P-2012-4721, P-2012-4785, P-2013-0275

IN THE MATTER OF AN ARBITRATION

Under

THE PUBLIC SERVICE ACT

Before

THE PUBLIC SERVICE GRIEVANCE BOARD

BETWEEN

Hugh MacDonald, Chad Chambo and Wayne Routh

Complainants

• and -

The Crown in Right of Ontario (Ministry of Community Safety and Correctional Services)

Employer

BEFORE

Kathleen G. O’Neil

Vice-Chair

FOR THE COMPLAINANTS

Hugh MacDonald, Chad Chambo and Wayne Routh

FOR THE EMPLOYER

Caroline Cohen Ministry of Government Services Legal Services Branch Counsel

CONFERENCE CALL

July 31, October 28, 2013

Decision

1This decision deals with the individual complaints of three Operational Managers (OM’s) at the Central East Correctional Centre (CECC) concerning the late payment of monies due under a confidential memorandum of settlement. The employer says that there has been no breach of the settlement or, in the alternative, such a minimal one that the Board should not give any monetary award.

2There was no objection to the Board’s jurisdiction to hear and determine this dispute.

How this dispute arose – factual context

3This dispute arises out of three individual settlements dated November 27, 2012, each of which required the payment of a certain amount of money “within 60 days of the execution of the minutes”. Fifty-five days after the settlement, Mr. MacDonald sent an e-mail to the employer representative who had dealt with their grievances. In response, the representative indicated she had completely forgotten about the payment that was due soon, and that she would make her best efforts to get it paid on time.

4The money was paid on January 29, 2013, which is three days past the deadline, if counted as calendar days. If counted as business days, it was not late. The complainants’ position is that it was three days late, and that as damages for the breach, they should receive the full amount claimed in their original grievances, placement at the top of the pay grid for their classification and $15,000 as damages for the breach.

5The complaints that the complainants agreed to settle concerned the fact that they had not received a 2% raise which they say was promised to them by a former superintendent on the occasion of their being confirmed as Operational Managers. They took the position that others had received the extra 2% and that the employer’s refusal to pay them in the same fashion was unfair differential treatment. The complainants now see the settlement as having prevented them from reaching the top rate, which would have put them in the same position as others who received a lump sum to maintain their base compensation level, in the intervening period when there have been no pay for performance awards. It was suggested by the complainants that when they agreed to the settlement, the employer knew, but did not disclose, that these lump sums were in play and then did not keep their word in regards to the implementation of the settlement.

Excerpts from the Rules of the Board

6The following excerpt from the Rules of the Board is relevant to the parties’ arguments:

From the Public Service Grievance Board Rules:

Definitions

1. In these Rules,

(d) “Day” means any day of the week Monday to Friday, excluding a statutory holiday and any other day the Board is closed;

Considerations and Conclusions

7The above facts and arguments raise the following issues, which will be addressed in turn:

a) Was the settlement breached?

b) If so, what should the remedy be?

a) Was the settlement breached?

8The employer argues that, if one counts according to the definition of days in the Board’s rules, there has been no breach of the Minutes of Settlement. Even using calendar days, the payment was late by only two or three days, a minimal breach at best, in the employer’s view. Employer counsel submitted that the Ministry takes its responsibilities seriously, and that there is no evidence or allegation that the lateness was deliberate. The senior administrator with whom the complainants dealt said she would do her best, and she did. Further, counsel observes that nothing in the settlement, enabling statute, or rules of the Board provides for interest or a penalty in the event of late payment.

9By contrast, the complainants argue that the settlement does not provide for business days as the measure of the 60 days, and that ordinary calendar days should therefore be the standard for counting. Mr. Routh argued that this is particularly true in the context of a correctional facility which is operational 24 hours a day, every day of the year.

10In determining this portion of the matter, it is important to observe that the settlement document is a contract between the parties. The Board’s role is to interpret the wording of the contract that settled the dispute between the parties, with the objective of finding the intention of the parties as expressed in the words they chose.

