Ontario Supreme Court

Shelter Corp. v. Ontario (Human Rights Comm.)

Date: 2001-02-01

The Shelter Corporation, Bramalea Ltd. and Creccal Investments Ltd. Appellants

and

Ontario Human Rights Commission, Dawn Kearney, J.L. and Catarina Luis Respondents

Date of Decision: February 1, 2001

Before: Ontario Superior Court of Justice, Divisional Court, O’Driscoll, MacFarland and Clarke JJ.

Decision No.: 40/99 and 43/99

Appeal from: (sub nom. Kearney v. Bramalea Ltd. (No. 2)) (1998), 1998 29852 (ON HRT), 34 C.H.R.R. D/1 (Ont. Bd.lnq.)

Appearances by:

Martin J. Doane, Counsel for the Appellant Shelter Corporation

Gary Luftspring and P.A. Neena Gupta, Counsel for the Appellant Creccal Investments Ltd.

Anthony Griffin, Counsel for the Ontario Human Rights Commission

Beth Symes, Counsel for the Respondents Dawn Kearney, J.L. and Catarina Luis

Sheena Scott and Marie Chen, Counsel for the Interveners African Canadian Legal Clinic, Congress of Black Women in Canada and Jamaican Canadian Association

I. NATURE OF THE PROCEEDINGS

[1] The Shelter Corporation (“Shelter”) appeals (40/99) to the Divisional Court from the December 22, 1998, decision of a unanimous three-member Board of Inquiry (“Board”) [sub nom. Kearney v. Bramalea Ltd. (No. 2), 1998 29852 (ON HRT), 34 C.H.R.R. D/1], appointed under s. 38(1) of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (“Code”).

[2] Creccal Investments Ltd. (“Creccal”), in a separate Notice of Appeal (43/99), appeals to this Court from the same December 22, 1998, decision of the Board.

[3] The complainants Dawn Kearney, J.L. and Catarina Luis are cross-appellants in Appeal 43/99.

[4] On April 19, 1995, Bramalea Inc. went bankrupt. Orders were obtained allowing these proceedings to continue notwithstanding the bankruptcy.

[5] The applicable appeal provisions are found in the Code:

42(1) Any party to a proceeding before the board of inquiry may appeal from a decision or order of the board to the Divisional Court in accordance with the rules of court.

(3) An appeal under this section may be made on questions of law or fact or both and the court may affirm or reverse the decision or order of the board of inquiry or direct the board to make any decision or order that the board is authorized to make under this Act and the court may substitute its opinion for that of the board.

[6] At issue in this appeal is the landlords’ use of a rent/income criterion in deciding whether to rent an apartment to a person or persons protected under s. 2, s. 4, s. 9 and s. 11 of the Code. Does the application of the criterion regarding those protected groups result in indirect discrimination contrary to the Code?

[7] On September 9, 1999, some ten months after the Board of Inquiry’s decision, the Supreme Court of Canada released its reasons in British Columbia (Public Service Employee Relations Commission) v. BCGEU, 1999 652 (SCC), [1999] 3 S.C.R. 3 [35 C.H.R.R. D/257] (“Meiorin”). In her reasons, McLachlin J. (for the full Court), abolished the distinction between “direct” and “indirect” discrimination, On December 16, 1999, the Supreme Court of Canada released its decision in British Columbia (Superintendent of Motor Vehicles) v. British Columbia (Council of Human Rights), 1999 646 (SCC), [1999] 3 S.C.R. 868 [36 C.H.R.R. D/129] (“Grismer”). McLachlin J. (for a unanimous seven-judge court), wrote [p. 880, § 19-20 [D/135-D/136]:

Meiorin announced a unified approach to adjudicating discrimination claims under human rights legislation. The distinction between direct and indirect discrimination has been erased. Employers and others governed by human rights legislation are now required in all cases to accommodate the characteristics of affected groups within their standards, rather than maintaining discriminatory standards supplemented by accommodation for those who cannot meet them. Incorporating accommodation into the standard itself ensures that each person is assessed according to her or his own personal abilities, instead of being judged against presumed group characteristics. Such characteristics are frequently based on bias and historical prejudice and cannot form the basis of reasonably necessary standards. While the Meiorin test was developed in the employment context, it applies to all claims for discrimination under the B.C. Human Rights Code.

Once the plaintiff establishes that the standard is prima facie discriminatory, the onus shifts to the defendant to prove on a balance of probabilities that the discriminatory standard is a BFOR [a bona fide occupational requirement) or has a bona fide and reasonable justification. In order to establish this justification, the defendant must prove that:

(1) it adopted the standard for a purpose or goal that is rationally connected to the function being performed;

(2) it adopted the standard in good faith, in the belief that it is necessary for the fulfillment of the purpose or goal; and

(3) the standard is reasonably necessary to accomplish its purpose or goal, in the sense that the defendant cannot accommodate persons with the characteristics of the claimant without incurring undue hardship.

See also: Entrop v. Imperial Oil Limited (2000), 2000 16800 (ON CA), 50 O.R. (3d) 18 37 C.H.R.R. D/481.

