HUMAN RIGHTS TRIBUNAL OF ONTARIO
B E T W E E N:
James Smith
Applicant
-and-
Nortek Computers Ltd.
Respondent
INTERIM DECISION
Adjudicator: Brian Eyolfson
Indexed as: Smith v. Nortek Computers Ltd.
Introduction
1This Application was filed under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the "Code"), on September 18, 2013, and alleges discrimination with respect to employment because of disability. The applicant's allegations include that his employment was terminated after he was off work due to illness. In the Application, the applicant names his former employer, Nortek Computers Ltd. ("Nortek"), as a respondent.
2In its Response to the Application, Nortek submits that it was very sympathetic regarding the applicant's health issues, and that his employment was terminated solely as a result of poor work performance that only became visible when he went on leave.
3This Interim Decision addresses the applicant's Request for an Order During Proceedings ("RFOP") to add Nortek's owner, Robert Everest, as an individual respondent to the Application.
BACKGROUND
4This Application was scheduled to be heard by the Tribunal on August 26 and 27, 2014. On July 29, 2014, the Tribunal received a Notice of Bankruptcy concerning Nortek, and, on August 1, 2014, the Tribunal asked the applicant to advise the Tribunal of his intentions with respect to the Application, and his position on whether the hearing could proceed.
5On August 1, 2014, the Tribunal received the applicant's RFOP to add Mr. Everest as a respondent to the Application. On August 12, 2014, the Tribunal received submissions from Mr. Everest, opposing the applicant's RFOP to add him as a respondent.
6On August 13, 2014, the Tribunal issued a Case Assessment Direction ("CAD"). In the CAD, the Tribunal asked Nortek's trustee in bankruptcy (the "trustee"), the respondent, or Mr. Everest, to advise the Tribunal and the applicant if a stay affecting this proceeding was in place, and to provide a copy of any stay order to the Tribunal and the applicant. In addition, the Tribunal asked the parties and Mr. Everest, and provided the trustee with an opportunity, to make submissions on the scope of any stay, and whether any stay had any bearing on the applicant's RFOP to add Mr. Everest as a party to the proceeding.
7In correspondence dated August 18 and 20, 2014, the trustee explained that, on July 24, 2014, Nortek filed an assignment under s. 49 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended (the "BIA"). The trustee submitted that, by virtue of s. 69 of the BIA, no creditor has any remedy against the insolvent person or the insolvent person's property, or shall commence or continue any action, execution or other proceedings, for the recovery of a claim provable in bankruptcy. The trustee also provided a copy of a Notice of Stay of Proceedings with respect to Nortek, and submitted that the stay is as against Nortek, and does not extend to Mr. Everest.
8By correspondence dated August 21, 2014, the applicant submitted that he wishes to rely on his arguments contained in his RFOP to add Mr. Everest as a respondent. He also submitted that he understood the impact of the stay with respect to Nortek, and that he wishes to proceed as against Mr. Everest as an individual respondent.
9The Tribunal issued a CAD dated August 22, 2014, indicating that it was appropriate that the hearing dates be adjourned, as the hearing was scheduled to commence in only two business days, and there did not appear to be any dispute that there is a stay with respect to Nortek. The Tribunal indicated that it would issue further directions, and/or determine the applicant's RFOP to add Mr. Everest as a respondent to the Application.
ANALYSIS AND DECISION
10In his RFOP, the applicant submits that, as Nortek has filed for bankruptcy, there is a real concern that, if the Application is successful, Nortek may not be in a position to remedy a breach of the Code. The applicant also submits that the allegations raised are primarily with respect to the conduct of the proposed respondent. He submits that Mr. Everest is the owner and President of Nortek, who ultimately would have made the decision to terminate his employment. The applicant also submits that there would be little prejudice to Mr. Everest in adding him to the Application, even this late in the proceeding, as he has been the contact person for Nortek since the beginning of this matter.
11In opposing his addition as a respondent to the Application, Mr. Everest submits that the applicant was hired by the corporation, Nortek, and not by Mr. Everest in his personal capacity. He submits that a corporation is a separate person in law. He suggests that the applicant file a claim with the trustee.
12In Smyth v. Toronto Police Services Board, 2009 HRTO 1513 ("Smyth"), the Tribunal set out a three-stage test for adding respondents, at para. 12:
When determining a request to add a respondent, the Tribunal should consider the following three questions:
(1) Are there allegations made that could support a finding that the proposed respondent violated the Code?
(2) 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?
(3) Would it be fair, in all the circumstances, to add the proposed respondent?
The application of the first stage involves considering whether there are allegations made in the Application that could lead to a finding that the proposed respondent violated the Code. At the second stage, the Tribunal applies the factors set out in Persaud v. Toronto District School Board, 2008 HRTO 31 ("Persaud"), at para. 5, which focus principally on whether there is an organization that is part of the proceeding which is able to take responsibility for the conduct, and whether the conduct of the individual respondent is a "central issue" in the proceedings. The factors from Persaud are applicable to both requests to add individual respondents and requests to remove them. At the third stage, the Tribunal may consider a variety of factors, including the effects on the hearing process of adding the proposed respondent, the reasons the proposed respondent was not named in the Application or Response, and prejudice to the other parties.
