McKinley v. BC Tel (2001), 271 N.R. 16 (SCC)

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[French language version follows English language version]

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Temp. Cite: [2001] N.R. TBEd. JN.043

Martin Richard McKinley (appellant) v. BC Tel, British Columbia Telephone Company, BC Telecom Inc., BC Tel Services Inc., BC Tel Systems Support Inc., BC Mobile Ltd., BC Tel Properties Inc., Canadian Telephones and Supplies Ltd. and TSI Telecommunications Services International Inc. (respondents)

(27410; 2001 SCC 38)

Indexed As: McKinley v. BC Tel et al.

Supreme Court of Canada

McLachlin, C.J.C., L’Heureux-Dubé, Iacobucci, Major, Bastarache, Binnie and Arbour, JJ.

June 28, 2001.


After 17 years’ employment, the plaintiff was summarily dismissed for alleged dis­honesty respecting the status of his medical condition (high blood pressure), for which he was on a leave of absence. The plaintiff sued for damages for wrongful dismissal.

The British Columbia Supreme Court, in a jury trial, allowed the action. The jury found wrongful dismissal and awarded, inter alia, $108,793 general damages (22 months’ notice plus four months’extended notice for bad faith) and $100,000 aggravated damages. The defendant employer appealed. The plaintiff cross-appealed the refusal to award punitive damages.

The British Columbia Court of Appeal, in a judgment reported 123 B.C.A.C. 295; 201 W.A.C. 295, allowed the appeal and ordered a new trial. The court held that any act of dishonesty, as a matter of law, always con­stituted cause for dismissal. The trial judge erred in in­structing the jury that dis­honesty merited dismissal only if it was of such a degree as to be incompatible with the em­ployment relation­ship. The court dis­missed the cross-appeal. The plaintiff appealed.

The Supreme Court of Canada allowed the appeal. Dishonesty per se, without consider­ation of context, did not constitute cause for dismissal as a matter of law. The court restored the jury verdict of wro­ngful dis­missal and the damages awarded, with the exception of setting aside the award for aggravated damages.

Damages – Topic 906

Aggravation – General – Aggravated damages v. exemplary damages – The Supreme Court of Canada stated that “these two heads of damages are distin­guishable by their different purposes. While aggravated damages aim to com­pensate for intangible injury, punitive damages are penal and exemplary in nature, and may be awarded only where the conduct giving rise to the complaint is found to merit punishment” – See para­graph 85.

Damages – Topic 911

Aggravation – In contract – Aggravated damages – Wrongful dismissal – A jury awarded a wrongfully dismissed employee $100,000 aggravated damages in addition to 22 months’ notice plus an additional four months’ notice for the employer’s bad faith – The Supreme Court of Canada set aside the award – The purpose of aggra­vated damages was to compensate an employee for intangible injuries where the employer’s conduct was “independently actionable”, constituted a wrong separate from the breach of contract for failure to give reasonable notice and arose from the dismissal itself – There was insufficient evidence of a separately actionable wrong to leave the issue with the jury – There was no evidence of any intention to delib­erately inflict mental distress or act in a discriminatory manner – See paragraphs 78 to 84.

Damages – Topic 1326

Exemplary or punitive damages – Wrong­ful dismissal – A trial judge declined to leave the issue of punitive damages with the jury in a wrongful dismissal action – The Supreme Court of Canada affirmed that deci­sion – There was no separately ac­tion­able course of conduct by the employer and the employer’s conduct was not suf­ficiently harsh, vindictive, repre­hensible, malicious or extreme in nature to warrant punishment – See paragraphs 85 to 89.

Master and Servant – Topic 7563

Dismissal of employees – Grounds – Dis­honesty – The Supreme Court of Canada rejected the submission that an employee’s dishonesty, irrespective of degree and surrounding circumstances, always consti­tuted cause for dismissal – The court stated that “whether an employer is justified in dismissing an employee on the grounds of dishonesty is a question that requires an assessment of the context of the alleged misconduct. More specifi­cally, the test is whether the employee’s dishonesty gave rise to a breakdown in the employment re­la­tionship. … just cause for dismissal exists where the dishonesty violates an essential condition of the em­ployment contract, breaches the faith inherent to the work re­lationship, or is fundamentally or directly inconsistent with the employee’s obliga­tions to his or her employer.” – In a jury trial, “a trial judge must instruct the jury to determine: (1) whether the evidence estab­lished the em­ployee’s deceitful con­duct on a balance of probabilities; and (2) if so, whether the nature and degree of the dis­honesty war­rants dismissal” – The sec­ond part of the test was a factual inquiry for the jury – See paragraphs 48 to 49.

