HUMAN RIGHTS TRIBUNAL OF ONTARIO
B E T W E E N:
Angus Lake Applicant
-and-
1627325 Ontario Ltd. operating as Best Western Sword Motor Inn and Robinson Lee Respondents
INTERIM DECISION
Adjudicator: Brian Cook Date: January 17, 2014 Citation: 2014 HRTO 73 Indexed as: Lake v. 1627325 Ontario Ltd. o/a Best Western Sword Motor Inn
APPEARANCES
Angus Lake, Applicant Melissa MacRae, Counsel
1627325 o/a Best Western Sword Motor Inn and Robinson Lee, Respondents Ralph Swaine, Counsel
Best Western International Inc., Proposed Respondent Daryl Cukierman, Counsel
INTRODUCTION
1This Interim Decision is further to a telephone conference call hearing held on October 2, 2013. The issues canvassed in that hearing include identification of the appropriate respondents to the Application, how to ensure that the respondents receive notice of the proceedings, and whether the Application should be deferred pending the conclusion of adjudication of the applicant's claim for benefits under the Workplace Safety and Insurance Act, 1997.
2Written submissions from the parties were received in December 2013.
3The applicant worked at the Best Western Sword Motor Inn (“the Sword Motor Inn”) as a maintenance worker. He worked in this position for about 25 years. The applicant alleges that he worked under a contract of employment that was terminated in May 2012 following a work-related injury that restricted his ability to perform his regular work.
4Starting sometime in February 2008, the Sword Motor Inn was operated by a numbered corporation. Robinson Lee was the owner of the numbered corporation and the manager of the Sword Motor Inn. Mr. Lee sold the business by way of asset sale to Sunil Patel sometime after May 2012 and after the events giving rise to the Application.
5The Application was filed on August 10, 2012. The Application named 1627325 Ontario Ltd. operating as Best Western Sword Motor Inn as the respondent and identified Robinson Lee as the owner/director of the corporation. Mr. Lee was not at that time identified as a personal respondent.
6A Response was received which identified Elsa Kwong as the General Manager and the person with authority to deal with the Application. The Response asked the Tribunal to dismiss the Application on the basis that the Workplace Safety and Insurance Board (WSIB) had denied the applicant's claim for benefits. The Response also indicated that the applicant had not been an employee but was rather an independent contractor. The Response also asserted that the applicant was not fired but rather quit. The Response stated that the numbered company respondent identified in the Application was an “inactive corporation” and that Mr. Lee was living in Asia.
7Interim Decision, 2012 HRTO 2192, dated November 22, 2012 denied the request to dismiss the Application because of the findings of the WSIB. The Tribunal found that the WSIB had not appropriately dealt with the substance of the Application, and directed that the Application would continue to be processed.
8In February 2013 the applicant filed a Request for Order During Proceedings, seeking to add Robinson Lee as a personal respondent and Best Western International Inc. as a corporate respondent.
9The proposed additional corporate respondent filed a Response to the Request for Order During Proceedings arguing that it is not a proper respondent to this Application. Although some information was received from Ms. Kwong, a Response to the Request for Order During Proceedings was not received from Mr. Lee.
10The telephone conference call hearing on October 2, 2013 was scheduled pursuant to a Case Assessment Direction which directed that notice of the hearing would be sent to the respondent and all the proposed respondents, using the contact information so far provided to the Tribunal.
11At the telephone conference call hearing Melissa MacRae, counsel, appeared on behalf of the applicant. Ralph Swaine, counsel, appeared on behalf of Robinson Lee. Daryl Cukierman, counsel, and Kylie Crawford Ten Brook, in-house counsel, appeared on behalf of Best Western International Inc.
12Ms. MacRae advised that the applicant is no longer seeking to add Sunil Patel, the current owner of the business, as a respondent. She explained that the applicant now understands that Mr. Patel had nothing to do with the events giving rise to the Application and did not have any liability with respect to the decisions or actions of the previous owner because the business had been sold on the basis of a sale of assets.
