Cunningham v. Showa Canada Inc., 2013 HRTO 900

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

James Cunningham

Applicant

-and-

Showa Canada Inc., Brenda McKee and Ester Allen

Respondents

INTERIM DECISION

Adjudicator: Kathleen Martin

Date: May 24, 2013

Citation: 2013 HRTO 900

Indexed as: Cunningham v. Showa Canada Inc.

WRITTEN SUBMISSIONS

James Cunningham, Applicant

Richard Miller, Counsel

Showa Canada Inc., Brenda McKee and Ester Allen, Respondents

Dan Black, Counsel

Farber & Partners Inc., Trustee of the Estate of James Anthony Cunningham, a bankrupt, Affected Party

Dennis Kish, Counsel

1This is an Application filed under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”) on June 6, 2011, alleging discrimination with respect to employment based on disability. This Interim Decision addresses whether the applicant’s status as an undischarged bankrupt affects his ability to proceed with the Application.

Factual Background

2The Application arises out of the applicant’s employment with the organizational respondent. The respondent McKee is the president of the organizational respondent and the respondent Allen is described by the applicant as in “HR and other depts.”.

3The applicant states that he was injured at work and placed on modified duties. The applicant alleges that he was not properly accommodated and raised concerns with the two individual respondents to no avail. The applicant further alleges that his employment was terminated in June 2010 because the respondents perceived him to be a high risk and liability as an injured worker.

4With respect to remedy, the applicant does not particularize his request. Instead, the applicant checks off the box for monetary compensation and states that he would settle for “whatever the Commission deems fair and reasonable”. In describing the effect on him of the events outlined in the Application, the applicant states that the termination was “sudden, and shocking, this action by the employer placed myself and my family in financial duress and I had to claim bankruptcy..”. In addition, the applicant states that his physical health “deteriorated” and the worries and stress resulted in deterioration of his mental and emotional health. The applicant refers to the loss of medical benefits, stating that these are recoveries that he would wish to have considered.

5A Response has been filed denying the allegations and raising a number of preliminary issues including that the Application is out of time.

6A mediation was scheduled for December 6, 2012. On December 5, 2012, the Human Rights Legal Support Centre wrote to the Tribunal advising that it would be representing the applicant. Previously the applicant had been self-represented.

7On December 6, 2012, the Registrar cancelled the mediation and the Tribunal issued a Case Assessment Direction. In the CAD, the Tribunal stated that it appears that the applicant went into bankruptcy following his termination which may have an impact on the proceeding. The Tribunal sought submissions from the parties and the Trustee in Bankruptcy on whether the Trustee in Bankruptcy must approve the commencement and/or continuation of the Application.

8Initially only the parties provided submissions on this issue. The applicant took the position that while he was an undischarged bankrupt, the Trustee could not prevent him from commencing or continuing the Application. The respondents took a contrary position, submitting that the applicant had no right to commence the Application. While not taking a position on the substantive issue, the Trustee filed documentation about the bankruptcy. The documentation reflects that the applicant filed an assignment into bankruptcy on December 31, 2009, at which time the Trustee was appointed and that a Mediation Settlement Agreement was reached on November 10, 2011 requiring periodic payments by the applicant ending October 2013.

9On February 19, 2013, the Tribunal issued another Case Assessment Direction seeking further submissions from the Trustee and the parties. The parties and the Trustee have filed further submissions.

The Parties’ Submissions

10In order to provide context to the parties’ submissions, I begin by setting out extracts from provisions of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 (“BIA”), which were referred by the parties.

71. On a bankruptcy order being made or an assignment being filed with an official receiver, a bankrupt ceases to have any capacity to dispose of or otherwise deal with their property, which shall, subject to this Act and to the rights of secured creditors, immediately pass to and vest in the trustee named in the bankruptcy order or assignment, and in any case of change of trustee the property shall pass from trustee to trustee without any assignment or transfer.

