WRONGFUL DISMISSALDEVEL.OPMENTSPart II

NeilR.Mcl..eqdWoloshjnf,fattlson

200~111-2ndAve.$.

Saskatoon,Sask.$ll< 11<6Ph:244-2242Fax:652~0332

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Neil received a B.A. (Hon.) fromtheUniversity~f Saskatchewan in 1970 and hj~ LL.B. in 1981; . HeW.a,Sadmitted to the bar in 1982~Neil's areas of practice include Labour Law, Administrative Law and Civil

. Litigation..... He has appeared frequently before' the Saskatchewan Labour Relations' Board,ai'bitration .boards>andother administrative tribunals. Neil has also lectured extensively in administrative arid labourlaw.. he is Past-President of Public Legal Education Association of Sas~tchewail andPast~Presidentofthe Canadian Bar Association Labour/Administrative Law Section (Saskatchewan). Neil practices with,Woloshyn Mattison in S~skatoon~ . . . . . , . .

TABLE OF CONTENTS

I. WRONGFUL DISMISSAL AND THE UNIONIZEDEMPLOYEE •••••.••••••• .•••••••••••..••••••••.•••

Page No.

1

A. WEBER V. .=:O~NT-==A=R=I.=:O_-=Hc=.Y=D=R=O 95 C. L . L . C.210-027 (S.C.C.) 2

(s.c.c.) 5

C. ZAKERSON V. JUBILEE RESIDENCES INC.(1987), 52 S.R. 198 (QB) •••••••••••••••••••••• 6

II. STATUTORY NOTICE PROVISIONS . 7

A. MACHTINGER V. H.O.J. INDUSTRIES LTD.

1 . S'UIIlDlary. . • • • • • • • • . • • . . • • • . • • • . • • • • • . • • . . • • 72. Facts 83 • I s sue 84. Analysis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

B. RASANEN V. ROSEMOUNT INSTRUMENTS LTD.(1994), 1 C.C.E.L (2d) 16 •••...••...••••••...• 12

III. NEGLIGENT MISREPRESENTATIONS IN HIRING......... 14

A. QUEENS.C.R.

V. COGNOS INCORPORATED [1993] 114

1 . S'UIIlDlary. • • • • • . • . . . • • • . . . • • • • . • • • • . . . . • . • . • 142. Facts 153 . I s sues 1 74. Analysis.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

a) Duty of Care 19b} Breach of the Duty of Care •..•••..••.. 19c} Effect of Employment Agreement ••..••.. 21d) Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

WRONGFUL DISMISSAL DEVELOPMENTSPART II

I. WRONGFUL DISMISSAL AND THE UNIONIZED ENPLOYEE

Where there is a collective agreement, with a grievance

arbitration procedure available to an employee, there now seems

very little question that the right of a discharged employee to

sue for wrongful dismissal is nonexistent. Simply framing an

action in tort will not have the effect of preserving the right

of action in the civil courts.

Deference to the pursuit of remedies through an arbitration (or

) statutory tribunal) scheme was affirmed in the recent

Saskatchewan Court of Appeal case of Moldowan v. Saskatchewan

Government Employees Union, et al (July 21, 1995). Although this

was a case involving the denial of a promotion not termination,

and involved an allegation of and negligence in the nature of a

breach of the duty of fair representation by the union, it does

constitute a clear statement by this court that it will defer to

alternative regimes for the resolution of disputes within the

collective bargaining relationship.

Moldowan sued her union and the union representative for

negligent representation, negligence at common law, and a breach

of s. 25.1 of The Trade Union Act. At the Court of Queen's Bench

the union sought a declaration that the dispute was within the

- 2 -

exclusive jurisdiction of the Labour Relations Board. The lower

court was influenced in its conclusion by the argument that the

Labour Relations Board did not have the power to award damages in

the circumstances, and therefore it was appropriate that there be

a right of civil action. Further.more, the Learned Chambers Judge

accepted the view, for which there was some Ontario case

authority, that there remained a residual jurisdiction in the

Court to deal with the simple negligence of unions which had not

been entirely assumed by statutory provisions.

