Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771

Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771
Collection
Supreme Court Judgments
Date
2005-11-24
Neutral citation
2005 SCC 70
Report
[2005] 3 SCR 425
Case number
30090
Judges
McLachlin, Beverley; Major, John C.; Binnie, William Ian Corneil; LeBel, Louis; Deschamps, Marie; Abella, Rosalie Silberman; Charron, Louise
On appeal from
Saskatchewan
Subjects
Labour law
Notes
SCC Case Information: 30090
Decision Content
SUPREME COURT OF CANADA
Citation: Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771, [2005] 3 S.C.R. 425, 2005 SCC 70
Date: 20051124
Docket: 30090
Between:
Her Majesty The Queen ex rel. Linda Merk
Appellant
and
International Association of Bridge, Structural,
Ornamental and Reinforcing Iron Workers, Local 771
Respondent
Coram: McLachlin C.J. and Major, Binnie, LeBel, Deschamps, Abella and Charron JJ.
Reasons for Judgment:
(paras. 1 to 48)
Dissenting reasons:
(paras. 49 to 61)
Binnie J. (McLachlin C.J. and Major, LeBel, Abella and Charron JJ. concurring)
Deschamps J.
______________________________
Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771, [2005] 3 S.C.R. 425, 2005 SCC 70
Her Majesty The Queen ex rel. Linda Merk Appellant
v.
International Association of Bridge, Structural,
Ornamental and Reinforcing Iron Workers, Local 771 Respondent
Indexed as: Merk v. International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers, Local 771
Neutral citation: 2005 SCC 70.
File No.: 30090.
2005: February 10; 2005: November 24.
Present: McLachlin C.J. and Major, Binnie, LeBel, Deschamps, Abella and Charron JJ.
on appeal from the court of appeal for saskatchewan
Labour law — Employee protection — Whistleblower — Provincial legislation providing that no employer can discharge employee who “has reported . . . to a lawful authority any activity that is or is likely to result in an offence” — Employee fired for reporting to union officials alleged financial abuse by supervisors — Whether “lawful authority” limited to persons capable of exercising authority with respect to offences — The Labour Standards Act, R.S.S. 1978, c. L‑1, s. 74.
The appellant, M alleges that she was fired as bookkeeper and office manager of the respondent trade union because she blew the whistle by informing International Union of Iron Workers representatives of alleged financial misconduct committed by her immediate supervisors at Local 771. Under s. 74(1)(a) of the Saskatchewan Labour Standards Act, no employer can discharge an employee because the employee “has reported . . . to a lawful authority any activity that is or is likely to result in an offence”. While the trial judge was satisfied that the financial misconduct amounted to “an offence” and that M was terminated because she reported it, she nevertheless concluded that M had not complained to a “lawful authority”. In her view the expression “lawful authority” should be limited to a person or institution authorized by law to deal with the activity as an offence and did not include employers. Both the summary conviction appeal judge and the majority of the Court of Appeal agreed with the interpretation of “lawful authority” adopted by the trial judge.
Held (Deschamps J. dissenting): The appeal should be allowed and a conviction entered.
Per McLachlin C.J. and Major, Binnie, LeBel, Abella and Charron JJ.: The expression “lawful authority” in s. 74 of The Labour Standards Act includes not only the police or other agents of the state having authority to deal with the activity complained of “as an offence”, but also individuals within the employer organization who exercise lawful authority over the employee(s) complained about, or over the activity that is or is likely to result in the offence. This interpretation of s. 74 flows from the plain meaning of the expression “lawful authority” and is consistent with its purpose and context. If the legislature had wished to limit the scope of s. 74 to complaints to a “public authority” instead of a “lawful authority” it would have said so. [3] [38]
The plain meaning of s. 74 is reinforced by the labour relations context. Whistleblower laws, such as s. 74, seek to reconcile an employee’s duty of loyalty to his or her employer with the public interest in the suppression of unlawful activity. The employees’ duty of loyalty and the public’s interest in whistleblowing is best reconciled with the “up the ladder” approach, i.e. protecting employees who first blow the whistle to the boss or other persons inside the employer organization who have the “lawful authority” to deal with the problem. The legislature wanted a workplace free of unlawful activity but it did not specify prosecution as the only or even the preferred method of bringing about that result. By withholding whistleblower protection unless and until the employee goes “outside” to the enforcement authorities of the state, the Court of Appeal’s narrow interpretation of s. 74 would discourage the internal resolution of alleged misconduct. Failure by whistleblowing employees to “try to resolve the matter internally” is condemned by courts and labour arbitrators as prima facie disloyal and inappropriate conduct. There is nothing in s. 74 or surrounding context to suggest that the Saskatchewan legislature in 1994 intended to expose “loyal” employees to employer retaliation without a remedy. [16] [19] [23‑26] [36]
M pursued an “up the ladder” reporting approach. Based on the trial judge’s findings, M was discharged because she reported to a lawful authority (the International Union of Iron Workers) the financial misconduct of her supervisors. The alleged misconduct was an “activity that is or is likely to result in an offence” within the meaning of s. 74. On a correct interpretation of “lawful authority”, the union’s dismissal of M violated s. 74(1)(a) of The Labour Standards Act. [42] [48]
Per Deschamps J. (dissenting): The wording of s. 74 and its context do not indicate that the legislature intended to extend protection to an employee who reports a suspected wrongdoing within an organization. Broadening the definition of “lawful authority” to include employers is therefore inconsistent with this Court’s approach to statutory interpretation and the plain meaning of the provision. “Lawful authority”, as used in s. 74, can only be understood to mean persons or entities with the authority to enforce federal and provincial statutes. Since there is a rational basis for the external reporting requirement, a court must not second‑guess the legislature’s decisions about how to formulate effective labour policy. [51] [54] [57]
Cases Cited
By Binnie J.
