Judgments

[1995] 2 F.C. 73

T-2555-93

The Professional Institute of the Public Service of Canada (Applicant)

v.

The Attorney General of Canada (Respondent)

Indexed as: Professional Institute of the Public Service of Canada v. Canada (Attorney General) (T.D.)

Trial Division, Teitelbaum J.—Ottawa, November 14, 1994 and January 5, 1995.

Judicial review — Order in Council P.C. 1993-1868, made pursuant to Public Sector Compensation Act, adjusting wage rates in master agreement from 3% to 0% for groups opting out of master bargaining — As long as Order in Council within scope of Act, not subject to judicial review unless “egregious” i.e. passed solely in bad faith — Governor in Council acting with dual purpose: (1) implementation of wage restraint policy, and (2) prevention of P.S.S.R.A., s. 99 reference hearings — Application dismissed.

Public Service — Labour relations — Collective Agreements — Order in Council P.C. 1993-1868 made pursuant to Public Sector Compensation Act adjusting wage rates in master agreement from 3% to 0% — Not subject to judicial review as one purpose to implement wage restraint policy although second purpose to forestall P.S.S.R.A., s. 99 reference.

This was an application for judicial review of Order in Council P.C. 1993-1868, made pursuant to the Public Sector Compensation Act, subsection 11(1).

On September 24, 1991 a master agreement was signed providing for a 3% pro rata increase for those bargaining groups opting out of master bargaining, effective October 1, 1993. The Public Sector Compensation Act (PSCA) came into force on October 3, 1991. It extended most compensation plans by two or three years. Section 11 provided that the Governor in Council, on the recommendation of Treasury Board, could adjust wage rates under a compensation plan in keeping with the Government’s wage policy as announced in its February 26, 1991 budget. Treasury Board did not make a recommendation to adjust the wage rates in the master agreement. On April 2, 1993, the PSCA was amended by the Government Expenditures Restraint Act, 1993 No. 2. Agreements such as the master agreement were extended for two years. Treasury Board again did not recommend any adjustment of the wage rates set out in the master agreement. On January 28, 1993 the Institute notified Treasury Board that each of its 18 groups would opt out of master bargaining, and that pursuant to the master agreement each group should receive a 3% increase effective October 1, 1993 for the extended term of the agreement. When Treasury Board advised that it would not implement the 3% prorated increase because the compensation plans were subject to the freeze provisions, the Institute filed a reference under the Public Service Staff Relations Act, section 99 challenging Treasury Board’s anticipatory refusal to implement the increase. On September 15, the Institute obtained grievance forms so that each of its 10,000 members could file an individual pay grievance. By Order in Council P.C. 1993-1868, dated September 24, 1993 the Governor in Council adjusted the 3% pro rata increase to 0%.

Citing Gingras v. Canada, [1990] 2 F.C. 68(T.D.), the applicant submitted that a discretionary decision is reviewable and must be made strictly within the limits of the purpose and spirit of the statute, and that a court should interfere where a public authority has acted for an improper purpose. It alleged that the Treasury Board and the Governor in Council had exercised their discretion to adjust wage rates under the master agreement in bad faith, or for improper or irrelevant reasons, and with discriminatory effect, thereby abusing their power. It submitted that the real reason Treasury Board recommended that the 3% increase should be adjusted to 0% was because it anticipated losing the section 99 reference. The respondent submitted that the power granted the Governor in Council under PSCA, section 11 was in relation to a matter of public convenience and policy and either the Order in Council was not subject to judicial review or, as long as one of the purposes fell within the Governor in Council’s mandate, the Order in Council was valid.

The issues were whether the Order in Council was subject to judicial review and whether it resulted from an improper exercise of discretion.

Held, the application should be dismissed.

The Court had to determine the nature of the Governor in Council’s function under section 11: whether the Order in Council was a discretionary decision in the nature of policy or legislative action and reviewable on limited grounds, or whether it was made in the exercise of a statutory power and therefore reviewable according to the ordinary principles of administrative law. If the matter is one of public convenience and general policy, it would take an egregious case to strike down the Order in Council.

Where statutory discretion is exercised in good faith in accordance with the principles of natural justice and where reliance has not been placed on irrelevant considerations, the courts should not interfere. Rules governing procedural fairness do not apply to a body exercising purely legislative functions. It is not fatal that some irrelevant factors be taken into account; it is only when such a decision is based on predominantly or entirely irrelevant considerations that it is impeachable.

Even if in passing the Order in Council, the Governor in Council considered the fact that Treasury Board anticipated losing the section 99 reference, as long as it was also adjusting wage rates to ensure that the compensation plan was consistent with the Government’s wage policy, the Order in Council would not be subject to judicial review. As long as the Order in Council came within the scope of the PSCA, judicial intervention was not warranted, unless it was obviously an “egregious” case. Gingras dealt with an administrative act, not an Order in Council dealing with matters of public convenience and policy. The passing of the Order in Council would be egregious if it was done solely in bad faith and not in order to implement a fiscal policy thought at the time to be correct. In passing Order in Council P.C. 1993-1868 the Governor in Council acted with a dual purpose: to implement its wage restraint policy, and to prevent the section 99 reference and 10,000 grievances from proceeding. The latter was therefore not the sole or predominant reason for passing Order in Council P.C. 1993-1868.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Export and Import Permits Act, R.S.C., 1985, c. E-19, ss. 5, 8.

Federal Court Act, R.S.C., 1985, c. F-7, s. 18 (as am. by S.C. 1990, c. 8, s. 4).

Financial Administration Act, R.S.C., 1985, c. F-11.

Government Expenditures Restraint Act, 1993 No. 2, S.C. 1993, c. 13, ss. 2, 3, 4, 5, 6, 7, 8, 26.

Interpretation Act, R.S.C., 1985, c. I-21, s. 31(3).

Official Languages Act, R.S.C., 1985, c. O-3.

Order in Council P.C. 1993-1868.

Public Hospitals Act, R.S.O. 1970, c. 378.

Public Sector Compensation Act, S.C. 1991, c. 30, ss. 5 (as am. by S.C. 1993, c. 13, s. 4), 6, 9, 10, 11(1).

Public Service Staff Relations Act, R.S.C., 1985, c. P-35, s. 99 (as am. by S.C. 1992, c. 54, s. 72).

CASES JUDICIALLY CONSIDERED

APPLIED:

Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735; (1980), 115 D.L.R. (3d) 1; 33 N.R. 304; Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1994] 2 F.C. 247 (1994), 17 Admin. L.R. (2d) 121 (C.A.); Thorne’s Hardware Ltd. et al. v. The Queen et al., [1983] 1 S.C.R. 106; (1983), 143 D.L.R. (3d) 577; 46 N.R. 91; Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1993] 3 F.C. 199 (1993), 62 F.T.R. 172 (T.D.); Doctors Hospital and Minister of Health et al., Re (1976), 12 O.R. (2d) 164; 68 D.L.R. (3d) 220; 1 C.P.C. 232 (Div. Ct.); Maple Lodge Farms Ltd. v. R., [1981] 1 F.C. 500 (1980), 114 D.L.R. (3d) 634; 42 N.R. 312 (C.A.); affd [1982] 2 S.C.R. 2; (1982), 137 D.L.R. (3d) 558; 44 N.R. 354; National Anti-Poverty Organization v. Canada (Attorney General), [1989] 3 F.C. 684 (1989), 60 D.L.R. (4th) 712; 36 Admin. L.R. 197; 26 C.P.R. (3d) 440; 99 N.R. 181 (C.A.).

DISTINGUISHED:

Gingras v. Canada, [1990] 2 F.C. 68 (1990), 69 D.L.R. (4th) 55 (T.D.).

CONSIDERED:

Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525; (1991), 83 D.L.R. (4th) 297; [1991] 6 W.W.R. 1; 58 B.C.L.R. (2d) 1; 127 N.R. 161.

