Sterling O & G International Corp. (Re), 2012 MBCA 18

Citation: Sterling O & G International Corp. (Re), 2012 MBCA 18 Date: 20120217 Docket: AI 11-30-07673 IN THE COURT OF APPEAL OF MANITOBA B E T W E E N : STERLING O & G INTERNATIONAL ) D. G. Guénette CORPORATION ) for the Applicant ) (Employer) Respondent ) M. T. Green ) for the Manitoba Labour - and - ) Board ) DIRECTOR OF EMPLOYMENT ) Chambers motion heard: STANDARDS DIVISION ) February 9, 2012 ) (Director) Applicant ) Decision pronounced: ) February 17, 2012 FREEDMAN J.A. 1 The Director of Employment Standards Division (the Director), under The Employment Standards Code , C.C.S.M., c.

E110 (the Code ), seeks leave to appeal an order (the Order) made by the Manitoba Labour Board (the Board). The Order set aside an administrative penalty (the Penalty) imposed on the respondent under the Code . 2 Leave to appeal a final decision of the Board may be granted on a question of law or jurisdiction (s. 130). No jurisdictional issue is raised by the Director. The test for leave has been stated in many cases; see, e.g., the detailed analysis by Scott C.J.M. in Winnipeg Airports Authority Inc. v. EllisDon Corp. , 2011 MBCA 51 , 268 Man.R. (2d) 66 .

After reviewing many of this court’s decisions on leave, the Chief Justice restated the applicable criteria for the granting of leave to appeal on questions of law as follows (at para. 48):

(1) Is the question upon which leave is sought one of law alone?

(2) Is there a reasonable prospect that the appeal will succeed?

(3) Is the question of sufficient importance to warrant consideration by the province’s highest court? 3 On January 6, 2011, pursuant to s. 135(6) of the Code the Director issued an order (the Production Order) addressed to the respondent requiring the production of certain records and information by January 24, 2011. The Production Order stated that failure to comply could result in the issuance of an administrative penalty. 4 The Production Order was not served on the respondent on a timely basis. That was disputed by the Director before the Board, but it is not disputed now.

In any case, whether service was effected in accordance with the Code would seem to raise a question of mixed fact and law. 5 The Production Order did not come to the attention of the respondent until early March. In the meantime, on February 28, 2011, the Director had issued a notice of the Penalty, which was issued for non-compliance with the Production Order, pursuant to s. 138.1(1) of the Code . That

section states:

Administrative penalty 138.1(1) … [A]n administrative penalty under this

section may be imposed in respect of a person’s failure to comply with a provision of this Code … if the failure occurs after the director has given the person notice of the requirement to comply with that provision. [emphasis added] 6 At the request of the respondent, which wanted to appeal the Penalty, the Board conducted an appeal hearing. The resulting Order set aside the Penalty. 7 The Director has raised two issues which it seeks to have determined by a panel of this court: 1. Did the Board err when it revoked the Penalty without considering as relevant that the respondent had become aware of the Production Order in March; and 2. Did the Board err in its

interpretation of s. 136 of the Code which relates to service of documents? 8 Counsel for the Director stated in his submission that the Order might be right or wrong; what he was seeking was leave to argue before a panel that the matter should be sent back to the Board for it to take into account the evidence it had disregarded. 9 In its reasons, after reciting the facts, the Board said that the only issue before it related to service of the Production Order.

After a detailed consideration of the Code and other matters it thought relevant, the Board decided that it was not satisfied that the respondent had been properly served with the Production Order. As a consequence, it could not be satisfied that the respondent was aware of the issuance of the Production Order requiring it to produce documents by January 24, 2011. It concluded: “[I]t follows that the [Penalty] will be revoked” (at para. 14). 10 The Director challenges “the Board’s disregard of relevant facts that arose” after the date when, by the Production Order, the documents were to have been produced.

That fact appears to be that the respondent became aware of the Production Order in March. 11 Moreover, the Director is not happy with the Board’s observations in its reasons about service of documents and particularly comments it made about “alternative methods of service” (at para. 13). 12 The first issue is whether the Board erred in not considering as relevant that the respondent had become aware of the Production Order in March.

The Board clearly knew when the respondent became aware of the Production Order, but concluded that the overriding consideration was that the respondent did not become aware of it until after the Penalty was issued. It is not unreasonable for the Board to have decided that that should be the paramount consideration. Based thereon, the Board held that the Penalty could not stand. 13 In fact, the Board’s decision was on one straightforward question: was the respondent properly served with the Production Order? If it was not, then it could hardly be faulted, let alone subjected to the Penalty, for failure to comply.

I agree with the Board’s counsel, who submitted: … [I]t is against any notion of fairness that someone could be fined for failing to comply with an order which they did not know existed .… 14 At this stage, the Director has conceded that the Production Order was not served on the respondent prior to the issuance of the Penalty. Simply put, due process was not followed. I cannot see how the Board can be said to have erred in revoking the penalty.

I fail to see how the later awareness by the respondent of the Production Order could somehow validate the Penalty, since it could not be sustained under s. 138.1(1) of the Code . If the Board did disregard that evidence, it was not unreasonable for it to have done so. 15 The Board’s counsel also argued that the Director could simply have issued and served another production order with a new deadline, and there would then be no question about the validity of any subsequently issued administrative penalty. 16 The second issue is whether the Board erred in its

interpretation of s. 136 of the Code , which relates to service of documents. In my opinion, on this issue the Director is seeking leave to appeal, not the final decision of the Board, but the observations of the Board on alternative methods of service. 17 There is no discrete right to appeal, with leave, the reasoning of the Board leading up to its final decision.

As noted earlier, the only matter that may be appealed, with leave, is the final decision itself. 18 The standard of review this court would apply on appeal is a relevant consideration on a leave application, as it relates to the “reasonable prospect of success” criterion. 19 If this case was heard on appeal, the standard of reasonableness would very likely be applied by a panel of the court on questions of law involving the

interpretation of the Code by the Board, including any final decision by the Board on alternative service methods. See Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association , 2011 SCC 61 , where, for the majority

of the Supreme Court of Canada, Rothstein J. said (at para. 34): …. … [U]nless the situation is exceptional, and we have not seen such a situation since Dunsmuir [2008 SCC 9 , [2008] 1 S.C.R. 190 ], the

interpretation by the tribunal of “its own statute or statutes closely connected to its function, with which it will have particular familiarity” should be presumed to be a question of statutory

interpretation subject to deference on judicial review. 20 Whether or not the Board was reasonable in its observations on service methods, its final conclusion that, in effect, the Production Order was not properly served, is now accepted by the Director. 21 Thus, the Director purports to challenge a decision, the essential foundatio n of which he now accepts. 22 In my view there is no reasonable prospect of the Director successfully challenging the Order. Leave is denied. The respondent did not appear on this application. I make no order as to costs. J.A.