Caimaw v. Paccar of Canada Ltd.

Caimaw v. Paccar of Canada Ltd.
Collection
Supreme Court Judgments
Date
1989-10-26
Report
[1989] 2 SCR 983
Case number
20174
Judges
Dickson, Robert George Brian; McIntyre, William Rogers; Lamer, Antonio; Wilson, Bertha; La Forest, Gérard V.; L'Heureux-Dubé, Claire; Sopinka, John
On appeal from
British Columbia
Subjects
Administrative law
Appeal
Notes
SCC Case Information: 20174
Decision Content
Caimaw v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983
Paccar of Canada Ltd. (Canadian
Kenworth Company Division) Appellant
v.
Canadian Association of Industrial,
Mechanical and Allied Workers, Local 14 Respondent
and
British Columbia Hydro & Power Authority Respondent
and
International Brotherhood of
Electrical Workers, Local 213 Respondent
and
Industrial Relations Council of British Columbia,
formerly the Labour Relations
Board of British Columbia Respondent
indexed as: caimaw v. paccar of canada ltd.
File No.: 20174.
1988: December 13; 1989: October 26.
Present: Dickson C.J. and McIntyre*, Lamer, Wilson, La Forest, L'Heureux‑Dubé and Sopinka JJ.
on appeal from the court of appeal for british columbia
Administrative law -- Judicial review -- Jurisdiction -- Curial deference -- Court overturning decision of labour tribunal on judicial review ‑‑ Determination of jurisdiction of court on judicial review to overturn labour tribunal -- Jurisdiction infringed if error in interpreting jurisdictional provisions or if decision patently unreasonable -- Whether or not labour tribunal erred in interpreting jurisdictional provisions -- Whether or not patently unreasonable error in performance of board's function -- Labour Code, R.S.B.C. 1979, c. 212, ss. 27, 33.
Appeals -- Standing -- Administrative tribunals -- Whether or not tribunals have standing in appeals from their own decisions.
CAIMAW and Paccar were parties to a collective agreement with a stated term extending to April 30, 1983. This collective agreement contained a renewal clause which provided for the contract's continuing from year to year unless notice to the contrary were given. The agreement also contained a termination clause which provided that the agreement would continue during negotiations and that negotiations would be discontinued on written notice by either party. During the course of the collective agreement, Paccar laid off a large number of employees and limited its activities to warehouse operations. The union was served with a notice to terminate and negotiations were conducted over six months but without success. Paccar notified the union that it was discontinuing negotiations and that it considered the agreement terminated in all respects except those required by the Labour Code and the Employment Standards Act. It then set out the terms and conditions which it was putting into effect. The employees continued to work after the date when these new conditions were unilaterally implemented.
CAIMAW alleged several violations of the Code and requested that the Industrial Relations Council make a determination as to whether a collective agreement was in full force and effect. A three‑member panel of the Board decided against the union. A five‑member panel reheard the application, along with another application between British Columbia Hydro & Power Authority and IBEW, and a consolidated decision in respect of both applications upheld the decisions of the original Boards, though for different reasons.
Both CAIMAW and IBEW petitioned the Supreme Court of British Columbia pursuant to the Judicial Review Procedure Act for an order quashing the decision of the review panel of the Labour Relations Board. The applications were granted and were upheld on appeal. Paccar appealed to this Court with leave. B.C. Hydro was named as a respondent but neither it nor the IBEW appeared before this Court or submitted factums.
At issue here was whether the Labour Relations Board decision, which permitted an employer to unilaterally alter terms and conditions of employment after the termination of a collective agreement, was patently unreasonable and therefore subject to review by this Court. A subsidiary issue concerned the standing before this Court of the Labour Relations Board.
Held (L'Heureux‑Dubé and Wilson JJ. dissenting): The appeal should be allowed.
Per Dickson C.J. and La Forest J.: The Labour Relations Board had jurisdiction to embark upon the specific inquiry as to whether the employer has the authority to unilaterally alter the terms and conditions of employment.
