Downs Construction Ltd. v. Workers’ Compensation Appeal Tribunal, 2012 BCCA 392

In Downs Construction Ltd. v. Workers’ Compensation Appeal Tribunal, the British Columbia Court of Appeal (BCCA) held that a worker who fails to obtain workers' compensation benefits for a workplace injury is not entitled to sue his/her employer for a common law breach of duty. The judgment reinforces the historic trade-off in s. 10 of the B.C. Workers' Compensation Act (BCWCA), which bars an action for an injury arising out of and in the course of employment if the worker could bring a claim under s. 10 of the BCWCA. The BCCA found the trade-off was appropriate even if there may be a lacuna in the compensation scheme under the Act.

Chiasson J.A. indicated that the trial judge and the Workers' Compensation Tribunal (WCAT) misunderstood the purpose of the 'historic trade-off' embodied in s. 10 of the BCWCA. Rather than the trade-off merely being a quid pro quo in which workers exchange tort rights for compensation under the BCWCA, the trade-off involves workers relinquishing their right to sue their employers and co-workers, along with the benefits of potentially larger damages, in exchange for prompt and guaranteed no-fault compensation, in which employees may receive compensation for workplace injuries regardless of fault. He drew on the judgment by Sopinka J in Pasiechnyk v. Saskatchewan (Workers’ Compensation Board) [1997] 2 S.C.R. 890 to emphasize the complexity of the historic trade-off, but also on commentary by the Minister during the reading of the Bill which would become the BCWCA. Chiasson J.A. noted that the Minister's comments on the need for the compensation scheme to provide sustainable benefits reflect concerns at the core of the historic trade-off. In his view, it would be contrary to legislative intent if employees are permitted to bring tort claims “notwithstanding the action of the Legislature to curb such claims because they were having an adverse financial effect on employers”.

In this case, a worker claimed compensation for, inter alia, post traumatic stress disorder pursuant to s. 5.1 of the BCWCA, and also brought a tort claim against her employer and co-worker for mental stress. The BCCA held that while the worker was not entitled to benefits through the BCWCA because she did not fit the criteria required for compensation, the injury arose out of and in the course of employment. As such, the worker was not entitled to bring a tort claim against her employer or her co-worker for the workplace injury she suffered because of the “historic trade-off” principle.

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Carolyn Lambert

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Small v. New Brunswick Liquor Corporation, 2012 NBCA 53

The New Brunswick Court of Appeal considered the distinction between the reasonableness standard and the correctness standard of review as applied to questions of pure statutory or contractual interpretation. The court identified an overlap between the two standards: while an administrative adjudicator’s interpretation may attract deference, an adjudicator is never entitled to deviate from accepted interpretive methodology. Consequently, the Court of Appeal upheld the lower court’s finding that an adjudicator’s interpretation of the By-laws of the New Brunswick Liquor Corporation (the Corporation) was unreasonable.

The respondent employer had dismissed the appellant employee, Anne Small, without cause, which the appellant grieved under the Public Service Labour Relations Act, RSNB 1973, c P-25. The adjudicator awarded her the retirement allowance sought, basing his decision on his interpretation of the Corporation’s bylaws under Article 22.04. Article 22.04 deems “dismissed” employees ineligible for any retirement allowance; the adjudicator found ambiguity in the term “dismissed” and read it down to mean only “dismissed with cause.” Article 22.01 deems “laid off” employees eligible for the retirement allowance; the adjudicator relied on his interpretation of the former provision to interpret “laid off” as including “dismissed without cause.” On appeal, the applications judge found the adjudicator’s interpretation of the By-law unreasonable and vacated the award.

The Court of Appeal held that it is unreasonable, and a fortiori incorrect, for an adjudicator to interpret statutory or contractual provisions except according to the textual, contextual, and purposive methodology which the law imposes. Where a provision is ambiguous, the adjudicator’s choice between two reasonable interpretations will generally prevail under the deferential standard of review; but the adjudicator must first have employed the correct interpretive methodology to determine whether the provision was truly ambiguous. The adjudicator erred  by interpreting Article 22.04 as a stand-alone provision, then relying on that interpretation to interpret Article 22.01(l). Moreover, the adjudicator interpreted “laid off” in Article 22.01(l) without reference to the definition of “layoff” in Article 2.01(k). Robertson JA found that under the requisite textual, contextual, and purposive interpretive methodology, the provisions admitted of no ambiguity; rather, they unambiguously excluded the appellant from eligibility for the retirement allowance under any reasonable interpretation.

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Aaron SanFilippo

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Association of Justice Counsel v. Attorney General of Canada, 2012 ONCA 530

The Ontario Court of Appeal considered whether the Expenditure Restraint Act ("ERA") infringed on the Association of Justice Counsel’s (“AJC”) s.2(d) Charter rights. This is the first case under the ERA to reach a Court of Appeal.  The Court of Appeal held that AJC had failed to show that the ERA infringed on their s. 2(d) right to engage in a meaningful process of collective bargaining.

