Shear Diamonds Ltd. V. Anderson et al, 2017 NUCJ 10

nunavuumi iqkaqtuijikkut NUNAVUT COURT OF JUSTICE La Cour de justice du Nunavut Citation: Shear Diamonds Ltd. V. Anderson et al , 2017 NUCJ 10 Date of Judgement: 2017-05-17 File Number: 08-14-247-CVC Registry: Iqaluit Appellants: Pamela Dawn Strand, Julie Lassonde-Gray, Gregory Missal, Gregory R. Rieverley, David G.

Prince, and Manuel Rappaport (Shear Diamonds Ltd.) -and- Respondents: Robert Anderson, Garry Coates, Kyle Conway, Brittany Croteau, Delene Daniels, Stuart Eamor, Tim Fikus, Jerry Fulcko, Michelle Hurley, Brenda Hutsul, Michael Jennett, Ron Jones, Jose Madrigal, Robert McLean, Raymond Oniak, David Pennington, Adrian Porter, Walter Scott Richie, Samuel Roberts, Donald Sopher, Phillip Tanasichuk, Salomon Ullulaq, and Lisa Winter. ________________________________________________________________________ Before: The Honourable Madam Justice Cooper Counsel (Appellant): Glen Tait Counsel (Respondents): Self-Represented Location Heard: Iqaluit, Nunavut Date Heard: September 8, 2016 Matters: Labour Standards Act, R.S.N.W.T. 1988, c.

L-1 (Nunavut) REASONS FOR JUDGEMENT (NOTE: This document may have been edited for publication) I. INTRODUCTION: [ 1 .] This is an appeal of a decision of the Labour Standards Board [the Board] in which the appellants were found liable to the respondents for termination pay.

II. BACKGROUND: [ 2 .] The respondents were all employees at a diamond mine which ceased operations in September of 2012. At the time the mine ceased to operate it was owned by Shear Diamonds Ltd. [ Shear ]. The appellants were each, at one time or another, directors of Shear. [ 3 .] In early September of 2012, the employees received notice of a temporary layoff. They expected to return to work within 2- 6 weeks. [ 4 .] The employees received a subsequent notice advising them that the layoff would be permanent.

They were told that they would receive termination pay equivalent to two weeks wages, plus vacation pay, as required by the the Labour Standards Act, R.S.N.W.T. 1988, c. L-1 (Nunavut) [the Act] . They were told that this payment would be made to them by October 15, 2012. [ 5 .] The termination pay was not received by October 15, 2012.

The respondents filed a complaint with the Labour Standards Officer [LSO] seeking an order directing the company to pay. [ 6 .] The complaints, filed by the individual Respondents, were received by the LSO on four different dates and were initially dealt with in four groups, in accordance with the date on which they were received. [ 7 .] Notice of the complaints was provided to Shear, initially at its registered office in Toronto and subsequently also at its registered offices in Calgary and Iqaluit. Shear did not respond to the complaints.

Notice was not provided to the directors of Shear. [ 8 .] The LSO issued a decision which found against Shear and subsequently issued Certificates which named both Shear and the directors of Shear, as disclosed in the Corporate Registry in Nunavut, as liable for termination pay. [ 9 .] The precise procedural history is somewhat difficult to follow, however, the overall progression of the matter and the nature of the issues is apparent. [ 10 .] The LSO forwarded the Certificate to the Labour Standards Board for confirmation.

It is apparent that around the same time a search of the corporate registry in Alberta was undertaken and it was determined that there were additional directors who were not named in the original certificate. The Board directed that the LSO issue certificates in relation to each of the additional directors.

The LSO carried out this direction by issuing “amended certificates” which named both Shear and the additional corporate directors. [ 11 .] It was at this point that the appellants became involved in the matter. [ 12 .] The appellants became aware of the matter upon receiving the amended certificates and notice that Shear had filed an appeal which was being heard by the Board. In fact, Shear never did file an appeal or respond to the proceedings in any manner. [ 13 .] Upon becoming aware of the matter, the appellants made their concerns clear.

