Lopez v. The Bank of Nova Scotia

Lopez v. Bank of Nova Scotia
Court (s) Database
Federal Court Decisions
Date
2024-09-04
Neutral citation
2024 FC 1372
File numbers
T-2207-22
Decision Content
Date: 20240904
Docket: T-2207-22
Citation: 2024 FC 1372
Ottawa, Ontario, September 4, 2024
PRESENT: The Honourable Madam Justice Tsimberis
BETWEEN:
ROSANA LOPEZ
Applicant
and
THE BANK OF NOVA SCOTIA
Respondent
JUDGMENT AND REASONS
I. Overview [1] This is an application for judicial review [Application] of four decisions (one final and three interlocutory) in respect of an unjust dismissal complaint [Complaint] brought by Rosana Lopez [Applicant or Ms. Lopez] under section 240 of the Canada Labour Code, R.S.C. 1985, c. L-2 [Code] against The Bank of Nova Scotia [Respondent or Scotiabank], where the Adjudicator, Michael Bendel [Adjudicator], was asked to determine the appropriate remedy, if any, to which the Applicant is entitled, given Scotiabank conceded the without-cause dismissal was unjust, and the parties agreed to a settlement. The administrative history of this matter is lengthy and complex, with several interim decisions on discrete issues, as well as a final decision on remedy, by the Adjudicator.
[2] The only issue to be determined by the Adjudicator was the appropriate remedy. However, over the course of the Complaint’s adjudication, the Applicant raised several related issues warranting interim decisions by the Adjudicator. Among these interim issues were whether the Adjudicator had a reasonable apprehension of bias and whether an offer to settle during mediation could be entered into the adjudication’s evidence. The Applicant alleges these interim decisions demonstrate a reasonable apprehension of bias in the Adjudicator, and further, that the agreement between the parties to settle the dispute [Settlement Agreement], should be deemed unenforceable, such that the Applicant can retain her legal rights and recover adequate damages from Scotiabank.
[3] For the reasons that follow, this judicial review is dismissed without costs to the Respondent.
II. Background A. Initial Termination and Complaints [4] Ms. Lopez’s employment with Scotiabank, a federally regulated bank, was terminated on January 16, 2018, after she had worked there for approximately 11.2 years, with her last title being “Manager Business Operations, Digital Channels”. Scotiabank terminated the Applicant’s employment with immediate effect and without cause citing that Ms. Lopez did not possess the necessary skills for her role as the reason for her termination.
[5] Following Ms. Lopez’s dismissal, Scotiabank offered her a severance package. The severance package included a 10-month continuance of salary and benefits (ending November 9, 2018), which was conditional upon Ms. Lopez’s execution of a release. Although Ms. Lopez rejected the severance package and refused to sign the release, the Respondent paid the salary and benefits for the 10-month period pursuant to their legal obligations.
[6] Ms. Lopez believed her dismissal was unjust, and on January 23, 2018, she filed the Complaint under section 240 of the Code, claiming unjust dismissal. In addition to this, on March 22, 2018, Ms. Lopez filed a separate complaint with the Canadian Human Rights Commission [CHRC], alleging that her termination was discriminatory and linked to a disability leave she had taken between 2015 and 2017. She claimed that Scotiabank had violated the Canadian Human Rights Act, R.S.C., 1985, c. H-6 [CHR Act], by failing to reinstate her to her previous position after her leave, seeking both damages for pain and suffering and reinstatement [CHRC Complaint].
[7] The CHRC, however, decided on December 19, 2018, that it would not deal with Ms. Lopez’s complaint under the CHR Act. Instead, the CHRC concluded that the unjust dismissal procedure under the Code was a more appropriate avenue for addressing her claims. This decision effectively consolidated the matters before the Adjudicator appointed under the Code.
