Date:
20080228
Docket: A-215-07
Citation: 2008 FCA 75
CORAM: DESJARDINS
J.A.
LÉTOURNEAU
J.A.
TRUDEL J.A.
BETWEEN:
MICHEL GAUTHIER
Appellant
and
ATTORNEY GENERAL OF CANADA
Respondent
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
Issue
[1]
Was the
Assistant Deputy Minister of the Department of Human Resources and Skills
Development Canada (the Department) justified in finding that the appellant, by
his activities as a municipal councillor for the city of
Saint-Jean-sur-Richelieu, was in an apparent conflict of interest with his
duties as an investigator under the Employment Insurance Act and
Regulations?
[2]
Asked to
rule on that question, Shore
J. of the Federal Court of Canada (the judge) found in the affirmative: see Gauthier
v. Attorney General of Canada, 2007 FC 304. He accordingly dismissed with
costs the application for judicial review submitted to him by the appellant.
That is the decision now before this Court on appeal.
[3]
As usual,
this question is accompanied by the thorny issue of the standard of review,
which was and continues to be a source of difficulty and confusion in this
case.
[4]
I hasten
to add that the integrity of the appellant Mr. Gauthier has not in any way been
questioned in these proceedings. The issue is one of an apparent conflict of
interest, not an actual conflict.
Facts
[5]
For
reasons that will become obvious in due course, relating to the appellant’s
arguments and the remedy he is seeking, it is unnecessary to provide a detailed
account of the underlying facts of the case.
[6]
The
appellant is employed by the Public Service of Canada as an employment
insurance investigator. The purpose of his investigations is to uncover fraud
or abuse in the administration of the Act and Regulations governing
participation in the insurance scheme and the granting of employment insurance
benefits. They may [TRANSLATION] “lead to fines, financial penalties or the
establishment of overpayments”: see appeal record, page 98, paragraph 3 of the
affidavit by the Assistant Deputy Minister of the Department.
[7]
The
appellant’s work in this capacity involves, inter alia, contact with the
public, working in conjunction with local police services, recommending
prosecution and laying informations: ibid., at paragraph 4.
[8]
As a
public servant, the appellant is subject to the Values and Ethics Code for
the Public Service (the Code). The Code derives from a Treasury Board
policy contained in a directive introduced pursuant to subsections 7(1) and
11.1(1) of the Financial Administration Act, R.S.C. 1985, c. F-11. It
came into effect on September 1, 2003, replacing the Conflict of Interest
and Post-Employment Code for the Public Service. Until that date, the
appellant had been governed by the former Code.
[9]
Between
1982 and April 2005, the appellant performed his investigator duties at the
Saint-Jean-sur-Richelieu office. The area served by the office comprised
several municipalities, including the town of Iberville.
[10]
In 1999,
he became involved in municipal politics. In November of that year he was
elected to the Iberville town council and, at that point, was faced with the
potential for a conflict of interest within the meaning of the Code. The appellant
was aware of this. As the Code required, he submitted a confidential report to
the then Assistant Deputy Minister regarding his duties as an elected
representative.
[11]
In a
letter to him on November 2, 1999, the appellant’s contention that he was not
in a conflict of interest situation was upheld. However, he was urged to be
careful and cautious so as to avoid any conflict of interest, even an apparent
one: see appeal record, page 67, letter from Danielle Vincent, then Assistant
Deputy Minister.
[12]
As a municipal
councillor, the appellant was paid approximately $21,400 a year. In addition to
his salary, he received a tax-free allowance of $10,700. He was involved on a
number of committees, including recreation, public transit, public safety and
town planning.
[13]
Saint-Jean-sur-Richelieu
did not escape the great wave of mergers that swept over the municipal world.
In 2001, the name of Saint-Jean-sur-Richelieu remained, but the territory of
the former town was enlarged by the addition of the towns of Iberville, Saint-Luc,
L’Acadie and Saint-Athanase.
[14]
On
November 3 of the following year, the appellant was elected municipal
councillor for District 2 of the new city of Saint-Jean-sur-Richelieu. This
district corresponded to the old town of Iberville, for which he had been a
municipal councillor prior to the merger.
[15]
The
appellant again sought to ensure that he was in compliance with the Code. He
met with the Brossard Office director, who concluded that it was not necessary
for the appellant to file another confidential report under the Code, since the
circumstances that had previously existed were essentially still the same: ibid.,
at page 33, see paragraph 14 of appellant’s affidavit.
