Ontario Human Rights Commission v. Howard, 2006 HRTO 4

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Ontario Human Rights Commission

Commission

-and-

Pamela Howard

Complainant

-and-

Henry deRuiter

Respondent

DECISION on application for Costs

Adjudicator: David J. Mullan

Date: March 24, 2006

Citation: 2006 HRTO 04

Human Rights Tribunal of Ontario

400 University Avenue, 7^th^ Floor

Toronto ON M7A 1T7

Phone (416) 314-0004 Fax (416) 314-8743 Toll free 1-800-668-3946

TTY (416) 314-2379 / 1-800-424-1168

E-mail hrto.registrar@jus.gov.on.ca

Website www.hrto.ca

APPEARANCES

Ontario Human Rights Commission ) Sylvia Davis, Counsel

Pamela Howard, Complainant ) No appearance

Henry deRuiter, Respondent ) Joy Hulton, Counsel

INTRODUCTION

1Pamela Howard complained that Henry deRuiter discriminated against her in employment because of sex, family status, and marital status contrary to Section 5(1) of the Human Rights Code, R.S.O. 1990, c.H.19, as amended (the “Code”). She also alleged that Henry deRuiter had harassed her sexually in employment contrary to Section 7(2) of the Code. At the hearing, these allegations were expanded to include violations of Section 5(2) (harassment on the basis of marital and family status). Counsel for the Respondent did not object to the inclusion of this additional ground.

2After a hearing that lasted four days, I ruled that the Complaint had not been made out. While I was prepared to hold that the Commission’s evidence was sufficient to raise a prima facie case with respect to some of the allegations of sexual harassment, I determined, largely on the basis of issues as to credibility, that the Commission had not established the allegations by reference to the appropriate standard of a balance of probabilities.

3At the conclusion of the hearing, Counsel for the Respondent intimated that she would be making an application for costs against the Commission under Section 41(4) of the Code. The hearing of that application took place on November 30 and December 1, 2004.

4Section 41(4) provides as follows:

(4) Where, upon dismissing a complaint, the Tribunal finds that,

(a) the complaint was trivial, frivolous, vexatious or made in bad faith; or

(b) in the particular circumstances undue hardship was caused to the person complained against,

the Tribunal may order the Commission to pay to the person complained against such costs as are fixed by the Tribunal.

5At the hearing of the application for costs, Counsel for the Commission raised a preliminary objection. She asserted that I had no jurisdiction to award costs in favour of a Respondent whom the Police Services Board (through the Regional Municipality of York) was fully indemnifying by providing him free of charge with an in-house lawyer. Counsel for the Respondent resisted that argument, and claimed in the alternative that the Tribunal had a residual discretion to make an award of nominal costs against the Commission reflecting the extent to which the Respondent was personally out of pocket by having to attend the hearing. I reserved my ruling on these arguments.

6Thereafter, Counsel for the Respondent relied principally on Section 41(4)(b) of the Code. In so doing, she placed emphasis on the way in which the Commission had processed this Complaint. There had been two Case Analysis reports within the Commission that had recommended that the Commission not forward the Complaint to the Tribunal. According to Counsel for the Respondent these raised the very same concerns about the evidence on which I based my dismissal of the Complaint. However, there then followed a third Case Analysis report from which relevant evidence resulting from the investigation had been removed. It was on the basis of this third report that the Commission referred the matter to the Tribunal. Counsel for the Respondent also called the Respondent to testify as to the impact that the proceedings had had upon his professional and personal life. Counsel for the Respondent did not, however, adduce any evidence as to the costs that were actually incurred in this case whether by way of disbursements or other out of pocket expenses, or as an appropriate reflection of the costs to the Regional Municipality of York of providing her services to the Respondent. (Indeed, it was never revealed under what arrangement Ms. Hulton came to be representing the Respondent.)

