Judgments

[1997] 2 F.C. 706

T-1532-96

Attorney General of Canada (Applicant)

v.

Kenneth John Hester (Respondent)

Indexed as: Canada (Attorney General) v. Hester (T.D.)

Trial Division, Gibson J.—Ottawa, February 4 and 21, 1997.

Public Service — Jurisdiction — Grievance — Judicial review of PSSRB decision employer violated collective agreement by refusing request for vacation leave, ordering employer to grant one day of vacation leave in addition to entitlement under collective agreement — Public Service Staff Relations Act, s. 96(2) prohibiting adjudicator from rendering decision effect of which to require amendment of collective agreement — Tribunal added to respondent’s leave entitlement without justification — Contravened limitation of jurisdiction imposed by s. 96(2).

Damages — Non-compensatory — Exemplary — Judicial review of Public Service Staff Relations Board decision employer violated collective agreement by refusing request for vacation leave, ordering employer to grant one day of vacation leave in addition to entitlement under collective agreement — Board expressing concern over —number of cases— where employee’s wishes disregarded for reasons Board finding improper — Necessity relief granted address concerns — Tribunal imposing remedy for conduct considered worthy of punishment with respondent being beneficiary, over-compensated — Remedy constituting punitive damages — Punitive damages awarded only where conduct deserving of punishment as harsh, vindictive, reprehensible, malicious — Nothing justifying such remedy herein.

This was an application for judicial review of the Public Service Staff Relations Board’s decision that the employer had violated the collective agreement and ordering it to grant one day of vacation leave to the respondent in addition to his entitlement under the collective agreement. The respondent, a Transport Canada employee at the Winnipeg airport, had submitted a request for one day’s annual leave to attend a social/sporting event at which he was to receive an award. The employer denied the request, indicating that it had been submitted too late and, if granted, would have required the payment of overtime that had not been budgeted for. There was no dispute that the employer had violated the collective agreement in refusing the respondent’s requested vacation leave. The Tribunal, after concluding that overtime costs did not justify the denial of leave under the guise of operational requirements, went on to express concern about the number of cases where the wishes of employees are set aside for considerations consistently found to be improper in assessing operational requirements. The relief granted had to sufficiently address those concerns.

The issues were whether the Tribunal exceeded its jurisdiction by rendering a decision the effect of which would be to require the amendment of a collective agreement; and whether the remedy ordered was punitive and exceeded the Tribunal’s jurisdiction.

Held, the application should be allowed.

Public Service Staff Relations Act, subsection 96(2) (which prohibits an adjudicator from rendering a decision having the effect of amending a collective agreement) is a jurisdiction limiting provision and its interpretation involves a jurisdictional question. By ordering the remedy that it did, the Tribunal added to the respondent’s leave entitlement fixed or determinable under the collective agreement, without justification based on any provision of the collective agreement. Against any standard of review the Tribunal, in providing for the remedy that it did, committed a jurisdictional error by contravening the clear and unequivocal limitation of its jurisdiction imposed by subsection 96(2).

Absent a finding of jurisdictional error, the standard of review of a determination of an appropriate remedy would normally be that of reasonableness. But where the remedy is punitive, the order imposing the remedy can be found to be patently unreasonable. The remedy awarded derived at least as much from the conduct of the employer over a “number of cases” as from the conduct of the employer in the matter under adjudication. The Tribunal effectively imposed a remedy for conduct it considered worthy of punishment with the respondent, as opposed to the State Treasury, being the beneficiary. The remedy imposed was in the nature of punitive damages, which may only be awarded in respect of conduct which is of such a nature as to be deserving of punishment because of its harsh, vindictive, reprehensible and malicious nature. Nothing in the record justified punitive damages herein. Against a standard of reasonableness, the Tribunal erred in law in awarding a remedy which over-compensated the employee.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Public Service Staff Relations Act, R.S.C., 1985, c. P-35, ss. 91 (as am. by S.C. 1992, c. 54, s. 68), 96(2), 96.1 (as enacted idem, s. 70).