The request to add Mr. Lee as a personal respondent
13The factors typically considered by the Tribunal when determining whether a person who was original personal respondent should be removed or added as a respondent are as follows:
Is there is a corporate respondent in the proceeding that also is alleged to be liable for the same conduct?
Is there any issue raised as to the corporate respondent’s deemed or vicarious liability for the conduct of the personal respondent who sought to be removed?
Is there is any issue as to the ability of the corporate respondent to respond to or remedy the alleged Code infringement?
Does any compelling reason exist to continue the proceeding as against the personal respondent, such as where it is the individual conduct of the personal respondent that is a central issue or where the nature of the alleged conduct of the personal respondent may make it appropriate to award a remedy specifically against that individual if an infringement is found?
Would any prejudice be caused to any party as a result of removing the personal respondent?
Persaud v. Toronto District School Board, 2008 HRTO 31
14In Smyth v. Toronto Police Services Board, 2009 HRTO 1513 at paragraph 12, the following test was proposed when considering a request to add a personal respondent who was not initially named as a respondent in the Application:
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?
- Would it be fair, in all the circumstances, to add the proposed respondent?
15Section 46(3) of the Code provides:
For the purposes of this Act, except subsection 2 (2), subsection 5 (2), section 7 and subsection 46.2 (1), any act or thing done or omitted to be done in the course of his or her employment by an officer, official, employee or agent of a corporation, trade union, trade or occupational association, unincorporated association or employers’ organization shall be deemed to be an act or thing done or omitted to be done by the corporation, trade union, trade or occupational association, unincorporated association or employers’ organization.
16In general, the operation of section 46(3) means that a corporation is deemed to be responsible for the conduct or omissions of its employees or officers. In most employment cases, there is consequently no practical reason to name the employee or officer personally. In employment cases, the Tribunal has generally granted requests to remove individuals who have been named as personal respondents when the alleged acts of discrimination were done during the course of the individual’s performance of duties for the employer.
17One circumstance where it may be appropriate to add an individual as a personal respondent is when there is doubt that the corporation continues to exist or that it has the resources to pay compensation in the event that discrimination is found to have occurred (see, Ontario Human Rights Commission v. Farris, 2012 ONSC 3876, at paragraphs 52 – 57).
18In this case, there appears to be some question about the continued existence of the corporation and its ability to pay compensation in the event that discrimination is found. As well, there is no dispute that the alleged acts of discrimination were done by Mr. Lee personally. In these circumstances, I find that it is appropriate to allow the request to add Mr. Lee as a personal respondent and the style of cause is amended to reflect this new respondent.
19There is a dispute in this case about the nature of the relationship between the Sword Motor Inn and the applicant. The applicant states that he was an employee, while the Sword Motor Inn states that he was an independent contractor.
20If there was an employment relationship, section 5 of the Code would apply with respect to the allegations of discrimination because of disability:
- (1) Every person has a right to equal treatment with respect to employment without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, record of offences, marital status, family status or disability.
(2) Every person who is an employee has a right to freedom from harassment in the workplace by the employer or agent of the employer or by another employee because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, age, record of offences, marital status, family status or disability.
21The question of the relationship between the applicant and the Sword Motor Inn and whether the allegations are “with respect to employment” is a matter that can only be determined on the basis of evidence which has not yet been heard. If it is found that the allegations are not “with respect to employment” but instead relate to a contract for service, section 3 of the Code may apply:
- Every person having legal capacity has a right to contract on equal terms without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, gender identity, gender expression, age, marital status, family status or disability.
22It appears to me that the issue of whether the applicant was an employee or an independent operator is not relevant to the question of whether Mr. Lee should be added as a personal respondent. He is added as a personal respondent because he is potentially liable in the event that the applicant's Code-protected rights have been infringed, regardless of the employment relationship. If there was no discrimination or if the Code does not apply to the circumstances because sections 5 or 3 do not apply, there will be no liability.
The Request to add Best Western International Inc. as a Respondent
23Best Western Inc. (BWI) is an Arizona non-profit corporation. On behalf of BWI, Mr. Cukierman said BWI acts as a co-operative marketing organization for approximately 4,200 member hotels. Mr. Cukierman submits that BWI exercises no control over the member hotels with respect to any employment-related issues. He stated that the relationship between BWI and the individual member hotels, and the owners of those hotels, is not a franchisor – franchisee relationship.