REFERRED TO:

Roncarelli v. Duplessis, [1959] S.C.R. 121; (1959), 16 D.L.R. (2d) 689; Shawn v. Robertson, [1964] 2 O.R. 696 (H.C.); Philco Corp. v. R.C.A. Victor Corp., [1967] 1 Ex. C.R. 450; (1966), 50 C.P.R. 282; 33 Fox Pat. C. 120.

AUTHORS CITED

Concise Oxford Dictionary, 7th ed. Oxford: Clarendon Press, 1982, “egregious.”

House of Commons Debates, Vol. II, 3rd Sess., 34th Parl., June 19, 1991, at pp. 2075-2077.

Living Webster Encyclopedic Dictionary of the English Language. Chicago: The English Language Institute of America, 1967, “egregious.”

Shorter Oxford English Dictionary. Oxford: Clarendon Press, 1993, “egregious.”

APPLICATION for declaration Order in Council P.C. 1993-1868 was invalid. Application dismissed.

COUNSEL:

Catherine H. Maclean for applicant.

John Edmond for respondent.

SOLICITORS:

Nelligan/Power, Ottawa, for applicant.

Deputy General of Canada for respondent.

The following are the reasons for order rendered in English by

Teitelbaum, J: This is an application by the Professional Institute of the Public Service of Canada (the Institute) for an order in the nature of certiorari, pursuant to section 18 of the Federal Court Act, R.S.C., 1985, c. F-7, as am. by S.C. 1990, c. 8, s. 4, quashing Order in Council P.C. 1993-1868 dated September 24, 1993. The Order in Council was made by the Governor General in Council pursuant to subsection 11(1) of the Public Sector Compensation Act, S.C. 1991, c. 30 (the PSCA) and adjusted certain wage rates provided by a master agreement between the Institute and Treasury Board. Specifically, the Order in Council amends the applicable provisions of Article 48 of the Master Agreement between the applicant and Treasury Board to provide for a “0%” pro rata wage increase for the bargaining groups who wished to opt out of the Master Agreement bargaining in the next round.

At the commencement of the hearing, I was informed that counsel had agreed that the proper style of cause should read The Professional Institute of the Public Service of Canada, applicant and the Attorney General of Canada, respondent. I allowed this amendment.

Counsel had also agreed, I was told at the commencement of the hearing, “the appropriate relief in this case … bearing in mind the wording of Section 18 of the Federal Court Act … would be a request that you (I) declare the Order in Council in question to be invalid.”

As I have stated, the Order in Council in issue was passed pursuant to subsection 11(1) of the Public Sector Compensation Act, as amended.

As well, at the commencement of the hearing, counsel for the applicant submitted a document with the heading “Chronology” in order to, I believe, make it easier for me to follow when and what took place during the relevant time frame.

I am satisfied that in order to better understand this decision it is necessary to reproduce this document. Both counsel agree as to the dates on the said document. Counsel for respondent did state “the Chronology was, generally speaking, agreed between the parties.” Counsel emphasized that he does not dispute the dates but does not necessarily agree with all that is contained in the Chronology document especially as it relates to percentages of increase.

CHRONOLOGY

1991

February 18, 1991 — PIPSC applied for the establishment of a binding Conciliation Board for the 18 groups involved in Master Bargaining.

App. Rec. A.G. Exhibit “B” to Affidavit of Pierce Sutherland—Binding Conciliation Board Report TAB 1 p. 016 at 022

February 26, 1991 — Government announces wage policy for federal public servants in the Federal Budget.

App. Rec. A.G. Excerpt from Hansard TAB 2 p. 084 at 086

June 19, 1991 — The President of the Treasury Board made a statement in the House of Commons indicating a 0%, 3% and 3% wage increase was available to bargaining units in the Public Service.

App. Rec. A.G. Exhibit “A” to Affidavit of Pierce Sutherland TAB 1 p. 004 at 006

June 26, 1991 — Collective Agreement signed between Treasury Board and the Canadian Merchant Service Guild (CMSG) for Ships Officers bargaining unit. It provided for wage increases of:

(a) 6.6% to 12.3% depending on sub-group beginning on September 1, 1990 and ending on March 31, 1992;[1]

(b) 3% beginning on April 1, 1992 and ending on March 31, 1993;

(c) 3% beginning on April 1, 1993 and ending on March 31, 1994.

App. Rec. PIPSC Exhibit “B” to Affidavit of Robert McIntosh TAB 2

August 16, 1991 — Binding Conciliation Board for PIPSC Master Bargaining rendered its decision. It provided for wage increases of:

(a) 4.7% beginning on October 1, 1990 and expiring on September 30, 1992;[2]

(b) 3.0% beginning on October 1, 1992.[3]

App. Rec. A.G. Exhibit “B” to Affidavit of Pierce Sutherland TAB 1 p. 016 at 032

August 27, 1991 — Arbitral Award issued for the Administrative Support Category bargaining unit of the Medical Research Council (“the Medical Research Council Bargaining Unit”) which provided for increases of:

(a) 2.9% beginning and ending on February 1, 1991.[4]

(b) 3% beginning on February 2, 1991 and ending on March 31, 1992;

(c) 3% beginning on April 1, 1992 and ending on March 31, 1993.

Arbitral Award PSSRB File No. 185-11-344

September 4, 1991 — Arbitral Award issued for the Law Group bargaining unit for which Treasury Board is the Employer (“the Law Group Arbitral Award”) which provided for increases of;

(a) 4.7% beginning on March 1, 1991 and ending on February 28, 1993.[5]

Arbitral Award PSSRB File No. 185-2-345

September 12, 1991 — Arbitral Award was issued for the Ship Repair—Chargehand bargaining unit for which Treasury Board is the employer (“the Ship Repair Arbitral Award”) which provided the following wage rate increases:

(a) 9.7% beginning on April 1, 1991 and ending on March 31, 1992; (economic adjustment 5.5% addition of 4 new steps to range)

(b) 7.1% beginning on April 1, 1992 and ending on March 31, 1993.

Arbitral Award PSSRB File No. 185-2-346

September 16, 1991 — Bill C-29 introduced (Public Sector Compensation Act—“the PSCA”).

App. Rec. PIPSC Affidavit of Robert McIntosh para 9

September 24, 1991 — 1993 Master Agreement between PIPSC and Treasury Board for the 18 bargaining units was signed. It incorporated the terms of the Binding Conciliation Report.

App. Rec. PIPSC Exhibit “A” to Affidavit of Robert McIntosh TAB 2”A”p. 198

October 2, 1991 — PSCA received Royal Assent (came into effect on Oct. 3, 1991)

App. Rec. PIPSC Affidavit of Robert McIntosh para 9 TAB 2

November 28, 1991 — Order in Council P.C. 1991-14/2375 was issued which adjusted the wage rate increases contained in the Medical Research Council Arbitral Award as follows:

(a) 4.2% beginning on February 1, 1991 and ending on January 31, 1992;

(b) 0% beginning on February 1, 1992 and ending on January 31, 1993; and

(c) 3% beginning on February 1, 1993 and ending on January 31, 1994.

Order in Council P.C. 1991-14/2375

December 12, 1991 — Order in Council P.C. 1991-9/2535 was issued which adjusted the wage rate increases contained in the Ship Repair Arbitral Award as follows:

(a) 0% for the period beginning on April 1, 1991 and ending on March 31, 1992; and

(b) 3% for the period beginning on April 1, 1992 and ending on March 31, 1993.

Order in Council P.C. 1991-9/2535

December 12, 1991 — Order in Council P.C. 1991-10/2535 was issued which adjusted the wage rate increases contained in the Law Group Arbitral Award as follows:

(a) 0% for the period beginning on March 1, 1991 and ending on February 28, 1992; and

(b) 3% for the period beginning on March 1, 1992 and ending on February 28, 1993.