The AJC alleged that the ERA rendered their right to collectively bargain on salary under s. 2(d) of the Charter with the Treasury Board Secretariat ("TBS") useless between the years of 2006 - 2011. The application judge found infringement of the AJC’s s.2(d) rights but upheld the ERA under s.1 of the Charter. The Attorney General appealed the application judge’s holding that the ERA infringed s.2(d), and the AJC cross-appealed that the provisions were justified under s.1. The court applied the "effectively impossible" test outlined in Fraser, which states that legislation violates s. 2(d) if it renders the pursuit of collective bargaining goals "effectively impossible." The court found that AJC's claim did not satisfy the "effectively impossible" test. Relying on Fraser, the court held that s. 2(d) guarantees a process of collective bargaining but not necessarily a result. Further, as stated in Fraser, s. 2(d) only protects the right to collective bargaining in the minimal sense of good faith. Applying the Fraser test, the court found that the AJC had engaged in a meaningful process of collective bargaining over a two-year period with TBS prior to the enactment of the ERA. During that process, the Court found that TBS had considered the demands of AJC in good faith. Therefore, the court held that AJC had failed to show that the ERA infringed on their s. 2(d) right to engage in a meaningful process of collective bargaining.

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Haran Viswanathan

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Steinberg v. Ellis Entertainment Corp., 2012 ONCA 362

In this case, the Ontario Court of Appeal considered a complicated pleadings issue. A corporation and an individual jointly defended an action; the corporation also counter-claimed. When the corporation became insolvent, it failed to pursue its defence. Its defence was struck out, and a creditor assigned the counterclaim to the individual, who obtained an order to continue the counterclaim. Is the individual permitted to amend his pleadings to make them consistent with the counterclaim? The court unanimously dismissed the appeal, stating that to allow the amendments would be an abuse of process.

Steinberg, a former employee of Ellis Entertainment Corporation, began a wrongful dismissal action against the corporation and against Ellis, its CEO, personally. The corporation and Ellis jointly defended the action, stating in their statement of defence that Steinberg voluntarily resigned from his employment with the corporation or, alternatively, that Steinberg had engaged in serious misconduct that justified termination of his employment for cause. When the corporation become insolvent, its first-ranking secured creditor acquired the counterclaim, and in turn, assigned it to Ellis. Steinberg obtained an order striking the corporation’s defence, and consequently, the corporation was deemed to have admitted the allegations in the statement of claim, including that Steinberg was wrongfully dismissed. The corporation's counterclaim did not contain any allegations specific to it, but rather recited a number of allegations of misconduct by Steinberg during his employment with the corporation. These allegations were inconsistent with and contrary to the corporation's deemed admissions.

Ellis argued that the deemed admissions of the corporation had no impact on the legal viability of the counterclaim because the corporation lost all of its rights and interests in the counterclaim when the secured creditor had acquired its assets; by the time the corporation's statement of defence was struck out, the corporation no longer had the right to advance that counterclaim since Ellis had acquired it personally by assignment. However, Gillese JA stated that the effect of the assignment was to give Ellis the right to pursue the counterclaim on behalf of the corporation, due to which Ellis could not have a better claim than the Corporation.

In response to Ellis's argument that Steinberg's appeal constituted a collateral attack on the order to continue, Gillese JA wrote that the striking out of its statement of defence meant that the Corporation could not succeed in establishing the claims in the counterclaim.  Because of this, the amendments that Ellis sought to make were not tenable at law, and as a result, the order of Hainey J had not allowed a collateral attack.

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Bhuvana Sankaranarayanan

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Bowes v. Goss Power Products Ltd., 2012 ONCA 425

In Bowes v. Goss Power Products Ltd. the Ontario Court of Appeal considered whether an employee, who is terminated without cause, is required to mitigate his or her loss when entitled to a fixed term of notice or pay in lieu, and the contract of employment is silent with respect to mitigation. The Court of Appeal held that the clause should be treated as fixing liquidated damages and there is no obligation on the part of the employee to mitigate. Accordingly, theappellant was entitled to the full amount of salary in lieu of notice as specified in the Employment Agreement, notwithstanding any salary earned from his new employer, and reversed the costs of the application in favour of the appellant. 

The appellant was terminated without notice from his work at Goss Power Products Ltd. after forty-one months of employment. Under the terms of his employment agreement with the respondent, he was entitled to either 6 months notice or payment in lieu. Two weeks after he had been terminated, the appellant commenced employment with another company at the same salary he had been paid by the respondent. The respondent paid Bowes the statutory minimum under the Employment Standards Act, 2000, S.O. 2000, c. 41, of three weeks’ pay in lieu of notice, because the appellant mitigated his loss successfully. In holding that a duty to mitigate does not exist where damages are either liquidated or a contractual sum, the court overruled the decision in Graham v. Marleau, Lemire Securities Inc.(2000), 49 C.C.E.L. (2d) 289 (S.C.) which held that there exists a presumption of a duty to mitigate in employment contracts, regardless of whether the employment contract stipulates a contractually fixed term of notice or not, unless the contract of employment can be interpreted as exempting the employee (either expressly or by implication) from a duty to mitigate. 

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Elizabeth Severinovskaya 

Mary Phan

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