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A-432-77
Administrator under the Anti-Inflation Act (Applicant)
v.
Jean Léveillée, Harold Demers, Gaston Cadieux, Yvon Lahaie and Bernard Belanger (Respondents)
Court of Appeal, Jackett C.J., Pratte and Ryan JJ.—Ottawa, December 21 and 22, 1977.
Judicial review Labour relations Anti-Inflation Act Increase allowed because of historical relationship between school system's executive employees and teachers Whether or not amount consistent with objectives of Act Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28 Anti-Infla tion Act, S.C. 1974-75-76, c. 75, ss. 20, 30 Anti-Inflation Guidelines, SOR/76-1, s. 44(1) as amended by SOR/76-298, s. 18.
This is a section 28 application to set aside a judgment of the Anti-Inflation Appeal Tribunal varying an order of the Administrator and ordering that the employer might increase, for the guideline year, the total compensation of its executive employees because of the historical relationship between them and the teachers of the school system. The issue is whether or not the Tribunal erred in law in allowing this further amount by not fulfilling the condition precedent for such allowance— consistency with the objectives of the Anti-Inflation Act.
Held, the application is dismissed. The general rule adopted imposing a more or less arbitrary limit on the increases does not apply where a historical relationship exists that may allow an additional amount, consistent with the objectives of the Act. The historical relationship must be one where the efficacious working of the particular part of the employment sector requires that additional amount. The amount, however, must not be greater than necessary to overcome the harm that would be done if the historical relationship were not taken into account. The Tribunal's conclusion maintains the vertical wage relationship between respondents and teachers, and yet recog nizes implicitly the objectives of the Anti-Inflation Act by only allowing the minimal amounts required to meet the exigencies of the situation. This decision was open to the Tribunal.
APPLICATION for judicial review. COUNSEL:
E. A. Bowie and Deen Olsen for applicant. Gordon F. Henderson, Q.C., and R. Fitzsim- mons for respondents.
SOLICITORS:
Deputy Attorney General of Canada for applicant.
Gowling & Henderson, Ottawa, for respond ents.
The following are the reasons for judgment rendered in English by
JACKETT C.J.: This is a section 28 application to set aside a judgment of the Anti-Inflation Appeal Tribunal varying an order of the Administrator under section 20 of the Anti-Inflation Act, S.C. 1974-75-76, c. 75, and ordering that the Prescott and Russell Counties Roman Catholic Separate School Board "may, for the guideline year Sep- tember 1, 1975, to August 31, 1976, increase the total compensation of its executive group of employees (the respondents) by an amount that is not greater than the sum of $24,668 and $2,400 per employee in the group, with appropriate adjustments .. ." .
The Anti-Inflation Act is an Act "for the restraint of profit margins, prices, dividends and compensation" and contains a recital that the "containment and reduction of inflation" is a matter of national concern. By section 3, the Gov ernor in Council is authorized to publish "guide- lines" concerning, inter alia, the restraint of "com- pensation". By section 20, an officer known as the "Administrator" may make an order to prohibit a person "from contravening the guidelines". By section 30, there is an appeal from such an order to the "Appeal Tribunal", which appeal is, as I read the Act, by way of a hearing "de novo". In other words, on such an appeal, the Tribunal has jurisdiction over all aspects of the subject matter of the appeal including questions of fact, law and discretion.
This matter raises a question concerning that part of the "guidelines" dealing with compensa tion. By virtue of section 43 thereof, if it stood alone, the increase that would have been permissi ble, in the circumstances of this case, would be "an increase in the average compensation for the group for the guideline year" of $2,400. The question is whether the Tribunal erred in law in allowing a further amount under section 44(1), SOR/76-1, as amended by SOR/76-298, which reads in part:
44. (1) Where a group
(b) has an historical relationship with another group,
the employer may in a guideline year increase the total amount of the compensation of all the employees in the group, by an amount that is not greater than the sum of
(c) the amount permitted under subsection 43(1), and
(d) such further amount as is consistent with the objectives of the Act.
