BOARD OF INQUIRY (Human Rights Code)

IN THE MATTER OF the Ontario Human Rights Code, R.S.O. 1990, c. H.19, as amended;

AND IN THE MATTER OF the complaints by Harcourt Sinclair dated April 11, 1997 and Jennifer Newby dated August 6, 1997 alleging discrimination in accommodation because of race, colour, and age.

B E T W E E N:

Ontario Human Rights Commission

-and-

Harcourt Sinclair and Jennifer Newby

Complainants

-and-

Morris A. Hunter Investments Ltd. and Larry McGrath

Respondents

DECISION

Adjudicator: Mary Anne McKellar

Date: November 5, 2001

Board File No.: BI-0207/208-99

Decision No.: 01-024

A P P E A R A N C E S

Ontario Human Rights Commission ) William Holder, Counsel

Harcourt Sinclair, Jennifer Newby, ) Bruce Porter

Complainants ) Leilani Farha, Counsel

Morris A. Hunter Investments Ltd., ) Morris A. Hunter

Corporate Respondent )

Larry McGrath, ) Larry McGrath

Personal Respondent )

INTRODUCTION

In complaints dated March 11 and August 6, 1997, respectively, the Complainants, Harcourt Sinclair and Jennifer Newby allege that the Corporate Respondents, Bexon Investments Ltd. (“Bexon”), and Morris A. Hunter Investments, and the Personal Respondent Larry McGrath discriminated against them in the provision of accommodation contrary to the Ontario Human Rights Code, R.S.O. 1990, c.H.19, as amended (“the Code”), by rejecting their application for tenancy when they failed to meet a specified rent/income ratio and job tenure criterion. Specifically, the Complaints allege that rent/income ratios have an adverse impact on young prospective tenants and prospective tenants who are persons of colour because their incomes are significantly lower than those of older adults and those who are not persons of colour.

In accordance with the Board’s usual practice, the hearing into the Complaints commenced by conference call. McGrath took that call on behalf of all Respondents. At various times subsequently McGrath advised the Board in writing that the Respondents would not be participating in the hearing of this matter, and no Response to the Commission’s Statement of Facts and Issues was filed. Consequently, the Board was somewhat surprised to find not only McGrath but Morris Hunter in attendance on the first day of hearing, and to find that the Commission and Complainants had settled the Complaints as against Bexon. Upon receipt of a completed Form 3 (Confirmation of Full Settlement) executed by the Complainants, the Commission, and counsel for Bexon, the Board issued an order disposing of the Complaints against Bexon “in accordance with the terms of the [settlement] agreement dated 19 May 2000”.

At the outset of the hearing, the Commission brought a motion to amend the Complaint to reflect the correct name of one of the respondents. This motion was opposed by Morris Hunter. After hearing the submissions of the parties, the Board issued the following oral ruling:

The Board orders the Complaint amended to reflect that the correct name of the corporate respondent identified as Morris A. Hunter Investments is in fact Morris A. Hunter Investments Ltd. The misdescription has not operated to prejudice the corporate respondent, as its principal shareholder, Morris A. Hunter, has been present throughout these proceedings. Mr. Hunter, on behalf of the corporate respondent may renew his submission that the case should be dismissed as against the corporate respondent at the end of the hearing.

McGrath and Hunter attended during the testimony of the Complainants and cross-examined them. They then absented themselves from the hearing on the days that the Commission and the Complainants proffered the evidence of their experts, but attended once again following the conclusion of that testimony to lead their own evidence. They also attended and participated in the hearing during final argument.

Once the Complainants had finished testifying, they also absented themselves from the hearing. They continued, however, to be represented by the Centre for Equality Rights in Accommodation throughout the proceeding.

BACKGROUND

This recitation of certain background facts is based on the testimony of the Complainants and McGrath. These witnesses, and particularly McGrath, testified at much greater length and in much greater detail about these events than the following synopsis reflects. The Board is aware that there was a significant dispute between the parties respecting the sufficiency of the Complainants’ tenancy application and the reasons they failed to obtain an apartment at 1920 Weston Road. On the view the Board takes of this case, however, this dispute does not need to be resolved.

The Complainants are both black. In March 1997, the Complainants had been dating one another for some time and decided to look for an apartment to share. At the time, Harcourt Sinclair was 27 years old and Jennifer Newby was 23 years old. Both were attending school and working on a part-time basis for United Parcel Service. They learned that there was a vacant one-bedroom apartment available in a large apartment building located at 1920 Weston Road. The rent was $630 per month. On or about March 4, 1997, McGrath, the Property Manager of the building, showed them the apartment.

The Complainants liked the apartment and McGrath provided them with a rental application form. It was accompanied by a covering letter, indicating that certain supporting documents must be submitted along with a completed application. These documents included the following:

Letter from employer confirming employment or confirmation of pension or other annual income. Letter of employment should show length of full time employment and annual earnings. Applicants should consider that their employment income be approximately three times the rental payment and have a solid work history.

The Complainants returned the application to McGrath a few days later. He requested further supporting documentation. After responding to this request, the Complainants were advised by McGrath that the apartment in question had already been rented. They also failed to obtain a second one-bedroom apartment that subsequently became available at 1920 Weston Road. The Complainants managed to rent a comparable apartment from a different landlord at a rent of $650 per month commencing April 1, 1997. They continued to occupy this apartment at the time of the hearing and testified that they had never had any trouble meeting the rental payments.