Order in Council P.C. 1991-10/2535

1992

December 2, 1992 — Government makes Economic and Fiscal Statement

App. Rec. A.G. Excerpts from Hansard TAB 2 p.095

December 10, 1992 — Bill C-105 introduced (the Government Expenditures Restraint Act which provided for the amendment of the PSCA) (sections 3 to 8 of Bill C-113 were deemed to have come into force on December 10, 1992)

App. Rec. PIPSC Exhibit “C” to Affidavit of R. McIntosh Tab 2—C

1993

January 28, 1993 — PIPSC provides notice to Treasury Board that each group wishes to opt out of Master Bargaining. It confirms the new expiry date for each bargaining unit and asks for the rates of pay for each to be amended in accordance with sub-paragraph 48.03(b)(ii) of the Master Agreement (3% pro-rata increase until new termination date of the collective agreement for each group).

App. Rec. PIPSC Exhibits “A”—“R” inclusive to Affidavit of Luc Grenier TAB 3

February 17, 1993 — Bill C-113 Introduced (the Government Expenditures Restraint Act, 1993 No. 2” replacement for Bill C-105 which contained identical proposed amendments to the PSCA).

App. Rec. PIPSC Affidavit of Robert McIntosh TAB 2—p. 7 and Exhibits “C” & “D”

April 2, 1993 — Bill C-113 received Royal Assent

App. Rec. PIPSC Affidavit of Robert McIntosh TAB 2—p. 7

June 17, 1993 — Treasury Board notifies PIPSC that the 18 groups are “subject to the wage legislation which in effect freezes their compensation plan until September 30, 1995.” PIPS is also told that “the wage legislation does not permit the application of the pro-rated 3% increase to the groups’ compensation plans.”

App. Rec. PIPSC Exhibit “U” to Affidavit of Luc Grenier TAB 3”U

July 27, 1993 — PIPSC files a section 99 reference to the PSSRB seeking enforcement of the 3% pro-rata increase for each of the groups who have opted out of Master Bargaining pursuant to Article 48.04 of the Master Agreement.

App. Rec. PIPSC Exhibit “E” to Affidavit of Robert McIntosh TAB 2”E

September 15, 1993 — PIPSC requested 10,000 grievance forms to enable PIPS members to file grievances concerning Treasury Board’s failure to apply Article 48 of the Master Agreement.

App. Rec. PIPSC Exhibit “V” to Affidavit of Luc Grenier TAB 3—V

September 24, 1993 — Order in Council P.C. 1993-1868 was issued adjusting the wage rates provided under subparagraph 48.03(b)(ii) of the Master Agreement to 0% for each of the periods referred to in clause 48.04.

App. Rec. PIPSC Exhibit “W” to Affidavit of Luc Grenier TAB 3—W

October 21, 1993 — Date upon which s. 99 reference was to be heard before the PSSRB.

App. Rec. PIPSC Exhibit “O” to Affidavit of Robert McIntosh TAB 2—O

GROUNDS FOR THE APPLICATION

The application is based on the following grounds:

1) Order in Council P.C. 1993-1868 was made without authority;

2) and in the alternative, Order in Council P.C. 1993-1868 was an abuse of authority.

BACKGROUND

The Institute represents 29 groups, organized by classification, in the Public Service where Treasury Board is designated as employer. On August 14, 1990, the Institute entered into an agreement with Treasury Board to negotiate one master collective agreement on behalf of 18 of these groups (the Master Agreement). This was the third such agreement to negotiate a master agreement covering more than one group. (Prior to entry into master bargaining, each group negotiated a separate collective agreement with Treasury Board.) The following group classifications were included in master bargaining as of September 30, 1993: Actuarial Science (AC), Agriculture (AG), Biology (BI), Dentistry (DE), Forestry (FO), Historical Research (HR), Home Economics (HE), Mathematics (MA), Meteorology (MT), Nursing (NU), Occupational and Physical Therapy (OP), Pharmacy (PH), Scientific Regulation (applies to the Scientific Regulation Sub-Group SG-SRE only), Scientific Research (SE), Social Work (SW), Veterinary Medicine (VM), Defence Scientific Service (DS) and Commerce (CO), with a total membership as of that date of 10,734 (a copy of the 1993 Master Agreement is attached as Exhibit “A” to the McIntosh affidavit).

Master bargaining initially began in 1985. The first master collective agreement had effective dates for salary increases which varied for each group, depending on the expiry date of each groups’s collective agreement prior to entry into the Master Agreement. Two more master agreements were subsequently entered into which had a common date for salary adjustments for all groups. The 1987 Master Agreement was signed July 9, 1986 and expired on September 30, 1987 and the 1990 Master Agreement was signed on April 20, 1989 and expired on September 30, 1990.

Bargaining on the 1993 Master Agreement began on September 7, 1990 and continued until February 12, 1991. As no settlement could be reached, the outstanding issues were referred to conciliation before a conciliation board appointed under the Public Service Staff Relations Act, R.S.C., 1985, c. P-35. By agreement between the Institute and Treasury Board, the recommendations of the Conciliation Board were to be binding on both parties. The Conciliation Board rendered its report on August 16, 1991 which contained a provision allowing bargaining units to opt out of master bargaining (Article 48). Where the opting out provision was invoked, the Board’s report indicated that the duration of the Master Agreement would be extended beyond the life otherwise set and that the bargaining unit was to receive a 3% prorated increase for this extended period.

As noted above, since each group that agreed to participate in master bargaining in 1985 had separate collective agreements with Treasury Board with different expiry dates, a mechanism was incorporated into the duration clause of the Master Agreement. This clause was numbered Article 46 in the 1987 Master Agreement and Article 48 in both the 1990 and 1993 Master Agreements. Although dates changed and editorial changes were made, the text of the article has remained unchanged in all three Master Agreements. Article 48 of the 1993 Master Agreement, in part, is set out below:

48.01 Subject to clauses 48.03 and 48.04, the duration of this Collective Agreement shall be from the date it is signed to September 30, 1993.

48.02 Unless otherwise expressly stipulated, the provisions of this Collective Agreement shall become effective on the date it is signed.

48.03 If either of the parties determine that a Bargaining Unit(s), as specified in Article 2 and Article 26 of this Agreement, is not to participate in the next round of Master Agreement Bargaining, the Bargaining Agent or the Employer shall serve written notice to this effect to the other party and unto the Public Service Staff Relations Board. Such notice to opt out must be served on the other party at least sixty (60) days prior to the expiry of this Agreement referred to in clause 48.01.

(a)  Where no notice to opt out is received for Bargaining Unit(s) specified in Articles 2 and 26 within the specified time period the parties agree that such Bargaining Unit(s) are hereby included in the next round of Master Agreement Bargaining.

(b) (i) Where written notice to opt out is served by either party within the specified time period, the Collective Agreement for a particular Bargaining Unit(s) for which an opt out notice was served, will expire on the date(s) in clause 48.04 in lieu of the date specified in clause 48.01.

(ii)  Should a Bargaining Unit(s) opt out of Master Bargaining the rates of pay in Appendix “A” will be amended to contain a line “C”. Line “C” will be calculated by increasing line “B” by 3% prorated on the basis of the time period contained in clause 48.04.

Therefore, clause 48.03 allowed groups to opt out of the next round of master agreement bargaining by giving notice at least 60 days prior to September 30, 1993. Where a group decided to opt out, clause 48.03(b) extended the Master Agreement for the group for a specified period of time beyond September 30, 1993 and the group became entitled to a 3% increase prorated to the extended expiry date. Clause 48.04 listed the groups noted earlier and for those groups opting out, the Master Agreement would be extended from anywhere between December 21, 1993 and July 20, 1994.