The first step in determining whether an administrative tribunal has exceeded its jurisdiction by answering a question of law in a patently unreasonable manner is to determine its jurisdiction. Section 27 is a direction to the Board simply as to the purposes and objects to which it should have regard. It is not a jurisdiction limiting provision entailing judicial review even if the Board should err in its interpretation or application. The effect of s. 33 was that it was for the Board to determine whether any particular decision accords with the purposes and objects of s. 27, provided its interpretation was not patently unreasonable.
Where, as here, an administrative tribunal is protected by a privative clause, its decisions should only be reviewed if that Board has either made an error in interpreting the provisions conferring jurisdiction on it, or has exceeded its jurisdiction by making a patently unreasonable error of law in the performance of its function. The tribunal has the right to make errors, even serious ones, provided it does not act in a manner so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review. The test for review is a "severe test". The courts accordingly must adopt a posture of curial deference. Mere disagreement with the result arrived at by the tribunal does not make that result "patently unreasonable". The courts must focus their inquiry on the existence of a rational basis for the decision of the tribunal, and not on their agreement with it. Here, the Board's result was not patently unreasonable; indeed, it was as reasonable as the alternative. It was not necessary to go beyond that.
The scheme of the Labour Code, requiring the union and the employer to bargain collectively as the expiry of a collective agreement approaches, left no room for the operation of common law principles. As long as the ongoing duty on the parties to bargain collectively and in good faith remained, then the tripartite relationship of union, employer and employee brought about by the Code displaced common law concepts. The termination of the collective agreement had no effect on the obligation of the parties to bargain in good faith imposed by s. 6.
The terms and conditions formerly contained in a collective agreement are to be presumed to continue to govern the relationship, absent circumstances that would imply otherwise. The alternative would be chaos. The termination clause, however, would be of little effect if the employer were denied the power to change the terms of employment on the expiry of the contract. Such a move would not terminate the contract in any real sense but rather would signal the commencement of a new bargaining session.
The Act did not expressly provide that the employer has the power contended for but it was not unreasonable for the Board to find that the power existed. Indeed, the power to change the terms of employment on expiry of an agreement can be inferred from the existence of provisions in the Code which limit the circumstances in which unilateral changes can be made. The power of unilateral alteration did not introduce any unfairness into the bargaining relationship.
The two statutory freeze periods provided the union protection when it would be particularly vulnerable to management initiatives designed to weaken or destabilize it. The employer is expressly prohibited from pursuing a course of action it would otherwise be able to pursue, subject of course to the unfair labour practice provisions of the Code. The Board's conclusion that what is not prohibited by either the wording or the policy of the statute is permitted was not an unreasonable approach.
The Industrial Relations Council has standing before this Court to make submissions not only explaining the record before the Court, but also to show that it had jurisdiction to embark upon the inquiry and that it has not lost that jurisdiction through a patently unreasonable interpretation of its powers.
Per Lamer and Sopinka JJ.: It is not always necessary for the reviewing court to ignore its own view of the merits of the decision under review. Reasonableness is not a quality that exists in isolation. Any adjudication upon the reasonableness of a decision must involve an evaluation of the merits which provides a reference point for making a relative decision.
Curial deference is most important in the review of specialist tribunals' decisions but it does not come into play until the court finds itself in disagreement with the tribunal. Only then is it necessary to consider whether the error (so found) is within or outside the boundaries of reasonableness. The test is a "severe test" but even here an appreciation of the merits is not irrelevant.
The Board's decision was consistent with the Labour Code and the collective agreement. The Code did not totally exclude the general law and accordingly was silent in respect of some matters, including the employer's actions here. No amount of liberal interpretation could fill any lacuna caused by that silence. No express statutory conditions were violated. The decision, moreover, was consistent with the contractual expectations of the parties, since the insertion of the termination clause would have been meaningless if the terms of the collective agreement were held to persist indefinitely, or until a new collective agreement is concluded.
Per Wilson J. (dissenting): The reasons of La Forest J. were agreed with as to the broad scope of the principle of curial deference to the decisions of administrative tribunals because of their special expertise and as to the interpretation given to s. 27 of the Labour Code. However, a decision of a Board which meets the "severe test" of being "patently unreasonable" is not protected by the principle of curial deference. Such decisions must be treated as decisions which the Board had no jurisdiction to make. They cannot be passed off as the product of special expertise or "policy choices" which are not subject to review by the courts.