[8] The case at bar was presented to the Board of Inquiry as a case of indirect discrimination. It was so argued before us. In my view, the abolition of the distinction between direct and indirect discrimination does not affect the result of this appeal,

II. RELEVANT SECTIONS OF THE CODE

2(1) Every person has a right to equal treatment with respect to the occupancy of accommodation, without discrimination because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, same-sex partnership status, family status, handicap or the receipt of public assistance.

4(1) Every sixteen or seventeen year old person who has withdrawn from parental control has a right to equal treatment with respect to occupancy of and contracting for accommodation without discrimination because the person is less than eighteen yews old.

9. No person shall infringe or do, directly or indirectly, anything that infringes a right under this Part.

11(1) A right of a person under Part I is infringed where a requirement, qualification or factor exists that is not discrimination on a prohibited ground but that results in the exclusion, restriction or preference of a group of persons who are identified by a prohibited ground of discrimination and of whom the person is a member, except where,

(a) the requirement, qualification or factor is reasonable and bona fide in the circumstances; or

(b) it is declared in this Act, other than in section 17, that to discriminate because of such ground is not an infringement of a right.

III. THE HEARING

[9] After its appointment on June 10, 1993, the Board held more than sixty days of hearings over a three-year period. The Board rendered its decision on December 18, 1998.

[10] Shelter’s Notice of Appeal (40/99) is dated January 20, 1998 [sic].

[11] Creccal’s Notice of Appeal (43/99) is dated January 20, 1999, and the complainants’ cross-appeal is dated February 4, 1999.

IV. THE COMPLAINTS AND THEIR CHRONOLOGY

A. Kearney v. Bramalea Inc.

[12] On September 23, 1988, Dawn Kearney signed a complaint under the Code against Bramalea and filed it with the Human Rights Commission (“Commission”). She alleged that on September 14, 1988, she was 17 years of age, married, pregnant and living with her in-laws and with her husband, Michael, then 18 years of age. Michael Kearney was earning $9.24 per hour. The couple went to Bramalea’s rental office in Brampton and asked about a two‑bedroom apartment for rent in the range of $600 per month

[13] In its response to Ms. Kearney’s complaint, Bramalea referred to the use of the rent/income ratio as follows:

My clients (referring to Bramalea) informed the complainant that in order to occupy an apartment with Bramalea Ltd., any and all applicants must be able to demonstrate an “on-going” ability to pay the monthly rental fees. As such, Bramalea Ltd. had established a policy whereby all applicants must be able to demonstrate that their total income would meet a guideline of 25% (or less) of total salary which can be paid towards rent.

Furthermore, such a criteria is established uniformly and universally for all applicants to Bramalea.

[14] The Commission investigated the complaint and found out that “there is no evidence to indicate that the complainant was treated differently because of her age or sex (pregnancy)” and that the “statistical evidence is at best inconclusive” (Commission Case Summary, Appeal Book, vol. X, tab E).

B. J.L. v. Shelter Corporation

[15] On June 25, 1990, J.L. filed a complaint against Shelter alleging that her right to equal treatment without discrimination had been infringed by Shelter at Aquitaine Shores on the basis of

(1) age, contrary to s. 2(1), s. 3 and s. 8 (now s. 9) of the Code, or

(2) age and sex, contrary to s. 10 (now s. 11) of the Code. She alleged that Shelter’s policy of disqualifying an applicant for an apartment when that person would be paying more than 25 percent of income for rent resulted in the exclusion of single women and young people.

[16] The Commission investigated this complaint and concluded (Commission Case Summary: Appeal Book, vol. X, tab E).

(a) There was insufficient evidence to support the allegation of direct discrimination based on age.

(b) There was insufficient evidence to support the allegation of constructive discrimination based on age or sex because 54% of the then current tenants at the apartment complex (Aquitaine Shores) were young people (ages 20-29) at the time they were approved and 44% of the tenants were female.

(c) The matter be considered whether or not the 30% minimum rent/income ratio was a potential violation of the Code and whether a Board of Inquiry should be appointed.

C. Luis v. Creccal

[17] On May 4, 1992, Catarina Luis filed a complaint against Creccal. She alleged that her right to equal treatment without discrimination because of family status had been infringed:

(1) contrary to s. 2 and s. 9 (now s. 10) of the Code, and

(2) contrary to s. 11 of the Code, there had been constructive discrimination because her right to equal treatment with respect to accommodation had been infringed because of sex, marital status, place of origin, citizenship and the receipt of public assistance. This allegation was based on Creccal’s use of minimum income criteria.

[18] The Commission investigated the allegation against Creccal. The record shows that:

(1) Since at least 1988, the Commission knew that Creccal had used income criteria.

(2) In April 1988, a Commission employee made suggestions/recommendations regarding specific language used in Creccal’s application form concerning minimum income criteria. Creccal amended its form as a result.

(3) After the receipt of Ms. Luis’s complaint another employee of the Commission made suggestions for further amendments to Creccal’s application form. These, too, were implemented by Creccal.