Referred to: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; Kolodziejski v. Auto Electric Service Ltd. (1999), 177 Sask. R. 197; Re Ministry of Attorney‑General, Corrections Branch and British Columbia Government Employees’ Union (1981), 3 L.A.C. (3d) 140; Haydon v. Canada, [2001] 2 F.C. 82; Read v. Canada (Attorney General) (2005), 30 Admin. L.R. (4th) 218, 2005 FC 798; Re Simon Fraser University and Association of University and College Employees, Local 2 (1985), 18 L.A.C. (3d) 361; Forgie and Treasury Board (Immigration Appeal Board), [1986] C.P.S.S.R.B. No. 310 (QL); Re Treasury Board (Employment & Immigration) and Quigley (1987), 31 L.A.C. (3d) 156; Newfoundland and Labrador Nurses’ Union v. Health Care Corp. of St. John’s, [2001] Nfld. L.A.A. No. 1 (QL); R. v. Wust, [2000] 1 S.C.R. 455, 2000 SCC 18; R. v. McIntosh, [1995] 1 S.C.R. 686; R. v. Hasselwander, [1993] 2 S.C.R. 398; R. v. Goulis (1981), 125 D.L.R. (3d) 137.
By Deschamps J. (dissenting)
Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42; R. v. B. (G.), [1990] 2 S.C.R. 57; R. v. Morin, [1992] 3 S.C.R. 286.
Statutes and Regulations Cited
Act respecting labour standards, R.S.Q., c. N‑1.1, s. 122.
Criminal Code, R.S.C. 1985, c. C‑46, ss. 40 , 279 , 294 , 369 , 425.1 .
Election Act, R.S.A. 2000, c. E‑1, s. 161.
Employment Rights Act 1996 (U.K.), 1996, c. 18, s. 43C(1)(a) [am. 1998, c. 23, s. 1].
Employment Standards Act, R.S.B.C. 1996, c. 113, s. 83.
Employment Standards Act, R.S.P.E.I. 1988, c. E‑6.2, s. 35.
Employment Standards Act, R.S.Y. 2002, c. 72, s. 108.
Employment Standards Act, S.N.B. 1982, c. E‑7.2, s. 28.
Employment Standards Act, 2000, S.O. 2000, c. 41, s. 74.
Employment Standards Code, R.S.A. 2000, c. E‑9, s. 125.
Employment Standards Code, S.M. 1998, c. 29, s. 133.
Federal‑Provincial Agreements Act, R.S.S. 1978, c. F‑13, s. 9.
Forest and Range Practices Act, S.B.C. 2002, c. 69, s. 58.
Highway Traffic Act, R.S.N.L. 1990, c. H‑3, s. 109.
Interpretation Act, 1995, S.S. 1995, c. I‑11.2, ss. 10, 36.
Labour Standards Act, R.S.N.L. 1990, c. L‑2, s. 78.
Labour Standards Act, R.S.N.W.T. 1988, c. L‑1, s. 67.1.
Labour Standards Act, R.S.S. 1978, c. L‑1, s. 74 [am. 1994, c. 39, s. 41].
Labour Standards Act, 1969, S.S. 1969, c. 24, s. 64.
Labour Standards Act (Nunavut), R.S.N.W.T. 1988, c. L‑1, s. 67.1.
Labour Standards Amendment Act, 2005, S.S. 2005, c. 16, s. 8.
Labour Standards Code, R.S.N.S. 1989, c. 246, s. 30.
