2011 NBCA 80, 2011 NBCA 80

COURT OF APPEAL OF NEW BRUNSWICK 142-10-CA ARTHUR McLEAN APPELLANT ARTHUR McLEAN APPELANT - and - - et - CITY OF MIRAMICHI, a municipal corporation, by virtue of the Municipalities Act RESPONDENT VILLE DE MIRAMICHI, une municipalité constituée en vertu de la

Loi sur les municipalités INTIMÉE McLean v. City of Miramichi, 2011 NBCA 80 McLean c.

Miramichi, 2011 NBCA 80 CORAM: The Honourable Justice Robertson The Honourable Justice Richard The Honourable Justice Bell CORAM : L’honorable juge Robertson L’honorable juge Richard L’honorable juge Bell Appeal from a decision of the Court of Queen's Bench: September 30, 2010 Appel d’une décision de la Cour du Banc de la Reine : Le 30 septembre 2010 History of Case: Historique de la cause : Decision under appeal: 2010 NBQB 322 Décision frappée d’appel : 2010 NBBR 322 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: June 20, 2011 Appel entendu : Le 20 juin 2011 Judgment rendered: September 22, 2011 Jugement rendu : Le 22 septembre 2011

Reasons for judgment by: The Honourable Justice Robertson Motifs de jugement : L’honorable juge Robertson Concurred in by: The Honourable Justice Richard The Honourable Justice Bell Souscrivent aux motifs : L’honorable juge Richard L’honorable juge Bell Counsel at hearing: For the appellant: Harold L. Doherty For the respondent: Richard G. Petrie Avocats à l’audience : Pour l’appelant : Harold L. Doherty Pour l’intimée : Richard G. Petrie THE COURT The appeal is allowed and the decision of the application judge is set aside.

The appellant is entitled to an order of reinstatement in accordance with the terms set out in the Notice of Application. The appellant is also entitled to costs of $2,500 on the application and $2,500 on the appeal. LA COUR L’appel est accueilli et la décision du juge saisi de la requête est annulée. L’appelant a droit à une ordonnance de réintégration conforme aux conditions énoncées dans l’avis de requête. L’appelant a également droit aux dépens qui sont fixés à 2 500 $ pour la requête et à 2 500 $ pour l’appel. The judgment of the Court was delivered by ROBERTSON, J.A. I.

Introduction [ 1 ] The respondent municipality informed the appellant, a unionized police officer in the Miramichi Police Force, that his employment with the municipality was terminated as a result of the application of the common law doctrine of frustration. The appellant had been off work for a little over three years, after being diagnosed with a post-traumatic stress disorder following the occurrence of a tragic work-related incident. During this period the appellant was in receipt of workers’ compensation benefits.

The benefits ceased once the Workplace Health, Safety and Compensation Commission determined that the appellant was no longer subject to the work “restriction”. The municipality’s decision to declare the employment contract “frustrated” was prompted by the appellant’s announcement of an intention to return to work. Ultimately, the appellant sought judicial review of the decision on the ground of non- compliance with the dismissal process set out in the Police Act , S.N.B. 1977, c. P-9.2.

[ 2 ]

Section 17.91(1) of the Police Act states a police officer shall not be dismissed for “unsatisfactory work performance”, except in accordance with the provisions of the Act . The Act states the dismissal is conditioned on the municipal police chief making a recommendation to an arbitrator, appointed under the Act, and the arbitrator accepting the recommendation. Initially, the appellant filed a complaint with the New Brunswick Police Commission with respect to the municipality’s non-compliance with the provision.

The Commission ruled the matter was outside its mandate because the complaint did not relate to either job performance or misconduct. Thereafter, the appellant sought judicial review of the municipality’s decision, seeking an order to quash the dismissal decision and an order of reinstatement. The municipality countered that s. 17.91(1) did not apply in cases involving the application of the doctrine of frustration and, therefore, the appellant’s true remedy is to grieve his dismissal under the governing collective agreement.

The application judge accepted the municipality’s argument in a decision now reported at 2010 NBQB 322, 364 N.B.R. (2d) 392 . [ 3 ] Three issues were raised on appeal. The first is an interpretative one: Does s. 17.91(1) of the Act apply in cases where the decision to dismiss a police officer is premised on the application of the common law doctrine of frustration? The second issue is tied to the allegation that the dismissal is a disguised form of discipline and, therefore, the dismissal must be dealt with under the Act and not the grievance procedure set out in the collective agreement.

The third is whether the application for judicial review of the municipality’s decision is an impermissible collateral attack on the decision of the Police Commission tied to the appellant’s failure to seek judicial review of that decision. What we are not dealing with is the merits of the case at hand and, in particular, whether the employment contract in question was in fact and law frustrated. In other words, the

interpretation of s. 17.91(1) cannot be driven by the specific circumstances surrounding the appellant’s case. [ 4 ] In my view, a decision to treat a contract of employment as having been “frustrated” falls within the ambit of s. 17.91(1) of the Police Act . Admittedly, when the

section is read in isolation, the argument of there being a substantive difference between an officer who is performing his or her tasks unsatisfactorily and one who is simply incapable of performing any tasks, satisfactorily or otherwise, is attractive. But this Court cannot resort to a literal

interpretation of an isolated provision. A contextual analysis is required. That analysis forces us to consider three additional factors. [ 5 ] First, the Legislature made a conscious decision to ensure that dismissal and demotion decisions would be dealt with under the Police Act and not in a court room or under a grievance procedure set out in a collective agreement. Prior to 2005, the administrative process set out in the Act applied only to allegations of misconduct tied to breaches of the Code of Professional Conduct , which was included as a regulation to the Act .

In 2005, the Act was amended and s. 17.91(1) added with the clear intent of ensuring that terminations for cause, that did not fall within the category of misconduct, would also be dealt with under the legislation. To turn around and ask that s. 17.91(1) be interpreted narrowly, so as to exclude termination decisions grounded on the doctrine of frustration, would undermine the clear intent of the Legislature. Moreover, policy reasons have not been offered, nor are any self-evident, which would explain why the Legislature might have excluded frustration cases from the ambit of the Act .

