Better Beef Ltd. et al. v. MacLean et al.

[Indexed as: Better Beef Ltd. v. MacLean]

80 O.R. (3d) 689

Ontario Superior Court of Justice, Divisional Court Gravely, Chapnik and Swinton JJ. May 31, 2006

Employment law -- Pay equity -- Employee accepting severance package and signing release of all further claims against employer -- Employee subsequently initiating complaint that employer had contravened Pay Equity Act by not preparing or posting pay equity plan in workplace -- Pay Equity Hearings Tribunal erring in holding that settlement and release did not bar employee's complaint under Act -- Parties having right to contract out of Pay Equity Act -- Release not having to refer specifically to Act in order to release employee's claims under Act -- Fact that employer was not in compliance with Act at time of release having no effect on validity of release -- Pay Equity Act, R.S.O. 1990, c. P.7. [page690]

The respondent accepted a severance package from the applicant employers in 2000 and signed a release which provided that she had "no further claims of any description" against the applicants. The respondent subsequently requested a copy of the applicants' pay equity plan. There was no reply. At the relevant time, the applicants had not prepared or posted a pay equity plan in the workplace as they were required to do by January 1, 1990. The respondent filed a complaint with the Pay Equity Commission alleging a contravention of the Pay Equity Act. A Review Officer issued an order to pay against the applicants. The applicants brought an application to the Pay Equity Hearings Tribunal seeking revocation of the Review Officer's order, and brought a preliminary motion for a determination as to whether the release signed by the respondent constituted a bar to her bringing a complaint under the Act. The Tribunal found that the release did not operate as a bar. The applicants brought an application for judicial review of that decision.

Held, the application should be granted.

As the release was governed by general principles of contract law, the appropriate standard of review of the Tribunal's decision was correctness.

Parties have a right to contract out of the Pay Equity Act when settling a claim under that Act. The release in this case was unequivocal. There was no suggestion of coercion or duress and no allegation of impropriety or unconscionability in the settlement or its terms. The fact that the release did not refer specifically to claims under the Act was irrelevant, as it was the applicants' uncontradicted evidence at the hearing before the Tribunal that the release was intended to cover all employment standards, human rights and pay equity claims, and the literal and ordinary meaning of the release was that the parties' intention was to make a full and final release of all claims against the applicants. From a policy perspective, compliance with the Act as a precondition to settlement upon termination of the employment relationship would discourage efficient resolution of employment issues and would be contrary to both the interests of the individual involved and the public interest. The Tribunal erred in finding that the complaint was not barred by the release.

APPLICATION for judicial review of a decision of the Pay Equity Hearings Tribunal.

Cases referred to Bucyrus Blades of Canada Ltd. v. McKinley, 2005 1491 (ON SCDC), [2005] O.J. No. 231, 194 O.A.C. 160, 250 D.L.R. (4th) 316, 27 Admin. L.R. (4th) 192 (Div. Ct.), supp. reasons at [2005] O.J. No. 1563 (Div. Ct.), folld Other cases referred to Bartlett v. Canada Life Assurance Co., 1998 31629 (ON CJ), [1998] O.J. No. 2691, 69 O.T.C. 264, 7 C.C.L.I. (3d) 219, 81 A.C.W.S. (3d) 87 (Gen. Div.); Caressant Care Nursing Home of Canada Ltd. v. London and District Service Workers' Union, Local 220, 2005 13791 (ON SCDC), [2005] O.J. No. 1560, 197 O.A.C. 238, 32 Admin. L.R. (4th) 129 (Div. Ct.), supp. reasons [2005] O.J. No. 5009 (Div. Ct.); D'Arcy Masius Benton & Bowles (Re), [1993] O.E.S.A.D. No. 157; Gissing v. T. Eaton Co., [1911] 25 O.L.R. 50 (C.A.); Holmes v. Jarrett (1993), 1993 8479 (ON SC), 68 O.R. (3d) 667, [1993] O.J. No. 679, [1993] I.L.R. 1-2949 (Gen. Div.); Trent University Faculty Assn. v. Trent University (1997), 1997 1067 (ON CA), 35 O.R. (3d) 375, [1997] O.J. No. 3417, 150 D.L.R. (4th) 1 (C.A.); Ward (Re) (1975), 1975 550 (ON SC), 9 O.R. (2d) 35, 59 D.L.R. (3d) 361, 20 R.F.L. 173 (Div. Ct.) Statutes referred to Human Rights Code, R.S.O. 1990, c. H.19 Pay Equity Act, R.S.O. 1990, c. P.7 [as am.], ss. 7, 24(3), 25(2), 25.1 [page691]

Michael W. Kerr, for applicants. Mary Cornish, for respondent Pay Equity Hearings Tribunal. No one appearing for the respondent Harriet MacLean.