The question is whether the further amount pur portedly allowed by the Tribunal under section 44(1)(d) was allowed on the basis of an error of law. The applicant's position, as I understand it, is that the Tribunal did not fulfil the condition prece dent to such an allowance of first finding that such allowance was "consistent with the objectives of the Act".
Briefly, the relevant facts, as I understand them, are
(a) that, immediately prior to the control period, the teachers including the school princi pals in the employ of the employer were granted increases,
(b) that the respondents were the management staff of the employer and traditionally were paid salaries higher than those paid to the school principals,
(c) that the increases granted to the teachers were such that, even if $2,400 were added to the salaries of each of the respondents, some of the principals would be receiving compensation higher than that paid to some of the respondents,
(d) for the purposes of section 44 of the guide lines there is an historical relationship between the teachers and the respondents.
In these circumstances, the Tribunal found that the respondents "could legitimately expect ... that the School Board would continue to have regard to the highest paid principals' salaries in setting the salaries of the executive group, that all of them would make at least marginally more than the highest paid principals...."
The Tribunal dealt at some length with the argument for the applicant that, because the his torical relationship was weak, the respondents had no right to have it maintained, and said, inter alia:
Here the Administrator refused to permit the payment of any further amounts to maintain the weak historical relation ship that he found to exist because, in his view, to permit any compensation pursuant to paragraph 44(1)(d) of the Guidelines to a group of employees constrained by the $2,400 maximum under section 43 "would not be consistent with the objectives of the Anti-Inflation Act" in the absence of "some very compell ing reason" to give relief from that constraint.
It is true, of course, that under the philosophy of the Anti- Inflation Act the greater the constraints placed on increases in compensation, the more inflation will be controlled, but in the opinion of the Appeal Tribunal the phrase "the objectives of the Act" in paragraph 44(1)(d) of the Guidelines cannot be so baldly construed. The aim of section 44 itself is to make constraint more fair and workable.
In our view, section 44 must serve a similar purpose here, to maintain the vertical wage relationships in the administrative set-up of the Prescott and Russell Counties Roman Catholic Separate School Board, at least to the extent that "subordi- nates" are not paid more than their superiors. Quoting again from our decision in the Sudbury Separate School Board case, at 26,011:
The broad objectives stated (in the preamble to the Anti- Inflation Act,) are left by the Act to be worked out through the Guidelines established by the Governor-in-Council in regulations under s. 3(2) of the Act ... The Governor-in- Council has seen fit in s. 44 of the Guidelines to permit increases calculated by reference not to the general levels of inflation in the economy but by reference to particular historical relationships between groups of employees.... The point is that s. 44 of the Guidelines is itself an important consideration in determining the specific objectives of the Anti-Inflation Act as they are worked out through the Guidelines.
Section 44 makes it clear that the objective is to restrain
compensation without undue disruption of historical relation
ships that have in part determined employee compensation. Thus, in the opinion of the Appeal Tribunal it is consistent with the purposes of the Anti-Inflation Act to hold that an average increase in compensation in excess of $2,400 must be permitted to the Appellant's employee group to maintain even minimally the historical hierarchy in wages paid by the employer School Board here.
The Anti-Inflation Appeal Tribunal has concluded that, on the basis of the historical relationship found by the Administra tor, the School Board should be permitted to increase the average compensation of the employees in the executive group by a further amount such that the salary for every position in the group can be at least marginally more than the salaries of the highest paid principals, and such that those who, for two or more years before October 14, 1975, made significantly higher salaries than the highest paid principals, can continue to do so. On the other hand, we have concluded that the amounts agreed
upon by the School Board are not consistent with the objectives of the Anti-Inflation Act because they exceed the minimal legitimate expectations engendered by the very weak historical relationship established here.
Our conclusion, in other words, is that the School Board may, for the guideline year, September 1, 1975 to August 31, 1976, increase the total amount of the compensation of the employees in the executive group by an amount that is not greater than the sum of $24,668 and the $2,400 per employee allowed by section 43 of the Guidelines, with appropriate adjustments to the extent that any of the three "Program Director" positions ceased to exist or be occupied before the end of that guideline year. The Tribunal is not insensitive to the arbitrary aspect of this formula in that we have selected the lowest salary differential since 1970 for each position in the executive group in "quantifying" the historical relationship. We regret too that we could find no tidier formula but we are satisfied that the conclusion we have reached allows for sub stantial justice within the objectives of the Anti-Inflation Act and Guidelines.