In short, the adoption of a literal and narrow

interpretation of s. 17.91(1) would undermine the Legislature’s attempt to ensure that dismissal and demotion decisions be adjudicated upon in accordance with the process set out in the Act . The

interpretation is also antagonistic to s. 17 of the

Interpretation Act , R.S.N.B. 1973, c. I-13, which provides that every provision shall be deemed remedial and shall receive a fair and liberal construction that best ensures the attainment of the provision’s object. [ 6 ] Second, the Legislature also recognized that employers could mischaracterize the true ground for dismissal. An allegation of misconduct could be proven to be a matter relating to unsatisfactory work performance and, conversely, an allegation of unsatisfactory work performance could be proven to be a matter of misconduct.

In 2005 and 2008, the Police Act was amended to permit the arbitrator to deal with cases of mischaracterization (ss. 17.97 and 32.991). Correlatively, the decision to terminate an employment relationship on the ground of contract frustration may turn out to be a case of employer mischaracterization. The dismissal decision based on frustration may mask other reasons for termination more closely tied to disciplinary/misconduct issues: issues which must be dealt with under the Act . The present case is on point.

The appeal record contains independent documentary evidence which provides the appellant with ammunition to support his argument that his dismissal is “disguised discipline”. [ 7 ] The third contextual factor reinforces the first two. The remedial powers of an arbitrator appointed under the Police Act are broad enough to deal effectively with the types of issues that typically arise in cases where the employer argues frustration of the employment contract. The same cannot be said of cases that must be decided in a court room or arbitrated under the grievance procedure set out in a collective agreement.

One must recognize that the application of the frustration doctrine, in the employment context, has moved away from its historical and mostly commercial roots. No longer are we dealing with the classical case of frustration of an employment contract: the death or permanent and total physical incapacity of an employee. The notions of psychological injury, temporary versus permanent incapacity, total versus partial incapacity and the duty to accommodate in accordance with human rights legislation have worked their way into the analytical framework. In that regard, s. 17.95(

d) obligates an arbitrator appointed under the Act to consider whether a police officer with a disability, as defined under the Human Rights Act , R.S.N.B. 1973, c. H-11, has been accommodated. Moreover, s. 17.96(1)(b)(ii) authorizes the arbitrator to impose any remedial measure he or she considers appropriate. By contrast, the relief available at common law under the doctrine of frustration is extremely limited. The remedial measures an arbitrator appointed under a collective agreement may adopt are a matter of negotiation. In short, the

interpretation which the appellant places on s. 17.91(1) is consistent with the legislative purpose underscoring its adoption and the legislative scheme.

[ 8 ] Bluntly stated, one cannot ignore the steps the Legislature has taken to ensure that the power to dismiss, demote or discipline police officers is not left to the vagaries of the common law or collective bargaining regimes in which employers and unions are entitled to resolve grievances in ways that may conflict with the objects of the Act .

That legislation offers a convenient forum for adjudicating on termination decisions that require the application of the frustration doctrine and the application of the “impossibility of performance” test in cases not involving the death of one of the parties to the employment contract. [ 9 ] As to the municipality’s collateral attack argument, I find the Police Commission was without jurisdiction to rule on the appellant’s complaint that the provisions of the Police Act had not been followed.

Section 17.91(1) comes into play only in cases where the Chief of Police recommends to an arbitrator the dismissal or demotion of a police officer. The Police Commission has no power to rule on the applicability of the frustration doctrine and no power to act until such time as a recommendation is received from the Chief of Police or other provisions of the Act are invoked. Therefore, the appellant made a wise decision not to seek judicial review of an “opinion” that should not have issued in the first instance.

I shall say no more of this issue. [ 10 ] In brief, the application judge erred in failing to set aside the municipality’s decision to terminate the appellant’s employment on the ground the contract of employment had been frustrated. Therefore, the appeal should be allowed and an order for reinstatement should issue. Obviously, this ruling does not preclude the municipality from pursuing the termination and frustration issues in accordance with the process set out in the Police Act . II.

Background [ 11 ] In August of 2006, the appellant, Arthur McLean, while on duty and driving his police cruiser, struck and killed a pedestrian, the son of an employee of the respondent municipality. At that time, Mr. McLean had been on the police force for a little over 14 years. A coroner’s inquest attributed no fault to Mr. McLean. Commencing August 4, 2006, the Workplace Health, Safety and Compensation Commission accepted Mr. McLean’s application for compensation benefits due to an “acute stress disorder”.

Fifteen months later (October 9, 2007) the Commission determined that benefits should cease on the basis of an expert medical opinion that Mr. McLean was no longer suffering a work related “post-traumatic stress disorder”. In response, Mr. McLean submitted the report of a consulting psychiatrist, dated January 22, 2008, in support of the contention that Mr. McLean was unable to return to work. The Commission agreed with this opinion and compensation benefits remained payable.

In its confirmatory letter of March 14, 2008, the Commission noted several institutional factors which could prevent him from returning to work including: (1) the fact that the father of the deceased pedestrian works for the same employer;

(2) Mr. McLean was considering a lawsuit against the respondent municipality; and (3) the unfortunate possible social repercussions of a well-known case. However, the letter went on to inform Mr. McLean it would be necessary for him to engage in vocational retraining and to assist the Commission in developing a return to work plan. In May of 2008, there were discussions between the Commission and the City and the Commission and Mr. McLean as to other career options. On August 20, 2008, Mr. McLean identified “college instructor” as the preferred alternative occupation for which retraining would be required.

In that regard, Mr. McLean entered into “declarations of understanding” with the Commission. [ 12 ] In September of 2009, Mr. McLean ran into the manager/clerk of the municipality and informed him that he wished to return to work. In response to this random meeting, the municipality wrote to Mr. McLean, on September 28, 2009. The municipality stated it was of the understanding that the employment relationship had been effectively terminated once Mr.