11If there is no ambiguity in the wording chosen by the parties, there is no need to go outside the terms of the contract for assistance in its interpretation. The minutes of settlement simply use the word “day”, with no qualifier, such as working day or calendar day, and no detailed definition such as one finds in the Board’s rules. The ordinary meaning of the word “day” without any qualifier is usually any twenty-four hour period. Unless there is some other meaning to be derived from the context of other provisions of the contract, that is generally the meaning attributed to the word “day” in disputes over its meaning. See, for instance, Re International Paints (Canada) Ltd., Ontario Division And United Steelworkers, Local 14209, 1985 CanLII 5339 (ON LA), 19 L.A.C. (3d) 94 (Kennedy).

12Here, there is nothing in the context of the agreement or the circumstances of its making that would lead me to find that the parties intended any other meaning to the word “day” than a period of twenty-four hours, or calendar day. I have considered the employer’s argument that one might use the definition of “day” in the Board’s rules. However, it is very clear that the definition refers to the use of the word within the rules themselves. There is nothing in the rules, or the wording of the Minutes of Settlement, which persuades me that the parties to the settlements adopted the definition found in the Board’s rules as the governing definition for their settlements. The definition in the Board’s rules boils down to “any day the Board is open”, and there is no reason before me to conclude that the Board’s schedule was what the parties had in mind. They were free to adopt that definition, but did not do so in the words they agreed on.

13I have also considered the complainants’ argument that in an operation that runs all year round, 24 hours a day, that there is even less reason to choose a definition for “day” other than calendar day. There was no evidence that the administrative side of the Ministry that would have been responsible for the payment also operates on the same schedule as the institutions with the responsibility for constant care of inmates, so that I find this consideration essentially neutral, and is not necessary to the result, given the other reasons just above.

14Accordingly, it is my finding that the parties used wording which is clear enough in context, and required the payment of the settlement monies within 60 days, in the ordinary sense of the word, meaning 60 periods of twenty-four hours, of the signing of the Minutes of Settlement. Using this definition, the payments were due by January 26, 2013. Since they were not received until January 29, 2013, I find that they were three days late, which represents a breach of the Minutes of Settlement.

b) What should the remedy be?

15Having found a breach, the question arises whether there should be any remedy beyond the declaration that there was a breach.

16For their part, the complainants rely on the fact that the employer had to be reminded to pay at all, and then they paid late. They do not think it is a trivial matter that the employer did not live up to a settlement made in good faith between the parties. Additionally, they do not feel they were treated in a professional manner by the employer.

17Further, the complainants allege that the employer regularly pays late under settlements, and that if there is no negative consequence, they will continue to do so. They note that, given that the employer insists on confidentially clauses in many settlements, it is hard to make exact references, an element which the complainants see as leaving the employer freer to breach settlements as they did here. They also refer in general to arbitral case law where employers were ordered to pay additional monies even where the settlement was not delayed for a long period of time.

18Mr. Macdonald also noted that the employer had been found to have bargained in bad faith with one of the unions with which it bargains, the Association of Management, Administrative and Professional Crown Employees of Ontario (AMAPCEO) when it failed to disclose an increase agreed to with the Ontario Public Service Employees Union (OPSEU). The connection drawn appeared to be a lack of transparency in regards to later changes to the pay for performance system. Mr. Chambo took strong exception to the employer’s position that there should be no consequence to their breach of the settlement. He said he had spent 29 years in the Ministry and fought long and hard for his wage increments. He was of the view that the employer was belittling their grievances unfairly. Mr. Routh argued by analogy to the situation of a breach of conditions by a person in conflict with the law. If the conditions are breached, the arrangement is null and void, and a stiffer penalty may well be the result. Therefore, they argue that they should get the full remedy they were requesting in the grievances which they settled.

