Judgments

Decision Information

Decision Content

A-1418-84
Canadian Imperial Bank of Commerce (Appli- cant)
v.
Marc Boisvert, in his capacity as an adjudicator sitting pursuant to the provisions of section 61.5 of the Canada Labour Code and Jacqueline Chayer (Respondents)
INDEXED AS: CANADIAN IMPERIAL BANK OF COMMERCE V. BOISVERT
Court of Appeal, Marceau, MacGuigan and Lacombe JJ.—Montreal, January 27; Ottawa, April 3, 1986.
Labour relations — Unjust dismissal — Application to review Adjudicator's decision dismissal unjustified — Bank dismissing employee upon arrest of common law spouse for robberies of Bank — Adjudicator ordering Bank to pay indemnity equivalent to lost salary — Parties previously agreeing that only validity of complaint to be considered — Application allowed — Failure to hear parties on question of remedies infringing audi alteram partem rule — Adjudicator erred in holding just cause for dismissal requiring respondent to commit illegal act — Any act incompatible with due or faithful discharge of duty to master sufficient — Marriage or cohabitation with particular person, in some fact situations, creating just cause for dismissal — Nature and requirements of employment making continued cohabitation with robber incompatible with duties — Bank also having right to dismiss under contract of employment as employee undertaking to avoid conduct prejudicial to interests and reputation of Bank
— Administrative dismissal and conflict of interest discussed
— Canada Labour Code, R.S.C. 1970, c. L-1, s. 61.5 (as enacted by S.C. 1977-78, c. 27, s. 21; as am. by S.C. 1980-81- 82-83, c. 47, s. 27; 1984, c. 39, s. 11), 122(1) (as am. by S.C. 1977-78, c. 27, s. 43).
Judicial review — Applications to review — Labour rela tions — Application to review Adjudicator's decision dismissal unjustified — Employee dismissed from managerial position at Bank upon arrest of common law spouse for bank robberies — Application allowed — Decision of adjudicator pursuant to s. 61.5 of Code subject to s. 28 review, despite privative clause of s. 61.5(10) — Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28 — Canada Labour Code, R.S.C. 1970, c. L-1, s. 61.5(10) (as enacted by S.C. 1977-78, c. 27, s. 21).
This is an application to review an Adjudicator's decision that the respondent Chayer's dismissal was unjustified. The Bank dismissed Chayer from a managerial position at a Mon- treal branch upon the arrest of her common law husband for
two robberies at the same branch of the Bank in St. Lambert. Chayer complained pursuant to section 61.5 of the Canada Labour Code. The Adjudicator directed the Bank to pay its former employee an indemnity equivalent to her lost salary, although at the outset the parties agreed that only the question of whether the complaint was valid would be considered. The Adjudicator started from the premise that "just cause" in section 61.5 "necessarily implies that the employee is personal ly responsible". He then summarized the testimony to show that there was no evidence that the complainant gave the man she was living with confidential information regarding security measures. He held that there could not be a conflict of interest without a specific wrongful act by the employee, and the mere fact of living with someone did not constitute such an act. The Adjudicator dismissed the suggestion that this was an adminis trative dismissal, since a dismissal is administrative only in very special circumstances, which raise a question as to either the employee's physical ability to perform his work or his incompetence.
Held, the application should be allowed.
Per Marceau J.: The Adjudicator's reasoning is invalid because it is based on a false premise. Section 61.5 altered the right of dismissal to preclude arbitrary action by the employer and to ensure continuity of employment. Only a right of "just" dismissal now exists, and this means dismissal based on an objective, real and substantial cause, independent of caprice, convenience or purely personal disputes, entailing action taken exclusively to ensure the effective operation of the business. Going beyond that, as the Adjudicator did, is wrong. Although it is difficult to justify dismissal under section 61.5, it can still be done outside cases of incompetence or disability or serious misconduct on the part of the employee.
If the section 61.5 remedy were available only in cases of disciplinary dismissals, the Adjudicator's proposition, that any dismissal not based on a wrongful act by the employee is unjust, would be irrefutable. A person cannot be disciplined for anything other than an act committed by that person himself. However, since its inclusion in the Code, section 61.5 has been resorted to by employees laid off on grounds other than discipli nary ones. An "administrative dismissal" is a non-disciplinary one which may be justified by the employer on the basis of the employee's incompetence or physical or mental disability, and a "conflict of interests" has long been advanced as a reason for dismissal. It is well established that any unilateral termination by an employer of the contract of employment, except a lay-off for redundancy, falls within section 61.5.
The justification relied upon by the Bank met the require ments of section 61.5 although the situation here was not one of conflict of interest. That concept was applicable to cases in which an employee engages in activities which are external and parallel to those he performs as part of his job, and which conflict with the latter. However, an employee may lose a characteristic or attribute which might reasonably be regarded as necessary for carrying out the employment, resulting in a
loss of confidence by the employer such that ordinary employ- er-employee relations could not continue.
The question of whether the Bank should have paid some compensation in lieu of prior notice, is not relevant in an action based on section 61.5 of the Code.
Per MacGuigan J. (Lacombe J. concurring): There is a preliminary issue as to the effect of the privative clause in subsection 61.5(10) of the Canada Labour Code. In light of subsection 122(1) no decision of the Canada Labour Relations Board is reviewable by the Court except under paragraph 28(1)(a) of the Federal Court Act for failings with respect to natural justice, excess of jurisdiction or refusal to exercise jurisdiction. The respondents argued that the privative clause in subsection 61.5(10) might extend to adjudicators the same freedom from review under paragraphs 28(1)(b) and (c) that the Board possesses. This issue was decided to the contrary in Pioneer Grain Co. Ltd. v. Kraus, [1981] 2 F.C. 815 (C.A.).
The Adjudicator erred in law with respect to the remedy awarded. Corporation Dicom v. Petit, judgment dated Novem- ber 21, 1984, Federal Court, Appeal Division, A-413-84, not yet reported, held that an adjudicator who failed to hear the parties on the question of remedies infringed the audi alteram partem rule of natural justice. The Adjudicator here fell into the same trap. For this lapse alone, the matter must be returned to the Adjudicator.
It was stated in Pearce v. Foster (1886), 17 Q.B.D. 536 (C.A.) that "where a person has entered into the position of servant, if he does anything incompatible with the due or faithful discharge of his duty to his master, the latter has the right to dismiss him". Actual prejudice to the employer need not be proved. Potential harm is sufficient. It is irrelevant whether the facts of the case fall within the ordinary limits of conflict of interest, since incompatibility with the respondent's duties to her employer will suffice.
The law can be summarized in the following principle: marriage or cohabitation with a particular person can, in some fact situations, create a just cause for dismissal; whether it does will depend on a close analysis of the whole fact situation and especially of the nature and requirements of the particular employment.
The Adjudicator erred in his opinion that just cause for dismissal requires the respondent to herself have committed an act that is illegal or contrary to law. Such a test would eliminate many conflict of interest situations. The true test of an employee's misconduct is whether the acts of the employee are "incompatible with the due or faithful discharge of his duty to his master".
On the facts, the employer Bank receives valuables for safe-keeping, which it must go to extreme pains to protect from theft. By February 1980 the complainant's continued cohabita tion with a convicted robber placed her in a situation of incompatibility with her duties to her employer. The nature of her common law spouse's illegal activities constituted a stand ing threat to all financial institutions. As a key employee, the
complainant had direct knowledge of her own Bank's security arrangements and indirect knowledge of those of other banks. In such a close association she might even unwittingly let slip a detail helpful to an alert criminal mind. His criminality must be deemed to have been clearly visible to the complainant. She betrayed her duty to her employer by continuing to associate with such a criminal. Nothing more is required for incompati bility with the interests of her employer. Under the contract of employment, the complainant undertook to act with honesty and loyalty and to avoid conduct prejudicial to the interests and reputation of the Bank. In these circumstances, the Bank also had, under the contract, a right to terminate her employment without notice.
