Docket: A-301-13
Citation: 2014 FCA 268
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CORAM:
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NADON J.A.
SCOTT J.A.
BOIVIN J.A.
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BETWEEN:
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NATIONAL BANK OF CANADA
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Appellant
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and
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DORIS LAVOIE
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AND
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LINE GAGNON
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Respondents
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REASONS FOR JUDGMENT
NADON J.A.
[1]
On August 20, 2009, the respondents were
dismissed by the appellant, their employer. At the time of their dismissal,
both respondents had accumulated over 30 years of service, including, from
1990 onwards, about 19 years at the Québec currency exchange office, on St-Jean Street.
[2]
On May 7, 2012, François G. Fortier, an
adjudicator appointed under the authority of Part III of the Canada
Labour Code, R.S.C. 1985 c. L-2 (Labour Code), allowed the respondents’
unjust dismissal complaints, substituted their dismissal by a one-month
suspension without pay, and ordered that the respondents be reinstated in their
positions with all the rights and privileges they had been deprived of since
September 20, 2009.
[3]
On June 12, 2013, Justice Martineau of
the Federal Court (the judge) dismissed with costs the appellant’s application
for judicial review seeking the setting aside of the adjudicator’s decision,
and on September 11, 2013, the appellant filed a notice of appeal before
this Court asking it to set aside the decision of the Federal Court, to allow
its application for judicial review and to set aside the adjudicator’s
decision. In addition, the appellant asks that we render the decision that the
adjudicator should have made, namely to uphold the decision to dismiss the
respondents.
[4]
For the reasons which follow, I am of the view
that the appeal should be allowed.
Adjudicator’s
decision
[5]
The respondents’ complaints were heard over nine
days, including eight days of evidence and one day of submissions. The
appellant filed seventy-five exhibits, while the respondents adduced five. The
adjudicator also heard seven witnesses, including the respondents.
[6]
In his decision, the adjudicator commenced by
recounting the testimony he had heard. He then outlined the parties’ arguments
before moving to an analysis, which I will summarize below.
[7]
For the adjudicator, the issue was whether, in
the light of the evidence, the appellant had been justified to dismiss the
respondents on August 20, 2009. His review of the evidence led him to the
following findings:
i.
The respondents violated the Bank Act, and
the appellant’s code of ethics and standard operating practices in performing
their work at the Québec exchange office.
ii.
The respondents’ conduct was such that it had to
be punished.
iii.
The appellant chose the ultimate punishment,
dismissal.
iv.
Just as employees have duties and obligations
towards their employers, employers have rights and obligations with respect to their
employees.
v.
The employer left the respondents unsupervised.
vi.
The respondents adopted practices that did not comply
with the standards established by their employer and made decisions falling
under the authority of their superiors, such as with respect to the exchange
rate to be applied to the buying and selling of currency.
vii.
The respondents’ practices were unacceptable.
viii. The appellant, as the employer, could have discovered what was going
on at its Québec exchange office if it had followed its own directives to carry
out monthly verifications and inspections.
ix.
Consequently, the appellant was negligent since
it had failed to fulfill its role of control and supervision, that is, the role
[translation] “of a good manager”.
x.
The respondents were justified in thinking that
their modus operandi was acceptable to their employer since they had
operated in this manner for many years.
xi.
Since the respondents’ practices and breaches
had been going on for [translation]
“a long time”, the appellant should have discovered earlier what it discovered
in summer 2009; it consequently had failed to exercise diligence.
xii.
Nothing would have happened had the appellant
provided the respondents with better supervision and carried out monthly
verifications.
xiii. The respondents did not intend to steal from their employer or to
enrich themselves.
xiv. Even if the respondents acted improperly in ignoring their employer’s
regulations and in making decisions falling under the authority of their superiors,
without informing them, in the circumstances, the relationship of trust had not
been irrevocably broken.
xv.
Since the employer failed to discipline them
before August 2009, the respondents were entitled to believe [translation] “that they could continue
doing as they did and ‘do what was needed to make things work’”.
xvi. The appellant was entitled to punish the
respondents’ conduct, but their dismissal was an exaggerated measure in the
circumstances of the case.
xvii. A one-month suspension would have been the appropriate remedy.
Decision of the
Federal Court
[8]
The judge dismissed the application for judicial
review. In his opinion, the adjudicator’s decision was reasonable. Specifically,
he was of the opinion that the adjudicator’s reasoning was neither arbitrary
nor capricious or unreasonable and that his findings were supported by the
evidence.