13In the present case, there appears to be a stay of this proceeding, pursuant to s. 69 of the BIA, as against Nortek, the only respondent currently named in this Application. In the circumstances, it is not entirely clear to me if it is appropriate to consider the applicant's RFOP to add a party to this proceeding, brought after the stay was in place.
14In any event, for the reasons that follow, I find that it is not appropriate to add Mr. Everest as a respondent to this Application.
15With respect to the first stage of the test set out in Smyth, the applicant acknowledges in his RFOP that, in order for an individual to be properly named as a respondent, the allegations made must, if established, be able to support a finding that the individual breached the applicant's Code rights. The applicant refers to the Tribunal's decision in Budd v. McDougall, 2013 HRTO 93 ("Budd"), where a receivership order stayed proceedings as against the organizational respondent, but not as against two individual respondents who were also named in the Application. After the Application was withdrawn as against the organizational respondent, the Tribunal found that it was appropriate to continue the Application as against the named individual respondents. The Tribunal held that the central question to address was whether or not there were allegations made against either individual respondent that could support a finding that they violated the Code.
16With respect to the first individual respondent, the Tribunal in Budd considered, at para. 24: the nature of the employer (a family run business in which the individual respondent was a secretary of the corporation and occupied a senior position); the nature of the allegations against the individual respondent (that she played a critical role in refusing to accommodate the applicant); and, the early stage of the proceeding and the absence of a respondent organization defending it. The Tribunal was satisfied that there were allegations made against the individual respondent that "may support a finding that she violated the Code" (at para. 23).
17The Tribunal in Budd reached the same conclusion with respect to the second individual respondent, who had been one of two shareholders of the organizational respondent and an administrator; however, the Tribunal acknowledged that the case against him was more challenging to assess. The applicant made a general allegation that the second individual respondent refused to accommodate her. The Tribunal noted that the applicant later clarified that she assumed that decisions had to go through the second individual respondent, and that this claim was supported by a manager telling the applicant that the issue of her accommodation was in the hands of both individual respondents, and some documentation was authored by, or copied to, the second individual respondent. While the Tribunal noted that it had some reservations, it determined that the Application should also continue as against the second individual respondent, also noting that the proceeding was at an early stage, with only a nominal Response to the Application having been provided. Having regard to all of the circumstances, including the nature of the corporate entity, and the acknowledgement by the first individual respondent that decisions were made in consultation with management, and the absence of a corporation defending the Application, the Tribunal determined that the second individual respondent would remain a respondent.
18The applicant also referred to the Tribunal's decision in Madhani v. Sears Canada Inc., 2013 HRTO 290 ("Madhani"), wherein the Tribunal stated as follows, at paras. 42 and 43:
Where the Tribunal is asked to remove a personal respondent who is an employee or agent of a corporation that is also named as a respondent, facts that speak to the nature and degree of involvement of that individual should in my opinion be the starting point. Would the facts as alleged or the evidence available to date support a finding that the conduct of the personal respondent was no more than the conveying or effecting of a decision taken by the directing mind(s) of a corporate or other institutional respondent?
In my view, a request to remove a respondent because he or she is unlikely in the circumstances to be found personally liable under the Code should be considered with great caution where the applicant (and the Tribunal) is not in a position to know sufficient detail to be sure who was actively involved or responsible. Where the request has been made before disclosure of documents and witness statements, there is usually much less information available that could be relevant to the decision to remove a respondent.
19Referring to the decision of the Divisional Court in Ontario Human Rights Commission v. Farris, 2012 ONSC 3876, at para. 51, the applicant submits that a respondent declaring bankruptcy raises concerns about enforceability, degrading any effectiveness of a successful application. In Farris, the Court held that a finding of corporate liability is not meant to act as a shield against a finding of individual liability, where the acts of the individual constitute a violation of the Code. The Court also held that the focus of human rights legislation is to provide an effective remedy to the complainant, and one measure of the effectiveness is the degree to which the damages can be collected.
20The applicant also submits that the Tribunal has permitted the addition of individual respondents where corporate respondents have been involved in bankruptcy proceedings, and where there has been a sale of a corporate respondent. In Trowell v. 6286160 Canada Limited, 2011 HRTO 1244 ("Trowell"), the Tribunal determined that it was fair to add the owner of a corporate respondent as an individual respondent where the corporate respondent had filed an assignment in bankruptcy. The Tribunal stated as follows, at para. 15:
The Tribunal has added personal respondents in circumstances involving a corporate respondent in the midst of bankruptcy proceedings when it has determined that the proposed respondent's actions have been central to the applicant's case (see Cugliari v. Telefficiency Corporation, 2001 26229 (ON H.R.T.). The Tribunal has also awarded financial damages solely against personal respondents in instances in which a human rights complaint has been discontinued against a named corporate respondent that went into receivership (see Selinger v. McFarland, 2008 HRTO 49).
