Date: 20130208
Docket: A-137-12
Citation: 2013 FCA 33
CORAM: EVANS
J.A.
SHARLOW
J.A.
WEBB
J.A.
BETWEEN:
MARK PAYNE
Appellant
and
BANK OF MONTREAL
Respondent
REASONS FOR JUDGMENT
EVANS J.A.
Introduction
[1]
While
Mark Payne was the manager of the Bank of Montreal’s (BMO) branch in Woodstock, a small Ontario town, he had a sexual relationship with the assistant branch
manager, Teresa Carter. They engaged in sexual activities at the branch and elsewhere.
[2]
Following
an allegation by Ms Carter that Mr Payne was stalking her, BMO became aware of
the affair and dismissed him for cause. Mr Payne complained to Human Resources
and Social Development Canada that his dismissal was unjust and thus contrary
to subsection 240(1) of the Canada Labour Code, R.S.C. 1985, c. L-2
(Code). An adjudicator, Peter J. Barton (Adjudicator), heard his complaint
under subsection 242(2) of the Code. In a decision, dated November 11, 2010 and
April 26, 2011, the Adjudicator held that the dismissal was unjust and ordered
BMO to reinstate Mr Payne. The relevant provisions of the Code are attached as
an Appendix to these reasons.
[3]
BMO
made an application to the Federal Court to review the Adjudicator’s decision.
In a decision rendered by Justice Rennie (Judge) on April 13, 2012 (2012 FC
431), the Court granted BMO’s application for judicial review and set aside the
decision of the Adjudicator on the ground that it was unreasonable.
[4]
This
is an appeal from the Judge’s decision. The first question to be decided is
whether the Adjudicator’s decision that Mr Payne’s misconduct was not
sufficiently serious to warrant dismissal was unreasonable because of the
reasons given for it and the decision itself. If the dismissal decision is
upheld, the second question is whether the remedy of reinstatement was
unreasonable.
[5]
For
the reasons that follow, I am not persuaded that the Adjudicator’s dismissal
decision was unreasonable, but find that the order of reinstatement was. Accordingly,
I would allow the appeal in part and remit the matter to a different
Adjudicator to determine an appropriate remedy.
Factual background
[6]
The
essential facts are not in dispute. Mr Payne, who is now 62 years of age, was
hired by BMO in August 2003 to be the branch manager at its location in Mount Forest , Ontario. In April 2007, he was promoted to be the manager of BMO’s branch at
Woodstock. The appointment came with an increase in both salary and grade
level.
[7]
In
September 2008, BMO suspended Mr Payne with pay while it investigated
complaints made against him by five female employees at the ten-employee Woodstock branch. They alleged that he had engaged in inappropriate conduct, including:
angrily shouting; demeaning them in front of colleagues and customers;
questioning an employee about the nature of a medical appointment for which she
had requested time off; and commenting on the personal appearance of two
employees.
[8]
On
October 16, 2008, following an investigation of these complaints (the first
investigation), Mr Payne received corrective action – step 3, the most serious
level of discipline short of dismissal. He was required by the action plan to
refrain from making unwelcome comments and/or conduct directed at other employees,
and was expected to understand the difference between appropriate and
inappropriate conduct in dealing with others, including his subordinates. It
added: “These performance expectations extend to all interactions with
colleagues and in all contexts.”
[9]
He
was also denied a bonus for that fiscal year and transferred with the title of
branch manager to a smaller branch in another Ontario community, Norwich, where he was to “shadow” or receive peer coaching from the incumbent manager
prior to her retirement in just over a year’s time. The transfer involved a
reduction of Mr Payne’s grade level, but not his salary.
[10]
On
November 6, 2008, BMO started a second investigation into Mr Payne’s conduct on
the basis of the complaint of stalking made by Ms Carter. When interviewed the
next day by investigators, Mr Payne denied having had a personal relationship
with her, and was again suspended with pay. However, at an interview on
November 10, he admitted to a sexual relationship, and on November 12 was put on
unpaid leave.
[11]
It
is agreed that the sexual relationship had started in the summer of 2008, and
continued until their spouses learned of it in late October. They had engaged
in consensual sexual activity at the Woodstock branch, during and after
business hours, and at Ms Carter’s home, including on two occasions after Mr
Payne had been transferred to Norwich and had received the corrective action
plan. It is also agreed that they met for lunch during the first investigation
and that he disclosed information to her about the investigation that he had
been told was confidential and was not to be shared.