B. Settlement Offer [8] On September 21, 2018, Scotiabank offered to settle the Complaint and reinstate Ms. Lopez in her former position, effective November 1, 2018 [Settlement Offer]. The Settlement Offer was not marked without prejudice. The Settlement Offer provided that Ms. Lopez’s original hire date (October 2, 2006) would be recognized for continuous employment for the purposes of vacation, Employment Share Ownership Plan, pension and benefits entitlement. However, should a severance be considered for Ms. Lopez in the future, Scotiabank would calculate any severance package based on her service as of November 1, 2018, the proposed date of reinstatement (length of service will begin from the start of this most recent period of employment and the prior service would not be considered for any future severance package). The Settlement Offer was conditional upon Ms. Lopez withdrawing the Complaint and signing a release of claims with respect to her previous period of employment.
[9] Ms. Lopez rejected the Settlement Offer for three reasons: (1) the offer was for a return to work “without seniority” that would affect her compensation for wrongful dismissal at common law in the event of any future termination (calculation of any future severance package); (2) she would be precluded from filing a complaint of unjust dismissal under the Code in the event her employment was terminated within 12 months of her reinstatement; and (3) the offer required her to sign a release.
C. Appointment of the Adjudicator and Early Proceedings [10] On March 1, 2019, Michael Bendel was appointed as the Adjudicator to hear Ms. Lopez’s Complaint. Early in the proceedings, Scotiabank shifted its position and conceded that Ms. Lopez’s dismissal was unjust, focusing the dispute on the remedy owed to Ms. Lopez.
[11] This shift led to a preliminary legal battle about the scope of the Adjudicator’s jurisdiction and the appropriate procedure to follow. Scotiabank argued that the CHRC’s decision to defer to the Code procedure might not have been correct, given their concession on the unjust dismissal. Scotiabank suggested that the matter be referred back to the CHRC to confirm its decision. However, the Adjudicator rejected this request, asserting that the CHRC’s decision was regular on its face and that his responsibility was to proceed under the authority conferred by that decision.
D. Mediation Attempts and Procedural Battles [12] On August 26, 2020, a mediation session was held in an attempt to resolve the dispute. While the parties reached a verbal agreement on a discrete issue during this session, they could not settle the entire Complaint. After the mediation, the Adjudicator continued to engage with the parties to clarify the partial settlement and explore ways to resolve the remaining issues.
[13] A significant point of contention arose regarding whether Ms. Lopez had fulfilled her duty to mitigate her damages, a key consideration in determining the monetary remedy. Scotiabank sought to introduce prior settlement offers as evidence that Ms. Lopez had failed to mitigate her losses, arguing that these settlement offers were relevant to assessing her entitlement to back pay. After the failed mediation, the Adjudicator proposed that this issue of admissibility be addressed as a preliminary matter, asserting that it would be a violation of natural justice to exclude such evidence, and invited the parties to make submissions.
[14] Ms. Lopez’s counsel strongly opposed this approach, arguing that the Adjudicator’s conduct suggested pre-judgment and bias, especially since the Adjudicator had initiated this issue based on information obtained during the mediation. This led to a motion for the Adjudicator’s recusal, which was based on the allegation that he had overstepped his role and compromised procedural fairness by appearing to predetermine the issue. The Adjudicator, however, denied the recusal motion, stating that his actions were within his discretion and that he had not made any substantive decisions but merely suggested how the case could move forward efficiently.
[15] Following this, the parties were required to make submissions on the admissibility of the settlement offers. Despite these submissions, the Adjudicator further intervened, suggesting that the parties had overlooked the impact of section 16(c) of the Code, which grants adjudicators broad discretion in receiving evidence, even if it might not be admissible in court. This ongoing procedural battle deepened Ms. Lopez’s concerns about the fairness of the process.
E. Provisional Reinstatement [16] Amidst these procedural disputes, some settlement negotiations between counsel followed, but it was not until July 19, 2021 that a provisional agreement was reached between the parties and Ms. Lopez was provisionally reinstated to her position and returned to work for Scotiabank while the Adjudicator determined what remedy, if any, was available to Ms. Lopez. The parties agreed upon this reinstatement as a temporary measure while the final determination of her entitlements was pending. The provisional reinstatement was primarily intended to mitigate further losses while the adjudication process continued to address any unresolved issues, particularly the treatment of her prior service credit and related entitlements.