The Complainants allege that their applications for tenancy were rejected because they failed to satisfy a rent/income ratio of 33% and had not been employed on a continuous full-time basis for at least three years. While not denying that rent/income ratios are used in assessing applications for tenancy at 1920 Weston Road, the Respondents maintained at the hearing that the Complainants’ failure to complete the application form properly and to provide all necessary information, along with their employer’s refusal to confirm the permanency of their employment led to the rejection of their application. The Board notes, however, that the response to the Complaints prepared by McGrath and filed with the Commission in June 1997 indicated that:

Ms. Newby & Mr. Sinclair were made aware that they required a qualifying income of $24,000.00 and they had to have a satisfactory work history.

We have a valuable asset which we must protect and we follow that [sic] same guidelines a bank or mortgage company would use for a mortgage. I appreciate that the applicant liked the apartment as it had just been redecorated but, in our evaluation they were not qualified for that amount of rent. The fact that their employer would not assure us that their part time employment was not of a permanent nature but subject to the companies [sic] level of business was an added concern.

In addition to the testimony of the Complainants and McGrath, the Board heard opinion evidence from a number of expert witnesses. This evidence was adduced by the Commission and Complainants in support of their position that the use of rent/income ratios have an adverse impact upon young persons and persons of colour and cannot be justified as a reasonable business practice.

The Respondents did not cross-examine the expert witnesses called by the Complainants and the Commission nor did they lead any expert evidence of their own with respect to the adverse impact of rent/income ratios on protected groups or the business justification of such rental practices.

THE PARTIES

The Complaints were set out on the Commission’s standard form, which includes a box for identifying respondents. The following text appeared in this box: “Larry McGrath (Property Manager), Bexon Investments Ltd., Morris A. Hunter Investments (landlords), c/o Westlaw Developments, 1920 Weston Road”. Thus the Complaints appeared to identify three Respondents, McGrath, Hunter and Bexon, and to provide a mailing address, “c/o Westlaw Developments, 1920 Weston Road” for all of them.

When the Commission referred the Complaints to the Board, its covering letter listed the above parties as respondents, and it also listed “Westlaw Developments” (“Westlaw”) as a respondent. In all of its correspondence to the parties, the Board perpetuated this error and continued to identify Westlaw as a respondent. In his written communications with the Board, McGrath wrote on stationery headed Westlaw Developments. It is unfortunate that none of that correspondence included a Response to the Commission’s Statement of Facts and Issues, as that might have clarified the relationship between Westlaw and the Respondents, and Westlaw’s status in these proceedings.

Only at the first day of hearing did the following become clear:

• McGrath was representing himself;

• Morris Hunter was representing Hunter;

• The Complaints against Bexon had settled;

• McGrath and Hunter did not intend to cross-examine or otherwise challenge the experts that the Commission and Complainants proposed to call.

Only after the Complainants’ testimony had been concluded and McGrath and Hunter had absented themselves from the hearing, did the following particulars of the relationship between Westlaw and the named respondents become clear, and then only in response to questions from the Board;

• Westlaw is a partnership;

• Bexon and Hunter are the partners in Westlaw;

• A Registered Partnership name search ordered by the Commission failed to come up with any information for Westlaw;

• Westlaw owns the building at 1920 Weston Road; and

• Westlaw is not a respondent.

Further clarification on these matters were provided by McGrath and Hunter when they again attended the hearing, resulting in their entering into an agreed statement of facts with the Commission and the Complainants. It reads as follows:

1. ‘Westlaw Developments’ is the employer of Larry McGrath.

2. ‘Westlaw Developments’ is an entity through which Bexon Investments

Limited and Morris A. Hunter Investments Limited carry on business.

From the uncontradicted evidence of McGrath the Board concludes that:

• Westlaw employed McGrath;

• The practice of using rent/income ratios in assessing applications for tenancy at 1920 Weston Road preceded McGrath’s employment as Property Manager;

• McGrath is Westlaw’s only employee;

• Westlaw’s only business activity is the rental of the residential apartment units located at 1920 Weston Road;

• Bexon and Hunter play no active role in the operation of Westlaw’s business activity.

Hunter maintained at the hearing that Westlaw was a properly registered partnership, but provided no documentary evidence to corroborate his statement, which was contradicted by the results of the Commission’s search, as indicated above.

The Commission and the Complainants were aware throughout the hearing that Westlaw was not a respondent to the Complaints, and that this was a matter of some concern to the Board. They did not seek to add Westlaw as a respondent even after its relationship to McGrath and Bexon and Hunter was clarified, and even after the Board questioned the impact that Westlaw’s omission could have on potential remedial orders.

McGrath and Hunter had absented themselves from the hearing on the occasions when the Board posed the questions that led to the clarification of Westlaw’s legal status and involvement in these matters. They apparently did not realize that Westlaw was not a party until the last day of the hearing, when the Commission was in the course of making its legal submissions. At that point, Hunter sought to amend the Complaints to add Westlaw as a respondent. This motion was opposed by the Commission and the Complainants, in part because they had already settled the Complaints as against Bexon. Hunter abandoned his motion when the Board ruled that it would be unfair to determine it in the absence of notice to Bexon, and that the hearing would be adjourned to allow for such notice to be given.