[12]
On
November 17, 2008, the employee relations business partner of the bank
responsible for employment policies sent an email to BMO’s Senior
Vice-President, Ontario Regional Division, recommending that Mr Payne’s
employment be terminated for cause (Appeal Book, p. 131). She wrote:
Mark continues to demonstrate a lack of awareness
with respect to his actions and behaviours as a manager and BMO employee – throughout
our call he attempted to deflect his actions; stated that Teresa Carter was
“entrapping him due to poor performance” and referred to our .. [first]
investigation into his management practices as “silly.” I … made it clear to
him that his perception of our internal investigation as “silly” is a clear
indication of his lack of self awareness.
[13]
This
same writer had also noted in her report of the first investigation that Mr
Payne
was not self-aware regarding his perceived behaviour
and when asked to reconsider the perception of his actions, his response was
perceived as remorseful and committed to change. (Appeal Book, p. 103)
[14]
On
November 20, 2008, Mr Payne was dismissed for cause. The dismissal letter
alleged that he had breached the confidentiality of the first investigation by
discussing it with Ms Carter; acted inappropriately on bank premises during and
outside business hours; failed to meet the expectations set out in the
corrective action letter of October 16; and breached BMO’s Code of Business
Conduct and Ethics. The Code of Conduct states that the highest ethical
standards must guide employees’ decisions; breaches are taken very seriously
and may lead to disciplinary action, including dismissal.
[15]
Summarizing
the basis of the dismissal, the letter stated: “You have demonstrated poor
judgment, a lack of integrity and honesty in your conduct and we have lost
trust and confidence in you” (Appeal Book, p. 134).
Adjudicator’s decision
[16]
After
setting out the facts, the Adjudicator dealt with the grounds for the
dismissal. He found that Mr Payne had knowingly breached confidentiality
regarding the first investigation and had lied to BMO’s investigators about the
nature of his relationship with Ms Carter. The Adjudicator held that these
incidents were not “overly serious”, but serious enough to warrant some
discipline.
[17]
The
Adjudicator regarded Mr Payne’s sexual relationship with Ms Carter as the
principal basis of his dismissal. In this context, he found as a fact that a
male employee at the Woodstock branch knew of their “attachment” because he had
seen Mr Payne kiss Ms Carter’s hand at work and had said that they should “keep
it out of the office”. However, there was no evidence that other employees or
members of the local community were aware of it. The Adjudicator inferred from
the description of the relationship in the agreed statement of fact as
“consensual” that no improper pressure was exerted.
[18]
The
Adjudicator found no evidence that Mr Payne had breached BMO’s anti-harassment
policy by, for example, abusing his supervisory position by threatening
penalties or offering advantages related to work. On the other hand, the
Adjudicator surmised that Mr Payne’s conduct may well have breached the
personal integrity principle of BMO’s Code of Conduct, and held that his
initial denial of the relationship with Ms Carter constituted dishonesty for
the purpose of the Code of Conduct.
[19]
The
Adjudicator concluded that, regardless of whether Mr Payne had breached BMO’s
anti-harassment policy or its Code of Conduct, his conduct was “reckless in the
extreme” and put the Bank at “real risk”: “[i]ts reputation in the community
could have been seriously damaged by publicity.” However, in the absence of
evidence that other employees (with one exception), customers, or members of
the local community were aware of the relationship, the Adjudicator found that
Mr Payne’s activities had in fact caused little or no harm to BMO.
[20]
The
Adjudicator noted that the doctrine of progressive discipline requires that
employees normally be given an opportunity to mend their ways before being
discharged, and that Mr Payne may have learned from an opportunity to reflect
on his misconduct with Ms Carter. The Adjudicator also recognized that, despite
the absence of previous lesser penalties, an employer may dismiss an employee
for a “very serious incident”. In the Adjudicator’s view, the question was
whether, when considered together with his breach of confidentiality and lies,
Mr Payne’s affair with Ms Carter was of this nature.
[21]
Although
finding that Mr Payne’s misconduct was dangerous, foolish and reckless, the
Adjudicator concluded that, even when considered together with the breach of
confidentiality and lies, it was not so serious as to warrant dismissal. He
gave the following reasons.
[22]
First,
the relationship was essentially a matter between consenting adults “who
happened to work in the same place.” The characterization of the relationship
in the agreed statement of fact as consensual implied, the Adjudicator said,
that Mr Payne had not exerted work-related pressures on Ms Carter, and the
Adjudicator found no evidence that he had. The fact that he was her supervisor
and in a role model position was not determinative.
[23]
Second,
little or no harm was caused to BMO by Mr Payne’s behaviour, although “things
might be different” if more than one employee or a person in the community had
known of the relationship and was “upset”.
[24]
Third,
since Mr Payne had always had the best interests of the bank at heart, except
for his affair with Ms Carter, a suspension might well have succeeded because
he might have learned if he had had time to reflect on his conduct.