[1] BY THE COURT: -- Better Beef Limited and Can-Ab Management Inc. (the "applicants") bring this application for judicial review of the decision of the Pay Equity Hearings Tribunal (the "Tribunal") dated October 26, 2004. In that decision, the Tribunal held that the settlement and release signed by Harriet MacLean upon termination of her employment (the "Release"), did not bar her subsequent complaint under the Pay Equity Act, R.S.O. 1990, c. P.7, as amended (the "Act").

[2] The applicants, who were the employers of the respondent Harriet MacLean, seek an Order quashing the Tribunal's decision based on the "full and final" Release signed by Ms. MacLean, the circumstances of the case, and the holding of the Divisional Court in Bucyrus Blades of Canada Ltd. v. McKinley, 2005 1491 (ON SCDC), [2005] O.J. No. 231, 250 D.L.R. (4th) 316 (Div. Ct.), leave to appeal denied.

[3] This court, in Bucyrus, supra, faced with substantially the same issues as raised here, overturned the Tribunal's decision in that case and, applying common law principles, upheld the parties' agreement in the form of a release of all claims by the employee. In doing so, the court held that "the law does not interfere with the right to contract out of the Pay Equity Act when settling a claim under that Act" (para. 29).

[4] In the instant case, the respondent Tribunal submits that Bucyrus was wrongly decided; and it adopts and relies upon the dissenting reasons of Pitt J. in that case.

Background

[5] Better Beef Limited ("Better Beef") is a privately held beef processing corporation located in Guelph, Ontario. The company employs approximately 1100 hourly employees, represented by the United Food and Commercial Workers Union, Local 175.

[6] Can-Ab Management Inc. ("Can-Ab") is a privately held corporation that provides salaried employees to Better Beef on a fee for service basis, and in this regard, employs approximately 225 salaried non-bargaining unit personnel associated with Better Beef.

[7] The respondent, Harriet MacLean, was employed in a number of positions as an hourly employee of Better Beef from [page692] November 11, 1986, to the fall of 1992. After moving out of the bargaining unit in 1992, she was employed and paid by Can-Ab.

[8] Ms. MacLean's employment was terminated on or about February 22, 2000, allegedly for cause.

[9] By letter dated February 23, 2000, Ms. MacLean requested a copy of Better Beef's pay equity plan, to which no reply was given.

[10] An enhanced severance package was offered to and accepted by Ms. MacLean on March 2, 2000. The package included eight weeks salary in lieu of notice of termination, continuance of benefits other than disability to April 18, 2000, vacation moneys accrued to April 18, 2000, severance pay equal to 26 weeks salary, and a letter of recommendation in exchange for the signing of the Release.

[11] The Release, set out in its entirety, stated:

I Harriet MacLean understand and agree that Better Beef Limited has fulfilled all of the conditions of the attached severance agreement, dated March 2, 2000 and I will have no further claims of any description against Better Beef Limited. I also understand and agree that the terms of this settlement are strictly confidential, and will not disclose the terms to anyone.

[12] By letter dated March 2, 2000, Ms. MacLean again requested a copy of the company's pay equity plan to which there was no reply. At the relevant time, the applicants had not prepared or posted a pay equity plan in the workplace for the non-bargaining unit employees, as it was required to do by January 1, 1990.

[13] At some time after the termination of her employment, Ms. MacLean initiated a complaint with the Pay Equity Commission in which she alleged a contravention of the Act by the applicants.

[14] On September 18, 2003, Review Officer Margaret Paczynski issued an order under s. 24(3) of the Act in which the applicants were ordered to pay Ms. MacLean a total of $56,756 less statutory deductions, plus interest.

