Bala Khandaswami v. Noma Cable Tech Ltd., 2009 HRTO 1421

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Bala Khandaswami

Applicant

-and-

Noma Cable Tech Ltd., Mel Godfrey, John McLarty and Kenneth Siddall

Respondents

INTERIM DECISION

Adjudicator: Judith Hinchman

Date: September 8, 2009

Citation: 2009 HRTO 1421

Indexed as: Khandaswami v. Noma Cable Tech

WRITTEN SUBMISSIONS BY

Bala Khandaswami, Applicant ) Farah Malik,

) Counsel

Southwire Canada Company ) Anneli Legault,

) Counsel

Gentoma Company and Gentek Inc. ) Derek L. Rogers,

) Counsel

INTRODUCTION

1This is an Application dated May 19, 2009 under section 53(5) of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”). The underlying human rights complaint (the “Complaint”) was filed with the Ontario Human Rights Commission on March 30, 2006. The purpose of this Interim Decision is to decide a request to add respondents.

BACKGROUND

2The applicant was employed with Noma Cable Tech Ltd. (“Noma Cable”) until the termination of his employment on September 30, 2005. The letterhead of the September 30, 2005 termination letter from Noble Cable states that Noma Cable was at that time a division of Noma Inc.

3The applicant filed his Complaint on March 30, 2006 alleging discrimination in his employment on the basis of several Code grounds. The respondents to the Complaint as filed with the Ontario Human Rights Commission were Noma Cable, John McLarty, Kenneth Siddall and Mel Godfrey.

4Southwire Canada Company (“Southwire”) was incorporated on February 8, 2006. On April 3, 2006, through an Asset Purchase Agreement between Southwire and Noma Company (the “Asset Purchase Agreement”), Southwire purchased the property and certain assets of Noma Company, a company incorporated in Nova Scotia. A review of the Asset Purchase Agreement shows that the address of the “Facility” where the Seller’s business was conducted is the same as that of the corporate respondent Noma Cable.

5William E. Redmond, Jr., as Noma Company Director, CEO, and President, signed the Asset Purchase Agreement.

6Several years later in his May 19, 2009 Application, the applicant asserted that Southwire is the successor of Noma Cable and thus should be added as a respondent.

7Counsel for Southwire and personal respondent Mel Godfrey filed a response disputing that Southwire is a proper party to the Application and identified Gentek Inc. as another organization which should be added as a respondent. Southwire also filed a Request for an Order that it is not a proper respondent to this Application.

8The applicant responded to Southwire’s request for an Order and filed his own Request for an Order that Gentoma Company, Southwire, and Gentek Inc. all be added as respondents. All three have filed responses.

REQUEST FOR AN ORDER TO ADD RESPONDENTS

9This Application is governed by the Tribunal’s Rules of Procedure for Transitional Applications (the “Transitional Rules”). Section 53(5) applications must be based on the “subject-matter of the complaint or amended complaint” filed at the Commission. The parties named in the original complaint are the parties to the Application. Rule 4.3(b) permits the Tribunal to add a party in order to ensure the fair, just and highly expeditious resolution of the Application.

10This Tribunal has held that it would not be fair, just and expeditious to add a respondent unless there are facts alleged that, if proven, could support a finding that the proposed respondent violated the applicant’s rights. See Marchese v. Fortinos, 2009 HRTO 25. In addition, the Tribunal has asked itself whether the addition of the proposed respondent as a party would cause substantial prejudice to that party’s ability to make full answer and defense that cannot be alleviated by procedural orders of the Tribunal. (See Pieters v. Liquor Control Board of Ontario, Store 568, 2007 HRTO 22, Payne v. Otsuka Pharmaceutical Co., 2001 CanLII 26231 (Ont. H.R.T.), and Greenhorn v. 621509 Ontario Inc. (Belleville Dodge Chrysler Jeep), 2006 HRTO 22.)

Should Southwire be added as a respondent?