THE CODE

The pertinent provisions of the Code and regulations are the following:

s. 2(1) Every person has a right to equal treatment with respect to the occupancy of accommodation, without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, marital status, same-sex partnership status, family status, handicap or the receipt of public assistance.

s. 9 No person shall infringe or do, directly or indirectly, anything that infringes a right under this Part.

s.11(1) A right of a person under Part I is infringed where a requirement, qualification or factor exists that is not discrimination on a prohibited ground but that results in the exclusion, restriction or preference of a group of persons who are identified by a prohibited ground of discrimination and of whom the person is a member, except where,

(a) the requirement, qualification or factor is reasonable and bona fide in the circumstances; or

(b) it is declared in this Act, other than in section 17, that to discriminate because of such ground is not an infringement of a right.

(2) The Commission, the board of inquiry or a court shall not find that a requirement qualification or factor is reasonable and bona fide in the circumstances unless it is satisfied that the needs of the group of which the person is a member cannot be accommodated without undue hardship on the person responsible for accommodating those needs, considering the cost, outside sources of funding, if any, and health and safety requirements, if any.

(3) The Commission, the board of inquiry or a court shall consider any standards prescribed by the regulations for assessing what is undue hardship.

S.21(3)The right under section 2 to equal treatment with respect to the occupancy of residential accommodation without discrimination is not infringed if a landlord uses in the manner prescribed under this Act income information, credit checks, credit references, rental history, guarantees, or other similar business practices which are prescribed in the regulations under this Act in selecting prospective tenants.

O.Reg.290/98 provides as follows:

1(1) A landlord may request credit references and rental history information, or either of them, from a prospective tenant and may request from a prospective tenant authorization to conduct credit checks on the prospective tenant.

(2) A landlord may consider credit references, rental history information and credit checks obtained pursuant to requests under subsection (1), alone or in any combination, in order to assess the prospective tenant and the landlord may select or refuse the prospective tenant accordingly.

(3) A landlord may request income information from a prospective tenant only if the landlord also requests information listed in subsection (1).

(4) A landlord may consider income information about a prospective tenant in order to assess the prospective tenant and the landlord may select or refuse the prospective tenant accordingly only if the landlord considers the income information together with all the other information that was obtained by the landlord pursuant to requests under subsection (1).

(5) If, after requesting the information listed in subsections (1) and (3), a landlord only obtains income information about a prospective tenant, the landlord may consider the income information alone in order to assess the prospective tenant and the landlord may select or refuse the prospective tenant accordingly.

2(1) A landlord may require a prospective tenant to obtain a guarantee for the rent.

(2) A landlord may require a prospective tenant to pay a security deposit in accordance with sections 117 and 118 of the Tenant Protection Act, 1997.

3. In selecting a prospective tenant, a landlord of a rental unit described in paragraph 1, 2 or 3 of subsection 5(1) or subsection 6(1) of the Tenant Protection Act, 1997 may request and use income information about a prospective tenant in order to determine a prospective tenant's eligibility for rent in an amount geared-to-income and, when requesting and using the income information for that purpose only, the landlord is not bound by subsections 1(3) and (4).

4. Nothing in this regulation authorizes a landlord to refuse accommodation to any person because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, family status, handicap or the receipt of public assistance.

5. This Regulation comes into force on the day clause 48(a.1) of the Act comes into force.

THE BOARD’S JURISPRUDENCE

The Board has issued two previous decisions dealing with the impact of the use of rent/income ratios on the accommodation rights of groups identified by prohibited grounds of discrimination. See Kearney v. Bramalea Ltd. (No. 2) (1998), 1998 CanLII 29852 (ON HRT), 34 C.H.R.R. D/1 and VanderSchaaf v. M.R. Property Management Ltd. (2000), 2000 CanLII 20867 (ON HRT), 38 C.H.R.R. D/251. The Kearney decision has since been upheld on appeal to the Divisional Court (2001 CanLII 28414 (ON SCDC), [2001] O.J. No. 297) (“the Kearney Appeal”) and leave to appeal to the Court of Appeal from that decision has been denied.

The Kearney Board determined that the use of rent/income ratios constituted unlawful discrimination on the basis of age, race, sex, marital status, family status, citizenship, place of origin and receipt of public assistance. It ordered the respondent landlords to cease using rent/income ratios in selecting prospective tenants, whether alone or in conjunction with other factors. Each of the three complainants in that case was awarded general damages for her loss of the right to be free from discrimination occasioned by the application of a rent/income ratio. Those damage awards ranged between $4000 and $5000. In addition, the one complainant who was compelled to rent a more expensive apartment than the one she was denied, was awarded an amount of specific damages in respect of that difference.