7Counsel for the Commission asserted that the complaints that Counsel for the Respondent was making about the Commission’s processing of the Complaint should have been raised at the outset of the hearing on a motion to dismiss the complaint for abuse of process. She also contended that, before any assessment of costs against the Commission, whether under Section 41(4)(a) or (b), the Respondent was required to show that the Commission has been irresponsible in pursuing the Complaint in the sense of referring it to the Tribunal. As well, both in her opening submissions and in reply after the Respondent had testified, she argued that there was a very high threshold that had to be crossed before a Respondent suffered “undue hardship” in terms of Section 41(4)(b) and that the evidence in this case did not come close to meeting that standard.

8ISSUES

1. Does the Tribunal have authority to make an award of costs in favour of a Respondent who is being represented free of charge by “in-house” Counsel?

2. Does the Tribunal have jurisdiction to award costs (either substantial or nominal) without any proof of the costs actually incurred?

3. Was the complaint in this case “trivial, frivolous, vexatious or made in bad faith” in terms of Section 41(4)(a) of the Code?

4. Having regard to all legally relevant factors and evidence, did the Respondent suffer “undue hardship” in terms of Section 41(4)(b) of the Code?

5. More particularly, in evaluating whether a Respondent has suffered “undue hardship” for the purposes of Section 41(4)(b), can the Tribunal have regard to the conduct of the Commission in the processing of the Complaint (in this instance, at the investigation or pre-referral stage)?

6. If the Respondent is entitled to costs, what would be a fair and reasonable quantum of those costs?

9DECISION

1. The Tribunal’s discretion under Section 41(4) of the Code to fix costs does not extend to awarding counsel fees for Counsel who have acted without fee or promise of reimbursement for a party who is not their employer. However, that does not preclude an award of costs to that party for disbursements made for the purposes of preparing for and participating in the proceedings.

2. In the absence of specific proof as to the actual costs incurred in defence of the Complaint, the Tribunal has discretion to award at least a nominal amount by way of costs.

3. There is insufficient evidence to support a finding that this “complaint was trivial, frivolous, vexatious or made in bad faith” in terms of Section 41(4)(a) of the Code.

4. The conduct of the Commission in processing the Complaint at the investigation or pre-referral phase may be a relevant factor in assessing whether the Respondent has suffered “undue hardship” for the purposes of Section 41(4)(b) of the Code.

5. The prolongation of these proceedings occasioned by Commission staff’s vacillation on whether to recommend that the Commission refer this matter to the Tribunal constituted undue hardship to the Respondent in the particular circumstances of this case.

6. In all of the circumstances, $500 represents a fair and reasonable award of costs.

ANALYSIS

Costs and In-house Counsel

10Counsel for the Commission simply asserted that there was no basis for an award of costs where Counsel was representing the Respondent free of charge even where that Counsel was a salaried employee of an organization providing representation to the Respondent. No authority was advanced in support of that proposition. Equally, in resisting the argument, Counsel for the Respondent provided no authority. Both were content to let the Tribunal to do its own research and rule on this issue.

11At “common law”, the position in Ontario has historically been that advanced by Counsel for the Commission (Jarvis v. Great Western Railway Co. (1859), 8 U.C.C.P. 280). Indeed, the Ontario High Court of Justice affirmed this proposition as recently as 1989 in Feldman v. Law Society of Upper Canada (1989), 1989 CanLII 4113 (ON HCJ), 68 O.R. (2d) 157 (H.C.J.). This case involved the Law Society claiming the costs of a full-time salaried employee who had represented the Society in judicial review proceedings. After a full consideration of the authorities and relevant legislation, Doherty J. (as he then was) concluded that the Law Society was not entitled to those costs, only disbursements.

12Doherty J. did not like the common law rule. He much preferred the “English” rule, applied in some provincial jurisdictions. That rule allowed the awarding of counsel fees in cases where a salaried lawyer represented the successful party. Nonetheless, he felt constrained to follow the Ontario common law rule by reason of the binding authority of Ottawa Gas Co. v. City of Ottawa (1902), 4 O.L.R. 656 (Div. Ct.), leave to appeal to the Court of Appeal refused (1902), 5 O.L.R. 246 (Ont. C.A.). Only specific legislation authorizing the payment of costs where a salaried, in-house counsel represented the winning party would justify not following the rule.