V. THE COMMISSION’S POSITION IN 1993 AND 1994 REGARDING RENT / INCOME CRITERIA

[19] In its press release of February 1993, four months before the appointment of the Board, the Commission stated:

POSITION STATEMENT

THE MINIMUM INCOME CRITERION

The application of the minimum income rule in determining qualification for tenancy has become almost universal in the province of Ontario since the 1970’s [sic]. The rationale behind the rule was to develop affordability criteria which could also be used to assess ability to pay the rent. The continued use of the rule is due to the ease of administration and its ready display of disposable income. It is the common practice of most landlords to apply the 30% rule, whereby rental payments cannot exceed 30% of one’s income.

It is the Commission’s position that the 30% rule, and other income criteria presently being applied by landlords, act as barriers for persons in receipt of public assistance and other disadvantaged groups protected under the Code. However, landlords argue that the practice is required to secure financial investments.

It is the Commission’s view that the most appropriate way to deal with the issue is to recommend the appointment of a Board of Inquiry to establish case law. At a Board of Inquiry, the Commission will seek, as remedy, the discontinuance of the application of the 30% rule. The Commission does not view credit checks, credit references, rental history or guarantors as appropriate alternatives.

[20] On February 1, 1994, seven months after the Board was appointed (June 10, 1993), the Chief Human Rights Commissioner, Rosemary Brown, appeared before the Ontario Legislature’s Standing Committee on Government Agencies. She indicated that the Commission’s position regarding the use of rent/income guidelines had changed from its earlier position. Before the Committee, Ms. Brown took the position that only the exclusive use of rent/income criteria was considered by the Commission to be discriminatory; other financial criteria would be permissible as long as they were used as part of a package of selection factors. The Hansard Report of February 1, 1994, shows:

Mr. Cousens: I want to talk about the Fair Rental Policy Organization of Ontario, where it’s a common practice for landlords to require that rental payments not exceed 30% of a prospective tenant’s income. Could you explain the rationale for this policy?

Ms. Rosemary Brown: We believe that such a practice constructively discriminates against people on public assistance and other groups, such as young people who are first-time renters and women, who are protected under the Human Rights Code. We believe that it is possible for landlords to screen the tenants on their ability to pay their rent by using other criteria. Some of the criteria that we suggest they look at would be rental history of people, doing a credit check on them asking for personal references or asking for a guarantor. There are other means of getting the information they have without this blanket discriminatory decision.

VI. THE POSITIONS OF THE PARTIES BEFORE THE BOARD OF INQUIRY

A. Counsel for the Commission

[21] He submitted that the use of rent/income criteria constitutes adverse effect discrimination under s. 11 of the Code because the application of the rule results in the exclusion, restriction or preference of a number of designated groups set out in s. 2 and s. 4 of the Code.

B. Counsel for the Complainants

[22] They submitted that: (1) the landlords’ use of a rent/income ratio involved system[ic] discrimination excluding protected groups and constituted direct discrimination of the groups protected in s. 2 and s. 4 of the Code. (2) The use by landlords of credit checks, co-signers and previous rental history also violated the Code.

C. Counsel for Shelter and Bramalea

[23] Counsel for Shelter and Bramalea agreed that their clients had applied rent/income criteria. However, they submitted:

(1) That the issue is whether or not the Code prohibits credit guarantors, such as landlords, from determining to whom they would extend credit on the basis of their ability to pay because, it was submitted, renting an apartment is in the nature of a credit transaction.

(2) That the rent/income ratio criterion does not discriminate or select on the basis of any of the prohibited grounds under the Human Rights Code.

(3) That the rent/income ratio criterion is bona fide and without the use of the ratio to screen prospective tenants and limit the risk, the landlord would suffer undue hardship. Indeed, the theory of the Commission and of the complainants is that the only form of allocation of rental accommodation that is able to avoid any illegal disparate impact on the groups of concern is a form of random allocation of accommodation – either first come, first served or a lottery between potential tenants.

D. Counsel for Creccal

[24] Counsel for this respondent adopted the evidence and submissions presented by counsel for Shelter and Bramalea. In addition, counsel for Creccal also took the position that Ms. Luis did not have any ground for complaint because, on the date of the alleged discrimination, Creccal did not have a bachelor apartment to rent.

VII. FINDINGS OF FACT BY THE BOARD OF INQUIRY

A. Kearney v. Bramalea Inc. [at D/17-D/18, § 134-35]

The evidence is clear that Ms. Kearney was 17 years old at the time that she and her husband, who was then 18, searched for an apartment in September 1988. She was pregnant. They were thus both members of the group identified as “young” in the analysis carried out by Dr. Ornstein. Further, as a pregnant woman, Ms. Kearney also came within the group of persons identified by “sex”.

The Board concludes that all the components of a prima facie case are established against the respondent, Bramalea. Bramalea’s use of an [sic] rent/income ratio constitutes prima facie constructive discrimination against Ms. Kearney, on the basis of age and sex.

B. J.L. v. Shelter [at D/17, § 124-25, 127-28]

Further, Shelter’s response to the complaint stated “It is our company’s policy that any applicant for tenancy meet our income criteria”.

In accordance with Shelter policy, the total amount of rent and utilities to be paid by the applicant should not exceed thirty percent (30%).

Mr. Gonsalves, an employee of Shelter, testified that Shelter’s rent/income ratio was in the range of 30% to 33.33% in June 1990. Mr. Gonsalves also testified that in June 1990, Shelter allowed couples to combine their incomes for the purpose of calculating the rent/income ratio, but did not permit two single people to do so.

