Caimaw v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983

Paccar of Canada Ltd. (Canadian Kenworth Company Division) Appellant

v.

Canadian Association of Industrial, Mechanical and Allied Workers, Local 14 Respondent

and

British Columbia Hydro & Power Authority Respondent

and

International Brotherhood of Electrical Workers, Local 213 Respondent

and

Industrial Relations Council of British Columbia, formerly the Labour Relations Board of British Columbia Respondent

indexed as: caimaw v. paccar of canada ltd.

File No.: 20174.

1988: December 13; 1989: October 26.

Present: Dickson C.J. and McIntyre*, Lamer, Wilson, La Forest, L'Heureux‑Dubé and Sopinka JJ.

on appeal from the court of appeal for british columbia

Administrative law -- Judicial review -- Jurisdiction -- Curial deference -- Court overturning decision of labour tribunal on judicial review ‑‑ Determination of jurisdiction of court on judicial review to overturn labour tribunal -- Jurisdiction infringed if error in interpreting jurisdictional provisions or if decision patently unreasonable -- Whether or not labour tribunal erred in interpreting jurisdictional provisions -- Whether or not patently unreasonable error in performance of board's function -- Labour Code, R.S.B.C. 1979, c. 212, ss. 27, 33.

Appeals -- Standing -- Administrative tribunals -- Whether or not tribunals have standing in appeals from their own decisions.

CAIMAW and Paccar were parties to a collective agreement with a stated term extending to April 30, 1983. This collective agreement contained a renewal clause which provided for the contract's continuing from year to year unless notice to the contrary were given. The agreement also contained a termination clause which provided that the agreement would continue during negotiations and that negotiations would be discontinued on written notice by either party. During the course of the collective agreement, Paccar laid off a large number of employees and limited its activities to warehouse operations. The union was served with a notice to terminate and negotiations were conducted over six months but without success. Paccar notified the union that it was discontinuing negotiations and that it considered the agreement terminated in all respects except those required by the Labour Code and the Employment Standards Act. It then set out the terms and conditions which it was putting into effect. The employees continued to work after the date when these new conditions were unilaterally implemented.

CAIMAW alleged several violations of the Code and requested that the Industrial Relations Council make a determination as to whether a collective agreement was in full force and effect. A three‑member panel of the Board decided against the union. A five‑member panel reheard the application, along with another application between British Columbia Hydro & Power Authority and IBEW, and a consolidated decision in respect of both applications upheld the decisions of the original Boards, though for different reasons.

Both CAIMAW and IBEW petitioned the Supreme Court of British Columbia pursuant to the Judicial Review Procedure Act for an order quashing the decision of the review panel of the Labour Relations Board. The applications were granted and were upheld on appeal. Paccar appealed to this Court with leave. B.C. Hydro was named as a respondent but neither it nor the IBEW appeared before this Court or submitted factums.

At issue here was whether the Labour Relations Board decision, which permitted an employer to unilaterally alter terms and conditions of employment after the termination of a collective agreement, was patently unreasonable and therefore subject to review by this Court. A subsidiary issue concerned the standing before this Court of the Labour Relations Board.

Held (L'Heureux‑Dubé and Wilson JJ. dissenting): The appeal should be allowed.

Per Dickson C.J. and La Forest J.: The Labour Relations Board had jurisdiction to embark upon the specific inquiry as to whether the employer has the authority to unilaterally alter the terms and conditions of employment.

The first step in determining whether an administrative tribunal has exceeded its jurisdiction by answering a question of law in a patently unreasonable manner is to determine its jurisdiction. Section 27 is a direction to the Board simply as to the purposes and objects to which it should have regard. It is not a jurisdiction limiting provision entailing judicial review even if the Board should err in its interpretation or application. The effect of s. 33 was that it was for the Board to determine whether any particular decision accords with the purposes and objects of s. 27, provided its interpretation was not patently unreasonable.

Where, as here, an administrative tribunal is protected by a privative clause, its decisions should only be reviewed if that Board has either made an error in interpreting the provisions conferring jurisdiction on it, or has exceeded its jurisdiction by making a patently unreasonable error of law in the performance of its function. The tribunal has the right to make errors, even serious ones, provided it does not act in a manner so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review. The test for review is a "severe test". The courts accordingly must adopt a posture of curial deference. Mere disagreement with the result arrived at by the tribunal does not make that result "patently unreasonable". The courts must focus their inquiry on the existence of a rational basis for the decision of the tribunal, and not on their agreement with it. Here, the Board's result was not patently unreasonable; indeed, it was as reasonable as the alternative. It was not necessary to go beyond that.

The scheme of the Labour Code, requiring the union and the employer to bargain collectively as the expiry of a collective agreement approaches, left no room for the operation of common law principles. As long as the ongoing duty on the parties to bargain collectively and in good faith remained, then the tripartite relationship of union, employer and employee brought about by the Code displaced common law concepts. The termination of the collective agreement had no effect on the obligation of the parties to bargain in good faith imposed by s. 6.

The terms and conditions formerly contained in a collective agreement are to be presumed to continue to govern the relationship, absent circumstances that would imply otherwise. The alternative would be chaos. The termination clause, however, would be of little effect if the employer were denied the power to change the terms of employment on the expiry of the contract. Such a move would not terminate the contract in any real sense but rather would signal the commencement of a new bargaining session.

The Act did not expressly provide that the employer has the power contended for but it was not unreasonable for the Board to find that the power existed. Indeed, the power to change the terms of employment on expiry of an agreement can be inferred from the existence of provisions in the Code which limit the circumstances in which unilateral changes can be made. The power of unilateral alteration did not introduce any unfairness into the bargaining relationship.

The two statutory freeze periods provided the union protection when it would be particularly vulnerable to management initiatives designed to weaken or destabilize it. The employer is expressly prohibited from pursuing a course of action it would otherwise be able to pursue, subject of course to the unfair labour practice provisions of the Code. The Board's conclusion that what is not prohibited by either the wording or the policy of the statute is permitted was not an unreasonable approach.

The Industrial Relations Council has standing before this Court to make submissions not only explaining the record before the Court, but also to show that it had jurisdiction to embark upon the inquiry and that it has not lost that jurisdiction through a patently unreasonable interpretation of its powers.

Per Lamer and Sopinka JJ.: It is not always necessary for the reviewing court to ignore its own view of the merits of the decision under review. Reasonableness is not a quality that exists in isolation. Any adjudication upon the reasonableness of a decision must involve an evaluation of the merits which provides a reference point for making a relative decision.

Curial deference is most important in the review of specialist tribunals' decisions but it does not come into play until the court finds itself in disagreement with the tribunal. Only then is it necessary to consider whether the error (so found) is within or outside the boundaries of reasonableness. The test is a "severe test" but even here an appreciation of the merits is not irrelevant.

The Board's decision was consistent with the Labour Code and the collective agreement. The Code did not totally exclude the general law and accordingly was silent in respect of some matters, including the employer's actions here. No amount of liberal interpretation could fill any lacuna caused by that silence. No express statutory conditions were violated. The decision, moreover, was consistent with the contractual expectations of the parties, since the insertion of the termination clause would have been meaningless if the terms of the collective agreement were held to persist indefinitely, or until a new collective agreement is concluded.

Per Wilson J. (dissenting): The reasons of La Forest J. were agreed with as to the broad scope of the principle of curial deference to the decisions of administrative tribunals because of their special expertise and as to the interpretation given to s. 27 of the Labour Code. However, a decision of a Board which meets the "severe test" of being "patently unreasonable" is not protected by the principle of curial deference. Such decisions must be treated as decisions which the Board had no jurisdiction to make. They cannot be passed off as the product of special expertise or "policy choices" which are not subject to review by the courts.

A patently unreasonable decision is one which no reasonable Board applying its expertise could possibly have arrived at. To describe a Board's decision as a "policy choice" does not insulate it from review if the policy on which the choice is based is inconsistent with the policy of the legislation under which it purports to have been made. Key elements of the legislation here were the obligation to bargain in good faith and the maintenance of a balance in the bargaining power between the parties.

The policy choices available to the Board were: (1) to permit the employer to decide when negotiations had reached an impasse and to unilaterally impose new terms on its employees if an impasse had been reached, or (2) to permit the same terms and conditions which were the product of the earlier bargaining process to continue to apply in the event of an impasse until such time as the parties are in a strike/lock-out position. The first did nothing to promote the collective bargaining process which is the legislatively accredited means of achieving collective agreements and industrial peace. It was also incompatible with the employer's obligation to bargain in good faith. The second allowed the Code to be interpreted in a way which did not interfere with the balance of bargaining power between the parties. Neither did it create a new power in the union, undermine the collective bargaining process, nor compel the parties to "re‑enter a world which has ceased to exist".

The decision of the Board was "patently unreasonable" and constituted jurisdictional error. It was not a question of choosing between equally viable and reasonable "policy choices". One was completely consistent with the concept of freedom and equality of bargaining power between the parties and the paramount role of the collective bargaining process in labour dispute resolution. The other was completely inconsistent with and inimical to both.

Per L'Heureux‑Dubé J. (dissenting): The British Columbia Labour Relations Board had standing to make arguments relative as to both the applicable standard of review and the steps it followed in reaching its decision. The Board, however, committed jurisdictional error when it stated that an employer may unilaterally impose the terms of employment upon the termination of the collective agreement, subject only to the obligation to bargain in good faith.

The Board was initially empowered to embark upon this specific inquiry but exceeded its jurisdiction in carrying it out. Section 27 of the Labour Code expressed the fundamental objectives of the legislation. The Board's decision neither referred to s. 27 nor discussed the public interest or the development of effective industrial relations. This omission was crucial to the Board's coming to a patently unreasonable solution.

The Board's decision was fraught with consequence because it in effect promulgated a "mini‑Code" on the "rights and obligations" of employers and unions at that stage of the bargaining process. It was all the more necessary, therefore, that the Board address the arguments based on the development of harmonious labour relations. The courts must defer to the judgment of administrative tribunals in matters falling squarely within the area of their expertise. Here, however, there was no indication that the Board even considered the requirements of effective industrial relations and the purposes and objects expressed in s. 27.

Collective bargaining, which was indispensable to the development of "effective industrial regulations" required by s. 27, has three broad characteristics in the Canadian context. First, legislative policy postpones the exercise of the economic sanctions until all other attempts at an agreement have failed. Second, the use of an economic sanction in collective bargaining necessarily entails that a party will suffer some loss in having recourse to it. Bargaining is premised upon mutual compromise. And third, the existence of an economic sanction presupposes the availability of a countervailing sanction of proportionate impact.

The unilateral imposition of the terms of employment as recognized by the Board shared none of these three characteristics. First, the policy provided for no ban on the unilateral imposition of terms of employment in the early stages of negotiation. Such unilateral sanction could, theoretically, occur at any time following the termination of the previous collective agreement. Second, the employer would not be detrimentally affected if it were to decide to reduce the salaries and cut other employment benefits. Third, no sanction was available to the union to countervail the unilateral setting of terms since the imposition of terms could conceivably take place before the right to strike arose under the Labour Code. More importantly, unlike the strike and lock‑out, the unilateral imposition of the terms of employment would not necessarily pressure both parties into agreeing upon a settlement.

The unilateral imposition of terms of employment is a sanction that opens the door to a number of abuses of the process of collective negotiation. It focusses on the individual employees and forces them either to accept the lower terms or to stop working altogether and accordingly stands in a class by itself as an economic sanction which is inherently destructive of the freedom to engage in collective bargaining. This sanction strikes a fundamental blow to the freedom of employees to form themselves into a union and engage the employer in collective bargaining. The only foreseeable effect of this measure is to fuel uselessly the flames of the labour dispute. Section 27 of the Labour Code, however, is designed to protect the integrity of the bargaining process against possible abuses.

Section 27 emphasized sovereign role of the union in the bargaining process and s. 46 conferred exclusive bargaining authority on certified unions even after the collective agreement had expired. The Board had it turned its mind to the fundamental policies expressed s. 27, would have had no choice but to come to the conclusion that s. 46 prevented an employer, on the termination of a collective agreement, from unilaterally implementing new working conditions through direct communication with the employees.

