as a Division of IP in Canada.
From time to time Mr. Baker entered into contracts of employment with IW. The most recent contract, which superseded all others, was dated April 2, 1996 (the “Contract”).
Under the Contract, Mr. Baker was made Chairman and Director of International Operations. Section 7 of the Contract granted Mr. Baker the option, upon and at any time prior to attaining the age of seventy (70) years, to elect to resign as Director of International Operations and to continue in employment as Vice-President of Public Relations.
In a letter dated January 11, 1999 from Mr. Baker to IW, Mr. Baker stated that he was exercising his option, pursuant to section 7 of the Contract, to assume the position of Vice-President; Public Relations. It is the position of IW that this option was not properly exercised.
According to the Contract, in the position of Vice-President, Public Relations, Mr. Baker was required to be available at all times to perform the following duties at the request of IW: attending trade shows and conventions; maintaining contacts with key customers and suppliers; providing advice to IW Contracts on international market development; and performing other public relations activities for the benefit of IW.
Mr. Baker was not called upon by IW to and did not perform any duties during the months of February, March and April, 1999.
Mr. Baker was terminated by letter dated April 30, 1999. He remained under contract with IW up until that date, and he received benefits until that date, which benefits included a company car and all other benefits provided for under the Contract.
The Respondents, Messrs. Rose, Polley and Thomson, were the Directors of IW at the time of Mr. Baker’s termination, and during the months of February, March and April 1999 when Mr. Baker did not receive salary.
The termination clause of the Contract (section 10) provided that, in the event of termination for any reason, Mr. Baker would receive three years’ salary ($160,000 per year) and all benefits for three years. IW did not pay this amount upon its termination of Mr. Baker.
IW became bankrupt in or about September of 1999 and Mr. Baker filed a proof of claim on or about October 29, 1999 seeking, among other things (such as the contractually owed termination pay), wages for the period February, March and April, 1999. Upon agreement between Mr. Baker and the Trustee in Brankruptcy, the Trustee allowed the claim in the amount of $400,000. Of this amount, Mr. Baker received approximately $80,000.
IW was under CCAA protection during the months of February, March and April, 1999. During this period, the affairs of IW were governed by the order of Mr. Justice Blair dated January 11, 1999 (the “Order”). Paragraph 16(b) of the Order provided that IW may “terminate the employment of such of its employees or temporarily lay off such of its employees as it deems appropriate”.
The parties agree that the following documents, attached as Schedule “A” to this document, shall be admitted as evidence at the hearing:
a. Contract of employment dated April 2, 1996;
b. Letter from Frank Baker to International Wallcoverings Inc., dated January 11, 1999;
c. Order of Mr. Justice Blair; dated January 11, 1999;
d. Letter of termination, dated April 30, 1999;
e. Proof of claim, dated October 29, 1999;
f. Release, dated November 14, 2000.
- By letter dated January 25, 2000, the Employment Standards Officer in this matter advised the applicant Frank Baker as follows:
Dear Mr. Baker:
A review of the documentation submitted by your solicitor, and a subsequent telephone conversation with her have revealed the following.
Your claim for wages owed in the amount of $40,000.00 covering the period February to April 1999 was not for work performed, but rather a term of your contract that you would be available for public functions and perform duties when requested by International Wallcoverings. During this period you were not called upon to perform any work.
Work shall not [sic] deemed to be performed for an employer during the time the employee is not at the place of employment and is waiting or holding himself ready for call to work.
Since no work was performed, I will not issue a Directors Order on your behalf.
Ms. M. Kate Stephenson advises that a Proof of Claim has been filed with the Trustee in Brankruptcy regarding your “wages”, and termination and severance pay.
Based on the above your file is closed. If you require clarification, do not hesitate to contact me.
The applicant seeks a review of the refusal of the Employment Standards Officer to issue an order against the employer International Wallcoverings Ltd. and against directors of International Wallcoverings Ltd.
Three persons who were directors at the time of Mr. Baker’s termination were represented by counsel at the hearing before me. The responding party directors submit by way of preliminary motion that, under subsection 68(2) of the Act, the Board lacks jurisdiction to review a refusal by an Employment Standards Officer to issue an order to pay against a director. The Ministry of Labour supports this view.
Counsel for the applicant submits that the Officer’s letter dated January 25, 2000 should not be characterized as a “refusal to issue an order” to which subsection 68(2) applies. Counsel submits that the term “Directors Order” in the above referenced letter refers to the Director of Employment Standards and not to the directors of International Wallcoverings Ltd. Counsel further submits that the Officer, by not addressing whether wages were in fact owed to Mr. Baker, did not pass the threshold necessary for the Officer to refuse to issue an order to pay. To put the argument another way, only after the Officer determined whether wages were owed could she then determine whether an order should be made against the directors. However, it is submitted that the Officer never determined that wages were owed. Counsel submits that the Act, being benefit-conferring legislation, must be given a broad and liberal construction, and any ambiguity should be resolved in favour of Mr. Baker.
The responding party submits that the Officer clearly did determine that no wages were owed and did refuse to issue an order against the directors (who were identified as respondents in the original complaint).
The applicant submits in the alternative that subsections 68(19) and (20) of the Act permit the Board to make an order that the Employment Standards Officer could have made, and that the Board should make an order against International Wallcoverings Ltd. which could then be enforced against the directors.
Subsection 68(19) states:
(19) The Board may, with necessary modifications, exercise the powers conferred on an employment standards officer under this Act and may substitute its findings or opinions for those of the officer who issued the order or refused to issue the order.
Subsection 68(20) states:
(20) Without restricting the generality of subsection (19), the Board may,
(a) if the review is a review of an order, amend, rescind or affirm the order or issue a new order; and
(b) if the review is a review of a refusal to issue an order, issue an order or affirm the refusal.
- Counsel for the responding party, aside from asserting the Board’s lack of jurisdiction under subsection 68(2) to review the Officer’s refusal, submits that the Board cannot make an order against a bankrupt company by virtue of the Bankruptcy and Insolvency Act.
Decision
The Board finds that the Employment Standards Officer refused to issue an order to pay against International Wallcoverings Ltd. and the directors named in the complaint. It is apparent from the above-quoted letter dated January 25, 2000, that the Officer refused to make an order after determining that no wages were owed to Mr. Baker. Although the Officer’s determination regrettably lacks detailed reasons, it is reasonably clear that the Officer decided that no wages were owing because no work was performed, and it flowed from that determination that no order to pay would be made.
Section 68(2) plainly states that a person may not apply for review of a refusal to issue an order against a director. The need to interpret the Act in a broad and generous manner (per Re Rizzo and Rizzo Shoes Ltd. 1998 CanLII 837 (SCC), [1998] 1 S.C.R. 27) does not require the Board to ignore the plain meaning of subsection 68(2).
The Boards finds, therefore, that it lacks jurisdiction to review the refusal to make an order to pay against the directors of International Wallcoverings Ltd.
The applicant submits that the Board should issue an order against the employer International Wallcoverings Ltd., which could then be enforced against the directors. International Wallcoverings Ltd. is bankrupt. The effect of the bankruptcy is that this Board lacks jurisidiction to make an order against the company. Secondly, the applicant settled his unsecured claim for wages with the Trustee in Bankruptcy and provided a release to the Trustee. The applicant is not entitled to an Order to Pay against the company.
For the above reasons, this application is dismissed. It is therefore unnecessary to determine whether Mr. Baker is entitled to wages under the Act.
“Anthony Brown”
for the Board