Federal Court Decisions

Date: 20030327

Docket: T-715-01

Neutral citation: 2003 FCT 364

Ottawa, Ontario, this 27th day of March, 2003

PRESENT:      THE HONOURABLE MR. JUSTICE JOHN A. O'KEEFE

APPLICATION UNDER:                   Canada Labour Code, R.S.C. 1985, c. L-2

AND APPLICATION UNDER:        Federal Court Act, R.S.C. 1985, c. F-7

BETWEEN:

                      MANITOBA ASSOCIATION OF NATIVE FIRE FIGHTERS, INC.

                                                                                                                                                       Applicant

                                                                              - and -

                                                              VINCENT PERSWAIN

                                                                                                                                                   Respondent

                                               REASONS FOR ORDER AND ORDER

O'KEEFE J.

[1]                 This is an application for judicial review in respect of the decision of adjudicator, Allen W. Yost, dated March 29, 2001, wherein he decided that the respondent had been unjustly dismissed pursuant to Part III, Division XIV of the Canada Labour Code, R.S.C. 1985, c. L-2, as amended (the "Code").

[2]                 The applicant seeks an order:

1.          Allowing the application for judicial review pursuant to Part III, Division XIV of the Code;

2.          Setting aside the adjudicator's decision, pursuant to Part III, Division XIV, subsection 242(3.1) of the Code;

3.          Staying the proceedings following the adjudicator's decision, ordering that the applicant compensate the respondent in the sum of $50,930; and

4.          Staying the proceedings following the adjudicator's decision, ordering that the applicant pay the respondent costs of $3,750 plus reasonable disbursements;

5.          Costs.

Background

[3]                 On July 22, 1996, the respondent, Vincent Perswain, was hired by the applicant, the Manitoba Association of Native Fire Fighters, Inc. ("MANFF"), as Fire Safety Officer.

[4]                 On or about June 17, 1998, the Board of Directors of MANFF declared the position of Fire Safety Officer redundant. It was also resolved that the services for fire protection, fire training and education would be tendered out as needed by request from the Independent First Nations.

[5]                 By letter dated June 1998, the respondent was given notice of this decision. The letter stated:

With the resignation of the Executive Director, the Board has decided to reorganize the staffing component of the office.

To that end, the Board has determined that the position of "Fire Safety Officer" is to be classified as "redundant".

Therefore, MANFF is undertaking its rights and hereby advises that it will accept your resignation should you desire to forward that on or before June     ,1998. If that is not forthcoming, MANFF will proceed with your termination and a financial settlement, . . .

[6]                 On July 6, 1998, the respondent's employment was terminated.    After the termination of the respondent's employment, the position of Fire Safety Officer was not filled. The vacant position of Executive Director was advertised in June 1998.

[7]                 On July 10, 1998, the respondent filed a complaint against the applicant, pursuant to section 240 of the Canada Labour Code, supra, alleging that he had been unjustly dismissed.

[8]                 On July 27, 28 and 29, 2000, a hearing took place with Allen W. Yost as adjudicator. During the hearing, the applicant objected to the jurisdiction of the adjudicator to hear the complaint on the basis that the respondent had been laid off because of a discontinuance of a function, pursuant to subsection 242.(3.1) of the Canada Labour Code, supra.

[9]                 In a decision, dated March 29, 2001, the adjudicator found that the respondent had been unjustly dismissed under Part III, Division XIV of the Canada Labour Code, supra. In his reasons, the adjudicator stated:

Considering the evidence as a whole, I find that the actual reason for the termination of Mr. Perswain's employment was that certain members of the Board did not want to have him continue as an employee. I am not satisfied that he was laid off because of lack of work or because of the discontinuance of a function.

[10]            The applicant was ordered to compensate the respondent in the sum of $50,930 and pay costs in the amount of $3,750, plus reasonable disbursements.

[11]            This is the judicial review of the adjudicator's decision.