It was "patently unreasonable" for the Board to find that the employer had this power; the decision of the British Columbia Court of Appeal was agreed with.

The Code provided for mechanisms allowing the Board to broaden the reach and scope of the proceedings before it. The first set of mechanisms involved procedural adjustments which could be brought to the adjudicative hearing. The second involved a more radical change in the nature of the proceedings. The Board was empowered to conduct full‑scale, public policy‑making hearings which would foster broad participation by the members of the labour relations community in proceedings involving issues of widespread interest. In a case like the present one, where a previous policy orientation is reversed, where the area concerned involves a void in the enabling statute, and where the question raised is of crucial importance to employers, unions and individual employees at large, the matter may more properly have been dealt with in a policy‑making hearing.

Cases Cited

By La Forest J.

Applied: Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., 1979 CanLII 23 (SCC), [1979] 2 S.C.R. 227; Blanchard v. Control Data Canada Ltd., 1984 CanLII 27 (SCC), [1984] 2 S.C.R. 476; considered: Cariboo College and Cariboo College Faculty Ass'n (1983), 4 CLRBR (NS) 320; McGavin Toastmaster Ltd. v. Ainscough, 1975 CanLII 9 (SCC), [1976] 1 S.C.R. 718; Re Telegram Publishing Co. and Zwelling (1975), 1975 CanLII 580 (ON CA), 67 D.L.R. (3d) 404; Northwestern Utilities Ltd. v. City of Edmonton, 1978 CanLII 17 (SCC), [1979] 1 S.C.R. 684; Bibeault v. McCaffrey, 1984 CanLII 133 (SCC), [1984] 1 S.C.R. 176; British Columbia Government Employees' Union v. Industrial Relations Council, British Columbia Court of Appeal, May 24, 1988, unreported; referred to: Hill v. Peter Gorman Ltd. (1957), 1957 CanLII 393 (ON CA), 9 D.L.R. (2d) 124; U.E.S., Local 298 v. Bibeault, 1988 CanLII 30 (SCC), [1988] 2 S.C.R. 1048; Lorne W. Camozzi Co. v. International Union of Operating Engineers, Local 115 (1985), 1985 CanLII 306 (BC CA), 68 B.C.L.R. 338; Reference Re Public Service Employee Relations Act (Alta.), 1987 CanLII 88 (SCC), [1987] 1 S.C.R. 313; Inter City Glass Co. v. Attorney General of British Columbia, British Columbia Supreme Court, January 24, 1986, unreported; Canadian Pacific Railway Co. v. Zambri, 1962 CanLII 11 (SCC), [1962] S.C.R. 609; International Association of Machinists and Aerospace Workers v. Air Canada, Canada Labour Relations Board, January 18, 1988, unreported; Canada Safeway Ltd. v. Retail, Wholesale and Department Store Union, Locals 454 and 480 (1985), 11 CLRBR (NS) 68; American Federation of Television and Radio Artists v. N.L.R.B., 395 F.2d 622 (1968); Atlas Metal Parts Co. v. N.L.R.B., 660 F.2d 304 (1981); American Ship Bldg. Co. v. Labor Board, 380 U.S. 300 (1965); N.L.R.B. v. Cone Mills Corp., 373 F.2d 595 (1967).

By Sopinka J.

Referred to: Blanchard v. Control Data Canada Ltd., 1984 CanLII 27 (SCC), [1984] 2 S.C.R. 476; Goodyear Tire & Rubber Co. of Canada Ltd. v. T. Eaton Co., 1956 CanLII 2 (SCC), [1956] S.C.R. 610; Bakery and Confectionery Workers International Union of America Local No. 468 v. White Lunch Ltd., 1966 CanLII 84 (SCC), [1966] S.C.R. 282; RWDSU v. Dolphin Delivery Ltd., 1986 CanLII 5 (SCC), [1986] 2 S.C.R. 573.

By Wilson J. (dissenting)

Re Peterboro Lock Mfg. Co. (1954), 4 L.A.C. 1499.

By L'Heureux‑Dubé J. (dissenting)

Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997; Roncarelli v. Duplessis, 1959 CanLII 50 (SCC), [1959] S.C.R. 121; Smith & Rhuland Ltd v. The Queen, 1953 CanLII 234 (SCC), [1953] 2 S.C.R. 95; Tremblay v. Commission des relations de travail du Québec, 1967 CanLII 63 (SCC), [1967] S.C.R. 697; Wall and Redekop Corp. v. United Brotherhood of Carpenters and Joiners of America (1986), 1986 CanLII 954 (BC SC), 5 B.C.L.R. (2d) 335 (S.C.), dismissing an application for judicial review from (1986), 86 C.L.L.C. 16,054, denying a reconsideration from (1985), 85 C.L.L.C. 16,050; U.E.S., local 298 v. Bibeault, 1988 CanLII 30 (SCC), [1988] 2 S.C.R. 1048; Canadian Air Line Pilots Association v. Air Canada, Montreal, Quebec (1977), 24 di 203; U.E.W. and DeVilbiss Ltd., [1976] 2 CLRBR 101; Local 155 of International Molders and Allied Workers Union v. National Labour Relations Board, 442 F.2d 742 (1971), conf. 442 F.2d 747; Cariboo College and Cariboo College Faculty Ass'n (1983), 4 CLRBR (NS) 320; Re Telegram Publishing Co. and Zwelling (1975), 1975 CanLII 580 (ON CA), 67 D.L.R. (3d) 404; Syndicat catholique des employés de magasins de Québec Inc. v. Cie Paquet Ltée, 1959 CanLII 51 (SCC), [1959] S.C.R. 206; McGavin Toastmaster Ltd. v. Ainscough, 1975 CanLII 9 (SCC), [1976] 1 S.C.R. 718.

Statutes and Regulations Cited

British North America Act, 1867, s. 96.

Canada Labour Code, R.S.C., 1985, c. L‑2, ss. 50, 89.

Industrial Relations Act, R.S.N.B. 1973, c. I‑4, s. 35(2).

Judicial Review Procedure Act, R.S.B.C. 1979, c. 209.

Labour Act, R.S.P.E.I., c. L‑1, s. 23.

Labour Code, R.S.B.C. 1979, c. 212, ss. 6, 27(1), (2), 31, 32(1)(a), (b), (c), 33, 34(1)(d), (e), (g), (h), (2), 28, 36, 46(a), 51(1), 61(1)(c), 62, 63, 65, 79(2), 80, 81(3)(a), (b), 82(2).

Labour Code, R.S.Q. 1977, c. C‑27, s. 59.

Labour Code Amendment Act, 1977, S.B.C. 1977, c. 72, s. 27(1).

Labour Relations Act, R.S.M. 1987, c. L‑10, s. 10(4).

Labour Relations Act, R.S.O. 1980, c. 228, s. 79.

Labour Relations Act, S.N. 1977, c. 64, s. 74.

Labour Relations Code, R.S.A. 1988, c. L‑1.2, s. 145.

National Labour Relations Act, 29 U.S.C., ss. 8(a)(5), 9(a).

Public Utilities Board Act, R.S.A. 1970, c. 302, s. 65.

Trade Union Act, R.S.S. 1978, c. T‑17, s. 11(1)(m).

Trade Union Act, S.N.S. 1972, c. 19, s. 33.

Authors Cited

Arthurs, H. W., D. D. Carter and H. J. Glasbeek. Labour Law and Industrial Relations in Canada, 2nd ed. Toronto: Butterworths, 1984.

Carrothers, A. W. R., E. E. Palmer and W. B. Rayner. Collective Bargaining Law in Canada, 2nd ed. Toronto: Butterworths, 1986.

Galligan, D. J. Discretionary Powers: A Legal Study of Official Discretion. Oxford: Clarendon Press, 1986.

Murphy, T. H. "Impasse and the Duty to Bargain in Good Faith" (1977), 39 U. Pitt. L. Rev. 1.

Pépin, Gilles et Yves Ouellette. Principes de contentieux administratif, 2^e éd. Cowansville, Quebec: Yvon Blais Inc., 1982.

Weiler, Paul. Reconcilable Differences. Toronto: Carswells, 1980.

APPEAL from a judgment of the British Columbia Court of Appeal (1986), 1986 CanLII 755 (BC CA), 7 B.C.L.R. (2d) 80, 32 D.L.R. (4th) 523, dismissing appeal from a judgment of Meredith J., [1986] B.C.W.L.D. 2745, allowing an appeal from a reconsideration of the Labour Relations Board of British Columbia (1985), 10 CLRBR (NS) 355, upholding the decisions of the original Board (CAIMAW v. Paccar of Canada Ltd. (Canadian Kenworth Company Division) and IBEW v. British Columbia Hydro & Power Authority). Appeal allowed, Wilson and L'Heureux-Dubé JJ. dissenting.

D. M. M. Goldie, Q.C., and B. R. Grist, for the appellant.

Ian Donald, Q.C., and Bruce Laughton, for the respondent Canadian Association of Industrial, Mechanical and Allied Workers, Local 14.

No one appeared for the respondent British Columbia Hydro & Power Authority.

No one appeared for the respondent International Brotherhood of Electrical Workers, Local 213.

J. Stuart Clyne, Q.C., and Eugene C. Jamieson, for the respondent Industrial Relations Council of British Columbia.

//La Forest J.//

The judgment of Dickson C.J. and La Forest J. was delivered by

Judgment of La Forest J.

LA FOREST J. -- The narrow issue in this appeal is whether the decision of the respondent Labour Relations Board of British Columbia permitting an employer, after the termination of a collective agreement, to unilaterally alter terms and conditions of employment is patently unreasonable and therefore subject to review by this Court. A subsidiary issue concerns the standing before this Court of the Labour Relations Board.

Facts

Facts

The respondent, Canadian Association of Industrial, Mechanical and Allied Workers (Local 14) ("CAIMAW"), is the certified bargaining agent for the employees of the appellant Paccar of Canada Ltd. (Canadian Kenworth Division) ("Paccar"). CAIMAW and Paccar were parties to a collective agreement with a stated term extending from May 1, 1982 to April 30, 1983. Paccar had been engaged in the manufacture of trucks, but during the course of the collective agreement, it laid off a large number of employees and limited its activities to warehouse operations. Instead of employing three hundred and fifty people before the layoffs, it employed only ten thereafter.

The collective agreement contained a renewal and termination provision, the relevant parts of which read as follows:

21.01 This [a]greement shall be effective as and from May 1, 1982, to and including April 30, 1983, and shall continue thereafter from year to year unless written notice of contrary intention is given by either [p]arty to the other four (4) months prior to April 30, 1983, or any anniversary date thereafter.

21.03 In the event of a notice of termination, this [a]greement shall remain in full force and effect while negotiations are being carried on, it being agreed that negotiations shall be discontinued upon delivery of a written notice by either [p]arty.

On January 4, 1983, Paccar notified CAIMAW, in a document entitled "Notice to Terminate", that:

This is notice to terminate the [c]ollective [a]greement between the parties and to commence negotiations for a new agreement, pursuant to the terms of the agreement and the Labour Code of B.C. Please contact the undersigned to arrange a mutually acceptable time and place to meet.

The parties negotiated over the next six months, but without success. On June 29, 1983, Paccar wrote CAIMAW:

In accordance with Article 21.03 and in view of the impasse the parties have reached, this is the requisite notice to discontinue negotiations and that the Company considers the [c]ollective [a]greement terminated effective July 4, 1983. All terms and conditions of the [a]greement, including the COLA clause are cancelled except as noted below and/or required by the Labour Code and the Employment Standards Act.

Paccar then set out the terms and conditions which it would put into effect on July 4, 1983. The employees of Paccar have continued to work since that date.

