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Workplace Safety and Insurance




Morningstar Rises Again. Ontario Divisional Court quashes WSIAT decision.

In November 2019, I reviewed a landmark decision of the WSIAT (Decision No. 1227/19) that, on an application by the employer to determine the right of Ms. Morningstar to sue the employer, took away her right to sue her employer for constructive dismissal and related damages flowing from that claim.   As my previous blog reviewed the facts of that case in detail, I will not repeat that summary here.   In that decision, WSIAT Vice Chair Registrar Joanna Smith concluded that the civil claim of Ms. Morningstar was inextricably linked to a work-related chronic mental stress injury which fell within the scope of the Workplace Safety and Insurance Act, 1997 (the “Act”).

Two recent decisions, including a further WSIAT decision in a similar case and a Divisional Court decision on a judicial review application by Ms. Morningstar, have once again changed the landscape respecting a worker’s right to commence an action against her employer for constructive dismissal that is founded on the same circumstances that might also give rise to a WSIB claim for traumatic or chronic mental stress.

In Morningstar v. WSIAT, 2021 ONSC 5576 issued on August 18, 2021, the Ontario Divisional Court considered a judicial review application brought by Ms. Morningstar.  It is important to note that Ms. Morningstar did not dispute the WSIAT’s ruling that her claims were barred for lost wages due to medical leaves prior to her alleged constructive dismissal, for a breach of the Occupational Health and Safety Act, or for harassment.   The remaining issues before the Divisional Court, then, were focused on whether the WSIAT properly barred her claims for constructive dismissal or for damages related to that dismissal.     On these remaining issues, the Court allowed the Application and quashed the decision of the WSIAT on the basis that the WSIAT’s rulings were unreasonable.   The Court specifically determined that the WSIAT could and should have been able to extricate Ms. Morningstar’s action in constructive dismissal and should have permitted it to proceed.

The Court’s decision includes a thorough review of the jurisprudence of the WSIAT on similar types of right to sue applications, specifically those involving actions for constructive dismissal or wrongful dismissal.     Having completed that review, the Court proceeded to dismantle the approach taken by Vice Chair Smith to apply an “inextricably linked” test.   In paragraph 94 of the decision, the Court summarized its approach as such:

“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.”

In paragraph 95, the Court also concluded that:

“Creating a distinction between constructive and wrongful dismissal permits the WSIAT to disregard the applicant’s contract of employment with the employer or the way in which the employer’s alleged treatment of the applicant or its failure to stem her abuse by her co-workers and managers could be construed not only as harassment but also as an intention to terminate the applicant’s contract.”

The Court also accepted the arguments on behalf of Ms. Morningstar that her claim for aggravated, moral and punitive damages flowing from the claim of constructive dismissal, separate and apart from damages for mental stress, and related to the employer’s conduct in the claim for constructive dismissal, should be permitted to continue.

In my respectful view, while the Court appropriately drew a distinction between the legal claim that an employee has for a dismissal of her employment and that of a workplace injury claim, the link between aggravated, moral and punitive damages for an employer’s conduct in the context of workplace harassment that provides the factual foundation of a constructive dismissal and benefits for a mental stress injury under the Act related to the same conduct are not so easily sorted into two distinct causes of action.   It would have been helpful, in my view, to also carefully consider judicial decisions which assess damages for aggravated, moral and punitive damages in the context of a dismissal claim to illustrate the strong relationship between mental injury and the reason for and quantum of those types of damages.   In the end, while a claim for reasonable notice can be distinguished from a claim for a workplace injury, I fear that the Court’s decision has revived the risks associated with overlapping compensation for mental stress injuries under the Act and damages related to an employer’s conduct that are informed or influenced by the scope and severity of those same injuries.

Earlier this year, the WSIAT issued another decision (Decision No. 616/21) on a right to sue application involving concurrent claims for a mental stress injury and for constructive dismissal, punitive damages and aggravated damages.   In this case, the worker first claimed benefits for chronic mental stress which was initially denied by the WSIB.  She then issued a civil claim for constructive dismissal, following which the WSIB reconsidered and allowed the mental stress claim.  Of note, the worker/plaintiff did not participate in the right to sue proceeding before the WSIAT.

In the decision, Vice Chair Garth Dee barred the portion of the civil claim that sought damages for a workplace injury but did not bar a claim for constructive dismissal.  Vice Chair Dee noted that it was up to the Court to determine to what extent the damages sought flow from a lack of notice of dismissal as opposed to a workplace injury.   Vice Chair Dee decided not to apply an “inextricable link” test.

In consideration of the types of damages sought in the civil action, Vice Chair Dee drew a distinction between aggravated damages and punitive damages.  In the context of a claim of wrongful dismissal, he described aggravated damages to be awarded for psychological distress or harm caused by the defendant’s conduct that resulted in the dismissal.  In cases where such damages are only claimed based on an injury to the plaintiff, he determined that such a claim is prohibited by the Act.  Punitive damages, in contrast, are non-compensatory and intended to punish the conduct of the defendant.  Such a claim, in his view, is not barred by the Act.   In the outcome of the case before him, he permitted the claim for constructive dismissal to continue including a claim for punitive damages, but not a claim for aggravated damages.

In my view, the approach taken by Vice Chair Dee is a better balance.   However, it highlights the importance of a careful review by the Courts as to the foundation for an award of damages (including moral damages) to guard against civil claims that seek to skirt around the historic trade-off that prevents civil actions for workplace injuries.

Update: A note to our readers that leave to appeal to the Court of Appeal was denied on January 20, 2022.



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