CASES JUDICIALLY CONSIDERED
APPLIED:
Pioneer Grain Co. Ltd. v. Kraus, [1981] 2 F.C. 815 (C.A.); Corporation Dicom v. Petit, judgment dated November 21, 1984, Federal Court, Appeal Division, A-413-84, not yet reported; Pearce v. Foster (1886), 17 Q.B.D. 536 (C.A.); Bursey v. Acadia Motors Ltd. (1980), 28 N.B.R. (2d) 361 (Q.B.); var'd (1982), 35 N.B.R. (2d) 587 (C.A.); Clouston & Co., Ld. v. Corry, [1906] A.C. 122 (P.C.).
CONSIDERED:
R. v. Arthurs, Ex p. Port Arthur Shipbuilding Co., [1967] 2 O.R. 49; 62 D.L.R. (2d) 342 (Ont. C.A.); Re Granby (Ville de) and Fraternité des Policiers de Granby Inc. (1981), 3 L.A.C. (3d) 443; Foot v. Eastern Counties Timber Co. Ltd., [1972] 1 I.R.L.R. 83 (Brit. Ind. Trib.); Skyrail Oceanic Ltd. v. Coleman, [1980] I.C.R. 596 (Brit. Empt. App. Trib.); rev'd [1981] I.C.R. 864 (C.A.); Caldwell et al. v. Stuart et al., [1984] 2 S.C.R. 603; Cindy Bosi v. Township of Michipicoten and K.P. Zurby (1983), 4 C.H.R.R. D/1252 (Bd. of Inq.).
REFERRED TO:
Empey v. Coastal Towing Co. Ltd., [1977] 1 W.W.R. 673 (B.C.S.C.); Tozer v. Hutchison (1869), 12 N.B.R. 540 (C.A.); Federal Supply and Cold Storage Co. of South Africa v. Angehrn & Piel (1910), 80 L.J.P.C. 1.
COUNSEL:
Louis P. Bélanger for applicant.
André Aumais for respondent Jacqueline
Chayer.
SOLICITORS:
Stikeman, Elliott, Montreal, for applicant.
Gurman, Marcovitch & Aumais, Montreal, for respondent Jacqueline Chayer.
The following is the English version of the reasons for judgment rendered by
MARCEAU J.: This application is to review an adjudicator's decision pursuant to section 61.5 of the Canada Labour Code [R.S.C. 1970, c. L-1, as enacted by S.C. 1977-78, c. 27, s. 21; as am. by S.C. 1980-81-82-83, c. 47, s. 27; 1984, c. 39, s. 11], the section which Parliament adopted in 1978 to provide protection for non-unionized employees in undertakings under its jurisdiction against the possibility of unjust dismissal, similar to the provi sion always included by unionized employees in their collective agreements. The section (which I prefer to reproduce as an appendix because of its length, especially as there is no need to know all its provisions for these purposes) provides that on a complaint by an employee who "considers his dis missal to be unjust" the Minister, if mediation by an inspector is unsuccessful, may appoint an adjudicator who, if he considers that the complaint is valid, will consider and impose one or more remedies which seem appropriate to him, including reinstatement. The chief difficulty, but also the special importance of the application before the Court, is that in my opinion the answer to it requires the Court to take a position on some of the less well-explored and more ill-defined aspects of the new recourse, an exception to the ordinary law, provided by this action for unjust dismissal under section 61.5 of the Canada Labour Code.
The facts underlying the case are somewhat unusual but not really complicated. On February 8, 1980 five people, wearing head masks and armed, burst into a branch of the appellant Bank, used violence to subdue its occupants, seized some cash and fled. This was the second armed robbery at the same branch of the Bank in the space of three weeks, and the employees were able to recog nize the same robbers as on the first occasion, led by the same leader. The new information, taken with that already obtained, served to confirm the suspicions of the police officers who were sum moned regarding one Régis Beaulieu, a repeat offender, whose record already included two rob beries. The police decided to act on their suspi-
cions and went at once to the residence of the suspect, which had already been located. Their intuition proved to be correct: when they burst into the apartment Beaulieu and his four accomplices were in the process of dividing the spoils of their robbery, and the weapons and other items they had used were only partly hidden. The five men were naturally arrested and all eventually pleaded guilty. During their investigation, however, the police realized that the apartment in which Beau- lieu lived and where he was apprehended was in fact also the apartment of Jacqueline Chayer, his common law wife with whom he had been cohabit ing for several years, and that this Jacqueline Chayer was a managerial employee of the Bank, where she worked as an accountant in one of the branches. Three days later, Jacqueline Chayer's superiors told her that she could not continue working for the Bank and that she was forthwith dismissed. Those are the facts: we may now look at the proceedings.
Protesting her innocence and refusing to submit passively to her employer's reaction, Jacqueline Chayer decided to make use of the new remedy introduced in 1978 by the provisions of section 61.5 of the Labour Code. She filed a complaint with an inspector, stating that she considered that she had been unjustly dismissed. The inspector not surprisingly failed in his mediation and the Minis ter quickly had to appoint an adjudicator to hear and dispose of the complaint. At the hearing the Bank called a long series of witnesses, including three security experts, to establish that in view of its great vulnerability to armed robbery it could not keep as a managerial employee—meaning an employee who was at all times aware of all the ramifications of the security system at branches of the Bank—the common law wife of an apparently hardened bank robber who was also the leader of a gang. It maintained that a conflict of interests existed which justified it in unilaterally terminat ing the contract of employment. The Adjudicator was not impressed by this argument: at the close of the hearing he found the dismissal to be totally unjustified and directed the Bank to pay its former employee an indemnity equivalent to the salary she
would have earned during the sixteen months which had elapsed if she had not been laid off, adding that he did not also order her to be rein stated simply because the complainant herself had not requested it. There is no doubt, since the judgment of this Court in Pioneer Grain Co. Ltd. v. Kraus, [1981] 2 F.C. 815 (C.A.), that the decision of an adjudicator pursuant to section 61.5 of the Labour Code continues to be subject to the full powers of review of section 28, despite the privative clause of subsection 61.5(10). The Bank accordingly lost no time in filing the application at bar to review and set aside the Adjudicator's decision.
Naturally, the validity of the Adjudicator's deci sion must be determined on the basis of the rea sons which he gave to explain his approach and to support his findings. These reasons are very exten sive, occupying over forty pages, but I think that to assess their content and be in a position to discuss them it will suffice if one knows them in outline and sees clearly the very simple reasoning they contain. The Adjudicator started from the premise that "just cause" in section 61.5 of the Canada Labour Code "necessarily implies that the employee is personally responsible", and that the best definition that can be given is that applied in an earlier case, R. v. Arthurs, Ex p. Port Arthur Shipbuilding Co., [1967] 2 O.R. 49; 62 D.L.R. (2d) 342 (Ont. C.A.) [at page 55 O.R.; 348 D.L.R.] (per Schroeder J.A.), and stated as follows:
If an employee has been guilty of serious misconduct, habitu al neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer's business, or if he has been guilty of wilful disobedience to the employer's orders in a matter of substance, the law recognizes the employer's right summarily to dismiss the delinquant employee.
The Adjudicator then proceeded to summarize the testimony to show that it provided no evidence that the complainant gave the man she was living with confidential information regarding security meas ures: the Bank therefore could not, he said, charge her with participating in the robberies. It also could not, the Adjudicator continued, talk of a conflict of interests, as it is not possible to talk of a conflict of interests without a specific wrongful act
by the employee, an act which "can be regarded as misconduct, as a wrongful act", and the mere fact that the complainant lived with the man, whom she loved and wanted to help, did not constitute such an act. Ascribing any blame whatever to her would be to make the wrongful act of the man she was living with her own, and to "establish as dogma the principle that one person is responsible for the wrongful act of another". Finally, the Adjudicator dismissed the suggestion that this was an administrative dismissal, since he said that a dismissal "is said to be administrative in very special circumstances, circumstances which raise a question as to either the employee's physical abili ty to perform his work or his imcompetence", and nothing of the kind was suggested here. Having thus dismissed all the arguments of the Bank, the Adjudicator had no difficulty concluding that the dismissal had been a flagrant injustice and should be compensated for in full.