The Court of Appeal analyzes at some length the duty of fair

representation and the development of that principle as part of

labour relations statutes, as recognized by the Supreme Court of

Canada. In the end the Court decided that the case did not

represent one where jurisdiction should be shared. Jackson J.A.

states, at 15:

In my opinion, in the circumstances where TheTrade Union Act applies, having regard for St.Anne, the nature of the regime established to dealwith complaints of this nature, the remediesprovided, the ability of the Board to enforce itsorders and the privative clause, the legislatureintended the Board to have exclusive jurisdictionto hear and deter.mine claims based on breaches ofthe statutory duty.

A. WEBER V. ONTARIO HYDRO 95 C.L.L.C. 210-027 (S.C.C.)

This decision of our highest Court, rendered on June 19, 1995,

- 3 -

endorses the principle of the exclusive jurisdiction of labour

tribunals and arbitrators. The majority determined that the

jurisdiction of superior courts over tort claims of an employee

have been ousted by binding arbitration. It should be noted that

binding arbitration to deal with collective agreement disputes

is now mandated in Saskatchewan legislation. Furthermore, most

collective agreements contain provisions whereby the parties

agree that disputes will be resolved through arbitration and the

decision of the arbitrator shall be final and binding on the

parties.

In Weber the employee plaintiff took an extended leave of absence

as a result of back problems. It was suspected that he was

malingering and so his employer, Ontario Hydro, hired an

investigator. The investigator gained access to Weber's home by

pretending to be someone else. Weber and his family felt that

they had suffered damages for mental anguish arising out of the

entry and intrusive surveillance. The union agreed and took the

matter to arbitration, in the course of which the case was

settled. The employee then commenced a court action in tort

claiming damages for trespass, nuisance, deceit and invasion of

privacy. He also claimed that his rights under s. 7 and 8 of the

Canadian Charter of Rights and Freedoms had been violated.

Through the Ontario courts the tort claims were dismissed but the

Charter complaint was allowed to stand. Weber further appealed

- 4 -

to the Supreme Court of Canada arguing that his tort action

should be restored. Ontario Hydro in turn appealed the decision

of the Ontario Court of Appeal to leave intact the allegations of

a Charter violation.

The Supreme Court split on the question of the status of the

Charter claims. The majority concluded that the language in the

collective agreement was capable of an application to the Charter

violations as alleged. Further.more, the they deter.mined that the

arbitrator could grant the Charter remedies sought. In a dissent

written by Iacobucci J., the minority took issue with the power

of a tribunal to grant remedies pursuant to the Charter. It was

the view of this minority that the arbitrator is not a court of

IIcompetent jurisdiction ll and would not have the necessary

remedial range.

While the question of whether there is a requisite and residual

jurisdiction in the courts to deal with Charter matters in the

context of collective bargaining may be open to argue another

day, the Supreme Court was clear that the arbitrator had

exclusive jurisdiction over all aspects of the dispute in ter.ms

of the. alleged tortious conduct. It should be noted that the

court stated that the jurisdiction of the superior courts may

survive in the situation where the required remedy is outside the

powers of the arbitrator. After a reading of the facts of this

case it is difficult to identify a situation where this exception

- 5 -

might be open.

It also seems that the court IIsaw through II an attempt here to get

around the exclusive jurisdiction of the arbitration board

through the characterization of conduct as tortious. The issue

is not the application of our traditional concepts of tort, the

issue is whether the dispute is one that is capable by resolution

by an arbitrator exercising the broad mandatory powers incumbent

within that role.

B. O'LEARY V. THE QUEEN 95 C.L.L.C. 210-028 (S.C.C.)

In a companion case before the Supreme Court an employer had

commenced an action against an employee. 0' Leary worked for

the New Brunswick government and was alleged to have driven a

leased vehicle with a flat tire resulting in a cost for

significant repairs. O'Leary sought to strike the claim arguing

that exclusive jurisdiction lay in the collective agreement

remedies, which were governed by the arbitration provisions of

the Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25.

