Her Majesty the Queen in Right of Ontario as represented by the Ministry of Community, Family and Children Services v. Crown Employees Grievance Settlement Board et al.

[Indexed as: Ontario (Ministry of Community, Family and Children Services) v. Crown Employees Grievance Settlement Board]

81 O.R. (3d) 419

Court of Appeal for Ontario,

Goudge, Sharpe and Gillese JJ.A.

June 26, 2006

Administrative law -- Judicial review -- Natural justice --Employer losing documents relevant to employee's grievance -- Arbitrator finding that union's ability to advance its case and employer's ability to defend its actions were both irreparably prejudiced -- Arbitrator erring in allowing grievance on preliminary motion without conducting hearing on merits of grievance -- Grievor's right to be treated fairly by employer not rising to same level as that of accused invoking breach of Charter rights in criminal context -- Destruction of documents in civil law context being procedural matter and calling for procedural remedies.

An employer lost documents relevant to an employee's grievance. The union moved to have the grievance granted on the basis of the employer's failure to disclose relevant documents. The arbitrator found no bad faith on the part of the employer but concluded that without the lost evidence, both the union's ability to advance its case and the employer's ability to defend its actions were irreparably prejudiced. Without hearing the grievance on the merits, the arbitrator ruled that the appropriate remedy was to allow the grievance. The employer brought an application for judicial review, arguing that it was denied natural justice. The Divisional Court held that the arbitrator's decision was not unreasonable and dismissed the judicial review application. The employer appealed. [page420]

Held, the appeal should be allowed.

Per Sharpe J.A. (Gillese J.A. concurring): The Divisional Court erred in applying a reasonable standard of review to the arbitrator's decision. While some deference should be accorded to the arbitrator's factual findings and remedial choices, a modified form of correctness review was appropriate. The arbitrator's decision to grant the grievance on the ground of "lost evidence" without affording the employer a hearing on the merits could not survive that degree of judicial scrutiny. While the grievor's right to be treated fairly by his employer was an important one, it did not rise to the same level as that of a criminal accused invoking a breach of Charter rights. At issue in this case was the need to reconcile the competing claims to natural justice of the grievor and his employer in a civil context, not the rights of an individual pitted against the state in a criminal law context. A stay of proceedings is an extraordinary remedy for lost evidence, to be granted only in the clearest of cases for lost evidence in criminal cases involving a breach of Charter rights. When one turns from the criminal law to the regime of civil or private law, the remedy is even more exceptional. The generally accepted principle in the civil law context is that destruction of documents is a procedural matter that calls for procedural remedies. Inadvertent destruction of evidence can be remedied in a variety of ways. An adverse inference can be drawn against the party who bears the obligation to produce the document or evidence in question. Similarly, the party failing to produce relevant material may be precluded from relying on that or related documents or evidence. No case was cited for the proposition that a claim or grievance can be allowed, without hearing all the evidence that is available, on the ground that the responding party inadvertently failed to produce relevant documents or evidence. The arbitrator in this case should have respected the natural justice rights of both parties and the grievor's right to substantive justice by holding a hearing on the merits.

Per Goudge J.A. (dissenting): The applicable standard of review of the arbitrator's decision was that of patent unreasonableness. The decision was not patently unreasonable.

APPEAL from the judgment of Lane J., [2005] O.J. No. 221, 195 O.A.C. 201 (Div. Ct.), dismissing an application for judicial review of the decision of the arbitrator.

Cases referred to Budget Car Rentals Toronto Ltd. and U.F.C.W., Loc. 175 (Re) (2000), 2000 50165 (ON LA), 87 L.A.C. (4th) 154 (Ont.); Canadian Union of Public Employees (C.U.P.E.) v. Ontario (Minister of Labour), [2003] 1 S.C.R. 539, [2003] S.C.J. No. 28, 226 D.L.R. (4th) 193, 304 N.R. 76, 2003 SCC 29; National-Standard Co. of Canada Ltd. and C.A.W., Loc. 1917 (Re) (1994), 1994 18625 (ON LA), 39 L.A.C. (4th) 228 (Ont.), consd R. v. Carosella, 1997 402 (SCC), [1997] 1 S.C.R. 80, [1997] S.C.J. No. 12, 31 O.R. (3d) 575n, 142 D.L.R. (4th) 595, 207 N.R. 321, 41 C.R.R. (2d) 189, 112 C.C.C. (3d) 289, 4 C.R. (5th) 139, distd Other cases referred to Alberta Union of Provincial Employees v. Lethbridge Community College, 2004 SCC 28, [2004] 1 S.C.R. 727, [2004] S.C.J. No. 24, 348 A.R. 1, 238 D.L.R. (4th) 385, 319 N.R. 201, 321 W.A.C. 1, 26 Alta. L.R. (4th) 201, 11 Admin. L.R. (4th) 1; Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39, 174 D.L.R. (4th) 193, 243 N.R. 22; Coriale (Litigation Guardian of) v. Sisters of St. Joseph of Sault Ste. Marie (1998), 1998 14695 (ON SC), 41 O.R. (3d) 347, [1998] O.J. No. 3735, 27 C.P.C. (4th) 328 (Gen. Div.); Endean v. Canadian Red Cross Society, 1998 6489 (BC CA), [1998] B.C.J. No. 724, 157 D.L.R. (4th) 465, [1998] 9 W.W.R. 136, 106 B.C.A.C. 73, 48 B.C.L.R. (3d) 90, 42 C.C.L.T. 222, 78 A.C.W.S. (3d) 667 (C.A.); Lakeport Beverages v. Teamsters Local Union 938 (2005), 2005 29339 (ON CA), 77 O.R. (3d) 543, [2005] O.J. No. 3488, 258 D.L.R. (4th) 10, 2005 C.L.L.C. Â220-057, 34 Admin. L.R. (4th) 60 (C.A.); [page421] Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, [2003] S.C.J. No. 17, 257 N.B.R. (2d) 207, 223 D.L.R. (4th) 577, 302 N.R. 1, 674 A.P.R. 207, 2003 SCC 20, 31 C.P.C. (5th) 1; London (City) v. Ayerswood Development Corp., 2002 3225 (ON CA), [2002] O.J. No. 4859, 167 O.A.C. 120, 34 M.P.L.R. (3d) 1, 119 A.C.W.S. (3d) 664 (C.A.); Moreau- Bérubé v. New Brunswick (Judical Council), [2002] 1 S.C.R. 249, [2002] S.C.J. No. 9, 245 N.B.R. (2d) 201, 209 D.L.R. (4th) 1, 636 A.P.R. 201, 2002 SCC 11; Ontario Public Service Employees Union v. Seneca College of Applied Arts & Technology (2006), 2006 14236 (ON CA), 80 O.R. (3d) 1, [2006] O.J. No. 1756, 267 D.L.R. (4th) 509, 212 O.A.C. 131, 49 C.C.E.L. (3d) 205 (C.A.); St. Louis v. Canada (1896), 1896 65 (SCC), 25 S.C.R. 649; Werner v. Warner Auto- Marine Inc., 1996 925 (ON CA), [1996] O.J. No. 3368, 3 C.P.C. (4th) 110 (C.A.) Statutes referred to Alberta Labour Relations Code, R.S.A. 2000, c. L-1 Canadian Charter of Rights and Freedoms Crown Employees' Collective Bargaining Act, 1993, S.O. 1993, c. 38, ss. 7(3), 48(1) [as am.] Labour Relations Act, S.O. 1995, c. 1, s. 48(1) Authorities referred to Brown, Donald J.M., and David M. Beatty, Canadian Labour Arbitration, looseleaf (Aurora: Canada Law Book, 2005) Mullan, David J."Establishing the Standard of Review: The Struggle for Complexity?" (2004) 17 Can. J. Admin. L. Prac. 59

