Constructive Dismissal and the Right to Sue: Morningstar v WSIAT et al, 2021 ONSC 5576

  • October 22, 2021
  • Michelle Alton and Rosie Basa, Tribunal Counsel Office, Workplace Safety and Insurance Appeals Tribunal

On August 18, 2021, a panel of the Divisional Court consisting of Justices Sachs, Backhouse and Kurke released its decision in Morningstar v. Workplace Safety and Insurance Appeals Tribunal (“WSIAT”) et al.  

The Court quashed WSIAT Decisions No. 1227/19 and 1227/19R, which barred the applicant Morningstar’s civil claim for constructive dismissal and related damages pursuant to section 31 of the Workplace Safety and Insurance Act, 1997 (the “WSIA”).   The Court found that the decisions were unreasonable because they failed to resort to the tools offered by the policy behind the WSIA, the wording of the operative provisions of the WSIA, and the WSIAT’s own jurisprudence. 

The Respondent, Hospitality Fallsview Holdings Inc., Operating as Hilton Niagara Falls/Fallsview Hotel and Suites (“Hilton”), has now filed a notice of motion seeking leave to appeal at the Ontario Court of Appeal. 

While the motion for leave is pending at the Ontario Court of Appeal, right to sue applications at the WSIAT will proceed, subject to the discretion of the assigned Vice-Chair or Panel and submissions of the parties.

Background

In both her civil action and in her right to sue application at the WSIAT, Ms. Morningstar claimed that she had been subjected to humiliating treatment by her co-workers.  Ms. Morningstar sought assistance from management, who she alleged treated her claims with indifference and subjected her to additional humiliation. Ms. Morningstar went on leave in November 2017, and filed a complaint with the Ministry of Labour.  An independent investigation found that Ms. Morningstar’s colleagues and managers had engaged in workplace harassment. The employer required the individuals who had harassed Ms. Morningstar to complete sensitivity training, however, following the conclusion of the investigation, Ms. Morningstar was expected to report to the same manager and continue to work alongside the co-workers that she alleged had harassed her.  On the basis of medical advice, Ms. Morningstar refused to return to work and resigned on February 16, 2018. 

On April 2, 2018, Ms. Morningstar filed a lawsuit against her employer alleging constructive dismissal, breaches of the Occupational Health and Safety Act and the Employment Standards Act, the tort of harassment and/or a poisoned work environment.  Ms. Morningstar sought aggravated, moral and punitive damages.  She specifically alleged that her colleagues’ harassment, as supported and reinforced by the employer, had forced her to resign. 

Decisions No. 1227/19 and 1227/19R

The employer, Hilton, applied to the WSIAT pursuant to section 31 of the WSIA to bar Ms. Morningstar from bringing any of her civil claims against Hilton.  At the WSIAT hearing, Hilton relied upon the allegations in Ms. Morningstar’s statement of claim, which the WSIAT accepted as true for the purposes of the decision it had to make.

Decision No. 1227/19 granted Hilton’s application and found that Ms. Morningstar’s statement of claim was, in essence, a claim for injury resulting from alleged workplace harassment, the employer’s failure to respond to her allegations, and the mental stress she experienced as a result.  The Vice Chair found that this was an exceptional case in which the foundational facts for the cause of action were inextricably linked to the workplace harassment, which was an injury compensated under the WSIA, such that Ms. Morningstar’s right to sue Hilton was removed. 

In coming to this conclusion, the Vice-Chair reviewed WSIAT case law, addressed the impact of damages not covered by the WSIA, and made determinations about the nature of Ms. Morningstar’s civil claim and the nature of Ms. Morningstar’s injury.  Ultimately, the Vice-Chair concluded that this was an exceptional case where the work accident causing personal injury and the claim for constructive dismissal were inextricably linked factually and were not, like other WSIAT cases reviewed, separate and remote.  The injury was determined to be the harm sustained as a result of the workplace harassment, which included damages for mental stress, constructive dismissal, and other heads of damages.  As the work injury underpinned Ms. Morningstar’s cause of action on all fronts, the Vice Chair found that the action was statute-barred. 

Ms. Morningstar applied for reconsideration of Decision No. 1227/19.  In Decision No. 1227/19R a different Vice-Chair denied the applicant’s request for reconsideration, finding that the request did not meet the WSIAT’s threshold test for reconsideration. 

