Canadian Union of Public Employees et al. v. The Minister of Labour for Ontario [Indexed as: Canadian Union of Public Employees v. Ontario (Minister of Labour)]

51 O.R. (3d) 417

[2000] O.J. No. 4361

Docket No. C32230

Court of Appeal for Ontario

Labrosse, Doherty and Austin JJ.A.

November 21, 2000

• Application for leave to appeal to the Supreme Court of

Canada granted September 6, 2001 (Gonthier, Major and Binnie

JJ.). S.C.C. File No. 28396. S.C.C. Bulletin, 2001, p. 1537.

Administrative law -- Bias -- Reasonable apprehension -- Appointment by Minister of Justice of retired judges as chairs of arbitration boards under Hospital Labour Disputes Arbitration Act giving rise to reasonable apprehension of bias -- Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H.14.

Administrative law -- Natural justice -- Applicants bringing application for judicial review of process of appointment of chairs of arbitration boards under Hospital Labour Disputes Arbitration Act -- Divisional Court erred in dismissing application on ground that actions of Minister of Employment authorized by statute and for that reason could not be attacked as denial of natural justice or as lacking in institutional independence or impartiality -- Court having power to review exercise of Minister's discretion to determine whether Minister's decision made in accordance with rules of natural justice -- Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H.14.

Employment -- Labour relations -- Interest arbitration -- Appointment by Minister of Justice of retired judges as chairs of arbitration boards under Hospital Labour Disputes Arbitration Act giving rise to reasonable apprehension of bias -- Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H.14.

The applicant unions represented hospital workers. Under the Hospital Labour Disputes Arbitration Act ("the Act"), hospital workers are forbidden to strike. Outstanding disputes concerning the negotiation of collective agreements for such employees must be submitted to interest arbitration. Prior to the Ontario government's introduction of Bill 136, the Public Sector Transition Stability Act, 1997 (S.O. 1997, c. 21), the chairs of arbitration boards under the Act were almost invariably chosen by the Minister of Labour or his or her delegate from a roster of arbitrators. The few appointees who were not drawn from the roster were persons who were skilled and experienced in interest arbitration and who were acceptable to the unions involved. In response to misgivings about Bill 136 expressed by the applicants, the Minister of Labour stated that some changes would be made to the legislation. The Minister stated, "The union movement has requested a return to the current legislative provision governing the appointment of arbitrators. Our amendments would do that", and "Our proposed amendments address completely the unions' concerns about Bill 136". The president of the applicant Canadian Union of Public Employees (C.U.P.E.) wrote to the Minister in January 1998 asking for confirmation of labour's understanding that appointees would be from the roster, failing which labour would be consulted. The Minister did not respond. On February 2, 1998, the Minister stated that hospital sectors "will continue under existing systems for appointment of arbitrators". On February 20, 1998, without any consultation with the applicants, the Minister personally appointed four retired judges, who were not on the roster, to resolve a number of collective bargaining disputes at Ontario hospitals. The applicants brought an application for judicial review of the new process for the appointment of chairs of arbitration boards under the Act, seeking a declaration that the Minister created a reasonable apprehension of bias and interfered with the independence and impartiality of boards of arbitration established under the Act, contrary to the principles of natural justice; a declaration that the Minister interfered with the legitimate expectations of the applicants and other affected unions; and an order in the nature of prohibition preventing the Minister from exercising his discretion to appoint persons to sit as chairs of arbitration boards under the Act, unless the appointments were made from the roster. The Divisional Court dismissed the application without dealing with its merits. The court held that, in the absence of a claim of a breach of the Canadian Charter of Rights and Freedoms, the actions of the Minister, being based on a power granted by statute, could not be attacked as a denial of natural justice or lacking in institutional independence or impartiality. The applicants appealed.

Held, the appeal should be allowed.

The Divisional Court erred in its conclusion that the actions of the Minister could not be attacked in the circumstances. Section 6(5) of the Act confers upon the Minister a discretionary power to appoint the chairs of arbitration boards under the Act. The exercise of discretionary power by a Minister is reviewable to determine whether the Minister breached the requirements of natural justice.

The abandonment of the established practice of selecting chairs of arbitration boards under the Act from the roster and the unilateral adoption by the Minister of a practice of personally selecting retired judges to replace them gives rise to a reasonable apprehension of bias and gives the appearance of interference with the institutional independence and the institutional impartiality of the boards of arbitration established under the Act. The issues to be decided on interest arbitrations under the Act are the content of the collective agreements between the union and individual hospitals. Such matters are not necessarily legal but practical, and they require the familiarity and expertise of a labour arbitrator rather than the skills of a lawyer or a judge. These disputes are being arbitrated not by choice but rather because the right to strike to resolve them has been taken away by legislation. By virtue of its funding of hospitals, the government of Ontario, which took away the right to strike, has a sub stantial financial interest in the outcome of these arbitrations. As a result of the impugned change, appointees no longer come from a group of individuals in whom, by reason of experience and expertise, the appellants have confidence and trust. On the contrary, appointees are now drawn from a group in whom, for historical reasons, labour has no trust and confidence. Not only do retired judges lack the expertise of the prior arbitrators, they are not independent. Retired judges have no security of tenure vis-à-vis the province. They have no assurance that they will be appointed to future arbitrations and they are asked to decide questions in which the person who appointed them has a substantial financial interest. The actions taken by the Minister, unilaterally and without consultation or warning, must reasonably be seen as an attempt to seize control of the bargaining process and not only to exclude the appellants from it, but also to replace mutually acceptable arbitrators with a class of persons seen to be inimical to the interests of labour, at least in the eyes of the applicants.

In addition, having regard to the circumstances surrounding the appointments, the Minister failed to meet the legitimate expectations of the applicants, contrary to the principles and requirements of fairness and natural justice. The statements of the Minister in his letter of February 2, 1998 constituted a commitment to continue the existing system for the appointment of arbitrators. Not only was that course abandoned, but the Minister proceeded in an entirely different direction, one that in the circumstances might be regarded as provocative or defiant. The applicants were entitled to notice of the Minister's intention, an opportunity to consider their position and possibly an opportunity to discuss the situation.

APPEAL from a judgment of the Divisional Court dismissing an application for judicial review of the process for appointment of chairs of arbitration boards under the Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H.14.

Brosseau v. Alberta Securities Commission, 1989 121 (SCC), [1989] 1 S.C.R. 301, 65 Alta. L.R. (2d) 97, 57 D.L.R. (4th) 458, 93 N.R. 1, [1989] 3 W.W.R. 456, 47 C.R.R. 394n (sub nom. Barry and Alberta Securities Commission (Re)); W.D. Latimer Co. v. Bray (1974), 1974 698 (ON CA), 6 O.R. (2d) 129 (C.A.), 52 D.L.R. (3d) 161, distd Canadian Pacific Ltd. v. Matsqui Indian Band, 1995 145 (SCC), [1995] 1 S.C.R. 3, 122 D.L.R. (4th) 129, 177 N.R. 325, 85 F.T.R. 79n; Multi- Malls Inc. v. Ontario (Minister of Transportation and Communications) (1976), 1976 623 (ON CA), 14 O.R. (2d) 49, 73 D.L.R. (3d) 18 (C.A.); R. v. Généreux, 1992 117 (SCC), [1992] 1 S.C.R. 259, 88 D.L.R. (4th) 110, 133 N.R. 241, 8 C.R.R. (2d) 89, 70 C.C.C. (3d) 1; Roncarelli v. Duplessis (1958), 1959 50 (SCC), [1959] S.C.R. 121, 16 D.L.R. (2d) 689; Valente v. R., 1985 25 (SCC), [1985] 2 S.C.R. 673, 14 O.A.C. 79, 24 D.L.R. (4th) 161, 64 N.R. 1, 19 C.R.R. 354, 23 C.C.C. (3d) 193, 49 C.R. (3d) 97, 37 M.V.R. 9, apld Other cases referred to 2747-3174 Québec Inc. v. Québec (Régie des permis d'alcool), 1996 153 (SCC), [1996] 3 S.C.R. 919, 140 D.L.R. (4th) 577, 205 N.R. 1; Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, 174 D.L.R. (4th) 193, 243 N.R. 22; Canada Assistance Plan (British Columbia) (Reference re), 1991 74 (SCC), [1991] 2 S.C.R. 525, 58 B.C.L.R. (2d) 1, 83 D.L.R. (4th) 297, 127 N.R. 161, [1991] 6 W.W.R. 1 (sub nom. Constitutional Question Act (Re)); Council of Civil Service Unions v. Minister for the Civil Service, [1984] 3 All E.R. 935, [1984] 3 W.L.R. 1174, [1985] A.C. 374, [1985] I.C.R. 14 (H.L.); Public Service Employee Relations Act (Alta.) (Reference re), 1987 88 (SCC), [1987] 1 S.C.R. 313, 51 Alta. L.R. (2d) 97, 38 D.L.R. (4th) 161, 74 N.R. 99, [1987] 3 W.W.R. 577, 28 C.R.R. 305, 87 C.L.L.C. 14,021 (sub nom. Alberta Union of Provincial Employees v. Alberta (Attorney General)); Remuneration of Judges of the Provincial Court of Prince Edward Island (Reference re), 1997 317 (SCC), [1997] 3 S.C.R. 3, 121 Man. R. (2d) 1, 156 Nfld. & P.E.I.R. 1, 150 D.L.R. (4th) 577, 217 N.R. 1, 483 A.P.R. 1, 158 W.A.C. 1, [1997] 10 W.W.R. 417, 46 C.R.R. (2d) 1, 118 C.C.C. (3d) 193, 11 C.P.C. (4th) 1 (sub nom. Provincial Court Judges Assn. (Manitoba) v. Manitoba (Minister of Justice)) Statutes referred to Canadian Charter of Rights and Freedoms, s. 11(d) Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H.14, ss. 4, 6(5), 9.2(1) [as am. by S.O. 1997, c. 21, Sch. A, s. 4(8)], 11(1) Labour Relations Act, S.O. 1995, c. 1, Sch. A, s. 49(10) Public Sector Transition Stability Act, 1997, S.O. 1997, c. 21 Authorities referred to Freedom of Association, Digest of decisions and principles of the Freedom of Association Committee of the Governing Body of the International Labour Office (Geneva: International Labour Office, 1996) Green, "The Rationale and Some Aspects of Judicial Independence" (1985) 59 A.L.J. 135, p. 135 Wood, Report on a Study and Information Mission to Canada (Geneva: International Labour Office, 1985), para. 156

Howard Goldblatt and Steven Barrett, for appellants. Leslie McIntosh, for respondent.

The judgment of the court was delivered by

AUSTIN J.A.: --

Overview

[1] The appellants, the Canadian Union of Public Employees ("CUPE") and Service Employees International Union ("SEIU") appeal with leave from the decision of the Divisional Court made February 17, 1999. The Divisional Court dismissed the appellants' application for judicial review. The appellants asked for judicial review of a new process for the appointment of chairs of arbitration boards ("interest arbitration") under the Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H.14 ("HLDAA"). This was a new process adopted by the Minister of Labour ("the Minister").

[2] Chairs of interest arbitrations were previously chosen from a group composed largely of trained, experienced and mutually acceptable individuals. The Minister changed the process so that chairs were chosen from retired judges. The central issue in this appeal is whether the Minister, in changing the process, violated the principles of natural justice by interfering with the impartiality and independence of the arbitrators and raising a reasonable apprehension of bias, and/or interfering with the legitimate expectations of the appellants.

[3] The Divisional Court dismissed the application without dealing with its merits. It decided that because the applicant unions did not claim any breach of the Canadian Charter of Rights and Freedoms ("the Charter"), the actions of the Minister, being based on a power granted by statute, could not be attacked as a denial of natural justice or lacking in institutional independence or impartiality. In my respectful view, the Divisional Court erred both in dealing with the matter on a "jurisdictional" basis and in dismissing the application.

[4] Because of the manner of disposition below, it is necessary to set out the facts, some of which are disputed, at some length.

The Facts

(a) CUPE and SEIU

[5] The events giving rise to this application began in June 1997 with the Ontario government's introduction of Bill 136, the Public Sector Transition Stability Act, 1997, S.O. 1997, c. 21. Amongst other matters, the Bill proposed to eliminate the existing system of arbitrations respecting the contents of collective agreements for employees covered by HLDAA (and for employees covered by the Police Services Act, R.S.O. 1990, c. P.15 and the Fire Protection and Prevention Act, S.O. 1997, c. 4 as well) and to replace it with a permanent Dispute Resolution Commission.

[6] Organized labour was strongly opposed to many aspects of Bill 136. In particular, CUPE and SEIU were opposed to the replacement of the existing interest arbitration system with the Dispute Resolution Commission. Background information about CUPE and SEIU and of the then existing arbitration system is required to better understand the appellants' position.

(a) CUPE and SEIU

[7] CUPE and SEIU are trade unions who together represent over 200,000 employees. Of these employees, over 70,000 work in hospitals, nursing homes, homes for the aged and other institutions included in the definition of "hospital" in HLDAA. Hospitals and hospital employees provide essential services to the public; as a result they are denied the right to lock out or to strike (HLDAA, s. 11(1)). Instead, s. 4 of HLDAA requires that outstanding disputes concerning the negotiation of collective agreements for such employees be submitted to interest arbitration.

(b) Boards of arbitration under [HLDAA](https://www.canlii.org/en/on/laws/stat/rso-1990-c-h14/latest/rso-1990-c-h14.html)

[8] A board of arbitration under HLDAA is generally composed of three persons. One person is named by the union and another is chosen by the employer. The third person, who becomes the chair of the board, is either agreed to by the parties or appointed by the Minister under s. 6(5) of HLDAA. That section reads as follows:

6(5) Where the two members appointed by or on behalf of the parties fail within ten days after the appointment of the second of them to agree upon the third member, notice of such failure shall be given forthwith to the Minister by the parties, the two members or either of them and the Minister shall appoint as a third member a person who is, in the opinion of the Minister, qualified to act.

[9] According to the appellants, prior to the passage of Bill 136, the vast majority of persons appointed to sit as chairs of boards of interest arbitrations were chosen by the Minister or his or her delegate from a list of arbitrators. The list was initially established in 1979 and was maintained thereafter for the primary purpose of supplying appointments to boards of rights (or grievance) arbitration under what is now s. 49(10) of the Labour Relations Act, S.O. 1995, c. 1, Sch. A ("the LRA"). The appellants refer to the members of this list as "the roster".

[10] According to the Minister, there was and is no such roster of interest arbitrators. Rather, interest arbitrators are appointed as the occasion arises, from a wide range of sources, one of which happens to be the arbitration roster maintained pursuant to the LRA.

[11] It is common ground that the LRA was amended in 1979 to provide for the creation and recognition of a group of arbitrators. Section 49(10) of the LRA does not describe the arbitrators as belonging to any particular class, such as rights arbitrators or interest arbitrators. The section reads as follows:

49(10) Approval of arbitrators, etc. -- The Minister may establish a list of approved arbitrators and, for the purpose of advising him or her with respect to persons qualified to act as arbitrators and matters relating to arbitration, the Minister may constitute a labour-management advisory committee composed of a chair to be designated by the Minister and six members, three of whom shall represent employers and three of whom shall represent trade unions, and their remuneration and expenses shall be as the Lieutenant Governor in Council determines.

(Emphasis added)

[12] The Labour Management Advisory Committee (the "LMAC") was established pursuant to s. 49(10) of the LRA in 1979 to advise the Minister about appointments to the list. Since then, LMAC, which is comprised of both trade union and management representatives appointed by Order in Council, has ensured that all persons on the list have expertise in the area of labour adjudication and are acceptable to both management and union. In addition to evaluating everyone seeking to be added to the list of arbitrators, LMAC plans and monitors an Arbitrator Development Program. Many persons are required to successfully complete this program before becoming eligible to be placed on the list. LMAC also conducts ongoing reviews of all the arbitrators on the list to ensure their continued acceptability. Its recommendations regarding additions to and removals from the list are invariably accepted by the Minister.

[13] Marcelle Goldenberg has been actively involved in SEIU affairs since 1978 and has been SEIU's Director of Research since 1996. She has been a member of LMAC since 1993. Her affidavit states that for the 20 years ending June 1997, arbitrators appointed to sit as chairs of interest arbitrations involving SEIU collective agreements have been, with two exceptions, "senior arbitrators appointed from the Ministry of Labour's roster of arbitrators". The two exceptions are Paul Weiler and Ray Illing, both very experienced, well-known and highly regarded in the labour relations field, and entirely acceptable to the appellants although not on the roster.

[14] Julie Davis has been a member of staff of CUPE since 1974 and has been CUPE's Chief Administrative Officer since 1996. Her affidavit parallels Ms. Goldenberg's; all of the appointments of interest arbitrators by the Minister or his or her delegate have been from the roster with the exception of Paul Weiler.

[15] Anthony A. Dean, Deputy Minister of Labour for the Province of Ontario, swore the affidavit setting out the Minister's position and the factual background. His affidavit dealing with the protest against Bill 136 reads in part:

9. Union representatives raised the concern that government would use this longstanding legislative power [s. 6(5) of HLDAA] to create the Dispute Resolution Commission through the back door, that is, that the Minister would begin appointing chairs who could be counted on to deliver the kinds of settlements the government wanted. Union representatives asked if we would agree that no changes would be made to "the list" without their agreement.

10. I and the other government representatives understood by this that the union representatives believed there existed a list of arbitrators maintained by the Ministry from which appointments of chairs of interest arbitration boards were made for the purpose of HLDAA. We replied, first, that no such list exists or had existed. Second, we stated that we could make no commitment with respect to future appointment practices. We stated that under the legislation, the Minister appointed and would continue to appoint fair, credible people.

11. A summary of the information prepared by LMS [Labour Management Services -- a branch or office of the Ministry] is attached as Exhibit "A" to my affidavit. Based on the information provided by LMS, I believe that in the 1990's most of the chairs of interest arbitration boards appointed under HLDAA have also been on the list of grievance arbitrators recommended to the Minister by LMAC for the purpose of the Labour Relations Act. However, prior to 1990, many of the chairs appointed for the purpose of HLDAA were not on the list. For example, in 1985/86, there were 58 ministerial appointments and of those 19 of the appointees were not on the list and in 1986/87, there were 80 ministerial appointments and 26 were not on the list. I believe from the information provided by LMS that many of the appointees who were not on the list ceased accepting appointments in the last 8 to 10 years because they were appointed to boards or commissions or they have retired from practice.

[16] There is much more material dealing with the question of who was appointed to conduct interest arbitrations during the period 1979 to 1997. I have drawn four conclusions from the materials. First, the main purpose of the machinery set up in 1979 was to produce persons qualified to do rights or grievance arbitrations who would be acceptable to both sides. Second, some of the persons so qualified are also skilled in interest arbitration. My third conclusion is that for some years the vast majority of interest arbitrators has been appointed by the Minister or his or her delegate from amongst this second group. Finally, those appointed to chair interest arbitrations who were not from the group or roster were persons who were skilled and experienced in interest arbitration and were quite acceptable to the unions involved. They included such persons as Paul Weiler, Ray Illing, former Justice George Adams and Chief Justice Alan Gold.

(c) Delegation of appointment power by Minister

[17] The matter of delegation is also in issue. The appellants say that although the power to appoint arbitrators is given to the Minister by s. 6(5) of HLDAA, it was the Minister's practice to delegate that power to a civil servant "to reduce the risk of direct political interference". Such delegation is authorized by s. 9.2(1) of HLDAA as amended by S.O. 1997, c. 21, Sch. A, s. 4(8).

[18] The Minister disputes the degree or amount of delegation. Mr. Dean's affidavit contains the following:

20. For the purpose of responding to this application for judicial review, LMS was asked to review its records in order to ascertain whether the Minister of Labour had historically delegated his or her duty to appoint chairs of interest arbitration boards under HLDAA. I am advised by Jean Read, the former Director of Arbitration with LMS, and I believe that she made appointments of chairs of interest arbitration boards for the purpose of HLDAA between approximately 1979 and 1981, although there is no record of a formal delegation. I am advised by Ursula Hardman of LMS and I believe that between approximately 1982 and 1994 the various Ministers of Labour personally made appointments of chairs of interest arbitration boards for the purpose of HLDAA. I am also advised by Ursula Hardman and I believe that the earliest delegation of the authority to appoint chairs of interest arbitration boards under HLDAA of which LMS has a record, is a delegation dated August, 1994 by the Hon. Mr. Mackenzie, the Minister of La bour from June of 1990 to October of 1994. I am advised by Ms. Hardman and I believe that the Hon. Ms. Coppen, Minister of Labour from October of 1994 to June of 1995 and the Hon. Mrs. Witmer, the Minister from June of 1995 to October of 1997, delegated their authority, but that Mr. Mackenzie and Ms. Coppen had also personally exercised the authority to make appointments of chairs of interest arbitration boards under HLDAA from time to time.

[19] At the relevant time, namely September 1997, the Minister had delegated the power to Paul Gardner, the Director of LMS, and Mr. Dean said in his affidavit that ". . . personally, I was not aware of any plans to change it", i.e. the practice of delegation. In fact, Mr. Flaherty, who became Minister of Labour in October 1997, ended the delegation some months later.

[20] I conclude that the appellants' position respecting delegation is substantially correct. Some Ministers delegated, others did not. Of those who delegated, some did so in writing, others less formally. The evidence leaves no doubt that the practice of delegation of the power to appoint under s. 6(5) of the HLDAA was well established although not uniformly followed.

(d) Interest of government in arbitrations

[21] As the primary funder and regulator of hospitals and nursing homes in Ontario, the government has a significant and direct interest in the outcome of interest arbitration proceedings under HLDAA. The vast bulk of total hospital revenue comes from the government. Approximately 75 per cent to 80 per cent of hospital budgets relate to labour costs and the government's primary method for controlling expenditures is wage control. Although nursing homes have sources of income that are not available to hospitals, they too are substantially dependent upon the government for funding. To the extent that the Minister is a member of Cabinet and thus of "the government", the Minister has a significant financial interest in HLDAA arbitrations.

(e) History of Bill 136

[22] Bill 136, the Public Sector Transition Stability Act, 1997, S.O. 1997, c. 21, was passed and proclaimed in force on October 29, 1997. The proposal to create a Dispute Resolution Commission was withdrawn and the Bill was otherwise substantially altered before it was passed and proclaimed in force. There is, however, much disagreement as to what was said or agreed to before and after the Bill was passed.

[23] The affidavit of Ms. Davis recites the details of the campaign against Bill 136, the resistance of the government, the increasing opposition and the eventual weakening and retreating of the government. Her position is that the government said that it would return to the status quo for the appointment of chairs to interest arbitration boards. Ms. Davis relies in particular on the statement of the Minister, then Elizabeth Witmer, to the House on September 18, 1997 as announcing inter alia that the government intended to "return to the status quo".

[24] Mr. Dean's position is that there was no commitment to return to the status quo. He says that the meetings described in some detail by Ms. Davis in her affidavit "were not negotiations [respecting the content of Bill 136 or what would replace it]. These were discussions for the purposes of information sharing and consultations on possible amendments to Bill 136." Parts of his affidavit are as follows:

8. In response to questioning from the union representatives about how appointments of chairs of interest arbitration boards would be made under the Hospital Labour Disputes Arbitration Act ("HLDAA"), the government representatives stated that Minister would continue to have the legislative authority to make appointments. We did indicate that there would be legislative amendments with respect to the arbitration process (the provisions regarding mediation-arbitration and Final Offer Selection would remain in the Bill) and that there would be certain criteria which arbitrators would be required to take into account in making an award.

9. Union representatives raised the concern that government would use this longstanding legislative power [s. 6(5) of HLDAA] to create the Dispute Resolution Commission through the back door, that is, that the Minister would begin appointing chairs who could be counted on to deliver the kinds of settlements the government wanted. Union representatives asked if we would agree that no changes would be made to "the list" without their agreement.

10. I and the other government representatives understood by this that the union representatives believed there existed a list of arbitrators maintained by the Ministry from which appointments of chairs of interest arbitration boards were made for the purpose of HLDAA. We replied, first, that no such list exists or had existed. Second, we stated that we could make no commitment with respect to future appointment practices. We stated that under the legislation, the Minister appointed and would continue to appoint fair, credible people.

11. At the September meetings, there were discussions about the use of the list or "pool" of grievance arbitrators recommended by LMAC for the purposes of the Labour Relations Act. I had already stated that there was no list for the purposes of HLDAA, although some of those appointed for the purposes of HLDAA were also on the list. I reminded the union representatives that the amended legislation would require mediation-arbitration unless the Minister chose another method, and that as the union representatives had expressed some concern that there was very little mediation expertise on the list, appointees who were not on the list would be required. In response to further questioning about the identity of the interest arbitrators, I expressly stated that union representatives would see some new faces whom they had not seen before. I indicated that my personal best guess was that there would not be many such people, but that union representatives should expect such appointments . I also indicated that I believed the appointees would be people who could do the job, and would be considered broadly as being fair and impartial.

12. In response to questioning about whether union representatives would be consulted about any appointments of arbitrators not on the list, I indicated that the traditional lines of communication regarding the appointment process for arbitrators would continue. Julie Davis asked what the process was, and I stated that "when we appoint arbitrators you don't like, we hear about it". I also indicated that we hear about it when union representatives like an appointment. Julie Davis said, "Oh, you mean I can call Paul Gardner from time to time, as I have in the past", and I said yes. I further indicated that the lines of communication were and would continue to be open.

13. Union representatives expressed concern at the lack of any assurances about how the appointments would be made. A lengthy and heated discussion took place about this issue. I recall the following exchange between Howard Goldblatt (speaking for the union representatives) and John Lewis and me (speaking for government representatives):

Q: Will you seek our agreement before adding anyone to the pool?

A: No.

Q: Will you consult with us before adding someone to the pool?

A: No.

Q: Let's determine the list of arbitrators right now.

A: No.

18. The only commitments made on behalf of government during these meetings and the only ones which we were authorized to make were reiterations of public commitments contained in the Minister's statement of September 18.

19. At the September meetings, union representatives also pressed the government representatives for a commitment that the delegated authority to appoint chairs or interest arbitration boards for the purpose of HLDAA would remain with Mr. Gardner, to whom the appointment power was delegated at that time. I indicated that personally, I was not aware of any plans to change it. However, in the course of the discussions, I kept returning to the point that the formal appointment authority would remain with the Minister under the legislation.

(Emphasis added)

[25] I do not accept Ms. Davis's interpretation of the Minister's statement to the House on September 18, 1997. The relevant part of the statement, as printed, says:

The OFL said there is "no need or justification for the proposed Dispute Resolution Commission". Our amendments would eliminate the DRC.

The union movement has requested a return to the current legislative provision governing the appointment of arbitrators. Our amendments would do that.

In substance, the Minister said that s. 6(5) of HLDAA would remain in force, not that the government would maintain or return to the status quo.

[26] In December, Ms. Davis became aware of the appointment for an arbitration of a person whom I assume was not on the roster. This appointment provoked a letter dated January 7, 1998 from the President of CUPE to the new Minister of Labour, Mr. Flaherty. The letter says:

Dear Minister:

During the course of discussions with the Government concerning Bill 136, representatives from the Ontario Federation of Labour, including the Ontario Director for the Canadian Union of Public Employees, were assured that their affiliated organizations, including C.U.P.E., would be fully consulted prior to the addition of names to any list from which persons may be appointed to conduct interest arbitrations. We are distressed to find that this has not been the case.

Accordingly, we are writing to confirm that your Ministry will only select persons to perform interest arbitrations or mediation/arbitrations under HLDAA/Bill 136 from among the persons who are included in the current list of arbitrators maintained by the Ministry of Labour in respect of arbitrators who have been appointed to conduct interest arbitrations in the past.

In accordance with the assurances provided to us by your Government, we reiterate that we expect to be fully consulted before any names are placed on this list.

[27] Ms. Davis does not say in her affidavit whether there was any response. I presume there was none. Ms. Davis says that CUPE did not pursue the matter because it was not a participant in the arbitration in question.

[28] The next relevant event was that the Minister wrote a letter dated February 2, 1998 to Kenneth P. Swan, President of the Ontario Labour Management Arbitrators Association. This letter was written in reply to Mr. Swan's letter of August 22, 1997 to Ms. Witmer, the then Minister of Labour. Mr. Swan's letter extols the virtues of the existing system and criticizes the changes proposed by Bill 136. The Minister's response of February 2, 1998 reads as follows:

Dear Mr. Swan:

I am writing in response to your letter to my predecessor, the Honourable Elizabeth Witmer, regarding the Public Sector Transition Stability Act, 1997 (Bill 136) which was proclaimed in force on October 29, 1997.

In your letter, you raise concerns on behalf of your organization regarding the neutrality of the Dispute Resolution Commission and the fairness of the arbitration process proposed under the Act as introduced.

I agree that, for a compulsory arbitration system to function as an adequate substitute for the right to strike, the parties must perceive the system as neutral and credible. I believe that we have achieved this goal.

In the development of the Act, the government heard from a wide range of stakeholders on these issues. In response to concerns raised, reference to the Dispute Resolution Commission was deleted from the Act. The police and hospital sectors will continue under existing systems for appointment of arbitrators. The fire services sector will now be covered by a process similar to that contained in the Hospital Labour Disputes Arbitration Act.

The Act reforms compulsory interest arbitration processes to stress negotiated solutions instead of arbitrated contracts, provide for expedited time lines and alternate dispute resolution mechanisms, and require arbitrators to consider criteria such as the employer's ability to pay, the economic situation in the municipality and province, and the extent to which services may have to be reduced if current funding and taxation levels remain unchanged.

Thank you very much for sharing your views and experience on this matter. I would be pleased to meet with you in the near future to discuss this and other issues of mutual interest.

(Emphasis added)

(f) The appointment of retired judges as arbitrators

[29] On February 20, 1998, without any consultation with the appellants, the Minister personally appointed four retired judges, who were not on the roster, to chair boards of interest arbitration to resolve a number of collective bargaining disputes at Ontario hospitals. On the same day, the Ministry of Labour ("Ministry") issued a background statement entitled "Interest Arbitration in the Hospital Sector" which included the following statement:

During this period of significant restructuring in the broader public sector . . . it is essential that parties to an arbitration have complete confidence in the objectivity and neutrality of arbitrators appointed by the Minister.

[30] On March 10, 1998, Wayne Samuelson, the President of the Ontario Federation of Labour, wrote to the Minister stating that the appointment of the retired judges constituted a clear breach of the understanding reached between labour and government during the discussions concerning Bill 136, and was taken without even a pretence of consultation.

[31] After receiving communications from Mr. Samuelson, the four judges withdrew, two on the basis that they would not proceed unless acceptable to both sides. More appointments of retired judges followed and in some cases arbitrations proceeded.

[32] Discussions between the appellants and the government continued but did not resolve the issues and this application was then brought.

[33] Under the transitional provisions of Bill 136 as enacted, where a chair had already been appointed, but the interest arbitration had not yet been completed, a party could reject the chair and request that a new chair be appointed. Following the passage of Bill 136, in every arbitration involving CUPE in which a chair had been appointed, the employer requested a new appointment. In all cases, the new appointment was a retired judge. Further, since the Minister began appointing retired judges, employers have advised CUPE that they are not prepared to accept anyone on the roster and have refused to propose names of potential chairs. Consequently, there have been no consensual appointments of chairs in CUPE cases since at least February 1998.

(g) Professor Weiler's evidence

[34] Part of the material filed in support of the application is an affidavit of Joseph Weiler. He has been a professor on the Faculty of Law at the University of British Columbia since 1974. Professor Weiler teaches labour law and labour policy. He has acted as an arbitrator in both rights and interest arbitrations in British Columbia and the Yukon. He has acted as a mediator, conciliator and facilitator in labour management disputes and has been a member of the National Academy of Arbitrators since 1983. He is widely recognized as an authority in labour matters.

[35] In an affidavit filed in these proceedings, Professor Weiler comments that "government may be both the lawmaker and the employer" and that "government may have a significant interest in the outcome of a dispute given its position as both the primary source of the [hospital] sector's funding and its regulator." He goes on to note that "[t]hese multiple roles of government may create a potential conflict of interest, and, as a result, efforts have been made in public sector collective bargaining law and practice to isolate these potentially conflicting roles." He then deals with the consequences of legislation which prohibits strikes as follows:

9. . . . Governments routinely amend public labour law in order to avoid work stoppages in essential services. As a substitute for the strike or lockout weapons, the collective bargaining model, as modified for the public sector, provides for the resolution of interest disputes (when negotiations reach an impasse) by an independent, impartial, single arbitrator (or chair of a tripartite arbitration board). The independence and neutrality of the arbitration board, as against the potential conflicts given the government's roles and interests as described above, is generally preserved through the use of neutral third parties who have proven to be mutually acceptable to unions and employers.

(Emphasis added)

[36] Thus Professor Weiler sees a trade-off of sorts: the loss of the right to strike is made up for or balanced by the adoption of an arbitration system using persons mutually acceptable to employer and employee. LMAC meets the needs of such a system. The independence and impartiality of arbitrators is guaranteed not by their remoteness, security of tenure, financial security or administrative security, but by training, experience and mutual acceptability.

[37] Professor Weiler comments on the operation of the LMAC system as follows:

18. Joint administration of the interest arbitration process used to break a bargaining impasse is therefore a key element in its potential for success. The two parties must jointly select their own "lawmaker", i.e., the interest arbitrator who will write their new collective agreement. This is achieved in an important way by their joint input into the composition of the roster of arbitrators and the selection of the arbitrator from that list to adjudicate their dispute.

(Emphasis added)

[38] Professor Weiler also discusses the tendency of labour dispute resolution in Canada to move away from the courts and judges and toward both permanent and ad hoc boards. In para. 10 of his affidavit, he says:

10. The reasons Canadian labour law has embraced the administrative tribunal rather than the judicial/court approach to interpreting and applying labour law was because the courts tend to be more legalistic, formal, and time consuming in their operation than was appropriate for industrial relations disputes. The court process was felt to be more appropriate for "one off" legal disputes between litigants rather than for the refereeing of ongoing relationships between unions and management. In contrast, the administrative tribunal approach to labour disputes tended to utilize personnel who were experts in labour relations (and not necessarily in law), who often had considerable experience in using alternative dispute resolution techniques (such as mediation and facilitation) and who were more comfortable working in an informal, expeditious adjudication process that was more amenable to the maintenance of the ongoing labour-management relationship. This administrative, curative approach to labour disputes allo ws the parties to participate to a greater extent as "industrial citizens" in the application of labour law to their workplace.

[39] Professor Weiler goes on to say that while judges were used as arbitrators in Canada in the 1950's and 1960's, such appointments were rare by the 1980's. He explains as follows:

13. An important reason why labour arbitrators are not drawn from the judiciary is that, when courts were involved in adjudicating labour law cases, judges often handled labour issues "consistent with general jurisprudential concepts" that reflected judicial training and experience. However, this approach may fail to recognize the special needs and traditions of the industrial community whose "industrial jurisprudence" is composed of labour relations statutes, regulations, collective agreements and the customs and values of the industrial relations community. As recognized in the Alberta Reference case, per McIntyre J., judges by their training and experience do not have the expert knowledge that is expected to be routinely applied by seasoned professional arbitrators. In contrast, many labour arbitrators are drawn from labour relations boards or other industrial relations professional contexts wherein they have been exposed to the nuances of industrial relations and have developed the necessary savvy to realize the implications of their decisions in the real world of work. There are a variety of exposures to the employment context that may or may not involve legal training or legal practice. Nevertheless, valuable insights gained in these contexts are very relevant to the performance of the role of a labour relations neutral and, accordingly, they are recognized by the parties in the work experience they consider relevant to the role of the arbitrator. These are identified in the "Criteria for the Recommendation of Candidates" jointly drafted by labour and management through the LMAC, and attached as Exhibit "B" to the Affidavit of Marcelle Goldenberg. Notable in its absence from the list of relevant work experience is sitting as a judge or practicing law other than labour law.

(Footnotes omitted)

[40] The reference to McIntyre J. is with respect to his statement in Reference re Public Service Employee Relations Act, (Alta.), 1987 88 (SCC), [1987] 1 S.C.R. 313 at pp. 416 and 417, 38 D.L.R. (4th) 161, as follows:

Our experience with labour relations has shown that the courts, as a general rule, are not the best arbiters of disputes which arise from time to time. Labour legislation has recognized this fact and has created other procedures and other tribunals for the more expeditious and efficient settlement of labour problems. Problems arising in labour matters frequently involve more than legal questions. Political, social, and economic questions frequently dominate in labour disputes. The legislative creation of conciliation officers, conciliation boards, labour relations boards and labour dispute-resolving tribunals, has gone far in meeting needs not attainable in the court system. The nature of labour disputes and grievances and the other problems arising in labour matters dictates that special procedures outside the ordinary court system must be employed in their resolution. Judges do not have the expert knowledge always helpful and sometimes necessary in the resolution of labour problems. . . . In my view, it is scarcely contested that specialized labour tribunals are better suited than courts for resolving labour problems, except for the resolution of purely legal questions.

[41] This view is supported inferentially by the fact that until very recently, lawyers and judges in Canada were not generally trained in negotiation, mediation or arbitration. Only in the last 10 years has instruction in alternate dispute resolution become a necessity amongst lawyers and judges across Canada.

[42] Professor Weiler's view of the appointment of judges or retired judges as arbitrators in labour arbitrations is, to say the least, negative. In his affidavit he says that:

23. It is widely known that the labour movement in Canada has had a negative view of the treatment it has been accorded by the judiciary over the past century. This traditional concern on the part of labour and the reasons for it are well documented, and have been identified by both academics and the judiciary itself.

(Footnotes omitted)

25. The appointment by the Minister of former judges to serve as interest arbitrators in hospital disputes has, not surprisingly, led to adverse reaction by unions who are expected to participate in these hearings and abide by the results. This reaction is not due to the merits of any individual former judge but rather to retired judges as a class or group, given the view and experience of unions concerning the role of the judiciary in labour relations. These retired judges do not have tenure as arbitrators and therefore do not have the kind of independence from government that they previously enjoyed when they served on the bench. They also have no expertise in industrial relations. Certainly they lack the deep and wide experience possessed by arbitrators familiar with the industrial relations community of Ontario.

26. In view of the traditional attitude of unions with respect to how well they have fared in the courts in labour cases, it is understandable that labour would be very concerned, and other observers would be mystified, that this particular occupational group of retired judges has now been appointed by the Minister to adjudicate interest disputes and thereby make "private" law for the labour relations parties, particularly when experienced expert arbitrators are readily available. This is especially cause for concern for labour because what is involved here is interest arbitration wherein the arbitrator will be writing the new collective agreement for the parties and not (as in the case of grievance (rights) arbitration) merely interpreting and applying the existing collective agreement between the parties. The discretion afforded the arbitrator in interest arbitration as contrasted with rights arbitration is fundamentally different. Accordingly, there is even greater need for the parties to an interest arb itration to have confidence that the adjudicator is qualified, impartial and independent.

27. Moreover, in view of the fact that it is contemplated that Ministerial appointees may also be involved in mediation-arbitration, the use of former judges is even more problematic given the general lack of experience of the courts with mediation techniques and other alternative dispute resolution methods. Mediation skills are quite different from arbitration skills. The process of mediation often involves private caucusing wherein the particular parties are expected to provide the mediator with confidential information about their bargaining position or strategy. This seems unlikely to occur if the parties lack confidence in the identity of the neutral who is appointed to the case. As such, mediation will not likely succeed in reaching voluntary settlements.

28. . . . However, if one side has serious concerns about the independence, impartiality or competence of the mediator assigned to the case, then the mediator can be an obstacle to innovation in workplace arrangements rather than a catalyst that will unleash the creative problem-solving capabilities of the parties to make changes that are in their mutual self- interest.

[43] Professor Weiler's views are supported by a Report on a Study and Information Mission to Canada (Geneva: International Labour Office, 1985). This report was written by Sir John Wood, C.B.E., L.L.M. as a representative of the Director-General of the International Labour Office in 1985. Paragraph 156 of the Report reads as follows:

The independence of arbitration is of paramount importance. It is the feature of the system in the public sector which seeks to balance the non-existence of the right to strike. That equation is one which not all those giving evidence accept as fair or proper but that question does not arise at this time. What is important is that where that system operates, arbitration must be independent. Confidence in arbitration is easily destroyed so everything must be done to ensure that doubts as to independence should be assuaged. It is not a question of testing or challenging their validity. It is essential to see whether steps can be properly taken to strengthen independence. One significant point put [sic] concerns the appointment of arbitrators. If at all possible, this should be done by a body independent of Government, a Labour Relations Board, a court and so on, depending on the particular structure. It is a matter that would require serious consideration by the provincial authorities.

(Emphasis added)

[44] Further support is found in Freedom of Association, Digest of decisions and principles of the Freedom of Association Committee of the Governing Body of the International Labour Office (Geneva: International Labour Office, 1996). It says:

Compensatory guarantees in the event of the prohibition of strikes in the public service or in essential services

547. As regards the nature of appropriate guarantees in cases where restrictions are placed on the right to strike in essential services and the public service, restrictions on the right to strike should be accompanied by adequate, impartial and speedy conciliation and arbitration proceedings in which the parties concerned can take part at every stage and in which the awards, once made, are fully and promptly implemented.

548. In mediation and arbitration proceedings it is essential that all the members of the bodies entrusted with such functions should not only be strictly impartial but, if the confidence of both sides, on which the successful outcome even of compulsory arbitration really depends, is to be gained and maintained, they should also appear to be impartial both to the employers and to the workers concerned.

(Emphasis added)

I understand "at every stage" as including the stage of choosing an arbitrator.

[45] What I take, and accept, from the foregoing is that in a situation where strikes and lockouts are prohibited and where the employer has substantial interest in the results of arbitrations, one process that works is to choose arbitrators who are mutually acceptable. In Canada, such arbitrators are unlikely to be judges. In the event judges are unilaterally appointed as arbitrators by the employer, the judges would not be regarded by unions as either impartial or independent. As Professor Weiler stated above, the problem is not with respect to any particular judge or judges. It is with respect to all judges as a class. There would, of course, be exceptions, such as Chief Justice Alan Gold and former Justice George Adams.

[46] Mr. Dean's affidavit purported to justify the need for new and different arbitrators on the grounds of ability to maintain "time-lines" and the need for skill and experience in mediation-arbitration and last-offer arbitration, both of which were new to HLDAA. No evidence was drawn to the attention of the court to show that retired judges were better qualified than roster members in these respects.

The Application

[47] The grounds relied on for the application are as follows:

(a) the Minister's appointment of the non-roster appointees undermines the impartiality and independence of the appointment and decision-making process under HLDAA;

(b) the Minister's appointment of the non-roster appointees to act as chairs of boards of interest arbitration under HLDAA breaches representations and an agreement made by representatives of the Minister on his behalf with respect to the appointment process under HLDAA and, in particular, of an agreement that appointments under HLDAA would be made in accordance with established practice and from the Ministry of Labour's roster of trained and experienced labour relations arbitrators;

(c) the Minister's failure or refusal to make appointments under HLDAA in accordance with the agreement interferes with the legitimate expectations of the affected unions; and,

(d) the Minister's failure or refusal to delegate his appointment functions to a member of the civil service in accordance with his Ministry's long-established practice breaches the agreement with the affected unions, gives rise to a reasonable apprehension of bias and interferes with the independence and impartiality of the boards of arbitration established under HLDAA.

The Divisional Court

[48] The application was dismissed by the Divisional Court. The reasons of Southey J. speaking on behalf of that court read in part as follows [at paras. 16-18]:

The applicants do not claim a breach of any rights under the Charter. That being so, actions of the Minister, if authorized by statute, cannot be successfully attacked as being a denial of natural justice or lacking in institutional independence or impartiality. In making that statement I rely on the decision of the Court of Appeal in Re W.D. Latimer Co. Ltd. and Bray (1974), 1974 698 (ON CA), 6 O.R. (2d) 129.

The applicants in the Latimer case sought to restrain a panel of the Ontario Securities Commission from continuing a hearing on the ground of bias because the panel had received information about the case as a result of the investigation by the Commission before the hearing. The applicant relied on the maxim "no man shall be judge of his own cause". Dubin J.A., delivering the judgment of the Court, said at p. 137:

There is no complaint of bias in fact. What is being said is that it is reasonable for the appellants in this case to fear that a tribunal, which comes to the hearing forearmed with prejudicial information as a result of its own investigation, will not deal fairly with the issues before it. It is the appearance of injustice which it is submitted constitutes bias in law in this case.

In the instant case, the Commission is by statute the investigator, the prosecutor and judge. Where a statute by its terms or by clear implication precludes the introduction of a common law rule and where the imposition of such a rule would frustrate the will of the Legislature or of Parliament as expressed in the statute, the Court is not free to insist that the common law rules prevail, however inviting it may be for a Court to do so.

The decision of the Court of Appeal in Latimer was cited with approval by the Supreme Court of Canada in Brosseau v. Alberta Securities Commission (1989), 1989 121 (SCC), 57 D.L.R. (4th) 458. L'Heureux-Dubé J., delivering the judgment of the Court said, at p. 468:

Dubin J.A. found that the structure of the Act whereby commissioners could be involved in both the investigatory and adjudicatory functions did not, by itself, give rise to a reasonable apprehension of bias.

I am in agreement with this proposition. So long as the chairman did not act outside of his statutory authority, and so long as there is no evidence to show involvement above and beyond the mere fact of the chairman's fulfilling his statutory duties, a "reasonable apprehension of bias" affecting the Commission as a whole cannot be said to exist.

I am satisfied that the actions of the Minister in appointing retired judges as chairmen of interest arbitration boards fell squarely within the authority given to him in s. 6(3) of the HLDAA. It is not open to the Court in those circumstances to apply the common law doctrines on which the applicants rely to negate the statutory authority of the Minister.

Issues

[49] The issues on this appeal are: Did the Divisional Court err in its conclusion that absent "a breach of any rights under the Charter . . . actions of the Minister, if authorized by statute, cannot be successfully attacked as being a denial of natural justice or lacking in institutional independence or impartiality"?; and, if the Divisional Court did err, has there been a denial of natural justice?

(a) Did the Divisional Court err in its conclusion?

[50] I disagree with the reasoning of the Divisional Court. The Divisional Court relied on W.D. Latimer Co. v. Bray [(1974), 1974 698 (ON CA), 6 O.R. (2d) 129, 52 D.L.R. (3d) 161 (C.A.)], and Brosseau v. Alberta Securities Commission [1989 121 (SCC), [1989] 1 S.C.R. 301, 65 Alta. L.R. (2d) 97], but both cases are distinguishable on their facts from the instant case. Both held that where there is a conflict between the provisions of the relevant statute and the rules of natural justice, the statute must govern. That is not the issue now before the court. There is no suggestion of conflict. In the instant case the issue is whether the decision of the Minister was made in accordance with the rules of natural justice.

[51] Section 6(5) of HLDAA confers upon the Minister a discretionary power. That the exercise of discretionary power by a Minister is reviewable by the court was affirmed in Roncarelli v. Duplessis (1958), 1959 50 (SCC), [1959] S.C.R. 121, 16 D.L.R. (2d) 689. The Supreme Court of Canada held that the decision of the Prime Minister and Attorney General of Quebec, as carried out through the agency of the Liquor Commission, had no legal force or effect. Rand J. stated at p. 140 that:

A decision to deny or cancel such a privilege [a liquor licence] lies within the "discretion" of the Commission; but that means that decision is to be based upon a weighing of considerations pertinent to the object of the administration.

"Discretion" necessarily implies good faith in discharging public duty; there is always a perspective within which a statute is intended to operate; and any clear departure from its lines or objects is just as objectionable as fraud or corruption.

(Emphasis added)

[52] The same proposition was restated from an administrative point of view in Multi-Malls Inc. v. Ontario (Minister of Transportation and Communications) (1976), 1976 623 (ON CA), 14 O.R. (2d) 49, 73 D.L.R. (3d) 18 (C.A.). The issue was whether the Minister refused to issue a permit for access to a highway for reasons not relevant to the purposes or objectives of the Public Transportation and Highway Improvement Act, R.S.O. 1970, c. 201. The court set aside the Minister's refusal of the permit and the matter was referred back to the Minister to reconsider on proper principles. In reaching this conclusion, Lacourcière J.A., speaking for this court, said at p. 57:

We are asked to draw the inference that the Legislature wished it to remain clear that the discretion as to cancellation was to remain unfettered; but the discretion is always subject to the requirements of natural justice and to "the control which the judiciary have over the executive, namely that in exercising their powers the latter must act lawfully and that is a matter to be determined by looking at the Act and its scope and object in conferring a discretion upon the Minister . . .", per Lord Upjohn in Padfield et al. v. Minister of Agriculture, Fisheries & Food et al., [1968] A.C. 997 at p. 1060.

(Emphasis added)

[53] In Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, 174 D.L.R. (4th) 193, the Supreme Court of Canada recently reaffirmed these principles and in addition expanded the scope of judicial review by requiring that statutory discretion be exercised in a manner consistent with the principles of the Charter. At pp. 853 and 854 S.C.R. L'Heureux-Dubé J., speaking for the court, said:

Administrative law has traditionally approached the review of decisions classified as discretionary separately from those seen as involving the interpretation of rules of law. The rule has been that decisions classified as discretionary may only be reviewed on limited grounds such as the bad faith of decision-makers, the exercise of discretion for an improper purpose, and the use of irrelevant considerations: see, for example, Maple Lodge Farms Ltd. v. Government of Canada, 1982 24 (SCC), [1982] 2 S.C.R. 2, at pp. 7-8; Shell Canada Products Ltd. v. Vancouver (City), 1994 115 (SCC), [1994] 1 S.C.R. 231. A general doctrine of "unreasonableness" has also sometimes been applied to discretionary decisions: Associated Provincial Picture Houses, Ltd. v. Wednesbury Corporation, [1948] 1 K.B. 223 (C.A.). In my opinion, these doctrines incorporate two central ideas -- that discretionary decisions, like all other administrative decisions, must be made within the bounds of the jurisdiction conferred by the statute, but that considerable deference will be given to decision-makers by courts in reviewing the exercise of that discretion and determining the scope of the decision-maker's jurisdiction. These doctrines recognize that it is the intention of a legislature, when using statutory language that confers broad choices on administrative agencies, that courts should not lightly interfere with such decisions, and should give considerable respect to decision-makers when reviewing the manner in which discretion was exercised. However, discretion must still be exercised in a manner that is within a reasonable interpretation of the margin of manoeuvre contemplated by the legislature, in accordance with the principles of the rule of law (Roncarelli v. Duplessis [citation omitted]), in line with general principles of administrative law governing the exercise of discretion, and consistent with the Canadian Charter of Rights and Freedoms (Slaight Communications Inc. v. Davidson, 1989 92 (SCC), [1989] 1 S.C.R. 1038).

[54] Having established the power and duty of the court to review the exercise of discretion by the Minister, I will now deal with the substance of the complaint, which is that the appellants have been denied natural justice. The Divisional Court did not deal with this because of the conclusion the court reached as discussed above.

(b) Has there been a denial of natural justice?

[55] The appellants claimed that natural justice was denied to them in two ways. First, because the Minister interfered with the impartiality and independence of boards of arbitration and raised a reasonable apprehension of bias, and second, because the appellants' legitimate expectations were not met.

(i) Independent and impartial tribunals and reasonable apprehension of bias

[56] Persons involved in litigation before the courts are entitled to have their claims dealt with by judges who are independent and impartial. The same is true, in general terms, of parties before administrative tribunals. Like courts, administrative tribunals are bound to observe the principles of natural justice. In Canadian Pacific Ltd. v. Matsqui Indian Band, 1995 145 (SCC), [1995] 1 S.C.R. 3, 122 D.L.R. (4th) 129, Lamer C.J.C. at p. 49 S.C.R. put it as follows:

I agree and conclude that it is a principle of natural justice that a party should receive a hearing before a tribunal which is not only independent, but also appears independent. Where a party has a reasonable apprehension of bias, it should not be required to submit to the tribunal giving rise to this apprehension. Moreover, the principles for judicial independence outlined in Valente are applicable in the case of an administrative tribunal, where the tribunal is functioning as an adjudicative body settling disputes and determining the rights of parties.

[57] The principles of judicial independence were outlined by LeDain J. in Valente v. R., 1985 25 (SCC), [1985] 2 S.C.R. 673, 24 D.L.R. (4th) 161. LeDain J. quoted at p. 687 S.C.R., with approval, the following statement by Sir Guy Green, Chief Justice of Tasmania, in "The Rationale and Some Aspects of Judicial Independence" (1985) 59 A.L.J. 135 at p. 135:

I thus define judicial independence as the capacity of the courts to perform their constitutional function free from actual or apparent interference by, and to the extent that it is constitutionally possible, free from actual or apparent dependence upon, any persons or institutions, including, in particular, the executive arm of government, over which they do not exercise direct control.

[58] It is important to note that Sir Guy Green includes both "actual or apparent interference" as compromising judicial independence. The concern in the present case is with "apparent" matters. LeDain J. went on p. 689 S.C.R. as follows:

Although judicial independence is a status or relationship resting on objective conditions or guarantees, as well as a state of mind or attitude in the actual exercise of judicial functions, it is sound, I think, that the test for independence for purposes of s. 11(d) of the Charter should be, as for impartiality, whether the tribunal may be reasonably perceived as independent. Both independence and impartiality are fundamental not only to the capacity to do justice in a particular case but also to individual and public confidence in the administration of justice. Without that confidence the system cannot command the respect and acceptance that are essential to its effective operation. It is, therefore, important that a tribunal should be perceived as independent, as well as impartial, and that the test for independence should include that perception. The perception must, however, as I have suggested, be a perception of whether the tribunal enjoys the essential objective conditions or guarantees of judicial independence, and not a perception of how it will in fact act, regardless of whether it enjoys such conditions or guarantees.

(Emphasis added)

[59] The importance of the perception of independence and impartiality is clear from the frequent references to it in subsequent jurisprudence. See for instance: 2747-3174 Québec Inc. v. Québec (Régie des permis d'alcool), 1996 153 (SCC), [1996] 3 S.C.R. 919 per Gonthier J. at p. 951, para. 43 and pp. 951-52, para. 45, 140 D.L.R. (4th) 577; Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, 1997 317 (SCC), [1997] 3 S.C.R. 3 per Lamer C.J.C. at pp. 78-79, paras. 111 and 112, 150 D.L.R. (4th) 577; Matsqui, supra, per Lamer C.J.C. at p. 42 S.C.R., para. 63 and p. 49 S.C.R., para. 80.

[60] Reference re Remuneration of Judges of the Provincial Court of Prince Edward Island, supra, deals with the question of whose perception counts. It is that of the "reasonable and informed person" according to Lamer C.J.C. at p. 79 S.C.R. If there is a "reasonable apprehension of bias" to this person, the tribunal is not perceived as independent and impartial. In Matsqui, supra, at p. 50 S.C.R., para. 81, Lamer C.J.C. said:

The classic test for a reasonable apprehension of bias is that stated by de Grandpré J. in Committee for Justice and Liberty v. Canada (National Energy Board), 1976 2 (SCC), [1978] 1 S.C.R. 369 at p. 394:

. . . the apprehension of bias must be a reasonable one, held by reasonable and right minded persons, applying themselves to the question and obtaining thereon the required information. In the words of the Court of Appeal that test is "what would an informed person, viewing the matter realistically and practically -- and having thought the matter through -- conclude. Would he think that it is more likely than not that Mr. Crowe, whether consciously or unconsciously, would not decide fairly".

De Grandpré J. further held that the grounds for the apprehension must be "substantial".

[61] R. v. Généreux, 1992 117 (SCC), [1992] 1 S.C.R. 259, 88 D.L.R. (4th) 110 involved a court martial. The central question was "whether the tribunal, from the objective standpoint of a reasonable and informed person, will be perceived as enjoying the essential conditions of independence", per Lamer C.J.C. at p. 287 S.C.R. He approached this question using security of tenure, financial independence and institutional independence as the essential conditions that had to be present. Speaking for himself and three others, Lamer C.J.C. found the tribunal wanting in all three respects and accordingly ordered a new hearing. In dealing with the question of institutional independence he said at p. 309 S.C.R.:

Secondly, the appointment of the judge advocate by the Judge Advocate General (art. 111.22 Q.R. & O.), undermines the institutional independence of the General Court Martial. The close ties between the Judge Advocate General, who is appointed by the Governor in Council, and the executive, are obvious. To comply with s. 11(d) of the Charter, the appointment of a military judge to sit as judge advocate at a particular General Court Martial should be in the hands of an independent and impartial judicial officer. The effective appointment of the judge advocate by the executive could, in objective terms, raise a reasonable apprehension as to the independence and impartiality of the tribunal.

(Emphasis added)

[62] Stevenson J., La Forest and McLachlin JJ. concurring, agreed that there must be a new trial but for reasons differing from those of Lamer C.J.C. Stevenson J. found that independence from the "executive" was impractical in the military establishment but that institutional independence within the court martial system was attainable. He described it thus at pp. 318 and 319 S.C.R.:

Given an ad hoc military tribunal, composed of military personnel, operating within a military hierarchy, what institutional independence should the Charter ensure?

The tribunal must be free to make its decisions on the merits.

Given that the members of the tribunal are necessarily operating within the military service, that means to me that no one who has an interest in seeing that the prosecution succeeds or fails should be in a position of influence.

Clearly, the accused and the "complainants" have that interest. That interest would, in my view, extend to the prosecutor and military personnel engaged in the investigation or in formulating or approving the charges.

I suggest that there must be found some point within the military hierarchy where the officer or official has no real or apparent concern about the outcome. There is, at that point, sufficient independence. I leave aside cases in which it can be shown to the contrary because the Charter provisions would clearly apply in such a case. In my view, the convening authority is sufficiently far removed from the investigative and complaint stages to convene the court martial and appoint its members.

I am concerned that the convening authority also appoints the prosecutor. This is done with the concurrence of the Judge Advocate General. With the scheme in force when this matter was tried, the judge advocate also was appointed by the Judge Advocate General.

I agree with the Chief Justice that the convergence of responsibilities in appointing the prosecutor and judge advocate is objectionable as it fails to meet the requirement that those appointing the tribunal have no apparent concern in the outcome.

In saying this, I do not do so on the basis that the Judge Advocate General and the convening authority are all part of the executive, but that there is at least an appearance that those responsible for choosing the tribunal, namely the convening authority and the Judge Advocate General, have an interest in the nomination of the prosecutor and, in effect, in a successful prosecution.

(Emphasis added)

Again, the appearance of independence was required.

[63] Matsqui, supra, also involved the tribunal being appointed by an interested party. The case involved appeals from tax assessments of real estate within reserves. The particular issue was whether or not lands granted to Canadian Pacific by the Crown were, by definition, excluded from lands "within a reserve". Canadian Pacific lost at the tribunal level, so applied to the Federal Court - Trial Division for judicial review. Canadian Pacific argued that the provisions permitting band members to sit on the assessment appeal tribunal raised a reasonable apprehension of bias. Joyal J. struck out the application on the ground that the issues raised could be litigated within the assessment appeal structure itself. Joyal J. did not deal with reasonable apprehension of bias. An appeal to the Federal Court of Appeal was allowed.

[64] The band appealed to the Supreme Court of Canada. In that court, Canadian Pacific argued that the assessment appeal procedures were not an adequate alternative to judicial review because the appeal tribunals themselves gave rise to a reasonable apprehension of bias. Two sources of bias were alleged [at pp. 40-41 S.C.R.]:

(1) Members of the bands may be appointed to the appeal tribunals. All members of the band are tax exempt yet enjoy the benefits of taxes spent on the reserve. Therefore a band member on the tribunal would have a direct and personal interest in determining the highest possible assessments to ensure the greatest tax revenue;

(2) Non-Indian members will be concerned about rendering decisions adverse to the interests of the band and its members which could affect them as follows:

(a) they "may" but not "shall" be paid remuneration for their services;

(b) they enjoy no tenure of office and may not be appointed to sit on future assessment appeals.

[65] Lamer C.J.C. began by noting that although s. 11(d) of the Charter did not apply, Charter principles developed by the Supreme Court of Canada were applicable in dealing with issues of independence and impartiality. At p. 41 S.C.R. he said:

As a preliminary comment, I would note that s. 11(d) of the Canadian Charter of Rights and Freedoms guarantees to everyone charged with an offence a hearing before an independent and impartial tribunal. Of course, this case does not involve someone "charged with an offence", so s. 11(d) does not apply directly. However, in interpreting s. 11(d), this Court has developed important principles on the correct approach which should be taken to issues of bias, and particularly the issues of independence and impartiality.

[66] He then went on to deal with the issue before him, which involved the appointment of band members to the tribunals which would hear appeals respecting the assessment for taxes of lands within the reserves of those same members. At p. 42 S.C.R., he said:

When the respondents allege an apprehension of bias on the basis of band members sitting on the appeal tribunals, they question the appearance of impartiality of these members. When they point to the lack of security of tenure of tribunal members, and the uncertainty as to whether they will receive remuneration, the respondents are questioning the appearance of independence of these members. For this reason, I will deal with the two allegations under the headings of "impartiality" and "independence". I would emphasize that the respondents are not alleging actual bias. Instead, they are alleging a reasonable apprehension flowing from the institutional structure of the tax assessment appeal tribunals. As was noted in Valente, supra, judicial independence involves both the individual independence of members of the judiciary, and the institutional independence of the court or tribunal (p. 687). It is the latter which the respondents are questioning her

[Emphasis in original]

Similarly, it is institutional impartiality and institutional independence which are of concern in the instant case.

[67] After an exhaustive analysis, Lamer C.J.C. concluded that there was a reasonable apprehension of bias. He said at p. 58 S.C.R.:

In my view, even a flexible application of the Valente principles leads to the inevitable conclusion that a reasonable and right-minded person, viewing the whole procedure in the assessment by-laws, would have a reasonable apprehension that members of the appeal tribunals are not sufficiently independent. Three factors lead me to this conclusion:

(1) There is a complete absence of financial security for members of the tribunals.

(2) Security of tenure is either completely absent (in the case of Siska), or ambiguous and therefore inadequate (in the case of Matsqui).

(3) The tribunals, whose members are appointed by the Band Chiefs and Councils, are being asked to adjudicate a dispute pitting the interests of the bands against outside interests (i.e., those of the respondents). Effectively, the tribunal members must determine the interests of the very people, the bands, to whom they owe their appointments.

In reaching this conclusion, I wish to emphasize that it is these three factors in combination which lead me to the conclusion that the appeal tribunals lack sufficient independence in this case. I am not saying that any one of these factors, considered in isolation, would have led me to the same conclusion.

[68] Cory J. concurred with Lamer C.J.C on the issue of institutional independence. Major J., McLachlin J. concurring and La Forest J. agreed with Lamer C.J.C. and Cory J. that the appeal should be dismissed but for reasons which did not deal with the question of bias. Sopinka J., L'Heureux-Dubé, Gonthier and Iacobucci JJ. concurring would have allowed the appeal and reinstated the order of Joyal J. dismissing the application for judicial review. Sopinka J. did not disagree with the reasons of Lamer C.J.C. dealing with independence. Sopinka J., however, would have deferred the application of the reasonable person test until after the fact so that the reasonable person would have the benefit of seeing how the tribunal worked in actual practice before deciding whether or not there was impartiality and independence.

[69] The appellants claim that the circumstances in the present case have raised a reasonable apprehension of bias. They claim that the appointment of retired judges has given rise to a reasonable apprehension of bias because both impartiality and independence have been compromised. From the foregoing, it is clear that impartiality and independence are different considerations and that each has both a personal and an institutional aspect. The present concern is with the institutional aspects of both impartiality and independence.

(ii) Legitimate expectations

[70] The appellants also claim that natural justice has been denied to them because the Minister's failure or refusal to make appointments under HLDAA in accordance with the agreement interferes with the legitimate expectations of the affected unions.

[71] The law respecting legitimate or reasonable expectations is in an early stage of development. According to Reference re Canada Assistance Plan (British Columbia), 1991 74 (SCC), [1991] 2 S.C.R. 525, 83 D.L.R. (4th) 297, it is part of the rules of procedural fairness and does not create substantive rights, nor does it apply to a body exercising purely legislative functions. In Baker, supra, L'Heureux-Dubé J. says (at p. 840 S.C.R.) that the doctrine of legitimate expectation:

. . . as applied in Canada, is based on the principle that the "circumstances" affecting procedural fairness take into account the promises or regular practices of administrative decision-makers, and that it will generally be unfair for them to act in contravention of representations as to procedure, or to backtrack on substantive promises without according significant procedural rights.

In Council of Civil Service Unions v. Minister for the Civil Service, [1984] 3 All E.R. 935, [1985] A.C. 374 (H.L.), the termination of a long-standing right to belong to a trade union without consultation would have been subject to judicial review but for an over-reaching concern for national security.

Analysis

[72] On its face, it is difficult, at least for another judge, to see how the appointment of retired judges raises any concern about the appearance of their independence or impartiality as arbitrators. Judges, retired or otherwise, are supposed to be independent and impartial by definition.

[73] In the instant case we are not faced with a single act as in Roncarelli, supra, (the cancellation of a liquor licence) or in Multi-Malls, supra, (the refusal of a highway access permit) but with a series of events beginning with the introduction of Bill 136 and culminating in the rejection of arbitrators from the roster and the appointment of retired judges in their place. The appellants' claims respecting bias, independence, impartiality and legitimate expectations must be assessed in the specific context in which they are raised.

[74] That context includes the nature of the disputes which are the subject matter of the process in issue, the pre- existing system, the nature of the change to the system and the manner in which the change was made.

(a) The nature of the disputes

[75] In dealing with the nature of the disputes that are the subject matter of the process in issue, the first concern is the fact that the issues to be decided are the content of the collective agreements between the union and the individual hospitals. These are not matters of interpretation but rather fundamental matters determining the working conditions of union members. As such they are of vital concern to those members. Such matters are not essentially legal but practical and require the familiarity and expertise of a labour arbitrator rather than the skills of a lawyer or a judge.

[76] It is also material that these disputes are being arbitrated not by choice but rather because the right to strike to resolve them has been taken away by legislation.

[77] Relevant as well is the fact that by virtue of its funding of hospitals and other institutions covered by HLDAA, the government of Ontario, which took away the right to strike, has a substantial financial interest in the outcome of these arbitrations.

(b) The pre-existing system

[78] Another part of the context which must be considered is the pre-existing system. The situation before February 20, 1998, how long it had existed, how it came about, how well it worked, whether it was successful and, if so, the reason for its success are all important factors in the contextual analysis.

[79] As stated earlier, the pre-existing system dated back to about 1979. The system of choosing an arbitrator by mutual acceptance had evolved over the years and was recognized by the statutory amendments made in 1979. The system appears to have worked reasonably well at reconciling the fact that the right to strike had been replaced by mandatory arbitration with the fact that the right to appoint the chair of the arbitration was in the hands of an entity which was not directly a party to the arbitration but which had a very substantial interest in it. Having worked as well as it did for almost 20 years, the arrangement must be regarded as having been successful.

(c) Nature of the change

[80] Insofar as the nature of the change is concerned, from one perspective the change complained of has not been great. No statutory amendment was required. No Dispute Resolution Committee has been appointed. Only one element has been altered, namely, the source of appointees. However, from the perspective of the appellants, the pre-existing system changed in four fundamental and crucial ways.

[81] First, the appointees no longer come from a group of individuals in whom, by reason of experience and expertise, the appellants had confidence and trust.

[82] Second, the appellants have been removed from the appointment process. Those who chair interest arbitrations no longer come from a list which is mutually agreeable to all participants. The removal of this element of mutuality diminishes the appellants' role as "industrial citizens" and, standing alone, impairs the independence and impartiality of those selected without any input from the appellants.

[83] The third change flows from the identity of those who have replaced the list of mutually agreeable candidates. If the new appointees were unknown quantities, there would still be a loss of mutuality. The new appointees are, however, not unknown quantities. From the perspective of the appellants they are worse; they are a negative force or influence in whom the appellants could be expected to have less confidence and trust than in unknown quantities.

[84] Finally, the change is effected by the Minister himself and not by a delegate whose actions might be more acceptable to the appellants. The Minister alone appoints the chairpersons. Any prospective appointee need look only to the Minister for appointment.

(d) The manner in which the change was made

[85] Before the introduction of Bill 136, the problems inherent in the exercise of the power conferred by s. 6(5) of HLDAA were resolved by appointing people from the roster. This "pre-approval" of arbitrators was threatened by the introduction of Bill 136. Bill 136 was proposed to replace the whole system of arbitrations respecting the contents of collective agreements with a Dispute Resolution Committee. This was unknown territory and labour reacted by objecting to it. This should have been anticipated. The prohibition of strikes works powerfully against labour and the establishment of LMAC and the system of pre-approval of interest arbitrators balanced the relationship between employer and employees. In the circumstances, any change proposed by the government would have been suspect.

[86] As a consequence every action or inaction, every statement or non-statement was seized upon as evidence of the Minister's intention to depart from, stay with or return to the existing or former system.

[87] The manner in which the change was made requires a more detailed review of what was said on behalf of the government during the discussion about Bill 136. Four matters in particular are important: the Minister's statement of September 18, 1997; the lack of response to the President of CUPE's letter of January 7, 1998; the Minister's letter of February 2, 1998; and the language of Mr. Dean's affidavit. These matters require consideration individually and together.

[88] In the Minister's statement of September 18, 1997, she said the following:

-- The OFL said there is "no need or justification for the proposed Dispute Resolution Commission". Our amendments would eliminate the DRC.

-- The union movement has requested a return to the current legislative provision governing the appointment of arbitrators. Our amendments would do that.

-- Mr. Speaker, it is with a sense of pride that I report on the outcome of our discussion on Bill 136. Our proposed amendments address completely the unions' concerns about Bill 136, without adversely affecting employers and without sacrificing and compromising a single one of our objectives.

[89] The appellants say that the statement that "the union movement has requested a return to the current legislative provision governing the appointment of arbitrators. Our amendments would do that" is true but misleading. What was requested was a return to the former system, including not only s. 6(5) of HLDAA but the practice of selecting arbitrators from the roster. The proposed "amendments" referred to towards the end of the statement did not address completely the union's concerns about Bill 136. The amendments did not deal with restoration of the former practice. The appellants say that the impression that they got was that the government was returning to the former system, including the former source of arbitrators. I agree with the appellants who understood this as an indication that the Minister intended to return to the status quo.

[90] The letter of January 7, 1998 from the President of CUPE to the Minister was set out earlier in these reasons. This letter asked for confirmation of labour's understanding that appointees would be from the roster, failing which labour would be consulted. There was no response to it. Had the government not intended to return to the former system, it would have been more candid had the government replied and said so. The appellants argue that not replying fed the appellants' belief that the Minister was returning to the old system. I agree. The failure to respond contributed to the appellants' understanding that no change had been or would be made.

[91] The Minister's letter of February 2, 1998 bolsters and confirms that understanding. The appellants rely on two matters of significance in the Minister's letter of February 2, 1998. The first is the statement that "for a compulsory arbitration system to function as an adequate substitute for the right to strike, the parties must perceive the system as neutral and credible". This is entirely consistent with the appellants' position and would tend to lead the appellants to believe that the Minister had returned or was returning to the old system.

[92] The second matter of significance is the statement that "the police and hospital sectors will continue under existing systems for appointment of arbitrators". The appellants say that this statement confirmed their understanding that the Minister had undertaken to return to the former system for the choosing of chairpersons for interest arbitrations. Unlike the Minister's statement of September 18, 1997, this letter does not limit itself to the legislation alone. The use of the expression "existing systems" was reasonably understood as referring to the practice of choosing chairpersons for interest arbitrations from the roster. It is difficult to see how "existing systems" could mean anything else. The Minister clearly stated that the government was continuing the existing system of appointing arbitrators from the roster.

[93] Finally, the appellants rely on the carefully chosen words of Mr. Dean in his affidavit. In particular, they refer to discussions at meetings in September 1997 about the choice of arbitrators and Mr. Dean's statement in his affidavit that:

. . . I expressly stated that union representatives would see some new faces whom they had not seen before. I indicated that my personal best guess was that there would not be many such people, but that union representatives should expect such appointments. I also indicated that I believed that the appointees would be people who could do the job, and would be considered broadly as being fair and impartial.

[94] Mr. Dean's statement that there would be some new faces is strictly speaking true. However, when all the faces are new, the statement becomes misleading. In fact, Mr. Dean's statement that there would "not be many such people" turns out to be quite wrong. His statement that the "appointees would be people who could do the job, and would be considered broadly as being fair and impartial" is misleading in that "broadly" could not possibly include the appellants.

[95] Accordingly, to the appellants, the appointments by the Minister on February 20, 1998, constituted a complete and total reversal of the Minister's position. The four retired judges were not on the roster, were not viewed in the same way as Paul Weiler, Justice Alan Gold or former Justice George Adams, and were appointed without consultation or warning.

[96] Even if the new appointees had been persons other than judges or retired judges, the surprise or shock experienced by the appellants would have been substantial, in view of the apparent commitment by the Minister in his letter of February 2, 1998. In light of the evidence of Professor Weiler with respect to labour's view of the courts and the judiciary on labour-related matters, the shock experienced by the appellants must have been very substantial indeed. That inference is supported by the tone of the letter of March 10, 1998 from Mr. Samuelson to the Minister.

Conclusions

[97] In Généreux, supra, Lamer C.J.C. held at p. 309 S.C.R. that the appointment of a military judge to sit as a judge advocate "should be in the hands of an independent and impartial judicial officer". Stevenson J. decided at p. 318 S.C.R. that "no one who has an interest in seeing that the prosecution succeeds or fails should be in a position of influence." It is beyond argument that the Minister, as a member of the government of Ontario, has a substantial interest in the outcome of the arbitrations in issue.

[98] Not only do retired judges generally lack the expertise of the prior arbitrators, but they are also not independent. In Matsqui, supra, Lamer C.J.C., Cory J. concurring, found at p. 58 S.C.R. that "a reasonable and right-minded person, viewing the whole procedure in the assessment by-laws, would have a reasonable apprehension that members of the appeal tribunals are not sufficiently independent." Lamer C.J.C. found that the complete absence of financial security for members of the tribunals, inadequate security of tenure and the fact that "tribunal members must determine the interests of the very people . . . to whom they owe their appointments" (at p. 58 S.C.R.) pointed to the lack of independence. All three factors are relevant in the instant case. Retired judges have no security whatever, vis-à-vis the province. They have no assurance at all that they will be appointed to future arbitrations and they are asked to decide questions in which the person who appoin ted them has a substantial financial interest.

[99] Having regard to the factors set out above, and applying the test of the "reasonable and informed person" as approved by Lamer C.J.C. in Matsqui, supra, I find that abandoning the established practice of selecting chairpersons from the roster and the unilateral adoption by the Minister of a practice of personally selecting retired judges to replace them, in the context outlined in these reasons, gives rise to a reasonable apprehension of bias and gives the appearance of interference with the institutional independence and the institutional impartiality of the boards of arbitration established under HLDAA.

[100] Of particular significance in reaching this conclusion are the enactment in 1979 of what is now s. 49(10) of the LRA, the establishment of a practice of selecting mutually acceptable chairpersons for interest arbitrations under HLDAA from the roster, the statement of February 2, 1998 that the hospital sector would continue under the existing system for the appointment of arbitrators and then the abrupt reversal of that decision and the unilateral appointment by the Minister himself of retired judges. Also of particular significance is the behaviour of employers following that reversal as set out in para. 33.

[101] The action taken by the Minister, unilaterally and without consultation or warning, must reasonably be seen as an attempt to seize control of the bargaining process and not only to exclude the appellants from it, but in addition to replace mutually acceptable arbitrators with a class of persons seen to be inimical to the interests of labour, at least in the eyes of the appellants.

[102] In addition, having regard to the circumstances surrounding the appointments, the Minister has failed to meet the legitimate expectations of the appellants, contrary to the principles and requirements of fairness and natural justice. In this context, the statements of the Minister in his letter of February 2, 1998 constituted a commitment to continue the existing system for the appointment of arbitrators. Not only was that course abandoned, but the Minister proceeded in an entirely different direction, one that in the circumstances might be regarded as provocative or defiant. The appellants were entitled to notice of the Minister's intention, an opportunity to consider their position and possibly an opportunity to discuss the situation. In these circumstances, the appellants' legitimate and reasonable expectations were not met.

[103] The appellants complain not only about the appointment of retired judges, but as well about the fact that it is the Minister who appoints them, rather then the Minister's delegate. In the circumstances, it does not seem likely that it would make any difference if the power were delegated and if the delegate were to continue to appoint only retired judges. Conversely, if the person responsible for the appointments chose to make them from the roster, it seems likely that the same person, to be consistent, would choose to make them through a delegate, with a view to distancing the appointments from the political sphere. Accordingly, I see no reason to deal with that complaint as a separate item.

[104] It may be suggested that this decision amounts to a judicial amendment of s. 6(5) of HLDAA. It is not. It does, however, recognize that the power granted to the Minister by s. 6(5) must, like other ministerial powers, be exercised in accordance with the legal principles set out earlier in these reasons. Those principles, in this case, are informed by a custom which has developed over the last 20 years. That custom has reflected the exercise of power granted by s. 6(5) so as to achieve a mutually desired objective, namely, effective arbitrations in a sector in which strikes and lockouts are forbidden and in which the appointing authority has a very substantial interest in the outcomes of the arbitrations.

Remedy

[105] Having found in favour of the appellants with respect to independence, impartiality and legitimate expectations, the question arises as to the appropriate relief. What the appellants ask for is set out in the notice of appeal as follows:

1. A declaration that the Minister created a reasonable apprehension of bias and interfered with the independence and impartiality of boards of arbitration established under HLDAA, contrary to the principles and requirements of fairness and natural justice;

2. A declaration that the Minister interfered with the legitimate expectations of the appellants and other affected unions, contrary to the principles and requirements of fairness and natural justice;

3. An order in the nature of prohibition preventing and prohibiting the Minister from exercising his discretion to appoint persons to sit as chairs of boards of interest arbitration under HLDAA, unless such appointments are made from the long-standing and established roster of experienced labour relations arbitrators;

4. An order quashing the appointments, made by the Minister, of all persons who were appointed as chairs of boards of interest arbitration under HLDAA who were not from the long-standing and established roster of experienced labour relations arbitrators.

[106] The relief claimed in items one, two and three of the preceding paragraph should be granted. As to item four, counsel did not address the consequences of an order in such terms. Having regard to the substantial number of arbitrations suggested by the material and to the various stages of resolution which they may have reached, and may still be reaching, since February 20, 1998, I would decline to make any order respecting item 4, subject to the right of counsel to address this court in that regard should they be so advised.

[107] I would therefore allow the appeal, set aside the order below and in its place grant an order in the terms set out above. With respect to item 3 of para. 105, the order will speak only from the date of release of these reasons and will not apply to persons not on the roster but who are mutually acceptable to the relevant parties. I would also award the appellants their costs of these proceedings, here and below.

Appeal allowed.