The 1993 Master Agreement was signed on September 24, 1991 and expired on September 30, 1993. It provided for a wage increase of 4.7% effective October 1, 1990, a 0% increase effective October 1, 1991 and a 3% increase effective October 1, 1992.

In its budget of February 26, 1991, the Government of Canada (the Government) announced its decision to restrain the operations of Government by freezing departmental operating budgets at then current levels and by restraining the wages and salaries of Cabinet Ministers, Members of Parliament, Order in Council appointments and all federal public servants. The Government stated that it was not prepared to contemplate wage increases beyond an annual rate of 3%. This decision, according to the respondent, was taken as a measure to control inflation and reduce the deficit.

On September 16, 1991, the Government introduced Bill C-29, the Public Sector Compensation Act (the PSCA) in the House of Commons. At that time, the parties had not yet signed the 1993 Master Agreement, which was signed on September 24, 1991. However, the PSCA, S.C. 1991, c. 30, received Royal Assent on October 2, 1991 and came into force on October 3, 1991, at which time the 1993 Master Agreement had been signed.

Sections 5 and 6 of the PSCA extended most compensation plans for either two or three years depending on whether the compensation plan expired before or on February 26, 1991. Sections 5 and 6 are set out below:

5. (1) Subject to section 11, every compensation plan for employees to whom this Act applies that was in effect on February 26, 1991, including every compensation plan extended under section 6, shall be extended for a period of twenty-four months beginning on the day immediately following the day on which the compensation plan would, but for this section, expire.

(2) For the purposes of subsection (1), a compensation plan shall be deemed to have been in effect on February 26, 1991 if the parties to the plan had, before that date, agreed in writing to establish the plan to have effect on the expiration of the previous compensation plan and the plan is established on or after that date without change.

6. Subject to section 11, where a compensation plan for employees to whom this Act applies would, but for this section, have expired before February 26, 1991 and no new compensation plan was established before February 26, 1991, or on or after that date in accordance with subsection 5(2), the compensation plan shall be extended for a period of twelve months beginning on the day immediately following the day on which the plan would have expired.

Under the terms of section 11 of the PSCA, a compensation plan established between the period of February 26, 1991 (the date of the Federal Budget) and the day immediately before the date of coming into force of PSCA (October 2, 1991) and which was to have effect on the expiry of the previous compensation plan, would not be subject to the compensation freeze provisions of sections 5 and 6 of the PSCA. The applicant is of the view that the 1993 Master Agreement came within the parameters of section 11 and was therefore not subject to the compensation freeze provisions of the PSCA. Section 11 also provided that the Governor in Council, on the recommendation of Treasury Board, could adjust wage rates under a new compensation plan referred to in that section, in keeping with the wage policy of the Government, as announced in its budget of February 26, 1991. Subsection 11(1) reads as follows:

11. (1) Where a compensation plan for employees to whom this Act applies expired before or was in effect on February 26, 1991 and a new compensation plan to have effect on the expiration of the previous compensation plan is established during the period beginning on February 26, 1991 and ending

(a) on the day immediately before a day on which this Act comes into force, or

(b) at any time on or after the day which this Act comes into force, where the process for resolution of a dispute respecting the compensation plan is by referral thereof to arbitration and a request for arbitration has been made in accordance with the laws applicable to the compensation plan before the day on which this Act comes into force,

sections 5 and 6 do not apply in respect of the previous compensation plan and the Governor in Council, on the recommendation of the Treasury Board, may adjust wage rates under the new compensation plan to such amounts and for such periods as the Governor in Council considers to be consistent with the wage policy of the Government of Canada arising from the February 26, 1991 budget, and any wage rates so adjusted shall be deemed to be embodied in the new compensation plan.

According to the applicant, the compensation plan in the 1993 Master Agreement was accepted by Treasury Board in the fall of 1991, and no recommendation was made to the Governor in Council to adjust that plan, which included the 3% pro rata increase for each group choosing to opt out of master bargaining in the next round, as provided by Article 48 of the Master Agreement. The applicant also notes that before and after the signing of the Master Agreement, representatives of the Institute were advised by Treasury Board that the 1993 Master Agreement would be honoured as it was not in conflict with the restraint legislation (see the McIntosh and Grenier affidavits). The applicant is of the view that this meant that Treasury Board’s position, at that time, was that the 1993 Master Agreement met the objectives of the Government’s compensation policies and therefore did not warrant unilateral adjustment by the Governor in Council.

On December 10, 1992, the Government introduced Bill C-105, the Government Expenditures Restraint Act, 1993 in the House of Commons, which among other things amended the PSCA. The Government Expenditures Restraint Act, 1993 was subsequently withdrawn and replaced by Bill C-113, the Government Expenditures Restraint Act, 1993 No. 2 (Restraint Act, No. 2) which was introduced on February 17, 1993 and received Royal Assent on April 2, 1993 [S.C. 1993, c. 13]. The proposed amendments to the PSCA were unchanged from Bill C-105 and was to reflect the Government’s December 2, 1992 economic statement. Sections 3 to 8, which deal with the PSCA, were deemed to have come into force on December 10, 1992 and sections 2 and 26 on April 1, 1992. Section 8 of the Restraint Act, No. 2 provides:

8. (1) All that portion of subsection 11(1) of the said Act [the PSCA] following paragraph (b) thereof is repealed and the following substituted therefore:

sections 5 and 6 do not apply in respect of the previous compensation plan and the Governor in Council, on the recommendation of the Treasury Board, may adjust wage rates under the new compensation plan to such amounts and for such periods as the Governor in Council considers to be consistent with the wage policy of the Government of Canada arising from the February 26, 1991 budget or the December 2, 1992 economic and fiscal statement, and any wage rates so adjusted shall be deemed to be embodied in the new compensation plan.

(2) Section 11 of the said Act is further amended by adding thereto the following subsection:

(3) Every new compensation plan in respect of which this section applies shall be

(a) extended for a period of twenty-four months beginning on the day immediately following the day on which the compensation plan would, but for this subsection, expire; and

(b) deemed to include a provision to the effect that the wage rates in effect under the plan on the day which the plan would, but for this subsection, expire shall not be increased for the twenty-four month period immediately following that day.

The applicant is of the view that this amendment, specifically paragraph 8(3)(b) extended the wage rates in effect under the Master Agreement, namely the 3% increase, for a period of two years. The respondent is of the view that as a result of the PSCA, as amended, the compensation plans for the groups covered by the Master Agreement are frozen until September 30, 1995.

On January 28, 1993, the Institute provided notice to Treasury Board on behalf of each of the 18 groups in master bargaining that, pursuant to Article 48 of the Master Agreement, each group wished to opt out of master bargaining. In that same notice letter, it was noted that the 1993 Master Agreement would be extended to a date under clause 48.04 and that each group would receive a 3% increase, calculated on a pro rata basis for the extended term under clause 48.03(b)(ii), to the new expiry date.

By letter dated April 30, 1993, Treasury Board advised the Institute that the requests would have to be examined in light of the Restraint Act, No. 2. By letter dated June 17, 1993, Treasury Board notified the Institute that the groups could opt out of master bargaining but advised that it would not implement the pro rata increase provided for under clause 48.03(b)(ii). It was Treasury Board’s view that wage legislation did not permit the application of the prorated 3% increase to the groups’ compensation plans. In other words, the wage increase provisions provided for in Article 48 were inapplicable, as the compensation plans were subject to the freeze provisions under the PSCA, as amended.

On July 27, 1993, the Institute filed a reference to the Public Service Staff Relations Board, pursuant to section 99 [as am. by S.C. 1992, c. 54, s. 72] of the Public Service Staff Relations Act, challenging Treasury Board’s interpretation of Article 48 of the Master Agreement, in light of the PSCA, as amended. A section 99 hearing was scheduled to commence on October 21, 1993.