The evidence establishes that Shelter was using a rent/income ratio in assessing applications, and that in June 1990, the application of J.L. was rejected, either in whole or in part, because her income level, and that of her co-applicant Ms. Dickenson, did not meet the criterion.

At the time J.L applied at The Crossways [sic] she was a 16 year-old woman, a member of the groups identified by “age” and by “sex”.

The Board concludes that all the components of the prima facie case are all established against the respondent Shelter. Shelter’s practice of using minimum income criterion to screen tenants constitutes prima facie constructive discrimination against J.L. on the basis of age and sex.

C. Luis v. Creccal [at D/16, § 111-13, 116 and 121]

Mr. Di Geso, the manager of The Crossways, testified that in 1990 Creccal used income criteria. He said that if an applicant was making $17,000 per year, The Crossways would explain that the applicant could not afford the apartment. Since Creccal required $22,000 per year for a bachelor apartment, an applicant making $17,000, $18,000 or $19,000 per year did not meet the income criteria. Creccal would not put the applicant on a waiting list if the income criteria [sic] was not met.

The evidence establishes that Creccal was using an income criterion when Ms. Luis applied for an apartment in 1990. To get a bachelor apartment, one needed an annual income of $22,000. Whether the criterion is expressed as a ratio or as an annual income determined after the landlord has made calculations, the result is the same.

(b) The Effect of the Factor

Ms. Luis’ complaint cites a number of grounds protected under the Code. The effect of a landlord’s use of a rent/income ratio on people in receipt of public assistance is most telling.

There is ample evidence, including evidence of the respondent’s own witness, to support the finding that Creccal’s income criteria excluded all recipients of social assistance from The Crossways.

The Board concludes that all the components of the prima facie case are established against the respondent Creccal. Creccal’s practice of using income criterion to screen tenants constitutes prima facie constructive discrimination on the basis of every ground cited in Ms. Luis’ complaint.

[25] Counsel for Creccal submitted that his client could not possibly have discriminated against Ms. Luis because the record shows that, on the day she sought to rent a bachelor apartment, none was available. In my view, if a prohibited discrimination took place of Ms. Luis at the hands of Creccal, the availability or non-availability of a bachelor apartment is of no significance.

D. The Board’s Findings and Conclusions Regarding “Direct Discrimination” [at D/23, § 181]

Since we have decided that a landlord’s use of income criteria to screen tenants results. In adverse effect or constructive discrimination against the protected groups identified in the complaints, and that the use of income criteria is neither reasonable, bona fide, or would cause undue hardship if it was not permitted, we have decided not to address the argument that the use of income criteria to screen tenants amounts to direct discrimination. We make this decision in part because we have decided that the use of income criteria has an impact which is so pervasive that it is proper to declare that the rule is contrary to the Code, and strike it in its general application.

E. Other Findings of the Board [at D/13-D/20, § 82, 102, 153, 192 and 158-59]

The Board was persuaded by Dr. Hulchanski’s evidence that rent-to-income ratios, presently used by landlords, are not a valid criterion for assessing a person’s ability or willingness to pay rent, nor that it predicts default. Nothing on cross-examination or in the respondents’ evidence persuaded us that his opinion was wrong.

The respondents also called a number of expert witnesses to give evidence, which we will refer to as needed in our reasons for our decision. After careful review of the respondents’ evidence we have decided that the respondents produced no evidence that the use of income criteria to screen tenants is a reliable predictor of default or the ability to pay rent. Furthermore, the respondents did not tender any evidence to support a finding that if landlords were not permitted to use income criteria to screen prospective tenants that they would suffer undue hardship.

The evidence supports a conclusion that it is unexpected changes in one’s circumstances after entering into a tenancy which are the most common cause of a tenant’s default.

…The point is there is no evidence that the use of income criteria does what some landlords may well think it does – predict default. There is ample evidence from the experts and from academic research, cited by the experts, that it does not predict whether an individual will default on paying rent. Therefore, there is no reason to believe that landlords will be affected by not being able to use the income criteria they have been using. Moreover, the complainants were simply seeking the chance to pay market rent. They were not asking for special rates or special treatment.

The evidence of the three landlords shows that they used various rent-to-income ratios – 25%, 27%, 30%, 331/3%, 34%. However, there is no empirical evidence that any of the ratios was picked because it had any predictive value with respect to the issue of whether a tenant would default in the payment of rent. The landlords were simply using “numbers” which had their historic bases as clearly outlined in the evidence of Dr. Hulchanski. The landlords were not using rent-to-income ratios because there was an objective rational basis for so doing.

The evidence tendered by the respondents fails to show a connection between a rent‑to‑income ratio and the risk of default The respondents did not submit empirical evidence comparing the default experiences of landlords who use rent-to-income ratios and those who do not.

[26] The Board, after finding a prima facie case of constructive/adverse effect discrimination had been established, held that none of the appellants/landlords had established, on a balance of probabilities, any of the three necessary components of a defence under s. 11 of the Code.