13The common law rule was based on the principle that costs were “an indemnification to the person entitled to costs, and are not designed to punish the loser”. Doherty J, however, expressed the following opinion (at 162):

The cost to the Law Society is none the less real and capable of quantification. The difficulty posed by quantification, or the inability to arrive at an exact figure for that expense, should be no bar to recovery especially as it is recognized that costs do not purport to provide full indemnification in any event.

14At the time that Doherty J. rendered this decision, Section 37 of the Solicitors Act, R.S.O. 1980, c. 478, provided:

37. Where the remuneration of a solicitor or counsel employed by a corporation is wholly or partly paid by salary, the corporation employing the solicitor or counsel has, notwithstanding, the right to recover and collect lawful costs in all actions and proceedings in the same manner as if the solicitor or counsel were not receiving a salary if the costs are by the terms of his employment payable to the solicitor or counsel as part of his remuneration in addition to his salary.

In Feldman, in-house counsel was not entitled to the costs as part of his remuneration in addition to his salary, and there was no evidence before me that Ms. Hulton, Counsel for Mr. deRuiter was so entitled in this case. However, Section 37 has now been repealed and replaced by Section 36 of the Solicitors Act, R.S.O. 1990, c.S.15. It provides:

36. Costs awarded to a party in a proceeding shall not be disallowed or reduced on assessment merely because they relate to a solicitor or counsel who is a salaried employee of the party.

Similarly, Section 441 of the Municipal Act, 2001, S.O. 2001, c. 25 provides:

441.(1) Despite any Act, in any proceeding to which a municipality or local board is a party, costs adjudged to the municipality or local board shall not be disallowed or reduced merely because the counsel who earned the costs, or in respect of whose services the costs are charged, was a salaried officer of the municipality or local board or of a municipality acting on behalf of the local board and for that, or any other reason, was not entitled to recover any costs from the municipality or local board in respect of the services rendered.

15Both of these provisions certainly represent a derogation from the historic Ontario rule reaffirmed in Feldman in situations to which they apply. However, neither provision read literally applies to this matter. Both depend on the counsel in question being a salaried employee of a party. While Ms. Hulton is a salaried employee of a corporation and a municipal corporation at that, that municipal corporation is not a party to these proceedings.

16Much as I would like to see these provisions as legislative endorsement of a reversal of the traditional Ontario common law rule, I feel constrained by Doherty J.’s judgment in Feldman to treat them as no more than specific exceptions to that rule. Unless the circumstances of a particular case come within a fair reading of either of these provisions, I am obliged to apply the traditional rule. Indeed, in Feldman itself (at 161), Doherty J. referred to the predecessor on Section 441(1) of the Municipal Act (Municipal Act, R.S.O. 1980, c. 302, s. 98(5)) and, rather than treating it as an indicator of a change in the common law, saw it as support for the proposition that costs can be claimed for salaried counsel “only where the legislature has specifically given them that entitlement”.

17What is, however, clear is that the judgment in Feldman is confined to counsel fees. It does not prevent the recovery of disbursements incurred by a party to proceedings. Thus, in that instance, there was no challenge to the assessment officer’s award of disbursements to the successful party. Moreover, Doherty J. posed the issue in the following terms (at 159):

Is the Law Society, when it is represented by counsel who are salaried employees, entitled as part of an award for costs to payment of counsel fees or is it entitled only to disbursements?

Similarly, there is no reason to treat the rule in Feldman as applying to prevent the recovery of disbursements under Section 41(4) of the Code. The discretion created by that section (“such costs as are fixed by the tribunal”) is sufficiently open-ended to allow for the award of disbursements.