Sean Kearney and Fateh Salim, for appellant. David Wright and Edward Holmes, for respondent OPSEU.

[1] SHARPE J.A. (GILLESE J.A. concurring): An employer lost documents relevant to an employee's grievance. On a preliminary motion, the arbitrator found no bad faith on the part of the employer but concluded that without the lost evidence, both the union's ability to advance its case and the employer's ability to defend its actions were "irreparably prejudiced". Without hearing the employer's evidence on the grievance proper, the arbitrator ruled that the appropriate remedy was to allow the union's grievance. The employer applied for judicial review on the ground that by granting the grievance without conducting a hearing on the merits, the arbitrator denied the employer's right to natural justice. The Divisional Court concluded that the arbitrator's award was not unreasonable and refused to quash it. The employer appeals that decision and asks for an order quashing the award and remitting the matter for a hearing on the merits. [page422]

Facts

[2] The grievance that gives rise to this appeal has what the arbitrator aptly described as "a fairly long and painful past". The grievor, Don Larman, a long-serving employee of the Ministry of Family and Children's Services ("the employer"), worked as one of six parole and probation officers at the employer's parole and probation office in St. Catherines. The grievor, a member of the respondent Ontario Public Service Employees Union ("the union"), was before the Grievance Settlement Board ("the Board") on several prior occasions. In April 1999 and again in July 2001, grievances were settled on terms that required the employer to remove documents from the grievor's file and prohibited the employer from relying on those documents in the future.

[3] On the basis of findings in an investigative report dated November 15, 2001, the employer alleged that the grievor had breached a term of the July 2001 settlement, disciplined the grievor and transferred him to another office in Simcoe. The grievor filed two grievances against that decision. Those grievances were settled on February 22, 2002. A term of the settlement was that the employer would hire an outside workplace review consultant to assess the situation at the employee's home office. The employer agreed that it would not take any disciplinary or punitive action based on the allegations contained in the November 15, 2001 investigative report and that it would not give that report to the workplace review consultant.

[4] The employer entered into a written consulting contract with Mediated Solutions Incorporated to conduct the workplace review. The Mediated Solutions Workplace Review Report of July 23, 2002, recommended that the grievor should be relocated laterally to another office in view of the history of conflict in his home office. It concluded that as the grievor had "been at the centre of past and present conflict", returning him to the same office "would unnecessarily disrupt the healing process" and that there was "too much water under the bridge to repair the working relationship" between the grievor and his former colleagues.

[5] The employer implemented this recommendation and temporarily assigned the grievor to another office. The grievor immediately grieved this decision, essentially on the ground that the employer had violated the terms of the February 22, 2002 settlement that no disciplinary or punitive action be taken on the basis of the allegations contained in the November 15, 2001 investigative report and that that report would not be given to the workplace review consultant. [page423]

[6] The union demanded disclosure of all relevant documents. The employer initially refused disclosure. The grievor filed a second grievance alleging breach of the terms of the collective agreement requiring disclosure. On the first hearing date, counsel for the union requested further disclosure and the matter was adjourned to afford the employer time to search for the documents.

[7] The contract between the employer and Mediated Solutions provided that Mediated Solutions was to maintain confidentiality over all documents and communications and was "not to destroy any material or information which is the property of [the employer] without [the employer's] prior written approval". Contrary to this contractual obligation, Mediated Solutions destroyed all documents it received and, in keeping with its usual practice, it also destroyed all notes made by those conducting the review. The employer advised the union that all documents provided to Mediated Solutions had been destroyed.