McLean began the retraining program, but that in light of the collective agreement his employment had been continued solely for the purpose of maintaining certain benefits available under the collective agreement during the retraining period. The letter went on to explain that once the job search program had been completed and compensation benefits ceased the municipality would consider Mr. McLean’s employment terminated for all purposes. [ 13 ] Subsequently, Mr. McLean obtained a letter from his consulting psychologist, dated October 6, 2009, indicating that it was “realistic” for Mr. McLean to return to work.

Mr. McLean also obtained an opinion letter, dated October 15, 2009, from his psychiatrist. The letter indicated Mr. McLean had been a patient since January 10, 2009, and, that as of August of that year, he was capable of gradually resuming his duties as a police officer. In a subsequent letter, dated November 13, 2009, the same physician indicated that Mr. McLean was now capable of returning to work on a fulltime basis. [ 14 ] On December 16, 2009, Mr.

McLean received a letter from the Commission indicating that the two opinion letters had been received on November 23, 2009, and on the basis of that evidence the Commission had determined Mr. McLean was no longer subject to a “work restriction” and therefore the Commission would no longer provide him with vocational rehabilitation services and, correlatively, he would no longer qualify for the job search program. Finally, he was informed that compensation benefits were to be terminated as of December 18, 2009. Finally, the Commission wrote to Mr.

McLean on January 9, 2010, confirming that on the basis of the medical evidence produced, he was able to return to work as a police officer without “restriction”. For this reason, the Commission had terminated benefits and support for the vocational training program.

[ 15 ] The appeal record also indicates that, on November 25, 2009, two days after the Commission had received the opinion letters from Mr. McLean, the City requested and was granted a meeting with Commission officials. The record discloses that the Chief of Police and the City’s assistant manager met with Commission staff seeking clarification with respect to the recent medical information which the Commission had received. The Commission’s notes also indicate the City questioned the validity of this information and indicated Mr.

McLean had “pre-accident disciplinary issues”, had taken legal action against the City and some workers and had also filed a complaint with the provincial Human Rights Commission. The notes also state the City had expressed concern about the impact and hardship to other municipal staff should Mr. McLean return to work. [ 16 ] On December 29, 2009, the City wrote to Mr. McLean informing him that, in light of the Commission’s decision, the City considered that the contract of employment had been frustrated as of March 2008, the date on which it was learned that Mr. McLean would not be returning to work.

On February 26, 2010, the municipality issued a “record of employment”, pursuant to federal employment legislation, indicating the employment had been terminated due to “frustration of the employment contract”. [ 17 ] On January 12, 2010, Mr. McLean wrote to the New Brunswick Police Commission complaining of his dismissal as a police officer without the municipality following the process set out in the Police Act (a recommendation from the Chief of Police and a hearing before an arbitrator as required under s. 17.91(1) of the Police Act ). The Police Commission wrote to the City and asked for a response to Mr.

McLean’s complaint. On February 1, 2010, legal counsel to the City wrote to the Police Commission. The letter stated that Mr. McLean’s employment was not terminated for reasons related to performance or misconduct, but rather because the contract of employment had been “frustrated” according to common law principles. The letter insisted that s. 17.91(1) and its related provisions were not applicable. On February 10, 2010, the Police Commission wrote to Mr.

McLean informing him that a “review” of his dismissal was not within its mandate but had to be pursued under the provisions of the applicable collective agreement. [ 18 ] On judicial review, Mr. McLean argued his dismissal fell within s. 17.91(1) of the Police Act and also that his dismissal was in fact a disguised disciplinary termination. The application judge implicitly accepted the municipality’s argument that the Police Act applies only in cases involving discipline or unsatisfactory work performance and that Mr. McLean’s termination did not fall within either category.

The application judge went on to summarily rule that the dismissal could be grieved under the provisions of the governing collective agreement. Nothing was said with respect to Mr. McLean’s argument that his dismissal was a disguised form of discipline. III. Analysis [ 19 ] The pivotal issue is an interpretative one: Does the decision to dismiss a police officer, based on the doctrine of frustration, fall outside the ambit of s. 17.91(1) of the Police Act ? The relevant provisions of the Police Act and the Code of Professional Conduct ( N.B. Reg. 2007-81 ) are attached as Appendix A to these reasons. [ 20 ]

Section 17.91(1) of the Police Act provides that, notwithstanding any other remedial measure that may be imposed, a police officer shall not be dismissed or demoted for “unsatisfactory work performance” except in accordance with the provisions of the Act .

Section 17.92(1) provides that a Chief of Police may recommend to an arbitrator the dismissal or demotion of a police officer for unsatisfactory work performance. The parties to the arbitration must select an arbitrator from an approved list prepared by the New Brunswick Police Commission, and if the parties are unable to agree, the Police Commission makes the selection: ss. 33, 33.01 and 33.02 of the Act . Pursuant to s. 17.96(2), the arbitrator has 15 days in which to render a decision. [ 21 ] The municipality’s thesis is not complicated.

The employment contract of a person who is mentally or physically incapable of working, for an extended period of time, is deemed at an end under the doctrine of frustration. In such cases, it is not a question of whether the employee has failed to perform his or her tasks satisfactorily. Rather, it is a case in which the employee is no longer capable of performing any tasks, satisfactorily or otherwise. Curiously, neither party focused on the following point of law. In strict legal theory, the application of the doctrine of frustration does not equate with a dismissal for cause.

This is because the application of the doctrine is dependent on both parties being free of “fault”. The doctrine brings about a termination of the employment contract such that neither party has a right to sue for damages, save with respect to any restitutionary rights arising at law or in equity or under the Frustrated Contracts Act , R.S.N.B. 1973, c. F-24. The obligations of both parties simply come to an end.

Furthermore, I confess the municipality’s argument is attractive in cases where termination of the employment contract is brought about by the death of the employee or by a permanent disability which renders job performance now or in the future virtually impossible. Certainly, the commercial airline pilot who is faced with a permanent loss of vision cannot expect the employment contract to continue in force so as to provide a right of cockpit occupancy.

