In a recent case, the Ontario Divisional Court overturned a Workplace Safety and Insurance Appeals Tribunal (WSIAT) decision that a constructive dismissal claim could not proceed in the Courts because the Plaintiff did not have the right to sue. Morningstar v. WSIAT is a case that demonstrates the importance of considering the policy rationale behind section 31 of the Workplace Safety Insurance Act (the “Act”).
The Facts
Judith Morningstar (“Morningstar”) worked in housekeeping at the Hilton Niagara Falls/Fallsview Hotel and Suites (“Hilton”) for a period of just over two (2) years. During this time, Morningstar experienced ongoing, long-term harassment by her colleagues based on an odour allegedly emanating from her. Morningstar complained to her manager (and explained that she had a medical issue) who then proceeded to make humiliating suggestions regarding her hygiene. Hilton conducted an internal investigation into the matter, and the report indicated that there had been no harassment. However, after Morningstar complained to the Ontario Ministry of Labour, an independent workplace investigation was conducted, and it was determined that Morningstar was harassed by her colleagues and managers. Despite this determination, Hilton still required Morningstar to report to the same manager and work alongside her abusers. Morningstar refused to return to work, claiming that she had been constructively dismissed.
Morningstar filed suit against Hilton claiming, among other things, constructive dismissal and seeking aggravated, moral, and punitive damages. In her constructive dismissal claim, Morningstar claimed that Hilton did not intend to be bound by their employment contract with her, as demonstrated by various facts (i.e., allowing her colleagues and managers to create and continue a hostile work environment).
The Workplace Safety and Insurance Appeals Tribunal (WSIAT)
Hilton applied to the WSIAT under section 31 of the Act to bar Morningstar from bringing any of her civil claims against them. Section 31 provides the WSIAT with exclusive jurisdiction to determine whether a right to sue an employer has been taken away from a plaintiff worker by operation of the Act.
In the first decision by the WSIAT, it was acknowledged that, except in exceptional circumstances, wrongful dismissal actions are not barred by the Act. The WSIAT held that Morningstar’s claim for constructive dismissal involved those exceptional circumstances because the claim derived from her injury in the workplace and was therefore barred by the Act. More specifically, the WSIAT found that the cause of action of her claims were “inextricably linked to workplace harassment, an injury that is compensated under the [Act], and thus [Morningstar’s] right to sue is removed in these circumstances” (para 34). The WSIAT concluded that Morningstar’s claim was barred by statute in these circumstances.
In the second decision, Morningstar sought reconsideration of the first WSIAT decision, claiming that the first decision misapprehended the nature of a constructive dismissal claim, which alleges breach of contract by an employer. This argument was rejected, and the WSIAT upheld the first decision. Morningstar then brought an application for judicial review of the two decisions barring her from pursuing her claim for constructive dismissal, as well as aggravated, moral and punitive damages against her former employer.
The Ontario Divisional Court
In their review, the Ontario Divisional Court (the “Court”) applied the standard of reasonableness and found that the aspects of the WSIAT decisions relating to constructive dismissal and attendant damages were not intelligible or justified and were therefore unreasonable. The Court started their analysis with a focus on the “historic trade-off” – the policy rationale – that the scheme of the Act represents. The court writes:
Under the scheme of the Act, workers receive insurance benefits by proving that their injury or disease is work-related, without having to prove that their employer was at fault for their injury or disease. In exchange, employers are protected against civil suits for work-related injuries by paying into the accident insurance fund, thus diluting, and reducing liability for any individual claim (para 47).
This is, ultimately, a legislative forfeiture of employees’ right to sue in exchange for a measure of certainty of benefits for workplace injury independent of proving an employer’s fault at trial (para 48). The Court clarifies, however, that the Act is focused on barring tort claims related to workplace injuries and that employers are not insulated from legitimate claims outside of the realm of tort. Where “actions represent genuine causes of action that do not trench on the tort claims that lie behind the policy of the Act, they have been permitted to proceed” (para 65). This is the rationale behind section 31 of the Act. It was intended to root out tort claims that may be disguised as other types of actions to escape the limits of the regime established by the Act. Claims such as bona fide claims for constructive/wrongful dismissal are not tort actions and “attract damages for which the Act offers no compensation” (para 77).
Here, Morningstar claimed that Hilton breached the employment contract that they had with her, making a bona fide claim for constructive dismissal. Section 31 would permit such a claim because it is not a claim based on tort law, rather they were based on contract law. The damages that Morningstar sought relating to her constructive dismissal claim were not within the purview of the Act and could only be accessed by way of a civil claim.
In sum, the Court concluded that the decisions by the WSIAT barring Morningstar’s claims for constructive dismissal and for aggravated, moral, and punitive damages were unreasonable and must be quashed. The decisions applied the “inextricably linked” test and ignored the policy behind the legislation. Instead of remitting the matter back to the WSIAT for reconsideration, as they ordinarily would, the Court permitted Morningstar to pursue her claim and damages in the Superior Court of Justice given the substantial delay in the proceeding, the increasing costs, and the need for the collection and presentation of evidence for litigation — “fairness dictates that the suit finally proceed without further avoidable delays” (para 128).
Key Takeaway for Employers
If this Division Court decision is applied by WSIAT and other Courts in the future, whether section 31 of the WSIA will bar a civil claim will depend on whether the substance of the claim is grounded in tort law or contract law. Constructive dismissal claims are based on contract law and are unlikely to be barred by section.31.