[8] On the basis of that information, the union moved to have the grievances granted on the basis that the employer had failed to produce relevant documents. On the union's motion to allow the grievances on the grounds of non-disclosure, the employer called Dave Hopkins, the manager of the St. Catherines office and the individual who had provided documents to Mediated Solutions for the purposes of its review. Hopkins testified that "to the best of [his] recollection" he provided all documents electronically without an accompanying letter or list. While Hopkins was not "100%" sure, he was "fairly confident" that that was all he had provided and that he had not included the forbidden materials from the earlier settlement. He did not keep a list of what he sent but he produced the documents he believed he had forwarded to Mediated Solutions. He also testified that pursuant to the terms of the earlier settlement he had destroyed a number of documents. No evidence was called to suggest that any any other documents had been provided to Mediated Solutions.

The Arbitration Award

[9] The union submitted that without knowing precisely what documents had been provided to Mediated Solutions, the union could not advance its case and that to proceed with the hearing would constitute a denial of natural justice and an abuse of process. The union asked the arbitrator to allow the grievance on grounds of non-disclosure. The employer submitted that those interviewed by the reviewers and the reviewers themselves were available to give viva voce evidence as to the documents that had been provided and that conducting a full hearing on the merits [page424] would afford both parties the right to a full hearing on the employer's decision to relocate the grievor.

[10] The arbitrator ruled that the grievances should be allowed on the ground of non-disclosure. In her view, the decision of the Supreme Court of Canada in R. v. Carosella, 1997 402 (SCC), [1997] 1 S.C.R. 80, [1997] S.C.J. No. 12, granting a stay of sexual assault charges on the ground that relevant material resulted in breach of the accused's constitutional right to full answer and defence, was "instructive". She noted that while Carosella arose in a criminal law context"the principles explored there do have some applicability to the instant matter" as the "right to a fair hearing includes the right to advance one's case and the right to respond".

[11] The arbitrator found that while the employer should have been more careful to identify the documents it did provide the consultant, the employer had asked the consultant not to destroy documents. The arbitrator concluded that the employer did not intentionally disregard its duty to disclose, and that its conduct did not amount to an abuse of the arbitration process.

[12] However, the arbitrator found that because the documents had been destroyed, there was "simply no way to be certain, with any degree of confidence, what documents were actually provided". She concluded that the destruction of the documents "irreparably damaged" the union's ability to advance its case and the employer's ability to defend its actions:

Without knowing the full extent of what was relayed to the reviewers, the basis upon which Mediated Solutions made its recommendations cannot be determined. Without knowing the complete basis upon which Mediated Solutions made its recommendations, it cannot be determined whether the employer based its decision to relocate Mr. Larman on prohibited information . . . [W]ithout knowing the full extent of what was relayed to the reviewers, neither the union nor the employer can have a full and fair hearing on the central issues in dispute. Likewise, this Board will not be able to determine if there was a breach of the settlement and determine the merits of the case.

[13] Emphasizing that she made no finding that the employer had breached the earlier settlement or destroyed documents to thwart the arbitration, the arbitrator concluded that as the destruction of the documents precluded the possibility of a full and fair hearing, and as there was no alternate remedy, the only appropriate remedy was to grant the grievance.

The Decision of the Divisional Court

[14] The employer applied for judicial review on the ground that by granting the grievance because of the non-disclosure without hearing viva voce evidence on the merits of the case, the [page425] arbitrator had denied the employer's right to natural justice. The Divisional Court dismissed the employer's application.

[15] The Divisional Court applied the "pragmatic and functional analysis" and described the standard of review as follows at para. 18:

Having regard to the limited nature of the privative clause, the purpose of the legislation (to create an expert tribunal to resolve labour disputes with a degree of finality), the expertise of the tribunal and the particular nature of the problem (to apply the concepts of natural justice to a case where a party has destroyed important documents), we conclude that some deference is owed to the Board on the issue of the order to be made in these circumstances. Accordingly, the question of whether natural justice has been given is for the court to determine, accepting the Board's reasonable findings on the facts, and the question of the remedy is for the Board, to be assessed on the basis of the standard of reasonableness.

[16] The Divisional Court concluded that there was no requirement to hear evidence on the merits of the case where a preliminary issue as to fairness was presented so long as the parties were given a full opportunity to present their case on that preliminary issue. The Divisional Court reviewed the arbitral jurisprudence and concluded that an arbitrator does have jurisdiction to enforce a disclosure order by dismissing or allowing a grievance. The Divisional Court rejected the argument that the arbitrator had misapplied R. v. Carosella and concluded at para. 37:

This is a labour relations hearing and the expertise of the arbitrator is directly engaged in determining the impact upon the case of the absence of these documents and in fashioning an appropriate remedy. On those subjects [she] is entitled to some deference from us on the reasonableness standard. [Her] reasons are cogent and [her] decision reasonable, both on the impact and on the remedy.

Issues

1. Did the Divisional Court err in applying the standard of reasonableness to the arbitrator's award?

2. Did the arbitrator and the Divisional Court err as to the consequences of the lost evidence and the employer's right to natural justice?

Analysis

1. Did the Divisional Court err in applying the standard of reasonableness to the arbitrator's award?

[17] The issue before the arbitrator on the union's preliminary motion for an order granting the grievance implicated both the union's and the employer's rights to natural justice. The arbitrator [page426] characterized the issue before her in terms of natural justice. She asked herself "whether a full and fair hearing, consistent with the requirements of natural justice" could be held without the lost documents. Her conclusion that "without knowing the full extent of what was relayed to the reviewers, neither the union nor the employer can have a full and fair hearing on the central issues in dispute" was plainly a result of her assessment that natural justice and the right to a fair hearing could not be assured without the missing documents.

[18] I would emphasize that the arbitrator was not simply dealing with the second grievance relating to disclosure. Both grievances were before the arbitrator and she decided both. In her award she quite properly and quite explicitly characterized the issue to be decided in terms of the requirements of the natural justice in relation to the transfer grievance. The disclosure grievance was, on its face, in the nature of an interlocutory proceeding. It stated: "We are grieving the lack of disclosure for the grievance dated August 2, 2002" relating to the grievance against the decision to transfer the grievor (emphasis added). I do not agree with the contention that it is possible or appropriate to view her award as nothing more that a choice of remedy in relation to the disclosure grievance that can somehow be assessed without regard to the employer's natural justice rights in relation to the transfer grievance.