CASES JUDICIALLY CONSIDERED

APPLIED:

Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557; (1994), 114 D.L.R. (4th) 385; [1994] 7 W.W.R. 1; 92 B.C.L.R. (2d) 145; 22 Admin. L.R. (2d) 1; 14 B.L.R. (2d) 217; 4 C.C.L.S. 117; Vorvis v. Insurance Corporation of British Columbia, [1989] 1 S.C.R. 1085; (1989), 58 D.L.R. (4th) 193; [1989] 4 W.W.R. 218; 36 B.C.L.R. (2d) 273; 42 B.L.R. 111; 25 C.C.E.L. 81; 90 CLLC 14,035; 94 N.R. 321.

CONSIDERED:

Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, [1979] 2 S.C.R. 227; (1979), 25 N.B.R. (2d) 237; 97 D.L.R. (3d) 417; 51 A.P.R. 237; 79 CLLC 14,209; 26 N.R. 341; Royal Oak Mines Inc. v. Canada (Labour Relations Board), [1996] 1 S.C.R. 369; (1996), 133 D.L.R. (4th) 129; 36 Admin. L.R. (2d) 1; 96 CLLC 210-011; 193 N.R. 81; Reibin et al. v. Canada (Treasury Board) (1996), 114 F.T.R. 174 (F.C.T.D.); Richmond v. Canada (Attorney General), [1996] 2 F.C. 305 (1996), 108 F.T.R. 205 (T.D.); confd A-197-96, Desjardins J.A., judgment dated 26/3/97, will soon be reported in F.C.R.

AUTHORS CITED

Collins-Robert French-English, English-French Dictionary by Beryl T. Atkins et al., 2nd ed. Glasgow, Scotland: Harper Collins Publishers, 1990.

APPLICATION for judicial review of Public Service Staff Relations Board’s decision that the employer had violated the collective agreement and ordering it to grant one day of vacation leave to the respondent in addition to his entitlement under the collective agreement (Hester and Treasury Board (Transport Canada), [1996] C.P.S.S.R.B. No. 44 (QL)). Application allowed.

COUNSEL:

Maureen Crocker for applicant.

Phillip G. Hunt for respondent.

SOLICITORS:

Deputy Attorney General of Canada for applicant.

Shields & Hunt, Ottawa, for respondent.

The following are the reasons for order rendered in English by

Gibson J.: As indicated in the extended style of cause, these reasons arise out of an application for judicial review of a decision of Albert Burke [[1996] C.P.S.S.R.B. No. 44 (QL)], a member of the Public Service Staff Relations Board, (the Tribunal) wherein the Tribunal, following a reference to adjudication pursuant to section 92 of the Public Service Staff Relations Act [R.S.C., 1985, c. P-35 (as am. by S.C. 1992, c. 54, s. 68)] (the Act), determined the employer to have violated the collective agreement at issue and ordered the employer to grant one day of vacation leave to the respondent. The day of leave was to be at a time chosen by the respondent, and on reasonable notice to the employer, within a period of six months following the date of the Tribunal’s decision. The employer was ordered not to deduct the day of leave from the respondent’s accumulated vacation leave credits. The decision of the Tribunal is dated May 31, 1996.

The facts giving rise to the respondent’s grievance and thus, to this application for judicial review, may briefly be summarized as follows. At all relevant times, the respondent was employed by Transport Canada at the Winnipeg airport. His employment was as a Technical Duty Manager. His employment was governed by the EL collective agreement, Code 404/89 (404-92 as extended), a collective agreement in effect between the Treasury Board of Canada and the International Brotherhood of Electrical Workers, Local 2228 (the collective agreement). On March 21, 1995, the respondent submitted a request for one day’s annual leave for April 8, 1995. He apparently wished to attend a social/sporting event on that day at which he would receive an award. The employer denied the request and indicated orally that it had been submitted too late and, if granted, would have required the payment of overtime that was not budgeted for. Thus, the grievance.

