2021 MBCA 82, 2021 MBCA 82

Citation: Waraich v Director of Employment Standards, Date: 20210928 2021 MBCA 82 Docket: AI20-30-09466 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Christopher J. Mainella Madam Justice Jennifer A. Pfuetzner Madam Justice Janice L. leMaistre BETWEEN : ) D. A. Johnston ) for the Appellant ) AMANDEEP WARAICH ) No appearance ) for the Respondent (Claimant) Respondent ) ) T. D.

Gisser, Q.C. - and - ) on a watching brief ) for the Manitoba Labour DIRECTOR OF EMPLOYMENT ) Board STANDARDS ) ) Appeal heard and (Defendant) Appellant ) Decision pronounced: ) September 21, 2021 ) ) Written reasons: ) September 28, 2021 mainella JA (for the Court) : Introduction [ 1 ] This appeal raises the question of the application of the doctrine of issue estoppel in a civil proceeding as a result of a decision in a prior administrative proceeding. [ 2 ] The defendant (the Director) appeals the decision made by a judge under section 9(1) of The Court of Queen’s Bench Small Claims Practices Act , CCSM c C285 (the Act ), granting the claimant’s claim. [ 3 ] Pursuant to section 15(1) of the Act , leave to appeal was granted by a judge of this Court on the following question of law ( 2020 MBCA 76 at para 14 ): . . .

Did the trial judge fail to apply the correct legal test in quashing two payment-of-wages orders issued under The Employment Standards Code [ The Employment Standards Code , CCSM c E110]? [ 4 ] The appeal proceeded in the claimant’s absence. The appeal was originally set to proceed at 9:30 a.m. on August 31, 2021. On the day before the appeal, the claimant advised the registrar she was feeling ill and she requested the appeal be rescheduled. The Court agreed to the adjournment and a new date, September 21, 2021 at 9:30 a.m., was confirmed by email and letter dated August 31, 2021.

At 1:06 a.m. on September 21, 2021, the claimant sent an email to the registrar advising that she could not attend the appeal

because of an unspecified babysitting issue and, for the first time, she further advised that she can only attend an appeal in the afternoon. [5] In our view, it was not in the interests of justice to adjourn the appeal again (see The College of Pharmacists ofManitoba v Jorgenson, 2020 MBCA 80 at para 4). The claimant did not file a factum, although we have the transcript of the SmallClaims Court trial which sets out her position. None of her requests to adjourn the appeal were supported by documentation or specifics;moreover, she has twice agreed to an appeal at times which she now claims she is unavailable.

The merits of the appeal are such thatfurther delay would not be appropriate and is prejudicial to the Director and the employees who have not been paid for several years. Finally, the registrar explained to the claimant when the matter was adjourned the first time that “it is not easy to reschedule a hearinglike this” and that “judges may decide to proceed with the appeal in your absence”. [6] At the conclusion of the appeal, we announced our decision that the appeal was to be allowed with reasons to follow,which now do. Background [7] The circumstances can be summarized in brief.

A dispute over unpaid wages resulted in an investigation anddetermination (on behalf of the Director) by an employment standards officer (the officer) under The Employment Standards Code,CCSM c E110 (the Code), that the “employer” (at section 1(1)) of five employees was the claimant in her personal capacity as opposedto a corporation. The claimant exercised her statutory right under the Code to appeal two of the five payment-of-wages orders, issued bythe officer in June 2017, to the Manitoba Labour Board (the Labour Board), which were resolved through mediation. The other threeorders were never appealed.

In August 2017, the Director filed those orders in the Court of Queen’s Bench (the filed orders). Pursuantto the Code, the filed orders became an enforceable judgment of the Court against the claimant. In 2019, due to the claimant’s refusal topay the unpaid wages, the Director took steps to garnish $5,549.61 from her personal bank account to satisfy the judgment. [8] On October 15, 2019, the claimant commenced a claim under the Act for the return of the garnished funds.

Shealleged that the administrative decision under the Code was incorrect; she was not the employer of the three employees who were thesubject of the filed orders—a corporation was their employer. [9] In her decision, the judge rejected the Director’s submission that the claim should be dismissed on the basis of resjudicata. She said that “there is nothing in the legislation which expressly prevents me from exercising my inherent jurisdiction ofjudicial review” (at para 4) of the administrative decision as to who was the employer of the three employees.

Ultimately, the judgequashed two of the three filed orders because, in light of the evidence she heard at the small claims trial, in her view, the administrativedecision was “unreasonable” (at para 17). She decided that, in those two cases, a corporation, not the claimant, was the employer. TheDirector was ordered to repay the claimant the sum of $2,359.14. Discussion [10] In our view, the judge erred in law because she failed to apply the correct legal test which, in the circumstances, was thedoctrine of issue estoppel (a species of res judicata), before quashing the two orders issued under the Code.

