Côté v. Smith, docket T-587-98

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docket T-587-98

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Date: 19980407

Docket: T-587-98

MONTRÉAL, QUEBEC, THIS 7th DAY OF APRIL 1998

Present: RICHARD MORNEAU, PROTHONOTARY

Between:

MICHEL CÔTÉ,

Applicant,

and

RON SMITH, PHILIP YANKEY, DONALD MISICK, PIERRE BENOIT, RAPHAËL NELSON, ROBERT TREMBLAY, ANDRÉ DESMEULES, DALE BAKER, GUY AUGER, BRUCE CULLIMORE, FRANK SAMPSON, JERRY ROBERTS, CARL BENNETT, GORDON OUTHOUSE, ROSE ALTON, JAMES COHOON, JEAN LEMAY, POLITAKIS APOSTOLOS, MARGARET CREIGHTON, JEAN-EUDES FRASER, ANTHONY KUSSEY, COLEEN MAKINSON, MAREK PRZYBYLA, WYBOUW GARFIELD, SHAHID RAZA, PIERRE LETENDRE, ROGER PERRON, GILBERT LALIBERTÉ, KOPEC KRZYSZOF, RAYNALD TANGUAY, ARMAND LACHANCE, BERTRAND LÉVESQUE, ELVIN M. MALLETT, GABRIEL LAVOIE, PETER TULL, SANDRA PARENT, ROGER PROULX, ARNETT SPENCE, STEPHEN LEWIS, SERGE BEAUDRY, JEAN-CLAUDE TREMBLAY, ANDRÉ BROUILLET, JACQUES DESROCHERS, ANDRÉ VÉZINA, MARTIN BRIAND, MICHEL REBMANN, FRANÇOIS LACOURSIÈRE, VALLIER CROUSSET, SAMUEL DURANT, RÉJEAN CASTONGUAY, PAUL-ANDRÉ MARCHAND, SERGE GERVAIS, ROGER GAGNON, JACQUES MÉNARD, HECTOR BOUDREAU, LÉONIDE MICHAUD, ANDRUSYSZYN LESZEK, DEALMEIDA LUIS, KOALCZYK ARKADIUSK, RÉJEAN DÉLISLE, TÉO USQUIZA, MOHAMMED CEDRIC, NARCISSE LÉVESQUE, MICHEL DIONNE, J. RICHARD TACKABERRY, MAURICE SCOTT, DENNIS MURPHY, MATHIEU DUFOUR, SUZANNE BOUTOT, LYSE TURGEON, GILLES MALENFANT, SYLVIE SAUVÉ, THÉO DE CHAMPLAIN, DENIS SAUCIER, IAN SIMPSON, ANDRÉ SIROIS, JAMES VAN OVERBEEK, DOUGLAS WHITE, DONALD MACKENZIE, JEAN-CLAUDE CORMIER, ROSS MILLER, DENIS LEMIEUX, JOHANNE SÉGUIN, MARIELLE LANGELIER, MICHEL POIRIER, PAUL ROBINETTE, MARCELLIN CHAMPAGNE, CHARLES OMER PICARD, CLAUDE SERGERIE, JEAN-YVES DUCHAINE, CLÉMENT LAVOIE, JEAN-GUY MARTINEAU, EARL J. HAYNES, ÉTIENNE MARCHAND, VINCENT FOSSL, ALOYSIUS MCGRATH, GUY LÉPINE, MARCEL GAGNON, ANTHONY GAMES, DECLOU M. CEPHAS, MARTIN RANGER, RÉJEAN LAVOIE, JEAN BÉLANGER, ROBIN RIGGIN, JACQUES FRADETTE, NORMAND ALBERT, DENIS GAGNON, RANDALL PIKE, MARCEL CHANDONNET, RONALD ROSE, FRANK DIXON, ARTHUR AKRILL, HUBERT GRIFFITH, ANDREZ MAZUR, GÉRARD PARSLOW, JOHN WOOD, CLYDE PELLEY, GAÉTAN LALONDE, GAÉTAN DESCHENES, ANDRÉ POULIN, JOCELYN PARENT, WILFRID OSBORNE, MARIO HÉBERT, J.G. SAINT-MARTIN, CLAUDE ROCHETTE, NORMAND LEMAY, MICHEL ANDRÉ, J-CLAUDE COURNOYER, PATRICK BACCHUS, ELPHÈGE CHAMPOUX, RICHARD DUFOUR, BERTRAND GAGNÉ, ESROM KEEPING, JAMES KRECICHWOST, ROBIN MCKENNA, GUSTAVE MICHAUD, LOUIS PÉRUSSE, ALLAN STROWBRIDGE, RICHARD TITUS AND HEBERT WILLIAMS,

