Alberta Union of Provincial Employees v. Alberta, 2010 ABQB 760

Court of Queen ’ s Bench of Alberta Citation: Alberta Union of Provincial Employees v. Alberta, 2010 ABQB 760 Date: 20101202 Docket: 0903 18475 Registry: Edmonton IN THE MATTER OF the Public Service Employee Relations Act , R.S.A. 2000, c.

P-43 AND IN THE MATTER of an Arbitration Award dated the 28 th day of October, 2009 by an Arbitration Board comprised of Chair Allen Ponak, Employer Nominee Paul Workman, and Union Nominee Vern Bartee (writing in dissent October, 2009) Between: Alberta Union of Provincial Employees Applicant - and - Her Majesty the Queen In Right of Alberta Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice R.P. Marceau _______________________________________________________ I. Introduction

[ 1 ] These proceedings are a result of a grievance launched by Mr. Ron Soenen, against his employer, the Government of Alberta (the “Respondent”). [ 2 ] Mr. Soenen, a correctional officer, was criminally charged with assaulting an inmate while on duty. Midway through the trial, Crown counsel advised the judge that he had a reasonable doubt of the guilt of Mr. Soenen, would be calling no more evidence and invited a dismissal of the charge. The judge acquitted Mr. Soenen. Mr. Soenen then applied to his employer for reimbursement of his legal expenses pursuant to s. 71(1) (

c) of the Financial Administration Act , R.S.A. 2000, c. F-12. This provision allows the Government of Alberta to indemnify a person associated with the Province for legal costs. His employer denied this request. [ 3 ] The Alberta Union of Provincial Employees (“the Applicant”) grieved this decision to an arbitration board (the “Board”), which declined to determine the issue on its merits on the basis that it did not have jurisdiction to hear and decide the matter. [ 4 ] The Applicant now seeks judicial review of the Board’s decision that it did not have jurisdiction to decide the merits of Mr.

Soenen’s grievance. II. Facts [ 5 ] Mr. Soenen was criminally charged with assaulting an inmate while on duty on May 5, 2006. The Respondent suspended Mr. Soenen for five days, and the charges proceeded to trial. [ 6 ] On February 26, 2007, Mr. Soenen was acquitted of the charge of assaulting the inmate. [ 7 ] Mr. Soenen had also grieved his suspension to an arbitration board, and in March 2008, the Board hearing the grievance upheld the suspension. [ 8 ] Mr.

Soenen incurred legal expenses in the course of defending himself against the criminal charges and requested indemnity for these expenses from the Respondent. In a letter, dated February 27, 2007, Mr.

Soenen cited Alberta Order in Council 668/92, and the Alberta Solicitor General, Correctional Services Policy 2.20.06 in support of his claim for reimbursement for his legal expenses, which provide that employees of the Crown may be reimbursed for legal expenses incurred in any civil, criminal, or administrative proceedings initiated for acts undertaken in the course of their employment, or at the request of the Crown. [ 9 ] The Respondent denied Mr. Soenen’s request for indemnification in a letter dated March 23, 2006.

The Applicant filed a grievance of this decision on May 1, 2007. [ 10 ] In May 2008, at a hearing before the Board, the Respondent challenged the Board’s jurisdiction to consider the grievance on the basis that the grievance did not arise out of the parties’ collective agreement. The Applicant argued that Mr. Soenen was entitled to reimbursement of his legal fees pursuant to s. 71 of the Financial Administration Act , and that s. 71 of the Act was implicitly incorporated into the collective agreement.

In support of this argument, the Applicant relied on the Supreme Court of Canada decision in Parry Sound (District) Social Services Administration Board v. Ontario Public Service Employees Union, Local 324 (O.P.S.E.U.) , 2003 SCC 42 , [2003] S.C.R. 157 (“ Parry Sound ”). [ 11 ] The Board concluded that it did not have jurisdiction to consider the matter. The Board found there was no express language in the collective agreement that governed the reimbursement of employee legal expense claims.

The Board also found that s. 71 of the Financial Administration Act could not be implicitly incorporated into the collective agreement because the provision in question was an isolated portion of a statute that did not qualify as an employment-related statute as contemplated by the Supreme Court in Parry Sound . The Board also determined that in order for a statutory provision to be implied into a collective agreement, it must integrate with the operation of other provisions of the collective agreement, and the legal expenses provision in the Financial Administration Act did not.

