Supreme Court divided over standard of review for arbitrators

A teacher’s union can call witnesses from an in camera school board meeting to testify about a dismissal ruled the Supreme Court of Canada divided by the kind of judicial standard of review that should apply to an arbitrator’s decision.

The ruling opens the door for employees to examine members of a decision-making authority over motives leading to a disciplinary sanction, reaffirms that deference must be shown to arbitrators in order to “preserve the expeditious, effective and specialized dispute settlement method represented by grievance arbitration,” and by the slimmest of margins held that the standard of review applicable to arbitrator’s decisions is not correctness but reasonableness.

“This is an extremely important ruling because it allows employees, in the public or private sector, to examine decision-making authorities such as a board of directors, executive board, or in our case a board of commissioners, about the motives leading to disciplinary measures,” said Audrey Limoges-Gobeil, counsel with the Syndicat de l’enseignement de la région de Laval.

But the ruling in Commission scolaire de Laval v. Syndicat de l’enseignement de la région de Laval, 2016 SCC 8, also underscores the divisive nature and lack of clarity over the type of judicial standard of review that should be applied to decisions made by arbitrators, points out Kenneth Thornicroft, a law and employment relations professor at the University of Victoria.

“It’s a difficult issue, this question of standard of review,” observed Thornicroft, a former member of the B.C. Employment and Assistance Appeal Tribunal. “We have made progress in terms of moving from three standards (patently unreasonable, reasonableness simpliciter, and correctness) to just two (reasonableness and correctness). But there is still obviously some lack of clarity around what particular type of decision attracts what particular standard. That’s where the problems seem to arise.”

The case involves a vocational training instructor who was summoned to attend a special meeting of the executive committee of the Laval school board in June 2009. The board wanted to determine whether his criminal record was relevant to his functions as a teacher – and if it was, whether his employment contract should be terminated. After hearing the teacher in a meeting that was closed to the public, the committee held an in camera meeting — from which both the teacher and his union representative were excluded — to consider the matter. When the committee reconvened in a public session, it adopted a resolution that terminated the teacher’s employment.

The union filed a grievance alleging that the procedure for dismissal provided for in the collective agreement had not been followed. More specifically, the collective agreement stipulated that a teacher could only be dismissed after “thorough deliberations” at a meeting of the board’s council. At the arbitration hearing the union summoned as its first witnesses three members of the executive committee who had been present in the in camera deliberations. The school board objected, arguing that the motives of the individual members of the committee were irrelevant and that “deliberative secrecy” shielded the members from being examined on what had been said in camera. It also argued that the motives of the committee members were “unknowable” and precluded the examination of the members of “any collective body on the motives that underlie a decision made by way of a written resolution.”

The arbitrator dismissed the objection, holding that the witnesses’ testimony was relevant to determine whether the committee’s deliberations were “thorough.” The matter ended up before Quebec Superior Court who applied the standard of correctness and barred testimony from the three members. The Quebec Court of Appeal, in a 2-1 decision that also applied the correctness standard, restored the arbitrator’s decision.

The SCC dismissed the appeal, holding that the principle of “unknowable” and deliberative secrecy do not apply to a public employer that decides to take disciplinary action against an employee, even if an in camera meeting is ordered. “Unknowable” motives come into play when a legislative body adopts provisions of a legislative nature, that is, acts of a public nature. Deliberative secrecy, on the other hand, prevents disclosure of how and why adjudicative decision-makers make their decisions. But in this case the decision to dismiss the teacher was a private law matter that falls under employment law, and not of a public nature, said the SCC. “Any employee, whether in the public or the private sector, has a right to contest disciplinary action taken against him or her and can, in doing so, raise any relevant evidence,” said the 60-page ruling penned by Justice Clément Gascon.

“We submitted that the commissioners could not be examined on the reasons behind the resolution (to dismiss the teacher) because it essentially is a collective body that can only express itself through a resolution but the SCC held that a public body acting as an employer is different than when it is acting as a legislator or a public governance ruler,” explained Yann Bernard, a Montreal lawyer with Langlois avocats who represented the school board. “The SCC did not want decisions to be shielded from an arbitrator’s eye in a work relations context. They want to make sure that the employee’s right to question and challenge the dismissal is complete. It’s very important that public organizations in Canada be aware of this from now on.”

More divisively, in a 4-3 decision, the majority held that the governing standard of review for arbitrator’s decisions was reasonableness – and not correctness as the Quebec Superior Court and the Quebec Court of Appeal found. The correctness standard applies to questions of law that are of “central importance” to the legal system as a whole, and are outside of the decision maker’s expertise, noted the majority. In this case, in light of the arbitrator’s broad jurisdiction over evidence and procedure, there is no question of law of central importance that was outside of his area of expertise. As points out Thornicroft, the arbitrator’s ruling turned on the phrase “thorough deliberations” in the collective agreement and the interpretation of a collective agreement is an arbitrator’s fundamental mandate.

The minority, while agreeing that the appeal should be dismissed, agreed with the lower courts that the correctness standard should have been applied. They held that the legal issues raised by the matter concerned general law. “Where the questions relates not simply to the rules of evidence in general, but to the scope of such basic rules as those relating to the immunities from disclosure and deliberative secrecy, a court reviewing an arbitrator’s decision in this regard must be able to go further than merely inquiring into the reasonableness of the decision,” wrote Justice Suzanne Côté.

Arbitrators will no doubt be pleased with the ruling, remarked Paul Iacono, a Toronto arbitrator and mediator with Beard Winter LLP. Besides reaffirming that deference must be shown to arbitrators, the finding that the standard for judicial review in most cases is reasonableness will be viewed “favourably” by arbitrators, said Iacono. “Most private arbitrators and mediators would agree with that the correctness standard applies only in very narrow cases,” said Iacono. The reasonableness standard “makes it easier for us,” he added.

Since this case highlights the challenges facing the judiciary over the appropriate standard of review applicable to arbitrators, perhaps it is time for a legislated solution with some statutory guidelines as is the case with British Columbia’s Administrative Tribunals Act, said Thornicroft. But Bernard doesn’t believe that would work. The powers vested on Superior Court to conduct judicial reviews stem from the Constitution, said Bernard. Besides, the courts would sooner or later have to provide guidance over the reach of the legislation, added Bernard.

In the meantime, Montreal lawyer Justine Dauphinais Sauvé is confident that the ruling will have a major impact. “The SCC clearly stated that an employee has a right to contest and hear examine evidence that lead to a disciplinary action, and that an employer cannot hide behind various legal theories to not testify and provide reasons for the action. That is extremely important,” said Sauvé, who plead the case along with Limoges-Gobeil.

This story was originally published in The Lawyers Weekly.

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