Mental Health Act, R.S.N.B. 1973, c. M‑10, s. 1(1) “nearest relative”.
Mental Health Services Act, S.S. 1984‑85‑86, c. M‑13.1, s. 28.2(1).
Mines and Minerals Act, S.M. 1991‑92, c. 9, s. 232(1).
Privacy Act, R.S.N.L. 1990, c. P‑22, s. 4.
.Privacy Act, R.S.S. 1978, c. P‑24, s. 3.
Protected Disclosures Act 2000 (N.Z.), 2000, No. 7, s. 7.
International Documents
European Communities. Commission Decision 99/352 of 28 April 1999 establishing the European Anti‑fraud Office (OLAF), [1999] O.J. L. 136/20, art. 2.
European Communities. Council Decision 99/394 of 25 May 1999 concerning the terms and conditions for internal investigations in relation to the prevention of fraud, corruption and any illegal activity detrimental to the Communities’ interests, [1999] O.J. L. 149/36.
European Communities. Staff Regulations of officials of the European Communities, [1968] O.J. L. 56/1, arts. 22a and 22b [added by Council Regulation 723/2004 of 22 March 2004 amending the Staff Regulations of officials of the European Communities and the Conditions of Employment of other servants of the European Communities, [2004] O.J. L. 124/1].
Authors Cited
Bennion, Francis Alan Roscoe. Statutory Interpretation: A Code, 4th ed. London: Butterworths, 2002.
Callahan, Elletta Sangrey, Terry Morehead Dworkin and David Lewis. “Whistleblowing: Australian, U.K., and U.S. Approaches to Disclosure in the Public Interest” (2004), 44 Va. J. Int’l L. 879.
Côté, Pierre‑André. The Interpretation of Legislation in Canada, 3rd ed. Scarborough, Ont.: Carswell, 2000.
Driedger, Elmer A. Construction of Statutes, 2nd ed. Toronto: Butterworths, 1983.
Dubin, Charles L., and John Terry. Whistleblowing Study. Study commissioned by the Competition Bureau. Ottawa: Industry Canada, 1997.
Graham, Randal N. Statutory Interpretation: Theory and Practice. Toronto: Emond Montgomery, 2001.
Laskin, Bora. “The Function of the Law” (1973), 11 Alta. L. Rev. 118.
Saskatchewan. Legislative Assembly. Debates and Proceedings (Hansard), 4th Sess., 22nd Leg., April 22, 1994, p. 1785.
Sullivan, Ruth. Sullivan and Driedger on the Construction of Statutes, 4th ed. Markham, Ont.: Butterworths, 2002.
APPEAL from a judgment of the Saskatchewan Court of Appeal (Tallis, Cameron and Gerwing JJ.A.) (2003), 238 Sask. R. 234, 305 W.A.C. 234, 233 D.L.R. (4th) 61, 28 C.C.E.L. (3d) 179, [2004] 7 W.W.R. 290, 2004 CLLC ¶210‑005, [2003] S.J. No. 640 (QL), 2003 SKCA 103, reversing a judgment of Ball J. (2003), 229 Sask. R. 37, [2003] 6 W.W.R. 746, 2003 CLLC ¶220‑045, [2003] S.J. No. 15 (QL), 2003 SKQB 9, reversing a decision of McMurtry Prov. Ct. J., [2002] S.J. No. 555 (QL), 2002 SKPC 78. Appeal allowed, Deschamps J. dissenting.
Roger J. F. Lepage, Kerri A. Froc and Alison Mitchell, for the appellant.
Roderick M. Gillies, for the respondent.
The judgment of McLachlin C.J. and Major, Binnie, LeBel, Abella and Charron JJ. was delivered by
1 Binnie J. _ In this case, the respondent trade union seeks to narrow the protection given to employees under the Saskatchewan “whistleblower” legislation contained in s. 74 of The Labour Standards Act, R.S.S. 1978, c. L-1 (as am. S.S. 1994, c. 39, s. 41). The somewhat unusual situation of a trade union seeking a dilution rather than an expansion of employee rights arises from the fact that the respondent union is itself being prosecuted by one of its own employees, Linda Merk.
2 Merk alleges that she was fired as bookkeeper and office manager of Local 771 because she blew the whistle on alleged financial abuses committed by her immediate supervisors, the president of the local, Charles Gumulcak, and its business manager, Bert Royer.
