Negligent misrepresentation claims against employers: a matter for labour arbitrators or civil courts?

28 January 2020

Introduction

Does a unionized employee's claim of negligent misrepresentation against an employer fall outside of the jurisdiction of a labour arbitrator and within the jurisdiction of the civil courts? The BC Court of Appeal in Stene v. Telus Communications Company, 2019 BCCA 215 reaffirmed the principle that claims that arise "inferentially or implicitly from the interpretation, application, administration or violation of the collective agreement" will fall within the jurisdiction of a labour arbitrator.



Background

Ms. Stene was a unionized employee of Telus and, accordingly, her employment agreement was governed by a collective agreement (the "Collective Agreement") between her union and Telus. While employed with Telus, Ms. Stene was injured in two motor vehicle accidents (the "MVAs"), which prevented her from carrying out her regular work duties.

Ms. Stene commenced an action regarding the MVAs. Shortly before her trial, her lawyer sent the Insurance Corporation of British Columbia ("ICBC") a settlement offer seeking $780,000 for her loss of earning capacity. Ms. Stene's lawyer then subpoenaed Ms. Stene's manager, Mr. McNiven, to prepare his testimony for the upcoming trial. Ms. Stene alleged that, during Mr. McNiven's trial preparation, Mr. McNiven assured Ms. Stene's lawyer that Telus would accommodate Ms. Stene once she returned to work ("Representation"). Ms. Stene alleged that Mr. McNiven's Representation led her to believe that her claim was worth less than the $780,000 settlement offer, thus causing her to accept ICBC's counteroffer of $325,000.

When Ms. Stene returned to work, she requested that Telus accommodate her rehabilitation by permitting her to work from home. Telus declined her request because her insurer opined that she was capable of working full-time without any functional limitations. Ms. Stene stopped working and applied for short-term disability benefits, which Telus also declined. In turn, Ms. Stene sued Telus for negligent misrepresentation on the basis that her settlement with ICBC for $325,000, as well as her expectation that she would be accommodated upon her return to work, were directly influenced by Mr. McNiven's Representation.

  1. BC Supreme Court

Telus applied to dismiss Ms. Stene's action for want of jurisdiction on the ground that Ms. Stene's negligent misrepresentation claim involved Telus's accommodation responsibilities pursuant to the Collective Agreement and thus should be heard before a labour arbitrator. The BC Supreme Court, in deciding whether it could entertain Ms. Stene's claim, set out section 57(1) of the Canada Labour Code, R.S.C., 1985, c. L-2:

57 (1)   Every collective agreement shall contain a provision for final settlement without stoppage of work, by arbitration or otherwise, of all differences between the parties to or employees bound by the collective agreement, concerning its interpretation, application, administration or alleged contravention.

The BC Supreme Court disagreed with Telus's argument, finding that her claim fell outside the scope of section 57(1) for two reasons:

  • The Representation was unrelated to Telus's dealings with Ms. Stene regarding her hours of work, pay or accommodation, and was irrelevant to how Telus addressed her claims for accommodation or her application for short-term disability or benefits; and
  • It was unlikely that a labour arbitrator could award Ms. Stene compensation because her alleged loss occurred outside of her employment with Telus.

The BC Supreme Court concluded that Ms. Stene's tort action could proceed in the BC courts.

  1. BC Court of Appeal

On appeal, the BC Court of Appeal agreed with Telus, noting that the Collective Agreement expressly governed hours or work, arrangements to work from home, regular full‑time and regular part‑time employment status, and wages and benefits. The BC Court of Appeal went on to characterize the parties' dispute as concerning the truth or falsity of the Representation regarding Telus's obligation to accommodate Ms. Stene's disability in the workplace under the Collective Agreement. In other words, the Representation was associated with the employment relationship and therefore arose "inferentially or implicitly from the interpretation, application, administration or violation of the collective agreement". On this basis, the BC Court of Appeal dismissed Ms. Stene's claim in favour of a labour arbitrator, in accordance with the Collective Agreement.


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