In VanderSchaaf, the Board determined that while the use of rent/income ratios constituted unlawful discrimination on the basis of sex, the complainant’s failure to obtain the apartment in that case resulted, not from the application of such ratio, but rather from the differential assessment criteria applied to co-tenancy applications from room-mates as compared to those from couples. Consequently, the Board concluded that the respondents in that case unlawfully discriminated against the complainant on the basis of marital status. The Board nevertheless went on to offer its obiter interpretation of s. 21(3) of the Code and O. Reg. 290/98 promulgated during the course of the Kearney Board’s deliberations, but not considered in that decision. In Vander Schaaf, as in this case, the Board received no assistance in this interpretative exercise from the respondents, who chose not to participate in the hearing. Had the Board found the necessary causal connection between the application of rent/income ratios and the complainant VanderSchaaf’s failure to obtain the apartment, it would have made the following remedial orders:

(1) that the Respondents cease and desist from requesting income information from prospective tenants, except to the extent that they also request information respecting rental history and credit references; and

(2) that the Respondents cease and desist from applying rent/income ratios in selecting tenants.

The complainant in VanderSchaaf was awarded general damages of $2500 in respect of her loss of the right to be free from discrimination occasioned by the differential assessment criteria applied to co-tenancy applications from single persons as compared to couples.

THE EXPERT EVIDENCE

The Board qualified four witnesses as experts to offer opinion evidence in specific areas. Their evidence is briefly summarized below.

The Commission proffered and the Board qualified Dr. Michael Ornstein as an expert witness in quantitative social research to provide opinion evidence on the effect of income and employment criteria on access to rental housing by groups identified by prohibited grounds of discrimination. He was similarly qualified in Kearney and in VanderSchaaf. His qualification was consented to by the Complainants. Ornstein’s evidence respecting his analysis of information from the 1996 Census was unchallenged, and on the basis of that evidence the Board accepts the following conclusions set out in his report:

• . . .the age differences in income are pervasive enough and large enough that the application of any reasonable income criterion would seriously disadvantage young people. This disadvantage extends at least to individuals in their mid-twenties, with much more severe disadvantage for people in their early 20s or younger.

• . . .young people [who form a household as a couple] have lower household incomes and are less likely to meet income criteria anywhere in the range from $25,000 to $50,000 annual income. . . Significant disadvantage affects women in couples until about their mid-20s. . . . disadvantage extends until men are in their mid 20s.

• Over the entire distribution of individual income . . . members of visible minorities have lower incomes than the non-minority population . . . . The differences are statistically significant and represent a meaningful differential in access to the housing market, but the impact of age is greater.

• Because the proportion of employees with permanent work increases steadily until about age 30, younger people are disadvantaged by its use as a criterion for access to accommodation.

• There is a very strong relationship between age and job tenure – defined in terms of how long the respondent has worked for his or her employer. . . . It turns out that the tendency for younger people to change jobs more frequently, and so have shorter average job durations, extends well into their thirties.

The Commission proffered and the Board qualified Dr. David Hulchanski as an expert witness to provide opinion evidence on Canadian housing policy, rental housing policy including housing programs and problems, and housing affordability. He was similarly qualified in Kearney. Hulchanski’s qualification as an expert was consented to by the Complainants and his evidence was unchallenged. On the basis of that evidence the Board accepts the following conclusions set out in his Summary of Proposed Evidence:

• A serious additional error with the housing expenditure-to-income ration is that it relies on a faulty definition of “income”. What is household “income”? What is meant by “income” in minimum income criteria? The ratio fails to be a valid measure of housing affordability in part because it relies on the income that is easiest to measure – cash income. It ignores the many other economic sources of support, both cash and non-cash, by which households meet their needs.

• Minimum income requirements that define income without considering total household resources may be easier to administer, but they simplify reality to the point that they fail to represent the economic resources available to households. Consequently, they are unreliable predictors of rental default.

• The inadequacy of the conventional measure as cash income, combined by the recognition of the reality of how households actually meet their needs, explains why a substantial number of renter households manage to spend a huge percentage of their cash incomes on rent without defaulting.

• In short, the inadequacy in the definition of income used in the standard housing expenditure-to-income ratio is itself enough to invalidate the use of minimum income criteria by landlords in the rental marketplace. It is not a valid and reliable indicator of what it claims to measure. There is no evidence to support its use as a measure of housing affordability, or ability to pay, or the risk of default. There is a great deal of evidence to the contrary -- evidence that many households, past and present, pay more than the prescribed ratio without defaulting on their rent. The reality of how households manage to meet their needs, including the need to have the cash to pay their rent, is too complex and diverse to be summarized in one simple measure.

The Commission proffered and the Board qualified Gary McIlravey as an expert witness in the area of residential market analysis to provide opinion evidence on tenant selection practices and the impact of rental arrears on the viability of residential landlord’s businesses. He was similarly qualified in Kearney and in VanderSchaaf. McIlravey’s qualification as an expert was consented to by the Complainants. His evidence was unchallenged, and on the basis of that evidence the Board accepts the following conclusions set out in his Summary of Proposed Evidence:

• Most fundamentally, the analysis and data presented in this report show that, even if minimum income criteria could predict tenant default, tenant default is not a significant factor in determining the economic viability of a landlord’s rental business. The average impact is no more than 0.5%in larger buildings. With vacancy rates in 1994 being in the 1.8% range, “normal” levels of vacancy represented a potentially greater cost to a landlord, than the potential cost of tenant default on rent. This is likely to remain true today, even with lower vacancy rates (0.8% range).

• Consequently, restricting applicants to apartment buildings solely on the basis of rent to income ratios in the hopes of reducing default, has no basis. The end does not justify the means, since default has no significant impact on profitability and investment. In fact, this practice potentially creates additional cost to the landlord, by restricting potential demand and increasing vacancy, rather than creating any meaningful savings in the area of bad debts and default.

