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Bill 147: Recovering legal costs at the Ontario human rights tribunal

On December 4, 2013, the Ontario government introduced Bill 147, Human Rights Code Amendment Act (Awarding of Costs), 2013 which gives the Ontario Human Rights Tribunal (the Tribunal) the power to make cost orders against employers and employees. If Bill 147 is passed into law then the Tribunal would have a number of decisions to make.

Will the Tribunal only order costs against employers as is the case for unjust dismissal complaints under the Canada Labour Code?

If not, will the Tribunal only order costs against employees if an application was frivolous, vexatious or was made in bad faith?

Will the Tribunal order costs against a person whose application is dismissed after a summary hearing?

Would cost orders be limited to a percentage of the claimed amount as is the case in small claims court?

If not, would the Tribunal adopt a principle that cost awards must be proportionate to the size of the claim as is the case under the Simplified Procedure under the Rules of Civil Procedure?

Will the Tribunal introduce a rule encouraging formal written settlement offers and impose cost consequences on those parties who refuse a reasonable settlement offer such as Rule 49 of the Rules of Civil Procedure?

Bill 147 is silent on these issues. It will be interesting to see if these issues are raised and discussed in committee before the Bill is finalized and put to a vote. If the legislature doesn’t address these issues then the Tribunal will decide them.

As with most new statute laws, the devils will be in the details.

For example, if the Tribunal starts ordering substantial-indemnity costs against employees then I suspect some employees – particularly vulnerable, low paid employees – will be reluctant to commence applications.

Consider a waitress who is sexually harassed by her manager in private after working only a few shifts. It is a he said/she said case. She quits immediately and finds another job at another bar a couple of days later. Her lost wages are nominal and let’s assume that the Tribunal’s general damage awards are in the $ 5 000 to 10 000 range at the time of her complaint for the type of sexual harassment claimed. I think the waitress would be less likely to file a complaint knowing her case is a straight credibility battle, potential damages are relatively low, and she could be ordered to pay the employer several thousand dollars if she loses.

If Bill 147 is passed into law as is and the Tribunal does not provide litigants with some idea of how it intends to exercise its discretion when awarding costs then it will be extremely difficult to advise employees whether to commence an application at the Tribunal or to commence an action in the courts.

It will also be difficult to advise employers whether or not to settle an application at mediation. At the moment, the employer must take into account post-mediation costs when deciding whether to settle at mediation. None of the legal costs are recoverable and this factors into an employer’s settlement position at mediation. (i.e. employers are motivated to settle at mediation to avoid non-recoverable legal costs that are incurred after mediation) This is one of the reasons why most applications are currently settled at mediation.

Hopefully these issues will be addressed in committee and Bill 147 will be amended accordingly. If not, and the Tribunal is provided with unfettered discretion to award legal costs then hopefully the Tribunal will amend its Rules to inform litigants how it intends to exercise its discretion before it starts making cost orders.

Doug MacLeod
MacLeod Law Firm: Employment & Labour Lawyers
doug@macleodlawfirm.ca

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Doug Macleod

Employment and labour lawyer at MacLeod Law Firm
For the past 25 years, Doug MacLeod of the MacLeod Law Firm has been advising and representing employers in connection with employee terminations. If you have any questions, you can contact him at 416 317-9894 or at doug@macleodlawfirm.ca. Read more
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