Applicant's Submissions

[12]            The applicant submits that the adjudicator did not have jurisdiction to determine if the respondent was unjustly dismissed due to the evidence of a discontinuance of a function, pursuant to subsection 242.(3.1) of the Canada Labour Code, supra.

[13]            The applicant submits that misinterpreting "discontinuance of a function", under subsection 242.(3.1), resulted in the adjudicator making an error in law.

[14]            The applicant submits that employers are free to reorganize their own business and that giving work to a contractor constitutes a discontinuance of a function within an employer's business so long as the action is performed in good faith. The applicant submits that the respondent's termination of employment was for legitimate and business reasons.

[15]            The applicant submits that if the adjudicator did have jurisdiction to find the applicant was unjustly dismissed, then the award was patently unreasonable as it was inordinately high. The applicant submits that the adjudicator breached his duty of fairness and acted outside any statutory power when he based his decision concerning the award on a finding of fact not supported by evidence. The applicant submits that no analysis or rationale for the two years notice was provided by the adjudicator based on the evidence before him. The applicant submits the amount of compensation should have been determined based on the evidence and what a reasonable period of notice would have been at common law. Lastly, the applicant submits that there was no evidence of any special circumstances justifying the award.

Respondent's Submissions

[16]            The respondent submits that at no time did the applicant assert that he was laid off due to a "lack of work". As such, the respondent submits the adjudicator was correct in ruling that he was not laid off due to a lack of work as allowed under subsection 242.(3.1) of the Code.

[17]            The respondent submits that the evidence does not support his lay off being based on redundancy of the position of Fire Safety Officer. Examples of evidence which the respondent refers to include:

·                         At the MANFF Board Meeting on September 11, 1997, there was apparently some concern regarding the lack of training activity with independent Bands. According to Ivan Hart, Executive Director of MANFF, the role of the Fire Safety Officer was mainly to provide training and some public education;

·                         At the MANFF Board Meeting on April 20, 21, 1998, the minutes do not disclose any commentary that the Fire Safety Officer was to be put out on contract. Additionally, there was a letter of criticism presented expressing concerns of favouritism towards staff members other than the respondent;

·                         On July 17, 1998, a motion was generated declaring the Fire Safety Officer position redundant and that the services for Fire Protection, Fire Training and Education be tendered out as needed by requests from the Independent First Nations. There are no minutes of this meeting. Apparently, there was testimony that Board members were not happy about the criticisms received at the April 20, 21 1998 Board meeting;

·                         Testimony that Vernon Meeches, who is noted as having seconded the July 17, 1998 motion, did not in fact do so;

·                         Testimony that the CEO of MANFF exhibited bullying behaviour towards the respondent and that there were personality problems between them;

·                         Testimony that the respondent had been kept busy at MANFF; and

·                         Evidence that the respondent had not been treated fairly.

[25]            The respondent submits the "good faith" of the employer is questionable and that the evidence supports the adjudicator's finding that the actual, operative and dominant reason for termination of his employment was because certain members of the Board did not want him to continue as an employee.

[26]            The respondent submits that the adjudicator's award was not patently unreasonable based on paragraphs 242.(4)(a) and (c) of the Code. The respondent submits that the applicant is incorrect in its assertion that the amount of compensation ought to be determined in consideration of what is a reasonable period of notice at common law.

[27]            Issues

1.          What is the standard of review of the adjudicator's decision that he had jurisdiction to find the respondent was unjustly dismissed and that the limitation under subsection 242.(3.1) of the Canada Labour Code, supra did not apply?

2.          Did the adjudicator err in concluding that there was not a discontinuance of a function pursuant to subsection 242.(3.1) of the Canada Labour Code, supra?

3.          If the adjudicator was correct in concluding that there was not a discontinuance of a function pursuant to subsection 242.(3.1) of the Canada Labour Code, supra, was the adjudicator's award patently unreasonable?

