SUPREME COURT OF CANADA

Blanchard v. Control Data Canada Ltd., [1984] 2 S.C.R. 476

Date: 1984-11-22

Denis Blanchard Appellant;

and

Control Data Canada Limited Respondent;

and

Jean-Paul Lalancette Mis en cause.

File No.: 17680.

1984: March 15; 1984: November 22.

Present: Beetz, McIntyre, Chouinard, Lamer and Wilson JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC

Judicial review — Labour law — Arbitral award — Complaint of dismissal without good and sufficient cause — Alteration by arbitrator of penalty imposed by employer — Writ of evocation — Privative clause — Powers of arbitrator — Whether arbitral award reasonable and sufficient reasons given — Act respecting labour standards, R.S.Q., c. N-1.1, ss. 124, 125, 126, 127, 128, 129 — Labour Code, R.S.Q. 1977, c. C-27 as am., s. 139 — Code of Civil Procedure, art. 846.

Appellant, contrary to his employer's policies and despite a previous prohibition, accepted a trip to Jamaica offered by the radio station with which he was negotiating an advertising purchase contract on behalf of his employer. Appellant was dismissed and submitted to the Commission des normes du travail a complaint of dismissal without good and sufficient cause. After examining the evidence submitted by the parties, the arbitrator concluded that appellant's insubordination did not justify such a penalty. Relying on s. 128 of the Act respecting labour standards, he substituted for the dismissal a suspension without pay for four months. Respondent applied to the Superior Court for a writ of evocation. The application was dismissed. A majority of the Court of Appeal reversed the judgment and authorized the writ to be issued. The majority of the Court held that the arbitrator had the power under s. 128 to amend the penalty chosen by the employer, but in the case at bar had exceeded his jurisdiction by making an unreasonable award. Additionally, they considered that the arbitrator's reasons were only an expression of opinion and that therefore the decision could be regarded as void and rendered entirely without jurisdiction. The present appeal raises three questions: whether (l) the existence of "good and sufficient cause for dismissal" is a prerequisite for the exercise by the arbitrator of his

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jurisdiction; (2) in light of the powers conferred on him by s. 128, the arbitrator exceeded his jurisdiction by making an "unreasonable" award; and (3) in view of the requirement in s. 129 of the Act that the arbitral award be supported by reasons, should this Court intervene and vacate the award if it is not supported by sufficient reasons?

Held: The appeal should be allowed.

Per curiam: On the first question: the existence of good and sufficient cause for dismissal is not a prerequisite to the exercise of the arbitrator's jurisdiction, but is an intra-jurisdictional question, since it is the very subject of the inquiry. It is the only question which the arbitrator must decide before making the order he thinks proper.

Per Beetz, Chouinard and Wilson JJ., agreeing on the two other questions with the reasons of Monet J.A., dissenting, in the Court of Appeal. Moreover, on the second question: the complaint which the majority of the Court of Appeal made against the arbitrator was not, strictly speaking, that he committed an error of law or fact, but more precisely, that he committed an abuse of authority like that referred to in para. 4 of art. 846 C.C.P. Whatever the arbitrator's decision, an abuse of power amounting to fraud and of such a nature as to cause a flagrant injustice would divest him of his jurisdiction and be a basis for judicial review by evocation, regardless of any privative clause. In the case at bar, however, the arbitrator's award did not constitute such an abuse. It cannot be said that the less severe penalty imposed by the arbitrator is, in view of all the circumstances, clearly abusive, flagrantly unjust, absurd, contrary to common sense and lacking any basis in the evidence as a whole.

Per McIntyre and Lamer JJ., agreeing in substance on the second and third questions with the reasons of Monet J.A., dissenting, in the Court of Appeal. The Supreme Court has tended in exercising its power of review to avoid intervening when the decision of the administrative tribunal, whether erroneous or not, is reasonable in view of the applicable legislation. Where there is a privative clause, however, judicial review may only be exercised on questions of jurisdiction. The distinction between error of law and fact then becomes superfluous: an unreasonable finding, whatever its origin, impairs the jurisdiction of the tribunal and justifies judicial intervention. In the case at bar the arbitrator did not exceed his jurisdiction. His interpretation of s. 128 and of the powers it confers is not only reasonable but correct. An arbitrator acting under that section has a power to substitute another penalty for the dismissal

[page 478]

imposed by the employer if, in his opinion, there is not a cause significant enough to warrant that penalty. As regards the award, it was not shown that in view of the facts considered by the arbitrator and his privileged position he rendered an unreasonable award by imposing a lesser penalty on appellant. A court may not agree with the arbitral award, but that does not authorize it to substitute its own opinion for that of an arbitrator who has acted in accordance with his enabling legislation and in a manner which is not "patently unreasonable".

ln addition, the arbitral award is not void because insufficient reasons were given for it. Even if the decision was not very well formulated, the arbitrator's reasons are intelligible and it is possible to understand the basis for his decision. In any case, even assuming that the reasons were insufficient, this is an error of law apparent of the face of the record. Where there is a privative clause such errors are generally beyond judicial review.

