Pay Equity Office v. Touchstone Youth Centre
2802-12-PE Pay Equity Office, Applicant v. Touchstone Youth Centre, Respondent.
BEFORE: Mary Anne McKellar, Acting Chair, Ann Burke and Carol Phillips, Members.
DECISION OF THE TRIBUNAL: March 4, 2014
The Pay Equity Office (“the Office”) has referred to the Tribunal, pursuant to section 24(5) of the Pay Equity Act, R.S.O. 1990, c. P.7, as amended (“the Act”), the issue of whether the respondent has complied with the Order of Review Officer Isgro issued November 27, 2012 (“the Order”). The Order required the respondent to pay $870.36 to an individual within 10 days.
On a referral under section 24(5), the only question before the Tribunal (as per sections 24(5.2) and (5.3) of the Act) is whether the Order has been complied. Typically, however, the Tribunal does not simply make a declaration to that effect, but where it finds non-compliance, goes on to direct compliance.
The respondent bears the onus of establishing that it has complied with the Order. This respondent did not file a response to the application, however, the Tribunal received correspondence in January 2013 advising that the respondent had made an assignment into bankruptcy and that this proceeding was therefore stayed pursuant to section 69.3(1) of the Bankruptcy and Insolvency Act (“the BIA”). The Trustee in Bankruptcy was the author of this correspondence, and enclosed financial documents revealing that the value of the respondent’s assets was approximately $2,000.00 and its debts approximately $388,000.00 ($300,000.00 of which was characterized as liability for pay equity claims). By decision dated January 21, 2013, the Tribunal (differently constituted) asked the Office to respond to the Trustee’s correspondence.
The Office e-mailed its reply to the Tribunal on February 4, 2013, however, the Tribunal had no record of receiving it and it did not make its way into the file. When the Tribunal later followed up with the Office, a copy of the correspondence was forwarded to the Tribunal on February 18, 2014.
The Office’s position is that in the absence of a court order specifically staying this proceeding, it is not stayed by section 69.3(1) because it is not “proceedings for the recovery of a claim provable in bankruptcy”. Only once the Tribunal has confirmed the Order, the Office argues, would a further proceeding to enforce that Order in court become one for the recovery of a claim provable in bankruptcy. The Office relies on certain arbitration awards to this effect. They reflect a different approach than has been taken by other statutory tribunals such as the Human Rights Tribunal of Ontario (see for example Trowell v. 6286160 Canada, 2010 HRTO 859) and the Ontario Labour Relations Board, which has specifically rejected the approach that the Office urges upon the Tribunal in this case:
The Board has taken a different approach, as is set out in Bennett & Wright Group Inc., [2001] O.L.R.D. No. 2498. The Board there found that the effect of the bankruptcy of a debtor, under s.69.3 of the Bankruptcy and Insolvency Act, was to stay any further proceedings, absent the consent of the trustee in bankruptcy or the court. Union counsel submits the approach of the boards of arbitration, referred to above, should be preferred. He suggests the Board’s approach in Bennett & Wright Group Inc. should not be followed because it does not adequately deal with the distinction between the process of quantifying amounts owing (which is what the union would like to do before the Board), as opposed to seeking to enforce a claim for amounts owing, which, counsel accepts, is properly stayed under s.69.3 of the Bankruptcy and Insolvency Act.
Attractive though it seems to get matters to the point where a clear, liquidated amount is determined as owing by the bankrupt to the creditor, so that the trustee in bankruptcy can know exactly what amounts are payable by the insolvent estate to creditors, the difficulty with counsel’s suggested approach is that s.69.3 of the Bankruptcy and Insolvency Act does not allow it. As was made clear in Bennett & Wright Group Inc., the provision restricts a creditor from seeking any remedy with respect to a claim provable in bankruptcy. The claim which the union advances in this matter is a claim provable in bankruptcy. The fact that the Board has not yet given its imprimatur that the monies claimed are owed to the union by the bankrupt debtor does not make the union’s claim any less a liquidated claim provable in bankruptcy.
The purpose of s.69.3 is not merely to restrict the union from being able to go to court to execute a Board order for payment of money by the debtor, as union counsel suggests. The purpose is also to protect the bankrupt debtor from all actions to recover amounts which it is alleged to owe. This is why “any remedy” is proscribed, and no action or proceedings can be commenced or continue against the debtor. The debtor is protected not only against the result of a proceeding (like a s.133 referral), but also against having to participate in, and defend, any proceeding. The Bankruptcy and Insolvency Act recognizes that the debtor may not be financially able to legitimately defend itself when in a state of bankruptcy, so actions and proceedings, as much as the results of those actions and proceedings, are stayed.
A similar approach was followed by the Board in Page Flooring Enterprises Inc. [2002] OLRB Rep. November/December 1144 and in Spectrum Supply Chain Solutions Inc. [2002] OLRB Rep. July/August 743, in which the issues were carefully canvassed.
Universal Workers Union, L.I.U.N.A., Local 183 v. En-San Contractors Ltd., 2004 CanLII 22669 (ON LRB)
The above reasoning is in our view more persuasive than that in the arbitral case law relied on by the Office. Furthermore, the rationale that the arbitration panels advanced for continuing the litigation against the bankrupt employer does not apply in this case. This proceeding is not necessary to quantify what is owing to the individual employee in whose favour the Order was made so that she may file a claim in bankruptcy. That amount has already been determined in the Order.
Accordingly, section 69.3(1) of the BIA operated to stay these proceedings as of January 4, 2013. Such stay of proceedings is not necessarily absolute. The trustee may consent to the continuation of legal proceedings against the bankrupt, or the court may grant leave to their continuation. Furthermore, the stay only operates “until the trustee has been discharged”.
Should the Office wish to proceed with this matter, it shall have until March 31, 2014 in which to advise the Registrar of the Tribunal if the trustee has been discharged, or if the stay has been lifted or waived, such that this matter can proceed. Should the Office fail to communicate with the Registrar, this application will be terminated.
We are not seized.
Dated at Toronto this 4th day of March, 2014.
“Mary Anne McKellar”
Mary Anne McKellar, Acting Chair
“Ann Burke”
Ann Burke, Member
“Carol Phillips”
Carol Phillips, Member