Monday, August 24, 2015

Which Doctrine to Apply: Common Employer or Successor Employer?

A recent case out of the Superior Court of Justice, Dear v. Glamour Designs Ltd., highlights an interesting nuance in the law surrounding transitions between employers.

The defendant in this case was one corporation within a family-owned group of businesses:  Special Occasional Sales Ltd., Glamour Designs Limited, and International Fashion Group, all of which were operated by members of the Maccarone family:  Vince Maccarone is president of IFG; his daughter Michelle is president of GDL, and there's a Katherine Maccarone listed as president of SOS.

Mr. Dear began working for SOS as a sales representative in March 2005.  There were a number of temporary layoffs in the tail-end of his employment period - one wonders whether or not these may, in and of themselves, constituted a constructive dismissal - and he was finally dismissed effective December 2014.

The hitch here is that SOS itself discontinued its operations in August 2013, and his employment thereafter was with GDL.  Dear claimed that they constitute 'common employers', and therefore that GDL is liable for employment-related liabilities of SOS.

Dear claimed that Vince told the employees in or around August 2013 that they would continue in their jobs but be compensated by GDL.  The defendant denied that, claiming that SOS had actually terminated the employment relationship by way of a notice given in March 2013 (which they could not produce).  GDL argued that, after the employment relationship between SOS and Dear was terminated, GDL stepped in and hired Dear.

Common Employers

At common law, the concept of 'employer' is a little bit flexible.  You're not strictly limited to claiming against the corporation that signs your payroll cheques; the case law has looked at a lot of different scenarios where a single business might have its affairs ordered into various corporations (for legitimate reasons, no less), but there are compelling public policy reasons not to arbitrarily limit the employees from being able to claim against any of those corporations.  As the Court of Appeal found in 2001 (citing a British Columbia decision):
As long as there exists a sufficient degree of relationship between the different legal entities who apparently compete for the role of employer, there is no reason in law or in equity why they ought not all to be regarded as one for the purpose of determining liability for obligations owed to those employees who, in effect, have served all without regard for any precise notion of to whom they were bound in contract. What will constitute a sufficient degree of relationship will depend, in each case, on the details of such relationship, including such factors as individual shareholdings, corporate shareholdings, and interlocking directorships. The essence of that relationship will be the element of common control.
On the other hand, there are plenty of scenarios where one person might have a substantial ownership stake in multiple discrete businesses, and there are good reasons why an employee of one such business should not be able to claim across the corporate veil in such cases.

So there's a fairly significant amount of case law now looking at the factors to earmark common employers, including the degree of integration of the businesses and the common control of the corporations.

The judge accepted Dear's position that GDL and SOS were common employers.  It's a little thin on some of the facts:  I don't know what SOS' business was, nor what GDL's business was.  It would be surprising if a new business could pick up a dissolving business' sales staff seamlessly if there wasn't some degree of integration between the businesses, or if NewCo wasn't actually absorbing OldCo's business line, but the bottom line for us is that we're looking at a fairly finite selection of facts in the decision:

  1. That the companies were all owned by relatives of each other;
  2. That the companies had adjacent offices;
  3. That Vince, at least at times, controlled or was at least involved in both corporations, issuing Records of Employment for both.
The judge then finds that the corporations "could easily have operated as one", and therefore was a single business.  That is, essentially, the test, but without knowing the business models of the different businesses, it's hard to know if there are additional facts underpinning this conclusion.  And that uncertainty is concerning:  On a face value read of the decision, it appears to be a precedent supporting a notion that businesses owned by close relatives will generally be responsible for each other's employment liabilities.  A difficult proposition to justify.

The important result of the finding, of course, is that Dear's employment was nearly a decade (as opposed to a little over a year) which has dramatic effect on his notice entitlements.  Accordingly, the judge awarded him judgment on the basis of nearly a decade of service.


It's not clear to whether or not the 'common employer' finding was truly warranted.  It seems plausible, but I'm not sure what other facts were on the record.

However, on my read of the decision, I can't help but question if a 'common employer' analysis was even necessary.  It seems to me that the issue could likely been resolved on the basis of a 'successor employer' analysis.