[27] The Board summarized its findings in these words [at D/25, § 195]:

…we have decided that the respondents’ use of income criteria to exclude the complainants from housing in their respective buildings constitutes adverse effect or constructive discrimination. The Commission and complainants’ evidence established a prima facie case for each complainant. The evidence was clear that the use of income criteria is not a valid predictor of default. There was substantial evidence that the use of the criteria disproportionately excludes groups protected by the Code from rental housing. Once the Commission had proven a prima facie case, the respondents had to prove that the use of the income criteria was reasonable and bona fide and result in undue hardship to the respondents if they were required to accommodate the complainants. The respondents failed to put forth evidence before the Board to discharge this onus. There was simply no evidence to support a finding that the use of income criteria in the selection of tenants is reasonable and bona fide. We find that the use of income criteria to select tenants violates the Code, whether it is used by itself or in conjunction with other selection criteria

VIII. DIRECT DISCRIMINATION

[28] The Board found [at D/23, § 181]:

Since we have decided that a landlord’s use of income criteria to screen tenants results in adverse effect or constructive discrimination against the protected groups identified in the complaints, and that the use of income criteria is neither reasonable, bona fide, or would cause undue hardship if it was not permitted, we have decided not to address the argument that the use of income criteria to screen tenants amounts to direct discrimination. We make this decision in part because we have decided that the use of income criteria has an impact which is so pervasive that it is proper to declare that the rule is contrary to the Code, and strike it in its general application.

IX. ORDER OF THE BOARD OF INQUIRY (D/25, § 198]

Having found that a landlord’s use of a rent/income ratio, or of an income criterion – whether alone or in combination with other assessment factors – in assessing applications for residential tenancy, breaches the Code, and having found that the rights of the three complainants were breached by the actions of the respective respondents herein, the Board makes the following orders:

1. The Board declares that the use of rent-to-income ratios/minimum income criteria violate sections 2(1), 4, 9 and 11 of the Human Rights Code whether used alone or in conjunction with other selection criteria or requirements.

2. The respondents, Creccal Investments, Shelter Corporation and Bramalea, shall cease and desist from using rent-to-income ratios or minimum income criteria in selecting prospective tenants whether alone or in conjunction with other selection criteria or requirements.

3. The respondent, Creccal, shall pay Ms. Luis specific damages of $460.00 for losses arising when she was denied housing at The Crossways.

4. The respondent, Creccal, shall pay Ms. Luis $5,000.00 as general damages for its breach of sections 2(1), 9 and 11 of the Code.

5. The respondent, Creccal, shall pay Ms. Luis prejudgment interest on the amounts set out in 3 and 4 above from May 4, 1992 calculated in accordance with the Courts of Justice Act, R.S.O. 1990, c. C.43, section 27 rate

6. The respondent, Shelter, shall pay J.L. $4,000.00 as general damages for its breach of sections 2(1), 4, 9 and 11 of the Code and pre-judgment interest on that amount from June 25, 1990 calculated in accordance with the Courts of Justice Act rate.

7. The respondent, Bramalea, shall pay Ms. Kearney $4,000.00 as general damages for its breach of sections 2(1), 4, 9 and 11 of the Code and pre-judgment interest on that amount from September 23, 1988 calculated in accordance with the Courts of Justice Act rate.

8. Post-judgment interest pursuant to the Courts of Justice Act shall begin to accrue on all damage awards one month from the date of this decision.

X. WHAT CONSTITUTES “CONSTRUCTIVE DISCRIMINATION” ALSO KNOWN AS “ADVERSE EFFECT DISCRIMINATION” ALSO KNOWN AS “DISPARATE IMPACT DISCRIMINATION”?

[29] In Canadian National Railway Co. v. Canada (Canadian Human Rights Commission), 1987 109 (SCC), [1987] 1 S.C.R. 1114 [8 C.H.R.R. D/4210 at D/4227, § 33248], Dickson C.J.C. (for the Court) quoted, with approval, from the Abella Report:

Discrimination… means practices or attitudes that have, whether by design or impact, the effect of limiting an individual’s or a group’s right to the opportunities generally available because of attributed rather than actual characteristics…

It is not a question of whether this discrimination is motivated by an intentional desire to obstruct someone’s potential, or whether it is the accidental by-product of innocently motivated practices of systems. If the barrier is affecting certain groups in a disproportionately negative way, it is a signal that the practices that lead to this adverse impact may be discriminatory. This is why it is important to look at the results of a system.

[30] The principles of constructive discrimination emerged in the decision of the United States Supreme Court in Griggs v. Duke Power Co., 401 U.S. 424 (1971). The Court held that the U.S. Federal Human Rights statute Title VII prohibited overt discrimination and also “practices that are fair in form, but discriminate in operation” (p. 471).

[31] In Canada, constructive discrimination was first recognized by the Supreme Court of Canada in Ontario (Human Rights Commission) and O’Malley v. Simpsons-Sears Ltd., 1985 18 (SCC), [1985] 2 S.C.R. 536 at 551 [7 C.H.R.R. D/3102 at D/3106, § 24772] per Mclntyre J.:

A distinction must be made between what I describe as direct discrimination and the concept already referred to as adverse effect discrimination in connection with employment. Direct discrimination occurs in this connection where an employer adopts a practice or rule which on its face discriminates on a prohibited ground. For example: No Catholics or no women or no blacks employed here… On the other hand, there is the concept of adverse effect discrimination. It arises where an employer for genuine business reasons adopts a rule or standard which is on its face neutral, and which will apply equally to all employees, but which has a discriminatory effect upon a prohibited ground on one employee or group of employees in that it imposes, because of some special characteristic of the employee or group, obligations, penalties, or restrictive conditions not imposed on other members of the workforce.

