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WSIA - The Lawsuit-Benefits Trade-off. Dean v 3150 Hawthorne Road Ltd.
In Dean v 3150 Hawthorne Road Ltd. (Div Court, 2023) the Divisional Court considered a JR brought by an employee against a WSIAT ruling that the respondent employer could not be sued because they were a Schedule 1 employers under the WSIA [pursuant to WSIA s.118(2) and 123]:[13] With respect to the Tribunal's decision that Hawthorne is a Schedule 1 employer, the applicants submit that the Tribunal failed to consider Hawthorne's own position and that of the Board that Hawthorne is not a Schedule 1 employer. This submission fails for two principal reasons.
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[15] Second, as the Tribunal correctly pointed out, where an employer's business activities are compulsorily covered in Schedule 1, it is considered to fall under the schedule even if it is not registered with the Board as such at the time of the accident: see, for example, Decision No. 334/07, 2007 ONWSIAT 570; Decision No. 2410/11, 2012 ONWSIAT 803; Decision No. 1504/12, 2013 ONWSIAT 1913; and Decision No. 1003/13, 2014 ONWSIAT 1114. The views of Hawthorne and the Board are immaterial: Decision No. 2410/11, at para. 52.
[16] It is important to understand that, while the Board has exclusive jurisdiction under s. 118(2) of the Act to determine whether an employer is a Schedule 1 employer, the Tribunal has exclusive jurisdiction under s. 31 of the Act to determine whether a worker's right to sue has been taken away. Further, under s. 123 of the Act, where the Board's determination of an employer's status as a Schedule 1 employer is challenged, the Tribunal has the power to make a final determination of the issue in that context, as well. The Tribunal was not required, therefore, to reconcile its decision with the views of Hawthorne or the Board. . Morningstar v. WSIAT
In Morningstar v. WSIAT (Div Ct, 2021) the Divisional Court considered a WSIA s.31 case:31 (1) A party to an action or an insurer from whom statutory accident benefits are claimed under section 268 of the Insurance Act may apply to the Appeals Tribunal to determine,
(a) whether, because of this Act, the right to commence an action is taken away;
(b) whether the amount that a person may be liable to pay in an action is limited by this Act; or
(c) whether the plaintiff is entitled to claim benefits under the insurance plan. --------------------------------The legislative scheme that carries the policy into effect
[50] A workplace “accident” is broadly defined under s. 2(1) of the Act, and includes (a) a wilful and intentional act, not being the act of the worker; (b) a chance event occasioned by a physical or natural cause; and (c) disablement arising out of and in the course of employment. Section 13(4) extends coverage to chronic or traumatic mental stress. Section 13(1) of the Act sets out the scope of what the scheme provides to workers for personal injury: “A worker who sustains a personal injury by accident arising out of and in the course of his or her employment is entitled to benefits under the insurance plan.”
[51] The legislative enforcement mechanism for the historic trade-off finds its place in ss. 26, 28, and 31 of the Act. The relevant provisions in the Act read as follows:No action for benefits
26 (1) No action lies to obtain benefits under the insurance plan, but all claims for benefits shall be heard and determined by the Board.
Benefits in lieu of rights of action
(2) Entitlement to benefits under the insurance plan is in lieu of all rights of action (statutory or otherwise) that a worker, a worker’s survivor or a worker’s spouse, child or dependent has or may have against the worker’s employer or an executive officer of the employer for or by reason of an accident happening to the worker or an occupational disease contracted by the worker while in the employment of the employer.
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Certain rights of action extinguished
28 (1) A worker employed by a Schedule 1 employer, the worker’s survivors and a Schedule 1 employer are not entitled to commence an action against the following persons in respect of the worker’s injury or disease:
1. Any Schedule 1 employer.
2. A director, executive officer or worker employed by any Schedule 1 employer.
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Decisions re rights of action and liability
31 (1) A party to an action or an insurer from whom statutory accident benefits are claimed under s. 268 of the Insurance Act may apply to the Appeals Tribunal to determine,
(a) whether, because of this Act, the right to commence an action is taken away[.] [52] Two things are immediately apparent about these provisions.
a. A primary focus in s. 26 of the Act, both in subsections (1) and (2), is on “benefits under the insurance plan”, that is, benefits included in the Act, as set out in s. 13(1). Benefits under the insurance plan that stand in place of what could be recovered in a tort action are what the historic trade-off is about, after all.
b. Further limiting the reach of s. 31 is the specific reference in s. 26(2) to workplace “accidents”, and that in s. 28(1) to a “worker’s injury or disease”. This carries into effect the policy behind the Act of taking away the ability to sue for personal injury, that is, under the tort regime. Contrary to the broader assertion advanced by Hilton in para. 39 of its factum, the wording “in lieu of all rights of action” in s. 26(2) can only reasonably be understood, in the context of these provisions and their wording, as referring to a tort claim or a claim for benefits available under the Act.