Master and Servant – Topic 7712

Dismissal of employees – Damages for wrongful dismissal – Punitive or vindictive damages – [See
Damages – Topic 1326

Master and Servant – Topic 7713

Dismissal of employees – Damages for wrongful dismissal – Aggravated damages -[See
Damages – Topic 911

Master and Servant – Topic 8003

Dismissal without cause – Notice of dis­missal – Reasonable notice – Consider­ations affecting (incl. bad faith) – A jury found that the plaintiff had been wrongful­ly dismissed – The jury fixed the period of reasonable notice at 22 months and extended the notice period a further four months to reflect the employer’s bad faith or unfair dealing in the manner of dis­missal – The Supreme Court of Canada held that the trial judge did not err in leaving the issue of extended notice with the jury, nor was the jury’s decision to award four months’ extended notice un­reasonable or unsupported by the evidence – See paragraphs 70 to 77.

Practice – Topic 5182

Juries and jury trials – Verdicts – Setting aside jury verdict – The appellant sub­mitted that a jury’s verdict should be set aside as being unreasonable and unjust – The Supreme Court of Canada stated that a jury verdict should be set aside only where the evidence “did not permit a jury acting judicially to reach the conclusion that it did” or there was no evidence to support the verdict – An appellate court could not interfere with a jury’s verdict merely because it would have reached a different conclusion on the evidence – See paragraphs 59 to 61.

Cases Noticed:

Wallace v. United Grain Growers Ltd., [1997] 3 S.C.R. 701; 219 N.R. 161; 123 Man.R.(2d) 1; 159 W.A.C. 1, refd to. [para. 17].

McPhillips v. British Columbia Ferry Corp. (1994), 45 B.C.A.C. 311; 72 W.A.C. 311; 94 B.C.L.R.(2d) 1 (C.A.), leave to appeal refused [1995] 1 S.C.R. ix; 185 N.R. 399; 63 B.C.A.C. 159; 104 W.A.C. 159, refd to. [para. 21].

Olmstead v. Vancouver-Fraser Park Dis­trict, [1975] 2 S.C.R. 831; 3 N.R. 326, refd to. [para. 25].

Clouston & Co. v. Corry, [1906] A.C. 122 (P.C.), refd to. [para. 30].

Laws v. London Chronicle Ltd., [1959] 2 All E.R. 285 (C.A.), refd to. [para. 31].

R. v. Arthurs; Ex parte Port Arthur Ship­building Co. (1967), 62 D.L.R.(2d) 342 (Ont. C.A.), refd to. [para. 32].

Blackburn v. Victory Credit Union Ltd. et al. (1998), 165 N.S.R.(2d) 1; 495 A.P.R. 1; 36 C.C.E.L.(2d) 94 (C.A.), refd to. [para. 33].

Jewitt v. Prism Resources Ltd. (1981), 30 B.C.L.R. 43 (C.A.), refd to. [para. 34].

Hill v. Dow Chemical Canada Inc. (1993), 140 A.R. 394; 11 Alta. L.R.(3d) 66 (Q.B.), refd to. [para. 34].

MacNaughton v. Sears Canada Inc. (1997), 186 N.B.R.(2d) 384; 476 A.P.R. 384 (C.A.), refd to. [para. 34].

Dougherty v. Bathurst Golf Association Ltd. (1997), 189 N.B.R.(2d) 230; 482 A.P.R. 230 (C.A.), refd to. [para. 34].

Butler v. Canadian National Railways, [1939] 3 W.W.R. 625 (Sask. C.A.), refd to. [para. 36].

Holloway v. Encor Energy Corp. (1991), 93 Sask.R. 226; 4 W.A.C. 226 (C.A.), refd to. [para. 37].

Epoch v. Beaver Lumber Co. (1997), 45 C.C.E.L.(2d) 135 (Ont. Gen. Div.), refd to. [para. 38].

Thompson v. Boise Cascade Canada Ltd. (1994), 7 C.C.E.L.(2d) 17 (Ont. Gen. Div.), refd to. [para. 38].

Justason v. Cox Radio & T.V. Ltd. (1997), 190 N.B.R.(2d) 228; 484 A.P.R. 228 (T.D.), refd to. [para. 38].

McCluskey v. Lawtons Drug Stores Ltd. (1998), 204 N.B.R.(2d) 137; 520 A.P.R. 137 (T.D.), affd. (1999), 210 N.B.R.(2d) 198; 536 A.P.R. 198 (C.A.), refd to. [para. 38].

