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HomeMy WebLinkAbout1985-0773.Cahoon.88-07-28ONTARIO EMPLoVfsDELACOURONNE CROWN EMP‘O"EES DE “ONTARlO GRIEVANCE CQMMISSION DE zEiiiMENT REGLEMENT DES GRIEFS Between: Before: For the Grievor: IN THE MATTER OF AN ARBITRATION sunder THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT Before THE GRIEVANCE SETTLEMENT BOARD OPSEU (B. Cahoon) For the Employer: Hcarin~,: and The Crown in Right of Ontario (Ontario Development Corporation) R.L. Verity, Q.C. Vice Chairman J. McManus Member W.A. Lobraico Member C. Paliare Counsel Gowling & Henderson Barristers & Solicitors J. Zarudny COUIlSel Crown Law Office, Civil Xinistry of ehe Atrcrney Genera! parch 26, 1988 773/a:, 455186 Grievor Employer -2 - . SUPPLSMENTARY DECISION In this matter, Barry Cahoon alleged that he had been suspended without pay and subsequently.discharged (some 16 months later) without just cause. On November 4, 1987, following an eleven day hearing, the Board issued a majority Decision (W. A. Lobraico dissenting). On the evidence adduced, the Board found that although the grievor had been properly suspended without pay on February 7, 1985 under s. 22(l) of the Public Service Act pending an investigation, the suspension could not be justified beyond June 1, 1985. Further, on the evidence, the Board found that the Employer had failed to establish just catise for Cahoon's dismissal on June 20, 1986. The Board granted the Union's motion for non-suit on the basis that there was no cogent evidence to explain the reasons for the grievor's dismissal in June of 1986. In addition and in the alternative, the majority held.that the inordinate procedural delays in the imposition of final discipline invalidated the dismissal. The factual circumstances giving rise to the grievance were set out in the Board's decision of November 4 and are summarily referred to here to clarify the outstanding issues: namely, the entitlement to and the quantum of compensation. -3 - The grievor, Barry Cahoon, was at all material times a Consultant with the Ontario Development Corporation. His position involved the assessment and approval of private sector business loan applications according to established criteria. On November 21, 1984, the grievor was arrested by F.B.I. agents in Cheektowaga, New York and found to be in wrongful possession of a false package of tetanus and botulism bacteria cultures. The grievor and his co-accused were charged with the offence of fraud by wire and conspiracy to commit fraud by wire. Subsequently, in November 1985, the grievor was charged with fraud over $200.00 contrary to s. 338(l) of the Canadian Criminal Code. The second charge related to an allegea fraud against the grievor's own employer, the Ontario Development Corporation. The dismissal letter specified both incidents of alleged misconduct but made no reference to either pending charge. Following the dismissal, the grievor pleaded guilty to both outstanding criminal charges. On September 15, 1986, the grievor pleaded guilty to fraud by wire in Buffalo, New York. Subsequently on December 3, 1986 in Hamilton, Ontario, the grievor pleaded guilty to defrauding the Ontario Development Corporation of $15,000.00. For whatever the reason, the Employer did not rely upon either guilty plea to justify the dismissal. In fact, at no time tiid the Employer bring a motion to expand the grounds for dismissal on the basis of the two subsequent guilty pleas. The Board.'s decisi the grievor would not be rei following rationale: -4 - on on November 4, 1987 made it clear that nstated. At p. 26 the,Board gave the In the absence of just cause for dismissal, the usual remedy is reinstatement with full compensation for all lost wages and benefits. Having regard to the Grievor's two subsequent criminal convictions, reinstatement would be a totally inappropriate remedy. A loans officer employed by O.D.C. is in a position of trust by virtue of his position in the administration of public funds. As subsequent events have established, the Grievor has committed two serious criminal offences against the interests of his employer. The Grievor’s conduct is simply incompatible with the fiduciary responsibility expected of the po3ition of a loans officer. Accordingly, he will not be reinstated. Boards of Arbitration are understandably reluctant to deny reinstatement in circumstances where just cause has not been established. In fact, reinstatement is denied only in unusual circumstances. However, in our opinion, these two separate incidents of major misconduct by the grievor have .persuaded us that there was simply no possibility of any viable continuing employment relationship. See generally, Re Lily Cups Ltd. and Printing Specialities and Paper Products Union, Local 466 (1981), 3 L.A.C. (3d) 6 (Brown); Re Extcndicare Ltd. (St. Catharines) and Ontario Nurses' Assoc. (1981), 3 L.A.C. (3d) 