août 21. 2019

You don't have to tell your employer everything: McKinley v B.C. Tel

McKinley v. BC Tel, 2001 SCC 38, [2001] 2 SCR 161

In Bhasin v Hrynew, [2014] 3 SCR 494, the supreme court of Canada imposed a duty of honest performance in contract. Bhasin has been considered or applied over 500 times. The supreme court of Canada is about to deal with Bhasin again, following the Ontario Court of Appeal reversal of a trial division application of Bhasin in an extremely similar fact situation.

The theoretical problem with Bhasin is the SCC assertion that there was a missing principle in contract law that required finding and fixing. Somehow ‘honesty’ was only being applied here and there rather than everywhere. Have no worries the SCC will patch things up and simply extend the duty of honest performance across contract. No problem.

Contract could better be understood to have evolved upon the premise that general application of the ‘duty of honest performance’ has already been repeatedly attempted and reversed because such a general duty conflicts with so many well established contract principles from the duty of confidentiality (don’t be ‘honest’ with a contracting partner) to the termination clause that until now explicitly limited the extent of liability. Those are substantive principles- in conflict with ‘honesty’ as Cromwell articulated it.

Words like ‘honesty’ when used in a court room are fraught with an ambiguity that the supreme court does a disservice not to recognize and avoid. The court specifically did not properly articulate the nuances of ‘honesty’.

In McKinley v BC Tel, [2001] 2 SCR 161, a very senior executive failed to disclose personal medical facts which affected his ability to work. Precedent from the supreme court of Canada said that ‘honesty’ was one of those things that contracts could not do without. As such the ‘dishonest’ employee could be fired as a matter of law. (Sounds like a Bhasin-type ‘pronouncement’).

Iacobucci meticulously went through the ‘honesty’ precedents, acknowledging the two lines of thought: honest as a firing offence because it was so crucial to contract and honesty as a question of fact: how much dishonesty and how serious?

Iacobucci determined that the employee could intentionally fail to disclose material facts and keep his job, reversing SCC precedent that held 'honesty' out as a higher principle deserving of respect. Iacobucci too was 'renovating' the law when he decided McKinley in 2001.

Now fourteen years later and the SCC is renovating 'honesty' again, this time pointing back to the need for a stricter application of 'honesty'.

It all sounds vaguely reminiscent of Kenyon deciding to extend 'honesty' in Mellish v Motteux, then Ellenborough reversing him years later, then the high court revising Ellenborough to come to our present law of latent defects in sale of property.

I trust that it is clear that the SCC flexible view of 'honesty' unintentionally proves the point that ratios survive while every attempt at the enunciation of 'principle', amounts to so much obiter to be reversed implicitly or explicitly within 14 years.

Dan Todd Commenté
The problem with decisions that assert a "fundamental" anything within the context of what were traditionally master-servant relationships is that there is a gross imbalance of power in many cases, where the Employer is free to lie with practically no consequence, while the consequences to the employee are 'fundamentally' possibly tragic. The courts speak of "employment relationships," borrowing from language of family and friendships, to describe an system that is rarely one of genuine honesty - and where it is, it is rarely abused. Consider, for example, the case of Daryl Katz, owner of the Edmonton Oilers, and operator of Rogers Arena. He comes to the City Council and gets public funding to build a $600 million arena in order to play a bloody game. That wasn't the initial amount, of course, but that ended up being the bill. Taxpayers of the city put up the money, he put up some $30 million, and in return, what do the taxpayers get? Well, for one, he got a non-compete clause that enabled him to put Northlands out of business - many people lost their jobs, and a not-for-profit publicly owned organization was no more. Then, all the concerts switched from Northlands Colosseum to Rogers Arena. Of course, this also enabled them to get rid of the union and so, today, when you pay for $15 beers, you may think - "Oh well, nice building, not easy to pay for it," you will be mistaken to think that the reason why the beer costs so much is to pay off the building. Uh-uh, my friend, Katz gets all the profit from the food and beverage, and all the ticket sales and parking and all the rest, and the public paid for 90% of the building, assumed all the risk, lots of people lost work and still, all the profits go into private pockets, meanwhile, the workers who work at the Arena are guaranteed no hours, schedules are changed last minute, and again, tips fund their food and rent - they are required to come to "Mandatory Meetings" which, if they don't attend, result in their termination, and in turn, they are given minimum wage, and promised and owed nothing, since they're all casual employees, and therefore get no pension, no benefits, no job security, just a giant middle finger, at the expense of the public. Now, you tell me, what level of honesty should Mr. Katz expect from his employees, which he also returns to them? Who faces greater consequences, and what sort of precedent does it set? The practical outcome has been to accuse an employee of misconduct, bring them in for an investigation, and even when HR can't prove the misconduct, they simply assert dishonesty that the employee didn't admit to something the employee says he didn't do. Then at court, or through the grievance procedure in case of unionized workplaces, the Employer asserts they never terminated on the basis of the initial misconduct, no siree, they terminated for "dishonesty" and "evasiveness" in the investigation meetings.
Edward Conway Commenté
Dan: You are totally right about the power imbalance in employer-employee relationships. There is nothing wrong with the court ignoring a termination clause in employer -employee relationships on the traditional rules of master-servant. That is one of the special cases where we all know the court ignores the contract and determines the case on equity principles. The real problem with the SCC approach to 'honesty' is that they repeatedly attempt to generalize a principle, thinking that generality is superior to the thousand and one rules of common law.