[15] The applicants brought an application before the Tribunal seeking revocation of the Review Officer's order. Then, on January 17, 2004, they brought a preliminary motion before the Tribunal seeking a determination as to whether the Release signed by Ms. MacLean constituted a bar to her bringing a complaint under the Act.

[16] The Tribunal found in favour of the employee, specifically holding that the Release did not operate as a bar to Ms. MacLean's pursuing her complaint under the Act. It is that decision which forms the subject of this application for judicial review. [page693]

The Statutory Framework

[17] The Act was designed as affirmative action legislation that imposed pro-active obligations on employers to identify and eliminate gender-based wage discrimination in the workplace. The Act applies to all employers in the public sector in Ontario and all employers in the private sector in Ontario who employ ten or more employees.

[18] Section 7 of the Act articulates the key obligation of the scheme, by imposing a pro-active obligation on each employer to achieve pay equity:

7(1) Every employer shall establish and maintain compensation practices that provide for pay equity in every establishment of the employer.

The Act also prohibits contracting out of this obligation as follows:

7(2) No employer or bargaining agent shall bargain for or agree to compensation practices that, if adopted, would cause a contravention of subsection (1).

[19] Private sector employers with more than 500 employees, including the applicants, were required by law to post pay equity plans for their establishments by no later than January 1, 1990.

[20] Pay equity is said to be achieved when every female job class in an establishment has been compared using the prescribed comparison methods and any adjustment to the job rate of each female job class has been made.

[21] An employee can file a complaint with the Pay Equity Commission alleging contravention of the Act. A Review Officer deals initially with the complaint, subject to the right of any party to request a de novo hearing before the Tribunal.

The Tribunal's Decision

[22] The applicants argued before the Tribunal that the Release signed by Ms. MacLean upon termination of her employment discharged the employer from any and all future claims, demands and actions. The Release, therefore, acted as a bar to her subsequent complaint under the Act. To hold otherwise would be contrary to both the specific intent of the Release and public policy. Ms. MacLean took the position that the case was about equality. The employer had contravened the Act by not posting a pay equity plan for its non-union employees and, therefore, the Release should not operate as a bar to pursuing a complaint under the Act.

[23] At the hearing before the Tribunal, Mr. Doug Hayes, Human Resources Manager for Better Beef, testified that the Release was intended to cover all employment standards, human [page694] rights and pay equity claims; and that the term "of every description" in the Release was incorporated "to avoid the risk of missing something".

[24] Though Ms. MacLean tendered no evidence, she made submissions to the Tribunal.

[25] In dismissing the employers' motion, the Tribunal articulated two basic reasons for its finding that the Release did not bar Ms. MacLean from pursuing a complaint under the Act. First, the employer had not complied with the Act prior to the signing of the Release; and second, the Release made no "specific reference" to the "right or rights the Employer wished the Employee to relinquish" under the Act. The Tribunal then went on to say [at para. 45]:

Even if the failure to make specific reference to the Act in the Release were curable, the failure to comply with the Act is fatal to the Employer's case. Also, if the parties had stated specifically that the Release is a bar to a claim under the Act, without a pay equity plan, the Release would be void.

[26] As to the common law principles relating to interpretation of contracts, the Tribunal likened the Act to human rights legislation and found that common law principles did not apply in this situation. The Tribunal stated, at para. 62:

Similarly, the Tribunal should not adopt common law principles to give effect to legislation that was enacted to counter discriminatory practices, where to do so, would defeat the purpose of that legislation. Thus, the common law principles regarding enforcement of releases or agreements, which counsel seeks to advance in this case, are not appropriate.

The Decision in Bucyrus Blades

[27] In rendering its decision in the case at bar, the Tribunal relied upon its own decisions in two cases where it had determined that "a release entered into by an employee upon the termination of employment will not bar a claim under the Act". Indeed, the Tribunal, at para. 51 of its decision, specifically adopted the findings in those cases, one of them being Bucyrus.

[28] The difficulty is that this court specifically overturned the Tribunal's decision on that point in the Bucyrus case. The decision of the Divisional Court in Bucyrus was released on January 24, 2005, a few months after the Tribunal's decision was rendered in the case at bar, on October 26, 2004.