The notion that a Chief of Police would have to resort to the arbitration provisions of the Police Act in order to effect a termination of an employment contract following the death of a police officer is simply nonsensical. [ 22 ] The present case is problematic because there was never a finding that Mr. McLean’s incapacity or disability was permanent. According to the medical evidence and the Workplace Health, Safety and Compensation Commission, Mr. McLean was

suffering from a work-related mental disability (post-traumatic stress) which rendered him incapable of performing his duties as a policeofficer. However, the Commission does monitor and revisit claims to determine whether the long-term disability benefits should ceasebecause of a change in circumstances. At no time did the Commission make a formal determination that Mr. McLean’s incapacity wastotal and permanent, such that there was no reasonable prospect of his returning to work in any capacity. In fact, it was the municipalitythat unilaterally concluded that Mr.

McLean’s employment contract had been frustrated. This leads us to examine more closely the tenetsof the frustration doctrine and, in particular, its development in the area of employment law. I do so because the analysis establishes thatthe legal issues which arise at common law can be dealt with more efficiently and effectively under the arbitration provisions of thePolice Act. A.

The Basic Tenets of the Frustration Doctrine [23] As a general proposition, the doctrine of frustration has the effect of automatically relieving both parties to thecontract of their obligations to perform where there is an unforeseen or unexpected change in circumstances, brought about without thefault of either party and for which the contract does not make sufficient provision, and which makes further performance of their contractimpossible, impracticable or radically different from what the parties had or might have intended had they thought about the matter: seeDavis Contractors Ltd. v.

Fareham Urban District Council, [1956] A.C. 696 (H.L.); National Carriers Ltd. v. Panalpina (Northern) Ltd.,[1981] A.C. 675 (H.L.); Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, per Binnie J. at 969;Turner v. Clark (1983), (NB CA), 49 N.B.R. (2d) 340, [1983] N.B.J.

No. 29 (C.A.) (QL); and the incisive analysis of Angela Swan, Canadian Contract Law, 2nd ed. (Markham, Ont.: LexisNexis, 2009) at 704 et seq. [24] Most of the modern jurisprudence surrounding the doctrine of frustration has arisen in the context ofcommercial contracts for the sale or lease of goods or land and in the commercial arena of maritime law. Professor John D.

McCamus, inThe Law of Contracts (Toronto: Irwin Law, 2005), explains that the doctrine of frustration has provided an excuse for non-performanceon the basis of changing circumstances in three kinds of circumstances: (1) where the frustrating event has rendered performanceimpossible; (2) cases in which performance remains possible, but the purpose for which one or both parties entered the agreement hasbeen undermined; and (3) cases where temporary impossibility has grounded discharge for frustration: see McCamus at 573.

The thirdcategory embraces cases mostly decided within the maritime law context where delay in performance was occasioned because of wartime conditions (e.g., closure of the Suez Canal). In the employment context, the third category is manifested in cases where theemployee is off work because of a debilitating illness (delay in performance). The second category is not relevant in the employmentcontext: recall the “coronation cases” beginning with Krell v. Henry, [1903] 2 K.B. 740 (C.A.).

The first category manifests itself incases involving the death of an employee or an individual employer. [25] It is now trite law that the death of the promissor in an employment contract (either the employee or individualemployer) discharges the contract such that no cause of action for breach of contract lies in the promisee (the surviving party): Hyde v.Dean and Canons of Windsor (1597), Cro. Eliz. 552, 78 E.R. 798. Impossibility of performance brought about by death provides a validdefence to an action for breach of contract when brought against the estate: see Hall v.

Wright (1859), 120 E.R. 695 (C.A.) anddiscussion in Barnacle and Wood, Employment Law in Canada, (Markham, Ont.: LexisNexis, 2005) at 18-8. [26] Save for those cases involving the death of an employee, the question most frequently addressed is whether anemployee’s absence due to “illness” brings about a frustration of the underlying employment contract. In that regard, absence from workdue to a “temporary” illness is not just cause for

summary dismissal, nor does it bring about the application of the frustration doctrine.However, a “permanent” disabling illness does bring about a frustration of the employment contract. This principle was affirmed inDartmouth Ferry Commission v. Marks (1903), (SCC), 34 S.C.R. 366: see also Ulnooweg Development Group Inc. v.Wilmot, 2007 NSCA 49, [2007] N.S.J.

No. 172 (QL), where the Nova Scotia Court of Appeal held that only an absence arising from apermanent condition can justify a finding of frustration of contract. [27] For obvious reasons, the modern case law does not dwell on the question of frustration in the context of thedeath of the employee. The same holds true of the employee who is permanently and totally physically disabled, such that the possibilityof returning to the work force or engaging in meaningful employment is not a realistic consideration.

The pilot who loses his eyesight orthe construction worker who loses the use of all of his or her limbs would invariably fall into this category. These cases simply do notmake it into the jurisprudence. Instead, the law reports reveal illnesses or incapacities which are difficult to diagnose in terms of whetherthey are temporary or permanent, or whether they bring about a “total” as opposed to “partial” incapacity. This leads one to ask yetanother question: How long must an employee be off work before the law will treat the disability as permanent and the employmentcontract frustrated?

Alternatively stated, at what point is an employer entitled to declare that there is no reasonable prospect of theemployee returning to the workplace and engaging in meaningful work? There is relatively little jurisprudence dealing with these typesof questions. The answer depends on a number of factors or principles first set down in Marshall v. Harland & Wolff Ltd., [1972] 2 AllE.R. 715 (N.I.R.C.) at 718, elaborated upon in Yeager v. R.J. Hastings Agencies Ltd., (BC SC), [1984] B.C.J. No. 2722(S.C.) (QL), and adopted by this Court in Bishop v.