24According to the BWI Bylaws and the BWI membership rules, the members of BWI are the owners of the individual hotels and not the hotels themselves. In this case, Mr. Lee was thus the member of BWI and not the Sword Motor Inn.
25On behalf of the applicant, Ms. MacRae submits that there was a franchisor – franchisee relationship. She refers to two decisions which described individual Best Western hotel owners as holders of a franchise. In Arsandco Investments Ltd. v. Municipal Property Assessment Corp., [2007] OJ No. 587 the reasons for judgment included the following statement (at paragraph 1): “The applicant Arsandco Investments Ltd. owns and operates the hotel and holds a franchise from Best Western for that purpose.”
26Calgary (City) v. Hospitality Inns Ltd., [2000] AMGBO No. 138 was another case dealing with property assessments and is a decision of the Municipal Government Board of Alberta. The applicant before the Board operated a Best Western hotel and, according to the decision described itself as “being part of the Best Western Franchise”.
27I note that both of these cases were concerned with the amount of property tax payable by the hotel to the municipality. The references to the hotel as a Best Western “franchise” hotel was for description purposes and not a finding about the legal relationship between BWI and the individual hotels.
28These decisions also do not represent a finding that the individual Best Western hotels were in fact franchisees since the issue of the relationship between the individual hotel and BWI was not an issue.
29A franchise relationship is basically a licensing arrangement. If BWI is not legally a franchiser, it has many of the features of a franchiser. However, whether or not BWI is a franchiser is not determinative of the issue of potential legal liability that arise in this case. What is important is the actual substance of the relationship between the parties. That relationship is defined by the language of the particular contract between the parties and how the contract is implemented in practice.
30Ms. MacRae submits that BWI has liability because it had a very significant degree of control over the operations of the Sword Motor Inn. She referred to a document called Best Western International Rules and Regulations. It indicates that BWI does control many elements of the operation of the individual hotel by imposing standards. These include rules about exterior signage and canopies, reservation systems, posting of rates, use of credit cards, insurance, the types of movies that can be viewed by hotel guests, the name brands of cereals and the type of juice to be available at breakfast buffets, participation in mandatory programs and promotions, certification of housekeeping and supervisory staff, the number and type of room lighting, minimum television size, the number and size of towels, bedding and beds. There are also rules specific to minimum standards for maintenance and grounds-keeping relevant to the work performed by the applicant in this case.
31Mr. Cukierman agrees that these matters are subject to rules and that control is exercised by BWI to ensure that the rules are followed. However, he argues that this control is a marketing issue to ensure uniform standards for “brand consistency”.
32Mr. Cukierman referred to the Membership Application and Agreement between BWI and the Sword Motor Inn, which was signed on December 11, 2007. Article 17 describes the relationship of the parties in the following terms:
Best Western is a non profit corporation operated on a cooperative basis by and for its hotelier members. The relationship of Best Western to its members is one of an independent contractor. Neither party has the power to obligate or bind the other in any way. No relationship of partners, joint venturers or agents is created. Best Western only provides services as directed by the membership. Best Western has no responsibility for the use, condition or operation of the hotel or the safety of the design of any structure or product. Best Western has no control over or responsibility for any decision affecting the employment or supervision of any person employed in connection with the hotel.
(emphasis in original)
33It appears that there are two possible ways that BWI might have liability if the applicant is able to show discrimination. The first way is if BWI had direct liability because it directly discriminated against the applicant. The second way is if BWI has vicarious liability for the alleged acts of discrimination by the Sword Motor Inn and/or Mr. Lee.
34The applicant in this case does not allege that he was directly discriminated against by BWI. He does not, for example, allege that the decision to terminate his employment was made by BWI.
35Ms. MacRae submits that BWI should be held directly liable for failing to ensure that human rights training and awareness was provided to the hotel management.
36In my view, at least on the facts as alleged by the applicant, the potential liability for such an alleged failure is not sufficient to find that BWI has direct liability for the applicant’s damages.
