2163-97-ES Algo Group Inc., Algo Apparel Inc., Algo Industries Ltd., Hamil Textiles Ltd., Lavie One Holdings Inc., Applicants v. Maria Anabela Abreu et al and Ministry of Labour, Responding Parties.
0500-98-ES Silva Torossian, Applicant v. One + One Fashions Inc., One + One Leaseco Inc., Algo Group Inc., Algo Apparel Inc., Algo Industries Ltd., Hamil Textiles Ltd., Lavie One Holdings Inc., La Vie En Rose Lingerie Canada Inc., Lavien Leasco Inc., 677453 Ontario Limited and Ministry of Labour, Responding Parties.
BEFORE: Laura Trachuk, Adjudicator/Referee.
DECISION: May 14, 2001
File No. 2163-97-ES is an application for review of Order to Pay No.42871 pursuant to section 68 of the Employment Standards Act (the Act). Order to Pay No. 42871 is part of a decision from an Employment Standards Officer finding that the applicants carried on related businesses and should be treated as one employer pursuant to section 12 of the Act. He found that they are therefore liable for termination and/or severance pay owing to 130 employees. File No. 0500-98-ES is an employee appeal of the same Order to Pay. Ms. Torossian claims that the Employment Standards Officer’s assessment of her claim is incorrect.
In a decision dated May 18, 1999 the Adjudicator/Referee held that Algo Group Inc., One + One Fashions Inc., One + One Leaseco Inc. and 677453 Ontario Limited carried on related businesses and should be treated as one employer pursuant to section 12 of the Act. The Adjudicator/Referee amended the order to dismiss the claims against the other applicants. That decision was issued pursuant to an agreement between the applicants and the Ministry of Labour that I would determine the liability issue first and remain seized with respect to any issues relating to the quantum assessed by the Employment Standards Officer. The Algo Group Inc. (referred to as Algo) now asks that the Order to Pay be reviewed on the basis that some of the claimants were allegedly hired by successor employers under section 13 of the Act. Algo is therefore raising a new issue with respect to liability. The Ministry objects to Algo being permitted to rely upon a new issue relating to liability at this stage of the proceeding.
The history of the agreement to proceed with a bifurcated hearing is set out below.
The claimants lost their jobs in February, 1996 when One + One Fashions Inc. filed for bankruptcy. Twenty of the employees filed claims thereafter. The Employment Standards Officer investigated and then issued the Order to Pay with respect to 130 employees on August 1, 1997. The Order to Pay was amended slightly on August 19, 1997. The Order to Pay names all of the responding parties in File No. 0500-98-ES and was based on the Officer’s determination that they should be treated as one employer pursuant to section 12 of the Act.
The applicants in File No. 2163-97-ES filed a detailed appeal in October 1997. The appeal specifies that the applicants are challenging the Officer’s finding under section 12 of the Act. The applicants also took the position that employees had received notice of termination. The applicants asserted further that the Officer had erred in his calculations as he had misapprehended the evidence with respect to the salary and the seniority of employees. There was no mention of section 13.
The hearing commenced on January 12, 1999. At the commencement of the hearing, counsel for both the applicants in File No. 2163-97-ES and the Ministry advised me that their clients had agreed to bifurcate the hearing. They asked me to hear the evidence and issue a decision with respect to the section 12 issue first . I was asked to remain seized in the event that I upheld the Order in case there were any issues relating to quantum. There was no mention of any other liability issue including section 13.
I issued a decision on May 18, 1999 in which I made the determination described in paragraph 2. At the end of my decision I directed Algo to “advise the Ministry and the claimants as to whether it is disputing the amount assessed by the Officer and if so, the details of its dispute.” No such information had been received by June 16, 1999 and again I directed Algo to advise me if it was disputing the amount assessed by the Officer and if so, the details of the dispute. Algo was to respond by June 30, 1999. On June 28, 1999 counsel for Algo indicated that she was awaiting instructions as to whether to file for judicial review of the decision. She states “It was our understanding that the hearing had been bifurcated between (a) the issue of Section 12 liability of Algo Group Inc. and (b) the specific issues of quantum.” She asked that the deadline “for providing details regarding the quantum dispute be adjourned until (4) weeks after the Divisional Court has rendered its decision…” She noted that the Ministry had agreed to her request. In a decision dated June 30, 1999 I stated that “The Adjudicator/Referee hereby extends the date by which the Algo Group Inc. must set out its objections with respect to the quantum of the of the officer’s award, if any, until four weeks after the Divisional Court has rendered its decision.”