The Book of Record discloses a number of dates set for a hearing before the Board which were adjourned for various reasons. Ultimately, a hearing was held on April 16th, 2014. The appellants provided written submissions for the April 16th hearing in which they raised four issues: a. the jurisdiction of the Board to direct the issuance of amended certificates;

b. the authority of the Labour Standards Officer to issue amended certificates; c. whether termination pay constituted wages, for which corporate directors could be personally liable; and d. whether some of the appellants were in fact corporate directors at the relevant time. [ 14 .] The Board issued a written decision on April 25, 2014. Based on the evidence submitted, the Board was satisfied that three of the individuals who were named personally in the certificates because of their status as corporate directors were, in fact, not directors at the relevant time.

The decision of the Board was to cancel the certificates and to direct the issuance of new certificates which did not include these three individuals.

In all other respects the certificates were upheld. [ 15 .] The appellants appeal the April 25, 2014 decision of the Board on the following grounds: a. the Board exceeded its jurisdiction when it directed the LSO to issue amended certificates; b. even if there was authority to direct the issuance of amended certificates, the appellants should have been provided notice and a hearing; c. the appellants were denied procedural fairness because they were denied notice and a hearing prior to the issuance of the amended certificates and they were denied access to the materials before the Board; d. there is a reasonable apprehension of bias on the part of the Board; e. the appellant Rievelry, was not a corporate director at the relevant time; f. termination pay does not constitute wages and accordingly, corporate directors cannot be found personally liable III.

ANALYSIS: A. Standard of Review: [ 16 .] This appeal is brought pursuant to s. 53 of the Labour Standards Act which provides for an appeal to the Nunavut Court of Justice on a point of law. The Board decision is entitled to deference where it is interpreting its own statute. B. Preliminary Comment: [ 17 .] Much of the underlying basis for the contention in this matter relates to the principle of notice and a party’s right to be heard when there are proceedings that may affect their interests.

It is trite to say that these are fundamental principles of natural justice. [ 18 .] Regard must be given to the statutory regime within with a particular administrative tribunal operates. [ 19 .] For example, s. 53 of the Act provides that a LSO may issue a certificate for wages owing prior to providing notice to an

employer. An employer is then given 30 days from the date of mailing of the certificate to make representations. This

section contemplates some kind of decision being made by a LSO prior to notice being given to the employer who is clearly impacted by the decision. [ 20 .]

Section 62 of the Act provides that corporate directors are liable to employees for unpaid wages, with some restrictions. The Act is silent on when or how corporate directors are to be given notice that there are allegations of unpaid wages. [ 21 .] All of this to say, there are no strict rules regarding the manner or timing of notice or the procedure for hearings. These may vary depending on the nature of the matter. The question is one of fairness. C.

Jurisdiction to Issue Amended Certificates: [ 22 .] The appellants submit that the Board has no jurisdiction to direct the LSO to issue amended certificates nor does the LSO have jurisdiction to amend a certificate. [ 23 .] Section 53(2) of the Act provides that of a LSO may make a determination as to whether an employer owes wages and upon finding that wages are owed, may issue a certificate to that effect. [ 24 .] Where a certificate is issued, the Board may investigate the matter and may: a. confirm wages owing as set out in a certificate; b. cancel a certificate and i. make another one, in which shall be set out the wages owing; or ii. take no further action. [ 25 .] In practice, once a certificate is issued by the LSO, the certificate is forwarded to the Board for review. [ 26 .] In this matter, the Board directed the LSO to issue new certificates in relation to the directors not previously identified.

The LSO implemented the direction by issuing amended certificates. The issuance of the amended certificate by the LSO resulted in those named on the certificate having a right of appeal to the Board. This right of appeal was exercised and was partially successful. [ 27 .] The alternative would have been for the Board to have canceled the existing certificates and issue a new one which included all of the individuals identified as directors.

The parties would then have had to exercise their right of appeal to the Court. [ 28 .] Alternatively, the LSO, upon becoming aware that there were additional corporate directors, could have issued certificates naming only the additional directors. This would have been awkward as it would have resulted in multiple certificates arising from the same claim. [ 29 .] Even if the appellants are correct that the issuance of amended certificates was an irregular procedure, the irregularity resulted in no prejudice to the appellants. D. Issues of procedural fairness: i.