[53] In the context of the policy that justifies such legislation as set out in Pasiechnyk, and of the words of the provisions in the Act, any assessment under s. 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. While the “trade-off” enacted in the legislation prevents attempts by employees at seeking to opt out of the scheme set up by the Act, employers likewise should not be permitted by the WSIAT to insulate themselves from legitimate claims outside of the realm of tort.
[54] Any failure to at least consider the type of action and the nature of compensation offered and not offered under the Act in a s. 31 analysis would appear to involve an unreasonable oversight. This is especially so in the case of damages for constructive dismissal. So, at para. 126 of WSIAT Decision No. 616/21, 2021 ONWSIAT 848, considered below, the Vice-Chair held that “[i]t is only when the damages claimed in the civil action result from the existence of a work-related personal injury that the right to bring a civil action is barred.”
[55] This court has long endorsed this principle. In Nasser v. ABC Group Inc., [2008] O.J. No. 453 (Div. Ct.), the moving party defendant in an action for constructive dismissal sought unsuccessfully to overturn a lower court ruling refusing a stay of the civil action, claiming that the employee’s redress lay in the Act. In drawing a distinction between benefits under the Act and damages for constructive dismissal, a breach of contract, the Court held:[6] There is ample authority for the proposition that a claim for wrongful dismissal is one for which there is no redress under the WSIA. See, for example, Decision 237/03R, 2003 ONWSIAT 1792.
[7] I agree with the finding of the learned motions judge that the plaintiff's claim here is clearly one of damages for breach of contract. The plaintiff does not seek relief for personal injury damages. WSIAT jurisprudence: guarding against disguised claims for worker’s compensation benefits
[56] Given the policy that lies behind the Act, the WSIAT generally does not bar actions for wrongful dismissal pursuant to its mandate in s. 31 of the Act: Decision No. 237/03R, 2003 O.W.S.I.A.T.D. 1792, at para. 42; Decision No. 237/03 [2003] O.W.S.I.A.T.D. No. 451, at paras. 49-65. As stated in Decision No. 194/16, [2016] O.W.S.I.A.T.D. No. 778, at para. 25:The remedy for wrongful dismissal, as has been noted in several of the decisions, is damages in lieu of notice. The [Act] does not provide this remedy; a cause of action for wrongful dismissal is therefore not subsumed by the [Act]. [57] The WSIAT decisions under review properly acknowledge that it is only in the “exceptional case” that a wrongful dismissal claim will be statute-barred, and only “where the circumstances of the wrongful dismissal claim are inextricably linked to the work injury”: the first decision, at para. 29; see the second decision, paras. 47-48, 54.
[58] Nevertheless, the WSIAT must take care to ensure that the bargain struck in the historic trade-off is not undermined by attempts by workers to bring civil suit for workplace injury or to bypass the Act’s limits on benefits by disguising their claims for benefits as other forms of action. The purpose of the WSIAT in s. 31 of the Act is to bar tort actions and also to root out tort claims that are disguised as other types of actions.
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Discussion
[81] In my view, in both of the decisions under review, the WSIAT’s reasoning and conclusions were unreasonable. It applied the “inextricably linked” test to the facts from the applicant’s statement of claim, and determined, twice, that the facts set out by the applicant were “inextricably linked” to the workplace injury, and that therefore the applicant’s action for constructive dismissal must be barred.
[82] These determinations were unreasonable because the two decisions applied the “inextricably linked” test in a way that ignored the policy behind the legislation and wording in ss. 26, 28, and 31 of the Act that offered guidance to their interpretation. In so doing, the WSIAT necessarily disregarded essential facts in the applicant’s claim and supported its decisions on inappropriate authorities and failed to consider relevant authorities.
[83] The focus in the decisions under review on the linkage of the facts to the accident in question, rather than on the bona fides of a cause of action for constructive dismissal or on the availability of benefits under the Act, leads to logical flaws in the decisions and generates a result that flies in the face of the “historic trade-off,” and is unreasonable. Although both decisions speak in terms of “inextricable linkage” of facts to the workplace injury, this is a misnomer when the WSIAT unreasonably did not resort to the tools at hand to extricate an apparently viable claim for constructive dismissal. The linkage is only inextricable if the tools that are available to extricate it are unreasonably ignored.