3 I agree with Cameron J.A., dissenting in the Saskatchewan Court of Appeal, that Linda Merk’s letter to the General President of the International Union of Iron Workers that “blew the whistle” on these alleged financial abuses was a complaint “to a lawful authority” within the meaning of the Act and brought Merk within the Act’s protection. The plain meaning of “lawful authority” includes those who exercise authority in both the private and public context. If the legislature had wished to limit the scope of s. 74 to complaints to a “public authority”, it would have said so. The correctness of the broader interpretation is reinforced by the purpose and context of s. 74, as will be seen. Based on the trial judge’s findings of fact, the union’s dismissal of Merk violated the Act. The appeal must be allowed and a conviction entered.
I. Facts
4 In the fall of 2000, Bert Royer received a Visa credit card for union expenses. Shortly thereafter, Merk realized that Royer was double charging expenses by putting them on his Visa card (which was paid directly by Local 771) despite already having received advances for the same expenses, or claiming reimbursement for the same amount as if the expenses had been paid from his own pocket. The trial judge found that in the result union funds were misappropriated. For example, Royer received a hotel advance for travel September 6-10, 2000, of $1,099.40. His actual hotel expense was $917.81. There was no evidence of repayment to the union. On October 28, 2000, he received $154.10 as an advance for hotel expenses. He then charged $162.64 on the union Visa to cover his hotel expense. There is no evidence of repayment. On October 19-20, 2000, Royer received an advance for an oil change and mileage for a trip to Saskatoon. He then put the oil change and gas charges of $48 on the union Visa. Merk alleged that Gumulcak was also collecting expenses to which he was not entitled.
5 After Merk’s remonstration with Royer met with an angry response, Merk’s father (a former business agent of Local 771) and three other union members wrote to the General President of the International Union of Iron Workers in Washington, Joseph Hunt, to complain that expense reimbursements to Royer and Gumulcak were not being dealt with in accordance with the union constitution. The General President assigned a union investigator from the International Union of Iron Workers, one Fred Marr, who came to Saskatchewan to speak to those involved, including Merk. Fred Marr subsequently reported that in his view the only problem with the double-dipping expense claims was that the by-laws of Local 771 did not specifically prohibit collecting more than once for the same expenses. According to the trial judge, Marr believed that if the by-laws were rewritten, the complaints would be resolved. She commented:
This is ridiculous. It should not be necessary to spell out in local by-laws that expenses are to be reimbursed one time only.
([2002] S.J. No. 555 (QL), 2002 SKPC 78, at para. 8)
Following receipt of Marr’s “report”, the executive of Local 771 met on September 21, 2001 and authorized the termination of Merk’s employment. She was not at that time informed of this authorization and, for the next few weeks, her superiors chose not to act on it.
6 After waiting a time for some response from the International Union of Iron Workers following Marr’s “investigation”, Merk took it upon herself to write to Joseph Hunt, the General President of the International Union of Iron Workers, on October 19, 2001 setting out her complaints and saying:
I hope you will appreciate my concerns and inform me of your decisions and subsequent actions regarding these serious problems by October 25, 2001. Your response will dictate any further actions that I may need to take. Any further delays will do nothing but jeopardize this local union which could unfortunately prove harmful to the membership and to this organization as a whole.
7 The response from the union was not what Merk anticipated. She was dismissed from her job by letter dated November 5, 2001, signed by Royer and Gumulcak. It said:
Due to a number of matters occurring during your employment; not the least of which occurred in the last few days prior to your leaving the workplace, as well as you forwarding your 19th of October 2001 correspondence to Joseph Hunt . . . and matters surrounding same, the local union has found it necessary to terminate your employment. [Emphasis added.]
II. Statutory Provisions
8 The Labour Standards Act, s. 74, provides:
74(1) No employer shall discharge or threaten to discharge or in any manner discriminate against an employee because the employee:
(a) has reported or proposed to report to a lawful authority any activity that is or is likely to result in an offence pursuant to an Act or an Act of the Parliament of Canada; or
(b) has testified or may be called on to testify in an investigation or proceeding pursuant to an Act or an Act of the Parliament of Canada.
(2) Subsection (1) does not apply where the actions of an employee are vexatious.
III. Judicial History
A. Trial Judge ([2002] S.J. No. 555 (QL), 2002 SKPC 78)
9 McMurtry Prov. Ct. J. reviewed the law and concluded:
Merk certainly was terminated because of her pursuit of the issue of Royer’s expenses through the union. Once it appeared to Royer that the union’s investigation cleared him, he felt safe to fire her. [para. 18]
10 The trial judge was therefore “satisfied beyond a reasonable doubt that Merk was terminated because she complained about Royer’s expenditures” (para. 15). In terms of s. 74, Royer’s conduct qualified as an “activity that is or is likely to result in an offence pursuant to an Act or an Act of the Parliament of Canada”. However, the Act also requires that the firing be related to a complaint to a “lawful authority”. On this point, the trial judge said:
If the language of the section permitted me to consider a member of the union bureaucracy as a lawful authority, I would have convicted. However, “lawful authority” must be interpreted as a person or institution authorized by law to investigate offences. If I am wrong and the General President of the union is a lawful authority, given his ability to remove any officer from his or her position, Merk’s complaint to Marr, the President’s investigator, would meet the test. I am convinced that Merk providing information to Marr is the reason she was dismissed. [Emphasis added; para. 19.]