[25]
He
ordered BMO to reinstate Mr Payne after a four-month suspension.
Federal Court’s decision
[26]
The
Judge applied a standard of reasonableness to review the Adjudicator’s
decision. Examining the Adjudicator’s reasons for decision, the Judge
identified the following errors.
[27]
First,
he had failed to apply the contextual analysis required by McKinley v. BC
Tel, 2001 SCC 38, [2001] 2 S.C.R. 161 at para. 57 (McKinley)
for assessing whether Mr Payne’s misconduct was “reconcilable with sustaining
the employment relationship.”
[28]
In
particular, the Adjudicator had not considered Mr Payne’s conduct as a whole,
including the conduct for which he had received the most serious level of
discipline other than dismissal following the first investigation of the
complaints from female staff members. He noted that Mr Payne was engaged in the
sexual relationship with Ms Carter before, during, and after the misconduct for
which he had been sanctioned. Additionally, the Adjudicator gave no weight to
the fact that Mr Payne was in a managerial position, and that the bank needed
to rely on his trustworthiness and good judgment, including providing
leadership on enforcing the anti-harassment policy.
[29]
Second,
the Adjudicator erred in law in believing that Mr Payne’s misconduct did not
warrant dismissal because it caused no actual harm to his employer: an
employee’s creation of a risk of harm to an employer may suffice to justify
dismissal. In any event, the Judge found, BMO was harmed because one employee
was aware of the relationship, which on occasion was carried out during the
business day and thus caused the bank to lose some of the hours for which it
was remunerating two employees.
[30]
Third,
the Judge noted, the Adjudicator did not explain in his reasons how conduct
that he characterized as reckless, foolish and dangerous was consistent with
BMO’s maintaining a level of confidence in Mr Payne’s judgment as a manager
sufficient to sustain an ongoing employment relationship.
[31]
The
Judge also found that if, contrary to his view, Mr Payne’s dismissal was
unjust, the remedy of reinstatement was unreasonable. This was because, on the
facts found by the Adjudicator, it was unreasonable to conclude that Mr Payne’s
conduct did not destroy BMO’s trust and confidence in him as an employee
responsible for managing staff.
Issues and Analysis
(i) Standard of review
[32]
The
principal question in dispute in this case is whether Mr Payne’s dismissal was
unjust. This is a question of mixed fact and law because the answer depends on
the Adjudicator’s application of the relevant law to the facts that he found. The
inquiry involves an assessment of the facts within the proper legal framework.
The standard of review applicable to an administrative tribunal’s determination
of questions of mixed fact and law is presumed to be reasonableness: Dunsmuir
v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 at para. 53.
[33]
There
is nothing to rebut that presumption here. Quite the contrary. The preclusive
clause in subsection 243(1) of the Code reinforces the conclusion that Parliament
intends adjudicators’ decisions to be judicially reviewed on a deferential
standard. Whether a dismissal is “unjust” calls for a careful examination of
the entire context, an exercise that inevitably engages an adjudicator’s
experience and appreciation of the realities of the employment relationship.
[34]
If
the Adjudicator committed no reviewable error in finding that the dismissal was
unjust, reasonableness is also the standard for determining whether he erred in
the exercise of his remedial discretion by ordering Mr Payne’s reinstatement.
[35]
It
is conceded that the Judge selected reasonableness as the standard of review on
both issues. The question for this Court is whether he correctly applied that
standard when he concluded that the Adjudicator’s decision on both dismissal
and remedy was unreasonable: Telfer v. Canada (Revenue Agency), 2009 FCA
23, 2009 D.T. C. 5046 at paras. 16-19. Consequently, the Adjudicator’s decision
remains the primary focus of this appeal.
(ii) Reasonableness review
[36]
The
Supreme Court of Canada in Dunsmuir provided guidance on the application
of the reasonableness standard of review. First, it reminds us (at para. 47)
that reasonableness is a deferential standard that recognizes that there is
often no uniquely correct answer to issues in dispute in administrative
proceedings, and (at para. 49) that the legislature assigns primary
decision-making to a specialist tribunal because of its experience in the
subject matter and familiarity with the legislative scheme for which the
tribunal is responsible. Reasonableness review recognizes that an attitude of
respectfulness for the decisions of specialist administrative tribunals is
required of reviewing courts (at para. 48).
[37]
Second,
the Court stated (at para. 48), in conducting a reasonableness review a court
must consider both the tribunal’s process of decision-making (that is, its
reasons) and the outcome of the process (that is, the decision itself). In
examining the reasons, a reviewing court must ask whether they justify the
decision, and are transparent and intelligible. As for the outcome, it must
fall within the range of possible acceptable decisions open to the tribunal on
the facts and the law.