[29] Though the factual circumstances differed somewhat in Bucyrus from those here, two significant factors -- a release signed upon termination of employment and an employee's complaint that the employer had contravened the Act's provisions -- are common to both. [page695]

[30] In Bucyrus, the employee entered into a settlement with the employer upon termination of the employment and, at the same time, contacted the Pay Equity Commission as to a previous complaint she had filed. The termination package included a term releasing the employer from any claim under "the Employment Standards Act, the Human Rights Code, or any other similar legislation governing or related to the employment".

[31] In a majority decision, the Divisional Court reached the conclusion that, in this context, the Act is similar legislation to the Human Rights Code R.S.O. 1990, c. H.19 and that the general words of the release in that case were sufficient in themselves and not in conflict with the specific words therein (para. 72). In applying a standard of correctness to the Tribunal's decision, the court in Bucyrus found that the Tribunal had erred in failing to ask whether, on the literal and ordinary meaning of the release, the parties' intention was to make a full and final release of all claims against the employer. Such an inquiry is a matter of contract interpretation.

[32] The majority stated, at para. 71:

In my view, once the Tribunal has set its task to interpret and give meaning to the parties' contract, it must do so in accordance with general principles of law, which has not been done in this case.

[33] In a dissenting opinion, Pitt J. found that, despite the release, the applicant in that case was not estopped from accepting any benefits that accrued under the Act. The learned judge stated, at para. 99:

Where a statute imposes a duty of a positive kind, an estoppel cannot be raised to release a party from complying with the statutory obligation. The duty of each party is to obey the law. To accept a private contract which purported to release a party from its positive obligations under a statute would be tantamount to allowing private parties to repeal the statute in the particular case. This is clearly contrary to public policy.

The decision of the majority is, of course, the governing one: see Re Ward (1975), 1975 550 (ON SC), 9 O.R. (2d) 35, 59 D.L.R. (3d) 361 (Div. Ct.), at p. 38 O.R. Indeed, a different Divisional Court panel in Caressant Care Nursing Home of Canada Ltd. v. London and District Services Workers' Union, Local 220, 2005 13791 (ON SCDC), [2005] O.J. No. 1560, 197 O.A.C. 238 (Div. Ct.), at paras. 36, 37 and 45 referred to the Bucyrus decision without further comment.

The Standard of Review

[34] The Tribunal submits that the Tribunal's decision in this case must be reviewed on the standard of patent unreasonableness [page696] "because the question of whether a party has complied with its pro-active obligation to establish and maintain pay equity in an establishment under the Pay Equity Act is a matter that falls within the core mandate, competence and expertise of the Tribunal" (Tribunal's Factum, para. 56).

[35] The applicants frame the question differently, claiming that the issue before the Tribunal was the interpretation of the Release and whether the Release was complete, final and binding; and therefore, the standard of review is correctness.

[36] We agree with the applicants that the issue before the Tribunal was the proper interpretation of the Release. As the Release is governed by general principles of contract law, the appropriate standard of review is correctness: see Bucyrus Blades, supra; Trent University Faculty Assn. v. Trent University (1997), 1997 1067 (ON CA), 35 O.R. (3d) 375, [1997] O.J. No. 3417 (C.A.), at pp. 385, 387 O.R.

Analysis

[37] We do not agree with the Tribunal's assertion that Bucyrus was wrongly decided. The court in that case gave careful consideration to the statutory framework, the purpose of the legislation and the public interest. It concluded, at para. 29, that "the law does not interfere with the right to contract out of the Pay Equity Act when settling a claim under that Act". The court was careful to distinguish this from a situation where an employee might bargain away rights as a term of an employment agreement or as a precondition to employment.

[38] In the case of Holmes v. Jarrett (1993), 1993 8479 (ON SC), 68 O.R. (3d) 667, [1993] O.J. No. 679 (Gen. Div.), Granger J. conducted a broad analysis of the doctrine of stare decisis. In general, the doctrine requires that cases be decided the same way when their material facts are the same. After summarizing the jurisprudence, Granger J. concluded at p. 676 O.R. that "the decisions of judges of coordinate courts are persuasive and should be given considerable weight unless there are very cogent reasons to depart from such decision". He noted that this approach brings more certainty and predictability to the law.