[84] I conclude that no proper lines of reasoning would support the decisions under review.
Inextricable linkage
[85] In para. 29 of the first decision, the Vice-Chair acknowledged what is generally the case, that most wrongful dismissal actions are not barred by the Act:[G]enerally the Tribunal has found that the right to bring an action for wrongful dismissal has not been removed by the [Act]. It is only in the exceptional case that this is so, where the circumstances of the wrongful dismissal claim are inextricably linked to the work injury. See, for example, Decisions No. 3836/17, 1319/01 2, and 566/00. [86] The Vice-Chair offered three cases as examples of inextricable linkage. With respect, those cases do not support its reasoning or cry out for a more detailed understanding. Decision No. 3836/17 permitted that portion of a claim to proceed that related to damages in lieu of notice for wrongful dismissal. Decision No. 1319/01 2 involved a situation where the claim for wrongful dismissal appeared to be a bad faith addition to a claim for personal injury that must otherwise be barred. And Decision No. 566/00 proves nothing at all. As noted in Decision No. 237/03, at para. 65, Decision No. 566/00 offers no analytical assistance of any kind, based as it is on a skeletal record without any deep review of the particular facts of the case or the plaintiff’s claim. Its purpose was merely to put into effect an agreement that had been reached between the parties.
[87] In response to argument by the applicant that the Vice-Chair’s reliance on these cases in the first decision was misplaced, the Vice-Chair in the second decision found (at para. 54), “no error in [the] adoption of those legal principles.” Instead, the Vice-Chair on the reconsideration held (at para. 55) that WSIAT cases were in “substantive [sic] consensus” that “in the general case, a claim for wrongful dismissal is not taken away by the WSIA; that an exception applies when the facts are inextricably linked to the compensable accident; and that the manner in which the cause of action is framed is not determinative.” The Vice-Chair held that the first decision applied these principles, which is accurate but requires comment. For that description of the “consensus” leaves out other elements in these authorities and other WSIAT authorities set out above, that the type of damages at issue and the bona fides of the cause of action are also relevant considerations.
[88] Although there were so many other cases available to guide their decisions, the Vice-Chairs relied on decisions whose actual lessons they appear not to have heeded. Nowhere in the decisions under review is there any assertion that the applicant’s claim for constructive dismissal was a bad faith attempt to circumvent the historic trade-off. Nowhere in the decisions under review is there an acknowledgement that the fact that the Act offers no means of compensating claims for constructive dismissal was an argument in favour of the applicant’s claim being permitted to proceed.
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Compressing the facts
[93] What does it mean for facts to be “inextricably linked” to the workplace harassment, a cause of action whose barring by the WSIAT the applicant does not contest?
[94] An action for personal injury can properly be barred by the Act, but it would appear to be unreasonable to bar an action for constructive dismissal simply because the same facts that relate to that action also incidentally support an action for personal injury. Such a test ignores Canadian law permitting different causes of action to be advanced based on the same facts. To focus on the facts as linked to the workplace accident, but to disregard both the claim for constructive dismissal in its own right and the nature of the benefits sought in the action, arrogates to the WSIAT more authority than was ever intended to be granted to it. The policy behind the Act and the wording in ss. 26, 28, and 31 of the Act require more analysis than a test involving mere “factual linkage” permits.
[95] It is well-established in Canadian law that the same facts can support concurrent liability in more than one cause of action. A plaintiff has the right to assert alternative causes of action that offer advantageous legal consequences unless the plaintiff thereby improperly attempts to avoid some limitation of liability by so doing: Central Trust Co. v. Rafuse, 1986 CanLII 29 (SCC), [1986] 2 S.C.R. 147, at paras. 48-54. As the general run of WSIAT cases acknowledge, so long as a plaintiff does not sue in constructive dismissal improperly to get around the limitations of the Act, the claim should be permitted to proceed, even where tort aspects of a claim are barred. Contrary to the reasoning of other WSIAT decisions in which claims in contract are barred, nowhere in the decisions under review is there any assertion that the applicant is attempting to disguise her injury claim as one sounding in constructive dismissal in order to avoid the limitations of the historic trade-off. . Morningstar v. WSIAT
In Morningstar v. WSIAT (Div Ct, 2021) the Divisional Court considered the 'historic trade-off' where injured workers gave up the right to sue employees in exchange for the WSIA insurance system:[46] Any analysis of this issue must begin with the “historic trade-off” that the scheme of the Act represents.
