Julia Matthews v. Dicken’s Burlington Inc., 2013 HRTO 1233

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Julia Matthews

Applicant

-and-

Dicken’s Burlington Inc.

Respondent

DECISION

Adjudicator: Dawn J. Kershaw

Date: July 16, 2013

Citation: 2013 HRTO 1233.

Indexed as: Matthews v. Dicken’s Burlington Inc.

APPEARANCES

Julia Matthews, Applicant

Firdaus Walele, Counsel

Introduction

1This is an Application filed under s. 45.9(3) of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”), alleging that the respondent contravened the terms of the settlement reached between the parties.

2The respondent did not participate in this hearing despite having received notice of it.

Evidence

3In Minutes of Settlement (MOS) signed by the parties on October 29, 2012, the respondent agreed to pay the applicant $2000.00 in general damages within 30 days of signing.

4The applicant demanded compliance with the financial settlement in November and December, 2012, to no avail. On December 13, 2012 the respondent requested an extra 7 days to pay, but no payment has been made to date.

5This Application was commenced in January 2013.In its Response, the respondent stated that it did not have assets.

6In May 2013, the applicant requested from the respondent answers to several questions about its financial situation, including whether or not it was still operating a pub, whether it was under bankruptcy protection, whether it continued to meet its creditor and payroll obligations and when it became aware it was impecunious and could not honour the settlement. The applicant received no response.

7The applicant conducted a corporate search, dated June 13, 2013, which showed a first meeting of creditors in December 2009, and a Trustee’s discharge date of March 23, 2012.

8Because the applicant received no response from the respondent to her letter, it is not clear if the respondent knew when it signed the MOS that it was impecunious.

9The applicant requests an order that the respondent pay the outstanding settlement money immediately, and pay an additional $1000.00 for breach of the settlement.

10The applicant also requests that the Tribunal add the officers of the corporation (“the officers”), namely Stan Michaud (“Mr. Michaud”) who signed the MOS and the alleged owner of the corporation, Rick Zimmerman (“the alleged owner”)as personal respondents to this Application.

11The applicant takes the position, as in Mishich v. Loans Till Payday Inc., 2013 HRTO 991, that the Tribunal may add a person as a party to a contravention application whether or not that person was a signatory to the settlement in question.

12The applicant submits that in the face of the corporation’s breach, Mr. Michaud and the alleged owner should be personally liable as officers (or “directing minds”) of the corporation because of the possibility that when the MOS were signed one or both of them knew that the corporation was impecunious, and they therefore acted in bad faith.

Order Against the Officers

13The proposed personal respondents had not been given notice of this Application, which is not required in these circumstances, as I find it is not appropriate to add them.

14Subsections 45.9(1) and (6) of the Code state as follows:

(1) If a settlement of an application made under section 34 or 35 is agreed to in writing and signed by the parties, the settlement is binding on the parties.

(6) Subject to the Tribunal rules, the parties to an application under subsection (3) are the following:

1. The parties to the settlement.

2. Any other person or the Commission, if they are added as a party by the Tribunal.

15The Tribunal considered a similar request to add a personal respondent in Mishich, above, in which the applicant sought either to add the person who signed the MOS as the “ultimate directing mind” of the respondent companies who should be personally liable for the companies’ failure to honour the terms of the MOS, or at the very least not to preclude the addition of that person as a party once the applicant was able to find that person and serve her with the Application.

16In Mishich, the Tribunal noted that it has not yet interpreted subsection 45.9(6) of the Code, but on several occasions has ruled on its power to add parties to applications under section 34 (para. 25). The Tribunal in doing so considers the following questions:

a. Are there allegations made that could support a finding that the proposed respondent violated the Code?

b. If the proposed respondent is an individual and an organization is also named, is there a compelling reason to include him or her as a respondent?

c. Would it be fair, in all the circumstances, to add the proposed respondent?

17The Tribunal in Mishich, at para. 26, recast those questions for the purposes of an application under section 45.9(3) as follows:

1. Are there allegations made that could support a finding that the proposed respondent acted in a manner inconsistent with the terms of settlement?

2. Is there a compelling reason to include him or her as a respondent?

3. Would it be fair, in all the circumstances, to add the proposed respondent?

18Assuming that the first requirement is satisfied, the question then is whether there is a compelling reason to include a proposed respondent. As stated in Mishich, this includes considering whether a non-party to the MOS should share, or assume, responsibility for a contravention of the MOS.

19As pointed out in Mishich, at para. 29, when MOS are signed, the parties have agreed on who the parties are and their respective obligations. As such,

the fact that the party to the settlement is unable to meet its obligations under the settlement will […] generally not be a compelling reason to require a stranger to the settlement to remedy any contravention, absent a compelling reason for holding such a stranger responsible for the contravention.

20In this case, the proposed respondents may not be “strangers” to the settlement, but there still must be a compelling reason to add them as personal respondents when the corporation was the signatory to the MOS.

21To add either of the proposed personal respondents in this case, I not only would have to find that each of them was a “directing mind” of the corporation, but also that they each became personally responsible for acts carried out in the corporation’s name because of “fraud, deceit, dishonesty or want of authority” or because the “corporate structure was a sham from the outset or was an afterthought to a deal which had gone sour”: Scotia McLeod v. People’s Jewellers Ltd., 26 O.R. (3d) 481, 1995 CanLII 1301 (C.A.). Otherwise, the proposed personal respondents are protected from personal liability when acting within the scope of their employment.