Lack of Notice of the November 26, 2012 hearing: [ 30 .] The appellants seek to have the decision of the Board set aside on the basis that they were not given notice of the fact that

complaints had been filed with the LSO or of the November 26th, 2012 hearing. [31.] It is apparent that the only decision that was made by the Board on November 26, 2012 was to direct the LSO to issuecertificates against additional corporate directors not formerly identified. It is this direction that led to the LSO issuing amendedcertificates. [32.] In making such a direction the Board was presumably relying upon s. 62 of the Act, which provides that every corporatedirector or officer is liable for unpaid wages up to a maximum of two months wages. This

section operates as a matter of law once afinding of liability has been made against a corporation. In some jurisdictions, the legislation specifically provides that directors arenotified only after a finding of liability has been made against the company (for example, Employment Standards Code RSA 2000, c.E-97, s.112(4); Employment Standards Act 2000, SO c.41,s.106). [33.] The issue is whether the individual directors had an opportunity to be heard and to put their positions before the Board.

The individual directors were given this opportunity on April 16th of 2016. [34.] In my view, if there were irregularities in the process up to November 26, 2012, those irregularities were rectified bysubsequent proceedings. [35.] There is no doubt that notice is a cornerstone of the judicial process and that persons whose rights will be effected must begiven the opportunity to participate and respond. Notice is most often established by providing an affidavit attesting to the fact that aparty has been served with notice. However, it is not the only way.

The manner in which a tribunal or court can be best assured that aparty is aware of proceedings is if the party appears or responds to the proceedings. That is precisely what occurred in this matter. Theappellants were aware of the April 16, 2014 hearing. The hearing had been adjourned from an earlier date to accommodate them and toprovide them with an opportunity to fully respond. They had the opportunity to put evidence before the Board via affidavit and to makewritten submissions. They took advantage of this opportunity. The issues they wished to raise were fully before the Board forconsideration. ii.

Lack of Disclosure of Materials: [36.] The appellants submit that the decision of the Board should be set aside because the materials before the LSO and the Boardwere not provided to the appellants prior to the April 26th, 2014 hearing. [37.] The fact is, aside from the complaints filed by the respondents, there were few materials in this matter. The issues raised bythe appellants both before the Board and on this appeal, were relatively straight forward. The respondents did not submit materialsbeyond the initial complaints.

There were three lawyers representing corporate directors who wanted to dispute liability, either on thebasis that their clients were not directors at the relevant time or on the basis that termination pay did not constitute wages. Counsel forthe appellants represented most of them. It is not clear that the materials filed by each of the three lawyers was provided to theappellants. However, when these materials are reviewed, it is clear that counsel are making the same argument. There was no prejudiceto the appellants by not receiving this material. iii.

Apprehension of Bias: [38.] The appellants allege that the actions of the Board in directing that “amended Certificates” be issued to include additionalcorporate directors resulted in a reasonable apprehension of bias in relation to any subsequent decisions by the Board. [39.] The test to determine if there is a reasonable apprehension of bias is set out by the Supreme Court of Canada in Committeefor Justice and Liberty v. National Energy Board, (SCC), [1978] 1 SCR 369, [1976] S.C.J. No. 118, at p. 394.

Thequestion to be asked is whether the actions give rise to a reasonable apprehension, which reasonably well-informed persons couldproperly have, of a biased appraisal and judgment of the issues to be determined by the Board. In my view, they do not. In directing thatcorporate directors be added to the certificates the Board was not making a decision on the merits of the matter. Once a corporation hasbeen found to be liable for wages, liability of corporate directors is automatic pursuant to the Act. In giving effect to this provision there

is no decision being made on the merits. E. Was Rievelry a Corporate Director at the Relevant Time: [ 40 .] It is submitted that the appellant, Rievelry, was not a corporate director at the relevant time and therefore, is not personally liable for any wages owing. There is no dispute that Rievelry resigned his directorship effective September 25, 2012. The issue is whether the termination pay became owing prior to that date. [ 41 .] I am of the view that this is not an issue of law upon which there is a right of appeal. In my view this is a purely factual matter.

However, if I am wrong on this point, I find that the Board’s finding that Rievelry was a corporate director at the relevant time is reasonable and is supported by the evidence. [ 42 .] The appellant refers to the Board decision in which it is stated that undated notices of both a temporary and a permanent termination was given to the employees. The appellant submits that the Book of Record does not contain the notices (Appellant’s Submissions, paragraph 82). This is incorrect. Both of the notices are contained in the Book of Record. Each of the notices was signed by one of the Appellants.