[38]
The
Court provided further clarification of the methodology of reasonableness
review in Newfoundland and Labrador Nurses’ Union v. Newfoundland and
Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708 (Newfoundland
Nurses). In particular, the Court stated (at para. 14) that inadequacies in
a tribunal’s reasons do not necessarily mean that the decision is unreasonable.
A reviewing court may still uphold the decision if it falls within Dunsmuir’s
acceptable possible range of outcomes. Reasons and outcome must be considered
together, not separately, in what Justice Abella, writing for the Court,
described as an “organic exercise”. Thus, she said (at para. 14): “the reasons
must be read together with the outcome and serve the purpose of showing whether
the result falls within a range of possible outcomes.”
[39]
The
Court also counselled reviewing courts (at paras. 16-18) against setting too
high a standard that tribunals must reach if their reasons are to provide the
requisite degree of justification, transparency and intelligibility. Not every
issue and argument need be addressed, nor need issues be explored in depth. A
reviewing court may also look to the tribunal’s record to assess the
reasonableness of the decision, although it may not substitute its reasons for
those of the tribunal (para. 15). Justice Abella stated (at para. 16):
… if the reasons allow the
reviewing court to understand why the tribunal made its decision and permit it
to determine whether the conclusion is within the range of acceptable outcomes,
the Dunsmuir criteria are met.
[40]
As
already noted, the Adjudicator in the present case had to determine whether Mr
Payne’s dismissal was unjust within the meaning of subsection 242(3) of the Code.
BMO criticizes the Adjudicator’s reasons on the ground that they do not
adequately take into account some legally relevant aspects of the facts, and
assigned too much weight to others.
[41]
However,
it is not normally the role of a court conducting a reasonableness review to substitute
its view for that of the tribunal on the relative importance of the facts
considered by the tribunal. Nonetheless, the court must still ask whether, on
the basis of the reasons given by the tribunal, supplemented when necessary
from the administrative record, the decision is rationally defensible as
falling within the margin of appreciation afforded by courts to specialist
tribunals through the deferential standard of reasonableness.
[42]
McKinley mandates an
essentially factual and multi-factored nature of the contextual inquiry for
determining whether, in the particular circumstances of any given case, an
employee’s misconduct is sufficiently serious to warrant dismissal. The Adjudicator
in the present case thus enjoys a relatively wide margin of appreciation. As
Justice Iacobucci said it McKinley (at para. 34):
The jurisprudence also reveals that an application
of a contextual approach – which examines both the circumstances surrounding
the conduct as well as its nature or degree – leaves the trier of fact with
discretion as to whether … [the misconduct] gives rise to just cause.
BMO has a steep hill to climb in order to establish
that the Adjudicator’s decision was unreasonable.
[43]
Similarly,
because the remedial discretion conferred on adjudicators by subsection 242(4)
of the Code is broad, and fashioning an appropriate remedy is particularly
within their expertise, a finding of unreasonableness cannot be lightly made.
(iii) Was the Adjudicator’s
unjust dismissal decision unreasonable?
(a) unjust dismissal:
the legal context
[44]
The
parties agree that the Supreme Court of Canada’s decision in McKinley is
the leading case on the analytical framework within which a court must
determine whether an employee’s misconduct is sufficiently serious to warrant
dismissal for cause, even if the employer had not previously imposed lesser
penalties, or “progressive discipline” on the employee for similar misconduct.
[45]
McKinley arose in the context
of a common law action for breach of contract in which the plaintiff alleged
that he had been dismissed without just cause. As the Adjudicator in the
present case recognized, the approach prescribed in McKinley is equally
applicable to determining whether an employee’s dismissal is “unjust” for the purposes
of the Code.
[46]
The
importance of McKinley is that it rejects a categorical approach to
determining whether an employee’s misconduct warrants dismissal. With limited
exceptions, the category of misconduct involved, including dishonesty, is not
determinative. Instead, a careful assessment of all the circumstances of the
particular case is required, in order to ensure that the punishment imposed on
the employee is proportionate to the gravity of the misconduct. Underlying this
principle is the recognition of the importance of work in the lives of
individuals, and of the power imbalance inherent in the employment relationship
(at paras. 53 and 54).
[47]
As
Justice Iacobucci, writing for the Court, put it: “an analysis of the
surrounding circumstances of the alleged misconduct, its level of seriousness,
and the extent to which it impacted upon the employment relationship” (at para.
56) is necessary “in order to assess whether it is reconcilable with sustaining
the employment relationship” (at para. 58). Earlier, he had said in respect of
the misconduct at issue in McKinley (at para. 48):
More specifically, the test is whether the
employee’s dishonesty gave rise to a breakdown in the employment relationship.