243 (Adams); and Re Corporation of the City of Toronto and Canadian Union of Public Employees, Local 79 -5 - '(1985), 18 L.A.C. (3d) 187 (Christie). However, in light of the Board's findings, the more difficult issues are the grievor's entitlement to damages and the quantum of those damages. The Board Decision of November 4, 1987 retained jurisdiction on those issues and requested further submissions. Able submissions were presented by the Parties on March 26, 1988 together with numerous legal and arbitral precedents. Briefly, the Employer submitted two main arguments: 1) By electing td call no evidence in the non-suit motion, the grievor had effectively disentitled himself to any damages. Simply put, the disentitlementwas alleged to arise because the grievor gave no evidence with regard to damages and mitigation. In support, the Employer relied upon Re Motor Transport Industrial Relations Bureau of Ontario and General Truck Drivers‘ Union (1973), 4 L.A.C. (2d) 154 (Brown). 2) In the alternative, the Board should decline to exercise its discretion in award,ing any form of compensation to the grievor. - 6 - The Union contended that the non-suit motion did not have an effect on the grievor's entitlement to compensation. Further, Mr. Paliare argued that the Union made no request for equitable relief. He contended that the grievor was entitled to full compensation on the finding of the period of improper suspension and no just cause for discharge. In sum, the Union sought compensation from June 1, 1985 to the date of the Supplementary Award, nine months additional damages in lieu of reinstatement Under s. 19 and interest. 1) of the Crown Employees Collective Bargaining Act the Parties have been given the right to submit "any differences" to arbitration. The Grievance Settlement Board has the statutory landate to "decide the matter" in a decision that is "final and binding". Clearly, s. 19(l) confers upon the Grievance Settlement Board broad remedial authority, including the authority to award damages; See, for example, Re The Queen in Rightof Ontario and 3ntario Public Service Employees Union, et all. (1987), 57 O.R. (2d) 641. S. 19(l) of the Crown Employees Collective Bargaining Act reads: Every collective agreement shall be deemed to provide that in the event the parties are unable to effect a settlement of any differences between them arising from the interpretation, application, administration or alleged contravention of the agreement, including any question as to whether or not a matter is arbitrable, such matter may be referred for arbitration to the Grievance - - 7 - Settlement Board and the Board after giving full opportunity to the parties to present their evidence and to make their submissions, shall decide the matter and its decision is final and binding upon the parties and the employees covered by the agreement. The Board does not accept the Employer's submission, based on the Motor Transport case (supra), that the Grievor's failure to call evidence effectively disentitled him to damages. The election to call no evidence was a calculated response by the Union that there was simply no case to meet. By granting the motion for non-suit, the Board accepted with the Union's position and concluded that the Employer had indeed failed to discharge the onus of establishing just cause for the dismissal on June 20, 1986. The Board would agree with the rationale of Arbitrator Arthurs in Re Metropolitan Toronto Board of Commissioners of Police and Metropolitan Toronto Police Association (1977)) 14 L.A.C. (2d) 1 at p. 12 where the learned Arbitrator makes' the following comments: . ..Moreover. if Mr. Brown in the Motor Transport Casey is suggesting that an employee can only claim the benefit of a "non-suit" device by abandoning his claim to compensation, I cannot follow his conclusion... The grievor's damages are readi1.y discernable and require no special proof. It is simply a case of lost wages and benefits which can be properly addressed in final submissions. In addition, the Supreme Court of Canada Judgment of Chief Justice Laskin in Red Deer College v. Michaels et al. (1975), 57 D.L.R. (3d) 386 stands for the -a- proposition that the onus in failure to mitigate damages rests with the Employer. During the final submissions at the hearing, the Union sought reinstatement with full remedial relief. In the alternative, Mr. Paliare argued that the grievor was entitled to full compensation with interest to the date of the decision. The alternate agreement was expanded upon at the supplementary hearing. The purpose of a damages award is to compensate in monetary terms for loss suffered because. of a breach of the collective agreement. The authority to award damages is remedial in nature and ,ioes not involve any punitive component. The Board is satisfied that a damages award is an appropriate remedy in these particular