CAIMAW then applied to the respondent Labour Relations Board (now the Industrial Relations Council) under s. 28 of the Labour Code, R.S.B.C. 1979, c. 212, (the "Code") alleging that Paccar had violated ss. 65, 79(2) and 82(2) of the Code, and requesting a determination under s. 34(1)(g) as to whether a collective agreement was in full force and effect. A three-member panel of the Board decided against the union. The union sought and was granted a re-hearing pursuant to s. 36 of the Code. At the re-hearing, the application was heard along with another application between British Columbia Hydro & Power Authority and the International Brotherhood of Electrical Workers, Local 213, (the "IBEW"), and a consolidated decision in respect of both applications was issued by a unanimous five-member panel of the Board, upholding, though for different reasons, the decisions of the original Boards.

Both CAIMAW and the IBEW petitioned the Supreme Court of British Columbia pursuant to the Judicial Review Procedure Act, R.S.B.C. 1979, c. 209, for an order quashing the decision of the review panel of the Labour Relations Board. Meredith J. granted the applications. Paccar and B.C. Hydro appealed to the British Columbia Court of Appeal, but the appeals were dismissed by a unanimous five-member panel of that court. Paccar appeals to this Court with leave. B.C. Hydro has been named as a respondent but neither it nor the IBEW appeared before this Court or submitted factums.

Decisions Below

Decisions Below

Before the first Board, two issues required resolution. The first was whether Paccar had in fact terminated the collective agreement. The Board held, interpreting those portions of Article 21 set out above, that the employer had duly terminated the agreement in accordance with its terms. The issue that then arose was whether, in spite of the termination of the agreement, its terms necessarily bound Paccar and governed its relationship with its employees or whether Paccar had the authority to impose, unilaterally upon the employees in the bargaining unit, terms and conditions of employment different from those set out in the terminated agreement. The Board concluded in favour of the latter position. The essence of its reasoning is set out in the following passage:

We conclude that the employer and the trade union may unilaterally impose terms and conditions of employment to be "incorporated" into the individual contracts of employment which spring up on the termination of the collective agreement. The appropriate response by the employer or the trade union to unacceptable "new terms" proposed by the other is to lock out or strike. That is not to say that an employer has a free hand. Certainly the employer's behaviour will be limited by the unfair labour practice provisions of the Code (for example, Section 6 thereof) and by Section 46.

The Board concluded that changing the terms and conditions on which an employer will continue to employ its work-force after the expiry of a collective agreement did not violate the exclusive bargaining authority given to the union by s. 46 of the Code. It therefore dismissed the complaint.

The re-hearing panel gave extensive, considered reasons and upheld the decision of the original Board, though for different reasons. Before the re-hearing panel, the unions made two arguments in support of the proposition that the earlier decision was inconsistent with the law and policy under the Labour Code. The first argument was premised on the view that when a collective agreement expires, individual contracts of employment between the employer and the employee resume operation, and that in accordance with the principles of employment law, those contracts cannot be altered except by agreement; see Hill v. Peter Gorman Ltd. (1957), 1957 CanLII 393 (ON CA), 9 D.L.R. (2d) 124 (Ont. C.A.) In the present case, it cannot be said that the employees either expressly or impliedly accepted the varied terms.

The second argument was based on the earlier decision of the Labour Relations Board in Cariboo College and Cariboo College Faculty Ass'n (1983), 4 CLRBR (NS) 320, and on s. 46(a) of the Labour Code. That section gives the union the exclusive authority to bargain collectively for the bargaining unit, and to bind the employees by collective agreement. The union argued that the effect of s. 46(a) was to preclude the employer from unilaterally altering terms of employment without the agreement of the union.

The Labour Relations Board decided against the union on both arguments. In doing so, the Board found it useful to examine the extensive American experience, though it did not blindly follow it. It held that on termination of a collective agreement, individual contracts of employment do not revive. They stated:

In light of the Supreme Court of Canada's decision in McGavin Toastmaster Ltd., [1975 CanLII 9 (SCC), [1976] 1 S.C.R. 718], and Chief Justice Laskin's above-quoted comments, we have concluded that it is no longer appropriate to speak of individual contracts of employment and common law principles flowing therefrom in respect of an employer-employee relationship which is governed by the Labour Code. Such contracts and principles are based on individual relationships between employer and employee, whereas the Labour Code and other similar labour relations legislation is premised on a collective relationship between an employer and his employees, with individual dealings between employer and employee being prohibited.

We are of the view that the comments of Chief Justice Laskin concerning the inapplicability of individual contracts of employment and the common law apply regardless of whether a collective agreement is in force. This conclusion flows from the fundamental change brought about by the certification of a trade union to represent a group of employees in a bargaining unit. Once certified, that union has the exclusive authority to bargain on behalf of and bind the employees in the unit. The individual employee has no authority to bargain on his own behalf whether a collective agreement is in force or not. In these circumstances, it does not make sense to speak of individual contracts of employment at any time. Individual employees may no longer make contracts regarding terms and conditions of employment; only the trade union may. Further, it no longer makes sense to speak of the common law. The collective bargaining relationship is governed by the provisions of the Labour Code, not the common law.

The Board then turned to the second argument based on s. 46(a) and said:

Having given this matter serious consideration, we have concluded that Section 46(a) of the Labour Code does not prevent an employer from making unilateral alterations to terms and conditions of employment after the expiry of the collective agreement and after he has sought to negotiate those alterations with the union and the union has rejected them.

In doing so, the Board explicitly disagreed with the decision in Cariboo College, supra. The Board concluded:

After the expiry of the collective agreement, no unilateral alterations to terms and conditions of employment may be made by an employer unless they are done so in compliance with his duty to bargain in good faith with the union. Further, we wish to make it clear that the fact that an employer has made unilateral alterations to his employees' terms and conditions of employment does not extinguish his obligation to continue to bargain in good faith with the trade union and make every reasonable effort to conclude a collective agreement.

In the period after the expiry of the collective agreement, where the employer continues to operate and the employees continue to work, it will be implied that the terms and conditions of employment for the employees will continue to be the same as those contained in the just expired collective agreement. This conclusion flows from the scheme of the Labour Code as a whole, but in particular, from the duty to bargain in good faith which limits the "when" and "how" of unilateral changes to terms and conditions of employment. It is that scheme, and, in particular, the limits on unilateral action prescribed by the duty to bargain in good faith which requires the initial maintenance of the status quo and the resulting implication of the terms and conditions of employment from the just expired collective agreement.

In the result, the union's complaint was dismissed.

Meredith J. allowed the application to quash. His reasons are brief and not entirely clear. They begin by saying:

I take it that counsel for the employers and the unions agree with me that at law, labour or otherwise, the employers in these cases have no authority to make unilateral alterations in terms and conditions of employment at any time.

That agreement, if it ever existed, did not survive into this Court. Whether an employer has the asserted authority was strongly debated before us. The essence of Meredith J.'s reasoning appears to be that employment necessarily involves an agreement. Agreement and unilateral alteration are each other's antithesis. As a result, the Board was "wrong" in concluding that there had been unilateral alterations at all, and so the matter was remitted back to the Labour Relations Board for further consideration.

The Court of Appeal dismissed the appeal from that order. It held that the common law, and more particularly basic contract law, had not been ousted by the Labour Code and applied not only to individual contracts of employment but also to collective agreements. The court held that terms could not be unilaterally imposed by an employer. Seaton J.A. said:

No foundation is given for the statement that "an employer has the authority under the Labour Code to make unilateral alterations . . .". No section says that; nor does any imply it. The Code as a whole seeks stability resulting from agreement. This new power creates instability resulting from unilateral action.

The Court of Appeal rejected all reliance on the American authorities. These, it thought, were concerned with the issue of whether unilateral changes constituted a failure to bargain in good faith, an argument the unions had abandoned in the present case at the opening of the original Board hearing, or alternatively dealt with changes favourable to the employees, which is unlike the case at bar. As the Court of Appeal was of the view that the three panels of the Labour Relations Board were wrong in finding that an employer had the authority to unilaterally alter terms and conditions of employment after the expiry of the collective agreement, the court, in the last line of its decision, held that to find such a power in the employer was patently unreasonable.

Analysis

Analysis

In oral argument before this Court, counsel for CAIMAW conceded that the Labour Relations Board had jurisdiction to embark upon the specific inquiry as to whether the employer has the authority to alter unilaterally the terms and conditions of employment. He submitted, however, that the Labour Relations Board lost jurisdiction by coming to the conclusion that that right exists without having any rational basis for so determining. In finding such a right, he submitted, the Labour Relations Board went beyond making a serious error within its jurisdiction and into the realm of patently unreasonable errors.

The first step in determining whether an administrative tribunal has exceeded its jurisdiction by answering a question of law in a patently unreasonable manner is to determine its jurisdiction. "At this stage, the Court examines not only the wording of the enactment conferring jurisdiction on the administrative tribunal, but the purpose of the statute creating the tribunal, the reason for its existence, the area of expertise of its members and the nature of the problem before the tribunal"; see U.E.S., Local 298 v. Bibeault, 1988 CanLII 30 (SCC), [1988] 2 S.C.R. 1048, at p. 1088.

The Labour Relations Board derives its authority from Part II of the Labour Code, particularly ss. 27 and 31 to 34. It is useful to set out these provisions. They read:

27. (1) The board, having regard to the public interest as well as the rights and obligations of parties before it, may exercise its powers and shall perform the duties conferred or imposed on it under this Act so as to develop effective industrial relations in the interest of achieving or maintaining good working conditions and the well being of the public. For those purposes, the board shall have regard to the following purposes and objects:

(a)securing and maintaining industrial peace, and furthering harmonious relations between employers and employees;

(b)improving the practices and procedures of collective bargaining between employers and trade unions as the freely chosen representatives of employees; and

(c)promoting conditions favourable to the orderly and constructive settlement of disputes between employers and employees or their freely chosen trade unions.

(2) The board may formulate general guidelines to further the operation of this Act; but the board is not bound by those guidelines in the exercise of its powers or the performance of its duties.

31. Except as provided in this Act, the board has and shall exercise exclusive jurisdiction to hear and determine an application or complaint under this Act and to make an order permitted to be made. Without limiting the generality of the foregoing, the board has and shall exercise exclusive jurisdiction in respect of

(a)a matter in respect of which the board has jurisdiction under this Act or regulations;

(b)a matter in respect of which the board determines under section 33 that it has jurisdiction; and

(c)an application for the regulation, restraint or prohibition of a person or group of persons from

(i)ceasing or refusing to perform work or to remain in a relationship of employment;

(ii)picketing, striking or locking out; or

(iii)communicating information or opinion in a labour dispute by speech, writing or other means.

32. (1) Except as provided in this section, no court has or shall exercise any jurisdiction in respect of a matter that is, or may be, the subject of a complaint under section 28 or a matter referred to in section 31, and, without restricting the generality of the foregoing, no court shall make an order enjoining or prohibiting an act or thing in respect of them.

33. The board has and shall exercise exclusive jurisdiction to determine the extent of its jurisdiction under this Act, a collective agreement or the regulations, to determine a fact or question of law necessary to establish its jurisdiction and to determine whether or in what manner it shall exercise its jurisdiction.

34. (1) The board has exclusive jurisdiction to decide a question arising under this Act, and, on application by any person or on its own motion, may decide for all purposes of this Act any question, including, without restricting the generality of the foregoing, any question as to whether

(d)a person is, or what persons are, bound by a collective agreement;

(e)a person is, or what persons are, parties to a collective agreement;

(g)a collective agreement is in full force and effect;

(h)a person is bargaining collectively or has bargained collectively in good faith;

(2) Except in respect of the constitutional jurisdiction of the board, a decision or order of the board under this Act, a collective agreement or the regulations, on a matter in respect of which the board has jurisdiction, or determines under section 33 that it has jurisdiction under this Act, a collective agreement or the regulations, is final and conclusive and is not open to question or review in a court on any grounds, and no proceedings by or before the board shall be restrained by injunction, prohibition, mandamus or another process or proceeding in a court, or be removable by certiorari or otherwise into a court.