A patently unreasonable decision is one which no reasonable Board applying its expertise could possibly have arrived at. To describe a Board's decision as a "policy choice" does not insulate it from review if the policy on which the choice is based is inconsistent with the policy of the legislation under which it purports to have been made. Key elements of the legislation here were the obligation to bargain in good faith and the maintenance of a balance in the bargaining power between the parties.
The policy choices available to the Board were: (1) to permit the employer to decide when negotiations had reached an impasse and to unilaterally impose new terms on its employees if an impasse had been reached, or (2) to permit the same terms and conditions which were the product of the earlier bargaining process to continue to apply in the event of an impasse until such time as the parties are in a strike/lock-out position. The first did nothing to promote the collective bargaining process which is the legislatively accredited means of achieving collective agreements and industrial peace. It was also incompatible with the employer's obligation to bargain in good faith. The second allowed the Code to be interpreted in a way which did not interfere with the balance of bargaining power between the parties. Neither did it create a new power in the union, undermine the collective bargaining process, nor compel the parties to "re‑enter a world which has ceased to exist".
The decision of the Board was "patently unreasonable" and constituted jurisdictional error. It was not a question of choosing between equally viable and reasonable "policy choices". One was completely consistent with the concept of freedom and equality of bargaining power between the parties and the paramount role of the collective bargaining process in labour dispute resolution. The other was completely inconsistent with and inimical to both.
Per L'Heureux‑Dubé J. (dissenting): The British Columbia Labour Relations Board had standing to make arguments relative as to both the applicable standard of review and the steps it followed in reaching its decision. The Board, however, committed jurisdictional error when it stated that an employer may unilaterally impose the terms of employment upon the termination of the collective agreement, subject only to the obligation to bargain in good faith.
The Board was initially empowered to embark upon this specific inquiry but exceeded its jurisdiction in carrying it out. Section 27 of the Labour Code expressed the fundamental objectives of the legislation. The Board's decision neither referred to s. 27 nor discussed the public interest or the development of effective industrial relations. This omission was crucial to the Board's coming to a patently unreasonable solution.
The Board's decision was fraught with consequence because it in effect promulgated a "mini‑Code" on the "rights and obligations" of employers and unions at that stage of the bargaining process. It was all the more necessary, therefore, that the Board address the arguments based on the development of harmonious labour relations. The courts must defer to the judgment of administrative tribunals in matters falling squarely within the area of their expertise. Here, however, there was no indication that the Board even considered the requirements of effective industrial relations and the purposes and objects expressed in s. 27.
Collective bargaining, which was indispensable to the development of "effective industrial regulations" required by s. 27, has three broad characteristics in the Canadian context. First, legislative policy postpones the exercise of the economic sanctions until all other attempts at an agreement have failed. Second, the use of an economic sanction in collective bargaining necessarily entails that a party will suffer some loss in having recourse to it. Bargaining is premised upon mutual compromise. And third, the existence of an economic sanction presupposes the availability of a countervailing sanction of proportionate impact.
The unilateral imposition of the terms of employment as recognized by the Board shared none of these three characteristics. First, the policy provided for no ban on the unilateral imposition of terms of employment in the early stages of negotiation. Such unilateral sanction could, theoretically, occur at any time following the termination of the previous collective agreement. Second, the employer would not be detrimentally affected if it were to decide to reduce the salaries and cut other employment benefits. Third, no sanction was available to the union to countervail the unilateral setting of terms since the imposition of terms could conceivably take place before the right to strike arose under the Labour Code. More importantly, unlike the strike and lock‑out, the unilateral imposition of the terms of employment would not necessarily pressure both parties into agreeing upon a settlement.
The unilateral imposition of terms of employment is a sanction that opens the door to a number of abuses of the process of collective negotiation. It focusses on the individual employees and forces them either to accept the lower terms or to stop working altogether and accordingly stands in a class by itself as an economic sanction which is inherently destructive of the freedom to engage in collective bargaining. This sanction strikes a fundamental blow to the freedom of employees to form themselves into a union and engage the employer in collective bargaining. The only foreseeable effect of this measure is to fuel uselessly the flames of the labour dispute. Section 27 of the Labour Code, however, is designed to protect the integrity of the bargaining process against possible abuses.