Interestingly, the New Brunswick Court of Appeal decided that the

action could be maintained as being outside of the collective

bargaining relationship. However, the Supreme Court of Canada

disagreed following its reasoning in the Weber case. As stated

by McLachlin J., at 141,244:

- 6 -

The Province's principle argument is that thecollective agreement does not expressly deal withemployee negligence to employer property and itsconsequences. However, as noted in Weber, adispute will be held to arise out of thecollective agreement if it falls under theagreement either expressly or inferentially. Herethe agreement does not expressly refer to employeenegligence in the course of work. However, suchn~gligence impliedly falls under the collectiveagreement. Again, it must be underscored that itis the essential character of the differencebetween the parties, not the legal framework inwhich the dispute is cast, which will bedeterminative of the appropriate forum forsettlement of the issue.

C. ZAKERSON v. JUBILEE RESIDENCES INC. (1987), 52 S.R. 198 (QB)

The Plaintiff, Zakerson, after having been on Workers

Compensation benefits had her employment terminated. She brought

an action against her employer for wrongful dismissal. There was

a collective agreement which covered the terms and conditions of

employment of the Plaintiff. The Plaintiff argued that the

language referring to grievance/arbitration in the collective

agreement, and in The Trade Union Act of that time, was

permissive only, allowing the employee to pursue an alternative

remedy through grievance/arbitration. It was argued that the

employee has a choice and that civil action was not ousted.

Barclay J. ruled that the grievance procedures in the collective

bargaining agreement were the exclusive recourse of the employee

- 7 -

and accordingly found there was no valid cause of action. He was

persuaded by the proposition that where the parties have agreed

to an arbitration process then it must be utilized, and in effect

becomes exclusive. The arguments raised in this case in 1987 may

only be of historical interest now because with the amendment to

s. 25(1) of The Trade Union Act there is mandatory arbitration in

Saskatchewan. The arguments that were made by Zakerson were

largely predicated on the "hole" in Saskatchewan labour

legislation wherein strikes and lock-outs during the term of the

collective agreement were prohibited but arbitration was only

permissive. Nonetheless, despi te the significance of the

amendment the case represents a clear statement with respect to

the fundamental principle here that a complainant employee,

whether it be a matter of tort or wrongful dismissal, or even

some other instance of breach of contract, has no traditional

cause of action in the superior courts.

II. STATUTORY NOTICE PROVISIONS

A. MACBTINGER v. B.O.J. INDUSTRIES LTD. [1992] 1 S.C.R. 986

1. Summary

An employee dismissed without cause must be given reasonable

notice of termination when his or her emploYment contract has

- 8 -

failed to comply with the minimum notice periods of the

Employment Standards Act in Ontario.

While unanimous in the result, judgments were delivered by

Iacobucci and McLachlin, J.J. The comments following are from the

judgment delivered by Iacobucci, J., concurred with by La Forest,

L' Heureux-Dube, Sopinka, Gonthier and Cory, J.J.

2. Facts

The two Appellants worked as managers for a car dealership for

over seven years, and at the time of commencing employment,

signed a contract of hiring for an indefini te period. The

contract contained clauses that allowed for termination. In one

employee's case, it was zero weeks notice, and in the other

employee's case, it was two weeks notice. The Employment

Standards Act, R.S.O. 1980 c.137, prescribes minimum notice

periods for both these employees, based on their length of

service, as four weeks. Upon dismissal, the employer paid to each

of these employees four weeks salary in lieu of notice.

3. Issue

The issue on appeal was stated at page 996:

"If an emploYment contract stipulates a period ofnotice less than that required by the Employment

"

'i- 9 -

Standards Act, R.S.O., 1980, c. 137, is anemployee who is dismissed without cause entitledto reasonable notice of termination, or to theminimum period of notice required by the Act?"

4. Analysis

The Court stated that contracts of an indefinite period require

the employer to give reasonable notice of a termination when the

dismissal is without just cause and if there is no express

contractual language to the contrary {Carter v. Bell and Sons

(Canada) Ltd. , [1936] O.R. 290 (C.A.». The Court stated that

this common law principle of reasonable notice is a presumption

which may only be rebutted if the contract specifies some other

period of notice. At page 999, the Court adopts the factors

outlined in the Bardal case, supra to determine what would

constitute reasonable notice: the character of the employment;

the length of service of the servant; the age of the servant; and

the availability of similar employment, having regard to the

experience, training and qualifications of the servant (Bardal,

supra, at page 145).