III. Issues [ 12 ] The issues to be determined in this application for judicial review are: 1. what is the appropriate standard of review to apply to the Board’s decision?; and 2. whether the Board’s decision should stand in light of the appropriate standard. IV. Analysis A. The Appropriate Standard of Review for the Board’s Decision i. The Parties’ Positions [ 13 ] The parties disagree as to the correct standard of review for the Board’s decision. The Applicant says it is correctness.

The Respondent says it is reasonableness. [ 14 ] The Applicant submits that the Supreme Court in Parry Sound , at para. 22 , determined that correctness is the applicable standard to apply to an arbitrator’s determination of whether or not a statute is incorporated into a collective agreement, thereby giving the arbitrator jurisdiction over the incorporated subject matter. [ 15 ] The Applicant further contends that the Supreme Court in Dunsmuir v.

New Brunswick , 2008 SCC 9 at paras. 57 and 62 , [2008] 1 S.C.R. 90, has established that an exhaustive review is not required in every case to determine the appropriate standard of review, and where prior jurisprudence has determined that a certain issue is to be reviewed on a correctness standard, the Court need not repeat the standard of review analysis. [ 16 ] The Respondent argues that the Board’s decision should be reviewed on the reasonableness standard. In support of this argument, the Respondent relies on the Alberta Court of Appeal’s decision in Alberta v.

Alberta Union of Provincial Employees , 2008 ABCA 258 , 295 D.L.R. (4 th ) 66 (“ Davis ”). In Davis , the Court considered an arbitration board’s decision that it had limited jurisdiction to determine whether a Union employee was dismissed in bad faith. The Court held that reasonableness was the proper standard on which to review the board’s decision on whether or not the grievance was arbitrable. [ 17 ] The Respondent also relies on the language of the collective agreement, which gives the Board the power to determine the arbitrability of any issue presented to it.

On this basis, the Respondent submits this issue is not a true question of jurisdiction, and that Dunsmuir , at para. 17 , applies and the standard of review is reasonableness. ii. Analysis [ 18 ] The Supreme Court in Dunsmuir set out the correct procedure for reviewing courts to follow when engaged in the process of judicial review. At para. 62, the Court stated: In

summary, the process of judicial review involves two steps. First, courts ascertain whether the jurisprudence has already determined in a satisfactory manner the degree of deference to be accorded with regard to a particular category of question. Second, where the first inquiry proves unfruitful, courts must proceed to an analysis of the factors making it possible to identify the proper standard of review.

[ 19 ] At the first step, the specific issue in question must first be identified in order to determine whether prior jurisprudence has addressed that issue. In this case, the primary substantive question to be answered is whether s. 71 of the Financial Administration Act is incorporated into this collective agreement, giving the Board jurisdiction to hear and decide the merits of the grievance. [ 20 ] When the issue is framed this way, the jurisprudence has clearly already determined what degree of deference the Board’s decision should be given on judicial review.

The Supreme Court dealt with this very issue in Parry Sound , at para. 22 , and determined that the standard of review was correctness: Determining whether the substantive rights and obligations of an external statute are incorporated into a collective agreement is a legal question of broad applicability that does not fall within an arbitrator’s core area of expertise.

Although the board has the power to determine whether the substantive rights and obligations of the Human Rights Code are incorporated into the collective agreement, the Court has the power to interfere if the Board resolved the issue incorrectly . [Emphasis added, italics in original.] [ 21 ] In the case at bar, as in Parry Sound , the Board was tasked with determining whether a provision of an external statute should be incorporated, or implied, into the collective agreement. The Supreme Court has clearly stated that the Board has the power to make this decision, but that it must do so correctly.

If not, the Court may interfere on judicial review to remedy the error. [ 22 ] Binding authority thus exists on the question of the appropriate standard of review, so it is unnecessary to go to the second step in the judicial review process of identifying a proper standard of review. Correctness is the appropriate standard of review for this Court. B. Application of the Correctness Standard to the Board’s Decision i.

The Parties’ Positions [ 23 ] The parties disagree on the circumstances in which legislation can be incorporated into a collective agreement. [ 24 ] The Applicant argues that the Board made three fundamental errors in coming to the decision that it did not have jurisdiction to hear the grievance. The Applicant argues that the Board was incorrect to conclude that: 1.