The Board also qualified M.S. Mwarigha as an expert witness in the area of discrimination in housing and its impact on social demographics and settlement patterns in the rental market to provide opinion evidence on the social impact of income criteria and employment qualifications on the settlement patterns of visible minority tenants and their relation to prejudices and stereotypes about low income visible minority tenants. Mwarigha was proffered as a witness by the Complainants and his qualification as an expert was consented to by the Commission. Mwarigha’s evidence was unchallenged. On the basis of that evidence the Board accepts the following conclusion set out in his Summary of Proposed Evidence:

• The kind of segregation that results from income based discrimination leads to differentiation in the rental markets into locations of prime rental housing that is occupied primarily by moderate income white residents and poor housing that is occupied by low-income and mostly black residents. Very often these two ‘locations’ are different not so much in terms of the actual rent levels but rather in the quality of housing. The quality of the housing is then confused in public attitudes with the living habits of the residents and increasingly negative images are fostered about low income visible minority tenants. In effect, low income black residents end up paying comparably higher rents for poor quality housing and then pay a serious social price foe the negative images created by the locations in which they are forced to live.

THE ANALYSIS

Although McGrath may have had several reasons for rejecting the Complainants’ tenancy application, I find that such rejection was prompted at least in part by his concern that they could not satisfy Westlaw’s prescribed rent/income ratio, as well as his concern that their employment was not “permanent”.

The unchallenged expert evidence in this case unequivocally supported findings that rent/income ratios: discriminate against rental applicants at least up until their middle twenties (Ornstein); discriminate against visible minority rental applicants (Ornstein); result in the creation of “ghettoized” communities of low income visible minority tenants in poor quality housing about whom prejudices and stereotypes develop and flourish (Mwarigha); and are not reliable predictors of rental default (Hulchanski). The expert evidence further established that, even if rent/income ratios were reliable predictors of default, losses associated with such default are not a significant factor in determining the economic viability of a landlord’s rental business (McIlravey).

The Board finds that the application to the Complainants of a rental policy requiring that applicants for tenancy satisfy a rent/income ratio constituted discrimination on the basis of age and colour contrary to the Code.

The unchallenged expert evidence also established that rental policies requiring applicants to be employed on a permanent basis or to satisfy a criterion of minimum tenure with an employer discriminate against rental applicants on the basis of age (Ornstein). Because the Respondents did not cross-examine Ornstein or call any expert evidence of their own, no evidence was led that would permit the Board to determine whether reliance on tenure of employment is a reasonable and bona fide business practice.

The Board finds that the application to the Complainants of a rental policy requiring that applicants for tenancy be employed on a “permanent” basis constituted discrimination on the basis of age contrary to the Code.

REMEDY

The determination of the appropriate remedies in this case raises interesting and difficult issues respecting both the scope of remedies available to the Board, and the persons against whom those remedies can be ordered. The Board will deal with each of these issues in turn.

The Board has already determined in Kearney and VanderSchaaf that the use of rent/income ratios to screen prospective tenants constituted discrimination on the grounds of sex, age, marital status, race, family status, place of citizenship, place of origin, and receipt of public assistance contrary to the Code. The Kearney determinations have been upheld on appeal. In those cases, as in this one, the incidents set out in the complaints occurred prior to the amendments to the Code and the promulgation of O.Reg. 290/98. It is therefore available to the Board to make a declaration that the rental practices applied to the assessment of the Complainant’s tenancy application contravened the Code as it existed at that time. The more difficult issue lies in determining what impact those legislative amendments have on the scope of the prospective remedies available.

In Kearney the Board ordered the respondent landlords to cease and desist applying rent/income ratios notwithstanding that the Code had been amended and O.Reg. 290/98 promulgated prior to the release of its decision. In VanderSchaaf, which was both heard and decided after those legislative amendments, the Board examined the impact of O.Reg. 290/98 and formed the opinion that it did not preclude the Board’s ordering such cease and desist orders. The Board in VanderSchaaf indicated that it would have ordered the respondents to cease and desist using rent/income ratios had it found in that case that the failure of the complainant to obtain the apartment in question resulted from the application of such ratios. Its analysis of the legislative amendments encompassed several paragraphs:

102. Section 2 is found in Part I of the Code, which also contains s. 9, prohibiting persons from "directly or indirectly" infringing "a right under this Part". Although s. 11 is found in Part II of the Code, pursuant to it, Part I is infringed where a factor that "is not discrimination on a prohibited ground" results in the exclusion, restriction or preference of a group identified by a prohibited ground of discrimination, except where the factor is reasonable and bona fide and the needs of the group cannot be accommodated without undue hardship". Kearney found that the use of rent/income ratios came within the description of behaviour proscribed by s. 11 with the consequence that the use of those ratios contravened the complainants' rights under Part I of the Code. In the "Order" portion of its decision, the panel declared that rent/income ratios (used alone or in conjunction with other factors) "violate sections 2(1), 4, 9 and 11 of the Human Rights Code, whether used alone or in conjunction with other selection criteria or requirements".