I should mention, incidentally, that in deciding on the scope of the remedies to be imposed the Adjudicator forgot the agreement reached at the outset, and accepted by him, that only the question of whether the complaint was valid would be con sidered to begin with, and that of proper compen sation, if it arose, would be subject of a subsequent hearing. To the extent that it imposed the payment of an indemnity, therefore, the decision was not rendered in strict compliance with the rules of natural justice (Corporation Dicom v. Petit, judg ment dated November 21, 1984, Federal Court, Appeal Division, A-413-84, not yet reported; leave to appeal denied: [1985] 1 S.C.R. vii): in this respect it cannot stand. However, for the moment this Court is concerned with its findings as to the validity of the complaint.
Thus, in explaining his approach the Adjudica tor did dismiss the possibility of applying to the facts of the cast at bar concepts such as "conflict of interests" and "administrative dismissal", but he dealt with these points, incidentally and as a supplementary aspect, because he was required to do so by the argument of the Bank. The real basis of the position he adopted is contained entirely in his initial proposition, namely that apart from cases of physical or mental disability any dismissal of an employee not based on a reprehensible and wrongful act committed by the employee is unjust
within the meaning of section 61.5 of the Code and so subject to penalty. Is this proposition of law a valid one? If it is, then the reasoning is unassail able and the conclusion drawn from it by the Adjudicator can only be upheld, for all that remains is to weigh the evidence, with which this Court is not concerned. Further, I do not think that the Bank was ever so naive as to think that it could show the respondent had revealed the secu rity measures in effect at its branches or had otherwise contributed to commission of the robber ies (in any case, it should then have taken action in the criminal courts), and I take it that no one would suggest for a moment that the fact of living with a criminal is in itself a reprehensible act. On the other hand, if this initial legal proposition of the Adjudicator is not valid then the reasoning is in error and cannot as such support the conclusion. That is therefore the major question raised by this appeal.
It is commonplace that the introduction of the remedy pursuant to section 61.5 of the Code in 1978 was a very major step in the transformation undergone by labour law applicable to federal undertakings since the time it was still founded on purely liberal concepts based on the theory of freedom of contract. Certainly the employer's right to terminate the contract of an employee was already far from being unfettered (prior notice, severance pay) and the common law courts no longer hesitated to apply the theory of abuse of right to penalize the excessive use of the right of dismissal by an employer. However, once the sec tion 61.5 remedy was in place it was no longer possible, as it had been formerly, to treat the right of dismissal as being of the very essence of an indefinite contract of employment; it also was no longer possible to speak of freedom of contract in this connection, as the new legislation was said to be a matter of public policy' and as such unaffect ed by the language of the contract of employment.
1 As a consequence of subsection 28(1) [as am. by S.C. 1977-78, c. 27, s. 3], applicable to all the provisions of Part III of the Code (which includes section 61.6); the subsection reads:
28. (1) This Part and all regulations made under this Part apply notwithstanding any other law or any custom, contract or arrangement, but nothing in this Part shall be construed as affecting any rights or benefits of an employee under any law, custom, contract or arrangement that are more favourable to him than his rights or benefits under this Part.
Even more dramatic was the fact that not only could the employer no longer consider terminating its employee's contract at will, it might even in future be compelled to have an employee it did not want. Any unjustly dismissed employee (unless a member of management within the meaning of subsection 27(4)) now had a means of ensuring reinstatement in his or her employment in addition to full monetary compensation. The Act did not define the concept of unjust dismissal, but it was one not unknown to the ordinary courts of law and, it was undoubtedly argued, could be defined in practice. (See the comments of I. Christie in his bookEmployment Law in Canada, Toronto, But- terworths, 1980, pages 379 et seq and of C. G. Simmons in his paper The Experience of the Unjust Dismissal Section, under Section 61.5 in The Canada Labour Code 1978-1981, published by the Industrial Relations Centre of Queen's University, Kingston in 1981,)
As can be seen, the Adjudicator's initial proposi tion, the validity of which is at issue, takes a firm position on the content of this concept of unjust dismissal referred to in section 61.5. In his view, any dismissal not based on a reprehensible and wrongful act by the employee is unjust. If the section 61.5 remedy were only available in cases of disciplinary dismissals—as might at first sight be inferred from the use of the word "dismissal", which in current usage suggests initially (as does the French word "congédiement") the idea of a penalty, of being thrown out—the Adjudicator's proposition would be prima facie irrefutable. A person cannot be disciplined and punished for anything other than an act committed by that person himself and attributable to him. However, it is clear that practice and precedent have never seen it in this way. Since its inclusion in the Code, the section 61.5 remedy has been used by employees laid off on grounds other than discipli nary ones. The concepts of administrative dismis sal and conflict of interests discussed in the Adjudicator's decision were developed specifically in relation to complaints by employees dismissed on grounds other than disciplinary ones. As I
understand the decisions of the adjudicators, an "administrative dismissal" is a non-disciplinary dismissal which may be justified by the employer on the basis, among other things, of the employee's incompetence or physical or mental disability, and a "conflict of interests" has long been recognized and advanced as a reason for dismissal. I think it is now well established that any unilateral termina tion by an employer of the contract of employment binding him to his employee falls within section 61.5, the only exception being the lay-off of employees who have become redundant, which is expressly covered earlier in the Code. The full meaning of the Adjudicator's proposition can thus be seen: aside from cases of incompetence and disability, the fact that there has been no personal wrongful act by an employee (which in his opinion is even implicit in the concept of a conflict of interests) will suffice to make a dismissal wrongful and unjust. This is a proposition to which I cannot subscribe.
I find nothing in the Act to suggest that, by creating the section 61.5 remedy, Parliament intended to give an employee with one year's ser vice a right over his employment so absolute that it can almost be regarded as a right of ownership (since he can have himself reinstated), and the effect of which would be not only security of employment but the quasi-abolition of the employ er's rights and freedoms. I have no hesitation in saying that the new section 61.5 remedy left far behind it the traditional common law remedy and its abuse of right doctrine. The very right of dismissal has been completely altered to preclude arbitrary action by the employer and to ensure continuity of employment. Only a right of "just" dismissal now exists, and this certainly means dismissal based on an objective, real and substan tial cause, independent of caprice, convenience or purely personal disputes, entailing action taken exclusively to ensure the effective operation of the business; but I feel that going beyond that, as the Adjudicator did, is in the present state of the law without foundation and erroneous. It is undoubted ly a very difficult matter to justify dismissal under section 61.5, but in my view this can still be done outside cases of incompetence or disability or seri ous misconduct on the part of the employee.
Accordingly, the reasoning on the basis of which the Adjudicator refused to recognize that the dis missal could have been justified in the circum stances seems to me to be invalid because it is based on a false premise. It is true that his conclu sion might, in spite of everything, be the right one, and that in fact the justification relied on by the Bank could in itself be inconsistent with the requirements of section 61.5. The Adjudicator's error would then be without significance. How ever, I do not think that is the case. The Bank showed with the aid of expert testimony the prob lems which continuing the respondent's contract of employment would have caused for it and the risk that doing so represented for such an institution. The Adjudicator did recognize the validity of this evidence, but his approach to the matter prevented him from considering it. "I understand", he wrote at the end of his decision (page 37), "the problems which the Bank may face ... but .. . these prob lems must be dealt with by the Bank if it had nothing with which to charge the complainant." In my opinion the justification relied on by the Bank met the requirements of section 61.5. I do not see how it is possible to speak of a conflict of interests, as suggested by counsel for the Bank in their effort to bring their case within a recognized classifica tion. I think it is better to reserve the concept of a conflict of interests for a situation in which an employee engages in activities which are external and parallel to those he performs as part of his job, and which conflict or compete with the latter. However, I think one can speak of the loss by the employee of a characteristic or attribute which might reasonably be regarded as necessary for carrying out the employment, resulting in a loss of confidence by the employer such that ordinary employer-employee relations could not continue. I think it is clear from reading the Adjudicator's observations on the testimony heard that if his interpretation of the law had been what I regard as the right one, he would undoubtedly have recog nized that the objective, real and substantial cause required by section 61.5 was in fact present, and I do not think there is any need to return the case to him just to determine whether my impression is correct in this regard.