Parry Sound stands for the proposition that a statute containing only a single employment-related provision cannot be considered an employment-related statute for the purposes of incorporating the provision into a collective agreement; this argument might be described as relating to the principle purpose of a specific piece of legislation; 2. the parties’ intention was relevant or determinative as to whether an employment-related statutory right should be incorporated as part of a collective agreement; and 3. the statutory provision at issue can only be incorporated into a collective agreement where that provision is related to existing provisions of the collective agreement. [ 25 ] The Respondent submits that the Board was correct to refuse to take jurisdiction and not incorporate s. 71 of the Financial Administration Act into the collective agreement, because: 1. the Applicant’s

interpretation of Parry Sound is flawed in relation to its applicability to the case at bar;

2. the Board has no power to amend the collective agreement and incorporate this provision; and 3. there is no express language regarding reimbursement of legal costs in the collective agreement itself. [ 26 ] The second arguments for both parties interrelate, as both consider the scope and origin of the Board’s authority. The third issue is a facet of the second, and relates to whether that authority can only exist where there is a foundation in the text of the collective agreement for that authority. ii. Analysis [ 27 ] At para. 49 of Dunsmuir , the Court set out how the correctness standard should be applied.

The Court stated: When applying the correctness standard, a reviewing court will not show deference to the decision maker’s reasoning process; it will rather undertake its own analysis of the question. The analysis will bring the court to decide whether it agrees with the determination of the decision maker; if not, the court will substitute its own view and provide the correct answer.

From the outset, the court must ask whether the tribunal’s decision was correct. [Emphasis added.] [ 28 ] In my view, the Board came to the correct conclusion in deciding that s. 71 of the Financial Administration Act should not be incorporated into the parties’ collective agreement.

I reached this conclusion for the following reasons. [ 29 ] It has not always been the case that an arbitration board could look outside the four corners of a collective agreement to ascertain or apply statutory provisions not explicitly included in the collective agreement. [ 30 ] In Parry Sound , at para. 24 , the Supreme Court traced the evolution of the law in relation to the effect of employment-related statutes on the content of collective agreements. The Court stated that the leading case on this issue was McLeod v. Egan , 1974 CanLII 12 (SCC) , [1975] 1 S.C.R. 517, 46 D.L.R. (3d) 150 (“ McLeod ”).

The Court continued: Prior to McLeod , the prevailing view was that an arbitrator was not authorized to apply statutes in the course of grievance arbitration other than as an aid to interpreting a collective agreement: D. J. M. Brown and D. M. Beatty, Canadian Labour Arbitration (loose-leaf ed.), at p. 2-60. On this view, an arbitrator had no alternative but to construe and apply a collective agreement in accordance with its express terms and conditions.

If the alleged misconduct did not constitute a violation of an express provision of the collective agreement, the subject matter of the dispute was not arbitrable.

In McLeod , however, the Court established that it is necessary to look outside the collective agreement in order to ascertain the substantive rights and obligations of the parties to that agreement. [ 31 ] The Court held, at paras. 28 and 29, that the following was true as a result of the advance in the law undertaken in McLeod : 28 As a practical matter, this means that the substantive rights and obligations of employment-related statutes are implicit in each collective agreement over which an arbitrator has jurisdiction.

A collective agreement might extend to an employer a broad right to manage the enterprise as it sees fit, but this right is circumscribed by the employee's statutory rights. The absence of an express provision that prohibits the violation of a particular statutory right is insufficient to conclude that a violation of that right does not constitute a violation of the collective agreement.

Rather, human rights and other employment-related statutes establish a floor beneath which an employer and union cannot contract. 29 As a result, the substantive rights and obligations of the parties to a collective agreement cannot be determined solely by reference to the mutual intentions of the contracting parties as expressed in that agreement. Under McLeod , there are certain terms and conditions that are implicit in the agreement, irrespective of the mutual intentions of the contracting parties.

More specifically, a collective agreement cannot be used to reserve the right of an employer to manage operations and direct the work force otherwise than in

accordance with its employees' statutory rights, either expressly or by failing to stipulate constraints on what some arbitrators regard as management's inherent right to manage the enterprise as it sees fit.

