Gannon v. Canada (Attorney General), 2004 FCA 417

Date: 20041207

Docket: A-43-04

Citation: 2004 FCA 417

CORAM:        LINDEN J.A.                               

SHARLOW J.A.

MALONE J.A.

BETWEEN:

                                                             CARL S. GANNON

                                                                                                                                            Appellant

                                                                           and

                                         THE ATTORNEY GENERAL OF CANADA

TREASURY BOARD

(DEPARTMENT OF NATIONAL DEFENCE)

                                                                                                                                      Respondents

                                    Heard at Halifax, Nova Scotia on November 10, 2004.

                               Judgment delivered at Ottawa, Ontario, on December 7, 2004.

REASONS FOR JUDGMENT BY:                                                                              MALONE J.A.

CONCURRED IN BY:                                                                                                   LINDEN J.A.

                                                                                                                                  SHARLOW J.A.

Date: 20041207

Docket: A-43-04

Citation: 2004 FCA 417

CORAM:        LINDEN J.A.

SHARLOW J.A.

MALONE J.A.

BETWEEN:

CARL S. GANNON

Appellant

and

THE ATTORNEY GENERAL OF CANADA

TREASURY BOARD

(DEPARTMENT OF NATIONAL DEFENCE)

                                                                                                                                      Respondents

                                                    REASONS FOR JUDGMENT

MALONE J.A.

I. Introduction

[1]                Carl S. Gannon appeals the order of a Federal Court Judge (the Applications Judge) which determined that his application for judicial review of the decision of adjudicator Anne E. Bertrand (the Adjudicator), rendered on March 20, 2002, should be dismissed. (Order and reasons for order by the Applications Judge dated December 31, 2003 and reported at (2003), 244 F.T.R. 124; 2003 FC 1532.)

[2]                For 22 years, Mr. Gannon was a member of Canada's public service. The terms of his employment were governed by the Financial Administration Act, R.S.C. 1985, c. F-11 (the FAA) and the Public Service Staff Relations Act, R.S.C. 1985, c. P-35 (the PSSRA).

[3]                Mr. Gannon's most recent position with the public service was as a Human Resources Advisor for the Department of National Defence (DND). On July 14, 2000, he was suspended without pay pending the outcome of an investigation into allegations of his abuse of his authority. On October 26, 2000 he was terminated, effective July 14, 2000. The stated statutory authority for his termination was paragraph 11(2)(f) of the FAA which reads as follows:

[4]                Mr. Gannon grieved his termination. His grievance was referred to adjudication pursuant to subparagraph 92(1)(b)(ii) of the PSSRA, which states:

II. The Adjudicator's Decision

[5]                The burden of proof rested upon DND to establish, on a balance of probabilities, that Mr. Gannon had committed the infractions alleged in the termination letter of October 26, 2000 and that cause for his termination existed.

[6]                After a lengthy hearing, the Adjudicator found cause to invoke discipline in three instances: drafting a false resume in order to secure higher employment with other government departments, recommending the hiring of a certain individual in breach of the employer's policy on causal employment, and the improper use of departmental computers and e-mail systems (paragraphs 120, 131 and 134 of her decision), but she found that there was no cause for termination. She dismissed the grievance with respect to suspension, but allowed the grievance with respect to termination (paragraph 149).

[7]                Invoking the theory of progressive discipline, the Adjudicator found that the employment relationship with Mr. Gannon had been fundamentally breached by his own misconduct so that reinstatement was not an option. However, she noted important mitigating factors, including Mr. Gannon's long employment service with DND, his good work record and the potential difficulties he might face in re-establishing himself in the workplace. She concluded that it was appropriate to award him six months' compensation in lieu of reinstatement. No reasons were offered for the period of six months as the measure of compensation.

III. The Decision of the Applications Judge

[8]                The Adjudicator's findings were determined by the Applications Judge to be supported by the evidence and to be not patently unreasonable. Finding no reviewable error in the Adjudicator's decision, the Applications Judge dismissed Mr. Gannon's application for judicial review.

IV. Standard of Review

[9]                The Applications Judge applied the patently unreasonable standard of review following a decision of this Court (see Green v. Canada (Treasury Board) (2000), 254 N.R. 48 at paragraph 7 and 8 (F.C.A.)) and a decision of the Supreme Court of Canada (see Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941 at 963-64). On that standard, in order to be overturned, an adjudicator's decision must be clearly irrational, that is, not in accordance with reason.

[10]            Since those decisions, the Supreme Court of Canada has rendered its decision in Alberta Union of Provincial Employees v. Lethbridge Community College, [2004] 1 S.C.R. 727. That appeal dealt with the remedial competence of an arbitration board under the Alberta Labour Relations Code, R.S.A. 2000, c. L-1 (the Alberta Code). The issue raised in Lethbridge Community College concerned the exercise of the board's power under the Alberta Code in circumstances where the disputed conduct was found to be non-culpable and damages were awarded because reinstatement was said to be inappropriate. The Court unanimously concluded that this decision must be assessed against the standard of reasonableness simpliciter.