Respondents,

AND

THE ATTORNEY GENERAL OF CANADA,

Intervenor.

ORDER

This application for an order for an interim stay is dismissed.

Richard Morneau

Prothonotary

Traduction certifiée conforme

Bernard Olivier, LL.B.

Date: 19980407

Docket: T-587-98

Between:

MICHEL CÔTÉ,

Applicant,

and

Respondents,

AND

THE ATTORNEY GENERAL OF CANADA,

Intervenor.

REASONS FOR ORDER

RICHARD MORNEAU, PROTHONOTARY

[1] This is an application by the applicant under section 18.2 of the Federal Court Act, R.S.C. 1985, c. F-7, asking the Court for an interim stay of the effect of a payment order (the payment order) served on the applicant on March 24, 1998, under section 251.1 of the Canada Labour Code, R.S.C. 1985, c. L-2, as amended (the Code).

Background

[2] The relevant provisions of the Code read as follows:

251.1 (1) Where an inspector finds that an employer has not paid an employee wages or other amounts to which the employee is entitled under this Part, the inspector may issue a written payment order to the employer, or, subject to section 251.18, to a director of a corporation referred to in that section, ordering the employer or director to pay the amount in question, and the inspector shall send a copy of any such payment order to the employee at the employee's latest known address.

...

251.11 (1) A person who is affected by a payment order or a notice of unfounded complaint may appeal the inspector's decision to the Minister, in writing, within fifteen days after service of the order, the copy of the order, or the notice.

(2) An employer or a director of a corporation may not appeal from a payment order unless the employer or director pays to the Minister the amount indicated in the payment order, subject to, in the case of a director, the maximum amount of the director's liability under section 251.18.

...

251.15 (1) Any person who is affected by a payment order issued under subsection 251.1(1) or a referee's order made under subsection 251.12(4), or the Minister on the request of any such person, may, after fifteen days after the day on which the order is made, or after the day provided in the order for compliance, whichever is the later, file in the Federal Court

(a) a copy of the payment order; or

(b) a copy of the referee's order, exclusive of the reasons therefor.

(2) After the expiration of the fifteen day period specified in an order to a debtor of the employer made under subsection 251.13(1), the regional director may file a copy of the order in the Federal Court.

(3) On the filing of a copy of an order in the Federal Court under subsection (1) or (2), the order shall be registered in the Court and, when registered, has the same force and effect, and all proceedings may be taken thereon, as if the order were a judgment obtained in that Court.

...

251.18 Directors of a corporation are jointly and severally liable for wages and other amounts to which an employee is entitled under this Part, to a maximum amount equivalent to six months' wages, to the extent that

(a) the entitlement arose during the particular director's incumbency; and

(b) recovery of the amount from the corporation is impossible or unlikely.

[3] The applicant was served with the payment order, in the amount of $704,853, as a director of the company Socanav Inc. That corporation operated a shipping business. It is deemed to have become bankrupt on September 20, 1996.

[4] The 144 respondents herein are all former employees of Socanav Inc. to whom moneys are owing as unpaid vacation pay, wages in lieu of notice and severance pay.

