IN THE SUPREME COURT OF BRITISH COLUMBIA

Transcription

1 IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Pioneer Distributors Ltd. v. Orr, 2015 BCSC 461 Re: Sections 2, 3 and 7 of the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 and the following decisions of the Employment Standards Tribunal: Decision D095/12 issued on September 19, 2012 Decision BCEST RD012/13 issued on January 25, 2013 Decision BCEST D093/13 issued on November 20, 2013 Decision BCEST RD003/14 issued on January 20, 2014 Date: Docket: S Registry: Vancouver Between: And Pioneer Distributors Ltd. Sean Orr, The Employment Standards Tribunal and The Director of Employment Standards Petitioner Respondents Before: The Honourable Madam Justice Hyslop On judicial review from: The Employment Standards Tribunal, dated September 19, 2012 [Decision BC EST #D095/12], January 25, 2013 [Decision BC EST #RD012/13], November 20, 2013 [Decision BC EST #D093/13 and January 20, 2014 [Decision BC EST #RD003/14] Reasons for Judgment Counsel for the Petitioner: Counsel for the Respondent, Sean Orr: G. Allison A. Mitchell R.J.M. Androsoff

2 Pioneer Distributors Ltd. v. Orr Page 2 Counsel for the Employment Standards Tribunal: Counsel for the Director of Employment Standards J. O Rourke M. Alman Place and Date of Hearing: Place and Date of Judgment: INTRODUCTION Vancouver, B.C. October 30 & 31, 2014 Vancouver, B.C. March 26, 2015 [1] This is a judicial review. Pioneer Distributors Ltd. ( Pioneer ) seeks judicial review of four decisions of the Employment Standards Tribunal (the Tribunal ), two appeal decisions, and two reconsideration decisions. Pioneer asks that each decision be quashed and the delegates determination be restored. [2] The decisions under review are as follows. I will identify each decision with its number, the date, the issuance of the decision, the author, and a very brief summary as to the nature of the appeal. Decision #: Issued: Tribunal Member: Summary: BC EST #D095/12 BC EST #RD012/13 (Reconsideration of BC EST #D095/12) BC EST #D093/13 September 19, 2012 January 25, 2013 November 20, 2013 Robert E. Groves Kenneth Wm. Thornicroft Robert E. Groves Varying Delegate Barker s decision and holding that Mr. Orr was entitled to the full vacation pay that he sought. Upholding the appeal decision. Review of Delegate Bianchini s method in calculating the vacation pay due to Mr. Orr. Finding that the amount owed is $56, plus interest with the exception of a 38-day period in 2012.

3 Pioneer Distributors Ltd. v. Orr Page 3 BC EST #RD003/14 (Reconsideration of BC EST #D093/13) January 20, 2014 David B. Stevenson Upholds the Tribunal s calculation of vacation pay, denying the application for reconsideration. THE COMPLAINT [3] Mr. Orr started an action in this court for damages relating to his employment with Pioneer. Included were claims for overtime pay and vacation pay, which Pioneer alleged were outside the jurisdiction of the British Columbia Supreme Court and solely within the jurisdiction of the Director of Employment Standards (the Director ). It is then that Mr. Orr filed his complaint on January 26, 2011 with the Ministry of Labour and Citizen Services - Employment Standards Branch (the Ministry ). [4] The British Columbia Supreme Court action was eventually settled. [5] In Mr. Orr s complaint, he alleged that Pioneer owed him compensation for 420 hours of overtime work and $73, for accumulated vacation pay, the latter calculated pursuant to s. 58 of the Employment Standards Act, R.S.B.C. 1996, c. 113 [ESA]. DECISION OF DELEGATE BARKER [6] Delegate Barker heard Mr. Orr s complaint. The hearings dealt, not only with vacation pay, but also with overtime pay. The Director issued its reasons for determination on March 27, [7] Delegate Barker concluded that Mr. Orr was entitled to overtime wages in the amount of $1,475.38, $13, for vacation pay, and accrued interest of $ In addition, the delegate assessed two administrative penalties of $ each against Pioneer for contravention of the ESA.

4 Pioneer Distributors Ltd. v. Orr Page 4 [8] In determining Mr. Orr s vacation pay, the delegate concluded that s. 80 of ESA barred Mr. Orr s vacation pay accumulated prior to November 1, Section 80 reads as follows: 80 (1) The amount of wages an employer may be required by a determination to pay an employee is limited to the amount that became payable in the period beginning (a) in the case of a complaint, 6 months before the earlier of the date of the complaint or the termination of the employment, and (b) in any other case, 6 months before the director first told the employer of the investigation that resulted in the determination, plus interest on those wages. [9] The appeal of the Director s determination by Delegate Barker is limited to s. 110 and s. 112 of the ESA: 110 (1) The tribunal has exclusive jurisdiction to inquire into, hear and determine all those matters and questions of fact, law and discretion arising or required to be determined in an appeal or reconsideration under Parts 12 and 13 and to make any order permitted to be made. (2) A decision or order of the tribunal on a matter in respect of which the tribunal has exclusive jurisdiction is final and conclusive and is not open to question or review in any court. 112 (1) Subject to this section, a person served with a determination may appeal the determination to the tribunal on one or more of the following grounds: (a) the director erred in law; (b) the director failed to observe the principles of natural justice in making the determination; (c) evidence has become available that was not available at the time the determination was being made. [10] A reconsideration of the Tribunal s appeal of the Director s determination is limited to s. 116 of the ESA: 116 (1) On application under subsection (2) or on its own motion, the tribunal may (a) reconsider any order or decision of the tribunal, and