103. Section 21(3) of the Code now provides that the Code's guarantee of equal treatment with respect to accommodation is not infringed by a landlord's use of income or other information in accordance with the regulation. Neither the Code nor the regulation defines "income information". Section 21(3) appears in Part II of the Code, under the heading, "Interpretation and Application". Because s. 21(3) constitutes an exception to the guarantees in the Code, it must be construed narrowly.

104. O.Reg. 290/98 provides that a landlord can request and consider "income information" as long as it also requests and considers rental history and credit references. If the latter information is not forthcoming, the landlord can consider income information alone. Section 4 of the regulation expressly states that nothing in it authorizes a landlord to refuse accommodation "because of" various proscribed grounds of discrimination. These proscribed grounds of discrimination are the same as the ones set out in s. 2(1) of the Code, and the grammatical structure of s. 4 of O.Reg. 290/98 is identical to that of s. 2(1) of the Code.

105. It is difficult to reconcile the amended Code and regulations with the decision in Kearney, no doubt because the former antedated and anticipated the latter. Both the Commission and the Complainant struggled valiantly to do so.

106. Both the Commission and the Complainant agreed that the term "income information" is broad enough to encompass information about the amount, source, and steadiness of a potential tenant's income. The Commission submits that O.Reg. 290/98 insofar as it allows landlords to consider "income information" permits them to apply rent/income ratios. The Complainant, on the other hand, while conceding that a landlord may obtain information respecting the amount of a potential tenant's income, argues that the landlord is not permitted to apply a rent/income ratio. The question of what meaning to ascribe to "income information" can only be answered having regard to the whole of O.Reg. 290/98. At this point, however, the Board notes that it would have been a simple matter for the legislature to have clearly indicated if it intended to permit landlords to use rent/income ratios by employing that express language in the regulation. The Board also notes that during the Standing Committee on General Government hearings into Bill 96, Government members of the Committee offered repeated assurances that it was not the Government's intention to authorize the use of a 30% rent/income ratio, but that their intention was confined to clarifying what information landlords could request from prospective tenants.

107. The Commission also submits that where landlords receive rental history, credit references and income information, they must consider each type in a meaningful way and may not "use minimum income criteria as an absolute cut-off in the absence of consideration of the other information prescribed in the Regulation, where such information is available". As well, the Commission submits that there is a distinction between "negative credit references or negative rental history and no credit references or no rental history". Some protected groups may have an absence of such information and the Regulation does not permit a landlord to refuse to rent to a person on the basis that credit references and rental history do not exist. This issue does not arise on the facts of this case, and the Board refrains from comment on this aspect of the interpretation of O.Reg. 290/98.

108. The real difficulty with interpreting O.Reg. 290/98 is determining what meaning to ascribe to s. 4. The Commission submits that this section, read in the context of the Code as a whole and Kearney, precludes a landlord from refusing to rent "directly because of a prohibited ground". The Board disagrees for several reasons. First, if that had been the legislative intention, it would have been much easier to say so plainly. Second, the Supreme Court of Canada in Ontario Human Rights Commission and O'Malley v. Simpsons-Sears (1985), 1985 CanLII 18 (SCC), 7 C.H.R.R. D/3102 found that a prohibition on discrimination employing the same grammatical structure as that found in s. 2 of the Code and s. 4 of O.Reg. 290/98 was not limited to prohibiting direct discrimination only. Rather, it also prohibited adverse effect discrimination. Third, reading s. 4 of O.Reg. 290/98 to prohibit direct discrimination only renders it utterly redundant since s. 2(1) of the Code already makes it unlawful to directly discriminate on the basis of a prohibited ground. That protection against direct discrimination is not undermined by permitting the use of rent/income ratios, rental history or credit references, all of which Kearney held to be neutral rules or factors that could be applied in a non-discriminatory fashion, but which nevertheless could constitute unlawful discrimination under the Code where they resulted in the exclusion, restriction or preference of a group identified by a prohibited ground of discrimination. Fourth, the Supreme Court of Canada in Meiroin identified the difficulties associated with analyses of discrimination that rely on the distinctions historically drawn among behaviours described as direct, indirect, constructive, adverse effect or systemic discrimination.

The distinction between a standard that is discriminatory on its face and a neutral standard that is discriminatory in its effect is difficult to justify, simply because there are few cases that can be so neatly characterized. For example, a rule requiring all workers to appear at work on Fridays or face dismissal may plausibly be characterized as either directly discriminatory (because it means that no workers whose religious beliefs preclude working on Fridays may be employed there) or as a neutral rule that merely has an adverse effect on a few individuals (those same workers whose religious beliefs prevent them from working on Fridays). On the same reasoning, it could plausibly be argued that forcing employees to take a mandatory pregnancy test before commencing employment is a neutral rule because it is facially applied to all members of a workforce and its special effects on women are only incidental. (at Para. 27)

109. In view of all of the above, the Board is reluctant to read s. 4 of O.Reg. 290/98 as creating a distinction between direct and indirect discrimination where the statutory language in question does not absolutely and expressly compel it.

110. The Complainant's representative submitted that s. 4 of O.Reg 290/98 prohibited all discrimination. He argued that its effect was to preserve the outcome in Kearney. In his view, O.Reg. 290/98 as a whole allowed landlords to request and use certain information, but required that they do so reasonably, and not in such a way as to contravene the Code. Hence his urging that a landlord's "consideration" of income information could not include the application of rent/income ratios, because they had been shown in Kearney to have no correlation with risk of default. Despite repeated questioning, he would not concede that any reasonable rent/income ratio could be specified. Although he described the regulation as "circular", the Complainant's agent did not describe it as repugnant to the Code and ineffective on that basis.

