Executive Summary: Key Legal and Evidentiary Issues

• Dispute over whether a recruitment consultant acted as the employer’s legal agent under common law principles.

• Examination of vicarious liability for fiduciary breaches committed by an alleged agent.

• Determination of whether temporary foreign workers on fixed-term contracts have a duty to mitigate losses when jobs do not materialize.

• Interpretation of contract terms within the regulatory context of the Temporary Foreign Workers Program.

• Assessment of apparent authority and timing of representations in establishing agency.

• Procedural concerns about resolving interconnected common issues through a summary trial before a full trial.

Facts and outcome of the case

Background of the dispute
This case involved a certified class action brought by temporary foreign workers recruited to Canada to work for Mac’s Convenience Stores Inc. under the federal Temporary Foreign Workers Program (TFWP). The plaintiffs alleged that the recruitment process, managed by immigration consulting firms collectively referred to as “Overseas,” involved charging them prohibited fees for jobs. The workers claimed these fees breached fiduciary duties and contravened employment and immigration laws. A subclass alleged that upon arrival in Canada, the promised jobs did not exist or were inconsistent with their contracts.

Mac’s had retained Overseas in 2012 to assist with hiring for its convenience stores, agreeing to pay a “success fee” for each hired worker. Overseas organized recruitment fairs, screened applicants, facilitated interviews, and handled TFWP paperwork. The plaintiffs claimed that Overseas acted as Mac’s agent in recruiting them and that Mac’s was therefore vicariously liable for any fiduciary breaches by Overseas. They also challenged the duty to mitigate in situations where the promised employment did not materialize, citing immigration restrictions that prevented them from working for other employers without a new labour market opinion and work permit.

Procedural history
The claim was filed in 2015 and was narrowed through prior appeals before certification in breach of fiduciary duty and unjust enrichment against Overseas, and breach of contract, breach of the duty of honest performance, and vicarious liability against Mac’s. Before the main trial, the parties agreed to determine three common issues by summary trial: whether Overseas acted as Mac’s agent, whether Mac’s could be vicariously liable for any fiduciary breach, and whether subclass members had a duty to mitigate losses when jobs did not exist. The Supreme Court of British Columbia found in favour of the workers on both disputed issues, holding that Overseas was Mac’s agent and that there was no duty to mitigate. Mac’s appealed those findings.

Court of Appeal’s reasoning
The Court of Appeal majority held that the trial judge erred in applying a colloquial rather than a legal definition of agency. At common law, an agent must have the authority to bind the principal contractually. The evidence showed Mac’s retained control over the signing of employment contracts, and nothing indicated that Overseas had actual or apparent authority to bind Mac’s to such agreements. Consequently, there was no agency relationship, and the claim for vicarious liability on that basis failed.

On the duty to mitigate, the Court held that under British Columbia law, employees with fixed-term contracts have a duty to mitigate unless the contract explicitly removes that obligation. Here, the contracts contemplated workers changing employers with proper immigration authorization, meaning a duty to mitigate existed. While acknowledging significant practical barriers to mitigation due to immigration restrictions, the Court stressed that such difficulties affect damages assessment, not the existence of the duty itself.

Dissenting opinion
Justice Dickson agreed with the majority on the mitigation issue but dissented on agency. He interpreted the trial judge’s findings as implicitly concluding that Overseas had authority to bind Mac’s in the multi-step hiring process, thus satisfying the legal test for agency.

Outcome
The Court of Appeal allowed Mac’s appeal, answering the common issues in its favour: Overseas was not Mac’s agent, and subclass members were required to mitigate losses. The case will proceed to trial for damages assessment, with Mac’s bearing the burden of proving any failure to mitigate. No damages were awarded at this stage, and the decision does not specify a costs order. Mac’s Convenience Stores Inc. was the winning party on appeal.