[39] In this case, no cogent or compelling reason has been given to justify a departure from the holding in Bucyrus. There is no indication that the decision was rendered without consideration of the appropriate statute or that the court failed to consider the relevant case law. Indeed, leave to appeal the decision was denied by the Court of Appeal.

[40] We conclude that the majority in Bucyrus correctly applied the law, and we must follow it. [page697]

[41] As to the particular circumstances in the case before us, they can be summarized as follows: upon the termination of her employment, Ms. MacLean was offered a package equal to 34 weeks salary with benefits for a time and a letter of recommendation in exchange for the Release which specifically indicated that she would have "no further claim of any description" against the employer.

[42] The Release is short, simple, unequivocal and drafted in broad terms. There is no suggestion of coercion or duress in its presentation or that its terms are oppressive or unfair. There is no allegation that Ms. MacLean did not fully understand or read English or that she did not sign the Release freely and voluntarily.

[43] It is well settled law that parties must be held to their agreements except where there is impropriety. See, for example, Gissing v. T. Eaton Co., [1911] 25 O.L.R. 50 (C.A.). In this case, there is no allegation of impropriety or unconscionability in the settlement or its terms.

[44] It was argued on behalf of the Tribunal that until Ms. MacLean's entitlement to pay equity adjustments was determined, she could not fully assess the offer made to her. That may be true; but, on the other hand, she certainly had the option of refusing to agree to the settlement or to sign the Release.

[45] When a contract is clear on its face, extrinsic information as to the intention of the parties may be irrelevant: see D'Arcy Masius Benton & Bowles (Re), [1993] O.E.S.A.D. No. 157. Nevertheless, we note the employer's uncontradicted evidence at the hearing before the Tribunal that the Release was intended to cover all employment standards, human rights and pay equity claims. We also note that the matter of pay equity was a "live issue" at the time, and that there was no basis for the Tribunal to speculate, as it did at para. 57, that "it was likely that the employee believed that the employer simply refused to deal with her pay equity concerns".

[46] In our view, it is clear on a plain reading of the Release, that the employer agreed to pay moneys and give certain benefits to Ms. MacLean and in return, she waived any other claims she had against it, including those emanating from the provisions of the Act. That is, the literal and ordinary meaning of the Release is that the parties' intention was to make a full and final release of all claims against the employer.

[47] As indicated by the Court of Appeal in Bartlett v. Canada Life Assurance Co., 1998 31629 (ON CJ), [1998] O.J. No. 2691, 69 O.T.C. 264 (Gen. Div.), at para. 32, courts will be slow to set aside a [page698] release and settlement made between the parties for valuable consideration.

[48] From a policy perspective, we are of the view that compliance with the Act as a precondition to settlement upon termination of the employment relationship would discourage efficient resolution of employment issues, and would be contrary to both the interests of the individual involved and the public interest. Indeed, a settlement process is contemplated in the pay equity complaint procedures outlined in s. 25.1 of the Act. Moreover, a release signed by one employee does not, in law, release an employer from its obligations to its female employees pursuant to the requirements of the Act.

[49] In the context of this particular case, the general words in the Release were unambiguous and sufficient in themselves to conclude that Ms. MacLean released any claims under the Act by way of her contractual settlement.

[50] Based on the evidence and the application of well- established principles of contract interpretation, the Tribunal should have concluded that the Release barred Ms. MacLean's right to seek compensation under the Act. Accordingly, the Tribunal erred in rejecting the Release and its decision must be set aside.

[51] Given this conclusion, it is unnecessary for us to consider the submission of the applicants that the Tribunal ought to have concluded that Ms. MacLean acted in bad faith in pursuing a complaint under the Act, after making a settlement and receiving benefits from it.

Conclusion

[52] The application is granted. An order will issue quashing the decision of the Tribunal dated October 26, 2004, and directing it to revoke the September 18, 2003 order of the Review Officer, pursuant to the provisions of s. 25(2) of the Act.

[53] Should the parties be unable to agree, we will entertain brief written submissions on the matter of costs within 30 days of the release of these Reasons.

Application granted. [page699]