F. Final Decision and Ongoing Challenges [17] The Adjudicator’s final decision eventually addressed these outstanding issues, including the monetary remedy due to Ms. Lopez and the terms of her reinstatement. However, Ms. Lopez remained dissatisfied with the Adjudicator's handling of the case. She argued that the final decision, like the earlier interim decisions, contained legal errors and demonstrated bias against her. Consequently, she now seeks judicial review of the entire adjudicative process, contesting the fairness and legality of the Interim #1, #2, #3 and Final decisions made by the Adjudicator.
[18] Ms. Lopez maintained the argument that they were entitled to substantial compensation for the period between the expiration date of Scotiabank’s 10-month continuance (November 9, 2018) and the date she returned to employment with Scotiabank (July 19, 2021). The heads of damages pursued were lost income, lost salary increases, non-pecuniary damages, interest, lost pension plan contributions, and legal fees.
[19] Scotiabank’s principal argument is that, had Ms. Lopez promptly accepted their Settlement Offer, she would not have suffered any of the losses or incurred any of the costs for which she was now seeking compensation. According to Scotiabank, this failure to mitigate her loss disqualified her from compensation.
[20] Ms. Lopez disputes that she failed to mitigate her losses. She claims she acted reasonably in rejecting their offer of prompt reinstatement because it was an unreasonable offer, reducing her right to severance pay in the event of any future termination of employment and failing to respect her rights under the Code. This is the basis of her reply to Scotiabank’s point on mitigation.
III. Adjudicative History and Decision Under Review [21] While the Adjudicator issued a final decision on the appropriate remedy on September 28, 2022 [Final Decision], several issues arose both from the Applicant’s submissions and the mediation which the Adjudicator had to address through the following interim decisions:
July 17, 2019: The Adjudicator ruled on the interplay between the CHRC Decision and the Complaint, rejecting Scotiabank’s request and finding that they would not refer the matter with respect to human rights back to the CHRC and that they would accept the jurisdiction over issues of human rights conferred upon them by the CHRC Decision [Interim Decision A]. Interim Decision A is not under review.
November 19, 2020: The Applicant motioned for the Adjudicator to recuse themselves following a mediation where the Adjudicator acted as a conduit between the parties on the basis that, as a mediator, the Applicant argues the Adjudicator has become a compellable witness on the terms of partial agreement reached during the mediation. The Adjudicator found no valid reason for why they should recuse themselves as a result of the possibility of being summoned to testify in these, or any other, proceedings [Interim Decision #1];
July 21, 2021: After agreement from counsel for the parties, the Adjudicator ruled on whether settlement privilege prevented them from considering the Respondent’s Settlement Offer in the record. The Adjudicator determined that, due to the powers vested in them by s 16(c) of the Code to receive evidence that is not admissible in a court of law, it is within their power to admit the Settlement Offer into the record, although they have the discretion to refuse to do so [Interim Decision #2]; and,
May 30, 2022: The Applicant made a second motion for the Adjudicator to recuse themselves on the basis that, after writing to counsel to solicit input on the issue of how s 168(1) of the Code affects the Applicant’s duty to mitigate losses with respect to the Settlement Offer (which had not been addressed in submissions), the Adjudicator had made “patent violations” of the principle of procedural fairness and exhibited a reasonable apprehension of bias. The Adjudicator determined that they can either make a decision after asking parties for supplementary submissions or to make a decision without further submissions, and as adjudicators are free to raise issues to the parties on their own, it was not a violation of procedural fairness to introduce issues. In response to the Applicant’s allegations that the Adjudicator “has made great effort to concoct legal issues…in favour of the Respondent”, the Adjudicator further found their conduct had been aligned with their obligations under the Code and did not inherently favour one party or another, so there was no reason to recuse themselves [Interim Decision #3].
[22] The Final Decision was issued nearly five months after Interim Decision #3. Having dealt with the procedural and evidentiary issues through the four interim decisions [Interim Decisions], the Adjudicator focused his findings on applying the relevant law to the evidence to determine whether the Applicant had a duty to mitigate her losses, what the scope of such a duty would be, and what remedy would be appropriate to award the Applicant.
[23] It was not disputed by the parties that, if the Applicant had accepted the Settlement Offer and had returned to work effective November 1, 2018 rather than in July 2021, her losses and costs would have been minimal. The crux of this issue was whether it was reasonable for the Applicant to not accept the Settlement Offer.