The statutory rights of employees constitute a bundle of rights to which the parties can add but from which they cannot derogate. [ 32 ] The Court in Parry Sound , at para. 38 , took the proposition from McLeod , that the employer’s right to control operations and direct the work force is subject not only to the express provisions of the collective agreement but also to employee’s statutory rights, and applied it in the human rights context, holding that the arbitration board was correct in concluding that the substantive rights and obligations of the Human Rights Code , were implicit in a collective agreement over which an arbitrator had jurisdiction. [ 33 ] That said, it is clear that the Parry Sound decision was founded, in part, on the language found in the Ontario Labour Relations Act , 1995 , S.O. 1995, c.1, s. 48(12)(j): 48.

(1) Every collective agreement shall provide for the final and binding settlement by arbitration, without stoppage of work, of all differences between the parties arising from the

interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable. ...

(12) An arbitrator or the chair of an arbitration board, as the case may be, has power, ... (

j) to interpret and apply human rights and other employment-related statutes, despite any conflict between those statutes and the terms of the collective agreement. [Emphasis added.] [ 34 ] Though it is clear that s. 48(12) (

j) played an important role in the decision, I do not subscribe to the position, argued by the Respondent and stated by the Board, that the Parry Sound decision is based entirely, or even primarily, on the existence of s. 48(12) (

j) in the sense that but for s. 48(12) (

j) of the Ontario Labour Relations Act, 1995 the decision in Parry Sound would have been different. In my view, McLeod , decided before s. 48(12) (

j) was enacted in 1992, is sufficient authority for the Parry Sound decision. [ 35 ] At para. 40 of Parry Sound , the Court stated: In my view, s. 48(12) (

j) does not clearly indicate that it was the legislature's intention to alter the principles described above. Quite the opposite. I believe that the amendments to the legislation affirm that grievance arbitrators have not only the power but also the responsibility to implement and enforce the substantive rights and obligations of human rights and other employment-related statutes as if they were part of the collective agreement. [Emphasis added.] [ 36 ] The Court’s use of the word “affirm” demonstrates that the general principle articulated in McLeod continues to stand independently of the specific language of s. 48(12) (

j) of the Ontario Labour Relations Act, 1995 . This is a clear statement by the Court that s. 48(12) (

j) only affirmed principles that already existed at common law, as set out in McLeod . [ 37 ] On this basis, I have no difficulty in concluding that the Parry Sound decision is not limited in its application to cases where there is specific legislation which permits the incorporation of human rights and other employment-related statutes into collective agreements. [ 38 ] I am not of the belief, however, that the application of Parry Sound extends as far as the Applicant argues it should. [ 39 ] The Supreme Court of Canada in Parry Sound repeatedly references “human rights and other employment-related statutes.” The Applicant argues that this language is broad enough to not only include statutes which relate principally or even partially to

employment, but also to any legislation which contains any provision which relates to employment. Here, that is the Financial Administration Act , s. 71(1)(c). I note this legislation provides the general authority for the Province to receive, manage, and distribute public funds. [ 40 ] In oral submissions, the Applicant defined an “employment-related statute” as any statute that contains a provision that affects the terms and conditions of employment for a union member.

Under that definition, the right to apply for reimbursement for legal expenses under s. 71 of the Financial Administration Act , would be included. [ 41 ] Based on Parry Sound , I do not agree that the definition of “employment-related statute” is that broad. [ 42 ] In my view, the Supreme Court’s use of the phrase “human rights and other employment-related statutes” means human rights, and other substantive rights like human rights, that fundamentally affect the employment relationship. [ 43 ] The right in question must be a fundamental right in order to be incorporated into a collective agreement, thus giving an arbitration board jurisdiction over the grievance.

Parry Sound is really about the type of substantive rights that fundamentally affect the employment relationship. [ 44 ] That said, I do not agree with the Respondent’s submission that because human rights have a quasi-constitutional status, they sit atop a pecking order of statutory rights that can be incorporated into a collective agreement and therefore it is only the constitutional and quasi-constitutional law which is implicitly a part of a collective agreement. [ 45 ] I do, however, find that the right in question must be one that fundamentally affects the employment relationship, in order for it to be incorporated into the collective agreement between the parties. [ 46 ] Parry Sound , at para. 28 , provides guidance on just what statutory provisions operate in this “fundamental” manner and are incorporated into a collective agreement.

These are: ...