Nominal Costs

18There was no evidence before me as to the disbursements incurred by the Respondent in preparing for and attending the hearing before the Tribunal. However, courts in Ontario accept that they have discretion to order merely nominal costs in appropriate cases: see e.g. Z.B. v. R.B., [1984] O.J. No. 638 (Q.L.) (Ont. Prov. Ct., Fam. Div.); Beattie v. Ottawa (City) Police Service, [2004] O.J. No. 4454 (Q.L.) (S.C.J.); Tamil Co-operative Homes Inc. v. Kandiah, [2005] O.J. No. 1757 (Q.L.) (S.C.J., Div. Ct.). There is no reason that option should not available to a Tribunal by virtue of the discretion to award costs created in Section 41(4). Provided that the other preconditions to the deployment of that discretion are satisfied, the Tribunal should have the authority in appropriate cases to make what may in effect be a declaration of entitlement to costs.

The Explicit Statutory Preconditions to an Award of Costs under Section 41(4)

Section 41(4)(a)

19As I made clear in my decision on the merits of this complaint, on the evidence adduced by the Commission, there was clearly a case for Constable deRuiter to answer. While, ultimately, I found that he had done sufficient to answer that case, most of my critical rulings were founded on the standard of proof applicable in proceedings such as this. Applying the same standard of proof to the application of Section 41(4)(a), I am not prepared to find, on the basis of the testimony adduced at the hearing, that, on a balance of probabilities, this Complaint “was trivial, frivolous, vexatious or made in bad faith”.

20Moreover, I find nothing in the documentation adduced and submissions made on the costs application that affect that conclusion. Certainly, there was evidence in that documentation that indicated vacillation within the Commission as to whether to recommend to the Commissioners that this matter be forwarded to the Tribunal for a hearing. However, the mere fact that the Commission’s staff may have had a difficult time determining whether to recommend that this matter go forward is not in itself sufficient to detract from the Tribunal’s own conclusions as to whether the case was “trivial, frivolous, vexatious or made in bad faith” reached after a full airing of the evidence at the hearing.

Section 41(4)(b)

21The Respondent testified at the costs hearing. In that testimony, he spoke of the strain that these proceedings placed on him both as a police officer and in the community of which he was a member.

22Within the police force, he felt that other officers distanced themselves from him and viewed him as “guilty”. This, he stated, was part of police culture when one of their number is subject to any form of disciplinary or misconduct hearing. He also expressed the opinion that this matter may have prejudiced his chances of promotion. While he has passed the examinations for promotion to Detective or Sergeant five or more years ago, he has yet to attain either of those ranks.

23He also testified that the proceedings had an impact on the way he behaved. He stated that he distanced himself from his colleagues and did not want to face them any more in social settings. This led him at one point to seek help. The prolongation of the proceedings also upset him.

24The Respondent also testified that he belonged to the same Church community as the Complainant. This also caused him anguish as he knew that members of that community were aware of what was going on and, indeed, some even asked him questions about what was happening.

25With the possible exception of the prolongation of the proceedings (to which I will return), I do not find that the Respondent suffered “undue hardship” in terms of Section 41(4)(b). The thrust of Section 41(4)(b) is well summarized by H. M. MacNaughton, Board of Inquiry, in Bryan v. Premark Canada Inc., [1999] O.H.R.B.I.D. No. 5 (Q.L.), at para. 18:

A respondent to a human rights complaint is put to hardship and expense, legal and otherwise, in defending their actions or inactions. Some such hardship is a necessary component of a statutory scheme which pits litigants against each other in an adversary setting. Only hardship, which is undue, is compensable.

Costs do not follow the event in these proceedings but are confined to those situations that engage the exceptional circumstances provided for in Section 41(4). For the purposes of Section 41(4)(b), a Tribunal must have regard to the meaning of the word “undue” and treat it as a significant restriction on the availability of costs.