The notices are: [ 43 .] The notices are not dated. The temporary termination states that the termination will be for a period of 2-6 weeks. The second notice refers to shut down date of September 3rd. It refers to the employees having received vacation pay up to September 9th and medical benefits up to September 15th, beyond the date of termination. This indicates that the employer certainly considered the termination date to be earlier than September 15th. [ 44 .] The Appellant argues that the pursuant to s. 14.06, the day of termination is deemed to be the last day of the temporary layoff.

This would still put the termination date at September 17th, a date prior to Revelry’s resignation as director. [ 45 .] The second letter states that termination pay will be paid to employees on October 15 th , however, this is not the date it would have become owing. Termination pay would have been due and payable on the termination date.

[ 46 .] The Board held that the liability for termination pay fell within Rievelry's time as a director. As previously stated, this is a reasonable

interpretation and is supported by the evidence. [ 47 .] An alternative

interpretation would be that the last day of the temporary layoff was 6 weeks after September 3rd, 2012, putting the termination date into October. In my view such an

interpretation would be contrary to the acknowledgement of an earlier termination date in the permanent termination letter. Further, it would allow the appellant to rely upon an ambiguity which they created, to the detriment of the employees. In matters such as the termination of employment clarity is to be encouraged, not discouraged. F. Are Corporate Directors Liable for Termination Pay? [ 48 .] The Notice of Appeal alleges that the Board erred in determining that some or all of the appellants are liable for the amounts of termination and/or vacation pay alleged. The Notice does not specifically allege an incorrect

interpretation by the Board in its determination that termination pay is wages, nor was the issue argued before me however, since this point was argued before the Board I will deal with it. [ 49 .] The Act provides in

section 62: Every director and other officer of a corporation is liable for the unpaid wages of the employees of the corporation, but not exceeding the equivalent of two moths wages for each employee who has not been paid, and the provisions regarding the recovery of wages apply, with the necessary changes and so far as they are applicable, to the recovery of such wages from a director and other officer of a corporation that does not pay its employee’s wages. [ 50 .] And at

section one: “wages” includes every form of remuneration for work performed but does not include tips and other gratuities. [ 51 .] And at

section 14.10: Termination pay shall for all purposes be deemed wages. [ 52 .] The appellants argued that termination pay is not wages and accordingly, corporate directors have no liability for termination pay. In doing so the appellants relied upon cases which were determined pursuant to the application of s. 119(1) of the

Canada Business Corporations Act [CBCA] . As stated by the Board in its decision, s. 119(1) of the CBCA is worded differently than the equivalent provision in the Nunavut Act, and, in particular, the CBCA does not have a provision that deems termination pay to be wages for all purposes. The Board held that this deeming provision is conclusive of the issue. The Board’s decision in this regard is not only reasonable it is, in my view, correct. IV. CONCLUSION: [ 53 .] The appellants have argued a number of jurisdictional and procedural irregularities and have asked the court to set aside the decision by the Board.

However, setting aside a Board decision does not mean that the matter is brought to an end. The matter is simply remitted to the Board for reconsideration, or, depending on the circumstances, a final decision on the matter is made by the

Court. If this were done, what additional information would the appellants hope to put before the Board that was not before it in April of 2014? What additional arguments would they hope to make? [ 54 .] The only real issue was the proper

interpretation of termination pay as wages. That issue was fully argued before the Board and was decided by the Board. The issue was not pursued on the appeal. [ 55 .] To be clear, there was never a dispute that the employees were terminated and were entitled to termination pay. This was clearly set out in the termination letter. The termination letter was signed by one of the appellants. It was never in dispute that the appellants were corporate directors at the relevant time (with the exception of Rievelry).

There was never a suggestion that the corporation had already paid the termination pay so there was no money owing. [ 56 .] Essentially, the appellants argue that the Board make procedural irregularities, which, although they did not actually impact on the right of the appellants to make their arguments, should result in the Board’s finding being set aside and the appellants relieved of liability for payment of money which is clearly owed and for which they are clearly liable. Such a position cannot succeed. [ 57 .] The appeal is dismissed.

Dated at the City of Iqaluit this 17th day of May, 2017. ___________________ Justice S. Cooper Nunavut Court of Justice