11Relying on Curling v. Torimiro, [2000] O.H.R.B.I.D. No. 16, the applicant argues that Southwire is liable as a successor corporation for any discriminatory conduct of Noma Cable or any agent of Noma Cable. He asserts the following:

• Southwire has taken over the operation of the same manufacturing and distribution business formerly operated and run by Noma Cable.

• Southwire appears to be the only corporate entity engaged in the business of manufacturing and distributing various electrical wire products from the same facilities where the applicant was formerly employed.

• Southwire continues to employ an individual respondent, Mel Godfrey, as Production Manager, a position he held at Noma Cable.

• The Asset Purchase Agreement is dated April 3, 2006, four days after the applicant filed his complaint and so Southwire should have been aware of this liability during its negotiations with Noma Company for the acquisition of its assets and cannot say that it is a complete stranger to the Complaint.

12On the contrary Southwire argues that the Tribunal does not have jurisdiction to make it liable for the acts of Noma Cable because it can not be considered a successor under human rights legislation. It argues that it is a complete stranger to the Complaint as distinguished from the facts of Curling where the personal respondent was the sole director of both the prior employer and the subsequent corporation so as to be the directing mind of both, and as well held himself out as the agent of the second corporation.

13Southwire asserts that it never employed the applicant nor did it terminate his employment, having completed the Asset Purchase Agreement with Noma Company to purchase certain assets of Noma Cable several months after Noma Cable terminated his employment. The Asset Purchase Agreement expressly excluded any employment related liabilities and liabilities for claims by Noma employees in respect of any period prior to an employee’s date of hire by Southwire and claims made pursuant to any collective bargaining agreement.

14Furthermore, it argues that 1) it could not have known that the applicant filed his Complaint four days prior to the purchase closing, 2) there is no evidence as to when the Complaint was served on Noma, and 3) it had no independent knowledge of Noma employees’ outstanding claims except as disclosed in the Asset Purchase Agreement and this claim was not revealed there.

15Southwire argues that prior to the sale it was a competitor of Noma Cable and had no previous relationship to it.

16Finally, Southwire argues that the fact that personal respondent Mel Godfrey was also employed by Southwire is not relevant, and that extending successor corporate liability on this fact alone would unreasonably expand the concept of successor corporate liability.

17Southwire cites in support Great Atlantic & Pacific Co. of Canada Ltd. v. Ontario (Human Rights Commission), (1993) 1993 CanLII 8616 (ON CTGD), 13 O.R. (3d) 824 for the proposition that because there are no successor rights provisions in the Code similar to section 63 of the Labour Relations Act, R.S.O. 1990, c.L.2 (the “LRA”) and section 13 of the Employment Standards Act, R.S.O. 1990, c.E.14 (the “ESA”), there is no power under the Code to add as a respondent a successor organization which had nothing to do with the complainant or the complaint. It also cites Bouvier v. Metro Express, [1992] C.H.R.D. No. 8 (CHRT) for the same result under the Canadian Human Rights Act.

18In Great Atlantic & Pacific, the Divisional Court reversed a Board of Inquiry order adding a successor organization as a respondent following a sale of assets, finding that it was a complete stranger to the complainant who resigned from the vendor corporation before the successor “came into the picture.” As Southwire urges, the court noted that the Code contains no “successor rights” provision similar to that found in the LRA or ESA.

19In Curling, the Ontario Board of Inquiry stated that:

It is appropriate to hold a successor corporation liable for the discriminatory conduct of an agent of its predecessor corporation, where, as in this case, the agent is also closely associated with the second corporation, and the second corporation carries on the business of its predecessor.

The Board distinguished the case before it from the facts in Great Atlantic & Pacific finding that the successor corporation was not a complete stranger to the events giving rise to the complaint because the personal respondent was the sole director listed for both corporations and there was evidence that the successor “continued” the business operated under the name of the initial corporation.