Had she applied the doctrineof issue estoppel, we are persuaded that the circumstances here would have prohibited her from retrying the already finally decided issueof who was the employer of the three employees in question. [11] At some point, a controversy as to rights and obligations, and any accompanying litigation, must end. As Steel JAnoted in Loewen v Manitoba Teachers’ Society, 2015 MBCA 13, “Being correct in law is important, but it is not always as important ashaving an end to litigation” (at para 111).

This feature of the justice system is necessary both for the public interest and, also, to protectindividuals from being vexed twice (see Sidney N Lederman, Alan W Bryant & Michelle K Fuerst, The Law of Evidence in Canada, 5thed (Toronto: LexisNexis, 2018) at sections 19.64-19.66). [12] The doctrine of issue estoppel is a common law rule that prevents a party from relitigating some point or issue of factthat has already been decided (see Angle v MNR, (SCC), [1975] 2 SCR 248 at 254).

The doctrine of issue estoppeladvances the interests of justice by ensuring that there is finality in legal proceedings. [13] Relevant to this appeal is that the doctrine of issue estoppel applies to civil proceedings following an administrativedecision, such as the one made here by the officer under the Code (see Danyluk v Ainsworth Technologies Inc, 2001 SCC 44 at para 1;and British Columbia (Workers’ Compensation Board) v Figliola, 2011 SCC 52 at para 27).

As was explained in Figliola, subject torights of review or appeal, fairness entitles litigants to expect that decisions of administrative decision-makers are “final and binding”and not open to relitigation in a different forum before a different adjudicator (at para 1). [14] The three preconditions to a successful plea of issue estoppel were summarized by Arbour J in Toronto (City) v CUPE,Local 79, 2003 SCC 63, as follows: “(1) the issue must be the same as the one decided in the prior decision; (2) the prior judicialdecision must have been final; and (3) the parties to both proceedings must be the same, or their privies” (at para 23; see also Figliola atpara 27). [15] All three preconditions of a successful claim of issue estoppel are present here.

The issue of who was the threeemployees’ employer was decided by the officer. That administrative decision was final as it was never appealed under the Code to theLabour Board, despite the claimant having that statutory right (see Figliola at para 51). The parties in the administrative proceedingunder the Code, the Director and the claimant, were the same as in the subsequent civil proceeding under the Act. [16] The decision of Stanbra v Stonewall Tire

(1971) Ltd, 1994 CarswellMan 158 (QB), is instructive. In that case, anemployee made a claim against his former employer to the Director for unpaid wages under a precursor statute to the Code, The Paymentof Wages Act, RSM 1987, c P31 (since repealed). The matter was investigated, but no administrative decision was made. The employeethen sued the employer in Small Claims Court for the amount in dispute.

Schulman J accepted that the doctrine of issue estoppel will barany civil claim where there has been a final administrative decision as to entitlement of unpaid wages by the Director; however, inStanbra, while the Director had conducted an investigation, “no order was made and no issue determined” (at para 9). The situation here

is quite different. In all three cases, orders were made against the claimant and became final when the appeal period to the Labour Boardexpired. [17] Although the judge erred in law by failing to apply the doctrine of issue estoppel, that alone is insufficient to allow theDirector’s appeal; application of the doctrine of issue estoppel in a civil case is a two-part analysis to ensure that the interests of finalityof litigation and ensuring justice is done in a particular case are balanced (see Danyluk at para 33).

Even where all of the preconditionsexist, the doctrine of issue estoppel should not be applied mechanically to “work an injustice” in the particular case (at para 1). [18] Because the judge failed to apply the correct legal test, it falls to this Court to exercise the residual discretion as towhether the doctrine of issue estoppel ought to be applied in this case, even though all of the preconditions for its application exist (seeDanyluk at paras 68-80; and Penner v Niagara (Regional Police Services Board), 2013 SCC 19 at paras 36-68). [19] In our view, taking into account the entirety of the circumstances, there is no principled reason why it would be unjustto apply the doctrine of issue estoppel here.

The circumstances favour the interests of finality and applying the doctrine of issue estoppelto bar the claimant’s civil claim relitigating the issue of who was the employer of the three employees in question. [20] To begin, there was no unfairness in the prior administrative proceeding under the Code. The claimant had a fairopportunity to put forward her position to the officer and the Labour Board.

One only needs to consider that the Labour Boardsuccessfully mediated the two orders which the claimant appealed. [21] The officer’s decision as to who was the employer of the three employees was not a complex decision (see Danyluk atpara 77). Determining the “true employer” in an employment relationship is an issue within the responsibility and expertise of anemployment standards officer (Tyndall and Cabral, Re, 1996 CarswellMan 733 at para 6 (LB), leave to appeal to Man CA refused, 1996CarswellMan 292).

