2013 NBCA 3, 2013 NBCA 3

COURT OF APPEAL OF NEW BRUNSWICK 52-12-CA ATTORNEY GENERAL OF CANADA on behalf of CORRECTIONAL SERVICE OF CANADA APPELLANT PROCUREUR GÉNÉRAL DU CANADA au nom de SERVICE CORRECTIONNEL DU CANADA APPELANT - and - - et - PAULETTE ROBICHAUD RESPONDENT PAULETTE ROBICHAUD INTIMÉE A N D B E T W E E N: ET ENTRE : ATTORNEY GENERAL OF CANADA on behalf of CORRECTIONAL SERVICE OF CANADA APPELLANT PROCUREUR GÉNÉRAL DU CANADA au nom de SERVICE CORRECTIONNEL DU CANADA APPELANT - and - - et - NATASHA MacKINNON RESPONDENT NATASHA MacKINNON INTIMÉE Attorney General of Canada, on behalf of Correctional Service of Canada v.

Robichaud and MacKinnon, 2013 NBCA 3 Procureur général du Canada, au nom de Service correctionnel du Canada, c. Robichaud et MacKinnon, 2013 NBCA 3 CORAM: The Honourable Justice Turnbull The Honourable Justice Robertson The Honourable Justice Richard CORAM : L’honorable juge Turnbull L’honorable juge Robertson L’honorable juge Richard Appeal from a decision of the Court of Queen’s Bench: May 2, 2012 Appel d’une décision de la Cour du Banc de la Reine : Le 2 mai 2012

History of Case: Historique de la cause : Decision under appeal: 2012 NBQB 152 Décision frappée d’appel : 2012 NBQB 152 , 2012 NBBR 152 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: October 25, 2012 Appel entendu : Le 25 octobre 2012 Judgment rendered: January 10, 2013 Jugement rendu : Le ​10 janvier 2013 Reasons for judgment by: The Honourable Justice Robertson Motifs de jugement : L’honorable juge Robertson Concurred in by: The Honourable Justice Turnbull The Honourable Justice Richard Souscrivent aux motifs : L’honorable juge Turnbull L’honorable juge Richard Counsel at hearing: For the appellant Attorney General of Canada: Angela J. Green and Susan R. Taylor For the respondents Paulette Robichaud and NatashaMacKinnon: J. Gordon Petrie, Q.C.

Avocats à l’audience : Pour le Procureur général du Canada, partieappelante : Angela J. Green et Susan R. Taylor Pour les intimées Paulette Robichaud et NatashaMacKinnon : J. Gordon Petrie, c.r. THE COURT The appeal is allowed. The appellant is entitled to anorder dismissing the respective actions brought in theCourt of Queen’s Bench and to costs on the motionand the appeal. In total, each respondent is ordered topay costs of $1,500. LA COUR Accueille l’appel.

L’appelant a droit à uneordonnance portant rejet des actions respectivesengagées devant la Cour du Banc de la Reine ainsiqu’aux dépens afférents à la motion et à l’appel. Autotal, chaque intimée est condamnée à des dépens de1 500 $. The judgment of the Court was delivered by

ROBERTSON, J.A. [ 1 ] Each respondent employee sued for constructive dismissal after their employer, as represented by the Attorney General of Canada, refused to undertake a formal investigation into the merits of an unsigned complaint of harassment and misconduct leveled against the respondents by other employees. The employer had determined the complaint failed to meet the requirements of the Treasury Board’s “Policy on Prevention and Resolution of Harassment in the Workplace”.

While the anonymous allegations did not result in any form of employer sanction or discipline, each of the Statements of Claim alleges the employer’s failure to investigate resulted in an “intolerable work environment”. [ 2 ] In response to the lawsuits, the employer brought a motion under Rule 23.01(2)(

a) of the Rules of Court for an order dismissing or staying the actions on the ground the Court of Queen’s Bench lacks the jurisdiction to try the actions. The employer’s jurisdictional argument hinged on the

interpretation and application of s. 236 of the Public Service Labour Relations Act , S.C. 2003, c. 22, s. 2. In brief, s. 236 provides that the right to grieve an employment dispute is in lieu of the right to sue and it matters not whether the employee opts to grieve or whether the grievance is of a kind which is subject to third-party adjudication. As it should happen, the two employees did not grieve the employer’s refusal to investigate.