It appears to be common ground that the transition from SOS to GDL occurred in or around August 2013 - presumably, Dear was on SOS' payroll one day, then GDL's the next.  (Not only did none of his layoffs cover that period, but it actually wouldn't matter to the successor employer doctrine if one of them had.)  If his duties didn't change significantly in that transition, then the only cogent explanation for the transition would be that, for employment relations purposes, GDL had acquired at least part of SOS' business.

This isn't a high standard - it doesn't require a formal purchase and sale of a business.  Transfers - even informal transfers - of office equipment, inventory, leases, good will, or other parts of the business - will often meet this test.  As I pointed out in another borderline common employer case, I have very seldom seen true 'successions of convenience' where one business winds up its business, and then a second and totally unrelated one opens up a similar business in the same location, without any dealings between the two.

Indeed, the very question of 'common employers' seems likely to be the wrong one in the context.  There's no question that GDL employed Dear, nor that GDL dismissed Dear.  We're not trying to pierce the corporate veil at all here, which is what the 'common employer' doctrine is typically about.  Rather, we're trying to determine whether or not Dear's notice period from GDL should bear in mind his prior years of service with a different organization.

If GDL's and SOS' businesses were closely related enough to possibly warrant a common employer finding, it seems essentially impossible that GDL could not have been a successor employer.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Thursday, August 20, 2015

Where Can A Landlord Recover Unpaid Utilities?

Deputy Judge Winny recently decided a Small Claims Court case dealing with a residential tenancy matter, which he said highlights the "imperfect intersection" between the jurisdictions of the Small Claims Court and the Landlord Tenant Board.

The Landlord had gone to the LTB to seek arrears of rent, including several hundred dollars for unpaid utility bills.  The adjudicator orally stated that the utilities were outside the Board's jurisdiction, and declined to award such damages, instead just awarding the 'rent' component of the arrears.

The Board's formal order made no reference to utilities.

Deputy Judge Winny disagreed with the adjudicator, finding, "In my view the board had jurisdiction over the claim for unpaid utilities."  Because the Board had jurisdiction, the Small Claims Court didn't.

This is immensely frustrating for a litigant, where you have a claim, but every venue to pursue it tells you, "This isn't our department."  The legal system can sound a bit like a telecom company, passing you from department to department.  (Kind of reminds me of the Mehedi case, where Mehedi kept getting bounced between the Court of Appeal and the Superior Court for a motion to set aside a judgment.  The difference is that, notwithstanding ridiculous delays, Mehedi probably will eventually have his case heard.)

Deputy Judge Winny expressed concern that the Board hadn't referenced the utilities in its formal order, but essentially suggested that the Landlord should have appealed the order under the Act, instead of pursuing the claim at Small Claims Court.


For the most part, I agree with Deputy Judge Winny's analysis:  Utilities are within the jurisdiction of the Landlord Tenant Board, and the LTB was probably wrong to find otherwise, and the ideal avenue for the Landlord would have been to seek reconsideration or to appeal the decision.

However, I don't agree that the Deputy Judge should have embarked upon an analysis of the Board's jurisdiction in the first place.

Here's the thing:  The Board's process is quite informal.  In an ideal world, we'd see written reasons as to why the Board dismissed the claim for utilities, but ultimately, oral reasons (even without a transcript) are probably going to end up being sufficient, within the context of the Board's process.

On the facts of this case, the Deputy Judge had a formal order from the Board that did not dispose of the utility claim, but an uncontested accounting of oral reasons that the claim was dismissed for jurisdictional reasons.

If the Deputy Judge was able to regard the Board as having dismissed the claim as being outside of the Board's jurisdiction, and I would argue that the basis was there to so conclude, then this would most likely result in what we call "issue estoppel", or "res judicata".  The Board, being a body of competent jurisdiction, had decided finally and specifically the question of the Board's own jurisdiction over utility claims, in a proceeding between the same parties.  Simply, it is not open to the Small Claims Court to re-open the question, even if it disagrees with the answer the Board gave.

By treating the question as being subject to res judicata, the Deputy Judge could have proceeded to consider the merits of the claim and award damages if appropriate, without even opining about the jurisdictional question (or perhaps expressing his doubts about it in obiter), and without creating a precedent as to the Small Claims Court's jurisdiction.  A messy solution in certain conceptual ways, but it would have gotten at the justice of the case.