circumstances. An aw.ard in favour of the grievor is based on lost wages and benefits as a result of breach of the employment contract. From the standpoint of labour relations, damages should flow for the period of the improper suspension, the dismissal without just cause and the Board's decision not to reinstate the grievor. We would agree with the Union contention that it makes no claim to equitable relief. Rather, the issue before us is the proper exercise of the Board's remedial authority. The primary effect of the post-discharge evidence of two guilty pleas was to disentitle the grievor to reinstatement - the normal remedy in the absence of just cause for dismissal. -9 - Following the Cheektowaga arrest in November of 1984, the Employer was justified in suspending the grievor without pay, for a reasonable period of time, pending an investigation. However, there was no justification for the continuance of that suspension beyond June 1, 1985. By that date, a final disciplinary decision should have been made, or alternatively, the grievor should have been reinstated to full employment. Accordingly, we find that the grievor is entitled to damages as of June 1, 1985. The Board's rationale at p. 24 of the Decision merits repetition: Similarly, on the evidence presented, the Employer should have been fn a position on the Plumtree Fur matter to take some form of final disciplinary action in November of 1985 when charges were laid against the Grievor and when the Employer had full knowledge of the particulars of the Crown's case. As the evidence reveals, the Grievor was suspended pending investigation in December of 1985 and no final disciplinary action was taken on the matter until some six months later. However, in the particular circumstances of this case, the Board is not persuaded that the grievor is entitled to damages to the date of the Decision or the date of the Supplementary Decision. We cannot agree that the grievor should receive general damages following his second guilty plea on December 3, 1986 - the date he. pleaded guilty to defrauding the Ontario Development Corporation. To award general damages after the second conviction, we think, would be unconscionable. - 10 - The evidence established that the grievor had been employed with O.D.C. since 1981. His salary at all relevant times was in the $SO,OOO.OO range. We find that the grievor is entitled to additional damages in lieu of reinstatement. In our opinion, nine months salary by way of additional damages is an appropriate award. In Re The Queen and OPSEU (supra), the Ontario Divisional Court held that the Board's authority to award interest against the Crown is found in s. 19(l) of the Crown Employees Collective Bargaining Act by necessary implication. At p. 648 the Court made reference to Professor Waddams, The Law of Damages (19831, at pp. 469/70: One who fails to pay promptly money justly due to another does the other a wrong. This wrong consists of delay in payment of what is owed,'and is entirely separate from the question of whether the sum was owed in the first place. .*... Interest consists of two elements: Compensation for the loss of use of money and compensation for decline in its value. Consequently, in terms of rapid inflation interest rates tend to be high. The loss to the plaintiff who has been deprived of his money and the enrichment of the defendant who has retained it pending the resolution of the dispute, are correspondingly increased. With interest rates of 20% and litigation lasting for four years, the loss to the plaintiff caused by the delay will actually exceed the principal amount in issue. It is not surprising, therefore, that in recent times (when interest rates and delays in litigation have exceeded the figures mentioned), there has been a strong tendancy towards permitting the recovery of interest. - 11 - At p. 649 Mr. Justice Craig's Judgment reads as follows: The Crown is one of the "parties" referred,to s. 19(l). Neither the agreement nor the Act authorize an award of interest in express terms, but the Board was authorised to make a "final and binding" decision as to "any differences" between "the parties". The Board did exercise its discretion to substitute reinstatement with compensation for lost wages; after deductions for income received from other employment, this loss extended back over several years. For reasons stated earlier, failure to award interest in 1985 on wages lost in earlier years means, in effect, that~the grievor's would receive only part of the value of the loss from which compensation was ordered. In my opinion that would amount to a failure of justice; and such a result would not have been intended by the Legislature. Interest was one of the "differences" that arose between the Crown and the grievors during the arbitration. It would be almost impossible for. the Legislature to enumerate all the-possible differences that might arise in an arbitration or the possible decisions available to the Board. The Legislature has said that the Board's decision is "final and binding": in my opinion authority to award interest against the Crown is found in s. 19(1).by necessary implication. Accordingly, we award interest on the damages awarded under the Hallowel House test. In summary, therefore, the Board makes the following decision: 1) The grievor shall be forthwith compensated in damages for all lost wages and benefits from June 1, 1985 to and including December 3, 1986. - 12 - 2) The .grievor shall receive nine months salary .by way of additional damages in lieu of reinstatement. 