[24] The Applicant submitted four arguments for why their failure to accept the Settlement Offer was reasonable and does not give rise to the duty to mitigate damages. In their own words, these arguments are:
The evidence of the contents of the Settlement Offer were inadmissible as privileged;
The Settlement Offer was for a return to work “without seniority”, meaning any future severance entitlement for Ms. Lopez if she is later dismissed would be calculated based on commencing her employment as of November 1, 2018, instead of her original start date and ignored her 11 prior years of service;
The Settlement Offer required Ms. Lopez to execute a release in favour of Scotiabank for any actual or future claims of unjust dismissal, termination or severance pay, overtime or vacation pay or any other claim against Scotiabank pursuant to the Code; and,
By reason of s 240(1)(a) of the Code, Ms. Lopez would be precluded from filing a complaint of unjust dismissal in the event her employment were terminated within 12 months of her reinstatement.
[25] Underlying Interim Decision #3 was a fifth issue identified by the Adjudicator, and for which he sought supplementary submissions from the parties: the effect of s 168(1) of the Code on the Applicant’s duty to mitigate losses. The Adjudicator’s concern was that this subsection of the Code could have the effect of justifying the Applicant’s rejection of the Settlement Offer if it was purported to deny her rights or remedies under the Code. Following Interim Decision #3, the Adjudicator received supplementary submissions on this issue.
[26] The Final Decision reiterates and adopts Interim Decision #2, finding that the Settlement Offer can be admitted as evidence for consideration pursuant to the Adjudicator’s enhanced evidentiary powers under s 16(c) of the Code. This dispensed with the Applicant’s first argument.
[27] The Adjudicator concluded that the Applicant had, and failed to comply with, a duty to mitigate her losses for two reasons:
Following Supreme Court of Canada case Evans v Teamsters Local Union No. 31, 2008 SCC 20 [Evans] at paragraph 30, dismissed employees are acting unreasonably with respect to their duty to mitigate losses when they reject an offer of employment or reinstatement to a position where the offered salary is the same, where the working conditions are not substantially different from the pre-dismissal conditions, where the work is not demeaning, and where the personal relationships involved are not acrimonious; and,
The Adjudicator had “serious doubts” whether compensation in respect of any subsequent termination of employment following acceptance of the Settlement Offer would have been less advantageous to the Applicant than what she had previously enjoyed.
[28] On the first reason, the Adjudicator noted that no case was cited to contradict the proposition in Evans, and the details of the Settlement Offer reflect that Ms. Lopez would have been reinstated at the same salary and not substantially different conditions as her previous employment.
I am not prepared to hold that the working conditions offered to the complainant on September 21, 2018, were "substantially different" from her previous working conditions. I will deal below with the complainant's argument that her compensation in respect of any subsequent termination of employment would have been less than she had been entitled to previously. However, even if I accept that the compensation in question would have been less, it is undisputed that every other detail of her employment relationship would have been identical to what she had enjoyed as of the date of her dismissal. It is thus impossible, in my view, to conclude that the conditions offered, while "different" from her pre-dismissal conditions of employment, were "substantially different" from them. To accept the complainant's argument on this issue would require me to substitute the words "identical or superior in every possible respect" for the words "not substantially different" in the test endorsed by the Supreme Court of Canada. Any reasonable person who had been dismissed from employment, it seems to me, would jump at the opportunity of benefiting from an employment package that was identical in every respect to the pre-dismissal one except as regards the compensation due in the event of any future termination of employment.
(Final Decision, pages 11-12)
[29] The Adjudicator also remarked that, based on his understanding of the law, the test concerning the reasonableness of rejecting an offer of employment by a dismissed employee is the same regardless of whether it is an offer of employment from a new employer or an offer of reinstatement from the dismissing employer. It was therefore unreasonable for the Applicant to expect full compensation for lost income, benefits, and costs over a period of 32 months from a position they could have taken back prior to incurring any such losses.
