Cheeseman v. McKnight Foods Inc., 2014 HRTO 950

HUMAN RIGHTS TRIBUNAL OF ONTARIO

B E T W E E N:

Morgan Cheeseman Applicant

-and-

McKnight Foods Inc. and 1192575 Ontario Inc. o/a Obsidian Group Inc. Respondents

INTERIM DECISION

Adjudicator: Judith Hinchman Date: June 27, 2014 Citation: 2014 HRTO 950 Indexed as: Cheeseman v. McKnight Foods Inc.

WRITTEN SUBMISSIONS

Morgan Cheeseman, Applicant Bay Ryley, Counsel

1192575 Ontario Inc. o/a Obsidian Group Inc., Respondent Bill Dimitropoulos, Counsel

2381923 Ontario Inc. o/a Fast Mart, Proposed Respondent Bill Dimitropoulos, Counsel

Introduction

1This is an Application filed under s. 34 of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the "Code"), alleging discrimination with respect to employment because of sexual harassment. This Interim Decision deals with the applicant's request to add three respondents.

2The Application names McKnight Foods Inc. as the respondent. By a Request for an Order during Proceedings filed June 4, 2014, the applicant requested that Jason McKnight be added as a personal respondent, and 2381923 Ontario Inc. o/a Fast Mart Inc. ("Fast Mart"), and 1192575 Ontario Inc. o/a Obsidian Group Inc. ("Obsidian") be added as organizational respondents.

3Both Fast Mart and Obsidian have filed responses to this request. Jason McKnight has not and the time for doing so has now passed.

4Rule 1.7(b) of the Tribunal's Rules affirms the Tribunal's power to add or remove a party. The Tribunal held in Smyth v. Toronto Police Services, 2009 HRTO 1513, that when determining a request to add a respondent, the Tribunal should consider the following three questions:

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

Obsidian and Fast Mart

5The 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. Neither Obsidian nor Fast Mart are proposed individual respondents and so the second question does not apply. With respect to the third question, 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, and prejudice to other parties.

6The applicant bases her request to add Fast Mart as a respondent on her submission that it appears that Fast Mart is now operating the Union Burger franchise at the location where McKnight Foods Inc. previously was the franchisee and where the alleged discrimination occurred. Fast Mart agrees that is has assumed operation of the Union Burger franchise as the new franchisee. It argues though that it has never had contractual or other business undertakings with the respondent.

7The Application contains no allegations against Fast Mart and does not allege that Fast Mart was operating the franchise during the period of the alleged discrimination. There is no apparent relationship between Fast Mart and the respondent McKnight Foods Inc. and no evidence that Fast Mart had any connection with the events in question or the management of the store. Consequently, I cannot find on the material currently before the Tribunal that there are any allegations that would support a finding that Fast Mart violated the Code. In these circumstances, there is also no basis for concluding that it would be fair to add Fast Mart to the Application.

8The applicant and Obsidian agree that Obsidian is the Franchisor of the Union Burger Franchise and that the respondent McKnight Foods Inc. executed a Franchise Agreement allowing it to own and operate a Union Burger franchise during the relevant period.

9The applicant further alleged that she contacted Obsidian to complain about the alleged sexual harassment and that because she was never provided with results of an investigation Obsidian could be liable under the Code.

10Obsidian relies on the Franchise Agreement, which has not been provided to the Tribunal, to argue that given its status as the Franchisor it could not be found liable in any circumstances.

11The Tribunal has found that whether or not a franchisor could be determined liable pursuant to its obligations under a franchise agreement or is in some other way legally responsible for any alleged discrimination is a matter to be determined following evidence and argument at a hearing. Philip v. Giant Tiger Stores, 2009 HRTO 1227, Wozenilek v. McDonald's Restaurants of Canada, 2010 HRTO 1120. I therefore find that it is premature to determine that there are no allegations made that could support a finding that the proposed respondent violated the Code.

12I must now determine if it would be fair in all the circumstances to add Obsidian as a respondent. In doing so I will consider the effects on the hearing process of adding the proposed respondent, the reasons the proposed respondent was not named in the Application, and prejudice to other parties.

