Canadian Human Rights Tribunal Upholds Liability of Former Employer Despite Sale of Company

Strategic Insights -

The Canadian Human Rights Tribunal has issued a decision upholding the liability of a former employer, Gladstone Transfer Ltd. (GTL), for discrimination allegations made by its former employee, Kostiantyn Bahmet, despite the company being sold to new ownership in 2022. The decision, dated May 9, 2025, dismisses the motion by the new owner, Grant Bradshaw, arguing that GTL is not the proper respondent in the case.

The Tribunal's analysis relied on the 1992 case of Bouvier v. Metro Express, which established that a successor employer cannot be held liable for discrimination committed by the employees of the previous employer unless the successor employer purchased the liabilities and assets of the previous employer in their entirety. However, the Tribunal distinguished the case at hand from Bouvier, as the sale of GTL to Bradshaw did not involve the transfer of assets but rather the sale of shares.

The Share Purchase Agreement between Bradshaw and the previous owner, Scott Kinley, contained a clause specifying that Kinley would be responsible for costs associated with the claims not covered by insurance, and that Kinley would indemnify Bradshaw in relation to those costs. The Tribunal found that this clause confirms an agreement between the parties that GTL's liabilities for outstanding claims for human rights violations would remain liabilities of GTL.

Key Takeaways:

  • The Canadian Human Rights Tribunal upheld the liability of Gladstone Transfer Ltd. (GTL) for discrimination allegations made by its former employee, Kostiantyn Bahmet.
  • The sale of GTL to new ownership in 2022 did not extinguish GTL's liability for alleged discrimination that occurred prior to the change in ownership.
  • The Tribunal relied on the 1992 case of Bouvier v. Metro Express to determine that a successor employer cannot be held liable for discrimination committed by employees of the previous employer.
  • The Share Purchase Agreement between Bradshaw and Kinley specified that Kinley would be responsible for costs associated with the claims not covered by insurance, and that Kinley would indemnify Bradshaw in relation to those costs.
  • GTL continues to exist as a corporation and is responsible for its previous liabilities, including the alleged discrimination against Mr. Bahmet.

Statistics:

  • Date of Tribunal decision: May 9, 2025 (2025 CHRT 37)
  • Filing date of complaint: August 2020
  • Date of sale of GTL: October 2022
  • Number of complaints filed by Mr. Bahmet: 1
  • Number of claims associated with human rights violations: 1

Sources:

  • Canadian Human Rights Tribunal (2025 CHRT 37)
  • Bouvier v. Metro Express, 1992 CanLII 1429 (CHRT)