In April of 2004, the Supreme Court of Canada released two judgments involving judicial review of the decisions of labour arbitrators.
In both Voice Construction Ltd. v. Construction and General Workers' Union, Local 92, 2004 SCC 23 and AUPE v. Lethbridge Community College, 2004 SCC 28, the Court retreated from over 20 years of jurisprudence by reviewing the arbitrators' decisions on the reasonableness standard of review instead of the more deferential patent unreasonableness standard.
These cases signify a shift inhow the Supreme Court in particular – and perhaps other courts in general – view arbitrators, which in turn may effect the level of finality that arbitrators' decisions currently enjoy.
The issue in Voice Construction was whether the collective agreement imposed an express prohibition on the employer's right to hire and select workers by requiring the employer to select workers dispatched through a union hiring hall.
The arbitrator concluded that provisions governing dispatch and "name hiring" constituted an express prohibition on the employer's right to hire and select workers. The Supreme Court eventually upheld the arbitrator's decision.
In Lethbridge Community College, the issue was whether the arbitration board made a reviewable error by awarding 4 months pay in damages resulting from a non-culpable dismissal. The union attacked the award on the ground that reinstatement should have been the appropriate remedy.
It alleged that the Alberta statute only permitted an arbitrator to substitute penalties for culpable discipline, not non-culpable discharge, and also alleged that even if the statute permitted a remedy other than reinstatement, reinstatement was the appropriate remedy in this case.
In both cases, the Court first had to ascertain the appropriate standard of review using the pragmatic and functional approach. That approach requires the consideration of four factors: the presence or absence of a privative clause, the expertise of the tribunal relative to that of the reviewing court on the issue in question, the purposes of the legislation and the provision in particular, and the nature of the question – law, fact, or mixed law and fact.
The Court first concluded that the privative clauses in the Alberta statutes were only "partial" privative clauses. Those statutes stated that arbitrators' decisions were final, but they also made allowance for judicial review if the application was made within 30 days. In Lethbridge, the Court referred to the privative effect as "undercut" by the 30 day period of review. The partial privative clause therefore required a "careful assessment of the arbitrator's role" (Voice Construction) and only "some deference" (Lethbridge).
On the issue of relative expertise, the Court agreed that arbitrators have greater expertise than courts in interpreting collective agreements. However, the Court was circumspect in attributing too much deference to arbitrators: in Voice Construction this only warranted a "certain degree of curial deference." In Lethbridge the Court also admitted that the relative expertise of arbitrators in the interpretation of legislation intimately connected with its mandate (i.e. the Labour Code) warranted some deference. The Court in both cases also agreed that the purpose of the statutes warranted deference.
On the fourth factor (nature of the question), in both cases the Court concluded that the issue was a question of law (or, on the "choice of remedy" issue in Lethbridge, an issue of mixed fact and law). This factor called for less deference to the arbitrator.
There are certainly several grounds on which to criticize the Court's decisions in those cases, and I will briefly mention two.
First, the Court in both cases appeared to be unduly fixated on the strength of the privative clause. While this debate over whether the standard of review should depend on the strength of the privative clause was played out in full between Justices LaForest and Cory in the 1993 Dayco Canada Ltd. decision, I had thought that the statement in Pushpanathan and Dr. Q that the absence of a privative clause is "neutral" would mean that even a partial privative clause would lead away from reasonableness towards patent unreasonableness. These cases would appear to suggest otherwise: it is still necessary to examine the privative clause in detail and distinguish between "final", "final and binding", "final and conclusive", "no-certiorari", and "no-certiorari after 30 days" privative clauses.
Second, courts have been fairly consistent in asserting that heightened precedential value was a factor indicating less deference. The reason for this position (affirmed in Lethbridge), however, has not always been clear. Essentially, if all arbitrators agree on an issue then they get deference; however, if arbitrators make a controversial decision different from other arbitrators, they deserve less deference.
So the standard of review does not actually revolve around the issue, but the outcome (or, more accurately, whether there is an arbitral consensus concerning the outcome). Also, to get to the Supreme Court a case must be of national importance; therefore, every case before the Supreme Court is of precedential importance and should therefore (on the reasoning in Lethbridge) attract a lower degree of defence. Since the Supreme Court has adopted the patent unreasonableness standard in other cases, this cannot have been its intention.
In Alberta (Health Sciences Assn. of Alberta v. David Thompson Health Region), the Court of Appeal applied those cases and reviewed an arbitrator's decision on the reasonableness standard of review. Lower courts in Saskatchewan, Newfoundland, New Brunswick and Ontario have also begun to adopt the reasonableness standard in cases that previously would have applied the patent unreasonableness standard. In Nova Scotia (Nova Scotia Government and General Employees Union v. Nova Scotia (PSC)), the Court of Appeal was originally going to review an arbitrator's decision on the patent unreasonableness standard but, after Voice Construction was released decided to review on the reasonableness standard as well.
On the other hand, the reasonableness standard is not leaking out to judicial review of labour board decisions. In Via Rail Canada Inc. v. Cairns, the Federal Court of Appeal refused to extend the reasoning in Voice Construction or Lethbridge to decisions of the Canada Industrial Relations Board. The issue in Cairns also involved remedial jurisdiction of the Board; however, the difference in the wording of the privative clause in the Canada Labour Code coupled with the general supervisory role of labour boards (contrasted with the more case-by-case adjudicative nature of arbitrators) led to the patent unreasonableness standard in that case. Also, in BC (Health Employers Assn.) v. Nurses' Bargaining Assn., the British Columbia court applied the patent unreasonableness standard when reviewing a decision of the labour relations board who was, in turn, reviewing the decision of an arbitrator.
It would appear, therefore, that the decisions in Voice Construction and Lethbridge have changed the law of judicial review only with respect to review of an arbitrator's decision. While it may still be possible to distinguish those cases when faced with a different issue or different statutory regime, it would appear that arbitrators are being treated with less deference than previously enjoyed. However, those cases have not yet heralded a more interventionist approach to judicial review for other labour tribunals.
Chris Rootham is an associate with Nelligan O'Brien Payne LLP practising labour and employment law.
[This article is reprinted with permission and first appeared in the August 2004 issue of The Lawyers Weekly.]