[5] It must be concluded from the evidence filed by the intervenor that a similar payment order was made in respect of the other three directors of Socanav Inc. Those payment orders, along with the order served on the applicant, were made because the inspector acting under the Code concluded that the present bankruptcy of Socanav Inc. made recovery of the various amounts owing to the respondents impossible or unlikely.

[6] In his application for judicial review, the applicant has challenged the constitutionality of sections 251.1, 251.11 and 251.15 of the Code on the ground that they are contrary to sections 7, 8 and 15 of the Charter. He also contends that section 251.18 of the Code is unconstitutional under section 91 of the Constitution Act, 1867 since section 251.18 is allegedly not a valid exercise of Parliament's jurisdiction in respect of labour law. Lastly, he vigorously challenges the payment order as being the result of an excess of jurisdiction, since that order is allegely manifestly unreasonable on its face, having been made by the inspector without a hearing first being held and therefore in violation of the principles of natural justice, and since it allegedly relates to moneys that are not owing by reason of collective agreements in place.

[7] With respect, more specifically, to his application under section 18.1 of the Federal Court Act, the applicant alleges in his affidavit that it is impossible for him to pay the amount set out in the payment order. He states that he does not have that amount of money and that liquidating his assets would not go far toward producing that amount.

[8] Since it is impossible for him to pay the amount sought in the payment order, he is asking this Court to stay the effects of that order on an interim basis, so that his right of appeal under subsection 251.11(1) is not defeated on April 8, 1998, and no execution proceedings under subsection 251.15(3) could be taken. In a nutshell, this is the irreparable harm that would be suffered by the applicant if a stay were not ordered.

Analysis

[9] It is common ground that the remedies sought in the instant application are subject to the analysis stated by the Supreme Court as follows in RJR MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, 334:

Metropolitan Stores adopted a three-stage test for courts to apply when considering an application for either a stay or an interlocutory injunction. First, a preliminary assessment must be made of the merits of the case to ensure that there is a serious question to be tried. Secondly, it must be determined whether the applicant would suffer irreparable harm if the application were refused. Finally, an assessment must be made as to which of the parties would suffer greater harm from the granting or refusal of the remedy pending a decision on the merits.

[10] With respect to whether there is a serious question to be tried, I am not prepared, even at the stage of an interim examination, to acknowledge that the issuance of a payment order could trigger the application of section 7, 8 or 15 of the Charter for the applicant's benefit. However, I am prepared to admit, on a preliminary basis, that the excesses of jurisdiction imputed to the inspector who made the payment order could raise a serious aspect to be argued.

[11] With respect to the irreparable harm that the applicant might suffer if the stay he is seeking were not granted, I do not believe, in relation to the loss of the right of appeal, that the applicant would suffer irreparable harm, because of the situation he is seeking in his application for judicial review and the lack of information concerning his future financial situation.

[12] In his application for judicial review, the applicant is seeking, inter alia, declarations that the sections that allow for payment orders to be made are void and inoperative. In the event that he is correct on the merits, the entire system of payment orders would fall. In this situation, the interim preservation of his right to appeal the payment order would be pointless, since there would no longer be an order to appeal.

[13] If, on the other hand, the applicant is wrong on the merits with respect to the declarations sought, there is nothing in the evidence submitted by him to indicate to us that he would then have any greater financial resources for the purpose of appealing under subsection 251.11(2) of the Code.

[14] With respect to the irreparable harm resulting from execution proceedings being taken, it cannot be assumed from the outset that the payment order will be filed under subsection 251.15(1) of the Code, or that even if it is filed there will be execution proceedings against the applicant. Since he says he has nowhere near the amount sought, the possibility that one of the respondents or the Minister of Labour will attempt instead to execute against one of the other directors cannot be ruled out. As well, the possibility that the applicant's insurers will be persuaded to change their minds in the short term and agree to cover the applicant with respect to his director's liability cannot be ruled out.