On September 15, 1993, the Institute advised Treasury Board that the refusal to apply the prorated increase was a violation of Article 48 of the Master Agreement for each employee in each group affected. As a result, the Institute requested 10,000 grievance forms so that each member could file an individual pay grievance.

By Order in Council P.C. 1993-1868, dated September 24, 1993, the Governor in Council adjusted clause 48.03(b)(ii) of the Master Agreement to 0% for each of the periods set out in clause 48.04 of the 1993 Master Agreement. A copy of the Order in Council was sent to the Institute by letter dated September 30, 1993. The letter also offered the Institute groups the opportunity to reconsider their decision to opt out given the groups who opted out would be “frozen” for an extended period of time.

By agreement between the parties dated October 18, 1993, the Public Service Staff Relations Board adjourned the section 99 reference sine die. On October 28, 1993, the Institute filed the application for judicial review of Order in Council P.C. 1993-1868.

The applicant notes that during the summer of 1991, collective agreements containing new compensation plans within section 11 of the PSCA were executed by Treasury Board. Both parties make reference to the ships’ officers collective agreement between the Canadian Merchant Service Guild (CMSG) and Treasury Board, which was entered into on June 26, 1991. The CMSG collective agreement was for a three and one-half year period from September 1, 1990 to March 31, 1994. It provided for wage increases of 0% in the first year, 3% in the second and 3% in the third year.

According to the applicant, Treasury Board never made a recommendation to the Governor in Council, within the terms of section 11 of the PSCA, to adjust the compensation plan incorporated into the CMSG collective agreement. The applicant notes that although the Treasury Board takes the position that the wage increase provided for in Article 48 of the 1993 Master Agreement was subject to the freeze provisions under PSCA, the 3% annual increase for the full third year of the CMSG collective agreement was implemented by Treasury Board on April 1, 1993. The applicant is also of the view that in the context of compensation plans governed by section 11 of the PSCA, the Institute is the only bargaining agent whose compensation plan was altered as a result of the Governor in Council Order.

On the other hand, the respondent claims that the Ships’ Officers Group was the only bargaining unit within the public service to agree to the Government’s three-year restraint program as announced in the February 26, 1991 budget and reaffirmed by the President of the Treasury Board in his statement of June 19, 1991, in the House of Commons.

The respondent listed the following orders in council passed under subsection 11(1) of the PSCA in relation to groups, other than those involved in the judicial review application:

— Order in Council, P.C. 1991-10/2535, December 12, 1991;

— Order in Council, P.C. 1991-9/2535, December 12, 1991;

— Order in Council, P.C. 1991-14/2375, November 28, 1991.

APPLICANT’S POSITION

With respect to the issue of jurisdiction, the applicant maintains that paragraph 18(1)(b) of the Federal Court Act gives me jurisdiction to hear and determine any application for relief in nature of certiorari against The Queen and therefore I have the jurisdiction to quash Order in Council P.C. 1993-1868.

The applicant’s position is that the PSCA did not nullify the 3% prorata increase as required under clause 48.03(b)(ii) of the Master Agreement and if it had not been for Order in Council P.C. 1993-1868, Treasury Board would not have been entitled to withhold the wage adjustment in clause 48.03(b)(ii).

In terms of review of orders in council, the applicant submits that Order in Council P.C. 1993-1868 was promulgated by the Governor in Council on September 24, 1993. The Governor in Council constitutes what may be termed the formal or apparent Executive of Government. The applicant, citing Roncarelli v. Duplessis, [1959] S.C.R. 121, further submits that the Supreme Court of Canada has stated that public authorities, including the Government Executive must act in good faith and not for capricious or irrelevant reasons. The applicant argues that the jurisprudence supports the proposition that where Executive or Ministerial discretion has been exercised in bad faith, or where reliance has been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should interfere.

The applicant also argues that where there has been substantial unfairness in exercising a discretionary power, that unfairness can be an abuse of discretionary power and that a court should interfere where a public authority exercises its discretion in a discriminatory manner. Therefore, after citing a number of cases including Gingras v. Canada, [1990] 2 F.C. 68(T.D.), the applicant maintains that a discretionary decision is reviewable and must be made strictly within the limits of the purpose and spirit of the statute and that a court should interfere where a public authority has acted for an improper purpose.

The applicant’s position is essentially that the following facts demonstrate that both Treasury Board and the Governor in Council exercised their discretion to adjust wage rates under the 1993 Master Agreement in bad faith or for improper or irrelevant reasons, and with discriminatory effect, thereby abusing their power:

1) the Master Agreement was entered into on September 24, 1991;

2) the Master Agreement provided for a 3% pro rata increase for those bargaining groups opting out of master bargaining. This pro rata increase would commence effective October 1, 1993;

3) the PSCA came into force on October 3, 1991. Section 11 of the PSCA allowed the Governor in Council, on Treasury Board’s recommendation, to adjust wage rates set out in the 1993 Master Agreement;

4) on more than one occasion, Treasury Board informed the Institute that the 1993 Master Agreement met the objectives of the Government’s compensation policies and therefore did not warrant unilateral adjustment by the Governor in Council. Accordingly, Treasury Board did not make a recommendation to adjust the wage rates in the 1993 Master Agreement (see McIntosh affidavit);

5) on April 2, 1993, the PSCA was amended [S.C. 1993, c. 13, s. 4] so that agreements such as the 1993 Master Agreement would be extended for a two-year period. The amendments preserved the right of Treasury Board to recommend that the Governor in Council adjust the wage rates to be consistent with the wage policy of the Government of Canada. These amendments were first tabled on December 10, 1992 and received Royal Assent on April 2, 1993;

6) Treasury Board, once again, did not recommend that the wage rates set out in the 1993 Master Agreement be adjusted;

7) on January 28, 1993, the Institute provided notice to Treasury Board that each of its 18 groups would opt out of the master bargaining and that, pursuant to clause 48.03(b)(ii) of the 1993 Master Agreement, each group should receive a 3% pay increase effective October 1, 1993 for the extended term of the Agreement. The applicant maintains that Treasury Board refused to acknowledge its contractual obligation to provide the 3% prorated increase;

8) on July 27, 1993, the Institute filed a section 99 reference under the Public Service Staff Relations Act, challenging the Treasury Board’s anticipatory refusal to implement the 3% increase as contained in the 1993 Master Agreement. The hearing was scheduled for October 21, 1993;

9) on September 15, 1993, the Institute obtained grievance forms from Treasury Board so that each member could file an individual pay grievance;

10) according to the applicant, the merits of the policy and anticipated individual grievances suggested that Treasury Board would be unsuccessful in arguing that the PSCA prevented the application of the 3% prorated increase under the 1993 Master Agreement;

11) by letter dated September 30, 1993, Treasury Board informed the Institute that an order in council has been passed adjusting the 3% pro rata increase to read 0%;

12) Treasury Board had from October 2, 1991, to recommend to the Governor in Council that wage rates in the 1993 Master Agreement should be adjusted in accordance with the wage policy of the Government of Canada. Yet, despite its assurances to the contrary, Treasury Board decided two years after its first opportunity to recommend that the compensation plan in the 1993 Master Agreement be adjusted because it was not in accordance with the wage policy of the Government of Canada;

13) the collective agreement with CMSG called for a 3% increase in the third year of the agreement. The CMSG collective agreement expired on March 31, 1994. Yet Treasury Board did not make a recommendation to the Governor in Council to adjust the compensation plan incorporated into the CMSG collective agreement. The applicant claims that in the context of compensation plans governed by section 11 of the PSCA, the Institute is the only bargaining agent whose compensation plan was altered as a result of a Governor in Council order.

The applicant submits that, on its face, the real reason Treasury Board recommended that the 3% pro rata wage increase should be adjusted to 0% was because it anticipated losing the section 99 reference. The applicant notes that there does not appear to be any other reason that could explain the two-year delay in reaching the decision that the wage rates set out in the 1993 Master Agreement were inconsistent with the wage policy of the Government of Canada.