Section 27 requires that the Labour Relations Board make its decisions having regard to the public interest and the object of promoting harmonious relations between employers and employees. This direction to the Board does not, however, allow a court to substitute its judgment for that of the Board as to what actions will "develop effective industrial relations" and "secur[e] and [maintain] industrial peace". Section 27 is not, in this sense, a jurisdiction limiting provision upon the interpretation of which the Board cannot err without being subject to judicial review. Indeed, if the courts could intervene every time they were of the opinion that a particular decision of the Board did not accord with the objectives set out in s. 27, the notion of curial deference would be deprived of virtually all meaning. Every decision of the tribunal would be open to review whether patently unreasonable or not. In my opinion, s. 27 amounts to a direction to the Board simply as to the purposes and objects to which it should have regard. Implicit in the establishment of an expert administrative tribunal, however, is that that tribunal is the best judge of what actions would develop "effective" industrial relations and "further" industrial peace and harmony. Thus, in Lorne W. Camozzi Co. v. International Union of Operating Engineers, Local 115 (1985), 1985 CanLII 306 (BC CA), 68 B.C.L.R. 338 (B.C.C.A.), at p. 345, Esson J.A. said:

But where, as here, the interpretation depends upon the question whether the specific exercise of power is justified by the purposes and objects of the Act, there is an element of "curial deference" involved. The board is uniquely qualified to know what is necessary to develop effective industrial relations or maintain good working conditions. So, where the question is whether a particular exercise of power not prevented by the express words of the Code is one intended to be granted to the board, the court must show reasonable deference to the board's views and reasons in support of it. [Emphasis added.]

That it was the legislative intention that the interpretation of s. 27 should be left for the Board alone to determine is made clear by s. 33. That section gives the Board the exclusive jurisdiction to determine the extent of its jurisdiction under the Act, to determine any fact necessary to establish its jurisdiction, and to determine in what manner it shall exercise its jurisdiction. At the very least, the effect of this section must be that it establishes that it is for the Board to determine whether any particular decision accords with the purposes and objects of s. 27, provided its interpretation is not patently unreasonable.

Where, as here, an administrative tribunal is protected by a privative clause, this Court has indicated that it will only review the decision of the Board if that Board has either made an error in interpreting the provisions conferring jurisdiction on it, or has exceeded its jurisdiction by making a patently unreasonable error of law in the performance of its function; see Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., 1979 CanLII 23 (SCC), [1979] 2 S.C.R. 227. The tribunal has the right to make errors, even serious ones, provided it does not act in a manner "so patently unreasonable that its construction cannot be rationally supported by the relevant legislation and demands intervention by the court upon review" (p. 237). The test for review is a "severe test"; see Blanchard v. Control Data Canada Ltd., 1984 CanLII 27 (SCC), [1984] 2 S.C.R. 476, at p. 493. This restricted scope of review requires the courts to adopt a posture of deference to the decisions of the tribunal. Curial deference is more than just a fiction courts resort to when they are in agreement with the decisions of the tribunal. Mere disagreement with the result arrived at by the tribunal does not make that result "patently unreasonable". The courts must be careful to focus their inquiry on the existence of a rational basis for the decision of the tribunal, and not on their agreement with it. The emphasis should be not so much on what result the tribunal has arrived at, but on how the tribunal arrived at that result. Privative clauses, such as those contained in ss. 31 to 34 of the Code, are permissible exercises of legislative authority and, to the extent that they restrict the scope of curial review within their constitutional jurisdiction, the Court should respect that limitation and defer to the Board.

In Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., supra, Dickson J., as he then was, thus put it at pp. 235-36:

Section 101 constitutes a clear statutory direction on the part of the Legislature that public sector labour matters be promptly and finally decided by the Board. Privative clauses of this type are typically found in labour relations legislation. The rationale for protection of a labour board's decisions within jurisdiction is straightforward and compelling. The labour board is a specialized tribunal which administers a comprehensive statute regulating labour relations. In the administration of that regime, a board is called upon not only to find facts and decide questions of law, but also to exercise its understanding of the body of jurisprudence that has developed around the collective bargaining system, as understood in Canada, and its labour relations sense acquired from accumulated experience in the area.

The comments of McIntyre J. in Reference Re Public Service Employee Relations Act (Alta.), 1987 CanLII 88 (SCC), [1987] 1 S.C.R. 313, at p. 416, are particularly apt:

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

See also Inter City Glass Co. v. Attorney General of British Columbia, unreported, B.C.S.C. January 24, 1986, at p. 6.

I do not find it necessary to conclusively determine whether the decision of the Labour Relations Board is "correct" in the sense that it is the decision I would have reached had the proceedings been before this Court on their merits. It is sufficient to say that the result arrived at by the Board is not patently unreasonable. Indeed, I would go so far as to say that the result reached by the Board is as reasonable as the alternative. It is not necessary to go beyond that.

I am of the opinion that the courts below did not apply the appropriate standard of review to the decisions of the Board. I cannot escape the conclusion that, instead of examining the reasonableness or rationality of the Board's decision, the courts substituted their view of the appropriate result. In doing so, they became the arbiters of labour policy as can be seen from the finding that, while "The code as a whole seeks stability resulting from agreement[, this] new power creates instability resulting from unilateral action". With respect, one cannot imagine that the Labour Relations Board did not consider the implications of a finding that the employer could unilaterally alter the terms and conditions of employment.

Other passages in the Court of Appeal's reasons also support the view that its decision was arrived at because it accorded with the court's view of the appropriate policy. Thus, Seaton J.A. held that "I do not accept that terms can be imposed unilaterally by an employer" (emphasis added). Later he said:

I accept that after the expiry of a collective agreement the implied terms and conditions of employment are those found in the expired agreement. That must be so. The employees are not working for nothing. Unless something happens, the seniority rights, the pension rights, the dental plan and all those benefits that have been won by unions over the years must continue. The alternative is chaos. [Emphasis added.]

Labour relations policy is a matter for the specialized tribunal. As noted in Lorne W. Camozzi Co. v. International Union of Operating Engineers, Local 115, supra, at p. 345: "The board is uniquely qualified to know what is necessary to develop effective industrial relations or maintain good working conditions." By substituting its view of the effect of the conclusion of the Labour Relations Board, I am of the opinion that the Court of Appeal exceeded its function.

The Court of Appeal was also influenced by its view of the role of the common law in labour relations. While it accepted that individual contracts of employment no longer arise if the parties are in a collective bargaining relationship, a conclusion inescapable since the decision of this Court in McGavin Toastmaster Ltd. v. Ainscough, 1975 CanLII 9 (SCC), [1976] 1 S.C.R. 718, they limited the ratio of that decision to the rejection of common law only in so far as it relates to individual employment contracts. They maintained that the essence of employment is not a "relationship", but agreement. Since the employer cannot "agree" directly with the employee, because that is precluded by statute (s. 46(a)), and since an agreement cannot be altered if one party does not expressly or impliedly consent to the alteration (see Hill v. Peter Gorman Ltd., supra), even though the agreement has by its own terms expired, the same terms and conditions must continue in force. Before this Court, counsel for the union did not try to defend the approach taken by the Court of Appeal with respect to the common law. While he submitted that the common law remains the substratum underlying the Labour Code, a position it is not necessary to accept or reject in this appeal, he submitted that the common law was only relevant to this appeal in that no express power to unilaterally alter a collective agreement could be found in it.

I do not see that the common law has any relevance to this appeal. The Labour Relations Board dealt with the application of the common law in specific response to the argument of the union that on termination of the collective agreement individual contracts of employment revive. The tribunal correctly rejected that argument as inconsistent with the decision of this Court in McGavin Toastmaster Ltd. v. Ainscough, supra. In that case, Laskin C.J. found that employer-employee relations governed by a collective agreement displaced the common law of individual employment. He noted at pp. 726-27:

Neither this Act [The Mediation Services Act, S.B.C. 1968, c. 26] nor the companion Labour Relations Act could operate according to their terms if common law concepts like repudiation and fundamental breach could be invoked in relation to collective agreements which have not expired and where the duty to bargain collectively subsists.

I can see no reason why this finding should be restricted to those cases where the collective agreement continues in existence. The operative factor, it seems to me, is the ongoing duty on the parties to bargain collectively and in good faith. So long as that obligation remains, then the tripartite relationship of union, employer and employee brought about by the Code displaces common law concepts. The termination of the collective agreement has no effect on the obligation of the parties to bargain in good faith imposed by s. 6. The union retains its certification as the representative of the employees whether a collective agreement is in force or not. The scheme of the Labour Code, requiring the union and the employer to bargain collectively as the expiry of a collective agreement approaches (ss. 62 and 63) does not leave any room for the operation of common law principles. To the extent the decision of the Court of Appeal relied on them in holding the decision of the Labour Relations Board to be unreasonable, I am of the opinion that the court erred.

The union submitted that the decision of the Board permitting the employer to alter terms and conditions of employment after unsuccessful bargaining towards a new agreement should be considered patently unreasonable because it is not expressly provided for in the Code or supported by implication from the scheme of the Code. Finding such a power, it maintained, would upset the balance of the labour relations legislation which offsets the union's right to strike against the employer's power to lock-out. The balance of the statute, it continued, would also be disturbed because the union has no countervailing or equivalent power. The union could not, for example, unilaterally decide that after expiry of the collective agreement a salary increase would take effect. Since the employer controls the payroll and manages the operation, such an attempt by the union to single-handedly alter the employment terms would simply be ignored by the employer.

It is not suggested that the Industrial Relations Council did not have the right to determine the existence of this power in the employer. This complaint was originally brought pursuant to s. 34(1)(g) of the Labour Code for a determination as to whether a collective agreement was in effect. It logically follows that if the Council has the power to determine if a collective agreement is in force, it can also determine the labour relations consequences of a determination that a collective agreement has been terminated. It is no longer suggested that the collective agreement was not properly terminated. The question is simply as to the consequences of that termination.

Both the Board and the Court of Appeal relied on a passage from Re Telegram Publishing Co. and Zwelling (1975), 1975 CanLII 580 (ON CA), 67 D.L.R. (3d) 404 (Ont. C.A.), where Kelly J.A. described the position upon the termination of a collective agreement as follows, at p. 412:

. . . the accepted view appears to be that where, after the collective agreement has expired, the employee has continued to work for the employer and the employer has continued to accept the benefit of his services, there being no agreement to the contrary, and no other circumstances from which there may be implied terms and conditions of employment different from those set out in the collective agreement, the terms and conditions of the employment after expiry are to be implied and would be similar to those spelled out in the collective agreement which related directly to the individual employer-employee relationship. [Emphasis added.]

The Court of Appeal seems to have attached no importance to the words I have emphasized. It is only sensible that the terms and conditions formerly contained in a collective agreement be presumed to continue to govern the relationship, absent circumstances that would imply otherwise. The alternative to this, it is fair to say, would be chaos. However, denying to the employer the power within the context of a collective bargaining relationship to, subject to its duty to bargain in good faith, change the terms on which it will make employment available denies almost all effect to the termination clause agreed to by the parties. Instead of terminating the agreement in any real sense, it simply would signal the commencement of a new bargaining session, coupled with the threat of strikes or lock-outs. The position taken by Judson J. in Canadian Pacific Railway Co. v. Zambri, 1962 CanLII 11 (SCC), [1962] S.C.R. 609, at p. 624, that "When a collective agreement has expired, it is difficult to see how there can be anything left to govern the employer-employee relationship" seems more satisfying. The relationship continues, of course, to be subject to the requirements contained in the appropriate statutory scheme.

While it is true that the Act does not expressly provide that the employer has the power contended for, it was not unreasonable for the Board to find that the power existed. Professor Weiler, the first Chairman of the Labour Relations Board of British Columbia and one of the drafters of the Code, discusses the issue of unilateral alteration as follows (Paul Weiler, Reconcilable Differences (1980), at pp. 65-66):

Suppose the employer cannot get an agreement from the union to change these requirements in a new contract. In that event, management is entitled to act unilaterally. It can simply post an announcement to its employees that it is reducing the price it will pay for labour and the amount of labour that it is going to use. That is what it means for management to exercise the rights of property and of capital; to be able to propose the terms upon which it will purchase labour for its operations.