[11]            It is arguable that this Court should adopt the standard in the Lethbridge Community College case, departing from the past jurisprudence of this Court, which has invoked the patently unreasonable standard in reviewing PSSRA adjudications. However, that issue need not be resolved in the present appeal because, in my analysis, it is sufficient to state that even if I apply the more onerous patently unreasonable standard I must conclude that the decision of the Adjudicator on the issue of remedy is clearly irrational and cannot stand.            

V. Grounds of Appeal

[12]            Mr. Gannon was self-represented before this panel and alleged several errors by the Applications Judge. There is no merit to most of his grounds of appeal. In particular, I am unable to discern any reviewable error with respect to the finding of the Arbitrator that the suspension of Mr. Gannon was justified.

[13]            However, I do not reach the same conclusion with respect to termination. In that regard, it is necessary to consider only his argument based on subsection 11(4) of the FAA, which reads as follows:

[14]            Mr. Gannon submitted that, as the Adjudicator found no cause for his termination, he could not lawfully be terminated, and the Adjudicator erred in failing to order his reinstatement as of the date of his termination, with full benefits. The argument of the Crown is that the Adjudicator was acting within her jurisdiction in substituting a monetary payment for reinstatement, and that the Applications Judge correctly declined to interfere.                 

VI. Analysis

(i) Part III of the Canada Labour Code

[15]            One of the leading cases dealing with the right to reinstatement of a wrongfully dismissed employee is this Court's decision in Atomic Energy of Canada Ltd. v. Sheikholeslami, [1998] 3 F.C. 349 (C.A.). That case involved an adjudication under Part III of the Canada Labour Code, R.S.C. 1985, c. L-2 (the CLC), where an injured employee who was determined to be fit to return to work failed to report for duty and was terminated. Her complaint of unjust dismissal under subsection 240(1) of the CLC was referred to adjudication. At the hearing, it was determined that the employee had been working elsewhere during the period that she had declared she was unable to work. The adjudicator upheld the complaint but denied her reinstatement, in lieu of which he ordered a lump sum payment.

[16]            In doing so, the adjudicator was acting under the authority of subsection 242(4) of the CLC, which reads as follows:                        

A Motions Judge set aside the adjudicator's award as to reinstatement on the basis that it was wrong for the adjudicator to base his decision entirely on his observation of the complainant at the hearing.

[17]            In allowing the appeal, Marceau J.A., writing for the majority of the Court, stated at paragraphs 11 and 12:

... Reinstatement, in my understanding, is not a right that a wrongfully dismissed employee possesses as he may possess human rights. It is a long-established common law, as well as civil law, rule that the courts will not order specific performance of a contract of personal service whose execution requires the constant personal dedication and willingness of one or both parties. ...

   The unfair dismissal provisions for non-unionized employees in the Canada Labour Code no doubt represent a statutory modification of the traditional rule that an employment contract will never be specifically enforced. But they certainly do not, and even could not, go so far as to create a right in the person of the wrongfully dismissed employee. ... They simply provide for reinstatement as a possible remedy that may be resorted to in proper situations. ... It is undisputable, however, on a mere reading of subsection 242(4) of the Code, ... that an adjudicator is given full discretion to order compensation in lieu of reinstatement, if, in his opinion, the relationship of trust between the parties could not be restored.

[18]            Chalifoux v. Driftpile First Nation et al. (2002), 299 N.R. 259 (F.C.A.) also dealt with an adjudication under Part III of the CLC. In that case, another panel of this Court followed the learned analysis advanced by Marceau J.A. and noted that the role of this Court in such cases is restricted, as stated by Desjardins J.A. at paragraph 15:

    In the review of discretionary powers, such as the present one, the weighing of relevant factors for or against an award of reinstatement is not the function of a court of law (See Suresh v. Canada (Minister of Citizenship and Immigration), [2002] S.C.J. No. 3, 2002 SCC 1">2002 SCC 1 at paragraph 34). Hence, where the statutory discretion has been exercised in good faith and in accordance with the principles of natural justice and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere (See Maple Lodge Farms Ltd. v. Canada, [1982] 2 S.C.R. 2">[1982] 2 S.C.R. 2 at 7).

(ii) Adjudications for Termination Pursuant to the FAA

[19]            The argument of the Crown that the Adjudicator's award is legally valid is based on the premise that the jurisdiction of an adjudicator appointed under the PSSRA to deal with a termination grievance is substantially the same as the jurisdiction of an adjudicator appointed under Part III of the CLC.