In other words, but for a restrictive interpretation of the phrase “lawful authority” to officials of the state (rather than a private entity such as a union), she would have entered a conviction.
B. Summary Conviction Appeal Judge _ Ball J. ((2003), 229 Sask. R. 37, 2003 SKQB 9)
11 The Queen’s Bench judge agreed with the trial judge’s interpretation of “lawful authority”, but allowed the appeal on other grounds (not here relevant) and substituted a conviction (para. 51).
C. Court of Appeal ((2003), 238 Sask. R. 234, 2003 SKCA 103)
12 Gerwing and Tallis JJ.A. allowed the appeal but agreed with the narrow interpretation of “lawful authority” adopted in the courts below. Gerwing J.A., basing herself in part on predecessor legislation, took the view that
the lawful authority must be one that is capable of exercising authority, i.e., compelling obedience, with respect to the conduct reported as an offence. Here the offence threatened to be reported, and the only one which can sustain the charge, is fraud, and the Union hierarchy, while it can enforce its own bylaws, has no capacity to deal with this as “an offence”. [para. 20]
13 Cameron J.A., dissenting, would have affirmed a conviction but on grounds different from those of the summary conviction appeal court. In his view, the General President was a “lawful authority” because the purpose of the whistleblower law was “best attained by interpreting this expression liberally, to include other persons in authority, including persons possessed of corporate authority recognized by law to act upon the reported wrongdoing” (para. 46).
IV. Analysis
14 Whistleblower laws create an exception to the usual duty of loyalty owed by employees to their employer. When applied in government, of course, the purpose is to avoid the waste of public funds or other abuse of state-conferred privileges or authority. In relation to the private sector (as here), the purpose still has a public interest focus because it aims to prevent wrongdoing “that is or is likely to result in an offence”. (It is the “offence” requirement that gives the whistleblower law a public aspect and filters out more general workplace complaints.) The underlying idea is to recruit employees to assist the state in the suppression of unlawful conduct. This is done by providing employees with a measure of immunity against employer retaliation. “[R]eports from insiders allow for early detection and reduction of harm, reduce the necessity for and expense of public oversight and investigation, and may ultimately deter malfeasance” (E. S. Callahan, T. M. Dworkin and D. Lewis “Whistleblowing: Australian, U.K., and U.S. Approaches to Disclosure in the Public Interest” (2004), 44 Va. J. Int’l L. 879, at p. 882).
15 The terminological debate in the Saskatchewan courts over the scope of the words “lawful authority” in s. 74, which on a plain meaning (in my view) includes a private authority as well as a public authority, is rooted in a more philosophic issue. Is the Saskatchewan legislature’s intention best respected by withholding s. 74 protection from employees unless and until they take their complaint to the police or some other public official who can “deal with the allegation qua offence”, as was held by the Saskatchewan Court of Appeal (at para. 21), or is it best respected by extending the protection to employees who go “up the ladder” inside the employer organization in an effort to have the “activity” terminated rather than prosecuted? A contextual and purposeful reading of s. 74 confirms its plain meaning. Purpose and context are important, as Laskin J. (as he then was) wrote over 30 years ago:
The distinction that I draw is between a purely formal, mechanical view of the law, antiseptic and detached, and a view of the law that sees it as purposive, related to our social and economic conditions, and serving ends that express the character of our organized society.
(B. Laskin, “The Function of the Law” (1973), 11 Alta. L. Rev. 118, at p. 119)
Here the legislature speaks of “lawful authority”. This is a well-known concept. If, for example, a landowner orders a trespasser off her property, she is exercising as landowner “lawful authority” every bit as much as if a policeman (whose lawful authority flows from a different source) were to do so. The question is not whether the authority is public or private, but whether it is lawful.
16 The general principles of labour relations provide, I believe, the appropriate context. In employment law, there is a broad consensus that the employee’s duty of loyalty and the public’s interest in whistleblowing is best reconciled with the “up the ladder” approach. The Saskatchewan legislature was not oblivious to the realities of the workplace.