[16]
With the
municipal elections approaching in 2005, the appellant submitted another confidential
report to his employer in September 2004. In it, he informed the employer of
his intention to seek another term as municipal councillor.
[17]
By a
letter dated February 23, 2005, the Assistant Deputy Minister for the Quebec
Region indicated that, having reviewed the facts, she considered his activities
as a municipal councillor for the city of Saint-Jean-sur-Richelieu to
[TRANSLATION] “constitute an apparent conflict of interest situation”: ibid.,
see page 76 of letter from the Assistant Deputy Minister. I will return to this
letter below.
[18]
The
appellant grieved the Assistant Deputy Minister’s decision. To resolve the grievance, he
and his union representative submitted two alternatives to the employer for
remedying the conflict of interest.
[19]
First, he
suggested that the 25 to 30 potentially problematic files from his Iberville
District No. 2 be transferred to the attention of one of his Office
colleagues. In exchange, he would take on an equivalent number of that
colleague’s files.
[20]
Second, if
the first proposal were rejected, he asked that all his files be exchanged with
the Brossard Office. He would leave Saint-Jean-sur-Richelieu and work in
Brossard. In return, a colleague from Brossard would come and work in
Saint-Jean-sur-Richelieu. Obviously, the appellant’s proposal to travel to the
neighbouring district would generate expenses for him, and he made it
contingent on those expenses being covered by his employer. In passing, I do
find it surprising, to say the least, that the appellant, who, according to the
impugned decision, created an apparent conflict of interest for himself by
deciding to take on other paid employment, should think himself entitled to
demand that the costs of ending this conflict of interest be borne by his first
employer, the victim of the conflict (and in this case, that means the
taxpayers as a whole) in order for the appellant to be able continue in his
second paid employment—the very source of the conflict. After all, under the
Code, it is the responsibility of the employee to “prevent real, apparent or
potential conflicts of interest from arising” and, needless to say, to take the
actions necessary to end them: see appeal record, page 124, under item Measures
to Prevent Conflict of Interest, the list of a public servant’s responsibilities.
[21]
Both of
the appellant’s proposals were rejected by his employer.
[22]
On April
21, 2005, the appellant requested a temporary assignment to the Brossard
territory until the date of the election, scheduled for November 6, 2005. The
request was denied. The employer then offered the appellant one of the
following three options, as appears from the e-mail sent by Yvan Desroches to
the appellant on April 21, 2005:
[TRANSLATION]
1. Cease your political
activities in the territory;
2. Give up your employment
temporarily or permanently; and
3. Submit a written
request for transfer.
[23]
A request
for a temporary transfer to Brossard was made by the appellant and was granted.
At that time, he was still in Saint-Jean-sur-Richelieu, but was performing his
investigator’s duties in the Brossard territory.
[24]
The
Assistant Deputy Minister’s decision was upheld at the final grievance level.
It was this decision which was the subject of judicial review in the Federal
Court: hence, the appeal to this Court.
Analysis of appellant’s arguments and of
impugned decision
[25]
Counsel
for the appellant submitted that the Court needs to intervene in this matter
because the judge erred in law by applying the wrong standard of review to the
decision before him.
[26]
Additionally,
he said the Court should intervene because the judge essentially endorsed the
Assistant Deputy Minister’s decision despite it being irremediably vitiated by
two errors of fact and one error of law. I will address these points now,
beginning with the standard of review.
(a) Applicable standard of review
[27]
The judge
applied the standard of patent unreasonableness to the decision before him,
whereas, by the time of the hearing in Federal Court, our Court had already
rendered its decision in Canada (Attorney General) v. Assh, 2006 FCA
358.
[28]
The
parties here informed us that Assh was in fact brought to the attention
of the judge below and debated before him. They were unable to explain how he
had arrived at that standard, considering that our Court had clearly identified
a different one. No mention of Assh was made by the judge in his
reasons.
[29]
Assh raised a conflict-of-interest
issue under the Code. The conflict in that case resulted from a pension
beneficiary’s $5,000 bequest to Mr. Assh, who had helped her to obtain the
pension. Mr. Assh was a lawyer specializing in pensions employed by the Bureau
of Pensions Advocates of the Department of Veterans Affairs. His role was to
assist veterans and their surviving spouses to apply for pensions. Hughes J.,
also of the Federal Court of Canada, who had decided Assh some 17 months
before the judge rendered his decision in the case at bar, ruled that the
appropriate standard of review was reasonableness simpliciter, since the
question was one of mixed fact and law resulting from application of the Code
to the facts of the case: see Assh v. Canada (Attorney General), 2005 FC
1411, at paragraph 32.