[30] On the second reason, the Adjudicator begins by noting he was given no authoritative information or explanation on the status or parameters of the compensation available to the Applicant under a theoretical, second severance package or how any of the features of this theoretical package were a right of the Applicant under her contract. He continues that the onus was on the Applicant to adduce evidence that her right to a second severance package following potential acceptance of the Settlement Offer would have been less favourable than her pre-dismissal right. However, the evidence submitted did not inform the Adjudicator of the nature of any right the Applicant enjoyed to a severance package before her dismissal or any possible entitlement. For this reason, the Adjudicator was unable to find as the Applicant claimed that she would lose some future right that she now enjoys. For the same evidentiary reason, the Adjudicator also found he was unable to consider the Respondent’s argument that it had acted reasonably in proposing a new “hire date” for the purpose of future severance as outlined in the Settlement Offer since it was concerned to avoid double compensation to the Applicant:
[The complainant had] already received a reasonable severance amount for her initial dismissal. If she were to be reinstated with the entirety of her service recognized and then dismissed in the future, she would effectively be receiving severance twice and placed in a better position than other employees.
[31] The “hire date” issue was also found to be devoid of merit, with the Adjudicator noting that this argument would likewise suggest every dismissed employee could claim the difference between the new “hire date” and their original hire date that would make it reasonable to reject taking any job with any new employer, which would make a mockery of the duty to mitigate. The Adjudicator similarly handled the issue of the release, finding no merit in the Applicant’s third argument because the inclusion of a release limited to the matters covered in the Settlement Offer was a standard practice to ensure that a settlement is indeed final.
[32] The Applicant’s fourth argument, concerning s 240(1)(a) of the Code, was largely centered around the statutory prohibition on unjust dismissal claims for employees who have not yet completed 12 consecutive months of continuous employment by an employer and that accepting the Settlement Offer would leave the Applicant vulnerable to subsequent dismissal by Scotiabank within 12 months of the new hire date for which they would have no basis for a fresh claim under the Code. The Adjudicator pointed out that employers do not have the power to waive this requirement, and if the Applicant’s argument was successful, it would render the duty to mitigate completely meaningless in every case that was subject to the Code because it would have to be true in every offer of employment made to every dismissed employee.
[33] Due to a lack of evidence and sufficient explanation, the Adjudicator found that s 168(1) would not come into play because the Applicant had not established whether any rights existed under either her contract of employment to severance pay or the Code that would be affected by the Settlement Offer.
[34] Overall, the Adjudicator found that the Applicant had failed to comply with the duty to mitigate her losses and subsequently dismissed the Complaint, but remained seized of the issues of costs prior to the Applicant’s rejection of the Settlement Offer and of the CHRC Complaint.
[35] The Applicant later inquired as to whether supplementary or amended reasons would be issued because the Adjudicator did not rule on whether the Applicant’s service-related entitlements were restored to her original hire date for all purposes. In response, the Adjudicator advised that he was functus officio.
IV. Relevant Law A. Legislation [36] The Code, as it was when the complaint was filed, is the governing legislation in this matter. Relevant subsections include:
Definitions
2 In this Act,
Board means the Canada Industrial Relations Board established by section 9;
external adjudicator means a person appointed under subsection 12.001(1);
Powers of Board
16 The Board has, in relation to any proceeding before it, power…
(c) to receive and accept such evidence and information on oath, affidavit or otherwise as the Board in its discretion sees fit, whether admissible in a court of law or not;
(f) to make such examination of records and such inquiries as it deems necessary;
Not required to give evidence — Part I
119 (1) No member of a conciliation board or no conciliation officer, conciliation commissioner, officer or employee employed in the federal public administration or person appointed by the Board or the Minister under this Part shall be required to give evidence in any civil action, suit or other proceeding respecting information obtained in the discharge of their duties under this Part.
Not required to give evidence — Act
119 (1.1) No member of the Board or no external adjudicator shall be required to give evidence in any civil action, suit or other proceeding respecting information obtained in the discharge of their duties under this Act.
Saving more favourable benefits
168 (1) This Part and all regulations made under this Part apply notwithstanding any other law or any custom, contract or arrangement, but nothing in this Part shall be construed as affecting any rights or benefits of an employee under any law, custom, contract or arrangement that are more favourable to the employee than his rights or benefits under this Part.