72. (1) The property of a bankrupt divisible among his creditors shall not comprise

(a) property held by the bankrupt in trust for any other person;

(b) any property that as against the bankrupt is exempt from execution or seizure under any laws applicable in the province within which the property is situated and within which the bankrupt resides;…

but it shall comprise

(c) all property wherever situated of the bankrupt at the date of bankruptcy or that may be acquired by or devolve on the bankrupt before their discharge…

68. (1) The Superintendent shall, by directive, establish in respect of the provinces or one or more bankruptcy districts or parts of bankruptcy districts, the standards for determining the surplus income of an individual bankrupt and the amount that a bankrupt who has surplus income is required to pay to the estate of the bankrupt.

“surplus income” means the portion of a bankrupt individual’s total income that exceeds that which is necessary to enable the bankrupt individual to maintain a reasonable standard of living, having regard to the applicable standards established under subsection (1).

“total income”

(a) includes, despite paragraphs 67(1)(b) and (b.3), a bankrupt’s revenues of whatever nature or from whatever source that are earned or received by the bankrupt between the date of the bankruptcy and the date of the bankrupt’s discharge, including those received as damages for wrongful dismissal, received as a pay equity settlement or received under an Act of Parliament, or of the legislature of a province, that relates to workers’ compensation; but

(b) does not include any amounts received by the bankrupt between the date of the bankruptcy and the date of the bankrupt’s discharge, as a gift, a legacy or an inheritance or as any other windfall.

(3) The trustee shall, having regard to the applicable standards and to the personal and family situation of the bankrupt, determine whether the bankrupt has surplus income. The determination must also be made

(a) whenever the trustee becomes aware of a material change in the bankrupt’s financial situation; and

(b) whenever the trustee is required to prepare a report referred to in subsection 170(1).

(4) Whenever the trustee is required to determine whether the bankrupt has surplus income, the trustee shall

(a) if the trustee determines that there is surplus income,

(i) fix, having regard to the applicable standards, the amount that the bankrupt is required to pay to the estate of the bankrupt,

(ii) inform, in the prescribed manner, the official receiver, and every creditor who has requested such information, of the amount fixed under subparagraph (i), and

(iii) take reasonable measures to ensure that the bankrupt complies with the requirement to pay; and

(b) if the trustee determines that there is no surplus income, inform, in the prescribed manner, the official receiver, and every creditor who has requested such information, of that determination.

11The Trustee raises no express objection to the commencement or continuation of the Application. However, the Trustee requests notice of the date of any mediation or future hearing so it may attend if it considers it appropriate to protect the interests of the general body of creditors.

12The Trustee states that pursuant to the BIA, any Tribunal or mediation award granted to the applicant would be the property of the bankruptcy estate and would devolve upon (and should be remitted to) the Trustee for the benefit of the creditors with the exception of awards that (i) are exempt or (ii) should be treated under the surplus income provisions of section 68 of the BIA. The Trustee states that section 67 provides that assets of the bankruptcy estate do not include property which is exempt under provincial or federal law and that case law provides that damages from pain and suffering, physical injuries, mental injuries, harassment and damage to reputation devolve upon the bankrupt and are exempt. In addition, the Trustee submits that case law provides that damages awarded for loss of income or earning capacity are not property that devolve upon the trustee in bankruptcy, but should also be taken into consideration when calculating the bankrupt’s surplus income obligations under section 68 of the BIA. Therefore, the Trustee submits that such awards should be disclosed so that the Trustee can determine whether the bankrupt has any surplus income obligations to his creditors. In support of its submissions, the Trustee refers to Mostajo, Re, 2006 CanLII 35001 (ONSC), Conforti (Re), 2012 ONSC 199, and Re Landry, 2000 CanLII 16846 (ON CA).

13The respondents submit that the applicant either had no right to commence and pursue the Application or has no right without the participation of the Trustee. The respondents submit that to the extent that the applicant is making a claim of “lost wages” or loss of earnings, such damages vest in and belong to the Trustee under s. 67 of the BIA. The respondents argue that under s. 71 of the BIA, the applicant’s property (which based on the expansive definition of property in the BIA includes a cause of action) devolved to the Trustee and thus the applicant had no right to pursue the claim in the Application.