In my view this finding is conclusive. I know that it might well be said that, even if valid grounds existed for terminating the contract, the
Bank should have paid some compensation in lieu of prior notice. That is a question which might arise in a common law action based on the theory of abuse of right, or even on the respondent's contract of employment providing for three months' prior notice in the event of termination by the Bank without "good and sufficient reason" (a phrase which, connected expressly with the idea of prejudicial conduct, might be interpreted in the sense of fault—the contract is set out in the appeal record at pages 412 and 413). However, in an action like the one at bar based on section 61.5 of the Code, this question does not appear to be relevant as the powers of the Adjudicator to impose a penalty only exist in so far as he can determine that the dismissal itself was unjustified.
I therefore consider that the Court should allow the application at bar and set aside the decision of the Adjudicator, and that it should refer the matter back to be again decided by him on the basis that the applicant had a good reason for terminating the respondent's employment, and that therefore the dismissal of the latter in the circumstances was not unjust within the meaning of section 61.5 of the Code.
Appendix
UNJUST DISMISSAL
61.5 (1) Subject to subsections (2) and (3), any person
(a) who has completed twelve consecutive months of contin uous employment by an employer, and
(b) who is not a member of a group of employees subject to a collective agreement
may make a complaint in writing to an inspector if he has been dismissed and if he considers his dismissal to be unjust.
(2) Subject to subsection (2.1), a complaint under subsection (1) shall be made within ninety days from the date on which the person making the complaint was dismissed.
(2.1) Where the Minister is satisfied that
(a) a person referred to in subsection (1) made, within the time referred to in subsection (2), a complaint in writing referred to in subsection (1) to a government official believed by the person to have authority to deal with the complaint, and
(b) the government official in fact had no authority to deal with the complaint,
the Minister may extend the time referred to in subsection (2) for the making of the complaint under this section.
(3) No complaint shall be considered by an adjudicator under subsection (8) in respect of a person where
(a) the person has been laid off because of lack of work or because of the discontinuance of a function; or
(b) a procedure for redress has been provided elsewhere in or under this or any other Act of Parliament.
(4) Where an employer dismisses a person described in subsection (1), the person who was dismissed or any inspector may make a request in writing to the employer to provide him with a written statement giving the reasons for the dismissal, and any employer who receives such a request shall provide the person who made the request with such a statement within fifteen days after the request is made.
(5) On receipt of a complaint made under subsection (1), an inspector shall endeavour to assist the parties to the complaint to settle the complaint or cause another inspector to do so, and, where the complaint is not settled within such period as the inspector endeavouring to assist the parties considers to be reasonable in the circumstances, the inspector so endeavouring shall, on the written request of the person who made the complaint that the complaint be referred to an adjudicator under subsection (6),
(a) report to the Minister that he has not succeeded in assisting the parties in settling the complaint; and
(b) deliver to the Minister the complaint made under subsec tion (1), any written statement giving the reasons for the dismissal provided pursuant to subsection (4) and any other statements or documents he has that relate to the complaint.
(6) The Minister may, on receipt of a report pursuant to subsection (5), appoint any person he considers appropriate as an adjudicator to hear and adjudicate upon the complaint in respect of which the report was made, and refer the complaint to the adjudicator along with any written statement giving the reasons for the dismissal provided pursuant to subsection (4).
(7) An adjudicator to whom a complaint has been referred under subsection (6)
(a) shall consider the complaint within such time as the Governor in Council may by regulation prescribe;
(b) shall determine his own procedure, but shall give full opportunity to the parties to the complaint to present evi dence and make submissions to him and shall consider the information relating to the complaint referred to him under subsection (6); and
(c) has, in relation to any complaint before him, the powers conferred on the Canada Labour Relations Board, in relation to any proceeding before the Board, by paragraphs 118(a), (b) and (c).
(8) An adjudicator to whom a complaint has been referred under subsection (6) shall consider whether the dismissal of the person who made the complaint was unjust and shall render a decision thereon and send a copy of the decision with the reasons therefor to each party and to the Minister.
(9) Where an adjudicator decides pursuant to subsection (8) that a person has been unjustly dismissed, he may, by order, require the employer who dismissed him to
(a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;
(b) reinstate the person in his employ; and
(c) do any other like thing that it is equitable to require the employer to do in order to remedy or counteract any conse quence of the dismissal.
(10) Every order of an adjudicator appointed under subsec tion (6) is final and shall not be questioned or reviewed in any court.
(11) No order shall be made, process entered or proceeding taken in any court, whether by way of injunction, certiorari, prohibition, quo warranto or otherwise, to question, review, prohibit or restrain an adjudicator in any of his proceedings under this section.
(12) Any person affected by an order of an adjudicator under subsection (9), or the Minister on the request of any such person, may, after fourteen days from the date on which the order is made, or the date provided in it for compliance, whichever is the later date, file in the Federal Court of Canada a copy of the order, exclusive of the reasons therefor.
(13) On filing in the Federal Court of Canada under subsec tion (12), an order of an adjudicator shall be registered in the Court and, when registered, has the same force and effect, and all proceedings may be taken thereon, as if the order were a judgment obtained in that Court.
(13.1) The Governor in Council may make regulations for the purposes of this Division defining the absences 'from employment that shall be deemed not to have interrupted continuity of employment.
(14) No civil remedy of an employee against his employer is suspended or affected by this section.
(15) Section 45 applies for the purposes of this Division.
* * *
The following is the English version of the reasons for judgment rendered by
MACGUIGAN J.: This is a section 28 application to review and set aside a decision of a grievance adjudication tribunal ("the tribunal" or "the Adjudicator") pursuant to the Canada Labour Code. The Adjudicator held that a bank did not have the right to dismiss a managerial employee who was cohabiting with someone involved in ille gal activity contrary to the interests of the bank.
The respondent Jacqueline Chayer ("the respondent") was hired by the Canadian Imperial Bank of Commerce ("the applicant" or "the Bank") in 1974. At the time of her dismissal on
February 11, 1980 she was a managerial employee of the Bank, specifically an assistant administra tion supervisor in a Montréal branch of the Bank.
The respondent met Régis Beaulieu in 1976 and began cohabiting with him in November of that year. In April 1977 Beaulieu and the respondent became engaged. Their common domicile was interrupted for seventeen months: while Beaulieu served a term in prison, from May 1978 to March 1979, the respondent returned to her parents' home and did not resume cohabiting with him until October 1979. However, the respondent con tinued visiting Beaulieu while he was in prison.
Beaulieu's past was, to say the least, a che quered one: he was sentenced to ten months in prison for robbery committed on July 12, 1977 at a "Chicken Villa", and was also sentenced to seven days in prison for having eight marijuana ciga rettes in his possession on November 4, 1977; he was charged with having committed robbery on November 15, 1979 in a Steinberg supermarket, and was released on this charge at the preliminary inquiry for lack of evidence; at the time the respondent was dismissed, he had also been charged with a third robbery committed on November 23, 1979. The respondent furnished bail for Beaulieu and he was released; after the respondent was dismissed in spring 1980, Beaulieu was found guilty of the third robbery and sen tenced to fifteen months in prison.