Carleton Co-Operative Ltd. (1996), (NB CA), 176 N.B.R. (2d)206, [1996] N.B.J. No. 171 (C.A.) (QL). Writing for the Court, Bastarache J.A. (as he then was) wrote:

In Parks, at pp.386-87, Clarke, C.J. cites with approval the English case of Marshall v. Harland & Wolff Ltd. and another, [1972] 2 AllE.R. 715 at 718, where Sir John Donaldson explains the conditions under which a contract of employment may be frustrated. The factorsto be considered are the terms of the contract regarding sick leave and pay, how long the sickness is likely to last, the nature of theemployment, the nature of the illness, the period of past employment.

The final question remains: was the employee's incapacity, lookedat before the dismissal, of such a nature, or did it appear likely at the time of dismissal, that further performance of the obligations in thefuture would be impossible or radically different from those undertaken? [para. 7] [28] Further guidance is found in White v. Woolworth Canada Inc., (NL CA), [1996] N.J.

No.113 (C.A.) (QL), where the Newfoundland and Labrador Court of Appeal opined, as a general observation, that between 18 months andtwo years absence from work is required to frustrate an employment contract of a long term and senior worker hired under an indefiniteterm contract. On the other hand, in Naccarato v. Costco Wholesale Canada Ltd., 2010 ONSC 2651, [2010] O.J.

No. 2565 (QL), theOntario Superior Court of Justice found that the defendant employer did not establish that the contract of employment was frustratedeven though the plaintiff employee had been absent from work for nearly five years at the date of termination. The plaintiff sufferedfrom depression but the medical evidence did not support a finding there was no reasonable likelihood he could return to work. This caseis to be contrasted with Duong v. Linamar Corp, 2010 ONSC 3159, [2010] O.J.

No. 2314 (QL), where it was found that the contract ofemployment had been frustrated by an absence from work, due to a back injury, extending over a three year period. The medicalprognosis during this period remained poor. The available medical reports covering the plaintiff’s absence showed no improvement inmedical condition and there was no evidence that the plaintiff had any prospect of returning to work in the foreseeable future.

The lasttwo cases lead one to ask whether the burden is on the employer or employee to establish the likelihood of returning to work. [29] The authors Barnacle and Wood conclude their analysis of the frustration doctrine in the employment contextby drawing attention to three contentious issues. First, there is the question of whether the permanency of the illness should be assessedas of the date the employer formally gives notice of the employment termination or whether the proper date is the date of trial (Barnacleand Wood at 18-13).

Second, it is unclear whether the courts will modify, in light of modern human rights legislation, the traditionalcommon law principle that the employer is not obliged to change the terms or conditions of employment in order to accommodate theemployee’s incapacity. In that regard, one should compare Parks v. Atlantic Provinces Special Education Authority Resource Centre forthe Visually Impaired, [1992] N.S.J. No. 20 (C.A.) (QL) with Antonacci v. Great Atlantic & Pacific Co. of Canada, (ON SC), [1998] O.J. No. 876 (G.D.) (QL).

In the latter case, Swinton J. held that the employer was under a duty to accommodate theemployee’s disability (psychological stress and a weak back) up to the point of undue hardship. This statement of the law is inconformity with the Supreme Court of Canada’s decision in Hydro-Québec v. Syndicat des employe-é-s de techniques professionnelles etde bureau d’Hydro-Québec,

section locale 2000, 2008 SCC 43, [2008] 2 S.C.R. 561, where the Court stated at para. 19 that: “Theemployer’s duty to accommodate ends where the employee is no longer able to fulfill the basic obligations associated with theemployment relationship for the foreseeable future.” However, those comments were made in the context of a grievance arbitration casein which the arbitrator took into account the application of the Quebec Charter of Human Rights and Freedoms and the prohibitionagainst discrimination based on disability and the correlative duty to accommodate. [30] As to the question of whether a labour arbitrator has the power to interpret and apply human rights and otheremployment-related statutes see Parry Sound (District) Social Services Administration Board v.

Ontario Public Service EmployeesUnion, Local 324, 2003 SCC 42, [2003] 2 S.C.R. 157, where the power was found to exist in s. 48(12)(

j) of the Ontario Labour RelationsAct, S.O. 1995, c. 1, Sch. A. The New Brunswick equivalent of the Ontario statute is s.76(1) (

a) to (

f) of the Industrial Relations Act,R.S.N.B. 1973, c. I-4, but it does not include the equivalent of s. 48(12)(

j) of the Ontario legislation, which allows an arbitrator to“interpret and apply human rights and other employment-related statutes”. But even in the absence of such a provision some arbitratorshave held that such legislation is now implicitly part of each collective agreement: see Brown & Beatty, Canadian Labour Arbitration, 4th ed. (Aurora, Ont.: Canada Law Book, 2011) at 2-69 and cases collected at note 11. Of course, there is always the possibility that thecollective agreement will expressly provide for the application of human rights and employment related legislation.

Article 4.01 of thecurrent collective agreement between the municipality and the union representing its police officers provides that both parties are boundby the New Brunswick Human Rights Act. However, other collective agreements may be worded differently. [31] The third outstanding issue which Barnacle and Wood identify is whether the doctrine of frustration isapplicable in cases where the employee is in receipt of long-term disability benefits under the terms of the employment contract.

Whilethe authors maintain the doctrine does not apply, the issue raises the additional question whether the doctrine is applicable in cases wherethe employee is in receipt of worker’s compensation benefits under provincial legislation. In that regard, s. 42.1 of the New BrunswickWorkers’ Compensation Act, R.S.N.B. 1973, c. W-13 is on point.

In cases where a claim for compensation is accepted, s. 42.1(2)provides no employer shall dismiss, suspend, lay off, penalize, discipline or discriminate against a worker because of a work-relatedinjury, from the date of the injury until the time the employer is no longer bound by the requirements of ss. (3) and (5). Basically s.42.1(3) states that once it is determined that the employee is entitled to resume work, the employer must permit the worker to go back tothe job held prior to the injury unless unfit for that job, in which case the employer must consider whether other suitable work isavailable. However,

section 42.1(6) goes on to provide that an employer is only bound by s. 42.1(3) for a period of two years after theworker becomes entitled to compensation benefits and provided the workplace has 20 or more workers. The time period is reduced toone year in cases where there are fewer than 20 workers in the workplace. In short, the doctrine of frustration cannot oust the applicationof s. 42.1 and defeat the employer’s obligation to allow the employee to resume work within a maximum two year time frame after theworker became entitled to compensation benefits.