5 Pioneer Distributors Ltd. v. Orr Page 5 (b) confirm, vary or cancel the order or decision or refer the matter back to the original panel or another panel. (2) The director or a person named in a decision or order of the tribunal may make an application under this section. (3) An application may be made only once with respect to the same order or decision. Facts Found by the Delegate [11] The background facts underlying this dispute are found in the reasons of the March 27, 2012 determination. These facts were relied upon by the four decisions that Pioneer seeks to review. [12] Mr. Orr was employed by Pioneer from November 1, 1999 to September 10, 2010, when Pioneer terminated his employment for cause. During that time, Mr. Orr was entitled to vacation pay pursuant to the ESA. From 1999 up to and including 2002, there was no record kept of Mr. Orr s vacation pay. [13] When Mr. Orr was hired by Pioneer, there were no discussions about vacation pay, nor any written agreement made relating to Mr. Orr s vacation pay. During his employment, Mr. Orr did not receive statements identifying when his vacation pay was paid nor the amount to which he was entitled. [14] It was accepted by Mr. Orr and Pioneer that if vacation pay was required to be paid annually, Pioneer would have paid it, and that Pioneer was obliged to pay it as calculated pursuant to s. 58 of the ESA. [15] Helena Ng was hired by Pioneer as an in-house accountant in In 2003, she started to record vacation pay, not only for Mr. Orr, but for all employees of Pioneer. [16] Instead of paying Mr. Orr his vacation pay each year, as required by the ESA, Pioneer carried over the unpaid vacation pay from year to year. It was recorded by Ms. Ng on spreadsheets as owing to Mr. Orr. Upon his dismissal from Pioneer s employment, Mr. Orr requested his accumulated vacation pay under the ESA. Pioneer refused to pay.

6 Pioneer Distributors Ltd. v. Orr Page 6 [17] George Klukas is the President of Pioneer. Pioneer is a high volume, low margin distributor of kitchen cabinets. [18] Mr. Orr was hired by Pioneer as a sales representative. Despite this, Mr. Orr performed a number of duties ancillary to his job as a sales representative. He performed warehousing duties, delivered product, made collections, and performed administrative office duties. When the company accountant was on vacation and when there were periods when an accountant was not employed, Mr. Orr performed accounting duties. [19] When Ms. Ng was hired there was no agreement as to vacation pay or its tracking. In 2003, Ms. Ng initiated tracking vacation pay on Excel spreadsheets. [20] Mr. Orr s vacation pay was tracked year by year and, if not paid, either in whole or in part, it would be carried forward to the next year. Mr. Orr s vacation pay, like other employees at Pioneer, was calculated based on a day s pay calculated on Pioneer s employee s salary. If Mr. Orr took holidays, that would be recorded on the left hand side of the spreadsheet and deducted from the vacation pay. This system also applied to other employees. [21] In 2004, Ms. Ng was absent from Pioneer for a period of time. Other accountants were employed and continued with the entries into the Excel spreadsheets. [22] Ms. Ng had not been instructed by Mr. Orr to track vacation pay in this manner. Ms. Ng designed the spreadsheets in accordance with her understanding of an employer s statutory obligations. [23] Ms. Ng did not have authority to enter into contracts on Pioneer s behalf. This authority belonged to Mr. Klukas. [24] Ms. Ng s employment ended in The replacement accountant, Hugh Forster, advised Mr. Klukas on March 29, 2010, by , of the accrual of vacation pay and the deduction for holidays taken. At this time, Mr. Klukas was advised by

7 Pioneer Distributors Ltd. v. Orr Page 7 Mr. Forster that the accrued vacation pay for Mr. Orr was $68, This information had been provided to Mr. Forster from Ms. Ng. Upon learning this, Mr. Klukas said nothing. After the departure of Ms. Ng, the spreadsheets continued to be maintained as they always had been. [25] Pioneer s records showed that other employees also had their vacation pay accrued in a similar manner as Mr. Orr, although none of the other employees had vacation pay accrued higher than $8, [26] Mr. Orr never mentioned his accrued vacation pay to Mr. Klukas during his period of employment with Pioneer until around the time Pioneer terminated Mr. Orr s employment. Mr. Orr testified that he thought that Mr. Klukas knew, but was unable to say how he came to this conclusion, other than as an owner, he would be expected to know this information. [27] In preparation for the financial statements for Pioneer each year, the accruals of vacation pay were not forwarded to the outside accountants to be included as a liability in Pioneer s annual financial statements. [28] Ms. Ng stated the Excel spreadsheets were maintained in the same manner that they had always been. They were on the computer for anyone to look at them. During his employment with Pioneer, Mr. Orr reviewed the Excel spreadsheets with the accruals of his vacation pay from time to time. Mr. Orr stated that he was accumulating the vacation pay as there may be an opportunity in the future to buy into Pioneer and the vacation pay would assist toward that end. He said that he and Mr. Klukas had discussions about buying into the business early on in Mr. Orr s employment. Ms. Ng confirmed she had been told by Mr. Orr that he might be a partner. [29] Mr. Klukas approach to Pioneer s payroll was hands off. Mr. Klukas only knowledge of Pioneer s payroll came from what Ms. Ng or other accountants specifically told him.