However, the motion judge dismissed the Attorney General’s joint motion because of a perceived need to adduce trial evidence with respect to the adequacy of the remedies available to the employees. [ 3 ] I respectfully disagree. This appeal hinges on whether the employer’s failure to investigate the unsigned allegations of harassment and misconduct was a “grievable” matter. I conclude it was and, therefore, s. 236 prevails. Moreover, nothing that was decided in Vaughan v.

Canada (Attorney General) , 2005 SCC 11 , [2005] 1 S.C.R. 146 undermines that conclusion, as s. 236 is Parliament’s direct response to the common law principles articulated in that case and that had been earlier applied by the Federal Court. Hence, the appeal should be allowed with costs, together with an order dismissing the actions. [ 4 ] The essential facts are not complicated. The respondents were employed as nurse managers with the Correctional Service of Canada, at a health facility located at the federal penitentiary in Dorchester, New Brunswick.

In June of 2010, an unsigned complaint was lodged against both employees for harassment and misconduct in the workplace. The employees asked their employer to conduct a formal investigation into the complaint. Their employer determined that the anonymous complaint did not meet the threshold requirements of the Treasury Board’s harassment policy. However, in accordance with that policy, the employer initiated an informal mediation process involving staff meetings. The respondent Robichaud refused to participate, while the respondent MacKinnon attended one of two meetings.

Neither employee attempted to grieve the employer’s failure to conduct a formal investigation into the allegations leveled against them with a view to establishing their innocence or guilt. [ 5 ] On June 27, 2011, each respondent filed a Notice of Action claiming damages for constructive dismissal because of the failure of their employer to conduct an investigation into the truth of the unsigned complaint. On January 6, 2012, the Attorney General of Canada filed an amended Notice of Motion under Rules 23.01(1)(b), 23.01(2)(

a) and 37.10 of the Rules of Court asking that the underlying action be stayed or dismissed. Before the motion judge, the Attorney General argued that s. 236 of the Public Service Labour Relations Act ousts the jurisdiction of the courts to try an action for constructive dismissal. The Attorney General submitted the employees were limited to pursuing the grievance procedure set out in that legislation, something they failed to do. The former employees countered with a three-prong argument.

First, they questioned whether the underlying dispute relates to the “terms and conditions of employment” which is a condition precedent to the application of s. 236. Second, it was argued that s. 236 does not apply to cases where the right to grieve does not provide the employee with an adequate remedy such as third-party adjudication. Third, it was argued that the question of whether the grievance procedure would have provided the employees with an adequate remedy and the question of whether the underlying dispute relates to “terms and conditions of employment” must be decided in the circumstances of each case.

After weighing the competing arguments, the motion judge concluded: “I find that the trial judge would be in a better position to determine whether the parties have an available remedy outside the court. The Court must hear evidence on the issue.” Accordingly, the joint motion for dismissal was dismissed. [ 6 ] The essence of the underlying lawsuit is not complicated. It is alleged that the failure of the employer to conduct an investigation into the unsigned allegations of harassment and professional misconduct resulted in the constructive dismissal of each employee.

This is so despite the attempts of management to bring about an informal resolution with respect to the allegations and despite the fact the allegations did not result in the imposition of sanctions or discipline. Moreover, in their written submission to this Court, the respondent employees assert that a cause of action is available when an employer fails to provide a harassment-free work environment; citing Stamos v. Annuity Research & Marketing Service Ltd. , [2002] O.J. No. 1865 (QL) (Ont. S.C.J.) .