Canadian Union of Public Employees Local 963 v. New Brunswick Liquor Corporation, 1979 CanLII 23 (SCC), [1979] 2 S.C.R. 227; Teamsters Union, Local 938 v. Massicotte, 1982 CanLII 18 (SCC), [1982] 1 S.C.R 710; Alberta Union of Provincial Employees v. Board of Governors of Olds College, 1982 CanLII 186 (SCC), [1982] 1 S.C.R. 923; St. Luc Hospital v. Lafrance, 1982 CanLII 187 (SCC) [1982] I S.C.R. 974; C L.R.B. v. Halifax Longshoremen's Association, 1983 CanLII 133 (SCC), [1983] 1 S.C.R. 245; National Bank of Canada v. Retail Clerks' International Union, 1984 CanLII 2 (SCC), [1984] 1 S.C.R. 269; Bibeault v. McCaffrey, 1984 CanLII 133 (SCC), [1984] 1 S.C.R. 176; Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association, 1973 CanLII 191 (SCC), [1975] 1 S.C.R. 382; Parkhill Bedding & Furniture Ltd. v. International Molders & Foundry Workers Union (1961), 1961 CanLII 342 (MB CA), 26 D.L.R. (2d) 589, considered; Lafrance v. Commercial Photo Service Inc., 1980 CanLII 167 (SCC), [1980] 1 S.C.R. 536, distinguished; Pearlman v. Keepers and Governors of Harrow School, [1979] 1 All E.R. 365, not followed; Heustis v. New Brunswick Electric Power Commission, 1979 CanLII 26 (SCC), [1979] 2 S.C.R. 768; Jacmain v. Attorney General of Canada, 1977 CanLII 200 (SCC), [1978] 2 S.C.R. 15; Crevier v. Attorney General of Quebec, 1981 CanLII 30 (SCC), [1981] 2 S.C.R. 220; Port Arthur Shipbuilding Co. v. Arthurs, 1968 CanLII 29 (SCC), [1969] S.C.R. 85; Newfoundland Association of Public Employees v. Attorney General of Newfoundland, 1977 CanLII 164 (SCC), [1978] 1 S.C.R. 524; South East Asia Fire Bricks Sdn. Bhd. v. Non-Metallic Mineral Products Manufacturing Employees Union, [1980] 3 W.L.R. 318 (U.K.); Re Racal Communications Ltd., [1980] 2 All E.R. 634, referred to.

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APPEAL from a judgment of the Quebec Court of Appeal, [1983] C.A. 129, which reversed a judgment of the Superior Court refusing to issue a writ of evocation. Appeal allowed.

Robert Décary, Germain Canuel and Michel Canuel, for the appellant.

Jean-Jacques Rainville and Réjean Rioux; for the respondent.

English version of the judgment of Beetz, Chouinard and Wilson JJ. delivered by

BEETZ J.—I have had the benefit of reading the opinion of my brother Lamer J. I adopt his description of the facts and pleadings and I refer also to his statement of the three points in issue.

On the first point, I consider as he does that the existence of good and sufficient cause of dismissal is not a prerequisite to the exercise of the arbitrator's jurisdiction, but is the very subject of his inquiry, and it is the principal question which the arbitrator must decide before making any other order he thinks proper and reasonable in view of all circumstances.

On the other two points, like Lamer J. I concur with the reasons of Monet J.A., dissenting in the Court of Appeal, Control Data Canada Ltée v. Lalancette, [1983] C.A. 129, at pp. 137-43.

I cannot add very much to the reasons of Monet J.A.

However, I feel I should make certain observations on the second point at issue.

According to the prior decisions of this Court, a patently unreasonable error by an administrative tribunal in interpreting a provision which it has to apply within the limits of its jurisdiction will in itself cause the tribunal to lose its jurisdiction. Reference may be made to these precedents in the case at bar, at least by analogy. But it is an analogy, considering the nature of the reproach addressed to the arbitrator by the majority of the Court of Appeal, at pp. 134 and 135 of the

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Recueils de jurisprudence de la Cour d'appel. This reproach was that

[TRANSLATION] ... [the arbitrator] committed an excess of jurisdiction by giving the facts an unreasonable interpretation: his award was totally lacking in reality and contrary to public order ... [it] constituted a flagrant denial of justice, an invitation to repeat the offence and a bad example for the other employees.

It appears to me that the reproach is not, strictly speaking, that the arbitrator committed an error of law or fact, but more precisely, that he committed an abuse of authority like that referred to in para. 4 of art. 846 of the Code of Civil Procedure:

846. The Superior Court may, at the demand of one of the parties, evoke before judgment a case pending before a court subject to its superintending and reforming power, or revise a judgment already rendered by such court, in the following cases:

847. when there is want or excess of jurisdiction;

848. when the enactment upon which the proceedings have been based or the judgment rendered is null or of no effect;

849. when the proceedings are affected by some gross irregularity, and there is reason to believe that justice has not been, or will not be done;

850. when there has been a violation of the law or an abuse of authority amounting to fraud and of such a nature as to cause a flagrant injustice.

However, in the cases provided in paragraphs 2, 3 and 4 above, the remedy lies only if, in the particular case, the judgments of the court seized with the proceeding are not susceptible of appeal.

Whatever the arbitrator's jurisdiction, strictly speaking, an abuse of authority amounting to fraud and of such a nature as to cause a flagrant injustice would divest him of his jurisdiction and be a basis for judicial review by evocation, regardless of any privative clause.

I cannot say that the arbitrator's award constituted such an abuse.

The majority on the Court of Appeal appears in fact to have decided that the only reasonable sanction for the unquestionably reprehensible behaviour of appellant necessarily had to be the ultimate sanction of dismissal, and that by imposing a less severe penalty the arbitrator acted contrary to public order. It seems to me, be it said

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with the greatest respect, that this is coming close to confusing the appellant's actions and those of the arbitrator. I am far from certain that I would have decided as the arbitrator did, but I also cannot say that the less severe penalty which is imposed instead of the ultimate penalty is, in view of all the circumstances, clearly abusive, flagrantly unjust, absurd, contrary to common sense, and lacking any basis in the evidence as a whole.

I would dispose of the appeal as my brother Lamer J. suggests.

English version of the reasons of McIntyre and Lamer JJ. delivered by

LAMER J.-This case raises the problem of the extent of judicial review of the decisions of administrative tribunals. Appellant Blanchard is asking this Court to restore the decision of a judge of the Superior Court of Quebec who refused to issue a writ of evocation against the mis en cause arbitrator. A majority of the Court of Appeal of Quebec reversed this judgment and directed that the writ be issued.