Having determined that the reasonable notice period may be

changed by express contractual language, it is also necessary to

understand how the notice periods in the Act affect the

reasonable notice period at common law. The Court stated that

Sections 4 and 6 of the Act lido not operate displace the

presumption at common law of reasonable notice" (at page 999).

- 10 -

The common law of reasonable notice is a civil remedy still

available to the plaintiff and the presumption of reasonable

notice is a "benefit" which could be considered greater than the

employment standards required by the Act.

The Court observed that the contracts in this case attempt to

contract out the minimum notice period and thus they are null and

void pursuant to Section 3 of the Act. The Court concluded that

these clauses can then not be used to determine the party's

intention and rebut the presumption at common law of a reasonable

period of notice. It is stated at page 1001:

"In this case weare not faced with an entirelyvoid contract, but a contract of which one clauseis null and void by operation of statute. I wouldnontheless apply the reasoning of Kerr, L. J.[Rover International Ltd. v. Canam Film Sales Ltd., [1989] 1 W.L.R. 912]: If a term is null and voidthen it is null and void for all purposes, andcannot be used as evidence of the parties'intention. If the intention of the parties is tomake an unlawful contract, no lawful contractualterm can be derived from their intention".

Once the clauses were declared null and void, there was no

evidence that could rebut the presumption at common law of

reasonable notice and therefore the parties are entitled to that

period of reasonable notice.

The Court also considered several policy considerations at pages

1002 to 1005. In coming to the conclusion that it did, it stated

- 11 -

at page 1003 - 1004:

"Accordingly, an interpretation of the Act whichencourages employers to comply wi th the minimumrequirements of the Act, and so extends itsprotections to as many employees as possible, isto be favored over one that does not. In thisregard, the fact that many individual employeesmay be unaware of their statutory and common lawrights in the employment context, is offundamental importance ..••

If the only sanction which employers potentiallyface for failure to comply with the minimum noticeperiods prescribed by the Act , is an order thatthey minimumly comply with the Act, employers willhave little incentive to make contracts with theiremployees that comply with the Act ....

In my view, an approach more consistent with theobjects of the Act is that, if an employmentcontract fails to comply with the minimumstatutory notice provisions of the Act, then thepresumption of reasonable notice will not havebeen rebutted. Employers will have incentive tocomply with the Act to avoid potentially longernotice periods required by the common law, and inconsequence more employees are more likely toreceive the benefit of the minimum noticerequirement. Such an approach is also moreconsistent with the legislative intentionexpressed by s.6 of the Act, which expresslypreserves the civil remedies otherwise availableto an employee against his or her employer."

The Labour Standards Act , R.S.S. 1978 c. L-1, as amended,

contains provisions similar to that under consideration in this

case:

45 Nothing in s. 43 or 43.1 affects anyprovision in a contract of service, or anyrecognized custom, by virtue of which an employeeis entitled to a longer notice of termination ofemployment or layoff or to more favourable

- 12 -

compensation in resepct of the period of any suchnotice than is provided for by that section.

72(1) Each requirement imposed by this Act is aminimum requirement only, and· every employee isentitled to the benefit of each requirement,regardless of any other term and condition of theemployee's emploYment that may exceed a minimumrequirement imposed by this Act.

(2) A right, benefit, term or condition ofemployment pursuant to a custom or contract,whether oral or written, express or implied, orpursuant to any other Act or regulations maypursuant to any other Act that provides anemployee with higher wages or a greater right orbenefit or requires fewer hours of work to beentitled to a right or benefit, than is requiredby this Act or the regulations shall prevail overthe provision of this Act or the regulations thatimposes the lesser requirement.

73 Except as may be otherwise permitted bythis Act and subject to s. 68, nothing in this Actcurtails, abridges or defeats any civil or otherremedy for the recovery of wages by an employeefrom his employer.

75(1) No agreement, whether heretofore orhereafter entered into, has any force or effect ifit deprives any employee of any right, power,privilege or other benefit provided by this Act.