19The complainants see the settlement as preventing them from getting what they were seeking under the original grievance, which is advancement to the top of the pay grid for their classification, and that it would be fair to return them to square one and remedy the original grievance. The fact that they did not get the extra 2% on confirmation as Operational Managers took on added importance when, in the intervening years, in which no pay for performance awards were given which would have allowed them to move toward the maximum of the grid, lump sum payments were nonetheless given to people already at the maximum of the grid. Mr. MacDonald saw it as especially unfair that people who are not even dealing with inmates, with the danger that involves, got a lump sum that he did not.

20By contrast, the employer argues that no monetary award should be made by the Board, emphasizing that there is no evidence to support the complainants’ allegations that the employer regularly breaches time lines in Minutes of Settlement, so that the decision must be made on the facts of this particular case.

21Employer counsel argues that there would be negative effects on settlements at the PSGB if interest is awarded here. The anticipated negative impact included a need to negotiate longer time periods for payment or to insert clauses clarifying that the employer will not pay interest in the case of late payments. Further, counsel notes that, regardless of whether the complainants’ reasons for agreeing to the settlement were related to the length of time it would take them to get to the top of the grid, the amount was not expressed in that way, but as reimbursement for out of pocket expenses, and that in any event, the complainants’ reasons for agreeing do not form any basis for interfering with the settlement they freely made.

22Further, the employer rejects the suggestion that they knew how pay for performance would be handled in the following year, something for which there is no evidence. All in all, counsel took strong exception to any suggestion that the settlements should be opened up or were negotiated in bad faith.

23Counsel for the employer referred to West Parry Sound v. CAW- Canada, 1996 CanLII 3728 (PE SCTD), 145 Nfld. & P.E.I.R. 189, a decision of an arbitration board, in which there was a delay in payment of settlement monies of between two and six weeks. The Board found that this was a minimal breach which was not worthy of even an order for payment of interest. A similar result is sought by the employer in this matter. The complainants see this as an older case, involving a union, and not an appropriate result in this case.

24In considering the above arguments, I start with the basic proposition that it is normal in breach of contract cases that any party harmed by the breach be made whole, by fashioning a remedy that returns the person as nearly as possible to the position they would have been in if the agreement had been respected in its entirety. However, the law recognizes certain exceptions to this. One of these is the idea accepted in many court and arbitral decisions that the law should not concern itself with trifles, or in Latin: “de minimis non curat lex”. This is a matter of policy so that the legal system does not encourage people to take formal legal action when what is at stake is so minimal as to not warrant the attention of all concerned, with the cost in time, energy and money which goes along with it.

25The position the parties would have been in if the money had been paid on time is that the complainants would have had the use of the money paid out under the settlement for an additional three days. I do not see it to be necessary to these reasons to quantify the exact amount, and, since the settlement was intended to be confidential, I decline to do so. Suffice it to say that no one argued that the amount of interest involved was anything but minimal.

26What the complainants actually argued for is something substantially greater. They want to return to the position they would have been in if they had won the original grievances, i.e. to be granted the extra 2% salary on confirmation as Operational Managers, which would have moved them towards the maximum on the grid, and perhaps made them eligible for the lump sum payments that have been awarded to those at the maximum of the grid in the intervening years. In order to obtain that result, the Board would have to find that there was some fundamental breach of the settlement that made it appropriate to disrupt the parties’ compromise. The breach I have found, a short period of delay in implementation, is nowhere near that fundamental. Thus, I do not find that the Board should disrupt the settlement. The main question is whether there should be an award of interest or not, given the small amount involved.

27As noted, the employer relies on the West Parry Sound decision, cited above. In that case, there had been confusion as to the wage rates agreed to in bargaining, resulting in several meetings between the parties, and a finding that the parties had never really shared the information at the table which would have made each party’s interpretation of the settlement clear to each other. The arbitration decision declared what the meaning was, and ordered retroactive payment to reflect that. In those circumstances, the decision was not to make any order other than a declaration that the employer breached its obligation. No interest was awarded for the late payment, given that the payments were made relatively close to when they should have been, and given that the very low rates of interest at the time meant the amounts of money that would be owed would have been minimal. The union’s request for damages in that case was denied, as the damages sought by the union appeared to be punitive in nature and the evidence gave no basis for such an award. For instance, the union brought no evidence with respect to why damages should be paid, and there was no evidence that the delay was anything but innocent, or intended to frustrate the Memorandum of Agreement.