Appellant Blanchard had been employed by the respondent since July 1973 and was dismissed on April 30, 1980. The circumstances resulting in this dismissal are essentially not in dispute. It was admitted that in November 1979, while working in advertising and promotion for the respondent, Mr. Blanchard accepted two tickets for a two-week stay in the Bahamas offered by station CJFM in connection with a contract for the purchase of advertising air time. These tickets were given by Mr. Blanchard to his subordinate Mr. Ducharme. It appeared that on the latter's return, Messrs. Blanchard and Ducharme were told by an officer of the company that such actions were contrary to professional ethics and the company's policies.

In April 1980, in similar circumstances, Mr. Blanchard accepted two tickets for a two-week stay in Jamaica, which he decided to use himself. Shortly after, on April 30, 1980, Mr. Blanchard was dismissed. It may be noted from the evidence admitted by the arbitrator that relations between Control Data Canada Limited and Mr. Blanchard

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had deteriorated before the latter trip, as the result of a complaint by Mr. Blanchard to the Commission de surveillance de la langue française.

On May 25, 1980, appellant submitted a complaint to the Commission des normes du travail for dismissal without good and sufficient cause, under ss. 124 et seq. of the Act respecting labour standards, R.S.Q., c. N-1.1.

DIVISION III

RECOURSE AGAINST DlSMISSALS NOT MADE FOR GOOD AND SUFFIClENT CAUSE

124. An employee credited with five years of uninterrupted service with one employer who believes that he has not been dismissed for a good and sufficient cause may present his complaint in writing to the Commission within 30 days of his dismissal, except where a remedial procedure, other than a recourse in damages, is provided elsewhere in this act, in another act or in an agreement.

125. Upon receiving the complaint, the Commission may appoint a person who shall endeavour to settle the complaint to the satisfaction of the interested parties.

The Commission may require from the employer a writing containing the reasons for dismissing the employee. lt must provide a copy of this writing to the employee, on demand.

126. Where no settlement is reached within 30 days of the filing of the complaint with the Commission, the employee may apply to the Commission to have his complaint referred to arbitration.

The Commission shall appoint an arbitrator whose name appears on the list provided for in the second paragraph of section 78 of the Labour Code (chapter C-27).

127. Sections 100.l to 100.9, 100.11 and 100.12, 100.14 to 100.16, 101, 101.3, 101.4, 139 and 140 of the Labour Code (chapter C-27) apply, mutatis mutandis, to the arbitrator so appointed.

128. Where the arbitrator considers that the employee has not been dismissed for good and sufficient cause, he may

(1) order the employer to reinstate the employee;

(2) order the employer to pay to the employee an indemnity up to a maximum equivalent to the wage he would normally have earned had he not been dismissed;

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(3) render any other decision he believes fair and reasonable, taking into account all the circumstances of the matter.

However, in the case of a domestic, the arbitrator may only order the payment to the employee of an indemnity corresponding to the wage and other benefits of which he was deprived due to dismissal up to a maximum period of three months.

129. The arbitration award must state the grounds on which it is based and be rendered in writing.

(Emphasis added.)

In an arbitral award on February 4, 1982 the mis en cause Jean-Paul Lalancette, relying on s. 128 of the Act, substituted for the dismissal a suspension without pay for four months and directed that Mr. Blanchard be reinstated retroactively to August 30, 1980, that is, the date of the suspension's expiry. In his reasons, the arbitrator reviewed the facts and the evidence presented by the parties, and concluded:

[TRANSLATION] Accordingly, there was insubordination by the complainant in view of the warning given by Mr. Jetté a year earlier; but once again, I am not persuaded that he was dismissed because of that, but rather because of all the events occurring in February, March and April 1980.

If we consider the three (3) events in turn, namely the reduction in performance, the complaint to the Commission and the acceptance of a trip to Jamaica, none of these events is a ground for dismissal in itself. Even if they were to be taken as a whole, I do not think that they constitute a ground for dismissal, as the demotion was to some extent negotiated by the two (2) parties; so far as the complaint is concerned, it was the complainant's right to make it even if it was an unfortunate move: he could perhaps have acted differently; and that leaves the trip to Jamaica.

Accordingly, I cannot conclude there should have been a dismissal, even though some penalty was required, and in the circumstances the arbitrator makes use of s. 128(3) of the Labour Standards Act, namely:

"(3) render any other decision he believes fair and reasonable, taking into account all the circumstances of the matter."

WHEREAS complainant has no previous disciplinary record;

WHEREAS the employee's performance was excellent until early 1980;

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IN VIEW OF the events of February, March and April 1980;

WHEREAS disciplinary action was necessary, but dismissal was not appropriate;

WHEREAS in light of the offence committed;

WHEREAS it seems fair and reasonable to substitute for the dismissal a suspension of complainant without pay;

FOR ALL THESE REASONS, THE ARBITRATOR:

1. DIRECTS that complainant be rehired from the date on which this decision is received;

2. SUBSTITUTES for the dismissal of April 30, 1980 a suspension without pay for four (4) months, that is from April 30 to August 30, 1980;

3. DIRECTS the employer to pay complainant a wage of $410.00 bi-weekly, beginning August 30, 1980 until the date he is rehired, plus the average salary increases paid to other employees, if any, and deducting for the four (4) weeks of salary paid, referred to in the letter of April 30, 1980, P-2, namely the salary paid up to May 2, 1980;

4. DECIDES that the whole shall bear interest at the legal rate, as specified in s. 100.15 (s. 88o of the Labour Code) referred to in s. 127 of the Labour Standards Act;

5. CONTINUES the rights and privileges of complainant as if he had not been dismissed, except for the suspension period;

6. DOES NOT AWARD any commission to complainant, pursuant to the employer's commissions plan, as complainant did not work;

7. RESERVES JURISDICTION to determine the amount owed under the provisions of s. 127 of the Labour Standards Act and 101.4 (89d of the Labour Code).