[19] In Canadian Union of Public Employees (C.U.P.E.) v. Ontario (Minister of Labour), 2003 SCC 29, [2003] 1 S.C.R. 539, [2003] S.C.J. No. 28, at paras. 100 and 102, Binnie J. pointed to the distinction between review on grounds of natural justice, which involves the manner in which a decision-maker goes about making the decision, and substantive review of the ultimate result or end product of the decision-maker's deliberations. The present application for judicial review asked the court to review the manner in which the arbitrator went about making her decision and to decide whether the arbitrator respected the employer's right to natural justice and procedural fairness.

[20] Strictly speaking, this is not an issue that attracts the "pragmatic and functional analysis" or requires an assessment of the appropriate standard of review. As Binnie J. explained in C.U.P.E., supra, at paras. 100, 102:

It is for the courts, not the Minister, to provide the legal answer to procedural fairness questions. It is only the ultimate exercise of the Minister's discretionary . . . power . . . that is subject to the pragmatic and functional analysis, intended to assess the degree of deference intended by the legislature to be paid by the courts to the statutory decision maker, which is what we call the standard of review. [page427] . . . . .

The content of procedural fairness goes to the manner in which the Minister went about making his decision, whereas the standard of review is applied to the end product of his deliberations.

Similarly, in Moreau-Bérubé v. New Brunswick (Judicial Council), 2002 SCC 11, [2002] 1 S.C.R. 249, [2002] S.C.J. No. 9, at para. 74, Arbour J. stated that where an application for judicial review raises procedural fairness or natural justice issues"no assessment of the appropriate standard of review" is required and the reviewing court should conduct "an assessment of the procedures and safeguards required in a particular situation". As this court explained in London (City) v. Ayerswood Development Corp., 2002 3225 (ON CA), [2002] O.J. No. 4859, 167 O.A.C. 120 (C.A.), at para. 10:

[w]hen considering an allegation of a denial of natural justice, a court need not engage in an assessment of the appropriate standard of review. Rather, the court is required to evaluate whether the rules of procedural fairness or the duty of fairness have been adhered to. The court does this by assessing the specific circumstances giving rise to the allegation and by determining what procedures and safeguards were required in those circumstances in order to comply with the duty to act fairly.

(Emphasis added)

See also Donald J.M. Brown & David M. Beatty, Canadian Labour Arbitration, looseleaf (Aurora: Canada Law Book, 2005) at para. 1: 5300.

[21] As the application for judicial review required an assessment of whether the employer's right to natural justice had been denied, I am not persuaded that it was necessary or appropriate for the Divisional Court to decide the case on the basis of the reasonableness standard of review produced by the "pragmatic and functional analysis".

[22] On the other hand, as we are not to apply the "pragmatic and functional analysis", it does not follow that we move immediately to one of the other standards it produces, namely, correctness. The arbitrator heard the parties and the evidence on the preliminary motion and she has expertise as a decision- maker with respect to the labour arbitration process. A court should, accordingly, treat her fact-finding and remedial decisions with appropriate deference. An examination of all the circumstances pertaining to the alleged denial of natural justice is necessarily contextual and the arbitrator's findings help to shape and define the context that the court is asked to consider on judicial review. The degree of respect or deference to be accorded the arbitrator's findings may well entail consideration of the specific nature of the decision, the statutory scheme, and the arbitrator's expertise: C.U.P.E., supra, at para. 103, referring to [page428] Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39; David J. Mullan"Establishing the Standard of Review: The Struggle for Complexity?" (2004) 17 Can. J. Admin. L. Prac. 59 at pp. 86-87: "[I]t is a modified form of correctness review at least in so far as there will be occasions on which some deference to tribunal choice of procedures is required . . . [T]he court, in assessing whether as a matter of correctness there has been a shortfall in procedural fairness, has, as part of that exercise to give some weight to the considered choices of the agency under review."

[23] In the present case, some deference should be accorded to the arbitrator's factual findings and remedial choices. However, the employer is entitled to have the court's assessment, in the words of London v. Ayerswood, supra, [at para. 10] of "the specific circumstances giving rise to the allegation" and its determination of "what procedures and safeguards were required in those circumstances in order to comply with the duty to act fairly". As I read the decision of the Divisional Court, it declined to engage in that analysis and refused to interfere with the arbitrator's decision simply on the grounds that it was not unreasonable. In my view, that was not the appropriate standard to apply.

2. Did the arbitrator and the Divisional Court err as to consequences of the lost evidence and the employer's right to natural justice?

[24] In my view, the arbitrator's decision to grant the grievance on the ground of "lost evidence" without affording the employer a hearing on the merits cannot survive the degree of judicial scrutiny mandated for issues of natural justice that I have just attempted to describe. Indeed, were it necessary to do so, I would conclude that if one were to apply the standard of reasonableness, the arbitrator's decision cannot "stand up to a somewhat probing examination" (Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, [2003] S.C.J. No. 17, at para. 55) and therefore should be quashed.

[25] In my view, R. v. Carosella, supra, is readily distinguishable and had limited application to the case at bar. First, Carosella dealt with (at para. 56) "a decision to obstruct the course of justice by systematically destroying evidence which the practices of the court might require to be produced". Here, the arbitrator expressly found that the documents in question were lost through inadvertence and the employer was exonerated of any attempt to thwart or abuse the arbitration process. Second, Carosella dealt with the infringement of a Charter [page429] right in relation to a serious criminal charge. While the grievor's right to be treated fairly by his employer is an important one, it does not rise to the same level as that of a criminal accused invoking a breach of Charter rights. Third, at issue in this case is the need to reconcile the competing claims to natural justice of the grievor and his employer in a civil context, not the rights of an individual accused pitted against the state in a criminal law setting as in Carosella. Fourth, Carosella involved the notes taken of an interview involving an historic sexual assault where the individual who took the notes had no recollection whatsoever of the interview. Here there are witnesses who do have a recollection of what they said or gave to the consultant.