28As the complainants argued, there are other cases where interest has been awarded even where the delay is short, or the amounts small, simply as a straightforward way to put the parties back in the position they would have been before the breach at issue. An example of this is a decision dated September 27, 2011 in the case of Greater Sudbury (City) and O.N.A. (Harris), a decision involving a policy grievance regarding late payment of retroactive pay to employees of the Pioneer Manor Long Term Care Facility, reported as 108 C.L.A.S. 105, 2011 CLB 25786. In that case the arbitrator expressed the view that it cannot be said that the failure to pay an amount owing under contract has no remedy because the amount is small. It was found that the affected employees were as entitled to the interest on those monies as any creditor. The delay in that case was two weeks, due to longstanding staffing issues. The idea that interest is the ordinary remedy in situations of late payment, and not punitive, is supported by the decision in the case of Canada Post Corp. and C.U.P.W., 1992 CanLII 14487 (CA LA), 30 L.A.C. (4th) 297 (Burkett), and the case law cited therein, where it was found that interest is part of making the aggrieved party whole.

29Given the division in the case law, the decision becomes one of considering all the circumstances to decide what the appropriate remedy should be. It is true that the matter at issue here is very small, and the Board does not wish to encourage litigation over such small amounts. On the other hand, the case indicates either the absence of a tracking mechanism on the part of the employer that would avoid such breaches, or an ineffective one, something the Board does not wish to encourage either. I have also considered the employer’s argument that awarding any remedy beyond a declaration would have a negative effect on settlements because they would be loathe to agree to any deadlines to pay which would make settlements harder to obtain. However, it is my view that the opposite argument has considerable force as well; if complainants have no confidence that settlements will be implemented as agreed, or that there will be no consequences for breaches, complainants may be more reluctant to settle, undermining the process in equal measure.

30In the end, I find the equities nearly evenly balanced, and have decided to simply follow the basic law of contract to the effect that a breach deserves a remedy, tailored to the size of the loss. In this respect I agree with the reasoning in the cases cited above, which find it appropriate to reflect the minimal nature of the loss in the amount of the remedy, rather than a denial of any remedy. This idea is also reflected in the following decisions, albeit in dealing with dissimilar fact situations: Algonquin and Lakeshore Catholic District School Board -and- Ontario English Catholic Teachers' Association Union Grievance. , 98 C.L.A.S. 287 2009 CLB 10556 (Slotnick) and Halifax Employers Assn. and Halifax Longshoremen's Assn., Loc. 269, I.L.A. (2007) 89 C.L.A.S. 287, 2007 CLB 12226 (Christie).

31I find no basis in the material before me to award any other remedy, and certainly no basis to void the settlement and to return the matter to litigation, given the minimal nature of the breach. There is even less reason to award the complainants the full remedy they sought in the original complaints without litigation, as it is the uncertainty of such a hearing that both parties avoided by settling. The parties made a compromise, which the Board is enforcing. It would be disproportionate to award a remedy which ignored the settlement itself. Such a result would be contrary to the widely accepted principle that enforcement of settlements is crucial to the appropriate functioning of the law of the workplace. See, for instance, among many other decisions to similar effect, Globe and Mail and CEP, Local 870M, (2013), 233 L.A.C. (4th) 265 (Davie), known colloquially as the “Jan Wong” case. Nor do I find any basis in the facts before me to award any penalty or other damages against the employer, as there was no evidence of either a deliberate or egregious breach.

32In the result, the employer is ordered to pay to each of the complainants interest on their respective settlement monies for three days in accordance with the Courts of Justice Act. I remain seized to the extent necessary to resolve any dispute over the implementation of this matter that the parties are unable to resolve themselves.