By a motion for a writ of evocation, respondent asked the Superior Court to quash the arbitrator's decision on three grounds:

-insufficient reasons were given for the decision;

-misinterpretation of s. 128 by the arbitrator;

-the arbitral award was unreasonable.

On April 5, 1982 Bisaillon J. dismissed the motion on the bench. In his opinion, the reasons given for the decision were quite sufficient since [TRANSLATION] "the conclusion arrived at by the

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arbitrator proceeds logically from the analysis made by him of the evidence".

On section 128, respondent argued that the arbitrator's powers are alternative and not cumulative. According to this interpretation, in other words, the arbitrator could not both order that the employee be reinstated and suspended for four months. Bisaillon J. dismissed this argument, observing that the wording of s. 128 does not require such an interpretation, and that moreover, even if the arbitrator erred in this regard, his error was "intra-jurisdictional" and so excluded from judicial review by the privative clause.

On the third ground, Bisaillon J. stated:

[TRANSLATION] It was then argued that the arbitrator committed an abuse of authority by making an unreasonable award. What is reasonable and unreasonable is a very elastic concept, but as the argument was that there had been an abuse of authority, the error must amount to an abuse of authority of such a nature as to cause a flagrant injustice (1976 CanLII 197 (SCC), [1977] 2 S.C.R. 568). I see no abuse of authority here, first, in the conclusion arrived at by the arbitrator that the action required a penalty and second, in the remedial measures adopted by him, all of which was within his jurisdiction. lt might be argued that his award was too harsh, or that it was not harsh enough, but the arbitrator has sole control of the degree of harshness. That is his function, and if it appears to the Court that his award was too harsh or not harsh enough, the Court cannot allow evocation solely in order to revise it in one direction or the other and to substitute its own concept of harshness.

(Case of Appeal, at p. 37)

On appeal, the Court was divided, [1983] C.A. 129. Turgeon J.A., writing for himself and for Malouf J.A., set aside the judgment of the Superior Court. After reviewing the decisions of this Court on disciplinary arbitration (Port Arthur Shipbuilding Co. v. Arthurs, 1968 CanLII 29 (SCC), [1969] S.C.R. 85; Newfoundland Association of Public Employees v. Attorney General of Newfoundland, 1977 CanLII 164 (SCC), [1978] 1 S.C.R. 524, and Heustis v. New Brunswick Electric Power Commission, 1979 CanLII 26 (SCC), [1979] 2 S.C.R. 768), Turgeon J.A. held that s. 128 expressly confers on the arbitrator a power to substitute some other penalty for that chosen by the employer, if this is justified by the circumstances. He therefore dismissed the argument of Control Data Canada

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Limited that the arbitrator had exceeded his jurisdiction by amending the penalty in the case at bar.

However, Turgeon J.A. held that the arbitrator had exceeded his jurisdiction by making an unreasonable award. Emphasizing the importance of the relationship of trust between an employer and his employee, Turgeon J.A. observed that [TRANSLATION] "if an employee's actions are likely to shake the trust an employer must have in him, it is not surprising that the latter decides to dispense with his services".

Applying these principles, therefore, Turgeon J.A. held that the acceptance of bribes by Mr. Blanchard constituted very serious misconduct for which the employer was justified in dismissing him.

As this misconduct is in addition a criminal offence, Turgeon J.A. concluded, at p. 134, that the arbitrator had lent his approval to unlawful acts, and that;

[TRANSLATION] The arbitrator committed an excess of jurisdiction by giving the facts an unreasonable interpretation: his award was totally lacking in reality and contrary to public order. In the case at bar, though recognizing that there had been insubordination and that this insubordination could cause conflicts of interest, the arbitrator directed that the mis en cause be reinstated subject merely to a suspension.

Additionally, Turgeon J.A. considered that the arbitrator's reasons were only an expression of opinion and that therefore the decision [TRANSLATION] "could be regarded as void and rendered entirely without jurisdiction".

Monet J.A. agreed with the majority on the interpretation of s. 128, but dissented on the other two points at issue. Noting that the Act respecting labour standards changes the rules of the game regarding dismissals without good and sufficient cause and gives the arbitrator very wide powers, Monet J.A. concluded that the employer had not shown that the award was unreasonable. He noted the existence of the privative clause in s. 139 of the Labour Code, R.S.Q. 1977, c. C-27, which is made applicable to an arbitrator by s. 127 of the Act, he emphasized the advantage which the arbitrator

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has in seeing and hearing the witnesses, and he went on to say (at p. 142):

[TRANSLATION] Was it a resentment or a sense of honesty which led appellant to dismiss the mis en cause? ln my view, the function of this Court in hearing this appeal is not to decide this question. Under the statute which is applicable, the powers of the arbitrator are autonomous, and in deciding not to simply vacate the dismissal he was exercising those powers. Similarly, he thought it fair to substitute a non-drastic disciplinary measure, that is, one which in light of his weighing of the evidence as a whole seemed fair and reasonable to him. His decision was not on the legality of the dismissal, but on whether the mis en cause was right in concluding that he had been unfairly treated by being dismissed. Surely this was his function, as specified by the Act.

After dismissing the second argument, Monet J.A. concluded on the final point at issue that sufficient reasons were given for the arbitral award and [TRANSLATION] "that it was even in accordance with the generally accepted principles in such matters".

With respect, I concur in the opinion of Monet J.A. and I conclude that the Court of Appeal erred in setting aside the decision of Bisaillon J. and authorizing that a writ of evocation be issued.