[26] A stay of proceedings is "an extraordinary remedy" for lost evidence to be "granted only in the clearest of cases" for lost evidence in criminal cases involving the breach of Charter rights: Carosella at para. 52. When one turns from the criminal law to the regime of civil or private law, and from staying a criminal proceeding to granting a civil claim on the basis of the inadvertent loss of evidence, the remedy is even more exceptional. I agree with the appellant that the generally accepted principle in the civil law context is that destruction of documents is a procedural matter that calls for procedural remedies: see St. Louis v. Canada (1896), 1896 65 (SCC), 25 S.C.R. 649; Endean v. Canadian Red Cross Society, 1998 6489 (BC CA), [1998] B.C.J. No. 724, 157 D.L.R. (4th) 465 (C.A.), at para. 9; Coriale (Litigation Guardian of) v. Sisters of St. Joseph of Sault Ste. Marie (1998), 1998 14695 (ON SC), 41 O.R. (3d) 347, [1998] O.J. No. 3735 (Gen. Div.), at p. 357 O.R.; Werner v. Warner Auto-Marine Inc., 1996 925 (ON CA), [1996] O.J. No. 3368, 3 C.P.C. (4th) 110 (C.A.), at paras. 23-24.

[27] Inadvertent destruction of evidence can be remedied in a variety of ways. An adverse inference can be drawn against the party who bears the obligation to produce the document or evidence in question: Coriale, supra. Similarly, the party failing to produce relevant material may be precluded from relying on that or related documents or evidence: Werner, supra. No case was cited to us for the proposition that a claim or grievance can be allowed, without hearing all the evidence that is available, on the ground that the responding party inadvertently failed to produce relevant documents or evidence.

[28] No doubt arbitrators do have the authority in appropriate cases to dismiss a grievance on preliminary grounds, for example, where the grievance is out of time, had been resolved by a settlement or suffers some other fatal procedural defect. However, I agree with the appellant that the arbitral jurisprudence relied on by the respondent and the Divisional Court does not support the decision to allow the grievance in the circumstances [page430] of this case. The arbitral decisions in Re National-Standard Co. of Canada Ltd. and C.A.W., Local 1917 (1994), 1994 18625 (ON LA), 39 L.A.C. (4th) 228 (Palmer) (Ont.) and Re Budget Car Rentals Toronto Ltd. and U.F.C.W., Local 175 (2000), 2000 50165 (ON LA), 87 L.A.C. (4th) 154 (Davie) (Ont.) both involve the dismissal of grievances and turn on the failure of a party to comply with an order in circumstance amounting to a deliberate or male fides attempt to thwart the arbitration process. Here, the arbitrator expressly exonerated the employer of any such deliberate conduct in the present case. Donald J.M. Brown & David M. Beatty, supra, at para. 3:1421, summarize the arbitral jurisprudence dealing with failure to produce documents in terms indicating that allowing a grievance for non-production of documents is restricted to situations of deliberate disregard of orders for production:

[W]here a timely request is made [for production of documents] and there is no response to it or to an order for production, it is open to the arbitrator to refuse to admit the document into evidence or to grant an adjournment. And if the party's refusal continues thereafter, the arbitrator may make an award of costs payable by the recalcitrant party where he has authority to do so, or may convene the hearing and either allow or dismiss the grievance.

(Footnotes omitted)

[29] Allowing the grievance on the ground that evidence had been lost was, in my view, an unusual and extreme remedy that cannot be supported on the basis of this jurisprudence.

[30] The arbitrator's reasons indicate that she approached the issue on the basis that, unless there was something approaching absolute certainty that the employer had not given the consultant the forbidden information, the grievance had to be granted. This standard appears to go beyond even the criminal standard of proof beyond a reasonable doubt and certainly exceeds the civil standard of proof on a balance of probabilities. Its application had the effect of denying the employer's natural justice right to present his case and have it considered fairly.

[31] The arbitrator should have respected the natural justice rights of both parties and the grievor's right to substantive justice by holding a hearing on the merits. There were several ways in which the union could have tested the employer's evidence and attempted to establish that Mediated Solutions relied on prohibited information in recommending the grievor's transfer. The union could have cross-examined both parties to each interview (i.e., the relevant ministry employees and the consultants). There would be several interviews to contrast and compare. The various employees of Mediated Solutions could have been cross-examined to determine the extent to which they relied on the prohibited information, if at all. In addition, the report produced by Mediated [page431] Solutions was available to the union. It also could have been used to identify inconsistencies and test evidence. Witnesses were available from the Ministry to testify about what documents had been provided to the consultants. Other Ministry employees could have been cross-examined on the issue of whether the prohibited information formed any part of their discussions with the consultants. In the end, if there remained any significant doubt about whether or not the employer had violated the terms of the settlement by providing the consultant with forbidden information, the arbitrator could have drawn an adverse inference against the employer on the ground that the documents had been destroyed and allowed the grievance on that basis. In my view, it was an error meriting the intervention of judicial review for the arbitrator to leap to the conclusion that the grievance had to be allowed on the basis of lost evidence without hearing all the evidence that was available.

Conclusion

[32] Accordingly, I would allow the appeal, grant an order of judicial review quashing the award and remit the matter to the Board for a hearing on the merits.

[33] At the oral hearing of this appeal, both parties agreed that there should be no order as to the costs of this appeal.