Complaint to inspector for unjust dismissal
240 (1) Subject to subsections (2) and 242(3.1), a person who has been dismissed and considers the dismissal to be unjust may make a complaint in writing to the Head if the employee
(a) has completed 12 consecutive months of continuous employment by an employer;
Powers of adjudicator
242 (2) An adjudicator to whom a complaint has been referred under subsection (1) …
(c) has, in relation to any complaint before the adjudicator, the powers conferred on the Canada Industrial Relations Board, in relation to any proceeding before the Board, under paragraphs 16(a), (b) and (c).
Decision of adjudicator
242 (3) Subject to subsection (3.1), the Board, after a complaint has been referred to it, shall
(a) consider whether the dismissal of the person who made the complaint was unjust and render a decision thereon; and
(b) send a copy of the decision with the reasons therefor to each party to the complaint and to the Minister.
Limitation on complaints
242 (3.1) No complaint shall be considered by an adjudicator under subsection (3) in respect of a person where
(a) that person has been laid off because of lack of work or because of the discontinuance of a function; or
(b) a procedure for redress has been provided elsewhere in or under this or any other Act of Parliament.
Where unjust dismissal
242 (4) If the Board decides under subsection (3) that a person has been unjustly dismissed, the Board may, by order, require the employer who dismissed the person to
(a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;
(b) reinstate the person in his employ; and
(c) do any other like thing that it is equitable to require the employer to do in order to remedy or counteract any consequence of the dismissal.
B. Caselaw (1) Reasonable Apprehension of Bias & Procedural Fairness [37] This Court has previously dealt with the judicial review of a determination on the issue of reasonable apprehension of bias on the merits of the underlying decision-maker’s decision (see for example Ahmad v Canada (Citizenship and Immigration), 2021 FC 214 [Ahmad] at para 13; and Oluwatusin v Canada (Citizenship and Immigration), 2023 FC 378 [Oluwatusin] at para 6).
[38] In Oluwatusin, the issue of whether the Refugee Protection Division [RPD] had a reasonable apprehension of bias against the applicant was raised to the Refugee Appeal Division [RAD], which determined there was no bias. On judicial review, this Court found that the appropriate standard of review on the RAD’s determination was reasonableness because the RAD was owed deference, given their finding was a determination on the merits of the issue, even if the standard of review would be correctness had there been a fresh allegation that the RAD had a reasonable apprehension of bias. Under Canada (Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para 10, there is a presumption that the merits of an administrative decision are reviewed on a reasonableness standard. A reviewing court “should derogate from this presumption only where required by a clear indication of legislative intent or by the rule of law” (ibid.) (Oluwatusin at para 6).
[39] The applicable test for the reasonable apprehension of bias is derived from Committee for Justice and Liberty et al. v National Energy Board et al., 1976 CanLII 2 (SCC), [1978] 1 SCR 369 [National Energy Board]:
This Court in fixing on the test of reasonable apprehension of bias, as in Ghirardosi v. Minister of Highways for British Columbia, and again in Blanchette v. C.I.S. Ltd., (where Pigeon J. said at p. 842-43, that “a reasonable apprehension that the judge might not act in an entirely impartial manner is ground for disqualification”) was merely restating what Rand J. said in Szilard v. Szasz, at pp. 6-7 in speaking of the “probability or reasoned suspicion of biased appraisal and judgment, unintended though it be”. This test is grounded in a firm concern that there be no lack of public confidence in the impartiality of adjudicative agencies, and I think that emphasis is lent to this concern in the present case by the fact that the National Energy Board is enjoined to have regard for the public interest.
(National Energy Board at 391).
[40] Phrased succinctly, the test is whether a reasonable and informed person would conclude on a balance of probabilities that a decision-maker was predisposed to decide an issue, or the entire matter, before them in favour of one party such that their mind was not completely open to the position of both parties. This test has seen recent use, affirming its validity and applicability to this case (see for example Maritime Employers Association v Lonshoremen’s Union, Local 375 (Canadian Union of Public Employees), 2020 FCA 29 [Maritime Employers Association] at para 5).
