Calculation of Lost Wages
   
The manner in which compensation for lost wages suffered as a result of discrimination should be calculated was reviewed by the Federal Court in Canadian Human Rights Commission and Robert Carter v. A.G. Canada. ²⁷⁴The case involved a member of the Armed Forces who was released on May 27, 1992 after having reached the age of mandatory retirement. At the time of his release, the policies of the Armed Forces regarding mandatory retirement (found in the Queen's Regulations²⁷⁵) made no reference to the saving provisions of subsection 15(1)(b) of the CHRA. It was on the basis of this deficiency that a Human Rights Tribunal ruled (August 14, 1992²⁷⁶) that the mandatory retirement policies of the Armed Forces constituted a discriminatory practice. Amendments were subsequently made to the Queen's Regulations²⁷⁷ (September 3, 1992) explicitly stating that the mandatory retirement policies were regulations adopted by the Governor in Council for the purposes of subsection 15(1)(b) of the CHRA.

In the case of Robert Carter, his mandatory retirement predated the September 3rd regulatory amendments by a period of more than three months. It was therefore clear that, at the moment of his release from the Armed Forces, he had been treated in a discriminatory fashion contrary to the provisions of the CHRA. While no party before the Tribunal adjudicating Carter's claim disputed this substantive conclusion, a difference of opinion arose regarding the remedy to which the complainant was properly entitled. The Tribunal concluded that the time period for which compensation could be awarded should run from May 27, 1992 (the date of Carter's mandatory retirement) to September 3, 1992 (the date of the amendments to the Queen's Regulations). It reasoned that the September 3 amendments put an end to the discriminatory practice and thus severed any causal link between the original discriminatory act and any claimed compensation extending beyond September 3, 1992. Damages for lost wages would therefore only be awarded for the time period beginning with the mandatory retirement and ending on September 3. The Tribunal also concluded that the calculation of lost wages during that time period should not be reduced by any overlapping pension income or severance pay received by the complainant. Both these findings of the Tribunal were disputed before the Federal Court.

On the question of the proper compensation period, the Federal Court endorsed the Tribunal finding that there must be a causal connection between a discriminatory act and the compensation being claimed. While the right to receive compensation is vested when a discriminatory act takes place, the quantum of damages and their extension in time had to be assessed in light of all the circumstances of a given complaint. In the case at bar, the Court found that the Tribunal had carefully reviewed all the facts and circumstances and had properly concluded that after the September 3 amendments "...there no longer existed a causal link between the discriminatory practice and Mr. Carter's lost wages since the discriminatory practice had ended. Therefore, as there must be a causal connection between the discriminatory practice and the compensation for lost wages, no compensation was required after September 2, 1992."²⁷⁸

The Tribunal ruling that overlapping pension income should not be deducted from an award for lost wages under the CHRA was linked to what is known as the "insurance exception". ²⁷⁹This exception first arose in civil actions and established the principle that benefits received for lost wages pursuant to a private insurance contract are not deductible from an award for damages. Over time this principle was extended to include employee benefits under a collective agreement or contract of employment. The Federal Court concluded that decisions of the Supreme Court of Canada establish that, with respect to the law governing civil responsibility generally, "...the insurance exception applies to pension benefits, that is, that pension benefits, whether it be payments from the Canada Pension Plan or from an employer's private pension plan, will not be deducted from an award of damages against a third party tortfeasor"²⁸⁰What remained to be determined, however, was whether the exception applied to damages for lost wages awarded under the provisions of the CHRA.

The Federal Court decision reproduces in extenso portions of previous judgments on the meaning and application of the insurance exception. The Court adopted past judicial pronouncements that the insurance exception had been upheld and applied only in cases where a third party tortfeasor (defendant) would have been unjustly enriched if overlapping benefits for lost wages (pursuant to collective agreements or private insurance contracts) were subtracted from damages awarded under general tort law. However, concern about unjust enrichment by a third party tortfeasor was not relevant to the facts in the case at bar. Of more relevance was the possibility that the complainant under the CHRA might receive a double recovery for lost wages. The Court concluded Athat had Mr. Carter remained an employee until September 3, 1992, he would not have received pension payments prior to September 3, 1992. Pursuant to sections 16 to 20 of the Canadian Forces Superannuation Act, it is clear that Mr. Carter could not receive a pension and accrue additional pension benefits at the same time. The tribunal's failure to deduct the pension income leaves Mr. Carter in a better situation than he would have been had he remained in the Canadian Armed Forces until September 2, 1992, since he has received wages and pension income for the same period of time, i.e. May 27 to September 2, 1992.²⁸¹@ Although the Court declined to rule on the possible application of the insurance exception to damage awards for lost wages under the CHRA in other circumstances, it found that the pension payments in the case before it did not fall within the scope of the exception.²⁸² It therefore concluded that the Tribunal had erred in excluding the pensions payments from the calculation of lost wages. It sent the matter back to the Tribunal for reconsideration.

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End Notes