This blog is not intended to and does not provide legal advice to any person in respect of any particular legal issue, and does not create a solicitor-client relationship with any readers, but rather provides general legal information. If you have a legal issue or possible legal issue, contact a lawyer.

The author is a lawyer practicing in Newmarket, primarily in the areas of labour and employment law and civil litigation.  If you need legal assistance, please contact him for information on available services and billing.

Thursday, August 6, 2015

For Democracy in Canada, Harper's Era Must End

There are many issues to consider in the upcoming Federal election, but there is one singular reason that Stephen Harper's government must be defeated:  There are elements within the Conservative Party of Canada which actively engaged in widespread criminal misconduct intended to thwart the exercise of democratic rights of Canadians, and as the governing party of Canada the party has permitted, condoned, and run interference for these criminal activities.

The Harper Government:  Lots to Dislike

Full disclosure:  While I certainly don't consider myself a partisan of any stripe, I've never been particularly fond of Stephen Harper.  In his early days as leader of the Alliance Party, his far right politics, his regionalism, and his advocacy of joining the "Coalition of the Willing" in Iraq turned me off of him.  He significantly moderated his policy positions in order to secure and hold power, but there have always been a lot of things about his politics and - perhaps more significantly - his style of governance that I found unappealing.

And there are a lot of reasons to oppose the Harper government.  The repeated attempts at unconstitutional legislation; the suppression of Parliamentary discussion and debate; the attacks on independent watchdogs, whistleblowers, and judicial officeholders; the now countless-scandals...the list goes on, without even going into controversial substantive policy issues.

My Member of Parliament, sadly, is Paul Calandra, one of Harper's Parliamentary Secretaries, who in the middle of his tearful apology for inappropriate non-sequitur responses in Question Period, acknowledged that it probably wasn't the last time he'd answer questions in a way that "doesn't effectively respond".  A Globe column rightly observed that "To call Mr. Calandra a clown is to do a disservice to the ancient profession of painted-face buffoonery."  The worst part of the whole Calandra affair, I would argue, is that Calandra wasn't acting of his own initiative, and indeed his conduct isn't unusual in the Harper government:  Most of the answers given by the Harper government are delivered by appointed mouthpieces directed to espouse certain talking points, regardless of the questions actually asked.  The Harper Government would regularly fail the Turing Test.

But set all that aside.  Whether or not the Harper government, originally elected on promises of transparency and accountability, is fit to now something of a secondary question, rendered relatively unimportant by issues of corruption, such that any Canadian who cares for the integrity of our democratic process simply cannot stand for the continuation of this government.

A Criminal Governing Party

There are elements within the Conservative Party of Canada which are criminally corrupt, and the Harper government has not only failed to take any effort to root out these elements, but has taken active steps to protect them, including obfuscating criminal investigations, attempting to block civil proceedings in response to these criminal acts, and enacting legislation which effectively protects the Party and its members from criminal investigation.

No, I'm not talking about the "in and out" election financing scandal, the 2006 issue where the Conservatives pled guilty (six years later) to exceeding spending limits and submitting fraudulent election returns, explaining it away as being a 'difference in interpretation' of the rules.  Nor am I talking about the recent criminal conviction of Harper's former Parliamentary Secretary, nor about the ongoing prosecution of Mike Duffy in connection with, among other things, allegedly receiving a bribe from Harper's Chief of Staff.  (Though, at a certain point, a trend does start to emerge.)

I'm talking primarily about the so-called 'robocall' scandals, and the Harper government's response to them.

Factual Background:  What We Know

During the May 2011 election, many eligible voters received misleading automated calls purporting to be from Elections Canada, telling them that their polling location had changed - usually directing them to a distant and inconvenient (not to mention incorrect) location.  The scandal is best known in Guelph, but it was quite widespread, with Elections Canada receiving complaints from 247 of the 308 ridings, and there are judicial findings of such calls being made in no fewer than seven contested ridings across the country:  Guelph, Elmwood-Transcona, Nipissing-Timiskaming, Saskatoon-Rosetown-Biggar, Vancouver Island North, Winnipeg South Centre, and Yukon.