XI. STANDARD OF REVIEW

[32] Section 42 and s. 43 of the Code, supra, provide an appellant with a right of a full review by the Divisional Court “on questions of law or fact or both”.

[33] The Supreme Court of Canada has considered the standard of review of a Board of Inquiry under the Code in:

(a) Zurich Insurance Co. v. Ontario (Human Rights Commission), 1992 67 (SCC), [1992] 2 S.C.R. 321 at 337‑38 [16 C.H.R.R. D/255 at D/261-D/262, § 14 and 16], per Sopinka J.:

…This Court will normally overturn findings of fact only where there has been a palpable and overriding error made by the trier of fact… The Code, however, states [in s. 42(3)] that an appeal lies to a court on any question of law or fact and that the court may substitute its opinion for that of the Board of Inquiry…

Evidently, the Legislature was not of the opinion that the conclusions of the Board of Inquiry should be given great deference as a result of accumulated expertise or specialized understanding.

In spite of the ability to overturn decisions of the Board on findings of fact, this Court has indicated that some curial deference will apply even to cases without privative clauses to reflect the principle of the specialization of duties… While [some] curial deference will apply to findings of fact, which the Board may have been in a better position to determine, such deference will not apply to findings of law in which the Board has no particular expertise. The record provided to the Court and the judgments below are not, in my view, in conflict on issues of fact but merely in interpreting the legal implications flowing from those facts… Accordingly, …I have reviewed the evidence unconstrained by curial deference.

(b) Dickason v. University of Alberta, 1992 30 (SCC), [1992] 2 S.C.R. 1103 at 1125-27 [17 C.H.R.R. D/87 at D/99, § 28-29], per Cory J:

However, the situation is different where there is neither specialized skill and knowledge exercised by an administrative decision-maker nor a statutory restriction imposed upon the Court’s review of those decisions. Here the IRPA [Individual’s Rights Protection Act, R.S.A. 1980, c. 1-12] has clearly indicated that a very broad standard of review would be appropriate to decisions rendered by a Board of Inquiry under the Act. Section 33(2) provides that a party may appeal a decision of the Board on questions of fact or mixed law and fact with the leave of a judge of the Court of Queen’s Bench. In the case at bar, Murray J. granted leave for an appeal on the facts. On a plain reading of the IRPA, it is clear that the legislature specifically intended that appellate courts should examine the evidence anew and, if deemed appropriate, make their own findings. Under this Act, no particular deference is owed by the Court of Appeal to the findings of the initial trier of fact. This court possesses the same statutory jurisdiction as the Court of Appeal.

In support of this position I would note that the provision for appeal in the IRPA is similar to that in the Ontario Human Rights Code which this Court considered in Etobicoke, supra. The statutory basis for an appeal from an Ontario Board of Inquiry is found in s. 42(3) of the Code, R.S.O. 1990, c. H.19. It provides for an appeal on any question of law or fact and states that the Court may substitute its opinion for the Board. In Etobicoke, Mclntyre J. held that this section (then s. 14d(4)) granted an appellate court broader powers to review findings of the trier of fact than exist at common law. The wording of s. 42(3) of the Ontario Code is more explicit than that found in s. 33(2) of the IRPA. However, the import of the two sections must be the same, as the right to an appeal on questions of fact would be meaningless if the appellate court were not empowered to substitute its own opinion for that of the Board. Nor is this a situation in which the administrative decision-maker possesses a specialized expertise which would merit curial deference. It can be seen that the IRPA grants the Court of Appeal and thus this Court the jurisdiction to make findings of fact based on a review of the evidence on the record, without deferring to the conclusions drawn by the Board of Inquiry.

XII. CONCLUSIONS

[34] In my view, the Board of Inquiry proceeded as it was required to do and weighed all the evidence.

[35] In my view, the Board was entitled to weigh and compare the expert evidence adduced by the various parties and accept the expert evidence adduced on behalf of the Commission and the complainants in preference to the expert evidence adduced by the appellants/landlords. The Board of Inquiry, on the evidence, was entitled to say [at D/14, § 102]:

…we have decided that the respondents produced no evidence that the use of income criteria to screen tenants is a reliable predictor of default or the ability to pay rent.

Furthermore, the respondents did not tender any evidence to support a finding that if landlords ware not permitted to use income criteria to screen prospective tenants that they would suffer undue hardship.

[36] In my view, there was evidence upon which the Board was entitled to make its finding that, on a balance of probabilities, Bramalea’s use of a rent/income ratio as the sole basis for refusing her application for accommodation constituted prima facie constructive discrimination against Ms. Kearney on the basis of age. Moreover, in my view, the Board was justified in finding Bramalea did not, on a balance of probabilities, call evidence to establish any one of the three components of a defence under s. 11 of the Code; namely.

(i) that the requirement was reasonable,

(ii) bona fide in the circumstances, and

(iii) that ceasing the use of the rent/income ratio would cause undue hardship to the landlords.

