Sabharwal v. Partie Défenderesse

Executive Summary: Key Legal and Evidentiary Issues

• Multiplicity of discrimination and reprisal complaints before the Canadian Human Rights Commission and their impact through res judicata on a later civil claim
• Effect of three prior settlement agreements (transactions and quittances) on the plaintiff’s ability to relitigate similar allegations against the same employer
• Application of the doctrine of res judicata to an administrative decision of the Canadian Human Rights Commission dismissing the fourth complaint as prescribed and frivolous
• Assessment of prescription under article 2925 C.c.Q. from the date of the alleged discriminatory refusal of candidacy in March 2021
• Evidentiary failure to demonstrate retaliation, given the employer’s explanation that refusal of candidacy was based on three failed housing-insurance exams rather than on prior complaints
• Rejection of the plaintiff’s claim of “impossibility to act” due to alleged depression, in the absence of medical proof and in light of his admitted decision to await the Commission’s decision before suing

Facts and procedural history

The dispute arises from a long-running conflict between Mr. Dhananjay Sabharwal and his prospective/short-term employer, Banque Toronto-Dominion (TD Bank), revolving around unsuccessful recruitment processes, a contract termination, and allegations of discrimination and retaliation. Over several years, the plaintiff filed four complaints before the Canadian Human Rights Commission (the Commission), as well as the present small claims action. The first complaint to the Commission was lodged around 10 April 2017. Mr. Sabharwal alleged discriminatory treatment based on race, colour and ethnic origin in a failed recruitment process that occurred between September and November 2016. This first complaint was settled on or about 19 June 2017 through mediation, without admission of fault or liability by TD and with a transaction and release agreement. The plaintiff then obtained a temporary position, via an employment agency, at TD Auto Finance. He worked there from about 5 April 2018 until the end of May 2018, and this contract was extended until 30 November 2018. On 16 October 2018, the defendant terminated his employment, citing a breach of confidentiality and personal-information protection rules. On 8 November 2018, the plaintiff filed a second complaint with the Commission, alleging discrimination between 6 July 2017 and 23 October 2018 in another unsuccessful recruitment process. That second complaint was also resolved through preventive mediation, once again without admission of liability. A third complaint was filed with the Commission on 21 December 2018. This time, Mr. Sabharwal alleged that TD had engaged in reprisals because he had filed the first two complaints, specifically by refusing him again in a further recruitment process in December 2018. On 6 November 2020, the parties settled the third complaint by mediation, with a further transaction and quitclaim, and again without any admission of fault. After these three settlements, the plaintiff continued to apply for postings advertised online by TD Bank. On 5 January 2021, he received a letter from TD advising that his candidacy had been retained and that he would be contacted for an interview. On 24 February 2021, TD Insurance invited him to apply for a sales position in Saint-Jean-sur-Richelieu. He applied and was contacted by recruiter Karine Nicholas, who informed him that he had passed two financial-sector exams (“Law” and “Automobile insurance”) but had failed the housing-insurance exam on three occasions. The plaintiff testified that Ms. Nicholas told him not to worry, because TD offered private tutoring to candidates who had failed an exam. He was informed that on 1 March 2021 he would have to complete an online simulation exercise and appear in person on 4 March 2021 at TD’s head office for an interview. When he attempted the simulation, an error code 524 appeared at the end of the test and blocked the simulation. He could not continue, and the test was automatically stopped. He contacted Ms. Nicholas, who told him that his candidacy was not being retained and that the 4 March 2021 interview would not take place. He also contacted a TD representative to insist that he had been promised tutoring. By email dated 3 March 2021, TD told him that it did not offer private tutoring services for candidates who had already failed a particular course three times and that the intensive schedule for 4 March 2021 would therefore not proceed. At the hearing, the plaintiff admitted that the error code was linked to an incorrect answer he had given rather than to a technical malfunction. Despite TD’s explanation, Mr. Sabharwal maintained that he had been screened out because he had previously filed three complaints with the Commission. However, when questioned by the Court, he acknowledged that TD’s communications referenced his three failures in the housing-insurance exam, not his complaints history.

The fourth Commission complaint and the small claims action

The plaintiff nonetheless framed his fourth complaint to the Commission, and later his small claims action, in terms of reprisal. He asserted that once recruiter Karine Nicholas became aware of his three prior complaints, she “cancelled” him, stopped his simulation exam, did not allow him to complete his existing exams and cancelled his interview, characterizing the situation as “pure retaliation.” Following its investigation, the Commission concluded that Mr. Sabharwal had not established that TD had rejected his candidacy because he had filed three earlier complaints. The Commission issued a decision on 20 November 2024 rejecting his fourth complaint as prescribed and frivolous. No judicial review or appeal was brought against that decision, which therefore became final. Shortly thereafter, on or around 6 December 2024, the plaintiff filed the present small claims action in the Quebec Court (Small Claims Division), essentially repeating the full set of allegations made in his fourth Commission complaint. TD opposed the claim on four main grounds: res judicata, prescription, lack of factual and legal foundation, and the binding effect of the prior settlements (transactions) entered into after the first three complaints.