As I see them, the questions at issue are:

(a) in light of the respondent's factum is the existence of "good and sufficient cause for dismissal" a prerequisite for the arbitrator to exercise his jurisdiction?

(b) in light of the powers conferred on him by s. 128, did the arbitrator exceed his jurisdiction by making an award "so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review?" (Canadian Union of Public Employees Local 963 v. New Brunswick Liquor Corporation, 1979 CanLII 23 (SCC), [1979] 2 S.C.R. 227, at p. 237-the C.U.P.E. case.)

(c) in view of the requirement in s. 129 of the Act that the arbitral award be supported by reasons, should this Court intervene and quash

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the award if it is not supported by sufficient reasons?

Before answering these three questions, it is worth mentioning again that s. 127 of the Act makes the arbitrator subject to the provisions of s. 139 of the Labour Code, which on April 5, 1982 (the day of the judgment in the Superior Court) provided that:

139. No action under article 33 of the Code of Civil Procedure, or extraordinary recourse within the meaning of such code, or injunction shall be exercised against any council of arbitration, court of arbitration, arbitrator on grievances, certification agent, labour commissioner or the Court by reason of any act, proceeding or decision relating to the exercise of their functions.

Of course, as a result of the decision of this Court in Crevier v. Attorney General of Quebec, 1981 CanLII 30 (SCC), [1981] 2 S.C.R. 220, such a clause can in no way impede judicial review regarding questions of jurisdiction. However, it is recognized that these clauses bar judicial review of any question other than that of jurisdiction. Further, on May 11, 1982, subsequent to the decision by the Superior Court in the. case at bar, the Quebec legislator amended s. 139 of the Code to bring it in line with this case law:

139. Except on a question of jurisdiction, no extraordinary recourse contemplated in articles 834 to 850 of the Code of Civil Procedure shall. be exercised and no injunction granted against any council of arbitration, court of arbitration, certification agent, labour commissioner or the Court acting in their official capacities.

It is therefore necessary to bear in mind the effect of the old s. 139 as limited by decisions of this Court. That provision clearly indicated the intention of the legislator to make the arbitrator responsible for deciding completely and finally the questions submitted to him by the Act. This deference is undoubtedly based both on the respect of the legislator for the arbitrator's expert knowledge and on the importance of ensuring a quick settlement of labour law disputes.

As Dickson J., as he then was, observed in similar circumstances in Heustis v. New Brunswick Electric Power Commission, supra, at p. 781:

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There is a very good policy reason for judicial restraint in fettering adjudicators in the exercise of remedial powers. 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.

(Emphasis added.)

The courts must respect this choice made by the legislator and be extremely cautious in exercising their power of review. They should only intervene if they find a genuine excess of jurisdiction by the arbitrator, not simply where they disagree with his findings. Judicial review may only be exercised here on questions of jurisdiction.

It is in keeping with this approach and bearing these observations in mind that I now turn to a solution of the three questions stated above.

(A) The problem of the prerequisite to the exercise of the arbitrator's jurisdiction

In this Court, respondent argued that the existence of a "good and sufficient cause for dismissal" is a prerequisite to the exercise of the arbitrator's power to "render any other decision he believes fair and reasonable". Respondent maintained that s. 128 provides for a procedure which has two distinct stages: first, the arbitrator must decide whether good and sufficient cause exists for the dismissal. If such a cause exists, the arbitrator has no jurisdiction to intervene. If such a cause does not exist, the arbitrator may exercise the powers conferred on him by s. 128. In other words, respondent argued that since the arbitrator committed an error as to the existence of good and sufficient cause, he conferred on himself a jurisdiction which he did not have under the Act.

This argument by respondent is based on the well-known theory in administrative law of so-called "collateral" or "preliminary" questions, according to which an administrative tribunal cannot err on these questions because any error

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would amount to assuming a jurisdiction which is different from what the legislator intended to confer on it.

In Jacmain v. Attorney General of Canada, 1977 CanLII 200 (SCC), [1978] 2 S.C.R. 15, Dickson J., dissenting, properly observed that this theory places the superior courts in an extremely difficult position (at p. 29):

The intractable difficulty is this. lt is hard to conceive that a legislature would create a tribunal with a limited jurisdiction and yet bestow on such tribunal an unlimited power to determine the extent of its jurisdiction. On the other hand, if the correctness of every detail upon which the jurisdiction of the tribunal depends is to be subject to retrial in the Courts and the opinion of a judge substituted for that of the tribunal, then the special experience and knowledge of the members of such a tribunal and the advantage they have of hearing and seeing the witnesses may be lost. The power to review jurisdictional questions provides the Courts with a useful tool to ensure that tribunals deal with the type of issues which the Legislature intended. It enables the Courts to check unlawful attempts at usurpation of power. But the Courts, in my opinion, should exercise restraint in declaring a tribunal to be without jurisdiction when it has reached its decision honestly and fairly and with due regard to the material before it. The Court should allow some latitude in its surveillance of jurisdictional findings. It should ask whether there is substantial evidence for decisions of fact and a rational basis for decisions of law, or mixed decisions of fact and law. The error must be manifest. The role of the Court is one of review, not trial de novo.

Professor Paul P. Craig, in his text Administrative Law, London, Sweet & Maxwell, 1983, at pp. 299 et seq., also emphasizes that the great weakness of the preliminary questions theory is the absence of any coherent test for distinguishing what is in fact preliminary.

To use the writer's words, at p. 302:

The enabling statute always, explicitly or implicitly, states, if X1, X2, X3, exist, you may or shall do [Y1, Y2, Y3].