Criminal proceedings have occurred in connection with the Guelph events, resulting in the conviction of a junior campaign staffer alone (though it's widely believed - including by the court - that he did not act alone).  Civil proceedings were initiated in respect of the other six ridings to attempt to reverse the election results.

While there were scattered reports of such calls around the time of the election, it became a major story in February 2012, at which point the Prime Minister's response was categorical:  "The Conservative Party can say absolutely, definitively, it has no role in any of this."

The Guelph Investigation and Sona Trial

Most of the scandal has focused on what took place in Guelph.  This was where the calls were best documented, and possibly widest in scope, with over 7000 such calls being made.

Estimates are that up to 200 people showed up at the fake polling location, and media reports indicated that several had torn up their voter ID cards in anger, after Elections Canada (or so they thought) sent them so far out of their way and then didn't even show up.

In the course of Elections Canada's investigation, they determined that the calls originated with an Alberta-based automated call provider called RackNine, which was widely used by Conservative candidates pursuant to an exclusive contract preventing RackNine from working for other parties.

The RackNine account set up using a prepaid cell phone registered to "Pierre Poutine", and the calls were made at a cost of a mere $162.10.

Elections Canada's investigation moved slowly, obtaining production order after production order, for records from RackNine, records from Rogers to establish the IP address from which the RackNine account was accessed (which was from the Guelph Conservative campaign headquarters), and the trail eventually brought them to the door of the Conservative headquarters, because it was apparent that the calls were made to non-Conservative supporters, using information obtained from the CPC's CIMS database.

However, the investigation had challenges with uncooperative witnesses - people scheduling interviews and indicating a willingness to cooperate, then cancelling the appointment at the last minute, and refusing to talk with Elections Canada, including multiple Tory campaign workers from Guelph.  The Party's lawyer took three months to respond to queries from Elections Canada after the election.

Unlike many regulatory bodies, Elections Canada has no mechanism to compel witnesses to cooperate.  Likewise, its investigative mandate is seriously hampered by its inability to compel productions without court orders (unlike, for example, CRTC).

The challenge for Elections Canada was that pinning it down to which computer, or which IP address, or which cell phone, was used to handle the calls wasn't enough to obtain a criminal conviction - it needed to identify the flesh-and-blood person behind the calls in order to lay charges.  Nearly a year after the election, as the investigation closed in on the Conservatives and its CIMS database, Conservative Party lawyer Arthur Hamilton paraded a half dozen witnesses into the investigator's office to say that a junior campaign staffer, Michael Sona, had told them about the robocall plot.

Arthur Hamilton, though not actually the lawyer for these witnesses, accompanied all of them into the meetings.  That's irregular.  He coached them during the meetings, and even provided answers for them.  That is not merely irregular, but inappropriate.  Elections Canada should have objected to the manner of these meetings being carried out, but didn't - this may have a lot to do with the fact that they were reliant on the witnesses cooperating voluntarily, so the witnesses get to call the shots.

In August 2014, Michael Sona was convicted.  (He is appealing.)

There's one huge problem with the CPC throwing Sona under the bus, however:  Only five people in the Guelph office had access to CIMS, and Sona wasn't one of them.  Justice Hearn concluded that Sona was guilty, but very likely did not act alone.  Others were involved, who have still not been identified or apprehended.

We can say with confidence that at least one other person in the Guelph campaign office was involved, and while the party on the whole would have us believe that it was a small-scale conspiracy at the riding level, there's something that doesn't mesh:  Assuming that these witnesses were telling the truth at all about Sona, it was a poorly kept secret.  Yet it takes almost a year before anyone implicates Sona to the Elections Canada investigators; Conservative witnesses engaged in a pattern of non-cooperation with the investigation; one of the senior Conservatives insists on an immunity deal in order to testify; and still nobody knows who the other conspirators are?

Not to mention that the nationwide usage of similar tactics makes it inherently unlikely that the malfeasance was limited to a riding-level miscreant.

The Six Ridings:  Civil Proceedings

In McEwing v. Canada, Justice Mosley considered an application to reverse the election results in the six ridings.

He denied the application, not being satisfied on the applicable burden that the fraudulent calls actually affected the election results.  As well, there was no direct evidence to implicate the successful MPs or their agents.