[34] GOUDGE J.A. (dissenting): -- I have had the benefit of reading the reasons for judgment of my colleague Sharpe J.A., but find that I view the case differently and would reach a different result. In my opinion, the issue at the heart of this case is the judicial scrutiny to be applied to the remedy found by this grievance arbitrator to be appropriate for the breach of the collective agreement. I conclude that very significant deference is required, and if that is accorded to the arbitrator's decision, it should not be set aside. I would therefore uphold the order of the Divisional Court and dismiss the appeal.

[35] My colleague has thoroughly reviewed the facts. I will add only what is required to explain my reasoning.

[36] As my colleague has described, this case involves the Ministry of Community and Social Services, Don Larman, an employee in the St. Catherines office of the Probation Service in the Ministry, and his union. It begins with a series of grievances by Mr. Larman and the settlements made of each of them.

[37] The first was a settlement of three grievances in April 19, 1999, which provided that the Ministry would not refer to or rely on any of the reports, allegations or incidents giving rise to the grievances in any subsequent proceedings. [page432]

[38] The second was a settlement of three new grievances in July 2001, which provided that the Ministry would destroy certain documentation relating to these grievances and would not rely on their contents.

[39] The third was a settlement of two further grievances on February 22, 2002, which likewise provided that the Ministry would not take disciplinary or other punitive action against the grievor based on the allegations and findings in an investigation report which had resulted in the Ministry actions that led to the grievances. At the mediation leading to this settlement, the Ministry committed to hire an outside professional group to undertake a review of the St. Catherines probation office. It was also agreed in the mediation that employees participating in the review could discuss any matter with the reviewers, including the matters that had been settled, but the Ministry could not rely on those matters in future.

[40] The reviewers were provided with documentary materials by the Ministry and also conducted interviews with employees of the St. Catherines office. Their report recommended that the grievor be transferred to another office. After reviewing the report, the Ministry transferred the grievor to the Simcoe office, to remain there until the probation service was transferred to a new Ministry, which would then decide on his work location.

[41] Mr. Larman immediately filed a grievance (the transfer grievance) claiming that, in transferring him, the Ministry violated the settlements, discriminated against him and unjustly disciplined him. The union sought disclosure in connection with this grievance. When the Ministry refused, the grievor filed a second grievance (the disclosure grievance) claiming that the Ministry was in breach of Arts. 22.14.4 and 22.14.5 of the collective agreement. They read:

22.14.4 The parties agree that principles of full disclosure of issues in dispute as alleged by a grievance advanced by the Union on behalf of a member or members, or the Union itself, and full disclosure of the facts relied upon by management in a decision that is subject to a grievance, are key elements in amicable and expeditious dispute resolution process.

22.14.5 The parties agree that at the earliest stage of the grievance procedure, either party upon request is entitled to receive from the other, full disclosure.

[42] The reviewers subsequently advised the Ministry that once the Ministry accepted their report, they destroyed all the documents sent to them by the Ministry and the notes they had made of their interviews with the employees.

[43] In due course, both grievances came before the arbitrator for resolution. When the union learned of the reviewers' actions [page433] and that the Ministry had no record of the documents it provided to the reviewers, the union moved to have both grievances granted because of the Ministry's breach of the two provisions of the collective agreement referred to above.

[44] The arbitrator heard the motion and permitted the parties to call any evidence and make any argument they chose on the issues before her. She excluded nothing that the parties sought to introduce.

[45] In her decision on the motion, the first issue addressed was whether the Ministry had a contractual duty under the collective agreement to disclose the notes and documents that were destroyed by the reviewers. She found that since this material was highly relevant, indeed crucial, to the union's case on the transfer grievance, and since the Ministry bore the legal responsibility for the actions of the reviewers, the destruction of this material constitutes a breach by the Ministry of its disclosure obligation under the collective agreement.

[46] The appellant appears not to have challenged that finding in the Divisional Court and does not do so in this court.

[47] The arbitrator then turned to the question of what remedy should result from this breach. Ultimately, she found that in light of what she had heard on the motion, the destruction of the material prevented a full and fair hearing of the transfer grievance and that the only remedy that would cure the prejudice caused by that destruction was to grant the grievance.

[48] She therefore concluded that the appropriate remedy for the Ministry's breach was to grant the transfer grievance and reinstate the grievor to his position in St. Catherines as soon as practical, with compensation for his financial loss if any.

[49] I would emphasize that she did not decide the transfer agreement on the merits. She did not find that the Ministry's transfer of the grievor to Simcoe was in breach of the settlements or that it constituted discrimination or unjust discipline. The transfer grievance was allowed and the grievor's transfer set aside not because of such a finding, but because the arbitrator found that it was the only remedy that would cure the harm caused by the Ministry's breach of its contractual obligation to disclose.

[50] The Ministry attacks the arbitrator's award on the ground that the arbitrator reached her decision without according the Ministry the opportunity to call evidence and make argument on the merits of the transfer grievance. The Ministry argues that this denies it natural justice and, consequently, no curial deference need be shown to the award on an application for judicial review.

[51] In my view, the Ministry was not denied natural justice. The merits of the transfer grievance were not before the arbitrator, nor did she decide that issue. She simply did not address [page434] whether the transfer of the grievor was in breach of the settlements or whether it constituted discrimination against him or wrongful discipline of him. Evidence and argument about those matters was not germane to the two issues before her, namely whether the Ministry breached its contractual obligation to disclose and, if so, what remedy should follow. By deciding those issues without hearing the Ministry's evidence on the merits of the transfer grievance, I do not think the arbitrator denied it natural justice.

[52] On the other hand, I think it is clear that the arbitrator did accord natural justice in connection with the issues she did decide. On the motion resulting in the remedial decision, the Ministry had full opportunity to call evidence and make argument. The Ministry was fully apprised of the union's position, namely, that the only appropriate remedy for the Ministry's breach was to allow the transfer grievance. It was entirely open to the Ministry to attempt to demonstrate that this was not so, that its breach caused no prejudice or that the prejudice could be otherwise fully cured.