3) Interest shall be awarded in accordance with the formula developed by the Ontario Labour Relations Board in Hallowel House Ltd. and Service Employees International Union, Local 183 (1980), OLRB Rep. Jan 35. The Board shall retain jurisdiction in the event that the parties experience any difficulty in the implementation of this decision. DATED at Brantford, Ontario,'this 28th day of truly, 1988. R';L. Verity, Q.C. - Vice-Chairman I dissent. (Dissent attached.) W.A. Lobraico - Member ADDENDUM I have read the chairman’s decision in the award dated May 18, 1988, and have partially concurred. The areas of the award that I find myself in agreement with are as folloirs: (a) That interest be awarded in accordance wirh O.L.R.B. formula. (b) That nine months salary be in lieu of reinstatement. (c) Compensation for lost wages and benefits from the date of June 1, 1985 The place where I part company from the chairman’s award is the date of the end of the compensation, December 3, 1986. On review of the facts, iC is quite clear that the employer at no time at ali relied on the guilty plea of the grievor co justify the dismissal, nor as stated in the eward at Page chree(3,: “I” Eat: at EC rime did :he e~~ic,‘:+r bril;g a aocior :o expand ihe grounds for dismissal CP tile basis of :‘ze z2.2 cont....... subsequent guilty pleas. It would then appear in light of the fact, that at the particular time there was no just cause for dismissal, and the employer had not acted in I a proper manner, chat the grievor should be compensated up to the release of the final award, and I Gould have so ordered. Board member Cohn D. MC Manus DISSENT Re: :33/85, 455166 OPSEU (Barry Cehoo?) and the Crown in the Right of Ontario (Ontario Development Corp.) This has been a long and protracted case involving very serious charges which were dealt with in Criminal Court here and in the U.&A. Our Vice Chairman had a very difficult task writing the two pronged award and has, I know, tried to deal with the issues according to current labour law. The initial award accepted Union counsel’s motion for non-suit but the Board ruled there would be no reinstatement and reconvened to hear argument as to whether damages should be awarded. I had agreed with the initial decision not to re-instate. However damages, in my opinion, would not be correct, as I believe the Employer had just cause. This question of damages was. considered at great length by the Board in its deliberations. The grievor was charged with wire fraud and con@racy in November, 1984 and subsequentIy pleaded guilty in September, 1986. A lot of pubkity resulted from the ease, both in Canada and the U.S.A., and his employer Was naturally vary concerned. During the course of the investigation it became evident that the grievor had been less than truthful regarding his actions and conduct relating to his employment. He was suspended with pay in January, 1985, and this was amended in February, 1985 when pay was withheld. At almost the same time the grievor was engaged in a scheme which was designed to fraudulently obtain a S~5,OOO loan from the O.D.C. ‘The scheme ultimately came to the employer’s attention in August ] 985, and the suspension was continued. The grievor pieaded guilty to fraud in December, 1986. . It ‘~8s cvidcnt to al! concerned that the grievor was not the kind of employee who S~:ou!d 2c suitable in the G.D.C. or elsewhere in a position of trust.!nvolving money. I\‘hile it ma!’ >c argued that the employer delayed the action of dismissal, in the circumstances they :vou:d have been justified in waiting until both court cases were concluded. .Any technical irregularities were, in my opinion, over shadowed by the serious nature .of the crimes. So, by his own actions, the grievor was suspended and dismissed and did not at an:r time attempt any expIanation. Perhaps this is not strange as there does not seem to be eni logical explanation and, in fact, the grievor and his Counsel waived his rights IJde? i !e Grievance Procedure when the dismissal was done in June, 1986. As a consequence of all these, we should not be considering damages of any kind, even if fuU restitution has been made. .4U of which is respectfully submitted. W.A. Lobraico - member