The Divisional Court dismissed the application for judicial review on December 15, 2000. On January 2, 2001 Algo advised that it was seeking leave to appeal and asked for a further extension of the date by which it “must set out its objection with respect to the quantum of the officer’s award, if any …” Algo filed an application for leave to appeal. That application was subsequently discontinued. On February 19, 2001 counsel for Algo advised Mr. Klein, the Ministry’s counsel, the solicitor for the Ontario Labour Relations Board who was representing me in the judicial review and Labour Relations Specialist Janet Ruzycki that the motion for leave to appeal was discontinued. In that correspondence for the first time, Algo alleges that certain claimants are not entitled to termination and severance pay because they were employed by a purchaser under section 13 of the Act subsequent to the bankruptcy. Algo also raises, for the first time, that one of the claimants, Sylvio Luciano resigned from his employment and had not been terminated. It says that it does not dispute the termination or severance pay that was calculated for the other employees.
The Ministry of Labour responded to Algo’s letter on February 27, 2001. The Ministry objected to Algo raising the issues with respect to section 13 and Mr. Luciano at this point in the proceeding as those are liability and not quantum issues. It argued that the only issue which was left open for determination was quantum. There were no outstanding issues with respect to liability. The Ministry said that the Adjudicator/ Referee has not retained jurisdiction to determine such issues. I subsequently directed Algo as follows:
The applicants are therefore directed to submit detailed pleadings with respect to their claim that each of the claimants is not entitled to the amounts assessed by the Employment Standards Officer. The pleadings should set out the quantum the applicants assert each claimant is entitled to, as well as the reason for that assertion. If the applicants are relying upon documents it would be useful to have those produced at this time as well. The applicants should also provide their submissions with respect to the Ministry of Labour’s claim that their objections are untimely.
- Algo responded that it should be able to raise the section 13 issue and the issue relating to Mr. Luciano now as they are not issues relating to section 12 but are “factual issues specific to each claimant with respect to their entitlement to notice and/or termination.” Algo also said that it is changing its position from its February correspondence and is now also disputing the start date and the wage rate used by the Employment Standards Officer in making each and every assessment. It also said that it is disputing whether each claimant was an employee of One + One Fashions Inc. and whether each employee was terminated by One + One Fashions Inc. The Adjudicator/Referee issued a decision on April 3, 2001 which stated as follows:
The applicants also dispute the amounts assessed by the Employment Standards Officer on the basis that they cannot be sure that the right “start date” or wage rate were used. However, it is the applicants who bear the onus of proof in this application. Furthermore, they were directed by the Board [Adjudicator/Referee] to provide particulars of their claim that the amounts assessed by the Employment Standards Officer were incorrect. They have not done so. The claimants are not required to prove their claims anew in this application. The applicants will not be permitted to challenge the amounts assessed for the individual claimants on the basis that the wrong start date or wage rate was used. Claimants therefore need not respond to that aspect of the applicants’ submissions.
- The decision also described the recent correspondence between the Ministry and Algo with respect to the new section 13 issue, attached the related correspondence and invited the claimants to file submissions before April 27, 2001 if they wished. I have received a few submissions including one from Gerard Joncas one of the individuals Algo claims is a successor under section 13.