In early 1980 two robberies occurred at the same branch of the Bank in St. Lambert, two weeks apart. Each time more than $6,000 was taken. In the first robbery on January 25, 1980 two Bank employees were wounded by shots from a sawed-off shotgun.
Some seven to eight minutes after the second robbery was committed on February 8, 1980, the police broke into the respondent's residence. They proceeded to arrest five suspects, including Beau- lieu, and to seize a revolver and a sawed-off shot gun. At the time of their arrest, the suspects were counting the money which they were about to divide. The respondent was told of the day's events
by two policemen when she returned to her apartment.
On February 11, 1980 the Bank demanded that the respondent resign, or she would be dismissed. The respondent rejected this ultimatum and was dismissed at once. The respondent filed a com plaint for unjust dismissal on March 7, 1980 with the federal Department of Labour, pursuant to subsection 61.5(1) of the Canada Labour Code. The complaint was referred to adjudication by the Minister of Labour pursuant to subsection 61.5(6) of the said Code. It is this decision by the Adjudicator, Mr. Boisvert, which is the subject of the application to review and set aside now before
the Court.
The decision by the Adjudicator was as follows:
I must thus consider whether the Complainant's dismissal was 'lust or unjust, and in so doing, I must ask myself what may constitute a just cause for dismissal within the meaning of the statute.
The concept of "just cause"
The concept of "just cause" is clearly defined by Professor Palmer in his work entitled Collective Arbitration in Canada, in which he tells us that "just cause" implies the necessity of the employee's individual responsibility. He has the following to say on this subject:
Central to the theory of just cause is the view that employees can only be disciplined or discharged for their own shortcom ings; an employer cannot make "examples" of employees by picking persons at random or, failing to find a specific culprit in a group of employees disciplining all of them.
As it is often difficult for an employer to determine culpabili ty with any accuracy, one can appreciate that this concept is often disregarded by them. However, such difficulty does not provide an excuse for an employer to avoid this stricture: employees who cannot be differentiated on a factual basis, cannot be differentiated in relation to discipline, even if this means wrong-doers go free. Thus, if a group produces poor work, the whole group cannot be disciplined, individual responsibility must be ascertained.
What this means is that labour law, like criminal law, enshrines the notion that an individual is not responsible for the actions of others. The following comments of Mr Jacques Fortin, in his Traité de droit criminel, therefore applies, in my opinion, to Canadian labour law:
Both common law and Canadian law recognize the principle of imputing the offending act to the individual. Thus, crimi nal responsibility is attributed to a person only for an act which he himself commits. The common law rule is set out in a judgment dating from 1730:
It is a point not to be disputed but that in criminal cases the principal is not answerable for the act of his deputy, as he is in civil cases; they must each answer for their own acts and stand or fall for their behavior.
I consider that in labour law, the complainant can be held responsible only for her own acts, and not for acts that she did not commit, acts committed by third parties. Just cause thus necessarily implies a personal action by the employee.
In this regard, I agree with the definition of just cause cited by the Complainant, a definition provided by the Ontario Court of Appeal in R C Arthurs, which reads as follows:
If an employee has been guilty of serious misconduct, habitu al neglect of duty, incompetence, or conduct incompatible with his duties, or prejudicial to the employer's business, or has been guilty of wilfull disobedience to the employer's orders in a matter of substance, the law recognizes the employer's right summarily to dismiss the delinquent employee.
I intend to begin by analysing the evidence in order to discover whether it shows that the Complainant personally committed an act of some sort which would justify her dismissal.
Analysis of the evidence
The evidence shows that the Complainant was an administra tive employee who, like any other employee in the bank, knew about the security measures to counter robberies, which accord ing to the testimony of experts are the main security concern of any bank. However, while the evidence shows that the Com plainant was hired in 1974, it does not show that during her period of employment, she ever informed anyone of one or more of the security measures known to her, which would surely have constituted an offence calling for punishment.
The evidence shows, then, that Beaulieu, in February 1980, had been sentenced only once for a robbery, and that he had a case pending before the courts. It does not show that the Complainant participated in these various offences in any manner. And I would point out that it was not until the spring of 1980 that Beaulieu was sentenced for the armed robbery of November 29, 1979, that is, after the Complainant was dis missed by the Respondent.
The evidence shows that Beaulieu committed two robberies in a branch of the Bank of Commerce, one toward the end of January and the other on February 8, 1980. It does not show that the Complainant was aware of these robberies prior to Beaulieu's arrest at the apartment which the couple shared. In short, with respect for the contrary opinion, the evidence does not show that in February 1980, the Complainant was living with an habitual bank robber, but rather with someone who had suddenly begun to rob banks, unbeknownst to the Complai nant. I see absolutely nothing that the Complainant did up to that point that would constitute a wrongful act.
While the Bank was entitled to require of the Complainant a relationship of absolute confidence in security matters, no
evidence was presented to the effect that she did anything to make herself unworthy of this confidence.
Can it be held that the way in which Beaulieu committed his robberies indicates that the Complainant gave him, even unin tentionally, confidential information security measures?
I should state at the outset that it is true, as the Respondent maintains, that the degree of evidence required in labour law is not the same as in criminal law, and that the preponderance of the evidence is - sufficient to prove the allegations that it has made against the Complainant. But this does not mean that the Respondent can be satisfied with suspicions. In labour law, evidence is evidence and a suspicion is a suspicion. In labour law, as in criminal law, a thousand suspicions can never consti tute valid evidence.
The Bank has presented evidence before me on the manner in which Beaulieu committed his crimes, but with respect for the contrary opinion, nothing conclusive can be drawn from this evidence to show that the Complainant even unintentionally gave him confidential information. The evidence cannot cause a logical mind to conclude reasonably that the Complainant gave Beaulieu, even unintentionally, any indication whatsoever as to the security measures in use at the Bank.
Thus, I truly cannot seriously deduce that the Complainant must have told Beaulieu that the branches were equipped with cameras from the mere fact that the latter committed a robbery in disguise. Nor can I deduce that she told him that the employees had instructions not to resist in the event of robbery, from the mere fact that Beaulieu fired shots. Nor can I deduce that she gave him confidential information from the mere fact that he attacked a branch which had never before been robbed, or again from the mere fact that he did not linger over the timed locks. All this information may have been acquired by looking over the premises in advance. While they may arouse certain suspicions with respect to the Complainant, they cannot constitute evidence worthy of the name, linking the Complai nant in any manner whatsoever to the planning of these crimes.
Nor can I draw any conclusion from the fact that during the robbery, Beaulieu remained at the door of the manager's office, that is, in a place where he could keep an eye on a control box signaling that the alarm had been set off, which constituted a means of determining when he should take flight. Witness Pierre Hainault, manager of the Bank's security department, states that this was a circumstance peculiar to this branch—a particular circumstance about which the Complainant would not normally have known and which she could not therefore have communicated to Beaulieu.
In addition, I certainly cannot take account of the fact that the Complainant borrowed $1,000.00 from the Bank during the holiday season in 1979, in order to uphold seriously the argu ment that she needed money and that this was a reason why she must have helped Beaulieu.
Finally, even if I give credence to the testimony of Captain Lambert, who states that Beaulieu told Detective Salvas that "Jacqueline told me to watch out, that I was being followed by the police", I cannot deduce solely from these words, reported out of their context, that the Complainant was giving her
support to Beaulieu's reprehensible actions. These words are as consistent with the Complainant advising Beaulieu that he ought to behave properly as with her advising him to take more care in committing his theft.
While the evidence tells me that the Complainant may have given confidential information to Beaulieu (and several factors listed by the witness Forgues applied to her), the same evidence does not enable me to conclude that she actually provided such information, even unintentionally. The evidence thus does not point to any wrongful act on the part of the Complainant.
Can I conclude that the relationship of confidence between the Bank and the Complainant was broken because of the existence of a conflict of interest?