What rights and resources do the employees and their union have in response? In essence, they have only the collective right to refuse to work on those terms, to withdraw their labour rather than to accept their employer's offer. That is what a strike consists of.

It was argued that the Labour Code as a whole was designed to balance the power of the employer and the union by balancing the right to strike against the right to lock-out. On this point, Professor Weiler writes as follows (p. 67):

A lockout is not the employer equivalent of a strike. As I have shown, the reciprocal employer lever is really the management prerogative to maintain or to change the terms and conditions which the employer will pay its employees who want to work in its operations. (A lockout is usually the instrument of an employer association, an employer "union," which wants to defend itself against selective trade union strikes of its members.)

Two further considerations support the view that it was not unreasonable to find that the employer has the power to alter the terms and conditions on which he will make employment available. First, the experience of other jurisdictions shows that allowing the employer this power will not have a catastrophic effect or upset the delicate balance of power between the union and the employer. Put another way, the experience of other jurisdictions does not show that the power of unilateral alteration introduces any unfairness into the bargaining relationship. Nothing was advanced to support the view that a denial of this power is an essential element of an effective labour relations regime. Secondly, the power to change the terms of employment once an agreement has expired and the parties have been unable to agree can be inferred from the existence of provisions in the Code which limit the circumstances in which unilateral changes can be made.

No Canadian labour relations legislation grants an employer explicit power to unilaterally change terms and conditions of employment. Rather, the different jurisdictions have either declared that it shall be an unfair labour practice to effect such changes without first bargaining collectively in respect of those changes or unless a strike or lock-out has occurred (see Labour Relations Act, R.S.M. 1987, c. L-10, s. 10(4); The Trade Union Act, R.S.S. 1978, c. T-17, s. 11(1)(m)) or have placed limits on the circumstances upon which such changes can be made. Thus, in the majority of jurisdictions an employer is prohibited from effecting changes until a strike or lockout has or could occur; see Labour Relations Code, R.S.A. 1988, c. L-1.2, s. 145; Labour Code, R.S.Q. 1977, c. C-27, s. 59; Canada Labour Code, R.S.C., 1985, c. L-2, ss. 50, 89; or until the parties have bargained collectively and failed to reach an agreement and a conciliator or mediator has either been unable to resolve the dispute or has not been appointed; see Labour Relations Act, R.S.O. 1980, c. 228, s. 79; Industrial Relations Act, R.S.N.B. 1973, c. I-4, s. 35(2); Labour Act, R.S.P.E.I. 1974, c. L-1, s. 23; Labour Relations Act, S.N. 1977, c. 64, s. 74; Trade Union Act, S.N.S. 1972, c. 19, s. 33. While none of these statutes exactly parallels the British Columbia Labour Code, much can be drawn from the fact that no jurisdiction has found it necessary to expressly permit an employer to unilaterally alter terms of employment, and implicitly all other jurisdictions allow it, albeit with some limitations. See also International Association of Machinists and Aerospace Workers v. Air Canada, unreported decision of the C.L.R.B. released January 18, 1988; Canada Safeway Ltd. v. Retail, Wholesale and Department Store Union, Locals 454 and 480 (1985), 11 CLRBR (NS) 68.

The American authorities provide further support for the approach taken by the Labour Relations Board, and cannot be dismissed as cursorily as was done by the Court of Appeal. The relevant American statute is the National Labour Relations Act, as amended, 29 U.S.C., particularly ss. 8(a)(5) and 9(a) which provide that it shall be an unfair labour practice to refuse to bargain collectively with the union, and that the union shall be the exclusive bargaining agent of the employees. In this the American legislation is broadly similar to many of the Canadian statutes. Though no express power of alteration exists, subject to limitations relating to the obligation to bargain in good faith with the union, it is clear that an employer does not violate the Act by making unilateral changes that are reasonably comprehended within the pre-impasse negotiating framework; see American Federation of Television and Radio Artists v. N.L.R.B., 395 F.2d 622 (D.C. 1968); Atlas Metal Parts Co. v. N.L.R.B., 660 F.2d 304 (7th Cir. 1981); American Ship Bldg. Co. v. Labor Board, 380 U.S. 300, 316 (1965); N.L.R.B. v. Cone Mills Corp., 373 F.2d 595 (4th Cir. 1967). The Court of Appeal rejected reliance on these cases because the issue facing the American courts was whether the employer had committed an unfair labour practice. The Labour Relations Board derived guidance from these cases as showing that such a power is not inconsistent with effective labour relations. The exercise of this power is moderated by the obligation imposed in s. 6 to bargain in good faith. It is not unreasonable for the Board to determine that this power can be tempered by that duty.

The British Columbia legislation expressly provides for two statutory freeze periods. The applicable provisions read:

51. (1) Where an application for certification is pending, a trade union or person affected by the application shall not declare or engage in a strike, an employer shall not declare a lockout, and an employer shall not increase or decrease rates of pay, or alter a term or condition of employment of the employees affected by the application, without the board's written permission.

52. (1) Where the board certifies a trade union as bargaining agent for employees in a unit and no collective agreement is in force,

(c)the employer shall not increase or decrease the rate of pay of an employee in the unit or alter another term or condition of employment until

(i)4 months after the board has certified the trade union as bargaining agent for the unit; or

(ii)a collective agreement is executed,

whichever occurs first.

These sections provide statutory protection to the union at a time when it would be particularly vulnerable to management initiatives designed to weaken or destabilize it. The employer is expressly prohibited from pursuing a course of action it would otherwise be able to pursue, subject of course to the unfair labour practice provisions of the Code. The scheme of the Code is such that it prohibits certain courses of action. The Board came to the conclusion that what is not prohibited by either the wording or the policy of the statute is permitted. Counsel for the union was unable to persuade me that this is an unreasonable approach. Clearly the legislature could have prohibited an employer from exercising this power. We were not directed to any legislation where such a prohibition, other than for a limited period of time, exists. In all these circumstances, it will be clear that I must respectfully disagree with the reasoning of the Court of Appeal.

Standing of the Industrial Relations Council

Standing of the Industrial Relations Council

The union argued that the Industrial Relations Council, having had the opportunity in two lengthy sets of reasons to offer a rational basis for its conclusion, has no standing to make submissions before this Court in support of the reasonableness of its decision. It takes the position that while the Board could legitimately show that it had jurisdiction to embark upon the enquiry it did, a point the union concedes in any event, it cannot argue that it has not subsequently lost that jurisdiction through a patently unreasonable decision. With respect, I cannot accept this argument. In my view, the Industrial Relations Council has standing before this Court to make submissions not only explaining the record before the Court, but also to show that it had jurisdiction to embark upon the inquiry and that it has not lost that jurisdiction through a patently unreasonable interpretation of its powers.

In Northwestern Utilities Ltd. v. City of Edmonton, 1978 CanLII 17 (SCC), [1979] 1 S.C.R. 684, Estey J., for a unanimous Court, commented on the right of an administrative tribunal to make submissions before the Court. In that case, the Public Utilities Board Act, R.S.A. 1970, c. 302, s. 65, conferred on the Public Utilities Board a specific right to be heard on the argument of any appeal from its decisions, but by implication in s. 63(2), it was precluded from bringing an appeal. In these circumstances, Estey J. stated at pp. 708-9:

The Board has a limited status before the Court, and may not be considered as a party, in the full sense of that term, to an appeal from its own decisions. In my view, this limitation is entirely proper. This limitation was no doubt consciously imposed by the Legislature in order to avoid placing an unfair burden on an appellant who, in the nature of things, must on another day and in another cause again submit itself to the rate fixing activities of the Board. It also recognizes the universal human frailties which are revealed when persons or organizations are placed in such adversarial positions.

In that case, the Board had presented "detailed and elaborate arguments" in support of the merits of its decision. Estey J., at p. 709, commented:

Such active and even aggressive participation can have no other effect than to discredit the impartiality of an administrative tribunal either in the case where the matter is referred back to it, or in future proceedings involving similar interests and issues or the same parties. The Board is given a clear opportunity to make its point in its reasons for its decision, and it abuses one's notion of propriety to countenance its participation as a full-fledged litigant in this Court, in complete adversarial confrontation with one of the principals in the contest before the Board itself in the first instance.

In these circumstances, the tribunal is limited to an explanatory role and "to the issue of its jurisdiction to make the order in question".

Estey J. then, however, limited the meaning of jurisdiction so as not to "include the transgression of the authority of a tribunal by its failure to adhere to the rules of natural justice". He continued (p. 710):

In such an issue, when it is joined by a party to proceedings before that tribunal in a review process, it is the tribunal which finds itself under examination. To allow an administrative board the opportunity to justify its action and indeed to vindicate itself would produce a spectacle not ordinarily contemplated in our judicial traditions.

At first sight, this may seem to conflict with Lamer J.'s comments in Bibeault v. McCaffrey, 1984 CanLII 133 (SCC), [1984] 1 S.C.R. 176, at p. 191, that:

. . . an infringement of the audi alteram partem rule in the case at bar postulates a patently unreasonable interpretation of s. 32 L.C. Such an interpretation by the commissioners, the judge or the Labour Court would in itself be an excess of jurisdiction of the kind recognized by the above-cited decisions of this Court as conferring on the [commissioners] the necessary interest (locus standi) to be appellants.

There is, however, no conflict between these two decisions if it is recognized that the right to be heard was, in that case, a statutory right, and the issue for decision by the Labour Commissioners was as to the scope of that right. It is not every case in which a denial of natural justice will flow from a patently unreasonable interpretation of a statute. In the latter case, however, the administrative tribunal will be able to make certain limited submissions.

In British Columbia Government Employees' Union v. Industrial Relations Council (unreported, B.C.C.A., May 24, 1988), the British Columbia Court of Appeal held that the Industrial Relations Council had the right to make the submissions that the court below had erred in substituting its judgment for that of the Industrial Relations Council, and that the court erred in finding the Council's interpretation of the Act to be patently unreasonable. In the course of his judgment, Taggart J.A. for the court made the following statement with which I am in complete agreement, at p. 13:

The traditional basis for holding that a tribunal should not appear to defend the correctness of its decision has been the feeling that it is unseemly and inappropriate for it to put itself in that position. But when the issue becomes, as it does in relation to the patently unreasonable test, whether the decision was reasonable, there is a powerful policy reason in favour of permitting the tribunal to make submissions. That is, the tribunal is in the best position to draw the attention of the court to those considerations, rooted in the specialized jurisdiction or expertise of the tribunal, which may render reasonable what would otherwise appear unreasonable to someone not versed in the intricacies of the specialized area. In some cases, the parties to the dispute may not adequately place those considerations before the court, either because the parties do not perceive them or do not regard it as being in their interest to stress them.

Before this Court, the Industrial Relations Council confined its submissions to two points. It first argued that the Court of Appeal erred in applying the wrong standard of review to the decision of the Board. It submitted that the Court of Appeal reviewed for correctness instead of for reasonableness. As I have already indicated, I agree that the Court of Appeal erred in adopting such an approach. The second branch of the Council's submissions was to show that the Board had considered each of the union's submissions before it, and had given reasoned, rational rejections to each of the arguments. The argument before us emphasized that the Council had made a careful review of the relevant authorities and had made a decision that was within its exclusive jurisdiction. At no point did it argue that the decision of the Board was correct. Rather it argued that it was a reasonable approach for the Board to adopt. The Council had standing to make all these arguments, and in doing so it did not exceed the limited role the Court allows an administrative tribunal in judicial review proceedings.

Disposition

Disposition

I would allow the appeal and restore the order of the Industrial Relations Council in so far as it relates to Paccar and CAIMAW. Paccar shall have its costs, but no order as to costs is made with respect to the Industrial Relations Council.

//Sopinka F.//

The reasons of Lamer and Sopinka JJ. were delivered by

Reasons of Sopinka J.