The inference to be drawn from that submission is that it was the respondents who were being harassed and it was their employer’s failure to act that led to their constructive dismissal. However, we are not being asked to decide whether

summary judgment should issue, but only to interpret and apply s. 236 of the Act and to decide whether the Attorney General’s motion was properly dismissed because of the need for further evidence on the issue of “adequate remedy”. [ 7 ] As noted at the outset, s. 236 of the Public Service Labour Relations Act is a legislated

response to a decision originating in the Federal Court and that eventually was confirmed by the Supreme Court of Canada: Vaughan v.Canada (Attorney General), 2005 SCC 11, [2005] 1 S.C.R. 146, aff’g 2003 FCA 76, [2003] 3 F.C. 645, aff’g 2001 FCT 1233, [2001]F.C.J. No. 1734 (QL), aff’g (FC), [2000] F.C.J. No. 144. (QL) (Prothonotary). But it is important to begin with anunderstanding of what was decided in that case.

In brief, the majority of the Supreme Court held that, where Parliament has created acomprehensive scheme for dealing with labour disputes, the process set out in the legislative scheme should not be compromised bypermitting parallel access to the courts. However, the Court recognized a residual discretion to permit court access in cases where thegrievance procedure did not allow for third-party adjudication. In other words, the courts retain a residual discretion to allow a lawsuit toproceed in cases where the legislative scheme does not provide the employee with an adequate remedy.

The Court cited the “whistle-blower” cases as falling within the residual category: see also Pleau v. Canada (Attorney General), 1999 NSCA 159, [1999] N.S.J. No.448 (QL). [8] It is also important to place the substantive ruling in Vaughan in its factual context. Thelegislation then in force (the Public Service Staff Relations Act, R.S.C. 1985, c. P-35) provided for a grievance procedure that did notinclude third-party adjudication with respect to the denial of early retirement benefits.

Grievance decisions were insulated from judicialreview by a “final and binding” clause found in the legislation and, as stated above, the applicable Act contained no equivalent to s. 236of the Public Service Labour Relations Act. However, the employee did not grieve the denial of benefits decision and instead sued in theFederal Court. On a motion for

summary judgment, the action was struck. The majority of the Supreme Court upheld the decision todismiss the underlying action. The Court held the privative clause was not sufficient to oust the Court’s residual discretion to intervene.While the absence of third-party adjudication may in certain circumstances impact on the court’s exercise of its residual discretion, theCourt cautioned other courts from getting involved and, if they do, their involvement is limited to hearing an application for judicialreview.

As noted above, the majority referred to the “whistle-blower cases” as coming within the exceptional category. In brief, themajority recognized that a public servant may have the option of going to court to resolve a dispute which is grievable but not arbitrable(i.e., not subject to third-party adjudication).

The minority opinion would have allowed the action to stand on the basis of a broaderprinciple: access to the courts is permissible in cases where there is no right to third-party adjudication and there is no express provisionin the legislation precluding recourse to the courts. [9] As noted, the legislative scheme being applied in Vaughan was the Public Service StaffRelations Act. However, that Act was subsequently repealed and replaced with the Public Service Labour Relations Act, which came intoforce in April of 2005, save for three provisions not relevant to this appeal.

The long and the short of it is that between the time the casewas decided in the Federal Courts and the release of the Supreme Court’s decision, Parliament had adopted the Public Service LabourRelations Act, which included a provision that ousted the right of access in cases where the underlying dispute was grievable. In Bron v.Canada (Attorney General), 2010 ONCA 71, [2010] O.J. No. 340 (QL), the Ontario Court of Appeal effectively held that the residualdiscretion outlined in Vaughan had been displaced by the amending legislation.

But the Appeal Court did question whether the residualdiscretion may persist if the grievance process could not provide an appropriate remedy. However, the Court concluded with thefollowing statement: “there is no suggestion in this case that it could not”. See also Van Duyvenbode v. Canada (Attorney General),[2007] O.J. No. 2716 (QL), aff’d 2009 ONCA 11, [2009] O.J. No. 28 and Yeates v. Canada (Attorney General), 2010 ONSC 3407,[2010] O.J. No. 2484 (QL), aff’d 2011 ONCA 83, [2011] O.J.

No. 373 (QL). [10] As will become apparent, this is not a case where it is necessary to determine whether s. 236 ofthe Public Service Labour Relations Act completely ousts the residual discretion of the courts to permit court adjudication of matters thatare grievable under the Act. On the facts, there is nothing exceptional about the case that would require further reflection and analysis.However, I would make the following general observations. First, if there is a residual discretion it must be found in the concept of“grievance” as used in s. 236. In other words, the issue is an interpretative one.