Section 27 emphasized sovereign role of the union in the bargaining process and s. 46 conferred exclusive bargaining authority on certified unions even after the collective agreement had expired. The Board had it turned its mind to the fundamental policies expressed s. 27, would have had no choice but to come to the conclusion that s. 46 prevented an employer, on the termination of a collective agreement, from unilaterally implementing new working conditions through direct communication with the employees.
It was "patently unreasonable" for the Board to find that the employer had this power; the decision of the British Columbia Court of Appeal was agreed with.
The Code provided for mechanisms allowing the Board to broaden the reach and scope of the proceedings before it. The first set of mechanisms involved procedural adjustments which could be brought to the adjudicative hearing. The second involved a more radical change in the nature of the proceedings. The Board was empowered to conduct full‑scale, public policy‑making hearings which would foster broad participation by the members of the labour relations community in proceedings involving issues of widespread interest. In a case like the present one, where a previous policy orientation is reversed, where the area concerned involves a void in the enabling statute, and where the question raised is of crucial importance to employers, unions and individual employees at large, the matter may more properly have been dealt with in a policy‑making hearing.
Cases Cited
By La Forest J.
Applied: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227; Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; considered: Cariboo College and Cariboo College Faculty Ass'n (1983), 4 CLRBR (NS) 320; McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 S.C.R. 718; Re Telegram Publishing Co. and Zwelling (1975), 67 D.L.R. (3d) 404; Northwestern Utilities Ltd. v. City of Edmonton, [1979] 1 S.C.R. 684; Bibeault v. McCaffrey, [1984] 1 S.C.R. 176; British Columbia Government Employees' Union v. Industrial Relations Council, British Columbia Court of Appeal, May 24, 1988, unreported; referred to: Hill v. Peter Gorman Ltd. (1957), 9 D.L.R. (2d) 124; U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Lorne W. Camozzi Co. v. International Union of Operating Engineers, Local 115 (1985), 68 B.C.L.R. 338; Reference Re Public Service Employee Relations Act (Alta.), [1987] 1 S.C.R. 313; Inter City Glass Co. v. Attorney General of British Columbia, British Columbia Supreme Court, January 24, 1986, unreported; Canadian Pacific Railway Co. v. Zambri, [1962] S.C.R. 609; International Association of Machinists and Aerospace Workers v. Air Canada, Canada Labour Relations Board, January 18, 1988, unreported; Canada Safeway Ltd. v. Retail, Wholesale and Department Store Union, Locals 454 and 480 (1985), 11 CLRBR (NS) 68; American Federation of Television and Radio Artists v. N.L.R.B., 395 F.2d 622 (1968); Atlas Metal Parts Co. v. N.L.R.B., 660 F.2d 304 (1981); American Ship Bldg. Co. v. Labor Board, 380 U.S. 300 (1965); N.L.R.B. v. Cone Mills Corp., 373 F.2d 595 (1967).
By Sopinka J.
Referred to: Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476; Goodyear Tire & Rubber Co. of Canada Ltd. v. T. Eaton Co., [1956] S.C.R. 610; Bakery and Confectionery Workers International Union of America Local No. 468 v. White Lunch Ltd., [1966] S.C.R. 282; RWDSU v. Dolphin Delivery Ltd., [1986] 2 S.C.R. 573.
By Wilson J. (dissenting)
Re Peterboro Lock Mfg. Co. (1954), 4 L.A.C. 1499.
By L'Heureux‑Dubé J. (dissenting)
Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997; Roncarelli v. Duplessis, [1959] S.C.R. 121; Smith & Rhuland Ltd v. The Queen, [1953] 2 S.C.R. 95; Tremblay v. Commission des relations de travail du Québec, [1967] S.C.R. 697; Wall and Redekop Corp. v. United Brotherhood of Carpenters and Joiners of America (1986), 5 B.C.L.R. (2d) 335 (S.C.), dismissing an application for judicial review from (1986), 86 C.L.L.C. 16,054, denying a reconsideration from (1985), 85 C.L.L.C. 16,050; U.E.S., local 298 v. Bibeault, [1988] 2 S.C.R. 1048; Canadian Air Line Pilots Association v. Air Canada, Montreal, Quebec (1977), 24 di 203; U.E.W. and DeVilbiss Ltd., [1976] 2 CLRBR 101; Local 155 of International Molders and Allied Workers Union v. National Labour Relations Board, 442 F.2d 742 (1971), conf. 442 F.2d 747; Cariboo College and Cariboo College Faculty Ass'n (1983), 4 CLRBR (NS) 320; Re Telegram Publishing Co. and Zwelling (1975), 67 D.L.R. (3d) 404; Syndicat catholique des employés de magasins de Québec Inc. v. Cie Paquet Ltée, [1959] S.C.R. 206; McGavin Toastmaster Ltd. v. Ainscough, [1976] 1 S.C.R. 718.