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It is clear that all the "X" conditions can to some extent be categorized as prerequisites to the exercise of the "Y" powers. In my view, there is no logical reason for distinguishing between condition X1 and condition X2 and concluding that one is preliminary and the other is not. Thus, if all the "X" conditions are said to be preliminary, the administrative tribunal has lost the capacity to err: it can only exercise the power conferred on it by the law if it is right in its interpretation of what is meant by X1, X2 and X3. Ultimately, the distinction between an appeal and judicial review is somewhat fine. This distinction becomes non-existent if we also adopt the theory that the administrative tribunal cannot err as to the content of powers Y1, Y2 and Y3, since it is then exercising a power that the law does not confer on it.

In short, it is important not to distort the superintending power of the superior courts, and to use the [TRANSLATION] "theory of prerequisites to the exercise of jurisdiction" with a great deal of caution. As Dickson J. observed in the C.U.P.E. case (at p. 233):

The courts, in my view, should not be alert to brand as jurisdictional, and therefore subject to broader curial review, that which may be doubtfully so.

The current tendency is thus to limit the concept of a "preliminary question" as far as possible. Even those who favour retaining this concept limit it to questions concerning jurisdiction in the strict sense, of the initial power to proceed with an inquiry (C.U.P.E., supra, at p. 234, and Service Employees' International Union, Local No. 333 v. Nipawin District Staff Nurses Association, 1973 CanLII 191 (SCC), [1975] 1 S.C.R. 382, at p. 389). These questions are identified by the fact that they fall outside the limits of the enabling legislation itself, and are not usually within the area of expertise of the administrative tribunal (Parkhill Bedding & Furniture Ltd. v. International Molders & Foundry Workers Union (1961), 1961 CanLII 342 (MB CA), 26 D.L.R. (2d) 589).

Whether we reject the theory of preliminary questions or apply it in its limited form as is currently being done, I think it is clear that the

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existence of good and sufficient cause is not a prerequisite to the exercise of the arbitrator's jurisdiction. On the contrary, it is the very subject of the inquiry. It is the only question which the arbitrator must decide before making the order he thinks proper. The Act does not confer a remedial authority on the arbitrator in the abstract: this authority is given to him when he finds that there is a situation requiring his intervention, namely dismissal without good and sufficient cause. By analogy, the Superior Court is not acting without jurisdiction when it directs that damages be paid after having erroneously held a defendant delictually liable: it is erring in the exercise of its jurisdiction. In the same way, the arbitrator is not acting without jurisdiction when he substitutes a new penalty for that chosen by the employer after erroneously finding that there was no good and sufficient cause for dismissal: he is erring in the exercise of his jurisdiction.

This observation gains additional weight from the actual wording of s. 128: the arbitrator has the powers specified in that section "where [he] considers that the employee has not been dismissed for good and sufficient cause". Section 128 does not make the use of these powers conditional on the objective existence of that cause, but on the arbitrator's subjective assessment.

For all these reasons, I consider that the existence of good and sufficient cause for dismissal is not a prerequisite to the exercise of the arbitrator's jurisdiction, but is an intra-jurisdictional question. This leads on to the second problem, which is determining whether the arbitral award is so unreasonable as to constitute an excess of jurisdiction.

(B) Whether arbitral award unreasonable

In principle, where there is a privative clause the superior courts should not be able to review errors of law made by the administrative tribunals. However, it is now settled that some errors of law can cause the arbitrator to lose his jurisdiction. The debate turns on the question of which errors of law result in the loss of jurisdiction. Contrary to the

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decision of Lord Denning in Pearlman v. Keepers and Governors of Harrow School, [1979] 1 All E.R. 365, where he said (at p. 372) that "no court or tribunal has any jurisdiction to make an error of law on which the decision of the case depends" (subsequently disapproved by the Privy Council in South East Asia Fire Bricks Sdn. Bhd. v. Non-Metallic Mineral Products Manufacturing Employees Union, [1980] 3 W.L.R. 318, and Re Racal Communications Ltd., [1980] 2 All E.R. 634), this Court has tended since Nipawin, supra, and C.U.P.E., supra, to avoid intervening when the decision of the administrative tribunal was reasonable, whether erroneous or not. In other words, only unreasonable errors of law can affect jurisdiction. The following extract from C.U.P.E., supra, at p. 237, frequently referred to in later cases, has become the classic statement of the approach taken by this Court:

Put another way, was the Board's interpretation so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review?

This is a very severe test and signals a strict approach to the question of judicial review. It is nevertheless the test which this Court has applied and continues to apply:

—in Teamsters Union Local 938 v. Massicotte, 1982 CanLII 18 (SCC), [1982] 1 S.C.R. 710, in which Laskin C.J. observed at p. 724 "that mere doubt as to correctness of a labour board interpretation of its statutory power is no ground for finding jurisdictional error";

—in Alberta Union of Provincial Employees v. Board of Governors of Olds College, 1982 CanLII 186 (SCC), [1982] 1 S.C.R. 923, where Laskin C.J. applied the test mentioned above to a case involving a "quasi-privative" clause, which preserved the remedy of certiorari but conferred on the administrative tribunal a final jurisdiction not subject to appeal;

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—in St. Luc Hospital v. Lafrance, 1982 CanLII 187 (SCC), [1982] 1 S.C.R. 974, where Chouinard J. used the C.U.P.E. test in a case not involving any privative clause respecting evocation;

—finally, and more recently, C.L.R.B. v. Halifax Longshoremen's Association, 1983 CanLII 133 (SCC), [1983] 1 S.C.R. 245; National Bank of Canada v. Retail Clerks' International Union, 1984 CanLII 2 (SCC), [1984] 1 S.C.R. 269 and Bibeault v. McCaffrey, 1984 CanLII 133 (SCC), [1984] 1 S.C.R. 176.

As this argument does not question the arbitrator's initial jurisdiction to rule on the award or to substitute his opinion for that of the employer, I cite these decisions in support of a rule, and to the extent that they enunciate a rule, which clearly applies to non-jurisdictional errors, without thereby stating any position on the effect of these decisions on the rule that must be applied to errors granting jurisdiction.