Human rights and other employment-related statutes [which] establish a floor beneath which an employer and union cannot contract. [Emphasis added.] “Fundamental” statutory provisions are those which dictate a base-line for employee and employer conduct. [ 47 ] Although s. 71 of the Financial Administration Act is related to employment, I do not find that it is the fundamental type of employment-related statute as envisaged by the Supreme Court in Parry Sound . [ 48 ] Similar to the approach in Parry Sound , the Supreme Court in McLeod referred to “statutory rights.” These are not merely entitlements available to the employee via other pieces of legislation, but which are not included in the language of the collective agreement; they are basic substantive rights , from which the employer must not derogate. [ 49 ] A right which is fundamental to an employee/employer relationship is not one which is permissive or optional.

This difference is not just simply of language but of function. [ 50 ] This distinction, permissive versus required, is a key distinction on which the Applicant’s argument founders. In most of the cases cited by the Applicant in favour of its position, the arbitration boards incorporated provisions of an external statute into a collective agreement when it was clear that the employer had violated one of the employee’s statutory rights included in that external statute.

[ 51 ] For example, in Parry Sound , the employer violated provisions of the Human Rights Code ; in McLeod , the employer violated a provision regarding maximum hours of work in the Employment Standards Act, 1968 , S.O. 1968, c. 35, s. 11(2); and in a number of arbitrator’s decisions, the employer violated provisions included in the Education Act , R.S.O. 1990, c. E-2 ( Ontario English Catholic Teachers’ Assn. (Occasional Teacher Unit) v. Toronto Catholic District School Board (Student Supervisors Grievance) , 2005 CanLII 94069 (ON LA) , [2005] O.L.A.A.

No. 245, 139 L.A.C. (4 th ) 366), the Municipal Freedom of Information and Protection of Privacy Act , R.S.O. 1990, c. M. 56 ( Kawartha Pine Ridge School District Board v. Elementary Teachers Federation of Ontario (S.D. Grievance) , [2008] O.L.A.A. No. 106, 169 L.A.C. (4 th ) 353 ); and the Election Act , R.S.O. 1990, c. E.6 ( Re Ontario (Ministry of Health) v. O.P.S.E.U. (Binkley) , 1996 CanLII 20359 (ON GSB) , [1996] O.G.S.B.A. No. 3, 61 L.A.C. (4 th ) 284). [ 52 ] In the case at bar, the Respondent employer has not breached any statutory right owed to its employee.

The right in question is not the right to have legal expenses related to employment reimbursed by the employer. It is the right to apply for that kind of relief. Here, the employer considered Mr. Soenen’s application for reimbursement, and exercised its discretion to decline to reimburse Mr. Soenen’s legal expenses. [ 53 ]

Section 71 of the Financial Administration Act reads: Indemnities by the Crown 71(1) Notwithstanding any other law, including

section 2, the Crown may give an indemnity if and only if the indemnity is in writing and ... (

c) is given to individuals who are or were members of the Executive Council, members of the Legislative Assembly, employees of the Crown, members of Provincial committees, members or directors of Provincial corporations or members, directors or officers of corporations or unincorporated bodies serving in such capacities at the Crown’s request, and the heirs and legal representatives of any such persons, to indemnify them against costs, charges and expenses, and on the basis, specified by the Lieutenant Governor in Council. [Emphasis added.] [ 54 ] The relevant portion of Order in Council 688/92 reads: With the approval of the Treasury Board, the Crown may give indemnities, including at least the terms of and conditions applicable to indemnities under

section 1 to individuals by their personal names, names of office or classes, who are or were members of the Legislative Assembly of Alberta, employees of the Crown...and their heirs and legal representatives. [ 55 ] Both provisions are permissive and thus do not establish a statutory right akin to those discussed in McLeod , or Parry Sound . V. Conclusion [ 56 ] For the foregoing reasons, I confirm the Board’s decision not to incorporate s. 71 of the Financial Administration Act into the parties’ collective agreement.

The Board was correct to conclude it did not have jurisdiction to hear and decide the merits of Mr. Soenen’s grievance. [ 57 ] The application for judicial review is dismissed. [ 58 ] The parties may speak to costs within 30 days, if required.

Heard on the 12 th day of November, 2010. Dated at the City of Edmonton, Alberta this 2 nd day of December, 2010. R.P. Marceau J.C.Q.B.A. Appearances: Sean P. McManus McManus & Hubler for the Applicant Walter J. Pavlic, Q.C. MacPherson, Leslie for the Respondent