[53] In C.U.P.E., supra, cited by my colleague, Binnie J. trenchantly described the distinction between an attack on an administrative proceeding that is based on a denial of procedural fairness or natural justice and an attack on the decision that results from that proceeding. The latter requires determination of the level of judicial scrutiny that is to be applied to the decision. He said this at para. 102:

The content of procedural fairness goes to the manner in which the Minister [the administrative decision maker] went about making his decision, whereas the standard of review is applied to the end product of his deliberations.

[54] In this case, I think the Ministry mischaracterizes its complaint by describing it as a breach of natural justice. Its real complaint is not about the way in which the arbitrator came to her choice of remedy. It is about the end product of her deliberations, namely the choice of remedy she made.

[55] This being so, it is necessary to determine the standard of review to be applied by the court in reviewing that remedial decision. This requires consideration of the four contextual factors used in the pragmatic and functional approach to this question that is now so well established in our jurisprudence.

[56] The legislative context for this analysis is the Crown Employees' Collective Bargaining Act, 1993, S.O. 1993, c. 38 ("CECBA"). It provides the framework for labour relations between the government of Ontario and its employees. Typical of [page435] such regimes, it mandates grievance arbitration as the means of resolving disputes. Section 7(3) provides:

7(3) Every collective agreement relating to Crown employees shall be deemed to provide for the final and binding settlement by arbitration by the Grievance Settlement Board, without stoppage of work, of all differences between the parties arising from the interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable.

[57] The only section of CECBA raised by the appellant as a statutory bar to the arbitrator's remedial decision is s. 48(1) which reads:

48(1) Subject to the specific requirements in this Part and to any requirements in the Labour Relations Act, 1995, the Grievance Settlement Board shall determine its own practice and procedure but shall give full opportunity to the parties to any proceeding to present their evidence and to make their submissions.

[58] The Divisional Court found that this section did not require the arbitrator to hear evidence on the merits of the transfer grievance when that was not before her, although it did require that the parties be given full scope on the issue of the appropriate remedy. I agree. As I have said, I think that this section was complied with by the arbitrator.

[59] Moreover, not only is there no legislative barrier to the arbitrator's remedial award, but I can see no reason in principle to suggest that such an order cannot be made. Indeed, orders that grant a remedy for breach of a collective agreement obligation that finally determine a grievance without resolving it on the merits are far from unknown. One relatively common example is where a grievance is filed in breach of a union's obligation to file within a certain time limit, resulting in a remedial order dismissing the grievance for breach of that obligation.

[60] The scope for judicial review of a remedial order by a grievance arbitrator was recently addressed by the Supreme Court of Canada in Alberta Union of Provincial Employees v. Lethbridge Community College, 2004 SCC 28, [2004] 1 S.C.R. 727, [2004] S.C.J. No. 24. While that case discusses this question in the context of the interpretation of a specific statutory provision, the court also analyzes the proper standard of review of a remedial order that chooses one remedy rather than another where both would be permitted by the legislation.

[61] Iacobucci J., writing for the court, made very clear the importance of the need for arbitrators to have broad remedial authority in order to properly fulfill the important role assigned to them of workplace dispute resolution and the accompanying need for curial deference in reviewing exercises of that remedial authority. [page436]

[62] In describing the purpose of the grievance arbitration scheme under the Alberta Labour Relations Code, R.S.A. 2000, c. L-1, Iacobucci J. [at paras. 34-35] used words that are equally applicable to the counterpart scheme under CECBA:

As noted earlier, the purpose of this grievance arbitration scheme, like all others, is to "secure prompt, final and binding settlement of disputes" arising out of the collective agreement: see Parry Sound, supra, at para. 17. Finality in the resolution of labour disputes is of paramount significance both to the parties and to society as a whole. Grievance arbitration is the means to this end; see Brown and Beatty, supra, at para. 2:1401, that "[t]his legislative framework has been recognized and accepted as establishing an arbitral mandate to fashion effective remedies, including the power to award damages, so as to provide redress for violations of the collective agreement beyond mere declaratory relief" (emphasis added).

Clearly, the overarching purpose and scheme of the Code lend considerable support for the arbitrator to fashion a remedy to suit the particular circumstances of the labour dispute in question.

[63] And again at para. 53:

. . . It bears repeating that arbitrators are equipped with broad remedial jurisdiction to secure prompt, final and binding settlement of disputes arising out of the interpretation or application of the collective agreement and disciplinary action taken by employers.

[64] Iacobucci J. described the need for curial deference at para. 40:

This Court's jurisprudence has recognized the broad remedial powers required to give effect to the grievance arbitration process. The need for restraint in the fettering of arbitral remedial authority was initially acknowledged by Dickson J. (as he then was) in Heustis, supra, at p. 781, wherein the policy rationale for judicial restraint was explained thus:

The whole purpose in establishing a system of grievance adjudication under the Act is to secure prompt, final, and binding settlement of disputes arising out of interpretation or application of the collective agreement, or disciplinary action taken by the employer, all to the end that industrial peace may be maintained.

[65] Iacobucci J. determined the applicable level of curial deference by considering the four factors of the pragmatic and functional approach.

[66] He began with the privative protection given in the Alberta Code which, as I note below, this court has found to be weaker than that given by comparable Ontario legislation.

[67] He then moved to the relative expertise of the arbitrator, which he found militates in favour of some deference. I would underline that. The evaluation of the gravity of a breach of collective agreement in a particular case, in a particular bargaining relationship, and the consequent determination of the appropriate [page437] remedy, are tasks for which the specialized decision-maker is much better suited than a reviewing court.

[68] In discussing the third factor, the purpose of the statutory scheme underpinning the decision under review, Iacobucci J. reiterated that the objective of grievance arbitration is to secure prompt, final and binding settlement of the disputes arising under collective agreements, and that the remedial authority required to discharge that mandate militates in favour of greater deference.