(2)· This Act applies to agreements made in orout of Saskatchewan with respect to service orlabour performed in Saskatchewan.

B. RASANEN V. ROSEMOUNT INSTRUMENTS LTD. (1994), 1 C.C.E.L (2D) 16

The job of the plaintiff employee became redundant and he was

offered two alternatives. When he did not accept either one the

employer deemed him to have resigned. In response Rasanen made a

claim under the Ontario Employment Standards Act for termination

pay, and he also commenced a civil action for wrongful dismissal

- 13 -

claiming constructive dismissal.

The Referee under the Employment Standards Act found in favour of

the employer and thereby refused the employee's claim for

termination pay. Later when the case got to trial the judge

determined that the doctrine of issue estoppel applied and

dismissed the action.

The three members of the Ontario Court of Appeal were all of the

same mind in terms of dismissing the appeal, but for different

reasons. Two judges upheld the application of the principle of

issue estoppel. They concluded that the questions before the

Referee were the same as those to be brought before civil court,

and had already been answered. Abell J. stated, at 174:

As along as the hearing process in the tribunalprovides parties with an opportunity to know andmeet the case against them, and so long as thedecision is wi thin the tribunal's jurisdiction,then regardless of how closely the process mirrorsa trial or its procedural antecedants, I can seeno principled basis for exempting issuesadjudicated by tribunals for the operation ofissue estoppel in a subsequent action ..•

In the contrary, the policy objectives underlyingissue estoppel, such as avoiding duplicativelitigation inconsistent results, undue costs, andinconclusive proceedings are enhanced inappropriate circumstances by acknowledging asbinding the integrity of tribunal decisions.

Judge Carthy disagreed with the majority on the question of the

- 14 -

application of issue estoppel. Carthy J. emphasized the

importance of common law rights and distinguished the full

hearing on all issues that might be available in the court from

the purpose of this tribunal - to provide limited relief pursuant

to the minimum standards of this type of emploYment legislation.

On the other hand Judge Carthy agreed with the trial judge that

there had been no constructive dismissal and would dismiss the

)

appeal on that basis.

Canada was denied.

Leave to appeal to the Supreme Court of

This case seems to represent a rather harsh instance of the

for e c los u reo f c 0 mm 0 n I a w righ t s . Ce r t a i n I y i tis

distinguishable from the situation where there is a broad

statutory or consensual arbitration scheme which has been

negotiated between the parties to afford a full determination on

all matters in dispute arising out of the employment

relationship.

III.

A.

1.

NEGLIGENT MISREPRESENTATIONS IN HIRING

QUEEN v. COGNOS INCORPORATED [1993] 1 S.C.R. 87

Summary

"In negotitating a contract of emploYment, a prospective employer

is bound by the same standard of care which applies to the making

)- 15 -

of contracts generally, ie. the objective standard required of a

resonable person. When it is clear that the employer's

representative has, in procuring the agreement by the employee,

negligently misrepresented facts respecting the nature, duties

and duration of the position under consideration, and the

employee acts upon such misrepresentations in accepting the

position to his/her detriment, it follows that the employee is

entitled to damages for wrongful dismissal when the employer

seeks to terminate the employee's services in accord with the

provisions of the emploYment contract thus improperly procured. II

([1993] S.C.C. D. 1293-01, Quicklaw at p. 1 - 2)

All Judges of the Supreme Court of Canada were unanimous in the

result. The following comments relate to the judgment of Sopinka

and Iacobucci, JJ., delivered by Iacobucci, J.

2. Facts

The Respondent, Cognos Incorporated, is a company carrying on

business in Ottawa, dealing primarily with the development and

marketing of computer programs. The Appellant is a chartered

accountant who had been living in Calgary with his wife and

children and was employed as an accountant for

approximately eight and one-half years. At the time of

interviewing with the Respondent company, he had a secure

managerial position and was quite well paid. He was seeking

- 16 -

employment outside Calgary, and was interested in the high-tech

industry and a more challenging position. Mr. Johnston, a manager

of the Respondent company who was in charge of developing a

product line for accounting software known as "Multiview",

received instructions to develop further modules for Multiview.