20In Bouvier, the Canadian Human Rights Tribunal similarly noted that the Canadian Human Rights Act contains no successor rights and found that in the case before it a transfer of assets did not infer liability upon the successor corporation because the complainant and the respondent were not employed by the business when it was transferred to the purchaser successor corporation. The Tribunal did note that in some instances a successor employer might be found to be liable for discriminatory acts of employees of the previous employer if, for example, the sale of the business was a sham transaction between two closely related companies such as companies with common directors or shareholders.

21Applying these principles to the issue before me, I do not find a sufficient relationship between Southwire and the Complaint to hold it liable for any discriminatory acts of the applicant’s employer or agents of that employer Noma Cable. First, Southwire was incorporated several months after the applicant’s employment was terminated. Second, although one of the personal respondents, Mr. Godfrey, held the position of production manager in both companies, the applicant has provided no submissions regarding Mr. Godfrey’s actions that, if proven, could lead to the liability of Southwire as recognized in Curling or included in the reasoning of Bouvier. Third, Southwire purchased certain assets from the Seller and then re-employed two of the personal respondents but there is no evidence that it “continued” the business of the Seller as that term was used in Curling. Finally, there is no evidence that the Asset Purchase Agreement was a sham transaction between two related entities.

22I decline to add Southwire as a respondent to the Application.

Should Gentoma Company and Gentek Inc. be added as respondents?

23The applicant’s corporate searches to date have failed to yield results for Noma Cable and thus he postulates that it may be either wound up or dissolved. The applicant has not been able to locate this respondent. The applicant appears to believe that Noma Company owned the Noma Cable assets and sold these to Southwire and thus was and is responsible for the liability of Noma Cable respecting the discrimination allegations. The applicant filed the results of a corporate search showing that Noma Company, through a name change, became Gentoma Company. The applicant believes that, at the time of the Asset Purchase Agreement, Gentek Inc. acted as a guarantor in relation to Southwire’s acquisition of Gentoma Company’s assets and thus Gentek Inc. had a sufficiently close relationship to Noma Company and Noma Cable to also bear responsibility.

24Gentoma Company and Gentek Inc. argue that they were not engaged in the business of manufacturing and distributing various electrical wire products from the same facilities where the applicant was formerly employed. Further, they argue that they did not employ the applicant. They complain that it has been three years since the Complaint was filed and that the applicant has not made any allegations against them during this time. With respect to the Asset Purchase Agreement signed by Noma Company, they argue that the agreement with Noma Company does not bind Gentoma. Finally, they argue that even if Gentek was the guarantor in relation to the asset sale, that relationship alone is insufficient to impose liability.

25The materials filed to date do not clearly identify the relationships between Gentoma Company, Gentek Inc., Noma Inc., and Noma Cable. The materials, however, do suggest that Noma Company and Gentek Inc. were related entities at the time of the asset sale and that Noma Company became at a later date Gentoma Company.

26What is clear is that:

• In its submissions, Southwire interchanges “Noma Company” and “Noma Cable Tech Ltd.”, as well as just stating “Noma” when discussing the asset purchase.

• The “Facility” address in the Asset Purchase Agreement is the same as that asserted by the applicant to be his employment address.

• The letterhead of the applicant’s employment termination letter, dated September 30, 2005, states that the corporate respondent and employer Noma Cable was a division of Noma Inc., although there is no other reference in the materials to Noma Inc.

• William E. Jr. Redmond signed the Asset Purchase Agreement on behalf of Noma Company.

• Company search results for Gentoma Company show that Noma Company underwent a name change effective February 16, 2007 to become Gentoma Company.

• William E. Jr. Redmond is listed as Director, CEO, and President of Gentoma Company. Thomas B. Testa is listed as Vice President and Chief Financial Officer.

• Gentek Inc. is listed as a New Jersey corporation with Mr. Redmond as CEO and Mr. Testa as vice president.