[47] The Ontario workplace insurance scheme provides no-fault benefits based on collective employer liability. 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.
[48] This legislated forfeiture by employees of the right to sue in exchange for a measure of certainty of benefits for workplace injury independent of the employer’s solvency or proving the employer’s fault at trial was set out in a report into schemes of workers’ compensation authored by the Honourable Sir William Ralph Meredith, former Chief Justice of Ontario. It has been called the “historic trade-off” and explained by Sopinka J. in Pasiechnyk v. Saskatchewan (Workers’ Compensation Board), 1997 CanLII 316 (SCC), at para. 26, in the following terms:26 The importance of the historic trade-off has been recognized by the courts. In Reference re Validity of Sections 32 and 34 of the Workers' Compensation Act, 1983 (1987), 1987 CanLII 118 (NL CA), 44 D.L.R. (4th) 501 (Nfld. C.A.), Goodridge C.J. compared the advantages of workers' compensation against its principal disadvantage: benefits that are paid immediately, whether or not the employer is solvent, and without the costs and uncertainties inherent in the tort system; however, there may be some who would recover more from a tort action than they would under the Act. Goodridge C.J. concluded at p. 524:While there may be those who would receive less under the Act than otherwise, when the structure is viewed in total, this is but a negative feature of an otherwise positive plan and does not warrant the condemnation of the legislation that makes it possible. I would add that this so-called negative feature is a necessary feature. The bar to actions against employers is central to the workers' compensation scheme as Meredith conceived of it: it is the other half of the trade-off. It would be unfair to allow actions to proceed against employers where there was a chance of the injured worker's obtaining greater compensation, and yet still to force employers to contribute to a no-fault insurance scheme. [49] From this, it is reasonable to conclude that the lawsuits that are statute-barred are those for torts causing work-related injuries. This is the “other half” of the historic trade-off, which protects the employer from potentially crippling tort litigation while paying insurance premiums to assist injured workers: Marine Services International Ltd. v. Ryan Estate, 2013 SCC 44, at para. 26 (adopting the comments by Professor Peter Hogg); Martin v. Alberta (Workers’ Compensation Board), 2014 SCC 25, at para. 51. When Sopinka J. referred to the “costs and uncertainties inherent in the tort system,” and to the possibilities of recovering more from a “tort action,” and to “injured workers,” he was speaking with deliberate precision. The Act’s focus is on barring tort claims related to workplace injuries. . Chen v. Workplace Safety and Insurance Appeals Tribunal
In Chen v. Workplace Safety and Insurance Appeals Tribunal (Div Ct, 2021) the Divisional Court sets out the basic legal trade-off of WSIB legislation:[3] A worker who is injured in an accident arising out of and in the course of employment is entitled to benefits under the insurance plan established by the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sched. A (“WSIA”) (see s.13(1)). Pursuant to s. 26(2), those benefits are in lieu of a right of action against the employer, and s. 28(1) provides that a worker employed by a Schedule 1 employer cannot sue any Schedule 1 employer with respect to their injury or disease.
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[14] The applicant submits that it is unfair and unjust to prevent her from proceeding with a tort action. However, the bar to her action arises from the WSIA, particularly s. 28(1). A worker of a Schedule 1 employer who is injured in the course of her employment is barred from pursuing a tort action against Schedule 1 employers because of what is known as the “historic trade-off”: the legislation gives such workers access to the no fault workers compensation scheme in return for the bar to civil proceedings against employers (Pasiechnyk v. Saskatchewan (Workers’ Compensation Board), 1997 CanLII 316 (SCC), [1997] 2 S.C.R. 890 at paras. 25-26). . Chen v. Workplace Safety and Insurance Appeals Tribunal
In Chen v. Workplace Safety and Insurance Appeals Tribunal (Ont CA, 2020) the Divisional Court clarified that while the Workplace Safety and Insurance Act, 1997 (WSIA) states that deciding when a person has a right to sue for workplace injury is in the exclusive jurisdiction of the WSIAT (Workplace Safety and Insurance Appeals Tribunal), a party stills retain the right of judicial review over that decision:[3] WSIAT has exclusive jurisdiction to decide whether a person’s right of action (the ability to sue in court) is taken away by the Workplace Safety and Insurance Act, 1997, SO 1997, c.16, Sch. A., s.31(10 and (2). A decision of WSIAT on this issue “is final and is not open to question or review in a court” (s.31(3)). Notwithstanding this very strong language, this court still retains jurisdiction to review the decision, but the deference accorded to WSIAT on review is high.
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