However, Justice Mosley was satisfied that the fraudulent calls took place, and that the Conservative voter database was used by the perpetrators:  "there was an orchestrated effort to suppress votes during the 2011 election campaign by a person or persons with access to the CIMS database."
I am satisfied, however, that the most likely source of the information used to make the misleading calls was the CIMS database maintained and controlled by the CPC, accessed for that purpose by a person or persons currently unknown to this Court.
While no finding was made against the particular candidates or the CPC as a body, Justice Mosley was highly critical of how they carried out the litigation, saying that the Conservatives "engaged in trench warfare in an effort to prevent this case from coming to a hearing on the merits."
Despite the obvious public interest in getting to the bottom of the allegations, the CPC made little effort to assist with the investigation at the outset despite early requests. I note that counsel for the CPC was informed while the election was taking place that the calls about polling station changes were improper. While it was begrudgingly conceded during oral argument that what occurred was “absolutely outrageous”, the record indicates that the stance taken by the respondent MPs from the outset was to block these proceedings by any means.
Sounds familiar.

The Conservative Response

Perhaps there are a small number of rogues within the party.  One might reasonably infer, from how widespread the calls were, that there was some complicity or encouragement, if not active participation and coordination, from one or more persons involved in the campaign at a national level, but we don't know that for certain.  We don't know that Stephen Harper himself, or any MPs or members of the party brass, were in on the conspiracy.

Nonetheless, the party's response to the scandal warrants scathing criticism, if not an adverse inference on the innocence of the senior party members.

One would think that the tough-on-crime Conservatives would have been eager to see justice done.  The Liberals and NDP were quick to provide Elections Canada with all the information they had.  Yet, when the NDP asked the Tories to do the same in Parliament, Pierre Poilievre stood up and delivered a flippant deflection:
Mr. Speaker, the hon. member is talking about robocalls and is making robo-accusations without any evidence. I say to him: if he has any evidence, he should press 1; if not, he should press 2 to apologize. If he has the wrong number, he should hang up and try again.
Dean Del Mastro (now a convict in his own right) tried to portray the whole thing as a misunderstanding, of calls presumably made in good faith because "at least 127 polling locations were changed", or deflected that the Liberals also hired robo-diallers.  Other talking points included that they were an 'isolated incident', or observations that they didn't change the outcome of the election or that there's no proof that any individual was *actually* prevented from voting.

Consider, for a moment, the implications of those responses:  That attempts at voter suppression and electoral fraud are not particularly concerning unless they were effective, and provably so.

In other quarters, including by neutral parties such as Elections Canada officials, the robocalls were strongly condemned as "absolutely outrageous".  The thrust of the Conservative response was to the effect of 'It wasn't us', coupled with lukewarm criticisms that the conduct is "unacceptable" and an overall strategy of trying to portray the scandal as "totally overblown" (to quote the late Senator Doug Finley, a senior official in the Conservative national campaign, and husband of cabinet minister Diane Finley).

Even before the evidence was clear that the perpetrators were Conservative insiders, I considered this approach to be utterly outrageous - a tacit approval by the governing party of criminal misconduct that was clearly intended for their benefit.

Protesters and opposition parties called for a full public inquiry, and an Ipsos-Reid poll found that 75% of respondents agreed that an inquiry should be established.  No such inquiry, which would have had the power to compel witness testimony, was ever established.

Ultimately, the question of whether or not senior Conservatives were in on the conspiracy is secondary in nature.  What's critical for the future of Canadian democracy, when we come across an incident of this nature, is that we respond fully and unreservedly:  That we condemn the acts in the strongest possible terms, that we leave no stone unturned in pursuing the perpetrators and bringing them to justice, and that we provide our elections watchdog with the appropriate tools to respond to similar misconduct moving forward.

A lack of response by the governing party amounts to an invitation to its supporters to continue to engage in such actions.

So the fact that the Conservatives attempted to minimize the scandal is concerning; the fact that they did not fully cooperate with the investigation is alarming; but what is most infuriating is the so-called Fair Elections Act.

The Fair Elections Act

The Conservatives enacted election reform legislation after the last election, but without any consultation with Canada's Chief Electoral Officer.