(2) Settlement Privilege and the Admissibility of the Settlement Offer in Adjudication [41] The most recent leading case on settlement privilege is Sable Offshore Energy Inc. v Ameron International Corp., 2013 SCC 37 [Sable], where Justice Abella (writing for a unanimous court) explained how settlement privilege promotes settlement, and it is a form of class privilege. As with other types of class privileges, “there is a prima facie presumption of inadmissibility, exceptions will be found ‘when the justice of the case requires it” (Sable at para 12, citing Rush & Tompkins Ltd. v Greater London Council, [1988] 3 All ER 737 (HL) at 740).
[42] Under settlement privilege, the common law rule is communications marked as “without prejudice” in the course of settlement negotiations are inadmissible (see Sable at para 13, citing David Vaver, “‘Without Prejudice’ Communications — Their Admissibility and Effect” (1974), 9 UBCL Rev 85, at 88). The justification for this privilege is the “understanding that parties will be more likely to settle if they have confidence from the outset that their negotiations will not be disclosed” (Sable at para 13).
[43] However, we are not dealing with the admissibility of the Settlement Offer in a court record or a settlement marked “without prejudice”. The context matters greatly here because s 16(c) of the Code expressly confers on a Board the discretion to admit evidence for their consideration in complaints under s 240 of the Code “whether admissible in a court of law or not.” While the Adjudicator also notes that they do not meet the definition of a member of a Board or external adjudicator such that s 16(c) directly applies, s 242(2) confers upon the Adjudicator all the powers conferred on a Board in sections 16(a), (b), and (c). By extension, this confers upon the Adjudicator the statutory discretion to admit into evidence anything they see fit, regardless of whether or not it would be admissible in a court under the common law.
[44] This same exercise of adjudicators’ discretion to admit normally inadmissible evidence has been upheld by courts in the context of hearsay evidence (see Canadian Broadcasting Corp. v Canadian Wire Service Guild et al., 1997 CanLII 15949 (NL SC), at paras 11-15), and specifically in the context of settlement communications (see Inter-Leasing, Inc. v Ontario (Finance), 2009 CanLII 63595 (ON SCDC) [Inter-Leasing] at paras 10-23).
(3) Duty to Mitigate Damages [45] There is a longstanding precedent that an unjustly dismissed employee must take reasonable steps to attempt to mitigate their losses flowing from their loss of employment (see Red Deer College v Michaels, 1975 CanLII 15 (SCC), [1976] 2 SCR 324, at 331-32).
[46] In the employment context, the Code has been consistently interpreted as providing remedy to applicants to make them whole from their loss (see for example Murphy v Canada (Adjudicator, Labour Code), 1993 CanLII 3009 (FCA), [1994] 1 FC 710, [1993] FCJ no 1236 [Murphy] at 722; see also Chalifoux v Driftpile First Nation, 2002 FCA 521 at para 12; see also Kouridakis v Canadian Imperial Bank of Commerce, 2021 FC 1035 at paras 56-57). However, this philosophy has a backstop where the employer offers the employee a chance to mitigate damages by returning to work, in which case “the central issue is whether a reasonable person would accept such an opportunity” (Evans at para 30). Whether a reasonable person would accept the employer’s offer to return to work is “an objective standard…to evaluate whether a reasonable person in the employee’s position would have accepted the employer’s offer” but the assessment under this standard must have regard to “the non-tangible elements of the situation — including work atmosphere, stigma and loss of dignity, as well as nature and conditions of employment” (Evans at para 30).
(4) Functus Officio [47] The legal principle of functus officio means that a legal body has lost jurisdiction over a matter once it has rendered a decision (see Safe Food Matters Inc. v Canada (Attorney General), 2023 FC 1471 [Safe Food] at para 76, citing Canadian Broadcasting Corp v Manitoba, 2021 SCC 33 at para 33). In the administrative process, functus officio ensures the finality of the decision-making process (see Elsipogtog First Nation v Peters, 2012 FC 398 [Elsipogtog] at para 43).