See:

(1) Ontario (Human Rights Commission) and O’Malley v. Simpsons-Sears Ltd., supra.

(2) British Columbia (P.S.E.R.C.) v. B.C.G.E.U. (Meiorin), supra, at § 54 [p. D/275].

[37] In my view, there was evidence upon which the Board of Inquiry was entitled to make its finding that, on a balance of probabilities, Shelter’s use of an income level/rent to income ratio as the sole basis for refusing her application for accommodation constituted a prima facie case of discrimination against Ms. J.L. on the basis of her age and that Shelter had not established, on a balance of probabilities, any one of the three necessary ingredients of a defence under s. 11 of the Code.

[38] In my view, there was evidence upon which the Board of Inquiry was entitled to make a finding, on a balance of probabilities, that Creccal’s use of income/rent ratio as the sole basis for refusing her application for accommodation constituted a prima facie case of constructive discrimination against Catarina Luis on the basis of “receipt of public assistance” and that Creccal had not established, on a balance of probabilities, any one of the three necessary ingredients of a defence under s. 11 of the Code.

[39] On the record before us, I see no reason to disturb the position adopted by the Board of Inquiry at pp. 54-55 [D/23] of its reasons, supra – that is, because of the findings regarding indirect discrimination, it is not necessary to discuss direct discrimination. It is to be remembered that the process prescribed by the Code is complaint driven. Before the Board, the whole thrust of the evidence was towards indirect discrimination: “practices that are fair in form, but discriminate in operation” (Griggs, supra, p. 431).

XIII. DAMAGES

Section 41(1) of the Code:

41(1) Where the board of inquiry, after a hearing, finds that a right of the complainant under Part I has been infringed and that the infringement is a contravention of section 9 by a party to the proceeding, the board may, by order,

(a) direct the party to do anything that, in the opinion of the board, the party ought to do to achieve compliance with this Act, both in respect of the complaint and in respect of future practices; and

(b) direct the party to make restitution, including monetary compensation for loss arising out of the infringement and, where the infringement has been engaged in wilfully or recklessly, monetary compensation may include an award, not exceeding $10,000, for mental anguish.

[40] Counsel for Creccal submitted that the Board of Inquiry erred in awarding Ms. Luis specific damages of $460 “in the absence of any evidence that Ms. Luis suffered losses of any amount as a result of the alleged discriminatory behaviour” of Creccal.

[41] The evidence shows that a bachelor apartment at The Crossways (Creccal) rented at $585 a month. Ms. Luis paid $50 to a rent agency and then rented an apartment at $630 per month for the ensuing year. $50 + (630 – 585) x 12 = $590. In my view, Ms. Luis had specific damages exceeding the $460 awarded to her.

[42] Counsel for Creccal, with counsel for Shelter joining in, submitted that the Board of Inquiry had no jurisdiction to award general damages to Ms. Luis, Ms. J.L. or Ms. Kearney because there was no evidence that any one of them suffered “mental anguish” (s. 41(1)(b)).

[43] In my view, a Board of Inquiry is entitled to award non-pecuniary intangible damages arising out of the infringement of the Code. It is an award to compensate for the intrinsic value of the infringement of the complainants’ rights under the Code; it is compensation for the loss of the right to be free from discrimination and the experience of victimization. There is no ceiling on the amount of general damages.

[44] Section 41(1)(b) of the Code provides a separate head of damages where the complainant has proved “mental anguish”. In this case, the Board did not make any award for “mental anguish”.

[45] In my view, there is no merit to the submissions of counsel for the appellants/landlords on this ground of appeal.

See: Naraine v. Ford Motor Company of Canada (No. 5) (1996), 1996 20056 (ON HRT), 28 C.H.R.R. D/267 at D/273‑D/274, § 39-44 (Ont. Bd.lnq.).

XIV. INTEREST

[46] The Board awarded pre-judgment interest to each complainant on the awards of specific and general damages from the date that each complainant had suffered the constructive discrimination.

[47] The Court of Appeal for Ontario in Ontario (Human Rights Comm.) v. Impact Interiors Inc. (1998), 1998 17685 (ON CA), 35 C.H.R.R. D/477 and the Divisional Court in London Monenco Consultants Limited v. Geiger (October 6, 1998 – unreported), have held that a Board of Inquiry has jurisdiction to award prejudgment interest on any award of damages.

[48] Here, the Board of Inquiry exercised its discretion. The record does not disclose any error in the Board’s exercise of that discretion.

XV. 1998 AMENDMENTS TO THE CODE AND ONT. REG. 290/98

[49] On June 17, 1998 (1998 Ontario Gazette: p. 1006), the following amendments to the Code were proclaimed:

21(3) The right under section 2 to equal treatment with respect to the occupancy of residential accommodation without discrimination is not infringed if a landlord uses in the manner prescribed under this Act income information, credit checks, credit references, rental history, guarantees or other similar business practices which are prescribed in the regulations made under this Act in selecting prospective tenants.