[30]
On appeal,
Evans J.A. of this Court undertook a pragmatic and functional analysis to
identify the applicable standard. He considered the impact of the existence of
a privative clause, which he considered to be fairly weak; the nature of the
issues; the relative expertise of the decision-maker and of the Court; and the
purposes of the Code.
[31]
In the
end, at paragraph 50 of his reasons, he found, with Nadon J.A. concurring
(though dissenting on the merits), that the standard of review applicable to
the interpretation of the Code and the facts at issue before him was that of
correctness. Although some factors taken into account in the pragmatic and
functional analysis suggested a measure of deference toward the decision-maker,
he considered for two reasons that correctness was the standard that should
prevail.
[32]
First, the
Code was in fact incorporated in Mr. Assh’s employment contract. And, as is the
case here, the decision was not that of an independent decision-maker.
[33]
Second,
the test at common law for an apparent conflict of interest situation is
similar to that for reasonable apprehension of bias. It is a test with which the
courts are familiar.
[34]
I set out
paragraphs 50 to 53 of his decision:
(v) Conclusion
[50] On the basis of the pragmatic and
functional considerations discussed above, I am of the opinion that
correctness is the appropriate standard for reviewing the final level grievance
decision respecting the interpretation of the relevant sections of the Code,
and the application of the provision respecting possible influence.
[51] In reaching this conclusion, I have
attached particular weight to two factors. First, and more important, the Code is effectively
incorporated into Mr. Assh's contract of employment, and the administrative
decision-makers responsible for its interpretation and application are not
independent of the employer. In my opinion, Parliament should not be taken
to have intended that, subject only to judicial review for unreasonableness,
the employer may determine unilaterally whether, by accepting this legacy, an
employee would be in breach of contract.
[52] It is true that breaches of the Code may be
punished by the employer through discipline, more serious disciplinary measures
may ultimately be referred to an Adjudicator under paragraphs 92(1)(b)
or (c) of the PSSRA, and Adjudicators' decisions on such matters
are normally reviewable for patent unreasonableness. However, this is not true
of all disciplinary action. Moreover, in my view, federal public service
employees should be able to obtain an independent determination of the scope of
their contractual obligations without first having to expose themselves to
disciplinary action by disregarding a grievance board's decision.
[53] Second, the test for determining the
existence of an apparent conflict of interest is somewhat similar to common law
concepts: the reasonable apprehension of bias applied to decision-makers
subject to the duty of fairness, and the strict principle that fiduciaries may normally not retain
benefits obtained in circumstances where there is any potential conflict
between their private interests and their legal duties as fiduciaries.
[Emphasis
added]
[35]
In his
written memorandum, counsel for the appellant argued that the applicable
standard in the case at bar was reasonableness simpliciter. At the
hearing, he added that he was relying on the standard of correctness if that
was what this Court had decided in Assh.
[36]
Counsel
for the respondent emphasized that the standard that should be applied is
reasonableness simpliciter because the issue turned on facts that were
within the expertise of the decision-maker and because it required the Code to
be applied to the established facts, thus implying a mixed question of fact and
law.
[37]
With
respect, this argument, though accepted in the Federal Court in Assh,
was rejected on appeal for the reasons stated above. Similarly, I do not think
counsel for the respondent has succeeded in removing the case at bar from the
ambit of the standard applied in Assh.
[38]
That said,
I believe that the decision should be reversed for the following errors of fact
made in the analysis of the appellant’s situation.
(b) First error of fact
[39]
Counsel
for the appellant is correct in his contention that the Assistant Deputy
Minister was mistaken regarding the area served by the Saint-Jean-sur-Richelieu
Office prior to the merger. In 1999, the services offered by the Office already
covered both Saint-Jean-sur-Richelieu and the town of Iberville, for which the
appellant was a municipal councillor. In that regard, the area served by the
Office was in no way affected by the merger. As for the appellant, he had been
conducting investigations within the territories of both municipalities since
1982.
[40]
The
following two paragraphs from the Assistant Deputy Minister’s letter to the
appellant clearly illustrate this error of fact. They are to be found at page
76 of the record and read as follows:
[TRANSLATION]
I understand that in
fall 1999 you filed a confidential report setting out your duties as municipal
councillor for the town of Iberville and you were told that this did not
represent a conflict of interest situation. The situation was different at
that time as you were not responsible for conducting investigations in the
territory of that municipality.