This test can be expressed in different ways. One could say, for example, that
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.
[48]
It
is clear from McKinley, and from the subsequent jurisprudence to which
counsel referred us, that this test is not easily satisfied. Dismissal for
cause is rarely found to be just in the absence of prior warnings and the
imposition of lesser penalties for similar misconduct.
[49]
The
Adjudicator correctly identified the McKinley analysis as applicable to
Mr Payne’s complaint. BMO concedes that a sexual relationship between a
supervisor and a subordinate employee, even when conducted at work, does not
fall into the limited categories of misconduct for which dismissal is justified
without a contextual analysis of all the relevant circumstances of the
particular case: see Cavaliere v. Corvex Manufacturing Ltd., [2009] O.J.
No. 2334 at para. 2.
[50]
The
Adjudicator’s error, BMO says, is that he did not apply the McKinley
methodology because he failed to take into account aspects of the context
within which he had to assess the seriousness of Mr Payne’s misconduct. This,
counsel submitted, led the Adjudicator to an outcome that was not defensible on
the facts and the law.
(b) Did the
Adjudicator consider Mr Payne’s misconduct as a whole?
[51]
Counsel
for both parties agree that the misconduct for which Mr Payne was disciplined
in October 2008 was part of the context that McKinley required the
Adjudicator to consider in assessing the seriousness of the sexual relationship
between Mr Payne and Ms Carter. The decision-maker must evaluate the employee’s
misconduct cumulatively to determine whether summary dismissal was unjust: Poliquin
v. Devon Canada Corp., 2009 ABCA 216, [2009] 9 W.W.R. 416 at paras. 73-75.
[52]
Counsel
for BMO says that the Adjudicator failed to apply the McKinley
methodology for determining whether Mr Payne’s misconduct justified dismissal
because he failed to take into account the misconduct for which he had already
been disciplined and which was contemporaneous with his affair with Ms Carter.
I do not agree.
[53]
First,
the Adjudicator described in some detail the employees’ complaints, the
resulting investigation and resulting disciplinary action. Second, in the
analysis section of his reasons the Adjudicator stated that the short time Mr
Payne had been employed by BMO and the fact that he had “two disciplines including
the one on October 16 on his record” (the emphasis is mine) justified a
more serious penalty.
[54]
It
is true that the Adjudicator does not refer to the misconduct for which Mr
Payne had already been disciplined when he asked whether the breach of
confidentiality, the lies, and the affair, considered together, warranted
dismissal for cause. However, given the references to the other misconduct
noted above, I cannot infer from the fact that the Adjudicator did not mention
it again that he had overlooked it. It is also clear from the Adjudicator’s
description of the facts that he was aware that the complaints that resulted in
the first investigation were broadly contemporaneous with the affair.
[55]
BMO
submits that Mr Payne was guilty of a pattern of conduct that demonstrated, in
different ways and at much the same time, his unfitness for managerial
responsibilities, particularly when most of the employees under his supervision
were women. The Adjudicator erred, counsel said, by overlooking this important
element of the context.
[56]
In
my view, this is essentially an argument that the Adjudicator should have given
more weight to this aspect of the case in his assessment of the seriousness of
Mr Payne’s misconduct. However, the assignment of weight to the various
elements of a contextual inquiry in the circumstances of a given case is within
Adjudicators’ discretion, and the unreasonableness standard will normally
preclude judicial intervention on this ground.
[57]
In
this regard, I would note important differences between the misconduct arising
from employee complaints about Mr Payne’s unwelcome comments and his manner of
speaking to them, and consensual sex with Ms Carter. However, I also recognize
that, at a more general level, they both involve inappropriate behaviour by a manager
to female employees under his supervision.
(c) Did the
Adjudicator err by requiring proof of harm?
[58]
Counsel
for BMO submitted that the Adjudicator erred by holding that an employee may
only be dismissed for cause when the risk of prejudice created by the
misconduct results in actual harm. Canadian Imperial Bank of Commerce v.
Boisvert, [1986] 2 F.C. 431 (C.A) at 456 is authority for the proposition
that misconduct that puts an employer at a substantial risk of serious harm may
suffice to justify summary dismissal, even if the harm does not materialize.
[59]
I
agree with counsel’s formulation of the relevant law. However, I do not accept
that, on a fair reading of the Adjudicator’s reasons, he regarded actual harm
as a legal prerequisite for dismissal for cause.