The Bank is surely aware of the flimsiness of its argument, since it argues lastly, not that the Complainant committed a particular offence—that she disclosed, even unintentionally, confidential information to her living partner—but rather that she was in a conflict of interest situation merely because she was living with Beaulieu. It argues that the mere fact that an employee lives with someone who has committed a robbery places him in a situation in which he breaks the bond of confidence that binds him to his employer, without it being necessary to prove a specific instance of wrongdoing.
With respect for this opinion, it cannot be accepted. A conflict of interest can arise only from a specific action taken by an employee, an action which in itself may be considered as an instance of misconduct or wrongdoing on his part. It cannot, however, arise in the absence of an action on the part of an employee. It cannot arise from the action of a third party. This, moreover, is how Brown and Beatty define conflict of interest:
There are certain other forms of misconduct which, if proper ly proven, have been found to evidence a lack of trustworthi ness for which an employee may properly be disciplined or discharged. Thus, the unauthorized removal or use of an employer's confidential documents, where it is only reason able for the employee to assume the documents were confi dential, has been held by arbitrators to be dishonest conduct for which some discipline may properly be invoked. So too, where an employee accepts moneys from contractors with whom his employer does business, or purchases goods, at wholesale prices for his own personal use by using the company's name, he may be liable to disciplinary sanctions.
At the root of any conflict of interest, there is thus a wrongful act which an employee must have taken in relation to his employer. In the case before me, however much I sought the wrongful act, I was unable to find it. I cannot maintain that the Complainant's remaining with Beaulieu after his imprisonment in 1979 was a wrongful act, since she loved him and wanted to help him; this would deny the Complainant the right to lead, outside of work, the emotional life that seemed right to her; it would also deny that an individual who has served a prison term, and who has thus paid his debt to society, is entitled to resume a normal life.
Furthermore, to accept the Respondent's line of argument could lead to absurd situations. If it is true that the Complai nant was aware of the Bank's security measures, and if she
must be considered to be in a conflict of interest merely because she lived with an individual who had previously been found guilty of armed robbery, it would be necessary to apply the same reasoning to another employee whose son committed a robbery, and in that case, why not the employee whose cousin or close friend did so? This would amount to enshrining the principle of responsibility for the wrongdoing of others.
Moreover, if this line of argument were to be accepted with respect to robbery, why should it not be extended to other crimes, such as fraud, breaking and entering, etc? And why should it not apply to businesses and other institutions which also have confidential security measures, such as a jewelry business, for example? Clearly, such a line of reasoning could easily lead to inequity and injustice for an employee who, without any wrongdoing on his part, has friends or relatives who commit crimes.
Thus, if the Complainant did not commit any wrongful act, she cannot be in conflict of interest, merely because her living partner committed a wrongful act.
The Respondent has compared the Complainant's situation with that of a magistrate who cannot sit in a case involving one of his former clients, not because he would be biased, but because there is a possibility that he would be so. The compari son is a clever one, but it does not hold up under scrutiny. While it is true that a magistrate cannot sit in a case involving one of his relatives or former clients, this is because to do so would constitute misconduct on his part. Case law and statu tory law have established the principle that a magistrate cannot sit in such cases, not because justice will not be done, but because justice must be seen to be done. It is the fact of disobeying this rule of conduct which, for a magistrate, consti tutes misconduct. However, in the present case, the Complai nant committed no act that was unlawful or contrary to the law by remaining with Beaulieu, the man she loved. She perhaps put herself in a situation in which she could more easily commit a wrongful act by disclosing security measures known to her, but she did not commit a wrongful act if she did not disclose them.
While the Respondent is right in arguing, as the Court of Appeal recalled in Control Data Canada Limitée v Jean-Paul Lalancette, that the individual contract of employment is based on the relationship of confidence which must exist between employer and employee, and also in arguing that an employer may rid itself of an employee in whom it no longer has confidence, it is nevertheless necessary for the alleged severance of the bond of confidence to be based on legal and acceptable reasons, and on the actual actions of the employee. However, in the present case, the severance of the relationship of employ ment is based, not on the actions of the Complainant, but on those of the Complainant's living partner, and this severance is in my opinion unlawful. In short, the relationship of confidence that must exist between an employee and his employer must not be broken because of a mere whim on the employer's part; rather, any such severance must be based on an act or omission on the part of the employee.
The Respondent argues, however, that it would be unrealistic and unreasonable for me to rescind the Complainant's dismis-
sal, since the Bank is entitled to refuse to employ someone who is aware of its security measures and who lives with an individual who commits robberies. While a bank may refuse to hire someone who, in its opinion, represents a risk to its security, and while its right to refuse to hire is subject to no limitation, this is not the case where it wishes to dismiss an employee who enjoys the protection provided by statute. In the latter case, the bank's right is limited by the requirement of "just cause" for dismissal, and the Bank has failed to show "just cause".
I understand the problems that the Bank may encounter in being obliged to continue to employ an employee whose hus band or living partner has committed a robbery. But these problems are the price that must be paid in order to prevent dismissal from being an arbitrary matter. The Bank must endure these problems if it has no case against the Complainant.
Since the Complainant was unjustly dismissed, I must there fore determine what measures I consider just to compensate the harm caused her.
Corrective action sought
It is subsection (9) of section 61.5 of the Canada Labour Code which determines what order I can make against an employer in the event of unjust dismissal. This subsection reads as follows:
(9) Where an adjudicator decides pursuant to subsection (8) that a person has been unjustly dismissed, he may, by order, require the employer who dismissed him to
(a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;
(b) reinstate the person in his employ; and
(c) do any other like thing that is equitable to require the employer to do in order to remedy or counteract any conse quence of the dismissal.
I wish to state immediately that if the Complainant had asked to be reinstated in her position, I would have granted her request. Indeed, the only reason why I am not ordering rein statement is that such an action was not requested.
However, the Complainant was treated unjustly, and it would not be equitable for her to suffer any monetary loss because of the dismissal. Considering the injustice done to her, I therefore consider it necessary to order the Employer to compensate her fully for any loss of remuneration resulting from her unjust dismissal, and accordingly to provide for the obligation for the Bank to pay her damages equal to the remuneration of which she was deprived from the date of her dismissal until August 12, 1981.
Accordingly, I uphold the Complainant's complaint;
I find that she was dismissed without just and sufficient cause;
I rescind the dismissal;
I order the Employer to compensate her for the remuneration she lost, from the date of her dismissal until August 12, 1981 (date agreed upon by the parties, by consent, as representing
the end of any quantum), with deductions of course being made for any amounts of money that she earned from another employer during the same period, the whole bearing interest at the legal rate;
and with the consent of the parties, I reserve my jurisdiction to rule on any difficulty in determining the compensation provided for in the preceding paragraph.
The applicable legislation is contained in the Canada Labour Code, as follows:
UNJUST DISMISSAL
61.5 (1) Subject to subsections (2) and (3), any person
(a) who has completed twelve consecutive months of contin uous employment by an employer, and
(b) who is not a member of a group of employees subject to a collective agreement
may make a complaint in writing to an inspector if he has been dismissed and if he considers his dismissal to be unjust.
(5) On receipt of a complaint made under subsection (1), an inspector shall endeavour to assist the parties to the complaint to settle the complaint or cause another inspector to do so, and, where the complaint is not settled within such period as the inspector endeavouring to assist the parties considers to be reasonable in the circumstances, the inspector so endeavouring shall, on the written request of the person who made the complaint that the complaint be referred to an adjudicator under subsection (6),
(a) report to the Minister that he has not succeeded in assisting the parties in settling the complaint; and
(b) deliver to the Minister the complaint made under subsec tion (1), any written statement giving the reasons for the dismissal provided pursuant to subsection (4) and any other statements or documents he has that relate to the complaint.
(6) The Minister may, on receipt of a report pursuant to subsection (5), appoint any person he considers appropriate as an adjudicator to hear and adjudicate upon the complaint in respect of which the report was made, and refer the complaint to the adjudicator along with any written statement giving the reasons for the dismissal provided pursuant to subsection (4).