SOPINKA J. -- I have had the benefit of reading the reasons for judgment prepared in this appeal by Justice Wilson, Justice La Forest, and Justice L'Heureux-Dubé, and I am in agreement with La Forest J. that the appeal must be allowed. My route in arriving at this conclusion differs in an important respect from my colleague's, and it is thus necessary for me to set out my approach to the matter.

While I agree generally with La Forest J. on the principles underlying the scope and standard of review of labour board decisions, I cannot agree that it is always necessary for the reviewing court to ignore its own view of the merits of the decision under review. Any adjudication upon the reasonableness of a decision must involve an evaluation of the merits. Reasonableness is not a quality that exists in isolation. When a court says that a decision under review is "reasonable" or "patently unreasonable" it is making a statement about the logical relationship between the grounds of the decision and premises thought by the court to be true. Without the reference point of an opinion (if not a conclusion) on the merits, such a relative statement cannot be made.

I share La Forest J.'s opinion of the importance of curial deference in the review of specialist tribunals' decisions. But, in my view, curial deference does not enter the picture until the court finds itself in disagreement with the tribunal. Only then is it necessary to consider whether the error (so found) is within or outside the boundaries of reasonableness. The test is, as La Forest J. points out, citing Blanchard v. Control Data Canada Ltd., 1984 CanLII 27 (SCC), [1984] 2 S.C.R. 476, a "severe test". But even here an appreciation of the merits is not irrelevant. Lamer J., speaking for himself and McIntyre J. in Blanchard, stated at pp. 494-95:

. . . though all errors do not lead to unreasonable findings, every unreasonable finding results from an error (whether of law, fact, or a combination of the two), which is unreasonable.

So long as the court is satisfied with the correctness of the tribunals' decision, any reference to reasonableness is superfluous.

Concerning the merits of the present case, I can be brief, since this ground has been substantially covered by La Forest J. in finding that the Board's decision was "not unreasonable". I am of the view that the Board's decision is consistent with the Labour Code, R.S.B.C. 1979, c. 212, which expressly provides for "freezes" in employment conditions in some circumstances, though not those with which we are concerned here (see ss. 51 and 61). Moreover, the Board's decision is consistent with the contractual expectations of the parties, since the insertion of the termination clause would have been meaningless if the terms of the collective agreement were held to persist indefinitely, or until a new collective agreement is concluded.

The Board concluded that the duty to bargain in good faith prevented the employer from altering the terms of the collective agreement until an impasse was reached. Thereafter, the employer reverted to its right to change these terms because no collective agreement was in force, nor was the employer bound by any ordinary contract. This result is summed up in the following statement:

The B.C. Legislature has not enacted a statutory freeze covering the period after the expiry of a collective agreement, with the result that the employer's authority to make unilateral alterations to terms and conditions of employment is left limited only by his duty to bargain in good faith.

In this respect, the Board's decision accords with the rule that a legislature is presumed not to depart from the general system of the law without expressing its intention to do so: Goodyear Tire & Rubber Co. of Canada Ltd. v. T. Eaton Co., 1956 CanLII 2 (SCC), [1956] S.C.R. 610, at p. 614.

In dealing with labour and other remedial legislation, this rule must be tempered by the rule of statutory construction that requires that such legislation be given a liberal construction. Accordingly, the legislation is not to be "whittled to a minimum" or given a narrow interpretation in the face of the expressed will of the legislature: Bakery and Confectionery Workers International Union of America Local No. 468 v. White Lunch Ltd., 1966 CanLII 84 (SCC), [1966] S.C.R. 282, at p. 292. The Labour Code, notwithstanding the use of the word, is not a code in the true civil law sense. It does not purport to totally exclude the general law. Accordingly, in respect of some matters, it is silent. This lacuna cannot be filled by any amount of liberal construction short of out-and-out judicial legislation. Rather, the general law applies to fill the void. In common law jurisdictions, this is the common law. In RWDSU v. Dolphin Delivery Ltd., 1986 CanLII 5 (SCC), [1986] 2 S.C.R. 573, at p. 589, McIntyre J. stated:

I am aware that the labour relations of the appellants are governed by the Canada Labour Code. However, since the Canada Labour Code is silent on the question of picketing, the common law applies, in this case the common law of British Columbia . . . .

The effect of the Board's decision is that, while the springing up of individual contracts of employment on the expiry of the collective agreement would be inconsistent with the statutory scheme of collective bargaining, the right of the employer to change the terms and conditions of employment in the absence of any agreement, collective or otherwise, is not. This result conforms with the principles referred to above and is the correct result. It is, therefore, not necessary to consider whether the decision was reasonable, or, much less, patently unreasonable.

I would therefore dispose of the appeal as proposed by La Forest J.

//Wilson J.//

The following are the reasons delivered by

Reasons of Wilson J. (Dissenting)

WILSON J. (dissenting) -- I have had the advantage of reading the reasons of both Justice La Forest and Justice L'Heureux-Dubé and, while I agree with the result arrived at by L'Heureux-Dubé J., I reach it by somewhat different reasons.

I am in agreement with my colleague, La Forest J., as to the broad scope of the principle of curial deference to the decisions of administrative tribunals such as Labour Relations Boards because of their special expertise. I also agree with him that s. 27 of the Labour Code of British Columbia is not, as such, "a jurisdiction limiting provision upon the interpretation of which the Board cannot err without being subject to judicial review". I do believe, however, that a decision of the Board which meets what La Forest J. calls the "severe test" of being "patently unreasonable" is not protected by the principle of curial deference. The principle does have its own built-in limitation. The question before us therefore is whether the Board's decision to the effect that an employer can, while employer and employees are, so to speak, between collective agreements, unilaterally impose terms or conditions of employment on the employees is "patently unreasonable" so as to constitute jurisdictional error or is, at most, an error of law made by the Board within its jurisdiction.

It is my view that the test of patent unreasonableness is met in this case and I say that while fully recognizing that the Board's initial jurisdiction to deal with the question is not in issue. Accordingly, if it were simply a question of whether the Board's interpretation of the Code was the correct one, or even whether it was a reasonable one, there would be no issue for the courts. In such circumstances the principle of curial deference would require that the Board's decision be respected. But the courts must not defer to decisions that are patently unreasonable. Such decisions cannot be passed off as the product of special expertise or, as the appellant submits, "policy choices" which are not subject to review by the courts. They can only be treated as decisions which the Board had no jurisdiction to make.

I accept, of course, that when we postulate the test of patent unreasonableness we are attempting to assess the reasonableness of the Board's decision, not in terms of the reasonable man or reasonable member of the general public, but in terms of the reasonable Board. This must be so if we are to allow for the fact that the Board is deemed to have special expertise. A patently unreasonable decision is accordingly one which no reasonable Board applying its expertise could possibly have arrived at.

My colleague, La Forest J., suggests that the test the courts should apply in determining whether a decision is patently unreasonable is whether there is a rational basis for it. If there is no rational basis for it, then, in his view, it is patently unreasonable. But if there is a rational basis for it, then the courts must defer to the decision. It is sufficient, my colleague says, that the Board's decision is "rationally defensible".

I am not sure how helpful it is to substitute one adjectival phrase for another and define patent unreasonableness in terms of rational indefensibility. It seems to me that this simply injects one more opportunity for ambiguity into a test which is already fraught with ambiguity. There is, it seems to me, a good argument to be made that "rational indefensibility" is an even stricter test than "patent unreasonableness". Be that as it may, both tests pose problems for the courts which, as my colleague points out, are to be viewed as lacking the special expertise required for the resolution of labour disputes which specialized labour boards enjoy.

If the resolution of the problem involves the application of the tribunal's special expertise, can a court be heard to say that the tribunal's decision was "patently unreasonable"? In this case, for example, would it be open to the Board to say: we know from experience in dealing with these matters that, strange as it may seem to the untrained person, the unilateral imposition of terms by an employer helps to promote settlement and secure industrial peace. Or would a complete answer to that be: maybe so, but that is not the right way to achieve that result: bringing economic pressure to bear on the employees during the bargaining process may achieve that result, but it is not conducive to harmonious relations between employers and employees and, indeed, is antithetical to the collective bargaining process which the legislature has obviously concluded is the highest and best means of achieving that result. In other words, does describing a Board's decision as a "policy choice" insulate it from review if the policy on which the choice is based is inconsistent with the policy of the legislation under which it purports to have been made? I do not believe so. A policy choice is only truly a policy choice if the choice is made between policies which are equally consistent with and supportable by the legislation. Is that the case here?

It seems to me that the key to the problem lies in the fundamental obligation of employer and union to bargain in good faith towards a new collective agreement once the earlier agreement has been properly terminated. I do not see how an employer can be bargaining in good faith towards a new collective agreement while at the same time unilaterally imposing detrimental terms upon the employees which he knows have already been rejected. (By detrimental terms I mean terms less beneficial to the employees than the terms in the earlier agreement.) I agree with the British Columbia Court of Appeal ((1986), 1986 CanLII 755 (BC CA), 7 B.C.L.R. (2d) 80) that where the employer continues to employ the employees and the employees continue to work for the employer after the earlier agreement has been terminated, the terms and conditions of employment should be deemed to be the same terms and conditions as those in the earlier agreement until such time as new terms result from the process of bargaining in good faith. This must be so if good faith bargaining between employer and union is to have any opportunity to work. If, however, the parties cannot agree on new terms then, subject to the further requirements of the Code, the parties have their rights of lock-out and strike. But it seems to me that to interpret the Code (where the Code is silent on the subject) as permitting the employer to unilaterally impose new terms on the employees in the interval is to allow the employer to effectively bring the good faith bargaining period to an end. It is to say that the employer may decide when an impasse has been reached, when the time has come that further bargaining is useless because he, the employer, is not prepared to move from his position, and that, having so decided, he may then proceed unilaterally to impose new terms even if those terms were the very ones which brought about the impasse. Compromise, which is the accepted means of ensuring the ongoing nature of the good faith bargaining process, is thus declared by the employer to be at an end and the employees are confronted with the option of living with the employer's new terms until the union is in a strike position or leaving their employ and trying to find work elsewhere.

Why, one might ask, should an employer be able to destroy in this way the freedom and equality of bargaining power both parties must have at the bargaining table? Why should he have this new power? It seems to me obvious that to permit the employer to decide when an impasse in the collective bargaining process has been reached and then give him the power to impose new terms unilaterally on his employees will do nothing to promote the collective bargaining process which is the legislatively accredited means of achieving collective agreements and industrial peace. As the British Columbia Court of Appeal pointed out at p. 85:

The Code as a whole seeks stability resulting from agreement. This new power creates instability resulting from unilateral action.

Must we conclude that in the absence of a specific provision in the Code the employer is free to do anything which he is not specifically prohibited from doing? This seems to be the underlying premise of the appellant's position. Nothing in the Code, they say, prevents the employer from unilaterally imposing new terms. Or do we in filling the legislative vacuum take guidance from the legislative scheme? It seems to me that the latter must be the proper course. I would respectfully adopt the following comment from the majority reasons of Professor Bora Laskin (as he then was) in Re Peterboro Lock Mfg. Co. (1954), 4 L.A.C. 1499, at p. 1502:

In this Board's view, it is a very superficial generalization to contend that a Collective Agreement must be read as limiting an employer's pre-collective bargaining prerogatives only to the extent expressly stipulated. Such a generalization ignores completely the climate of employer-employee relations under a Collective Agreement. The change from individual to Collective Bargaining is a change in kind and not merely a difference in degree. The introduction of a Collective Bargaining regime involves the acceptance by the parties of assumptions which are entirely alien to an era of individual bargaining. Hence, any attempt to measure rights and duties in employer-employee relations by reference to pre-collective bargaining standards is an attempt to re-enter a world which has ceased to exist.