111. It seems to the Board that there are three possible solutions to the conundrum of how to reconcile the Code, Kearney and O.Reg. 290/98. The first is to declare that the legislative changes are so hopelessly circular that it is impossible to ascribe meaning to them. On this reading, O.Reg. 290/98 is repugnant to the Code and cannot stand. The second possibility is that because the easiest to satisfy rent/income ratio considered in Kearney was 34% and it was found to contravene the Code, what the amendments and Kearney now mean is that landlords are prohibited from applying rent/income ratios of less than 35%, but may apply ratios larger than that, subject to the risk of those ratios being found to contravene the Code. The problems with this approach, however, are that the expert evidence here demonstrated that all rent/income ratios disproportionately disadvantage groups of persons identified by prohibited grounds of discrimination, and that the Kearney panel appeared to declare that all rent/income ratios contravene the Code. The third possibility, and the one I prefer, is to find that permitting landlords to obtain "income information" from prospective tenants does not permit them to apply rent/income ratios, all of which Kearney found contravened the Code. On balance, therefore, I adopt the Complainant's interpretation of "income information" to that offered by the Commission. I observe, however, that even this interpretation leaves open the possibility that sophisticated landlords may attempt to prefer higher-income applicants without contravening the Code, by "eyeballing" the relationship between income and rent, but not actually crunching the numbers.

The Kearney Appeal, supra, issued subsequent to the decision in VanderSchaaf. The appeal was allowed in part and the Court replaced two of the Kearney remedial orders having prospective effect with a single declaration that the respondents in that case had breached the complainants’ rights under the Code. The rationale for the Court’s substitution of its remedy is set out in the following passages respecting the impact of O.Reg. 290/98:

If paragraph 1 or paragraph 2 [declaring the use of rent/income ratios to contravene the Code and ordering the landlords to cease and desist from using them] of the December 22, 1998 Order of the Board is allowed to stand, the Appellants/landlords would be forever prohibited by paragraphs 1 and 2 from utilizing the new s. 21(3) of the Code and/or O.Reg. 290/98, entitled: “Business Practices Permissible to Landlords in Selecting Prospective Tenants for Residential Accommodation”.

If paragraph 1 and paragraph 2 of the impugned Order are allowed to stand, because of the June 17, 1998 amendments, the Appellants/landlords would be bound, in perpetuity, by a different set of rules than every other landlord in Ontario.

On several occasions during their submissions, counsel for the Respondents reminded us that the Code was remedial and not punitive. That proposition alone points out why those paragraphs cannot be allowed to stand.

The above passages represent the totality of the Divisional Court’s comments with respect to the legislative amendments. The Court did not engage in any analysis of how the provisions of O.Reg. 290/98 might be interpreted and applied. Instead, without engaging in that analytical exercise, the Court appears to have premised its orders on the assumption that O.Reg. 290/98 functioned to permit the use of rent/income ratios. The regulation on its face, however, only refers to “income information”, and only purports to permit landlords to ask for and rely on such information in restricted circumstances. While the Board is bound to follow the decisions of the Divisional Court, in the absence of the Court’s engaging in any close examination of the implications of O.Reg. 290/98, and with the Board’s own analysis in VanderSchaaf suggesting that O.Reg. 290/98 does not permit the use of rent/income ratios, the Board finds that O.Reg. 290/98 and the Kearney Appeal do not preclude it from making a cease and desist order. The Board is of the view that such an order would generally be appropriate for the following reasons.

Rent/income ratios have been found to constitute discrimination on 8 of the 14 grounds prohibited in subsection 2(1) of the Code. The Code protects those who are susceptible of being socially disadvantaged because of particular personal attributes. Kearney and VanderSchaaf recognize the fact that social disadvantage is frequently accompanied by economic or financial disadvantage. It is entirely possible that an evidentiary basis may also exist for concluding that rent/income ratios which prefer the economically advantaged would also be found to discriminate on other grounds prohibited under the Code, such as ancestry, colour, ethnic origin or handicap. Rent/income ratios have already been found and are likely to be found to be discriminatory in respect of their application to such a wide range of potential tenants that it would be difficult to think of circumstances in which they could be employed without contravening the Code.

Board of Inquiry decisions are not made in rem. They have no precedental authority and are not binding upon persons who are not party to them. Nevertheless they must be regarded as having significant persuasive authority. In this case involving an issue of access to accommodation and the use of a rule that restricts that access, it is difficult to conceive of a way in which an applicant for rental housing can be accommodated under the Code short of elimination of the access criteria. The situation before the Board does not involve a subsisting relationship between the complainant and the respondent, rather it pertains to the opportunity to commence a relationship. Human rights jurisprudence frequently states that members of protected groups who are differentially and disadvantageously impacted by apparently neutral rules of general application must make known their need for accommodation. That proposition is of very doubtful application to this type of situation where it is simply not meaningful to look at individual accommodation, and where the very existence of the rental criteria may have a chilling effect on applications from members of identified groups. The only accommodation possible is to forego use of the rent/income ratio at all in the assessment of many applicants for tenancy. The remedial orders in Kearney recognize this fact. Implicitly, so too does the Supreme Court of Canada’s analysis in British Columbia (Public Service Employee Relations Commission) v. B.C.G.S.E.U. (1996), 1999 CanLII 652 (SCC), 176 D.L.R. (4th) 1 (“Meiorin”), although since that case arose as a grievance following a termination of employment rather than as a proceeding under human rights legislation, we do not have the benefit of the Court’s pronouncement on what an appropriate remedy under human rights legislation might be.