The Tribunal concluded [at paragraphs 50-52]:

Thus, I have concluded that the employer did not make every reasonable effort to accommodate the grievor. In these circumstances, overtime cost did not justify denying leave under the guise of operational requirements. The 30-day requirement [the advance notice of requests for leave that the employer sought to require] does not form part of the collective agreement and thus cannot justify the employer’s refusal either. Therefore, the employer violated the collective agreement when it refused the requested vacation leave for April 8, 1995. Obviously, it is too late to order the employer to comply with the request of leave for April 8, 1995. I therefore order the employer to grant one day of vacation leave to the grievor, at a time he requests, and on reasonable notice to the employer within the next six months. This day of leave is not to be deducted from the grievor’s accumulated vacation leave credits.

I am mindful of the fact that by making this order the grievor is now entitled to a day’s vacation leave in addition to his allotment under the terms of the collective agreement. I am also mindful of the fact that there was no evidence before me that denial of leave for April 8, 1995 caused the grievor financial loss or severe hardship. Nonetheless, the grievor was deprived from attending a social function in which he was to receive an award of recognition. Apart from the deception that one would expect any employee to have experienced, there is the fact that the grievor is a shift worker. Thus, social functions are generally more difficult to attend assiduously and are therefore more likely to be treasured. The grievor has suffered a loss.

I am also concerned by the number of cases dealt with by members of this Board where the wishes of employees are set aside for considerations consistently found to be improper in assessing operational requirements. Some of those cases were cited to me in this hearing. The employer has struck a bargain and must abide by it. In these circumstances, I feel a lesser order than the one I am making would not sufficiently address the concerns stated above, and I note that my remedial authority is broad indeed: Heustis v. N.B. Electric Power Commission, [1979] 2 S.C.R. 768. [Underlining added.][1]

That the employer had violated the collective agreement in refusing the respondent’s requested vacation leave for April 8, 1995, was not in dispute before me. The sole issue was stated by counsel for the applicant and counsel for the respondent in their memoranda of argument in almost identical terms and in substance as follows: Did the adjudicator (the Tribunal) exceed his jurisdiction or err in law when he ordered the applicant (the employer) to grant the respondent an additional day of leave in excess of his entitlements under the terms of the collective agreement?

Counsel for the applicant argued that, against the appropriate standard of review, the Tribunal erred in providing a remedy to the respondent the effect of which would be to require the amendment of the collective agreement, and in ordering a remedy that was punitive in nature.

By contrast, counsel for the respondent argued that the Tribunal made no reviewable error in providing the remedy that it did, which remedy was within the Tribunal’s broad remedial authority, and was designed simply to put the respondent in, as close as possible, the same position as he would have been had the employer not wrongly refused the respondent’s request for leave.

Article 17.07 of the collective agreement reads as follows:

An employee’s vacation shall normally be taken in the fiscal year in which he/she becomes eligible for it. The Employer shall, subject to the operational requirements of the service, make every reasonable effort:

a)   to schedule an employee’s vacation leave for at least two (2) consecutive weeks, if so requested by the employee not later than May 1st;

b)   to give next priority to periods of vacation for which a request is made by employees prior to June 1st;

c)   subject to (a) and (b) above, to schedule an employee’s vacation leave at a time acceptable to him; [Underlining added by me for emphasis.]

Subsection 92(1) of the Public Service Staff Relations Act[2] provides that where an employee has presented a grievance up to and including the final level in the grievance process with respect to the interpretation or the application of a provision of a collective agreement, and the grievance has not been dealt with to the satisfaction of the employee, the employee may, subject to limitations not relevant here, refer the grievance to adjudication. The respondent took advantage of this right. Section 96.1 [as enacted idem, s. 70] of the Act provides to an adjudicator, in relation to an adjudication, all the powers, rights and privileges of the Public Service Staff Relations Board, once again subject to an exception that is not relevant here. The powers of the Board are broadly defined in section 21 and the following sections of the Act. Subsection 96(2) of the Act provides as follows:

96. …

(2) No adjudicator shall, in respect of any grievance, render any decision thereon the effect of which would be to require the amendment of a collective agreement or an arbitral award.

In Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation,[3] Dickson J., as he then was, wrote at page 233:

The question of what is and is not jurisdictional is often very difficult to determine. The courts, in my view, should not be alert to brand as jurisdictional, and therefore subject to broader curial review, that which may be doubtfully so.