[60]
The
Adjudicator properly acknowledged the serious risks of harm to BMO created by
Mr Payne’s misconduct. In particular, the relationship with Ms Carter could
have had an adverse effect on staff morale: employees might wonder whether sex
with the branch manager was the price of professional advancement. Second, the
conduct could have endangered the reputation of BMO in Woodstock: customers,
actual and potential, would likely form an unfavourable impression of a bank at
which the two senior employees were conducting a sexual relationship at work.
Third, there was the possibility of a lawsuit by Ms Carter against BMO based on
Mr Payne’s conduct.
[61]
Despite
the creation of these serious risks of harm, the Adjudicator found that only
one person, a male employee at the branch, was aware of the relationship, and
so BMO thus suffered little actual harm as a result of the misconduct. That an
employee’s dangerous conduct caused no significant harm to the employer is
relevant to a contextual analysis, and may reduce the seriousness of the
misconduct: Dooley v. C.N. Weber Ltd, [1994] O.J. No. 712 at para. 21; aff’d.
[1995] O.J. No. 940 (C.A.); leave to appeal denied [1995] S.C.C.A. No. 264 (Dooley).
[62]
I
read the Adjudicator’s reasons as saying only that the relatively small amount
of harm sustained by BMO reduced the seriousness of Mr Payne’s misconduct, not
that the creation of risk could never, as a matter of law, constitute just
cause for dismissal. That the Adjudicator did not say in his reasons that the conduct
of the relationship at work may have detracted from their productivity as
employees is not, in my view, a fatal omission.
[63]
The
weight to be attached to the fact that Mr Payne’s misconduct caused relatively
little harm to BMO is for the Adjudicator to determine when viewing all the
relevant circumstances of the case.
(d) Did the
Adjudicator take into account Mr Payne’s supervisory role?
[64]
Counsel
for BMO says that the Adjudicator erred by not including in his contextual
analysis of the seriousness of Mr Payne’s misconduct the fact that he was a
supervisor of other employees, most of whom were female. Sexual relationships
between managers and employees who report to them should always be examined
carefully to determine whether the manager has taken advantage of the inherent
power imbalance between them. Those occupying managerial positions owe duties
to both the employees they supervise and their employer: Bannister v.
General Motors of Canada Ltd. (1998), 164 D.L.R. (4th) 325 (Ont. C.A.); Simpson v. Consumers’ Assn. of Canada (2001), 209 D.L.R (4th) 214 (Ont. C.A.).
[65]
When
viewed in its totality, Mr Payne’s misconduct, counsel submits, was
fundamentally inconsistent with his performance of these duties, and warranted
dismissal for cause.
[66]
The
Adjudicator found that the relationship between Mr Payne and Ms Carter was
consensual, largely because this was how it was described in the agreed
statement of fact, but also because he found no evidence of threats or promises
related to work. Hence, he concluded, no improper pressure was being exerted in
the relationship
[67]
In
the absence of such evidence, sexual relationships between a supervisor and a
subordinate do not necessarily constitute cause for dismissal. Thus in S.(S.)
v. Huang & Danczkay Property Management Inc., [1999] O.J. No. 4802
(S.C.J.) Justice Swinton said (para. 43):
It is clear in Norberg [v. Wynrib,]
[1992] 2 S.C.R. 226, that not every sexual relationship between an employee and
supervisor or superior is involuntary because of inequality of bargaining
power. What vitiates consent is the element of duress, unconscionability, or
exploitation in the arrangement and that is lacking here.
[68]
The
Adjudicator understood that Mr Payne was Ms Carter’s supervisor, and was alive
to the possibility that Mr Payne could have abused his position to start or
continue a sexual relationship with her. The question is whether, on the facts
of this case, the Adjudicator failed to conduct a contextual analysis because
he did not go behind the characterization of the relationship in the agreed
statement of fact as consensual.
[69]
Mr
Payne knew that Ms Carter was vulnerable. She had previously received a poor
work performance review and he was responsible for writing the next one,
although in fact he did not. She had also said to him that she was experiencing
marital difficulties. She told the investigator that she felt pressure to
continue the relationship, and complained to BMO that he was stalking her when
the relationship was ending.
[70]
The
Adjudicator’s analysis of this aspect of the context is undoubtedly thin,
particularly in light of the greater awareness in more recent jurisprudence of
women’s vulnerability in the workplace to unwelcome sexual advances by their
superiors. However, four points need to be noted.
[71]
First,
the existence of a power imbalance between supervisor and subordinate has
generally been regarded as relevant in cases where sexual harassment is the
ground of dismissal, and the issue is whether the supervisor’s conduct was
unwelcome. This was not the basis on which BMO dismissed Mr Payne, and it has
not challenged the Adjudicator’s finding that Mr Payne had not breached its
anti-harassment policy.