I cannot believe that the legislature intended in the circumstances before us to return the parties to pre-collective bargaining standards, particularly if there is another interpretation of the Code which does not give one of the negotiating parties the power to alter dramatically the balance of bargaining power between them in his own favour and which also has the very significant advantage of endorsing rather than undermining the collective bargaining process. That interpretation is, of course, to permit the same terms and conditions which were the product of the earlier bargaining process to apply in the event of an impasse until such time as the parties are in a strike/lock-out position.

It is true that this solution will probably benefit the union. It must be assumed that where the employer terminates the earlier agreement it is because circumstances have changed and he considers it no longer to his advantage to have that agreement continue in effect. The important point, however, is that an interpretation of the Code which supports this solution does not interfere with the balance of bargaining power between the parties. It does not create a new power in the union. It does not undermine the collective bargaining process. It does not compel the parties to "re-enter a world which has ceased to exist". I cannot agree with La Forest J., therefore, that one interpretation of the Code is as reasonable as the other, that it is a matter of choosing between equally viable "policy choices". Far from it. One is completely consistent with the concept of freedom and equality of bargaining power between the parties and the paramount role of the collective bargaining process in labour dispute resolution. The other is completely inconsistent with and inimical to both. It is on that basis that I would find that the decision of the Board was "patently unreasonable" and constituted jurisdictional error.

I would dismiss the appeal with costs.

//L'Heureux-Dubé J.//

The following are the reasons delivered by

Reasons of L'Heureux-Dubé J. (Dissenting)

L'HEUREUX-DUBÉ J. (dissenting) -- Having carefully considered the opinion of my colleague Justice La Forest, I agree with him that the British Columbia Labour Relations Board had standing to make arguments relative to the applicable standard of review as well as to the steps it followed in reaching the decision now being challenged. With great respect, however, I must differ from his conclusion that the Board committed no jurisdictional error when it stated that an employer may unilaterally impose the terms of employment upon the termination of the collective agreement, subject only to the obligation to bargain in good faith.

As noted by La Forest J., the British Columbia Labour Code specifically prevents an employer from altering the terms of employment where an application for certification is pending (s. 51) and, upon certification, either for a period of four months or until the execution of a collective agreement, whichever comes first (s. 61). However, the Code provides for no statutory freeze of working conditions following the termination of a collective agreement, nor are there any applicable policy guidelines previously issued by the Board in this respect. In both the initial CAIMAW application, as well as in the subsequent CAIMAW/IBEW re-hearing, the Board accordingly proceeded on the basis of its general statutory jurisdiction to decide "any question as to whether . . . a collective agreement is in full force and effect" pursuant to subs. 34(1)(g) of the Labour Code. At the hearing before this Court, respondent properly conceded that the Board was initially empowered to embark upon this specific inquiry. However, it must be determined whether in carrying out this inquiry the Board exceeded its jurisdiction. To this end it is necessary to examine s. 27 of the British Columbia Labour Code which expresses the fundamental objectives of the legislation.

I

The Fundamental Objectives of the Labour Code

The Fundamental Objectives of the Labour Code

In 1973 a general purposes and objects clause appeared for the first time in the Labour Code. The clause then read as follows:

27. (1) The board may exercise the powers and shall perform the duties conferred or imposed upon it under this Act with the object of securing and maintaining industrial peace and promoting conditions favorable to settlement of disputes, and, for this purpose, the board may from time to time formulate general policies not contrary to this Act for the guidance of the general public and the board; but the board is not bound thereby in the exercise of its powers or the performance of its duties. [Emphasis added.]

This disposition was amended by the Labour Code Amendment Act, 1977, S.B.C. 1977, c. 72 and thereafter provided:

27. (1) The board, having regard to the public interest as well as the respective rights and obligations of parties before it, may exercise its powers and shall perform the duties conferred or imposed on it under this Act so as to develop effective industrial relations in the interest of achieving or maintaining good working conditions and the well-being of the public, and for those purposes, the board shall have regard to the following purposes and objects:

(a)securing and maintaining industrial peace, and furthering harmonious relations between employers and employees;

(b)improving the practices and procedures of collective bargaining between employers and trade-unions as the freely chosen representatives of employees;

(c)promoting conditions favorable to the orderly and constructive settlement of disputes between employers and employees or their freely chosen trade-unions. [Emphasis added.]

This is the formulation of s. 27(1) of the Labour Code which applies to the present appeal. It is appropriate, however, to complete the legislative history of s. 27(1) by noting that it was once again modified in 1987 by S.B.C. 1987, c. 24, s. 18 to read as follows:

27. (1) The council, having regard to the public interest as well as the rights of individuals and the rights and obligations of the parties before it and recognizing the desirability for employers and employees to achieve and maintain good working conditions as participants in and beneficiaries of a competitive market economy, shall exercise the powers and perform the duties conferred or imposed on it under this Act so as to achieve the expeditious resolution of labour disputes, and for these purposes the council shall have regard to the following purposes and objects:

(a)securing and maintaining industrial peace and furthering harmonious relations between employers and employees;

(b)improving the practices and procedures of collective bargaining between employers and trade unions as the freely chosen representatives of employees;

(c)promoting conditions favorable to the orderly and constructive settlement of disputes between employers and employees or their freely chosen trade unions;

(d)encouraging the voluntary resolution of collective bargaining disputes;

(e)minimizing the harmful effects of labour disputes on persons who are not involved in the disputes;

(f)providing such assistance to employers and bargaining agents as may facilitate the making or renewing of collective agreements;

(g)gathering and publishing information and statistics respecting collective bargaining in the Province.

General purpose clauses such as s. 27(1) of the Labour Code not only aim to provide guidance to the administrative agency; they also identify the limits of the discretion it enjoys in the exercise of its statutory powers. The role of such clauses is described by D. J. Galligan, Discretionary Powers: A Legal Study of Official Discretion (1986), as follows (at p. 109):

The legislative statement of objects and purposes is of clear and central importance in exercising delegated powers. By that means the content and scope of powers are defined, and guidance is provided to the official in making decisions; moreover, it is in terms of those objects that an assessment or evaluation of a decision is to be made.

Purposes and objects clauses find their historical roots in the common law. In Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997 (H.L.), Lord Reid explained why the fundamental objects of the enabling legislation restrict the delegation of discretionary powers (at p. 1030):

It is implicit in the argument for the Minister that there are only two possible interpretations of this provision -- either he must refer every complaint or he has an unfettered discretion to refuse to refer in any case. I do not think that [this] is right. Parliament must have conferred the discretion with the intention that it should be used to promote the policy and objects of the Act; the policy and objects of the Act must be determined by construing the Act as a whole and construction is always a matter of law for the court. In a matter of this kind it is not possible to draw a hard and fast line, but if the Minister, by reason of his having misconstrued the Act or for any other reason, so uses his discretion as to thwart or run counter to the policy and objects of the Act, then our law would be very defective if persons aggrieved were not entitled to the protection of the court. [Emphasis added.]

Complying with legislative intent is as valid a policy consideration in Canada as it is in England: [TRANSLATION] ". . . when Parliament delegates certain powers, it intends to enable the administrative agency concerned to meet the objectives which are either expressly or implicitly written in the act" (G. Pépin and Y. Ouellette, Principes de contentieux administratif (2nd ed. 1982), at p. 264). In the well-known case of Roncarelli v. Duplessis, 1959 CanLII 50 (SCC), [1959] S.C.R. 121, Martland J. expressed views foreshadowing those later adhered to by Lord Reid (at p. 156):

. . . the discretionary power to cancel a permit given to the Commission by the Alcoholic Liquor Act must be related to the administration and enforcement of that statute. It is not proper to exercise the power of cancellation for reasons which are unrelated to the carrying into effect of the intent and purpose of the Act.

In the specific area of labour relations, it has long been recognized by this Court that the statutory imperatives of maintaining industrial peace and harmonious industrial relations are to be implied to limit the discretion conferred by the enabling legislation. In Smith & Rhuland Ltd v. The Queen, 1953 CanLII 234 (SCC), [1953] 2 S.C.R. 95, the question raised was whether a provincial labour relations board could validly decline to certify a union on the basis that the secretary-treasurer of the union was a communist and exercised a dominant influence in the union. A majority of this Court found that, while the Board enjoyed a discretion to certify, this discretion could not be exercised on the basis of matters extraneous to the underlying purposes and objectives of the Act. Speaking for three members of the majority, Rand J. said at p. 100:

I am unable to agree, then, that the Board has been empowered to act upon the view that official association with an individual holding political views considered to be dangerous by the Board proscribes a labour organization.

In Rand J.'s view, the issue was one of vires: the Board exceeded its powers in exercising its discretion to certify based on considerations unrelated to the fundamental purposes of the legislation. Were such a case to arise today in British Columbia, it would no doubt be dealt with similarly under s. 27(1).

In Tremblay v. Commission des relations de travail du Québec, 1967 CanLII 63 (SCC), [1967] S.C.R. 697, this Court was asked to determine whether s. 96 of the British North America Act, 1867 allowed the labour relations board of Quebec to validly exercise the discretion conferred by s. 50 of the provincial Labour Relations Act. This provision stated: "If it be proved to the Board that an association has participated in an offence against s. 20 [domination by employer], the Board may . . . decree the dissolution of such association". In deciding that the board had constitutional authority to apply s. 50, Abbott J., who delivered the opinion of the Court, wrote at pp. 701-702:

The power given to the Board under s. 50 is a limited and discretionary power. It is purely incidental to the accomplishment of one of the primary purposes for which the association was granted corporate status, namely the maintenance of industrial peace.

Smith & Rhuland v. The Queen and Tremblay v. Commission des relations de travail du Québec demonstrate that general purposes and objects clauses such as s. 27(1) of the Labour Code are not enacted in a juridical vacuum. Such clauses codify the common law duty to exercise delegated powers in strict accordance with the fundamental dictates of the enabling statute. In this historical context, s. 27(1) amounts to more than a simple guide to the Board; it constitutes a statutory direction to carefully consider the goal of developing effective industrial relations having regard to certain specific purposes and objects.

The Board is generally well aware of the obligation s. 27(1) imposes upon it (see, e.g., Wall and Redekop Corp. v. United Brotherhood of Carpenters and Joiners of America (1986), 1986 CanLII 954 (BC SC), 5 B.C.L.R. (2d) 335 (S.C.), dismissing an application for judicial review from (1986), 86 C.L.L.C. 16,054, itself denying a reconsideration from (1985), 85 C.L.L.C. 16,050). However, in deciding the complaints which gave rise to the present proceedings, the Board gave no consideration at all to the underlying purposes and objectives of the Code. In the initial CAIMAW application and in the joint CAIMAW/IBEW re-hearing, there was not a single reference to s. 27 of the Code. Further, there was no discussion of the public interest or the development of effective industrial relations, with the result that it cannot be presumed that the Board implicitly considered that provision.

The Board's failure to discuss the requirements of s. 27 is especially fraught with consequence since the policy decision it was called to make affects by its very nature not only the parties before it but also all other unions, employees and employers in a highly sensitive area of collective bargaining. That the Board envisaged making a policy determination which would affect unions and employers at large is illustrated by the following extract from the CAIWAW/IBEW re-hearing:

We now wish to summarize our conclusions above by describing the rights and obligations of the parties under the Labour Code after the expiry of a collective agreement.

After the expiry of the collective agreement, no unilateral alterations to terms and conditions of employment may be made by an employer unless they are done so in compliance with his duty to bargain in good faith with the union . . . .

In the period after the expiry of the collective agreement, where the employer continues to operate and the employees continue to work, it will be implied that the terms and conditions of employment for the employees will continue to be the same as those contained in the just expired collective agreement.

The general references to "an employer" leave no doubt that the Board is engaged in an attempt to fill the void in the Labour Code with respect to the unilateral alteration of terms after the expiration of a collective agreement. This decision constitutes a "mini-Code" on "the rights and obligations" of employers and unions at that stage. The Board's policy decision goes well beyond the specific interests of the parties before it and acquires an importance akin to the enactment of a new legislative provision. This additional significance accentuates the necessity for the Board to meet head on the arguments based on the development of harmonious labour relations.