(7) An adjudicator to whom a complaint has been referred under subsection (6)
(a) shall consider the complaint within such time as the Governor in Council may by regulation prescribe;
(b) shall determine his own procedure, but shall give full opportunity to the parties to the complaint to present evi dence and make submissions to him and shall consider the information relating to the complaint referred to him under subsection (6); and
(c) has, in relation to any complaint before him, the powers conferred upon the Canada Labour Relations Board, in relation to any proceeding before the Board, by paragraphs 118(a), (b) and (c).
(8) An adjudicator to whom a complaint has been referred under subsection (6) shall consider whether the dismissal of the person who made the complaint was unjust and shall render a decision thereon and send a copy of the decision with the reasons therefor to each party and to the Minister.
(9) Where an adjudicator decides pursuant to subsection (8) that a person has been unjustly dismissed, he may, by order, require the employer who dismissed him to
(a) pay the person compensation not exceeding the amount of money that is equivalent to the remuneration that would, but for the dismissal, have been paid by the employer to the person;
(b) reinstate the person in his employ; and
(e) do any other like thing that it is equitable to require the employer to do in order to remedy or counteract any conse quence of the dismissal.
(10) Every order of an adjudicator appointed under subsec tion (6) is final and shall not be questioned or reviewed in any court.
122. (1) Subject to this Part, every order or decision of the Board is final and shall not be questioned or reviewed in any court, except in accordance with paragraph 28(1)(a) of the Federal Court Act.
The power of this Court to review and set aside is contained in subsection 28(1) of the Federal Court Act [R.S.C. 1970 (2nd Supp.), c. 10], which reads as follows:
28. (1) Notwithstanding section 18 or the provisions of any other Act, the Court of Appeal has jurisdiction to hear and determine an application to review and set aside a decision or order, other than a decision or order of an administrative nature not required by law to be made on a judicial or quasi-judicial basis, made by or in the course of proceedings before a federal board, commission or other tribunal, upon the ground that the board, commission or tribunal
(a) failed to observe a principle of natural justice or other wise acted beyond or refused to exercise its jurisdiction;
(b) erred in law in making its decision or order, whether or not the error appears on the face of the record; or
(e) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it.
There is a preliminary issue as to the effect of the privative clause in subsection 61.5(10) of the Canada Labour Code. Clearly, in the light of subsection 122(1) [as am. by S.C. 1977-78, c. 27, s. 43] of the Code, no decision of the Canada Labour Relations Board itself is reviewable by this Court except under paragraph 28(1)(a) of the Federal Court Act for failings with respect to natural justice, excess of jurisdiction or refusal to
exercise it. However, the respondents raised the question of whether the privative clause in subsec tion 61.5(10) of the Code might extend to adjudicators at least the same freedom from review under paragraphs 28(1)(b) and (c) that the Board possesses. This issue has already been decid ed to the contrary by this Court in Pioneer Grain Co. Ltd. v. Kraus, [1981] 2 F.C. 815 (C.A.).
It is immediately evident that the Adjudicator erred in law with respect to the remedy awarded. In Corporation Dicom v. Petit, No. A-413-84, this Court held on November 21, 1984 that an adjudicator who failed to hear the parties on the question of remedies infringed the audi alteram partem rule of natural justice, and that the matter had therefore to be returned to him on this issue. In the case at bar as well, the Adjudicator fell into the same trap: despite his explicit acknowledgment during the hearing of an agreement for further argument on remedies, if necessary after his deter mination of the substantive question (Appeal Book, volume III, page 384), he proceeded to award the remedy in his initial decision, namely eighteen months' salary, less what the respondent earned in alternative employment during the same period. For this important lapse alone, the matter must be returned to the Adjudicator.
On the substantive issue, the contract, which was entered into on July 22, 1974 and ratified anew by the respondent on September 13, 1976, was as follows:
In consideration of my being hired by the Canadian Imperial Bank of Commerce (the "Bank"), I do hereby solemnly pro mise, undertake and agree:
1. to act with honesty and loyalty ....
2. to preserve the most absolute secrecy regarding all the operations and affairs of the Bank ... .
8. that my employment may be terminated:
(d) by the Bank at any time during or after my probation, without prior notice or salary in view thereof, for any good and sufficient reason including, but without limiting the generality of the foregoing, conduct prejudicial to the inter ests and reputation of the Bank ....
The contractual provision in clause 8(d) author izes the dismissal without notice of an employee whose conduct is prejudicial to the interests and reputation of the Bank. The question of whether the respondent's conduct was prejudicial to the interests and reputation of the applicant is very similar to the larger question raised by the facts, namely whether the dimissal was for just cause and as such not subject to proceedings under sec tion 61.5 of the Code. It will be useful to examine these two questions together.
The general principle as to the misconduct that will constitute just cause for dismissal was well stated by Lord Esher in Pearce v. Foster (1886), 17 Q.B.D. 536 (C.A.), at page 539:
The rule of law is, that where a person has entered into the position of servant, if he does anything incompatible with the due or faithful discharge of his duty to his master, the latter has a right to dismiss him. The relation of master and servant implies necessarily that the servant shall be in a position to perform his duty duly and faithfully, and if by his own act he prevents himself from doing so, the master may dismiss him .... What circumstances will put a servant into the posi tion of not being able to perform, in a due manner, his duties, or of not being able to perform his duty in a faithful manner, it is impossible to enumerate. Innumerable circumstances have actually occurred which fall within that proposition, and innu merable other circumstances which never have yet occurred, will occur, which also will fall within the proposition.
Actual prejudice to the employer need not be proved. Potential harm is sufficient: Empey v. Coastal Towing Co. Ltd., [1977] 1 W.W.R. 673 (B.C.S.C.); Tozer v. Hutchison (1869), 12 N.B.R. 540 (C.A.). As it was put by Meldrum J. in Bursey v. Acadia Motors Ltd. (1980), 28 N.B.R. (2d) 361 (Q.B.), at page 369, varied in another respect on appeal (1982), 35 N.B.R. (2d) 587 (C.A.):
There is no evidence that defendant was in any way harmed by the potential conflict of interest. Nevertheless, in conflict of interest situations, the rule of Caesar's wife applies. It must not only be pure, it must be seen to be pure.
It is irrelevant that the employee's conduct was designed to protect only his own interest and not intended to injure that of his employer: Federal Supply and Cold Storage Co. of South Africa v. Angehrn & Piel (1910), 80 L.J.P.C. 1; Empey v. Coastal Towing Co. Ltd., supra.
In its argument the Bank invited this Court to conclude that the facts in the record showed that there was a conflict of interests between the respondent and the Bank. I feel that such a conclu sion is too restrictive: the only question raised by the case at bar is whether, to use the words of Lord Esher, supra, "he does anything incompat ible with the due or faithful discharge of his duty to his master", and there are an incalculable number of situations which can establish such incompatibility. It is irrelevant whether the facts of the case at bar fall within the ordinary limits of conflict of interests, since incompatibility with the respondent's duties to her employer will suffice.
Most of the applicable precedents are decisions by adjudicators. In Re Granby (Ville de) and Fraternité des Policiers de Granby Inc. (1981), 3 L.A.C. (3d) 443, an Adjudicator held that a disci plinary suspension was justified in circumstances in which a police officer had become involved in a social relationship with a woman who was the object of criminal charges in respect of which the grievor would in all likelihood serve as a principal witness for the prosecution. The Adjudicator left open the question whether in other circumstances a police officer's associating with a person who has a criminal record would constitute conduct incom patible with his position.