[48] The leading case on the principles of functus officio in the administrative law context is Chandler v Alberta Association of Architects, 1989 CanLII 41 (SCC), [1989] 2 SCR 848, [1989] SCJ no 102 [Chandler], where Justice Sopinka stated:
20] I do not understand Martland J. to go so far as to hold that functus officio has no application to administrative tribunals. Apart from the English practice which is based on a reluctance to amend or reopen formal judgments, there is a sound policy reason for recognizing the finality of proceedings before administrative tribunals. As a general rule, once such a tribunal has reached a final decision in respect to the matter that is before it in accordance with its enabling statute, that decision cannot be revisited because the tribunal has changed its mind, made an error within jurisdiction or because there has been a change of circumstances. It can only do so if authorized by statute or if there has been a slip or error within the exceptions enunciated in Paper Machinery Ltd. v. J. O. Ross Engineering Corp., supra.
[21] To this extent, the principle of functus officio applies. It is based, however, on the policy ground which favours finality of proceedings rather than the rule which was developed with respect to formal judgments of a court whose decision was subject to a full appeal. For this reason I am of the opinion that its application must be more flexible and less formalistic in respect to the decisions of administrative tribunals which are subject to appeal only on a point of law. Justice may require the reopening of administrative proceedings in order to provide relief which would otherwise be available on appeal.
[22] Accordingly, the principle should not be strictly applied where there are indications in the enabling statute that a decision can be reopened in order to enable the tribunal to discharge the function committed to it by enabling legislation. This was the situation in Grillas, supra.
[23] Furthermore, if the tribunal has failed to dispose of an issue which is fairly raised by the proceedings and of which the tribunal is empowered by its enabling statute to dispose, it ought to be allowed to complete its statutory task. If, however, the administrative entity is empowered to dispose of a matter by one or more specified remedies or by alternative remedies, the fact that one is selected does not entitle it to reopen proceedings to make another or further selection. Nor will reserving the right to do so preserve the continuing jurisdiction of the tribunal unless a power to make provisional or interim orders has been conferred on it by statute. See Huneault v. Central Mortgage and Housing Corp. (1981), 41 N.R. 214 (F.C.A.)
(Chandler at paras 20-23)
[49] The test for determining whether a decision-maker is functus officio is “whether the Adjudicator could be said to have finally determined the complaint before him” (Murphy at para 16). However, an adjudicator is not precluded under functus officio from issuing a clarifying award “as long as it does not create new or broader rights than those initially conferred” (Elsipogtog at para 49, citing Sherman v Canada (Customs and Revenue Agency), 2005 FC 173, [2005] FCJ no 209).
V. Issues [50] At the core of this matter are five issues:
Did the Adjudicator’s interventions suggest prejudgment and/or a reasonable apprehension that the Adjudicator was biased, constituting procedural unfairness?
Did the Adjudicator err by admitting the Settlement Offer into the record?
Did the Adjudicator err by refusing to recuse himself?
Did the Adjudicator err by holding that the Applicant failed to mitigate her damages and was therefore not entitled to any further remedy?
Did the Adjudicator err by refusing to exercise his discretion to rule on the terms of the Applicant’s reinstatement, and then declaring himself functus officio?
VI. Standard of Review [51] The Applicant submits the standard of review with respect to the procedural fairness issues, consisting of the reasonable apprehension of bias and the admissibility of the Settlement Offer in the record, is correctness. Specifically, while they rely on Vavilov for the general procedural fairness questions, they allege the scope of settlement privilege is a question of central importance to the legal system such that the admissibility of the Settlement Offer must also be reviewed on correctness. With respect to the other issues, they submit the standard of review is reasonableness.
[52] The Respondent argues all issues in this case should be assessed on the standard of reasonableness. They agree with the Applicant that reasonableness is the standard of review for the questions regarding remedy, the Adjudicator’s decision not to recuse themselves, and the functus officio finding. However, the Respondent argues that the issues of procedural fairness and/or bias alleged by the Applicant were dealt with on their merits by the Adjudicator and are distinguishable from the cases cited by the Applicant where issues were raised for the first time on appeal or judicial review. As such, a judicial review of these procedural fairness and/or bias issues would be subject to the reasonableness standard. The Respondent cites this Court’s recent decision in Oluwatusin, where the RAD considered arguments by the applicant that the RPD member had a reasonable apprehension of bias, the RAD made