Reading the remainder of the Tribunal's deci sion with these passages, which I regard as the highlights, I do not find a failure on the part of the Board to bring itself within the authority granted by section 44 of the "guidelines" when it made the allowances in question.
My understanding of the matter may be sum marized as follows:
1. The object of the Anti-Inflation Act is inter alla "to restrain .. . compensation".
2. The method adopted to carry out that object was, inter alla,
(i) to cause "guidelines" to be adopted "for the guidance of all Canadians in restraining . compensation" (section 3),
(ii) and to provide for a system of administra tive decisions or orders for giving legal application to such guidelines.
3. Such guidelines provided a formula of gener al application in respect of compensation with a maximum of $2,400 per annum subject, inter alia, to a "further amount ... consistent with the objectives of the Act" in a case involving an "historical relationship".
4. The Appeal Tribunal has comprehensive jurisdiction with regard to the latter question and this Court has jurisdiction to review its decisions on questions of law.
In so far as the law applicable is concerned, the object of the Anti-Inflation Act, as I read it in so far as "compensation" is concerned, is to put a brake on increases—not to eliminate increases. The general rule adopted is a more or less arbi trary limit (with a maximum of $2,400 per annum) imposed on the increases that would otherwise arise from the operation of market forces. This limit does not, however, apply where there is an historical relationship. In such a case an additional amount may be allowed consistent with the objectives of the Act. In relation to the facts of this case, this means, in my view,
(a) that the historical relationship must be such that the efficacious working of the particular part of the employment sector requires such an additional amount, and
(b) that such additional amount must not be any greater than is necessary to overcome the harm that would be done if such historical rela tionship were not taken into account.
Returning to the attack made on the Tribunal's reasoning based on the contention that it did not address itself to the limitation by reference to the objectives of the Act, I am of opinion that it must be rejected.
Putting the matter in my own words, what I understand the Tribunal to be saying is that, from the point of view of making the system continue to work efficaciously, the vertical wage relationships between the respondents and the teachers must be maintained to the extent at least of there being appreciable salary differences between them but they recognize, implicitly, if not explicitly, that the objectives of the Anti-Inflation Act require that no more should be allowed under section 44(1)(d) than is made necessary by the exigencies of the situation. On that basis, as I understand it, they fix the amount that they regard as "minimally" neces sary to meet the exigencies of the situation. In my view, this conclusion was open to the Tribunal in law and this Court has no right to interfere with it.
In my view, the section 28 application should be dismissed.
With regard to the contention that the Board erred, in not finding that the settlement made with the teachers before the control period was "infla- tionary" and in not taking this alleged fact into account, in determining whether any, and if so what, amount should have been allowed under section 44(I)(d), which contention was introduced by the applicant indirectly in the course of argu ment, I am not satisfied that the point was open to the applicant without obtaining an amendment to the memorandum filed by him in this Court. In any event, the point is based on allegations of fact that were not put in issue before the Tribunal and, in my view, the Tribunal cannot be said to have based its decision on an error in law in failing to deal with them. As I read the Act, the proceedings before the Tribunal are more of an "adversary" than an "inquisitorial" nature and a party to a proceeding in that Board cannot complain if a matter that was not raised was not dealt with. It is true that the applicant in that Court was more concerned before the Tribunal with supporting the Administrator's decision; but, if he did not foresee the possibility of losing on that point and did not put forward factual allegations that would arise if he did so lose, he cannot complain if such factual considerations were not raised and considered by the Tribunal of its own motion. Any implied requirement that the Tribunal must, of its own motion, investigate all conceivable avenues, would, I should have thought, seriously hamper the effi ciency of its work.
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PRATTE J. concurred.
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RYAN J. concurred.
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