48. The Lieutenant Governor in Council may make regulations,

(a.1) prescribing the manner in which income information, credit checks, credit references, rental history, guarantees or other similar business practices may be used by a landlord in selecting prospective tenants without infringing section 2, and prescribing other similar business practices and the manner of their use, for the purposes of subsection 21(3);

[50] On June 17, 1998 (1998 Ontario Gazette: p. 1006), Ont. Reg. 290/98 also became law:

1(1) A landlord may request credit references and rental history information, or either of them, from a prospective tenant and may request from a prospective tenant authorization to conduct credit checks on the prospective tenant.

(2) A landlord may consider credit references, rental history information and credit checks obtained pursuant to requests under subsection (1), alone or in any combination, in order to assess the prospective tenant and the landlord may select or refuse the prospective tenant accordingly.

(3) A landlord may request income information from a prospective tenant only if the landlord also requests information listed in subsection (1).

(4) A landlord may consider income information about a prospective tenant in order to assess the prospective tenant and the landlord may select or refuse the prospective tenant accordingly only if the landlord considers the income information together with all the other information that was obtained by the landlord pursuant to requests under subsection (1).

(5) If, after requesting the information listed in subsections (1) and (3), a landlord only obtains income Information about a prospective tenant, the landlord may consider the income information alone in order to assess the prospective tenant and the landlord may select or refuse the prospective tenant accordingly.

2(1) A landlord may require a prospective tenant to obtain a guarantee for the rent.

(2) A landlord may require a prospective tenant to pay a security deposit in accordance with sections 117 and 118 of the Tenant Protection Act, 1997.

3. In selecting a prospective tenant, a landlord of a rental unit described in paragraph 1, 2 or 3 of subsection 5(1) or subsection 6(1) of the Tenant Protection Act, 1997 may request and use income information about a prospective tenant in order to determine a prospective tenant’s eligibility for rent in an amount geared to income and, when requesting and using the income information for that purpose only, the landlord is not bound by subsections 1(3) and (4).

4. Nothing in this Regulation authorizes a landlord to refuse accommodation to any person because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sex, sexual orientation, age, marital status, family status, handicap or the receipt of public assistance.

[51] Counsel for the complainants submits that s. 4 of O. Reg. 290/98 applies only to s. 2 of the Code and not to s. 4 of the Code. In my view, this submission is without substance because s. 2(1) of the Code prohibits discrimination based on any age with respect to accommodation. Section 2 of the Code is not limited to 16- or 17-year-old persons as is s. 4.

[52] The amendments to the Code (s. 21(3) and s. 48(a.1) and O. Reg. 290/98) became law on June 17, 1998. The decision of the Board of Inquiry was released six months later on December 22, 1998. It will be recalled that the first two paragraphs of the Board’s order (p. 61 [D/25, § 198] of the Decision) state:

1. The Board declares that the use of rent-to-income ratios/minimum income criteria violate sections 2(1), 4, 9 and 11 of the Human Rights Code whether used alone or in conjunction with other selection criteria or requirements.

2. The respondents, Creccal Investments, Shelter Corporation and Bramalea, shall cease and desist from using rent-to-income ratios or minimum income criteria in selecting prospective tenants whether alone or in conjunction with other selection criteria or requirements.

[53] The case presented by the Commission and by the complainants to the Board of Inquiry was that the complainants’ rights under s. 2(1), s. 4, s. 9 and s. 11 of the Code had been violated when each appellant/landlord refused an application for accommodation based on a rent/income ratio or on a fixed annual income figure. The Board, on the evidence presented, found that the Commission and the complainants had proved, on a balance of probabilities, indirect discrimination.

[54] The evidence showed that a survey had been conducted of Ontario’s landlords. Of those landlords who answered the survey, 27 percent-28 percent acknowledged that they utilized the income/rent ratio to screen rental applicants.

[55] If para. 1 or para. 2 of the December 22, 1998 Order of the Board is allowed to stand, the appellants/landlords would be forever prohibited by paras. 1 and 2 from utilizing the new s. 21(3) of the Code and/or O. Reg. 290/98, entitled: “Business Practices Permissible to Landlords in Selecting Prospective Tenants for Residential Accommodation”.

[56] If para. 1 and para. 2 of the impugned Order are allowed to stand, because of the June 17, 1998, amendments, the appellants/landlords would be bound, in perpetuity, by a different set of rules than every other landlord in Ontario.

[57] On several occasions during their submissions, counsel for the respondents reminded us that the Code was remedial and not punitive. That proposition alone points out why those paragraphs cannot be allowed to stand.

XVI. RESULT

[58] The cross-appeal of Catarina Luis in Appeal 43/99 is dismissed.

[59] The appeal of Shelter and Bramalea (40/99) and the appeal of Creccal (43/99) are allowed in part in that para. 1 and para. 2 of the December 22, 1998, Order set out on p. 60 [D/25] of the Decision are struck out and replaced with the following:

1-2. In the three cases presented, the Board finds that the use by the appellants (landlords) of rent/income ratios or an income criteria as the sole factor in assessing the applications for residential tenancy of the complainants resulted in indirect discrimination and breached the rights of the three complainants under s. 2(1), s. 4, s. 9 and s. 11 of the Human Rights Code.

[60] In all other respects, appeals 40/99 and 43/99 are dismissed.

XVII. COSTS

[61] In all the circumstances, there will be no order as to costs.