He presented his plan to develop these modules to other senior

executives and indicated that an accountant would be required to

assist in writing and maintaining the software. Eventually Mr.

Johnston interviewed six applicants, one of whom was the

Appellant.

At the interview, which lasted approximately one and one-half

hours, Mr. Johnston made a number of representations to the

Appellant about the Multiview project and about the successful

candidate's role in its development. The representations

included statements to the effect that it was a major project

which would be developed over two years with enhancements and

maintenance following that time period and that the person being

interviewed would be needed throughout that time. It was

understood that the company was committed to the development of

additional modules and that the successful candidate would play

an important role on the Multiview project advising on accounting

standards. The trial judge found that this implicitly meant that

there was a reasonable plan in existence for additional modules

and that the company had made a financial committment for the

development of these modules. At the time of the interview,

)

- 17 -

there ~s evidence that Mr. Johnston was aware that he still

needed funding for the project as it had not yet been completely

approved.

Upon being offered the job in March, 1983, the Appellant accepted

immediately and signed a written contract of employment. The

written contract of employment contained two important clauses:

one clause which permitted the Respondent to terminate the

Appellant's employment without cause upon one month's notice or

pay in lieu of notice, and another clause allowing the

Respondent to reassign the Appellant to another position within

the company upon one month's notice.

Two weeks after the Appellant commenced employment, Mr.

Johnston's funding proposal for the development of further

modules for Multiview was rejected. Approximately six months

later, the Appellant received a first written notice of

termination, which notice was eventually rescinded and the

Appellant was assigned a different position within the company,

however, on July 31, 1984, he received a second written notice of

his termination effective October 25, 1984.

3. Issues

Did the company or Mr.

Appellant during the

Johnston owe a duty of care to the

hiring interview with respect to

- 18 -

representations made about the company and the "nature and

existence of the emploYment opportunity being offered"?

If a duty of cared was owed, did the Company or Mr. Johnston

breach that duty?

If there was a breach of the duty of care, was the liability

of the Company changed because the Appellant signed an emploYment

contract after the negligent misrepresentations occurred, which

contract included a termination provision as well as a

re-assignment provision?

4. Analysis

This case involves the application of the doctrine first

recognized by the House of Lords in the Hedley Byrne case,

supra. The five general requirements for such a successful

claim, set out at p. 110 of this judgment, are as follows:

(i) there must be a duty of care based on arelationship" between the representorrepresentee;

II specialand the

(ii) the representation in question must be untrue,inaccurate or misleading;

(iii) the representor must have acted negligently inmaking the said misrepresentation;

(iv) the representee must have relied, in a reasonablemanner, on said negligent misrepresentation;

(v) the reliance must have been detrimental to the

- 19 -

representee in the sense that damages resulted.

The Supreme Court of Canada concluded that the second, fourth and

fifth requirements were not in issue before this Court and the

only issues were with respect to the duty of care owed to the

Appellant in these circumstances and the alleged breach of this

duty. While conceding-that a special relationship existed giving

rise to a duty of care, the Respondent argued that the duty is

negated by a disclaimer in the employment contract. The

Respondent also suggested that the misrepresentations made during

the hiring interview were not made in a negligent manner.

a) Duty of Care

As stated at p. 116, lithe Respondent and Mr. Johnston were

under an obligation to exercise due diligence throughout

the hiring interview with respect to the representations

made to the Appellant about Cognos and the nature and

existence of the emploYment opportunity."

b) Breach of the Duty of Care

In order to determine whether the misrepresentations of

Mr. Johnston during the interview were negligently made,

one must determine the nature and extent of the duty of

care, also referred to as the "standard of care". In

- 20 -

deter.mining that the standard of care is more than one of

truthfulness or honesty, the Court notes that it is an

objective standard and described it at p. 121 as follows:

"It is a duty to exercise such reasonablecare as the circumstances require to ensurethat representations made are accurate andnot misleading."

The Supreme Court of Canada agreed with the trial judge's

view that in the circumstances, Mr. Johnston breached the

duty to exercise reasonable care by not providing highly

relevant information to the Appellant about the

uncertainty of the company's financial committment to the

project or the "nature and existence of the employment

opportunity" (at p. 122 - 123). The findings of fact

concerning Mr. Johnston's expertise and the surrounding

circumstances, referred to earlier, were also important in

reaching this conclusion.