The question that remains is whether an employer will be able to persuade a decision-maker that the provisions of the Workers’ Compensation Act support the argument that the employment contract should be deemedfrustrated following the expiration of the two years. At the same time, the same decision-maker will be asked to consider whether s. 42.1is simply one of the factors that must be taken into account when ruling on the issue of frustration.

B. Back to the Interpretative Issue at Hand [32] As stated at the outset, the interpretative argument that s. 17.91(1) of the Police Act does not apply, in caseswhere the employer has unilaterally declared the employment relationship to have been frustrated, cannot be premised on a literal andisolated reading of that provision. A contextual analysis is required: Lévesque and BMG Farming Ltd. v. Province of New Brunswick andNew Brunswick Crop Insurance Commission, 2011 NBCA 48, [2011] N.B.J.

No. 163 (QL); Imperial Tobacco Canada Limited et al. v.Her Majesty the Queen in Right of the Province of New Brunswick, 2010 NBCA 35, 357 N.B.R. (2d) 160; Creighton v. WorkplaceHealth, Safety and Compensation Commission, 2009 NBCA 73, 350 N.B.R. (2d) 352. [33] The first part of the contextual analysis requires us to go behind the 2005 amendment to the Police Act whichincorporated s. 17.91(1). Prior to that date, not all dismissals for cause fell within the ambit of the process set out in the Act.

At that time,the Police Act focused solely on the imposition of disciplinary measures for breaches of the Code of Professional Conduct set out in theregulations. Clearly, the Legislature wanted to ensure that misconduct was dealt with under the complaints/arbitration process set out inthe legislation and not left to the common law governing

summary dismissal or the grievance process set out in a collective agreement,even though that process also includes the prospect of the appointment of a third party arbitrator. However, the statutory scheme wasproblematic when it came to misconduct tied to work performance issues.

Section 34(

c) of Regulation 2007-81 requires every member ofa police force to “perform his or her duties promptly, impartially, and diligently, in accordance with the law and without abusing his orher authority”. Standing by itself, the provision leaves the impression that a member who acts in good faith, but who is unable to live upto the employer’s expectations as to employee competence, would or could be found guilty of misconduct. But surely, the concept ofmisconduct connotes deliberate acts or flagrant breaches of duties which the member could have competently performed if he or she puthis or her mind to the assigned or ancillary task.

Section 34(

c) also posed another problem. A dismissal for cause based on unsatisfactorywork performance, which could not be characterized as misconduct, would have to be dealt with outside the Act, either in the court roomor pursuant to the grievance procedures set out in a collective agreement. [34] In 2005, the Legislature made a conscious decision to ensure that all dismissal and demotion decisions forcause, whether the decisions are for unsatisfactory work performance or for code misconduct, would be dealt with under the Police Actand not in a judicial or other administrative forum.

While s. 17.91(1) clearly achieves that goal, that provision did have the effect ofadopting a different and less complex procedure for dealing with dismissals based on the ground of unsatisfactory work performance.However, the one constant that is of significance to this appeal is that the Legislature made a conscious decision to insure that alldismissal and demotion decisions, be they related to unsatisfactory work performance or matters of misconduct, be dealt with under theAct. In my respectful view, the adoption of a literal and narrow

interpretation of s. 17.91(1) would undermine the Legislature’s attempt toensure that dismissal and demotion decisions be adjudicated in accordance with the process set out in the Act. As stated at the outset, theliteral

interpretation is also antagonistic to s. 17 of the

Interpretation Act, which provides that every provision shall be deemed remedialand shall receive a fair and liberal construction that best ensures the attainment of the provision’s object. [35] I pause here to point out that the adoption of a narrow

interpretation of s. 17.91(1) of the Police Act is itselfproblematic when one asks: “How narrow?” If long-term absences from the workplace do not support an employer finding of just causefor dismissal or demotion for unsatisfactory work performance because the employee is not actually performing any tasks, how does onedeal with temporary absences from the workplace that, under the common law, are dealt with under the heading “absenteeism”? Thegeneral rule is that unapproved isolated absenteeism is not sufficient cause for dismissal, except in extreme circumstances: Beal v.

Grant(1984), (NB CA), 52 N.B.R. (2d) 163, [1984] N.B.J. No. 77 (C.A.) (QL) at 164 and cited in Echlin and Certosimo,Just Cause: The Law of

Summary Dismissal in Canada (Aurora, Ont.: Canada Law Book, 2010) at 9-15. On the other hand, continuedabsenteeism may give rise to grounds for dismissal provided the employer has taken preliminary steps to address the situation beforeeffecting the dismissal. The question which would remain is whether “absenteeism” cases should also fall outside s. 17.91(1) of the Actfor the same reason that “frustration” cases are to be excluded.

Admittedly, one could argue that even a narrow construction of s.17.91(1) might be broad enough to embrace cases of absenteeism by distinguishing between short-term or intermittent absences from theworkplace and those cases involving long-term absences. However, that approach raises yet another question: whether the absenteeismis for acceptable cause or amounts to employee misconduct because of an apparent lack of concern or indifference with respect to theperformance of employment obligations. Misconduct cases fall clearly within the provisions of the Act.

However, if s. 17.91(1) isinterpreted broadly, both the absentee and frustration cases would fall to be decided in accordance with the Act. [36] This leads one to ask whether it is reasonable to infer an intention on the part of the Legislature to exclude fromthe ambit of the Police Act dismissal decisions, anchored to the doctrine of frustration, having regard to other aspects of the legislativescheme. The answer has to be “no”. Let me explain. The Legislature recognized that employers could mischaracterize the true ground fordismissal.