8 Pioneer Distributors Ltd. v. Orr Page 8 [30] There was no dispute that the formula used by Pioneer in calculating the vacation pay was incorrect. Affidavit of Mr. Klukas Sworn February 21, 2004 and the Amended Petition Filed March 20, [31] Mr. Klukas, in his capacity as President of Pioneer, swore an affidavit attaching a number of exhibits on February 21, In it, Mr. Klukas included a number of facts that were not stated in the determination or not evidenced in the documentary record before the Tribunal when the decisions were made. This goes as far as the inclusion of inflammatory statements such as that Ms. Ng left Pioneer after admitting to engaging in theft over a period of years: Affidavit #1 of George Klukas at para. 17. [32] In its amended petition, filed March 20, 2014, Pioneer continued Mr. Klukas trend of introducing new facts. For example, at paragraph 19 of its amended petition, Pioneer described Ms. Ng as having no experience dealing with commissioned sales people and no knowledge of how to administer vacation pay for commissioned sales people. [33] Further, Pioneer chose to recast the findings of fact found by the delegate and accepted by Messrs. Groves and Thornicroft. At paragraph 27, Pioneer states that, in 2010, Mr. Orr told Mr. Klukas about the vacation pay accrual and Mr. Klukas expressed his view that the vacation pay should not have been accruing and disagreed with the accrual. In fact, the delegate found that Mr. Klukas learned of the accrual from Mr. Forster, by in March 2010, and did nothing about it. [34] Also, at paragraph 63, Pioneer claims the delegate found Mr. Orr was not entirely forthright with respect to vacation pay accrual. This is true to the limited extent that Mr. Orr s credibility was at issue when determining whether a personal calendar he kept represented a contemporaneous record of his hours of work.

9 Pioneer Distributors Ltd. v. Orr Page 9 Review of the Findings of Fact [35] The Director s determination is not the subject of judicial review. The review of the Tribunals decisions must be conducted solely on the basis of the record that is before the Tribunal when the decision was made. A judicial review is not a rehearing of the evidence, or an opportunity to bring new evidence. [36] In Canwood International Inc. v. Bork, 2012 BCSC 578, Mr. Justice Harris stated: [17] It is clear that the original Director's determination is not the subject of this judicial review. The Legislature has put in place a statutory scheme providing for appeals of determinations by the Director. That process is protected by a privative clause. As Mr. Justice Pitfield said in Laguna Woodcraft (Canada) Ltd. v. British Columbia (Employment Standards Tribunal), [1999] B.C.J. No (S.C.) [Laguna] at para. 11: Under the Employment Standards Act an appeal lies to the Tribunal from any decision made by the director. Judicial review, in the ordinary course, is not available where there is an appeal to higher authority. The judicial review should be pursued, where appropriate and necessary, in relation to decisions of the Tribunal and not of the director. [18] The particular significance of the presence of a privative clause was noted by Mr. Justice Davies in Gulf Coast Materials Ltd. v. Helgesen, 2010 BCSC In that case, the petitioner had pursued judicial review of the Director s original determination, but abandoned it during argument. The Court noted at para. 86: [86] Abandonment of direct judicial review of the Director s Determination and the Director s Recalculation Determination by Gulf Coast was not gratuitous. It was mandated by application of s. 110(1) of the Employment Standards Act, which provides: 110(1) The tribunal has exclusive jurisdiction to inquire into, hear and determine all those matters and questions of fact, law and discretion arising or required to be determined in an appeal or reconsideration under Parts 12 and 13 and to make any order permitted to be made. [19] This matter was of some importance in assessing whether to admit an affidavit sworn by Mr. Matkin in which he deposed to many facts about Canwood's business which he said he recalled generally testifying to before the Director's delegate. No transcript of oral testimony before the Director exists, although the evidence heard by him is summarised in detail in his written reasons. On the basis of the above authority, I am satisfied that the record on judicial review is the record that was before the Tribunal.

10 Pioneer Distributors Ltd. v. Orr Page 10 [29] The statute, therefore, limits the grounds of appeal. Importantly, there is no appeal from findings of fact made by the Director. It follows that disagreements about what facts ought to have been found on the evidence cannot form the subject matter of judicial review. The only way that alleged errors about findings of fact may form the basis of appeal is if the findings rise to the level of constituting an error of law. [37] I ignore any facts in Mr. Klukas affidavit and his amended petition that were not before the Director s delegate, the Tribunal, or that contradict findings of fact found in the determination. [38] Mr. Orr appealed the delegate s decision, but only as it relates to vacation pay. ISSUES [39] The issues that arise are as follows: 1. Does this judicial review involve reviewing all four Tribunal decisions or is it limited to those reconsideration decisions of members Thornicroft and Stevenson?; 2. What is the standard of judicial review?; and 3. How is the standard of review applied? Issue #1 - Does this Judicial Review Involve Reviewing all Four Tribunal Decisions or is it Limited to those Decisions of Members Thornicroft and Stevenson? [40] The threshold issue under review is whether the review by this Court is limited to a review of only members Thornicroft and Stevenson s decisions. POSITIONS OF THE PARTIES [41] Pioneer s position is that all four decisions that it seeks to quash are subject to review. [42] Pioneer relies on Mr. Justice Harris decision in Canwood, to support its argument that all four decisions are subject to review.