Decision With Respect to File No. 2163-97-ES
I have reviewed the materials in the file as well as my notes from the first day of hearing when the bifurcation was discussed. I have also considered the prejudice that would be caused by permitting Algo to raise the new section 13 issue now. I have decided that the prejudice to the claimants is substantial and that it would not be appropriate to permit Algo to change the agreement upon which this matter has proceeded two years after if was made. The Adjudicator/Referee will therefore not permit Algo to now claim that it is not liable for the assessments made by the Employment Standards Officer in favour of many of the claimants pursuant to section 13 of the Act.
This application has proceeded on the basis of the agreement between the applicants and the Ministry of Labour. They agreed that there was an issue with respect to the applicants’ liability under section 12 which would be dealt with first and that I would remain seized with respect to any issues related to the quantum of the assessments. There was never a suggestion throughout this long process that there was any claim that the applicants would not be liable under another section of the Act. Algo cannot back out of that agreement now. If the applicants had advised the Adjudicator/Referee at the beginning of the hearing that there was also a section 13 issue I would not have agreed to deal only with the section 12 issue first. The evidence with respect to section 13 would have become stale long before now and, of course no one has had any reason to try to preserve it. It would have been obvious that that would be the result of waiting this long to raise the issue. There would be substantial prejudice to the claimants if it were necessary for them to respond to the section 13 argument at this time. Furthermore, the claimants have relied for many years on the representation that they have a claim against the applicants and that if that claim was upheld under section 12 the only issue remaining would be the quantum, i.e. the calculation of their assessments. They knew they might have to prove their wage rate or start date if the applicants particularized different facts than were relied upon by the Officer. They certainly would not have known that there was any claim that a subsequent employer was liable for termination or severance for the period they worked at One + One Fashions Inc.. Furthermore, as they had been assessed termination and severance pay by an Employment Standards Officer they would have been precluded from making such a claim. Also Algo claims that some of the assets of One + One Fashions Inc. were purchased by a group of the claimants. At no time were those claimants advised that their claims might be affected by such a purchase.
These claimants have been waiting for five years for their claims to be finally determined. It is unconscionable to raise a new issue at this date which might take many months to resolve. Mr. Luciano has proceeded for five years on the expectation that the only barrier between him and the money assessed to him is the section 12 issue and a potential argument with respect to quantum. No one has ever suggested that he resigned and it is simply too late to do so.
For all of the above reasons Algo will not be permitted to proceed with a challenge to the claims assessed by the Officer under section 13 of the Act. They will also not be permitted to make the claim that Mr. Luciano is not entitled to the amount assessed to him because he quit.
Decision With Respect to File No. 0500-98-ES
The Employment Standards Officer assessed, on the basis of the Record of Employment issued when Ms. Torossian was terminated, that she was entitled to $1,560.00 termination pay. She subsequently contacted him and provided evidence that she had in fact worked two years longer and was entitled to severance pay as well. The Officer calculated that she should have been assessed at $5,225.00 including termination and severance pay. However, he advised her that she would have to file an appeal and seek to have an Adjudicator/Referee amend the Order to Pay. She therefore filed an application pursuant to section 67 of the Employment Standards Act.
Algo would not necessarily have understood that I was also directing it to file particulars about any dispute it had with the recalculation of Ms. Torossian’s assessment. Algo is therefore directed to advise me whether it is disputing the Officer’s recalculation and to file particulars with respect to any such dispute on or before May 29, 2001. A copy of the submissions should also be provided to Ms.Torossian and the Ministry of Labour.
It does not appear that there are any other issues outstanding with respect to this application. Algo and the Ministry of Labour are directed to advise me on or before May 29, 2001 as to whether there are any outstanding issues. Algo should also advise me on that date as to whether it is disputing Ms. Torossian’s claim. After receiving the submissions, if any, I will decide whether it is necessary to hold a further hearing with respect to this matter or whether I should confirm the Order to Pay and direct further payment to Ms. Torossian. If no submissions are received by May 29 , 2001 I will confirm the Order to Pay and direct further payment to Ms. Torossian.
“Laura Trachuk”
for the Adjudicator/Referee
This decision is issued under the administrative auspices of the Ontario Labour Reltions Board, 505 University Avenue, 2nd Floor, Toronto, Ontario, M5G 2P1