Statutes and Regulations Cited
British North America Act, 1867, s. 96.
Canada Labour Code, R.S.C., 1985, c. L‑2, ss. 50 , 89 .
Industrial Relations Act, R.S.N.B. 1973, c. I‑4, s. 35(2).
Judicial Review Procedure Act, R.S.B.C. 1979, c. 209.
Labour Act, R.S.P.E.I., c. L‑1, s. 23.
Labour Code, R.S.B.C. 1979, c. 212, ss. 6, 27(1), (2), 31, 32(1)(a), (b), (c), 33, 34(1)(d), (e), (g), (h), (2), 28, 36, 46(a), 51(1), 61(1)(c), 62, 63, 65, 79(2), 80, 81(3)(a), (b), 82(2).
Labour Code, R.S.Q. 1977, c. C‑27, s. 59.
Labour Code Amendment Act, 1977, S.B.C. 1977, c. 72, s. 27(1).
Labour Relations Act, R.S.M. 1987, c. L‑10, s. 10(4).
Labour Relations Act, R.S.O. 1980, c. 228, s. 79.
Labour Relations Act, S.N. 1977, c. 64, s. 74.
Labour Relations Code, R.S.A. 1988, c. L‑1.2, s. 145.
National Labour Relations Act, 29 U.S.C., ss. 8(a)(5), 9(a).
Public Utilities Board Act, R.S.A. 1970, c. 302, s. 65.
Trade Union Act, R.S.S. 1978, c. T‑17, s. 11(1)(m).
Trade Union Act, S.N.S. 1972, c. 19, s. 33.
Authors Cited
Arthurs, H. W., D. D. Carter and H. J. Glasbeek. Labour Law and Industrial Relations in Canada, 2nd ed. Toronto: Butterworths, 1984.
Carrothers, A. W. R., E. E. Palmer and W. B. Rayner. Collective Bargaining Law in Canada, 2nd ed. Toronto: Butterworths, 1986.
Galligan, D. J. Discretionary Powers: A Legal Study of Official Discretion. Oxford: Clarendon Press, 1986.
Murphy, T. H. "Impasse and the Duty to Bargain in Good Faith" (1977), 39 U. Pitt. L. Rev. 1.
Pépin, Gilles et Yves Ouellette. Principes de contentieux administratif, 2e éd. Cowansville, Quebec: Yvon Blais Inc., 1982.
Weiler, Paul. Reconcilable Differences. Toronto: Carswells, 1980.
APPEAL from a judgment of the British Columbia Court of Appeal (1986), 7 B.C.L.R. (2d) 80, 32 D.L.R. (4th) 523, dismissing appeal from a judgment of Meredith J., [1986] B.C.W.L.D. 2745, allowing an appeal from a reconsideration of the Labour Relations Board of British Columbia (1985), 10 CLRBR (NS) 355, upholding the decisions of the original Board (CAIMAW v. Paccar of Canada Ltd. (Canadian Kenworth Company Division) and IBEW v. British Columbia Hydro & Power Authority). Appeal allowed, Wilson and L'Heureux-Dubé JJ. dissenting.
D. M. M. Goldie, Q.C., and B. R. Grist, for the appellant.
Ian Donald, Q.C., and Bruce Laughton, for the respondent Canadian Association of Industrial, Mechanical and Allied Workers, Local 14.
No one appeared for the respondent British Columbia Hydro & Power Authority.
No one appeared for the respondent International Brotherhood of Electrical Workers, Local 213.