[69] Finally, Iacobucci J. turned to the fourth factor, the nature of the question decided by the arbitrator. In that case, the arbitrator found that the grievor had been dismissed without just cause. In fashioning a remedy, the arbitrator chose an award of damages rather than reinstatement. Iacobucci J. referred to the choice of remedy as a question of mixed fact and law. The arbitrator's decision on the issue was based on the facts of the particular case, and this fact intensity called for greater deference.

[70] Iacobucci J. considered these four factors and concluded that the proper standard of review of the arbitrator's remedial decision in that case was reasonableness.

[71] In my view, save for the first factor, this analysis is exactly applicable to this case. The relative expertise of the arbitrator and the purpose of the statutory scheme underpinning the decision point in favour of greater deference. The particular choice of remedy decided upon by the arbitrator here is clearly driven by the particular facts -- the case sought to be advanced by the union, the relevance of the destroyed material to its ability to do so, the absence of an alternative remedy that would cure the prejudice caused and her conclusion that on these specific facts a full and fair hearing of the transfer grievance cannot take place.

[72] As to the first factor, s. 7(3) of CECBA mirrors the "final and binding" privative provision in s. 48(1) of Ontario's Labour Relations Act, S.O. 1995, c. 1, which applies to a grievance arbitrator under that Act. In Lakeport Beverages v. Teamsters Local Union 938 (2005), 2005 29339 (ON CA), 77 O.R. (3d) 543, [2005] O.J. No. 3488 (C.A.), Laskin J.A. held that such a "final and binding" clause is stronger than the relatively weak privative clause in the Alberta Code and therefore provides more protection from judicial review than its Alberta counterpart. On this basis he distinguished Lethbridge Community College and found that it does not alter the highly deferential standard of review of decisions of labour arbitrators that has been in effect for many years in this province. He found that the pragmatic and functional approach yields patent [page438] unreasonableness as the proper standard of review of decisions of Ontario labour arbitrators.

[73] In Ontario Public Service Employees Union v. Seneca College of Applied Arts & Technology (2006), 2006 14236 (ON CA), 80 O.R. (3d) 1, [2006] O.J. No. 1756 (C.A.), this court, again through Laskin J.A., affirmed that position this time in addressing a grievance arbitrator's decision about her remedial authority to award aggravated or punitive damages in a grievance for unjust dismissal.

[74] I agree with these decisions and would find that the proper standard of review for the arbitrator's remedial decision in this case is patent unreasonableness.

[75] It remains to assess that decision against the standard of review. For the following reasons I would conclude that not only is it clearly not patently unreasonable but indeed the decision meets the less deferential standard of reasonableness.

[76] In Law Society of New Brunswick v. Ryan, supra, the Supreme Court of Canada unpacked the concept of reasonableness. As described there, an unreasonable decision is one that, in the main, is not supported by any reasons that can stand up to a somewhat probing examination. The reviewing court looks to see whether any of the reasons given by the tribunal adequately support the decision being reviewed. The court should not at any point ask itself what the correct decision would have been. See Ryan, paras. 48, 49 and 50. The court summarized this at para. 55:

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

[77] As I have said, the arbitrator first concluded that the Ministry was legally responsible for the reviewers' destruction of their notes of their interviews with employees of the St. Catherines office, the documents received from the Ministry and for not keeping a record of the documents forwarded. The Ministry was thus in breach of its disclosure obligation under the collective agreement. She then turned to the remedial issue.

[78] She reiterated that the union's case on the transfer grievance was that the Ministry's transfer of the grievor, which was admittedly based on the reviewer's report, violated the three [page439] settlements as well as constituting discrimination and unjust discipline. The Ministry had agreed not to rely on the incidents that were the subject of the settlements and to destroy certain documents and not supply them to the reviewers. It was vital to the union's case to establish that employees had discussed the incidents with the reviewers, that the reviewers had received certain documents and that both were used in preparing their report.

[79] Given this, the arbitrator found that the destroyed material was central to the union's case. It provided a critical basis for cross-examination of both the employees and the reviewers to test what information was passed and the extent to which the reviewers had relied on it.

[80] The arbitrator then considered whether there were other remedies that would cure the prejudice caused by the Ministry's breach. None were suggested by the Ministry. The arbitrator examined the taking of adverse inferences but found that wanting on the specific facts of this case. She then concluded that the appropriate remedy for the breach was to grant the transfer grievance and return the grievor to his position in the St. Catherines office as soon as practical.

[81] In my view, this decision meets the standard of reasonableness. It was reasonable for the arbitrator to find that for the union to make its case that the reviewers had received and acted on documents and information in contravention of the settlements, cross-examination was critical. The reviewers were agents of the Ministry, and, given the damaged relationships between the grievor and his colleagues in the St. Catherines office, many of the employees interviewed may also have been opposed in interest to the grievor.

[82] It was equally reasonable for the arbitrator to view the destroyed material as a critical tool in cross-examination since it carried the accuracy of contemporary records and was assembled without thought to the allegations to be made by the union in the transfer grievance.

[83] Finally, I think it was reasonable for the arbitrator to conclude that no other remedy would cure the prejudice. None was suggested by the Ministry, and she concluded that the alternative of drawing adverse inferences would not do the same job. While another arbitrator could reasonably conclude that there were alternatives that would cure the prejudice every bit as well, I do not think it was unreasonable for this arbitrator to decide otherwise in these circumstances.

[84] In my view, she was entitled to choose the remedy she did rather than others which, while they might go some distance and [page440] might serve the Ministry's interest in having a hearing of the transfer grievance on the merits, would not in her view completely cure the prejudice to the union. The arbitrator after all was fashioning a remedy for the Ministry's breach of the collective agreement. To seek to provide full redress to the union without regard for the interest of the breaching party does not seem to me unreasonable.

[85] I would therefore dismiss the appeal.

Appeal allowed.