[9]
Furthermore, in his reasons, the judge
set out the principles applicable in this case, namely that the decision was reviewable
under the standard of reasonableness (Bank of Montreal v. Payne, 2012 FC
431); that a reasonable decision “is concerned mostly
with the existence of justification, transparency and intelligibility within
the decision-making process and with whether the decision falls within a range
of possible, acceptable outcomes which are defensible in respect of the facts
and law” (Dunsmuir v New Brunswick, 2008 SCC 9,
[2008] 1 S.C.R. 190, at paragraph 47) (Dunsmuir); and
that the case law held that three issues arise when determining whether there
was good and sufficient cause for a dismissal, namely, whether the employee
committed the impugned act, whether this act warranted a disciplinary action by
the employer, and, if so, whether the act was serious enough to warrant the
dismissal (Heustis v. New Brunswick (Electric Power Commission), [1979]
2 SCR 768, at page 772 (Heustis).
[10]
According to the judge, the seriousness of the
action could lead to termination “when the relationship
of trust has been irrevocably broken”; he added that in the banking
world, increased importance is placed “on the integrity
of staff and on respect for general guidelines and codes of conduct, a
reflection of the maintenance of public confidence” (paragraph 8 of
the judge’s reasons). The judge also pointed out that the relationship of trust
between a banking institution and its employees, like the relationship of trust
between the institution and its clients, was crucial (see National Bank of
Canada v. Lepire, 2004 FC 1555; and Deschênes v. Canadian Imperial Bank
of Commerce, 2009 FC 799, aff’d 2011 FCA 216).
[11]
Lastly, the judge wrote that a contextual
approach should be favoured when determining the punishment, particularly in
the case of dismissal where a balance must be struck between the seriousness of
the employee’s actions and the punishment imposed by the employer (see McKinley
v. BC Tel, 2001 SCC 38, [2001] 2 S.C.R. 161, at paragraphs 48 to 57) (McKinley).
Analysis
[12]
Since this is an appeal from a decision
concerning an application for judicial review, the role of this Court is to
determine whether, in the case at bar, the Federal Court understood the
standard of review to be used and whether it correctly applied this standard
for the purpose of the proceeding. Consequently, in order to determine whether
the judge erred or not, we must focus on the adjudicator’s decision (see Canada
Revenue Agency v. Telfer, 2009 FCA 23, paragraph 18, and Payne v.
Bank of Montreal, 2013 FCA 33, paragraph 35).
[13]
There is no question that the judge properly understood
that the standard he had to apply was that of reasonableness. However,
according to the appellant, the judge erred in the mode of application of this
standard by concluding that the adjudicator’s decision was reasonable.
Particularly, the appellant submits that the result at which the adjudicator
arrived was not one of the possible outcomes (see Newfoundland and
Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board)), 2011
SCC 62, [2011] 3 S.C.R. 708) (Newfoundland). Indeed, according to the
appellant, since the adjudicator found that the respondents had committed
several serious breaches that, in many respects, represented a flagrant breach
of their obligations of honesty and integrity, the punishment the adjudicator
imposed was unreasonable, and the only possible punishment had been to uphold
the respondents’ dismissal.
[14]
In McKinley, the Supreme Court of
Canada, per Justice Iacobucci, wrote that, in the context of a jury action
for wrongful dismissal by reason of dishonesty, the judge had to instruct the jury
to determine two issues, namely, whether the evidence established the employee’s
deceitful conduct and, if it did, “ whether the nature
and degree of the dishonesty warranted dismissal” (paragraph 49), adding
that the seriousness of the acts committed by the employee required the facts
in evidence to be carefully considered and balanced. Justice Iacobucci added
that under the analytical framework he was proposing, each case had to be examined
on its own particular facts and circumstances and “[consider]
the nature and seriousness of the dishonesty in order to assess whether it is
reconcilable with sustaining the employment relationship” (paragraph 57).
According to Justice Iacobucci, this approach mitigated the risk resulting
from equating all forms of dishonest behaviour with just cause for dismissal,
but also meant “that dishonesty going to the core of the
employment relationship” could allow an employer to dismiss an employee.
[15]
Justice Iacobucci wrote that the goal of
the exercise he was proposing was to determine whether the employee’s conduct
resulted in a breakdown of the employment relationship. In other words, there
are grounds for dismissal if the employee “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 duties to his or her employer” (paragraph 48).