21In Trowell, the Tribunal was satisfied that the applicant was alleging that the proposed individual respondent had a central role in the decision to terminate the applicant's employment, and that this decision was related to her announced pregnancy. More specifically, the applicant alleged in her Application that the proposed individual respondent was upset by the news that she was pregnant, and, when her supervisor terminated her employment, he told her that he was just the messenger for the proposed individual respondent.
22In Burke v. Muskoka Riverside Inn, 2014 HRTO 279 ("Burke"), the Tribunal found that it was appropriate to add two individual respondents, at an early stage in the proceedings, where there was a sale of the corporate respondent. The Tribunal indicated that one of the individuals was the owner of the corporate respondent, and the applicant made allegations about the second individual in the Application which, if proven, could constitute a violation of the Code. The Tribunal indicated that it was unclear if the second individual was also an owner of the corporate respondent, but it appeared that she was, as it appeared that she completed the Response to the Application in the first person and used the words "us", "our", and "we". It is not clear from the Tribunal's decision if there were also allegations as against the first individual respondent which, if proven, could constitute a violation of the Code.
23In the present case, the applicant submits in his RFOP that Mr. Everest is the owner and President of Nortek, and that he ultimately would have made the decision to terminate the applicant's employment. He submits that Mr. Everest fully participated in the day-to-day operations of the business, and, in doing so, he would have been involved in the final decision to terminate the applicant's employment. The applicant also submits that, if it is found that Mr. Everest did make the decision to terminate the applicant's employment, a finding of liability could be appropriately applied to him. He submits that, as an owner and decision-maker of Nortek, the allegations provide a sufficient basis where liability could be found with respect to the termination of the applicant's employment.
24Mr. Everest is identified in the Application as the contact person for, and owner of, Nortek. It appears from a review of the Application, however, that Mr. Everest is not mentioned in the narrative setting out the applicant's allegations, or in response to any of the questions in the Application concerning the alleged discrimination. Rather, the applicant refers to speaking to a particular manager at Nortek about his initial absence from work due to illness and his later proposed return to work on a limited basis. He also alleges that, on other occasions, the manager refused to see him, did not return his call when he left a message, and terminated his employment when he attended the workplace. There do not appear to be any allegations made in the Application that could support a finding that the proposed respondent, Mr. Everest, violated the Code.
25I also note that the applicant's RFOP to add Mr. Everest as a party is not brought at an early stage, as compared to some of the cases referred to above wherein the issue of adding or removing individuals as respondents was addressed at earlier stages in the proceedings. See Budd, Madhani, and Burke, above. Rather the RFOP in the present case was brought approximately four weeks before the scheduled hearing on the merits, and well after the respondent disclosed arguably relevant documents to the applicant. Despite the applicant's RFOP being brought at a later stage in the proceeding, the applicant has not referred, in his RFOP, to any potential evidence that could support a finding that Mr. Everest violated the Code. I note that, included with the documents that the applicant provided to the Tribunal to be relied upon at the hearing, is a letter confirming the termination of the applicant's employment. The letter is signed by the manager who the applicant refers to in his Application.
26In my view, the applicant's submissions in his RFOP that Mr. Everest would have been involved in the decision to terminate his employment is rather speculative. I note that in the context of determining if an application should be dismissed on the basis that it has no reasonable prospect of success, the Tribunal has held that there must be a basis beyond mere speculation and accusations to believe that an applicant could show discrimination on the basis of one of the grounds alleged in the Code, for an application to continue in the Tribunal's process. See Forde v. Elementary Teachers' Federation of Ontario, 2011 HRTO 1389. In my view, this threshold is also applicable when applying the first stage of the test for adding a respondent set out in Smyth, i.e. are there allegations beyond mere speculation that could support a finding that the proposed respondent violated the Code?
27I find that in the present case there are not. The applicant has not pointed to anything, and there does not appear to be anything before me, that would suggest that Mr. Everest could be found liable as an individual respondent for violating the Code. The fact that Nortek has filed an assignment in bankruptcy is a factor that weighs in favour of adding a respondent, in light of the second stage of the test set out in Smyth. In my view, however, it would be neither fair, nor appropriate, in all of the circumstances to add Mr. Everest as a party to this proceeding, at this late stage of the proceeding, when there is nothing before me to suggest that he could be found to be personally liable for a violation of the Code.
28The applicant's RFOP to add Mr. Everest as an individual respondent is denied.
ORDER
29The applicant's RFOP to add Mr. Everest as an individual respondent is denied.
30In the circumstances, it appears that if the applicant wishes to continue the Application as against Nortek, he may need to either bring a motion in Superior Court to lift the stay, or reach an agreement with the Receiver with respect to his claim. If the applicant does wish to continue the Application as against Nortek, he is directed to take the necessary steps to enable him to do so, within 60 days of the date of this Interim Decision.
31The applicant is also directed to advise the Tribunal of his intentions in writing within 30 days of the date of this Interim Decision. If the applicant fails to do so the Tribunal may deem the Application to be abandoned and close its file.
32I am not seized
Dated at Toronto, this 31st day of October, 2014.
"Signed by"
Brian Eyolfson
Vice-chair