A. Applicable Rules of Statutory Interpretation
17 The direction from the Saskatchewan legislature to the courts in s. 10 of The Interpretation Act, 1995, S.S. 1995, c. I-11.2, is that “[e]very enactment shall be interpreted as being remedial and shall be given the fair, large and liberal construction and interpretation that best ensure the attainment of its objects.” The “objects” of s. 74 include better protection for employees who not only uncover unlawful “activity” but who bring this activity to the attention of a “lawful authority” who can do something about it. The question is how best to attain that objective.
18 Allied with s. 10 of The Interpretation Act, 1995 is the contextual approach to statutory construction encapsulated by E. A. Driedger: “[T]he words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.” (Construction of Statutes (2nd ed. 1983), at p. 87). This approach has regularly been adopted and applied in this Court: Rizzo & Rizzo Shoes Ltd. (Re), [1998] 1 S.C.R. 27; Bell ExpressVu Limited Partnership v. Rex, [2002] 2 S.C.R. 559, 2002 SCC 42. The analysis is applied in several steps.
(1) Grammatical and Ordinary Sense
19 Gerwing J.A. held that “lawful authority” should be limited to someone “in a position to deal with the allegation qua offence” (para. 21). In her view the words “lawful authority” take their colour from the reference in s. 74 to an “offence”, but it seems to me the word “offence” simply delineates the sort of “activity” the legislature wished to ferret out. The legislature’s desire was to have such “activity” brought to the attention of someone who had the “lawful authority” (public or private) to remedy the problem. While the response to unlawful conduct could include prosecution for an “offence”, it could also include steps short of prosecution through action by an employer or other private authority who has the lawful power to put a stop to the wrongful conduct. The legislature wanted a workplace free of unlawful activity. It did not specify prosecution as the only or even the preferred method of bringing about that result. Taking this case as an example, Joseph Hunt, the General President of the International Union of Iron Workers was not a public official but he had lawful authority, through mobilization of the powers of the international union, to bring to an end the ongoing misappropriations of members’ money at Local 771. There is nothing in the “grammatical and ordinary meaning” of s. 74 to cast doubt on this broader interpretation of “lawful authority”.
(2) The Scheme of the Act
20 The Labour Standards Act is essentially employee protection legislation. The whistleblower measure was expanded in 1994 together with other provisions collectively justified by the Labour Minister to the Legislative Assembly as follows:
The primary purpose of this Bill is to rectify some real injustices — injustices which most fair-minded people admit exist and need to be tackled, although they may not agree upon the means we have chosen.
(Saskatchewan, Legislative Assembly, Debates and Proceedings (Hansard), 4th Sess., 22nd Leg., April 22, 1994, at p. 1785)
21 One of the injustices addressed in The Labour Standards Act amendments was the problem of workplace retaliation against employees who blow the whistle on unlawful conduct. The courts in Saskatchewan have called for a “generous” interpretation of the Act. For example, Lane J.A., writing in a somewhat different context for the court in Kolodziejski v. Auto Electric Service Ltd. (1999), 177 Sask. R. 197 (C.A.), explained, at para. 18, that:
Labour standards legislation is characterized as “benefits-conferring legislation”. As such, it must be interpreted generously and any doubt arising from difficulties in language must be resolved in favour of the claimant. [Emphasis added.]
22 The appellant claims the benefit of the protection of the Act. The union respondent would deny it.
(3) The Object of the Act
23 Section 74, as stated, seeks to reconcile an employee’s duty of loyalty to his or her employer with the public interest in the suppression of unlawful activity. A long line of decisions in the labour relations field affirms that this balance is best achieved if “loyal” employees are encouraged to resolve the problems internally rather than marching forthwith to the police, i.e. work with internal remedies before going public. Yet the interpretation given s. 74 by the Saskatchewan Court of Appeal denies the “loyal” employee protection: the employee only obtains protection when the complaint is taken outside the employer organization to the police or other public authority. This is the antithesis of good labour relations policy, as noted by J. M. Weiler almost a quarter of a century ago in his arbitral award in Re Ministry of Attorney-General, Corrections Branch and British Columbia Government Employees’ Union (1981), 3 L.A.C. (3d) 140, at p. 163:
The duty of fidelity does not mean that the Daniel Ellsbergs and Karen Silkwoods of the world must remain silent when they discover wrongdoing occurring at their place of employment. Neither the public nor the employer’s long-term best interests are served if these employees, from fear of losing their jobs, are so intimidated that they do not bring information about wrongdoing at their place of employment to the attention of those who can correct such wrongdoing. However, the duty of fidelity does require the employee to exhaust internal “whistle-blowing” mechanisms before “going public”. These internal mechanisms are designed to ensure that the employer’s reputation is not damaged by unwarranted attacks based on inaccurate information. Internal investigation provides a sound method of applying the expertise and experience of many individuals to all problems that may only concern one employee. [Emphasis added.]