In looking for an error which might affect jurisdiction, the emphasis placed by this Court on the dichotomy of the reasonable or unreasonable nature of the error casts doubt on the appropriateness of making, on this basis, a distinction between error of law and error of fact. In addition to the difficulty of classification, the distinction collides with that given by the courts to unreasonable errors of fact. An unreasonable error of fact has been categorized as an error of law. The distinction would mean that this error of law is then protected by the privative clause unless it is unreasonable. What more is needed in order that an unreasonable finding of fact, in becoming an error of law, becomes an unreasonable error of law? An administrative tribunal has the necessary jurisdiction to make a mistake, and even a serious one, but not to be unreasonable. The unreasonable finding is no less fatal to jurisdiction because the finding is one of fact rather than law. An unreasonable finding is what justifies intervention by the courts.

Not only is the distinction between error of law and of fact superfluous in light of an unreasonable finding or conclusion, but the reference to error itself is as well. Indeed, though all errors do not

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lead to unreasonable findings, every unreasonable finding results from an error (whether of law, fact, or a combination of the two), which is unreasonable.

In conclusion, an unreasonable finding, whatever its origin, affects the jurisdiction of the tribunal. I hasten to add that the distinction between an error of law and one of fact is still entirely valid when the tribunal is not protected by a privative clause. Indeed, though all errors of law are then subject to review, only unreasonable errors of fact are, but no others.

Accordingly, the arbitrator in the case at bar only exceeded his jurisdiction if the award he made is unreasonable in light of the wording of s. 128 and/or the evidence. In this context, the arbitrator might have erred on four different points:

1. he interpreted the words "dismissed without good and sufficient cause" unreasonably;

2. he applied this test unreasonably to the facts of the case;

3. he gave an unreasonable interpretation of the various powers conferred on him by s. 128;

4. having regard to the evidence, he substituted an unreasonable penalty for that chosen by the employer.

It was not seriously argued in this Court that the arbitrator interpreted s. 128 unreasonably (questions 1 and 3). So far as the interpretation of the words "dismissed without good and sufficient cause" is concerned (question 1), respondent cited the decision of this Court in Lafrance v. Commercial Photo Service Inc., 1980 CanLII 167 (SCC), [1980] 1 S.C.R. 536. In that case, five employees had submitted a complaint to the labour commissioner pursuant to s. 16 of the Labour Code (then s. 15), alleging that they had been dismissed because they exercised a right enuring to them under the Code.

15. When an employee is dismissed, suspended or transferred by the employer or his representative because of the exercise by such employee of a right arising from this Code, the labour commissioner may

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order the employer to reinstate such employee in his employment, within eight days of the service of the decision, with all his rights and privileges, and to pay him as an indemnity the equivalent of the salary and other benefits of which he was deprived due to dismissal, suspension or transfer.

That indemnity is due in respect of the whole period comprised between the time of dismissal, suspension or transfer and that of the carrying out of the order, or the default of the employee to resume his employment after having been duly recalled by his employer.

If the employee has worked elsewhere during the above mentioned period, the salary which he so earned shall be deducted from such indemnity. .

16. An employee who believes that he has been illegally dismissed, suspended or transferred by reason of the exercise of a right which devolves on him under this code must, if he wishes to take advantage of section 15, present or mail his complaint in writing to the labour commissioner-general within fifteen days of the dismissal, suspension or transfer. The labour commissioner-general shall appoint a labour commissioner to make an investigation and decide as to the complaint.

17. lf it is shown to the satisfaction of the labour commissioner seized of the matter that the employee exercises a right accorded to him by this code, there shall be a presumption in his favour that he was dismissed, suspended or transferred because he exercised such right, and the burden of proof that the employee was dismissed, suspended or transferred for another good and sufficient reason shall be upon the employer.

This was the context in which Chouinard J. had. to interpret the final words of the presumption stated in s. 17 (then s. 16): "and the burden of proof that the employee was dismissed, suspended or transferred for another good and sufficient reason shall be upon the employer". After briefly reviewing the construction placed on these words by the courts, Chouinard J. concluded (at p. 547):

As his jurisdiction consisted of determining whether the other reason cited by the employer was a substantive reason as opposed to a pretext, and whether it constituted the true reason for the dismissal, by ruling on the severity of the penalty as compared with the seriousness of the wrongful act the judge substituted his judgment for that of the employer. In doing so he exceeded his jurisdiction, and this is the basis for the writ of evocation.

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Respondent is therefore arguing that under s. 128 an arbitrator does not have to weigh the "sufficiency" of the cause and must refrain from acting once he finds there is a good cause for the penalty chosen by the employer.

I agree with the Court of Appeal that this case does not apply to the case at bar. The construction given by Chouinard J. must be placed in the context of ss. 15 et seq. of the Labour Code, which provide a remedy against dismissal that is unlawful because it results from the exercise by an employee of a right conferred on him by the Code. In the context of this remedy, the employee benefits from the presumption of s. 17 of the Code, and the commissioner's role is very limited in light of this presumption: he is only required to ensure that "the other reason" cited by the employer is not a pretext to mask an unlawful dismissal. This is a long way from s. 128 of the Act respecting labour standards, since a labour commissioner acting under ss. 15 et seq. of the Labour Code is not required, as an arbitrator appointed by the Commission des normes du travail is, to review the reasonableness of the exercise of the disciplinary power of the employer but its legality. Any question regarding the proportionality of the penalty is thus beyond the immediate limits of his inquiry.