[72]
Second,
the Adjudicator was aware that Mr Payne and Ms Carter had given the
investigators different accounts of who instigated and protracted the
relationship.
[73]
Third,
it is clear from the Adjudicator’s description of BMO’s argument that he was
fully alert to the possibility of supervisors’ abuse of power, especially in
cases where sexual harassment is alleged.
[74]
Fourth,
while Ms Carter told the investigator that she had felt pressured to continue
the relationship, the Adjudicator noted that she and Mr Payne gave different
accounts of who was responsible for starting and continuing the affair. It
would have been difficult for the Adjudicator to have pursued the issue very
far, especially as Ms Carter was not a witness at the hearing
[75]
In
all these circumstances, a McKinley contextual analysis did not oblige
the Adjudicator to explore further whether the relationship was truly
consensual.
(e) Was the outcome
unreasonable?
[76]
As
I have already indicated, I do not regard as compelling the errors that BMO
alleges are contained in the Adjudicator’s reasons. The Adjudicator was
entitled to take the view that the seriousness of Mr Payne’s misconduct was
mitigated by the consensual nature of the sexual relationship and the fact that
it was not shown to have caused the employer significant harm.
[77]
The
third reason that the Adjudicator gave for concluding that dismissal was an
excessive penalty was that Mr Payne had not had an opportunity to learn from
the discipline imposed after the first investigation. And, having accepted Mr
Payne’s statement that he had always had the best interests of the bank at
heart, except for his affair with Ms Carter, the Adjudicator concluded that a
suspension “might well have succeeded” in causing him to reflect on his
shortcomings and to improve his managerial performance.
[78]
This
conclusion follows from the Adjudicator’s earlier reference to the concept of
progressive discipline, whereby the imposition of a lesser sanction for
misconduct gives employees an opportunity to mend their ways. He noted that,
since Mr Payne did not receive the step - 3 corrective action until October 16,
he had not had a chance to demonstrate that he would not in the future engage
in inappropriate behaviour with or towards female employees he was supervising.
[79]
It
was open to the Adjudicator as the finder of fact to accept the genuineness of
Mr Payne’s assertion that, apart from his affair with Ms Carter, he had always
had the best interests of BMO at heart. Nonetheless, I have concerns with this
aspect of the reasoning as a justification for the Adjudicator’s finding that
Mr Payne’s dismissal was unjust. Whether BMO should have given him another
chance is better addressed in this case in the context of the appropriateness
of the remedy of reinstatement awarded by the Adjudicator.
[80]
It
may seem surprising that the facts of the present case would not have been
found to warrant dismissal for cause. However, this is a question that
Parliament has committed to the Adjudicator. It is not the function of a
reviewing court to substitute its view of the merits of a dispute for that of
an Adjudicator. The court is limited to the residual role of ensuring that the
reasons given by the Adjudicator justify the outcome, and demonstrate that it
falls within the range of acceptable outcomes. That range may well include a
decision that appears “counter-intuitive” (Newfoundland Nurses, at para.
13) to the non-specialist.
[81]
Two
factors serve to underscore the need for judicial deference in this case: the
preclusive clause in subsection 243(1) of the Code, and the degree of
discretion inevitably left to the Adjudicator in weighing and balancing the
multiple factors of the contextual inquiry mandated by McKinley. That
context includes the fact that the Code conferred statutory protection against
unjust dismissal on non-unionized employees (unionized employees are protected
from arbitrary dismissal by “just cause” clauses in collective agreements), in
recognition of the power imbalance in the employment relationship and the
importance of work in individuals’ lives. Dismissal for cause not only
summarily terminates an employment relationship, but may also make it very
difficult for the employee to obtain comparable employment in the future.
[82]
Hence,
despite the Adjudicator’s finding that Mr Payne’s misconduct had been
dangerous, reckless, and foolish, his reasons, in my view, justify his
conclusion that dismissal for cause was an excessive penalty: the outcome fell
within the range of outcomes reasonably open to him on the facts and the law.
[83]
My
conclusion on the Adjudicator’s determination of the dismissal issue requires
me to consider the second question: if the dismissal was unjust, did the
Adjudicator err in ordering Mr Payne’s reinstatement?
(iv) Was the reinstatement remedy
unreasonable?
[84]
In
separate reasons delivered some five months after the dismissal decision, the
Adjudicator ordered BMO to reinstate Mr Payne after a four-month suspension,
and awarded him compensation. The issue here is whether the Adjudicator’s
exercise of his discretion to order reinstatement was unreasonable.
