Knauth v. The Independent Electricity System Operator et al.

Executive Summary: Key Legal and Evidentiary Issues

• Timeliness of the contravention-of-settlement (COS) application under s. 45.9(3) of the Human Rights Code, given that the alleged breaches dated back to 2011, 2017 and 2023 but the application was only filed in February 2025.
• Characterization of the $50,000 payment in the 2011 termination agreement (and on the 2011 T4 slip) as employment income, and whether any mischaracterization amounted to a contravention of the settlement agreement.
• Alleged post-employment disparagement/“blacklisting” by the employer in 2017 and 2023 and whether these events formed a “series of contraventions” with a last breach falling within the six-month limitation period.
• Whether the applicant’s reasons for delay (mental health, lack of legal counsel, fear of being sued, need for research, and alleged late “confession” by the union) met the “good faith” and “due diligence” requirement in s. 45.9(4) of the Code.
• Scope of the Human Rights Tribunal of Ontario’s jurisdiction on a COS application, including whether it can assess the validity of the settlement agreement itself or quash an arbitration award.
• Procedural fairness issues, specifically whether the Tribunal was required to hold an oral hearing on jurisdiction and whether dealing with the matter in writing denied the applicant a fair process.

Background and prior settlement

The case arises from the end of Maya Knauth’s employment with the Independent Electricity System Operator (IESO), a unionized workplace where she was represented by The Society of United Professionals. She worked there from July 2001 to March 31, 2011 as an analyst in the Market Assessment Unit. While on sick leave in early 2011, she advised her union she could not return to work and began exploring “exit packages.” Through the Society, she negotiated an exit arrangement with the IESO. On March 25, 2011, the IESO offered $50,000 plus $20,000 as “general damages,” with the latter characterized as non-taxable. The applicant indicated the package would be “very helpful” and asked when she should sign. On March 29, 2011, the applicant, the Society and the IESO executed a written Termination Agreement. Under that agreement, she resigned, released claims, and agreed to withdraw an existing HRTO application. The IESO then paid her $70,000 (less applicable statutory deductions). A key clause of the agreement (paragraph 7) provided that if she commenced or threatened legal action against the IESO relating to her employment or resignation, she would consent to a default judgment requiring her to repay the $70,000 (less statutory deductions) plus the IESO’s legal fees.

Subsequent complaints and 2024–2025 litigation

More than 13 years later, in June 2024, Ms. Knauth contacted her former union and alleged that the severance and tax treatment she received did not comply with the collective agreement. The union explained that the severance provisions of the collective agreement only applied to specific layoff and restructuring situations, which did not match her voluntary exit. She then raised broader complaints: that she should not have paid tax on the $50,000; that she had been forced to sign the 2011 agreement while mentally unwell; that she had been forced to resign; and that she had been “blacklisted” in the hydro sector because the IESO allegedly disparaged her. On that basis, she asserted that the 2011 agreement should be declared null and void. On September 24, 2024, she filed an Unfair Labour Practice (ULP) application at the Ontario Labour Relations Board (OLRB) seeking to set aside the Termination Agreement. The IESO, relying on paragraph 7 of the agreement, grieved through the union, seeking enforcement of her promise to repay the $70,000 plus interest and legal costs. The OLRB dismissed the ULP application on January 7, 2025 for failing to set out a prima facie case. On February 17, 2025, she filed a contravention-of-settlement (COS) application with the Human Rights Tribunal of Ontario, alleging that the IESO had breached the 2011 Termination Agreement and that the agreement should be set aside. This COS application squarely engaged paragraph 7 of the agreement, because it was litigation “related to her employment and/or resignation.”

Parallel arbitration and repayment order

In March 2025, the IESO filed a modified grievance before a labour arbitrator, replacing its earlier grievance. An arbitration hearing was held on May 13, 2025. On June 25, 2025, Arbitrator John Stout dismissed the applicant’s challenges and upheld the grievance, concluding that she had breached paragraph 7 by launching litigation against the IESO and ordering her to repay $70,000 (less statutory deductions) plus the IESO’s legal fees under the agreement. The applicant then commenced an application for judicial review of that arbitration award (a separate case, heard by the same Divisional Court panel the same day as this HRTO judicial review). In that parallel judicial review she argued again that the termination agreement was invalid and should be set aside. The Divisional Court in the present decision does not quantify the legal fees ordered by the arbitrator, and so the total financial impact of that award is not fully ascertainable from this judgment alone.