In Royal Oak Mines Inc. v. Canada (Labour Relations Board),[4] Mr. Justice Cory, referring to the above quotation from Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corporation, wrote [at page 400]:

The appellant argued that the question, as to the appropriate remedy for the Canada Labour Relations Board to have imposed in this case, involves the jurisdictional limits of the powers granted to the Board and that, accordingly, the standard by which this Court must review the order is one of correctness. I cannot agree. There is an abundance of case law which cautions courts against too easily identifying a statutory provision as jurisdictional.

Conscious of these opinions of the Supreme Court of Canada, I am nonetheless of the view that subsection 96(2) is a jurisdiction limiting provision and that its interpretation involves a jurisdictional question.

In Reibin et al. v. Canada (Treasury Board),[5] Mr. Justice Noël reviewed at length the standard of review of a decision of an adjudicator interpreting provisions of the Workforce Adjustment Directive which he described as [at page 184] “in effect interpreting the collective agreement.” He noted that there is no privative clause in the Act. He then went on to cite from Pezim v. British Columbia (Superintendent of Brokers)[6] where Mr. Justice Iacobucci wrote at pages 590 and 591:

Having regard to the large number of factors relevant in determining the applicable standard of review, the courts have developed a spectrum that ranges from the standard of reasonableness to that of correctness. Courts have also enunciated a principle of deference that applies not just to the facts as found by the tribunal, but also to the legal questions before the tribunal in the light of its role and expertise. At the reasonableness end of the spectrum, where deference is at its highest, are those cases where a tribunal protected by a true privative clause, is deciding a matter within its jurisdiction and where there is no statutory right of appeal….

At the correctness end of the spectrum, where deference in terms of legal questions is at its lowest, are those cases where the issues concern the interpretation of a provision limiting the tribunal’s jurisdiction (jurisdictional error) or where there is a statutory right of appeal which allows the reviewing court to substitute its opinion for that of the tribunal and where the tribunal has no greater expertise than the court on the issue in question, as for example in the area of human rights. [Extensive citations omitted.]

I turn then to the question of whether or not the Tribunal, by requiring the employer to provide to the respondent a day of leave in excess of that provided for under the collective agreement, exceeded its jurisdiction by, in the terms of subsection 96(2) of the Act, “render[ing] any decision … the effect of which would be to require the amendment of a collective agreement.” This point was not addressed in the Tribunal’s decision. By reference to the quotation from the Pezim decision that appears above, questions concerning the interpretation of a provision limiting the Tribunal’s jurisdiction are at the correctness end of the deference spectrum “where deference in terms of legal questions is at its lowest”.

I wrote in Richmond v. Canada (Attorney General):[7]

I am satisfied that in certain circumstances, the Arbitrator could find resort to the leave with pay provisions of the collective agreements to be required in order to comply with the non-discrimination provisions of the collective agreements, and that in those circumstances the collective agreements would not be violated, nor would subsection 96(2) be transgressed. In this regard, I agree with the position advanced on behalf of the applicants. The Adjudicator was required to interpret the collective agreements as a whole and not in abstract, apart from the non-discrimination provisions.

Here, there can be no allegation that the Tribunal failed to take into account the whole of the collective agreement in its decision. By ordering the remedy that it did, it clearly added to the respondent’s leave entitlement fixed or determinable under the collective agreement, without justification based on any provision of the collective agreement. Against whatever standard of review is applicable, whether it be correctness or reasonableness or some standard in between, I am satisfied that the Tribunal, in providing for the remedy that it did, committed a jurisdictional error by contravening the clear and unequivocal limitation of its jurisdiction imposed by subsection 96(2) of the Act.