11 Pioneer Distributors Ltd. v. Orr Page 11 [43] Mr. Orr s position is that this judicial review is limited to the reconsideration decisions of members Thornicroft and Stevenson. Mr. Orr argues that the decision in Canwood is wrong as it relates to the review of both the Tribunal s decisions. He relies on United Steelworkers, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 2009 v. Auyeung, 2011 BCCA 527 and cases subsequently decided. [44] The Tribunal s position is that it opposes the orders sought by Pioneer, which are numbers 1-5, 8 and 9 of the petition and takes no position as to number 7. [45] The Director takes the same position as that of the Tribunal. The Director adopts and relies upon the facts set out in the four decisions of the Tribunal and, as referred to earlier, objects to certain facts and characteristics of facts contained in Pioneer s amended petition and affidavit #1 of Mr. Klukas. [46] In Canwood, at para. 41, Harris J. concluded that the decisions which are the subject of review in the Supreme Court are the appeal decision of the Tribunal and its reconsideration as follows: [41] Before the Court of Appeal decision in Auyeung, the settled view appears to have been that judicial review relating to matters under the ESA is of the Tribunal decisions (both on appeal and the reconsideration) though not of the Director's original decision because the Tribunal has exclusive jurisdiction over those decisions by operation of the statute, see Laguna. Given the differences between the ESA and the Labour Relations Code in the way the power of reconsideration is defined and given the absence of any statement by the Court that the principle in Auyeung is of general application, I consider it would be a mistake to conclude that Auyeung was intended to disturb the existing conventional wisdom about the scope of judicial review under the ESA. In my view, therefore, the present judicial review is in respect of both Tribunal decisions. DISCUSSION [47] Canwood was appealed to the Court of Appeal: 2013 BCCA 96. This was only in the context of Canwood International Inc. seeking leave to appeal the costs order and an extension of time to appeal an order dismissing the petition for judicial review. In the course of his reasons for judgment, Mr. Justice Chiasson stated, in obiter:

12 Pioneer Distributors Ltd. v. Orr Page 12 [28] Although the judge held that the applicant had not exhausted its internal remedies, I think he did so using the phrase to describe the effect of the applicant recasting its constitutional arguments, not as a term of art in the traditional sense. The judge did use the phrase in that sense when considering whether to limit the judicial review to the reconsideration decision only. In that context, he distinguished this Court's decision in United Steelworkers, Paper and Forestry, Rubber, Manufacturing, Energy Allied Industrial and Service Workers International Union, Local 2009 v. Auyeung, 2011 BCCA 527, 314 B.C.A.C. 172, on the basis that it was limited to a consideration of the administrative scheme under the British Columbia Labour Relations Code, R.S.B.C. 1996, c That determination is not before me, but I question the approach of the judge while noting that, from a practical perspective, the review process under the Employment Standards Act essentially is the same as the process under the Labour Relations Code. In this case review of both the appeal and reconsideration decisions obliged the court to consider arguments made on the appeal that were not made on the reconsideration. [Emphasis added.] [48] Madam Justice Ballance in Stehlik v. British Columbia (Public Safety), 2013 BCSC 801, considered how to apply Auyeung in the context of a review under the Criminal Injury Compensation Act, R.S.B.C. 1996, c. 85 [CICA] and its successor statute, the Crime Victim Assistance Act, S.B.C. 2001, c. 38 [CVAA], administered by the Workers Compensation Board. The court considered Chiasson J.A. s remarks in Auyeung on judicial review: para. 69. It noted, Auyeung has not been universally applied to other administrative decision makers : para. 70. [49] In particular, the court in Stehlik relied on Routkovskaia v. FPI Fireplace Products International Ltd., 2012 BCCA 141 for the proposition that the result in Auyeung was reached in the context of a particular statutory scheme and it does not stand as a principle of general application in the context of judicial review : para. 72. See also Collins v. British Columbia (Utilities Commission), 2012 BCCA 455 at para. 13. [50] Further, the court considered the decisions in Hudon v. Stevenson, 2012 BCSC 253, Pistell v. British Columbia (Workers Compensation Appeal Tribunal), 2012 BCSC 463, and Mitchell v. British Columbia (Workers' Compensation Appeal Tribunal), 2012 BCSC 986. In Hudon and Pistell, the court held Auyeung applied to decisions under the Residential Tenancy Act, S.B.C. 2002, c. 78, and decisions of

13 Pioneer Distributors Ltd. v. Orr Page 13 the Workers Compensation Appeal Tribunal, respectively. In contrast, Auyeung was held not to apply to the Workers Compensation Appeal Tribunal in Mitchell. [51] The court in Stehlik also made reference to the Court of Appeal decision in Canwood and Chiasson J.A. s remarks in obiter at para. 28 that the review process under the ESA is essentially the same as that under the Labour Relations Code. The court concluded: [78] [T]he distinguishing factors between the Employment Standards Tribunal and the Labour Relations Board that Harris J. [at the trial level in Canwood] considered persuasive, namely the Tribunal's lack of a policy mandate and the lack of express grounds for reconsideration set out in its governing legislation, may carry less significance than he stated in his reasons. [52] Ultimately, in Stehlik, Ballance J. found that, while none of the decisions made pursuant to the CICA were reviewable, the reasoning of Auyeung was applicable to the decisions made under the CVAA. [53] In Sereda v. Ni, 2014 BCCA 248, an appeal of a judicial review from the Residential Tenancy Board, the petitioner sought to quash only the original decision of the board, despite being a new decision. Madam Justice Kirkpatrick, for the Court of Appeal stated: [26] Where there are multiple administrative decisions the proper approach on judicial review is for the Court to review the administrative body's review or reconsideration decision, rather than its original decision. This is because the original decision has already been reviewed, and, as in this case, the grounds for review of an original decision are often limited by the governing statute: United Steelworkers, Paper and Forestry, Rubber, Manufacturing, Energy Allied Industrial and Service Workers International Union, Local 2009 v. Auyeung, 2011 BCCA 527 [Auyeung]. That said, the original decision forms part of the record and it is likely that it will inform the court's review (Auyeung at para. 88). [27] The chambers judge approached the review on the basis that the decisions of both Arbitrator Lanon and Arbitrator Wood were the subject of review. Although Mr. Sereda only applied for review of the original decision, the proper decision for judicial review was the review decision of Arbitrator Wood. However, it was necessary for the chambers judge to consider the original decision as it formed part of the contextual matrix, and it was entirely appropriate for the chambers judge to have explicit regard to it.