Relevant Statutory Provision

[28]            The relevant provisions of the Canada Labour Code, supra, state as follows:

240. (1) Subject to subsections (2) and 242(3.1), any person (a) who has completed twelve consecutive months of continuous employment by an employer, and (b) who is not a member of a group of employees subject to a collective agreement, may make a complaint in writing to an inspector if the employee has been dismissed and considers the dismissal to be unjust. 241. (1) Where an employer dismisses a person described in subsection 240(1), the person who was dismissed or any inspector may make a request in writing to the employer to provide a written statement giving the reasons for the dismissal, and any employer who receives such a request shall provide the person who made the request with such a statement within fifteen days after the request is made. 242. (1) The Minister may, on receipt of a report pursuant to subsection 241(3), appoint any person that the Minister considers appropriate as an adjudicator to hear and adjudicate on the complaint in respect of which the report was made, and refer the complaint to the adjudicator along with any statement provided pursuant to subsection 241(1). . . . (3) Subject to subsection (3.1), an adjudicator to whom a complaint has been referred under subsection (1) shall

240. (1) Sous réserve des paragraphes (2) et 242(3.1), toute personne qui se croit injustement congédiée peut déposer une plainte écrite auprès d'un inspecteur si: a) d'une part, elle travaille sans interruption depuis au moins douze mois pour le même employeur; b) d'autre part, elle ne fait pas partie d'un groupe d'employés régis par une convention collective. 241. (1) La personne congédiée visée au paragraphe 240(1) ou tout inspecteur peut demander par écrit à l'employeur de lui faire connaître les motifs du congédiement; le cas échéant, l'employeur est tenu de lui fournir une déclaration écrite à cet effet dans les quinze jours qui suivent la demande. 242. (1) Sur réception du rapport visé au paragraphe 241(3), le ministre peut désigner en qualité d'arbitre la personne qu'il juge qualifiée pour entendre et trancher l'affaire et lui transmettre la plainte ainsi que l'éventuelle déclaration de l'employeur sur les motifs du congédiement. . . . (3) Sous réserve du paragraphe (3.1), l'arbitre:

Analysis and Decision

[29]            Issue 1

What is the standard of review of the adjudicator's decision that he had jurisdiction to find the respondent was unjustly dismissed and that the limitation under subsection 242.(3.1) of the Canada Labour Code, supra did not apply?

I would adopt the standards of review as set out by Dawson J. in Roe v. Rogers Cablesystems Ltd., [2000] F.C.J. No. 1457 (QL) (T.D.). Dawson J. stated at paragraph 23:

. . . in considering whether the adjudicator made findings of fact without regard to the material before him, the standard of review is patent unreasonableness. In determining whether the adjudicator had jurisdiction to proceed with the complaint, the standard of review is correctness.

[30]            Issue 2

Did the adjudicator err in concluding that there was not a discontinuance of a function pursuant to subsection 242.(3.1) of the Canada Labour Code, supra?

The adjudicator does not have jurisdiction to consider a complaint by the respondent if the respondent was terminated because of the discontinuance of a function. Strayer J. in Sedepex, Inc. v. Canada (Adjudicator appointed under the Canada Labour Code), [1989] 2 F.C. 289 (T.D.) stated at pages 299 to 300:

. . . Difficult as it may be in some cases, the question which the statute requires to be answered, in my view, is as to whether the actual operative and dominant reason for the termination was "lack of work". I am satisfied that that is the question which the adjudicator put to himself in this case when he concluded that the alleged reason of "lack of work" was a "sham".

In this case, the question that must be answered is whether the actual, operative and dominant reason for the termination of the respondent's employment was the discontinuance of a function.

[31]            With respect to discontinuance of a function, the Federal Court of Canada stated in Transport Guilbault v. Scott, [1986] F.C.J. No. 321 (QL) (C.A.):

. . . The discontinuance of a function within the meaning of s. 61.5(3) (1) is discontinuance of a function within a given employer's business. Such discontinuance may result from a decision made by the employer to give work done till then by its employees to a contractor. Provided that decision is genuine and there is nothing artificial about it, s. 61.5(3)(a) cannot be interpreted otherwise without unduly limiting the employer's freedom to plan and organize its business as it wishes.