[16]
In the matter at bar, there is no doubt that the
respondents committed the acts alleged by the appellant. There is also no doubt
that these acts warranted disciplinary action. The issue before the
adjudicator, and which we have to address in order to dispose of this appeal,
is whether the seriousness of the respondents’ acts necessarily had to lead to
dismissal, as suggested by the appellant. In other words, did the respondents’
conduct violate an essential condition of their employment contracts or breach
the faith inherent to the work relationship, or was it fundamentally
inconsistent with their duties to the appellant?
[17]
Let us see how the adjudicator described the
respondents’ acts and breaches. At page 32 of his reasons, he stated,
without disagreeing, that the appellant had shown that the respondents had
violated the Bank Act, S.C. 1991, c. 46, and its code of ethics
and standard operating practices in performing their work. According to the
adjudicator, this conduct called for a punishment.
[18]
Later, at page 33, he added that the
respondents had, over the years, developed practices that did not comply with
the standards established by their employer and that, moreover, they had made
decisions that fell under the exclusive authority of their superiors, such as
the exchange rate policy, specifically the daily rate to be applied by the
respondents when selling or buying foreign currency.
[19]
At page 36 of his reasons, the adjudicator
noted again that the respondents had acted improperly, that they failed to
follow some of their employer’s regulations and that they made decisions that
should have been made by their superiors, who were never informed or consulted.
[20]
With these observations, the adjudicator
described the nature of the respondents’ actions and breaches. He then looked
at the appellant’s breaches, namely, its failure to properly supervise the
respondents. Following is what the adjudicator had to say about this.
[21]
At page 34 of his reasons, the
adjudicator stated that if the appellant had performed monthly inspections or
verifications, as it should have done according to its own directives, the
respondents’ actions and breaches would have been discovered and the problem
could have been solved well before the dismissal date. Consequently, according
to the adjudicator, the appellant had been negligent, since it had failed to [translation] “fulfill
its role of control and supervision, that is, the role of a good manager”. Further
on, on the same page of his reasons, the adjudicator adds that the appellant
had not been diligent with respect to the respondents’ actions and breaches. He
was of the opinion that since the respondents’ actions and breaches had taken
place over many years, the employer had had [translation]
“both the time and ample opportunity to take action”
to resolve the situation. As it did not take action, the appellant had not been
diligent. Subsequently, at page 35 of his reasons, the adjudicator writes
that the appellant was responsible for ensuring that its employees complied
with the rules it had established, this being part of its duty to manage;
consequently, if the respondents had been properly supervised and there had
been regular verifications, [translation]
“none of this would have happened”.
[22]
The adjudicator’s reasoning can be summarized in
the following manner. The respondents had acted improperly. Their actions and
breaches occurred over the course of many years. During all these years, their
employer did nothing and should have discovered what was going on. The
respondents had been entitled to believe that they could continue to act as
they did. At no point had the respondents’ intended to steal from their
employer or to enrich themselves. The appellant had therefore been right to punish
its employees, but the punishment of dismissal had been an excessive measure. Consequently,
the relationship of trust could not have been irrevocably broken.
[23]
It seems to me that one must read the
adjudicator’s reasons as expressing, at least implicitly, the opinion that
regardless of the seriousness of the respondents’ actions, the appellant’s
negligence with respect to its duty to supervise and its failure to regularly
monitor the activities performed by the respondents at the exchange office, are
sufficient to excuse, in large part, the respondents’ actions and breaches.
[24]
In my opinion, the adjudicator’s decision is
unreasonable. In the present proceeding, he should have determined whether the
relationship of trust between the bank and the respondents had been irrevocably
broken, and he should therefore first have assessed the seriousness of the
respondents’ actions; he should have performed this assessment in the specific
context before him, namely, a banking operation at one of Canada’s major banks. The adjudicator should also have assessed the consequences of the respondents’
action for the employment relationship in order to determine whether the
respondents’ conduct violated an essential condition of their employment
contracts, breached the faith inherent to the work relationship, or was
fundamentally inconsistent with their obligations to their employer. The
adjudicator neither attempted to assess the seriousness of the respondents’
actions in the banking world, nor did he try to assess the consequences of
these actions for the employment relationship, focusing mainly on what he
characterized as negligence on the part of the appellant.
[25]
The employer’s conduct is definitely a relevant
factor in any analysis to determine whether an employer may dismiss an
employee; however, the employer’s conducts does not allow an adjudicator to bypass
the analysis of the seriousness of the employee’s actions and the possible
consequences of these actions for the employment relationship and, in this
context, the banking sector. The purpose of this analysis, as suggested by Justice Iacobucci
in McKinley, is to determine whether the respondents’ conduct was such
that the employment relationship was broken.