14 Pioneer Distributors Ltd. v. Orr Page 14 [54] If there was any doubt after Chiasson J.A. s obiter dicta in Canwood, Ballance J. s comments in Stehlik, and Kirkpatrick J.A. s conclusions in Sereda, Yellow Cab Co. v. Passenger Transportation Board, 2014 BCCA 329 settles the matter when Mr. Justice Groberman stated: [40] Where a party has taken advantage of a tribunal's reconsideration power, and the tribunal has undertaken the reconsideration, it is the reconsideration decision that represents the final decision of the tribunal. In such a situation, it is only the reconsideration decision that may be judicially reviewed, since it is the final decision of the tribunal. [41] A final common scenario arises where a tribunal has jurisdiction to reconsider a decision, but that power is discretionary. This situation arises where leave is required for reconsideration. A denial of leave will usually represent a considered decision by the tribunal that the allegation of error lacks substance or is so inconsequential as to be vexatious. [55] Mr. Justice Groberman stated that Auyeung is not to be taken for the broad proposition that when a tribunal has power to reconsider a decision, the court will refuse to consider the tribunal s initial decision. Rather, Groberman J.A. stated: [44] Where a denial of leave does not constitute a determination that the request for reconsideration lacks merit, it is my view that the initial administrative decision, and not the denial of leave, will be the appropriate target for judicial review. To hold otherwise would be to allow a tribunal, through procedural machinations, to oust the inherent, constitutionallyprotected supervisory jurisdiction of the superior courts. [56] Pioneer sought a reconsideration and was granted leave by Member Thornicroft who reconsidered Member Groves decision. It is the decision of Member Thornicroft that is subject to this review by me. Issue #2 - What is the Standard of Judicial Review? [57] There is no dispute among all the parties to this judicial review that the applicable standard of review is patent unreasonableness. Despite this, in this case, there is some disagreement as to exactly what that standard of review means and how it is to be applied to this case. [58] Patent unreasonableness arises from s. 58 of the Administrative Tribunal Act, S.B.C. 2004, c. 45 [ATA]

15 Pioneer Distributors Ltd. v. Orr Page (1) If the tribunal's enabling Act contains a privative clause, relative to the courts the tribunal must be considered to be an expert tribunal in relation to all matters over which it has exclusive jurisdiction. (2) In a judicial review proceeding relating to expert tribunals under subsection (1) (a) a finding of fact or law or an exercise of discretion by the tribunal in respect of a matter over which it has exclusive jurisdiction under a privative clause must not be interfered with unless it is patently unreasonable, (b) questions about the application of common law rules of natural justice and procedural fairness must be decided having regard to whether, in all of the circumstances, the tribunal acted fairly, and (c) for all matters other than those identified in paragraphs (a) and (b), the standard of review to be applied to the tribunal's decision is correctness. (3) For the purposes of subsection (2) (a), a discretionary decision is patently unreasonable if the discretion (a) is exercised arbitrarily or in bad faith, (b) is exercised for an improper purpose, (c) is based entirely or predominantly on irrelevant factors, or (d) fails to take statutory requirements into account. [59] Patent unreasonableness is by far the most deferential standard of review. Its application recognizes a specialized tribunal substantive in procedural expertise in the subject matter of the dispute. [60] The Tribunal s expertise is recognized in what is often referred to as the privative clause in s. 110 of the ESA. [61] Even though the parties agree as to the standard of review, which is patent unreasonableness, this still requires an analysis as to that standard s meaning and application. The Supreme Court of Canada in Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, McLaughlin C.J.C. for the Court stated: [21] In every case where a statute delegates power to an administrative decision-maker, the reviewing judge must begin by determining the standard of review on the pragmatic and functional approach... [62] In Dr. Q. the Court pointed out:

16 Pioneer Distributors Ltd. v. Orr Page 16 [22] To determine standard of review on the pragmatic and functional approach, it is not enough for a reviewing court to interpret an isolated statutory provision relating to judicial review. [63] In Speckling v. British Columbia (Workers Compensation Board), 2005 BCCA 80, Madam Justice Levine stated: [18] The four contextual factors considered in the pragmatic and functional approach are: (1) the presence or absence of a privative clause or statutory right of appeal; (2) the expertise of the tribunal relative to that of the reviewing court on the issue in question; (3) the purposes of the legislation and the provision in particular; and (4) the nature of the question -- law, fact, or mixed law and fact. [64] In applying those four factors to the ESA, I find the Tribunal has exclusive jurisdiction to inquire and determine all matters and questions of fact, law and discretion arising or required to be determined in the appeal or its reconsideration. A decision of a tribunal that has exclusive jurisdiction and is final and conclusive is not open to question or review by the court. The ESA has such powers: s [65] The expertise of the Ministry is vast. They daily receive complaints, be they from an employer or an employee. In responding, it applies the purposes of the ESA. In this matter, the question is whether Pioneer owes Mr. Orr vacation pay accrued over a period of roughly seven years and whether any liability attaches to the employer for that vacation pay in accordance with the ESA. [66] In this case, it is the intention of the legislature to leave the resolution of vacation pay to statute, not to the common law. The purposes of the ESA are set out in s. 2: 2 The purposes of this Act are as follows: (a) to ensure that employees in British Columbia receive at least basic standards of compensation and conditions of employment; (b) to promote the fair treatment of employees and employers; (c) to encourage open communication between employers and employees; (d) to provide fair and efficient procedures for resolving disputes over the application and interpretation of this Act;