24 This so-called “up the ladder” approach has also been favoured by courts and other labour arbitrators. In Haydon v. Canada, [2001] 2 F.C. 82 (T.D.), Tremblay-Lamer J. stated, at para. 120:
The applicants endeavoured on several occasions to have their concerns addressed internally without success. As a general rule, public criticism will be justified where reasonable attempts to resolve the matter internally are unsuccessful. [Emphasis added.]
See also Read v. Canada (Attorney General) (2005), 30 Admin. L.R. (4th) 218, 2005 FC 798, per Harrington J., at para. 123; Re Simon Fraser University and Association of University and College Employees, Local 2 (1985), 18 L.A.C. (3d) 361 (R. B. Bird); Forgie and Treasury Board (Immigration Appeal Board), [1986] C.P.S.S.R.B. No. 310 (QL) (M. Bendel); Re Treasury Board (Employment & Immigration) and Quigley (1987), 31 L.A.C. (3d) 156 (J. M. Cantin), and Newfoundland and Labrador Nurses’ Union v. Health Care Corp. of St. John’s, [2001] Nfld. L.A.A. No. 1 (QL) (P. Kelsey), at paras. 292-94, 298-99 and 312. Many of these cases arose in relation to public sector employees where the public interest in “whistleblowing” may be more obvious, but the need in the private sector to strike a proper balance is the same.
(4) The Public Policy Debate
25 Saskatchewan is not alone in its desire to protect legitimate whistleblowers. Amongst other more or less contemporaneous initiatives was the report to the federal government by the former Chief Justice of Ontario, Charles L. Dubin, who wrote in contemplation of amendments to the Competition Act, R.S.C. 1985, c. C-34 , that he too supported an “up the ladder” approach:
[T]he decisions of arbitral panels hearing grievances from whistleblowing employees suggest that the employee’s duty of fidelity is a strong one, and is generally breached when an employee criticizes his or her employer publicly or discloses information that damages the employer’s interests. An employee may be justified in going public to expose wrongdoing or illegal acts by the employer. But in order to successfully rely on that justification, the employee must first try to resolve the matter internally. Although these same principles would probably apply to common law actions for wrongful dismissal brought by non-unionised employees, there do not appear to be any reported judgments that deal with this issue. [Emphasis added.]
(C. L. Dubin and J. Terry, Whistleblowing Study (1997), at p. 20)
Failure to “try to resolve the matter internally” is condemned by courts, labour arbitrators and other commentators as prima facie disloyal and inappropriate conduct. It would be anomalous to interpret s. 74 as requiring recourse to outside agencies as a condition precedent to protection.
26 The correctness of the broader approach is confirmed by the experience in many other jurisdictions. In Britain, for example, whistleblower protection contained in the Employment Rights Act 1996 (U.K.), 1996, c. 18, requires (except in special circumstances) that an employee first make a good faith disclosure internally, either to his employer (s. 43C(1)(a)) or to another “internal” person when the worker reasonably believes that the relevant failure relates to the conduct of that person or that that person has legal responsibility over the matter. In New Zealand, the Protected Disclosures Act 2000 (N.Z.), 2000, No. 7, which covers both the public and private sectors, requires whistleblowers to report through internal channels (with a few minor exceptions) before blowing the whistle publicly (s. 7). In Europe, the so-called Whistleblowers’ Charter, 1999 is administered by the Anti-Fraud Office of the European Commission and creates procedures that require employees to exercise all internal avenues for reporting misconduct before they can blow the whistle to an outside authority. (See art. 2 of Commission Decision dated April 28, 1999 (1999/352/EC, ECSC, Euratom), [1999] O.J. L. 136/20, and related Council Decision dated May 25, 1999 (1999/394/EC, Euratom), [1999] O.J. L. 149/36; and arts. 22a and 22b of the Staff Regulations of officials of the European Communities, [1968] O.J. L. 56/1 (amended by Council Regulation (EC, Euratom) No. 723/2004 dated March 22, 2004, [2004] O.J. L. 124/1.) There is nothing in s. 74 or surrounding context to suggest that the Saskatchewan legislature in 1994 intended to expose “loyal” employees to employer retaliation without a remedy.
(5) Avoidance of Anomalous Results
27 The argument that an employer can dismiss without fear of prosecution an employee for bringing serious wrongdoing to its attention internally, but cannot do so as soon as the employee goes to outside authorities, invites rejection on the basis of irrationality, as described in R. Sullivan, Sullivan and Driedger on the Construction of Statutes (4th ed. 2002), at p. 246:
A variation on irrational distinction occurs when an interpretation leads to an outcome in which persons deserving of better treatment receive worse treatment or vice versa.