The COS application and HRTO’s jurisdictional ruling

Upon receiving the COS application, the HRTO issued a Case Assessment Direction in April 2025, flagging that the allegations appeared to be out of time under s. 45.9(3) of the Human Rights Code, which requires such applications to be brought within six months of the alleged contravention or the last in a series of contraventions, subject to a limited discretion to extend time if the delay was incurred in good faith and causes no substantial prejudice. Both parties provided written submissions on timeliness and jurisdiction. In September 2025, the HRTO dismissed the COS application for lack of jurisdiction. It reasoned that any alleged failure to provide severance or the alleged mischaracterization of the $50,000 payment as taxable employment income necessarily occurred in 2011, when the agreement was signed, the payments were made and the 2011 T4 slip was issued. The Tribunal held that she either knew or reasonably should have known of any such alleged breach at that time, more than a decade before the COS application. As to allegations that the IESO had “disparaged” or “blacklisted” her, she pointed to specific instances in June 2017 and September 2023. Even treating those as part of a “series” of breaches, the Tribunal found the final alleged breach in September 2023 still fell outside the six-month limitation period. The HRTO further held that most of the applicant’s arguments actually attacked the validity of the 2011 agreement itself—claiming coercion, unlawful terms, constructive dismissal and Charter violations—rather than alleging a contravention of an existing settlement. It concluded that s. 45.9 deals with enforcement of settlement agreements, not with deciding whether a valid agreement was ever formed or quashing other adjudicators’ decisions. On that basis, it found it lacked jurisdiction to address those broader validity and Charter issues or to set aside Arbitrator Stout’s 2025 award.

Assessment of delay, good faith and due diligence

The Tribunal considered the applicant’s explanations for delay in filing her COS application and rejected them as insufficient to meet the “good faith” and “due diligence” threshold required for an extension of time under s. 45.9(4). She contended that she did not realize there was a contravention regarding the tax treatment of the $50,000 until alleged “confessions” by the union in June–July 2024. The HRTO and later the Divisional Court found there was no such confession; the union had simply confirmed that, on the face of the agreement, the $50,000 related to employment and was therefore taxable, something she could have understood from the text of the settlement and her 2011 tax slip. She also argued that she delayed because she feared that the IESO would sue her under paragraph 7 if she filed a claim. The Court found this could not justify a 13-plus-year delay: she had voluntarily agreed in 2011 not to sue and knew from the outset that litigation could trigger repayment. She said she could not find a lawyer, but provided no evidence of sustained efforts to obtain counsel, and the Court noted that many HRTO applicants proceed self-represented and that lack of legal representation does not excuse non-compliance with clear statutory timelines. Finally, she suggested she needed additional time to research after the OLRB’s January 2025 decision; the Court observed that this reason was never put before the Tribunal and, in any case, did not address the long period between 2011 and 2025.

Standard of review and procedural fairness

On judicial review, the Divisional Court first addressed the applicable standard of review. For the HRTO’s interpretation and application of s. 45.9, its findings of fact, and its handling of the evidence, the Court applied reasonableness review, emphasizing the strong deference owed to the HRTO’s interpretation and application of human rights law, especially in light of the Human Rights Code’s privative clause. The applicant attempted to frame some complaints as procedural fairness issues, but the Court held that, except for the question of whether an oral hearing was required, her arguments really attacked the Tribunal’s evaluation of evidence and law, which fall under reasonableness review. She also argued that the question of jurisdiction attracted a correctness standard. The Court rejected this, holding there was no “true operational conflict” between administrative bodies that would engage correctness; rather, the HRTO’s conclusion that s. 45.9 did not cover attacks on the very validity of a settlement agreement was itself an interpretive and jurisdictional determination to be reviewed for reasonableness. Regarding procedural fairness, the applicant said she had been told that a hearing would be scheduled in June 2025 and that the absence of an oral hearing was unfair. The Court found she had provided no supporting evidence for this claim and, in any event, confirmed that the HRTO was entitled to decide jurisdictional and preliminary issues in writing. Relying on established case law, it held that summary disposition of a purely jurisdictional question on the written record is consistent with fairness.

Court’s conclusion and outcome

The Divisional Court ultimately concluded that the HRTO’s decision was reasonable and procedurally fair. It upheld the findings that all alleged contraventions of the 2011 termination agreement were long out of time under s. 45.9(3), that the applicant’s explanations did not meet the statutory “good faith” standard for extending the limitation period, and that the COS mechanism could not be used to attack the validity of the agreement itself or to overturn an arbitration award. The Court dismissed Ms. Knauth’s application for judicial review, thereby leaving intact both the HRTO’s refusal to hear the COS application and the broader legal consequences flowing from the 2011 settlement and the subsequent arbitration award. In this judicial review, the IESO (and, institutionally, the HRTO) were the successful parties, and the Court recorded the parties’ agreement that no costs would be awarded. As a result, there was no monetary award, damages or costs ordered in this decision, and although the arbitration award required repayment of $70,000 plus legal fees, the total net amount in favour of the IESO cannot be determined from this judgment alone.