I turn next to the question of whether or not the remedy ordered by the Tribunal was punitive in nature. There can be no question that the Tribunal had the authority to impose a remedy against the employer in circumstances where it found the respondent to have suffered a loss. I am in agreement with counsel for the respondent that the principle against which such a remedy is to be determined is that the remedy chosen should, to the greatest extent possible, put the person suffering the damage or loss in the same position in which he or she would have found himself or herself absent the wrong committed. In reviewing a determination as to an appropriate remedy in the context of a breach of a collective agreement, absent a finding of jurisdictional error, one would normally regard the standard of review as at or approaching that of reasonableness since the determination of an appropriate remedy in such a context is within the established role and expertise, or “home jurisdiction”, of the Tribunal.[8] But where the remedy is punitive in nature, the order imposing the remedy can be “properly found to be patently unreasonable.”[9]

In Vorvis v. Insurance Corporation of British Columbia,[10] Mr. Justice McIntyre wrote at page 1104:

Problems arise for the common law wherever the concept of punitive damages is posed. The award of punitive damages requires that:

… a civil court … impose what is in effect a fine for conduct it finds worthy of punishment, and then to remit the fine, not to the State Treasury, but to the individual plaintiff who will, by definition, be over-compensated. [Waddams, p. 563.]

Was the remedy imposed here, then, punitive in nature or akin to punitive damages? In answering the question I have posed, I will ignore the word “deception”, which might well be more appropriately “disappointment”, in the portion of the reasons of the Tribunal quoted above. I will, nonetheless, requote the last paragraph of the reasons that appears earlier in these reasons.

I am also concerned by the number of cases dealt with by members of this Board where the wishes of employees are set aside for considerations consistently found to be improper in assessing operational requirements. Some of those cases were cited to me in this hearing. The employer has struck a bargain and must abide by it. In these circumstances, I feel a lesser order then the one I am making would not sufficiently address the concerns stated above, and I note that my remedial authority is broad indeed: Heustis v. N.B. Electric Power Commission, [1979] 2 S.C.R. 768.

I read the foregoing quoted paragraph as indicating that the remedy awarded by the Tribunal derives at least as much from the conduct of the employer over a “number of cases” as from the conduct of the employer in the matter that was under adjudication before the Tribunal. In effect, the Tribunal is saying: this respondent is going to receive a remedy, not calculated by reference to the damage or loss that he has suffered, but rather by relation to a standard designed to ensure that, in future cases, the employer abides by the bargains that it has struck. In effect, the Tribunal is imposing a remedy, for conduct it finds worthy of punishment, with the respondent herein, as opposed to the State Treasury, being the beneficiary with the effect that the respondent will, by definition, be over-compensated.

Against this analysis, I am satisfied that the Tribunal has imposed a remedy in the nature of an award of punitive damages.

Mr. Justice McIntyre goes on at pages 1105-1106 in Vorvis to state:

When then can punitive damages be awarded? It must never be forgotten that when awarded by a judge or a jury, a punishment is imposed upon a person by a Court by the operation of the judicial process. What is it that is punished? It surely cannot be merely conduct of which the Court disapproves, however strongly the judge may feel. Punishment may not be imposed in a civilized community without a justification in law. The only basis for the imposition of such punishment must be a finding of the commission of an actionable wrong which caused the injury complained of by the plaintiff.

Finally, Mr. Justice McIntyre states at pages 1107-1108 of the Vorvis decision:

Moreover, punitive damages may only be awarded in respect of conduct which is of such nature as to be deserving of punishment because of its harsh, vindictive, reprehensible and malicious nature. I do not suggest that I have exhausted the adjectives which could describe the conduct capable of characterizing a punitive award, but in any case where such an award is made the conduct must be extreme in its nature and such that by any reasonable standard it is deserving of full condemnation and punishment.

I find nothing on the face of the decision of the Tribunal or on the record before me that would, against the foregoing quotations, justify a remedy in the nature of punitive damages. In awarding such a remedy, against a standard of reasonableness, I conclude that the Tribunal erred in law in a reviewable manner.

In summary then, both on the basis that the Tribunal, in making the award in favour of the respondent that it did, exceeded its jurisdiction and that it erred in law in awarding a remedy in the nature of punitive damages, I conclude that this application for judicial review must be allowed. An order will go accordingly, referring the matter back for determination and award of a remedy within the jurisdiction of the Tribunal and not of a punitive nature.

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