17 Pioneer Distributors Ltd. v. Orr Page 17 (e) to foster the development of a productive and efficient labour force that can contribute fully to the prosperity of British Columbia; (f) to contribute in assisting employees to meet work and family responsibilities. [67] In this case, the nature of the question is one of law, which is apparent in both the reconsideration decisions. Was Mr. Orr entitled to compensation since 2003 and up to the termination of his employment or was a portion of it barred pursuant to s. 80 of the ESA? [68] I conclude, based on the test in Dr. Q. referred to in Speckling that, as in Speckling, all four contextual factors point to the highest level of deference, the patent unreasonable standard of review : Speckling at para. 31. [69] The ATA does not define patent unreasonableness as it applies to findings of fact and law. Madam Justice Levine in Speckling set out the definition of patent unreasonableness by stating: [33] Having confirmed the correctness of the patently unreasonable standard of review, I agree with the chambers judge's summary of the approach to be taken in applying that standard. He noted the following principles (at para. 8): 1. The standard of review is that of patent unreasonableness: Canada (Attorney General) v. P.S.A.C. (1993), 101 D.L.R. (4th) 673 (S.C.C.). 2. "Patently unreasonable" means openly, clearly, evidently unreasonable: Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 S.C.R The review test must be applied to the result not to the reasons leading to the result: Kovach v. British Columbia (Workers' Compensation Board) (2000), 184 D.L.R. (4th) 415 (S.C.C.). 4. The privative clause set out in s. 96(1) of the Act requires the highest level of curial deference: Canada Safeway v. B.C. (Workers' Compensation Board) (1998), 59 B.C.L.R. (3d) 317 (C.A.) 5. A decision may only be set aside where the board commits jurisdiction error. 6. A decision based on no evidence is patently unreasonable, but a decision based on insufficient evidence is not: Douglas

18 Pioneer Distributors Ltd. v. Orr Page 18 Aircraft Co. of Canada Ltd. v. McConnell, [1980] 1 S.C.R. 245, and Board of Education for the City of Toronto v. Ontario Secondary School Teachers' Federation et al (1997), 144 D.L.R. (4th) 385 (S.C.C.). [70] Levine J.A. went on to state: [37] As the chambers judge noted, a decision is not patently unreasonable because the evidence is insufficient. It is not for the court on judicial review, or for this Court on appeal, to second guess the conclusions drawn from the evidence considered by the Appeal Division and substitute different findings of fact or inferences drawn from those facts. A court on review or appeal cannot reweigh the evidence. Only if there is no evidence to support the findings, or the decision is "openly, clearly, evidently unreasonable", can it be said to be patently unreasonable. That is not the case here. [71] In describing patent unreasonableness, Mr. Justice Corey for the majority in Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941 at 964 held: It is not enough that the decision of the Board is wrong in the eyes of the court; it must, in order to be patently unreasonable, be found by the court to be clearly irrational. [72] In Voice Construction Ltd. v. Construction & General Workers Union, Local 92, 2004 SCC 23, at para. 18, the Supreme Court of Canada again defined patently unreasonable. For the Court, Major J. stated: A definition of patently unreasonable is difficult, but it may be said that the result must almost border on the absurd. Between correctness and patent unreasonableness, where the legislature intends some deference to be given to the tribunal's decision, the appropriate standard will be reasonableness. In every case, the ultimate determination of the applicable standard of review requires a weighing of all pertinent factors: see Pushpanathan, supra, at para. 27. [73] In Auyeung, Chiasson J.A. for the Court of Appeal, in respect to Dunsmuir and the standard of patent unreasonableness, said: [73] I would not accede to the appellant's contention that Dunsmuir altered the scope of judicial review on the standard of patent unreasonableness as mandated by the ATA. The Board remains entitled to considerable deference.

19 Pioneer Distributors Ltd. v. Orr Page 19 Position of the Parties [74] Pioneer has defined the issues at paragraph 114 of its written submissions. Pioneer, though admitting the standard of review is patent unreasonableness, states that the Tribunal is not entitled to the highest standard of curial deference. [75] Pioneer identifies in paragraph 114(b)-(d) inclusive, in its written submissions, instances of the Tribunal s patent unreasonableness: When it determines, in the reconsideration decision, that there was no implied term but nevertheless permitted recovery; When it decided, in the reconsideration decision, that a decision to carry forward vacation pay indefinitely was a function of administration and when it decided there had been a contravention in s. 8; and When it decided to engage in a legal analysis of whether Ms. Ng was an agent and in overturning the delegate s finding that Ms. Ng was not an agent for purposes of created terms and conditions of employment. [76] Pioneer, in the same paragraph in its submissions, states that the Tribunal mischaracterized the issues: The determination of whether a contractual term and, in particular, an implied term, exists as an error of law rather than of fact; and The determination of whether a contractual term exists as an issue of interpretation of the contract. In so doing, the Tribunal applied the wrong test. [77] In the same paragraph, Pioneer complains that the Tribunal failed: To consider the reasonable expectations of the petitioner, and erred by failing to promote their fair treatment of the petitioner; or In the alternative, the Tribunal erred in its calculations of the amount to be paid.

