Northern Exposure

Canada’s Top Court to Decide If Human Rights Tribunal Can Award Legal Costs

By Ida Martin

This December, the Supreme Court of Canada is set to hear a case involving the issue of whether the Canadian Human Rights Tribunal has the authority to grant legal costs to a successful complainant. In an area of law where legal costs often dwarf the actual amount of any award, the Supreme Court of Canada decision could have major ramifications for human rights litigation across Canada.

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In 1998 Donna Mowat filed a complaint at the Canadian Human Rights Commission alleging that her employer, the Canadian Forces, had discriminated against her on the ground of sex, contrary to the provisions of the Canadian Human Rights Act. While she claimed compensation of more than $430,685 she was largely unsuccessful in her complaint and was awarded only $4,000 plus interest. (See Tribunal decision.)

That was not the end of the case. Mowat also asked for legal costs in the amount of $196,313. She was successful in part, being awarded $47,000 plus interest for legal costs – more than 10 times the $4,000 damage award! This was a surprising decision given that the Act doesn’t refer to legal costs at all. It only refers to the Tribunal’s ability to compensate a victim for “any expenses incurred by the victim as a result of the discriminatory practice.” This was the provision on which the Tribunal relied.

Understandably unsatisfied with the decision, Canadian Forces asked the Federal Court to review the Human Rights Tribunal’s costs award. The Federal Court judge largely agreed with the Tribunal’s decision. (See Federal Court decision.) Then the Canadian Forces appealed to the Federal Court of Appeal.

At the Federal Court of Appeal, Canadian Forces argued that if legal costs are considered to be “expenses,” it leads to the odd result whereby a successful complainant can be awarded legal costs but a successful respondent can’t. Canadian Forces argued that without very clear language, the government couldn’t be presumed to have established a one-sided regime whereby respondents can never recover costs, which is the effect of the Tribunal and the Federal Court decisions.

In the end, the Federal Court of Appeal accepted the employer’s arguments and overturned the Tribunal and Federal Court decisions. (See Federal Court of Appeal decision.) The Supreme Court of Canada will weigh in on the issue in December.

Effect of Supreme Court’s decision
If the Supreme Court of Canada decides that the federal Tribunal can award legal costs to complainants, human rights litigation will become even more expensive for employers. This might induce more employers to settle these types of cases earlier on in the litigation process before huge legal costs have been incurred.

If however the Supreme Court of Canada decides that the Tribunal can award costs to respondents as well as complainants, that will level the playing field substantially. It might even dissuade potential complainants from bringing a marginal complaint to begin with. And if the Supreme Court of Canada decides that the Tribunal can’t award legal costs to anybody, that will eliminate the costs risks for all participants in this process.

While the Canadian Human Rights Act only applies to federally regulated employees (about 10 percent of Canada’s workforce) the effects of the Supreme Court of Canada’s decision could be felt more broadly. This is because, like the federal Act, provincial human rights legislation in Saskatchewan, New Brunswick, Nova Scotia, and Ontario doesn’t explicitly provide for legal costs.