It should also be noted that the Court rejected the

Respondent's position that these representations were not

actionable because they were inferences or implications

relating to a future expectation. The Court concluded

that the representations did not relate to a future event

but related to the very existence of the job which had

been applied for. As well, the Court held that in

appropriate circumstances, an implied misrepresentation

- 21 -

can give rise to an action in negligence.

c) Effect of Employment Agreement

The Court stated that it is clear that there may be an

action in tort for negligent misrepresentation even though

the parties also have a contractual relationship. It also

does not matter that the representations may have been

made during pre-contractual negotiations. However, the

contract that is entered into may assist in determining

whether the claim for negligent misrepresentation will

succeed or to what extent it will succeed. The following

are three potential effects that a contract can have on

the action in tort:

(i) The contract can negate the action in tort leavingthe plaintiff with remedies only under contract;

(ii) The liability of the defendant may be limited orexcluded as a result of the term in the subsequentcontract that diminishes or extinguishes theplaintiff's tort remedy;

(iii) The contract may have no effect on the plaintiff'sclaim in tort.

A plaintiff cannot bring an action in tort for negligent

misrepresentation if a pre-contractual representation has

become an express term of the contract. It is said that

the actions are then concurrent and only the contractual

remedies are available. The question to be answered is

- 22 -

whether there is an express contractual obligation

co-extensive with the duty of care. In the case under

consideration, the Court held that there was no such

concurrency. The clauses regarding termination and

reassignment are different contractual duties than the

duty of care the Appellant alleges. Mr. Johnston did not

negligently misrepresent the length of time or the

conditions under which the Appellant's emploYment could be

terminated (the IIsecurity of emploYment ll) but, as stated

at p. 114, II rather, the Appellant argued that Mr. Johnston

negligently misrepresented the nature and existence of the

emploYment opportunity being offered ll•

This case does not fall within the second category of the

liability being limited or excluded by the clauses in the

contract. At p. 138 the Court states as follows:

II Clauses 13 and 14 of the emploYment agreementare far from being statements, express or implied,that the Respondent and its representative are notassuming responsibility for the representations madeto the Appellant during the hiring interview aboutthe nature and existence of the Multiview project .

... Something more than Clauses 13 and 14 isdefinitely required. These provisions relate to theright and obligations of the parties in the event ofthe appellant's termination or transfer. They havenothing to do with representations made during pre­or postcontractual negotiations, let alonedisclaimers for said representations. 1I

/

.,)

)

- 23 -

The Court also commented that there was no inconsistency

between the contract and the representations as those

representations were not warranties of job security but

were representations that a "particular job would exist

and it would have certain features" (at p. 138 - 139).

The Court concluded that the employment agreement in these

circumstances was irrelevant to the action for negligent

misrepresentation, falling in the third category described

above. The duty of care is independent of the contract.

d) Conclusion

The Court concluded at pages 140 - 141 that the Respondent

Mr. Johnston owed a duty of care to the appellant at

the interview to "exercise such reasonable care as the

circumstances required to ensure that the representations

made were accurate and not misleading. II The implied and

express representations made were negligent and the

appellant had relied on them to his detriment, thus

causing him damages. In this case, the contract made

subsequent to the pre-contractual representations is

irrelevant to this claim in that the clauses referred to

were not valid disclaimers of the Respondent's liability

for representations made.

- 24 -

The case of B.G. Checo International Ltd. v. British

Columbia Hydro and Power Authority, S.C.C., Nos. 21939 and

21955, January 21, 1993, is discussed at length in this

case. That case also dealt with a claim based on

negligent misrepresentations made during pre-contractual

negotiations. The Court distinguished that case on the

basis that there, the pre-contractual misrepresentations

were incorporated verbatim as terms in the contract

subsequently signed. Therefore, the duty of care and the

tort action were co-extensive with the duties in contract

and the plaintiff was barred from bringing concurrent

actions in tort and contract. The plaintiff should have

proceeded only in contract.

)