The applicant further submits that although section 11 of the PSCA states that the only reason the Governor in Council may adjust wage rates is to ensure that the compensation plan is consistent with the wage policy of the Government of Canada, the Treasury Board and the Governor in Council ignored this requirement and instead implemented the Order in Council in bad faith and for an improper and wrongful purpose, and with a discriminatory result.

With respect to onus, the applicant argues that the onus of explanation shifts to the Executive or Minister once a prima facie case of bad faith is made out, see Shawn v. Robertson, [1964] 2 O.R. 696 (H.C.).

RESPONDENT’S POSITION

The respondent’s position is essentially that the Governor in Council did not abuse its authority or otherwise exceed its jurisdiction under subsection 11(1) of the PSCA in making Order in Council P.C. 1993-1868.

With respect to the PSCA, the respondent notes that the PSCA was enacted by Parliament to implement the Government’s public sector wage restraint policy announced in its February 26, 1991 budget. The PSCA was subsequently amended by the Restraint Act No. 2 to reflect the continuation and extension of that policy announced by the Government in its December 2, 1992 economic and fiscal statement. The respondent also notes that to achieve its objectives, the PSCA extended public sector compensation plans and adjusted the wage rates under them. To ensure consistent treatment of compensation plans, the PSCA categorized them according to their expiry dates.

The respondent submits that the 1993 Master Agreement fell within the category of compensation plans subject to section 11 of the PSCA. Accordingly, it was extended to September 30, 1995 and in order to be consistent with the December 2, 1992 economic and fiscal statement, no wage rate increases are permissible during the extended period, namely from October 1, 1993 to September 30, 1995. The respondent’s proposition is based on the following: the 1993 Master Agreement fell into the third category of compensation plans, namely those plans established between February 26, 1991 and October 2, 1991. Plans falling under this category were not subject to either an extension under sections 5 and 6 of the PSCA or the wage rate adjustment found in sections 9 and 10. Instead, section 11 provided that the Governor in Council could adjust wage rates under such plans to be consistent with the Government’s wage policy arising from its February 26, 1991 budget. The respondent notes that section 11 of the PSCA was amended by the Restraint Act, No. 2 to include the reference to the December 2, 1992 economic and fiscal statement. It was also amended so as to extend compensation plans subject to it for 24 months following the day on which the plans would otherwise expire and freeze the wage rates under the plans.

The respondent also submits that the increase sought by the Institute is inconsistent with the Government’s economic and fiscal statement of December 2, 1992 and with the overall purpose of the PSCA. In its statement, the Government announced that wage rates in the public sector would not be increased for the period in question. Section 11 of the PSCA implements this statement by freezing wage rates for the period. The respondent maintains, based on subsection 31(3) of the Interpretation Act, R.S.C., 1985, c. I-21 and Philco Corp. v. R.C.A. Victor Corp., [1967] 1 Ex. C.R. 450, that where a power is conferred by a statute it may be exercised each time the circumstances require. As such, until notice was received from the Institute that the groups subject to the Master Agreement did not intend to participate in the next round of master bargaining and were seeking a wage increase, the Governor in Council had no reason to invoke subsection 11(1) of the PSCA. Once it became clear that the groups were seeking a wage increase, the Governor in Council could exercise the power under that section.

With respect to judicial review of the Order in Council, the respondent submits that the power granted the Governor in Council under section 11 of the PSCA is in relation to a matter of public convenience and policy, namely the implementation of the wage policy of the Government of Canada arising from its February 26, 1991 budget and its December 2, 1992 economic and fiscal statement. It empowers the Governor in Council to amplify the scope of the section and is therefore, argues the respondent, legislative in nature. The respondent further submits that in reviewing orders in council of this nature, a court may not investigate the motives which led the Governor in Council to pass this Order in Council. Instead, the respondent maintains that judicial review is limited to an examination of whether the Governor in Council performed its functions within the boundary of the Parliamentary grant of power and in accordance with any statutorily prescribed terms.

Alternatively, if the Governor in Council’s motives in passing the Order in Council are relevant, the respondent submits that so long as one of the purposes for the Order in Council falls within the Governor in Council’s mandate, the Order in Council is valid. The respondent maintains that the fact that purposes falling outside the mandate were also present does not defeat the Order in Council.

The respondent also submits that the Order in Council was passed for a purpose which falls within subsection 11(1) of the PSCA, namely to ensure that wage rates under the Master Agreement for the groups opting out of master bargaining are consistent with the wage policy of the Government. The fact that the section 99 reference filed by the Institute is, as a consequence of the Order in Council, defeated, does not thereby make the Order in Council ultra vires.

The respondent further submits that discrimination, even if established, is not a ground for quashing an order in council of a legislative nature.

ISSUES

Essentially, the issue before me centres on the reviewability of Order in Council P.C. 1993-1868 and on the question of whether the Order in Council resulted from an improper exercise of discretion and is an abuse of authority.

DISCUSSION

With respect to the review of the Order in Council, the first matter to be addressed is the nature of the action or function performed by the Governor in Council under section 11 of the PSCA, as per Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735. In other words, I must determine whether Order in Council P.C. 1993-1868, made pursuant to section 11 of the PSCA, adjusting clause 48.03(b)(ii), was a discretionary decision in the nature of policy or legislative action and reviewable on limited grounds or whether it was made in the exercise of a statutory power and therefore reviewable according to the ordinary principles of administrative law (see Linden J.A.’s comments in Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1994] 2 F.C. 247(C.A.), at page 255):

The first issue is whether the Minister’s issuance of the notice to importers dated May 8, 1989 was a discretionary decision in the nature of policy or legislative action, which is virtually unreviewable, or whether it was the exercise of a statutory power, reviewable according to the ordinary principles of administrative law. The Trial Judge held that it was the exercise of a statutory power and hence reviewable in the ordinary way, wherefrom she proceeded to quash the decision. With respect, I am of a different view—that the promulgation of the notice was a discretionary act in the nature of a policy guideline and hence was largely immune from review.

If the matter is considered to be one of public convenience and general policy then the comments of Dickson J. (as he then was) in Thorne’s Hardware Ltd. et al. v. The Queen et al., [1983] 1 S.C.R. 106, at pages 111-112 would apply:

Decisions made by the Governor in Council in matters of public convenience and general policy are final and not reviewable in legal proceedings. Although, as I have indicated, the possibility of striking down an order in council on jurisdictional or other compelling grounds remains open, it would take an egregious case to warrant such action. This is not the case.

In passing Order in Council … the federal Cabinet acted under statutory authority deriving from s. 7(2) of the National Harbours Board Act which provides that the Saint John harbour boundaries are those described in the schedule to the Act, “or as may be determined from time to time by order of the Governor in Council”.

The appellants attack the Order in Council expanding the harbour limits on the basis that it was passed for the sole purpose of increasing the National Harbours Board’s revenues. They say this amounts to “bad faith” on the part of the Governor in Council. They also argue that the harbour expansion for this reason is not within the scope of the jurisdiction conferred on the federal Cabinet by s. 7(2) of the Act and is therefore ultra vires. [Emphasis added.]

Dickson J. continued, at page 115:

I have referred to these several pieces of evidence, not for the purpose of canvassing the considerations which may have motivated the Governor in Council in passing the Order in Council but to show that the issue of harbour extension was one of economic policy and politics; and not one of jurisdiction or jurisprudence. The Governor in Council quite obviously believed that he had reasonable grounds for passing Order in Council … extending the boundaries of Saint John Harbour and we cannot enquire into the validity of those beliefs in order to determine the validity of the Order in Council.