26I see nothing in the Respondent’s position as a police officer that would justify a characterization of the hardship of subjection to the proceedings in this case as “undue”. Generally, there was an insufficient basis for drawing any conclusions that subjection to proceedings such as this is harder on a police officer (than others in workplace situations) because of the ingrained culture of police forces to distance themselves from those subject to any form of investigation based on their conduct. Moreover, despite any feelings that the Respondent had about the attitude of his fellow officers in the unit in which he was serving when the allegations surfaced, a number of them testified on his behalf in these proceedings. Also, he moved on from B Platoon not long thereafter to Criminal Investigation and, at the time of the costs hearing, had been in Intelligence with the York Regional Police responsible for “Biker Enforcement” for three years. Aside from his supervisor and any colleagues he chose to tell in those two units, there is no sense that these proceedings were even known to his fellow officers. Aside from his personal feelings on this matter, there is also no concrete evidence that his prospects of promotion have been hurt by these proceedings. His performance evaluations have continued to be strong and he has gone on to very responsible work in the police force.

27As for his Church community, the evidence in this respect was impressionistic and certainly not indicative of a degree of scrutiny and wariness on the part of one’s social and community groups beyond that attendant on any situation in which someone is subject to proceedings alleging unlawful discrimination.

28There is, however, one significant respect in which I do find that the Respondent suffered undue hardship. The Complaint in this matter was filed in June 1999 and was extended to include the Respondent in an Amended Complaint dated November 2001. Following the apparent conclusion of the investigation, an Officer of the Commission prepared a Case Analysis for the purposes of Section 36 of the Code. In that report, dated August 27, 2002, which was forwarded to the Respondent’s Counsel for comment, the Officer recommended to the Commissioners that they not refer the Complaint to a Board of Inquiry (now “the Human Rights Tribunal of Ontario” or “Tribunal”), primarily because of insufficient evidence to support the various elements of the Complaint. Subsequently, the Officer revised the Case Analysis. The revised Case Analysis was dated December 19, 2002. This too was sent to Counsel for the Respondent and, in a letter dated January 8, 2003, she intimated that the potential Respondents (including Constable deRuiter) were all in accord with its conclusions, once again a recommendation that the Commissioners not refer the Complaint to a Board of Inquiry. However, on March 6, 2003, yet another Case Analysis was issued. On this occasion, the recommendation was that the Commissioners, inter alia, refer the complaint of sexual harassment against the Respondent to a Board of Inquiry.

29What brought about this change of mind on the part of the staff of the Commission? There was no direct testimony on this at either the hearing of the Complaint or the costs hearing. For whatever reason, the Officer who was responsible for preparing the Case Analysis came to have a very different view of the evidence than he had held when he compiled the original Case Analysis and later revised it. What is also abundantly clear is that, in the final version of the Case Analysis, the Officer omitted statements that, in the earlier versions, were deployed to support the recommendation that the Commissioners not refer the complaint against the Respondent to a Board of Inquiry. For example, paragraph 17 of the second version was omitted entirely:

17. With respect to her allegations against respondent deRuiter related to differential treatment, the complainant has provided no direct evidence. However, in a memo dated November 1998, the complainant expressed her satisfaction once more with respondent deRuiter as her coach officer by stating, “I have never said one bad thing about P.C. deRuiter and everyone knows that”.

30What is also significant is that the covering letters that went to the Respondent’s Counsel under the signature of the Assistant Manager, Investigation Services, with the first two versions of the Case Analysis, both indicated that this was the document that would be forwarded to the Commissioners and that any representations with respect to the contents of the Case Analysis would be considered by the Commissioners. Implicit in this was a representation that the invitation to provide a reply contained in those letters was not being presented as an opportunity to persuade the Case Officer (or the Assistant Manager) to alter the Case Analysis or to change its recommendations but rather to make submissions to the Commissioners themselves with respect to the contents of the Case Analysis and its recommendations. Thus, if the changes to the final version of the Report came about as a result of representations by the Complainant, this would not only undercut the promise of the covering letter that this was the final version of the Case Analysis but also give lie to the statement in that letter that any representations with respect to the Case Analysis were for the consideration of the Commissioners alone.