Second, the fact that the grievance procedure does notallow for third-party adjudication with respect to the matter at hand would not by itself be sufficient to attract the residual discretion.Section 236 is clear on that point. The truly problematic cases will be those where the grievance process is itself “corrupt”. For example,Smith v.

Canada (Royal Canadian Mounted Police), 2007 NBCA 58, 316 N.B.R. (2d) 180, has been labeled a “truly exceptional case”.The employee had established “bad faith” on the part of the employer in circumstances where the grievance process did not allow forthird-party adjudication and the grievor was forced to grieve to those who were responsible for the bad faith conduct. But those are notour facts.

Finally, in regard to the whistle-blower exception identified in Vaughan, I draw attention to the Public Servants DisclosureProtection Act, S.C. 2005, c. 46, which came into force in 2007. [11] Having dealt with the common law principles governing the right of employees to seek redressin the courts in cases where legislation provides a comprehensive scheme for resolving employment disputes, it is time to turn to thegrievance process outlined in the Public Service Labour Relations Act.

Subsection 206(1) defines “employee” to include managers.Subsection 208(1) would appear to allow an employee to grieve virtually all work-related issues subject to a few express exceptionsoutlined in subsections (2) to (7). The exceptions have no relevance to the present appeal. An employee may present her grievance up tothe final level in the grievance process.

The right of an employee to refer a grievance to third-party adjudication is limited to thosecategories outlined in s. 209(1), which includes issues arising from a collective agreement and disciplinary action that resulted intermination, demotion, suspension or a financial penalty. All other grievances are determined at the final grievance level. The presentcase does not fall within the exceptional categories listed in s. 209(1). Grievances are heard and determined according to the proceduresset out in the Act and its Regulations. The grievance process is internal.

Management personnel determine the merits of the grievance.Section 214 of the Act provides that decisions made at the final level of the grievance process and which cannot be referred toadjudication are “final and binding” for all purposes. Pursuant to s. 233, decisions on matters referred to third-party adjudication aresubject to a full privative clause. But, regardless of the scope of the privative clause, both types of decisions are subject to judicialreview.

[12] As will become apparent, the pivotal issue on this appeal is whether the underlying dispute fallswithin the scope of s. 236 of the Act.

Subsection 236(1) provides that: “The right of an employee to seek redress by way of grievance forany dispute relating to his or her terms or conditions of employment is in lieu of any right of action that the employee may have inrelation to any act or omission giving rise to the dispute.” Section 236(2) provides that s. 236(1) applies “whether or not the employeeavails himself or herself of the right to present a grievance in any particular case and whether or not the grievance could be referred toadjudication”. But there is an exception to the prohibition against suing even though the dispute is grievable.

Pursuant to s. 236(3), theprohibition found in s. 236(1) does not apply to a category of employees (not relevant to this appeal) if the dispute relates to theemployee’s termination of employment and provided the termination does not relate to a breach of discipline or misconduct.

In otherwords, s. 236(3) contemplates situations in which an employee who is dismissed for cause (e.g. poor performance) will have a right tosue for wrongful dismissal, provided that person falls within a narrow category identified in s. 236(3). [13] In brief, s. 236 of the Act establishes that the right to grieve is in lieu of the right to sue. The factthe employee elects not to grieve or the grievance is not subject to third-party adjudication is of no moment. While there is an exceptionto the restriction on suing, the category is narrow and has no application in the present case.

The only question that we need decide iswhether the employer’s failure to undertake a formal investigation into the unsigned allegations leveled at the two employees was a“grievable” dispute relating to “terms and conditions of employment”. While the answer should appear obvious, the question was raisedbefore the motion judge but not answered. It is to that task I turn. [14] In accordance with the accepted principles of statutory

interpretation, this Court must undertakea contextual analysis: Rizzo & Rizzo Shoes Ltd. (Re), (SCC), [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2 (QL).Accordingly, s. 208 is relevant to the analysis. In part, s. 208 provides that an employee is entitled to present an individual grievance if heor she feels aggrieved by the

interpretation and application of an “instrument” issued by the employer that deals with terms andconditions of employment or as a result of any occurrence or matter affecting the employee’s terms and conditions of employment. TheTreasury Board’s harassment policy would logically fit within the concept of “instrument”. The harassment policy deals with terms andconditions of employment in that it proscribes and circumscribes unacceptable conduct in the workplace.