The respondent notes that the increase sought by the Institute is inconsistent with the Government’s economic and fiscal statement of December 2, 1992 and with the overall purpose of the PSCA. In its statement, the Government announced that wage rates in the public sector would not be increased for the period in question. Section 11 of the PSCA implemented this statement by freezing wage rates. If I accept the respondent’s assertion that the power granted the Governor in Council under section 11 of the PSCA is in relation to a matter of public convenience and policy, i.e. the implementation of the wage policy of the Government of Canada arising from its February 26, 1991 budget and its December 2, 1992 economic and fiscal statement and therefore is legislative, then I am governed by the limited scope of review as stated by the Supreme Court in Inuit Tapirisat (supra) and Thorne’s Hardware (supra). As such, the error would have to be an “egregious one” to warrant judicial intervention.

Linden J.A. writing for the Court in Canadian Assn. of Regulated Importers (supra) was of the view (contrary to the Trial Judge [[1993] 3 F.C. 199) that the Minister’s issuance of the notice to importers was a discretionary act in the nature of a policy guideline and therefore largely immune from review. The relevant sections in that case were sections 5 and 8 of the Export and Import Permits Act [R.S.C., 1985, c. E-19]. In 1989 the Governor in Council placed broiler and hatching eggs on the Import Control List under the Export and Import Permits Act. The challenge was to the notice of importers which, among other things, outlined an annual global quota, principles of quota allocation and matters dealing with the issuance of permits. The affected importers applied for certiorari quashing the import allocation quota decision and mandamus requiring the Minister to at least temporarily issue import permits based on historic import patterns. Linden J.A. noted that guidelines were within the Minister’s purview and not subject to ordinary review, save according to the three exceptions set out in Maple Lodge Farms Ltd. v. R., [1981] 1 F.C. 500(C.A.); affirmed [1982] 2 S.C.R. 2. I believe Linden J.A. was referring to the following comment by McIntyre J. of the Supreme Court, at pages 7-8:

Where the statutory discretion has been exercised in good faith and, where required, in accordance with the principles of natural justice, and where reliance has not been placed upon considerations irrelevant or extraneous to the statutory purpose, the courts should not interfere.

Therefore, in the case at bar, the applicant must establish that the discretion exercised in this case was exercised in bad faith, or that where required, the principles of natural justice were not complied with, or that reliance was placed upon considerations irrelevant or extraneous to the statutory purpose, subject to the qualifications noted below.

With respect to the application of the rules of natural justice, the Supreme Court has clearly stated that the rules governing procedural fairness do not apply to a body exercising purely legislative functions, see Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525, at page 558.

With respect to an attack based on irrelevant factors, Linden J.A.’s comments, at pages 259-260 of Canadian Assn. of Regulated Importers may once again be of some assistance:

The last basis of attack on the Minister’s conduct was that it was based on irrelevant factors and was not supported by the evidence. The Trial Judge was of the view that there was no evidence that the system adopted would support domestic supply management, that there was any consideration of the increased concentration of the market that might arise, nor of reliance on the Deloitte, Touche study which may have supported the decision. Rather she decided that the main focus was to transfer profits from one segment of the market to another, which might cause disruption of the market. Accordingly, the Trial Judge quashed the decision of the Minister because it was “based on irrelevant considerations.” With respect, I am of the view that the Trial Judge erred in this regard as well.

It is not fatal to a policy decision that some irrelevant factors be taken into account; it is only when such a decision is based entirely or predominant on irrelevant factors that it is impeachable. It is not up to the court to pass judgment on whether the decision is “wise or unwise”…. This court, because these matters involve “value judgments”, is not to “sit as an appellate body determining whether the initiating department made the correct decision” ….

As this court stated in National Anti-Poverty Organization v. Canada (Attorney General), [1989] 3 F.C. 684 at page 707, “Even if one were to assume that the Governor in Council acted with a dual purpose in mind (one falling within his mandate … and the other falling outside his mandate …) I doubt that this could advance the respondents’ case.” For, as the Supreme Court of Canada has explained, “Governments do not publish reasons for their decisions; governments may be moved by any number of political, economic, social or partisan considerations.” (See Thorne’s Hardware Ltd., supra, at pages 112 and 113.)

In other words, for a court to interfere, there must be reliance primarily on irrelevant matters as well as an absence of evidence supporting the Minister’s decision. [Emphasis added.]

Linden J.A. concluded, at page 263:

… there is ample evidence in the record to support the decision made by the Minister to adopt the system he did. In doing so he relied on relevant factors. This is not to say that the evidence demonstrated that he necessarily made the right decision. That is not the standard of review that we must apply. Indeed, even if it could be shown that he may have made the wrong decision, this Court would have no business interfering with it in these circumstances.

It would seem that in light of the above comments, that even if I assumed that in passing the Order in Council the Governor in Council took into account the fact that Treasury Board anticipated losing the section 99 reference, as long as I am satisfied that as per section 11 of the PSCA the Governor in Council was also adjusting wage rates to ensure that the compensation plan was consistent with the wage policy of the Government of Canada, the Order in Council would not be subject to judicial review. In other words, even if other considerations were taken into account, such as the possible loss of the section 99 reference, the jurisprudence makes it clear that as long as the Order in Council came within the scope of the PSCA, judicial intervention is not warranted, unless it is obviously an “egregious” case.

The above is consistent with the decision of the Ontario Divisional Court in Doctors Hospital and Minister of Health et al., Re (1976), 12 O.R. (2d) 164. where Cory J. (as he then was) writing for the Court considered the Public Hospitals Act, R.S.O. 1970, c. 378 and its regulatory nature regarding staffing, management and operation of public hospitals, held that the Lieutenant Governor in Council considered extraneous matters beyond the objects and policy of the Act when they made a decision to close the hospital for reasons of budgetary restraint. That decision was considered to have been made without jurisdiction and therefore void. In that case, it appears that the Lieutenant Governor only considered extraneous matters.

The applicant has cited the case of Gingras (supra) to support its proposition that where an executive or ministerial discretion has been exercised in bad faith, or where reliance has been placed upon considerations irrelevant or extraneous to the statutory purpose or acted for an improper purpose the courts should interfere. Gingras dealt with an action for declaratory judgment that the plaintiff, a member of the RCMP until 1984 and subsequently CSIS until his retirement in 1988, was entitled to the bilingual bonus created by the Treasury Board and the Public Service Commission in 1977. The plaintiff had not been paid his bonus on the ground that it was not included in his employment benefits. The plaintiff was bilingual and passed all the requisite tests for bilingualism.

The Trial Judge found that only the Treasury Board and subsequently the Director of the Service (CSIS) held decision-making authority over the plaintiff’s compensation, including the power to grant or deny the bilingualism bonus. However, in that case, the act in question was an administrative act, made by Treasury Board and the Director of CSIS, in accordance with the powers conferred by the Financial Administration Act [R.S.C., 1985, c. F-11], implementing the policies of general application on bilingualism in order to promote the objectives of the Official Languages Act [R.S.C., 1985, c. O-3]. The Trial Judge in that case was not dealing with an order in council. As such, the comments relating to review of administrative decisions are accurate, however, as noted by the Supreme Court, they do not appear to apply to orders in council dealing with matters of public convenience and policy.

CONCLUSION

From a reading of the above, it is apparent that I must determine from the facts of this case whether the passing of the Order in Council P.C. 1993-1868 was “egregious” in nature.

Egregious is defined, in the Concise Oxford Dictionary, 7th edition, Oxford: Clarendon Press as:

egre’gious (-jus)a. shocking (egregious folly, blunder, ass); (arch.) remarkable; hence—ly² adv., -ness, n. [f. L e (gregius f. grex gregis flock) illustrious, lit. ‘standing out from the flock’]

and in the new Shorter Oxford English Dictionary, Clarendon Press, 1993 as:

Egregious 1 Remarkably good; outstanding, striking; distinguished, excellent. Now rare. M16. 2 Remarkable in a bad sense; gross, flagrant; shocking. L16 3 Prominent, protruding. rare

and in The Living Webster Encyclopedic Dictionary of the English Language, Chicago, The English Language Institute of America, 1967 as:

e.gre.gious Extraordinary or remarkable in a bad sense or for undesirable characteristics; flagrant; as, an egregious blunder

What I take from the above definitions of the word egregious is that I must determine whether the respondent when it passed Order in Council P.C. 1993-1868 did so solely in bad faith and not in order to implement a fiscal policy that it thought at the time was the correct policy (political or otherwise) for the Government of the day to follow.