J. Stuart Clyne, Q.C., and Eugene C. Jamieson, for the respondent Industrial Relations Council of British Columbia.
//La Forest J.//
The judgment of Dickson C.J. and La Forest J. was delivered by
LA FOREST J. -- The narrow issue in this appeal is whether the decision of the respondent Labour Relations Board of British Columbia permitting an employer, after the termination of a collective agreement, to unilaterally alter terms and conditions of employment is patently unreasonable and therefore subject to review by this Court. A subsidiary issue concerns the standing before this Court of the Labour Relations Board.
Facts
The respondent, Canadian Association of Industrial, Mechanical and Allied Workers (Local 14) ("CAIMAW"), is the certified bargaining agent for the employees of the appellant Paccar of Canada Ltd. (Canadian Kenworth Division) ("Paccar"). CAIMAW and Paccar were parties to a collective agreement with a stated term extending from May 1, 1982 to April 30, 1983. Paccar had been engaged in the manufacture of trucks, but during the course of the collective agreement, it laid off a large number of employees and limited its activities to warehouse operations. Instead of employing three hundred and fifty people before the layoffs, it employed only ten thereafter.
The collective agreement contained a renewal and termination provision, the relevant parts of which read as follows:
21.01 This [a]greement shall be effective as and from May 1, 1982, to and including April 30, 1983, and shall continue thereafter from year to year unless written notice of contrary intention is given by either [p]arty to the other four (4) months prior to April 30, 1983, or any anniversary date thereafter.
. . .
21.03 In the event of a notice of termination, this [a]greement shall remain in full force and effect while negotiations are being carried on, it being agreed that negotiations shall be discontinued upon delivery of a written notice by either [p]arty.
On January 4, 1983, Paccar notified CAIMAW, in a document entitled "Notice to Terminate", that:
This is notice to terminate the [c]ollective [a]greement between the parties and to commence negotiations for a new agreement, pursuant to the terms of the agreement and the Labour Code of B.C. Please contact the undersigned to arrange a mutually acceptable time and place to meet.
The parties negotiated over the next six months, but without success. On June 29, 1983, Paccar wrote CAIMAW:
In accordance with Article 21.03 and in view of the impasse the parties have reached, this is the requisite notice to discontinue negotiations and that the Company considers the [c]ollective [a]greement terminated effective July 4, 1983. All terms and conditions of the [a]greement, including the COLA clause are cancelled except as noted below and/or required by the Labour Code and the Employment Standards Act.
Paccar then set out the terms and conditions which it would put into effect on July 4, 1983. The employees of Paccar have continued to work since that date.
CAIMAW then applied to the respondent Labour Relations Board (now the Industrial Relations Council) under s. 28 of the Labour Code, R.S.B.C. 1979, c. 212, (the "Code") alleging that Paccar had violated ss. 65, 79(2) and 82(2) of the Code, and requesting a determination under s. 34(1)(g) as to whether a collective agreement was in full force and effect. A three-member panel of the Board decided against the union. The union sought and was granted a re-hearing pursuant to s. 36 of the Code. At the re-hearing, the application was heard along with another application between British Columbia Hydro & Power Authority and the International Brotherhood of Electrical Workers, Local 213, (the "IBEW"), and a consolidated decision in respect of both applications was issued by a unanimous five-member panel of the Board, upholding, though for different reasons, the decisions of the original Boards.
Both CAIMAW and the IBEW petitioned the Supreme Court of British Columbia pursuant to the Judicial Review Procedure Act, R.S.B.C. 1979, c. 209, for an order quashing the decision of the review panel of the Labour Relations Board. Meredith J. granted the applications. Paccar and B.C. Hydro appealed to the British Columbia Court of Appeal, but the appeals were dismissed by a unanimous five-member panel of that court. Paccar appeals to this Court with leave. B.C. Hydro has been named as a respondent but neither it nor the IBEW appeared before this Court or submitted factums.