20 Pioneer Distributors Ltd. v. Orr Page 20 [78] Pioneer reasons at paragraph 127 of its submissions that the Tribunal should not be afforded the highest standard of deference because: 1. The issue before the delegate was one of concurrent jurisdiction; and 2. The issue before the Tribunal was not one of the interpretation of the ESA. [79] Pioneer provided no case law to suggest there exists a watered down version of patent unreasonableness because of concurrent jurisdiction. This is rather surprising given Pioneer s position in response to Mr. Orr s action in this Court where Pioneer alleged that the ESA had exclusive jurisdiction over Mr. Orr s vacation pay. Further, this argument ignores s. 110 of the ESA by which the Tribunal is required to inquire into, hear and determine all those matters and questions of fact, law and discretion arising or required to be determined. [80] In an attempt to support the watered down version of patent unreasonableness, Pioneer tries to import the principles of Dunsmuir v. New Brunswick, 2008 SCC 9, into this matter. [81] Mr. Orr argues at paragraph 69 of his submission that patent unreasonableness is by far the most deferential standard of review, the application of which recognizes a specialized tribunal s substantive and procedural expertise in the subject matter of the dispute. [82] In response to Pioneer s submissions, Mr. Orr argues that: There is no basis to conclude that the Tribunal is only entitled to a less robust, less deferential version of patent unreasonableness even if the merits of the claim could have been heard in another forum; The principles applied in Dunsmuir do not apply to this case as the Tribunal was well-within interpretation of provisions of its home statute, the ESA; and Even if the common law framework from Dunsmuir applied, the Supreme Court of Canada in Doré v. Barreau du Québec, 2012 SCC 12 at paras. 46-

21 Pioneer Distributors Ltd. v. Orr Page 21 47, emphasized that a high degree of deference is owed to administrative bodies applying to general legal principles to the interpretation of their home statute. [83] I agree with Mr. Orr s able submissions that Dunsmuir does not apply. I reject the argument on the matter made by Pioneer. Issue #3 - How is the Standard of Review Applied? The Law [84] The application of the standard of patent unreasonableness is that the court only has to be satisfied that the outcome of the Tribunal s proceeding is not clearly irrational : Public Service Alliance of Canada at para. 46. This has also been defined as almost border[ing] on the absurd : Voice Construction at para. 18. [85] The Supreme Court in Kovach v. British Columbia (Workers Compensation Board) (sub nom Kovach, Re), 2000 SCC 3 substantially adopted the dissenting reasons of Donald J.A. in setting aside the majority decision of the Court of Appeal: (1998), 52 B.C.L.R. (3d) 98 (C.A.). [86] Mr. Justice Donald concluded that the appeal from the Workers Compensation Tribunal was not patently unreasonable, stating: [26] Madam Justice Newbury identified serious flaws in the Board's reasoning but I think that the review test must be applied to the result not to the reasons leading to the result. In other words, if a rational basis can be found for the decision it should not be disturbed simply because of defects in the tribunal's reasoning. [Emphasis added]. [87] Kovach has been followed in British Columbia: Speckling at para. 33 and British Columbia Ferry and Marine Workers Union v. British Columbia Ferry Services Inc., 2013 BCCA 497 at para. 52. Application in this Case [88] Member Groves identified the error in the delegate s determination which was that there had to be an express agreement between Pioneer and Mr. Orr to

22 Pioneer Distributors Ltd. v. Orr Page 22 accumulate vacation pay outside of the application of ss. 58 and 80(1)(a) of the ESA. [89] In order for the vacation pay to accumulate indefinitely, the delegate concluded that such an express agreement had to exist and Mr. Klukas had to have subjective knowledge that this was being done. Member Groves varied the delegate s determination to provide that Pioneer pay Mr. Orr the balance of the vacation pay accumulated by him and carried forward annually since [90] In the reconsideration decision, Member Thornicroft stated: Under the law of agency, a principal is bound by the actions of its agent if the agent is acting within its express authority but also actions of its agent acting within their implied authority. This latter authority is also known as the agent s apparent or ostensible authority. Tribunal Member Groves decision regarding Ms. Ng s implied authority to bind Pioneer Distributors to pay Mr. Orr vacation pay accrued and carried forward since 2003 is principally set out in the Appeal Decision [at] paras [.] [91] Member Thornicroft found that Member Groves also considered the vacation pay issue in light of the doctrine known as estoppel when he noted at para. 36: Orr was led to believe that he would enjoy as an employment benefit, the accumulation of unpaid vacation pay carried forward on an annual basis[.] [92] Pioneer, in its argument, continues to reject the findings of fact found by the delegate. Pioneer also refused to accept the finding that Pioneer delegated its accounting responsibilities to Ms. Ng and other accountants hired by the firm. Member Thornicroft best describes Pioneer s position in his decision at paragraph 58: 58. Pioneer Distributors submits the Tribunal implicitly found that Pioneer should be vicariously liable for Ms. Ng s records and that this finding is entirely wrong. Counsel s argument continues: The Complaint is premised upon the failure of Ms. Ng to comply with the Act. If Ms. Ng had complied with the Act, Mr. Orr would have been forced to take vacation and would have been paid out his vacation pay in accordance with the Act. I have three comments with respect to this submission. First, the notion that it was Ms. Ng, and not Pioneer Distributors itself, that failed to comply with the Act is not tenable. Mr. Klukas, Pioneer Distributor s principal, expressly delegated the authority to administer the firm s payroll functions to Ms. Ng and the other accountants later employed by the firm (recall the delegate s finding that he