I am satisfied from a reading of all the evidence that the respondent passed the Order in Council P.C. 1993-1868 in order to implement its policy of wage restraint.

I believe it important to quote from a statement dated June 19, 1991 [House of Commons Debates, Vol. II, 3rd Sess., 34th Parl., at pages 2075-2077] by the Honourable Gilles Loiselle, then President of the Treasury Board, on the issue of collective bargaining in the Public Service of Canada as it clearly indicates the political policy being adopted by the Government of the day in relation to collective bargaining.

You will recall, Mr. Speaker, that in the February 26 Budget, the then Minister of Finance set out the government’s wage policy for the next three fiscal years. In fiscal year 1991-92, salary budgets in departments are frozen at the level of the previous year.

The Minister indicated at the time that any negotiated wage increase this year would require a corresponding reduction in employment and that, in any case, the government would not contemplate wage increases this year of more than 3 per cent. In the following two fiscal years, provision is made for annual increases of up to 3 per cent.

…

I regret to inform the House that unions generally have not agreed to accept, in their negotiating demands, the limits established by the Budget—and the fiscal situation that lies behind it.

Union leaders have continued to make wage and benefits demands that are well beyond the capacity of the public purse. Indeed the leadership of the two largest unions, the Public Service Alliance of Canada and the Professional Institute of the Public Service of Canada have, to my considerable regret, publicly stated that their unions will take whatever action is required to force the government to change its wage policy.

…

My strong preference, therefore, is to continue to work with the unions to arrive at fair settlements for our employees that are within the limits of what the government and the taxpayer can afford to pay.

At the same time, I will be the first to acknowledge that the choices we have offered the unions are not very palatable to them, any more than they have been to the government. This is reflected in the current state of the collective bargaining negotiations.

By June 21, the last day before the summer recess of Parliament, 55 of the 80 bargaining units, representing some 165,000 employees will have collective agreements that have expired. In five cases, they have been expired for more than one year.

By the time Parliament reconvenes in September, a further eight agreements will have expired. Also by that time, as many as 38 bargaining units and 170,000 Public Service employees could be in a legal position to strike. In addition, we expect binding awards to be handed down in early July for 18 occupational groups represented by the Professional Institute of the Public Service of Canada.

Mr. Speaker, these are the facts of the situation. I would now like to advise the House of the guiding principles that the government intends to follow during the summer months as this situation unfolds. We will continue to press for negotiated settlements for as long as the unions are wiling to come to the table. We owe this much to our employees and to the system of collective bargaining itself, which has served both employer and employees well over the years.

But we will move swiftly and firmly if the situation deteriorates unacceptably. We will seek the recall of Parliament to enact the necessary legislation if there are illegal strikes or if there is unreasonable disruption in service to the public.

As announced in the Budget, we will act to modify any arbitral awards that go beyond the 0-3-3 guidelines to bring them in line with the Budget. If we are forced to introduce legislation, it will cover all departments and agencies for which the Treasury Board is the employer as well as other public bodies that are dependent to a significant degree on Parliamentary appropriations. This would include Parliament and its employees. And the same terms will apply to all: a 0 per cent increase in wages in fiscal year 1991-92 or in the period immediately following the expiry of a collective agreement and 3 per cent in the following year.

Three groups whose contracts had already been the subject of protracted negotiations before the Budget—the Translation, Auditing, and Computer Systems Administration groups—will be provided with higher settlements for the period before this fiscal year, but they too will then be covered by 0 and 3.

This legislation, then, would apply for the first two years of the three-year compensation restraint program announced in the February 26 Budget. The government remains committed to the Budget ceiling of 3 per cent in the third year of the program. The Minister of Finance announced in the Budget inflation targets for the next five years; 3 per cent by the end of 1992; 2 1/2 per cent by the middle of 1994; and 2 per cent by the end of 1995. These reduced inflation levels should allow us to achieve the third year of the compensation restraint program through collective bargaining.

Having stated my desire to continue to negotiate, I recognize that for some bargaining groups it may not be feasible to expect a voluntary agreement by the time the House returns on September 16. If this proves to be the case, I think it will probably be in the best interests of all concerned to introduce compensation restraint legislation at that time to cover those who have not been able to settle for at least a two-year agreement within the 0-3-3 limits. I am very conscious that this would mean the suspension of collective bargaining for this round, but it may be the fairest course to take under the circumstances.

As I have stated, no agreement was reached between the applicant and the respondent on the 0-3-3 limits set out in the Budget speech. The only party that did reach such an agreement was the “CSMG,” the ships’ officers group.

All of the above resulted in the fact that on July 27, 1993 the applicant filed a section 99 reference and on September 15, 1993, the applicant requested 10,000 grievance forms which resulted in Order in Council P.C. 1993-1868. The section 99 reference was scheduled to be heard on October 21, 1993 by the PSSRB.

I am satisfied that it would be too much of a coincidence to believe that Order in Council P.C. 1993-1868 passed on September 24, 1993 was not passed because of the pending section 99 reference scheduled to be heard on October 21, 1993 and the fact that the applicant requested 10,000 grievance forms which would mean having 10,000 separate grievance proceedings at a very substantial cost to the respondent.

If I were satisfied that Order in Council P.C. 1993-1868 was only passed to prevent the going ahead of the grievance hearings or the section 99 hearing, I would not hesitate in concluding that the Order in Council was passed solely in bad faith based on totally irrelevant factors which would make me conclude that the Order in Council was passed in an egregious manner and thus invalid. But I cannot do so. It appears clear from the statement of the Honourable Gilles Loiselle that a policy of fiscal restraint was to be followed by the respondent and that the Government of the day would “move swiftly and firmly if the situation deteriorates unacceptably.”

It is apparent that the respondent felt that “the situation had deteriorated unacceptably” when it became apparent that it would not be able to implement its policy of fiscal restraint if it allowed the section 99 hearing to proceed to be heard on October 21, 1993 or if it allowed the 10,000 grievances to proceed to full hearings.

I would again repeat the words of Mr. Justice Linden [at page 260] in the Canadian Assoc. of Regulated Importers case (supra) as they appear to me to be most applicable to the present case.

It is not fatal to a policy decision that some irrelevant factors be taken into account; it is only when such a decision is based entirely or predominantly on irrelevant factors that it is impeachable.

I cannot, from all of the evidence put to me, conclude that the sole or predominant reason for the passing of Order in Council P.C. 1993-1868 was to prevent the hearing of the section 99 reference or to prevent the filing of any grievances by the members of the applicant.

I am satisfied that the evidence indicates that the Governor in Council acted with a dual purpose, firstly to implement its policy of “fiscal restraint” and secondly, to prevent the section 99 reference from proceeding to a hearing. It is pure speculation to say that the respondent passed the Order in Council solely to prevent the section 99 reference from proceeding as it feared it would not be satisfied with the result of the reference.

As was stated in National Anti-Poverty Organization v. Canada (Attorney General), [1989] 3 F.C. 684(C.A.), at page 707 “Even if one were to assume that the Governor in Council acted with a dual purpose in mind (one falling within his mandate … and the other falling outside his mandate … ) I doubt that this could advance the respondents’ case."

As I have stated, the evidence indicates the respondent acted with a dual purpose. Therefore, I am left with no alternative but to deny the application for judicial review.

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