The reconsideration Vice-Chair found that it was not an error for the original Vice-Chair to find that Ms. Morningstar’s cause of action was taken away based on the findings about the nature of the claim and there was no defect in the Vice-Chair’s analysis of the pleadings.  The reconsideration Vice-Chair also concluded that there was no error in the Vice-Chair’s analysis and application of principles arising out of the WSIAT’s jurisprudence, including that in the general case, a claim for wrongful dismissal is not taken away by the WSIA but that an exception applies when the facts are inextricably linked to the compensable accident.  The reconsideration Vice-Chair also confirmed that the manner in which the cause of action is framed is not determinative. As the Vice-Chair had made explicit findings that Ms. Morningstar’s accident and psychological injury fell within section 26, and her claim was that the actions of the employer and coworkers were the cause of her psychological injury, there was no error in the Vice-Chair’s finding that the right of action was taken away.   

The Divisional Court’s Decision

The Court found that the WSIAT decisions should be reviewed on a reasonableness standard, dismissing the Applicant’s argument that the correctness standard should apply.  In coming to this conclusion, the Court noted that the WSIAT has been accorded the highest level of deference, the WSIAT has exclusive jurisdiction in section 31 applications, and the privative clauses applicable to the WSIAT’s decisions have been described as the toughest in Ontario law. 

Following a brief summary of some of the principles outlined in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 –  including that the decision must be transparent, intelligible and justified, and that the Court should refrain from deciding the issues itself –  the Court engaged in a discussion of interpretative tools that it used to inform its reasonableness analysis.

The Court noted that the scheme of the WSIA is based on the historic trade off, in which workers receive insurance benefits if 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.   Relying on a passage in Pasiechnyk v Saskatchewan (Workers’ Compensation Board), 1997 CanLII 316 (SCC) in which the historic trade-off is described, the Court concluded that “the lawsuits that are statute-barred are those for torts causing work-related injuries.”

The legislative enforcement mechanisms for the historic trade off, contained in sections 26, 28 and 31 of the WSIA, were also examined. The Court stated that any assessment under section 31 reasonably begins from a position of restraint on the part of the WSIAT when an application is made to bar a claim that is not in tort. As explained by the Court, in a section 31 analysis, any failure to consider the type of action and nature of compensation offered under the WSIA would appear to involve an unreasonable oversight. 

The Court also extensively considered and reviewed WSIAT case law dealing with the statutory bar to claims and wrongful or constructive dismissal claims specifically.  The Court acknowledged that WSIAT jurisprudence generally does not bar actions for wrongful dismissal, but in the exceptional case a wrongful dismissal claim will be statute barred.  The Court noted that when non-tort claims are barred, there is often an indication that the plaintiff worker is attempting to improperly disguise a tort action as another kind of action so as to escape the limits of the regime established by the WSIA.  As explained by the Court, section 31 decisions look to ensure the historic trade off that informs the WSIA is respected, and disguised attempts to side-step the guiding policy behind the WSIA are prevented from proceeding no matter what causes of action they propose to be. 

The Court found that the WSIAT’s decisions applied the “inextricably linked” test in way that ignored the policy behind the legislation and the wording in sections 26, 28 and 31 of the WSIA.  The Court further found that the decisions disregarded essential facts in the applicant’s claim, supported its decisions on inappropriate authorities, and failed to consider relevant authorities. 

In particular, the Court found that the WSIAT decisions failed to consider the type of damages at issue and the bona fides of the cause of action.  The Court characterized the WSIAT as having engaged in “factual compression” by reducing Ms. Morningstar’s claims to only the chronic mental stress that derived from the workplace harassment by co-workers and managers, without any recognition that the employer stands in a different relationship to Ms. Morningstar than do her co-workers by virtue of the employment contract between the Hilton and Ms. Morningstar.  In compressing the facts, the Vice Chair disregarded facts central to the constructive dismissal claim, such as Hilton’s failures to deal with Ms. Morningstar’s concerns.

Ultimately, the Court found that Ms. Morningstar’s claim for harassment and other claims were determined to be properly barred under section 31 of the WSIA, but it was unreasonable for the WSIAT to bar the claim for constructive dismissal and attendant damages.  Accordingly, those portions of the WSIAT decisions were quashed.   The Court also concluded that fairness dictated that the matter not be remitted to the WSIAT for reconsideration, and therefore it substituted its own decision and dismissed the employer’s section 31 application in relation to Ms. Morningstar’s constructive dismissal claim and related damages.

In September 2021, the Hilton filed a notice of motion seeking leave to appeal the Divisional Court’s decision at the Ontario Court of Appeal.

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