37It therefore appears that if BWI has liability in this case, the potential liability is vicarious liability.
38The first place to look is section 46.3(1) of the Code which was quoted earlier but is reproduced for this part of the analysis:
46.3 (1) For the purposes of this Act, except subsection 2 (2), subsection 5 (2), section 7 and subsection 46.2 (1), any act or thing done or omitted to be done in the course of his or her employment by an officer, official, employee or agent of a corporation, trade union, trade or occupational association, unincorporated association or employers’ organization shall be deemed to be an act or thing done or omitted to be done by the corporation, trade union, trade or occupational association, unincorporated association or employers’ organization.
39The other sections of the Code referenced in section 46.3(1) are not relevant to this case. The BWI Bylaws indicate that it is a corporation. For BWI to have liability under section 46.3, Mr. Lee would have to be an officer, official, employee or agent of BWI.
40The BWI Bylaws have provision for the appointment of officers and officials and there is no suggestion that Mr. Lee was an officer or official of BWI. The contract between BWI and the Sword Motor Inn specifies that “no relationship of… agents is created.”
41For section 46.3(1) to apply, Mr. Lee would therefore have to be found to be an employee of BWI.
42Ms. MacRae submits that the decision of the Supreme Court of Canada in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59 is helpful in terms of the analysis of whether there was an employment relationship.
43I agree that Sagaz is useful in this case because it includes discussion of the tests to be applied when determining whether a person is an employee or an independent contractor. It also provides guidance on the principles of vicarious liability. At paragraph 47, Major, J., writing for the Court said:
Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account. In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hires his or her own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks.
44In considering these various factors, it is very clear that Mr. Lee was not an employee of BWI. Mr. Lee (through the numbered company) owned the hotel property. He and the numbered company and not BWI assumed all of the financial risk flowing from the operation of the hotel and the opportunity for profit. The payments Mr. Lee made to BWI were not varied depending on the financial success of the hotel. On the issue of control, it is clear that BWI set various standards regarding the operation of the hotel. Mr. Lee could be expelled from BWI if he failed to meet those standards and would then not be allowed to operate the hotel as a Best Western hotel. However, there is no indication that BWI had any direct control over Mr. Lee’s day to day activities or the manner in which he met the required standards. Mr. Lee’s relationship with BWI was that of an independent operator and not an employee.
45The only factor that would suggest that BWI could be liable that flows from the corporate relationship with Sword Motor Inn is the significant degree of control BWI exercises with respect to minimum standards for the operation of the hotel. I agree with Mr. Ciukerman that these standards are consistent with marketing and the need to ensure uniform standards for “brand consistency”. These standards are consistent with a contract of service, indicative of an independent contractor relationship and are not in themselves suggestive of a contract for service, which could be indicative of an employer-employee relationship.
46I further note that the relationship between the applicant and BWI is even less suggestive of an employee-employer relationship as it is clear that it was Mr. Lee and the hotel that had the employment or contract relationship with the applicant and not BWI and it was Mr. Lee and the hotel and not BWI that controlled or directed his day to day activities.
47As noted in Sagaz (at paragraph 33), the most common relationship that attracts vicarious liability is that between employer and employee, which is distinguished from the relationship between an employer and an independent contractor which typically does not give rise to a claim for vicarious liability.
48These principles were revisited by the Supreme Court of Canada in K.L.B. v. British Columbia, [2003] 2 SCR 403, 2003 SCC 51. At paragraphs 19 and 20, Mclachlin C.J. said:
To make out a successful claim for vicarious liability, plaintiffs must demonstrate at least two things. First, they must show that the relationship between the tortfeasor and the person against whom liability is sought is sufficiently close as to make a claim for vicarious liability appropriate. This was the issue in 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, [2001] 2 S.C.R. 983, 2001 SCC 59, where the defendant argued that the tortfeasor was an independent contractor rather than an employee, and hence was not sufficiently connected to the employer to ground a claim for vicarious liability. Second, plaintiffs must demonstrate that the tort is sufficiently connected to the tortfeasor’s assigned tasks that the tort can be regarded as a materialization of the risks created by the enterprise. This was the issue in Bazley, supra, which concerned whether sexual assaults on children by employees of a residential care institution were sufficiently closely connected to the enterprise to justify imposing vicarious liability. These two issues are of course related. A tort will only be sufficiently connected to an enterprise to constitute a materialization of the risks introduced by it if the tortfeasor is sufficiently closely related to the employer.