[20]            One difficulty with this position is that it appears to disregard paragraph 167(1)(d) of the CLC, which states:

The FAA defines 'department' to include any of the departments named in Schedule I, which includes DND. Thus, the employment of Mr. Gannon with DND was not within the scope of Part III of the CLC.

[21]            The Crown did not refer the Court to any provision in the FAA or the PSSRA that is analogous to subsection 242(4) of the CLC, or any law or legal principle that would suggest that an adjudicator appointed under the PSSRA to deal with a termination grievance has remedial powers similar to those found in subsection 242(4) of the CLC.

[22]            Paragraphs 100(3)(c) and (d) of the PSSRA provide the Public Service Staff Relations Board with the power to make regulations respecting "the procedure to be followed by adjudicators" and the "form of decisions rendered by adjudicators", respectively. Part VIII of theP.S.S.R.B. Regulations and Rules of Procedure, 1993, S.O.R./93-348, outlines the grievance process and adjudication procedure. However, these Regulations do not contain any provisions specifying the powers and remedies available to the adjudicator when dealing with a case of unjust dismissal, and certainly nothing analogous to subsection 242(4) of the CLC.

[23]            Pursuant to paragraph 7(1)(e) of the FAA, matters of personnel management in the public service are primarily the responsibility of the Treasury Board, which has further authority under paragraph 11(2)(f) to establish standards and guidelines. The Crown did not argue that the Treasury Board has established any standards or guidelines under paragraph 11(2)(f) that would justify the remedy devised by the Arbitrator in this case.

[24]            I acknowledge the common law rule, as identified by Marceau J.A. in Atomic Energy, supra, that an employment contract is not specifically enforceable. However, that common law rule must yield if a statute states the contrary. Mr. Gannon argues, in effect, that subsection 11(4) of the FAA abrogates the common law rule to the extent that it deprives his former employer of the lawful authority to terminate his employment except for cause. His argument, put simply, is that the principles of progressive discipline cannot trump subsection 11(4) of the FAA. I see nothing in the legal argument of the Crown that provides an effective answer to Mr. Gannon's argument.

[25]            Reference was made to the decision of Deigan v. Canada (Industry), [2002] F.C.J. No. 963 (QL), 2002 FCA 273, where this Court held that there was no reason to interfere with the decision of a PSSRA adjudicator to substitute a monetary payment for reinstatement in the case of a terminated public service employee. However, on a careful examination of the record in that case, it is clear that no argument with respect to subsection 11(4) of the FAA was ever made.

[26]            In this case, the Adjudicator simply ignored subsection 11(4) of the FAA. Further, the Crown failed to refer the Court to any law giving the Adjudicator the right to impose a monetary payment in lieu of reinstatement. Accordingly, I am compelled to conclude that the decision of the Adjudicator as to the remedy imposed is irrational and cannot stand.

VII. Conclusion

[27]            In summary, I am unable to discern any basis for interfering with the decision of the Adjudicator that DND had cause for suspending Mr. Gannon's employment and imposing some penalty for his wrongful acts, but that the wrongful acts did not give DND cause to terminate his employment. Therefore, in my view, the remedy imposed was inconsistent with the findings and was not permitted by the relevant legislation. Based on the evidence presented, the Adjudicator's findings should have led to Mr. Gannon's reinstatement and, at her discretion, the imposition of penalties other than termination for his wrongful acts.

[28]            I would allow this appeal and set aside the decision of the Applications Judge. Making the decision the Applications Judge should have made, I would allow the application for judicial review and set aside the portion of the Adjudicator's decision relating to the remedy for the termination of Mr. Gannon without cause. I would refer Mr. Gannon's termination grievance to a newly appointed adjudicator with a direction to order that the termination be rescinded and to consider what lesser penalty should be imposed based on the conduct identified by the Adjudicator as cause for discipline; such adjudication to be commenced within 120 days of the date of judgment in this appeal.

[29]            Mr. Gannon is entitled to his costs in this Court and in the Federal Court.

                                                                                         "B. Malone"              

J.A.

"I agree         

A.M. Linden

J.A."

"I agree

K. Sharlow

J.A."

                          FEDERAL COURT OF APPEAL

    NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                       A-43-04

STYLE OF CAUSE:                           CARL S. GANNON v. THE ATTORNEY GENERAL OF CANADA AND OTHER

PLACE OF HEARING:                                 Halifax, Nova Scotia

DATE OF HEARING:                                   November 10, 2004

REASONS FOR JUDGMENT BY: Malone J.A.

CONCURRED IN BY:                                  Linden J.A.

Sharlow J.A.

DATED:                                                          December 7, 2004

APPEARANCES:

SOLICITORS OF RECORD: