COURT FILE NO.: 528/02

DATE: 20050412

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

LANE, MATLOW and MOLLOY JJ.

B E T W E E N:

CARESSANT CARE NURSING HOME OF CANADA LIMITED

David M. Golden, Irv Kleiner and Lisa Corrente, for the Applicant

Applicant

• and -

LONDON AND DISTRICT SERVICE WORKERS’ UNION, LOCAL 220 and PAY EQUITY HEARINGS TRIBUNAL

Cathy Lace, for the Respondent Union

Leslie A. Leroux, for the Respondent Tribunal

Respondents

HEARD: February 2 and 4, 2005

REASONS FOR JUDGMENT

MOLLOY J.

A. INTRODUCTION

1The applicant (“Caressant Care”) is a private corporation which owns a nursing home and retirement home in St. Thomas, Ontario. The two homes are on the same property and are essentially separate wings of the same building, separated by a door. The nursing home side is licensed under the Nursing Home Act, R.S.O. 1990, c. N.7, receives government funding for its operations and is subject to strict government scrutiny and controls. The retirement home side is strictly a private business operation, receives no government funding, and is not subject to any controls beyond those imposed on any business operating in the province. Both aspects of Caressant’s business have a predominantly female workforce and are subject to wage adjustment under the Pay Equity Act, R.S.O. 1990, c. P.7, as amended (“the Act”). It is clear the nursing home side of Caressant’s business falls within the broader public sector and as such is subject to the “proxy method” for purposes of wage comparison. Likewise, it is clear that private businesses are not subject to the proxy method of comparison. The issue in the case before the court is whether, in the particular circumstances of this business, the retirement home side of Caressant Care is also subject to the proxy method of comparison.

2In a decision dated December 17, 2001, the Pay Equity Hearings Tribunal decided that Caressant Care fell within the definition of public sector employer under the Act and that its entire operation, both the nursing home and retirement home aspects, were subject to the proxy method of comparison. That decision was based on an Appendix to the Schedule to the Act, which provided that the public sector included “any corporation …that operates or provides a nursing home, under the authority of a licence issued under the Nursing Homes Act”.

3On February 6, 2002, the Ontario Legislature enacted a regulation which amended the applicable part of the definition by adding to it, “but, for greater certainty, only in respect of its nursing home beds with respect to which funding is received from the Province of Ontario”. Following this amendment, Caressant asked the Tribunal to reconsider its earlier decision. By decision dated May 6, 2002, the Tribunal refused to exercise its discretion to reconsider its decision.

4Caressant Care now seeks judicial review of both Tribunal decisions.

B. THE STATUTORY SCHEME

5The Pay Equity Act came into force on January 1, 1988. The purpose of the legislation is to redress historic and systemic gender discrimination in the workforce, which has resulted in women being paid less than men for work of equal value. The Act applies to the public sector and to private employers with more than 10 employees. However, there are distinctions within the legislation between public and private employers as to the applicability of certain provisions.

6Under the legislative scheme, employers are required to identify job classes based on a neutral set of criteria and to determine if there is gender predominance in those job classes. The value of the work performed by each job class is then determined based on skill, effort, responsibility and working conditions. Under the scheme as first introduced, the remaining step required the employer to carry out a “job-to-job” comparison, comparing the remuneration paid to female job classes with that paid to equal or comparably valued male job classes. The employer was then required to increase the salaries of female employees who were receiving less than their male counterparts in comparable male job classes.

7There were difficulties applying the job-to-job comparison method in predominantly female workplaces. In 1993, the Act was amended to include two alternative methods of comparison for situation in which the job-to-job method was not workable: the proportional value method and the proxy method.

8The proportional value method applies to any situation in which there are not sufficient males or male job classes in the workplace to compare using the job-to-job method. Under the proportional method, the employer is required to determine the ratio between the remuneration paid for male job classes and the value of the work performed. The same exercise is then carried out for the female job classes. If the ratio of pay to value of work is lower for a female job class than for male job classes, the female wages are required to be raised to achieve equity.

9If an employer is unable to apply either of the job-to-job or proportional value methods of comparison, the employer is obliged to notify the Pay Equity Office. The matter is then referred to a Review Officer who considers whether, in fact, there is any female job class within the employer’s establishment that cannot be compared using those two methods of comparison. If so, and if the Review Officer determines “that the employer is a public sector employer”, then the Review Officer may make an order declaring the employer to be a “seeking employer”: s. 22.12(2) of the Act. The seeking employer is required to determine the relationship between the value of work performed in its female job classes and the remuneration paid for that work. This pay/value ratio is then compared to that of a proxy employer, based on a list set out in Regulation 396/93 of the Act. The Regulation contains a list of categories of seeking employers and matches them to a list of proxy employers. The proxy employers are for the most part public hospitals, school boards or facilities operated by a municipality. Seeking employers who operate nursing homes, homes for the aged or who provide other services for seniors are compared to “a home for the aged operated by one or municipalities under the Homes for the Aged and Rest Homes Act”. A seeking employer that does not fit within any of the categories listed must be compared to a hospital or municipality: s. 2(1) and (3) of the Regulation.

10It is a precondition to the application of the proxy method of comparison that the Review Officer determine the employer to be a “public sector employer”. The Act includes both a Schedule and an Appendix to that Schedule. “Public sector employer” is defined in the Act to mean any employer listed in the Schedule to the Act. In turn, s. 1(i) of the Schedule provides that the public sector includes any corporation “set out in the Appendix to this Schedule”. The Appendix is organized under the headings of various Government of Ontario Ministries. Under the heading “Ministry of Health”, the Appendix sets out a number of employers deemed to be part of the public sector, including:

1. Any corporation … that operates or provides,

(b) a nursing home, under the authority of a licence under the Nursing Homes Act (R.S.O. 1990, c. N.7)

11There is no other clarification in the Act as to which employers are public sector and which are not. “Private sector” is defined to mean all of the employers who are not in the public sector and an employer is deemed to be in the “public sector” if it is listed in either the Schedule or Appendix.

12An employer’s “establishment” is defined in s. 1(1) of the Act to mean “all of the employees of an employer employed in a geographic division. The relevant portion of the definition of “geographic division” is “county, territorial district or regional municipality”.

13An employer subject to an order made by a Review Officer may request a hearing before the Pay Equity Hearings Tribunal. That Tribunal is protected by a privative clause, s. 30(1) of the Act, which states:

The Hearings Tribunal has exclusive jurisdiction to exercise the powers conferred upon it by or under this Act and to determine all questions of fact or law that arise in any matter before it and the action or decision of the Hearings Tribunal thereon is final and conclusive for all purposes.

C. THE DECISION OF THE TRIBUNAL

The Initial Decision (December, 2001)

14Caressant Care reported to the Pay Equity Office that it had a predominantly female workforce at its retirement home and was unable to use either of the job-to-job or proportional value methods of comparison in order to develop a pay equity plan. The Review Officer confirmed that Caressant Care was in fact unable to use those methods and went on to determine that Caressant Care fell within the term “public sector employer”, such that the proxy method of comparison would apply. Caressant Care sought a hearing before the Tribunal with respect to that determination. The Tribunal hearing proceeded before a three-person panel and occupied 35 days of testimony and argument over a period of two-and-a-half years. The Tribunal issued a 67 page written decision on December 17, 2001. The Tribunal heard this case together with four others in similar circumstances. However, only the decision with respect to Caressant Care is before this court on judicial review.

15The Tribunal first reviewed some of the general background facts. The Tribunal accepted evidence before it that there are 500 retirement homes in Ontario and 300 nursing homes licensed under the Nursing Homes Act. Of the retirement homes, 70 have adjoining nursing homes (of which Caressant Care’s facility in St. Thomas is one). The Tribunal noted the substantial differences between nursing homes and retirement homes. Nursing homes are highly regulated by the Ministry of Health and governed by statute; anyone who wants may build and operate a retirement home subject only to laws of general application such as zoning by-laws and fire codes. Nursing homes are subject to mandatory service standards, government monitoring and inspections; retirement homes have no such restrictions and are not inspected even if they have an adjoining nursing home that is inspected. Nursing homes receive considerable government funding in three notional envelopes (accommodation, nursing, and programs) and may also receive some funds from the residents; retirement homes receive no government funding. Nursing homes must account strictly for all funds received and are permitted to earn a profit only on the accommodation aspect of its business with any monies unspent in respect of nursing and programs being returned yearly to the government; retirement homes are businesses operated for a profit without government controls. Nursing homes are required to comply with a government design standard for their physical facilities; retirement homes are only required to meet minimum building code standards. Admissions to nursing homes are controlled by a government agency and applicants are placed on waiting lists and placed in facilities based on Ministry of Health eligibility criteria; admissions to retirement homes are based solely on choices made by the residents and their families. A resident of a retirement home adjacent to a nursing home has no right to admission to the nursing home, but must go through the same process of eligibility selection through the Ministry. Nursing home regulations specify certain numbers of employees with certain qualifications and mandatory staff/resident ratios; retirement homes are free to hire any type or number of employees they wish. Nursing homes are treated as part of the public sector for pay equity purposes; retirement homes are not.

16The Tribunal noted that the Act makes substantial distinctions between the public and private sector. The Tribunal held that the interpretation to be ascribed to “public sector” and “private sector” can only be based on how those terms are used in the Pay Equity Act itself. It found case law based on how those terms are used in other contexts to be of no assistance in this analysis. The Tribunal reviewed the definitions in the Act and held that this created a “hierarchy of inquiries” in that one must first consider whether an employer is listed in the Schedule. If so, the employer is public sector. If not, by the process of exclusion, it is private sector. The Tribunal further held that the Act “sets up a binary scheme”, in that an employer has to be in one category or the other, and held that the Act “does not contemplate the existence of ‘hybrid’ employers”: Reasons para 64. The Tribunal then reviewed the various categories of employers listed in the Schedule and Appendix and concluded it was simply a catalogue of entities rather than a functional examination of activities performed. It therefore rejected the possibility of a jurisprudential definition of “public sector” based on the nature of the employer’s operations and determined that it is the identity of the employer and whether it is listed in the Schedule that is the sole determinant of public sector status: Reasons paras 71-73.

17Next, the Tribunal looked at the Schedule and Appendix and held that the provision with respect to operators of nursing homes was clear and unambiguous. A corporation that operates a nursing home under a license under the Nursing Homes Act falls within the public sector. The Tribunal held that since the language was unambiguous, it should be given its plain meaning without resort to extraneous aids to interpretation such as legislative debates: Reasons paras 57 and 75. Thus, the Tribunal determined that the question before it was whether the corporation that operated the nursing home also operated the retirement home.

18To answer that question, the Tribunal turned to established jurisprudence dealing with how “employer” status is determined under the Act. Reference was made to Hilton Works (No.3)(1994), 5 P.E.R. 34, in which a tribunal under the Act held that theoretically a non-legal entity could be an “employer” for purposes of the Act, but where there is a relationship between the non-legal entity and a legal entity, “the existence of only one legal entity may be a sufficient indicator that the non-legal entity does not enjoy sufficient independence and autonomy to be capable of being a separate employer”: Reasons para 78.

19The Tribunal found that the existence of only one legal entity operating the nursing home and the retirement home was sufficient to determine the Caressant Care corporation to be the employer for both facilities. The Tribunal then reasoned that since that employer holds a nursing home license, it is a public sector employer for purposes of the Act.

20The Tribunal then went on to find, in the alternative, that when all the relevant factors developed under previous jurisprudence are taken into account, the Caressant Care corporation is the employer in respect of both the nursing home and retirement home. The criteria considered were: who has overall financial responsibility; who has responsibility for compensation practices; what is the nature of the business, service or enterprise; and what is most consistent with achieving the purposes of the Act: Reasons at para 83. Although the finances of both aspects of the business are separately accounted for, overall financial supervision and control of both businesses is by the Caressant Care head office personnel. Likewise, the corporation is responsible for compensation practices at both workplaces. There are separate staff rooms for each side of the business, separate employee requirements and separate bargaining units. However, there is also considerable overlap in functions. For example, there is only one central office and only one phone number, which could be answered by staff in either facility. Some of the food preparation and related services are shared. Employees on the retirement home side do the laundry for both facilities. A registered nurse employed on the nursing home side is in charge of the entire facility at night. Based on these and other facts of a similar nature, the Tribunal concluded that there was a single employer for both sides of the business. The Tribunal stated, at para 86, “In these Applications the employment practices of the Nursing Home and the Retirement Home in each Retirement Community are so intertwined on a regular basis that they are inconsistent with the notion of separate employer status.”

21Finally, the Tribunal considered whether the nursing home and retirement home sides of the business were part of the same “establishment”. It ruled that under the Act this designation is based on geographic divisions, regardless of whether the work performed in different locations is similar in nature. Therefore, all employees of the employer in a municipality would be part of the same establishment for purposes of the Act. The Tribunal held that it is not necessary to find a community of interest among employees in order to determine either the identity of the employer or the scope of the establishment. The Tribunal rejected the argument that this would result in an absurd result by bringing employees of the retirement home into the public sector. The Tribunal recognized the logical consequences of its decision for radically different business operations, stating at para 90, “Consequently, if a single legal entity operates a gas station, a retirement home and a pizza parlour within the same municipality, the workers of all three comprise the employer’s establishment.”

22The Tribunal concluded its analysis by holding, in para 95:

The Applicants also suggested strongly and repeatedly that the Legislature never intended to make proxy applicable to the Retirement Homes. The flaw in this argument, of course, is that the Tribunal must interpret the language actually employed in the Act, and to give effect to the Applicants’ position would require us to read language into the Schedule so that a corporation is part of the public sector if it operates a nursing home pursuant to a license “but only to the extent of its nursing home operations”. In any event, the Legislature has the ability to amend the Act. We note it did so after some early Tribunal decisions identified the Crown as the employer of persons working in agencies listed in the Schedule.

The Reconsideration Decision (May, 2002)

23The Tribunal’s initial decision was released on December 17, 2001. On February 6, 2002, Regulation 37/02 under the Act was proclaimed. It addressed only that section of the Appendix to the Schedule dealing with operators of nursing homes and amended it by adding the words “but, for greater certainty, only in respect of its nursing home beds with respect to which funding is received from the Province of Ontario.” This language is strikingly similar to that which the Tribunal had said in its initial ruling would have to be read into the provision in order to achieve the result for which Caressant Care and other applicants had argued.

24Caressant Care requested the Tribunal to reconsider its initial decision, submitting that the amendment to the Appendix constituted a change in circumstances and that the decision was wrong in law. The reconsideration was heard by the same panel that issued the initial decision. The Tribunal held, consistent with other jurisprudence of the Board, that reconsideration was a discretionary matter and would be exercised only where: (i) there was new evidence not available at the time of the hearing that would likely make a substantial difference to the outcome; (ii) there had been a change in circumstances; or (iii) it was established that the earlier decision was wrong in law.

25The Tribunal held that the amendment to the Appendix did not have retrospective effect and therefore had no bearing on its decision. It declined to consider the new provision as an interpretive aid, holding that it had already decided the language of the Act was plain and unambiguous and it was therefore not relevant to consider extraneous evidence on its interpretation. Other arguments made by the applicants as to the earlier decision being wrong in law were found to be simply a rehashing of arguments made earlier and already rejected in the initial decision. The Tribunal therefore refused to reconsider its initial decision.

D. STANDARD OF REVIEW

26There are three potential standards of review: correctness, reasonableness simpliciter, and patent unreasonableness. The Supreme Court of Canada has held that the determination of the appropriate standard of review for a particular decision of an administrative tribunal should be based on a “pragmatic and functional approach” based on four factors: (i) the existence or absence of a privative clause; (ii) the purpose of the legislation and of the particular provision; (iii) the expertise of the tribunal relative to that of the reviewing court on the issue in question; and (iv) the nature of the question before the tribunal: Pushpanathan v. Canada (Minister of Citizenship and Immigration), 1998 778 (SCC), [1998] 1 S.C.R. 982.

27The Pay Equity Tribunal is protected by the “strong” privative clause in s. 30(1) of the Act: Haldimand-Norfolk (Regional Municipality) Commissioners of Police v. ONA, [1989] O.J. No. 1995 (Div.Ct.), upheld on appeal, (1990) 41 O.A.C. 148 (C.A.); Wentworth County Board of Education v. Wentworth Women Teachers’ Association, [1991] O.J. No. 723 (Div.Ct.). This is a factor that suggests a standard of review at the highest level of deference, patent unreasonableness.

28The purpose of the Act is to redress systemic gender discrimination in compensation for work. The public interest is clearly engaged and there is a high policy-driven component to decisions under the Act. Decision makers under the Act are required to balance multiple sets of competing interests. The particular legislative provisions at issue in this case are definitional sections of the Act which will determine whether the employees of the retirement home side of the business will be considered as part of the broader public sector for purposes of pay equity. There has already been a determination that a job-to-job comparison is not workable in this workplace. If the employees do not fall within the public sector, they will not receive pay equity adjustments, even though the employees in the adjacent nursing home will. On the other hand, the employer runs a private business in competition with hundreds of other retirement homes in the province. Designating this business as part of the public sector would require the employer to increase the wage levels of its employees by comparing them to the wage levels at publicly owned and funded nursing homes without receiving any government funding toward its costs. The Tribunal’s decision, therefore, affects the public interest as well as the private interests of the employer and employees. This weighing of competing interests in a policy-laden public interest field is another factor attracting a standard of review at the more deferential end of the scale: Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226 at para 31.

29The question before the Tribunal involves the interpretation of its home statute. An understanding of the policy and practical implications of such a determination must necessarily inform the decision. The Tribunal has considerable expertise in the subject area of pay equity. In Ontario Nurses’ Assn. v. Ontario (Pay Equity Hearings Tribunal) (1995), 1995 1488 (ON CA), 23 O.R. (3d) 43 (C.A.), Abella J.A. (as she then was) recognized the special expertise of the Tribunal at page 56, as follows:

The language of the statute makes it clear that the overall responsibility for when, whether and how pay equity is achieved lies with the Pay Equity Commission, and its adjudicative branch, the Pay Equity Hearings Tribunal. The tripartite membership of the Tribunal consists of representatives from labour, management, and legal spheres whose backgrounds and continuing exposure to the legislation gives them a unique expertise. And it is clear from the privative clause and the legislation as a whole that the purpose of the Tribunal is to serve as the exclusive adjudicative body dealing with the redress of systemic gender discrimination in compensation for work, or pay equity.

30To the extent that the Tribunal is engaged in technical pay equity matters (such as the application of various methods of wage comparison and the identification of job classes), the Tribunal’s special area of expertise is clearly engaged. Likewise, application of many of the legal principles developed in pay equity jurisprudence (such as who is the “employer” for the purposes of pay equity and the meaning of “establishment”), may also engage that special expertise, although to a somewhat lesser extent. On the other hand, questions of pure law not requiring a deep understanding of the operation of pay equity schemes, will not engage the Tribunal’s expertise to the same degree. Depending on the nature of the particular question before it, the Tribunal’s expertise will not be greater than that of the Court.

31The question before the Tribunal in this case required it to interpret the definition of “public sector employer” within the context of the legislation. Upon interpreting that definition as plain and unambiguous, the Tribunal concluded that if a corporation held a nursing home license it was by definition a public sector employer. That, in my view, is primarily a question of law involving principles of statutory interpretation. However, the provision in question must be interpreted in context, which requires an understanding of the statutory scheme and, as I will develop later, the legislative intent of the particular provision involved. In that regard, the Tribunal clearly has an expertise beyond that of the Court. In addition, in considering the implications of its interpretation of the definition, and particularly in determining who was the employer and what was the establishment, the Tribunal was applying pay equity concepts in the area of its special expertise.

32On the whole, the question before the Tribunal in its initial decision was a question of mixed fact and law, but one that is more law-driven than fact-driven. This is a factor that would suggest less deference.

33Determining the appropriate standard of review requires this Court to weigh each of the four factors identified in Pushpanathan in the context of the particular tribunal and the particular question before that tribunal. The starting point is usually a consideration of the standard applied by other reviewing courts. However, a review of previous cases dealing with the standard of review for this Tribunal is not determinative in this case. The Court of Appeal in Ontario Nurses’ Assn. v. Ontario (Pay Equity Hearings Tribunal), supra, applied a standard of patent unreasonableness. However, that case turned on whether the issue determined by the Tribunal was jurisdictional in nature and whether the applicable standard was either correctness or patent unreasonableness. This was before the Supreme Court of Canada’s decisions in Canada (Director of Investigation and Research) v. Southam, 1997 385 (SCC), [1997] 1 S.C.R. 748 and Pushpanathan (in 1998), and therefore did not involve a consideration of the four factors and the possibility of a reasonableness simpliciter standard in addition to the other two standards. The same comment, and therefore the same caution, applies to the decisions of the Divisional Court and Court of Appeal in Haldimand-Norfolk (Regional Municipality) Commissioners of Police, supra.

34Counsel for the Tribunal and counsel for the Union rely on Employees at the Queen Street Mental Health Centre v. Ontario (Management Board Secretariat), [2001] O.J. No. 2255 (Div.Ct.) and General Health Services Inc. (c.o.b. Circle of Life Health Services) v. Buchanan, [2004] O.J. No. 1567 (Div.Ct.) as having established an applicable precedent for the standard of patent unreasonableness. I do not agree. The Queen Street Mental Health Centre case was subsequent to Pushpanathan. However, the Court in that case did not set out any analysis of the factors identified in Pushpanathan, but rather relied on the Court of Appeal decision in Ontario Nurses’ Association v. Ontario (Pay Equity Hearings Tribunal) as authority for imposing a standard of patent unreasonableness. Further, that decision is distinguishable on its facts. The issue before the Tribunal in that case was the applicants’ contention that a pay equity plan did not comply with the Act because the methodology used for valuing jobs was not gender neutral. That is an issue which goes to the heart of the Tribunal’s specialized expertise. In the Circle of Life case, it would appear that the issue of the appropriate standard to be applied was not argued, but rather that all counsel conceded the standard of review was patently unreasonable. Again, this decision is distinguishable because of the nature of the decision before the Tribunal, which had a significant factual component.

35Wellington (County) v. Butler (2001), 2001 38739 (ON SCDC), 56 O.R. (3d) 271 (Div.Ct.), was a judicial review of a Pay Equity Tribunal decision interpreting the word “employee”. The Tribunal held that the individuals involved (who provided day care in their homes) were employees of the County, rather than independent contractors, and therefore entitled to pay equity under the Act. The Divisional Court three-member panel was split on the appropriate level of review. The majority members (Aston and Wright JJ.) were both of the view that the Tribunal decision should be quashed, and both stated they would have quashed the decision no matter what standard of review was applied. Aston J. appears to have leaned somewhat towards the reasonableness simpliciter standard, based on a determination that although the Tribunal had expertise it was not engaged in the same way, relative to the court, as would be the case in considering other aspects of the complex statutory scheme. He saw the question of whether the individuals were employees as being, ultimately, a legal conclusion. However, he then went on to hold that the applicable standard did not affect the outcome of his decision and ruled that the Tribunal decision should be quashed as patently unreasonable. Wright J. agreed in the result with Aston J., but for separate reasons in which he stated that the issue before the Tribunal was a question of law and that the Tribunal had no expertise to determine it. Lane J., in dissent, would have imposed a patently unreasonable standard of review, and would not have interfered with the Tribunal decision.

36The only other decision of which I am aware dealing with the application of the Pushpanathan principles to determine the standard of review for this Tribunal is a decision of this Court, which was released just a few days before the argument of this case: Bucyrus Blades of Canada Ltd. v. McKinley, 2005 1491 (ON SCDC), [2005] O.J. No. 231 (Div.Ct.). The applicant in that case (Ms McKinley) had been dismissed by her employer, Bucyrus Blades. She accepted a termination package and signed a release which released all claims including "any claim under the 'Employment Standards Act of Ontario', the 'Human Rights Code of Ontario', or any other similar legislation governing or related to the employment of the Releasor". Thereafter she proceeded with a complaint under the Pay Equity Act seeking an adjustment of her wages. The Review Officer decided that since the Pay Equity Act was not specifically listed, Ms McKinley had not released her rights under that legislation. The Tribunal confirmed the Officer’s decision. On judicial review, the majority of the Divisional Court considered the Pushpanathan factors and held that the appropriate standard of review on this issue was correctness, but that a standard of reasonableness applied to a further decision as to whether, apart from Ms McKinley’s situation, the employer was subject to pay equity. Crane, J. (writing on behalf of himself and Ferrier J.) held at paras 59 and 60:

It is clear from its Reasons that the Tribunal decided to engage in a legal interpretation of the parties' agreement. It did an analysis of the wording of their contract and came to a conclusion on the intention of the parties. In my view, this is the application of the common law of contract. The review standard of correctness applies.

The Tribunal also engaged in a policy determination as to whether the employer (absent Ms. McKinley) was subject to the provisions of the Pay Equity Act, and in particular s. 7. This issue is, on this Record, one of mixed fact and law to which a standard of reasonableness could apply.

37The minority judge in Bucyrus Blades (Pitt J.) would have applied a standard of patent unreasonableness.

38I am mindful, also, of the Supreme Court of Canada’s further elucidation of the Pushpanathan principles in Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92, 2004 SCC 23, [2004] 1 S.C.R. 609, in which the decision under review involved a labour arbitrator’s interpretation of a collective agreement. All nine judges of the Court held that the applicable standard of review was reasonableness simpliciter. Major J. (writing the unanimous opinion of the Court on these points) held at para 18:

. . . Where little or no deference is directed by the legislature, the tribunal's decision must be correct. Where considerable deference is directed, the test of patent unreasonableness applies. No single factor is determinative of that test. A decision of a specialized tribunal empowered by a policy-laden statute, where the nature of the question falls squarely within its relative expertise and where that decision is protected by a full privative clause, demonstrates circumstances calling for the patent unreasonableness standard. By its nature, the application of patent unreasonableness will be rare. A definition of patently unreasonable is difficult, but it may be said that the result must almost border on the absurd. Between correctness and patent unreasonableness, where the legislature intends some deference to be given to the tribunal's decision, the appropriate standard will be reasonableness. In every case, the ultimate determination of the applicable standard of review requires a weighing of all pertinent factors: see Pushpanathan, supra, at para. 27.

(Emphasis added)

39In Voice Construction, the Supreme Court noted the legislation shielded the decisions of arbitrators from review to some extent, but not with a full privative clause. The Court also noted that the existence of numerous cases imposing a standard of patent unreasonableness in reviewing decisions of labour arbitrators, but nevertheless concluded that a reasonableness simpliciter standard was applicable. The Court found that the interpretation of contracts is within the normal expertise of courts, although labour arbitrators have special expertise in collective agreements, which favours “a certain degree of curial deference”: per Major J. at para 27.

40On the issue of the nature of the legislation, Major J. noted the difference between the Labour Relations Board (which is more policy based) and a labour arbitrator (who decides disputes between parties). He held at para 28:

The LRC [Alberta Labour Relations Code] seeks to regulate and resolve labour disputes in the most efficacious and least disruptive way. Generally, the resolution of labour relations disputes by the Labour Relations Board requires "polycentric" decision making which means it involves a number of competing interests and considerations, and calls for solutions that balance benefits and costs among various constituencies: see Pushpanathan, at para. 36. By contrast, proceedings before an arbitrator do not require the consideration of broad policy issues. Instead, the role of the arbitrator is to resolve a two-party dispute. In this appeal, that dispute related to the employer's obligation to hire dispatched workers. Even so, this factor suggests a deferential standard of review.

41Finally, the Court in Voice Construction examined the nature of the question before the arbitrator, concluded that the interpretation of the collective agreement was a question of law, and held, at para 29:

Generally speaking, questions of law are subjected to a more searching review than are other questions, and frequently require the standard of correctness. Nevertheless, the interpretation of collective agreements, as noted in para. 27, is at the core of an arbitrator's expertise and this, in turn, points to some deference.

42The Supreme Court of Canada’s decision in Barrie Public Utilities v. Canadian Cable Television Association (2003), 2003 SCC 28, 225 D.L.R. (4th) 206 is also instructive. In that case the CTRC had interpreted the words “supporting structure of a transmission line” in a particular way, which supported its order that cable television companies could attach their cables to distribution poles owned by electric power utilities. The Supreme Court of Canada held that the appropriate standard of review for this particular question was correctness. The Court described the question as one of “statutory interpretation” and held, at para 16:

Deference to the decision maker is called for only when it is in some way more expert than the court and the question under consideration is one that falls within the scope of its greater expertise (Dr. Q, at para. 28). In my view, this is not such a case. The proper interpretation of the phrase "the supporting structure of a transmission line" in s. 43(5) is not a question that engages the CRTC's special expertise in the regulation and supervision of Canadian broadcasting and telecommunications. This is not a question of telecommunications policy, or one which requires an understanding of technical language. Rather, it is a purely legal question and is therefore, in the words of La Forest J."ultimately within the province of the judiciary" (Ross v. New Brunswick School District No. 15, 1996 237 (SCC), [1996] 1 S.C.R. 825, at para. 28). This Court's expertise in matters of pure statutory interpretation is superior to that of the CRTC. This factor suggests a less deferential approach.

43In addressing the nature of the question, the Supreme Court again stated that the problem was a “purely legal one” and noted that it was a “question of general importance to the telecommunications and electricity industries”, which was a factor in determining that this was “not a case calling for deference to the decision of the CRTC”: Barrie Public Utilities at paras 18-19.

44I turn then to the application of the Pushpanathan principles to the particular circumstances of this case. At the heart of the Tribunal’s initial decision is a question of statutory interpretation which is not outside the normal expertise of the courts. Therefore, less deference is required than would otherwise be the case. That said, the provision in question must be interpreted within the context of the Act as a whole, and the Tribunal unquestionably has special expertise in that area relative to the Court. The presence of a privative clause, the nature of the legislation and of the particular provision involved also support a deferential standard of review. Notwithstanding that the question before the Tribunal was largely legal in nature, the other factors mandate a level of deference beyond correctness. The Tribunal was interpreting its home statute and its decision had policy implications as well as the determination of the rights of parties before it.

45In my opinion, the question of statutory interpretation that was before the Tribunal in this case requires a more deferential standard than the issue of interpreting a release (which was before the Tribunal in Bucyrus Blades and which was found to attract a standard of correctness). The nature of the question, within the context of the legislation and policy elements involved, is somewhat similar to the situation in Voice Construction. Statutory interpretation is a matter not unfamiliar to courts (as is the interpretation of contracts), but the Tribunal here has special expertise to apply to that process (like a labour arbitrator interpreting a collective agreement). The Tribunal was essentially resolving a dispute between parties (the employer and its employees/union), as is the case with a labour arbitrator interpreting a collective agreement. I recognize, however, a major distinguishing factor between this case and Voice Construction is the existence of a strong privative clause, implying a greater level of deference.

46There are also similarities between this case and the Barrie Public Utilities case in which the Supreme Court of Canada imposed a standard of correctness. However, the question before the CTRC in that case was somewhat more tangential to its core expertise than is the question before this Tribunal. Also, there was a right of appeal in the governing legislation, whereas the CRTC is protected by a privative clause. Therefore, a level of deference higher than correctness is called for here.

47There will no doubt be cases in which decisions of the Pay Equity Tribunal will be entitled to the highest level of deference, as for example where its decision is policy-laden and squarely within its core expertise under the legislation. In this case, however, the nature of the question before the Tribunal tips the scales away from that most deferential of standards. In my view, the standard of review for the initial decision is reasonableness simpliciter.

48With respect to the reconsideration decision, the issue of whether the amendment to the Regulation is retrospective in effect is a pure question of law. The Tribunal is required to be correct on that point. On the other issues, the Tribunal was exercising discretion with respect to issues already before it in the initial decision. This Court ought not to interfere with that discretion unless it is patently unreasonable.

E. PRINCIPLES OF STATUTORY INTERPRETATION

49The central and determinative issue in this case is one of statute interpretation. Various principles of statute interpretation arise, and all must be considered in conjunction to arrive at the proper construction of the provisions in question.

Overarching Principles and The Interpretation Act

50The starting point for any exercise of statutory interpretation is the Interpretation Act itself, R.S.O. 1990 c. I.11, and in particular in this case, s. 10 which states:

10. Every Act shall be deemed to be remedial . . . and shall accordingly receive such fair, large and liberal construction and interpretation as will best ensure the attainment of the object of the Act according to its true intent, meaning and spirit.

51Elmer Driedger synthesized the overarching principles of statutory interpretation as follows in Construction of Statutes (2nd Ed. 1983) at p. 87:

Today there is only one principle or approach, namely, the 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.

52Needless to say, all of the elements identified by Mr. Driedger do not always coincide, such that sometimes, for example, the ordinary words are not harmonious with the object of the Act, or with the intention of Parliament. Resort must often be had to some rules of special application.

Liberal Purposive Construction

53The Pay Equity Act is human rights legislation, remedial in nature, and as such must be given a broad and liberal construction consistent with its purpose: Ontario (Human Rights Commission) v. Simpsons Sears Ltd., 1985 18 (SCC), [1985] 2 S.C.R. 536. Thus, although courts must be guided by the plain meaning of the words used in such legislation, they “should not search for ways and means to minimize those rights and enfeeble their proper impact”: CNR v. Canada (Human Rights Commission), 1987 109 (SCC), [1987] 1 S.C.R. 1114, at para 24.

54Generally speaking, where words are open to more than one interpretation, courts should choose the one that advances the remedial purpose of human rights legislation. Thus, provisions granting or extending rights should be read generously; provisions restricting those rights should be read strictly: Berardinelli v. Ontario Housing Corp. (1978), 1978 42 (SCC), 90 D.L.R. (3d) 481 (S.C.C.).

Intention of the Legislation

55As a general rule, the intention of the legislation is to be gleaned from the words used in the provision at issue, when seen within the context of the legislation itself. Where the language used is plain and unambiguous, there is generally no basis for looking outside the legislation to determine its intention.

56The objective of statutory interpretation, however, is to achieve what the legislature intended, if that can be done without unduly straining the language used. Judges used to be reluctant to consider outside sources, such as legislative debates, as an aid to interpreting statutes. However, in more recent years, particularly in constitutional cases, many courts have recognized the usefulness of historical evidence, including legislative debates, in determining the purpose and intent of legislation. The Supreme Court of Canada held in Rizzo & Rizzo Shoes Ltd. (Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, at para 31, that “the use of legislative history as a tool for determining the intention of the legislature is an entirely appropriate exercise.” The Court further held at para 35:

Although the frailties of Hansard evidence are many, this Court has recognized that it can play a limited role in the interpretation of legislation. Writing for the Court in R. v. Morgentaler, 1993 74 (SCC), [1993] 3 S.C.R. 463, at p. 484, Sopinka J. stated:

. . . until recently the courts have balked at admitting evidence of legislative debates and speeches. . . . The main criticism of such evidence has been that it cannot represent the "intent" of the legislature, an incorporeal body, but that is equally true of other forms of legislative history. Provided that the court remains mindful of the limited reliability and weight of Hansard evidence, it should be admitted as relevant to both the background and the purpose of legislation.

57Thus, in determining the intention of the legislation it may be helpful for a decision maker to look at historical sources such as legislative debates, provided of course that the references are relevant and the decision maker remains mindful of weight and reliability.

58Finally, it should also be noted that extrinsic evidence may be admissible to demonstrate that there is a latent ambiguity in statutory language which appears on its face to be clear and straightforward. The following excerpt from Leitch Gold Mines Ltd. v. Texas Gulf Sulphur Co. (Incorporated), 1968 405 (ON SC), [1969] 1 O.R. 469 (H.C.J.) at p. 524, deals with the admission of extrinsic evidence to interpret a contract but is, in my opinion, equally applicable to statutory interpretation:

Extrinsic evidence may be admitted to disclose a latent ambiguity, in either the language of the instrument or in its application to the facts, and also to resolve it, but it is to be noted that the evidence allowed in to clear up the ambiguity may be more extensive than that which reveals it. Thus, evidence of relevant surrounding circumstances can be accepted to ascertain the meaning of the document and may clarify the meaning by indirectly disclosing the intention of the parties.

The Absurdity Rule

59Statutory terms ought not to be interpreted in a manner that would create an absurd result. Dreidger on the Construction of Statutes, 3rd ed. (Toronto: Butterworths, 1994) states (at p.85-86) that the modern absurdity rule may be summarized by the following propositions:

(1) It is presumed that legislation is not intended to produce absurd consequences.

(2) Absurdity is not limited to logical contradictions and internal incoherence; it includes violations of justice, reasonableness, common sense and other public standards. Also, absurdity is not limited to what is shocking or unthinkable; it may include any consequences that are judged to be undesirable because they contradict values or principles that are considered important by the court.

(3) Where the words of the legislative text allow for more than one interpretation, avoiding absurd consequences is a good reason to prefer one interpretation over another. Even where the words are clear, the ordinary meaning may be rejected if it would lead to an absurdity.

(4) The more compelling the reason for avoiding the absurdity, the greater the departure from the ordinary meaning that may be tolerated. However, the interpretation that is adopted should be plausible.

60The general rule that statutes be given there “ordinary meaning” is subject to the limiting application of the absurdity rule in order “to prevent unjust and unreasonable consequences”. Thus, the ordinary meaning of words used may be rejected, even if it is plain, in order to avoid absurd consequences: Axa Insurance v. Ahmed Nuur (2000), 2000 22724 (ON SC), 52 O.R. (3d) 70 (S.C.J.).

61Dreidger notes that one of the most frequently recognized forms of absurdity is an interpretation of a provision which would result in “irrational distinctions”. Thus, a particular interpretation should be avoided if it would result in persons “receiving different treatment for inadequate reasons, or for no reason at all”: Dreidger on the Construction of Statutes, ibid, at p. 86. Dreidger cites a number of cases which have applied this principle, including the Supreme Court of Canada decision in Hills v. Canada (Attorney-General) (1988), 1988 67 (SCC), 48 D.L.R. (4th) 193 (S.C.C.) in which the issue was whether a member of a union whose union dues were used, in part, by the international union to pay strike pay to other workers could be said to have “financed” the strike, such that he would be disentitled to unemployment benefits under the applicable legislation. The Supreme Court observed that union dues might be administered by the international union “out of sheer convenience” and could just as well have been administered by the local union to which the applicant belonged or kept in a separate account. If the latter had happened, then the applicant could certainly not be said to have “financed” the strike. The Court therefore chose to interpret “financed” as having a direct or deliberate element, stating (at p. 226), “Could the legislature really have intended disentitlement to be dependant upon such a trivial fact? I think not.”

62The decision of the Supreme Court of Canada in Berardinelli v. Ontario Housing Corp., supra, provides another illustration of this principle. In that case, the plaintiff had sued the owner of his housing complex for damages sustained when he slipped and fell because of ice and snow on the common areas of the complex. The complex was owned by the Ontario Housing Corporation under the authority of the Housing Development Act, R.S.O. 1970, 213, which gave Ontario Housing the statutory power and duty “to plan, construct and manage any building development”. Ontario Housing took the position that in managing this complex it was exercising a statutory power and as such was protected by a six-month limitation period under the Public Authorities Protection Act, R.S.O. 1970, c, 374, which applied to acts done in execution “of any statutory or other public duty”. The Ontario Court of Appeal had held that Ontario Housing was acting in execution of its statutory duty to manage the building and any default in that duty (as, for example, the failure to properly clear ice and snow) was subject to the protection of the six-month limitation period. This was reversed by the Supreme Court of Canada based, in part, on the illogical consequences of such an interpretation. Estey J. (writing for the majority), held at p. 492:

The Court is here confronted with at least two possible, but quite different interpretations of s. 11. The one would impose on all actions involving the execution of powers undertaken pursuant to s.6(2) of the Housing Development Act, however minor or miniscule, the protection of the limitation period established by s. 11. The imposition of this limitation period for this special class would have the direct result of producing two categories of housing units in the community: the one operated by persons having a statutory mandate to which a six-month limitation period would extend; and the other operated by a person without statutory authority to which the general limitation period would apply. Of course both housing projects would appear identical in fact to the attending public whose rights are directly affected by the distinction.

(emphasis added)

63In order to prevent this seemingly irrational distinction, the Supreme Court of Canada adopted an interpretation of the language in the statute that went beyond its literal, plain meaning and held the six-month limitation period would only apply to acts taken under a statutory power which had a public aspect or connotation. The Court reasoned that to do otherwise would “create different conditions of owner liability for two apparently similar housing facilities”: Berardinelli at p. 495.

64A similar rationale prompted the Supreme Court of Canada to reject a strict and literal interpretation of certain provisions of Ontario’s Employment Standards Act in Rizzo & Rizzo Shoes Ltd. (Re), supra. The legislation provided that employees whose employment was “terminated by an employer” were entitled to specified termination pay. At issue was whether employees who lost their jobs when a creditor petitioned the employer into bankruptcy were terminated “by the employer”, or rather by operation of law. The Supreme Court acknowledged that the “plain meaning” of the words used would appear to suggest that the bankruptcy situation did not fit within the provision, as had been found by the Court of Appeal. However, Iacobucci J. (writing the unanimous decision of the Supreme Court) went on to apply the absurdity rule to this situation, stating that “an interpretation can be considered absurd if it leads to ridiculous or frivolous consequences” or “if it is extremely unreasonable or inequitable”: para 27. If the termination pay provisions did not apply to a bankruptcy situation, employees terminated the day before the bankruptcy would be entitled to the payments, whereas those kept on (ironically, likely the most senior employees) would not. In order to avoid the absurdity of that consequence, the Court interpreted the term “terminated by the employer” to include a situation in which the employee was terminated as a result of the bankruptcy of the employer.

The Presumption Against Retrospective Effect

65Statutes are presumed to look forward from the date of their enactment and to affect only rights in the future. There is a presumption against interpreting a statute as having retrospective effect unless the statute stipulates this is to be the case or such an interpretation arises by necessary implication. Declaratory statutes are an exception to the general rule against retrospective or retroactive effects. Declaratory statutes are those meant to remove doubt as to the common law or the meaning or effect of a statute. However, it must still be clear that a retrospective effect is intended: Quebec (Attorney General) v. Healey, 1987 80 (SCC), [1987] 1 S.C.R 158.

66The mere fact that a statutory amendment follows a judicial or quasi-judicial interpretation of that statute is not sufficient, in and of itself, to require a retrospective interpretation of the amendment. On the contrary, s. 17 of the Interpretation Act states, “The repeal or amendment of an Act shall be deemed not to be or to involve any declaration as to the previous state of the law.”

67In Rizzo & Rizzo Shoes Ltd. (Re), (see para 64 above), the legislation was amended after the Rizzo bankruptcy, but before the appeal was heard in the Supreme Court of Canada. The amended version of the legislation specifically provided that where employment is terminated by operation of law as a result of the bankruptcy of the employer, the employer will be deemed to have terminated the employment. Iacobucci J. noted the fact of this amendment at para 42 of his Reasons, then cited s. 17 of the Interpretation Act and stated, “As a result, I note that the subsequent change in the legislation has played no role in determining the present appeal,”

F. ANALYSIS

68I turn now to consider whether the Tribunal’s interpretation of the Act in this case can stand.

Reconsideration Decision

69On reconsideration, the Tribunal determined that the amendment to the public sector definition in the Act did not have retrospective application. On this issue, which is a pure question of law, the Tribunal was required to be correct. In my view, the Tribunal was correct on this point.

70The amendment does not specifically state that it is to have retroactive effect. It is worth noting that the Act specifically contemplates the possibility of some Regulations having retroactive effect in s. 36(2), which states, “(2) Retroactivity. - A regulation made under clause (1)(f.1) [not at issue here] is, if it so provides, effective with reference to a period before it was filed.” (emphasis added)

71Further, there is no necessary implication that the provision was intended to be applied retrospectively. Given the timing of the amendment, it may well be logical to conclude that the Legislature was responding directly to the Tribunal’s initial decision in this particular case. However, it does not necessarily follow that the Legislature thereby intended to affect all those cases already resolved prior to the amendments and alter the rights of employees and employers prior to that time. It was open to the Legislature to specify retroactive application. It did not do so. There is some merit to the applicant’s argument that the language used in the amendment suggests a declaratory intent. It is not a completely new definition. Rather, there is simply an addition to it preceded by the words “but for greater certainty”. However, I do not see such wording as sufficient to take this out of the application of s. 17 of the Interpretation Act. In my view, the Supreme Court of Canada’s decision in Rizzo Shoes is directly applicable. The amendment to the legislation cannot be deemed to have any declaratory effects as to the previous state of the law, and the Reconsideration Tribunal ought not to have taken it into account.

72There is no need to consider whether the Reconsideration Tribunal erred in failing to reverse its earlier decision as being wrong in law. Apart from the amendment to the legislation, there was nothing before the Tribunal that had not been part of the earlier hearing. The real issue, therefore, is whether the Tribunal’s initial decision can stand.

The Tribunal’s Initial Decision

73The nub of this case is the Tribunal’s interpretation of the definition of “public sector employee”. On this point, the Tribunal’s interpretation must be reasonable. It is not required to be correct. Further, the issue is not whether I would have decided the point in the same manner, or whether there are other interpretations of the provision that might, in my view, be more reasonable than the one chosen by the Tribunal. If the Tribunal’s interpretation is a reasonable one that can be rationally supported by the legislation, that is sufficient. An unreasonable decision is one that “is not supported by any reasons that can stand up to a somewhat probing examination”: Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247 at paras 48-56; Canada (Director of Investigation and Research) v. Southam, supra. As stated by Iacobucci J. in Ryan at para 55:

A decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived. If any of the reasons that are sufficient to support the conclusion are tenable in the sense that they can stand up to a somewhat probing examination, then the decision will not be unreasonable and a reviewing court must not interfere (see Southam, at para. 56). This means that a decision may satisfy the reasonableness standard if it is supported by a tenable explanation even if this explanation is not one that the reviewing court finds compelling (see Southam, at para. 79).

74In my view, the Tribunal reached a reasonable conclusion that Caressant Care was the “employer” of the employees in the retirement home. Typically the pay equity jurisprudence on determining who is the “employer” for purposes of pay equity has arisen in a different context, usually where a large employer seeks to argue that smaller divisions or branch operations are the actual employer. Notwithstanding this different context, it was not unreasonable for the Tribunal to conclude in this case that the same corporation was the actual employer for both parts of the business and should be treated as the “employer” for purposes of pay equity.

75Similarly, the Tribunal was reasonable in determining that both the retirement home and the nursing home were part of the same “establishment” as that term is used in the legislation, referring to a geographic region. Again, the issue arises in a somewhat different context in this case, but the Tribunal was reasonable in taking a consistent approach and applying the established jurisprudence on the point.

76Where the problem arises is in the Tribunal’s determination that a strict interpretation of the term “public sector employer” was appropriate and that once an employer was found to be a public sector employer in any aspect of its business, it was a public sector employer for all purposes under the Act and with respect to all of its employees in the relevant geographic boundaries. The Tribunal itself identified the consequences of that determination at para 90 when it noted, “Consequently, if a single legal entity operates a gas station, a retirement home, and a pizza parlour within the same municipality, the workers of all three comprise the employer’s establishment.” Since all of these would be in the private sector, this is not problematic. However, if one adds a nursing home to the businesses owned by that legal entity, the same result applies. All will be part of the same establishment for pay equity purposes, and all will be deemed, on the Tribunal’s interpretation, to be part of the public sector. Thus, the pizza parlour employees and the gas station attendants will be compared, for pay equity purposes, to the employees of hospitals or municipalities. This, in my opinion, creates an absurd result in that it is perfectly clear that a pizza parlour is not part of the broader public sector and was never intended to be treated as such.

77The Act, as noted by the Tribunal, makes distinctions between public and private sector employers in various ways. One of the consequences of the Tribunal’s interpretation of “public sector employer” is to bring within the ambit of the public sector aspects of the Act, businesses and employees who are plainly not part of the public sector, no matter how one would logically define it. It therefore sets up a completely artificial designation, deeming businesses and employees to be in the public sector, when common sense would say otherwise. In this instance a private sector retirement home will be forced to use a proxy method of comparison designed to be used only for public sector employers for the sole reason that the owner of the retirement home also happens to own a nursing home in the same area. At the same time, that retirement home’s competitors will not be treated in the same manner unless they also have common ownership with a nursing home. There are 500 retirement homes in Ontario and only 70 of those owners also own a nursing home. The remaining 430 retirement home owners will be treated as private sector employers in respect of their retirement home business; the other 70 will be treated as public sector employers. In my view, this is an irrational distinction based on “sheer coincidence”, similar to the situation before the Supreme Court of Canada in Hills v. Canada (Attorney-General).

78The Tribunal’s interpretation may also create an extremely unfair result for the employer. For example, a company that has a total of 1000 employees in its retirement homes and only 10 employees in a small nursing home section would be treated as a public sector employee for all purposes and all employees, merely because it holds a nursing home license in respect of a small portion of its business. The employer receives no government funding for the retirement home salaries, but must nevertheless be compared to government-funded nursing homes for purposes of setting salaries in the retirement home. The retirement home facilities are private for-profit entities competing against other retirement homes in the province, of which there are hundreds. However, operators of retirement homes who do not also have a nursing home license will not be subject to such a requirement. That is not a level playing field, particularly since the employer whose private sector retirement home is brought into the public sector aspects of the Act will not have the government funding that goes with that public sector status. The Tribunal’s interpretation creates different conditions for owners of retirement homes depending on whether or not they also happen to own a nursing home (or, for that matter, any other facility listed in the Appendix). This is precisely the result that the Supreme Court in Berardinelli sought to avoid.

79Also, on the Tribunal’s strict reading of the definition, it would apply only to the “corporation” that holds the nursing home license. Therefore, business owners who have incorporated separate entities for their nursing home facilities would not have their other businesses caught by the Tribunal’s interpretation of the definition. This would result in a different application of the pay equity rules based solely on corporate organization, with businesses having both operations under the same corporation being subject to an entirely different pay equity methodology than businesses with separate corporate structures.

80The absurd consequences of a literal reading of the section assumes even greater significance when examined in light of the intention of the legislation and of the provision in particular. The Tribunal refused to consider extrinsic evidence to inform its interpretation of the section, maintaining that the provision was clear and unambiguous. However, even looking simply at the legislation, it is apparent that this interpretation is at odds with the scheme of the Act. The legislation draws clear distinctions between private sector and public sector employers and stipulates that the proxy method of comparison applies only to public sector employers. It is also part of the scheme of the Act to compare “like” to “like”. There is a fundamental absence of logic and fairness in comparing a private retirement home to a publicly run and funded nursing home. Given this context and the odd consequences of a literal interpretation, it was incumbent upon the Tribunal to consider whether there was any extrinsic reliable evidence to serve as a guide to interpretation. To refuse to even consider such evidence was, in my view, unreasonable.

81In Service Employees International Union, Local 204 v. Ontario (Attorney General) (1997), 1997 12286 (ON SC), 35 O.R. (3d) 508 (Div.Ct.), this Court had occasion to consider the proxy method provisions of the Act, although in a different context. The issue in that case was the constitutionality of a 1996 amendment to the Act, which purported to cap proxy pay equity payments at 3% of payroll and to eliminate the proxy method of comparison for future adjustments. In the course of its decision, however, the Court considered the genesis of the proxy method of comparison and what it was intended to achieve. The Court noted that prior to the introduction of the proxy method, comparisons were only made between job classes within the same organization. This did not work for organizations that had no male job classes to be used as a comparison. The proxy method therefore permitted comparisons between organizations. The Court then (at page 512) cited the following excerpt from a January 1989 Report from the Pay Equity Commission to the Minister of Labour:

The effectiveness of proxy comparisons in providing redress for predominantly female sectors would depend on how far it is extended. Potentially, this approach could be used for all target sectors. However, an effective argument for allowing proxy comparisons can be made more easily for broader public sector organizations than for private sector organizations . . . .organizations in . . .[the broader public] sector are closely connected to the provincial government via funding, regulation and legislation . . .

82In a later report in October, 1989, the Pay Equity Commission stated, at p. 54, that the proxy method was only feasible for the public sector. At p. 76 of the same report it stated that “proxy comparison was not acceptable to the private sector.”: S.E.I.U., Local 204, at p. 513.

83In 1993, the Legislature proposed Bill 102 to amend the Act to add, among other things, the proxy method of comparison. The Bill was introduced into the House on November 26, 1992, by the Hon. Bob Mackenzie, who stated at the time, “Proxy is designed to be used only in the broader public sector and only after all other methods of achieving pay equity have been attempted.”: Ontario, Legislative Assembly, Standing Committee on Pay Equity in Debates, No. 86 (26 November 1992) at 3533.

84On May 12, 1993, Ms Sharon Murdock (the Member for Sudbury) moved third reading of the Bill. In her speech at that time she stated, “I can’t help but reinforce that the proxy provision under Bill 102 does not go to the private sector – it only applies to the public sector.” On June 7, 1993, Ms Murdock is quoted in Hansard as stating, “In terms of proxy, for instance, the proxy method of comparison only applies to the private sector; it doesn’t apply to the private sector at all, so that’s important.”: Ontario, Legislative Assembly, Standing Committee on Pay Equity in Debates, No. 18 (12 May 1993) at 732 and No. 28 at 1221.

85These excerpts from Hansard are consistent and were made by Members with responsibility for explaining the legislation to the House. Further, they echo the Commission’s own report and recommendations to the Minister. These are highly reliable sources as to the intention of the Legislature in respect of the application of the proxy method of comparison. It is clear the proxy method was never intended to apply to the private sector, and even more certainly, was never contemplated to force a privately operated and funded business to use the proxy method to compare its employees to government employees in publicly funded facilities. These comments are also consistent with the scheme of the legislation generally.

86It was, therefore, particularly unreasonable for the Tribunal to insist on a rigid, literal reading of the provision in question when reliable sources were available to facilitate an interpretation more in keeping with the intention of the legislation. It is apparent when one looks at the Debates that it was never contemplated that a private business such as a retirement home would find itself in this situation. This creates an uncertainty about the meaning of the provision that ought to have required the Tribunal to look further for its meaning. When this is considered together with the absurdity of the consequences and the unfairness of their application, it is not possible, in my view, to characterize the Tribunal’s interpretation as a reasonable one.

87I recognize that the Act seeks to address systemic discrimination against women and as such should be given a liberal interpretation consistent with that purpose. Obviously, extending pay equity to more, rather than fewer, female employees does advance the objectives of equality for those women. However, that does not mean that an interpretation should be given to provisions of the legislation which results in unfair consequences for some employers not imposed on other employers running exactly the same business. The obligations to advance equal rights for women should be imposed equally. Putting a heavier burden on private sector employers who also happen to own a nursing home is an unfair application of the law and cannot be justified if an interpretation in keeping with the intention of the legislation is available.

88The Tribunal recognized what was necessary to interpret the section in order to avoid this result. It stated at para 95 that to give effect to the Applicants’ position would require it to “read language into the Schedule so that a corporation is part of the public sector if it operates a nursing home pursuant to a licence ‘but only to the extent of its nursing home operations’.” In my opinion, that is, in fact, the only interpretation which would give effect to the intention of the provision and avoid an absurd result. A reasonable interpretation of the legislation requires that such a qualifier be read into it, and the Tribunal’s failure to do so cannot be sustained.

89Counsel for the Union submitted that the Tribunal had decided, alternatively, that the operations of the retirement home and nursing home were so intertwined that it was not possible to segregate them for purposes of a pay equity plan. The Tribunal made no such finding. The Tribunal did comment on some overlapping of personnel and functions. However, that was merely by way of background. It is apparent from the Tribunal’s Reasons that its finding of public sector status was based entirely on its literal interpretation of the provision. The Tribunal would have reached the same conclusion if the two facilities were miles apart, provided they were still in the same geographic area so as to fall within the same “establishment”.

G. CONCLUSIONS

90In the result, the Tribunal’s decision cannot stand and is therefore quashed. It does not necessarily follow from this that this particular employer is not “public sector” or a “seeking employer” in respect of its nursing home operation. Having applied an improper definition of “public sector employer”, the Tribunal concluded that the retirement home fell within that category solely because Caressant Care also owned a nursing home. It was not necessary in that context to look carefully at whether any of the employees or classes of employees at the retirement home were so intertwined with the functions of the nursing home that it was not possible to say they were truly in a different workplace. This matter is therefore remitted back for a new hearing before a differently constituted Tribunal, which is directed to interpret the term “public sector employer” in accordance with these Reasons. For the sake of clarity, the proper interpretation of that term is consistent with the amended version in O. Reg 37/02. That is not to say that the amendment has retrospective effect. Rather, the amended version is simply a clearer statement of what the provision actually meant all along.

91Costs, if sought, will be considered on the basis of written submissions. Counsel for the applicant is requested to coordinate the exchange of submissions amongst counsel and to then deliver three bound sets of the submissions to the Divisional Court office no later than 30 days after the release of these Reasons.

MOLLOY J.

I agree: ___________________________

LANE J.

I agree: ___________________________