23 Pioneer Distributors Ltd. v. Orr Page 23 preferred to take a hands off approach to payroll administration). Ms. Ng may well have misunderstood the firm s Act obligations but this misunderstanding was one made during the course of her employment duties on behalf of Pioneer Distributors and thus, in this case, her error is Pioneer Distributors error. Second, and by the same logic, the payroll records in question were not Ms. Ng s records but, rather, Pioneer Distributors records - records I might add, it was obliged to keep under section 28 of the Act. Third, having acknowledged that if it had complied with the Act, Mr. Orr would have been paid in full, it now says that because its employee, Ms. Ng, caused the company to default in its Act obligations, Mr. Orr should now have to suffer the adverse economic consequences of that default. I reject that approach as being inconsistent with the section 2(d) purpose relating to fair treatment of employees and employers. There is nothing unfair about requiring an employer to pay the wages (including vacation pay) that an employee has earned, but it is very unfair to deny employees wages they have earned especially when the firm represented that these accrued wages would ultimately be paid out in full. [Emphasis added.] [93] I will approach the written submissions of Pioneer in the same order as responded to by Mr. Orr in his written submissions. [94] Pioneer states in its written submissions: The Tribunal was patently unreasonable when it determined, in the Reconsideration Decision, there was no implied term but nonetheless permitted recovery. [95] Pioneer insists that the only way vacation pay could be recovered is if there was a contract of employment to accumulate vacation pay, or to imply such a term. Pioneer argues that the Delegate found there was no contractual term, therefore, the Delegate s decision should be restored. [96] Pioneer argues that without a contract to accumulate holiday pay makes recovery of Mr. Orr s vacation pay barred by s. 80 of the ESA. To do it any other way, Pioneer argues, provides Mr. Orr a greater benefit. [97] Pioneer further argues at paragraph 131 of its written submissions that it is: clearly irrational, on an appeal, to reject the very foundation of the Complaint which was also rejected by the Delegate albeit on different grounds, yet still allow the appeal. This is particularly so when the result will be to permit a party to avoid the operation and application of the Act.

24 Pioneer Distributors Ltd. v. Orr Page 24 [98] Mr. Orr restates Pioneer s ground of review as: It was not patently unreasonable for Member Thornicroft to permit recovery despite finding that an agreement to administer vacation pay would have been contrary to section 4 of the ESA. [99] Mr. Orr argues that Pioneer misconceives the role of the court in a judicial review and the limitations imposed in s. 116 of the ESA when considering whether the Decision is patently unreasonable. It is the outcome not the defects in the reasoning which is reviewed by the court: Kovach. [100] Mr. Orr argues that Pioneer fails to recognize the role of the Tribunal on a reconsideration decision pursuant to s. 116 of the ESA, which is to confirm, vary or cancel the decision, or to refer the matter back to the original panel or another panel. Member Thornicroft confirmed Member Groves decision, which he was entitled to do. Member Thornicroft enhanced and amplified Member Groves decision. [101] I find there is no contradiction between Member Groves and Member Thornicroft s decisions. [102] Pioneer cites no law which would bind the Tribunal to the legal basis of Mr. Orr s complaint. Victoria Times Colonist supports a contrary position. Madam Justice Balance said: [123] The petitioner concedes that the reconsideration panel accurately summarized its argument but says it then proceeded to decide an entirely different issue. It complains that the reasoning of the Reconsideration Decision demonstrates that the panel did not consider and address the substance of the petitioner's argument and, in that sense, effectively made its decision on grounds that were not advanced by the petitioner. In particular, the petitioner submits that the Board failed to grappled with its arguments on statutory interpretation. [125] The Original Decision dealt fully with the substance of the petitioner's primary argument. The reconsideration panel amplified the reasons as to why the Legislature could not be taken to have intended by its amendment of s. 2, the fundamental changes to the law and policy of the Code urged by the petitioner. In the end, the Board granted leave but not reconsideration and issued reasons for its decision. The fact that it did so does not eclipse the reasons of the original panel: the reasons in the Reconsideration Decision are supplemental to the Original Decision.

25 Pioneer Distributors Ltd. v. Orr Page 25 [103] Mr. Orr argues that Pioneer misapprehends Member Thornicroft s conclusions in the interplay between the implied term that Mr. Orr alleged and s. 4 of the ESA. I agree that Pioneer overstates what this conclusion played in its role in Members Groves and Thornicroft s decisions. Rather, Member Thornicroft did not go that far when he wrote: 59. A significant portion of Pioneer Distributors argument relates to whether the Tribunal erred in finding a contract in regard to the continuing accrual of Mr. Orr s earned, but unpaid, vacation pay. In my view, there could not have been a valid [contract] between the parties to the effect that earned vacation pay would not be paid out as dictated by the Act but, rather, would accrue on an ongoing basis to be paid out at some indefinite future point (for example, when demanded or on termination of employment). Had the parties specifically agreed to such an arrangement it would appear that sort of agreement would have been unlawful. Employers are obliged to ensure that employees take their annual vacation (subsection 57(2)) and must, in addition, pay all earned vacation pay prior to the employee taking that leave (subsection 58(2)). An agreement whereby the employee forfeited their vacation entitlement, or their right to be paid accrued vacation pay in the manner mandated by the Act, offends section 4 of the Act and thus would be void. [My emphasis] [104] This statement, by Member Thornicroft, was posed as an example. It was not made in the context of the relationship and the situation of Pioneer and Mr. Orr. Pioneer unilaterally, through its accountants, accrued Mr. Orr s vacation pay without complaint from Mr. Orr. This created an understanding that this accrual was to Mr. Orr s credit and that he would be paid out in the future. Mr. Orr could have strictly enforced his legal rights under the ESA and demanded that which was owing to him. This statement coincides and is in agreement with Member Groves decision at paragraph 80. [105] Pioneer does not demonstrate how the findings of Member Thornicroft were patently unreasonable. Rather, Pioneer chooses to attack the reasoning based on Pioneer s view of the facts. [106] Pioneer persists on emphasizing that Mr. Klukas did not have subjective knowledge of Mr. Orr s vacation pay accruing.