Decisions Below
Before the first Board, two issues required resolution. The first was whether Paccar had in fact terminated the collective agreement. The Board held, interpreting those portions of Article 21 set out above, that the employer had duly terminated the agreement in accordance with its terms. The issue that then arose was whether, in spite of the termination of the agreement, its terms necessarily bound Paccar and governed its relationship with its employees or whether Paccar had the authority to impose, unilaterally upon the employees in the bargaining unit, terms and conditions of employment different from those set out in the terminated agreement. The Board concluded in favour of the latter position. The essence of its reasoning is set out in the following passage:
We conclude that the employer and the trade union may unilaterally impose terms and conditions of employment to be "incorporated" into the individual contracts of employment which spring up on the termination of the collective agreement. The appropriate response by the employer or the trade union to unacceptable "new terms" proposed by the other is to lock out or strike. That is not to say that an employer has a free hand. Certainly the employer's behaviour will be limited by the unfair labour practice provisions of the Code (for example, Section 6 thereof) and by Section 46.
The Board concluded that changing the terms and conditions on which an employer will continue to employ its work-force after the expiry of a collective agreement did not violate the exclusive bargaining authority given to the union by s. 46 of the Code. It therefore dismissed the complaint.
The re-hearing panel gave extensive, considered reasons and upheld the decision of the original Board, though for different reasons. Before the re-hearing panel, the unions made two arguments in support of the proposition that the earlier decision was inconsistent with the law and policy under the Labour Code. The first argument was premised on the view that when a collective agreement expires, individual contracts of employment between the employer and the employee resume operation, and that in accordance with the principles of employment law, those contracts cannot be altered except by agreement; see Hill v. Peter Gorman Ltd. (1957), 9 D.L.R. (2d) 124 (Ont. C.A.) In the present case, it cannot be said that the employees either expressly or impliedly accepted the varied terms.
The second argument was based on the earlier decision of the Labour Relations Board in Cariboo College and Cariboo College Faculty Ass'n (1983), 4 CLRBR (NS) 320, and on s. 46(a) of the Labour Code. That section gives the union the exclusive authority to bargain collectively for the bargaining unit, and to bind the employees by collective agreement. The union argued that the effect of s. 46(a) was to preclude the employer from unilaterally altering terms of employment without the agreement of the union.
The Labour Relations Board decided against the union on both arguments. In doing so, the Board found it useful to examine the extensive American experience, though it did not blindly follow it. It held that on termination of a collective agreement, individual contracts of employment do not revive. They stated:
In light of the Supreme Court of Canada's decision in McGavin Toastmaster Ltd., [[1976] 1 S.C.R. 718], and Chief Justice Laskin's above-quoted comments, we have concluded that it is no longer appropriate to speak of individual contracts of employment and common law principles flowing therefrom in respect of an employer-employee relationship which is governed by the Labour Code. Such contracts and principles are based on individual relationships between employer and employee, whereas the Labour Code and other similar labour relations legislation is premised on a collective relationship between an employer and his employees, with individual dealings between employer and employee being prohibited.
. . .
We are of the view that the comments of Chief Justice Laskin concerning the inapplicability of individual contracts of employment and the common law apply regardless of whether a collective agreement is in force. This conclusion flows from the fundamental change brought about by the certification of a trade union to represent a group of employees in a bargaining unit. Once certified, that union has the exclusive authority to bargain on behalf of and bind the employees in the unit. The individual employee has no authority to bargain on his own behalf whether a collective agreement is in force or not. In these circumstances, it does not make sense to speak of individual contracts of employment at any time. Individual employees may no longer make contracts regarding terms and conditions of employment; only the trade union may. Further, it no longer makes sense to speak of the common law. The collective bargaining relationship is governed by the provisions of the Labour Code, not the common law.
The Board then turned to the second argument based on s. 46(a) and said:
Having given this matter serious consideration, we have concluded that Section 46(a) of the Labour Code does not prevent an employer from making unilateral alterations to terms and conditions of employment after the expiry of the collective agreement and after he has sought to negotiate those alterations with the union and the union has rejected them.
In doing so, the Board explicitly disagreed with the decision in Cariboo College, supra. The Board concluded:
After the expiry of the collective agreement, no unilateral alterations to terms and conditions of employment may be made by an employer unless they are done so in compliance with his duty to bargain in good faith with the union. Further, we wish to make it clear that the fact that an employer has made unilateral alterations to his employees' terms and conditions of employment does not extinguish his obligation to continue to bargain in good faith with the trade union and make every reasonable effort to conclude a collective agreement.