Boston Deep Sea Fishing and Ice Co. v. Ansell (1888), 39 Ch. D. 339 (C.A.), refd to. [para. 42].

Federal Supply and Cold Storage Co. of South Africa v. Angehrn & Piel (1911), 80 L.J.P.C. 1 (P.C.), refd to. [para. 43].

Real Canadian Superstore v. United Food and Commercial Workers, Local 1400 et al. (1998), 173 Sask.R. 203 (Q.B.), refd to. [para. 46].

Reade v. Newfoundland Co-Ordinating Council on Deafness (1987), 63 Nfld. & P.E.I.R. 194; 194 A.P.R. 194 (Nfld. T.D.), refd to. [para. 46].

Smith v. Dawson Memorial Hospital and Flood (1978), 29 N.S.R.(2d) 277; 45 A.P.R. 277 (T.D.), refd to. [para. 46].

Evans v. Sobeys Capital Inc. (1995), 135 Nfld. & P.E.I.R. 140; 420 A.P.R. 140; 15 C.C.E.L.(2d) 197 (Nfld. C.A.), refd to. [para. 46].

Lake Ontario Portland Cement Co. v. Groner, [1961] S.C.R. 553, refd to. [para. 51].

Reference Re Public Service Employee Relations Act (Alta.) – see Reference Re Compulsory Arbitration.

Reference Re Compulsory Arbitration, [1987] 1 S.C.R. 313; 74 N.R. 99; 78 A.R. 1, refd to. [para. 53].

Machtinger v. HOJ Industries Ltd. – see Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd.

Lefebvre v. HOJ Industries Ltd.; Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986; 136 N.R. 40; 53 O.A.C. 200, refd to. [para. 53].

McCannell v. McLean, [1937] S.C.R. 341, refd to. [para. 60].

Gray Coach Lines Ltd. v. Payne, [1945] S.C.R. 614, refd to. [para. 60].

Scotland v. Canadian Cartridge Co. (1919), 59 S.C.R. 471, refd to. [para. 60].

Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321, refd to. [para. 78].

Horton v. Niagara (Regional Municipality) (1987), 9 C.H.R.R. D/4611 (Ont.), refd to. [para. 82].

Wamboldt v. Canada (Minister of National Defence) (1983), 4 C.H.R.R. D/1479, refd to. [para. 82].

Public Service Employee Relations Com­mission (B.C.) v. British Columbia Gov­ernment and Service Employees’ Union, [1999] 3 S.C.R. 3; 244 N.R. 145; 127 B.C.A.C. 161; 207 W.A.C. 161, refd to. [para. 89].

Superintendent of Motor Vehicles (B.C.) et al. v. Council of Human Rights (B.C.), [1999] 3 S.C.R. 868; 249 N.R. 45; 131 B.C.A.C. 280; 214 W.A.C. 280, refd to. [para. 89].

Collinson v. Coutts (William E.) Co., [1995] B.C.J. No. 2766 (S.C.), refd to. [para. 89].

Authors and Works Noticed:

Levitt, Howard A., The Law of Dismissal in Canada (2nd Ed. 1992), p. 124 [para. 33].


D. Murray Tevlin, Geoffrey J. Litherland and Jennifer A. Lamont, for the appel­lant/cross-respondent;

Jack Giles, Q.C., and Karen Shirley-Paterson, for the respondents/cross-ap­pellants.

Solicitors of Record:

Tevlin, Gleadle, Vancouver, B.C., for the appellant/cross-respondent;

Farris, Vaughan, Wills & Murphy, Vancouver, B.C., for the respond­ents/ cross-appellants.

This appeal was heard on January 24, 2001, before McLachlin, C.J.C., L’Heureux-Dubé, Iacobucci, Major, Bastarache, Binnie and Arbour, JJ., of the Supreme Court of Canada.

On June 28, 2001, Iacobucci, J., delivered the following judgment in both official languages for the Supreme Court of Canada.


McKinley v. BC Tel et al.

[2001] 2 SCR 161

Supreme Court of Canada
Reading Time:
42 minutes
Arbour, Bastarache, Binnie, Iacobucci, L’Heureux-Dubé, Major, McLachlin 

Iacobucci, J.
: This appeal arises out of a wrongful dismissal action. It calls upon the Court to elaborate the circumstances in which an employer would be justified in summarily dismissing an employee as a result of the latter’s dishonest conduct. More specifically, the question is whether
dishonesty, in and of itself, suffices to warrant an employee’s termination, or whether the nature and context of such dishonesty must be considered in assessing whether just cause for dismissal exists.

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