49In the present case, it does not appear to me that the relationship between Mr. Lee and BWI was of a nature that BWI could be said to have vicarious liability for Mr. Lee’s alleged actions with respect to the applicant. While it is clear that the BWI exerts a considerable degree of control over its member hotels, that control is with respect to standards and marketing issues. The allegations in this Application are not related to any of those matters. They are instead related to allegations of employment-related decisions. Those are decisions over which BWI explicitly had no control at all. As noted, this is very clear on the basis of the contractual relationship between BWI and Mr. Lee. There is nothing alleged in the Application to suggest that BWI exerted any control over the terms of the applicant’s employment or any decisions about his employment or contract of or for service.
50The only allegation in this regard is that the applicant was required to attend training at the hotel that was administered by someone from BWI. The training is said to have been to ensure that certain maintenance standards were maintained. BWI denies that this training ever took place. Even if it did, this seems consistent with the branding and service standards matters and is not consistent with a theory that BWI exerted any control over the actual terms of the applicant's employment relationship with Mr. Lee.
51For all of these reasons, I am satisfied that there is no basis to believe that vicarious liability could attach to BWI if it is found that the applicant’s Code-protected rights were infringed as alleged.
Status of Mr. Lee
52Mr. Swaine advised that Mr. Lee is in poor health. Mr. Swaine indicated that he was acting for Mr. Lee personally as well as representing the Sword Motor Inn and the numbered company. He acknowledged that there appear to have been problems in the past in terms of delivering documents to Mr. Lee. On this point, Ms. MacRae proposed that the Application should proceed without further notice to Mr. Lee because he may have been trying to avoid service. At the telephone conference call hearing I indicated that this did not seem appropriate at this time given the information about Mr. Lee’s poor health.
Should the Application be deferred?
53As noted, the applicant has filed a claim for benefits with the WSIB for the injuries he sustained in the course of doing his work for the Sword Motor Inn. His claim was initially denied by the WSIB when the WSIB determined that the applicant was an independent contractor and not a worker for the purposes of the Workplace Safety and Insurance Act (WSIA). The applicant objected to that decision and the WSIB reversed its decision and determined that the applicant was in fact a worker. However, his claim was then denied because he had not filed the claim within the time period established by WSIA.
54That decision was the subject of an objection to the WSIB Appeals Branch that was apparently considered at the end of October 2013.
55The Tribunal will often defer consideration of an Application when there is an ongoing related proceeding. However, in this case, I find that it is not appropriate to defer further consideration of the Application at this time.
56If the applicant is able to establish that the WSIB should exercise its discretion to waive the time limit for filing a claim, the WSIB will then determine his entitlement to benefits under the WSIA. That determination will not include a determination of whether the applicant’s Code-protected rights were infringed because the WSIB does not have jurisdiction to determine this. There is a potential for overlap in respect of compensation for lost wages subsequent to the determination as this would be a basis for the applicant’s claim for loss of earnings from the WSIB and is part of the claim in the Application. On this point, Ms. MacRae points out that any determination by the Tribunal can take this into account, depending on the status of the applicant’s claim before the WSIB. Ms. MacRae also points out that Mr. Lee’s health status is another reason why it may be appropriate to continue with the Application and not defer at this time.
57I agree with the applicant’s submissions and conclude that it is not appropriate to defer consideration of the Application at this time.
NEXT STEPS
58Both parties have confirmed a willingness to try mediation at the Tribunal. The Tribunal will accordingly schedule a mediation session. Given Mr. Lee’s health status, the Tribunal will communicate with the parties to establish a date that will best accommodate the parties.
Dated at Toronto, this 17th day of January, 2014.
"Signed by"
Brian Cook Vice-chair