A decision by the British Industrial Tribunal dismissing a clerk's complaint of unjust dismissal is even more in point: Foot v. Eastern Counties Timber Co. Ltd., [ 1972] 1 I.R.L.R. 83. The employer carried on the business of an electrical contractor and the complainant handled pay and billing. The employer dismissed the complainant with two weeks' salary, in lieu of notice, when it learned that the complainant's husband had just opened an electrical business a short distance away. The Tribunal recognized that it was not good business for an employer to retain in its service the wife of a competitor who would have access to confidential information about her employer's business. According to the Industrial Tribunal, this situation of conflict was a good reason for the dismissal of the complainant and
she therefore had not been unjustly dismissed. The British Employment Appeal Tribunal came to the same conclusion in Skyrail Oceanic Ltd. v. Cole- man, [1980] I.C.R. 596 (set aside by the Court of Appeal on other grounds: [1981] I.C.R. 864), in which the employer had dismissed a ticket agent working for a travel agency solely on the ground that the employee had just married a man who had the same job with a rival travel agency.
Can cohabitation between man and woman ever constitute just cause for dismissal in Canada? The Supreme Court of Canada had to consider a simi lar issue recently in Caldwell et al. v. Stuart et al., [1984] 2 S.C.R. 603. A Catholic teacher in a Catholic school was not rehired for the following school year because she had married a divorced man in a civil ceremony contrary to Catholic teaching. Because the matter arose as an allega tion of discrimination based on material status and religion under provincial human rights legislation, the question was not whether the employee was dismissed for just cause but rather whether she had lost a bona fide qualification in respect of her occupation. McIntyre J. wrote for the Court (at pages 624-625):
It is my opinion that objectively viewed, having in mind the special nature and objectives of the school, the requirement of religious conformance including the acceptance and observance of the Church's rules regarding marriage is reasonably neces sary to assure the achievement of the objects of the school. It is my view ... that the requirement of conformance constitutes a bona fide qualification in respect of the occupation of a Cathol ic teacher employed in a Catholic school, the absence of which will deprive her of the protection ... of the Human Rights Code.
Although this decision does not in terms define just cause for dismissal to include a marriage relationship, it does have the effect of legitimizing dismissal for that reason on the special facts there in. In fact, McIntyre J. commented on the overlap (at page 622):
It could be that in many cases, the same conduct or characteris tic of an employee will both constitute reasonable cause for dismissal and have the effect of depriving the employee of a
bona fide qualification. To that extent the two concepts may overlap....
In Cindy Bosi v. Township of Michipicoten and K.P. Zurby (1983), 4 C.H.R.R. D/1252, where a married woman was refused employment as an account clerk with a municipality because her husband was also employed by the municipality as a police officer, Professor Martin L. Friedland, sitting as a board of inquiry, held that there was such substantial potential conflict of interest as to constitute marital status a bona fide occupational qualification and requirement, even if marital status as a prohibited ground of discrimination were taken to include not just marriage but mar riage to a particular person.
In my view the law can therefore be summarized in the following principle: marriage or cohabita tion with a particular person can, in some fact situations, create a just cause for dismissal; wheth er it does will depend on a close analysis of the whole fact situation and especially of the nature and requirements of the particular employment.
Turning to the facts of the instant case, I would agree, without deciding the point, that the Adjudicator was correct in finding that the notion of just cause implies the necessity of personal responsibility on the part of the employee:
I consider that in labour law, the complainant can be held responsible only for her own acts, and not for acts that she did not commit, acts committed by third parties. Just cause thus necessarily implies a personal action by the employee.
However, he went on to find that there was no imputable "act or negligence" on the part of the employee:
At the root of any conflict of interest, there is thus a wrongful act which an employee must have taken in relation to his employer. In the case before me, however much I sought the wrongful act, I was unable to find it. I cannot maintain that the Complainant's remaining with Beaulieu after his imprisonment in 1979 was a wrongful act, since she loved him and wanted to help him; this would deny the Complainant the right to lead, outside of work, the emotional life that seemed right to her; it would also deny that an individual who has served a prison term, and who has thus paid his debt to society, is entitled to resume a normal life.
However in the present case, the Complainant committed no act that was unlawful or contrary to the law by remaining with Beaulieu, the man she loved. She perhaps put herself in a situation in which she could more easily commit a wrongful act
by disclosing security measures known to her, but she did not commit a wrongful act if she did not disclose them. [My emphasis.]
It is clear from this passage that the Adjudica tor had an entirely mistaken view of the law. In his opinion, for just cause for dismissal to exist the respondent would have had herself to commit an act that is illegal or contrary to law. If that were the test, that would eliminate many conflict of interests situations. The true test of an employee's misconduct, however, is that stated by Lord Esher, supra: it applies to acts of the employee which are "incompatible with the due or faithful discharge of his duty to his master".
On the facts here, the employer is a Bank, and as such receives by way of deposit sums of money and other valuables for safe-keeping, which it must therefore go to extreme pains to protect from theft. The employee, who as an accountant is familiar with all of the Bank's security measures, takes up in November 1976 with a man who commits a robbery in July 1977. During his incarceration from May 1, 1978 to March 1, 1979, she comforts him in prison. Perhaps she has second thoughts about remaining with him, because it is more than eight months after his release before they resume cohabitation on October 19, 1979. Less than a month later, he is charged with robbery from Steinberg's on November 15, though he is released for want of evidence at his preliminary hearing on December 6. He is subsequently charged with the commission of another robbery on November 29, for which she acts as guarantor for his bail (and for which he was convicted in April 1980).
To top it all off, he then commits two armed robberies against another branch of her own Bank on January 25 and February 8, 1980. After the second robbery he is surprised by the police in their joint apartment dividing up his ill-gotten gains with his co-perpetrators. In addition to the money, the police find arms and ammunition.
Whether or not the respondent knew in advance of the robberies against her own Bank (and the Adjudicator has found that there is no evidence that she did), Beaulieu's use of their joint premises as a centre of operations would indicate that he was making small attempt to keep her uninvolved. In any event, at least by February 1980, her
continued cohabitation with Beaulieu placed her in a situation of incompatibility with her duties to her employer. Even if never carried out against her own Bank, Beaulieu's illegal activities were of such a nature as to constitute a standing threat to all financial institutions, her own included. As a key employee, she had direct knowledge of her own Bank's security arrangements and indirect knowl edge of those of other banks. In such a close association she might even unwittingly let slip a detail helpful to an alert criminal mind.
The Adjudicator's interpretation that Beaulieu was until 1980 a rehabilitated criminal ("who has served a prison term, and who has thus paid his debt to society") who then suddenly turned from Dr. Jekyll into Mr. Hyde ("who had suddenly begun to rob banks") is simply not credible. His criminality must be deemed to have been clearly visible to her and it was only the Adjudicator's idée fixe that misconduct requires an act contrary to law on the employee's part that prevented him from seeing the situation as it was. She betrayed her duty to her employer by continuing to associ ate with a person so apparently dedicated to play ing Robin Hood for his own benefit. Nothing more is required for incompatibility with the interests of her employer.
This conclusion is above all established by the respondent's obligations under the contract of employment itself: according to Lord James of Hereford in Clouston & Co., Ld. v. Corry, [1906] A.C. 122 (P.C.), at page 129:
... misconduct inconsistent with the fulfilment of the express or implied conditions of service will justify dismissal.
In the case at bar, she undertook to act with honesty and loyalty and to avoid any conduct prejudicial to the interests and reputation of the Bank. We have already seen that her conduct was prejudicial to the interests of the Bank; that it was prejudicial to the Bank's reputation requires no
proof. In these circumstances the Bank also had, under the contract, a right to terminate her employment without notice.
The events in this case took place before the advent of the Canadian Charter of Rights and Freedoms [being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.)] and the respondent made no argument based on freedom of association under paragraph 1(a) of the Canadian Bill of Rights [R.S.C. 1970, Appendix III].
I would therefore grant the application, set aside the decision of the Adjudicator and refer the matter back to the Adjudicator on the basis that, by placing herself in a situation of incompatibility with the interests of her employer, the respondent had provided just cause for her dismissal without notice.
LACOMBE J.: I concur.
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