As you now have to
perform your duties as investigator in a territory including the city of
St-Jean-sur-Richelieu, you are now placed in a situation where your
personal and professional activities could be a source of conflict, or appear
to be in the eyes of the public, and your objectivity in the performance of
your duties could be called into question.
[Emphasis added]
[41]
Despite
the fact that this error was pointed out to the Assistant Deputy Minister in
February 2005 by the appellant, she repeated it in her affidavit filed in
support of her decision in March 2006: see appeal record, page 135, appellant’s
message to the Assistant Deputy Minister, and page 98, at paragraphs 7, 8 and 9
of the her affidavit, where the error is repeated.
(c) Second error of fact
[42]
As appears
at paragraph 19 of the Assistant Deputy Minister’s affidavit (appeal record, page 100),
she thought that the appellant’s electoral district included downtown
Saint-Jean-sur-Richelieu. That was not the case; he was responsible for
District 2, made up of the territory of the old town of Iberville and of
Saint-Athanase, while downtown Saint-Jean-sur-Richelieu is in Districts 1, 5,
6, 9, 10 and 11: see paragraph 5 of appellant’s affidavit, page 185 of appeal
record.
[43]
This error
led to the error in analyzing the proposal made by the appellant to exchange
approximately 30 cases in District 2 Iberville with another Office colleague.
In reaction to the appellant’s proposal, the Assistant Deputy Minister
concluded that the resultant workload would be impossible for one investigator
to handle. At paragraph 19 of her affidavit, she stated:
[TRANSLATION]
Two investigators cover
the territory of the city of Saint-Jean-sur-Richelieu. Mr. Gauthier’s
electoral district takes in downtown Saint-Jean-sur-Richelieu. The majority of
that city’s population lives in the downtown area. Allowing Mr. Gauthier not to
handle cases from his electoral district would thus result in imposing the
burden of cases from the downtown area on a single investigator, which is not
possible . . .
[Emphasis added]
The error also indicates a misunderstanding of the
appellant’s proposal.
(d) Error of law without foundation
[44]
Counsel
for the appellant submitted that his client’s freedom of expression, as
protected by section 2(b) of the Canadian Charter of Rights and
Freedoms (the Charter), is at stake here. The effect of the loyalty
obligation imposed by public-servant status and the Code is to limit the
appellant’s freedom of expression in the performance of his duties as a
municipal councillor.
[45]
The
appellant does not question the constitutional validity or legitimacy of the
Code. He accepted the test set forth by this Court in Threader v. Canada
(Treasury Board), [1987] 1 F.C. 41, at 57, for determining whether a
conflict of interest situation exists:
Would an informed person, viewing the matter
realistically and practically and having thought the matter through, think it
more likely than not that the public servant, whether consciously or
unconsciously, will be influenced in the performance of his official duties by
considerations having to do with his private interests?
His challenge on constitutional grounds was directed rather
at the Assistant Deputy Minister’s application of the Code. As applied by her,
he submitted, the Code would unduly limit the appellant’s freedom of expression
and, as such, would offend section 2(b) of the Charter.
[46]
He further
submitted that the Assistant Deputy Minister did not take the Charter’s impact
into account at all when she analyzed the appellant’s situation. As proof of
this, he indicated that nowhere in her correspondence with the appellant did
she refer to the Charter or to the federal government’s obligation under the
Charter, particularly with respect to minimal impairment.
[47]
He
submitted that the three options stated and offered by the employer did not
meet the requirements of minimal impairment and that the options he proposed
did meet those requirements and ought to have been accepted by his employer. I
will begin by disposing of this last point.
[48]
This
proceeding is an appeal from a Federal Court judicial review decision. Neither
this Court nor the one below has the authority to decide the substantive issue,
namely, which of the above-mentioned options would have been the most
appropriate. Judicial review is concerned with the legality, not the propriety,
of the decision. However, counsel for the appellant, well aware of this
limitation, asked that the case be referred back to the Assistant Deputy
Minister at the final grievance level to be redetermined. As will be seen
below, that is the solution I would suggest.
[49]
It is true
that the Assistant Deputy Minister’s correspondence is silent regarding the
Charter. However, though the letter of the Charter may not be there, its spirit
is there and in the Code as well. I feel that implicit in the options offered
by the employer, regardless of whether or not they were the most appropriate,
is the employer’s intention to reconcile the performance of the two positions
held by the appellant, balancing the appellant’s rights on the one hand against
the public interest in an honest, impartial and effective Public Service on the
other. These are among the objectives sought by the Code.