And in Flieger v. New Brunswick, [1993] 2 S.C.R. 651 the Supreme Court of Canada stated at page 664:

Therefore a "discontinuance of a function" will occur when that set of activities which form an office is no longer carried out as a result of a decision of an employer acting in good faith. For example, if a particular set of activities is merely handed over in its entirety to another person, or, if the activity or duty is simply given a new and different title so as to fit another job description then there would be no "discontinuance of a function". On the other hand, if the activities that form part of the set or bundle are divided among other people such as occurred in Mudarth, supra, there would be a "discontinuance of a function". Similarly, if the responsibilities are decentralized, as happened in Coulombe, supra, there would also be a "discontinuance of a function".

[32]            The respondent's termination letter dated June 1998 read in part:

With the resignation of the Executive Director, the Board has decided to reorganize the staffing component of the office.

To that end, the Board has determined that the position of "Fire Safety Officer" is to be classified as "redundant".

[33]            In Wolf Lake First Nation v. Young, [1997] F.C.J. No. 514 (QL) (T.D.) at paragraphs 8 to 9, Nadon J. (as he then was) stated:

Common sense dictates that the adjudicator is not required to simply accept the employer's statement that the employee was laid off for the reasons described in paragraph 242(3.1)(a). If that was indeed the effect of that paragraph then the adjudicator's role would effectively be eliminated because any employer faced with an adjudication under s. 242 of the Code would simply have to give the above explanation, and since no examination could then be done, the issue would be closed.

. . .

Thus, when faced with an employer claiming that an employee has been terminated because of a lack of work or discontinuance of a function, the adjudicator must first examine the merits of the employer's claim. If the adjudicator determines that the employee was let go for one of these two valid reasons then the adjudicator will not proceed further. However, when an adjudicator determines that the explanation offered by the employer is not valid, the adjudicator has the jurisdiction to do a full enquiry into the circumstances surrounding the dismissal.

Thus, the adjudicator was not required to accept the applicant's statement that the termination of the respondent's employment was due to a decision to reorganize the staffing component of the office and that as a result, the respondent's position of "Fire Safety Officer" was redundant.

[34]            The adjudicator then proceeded to examine the applicant's claim that the respondent was terminated due to redundancy. The adjudicator stated in his decision at pages 13 to 14:

I note that the minutes of the Board meetings held on Sept. 11, 1997 and April 20 and 21, 1998 (exhibits 19 and 17, respectively) document the Board's concerns about whether there was a need for a separate Receptionist position and about the problem in funding it. The President's letter to Ms. Head (exhibit 6) states that the Executive Assistant position is to be classified as "redundant" and that its duties are to be combined with those of another in order to come in line with staff funding available from INAC. This documentation is consistent with there having been a process leading to a decision to merge the Receptionist position with another.

On the other hand, the concern documented with respect to the Fire Safety Officer position is that the Officer should have done more with the independent First Nations. There is no documentation that the Board considered whether the position was really needed at all or whether the funds dedicated to it ought to be freed up for other purposes. The President's letter to Mr. Perswain (exhibit 4) states that the Fire Safety Officer position is to be classified as "redundant", but the only reason given is that the Board has decided to reorganize the staffing component of the office.

I accept Ms. Head's testimony that Mr. Smith exhibited what might reasonably be described as bullying behaviour toward Mr. Perswain and herself. The Board's decision to reprimand Ms. Head and Mr. Perswain after they made known their concerns about Mr. Smith's behaviour (as documented in the minutes of the Board meetings held on April 20 and 21, 1998) is consistent with Mr. Houle's testimony that the Board members were unhappy with staff criticism of Mr. Smith's leadership, with Chief Dennis Pashe being the most vocal.