[85]
The
Adjudicator stated that reinstatement was the preferred remedy following a
finding of unjust dismissal, “barring exceptional circumstances.” Referring to
the factors that have been said to justify not reinstating an unjustly
dismissed employee, the Adjudicator emphasized the following. First, Mr Payne’s
lies about the affair would have damaged BMO’s trust in him, but were perhaps
“understandable.” Second, he found Mr Payne’s previous discipline “troubling”,
and noted that he was very vulnerable to removal if further problems arose.
However, the Adjudicator regarded that as a matter for the future; meanwhile
his shortcomings could be addressed by training. Third, Mr Payne’s personal
relationship with other BMO officials had deteriorated. Fourth, Mr Payne had
not been in his new posting long enough to show whether he had learned anything
from the discipline. Since the employer had not established that reinstatement
was “unrealistic”, Mr Payne deserved another chance.
[86]
In
Atomic Energy of Canada Ltd. v. Sheikholeslami, [1998] 3 F.C. 349
(C.A.) at para. 12, leave to appeal denied S.C.C. Bulletin, 1998, p.1399, the
Court noted that adjudicators have full discretion to choose among the remedies
listed in subsection 242(4) of the Code, including compensation and
reinstatement. While reinstatement is not a right, in practice it is the remedy
favoured by adjudicators for unjust dismissal, save for exceptional
circumstances.
[87]
Even
given the degree of deference due to an adjudicator’s exercise of the broad
remedial discretion conferred by the Code, the reasons given in this case do
not, with all respect, provide a cogent justification for the decision to order
reinstatement.
[88]
The
contextual factors to be considered in determining whether a dismissal is
unjust overlap to a considerable extent with those relevant to deciding if
reinstatement is appropriate. A non-exhaustive list of the factors normally
considered in the context of reinstatement is set out by Justice Manson in Bank
of Montreal v. Sherman, 2012 FC 1513. A critical question for reinstatement
has a pronounced forward-looking character: could the employer ever have
confidence in the employee’s judgment again, such that it should be prepared to
run the risk of further misconduct? This is not a question that the Adjudicator
squarely addresses. It is not the same as the question posed by the
Adjudicator: is reinstatement “unrealistic”?
[89]
Even
if the Adjudicator did ask the right question, it was not reasonably open to
him on the facts and the law to conclude that Mr Payne should be reinstated as
the manager of the Norwich branch (the only option considered by the
Adjudicator). An employee with many more years of BMO service than Mr Payne had
filled his position, and she might have to be replaced if he was reinstated.
[90]
The
Adjudicator canvassed the factors that indicated that reinstatement was
inappropriate: Mr Payne had told lies to investigators and breached
confidentiality; he was “not a particularly good manager”; his position at Norwich had been filled; and he had poor relations with his superiors. The Adjudicator’s principal
reason for reinstatement seems to have been that, because Mr Payne had not had
an opportunity to learn from the earlier discipline, he deserved a chance to
show that he could learn, and regain the bank’s trust and confidence in him as
a manager.
[91]
However,
the Adjudicator did not mention the fact that Mr Payne returned to Woodstock to resume his sexual relationship with Ms Carter at the branch after he
had received the corrective action, and in defiance of its clear directive
regarding the need for acceptable behaviour towards employees. In my view, this
undermines the principal basis of the Adjudicator’s conclusion, namely that Mr
Payne deserved an opportunity to mend his ways after his discipline and to show
BMO that it could again have trust and confidence in him as a manager. The
Adjudicator also relied on his view that Mr Payne had not had an opportunity to
learn from the earlier discipline to support his conclusion that the dismissal
was unjust. However, this was only one of three factors of which the
Adjudicator based the dismissal decision.
[92]
In
view of the Adjudicator’s other findings, and looking at the record as a whole,
I can see no rational basis, or line of reasoning, to justify awarding the
remedy of reinstatement. Although he is now 62 years of age, Mr Payne had only
been employed by BMO for little more than five years when he was dismissed. He
thus did not have years of unblemished service with BMO, which might have
provided a basis for concluding that its trust and confidence in him as a
manager could be restored.
[93]
It
is to be hoped that the parties can reach an agreement on the issue of remedy
without again resorting to an Adjudicator. This case has already consumed an
undue amount of time and resources.
(v) Conclusions
[94]
For
all of the above reasons, I would allow the appeal in part, dismiss the
application for judicial review in so far as it impugned the decision of the
Adjudicator that the dismissal was unjust, but grant it to the extent of
setting aside the remedy awarded by the Adjudicator. If the parties cannot
reach an agreement on the remedy, I would the remit matter to a different
Adjudicator to determine an appropriate remedy. In view of the mixed success of
the parties on this appeal, I would award no costs in this Court or below.
“John M. Evans”
“I
agree.
K.
Sharlow J.A.”
“I
agree
Wyman
W. Webb J.A.”
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