In the period after the expiry of the collective agreement, where the employer continues to operate and the employees continue to work, it will be implied that the terms and conditions of employment for the employees will continue to be the same as those contained in the just expired collective agreement. This conclusion flows from the scheme of the Labour Code as a whole, but in particular, from the duty to bargain in good faith which limits the "when" and "how" of unilateral changes to terms and conditions of employment. It is that scheme, and, in particular, the limits on unilateral action prescribed by the duty to bargain in good faith which requires the initial maintenance of the status quo and the resulting implication of the terms and conditions of employment from the just expired collective agreement.
In the result, the union's complaint was dismissed.
Meredith J. allowed the application to quash. His reasons are brief and not entirely clear. They begin by saying:
I take it that counsel for the employers and the unions agree with me that at law, labour or otherwise, the employers in these cases have no authority to make unilateral alterations in terms and conditions of employment at any time.
That agreement, if it ever existed, did not survive into this Court. Whether an employer has the asserted authority was strongly debated before us. The essence of Meredith J.'s reasoning appears to be that employment necessarily involves an agreement. Agreement and unilateral alteration are each other's antithesis. As a result, the Board was "wrong" in concluding that there had been unilateral alterations at all, and so the matter was remitted back to the Labour Relations Board for further consideration.
The Court of Appeal dismissed the appeal from that order. It held that the common law, and more particularly basic contract law, had not been ousted by the Labour Code and applied not only to individual contracts of employment but also to collective agreements. The court held that terms could not be unilaterally imposed by an employer. Seaton J.A. said:
No foundation is given for the statement that "an employer has the authority under the Labour Code to make unilateral alterations . . .". No section says that; nor does any imply it. The Code as a whole seeks stability resulting from agreement. This new power creates instability resulting from unilateral action.
The Court of Appeal rejected all reliance on the American authorities. These, it thought, were concerned with the issue of whether unilateral changes constituted a failure to bargain in good faith, an argument the unions had abandoned in the present case at the opening of the original Board hearing, or alternatively dealt with changes favourable to the employees, which is unlike the case at bar. As the Court of Appeal was of the view that the three panels of the Labour Relations Board were wrong in finding that an employer had the authority to unilaterally alter terms and conditions of employment after the expiry of the collective agreement, the court, in the last line of its decision, held that to find such a power in the employer was patently unreasonable.
Analysis
In oral argument before this Court, counsel for CAIMAW conceded that the Labour Relations Board had jurisdiction to embark upon the specific inquiry as to whether the employer has the authority to alter unilaterally the terms and conditions of employment. He submitted, however, that the Labour Relations Board lost jurisdiction by coming to the conclusion that that right exists without having any rational basis for so determining. In finding such a right, he submitted, the Labour Relations Board went beyond making a serious error within its jurisdiction and into the realm of patently unreasonable errors.
The first step in determining whether an administrative tribunal has exceeded its jurisdiction by answering a question of law in a patently unreasonable manner is to determine its jurisdiction. "At this stage, the Court examines not only the wording of the enactment conferring jurisdiction on the administrative tribunal, but the purpose of the statute creating the tribunal, the reason for its existence, the area of expertise of its members and the nature of the problem before the tribunal"; see U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048, at p. 1088.
The Labour Relations Board derives its authority from Part II of the Labour Code, particularly ss. 27 and 31 to 34. It is useful to set out these provisions. They read:
27. (1) The board, having regard to the public interest as well as the rights and obligations of parties before it, may exercise its powers and shall perform the duties conferred or imposed on it under this Act so as to develop effective industrial relations in the interest of achieving or maintaining good working conditions and the well being of the public. For those purposes, the board shall have regard to the following purposes and objects:
(a)securing and maintaining industrial peace, and furthering harmonious relations between employers and employees;
(b)improving the practices and procedures of collective bargaining between employers and trade unions as the freely chosen representatives of employees; and
(c)promoting conditions favourable to the orderly and constructive settlement of disputes between employers and employees or their freely chosen trade unions.
(2) The board may formulate general guidelines to further the operation of this Act; but the board is not bound by those guidelines in the exercise of its powers or the performance of its duties.
. . .
31. Except as provided in this Act, the board has and shall exercise exclusive jurisdiction to hear and determine an appl