• In its response to the Application, Southwire states that Gentek Inc. should be named as a respondent. No explanation is provided. The Asset Purchase Agreement, section 10.4 specifies that notices or communications to the Seller were to be addressed to NOMA Company c/o Gentek Inc. at the address that also appears in the company searches filed by the applicant as that of William E. Redmond Jr. for both Gentoma Company and Gentek Inc.

27If in fact Gentoma Company is merely a renamed entity of Noma Company, the Seller of the Assets, and if either or both of Noma Company and Gentek Inc. were in fact owners of the corporate respondent Noma Cable at the time of the alleged discrimination and thus the real employer, then they may be added as respondents to this Application.

28These two entities complain that the applicant and his counsel have had three years to name them and having failed to do so it is unfair to do so now. It is apparent that the applicant has not been able to trace that connection. The knowledge of those relationships will be within the control of Gentoma and Gentek.

29To ensure a fair, just and expeditious resolution of the issues of this case, it would be useful for Gentoma Company and Gentek Inc. to provide affidavits with supporting exhibits that set out any legal relationships between Gentoma Company, Gentek Inc., Noma Company, Noma Inc. and Noma Cable during the period of the alleged discrimination up to the present time.

30Upon receipt of the affidavits described above and in accordance with the timetable set out below, the parties and proposed respondents Gentoma Company and Gentek Inc. are directed to make submissions on whether the proposed respondents should be added to the Application. Gentoma Company, and Gentek Inc. may also make submissions on whether the addition of these proposed respondents would cause substantial prejudice to that party’s ability to make full answer and defense that cannot be alleviated by procedural orders of the Tribunal.

31Upon review of the affidavits and submissions, the Tribunal may determine this issue on the basis of the written submissions. If oral submissions are required, the Registrar-Transition will contact the parties to schedule a hearing.

Contact information for John McLarty and Kenneth Siddall

32The applicant has been unable to locate personal respondents John McLarty and Kenneth Siddall who have not filed responses to his Application. The applicant by letter dated May 19, 2009 requested that Southwire provide him with the last known addresses of these individuals. Southwire responded that Kenneth Siddall had never worked for Southwire and it has no information about his whereabouts. It stated though that while John McLarty is retired from Southwire, it had been unable to secure his consent to disclose his address.

33Southwire is ordered to disclose the last known contact information it has for John McClarty. I further order the proposed respondents Gentoma Company and Gentek Inc. to disclose any information they have on the last known contact information for John McClarty and Kenneth Siddall.

ORDER

34For all of the above reasons, I make the following Orders:

1. Southwire is not added as a respondent.

2. Within 20 days of the date of this Interim Decision, Gentoma Company and Gentek Inc. shall serve on all parties and to each other, and file with the Tribunal, affidavits with supporting exhibits that set out any legal relationships between Gentoma Company, Gentek Inc., Noma Company, Noma Inc., and Noma Cable during the period of the alleged discrimination up to the present time.

3. Upon receipt of the affidavits described above and in accordance with the timetable set out below, the parties and proposed respondents Gentoma Company and Gentek Inc. are directed to make submissions on whether the proposed respondents should be added to the Application. Gentoma Company and Gentek Inc. may also make submissions on whether the addition of these proposed respondents would cause substantial prejudice to that party’s ability to make full answer and defense that cannot be alleviated by procedural orders of the Tribunal.

i. By no later than October 20, 2009, the applicant shall serve and file his written submissions and authorities;

ii. By no later than November 3, 2009, the respondents and proposed respondents Gentoma Company and Gentek Inc. shall serve and file their written submissions and authorities;

iii. By no later than November 10, 2009, the applicant shall serve and file any reply.

4. Within 20 days of the date of this Interim Decision, Southwire shall disclose to the applicant and file with the Tribunal the last known contact information for John McLarty.

5. Within 20 days of the date of this Interim Decision, Gentoma Company and Gentek Inc. shall each disclose to the applicant and file with the Tribunal their last known contact information for John McLarty and Kenneth Siddall.

35I am not seized of this matter.