An allegation of misconduct could be proven to be a matter relating to unsatisfactory work performance and, conversely, anallegation of unsatisfactory work performance could be proven to be a matter of misconduct. For example, absenteeism could becharacterized as a matter giving rise to unsatisfactory work performance or as misconduct on the employee’s part.

In 2005 and 2008, thePolice Act was amended to permit the arbitrator to deal with cases of mischaracterization by the addition of ss. 17.97 and 32.991.Correlatively, the decision to terminate an employment relationship on the ground of contract frustration may mask other reasons fortermination. It may be more convenient for an employer to argue an employment contract was terminated on the basis of the frustrationdoctrine when in fact the true reason for the termination relates to matters that would, if proved, provide just cause for dismissal.

Turning to the common law jurisprudence, one rarely sees a frustration case where the employer is defending a law suit for unjust dismissal solely on the application of the doctrine of frustration. As it should happen the problem of “mischaracterization” is raised on this appeal. Following the Workplace Health, Safety and Compensation Commission’s receipt of the medical evidence supporting Mr. McLean’s ability to return to work, officials of the municipality met with members of the Commission to explain why the municipality did not want to see Mr. McLean return to work.

Hence, the appeal record contains independent documentary evidence which provides the appellant with ammunition to support his argument that his dismissal is simply a “disguised discipline”. This state of affairs further supports the argument that the terminations of employment tied to the frustration doctrine should be dealt with under the Police Act.

At a minimum, there are valid policy reasons for inferring such an intent on the part of the Legislature. [ 37 ] There is one other contextual factor which supports the understanding that terminations based on the doctrine of frustration should be dealt with under the Police Act . Some of the matters which an arbitrator is obligated to consider when dealing with a dismissal for unsatisfactory work performance are directly relevant to issues which arise in cases where the doctrine of frustration is pled. Correlatively, the remedial powers of the arbitrator are broad enough to deal effectively with these issues.

This may not be true if the application of the frustration doctrine must be pursued in another forum. [ 38 ] As explained earlier, the notions of psychological injury, temporary versus permanent incapacity, total versus partial incapacity and the duty to accommodate in accordance with human rights legislation have worked their way into the analytical framework surrounding the application of the frustration doctrine. The duty to accommodate employees with a disability is a matter expressly dealt with in the Police Act .

This leads one to ask whether the employer is able to accommodate the employee, up to the point of undue hardship, by finding suitable alternative employment or adopting measures that eliminate barriers to the employee’s ability to perform assigned tasks. So far as the duty to accommodate at common law is concerned, the law is in a gestational stage. For the non- unionized police officer who must rely on contract principles or human rights legislation, the prospect of litigating before the courts or a human rights tribunal may not be viewed as a practical option.

For unionized police officers, the governing legislation or the collective agreement may or may not permit a grievance arbitrator to address the issue of reasonable accommodation to the point of undue hardship on the employer. These realities must be contrasted with the provisions of the Police Act dealing with unsatisfactory work performance. [ 39 ] Pursuant to s. 17.95(

c) of the Police Act , an arbitrator is required to consider whether the police officer was afforded appropriate “treatment, training, guidance, coaching or counseling” to assist the officer in reaching an acceptable level of performance. Pursuant to s. 17.95(d), an arbitrator is obligated to consider whether the needs of the police officer were accommodated in cases where the officer has a disability as defined in the Human Rights Act . In turn, that Act provides

definitions for both mental and physical disability. Moreover, s. 17.96(1)(b)(ii) authorizes the arbitrator to impose any remedial measure he or she considers appropriate. By contrast, the relief available at common law under the doctrine of frustration is extremely limited. The remedial measures an arbitrator appointed under a collective agreement may adopt are a matter of negotiation. In short, the

interpretation which Mr. McLean places on s. 17.91(1) is consistent with the legislative purpose underscoring its adoption and the legislative scheme in general. In particular, the issue of frustration can be dealt with efficiently and effectively under the Act . IV. Conclusion - Disposition [ 40 ] In my view, and as a matter of statutory

interpretation, the recommendatory and arbitral process set out in s. 17.91(1) of the Police Act is applicable in cases where the decision to dismiss a police officer is premised on the application of the common law doctrine of frustration. Accordingly, the application judge erred in failing to set aside the municipality’s unilateral decision to terminate the appellant’s employment on the ground of frustration. Therefore, the appeal should be allowed and an order for reinstatement should issue on the terms set out in the Notice of Application. I would award Mr.

McLean costs of $2,500 on the judicial review application and $2,500 on the appeal. Obviously, this ruling does not preclude the municipality from pursuing the termination and frustration issues in accordance with the process set out in the Police Act . ____________________________________ J.T. ROBERTSON, J.A. WE CONCUR:

____________________________________ J.C. MARC RICHARD, J.A. _____________________________________ B. RICHARD BELL, J.A.

SCHEDULE A /

ANNEXE A Sections 17.91(1), 17.92(1), 17.95(

c) and ( d ), 17.96(1)( b )(ii), 17.96(2), 17.97, 32.991, 33, 33.01 and 33.02 of the Police Act , S.N.B. 1977, c. P-9.2 / Les dispositions 17.91(1), 17.92(1), 17.95 c ), 17.95 d ), 17.96(1) b )(ii), 17.96(2), 17.97, 32.991, 33, 33.01 et 33.02 de la Loi sur la police , L.N.-B. 1977, ch.