31As already mentioned, I have no basis for determining how in fact the changes did come about. What is apparent, however, is that by providing Counsel for the Respondent with the first two versions of the Case Analysis, the Assistant Manager created the impression that the Case Officer had reached a final determination on whether the matter should be forwarded to a Board of Inquiry. While the covering letter made it clear that, nonetheless, the Commissioners might take a different view of the matter, the letter did contain the assurance that the investigator had reached a final conclusion absent perhaps subsequent direction from the Commissioners themselves. It is therefore understandable how it came as an unpleasant surprise to both the Respondent and his Counsel to learn of the third and final version of the Case Analysis, one that not only omitted material seemingly favourable to the Respondent but also contained a reversal of the initial recommendation with respect to the Respondent.

32On the terms of the Assistant Manager’s own letters to the Respondent’s Counsel, this was not an appropriate course of action and, in my view, constituted undue hardship to the Respondent. The first two letters seemed to provide the assurance that the investigation had not, in the mind of the Officer compiling the Case Analysis, established a sufficient case for proceeding with the Complaint. The third Case Analysis, coming more than six months after the first, dashed the considerable comfort the Respondent took out of that assurance and the author’s reasons for reaching that conclusion.

33In her submissions, Counsel for the Commission argued that it was a precondition of any award of costs under Section 41(4)(b), that I find not only that the Respondent suffered “undue hardship” but that the Commission had been “irresponsible in pursuing the complaint”. This additional requirement is not spelled out in the provision itself. However, some Tribunals have supported this as an additional requirement of either or both limbs of Section 41(4). However, there is clearly a division of authority on this point: see Jeffrey v. Dofasco Inc., 2004 HRTO 17 (M.D. Garfield, Chair), at paras. 9-10.

34For my part, I would follow the reasoning of the Tribunal in Jeffrey (itself applying Grace v. 149468 Canada Inc. (c.o.b. Mercedes Homes Inc.), [1996] O.H.R.B.I.D. No. 5 (Q.L.)) and hold that, in the absence of any explicit statutory statement to this effect, the conduct of the Commission is at most a factor that goes to the discretion of the Tribunal to award costs and, thereafter, establish the quantum of costs. In any event, I am also prepared to hold that, in this case, the Commission (through its staff) did act “irresponsibly in pursuing the complaint”, not in the normal sense of referring it to a Board of Inquiry, but in the sense of not following its own self-imposed or acknowledged rules with respect to the status of a Case Analysis.

35Ms. Davis, for the Commission, also urged that it was too late for Counsel for the Respondent to raise concerns about the Commission’s conduct on an application for costs. Respondent’s Counsel was aware of the facts when the hearing of the Complaint commenced and should have made an application for a stay or dismissal of the proceedings for abuse of process at that point. I reject this argument and any implication in it that Ms. Hulton, by not applying for a stay of proceedings at the commencement of the hearing, was in effecting waiving her right to raise any issue as to the Commission’s conduct on an application for costs. Stays of proceedings are notoriously difficult to obtain in Human Rights hearings, especially in the wake of Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44, [2000] 2 S.C.R. 307. Indeed, albeit in a partially dissenting judgment, LeBel J. (Iacobucci, Binnie and Arbour JJ. concurring), at para. 183, refers to an “order for costs” as a less drastic and often preferable remedy to that of a stay. Given that, I can see no reason why the Respondent should be precluded from seeking costs simply because, through his Counsel, he made the judgment that he would not seek a stay at the commencement of these proceedings but rather postpone any question as to the conduct of the Commission’s staff until the costs stage (if any).

Quantum of Costs

36Keeping in mind that the Respondent is not entitled to counsel fees and that he has offered no proof of actual disbursements but rather is more interested in vindicating his position by an award of nominal costs, I will set the costs at $500. This also reflects in part a very rough sense of the Respondent’s out of pocket expenses in preparing for and attending this hearing and my concern at the conduct of the Commission in relation to the Case Analysis.

ORDER

37Pursuant to section 41(4)(b) of the Code, the Tribunal orders the Ontario Human Rights Commission to pay $500 by way of costs in this proceeding, within 30 days of this Order.