Name of Case: Canadian Human Rights Commission. v. Attorney General of Canada, Donna Mowat

Status: Argued December 13, 2010. Judgment Reserved.

Judgment under Appeal: Judgment of the Federal Court of Appeal dated October 26, 2009

Facts: In 1998, Donna Mowat, a former master corporal with the Canadian Forces, filed a complaint with the Canadian Human Rights Commission alleging that the Forces had discriminated against her on the ground of sex, contrary to the provisions of the Canadian Human Rights Act. Seeking compensation of more than $430,685, Mowat claimed that the Canadian Forces failed to provide her with a harassment-free workplace, adversely differentiated against her in employment and refused to continue her employment. The harassment complaint included an allegation of sexual harassment.

In an August 2005 decision on the merits of the complaint, the Canadian Human Rights Tribunal dismissed all of Mowat's allegations with the exception of the allegation of sexual harassment. The Tribunal awarded Mowat $4,000 plus interest for "suffering in respect of feeling[s] or self-respect" as a result of the failure of the Canadian Forces to maintain a harassment-free workplace.

Mowat, who had been represented by a lawyer, then sought an award of "reasonable costs" against the Canadian Forces for the legal expenses she had incurred in prosecuting her claim totalling nearly $200,000. In a decision released November 15, 2006, the Tribunal concluded that it had the power to award legal costs under s.52(2) of the Act, which provides "[i]f at the conclusion of the inquiry the member or panel finds that the complaint is substantiated, the member or panel may … make an order against the person found to be engaging or to have engaged in the discriminatory practice and include in the order any of the following terms that the member or panel considers appropriate: ... (c) that the person compensate the victim for any or all of the wages that the victim was deprived of and for any expenses incurred by the victim as a result of the discriminatory practice." Based on this section, the Tribunal awarded Mowat legal costs amounting to $47,000 plus interest on this amount from the date of the award.

Case History: The Attorney General of Canada applied for judicial review of the Tribunal's costs decision. In a February 28, 2008 ruling, the Federal Court of Canada, applying a reasonableness standard of review rather than correctness, held that the Tribunal's determination that it had authority under the Act to award costs was reasonable. However, the Court quashed the award on the ground that the Tribunal had failed to meet the requirements of procedural fairness in not providing adequate reasons to support the $47,000 amount awarded. The Attorney General appealed to the Federal Court of Appeal.

The Federal Court of Appeal allowed the appeal and held that the Tribunal had erred in determining that, in the absence of explicit statutory authority, it could award legal costs.

Writing the unanimous decision of a three-member panel of the Court, Justice Carolyn Layden-Stevenson held that the standard of review was correctness, not reasonableness, because "[t]he nature of the question is narrow and discrete. ... [I]t is both a question of general law of central importance to the legal system as a whole and one that is outside the specialized expertise of the Tribunal."

Layden-Stevenson observed that "[t]he question has not been answered consistently by the Tribunal and is the subject of diverse opinions in the Federal Court" and that "[i]t is difficult, if not impossible, to conclude that the answer (either yes or no) can be said to fall within a range of possible acceptable outcomes. There is much to be said for the argument that where there are two conflicting lines of authority interpreting the same statutory provision, even if each on its own could be found to be reasonable, it would not be reasonable for a court to uphold both.... [A]lleged victims of discriminatory practices are entitled to know, in circumstances where they retain counsel to represent them at the hearing before the Tribunal, whether, if successful, they may be entitled to legal costs in relation to the proceeding. Alleged discriminators are similarly entitled to know, if the claim is substantiated, whether significant cost consequences may follow."

Turning to the substance of the appeal, Layden-Stevenson agreed with the federal government's submission that the word "costs" is a legal term of art, i.e. "a word or expression that, through usage by legal professionals, has acquired a distinct legal meaning. It has a technical meaning because of its conventional use by lawyers and judges." That being the case, she found it significant that "costs" appears nowhere in the Act, and cited the statement of the Ontario Divisional Court in Ontario (Liquor Control Board) v. Ontario (Ontario Human Rights Commission) (1988), 25 O.A.C. 161, with reference to the Ontario Human Rights Code, that "[t]he power of the Board of Inquiry under s.40(1) to make 'restitution including monetary compensation' is not an express provision for the award of costs to complainants under the Code. The rule of liberal interpretation to carry out the objects of the Code to, as far as possible, remedy the effects of and prevent discrimination [does] not apply to procedural matters or the question of costs."

Layden-Stevenson also attached considerable importance to the fact that specific legislation, Bill C-108, had been introduced in Parliament in 1992 to amend the Canadian Human Rights Act to empower the Tribunal to order payment of legal costs to a successful complainant or to a respondent who would otherwise suffer excessive financial hardship due to a groundless complaint, but that this bill had never become law. She concluded from this that "it does indicate that the existing provisions are not intended to authorize the awarding of costs. Parliament has considered a grant of authority but, thus far, has not given it." The judge also noted that "[i]ndeed, it appears that as recently as June of 2009 the Commission was of the same view since it recommended an amendment to the Act that would enable the Tribunal to award costs in specified and much more limited circumstances than those awarded by the Tribunal [in the present case]." She declared: "To conclude that the Tribunal may award legal costs under the guise of 'expenses incurred by the victim as a result of the discriminatory practice' would be to introduce indirectly into the Act a power which Parliament did not intend it to have."

Issue(s): (i) Whether the Federal Court of Appeal erred in holding that the Canadian Human Rights Tribunal does not have jurisdiction under the Canadian Human Rights Act to award legal costs; and (ii) whether there is a distinction between "expenses," which the Act empowers the Tribunal to award and "costs," which term is not expressly mentioned in the legislation.

Status: The Supreme Court of Canada granted leave to appeal on April 22, 2010.

Lancaster Reference: For analysis of the Federal Court of Appeal's decision, see Lancaster's Human Rights and Workplace Privacy E-Bulletin, March 17, 2010, Issue No. 132.