See also P.-A. Côté, The Interpretation of Legislation in Canada (3rd ed. 2000), at pp. 451-52. In R. v. Wust, [2000] 1 S.C.R. 455, 2000 SCC 18, our Court declined to accept the interpretation of a sentencing provision which “would reward the worst offender and penalize the least offender” (para. 42). A comparable anomaly would arise here if a narrow view of “lawful authority” were adopted.
(6) Legislative History
28 Part of Driedger’s “entire context” is legislative history. The majority opinion of Gerwing J.A. was in part predicated on her view that s. 74 was intended merely as an incremental advance on an earlier immunity clause contained in s. 64 (later renumbered s. 74), which itself was limited to cooperation with public authorities:
64. No employer shall discharge or threaten to discharge or in any manner discriminate against an employee because the employee has testified or is about to testify in an investigation or proceeding held or to be held pursuant to the provisions of this Act, or an employee who makes a complaint or furnishes information to the minister or his agent under this Act.
(The Labour Standards Act, 1969, S.S. 1969, c. 24)
On this basis Gerwing J.A. concluded:
The current s. 74 broadened the protection to other statutes, but nothing in its wording or in the legislative history suggests that the term “lawful authority” should be extended to someone not in a position to deal with the allegation qua offence. [para. 21]
29 There are, of course, legislative provisions in other jurisdictions that adopt this narrower approach. Section 425.1 of the Criminal Code, R.S.C. 1985, c. C-46 , for example, gives protection to employees who blow the whistle to “a person whose duties include the enforcement of federal or provincial law”. It will be noted, however, that the wording of the Criminal Code is a good deal more explicit in its restricted scope. The effect of the majority decision in the Saskatchewan Court of Appeal, with respect, is to read into s. 74 the more restrictive language of the Criminal Code without textual or contextual justification.
30 The aim of predecessor sections to s. 74 was to encourage employee cooperation with government officials in labour matters, and was typical of the protection that is found in most Canadian labour codes; see, e.g., Employment Standards Act, R.S.B.C. 1996, c. 113, s. 83; Employment Standards Code, R.S.A. 2000, c. E‑9, s. 125; The Employment Standards Code, S.M. 1998, c. 29, s. 133; Employment Standards Act, 2000, S.O. 2000, c. 41, s. 74; An Act respecting labour standards, R.S.Q., c. N‑1.1, s. 122; Employment Standards Act, S.N.B. 1982, c. E-7.2, s. 28; Employment Standards Act, R.S.P.E.I. 1988, c. E-6.2, s. 35; Labour Standards Code, R.S.N.S. 1989, c. 246, s. 30; Labour Standards Act, R.S.N.L. 1990, c. L-2, s. 78; Labour Standards Act, R.S.N.W.T. 1988, c. L-1, s. 67.1; Labour Standards Act (Nunavut), R.S.N.W.T. 1988, c. L-1, s. 67.1; Employment Standards Act, R.S.Y. 2002, c. 72, s. 108.
31 In recent years, however, legislative horizons have expanded. Section 74 is not on its face directed to cooperation between employees and government officials. Having regard to the consideration already mentioned it seems to me that s. 74 should be seen as part of a broader legislative reform rather than the narrower incremental step favoured by the Saskatchewan Court of Appeal.
(7) Penal Provision
32 The respondent says that s. 74 is a penal provision and that it must therefore be read restrictively. Gerwing J.A., at para. 25 of her judgment, concluded that “the interpretation of a penal statute that is ambiguous must be resolved in a manner favourable to the accused person”: R. v. McIntosh, [1995] 1 S.C.R. 686, at paras. 38-39.
33 In my view, with respect, this approach is of limited value when interpreting a regulatory statute such as The Labour Standards Act. If it is concluded in all the relevant circumstances that the legislature intended a broad approach, that is the approach that will be adopted. In R. v. Hasselwander, [1993] 2 S.C.R. 398, the Court addressed the interpretation of the definition of “prohibited weapon” in the Criminal Code , and noted that while one possible definition would bring the accused’s weapon within the prohibition, the other would not. In resolving this issue, Cory J. adopted an earlier dictum of Martin J.A. of the Ontario Court of Appeal in R. v. Goulis (1981), 125 D.L.R. (3d) 137:
. . . even with penal statutes, the real intention of the legislature must be sought, and the meaning compatible with its goals applied. [p. 413]
Sullivan also stated, at p. 387:
The rule [of strict construction] is difficult to reconcile with federal and provincial Interpreta