For my part, I consider that the words "good and sufficient" in s. 128 must be given a meaning, and it is that there has to be a cause which in the arbitrator's opinion is significant enough to warrant a dismissal. In other words, there is no good and sufficient cause if the arbitrator considers that the penalty of dismissal was disproportionate to the wrongful act. This is the interpretation applied by the arbitrator in the case at bar: he concluded that there was no good and sufficient cause since in his view Mr. Blanchard's action was not wrongful enough to justify his dismissal. I therefore consider that the interpretation of these words by the arbitrator (question 1, supra) is not only reasonable but correct. I will return below to the question of how these words apply to the facts in the case at bar (question 2, supra).

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As regards the interpretation by the arbitrator of the powers conferred on him by s. 128 (question 3, supra), I consider that it is also reasonable and so beyond judicial review. The Court of Appeal referred to the decision of this Court in Heustis, supra, to determine the scope of the arbitrator's powers under s. 128.

In that case, the adjudicator appointed pursuant to the Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25, had to determine whether the employer had good and sufficient reason to dismiss Mr. Heustis, but had no express power to substitute a lesser penalty. Dickson J., as he then was, concluded (at p. 783):

There being nothing in either the agreement, or the Act, which expressly precludes the adjudicator's exercise of remedial authority, I am of the opinion that an adjudicator under the Public Service Labour Relations Act of New Brunswick has the power to substitute some lesser penalty for discharge where he had found just and sufficient cause for some disciplinary action, but not for discharge.

If that was true where there were no express remedial powers, a fortiori an arbitrator acting under s. 128 has the power to substitute a lesser penalty than that chosen by the employer. The terms of that section are clear: the arbitrator may order that the employee be reinstated, that an indemnity be paid to him, or he may "render any other decision he believes fair and reasonable, taking into account all the circumstances of the matter". In the case at bar, the arbitrator held that these provisions authorized him to substitute a four-month suspension for the dismissal, and once again, his construction of the law is reasonable and, be it said in passing, correct.

I therefore consider that the mis en cause arbitrator did not interpret the law unreasonably and did not exceed his jurisdiction (questions I and 3, supra).

However, a majority of the Court of Appeal held that the decision made by the arbitrator was unreasonable in view of the seriousness of appellant's act. In other words, the arbitrator was said

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to have erred in his application of the law to the facts of the case (questions 2 and 4, supra).

As I mentioned earlier, the arbitrator was said to have erred in two ways, namely by deciding that appellant's wrongful act did not justify dismissal and by imposing a penalty which was too light in view of the seriousness of the act. The court will only intervene if it is persuaded that the arbitrator made an unreasonable award. In coming to such a conclusion, the courts should always be mindful of the fact that an arbitrator is in a far better position to assess the impact of the award. It needs to be said again that administrative tribunals exist to provide solutions to disputes that can be best solved by a decision-making process other than that available in the courts. Often, too, the administrative "judge" is better trained and better informed on the area of his jurisdiction, and has access to information which more often than not does not find its way into the record submitted to the court. To this must be added the fact that the arbitrator saw and heard the parties.

In the case at bar, he chose to impose a four-month suspension without pay for an act which was unquestionably very reprehensible. He found that appellant's wrongful act did not justify his dismissal, taking all the circumstances into account.

The Court naturally condemns the actions of appellant and is fully in agreement with the arbitrator that those actions should be penalized. As to whether the penalty should have been dismissal or something less is a question for the arbitrator to decide.

For my part I was not persuaded that the arbitrator's decision, that the dismissal was not justified in the circumstances, was not based on a rational and reasonable assessment of the circumstances of the case and the rules applicable to the matter.

This Court may or may not agree with an arbitrator's award, but that does not authorize it to substitute its own opinion for that of an arbitrator who has acted in accordance with his enabling

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legislation and in a manner which is not "patently unreasonable". It is clear that the arbitrator took into account all the circumstances surrounding the dismissal and that he concluded that Mr. Blanchard had been dismissed for various reasons, only one of which was his acceptance of bribes. It is conceivable that in most circumstances, such a wrongful act would be a good and sufficient reason for dismissal. However, it was not shown that in light of the facts considered by the arbitrator and his privileged position, he made an unreasonable decision by imposing a lesser penalty on appellant.

With respect, therefore, it seems to me that the Court of Appeal erred in accepting this argument of the employer.

(C) Insufficiency of reasons given

There remains the final argument of respondent, which was also accepted by the Court of Appeal, that insufficient reasons were given for the arbitrator's award and that therefore it is "void and rendered entirely without jurisdiction".

In my view, this argument must be dismissed. Assuming for the purposes of argument that the reasons were in fact insufficient or ambiguous, as respondent suggested, this is an error of law apparent on the face of the record.

[TRANSLATION] Error of law may also be pleaded to deal with insufficiency apparent on the record of the reasons given for the decisions of administrative bodies.

(Principes de contentieux administratif, G. Pépin and Y. Ouellette, 2nd ed., 1982, Yvon Blais Inc., at p. 277.)

Where there is a privative clause such errors are beyond judicial review except in accordance with the rules discussed above. Additionally, it is hard to see how such a deficiency in the reasons could affect the arbitrator's jurisdiction to hear the case and to render the decision he thinks proper, except to the extent that the insufficiency of the reasons is so great that it amounts to an infringement of the rules of natural justice.

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That does not appear to be the case here. There was no total absence of reasons. Even if as respondent suggests the decision was not very well worded, the arbitrator's reasons are intelligible and it is possible to understand the basis for his decision. Such a wording is far from amounting to an infringement of the rules of natural justice. I would therefore dismiss this last argument.

For these reasons, I would allow the appeal, set aside the judgment of the Court of Appeal and restore that of the Superior Court denying the writ of evocation. Respondent will pay costs in all courts, except to the mis en cause arbitrator in this Court, as the latter filed no factum.

Appeal allowed.

Solicitors for the appellant: Canuel, Quidoz, Tremblay, Blier, Castonguay & Sylvain, Montréal.

Solicitors for the respondent: Vermette, Dunton & Associés, Montréal.