[50]
The Code
also recognizes the right of a public servant to hold employment outside the
Public Service.
[51]
The
following passages from the Code, which government officials are responsible
for applying and enforcing, attest to their duty to find a compromise solution
when a conflict of interest situation arises or is apprehended:
Objectives of this Code
The Values
and Ethics Code for the Public Service sets forth the values and ethics of
public service to guide and support public servants in all their
professional activities. It will serve to maintain and enhance public
confidence in the integrity of the Public Service. The Code will also serve
to strengthen respect for, and appreciation of, the role played by the Public
Service within Canadian democracy.
. . . . .
Ministers are
responsible for preserving public confidence in the integrity of management and
operations within their departments and for maintaining
the tradition of political neutrality of the Public Service and its continuing
ability to provide professional, candid and frank advice.
Ethical
Values:
Acting at all times in such a way as to uphold the public trust.
Public
servants shall perform their duties and arrange their private affairs so
that public confidence and trust in the integrity, objectivity and impartiality
of government are conserved and enhanced.
. . . . .
If a conflict
should arise between the private interests and the official duties of a public
servant, the conflict shall be resolved in favour of the public interest.
Responsibilities, Authorities and Accountabilities
. . . . .
Deputy Heads
. . . . .
4. To determine the appropriate method for a
public servant to comply with the Code, as set out in Chapters 2 and 3, in
order to avoid conflicts of interest. In doing so, the Deputy Head will try
to achieve mutual agreement with the public servant.
. . . . .
Methods of Compliance
. . . In determining appropriate action, the
Deputy Head will try to achieve mutual agreement with the public servant in
question . . .
Outside Employment or Activities
Public servants may engage in employment
outside the Public Service
and take part in outside activities unless the employment or activities are
likely to give rise to a conflict of interest or in any way undermine
the neutrality of the Public Service.
[Emphasis added]
[52]
In short,
I do not think that the employer failed to consider its obligations under the
Charter. It was aware of its obligations under the Code, one of which is to
strive for minimal impairment of a public servant’s rights by means of a
solution that either forms a consensus or receives the public servant’s
consent.
[53]
Moreover,
given the case law that has developed around the Code and its application, I
would be hard pressed to assume or reasonably infer that the employer was
unaware of (a) the clash of values that exists between freedom of expression as
guaranteed by the Charter and the public service duty of loyalty imposed on
government employees by the Code and (b) its obligation to reconcile those
values.
[54]
For these
reasons, I do not think this Court should support the allegation that there was
a failure to consider the appellant’s Charter rights and that an error of law
resulted.
Conclusion
[55]
I feel
that the errors of fact made by the Assistant Deputy Minister in her analysis
of the existence of a conflict of interest situation are serious and
significant. They are at the very heart of the issue she had to decide. They
also had an impact on the analysis and choice of options to remedy what she saw
as an apparent conflict.
[56]
It may be
that, despite these errors of fact, the Assistant Deputy Minister’s decision as
to the existence of an apparent conflict of interest and the solutions proposed
was the right one; it may be that the decision was the right one regarding the
apparent conflict but wrong as to the choice of solutions, because of these
errors; or it may be that her decision on both of these matters was not the one
she would have made had she not been mistaken as to the facts. It is not for
this Court to rule on any of those questions. However, one thing is very clear
to me in the case at bar: the appellant is entitled to a fair and equitable
decision, which decision needs to be made on the basis of a factual analysis
free from errors as significant as the ones committed.
[57]
The judge
seized of the appellant’s application for judicial review should have
intervened to remedy the unfairness resulting from these errors in the
decision-making process.
[58]
For these
reasons, I would allow the appeal with costs and set aside the Federal Court’s
judgment of March 30, 2007. Rendering the judgment which should have been
rendered, I would allow the appellant’s application for judicial review with
costs, set aside the decision of the Assistant Deputy Minister at the final
grievance level dated November 22, 2005, and refer the matter back to him for
redetermination, taking the present reasons for judgment into account and
making the necessary corrections to the errors of fact that vitiated the
decision of the former Assistant Deputy Minister.
“Gilles
Létourneau”
I
concur.
Alice Desjardins J.A.
I
concur.
Johanne
Trudel J.A.
Translation
certified true.
Stefan
Winfield, reviser
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