Based on Kearney and Meiorin, and this Board’s unchallenged interpretation of O. Reg. 290/98 in VanderSchaaf , all landlords, regardless of whether they were parties to and bound by those decisions, would be wise to consider carefully indeed whether to continue using rent/income ratios as a means of screening tenants. While using rent/income ratios would not render them susceptible of an enforcement application or contempt proceedings pursuant to decisions to which they were not a party, such practices would render them susceptible to further human rights complaints, in which, in the absence of any further legislative reform, an order to cease and desist using such ratios could well issue should the Board follow its own jurisprudence to date. Certainly in the circumstances of this case such an order would be appropriate.

With respect to rental practices requiring tenants to satisfy minimum job tenure criteria, the Board notes that O. Reg. 290/98 addresses itself to landlords’ use of “income information”. It does not expressly purport to apply to “employment information”. In the absence of such express language, the Board is not prepared to find that O.Reg. 290/98 has any application in permitting the collection of and reliance on information respecting the status and tenure of a potential tenant’s employment. Nor does any provision in the Code purport to permit the collection of such information. Consequently, an appropriate order in respect of this practice would have been to order landlords to cease and desist from requiring potential tenants to meet minimum job tenure criteria.

In addition to fashioning prospective remedies to ensure that respondents’ future practices/actions comply with the Code, the Board also typically awards damages to redress the impact on complainants of the respondents’ contraventions.

An award of general damages in respect of the Complainant’s loss of the right to be free from discrimination would be appropriate in the circumstances of this case. As it did in VanderSchaaf, the Board would assess those damages at $2500 per Complainant.

An award in respect of the additional rental costs incurred by the Complainants in obtaining alternate accommodation in the amount $20.00 per month over a reasonable period of time would also be an appropriate award of damages. For this purpose, the Board would assume a one-year period to be appropriate.

Having made the above observations about the scope of the Board’s remedial jurisdiction, and the remedies the Board would have found to be appropriate in this case, the Board now turns to the question of whether any of them can be awarded in the circumstances of this case, and if so, against whom. This problem arises as a direct consequence of the settlement between the Commission, the Complainants and Bexon.

The Board finds that the Code was contravened when McGrath applied Westlaw’s rental policies in rejecting the Complainants’ tenancy application because of their failure to satisfy minimum income criteria, and because the Complainants’ employer refused to characterize their employment as “permanent”.

Westlaw is vicariously responsible for the actions of its employee pursuant to s. 45(1) of the Code:

For the purposes of this Act, except subsection 2(2), subsection 5(2), section 7 and subsection 44(1), any act or thing done or omitted to be done in the course of his or her employment by an officer, employee or agent of a corporation, trade union, trade or occupational association, unincorporated association or employers’ organization shall be deemed to be an act or thing done or omitted to be done by the corporation, trade union, trade or occupational association, unincorporated association or employers’ organization.

By statute Westlaw is vicariously liable for McGrath’s actions. Although Westlaw was not a named party to the complaint and did not participate at the hearing, both of its principals were respondents and clearly had notice of the Complaints. It does not appear that there is any factual defence it could have mounted to the Complaints that was not presented in the evidence of McGrath.

But for the fact that the Complainants and the Commission have settled with Bexon, the Board would have no difficulty in making remedial orders against Westlaw. The nature of Bexon’s relationship with Westlaw, however, means that such orders would necessarily be binding upon and enforceable against Bexon, a party whom the Board has released from the Complaints on the consent of the Commission and Complainants.

In these circumstances, the Board declines to make an order against Westlaw. Had the proper parties been named in this proceeding, the Board would have ordered Westlaw to cease and desist using rent/income ratios in assessing prospective applications for tenancy, and in applying its rental policy requiring a “solid work history” to require applicants to be employed on a “permanent basis”.

Notwithstanding that Hunter is a partner in Westlaw, such that any damages ordered against Westlaw might ultimately be enforceable against Hunter, all the evidence was that Hunter had no involvement in Westlaw’s day-to-day operations. There is therefore no basis for liability as against Hunter.

McGrath is the only proper party against whom the Board can make a remedial order.

The Board will not be making an order in respect of damages. The order cannot be made against Hunter or Westlaw, and the Board is of the view that it is inappropriate to make such order against McGrath, who was merely applying Westlaw’s pre-existing rental policy. In any event, any monies already received in lieu of damages pursuant to the settlement with Bexon would have to be set off against whatever the Board ordered.

ORDER

The Board orders McGrath to cease using rent/income ratios and to cease requiring that rental applicants be employed on a permanent basis.

Dated at Toronto, this 5th day of November, 2001

“Mary Anne McKellar”

Mary Anne McKellar, Vice-Chair