The reforms address non-issues like vouching - notwithstanding the Conservatives' alarmist rhetoric about vouching facilitating electoral fraud, there's actually no reason that such fraud is actually occurring on any scale.  Conversely, vouching facilitates over a hundred thousand legitimate ballots in each election.  And, in what may come as a surprise to many Canadians at the ballot box, voter information cards are no longer acceptable as ID.

So a lot of legitimate voters are likely to be turned away.  And with Elections Canada now being prohibited from trying to encourage people to vote (which seems like a strange limitation), it appears that the Tories now regards voter turnout as a partisan issue, and seem to take the view that a lower general voter turnout will be to their advantage.  And they're probably right, when it comes down to it.  But I daresay that most citizens in most democracies intuitively think that a lower voter turnout is bad, the sign of a weaker democracy, and that increasing voter turnout is intrinsically good for democracy, and that efforts to make it harder to vote are inherently undemocratic.

In terms of Elections Canada's investigative powers, and the obligations of parties to maintain records, where the robocall investigation revealed serious shortcomings, the changes were marginal and unhelpful, failing altogether to expand Elections Canada's investigative functions and powers, failing to impose obligations on parties to maintain records of calls made to voters.

Instead, the reforms strip the independent Chief Electoral Officer of his investigative mandate, moving the investigative arm of Elections Canada to the purview of the Director of Public Prosecutions, and completely severing the CEO's relationship to the role.

Investigations are carried out by the Commissioner of Canada Elections, and historically this was done on the direction of the Chief Electoral Officer - basically, the Commissioner was appointed by and reported to the CEO.  Over the course of the last several years, this has brought the CPC into conflict with CEO Marc Mayrand on several occasions - such as the "in and out" scandal (including an RCMP raid on Tory headquarters in 2008), the charges against Dean Del Mastro, etc.)

The CEO's appointment was a life term, until age 65, unless removed for cause following a majority vote of both the House of Commons and Senate.  (The Fair Elections Act changed that, too, limiting the CEO to a single term of 10 years.)

Now, the Commissioner's role is expanded, to be essentially self-directing, with the Commissioner being appointed for a 7 year term by the Director of Public Prosecutions (subject to removal for cause by the DPP), with an express prohibition on any consultation with the CEO prior to the appointment.  For reference, the DPP is appointed by the Minister of Justice for a seven year term, and can be removed for cause by majority vote of the House of Commons.

A Breakdown
  • Voter suppression calls were made to non-Conservative supporters, using the CIMS database, in no fewer than 7 (and possibly many more) ridings;
  • Multiple Conservative staffers knew the particulars of some of these calls, but the party closely controlled the flow of information to Elections Canada;
  • The CPC actively attempted to prevent the civil litigation from coming to a hearing on the merits, and failed to assist the criminal investigation from an early stage;
  • Multiple Conservative partisans declined to cooperate with Elections Canada's investigation;
  • Eventually, the Conservatives served up a junior staffer on a silver platter, but this staffer did not act alone, and likely was connected to only one of the multiple ridings in which the calls were made;
  • On the whole, the Conservatives made every effort to minimize the fraud, and offered nothing more than lukewarm criticisms of the criminal misconduct;
  • Elections Canada ran into multiple walls in the course of its investigation, many of which were put up by the CPC in the first place, and the government has failed and refused to empower Elections Canada to overcome such obstructions; and
  • The Government, displeased with the Chief Electoral Officer's criticisms of the Conservative non-cooperation in the investigation, severed his relationship to the investigative branch of Elections Canada.
Some would argue that the Government's conduct reeks of guilt, that their tactics and conduct show that they have something to hide.

That may or may not be the case, but even if the Government itself is innocent of wrongdoing, the undeniable reality is that their response to the robocalls is one of, at minimum, tacit condonation.  Minimizing the scandal and stonewalling the investigation sends a clear message to the perpetrators:  We've got your back.

For any Canadian now, failing to oppose the current Conservative government would mean accepting both the criminally corrupt elements within the party and the party's overt non-chalance about those criminal elements, and I fail to see how any other political issue can take voting precedence over one that goes to the very heart of our democracy itself.

I haven't yet decided which way I'm voting.  But I know that I'm not voting Conservative.

And in case any of you are tempted to not vote, or to decline or spoil your ballot out of a dislike for all the options (though that would seem to be exactly what the Tories want you to do), here's some further reading.