The Federal Court of Canada recently, as in December of 2023, reviewed a decision of Adjudicator Kaufmann in an unjust dismissal complaint which awarded substantial indemnity costs. On the facts before the adjudicator there was no evidence of the usual criteria used for such an award in a civil trial such as an unproven allegation of fraud, or alternatively some form of reprehensible conduct on the part of the employer defendant which was proven to be worthy of sanctions.
The history of the case is noteworthy. The adjudicative decision was set aside on first review by the Federal Court which was then, in turn, reversed by the Federal Court of Appeal. 1
It must be recalled that, while the adjudicator does have power to award costs to the successful complainant, they do not have power to award similar costs against an unsuccessful employee complainant as the jurisdiction under the Canada Labour Code requires a preliminary finding of an unjust dismissal.
The adjudicator had, oddly, not provided reasons for her costs award. This may have been so due to the fact the company made no submissions as to costs in response to the complainant’s request to be made whole for costs.
The Court of Appeal noted that significant deference should be allowed to a review of remedial awards in labour matters, which go the “very heart of the specialized expertise of labour adjudicators”. Further, this court noted that the operative statute specifically provides “largely uncircumscribed remedial authority to decision-makers” under the unjust dismissal provisions of the Code. 2
Even more importantly, this appellate court noted that the Supreme Court had previously held that in considering a judicial review from the Canada Labour Relations Board that a remedy provided by that board will not be reversed on judicial review “unless it is punitive, offends the Canadian Charter of Rights and Freedoms, counteracts the purposes of the Code, or bears no rational connection to the breach sought to be remedied”. This is, to say modestly, a tremendous burden on the applicant. This standard, similarly, the Federal Court of Appeal stated, should be imposed in this context.
After reviewing the apposite views of prior decisions on costs, the Court of Appeal concluded that it cannot be a precursor to such an award that a finding of “unduly objectionable conduct” of the employer be made. Further, in this instance this court noted the power imbalance of a person of limited means, a single parent earning an annual salary under $40,000, the relatively modest sum of monetary recovery, facing a large well funded corporation, factors which led to the logic of such an award, even in the absence of reasons given on this issue:
[100] In the case at bar, the appellant was of limited means, earning just under $40,000.00 per year when employed by the respondent. In addition, she was a single parent. Given the amount of damages awarded in the instant case, which were limited to out-of-pocket losses for a relatively short period and a modest amount of severance pay, it is entirely possible that the fees charged by the appellant’s counsel might have been close to or perhaps even exceeded the amount of damages awarded. Were this the case, the appellant would have been worse off for pursuing the complaint than she would have been had she not filed a complaint. Such a result would be the antithesis of a remedial order and defeat the purpose of the unjust dismissal provisions in the Code.
[101] On the other side of the ledger, the appellant was faced with a large respondent, with substantial resources and the ability to pay experienced labour counsel, who mounted a lengthy case over several days of hearing and through lengthy written submissions.
[102] In the circumstances, I believe that it was reasonably open to the Adjudicator to have awarded the appellant substantial indemnity costs. Anything less may well have led to a denial of any real remedy. There is ample authority from other adjudicators to support the award, and it is allowable under the jurisprudence from this Court. Moreover, the award is in keeping with the purpose behind the unjust dismissal provisions in the Code.
The decision provides a real impetus to the unjust dismissal remedy under the Code.
- Adjudicator Kaufmann decision unreported on Canlii to date, 2018 CarswellNat 5495, [2018] C.L.A.D. No. 177 ; Federal Court Trial Division; Federal Court of Appeal; There was also a liability issue in the case, one which similarly was set aside by the Trial Division and then restored by the FCA
- S. 242(4)