I also accept the testimony of Mr. Meeches that Chief Pashe had advocated "getting rid" of Ms. Head at one of the April, 1998 meetings and of Mr. Perswain at one of the meetings in April or June, 1998. Mr. Meeches admitted that he was not certain about the dates of some of the events which he recounted.

The problems continued and Mr. Smith resigned prior to the Board meetings in mid June, 1998. There were no minutes of the meeting which resulted in the decision to declare the Fire Safety Officer position redundant. Time had taken its toll on memories by the date of the hearing, and there was even conflicting evidence as to who had made and seconded the motion. Mr. Hart said there was discussion around contracting out the services because there was not enough work to have a full-time Fire Safety Officer. Darcy Houle could not recall who had told him that there was not a big demand for Mr. Perswain's services in the communities.

The adjudicator then went on to discuss the jurisprudence relating to the discontinuance of a function or lack of work. After this discussion, he concluded after having considered the evidence as a whole "that the actual reason for the termination of Mr. Perswain's employment was that certain members of the Board did not want to have him continue as an employee". He then stated in his decision that he was not satisfied that the respondent was laid off because of lack of work or because of the discontinuance of a function. I am of the opinion that the adjudicator was correct in his conclusion and therefore, he had jurisdiction to deal with the case.

[35]            As noted above, when the adjudicator considered all of the evidence, he found that the respondent was laid off because certain members of the Board did not want to have him continue as an employee. He then concluded that the respondent was not dismissed for just cause. Therefore, he was unjustly dismissed. I am of the opinion that the adjudicator was correct in this conclusion.

[36]            Issue 3

If the adjudicator was correct in concluding that there was not a discontinuance of a function pursuant to subsection 242.(3.1) of the Canada Labour Code, supra, was the adjudicator's award patently unreasonable?

The applicant submits that the adjudicator's findings with respect to the quantum of the award was patently unreasonable. Subsection 242.(4) of the Code provides:

(4) Where an adjudicator decides pursuant to subsection (3) that a person has been unjustly dismissed, the adjudicator may, by order, require the employer who dismissed the person to (a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;

(4) S'il décide que le congédiement était injuste, l'arbitre peut, par ordonnance, enjoindre à l'employeur: a) de payer au plaignant une indemnité équivalant, au maximum, au salaire qu'il aurait normalement gagné s'il n'avait pas été congédié;

(b) reinstate the person in his employ; and (c) do any other like thing that it is equitable to require the employer to do in order to remedy or counteract any consequence of the dismissal.

b) de réintégrer le plaignant dans son emploi; c) de prendre toute autre mesure qu'il juge équitable de lui imposer et de nature à contrebalancer les effets du congédiement ou à y remédier.

[37]            In Wolf Lake First Nation, supra, Nadon J. (as he then was) stated at paragraph 51:

Subsection 242(4) of the Code is clear in its application; it is designed to fully compensate an employee who is unjustly dismissed. It is not limited to the amount of severance pay to which the employee is entitled. It is not calculated by determining the notice period which should have been given to the employee. In Slaight Communications Inc. v. Davidson, [1985] 1 F.C. 253 (Fed. C.A.); aff'd, [1989] 1 S.C.R. 1038 (S.C.C.), Mahoney J.A. stated at 260:

The intent of subsection 61.5(9) [now 242(4)] is to empower the adjudicator, as near as may be, to put the wronged employee in the position of not suffering an employment related disadvantage as a result of his unjustified dismissal.

Although the section places a ceiling on the amount of damages that may be awarded, the amount is not linked to the amount of severance pay awarded to the employee. Limiting the amount of damages for unjust dismissal to the amount of severance pay or on the basis of the common law is clearly an error. Support for this proposition is found in Canadian Imperial Bank of Commerce v. Boisvert, [1986] 2 F.C. 431 (F.C.A.), . . .