[26]
I note that the adjudicator relied solely on
general statements with respect to the respondents’ breaches. Nowhere in his
decision did he give concrete examples of the appellant’s allegations against
the respondents. Here are some examples:
(1) Despite the fact that the appellant gave them instructions in a
daily digest on the exchange rates to be used, the respondents did not obey
these instructions and negotiated exchange rates without authorization or
approval.
(2) On several occasions, the respondents charged transaction fees lower
than those stipulated by the appellant.
(3) Despite the appellant’s instructions, the respondents did not
complete the transaction records the appellant required for each transaction.
According to the appellant, this resulted in concealing certain transactions so
that the monitoring mechanisms implemented by the appellant could be
circumvented.
(4) In the cash drawer, the respondents kept more till money than the
amounts authorized by the appellant.
(5) The respondents hid a key to the St-Jean Street exchange office
behind the entrance adjacent to an art gallery, thus making the key accessible
to the public, according to the appellant.
(6) The respondents made the combinations to the various bank safes on
the premises of the exchange office available and had kept the same
combinations for about five years.
(7) The respondents did not comply with the appellant’s directives
regarding the procedure to be followed for reporting tally differences.
[27]
Did the respondents’ breaches go to the core of
the employment relationship? Did the breaches, or any of these breaches,
violate an essential condition of their employment contracts? Did the breaches,
when considered as a whole, breach the faith inherent to their work
relationship or were they fundamentally or directly inconsistent with their
obligations as employees? The adjudicator failed to reply to any of these
questions.
[28]
At page 36 of his reasons, the adjudicator concluded
that the relationship of trust between the respondents and the appellant had
not been irrevocably broken. This conclusion, unsupported as it is by the
analysis that the adjudicator should have performed of the seriousness of the
respondents’ actions and breaches and their possible consequences for the
employment relationship, is completely unreasonable.
[29]
In Newfoundland, the Supreme Court, per
Justice Abella, repeated the test set out in Dunsmuir, which is
that the reviewing court has to inquire into the qualities that make the
administrative tribunal’s decision reasonable, namely justification,
transparency and intelligibility within the decision-making process, and also determine
whether the decision falls within a range of possible, acceptable outcomes
which are defensible in respect of the facts and law (Newfoundland, paragraph 11).
[30]
At paragraph 12 of her reasons in Newfoundland, Justice Abella added that reasonable means that the reasons do in
fact or in principle support the conclusion reached. In my opinion, the
adjudicator’s reasons do not support his conclusion that the relationship of
trust was not broken.
[31]
At paragraph 14 of her reasons, Justice Abella
writes that 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”. In my opinion, the result arrived at by the
adjudicator, with respect to his reasons, does not fall within a range of
possible outcomes.
[32]
For these reasons, the adjudicator’s decision is
unreasonable, and consequently, the judge erred in refusing to intervene.
[33]
The appellant is asking us not only to
set aside the adjudicator’s decision and to render the judgment that the judge
should have made, that is, to set aside the adjudicator’s decision, but also to
render the decision that the adjudicator should have made, namely, to uphold
the respondents’ dismissal. Even though it is possible for us, in some cases,
to make the decision that the administrative decision-maker should have made (see
Giguère v. Chambre des notaires du Québec, 2004 SCC 1, [2004] S.C.R. 3),
it is my opinion that it is preferable here to refer the matter back to another
adjudicator. First, as pointed out by the judge at paragraph 10 of his
reasons, we do not have the advantage of a transcript of the testimonies, which
would allow us to properly understand and assess the case made before the
adjudicator. Second, the evidence before us stems solely from the affidavits
filed to « reconstruct » the evidence that was filed before the adjudicator. In these circumstances, it does not seem wise
to substitute our decision for a decision that is rightfully an adjudicator’s
to make. Third, I am not satisfied that there is only one possible outcome in
the present matter, namely, the respondents’ dismissal. It will be up to the
adjudicator appointed to the case to determine whether, in the light of the
seriousness of the respondents’ acts and breaches alleged by the appellant, the
relationship of trust has been irrevocably broken.
[34]
Consequently, I would
allow the appeal with costs, set aside the Federal Court’s decision, allow the
application for judicial review with costs, set aside the decision of the adjudicator
dated May 7, 2012, and refer the matter back to a different adjudicator
for reconsideration of the respondents’ unjust dismissal complaints in the light
of these reasons.
“M. Nadon”
“I agree.
A.F. Scott, J.A.”
“I agree.
Richard Boivin, J.A.”
Translation
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