13The requested amendment was made a month and a half prior to the scheduled hearing. Although this is not early in the process, for other reasons below I am ordering an adjournment and so in my view there is sufficient time for Obsidian to file a Response and make disclosure.

14In June 2013, after the applicant complained to the "Head Office of Union Burger" about the alleged sexual harassment, she received an email from the Vice President of the Obsidian Group Inc. / Union Burger. The applicant has not explained why she did not include Obsidian in the original application. I am mindful of the fact, however, that the applicant was unrepresented at the time she filed her Application.

15There is no identified prejudice to the other respondent in naming Obsidian as a respondent and if the Application is allowed, an order against Obsidian may be necessary to address any findings of discrimination. Furthermore, Obsidian has been aware of the alleged sexual harassment since June 2013.

16On balance, I find that it would be fair in all the circumstances to add Obsidian as a respondent.

Jason McKnight

17The allegations of sexual harassment are against Jason McKnight. There is no prejudice to Mr. McKnight if he were added as a personal respondent because he is the owner of the named respondent and fully aware of all allegations and circumstances. Given that his company has been named a respondent I must determine if there are compelling reasons to add Mr. McKnight as a personal respondent.

18I agree with the applicant that as per Sigrist and Carson v. London District Catholic School Board, 2008 HRTO 14, the individual conduct of Mr. McKnight is the central issue and the nature of the alleged conduct, harassment, if proved would make it appropriate to award a remedy specifically against Mr. McKnight, rather than his company.

19However, on June 25, 2014 the Tribunal received a letter from a Trustee in Bankruptcy stating that Mr. McKnight has filed a proposal under section 62 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3 ("BIA"), and requesting that all proceedings regarding this Application as between the applicant and Mr. McKnight be stayed. Section 69 of the BIA stays any proceedings with respect to claims provable in bankruptcy and thus could cover any monetary remedies awarded against Mr. McKnight. However, it is not clear that any non-monetary remedies as may be claimed against Mr. McKnight would be affected by the filing of the proposal. Furthermore the current respondent McKnight Foods Inc. is not named in the BIA proposal.

20The Tribunal has found that stays under the BIA operate only to stay the proceedings against the bankrupts, not against the other respondents.

21In this case the present Interim Decision grants the applicant's request to add a second organizational respondent. McKnight Foods Inc. is already a respondent and not named in the proposal filed under the BIA. Therefore it is appropriate to continue the Application against those two organizational respondents and consider the effect of the BIA on whether Mr. McKnight should be added as a personal respondent and on any non-monetary remedies as may be claimed against Mr. McKnight.

22The applicant is requested to file submissions on the following:

• Does she still wish to add Mr. McKnight as a personal respondent if she can only seek non-monetary remedies?
• If so, what are those non-monetary remedies?

23The other parties, McKnight Foods Inc. and Obsidian and also the proposed personal respondent Mr. McKnight, are requested to file submissions on the question of what the effect of the BIA stay is on any remedies sought against Mr. McKnight.

24In light of this latter development, the Tribunal on its own initiative under Rule A4 adjourns the hearing scheduled for July 17 and reschedules it to September 25, 2014.

Order

25The Tribunal orders as follows:

a. The request to add Fast Mart is denied;

b. The request to add Obsidian as a respondent is granted;

c. The title of proceeding shall be amended accordingly.

d. The respondent Obsidian shall file its Response and make disclosure to the other parties pursuant to Rule 16.1 of all arguably relevant documents in its possession within 30 days of the date of this Interim Decision. By no later than August 22, 2014, Obsidian shall serve on the other parties and file with the Tribunal all the documents they intend to rely on at the hearing, its witness list, and witness statements as per Rules 16.2, 16.3, 17.1, and 17.2.

e. The parties shall serve on each other and file with the Tribunal written submissions on the question of the effect of the Trustee's letter respecting the proposal filed on behalf of Mr. McKnight on the remedies that may be sought against Mr. McKnight in accordance with the following schedule:

i. The applicant shall serve and file her written submissions by no later than July 11, 2014;

ii. The respondents and Mr. McKnight shall serve and file their written submissions by July 25, 2014; and

iii. The applicant shall serve and file any written submissions in reply by no later than August 4, 2014.