And at paragraphs 52 and 53:

More recently, in Alberta Wheat Pool v. Konevsky [1990] F.C.J. No. 877, Iacobucci C.J. (as he then was) for the Federal Court of Appeal was even more direct in stating at 2:

We are also of the view that the interpretation of paragraph 61.5(9)(a) of the Canada Labour Code . . . cannot be read down so as to limit the compensation that an adjudicator is empowered to award to an employee to the amount that could be claimed under the common law: See Auto Haulaway Inc. v. Reid (A-1044-88, October 19, 1989, [1989] F.C.J. No. 949) per Pratte, J.A.

An adjudicator awarding damages for unjust dismissal is entitled to set the amount of the award. The award is intended to compensate the employee for damages actually suffered as a result of the dismissal. While there is discretion in the amount of damages that may be awarded, an adjudicator commits an error when he or she limits the amount of the award to the amount of severance to which the employee would be entitled if the dismissal had been a justified one based on s. 235 or the common law.

It is obvious from this jurisprudence that the quantum of the award is not limited to the amounts awarded at common law. Subsection 242.(4) of the Code is clear in its application. As Nadon J. (as he then was) stated, "it is designed to fully compensate an employee who is unjustly dismissed".

[38]            The adjudicator in the present case awarded compensation for the period from July 6, 1998 (date of termination) to June 29, 2000 (last day of the adjudication hearing) (approximately $79,231). He reduced the amount for this period by his severance pay and earnings from other employment during that period (approximately $35,368). As such, the award for lost salary was $43,863. Additionally, he ordered the payment of the lost benefit of MANFF's matching contribution to the respondent's pension and insurance in the amount of $2,834. He also awarded interest as follows:

The total compensation, excluding interest, costs and disbursements, is $46,697. Interest on $46,697 at 5% (which is at or near the pre-judgment interest rate which applied during the period) from July 6, 1998 to June 29, 2000 is approximately $4,786. Interest for that period should more properly be calculated on a periodic basis, taking into account the difference between Mr. Perswain's salary and benefits had he remained employed by MANFF and the salary and benefits he did receive. I will approximate that calculation by using half of $4,786, i.e. $2,393. Interest on the subtotal of $49,090 at 5% from June 29, 2000 to the date of this award is then approximately $1,840, so the total compensation, excluding costs and disbursements, is $50,930.

[39]            The adjudicator refused to award costs on a solicitor and client basis. He fixed the costs at $3,750, plus reasonable disbursements. He based this award of costs on the Wolf Lake First Nation, supra case. This was a reasonable conclusion.

[40]            In light of subsection 242.(4) of the Code and the jurisprudence on this subsection, I am of the view that the adjudicator's award was not patently unreasonable. The adjudicator properly deducted the amounts earned from other employment and the length of the period for salary to be paid was within the range of times he could have decided upon. Accordingly, it is not for this Court to substitute its opinion in these circumstances.

[41]            The application for judicial review is dismissed.

ORDER

[42]            IT IS ORDERED that the application for judicial review is dismissed.

                                                                                     "John A. O'Keefe"            

                                                                                                      J.F.C.C.                      

Ottawa, Ontario

March 27, 2003

                          FEDERAL COURT OF CANADA

                                       TRIAL DIVISION

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                   T-715-01

STYLE OF CAUSE: MANITOBA ASSOCIATION OF NATIVE

FIRE FIGHTERS, INC.

- and -

VINCENT PERSWAIN

                                                         

PLACE OF HEARING:                                   Winnipeg, Manitoba

DATE OF HEARING:                                     Tuesday, October 22, 2002

REASONS FOR ORDER AND ORDER OF O'KEEFE J.

DATED:                      Thursday, March 27, 2003

APPEARANCES:

                                     Mr. David Newman

FOR APPLICANT

Mr. Martin Pollock

FOR RESPONDENT

SOLICITORS OF RECORD:

                                     Pitblado Buchwald Asper

2500 - 360 Main Street

Winnipeg, Manitoba

R3C 4H6

FOR APPLICANT

Pollock & Company

Suite 1120

363 Broadway Avenue

Winnipeg, Manitoba

R3C 3N9

FOR RESPONDENT