22In this case, even if either, or both, Mr. Michaud and the alleged owner was a directing mind of the corporation, of which there is no evidence, there is no evidence other than speculation that there was any “fraud, deceit, dishonesty or want of authority” by either of them. The applicant speculated that the corporation may have been impecunious when Mr. Michaud signed the MOS, but the only evidence was the corporate search which shows a corporation that continued to operate as of June 17, 2013.

23There is no evidence to support a finding that any of the factors required to hold personal respondents liable for the corporation’s contravention existed, and therefore there is no compelling reason to add them to this Application.

24As such, I find there is no need to consider the other factors to decide whether to add the personal respondents, and this part of the Application is dismissed.

Order Against the Corporation

25In this case, the applicant made no submissions with respect to why general damages should be ordered. Any impact on the applicant of the respondent’s failure to pay, other than financial, is unknown to the Tribunal.

26Respect for terms of settlement is not only a legally binding, contractual obligation, it also promotes essential Code values. A contravention of settlement can undermine the administration of justice by discrediting the human rights system and generating wrong disincentives to negotiation. The uncertainty created by a contravention of settlement potentially undermines the substantive and procedural provisions of the Code. See, for example: Sugarman v. St. Lawrence College, 2012 HRTO 664, and Saunders v. Toronto Standard Condominium Corp. No. 1571, 2010 HRTO 2516.

27In this case however, there is no evidence of any impact other than financial, on the applicant, and as such, no award for general damages is appropriate.

28The Tribunal finds however that this is a case where an interest award is appropriate. Interest awards recently have been discussed by the Tribunal in Lachapelle v. Stargratt, 2013 HRTO 1232.

29In Impact Interiors Inc. v. Ontario (Human Rights Commission), 1998 CanLII 17685 (ON CA), [1998] O.J. No. 2908, the Court of Appeal affirmed that pre-judgment interest on compensatory awards is available as a remedy under what was then s. 41(1)(b) of the Code. That section of the Code has been replaced by subsequent amendments, but like s. 45.9(8) it did not specifically mention interest.

30The Divisional Court in Quereshi v. Ontario (Human Rights Commission), 2006 CanLII 63686 (ON SC), [2006] O.J. No. 1782, confirmed that pre-judgment interest should be calculated in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43. The Tribunal has awarded pre-judgment interest in a number of cases involving contravention of a settlement agreement, including: Malabre v. LMC Endocrinology Centres (Toronto) Ltd., 2013 HRTO 385; Ahearn v. North Hill Dental Center, 2012 HRTO 2166; Medeiros v. Cambridge Canvas Centre, 2011 HRTO 1519; Fakira v. London Roof Truss, 2011 HRTO 365; and Saunders, above.

31Section 128(1) of the Courts of Justice Act says:

128.(1)A person who is entitled to an order for the payment of money is entitled to claim and have included in the order an award of interest thereon at the prejudgment interest rate, calculated from the date the cause of action arose to the date of the order.

32The respondent shall be required to pay to the applicant pre-judgment interest on the entire amount of $2000.00.

33The respondent shall also be required to pay post-interest judgment as of the date of this Decision.

34With respect to post-judgment interest, s. 129(1) of the Courts of Justice Act says:

129.(1)Money owing under an order, including costs to be assessed or costs fixed by the court, bears interest at the post-judgment interest rate, calculated from the date of the order.

35The wording of s. 129(1) reflects the fact that in court proceedings money judgments are normally payable as of the date of judgment. In contrast, it is common for the Tribunal to issue decisions that delay payment, giving the respondent time to pay and for post-judgment interest to run from the date payment is due. For example, in both Saunders and Medeiros, above, the respondent was given thirty days to pay and post-judgment interest ran from the date that was thirty days after the decision. In Ahearn and Fakira, above, the respondent was given seven days to pay and post-judgment interest ran from the date payment was due. The Tribunal has also ordered payment as of the date of decision. For example, in Malabre, above, payment was due on the date of the decision.

36Section 130(1) of the Courts of Justice Act says that where it considers it just to do so, the court may decline to award interest, vary the interest amount, or change the period it will run. Section 130(2) lists factors that the court shall take into account when exercising its discretion under s. 130(1) including: the circumstances of the case; and any other relevant consideration.

37The relevant circumstances here are that following the signing of the settlement agreement, the respondent made no payment to the applicant and although it contacted her to ask for an additional 7 days to pay, it has since offered only a bald explanation of being without assets as the reason it has not paid. The respondent since has not communicated with the Tribunal or responded to the applicant’s inquiries with respect to this Application in any way. In these circumstances, it serves no remedial purpose to give the respondent additional time to pay the principle owing, or to delay the running of post-judgment interest.

38The Tribunal orders that the respondent:

1. immediately pay the settlement funds pursuant to the MOS;

2. pay pre-judgment interest on the $2000.00 from November 28, 2012 to the date of this Decision, in accordance with section 128 of the Courts of Justice Act, R.S.O 1990, c. C.43; and

3. pay post-judgment interest on the $2000.00 in accordance with section 129 the Courts of Justice Act, R.S.O 1990, c. C.43from the date of this Decision.