Moreover, the claimant had an appeal right of the officer’s determination in the administrative proceeding to theLabour Board. The Labour Board is a highly specialized and independent administrative body with expertise in labour and employmentlaw (see Nygård International Partnership Associates (Re), 2006 MBCA 115 at paras 30-31; and Knights of Columbus (Re), 2010MBCA 110 at para 7). It has comprehensive rules of procedure to ensure a fair process (see Manitoba Labour Board Rules ofProcedure, Man Reg 184/87R).

Judicial review or appeal of the decisions of the Labour Board for questions decided under the Code isallowed for in prescribed circumstances (see the Code at section 130(2); and The Labour Relations Act, CCSM c L10 at section 143(6)). [22] There was an assertion by the claimant that she could not afford to deposit the unpaid wages of the three employeesbefore exercising her appeal right as the law requires (see the Code at sections 111(1)-111(2)). The deposit requirement discouragesunmeritorious appeals.

The chairperson of the Labour Board has the discretion to reduce the amount of the deposit to a minimum of$5,000 (see the Employment Standards Regulation, Man Reg 6/2007 at

section 30). [23] There is no credible evidence of the claimant being impecunious such that there is a concern as to the fairness of theadministrative proceeding. The claimant is a businesswoman who has run a commercial cleaning business. She owns a residence. Shequalified for a mortgage on that residence. A 2016 tax return filed at the small claims trial showed that the claimant had $32,000 inincome that year. She made no efforts to get an extension of time from the Labour Board to gather the necessary funds to deposit toprosecute her appeal.

The amount of unpaid wages is not significant. [24] It would also not be unfair in the circumstances to use the prior administrative proceeding to preclude the claimant’scivil claim. [25] Administrative schemes like the Code are designed to provide the expeditious and efficient resolution of disputes in acost-effective manner (see Danyluk at para 50).

That process would be undermined if employers could simply forego an appeal to theLabour Board, wait to see if the Director took enforcement action, and then be allowed to go into full battle mode and relitigate themerits of the administrative decision by a civil claim in Small Claims Court.

The delays and added costs of such a system would becontrary to the public interest and unfair to the interests of employees. [26] Leaving aside the legislative objectives of the Code, the particular circumstances here also do not make it unfair to barthe claimant’s civil claim as a result of the prior administrative process, because there was not a “significant difference between thepurposes, processes or stakes involved in the two proceedings” (Penner at para 42).

In Hughes Land Co v Manitoba (1998), (MB CA), 167 DLR (4th) 652 (Man CA), Scott CJM described the required analysis this way (at para 37): The application of issue estoppel does not require an exact duplication. The key issue as we have seen is simply whether the question tobe decided in the second action was fundamental to the earlier decision. If so, the never-ending ingenuity of counsel to create newformulations and characterizations cannot displace the application of the doctrine of res judicata.

An argument based on fairness will notbe accepted by the Court in a second go-round simply because the matter has been dressed up as “a new approach”: Favor and Favor v.Winnipeg (City) (1989), (MB CA), 57 Man. R. (2d) 228 (C.A.). Simply “re-engineering” the claim is not goodenough: Corbin v. Winnipeg (City) (1997), (MB KB), 116 Man. R. (2d) 107 (Q.B.) at p. 110. [27] In our view, the question being decided in the civil claim was “fundamental” to the officer’s earlier administrativedecision (ibid).

What was in dispute in the administrative proceeding and in the civil proceeding was identical; the identity of theemployer of the three employees. Also, there is no unique remedy available in the civil proceeding different than in the administrativeproceeding (see the Code at section 3(1); and Danyluk at paras 68-70). What was at risk for the claimant was the same in bothproceedings; the amount of the unpaid wages of the three employees, nothing more.

Finally, a review of the trial transcript makes clearthat the civil proceeding was a duplication of the administrative proceeding under the Code, except that the civil proceeding was moreformal and the decision-maker was different, neither of which is reason not to apply the doctrine of issue estoppel. [28] In conclusion, we are satisfied that the claimant’s claim was properly considered and adjudicated on in theadministrative proceeding under the Code, such that the application of the doctrine of issue estoppel in the subsequent civil proceedingunder the Act would not work an injustice (see Danyluk at para 80; Znamensky Selekcionno-Gibridny Center LLC v DonaldsonInternational Livestock Ltd, 2010 ONCA 303; and Metropolitan Toronto Condominium Corp No 1352 v Newport Beach Development

Inc , 2012 ONCA 850 at paras 65-76 ). Disposition [ 29 ] In the result, the appeal was allowed without costs and the decision of the judge was set aside. JA JA JA