14In the alternative, the respondents argue that even if the applicant has claimed and is entitled to any personal damages in respect of injury to dignity, such personal damages would constitute “revenues of whatever nature or from whatever source that are earned or received by the bankrupt between the date of the bankruptcy and the date of the bankrupt’s discharge” for the purpose of s. 68 of the BIA. If the applicant was awarded such damages, the Trustee must determine under s. 68 (3) and (4) whether all or any of such damages constitutes “surplus income” that the applicant is required to pay to the applicant’s estate. In these circumstances, the respondents submit that the Trustee should participate in any mediation and any hearing to ensure that the settlement amount or damages reflects an appropriate allocation.

15The applicant submits that there is no reason or basis for the Application not to proceed to mediation and if necessary, hearing. The applicant states that the applicant has brought a claim for injury to his dignity before the Tribunal, which is a personal claim and not one based on property. The applicant submits that an undischarged bankrupt is prevented from bringing claims related to his or her “property” as defined under the BIA, but not damages flowing from personal offence. The applicant submits that the Supreme Court of Canada in Wallace v. United Grain Growers Ltd., 1997 CanLII 332 (SCC), [1997] 3 S.C.R. 701 at para. 38 has noted that claims for mental distress and loss of reputation, among other similar claims, are of a personal nature and do not vest with the Trustee.

16Further, the applicant argues that any settlement which includes lost wages or an award for lost wages if made by the Tribunal would not automatically devolve upon the Trustee but would be income to be dealt with under s. 68 of the BIA. In this respect, the applicant relies on Bolster v. British Columbia (Ministry of Public Safety and Solicitor General) (No. 2) (2004), 49 C.H.R.R. D/101, 2004 BCHRT 32. In Bolster, the British Columbia Human Rights Tribunal found that an applicant’s bankruptcy did not eliminate the applicant’s ability to recover any award of wage loss damages prior to or during his bankruptcy, but that it is for the trustee to apply for payment of any portion of that award to the court under s. 68 if it chooses to do so.

Next Steps

17Having considered the parties’ submissions, I find that the Application can continue to be processed with notice to the Trustee. Given the parties’ consent to mediation, mediation will be scheduled.

18I note that in the applicant’s and in the respondent’s recent submissions, there appears to be agreement that in the case of claims for personal damages, which would arguably encompass a claim for injury to dignity, feelings and self-respect, there is no impediment to an applicant proceeding (although the respondent suggests that such damages if awarded would be subject to s. 68 of the BIA). On the issue of a wage loss (and presumably similar losses), the parties’ positions are more opposed. The applicant submits that an award for lost wages would not automatically devolve upon the Trustee but would be income which would be dealt with under s. 68, whereas the respondent asserts the applicant has no right to pursue such a claim. Notably the Trustee makes similar submissions to that of the applicant about the potential treatment of any wage claim and does not raise a concern about the applicant’s ability to commence or continue with the Application.

19At this stage, based on the Application as drafted (without any particulars of the remedy being sought), I do not find it appropriate to make any further determination about whether there is any impediment to the applicant pursuing a particular remedy. However, I do order the applicant to provide particulars of any remedy being sought so that the Trustee may consider if it wishes to attend the mediation and/or continue to participate in this proceeding.

20If the Application is not resolved in mediation and the applicant’s capacity to continue with a particular claim remains an issue between the parties, either party or the Trustee may bring a request to the Tribunal by filing a Request for Order During Proceeding (Form 10).

21The Tribunal directs:

• The Application will be scheduled for mediation with notice to the Trustee;

• The applicant is required to provide written particulars of the remedy he will be seeking in the Application within 14 days of the date of this Interim Decision, with a copy to the respondent and the Trustee. The particulars shall include the specific monetary compensation being sought along with a description of the loss (or losses) sought to be compensated;

• The Trustee shall advise the Registrar and the parties if it will be attending the mediation within seven days of the receipt of the applicant’s written particulars of the remedy and if so, what role, if any, it seeks to have in that mediation; and

• The Trustee shall continue to receive notice of the proceeding. Unless directed otherwise, the applicant and respondent shall provide the Trustee with ongoing notice of their filings in the Application.