P-9.2 : 17.91(1) Notwithstanding any other remedial measure that may be imposed, a police officer shall not be dismissed or demoted for unsatisfactory work performance except in accordance with the provisions of this Part. […] 17.92(1) A chief of police may recommend to an arbitrator the dismissal or demotion of a police officer for unsatisfactory work performance. […] 17.95 An arbitrator shall consider whether: […] (

c) where it was reasonable to do so, the member of a police force was afforded appropriate treatment, training, guidance, coaching or counselling to assist the member of a police force in reaching an acceptable level or standard of work performance; 17.91(1) Nonobstant toute autre mesure de redressement qui peut être imposée, un agent de police ne peut faire l’objet d’un renvoi ou d’une rétrogradation pour rendement insatisfaisant qu’en conformité avec la présente partie. […] 17.92(1) Un chef de police peut recommander à un arbitre le renvoi ou la rétrogradation d’un agent de police pour rendement insatisfaisant. […] 17.95 Un arbitre doit tenir compte des circonstances suivantes : […]

c) lorsqu’il était raisonnable de le faire, si le membre s’est vu offrir le traitement, la formation, les conseils, l’entraînement ou l’orientation personnelle appropriés pour l’aider à atteindre un niveau ou une norme acceptable de rendement;

(

d) where it was reasonable to do so, the chief of police or civic authority, as the case may be, accommodated the needs of the member of a police force, if the member of a police force has a mental or physical disability as defined in the Human Rights Act that requires accommodation; and […] 17.96(1) Upon completion of the presentation of evidence and representations, the arbitrator shall […] (

b) reject the recommendation of the chief of police or civic authority and shall […] (ii) impose any remedial measure he or she considers appropriate. […] 17.96(2) The arbitrator shall, within fifteen days after the completion of the arbitration hearing, give the parties notice in writing of his or her decision. […] 17.97 If a chief of police or civic authority serves a notice of arbitration hearing under this Part and the arbitrator determines that the act or omission that lead to the arbitration hearing would, if proved, constitute a breach of the code, the arbitrator shall deal with the matter as a matter of discipline under

Part III. […] 32.991 If the Commission serves a notice of arbitration hearing under this Part and the arbitrator determines that the act or omission that lead to the arbitration hearing would, if proved, constitute unsatisfactory work

d) lorsqu’il était raisonnable de le faire, le chef de police ou l’autorité municipale, selon le cas, a pris les mesures destinées à répondre aux besoins du membre d’un corps de police souffrant d’une incapacité physique ou mentale, selon le sens qu’en donne la

Loi sur les droits de la personne, et ayant besoin de ces mesures; […] 17.96(1) À la conclusion de la présentation de la preuve et des observations, l’arbitre doit rendre l’une ou l’autre des décisions suivantes : […]

b) rejeter la recommandation du chef de police ou de l’autorité municipale et : […] (ii) soit imposer toute mesure de redressement qu’il estime appropriée. […] 17.96(2) L’arbitre doit donner aux parties un avis écrit de sa décision dans les quinze jours qui suivent la conclusion de l’audience d’arbitrage. […] 17.97 Si un chef de police ou une autorité municipale signifie un avis d’audience d’arbitrage en vertu de la présente

partie et que l’arbitre détermine que l’acte ou l’omission ayant mené à l’audience d’arbitrage constituerait, s’il est prouvé, une infraction au code, l’arbitre doit traiter de la question comme une question de discipline en vertu de la

partie III. […] 32.991 Si la Commission signifie un avis d’audience d’arbitrage en vertu de la présente

performance, the arbitrator shall deal with the matter as a matter of unsatisfactory work performance under

Part I.1. […] 33(1) When conducting an arbitration hearing under

Part I.1, III or III.2, an arbitrator has all the powers, privileges and immunities of a commissioner under the Inquiries Act and regulations under that Act, except the power to punish for contempt, and may certify a contempt in accordance with

section 33.05. 33(2)The procedural safeguards contained in the Inquiries Act and in the regulations under that Act apply to arbitration hearings under Parts I.1, III and III.2. 33.01 The Commission shall, in accordance with the regulations, establish and maintain a list of persons who have indicated a willingness to act as an arbitrator under Parts I.1, III and III.2. 33.02(1) The parties shall, within ten days after the chief of police or civic authority serves a notice of arbitration hearing under

Part I.1 or III, appoint an arbitrator from the list established and maintained under

section 33.01. 33.02(2) If the parties fail to appoint an arbitrator within the time prescribed in subsection (1), the Commission shall appoint an arbitrator from the list it establishes and maintains under

section 33.01.

partie et que l’arbitre détermine que l’acte ou l’omission ayant mené à l’audience d’arbitrage constituerait, s’il est prouvé, un rendement insatisfaisant, l’arbitre traite de la question comme une question de rendement insatisfaisant en vertu de la

partie I.1. […] 33(1) Dans le cadre d’une audience d’arbitrage tenue en vertu de la

partie I.1, III ou III.2, l’arbitre est investi de tous les pouvoirs, privilèges et immunités conférés aux commissaires sous le régime de la

Loi sur les enquêtes et de ses règlements, à l’exception du pouvoir de punir pour outrage, mais il peut déférer l’outrage conformément à l’article 33.05. 33(2) Les garanties de procédure prévues à la

Loi sur les enquêtes et ses règlements s’appliquent aux audiences d’arbitrage tenues en vertu des parties I.1, III et III.2. 33.01 La Commission doit, conformément aux règlements, établir et tenir une liste de personnes ayant indiqué leur volonté d’agir à

titre d’arbitre en application des parties I.1, III et III.2. 33.02(1) Les parties doivent, dans les dix jours qui suivent la date où le chef de police ou l’autorité municipale a signifié l’avis d’audience d’arbitrage en vertu de la

partie I.1 ou III, nommer un arbitre à partir de la liste établie et tenue en vertu de l’article 33.01. 33.02(2) Si les parties font défaut de nommer un arbitre dans le délai prescrit au paragraphe (1), la Commission nomme un arbitre à partir de la liste établie et tenue en vertu de l’article 33.01.

Section 34(

c) of Regulation 2007-81 of the Police Act / Alinéa 34

c) du règlement 2007-81 pris en vertu de la

Loi sur la police :

34 It is incumbent upon every member of a police force: (

c) to perform his or her duties promptly, impartially and diligently, in accordance with the law and without abusing his or her authority[.] 34 Il incombe à tout membre d’un corps de police de faire ce qui suit :

c) remplir ses fonctions avec promptitude, impartialité et diligence, conformément au droit et sans abuser de son autorité[.]