Therefore, it is reasonable todeduce that the employer’s failure to properly apply the policy is a grievable matter. [15] Even if s. 208 of the Act and the Treasury Board’s harassment policy were ignored, we wouldbe left with deciding whether the employer’s refusal to investigate comes within the ambit of a “dispute” relating to “terms andconditions of employment” as set out in s. 236(1). That being so, one could not quibble with the proposition that the terms and conditionsof employment can be either express or implied.

As the record discloses no formal contract of employment, we must assume that theemployer’s obligations are those implied at law. As the employees are arguing constructive dismissal, they must be arguing theiremployer breached an implied obligation to conduct an investigation into the merits of the unsigned allegations. In other words, there is adispute as to whether the employer was obligated to conduct an investigation and whether that obligation was breached and the breachresulted in damages. In my view, these accepted facts qualify as a “dispute” relating to the “terms and conditions of employment”.

Itfollows that the employer’s decision not to investigate was a grievable matter within the meaning of s. 236. As s. 236 is applicable, theright to grieve is in lieu of the right to sue and it matters not whether the employees did in fact grieve.

The same holds true in regard tothe fact that the grievance decision would not have been subject to third-party adjudication. [16] Once again, it is important to remember that s. 236(1) provides that if an employee can grievethat employee cannot sue, even if the employee opts not to grieve and even though the grievance is not of a kind that is subject to third-party adjudication. Hence, you cannot argue that a grievance procedure, which does not provide for third-party adjudication, does notprovide an adequate remedy. Section 236(1) expressly eliminates that argument.

At the same time, it is equally clear that a grievance willnever measure up to the right to sue, where the remedy being sought is framed in “damages”. At the end of the day, it is important torealize that the parties do not have to go to trial to adduce evidence as to what is or is not an adequate remedy. Indeed, in Smith v.Canada (Royal Canadian Mounted Police), this Court made a ruling on a motion for

summary judgment with respect to the adequacy ofthe grievance process applicable to members of the Royal Canadian Mounted Police. In my view, the motion judge fell into error inholding that it was necessary to hear evidence with respect to the relative adequacy of the remedies provided under the administrativelaw scheme and those available at common law. [17] As an aside, it is readily apparent that, even if one were to apply the Supreme Court’s reasoningin Vaughan to the appeal at hand, the two employees could not succeed.

Applying the minority’s decision, this is a case where there is anexpress provision precluding recourse to the courts and, therefore, it makes no difference whether there is or is not a right to third-partyadjudication. Applying the reasoning of the majority, there is nothing exceptional about this case. Had the employer’s refusal toinvestigate been grieved, the proper recourse would have been to seek judicial review. [18] In

summary, there is nothing exceptional about this case. The employer chose not to conduct aformal investigation into an unsigned complaint leveled against two nurse supervisors by other employees. The anonymous complaintdid not result in employer sanctions against anyone. The employees chose not to grieve the employer’s refusal even though the decisionwas grievable. Instead, they decided to sue for constructive dismissal and damages.

Section 236 of Public Service Labour Relations Act

expressly provides that the right to grieve is in lieu of the right to sue and it matters not whether the employee grieves or the grievance decision is subject to third-party adjudication. Accordingly, the motion judge should have granted an order dismissing the actions. [ 19 ] I would allow the appeal and set aside the joint order granted below. The appellant is entitled to an order dismissing the respective actions brought in the Court of Queen’s Bench. The appellant is also entitled to costs on the motion and the appeal.

In total, each respondent should pay costs of $1,500. ____________________________________ J.T. ROBERTSON, J.A. WE CONCUR: ____________________________________ WALLACE S. TURNBULL, J.A. ______________________________________ J.C. MARC RICHARD, J.A.