[15] In addition, although each director is jointly and severally liable for the entire debt under section 251.18 of the Code, the applicant has not satisfied me that we should rule out the possibility that the directors could get together to assemble the amount claimed, which in my view would avoid execution proceedings being taken.

[16] In the event that such proceedings are nonetheless taken against the applicant, it appears that he could file a notice of intent to make a proposition under the Bankruptcy Act, R.S.C. 1985, c. B-3 (the Act). Once that notice was filed, it would prevent any execution proceedings being taken. The notice could remain in effect for a sufficiently long period - up to six months. Additional time may even be sought on application to the Superior Court. During that period, the applicant would not be bankrupt. He would not be tarred with the irreparable epithet of "bankrupt". That grace period under the Act would also reasonably certainly allow the applicant to apply to this Court to hear his application for judicial review on the merits.

[17] Counsel for the applicant argued vigorously against the possibility of his client proceeding under the Act in respect of a sum of money that he says is definitely not owing by the applicant. In his view, filing a notice of intention would bring his client negative publicity and accordingly cause him irreparable harm.

[18] I cannot share this view. Although proceeding under the Act could possibly attract some attention, I cannot convince myself, having regard to all of the circumstances, that such a procedure would result in the applicant suffering irreparable harm.

[19] Accordingly, I cannot consider that refusal to grant the applicant the stay sought would cause him irreparable harm.

[20] In the event that I am wrong in not finding that the applicant would suffer irreparable harm by proceeding under the Act to gain time to have his application for judicial review heard, I would then be of the opinion that the interest of the 144 respondents in having the recovery mechanism in the Code upheld, that interest being in the nature of the public interest here, would suffer irreparable harm if this were not the case. In my view, the balance of convenience tilts in favour of the respondents. Although most of the respondents will shortly be attempting to exercise maritime liens in order to recover their claims, it cannot be assumed that those liens will be successful. In addition, those liens will be executed against the proceeds of sale of ships, that is, in a context very different from the Code, which deals with the personal liability of the directors.

[21] Accordingly, for these reasons, this application for an interim stay will be dismissed.

Richard Morneau

Prothonotary

MONTRÉAL, QUEBEC

April 7, 1998

Traduction certifiée conforme

Bernard Olivier, LL.B.

Federal Court of Canada

Court File No. T-586-98

between

MICHEL CÔTÉ,

Applicant,

" and "

RON SMITH ET AL.,

Respondents,

" and "

ATTORNEY GENERAL OF CANADA,

Intervenor

REASONS FOR ORDER

FEDERAL COURT OF CANADA

NAMES OF COUNSEL AND SOLICITORS OF RECORD

COURT FILE NO: T-587-98

STYLE OF CAUSE: MICHEL CÔTÉ,

Applicant,

AND

RON SMITH ET AL.,

Respondents,

AND

ATTORNEY GENERAL OF

CANADA,

Intervenor.

PLACE OF HEARING: Montréal, Quebec

DATE OF HEARING: April 6, 1998

REASONS FOR ORDER OF RICHARD MORNEAU, PROTHONOTARY

DATE OF REASONS FOR ORDER: April 7, 1998

APPEARANCES:

Laurent Fortier and Mireille Tabib for the applicant

Raymond Piché for the intervenor

Bernard Gravel for the respondent Mario Hébert

Paul-É. Dion for the respondent Ron Smith

Gary H. Waxman for the respondent Wybouw Garfield

SOLICITORS OF RECORD:

Laurent Fortier and Mireille Tabib for the applicant

Stikeman, Elliott

Montréal, Quebec

George Thomson for the intervenor

Deputy Attorney General of Canada

Bernard Gravel for the respondent Mario Hébert

De Grandpré, Chaurette, Lévesque

Montréal, Quebec

Paul-É. Dion for the respondent Ron Smith

Montréal, Quebec

Gary H. Waxman for the respondent Wybouw Garfield

Montréal, Quebec

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Côté v. Smith, docket T-587-98

Citationsdocket T-587-98

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docket T-587-98