Res judicata and the effect of prior transactions

The Court first addressed the objection based on res judicata. It noted that the plaintiff had filed four complaints against TD (the first three having been settled by transaction and quitclaim) and that, after each settlement, he returned to the Commission with a new complaint founded on similar facts and legal allegations. For the Court, TD had participated in good faith in the mediations before the Commission solely to put an end to the dispute quickly, and each transaction carried res judicata effect between the parties under article 2633 of the Civil Code of Québec. In addition to the three settlements, the Commission’s decision rejecting the fourth complaint on prescription and frivolousness grounds was final and unchallenged. Applying article 2848 C.c.Q., the Court examined whether the three criteria for res judicata were met: identity of parties, of cause, and of object. The same parties (Sabharwal and TD) were involved both in the fourth complaint and in the small claims action. As to the “cause,” relying on the Quebec Court of Appeal’s approach in Gowling Lafleur Henderson v. Lixo Investments Ltd., the Court held that the material facts and their legal qualification were identical, because the small claims action simply reiterated the allegations in the fourth complaint without any new or previously unknown facts. On “object,” the Court, again following the broad definition given by the Court of Appeal, found that the benefit or right sought was the same: recognition and sanctioning of alleged discrimination and retaliation arising out of TD’s refusal of the plaintiff’s candidacy. The reduction of the monetary quantum in order to fit within the small claims jurisdiction did not change the fundamental object of the dispute. The Court then examined whether an administrative decision of the Commission could ground res judicata. Citing the Supreme Court of Canada (including Boucher v. Stelco and Danyluk v. Ainsworth Technologies), as well as administrative law principles, it held that administrative decisions may have res judicata effect if they are of a judicial or quasi-judicial nature. A decision is judicial in nature when made following an adversarial process that includes fact-finding, application of an objective legal standard, and a fair opportunity for each party to be heard and to present evidence and argument. The Court emphasized prior case law holding that, when the Commission decides to reject a complaint after an investigation and on the basis of an investigation report, it acts in a quasi-judicial capacity, even though the overall regime is administrative. Given that the Commission’s decision in the present matter was rendered under section 44 of the Canadian Human Rights Act, following an investigation, the Court concluded that it possessed the requisite judicial nature to attract res judicata. Parallel Federal Court authority confirmed that res judicata also applies where a second complaint raises no new facts that were unknown or undiscoverable at the time of the first decision, and that repeated relitigation can amount to an abuse of process. In light of these principles, the Quebec Court held that the plaintiff’s small claims action, which merely repeated the substance of the fourth complaint, was barred by res judicata flowing both from the Commission’s final decision and from the earlier transactions and quitclaims.

Prescription and alleged impossibility to act

The Court then considered prescription (limitation). Under article 2925 C.c.Q., the applicable prescription period is three years from the occurrence of the facts giving rise to the right or from the point at which the claimant became aware of them. The alleged discriminatory refusal of the plaintiff’s candidacy took place at the latest on 2 March 2021, when TD definitively informed him that it could not proceed with the process given his three failures of the housing-insurance exam. That date therefore marked the start of the three-year period, expiring on 2 March 2024. The small claims action was filed on 6 December 2024 and notified to TD on 30 December 2024, well after the expiry of the three-year prescription period. The plaintiff attempted to argue that he had been unable to act before both the Commission and the Small Claims Division because he was suffering from depression following his father’s death (he was his father’s caregiver). The Court rejected this argument on evidentiary grounds. No medical record or expert evidence was filed to establish that a physician had diagnosed a depressive disorder that actually rendered him incapable of acting within the limitation period. In addition, the evidence showed that the plaintiff had not been on sick leave from work. During the hearing, he in fact admitted that the real reason for his delay was that he had been waiting for the Commission’s decision before deciding whether to pursue TD in small claims court. The Court held that such a strategic choice does not constitute legal “impossibility to act” and could not suspend or extend the prescription period. On this basis as well, the claim was prescribed and therefore inadmissible.

Evaluation of the retaliation claim and outcome

Beyond the procedural bars of res judicata and prescription, the Court also agreed with TD that the action was “manifestly ill-founded in fact and in law.” The plaintiff’s core allegation was that TD had retaliated against him because of his three prior human rights complaints, by cancelling his exam simulation and scheduled interview once the recruiter discovered his complaint history. However, the evidence showed that TD’s stated reason for not moving forward was the plaintiff’s three failures in the housing-insurance exam, and that its email explicitly referred to this exam record rather than to his past complaints. The plaintiff himself acknowledged, under questioning, that TD’s communications mentioned only his exam failures. He also conceded that the error code in the simulation test resulted from his own incorrect answer rather than a technical system failure. The Commission had already investigated these facts and concluded that the discrimination and retaliation allegations were not substantiated; the Quebec Court saw no new evidence capable of altering that assessment. In conclusion, the Court held that the plaintiff’s action was barred by res judicata, prescribed, and in any event devoid of sufficient factual and legal merit. Accordingly, it rejected the introductory motion and dismissed the claim “with costs.” The successful party is Banque Toronto-Dominion (TD Bank). The judgment does not quantify any monetary damages or specific amount of costs in TD’s favour; only ordinary court costs are awarded, and the exact total cannot be determined from the decision.