I agree with my colleague La Forest J. that courts must defer to the judgment of administrative tribunals in matters falling squarely within the area of their expertise. It is now well-established that an administrative tribunal exceeds its jurisdiction because of error only if: (1) it errs in a patently unreasonable manner in respect of a question which is within its jurisdiction; or, (2) it commits a simple error in respect of a legislative provision limiting the tribunal's powers (see U.E.S., local 298 v. Bibeault, 1988 CanLII 30 (SCC), [1988] 2 S.C.R. 1048, at p. 1086). However, unlike my colleague La Forest J., I cannot accept that the Board's decision is anything but unreasonable. Here, as I said earlier, there is no indication that the Board even considered the requirements of effective industrial relations and the purposes and objects expressed in s. 27. Such an omission, in my view, played a crucial role in leading the Board astray and causing it to come to a patently unreasonable solution.

I now turn to my reasons for finding no rational basis for the Board's decision.

II

Infringement upon the Fundamental Objectives

Infringement upon the Fundamental Objectives

Collective bargaining has been entrenched in Canadian labour relations law and policy for over fifty years. It is indispensable to the development of "effective industrial relations" pursuant to s. 27. From a legislative standpoint, collective bargaining involves the recognition of three basic freedoms on the part of employees: "to form themselves into associations, to engage employers in bargaining with the associations, and to invoke meaningful economic sanctions in support of the bargaining" (A. W. R. Carrothers, E. E. Palmer and W. B. Rayner, Collective Bargaining Law in Canada (2nd ed. 1986), at p. 4). The scheme postulates that the employees' control over the supply of labour will match the employer's control over its demand, thereby fostering the proper conditions for constructive and successful negotiations. The strike and the lock-out are the principal economic sanctions which are provided for and regulated by labour legislation. These, however, are but two of a wide array of economic sanctions in the labour context.

While they may be different in accessory respects, all economic sanctions used in collective bargaining share three fundamental characteristics: they only come into play after concerted attempts at settlement; they hurt both parties economically; and they presuppose the existence of countervailing measures.

1 - The Characteristics of Economic Sanctions

The Characteristics of Economic Sanctions

First, all Canadian labour jurisdictions have adopted a legislative policy of postponing the exercise of the economic sanctions until all other attempts at an agreement have failed. As noted by Professors H. W. Arthurs, D. D. Carter and H. J. Glasbeek in Labour Law and Industrial Relations in Canada (2nd ed. 1984), at p. 213:

Canadian collective bargaining legislation usually requires the parties to exhaust certain dispute resolution procedures before striking or locking-out.

For instance, in British Columbia, the use of the strike and lock-out is subject to tight control by the Labour Code and close scrutiny on the part of the Labour Board. Under the Code, there is no right to strike or to lock out during the term of the collective agreement. These rights only arise upon the termination of the agreement, after the parties have "bargained collectively about the dispute which is the cause or occasion of the strike or lock-out and failed to conclude a collective agreement" (s. 80). In the case of the strike, there is the further requirement of holding a vote "by secret ballot and in accordance with the regulations, of the employees in the unit affected, as to whether to strike" in which a "majority of those employees who vote have voted for a strike" (s. 81). Where the vote favours a strike, the right to strike may only be exercised within three months following the vote (s. 81(3)(a)), and after 72 hours have elapsed following written notice given by the trade union that the employees are going to strike (s. 81(3)(b)(i) and (ii)). Where a mediation officer has been appointed, a further delay may be necessary to allow for the officer's report to be made to the Minister (s. 81(3)(b)(iii)).

In deferring the use of the strike and lock-out until the negotiations come to a deadlock, the legislation furthers the fundamental commitment to the "orderly and constructive settlement of disputes", which is expressed in s. 27(1)(c) of the British Columbia Labour Code.

Second, the use of an economic sanction in collective bargaining necessarily entails that a party will suffer some loss in having recourse to it. Bargaining is premised upon mutual compromise. By engaging in a strike, members of a trade union accept that they will be out of work and receive no salary from the employer during the length of the strike. Likewise, where an employer locks out its employees, the employer accepts that its production may shut down and that its flow of revenues may eventually come to a halt.

Third, the existence of an economic sanction presupposes the availability of a countervailing sanction of proportionate impact (Carrothers, supra, at p. 577):

The systems of industrial relations in Canada are, as a matter of deliberate legislative policy, based on collective action, the use of market forces and the concept of countervailing power. [Emphasis added.]

2 - Discussion

Discussion

The unilateral imposition of the terms of employment as recognized by the Board in the present instance shares none of these three characteristics. First, the policy stated by the Board in the CAIMAW/IBEW re-hearing provides for no ban on the unilateral imposition of terms of employment in the early stages of negotiation. Such unilateral sanction may theoretically, on the basis of that policy, take place at any time following the termination of the previous collective agreement. This result is most unusual when compared to the law in other jurisdictions. In the United States, an exception to the general prohibition against the imposition of the terms of employment was created in the case of an impasse. This exception is itself subject to restrictions with respect to the extent, context and manner of the changes brought about by the employer (see the discussion by T. H. Murphy, "Impasse and the Duty to Bargain in Good Faith", (1977) 39 U. Pitt. L. Rev. 1, at pp. 24-34). Moreover, as noted in the reasons of my colleague La Forest J., the majority of Canadian jurisdictions prohibit unilateral changes either until the right to strike or lock out is acquired or until negotiation, conciliation and mediation have all failed to produce an agreement. Consequently, there is a near unanimous recognition of the need to freeze working conditions until either an impasse is reached or the right to strike or lock out arises -- a situation which typically takes a number of months after termination. However, on the basis of the policy formulated by the Board, British Columbia would be the only jurisdiction in North America where the imposition of terms can occur before such time.

Second, the employer is not detrimentally affected if it decides to reduce the salaries and cut other employment benefits. The unilateral imposition of terms may thus actually be profitable to the employer since it allows continued production at lower costs.

Third, since the imposition of terms could conceivably take place before the right to strike arises under the Labour Code, no sanction is available to the union to countervail the unilateral setting of terms. The union cannot impose on the employer the wages, hours and other benefits it seeks to obtain. It has no choice but to live with the new conditions until the right to strike springs into existence, and even then it may have no option.

More importantly, unlike the strike and lock-out, the unilateral imposition of the terms of employment does not necessarily pressure both parties into agreeing upon a settlement. This sanction opens the door to a number of abuses of the process of collective negotiation. Altering terms may have detrimental repercussions on the process of bargaining, such as discrediting the union's authority to negotiate an agreement or unduly forcing the union's hand in the decision to call for a strike.

The risk that the union's authority may be curtailed was discussed in a decision of the Canadian Labour Relations Board, Canadian Air Pilots Association v. Air Canada, Montreal, Quebec (1977), 24 di 203. While that Code expressly freezes the working conditions until the right to strike arises, this prohibition was designed to address the same concerns (at p. 214):

The prohibition [against unilateral alteration of terms] is imposed on the employer, because Parliament recognizes that in the normal course it is the employer that is in the position to influence the proceedings at the bargaining table by making decisions affecting its operation without prior consultation with the union. By making such decisions and acting unilaterally, the employer can undermine the authority of the employees' bargaining agent, and also poison the environment within which collective bargaining is being conducted and thereby catalyze avoidable legal or illegal industrial conflict. Such unilateral action is contrary to the cooperative relationship envisioned by and sought to be promoted in the Canada Labour Code, Part V. [Emphasis added.]

The objective of "cooperative relationship" in the Canada Labour Code is similar to the objective of "furthering harmonious relations between employers and employees" set out in s. 27(1)(a) of the British Columbia Labour Code.

Similar concerns are expressed in U.E.W. and DeVilbiss Ltd., [1976] 2 CLRBR 101, (Ont. L.R.B.) at p. 115:

When an employer, while negotiating with a trade union, implements new conditions of employment that have not even been first proposed to the trade union, the inference logically arises that the tactic is designed to undermine the status of the trade union -- amounting to a suggestion that beneficial terms and conditions of employment do not require the presence of the bargaining agent.

Here again, I have no doubt that s. 27 of the Labour Code is designed to protect the integrity of the bargaining process against possible abuses of the type described above by the Ontario Labour Board.

These concerns with respect to the integrity of the bargaining process are most acute when the employer proceeds to reduce or cancel employment benefits. Such changes are by their very nature inherently prejudicial to the freedom of unions to decide whether or not to strike. Indeed, in reducing the conditions of employment, the employer leaves the union and the employees with the following choices: to continue to work under the new, less favourable conditions, or to strike even though that may not otherwise have been the employees' intention. If no strike is called, then the employees lose faith in a union under whose leadership the benefits have decreased. If the union is forced into calling a strike at an inopportune time, the same destructive result can follow. To force such a choice upon the union is to make a mockery of the bargaining system. Such an ultimatum is especially disparaging of the system since the pressures are brought to bear upon the most vulnerable participants in the process: the individual employees. The basic imbalance sought to be corrected by the right of employees to associate is described in detail by Carrothers, supra, at p. 4:

The employee, treating with his employer over terms under which he is to sell his services, is, individually, at an incompensable disadvantage. Where the process of production displays a high capacity for substituting one person for another, or one job for another, and where the economy is operating at a level short of full employment, most individual workmen must take the terms offered or go without.

In focusing on the individual employees and forcing them either to accept the lower terms or to stop working altogether, the unilateral imposition of terms stands in a class by itself as an economic sanction which is inherently destructive of the freedom to engage in collective bargaining and strikes a fundamental blow to the freedom of employees to form themselves into a union and engage the employer in collective bargaining. The only foreseeable effect of this measure is to uselessly fuel the flames of the labour dispute. Such a result is inimical of the statutory purposes set out in s. 27 of the Labour Code. These concerns were addressed in Local 155 of International Molders and Allied Workers Union v. National Labour Relations Board, 442 F.2d 742 (D.C. 1971), where the employer decreased employment benefits with a view to pressure the union into going on strike. The Board, later confirmed by the Court of Appeals, found that (p. 747):

It would seem reasonable to infer that when one party to the bargaining takes action which has a work stoppage as at least one of its objects, such conduct is inimical of the statutory purposes and reveals a purpose inconsistent with good-faith bargaining.

In stating as a goal the improvement of collective bargaining "between employers and trade unions as the freely chosen representatives of employees", s. 27(1)(b) of the Labour Code emphasizes the sovereign role of the union in the bargaining. This role is also underscored in s. 46(a) of the Code, which states:

46. Where a trade union is certified as bargaining agent for an appropriate bargaining unit,

(a)it has exclusive authority to bargain collectively for the unit and to bind it by a collective agreement until the certification is cancelled;

Since the Code's definition of "collective bargaining" includes "the regulation of relations between an employer and employees" (s. 1), s. 46 confers exclusive bargaining authority to a certified union even after the collective agreement has expired.

In Cariboo College and Cariboo College Faculty Ass'n (1983), 4 CLRBR (NS) 320, the Board found that s. 46 prevents an employer, upon the termination of a collective agreement, from unilaterally implementing new working conditions through direct communication with the employees. Vice-Chairman Sheen wrote at pp. 336-37:

In British Columbia, due to the provisions of s. 46 of the Labour Code, an employer cannot unilaterally alter an employee's terms of employment even in the interregnum between the expiration of the agreement and the commencement of a strike or lockout. For, by virtue of that section, a trade union certified to represent the employees in a bargaining unit, has the exclusive authority to "bargain collectively" for that unit and to conclude an agreement binding upon it.

[A]lthough there is no collective agreement in force, if an employer wishes to alter the terms and conditions of employment of the employees in that unit, it must do so by means of negotiations with the certified bargaining agent -- it cannot get legally binding agreements by means of bargaining with, or unilateral imposition upon, individual employees. For, so long as the union is the certified bargaining agent for those employees, the termination of the collective agreement does not give the employer the right to deal with the employees individually.

He added:

. . . the College sought to sign and implement the nine-month contract, at least until the settlement of a new collective agreement. In so doing it sought to achieve directly with the employees what it could not accomplish in bargaining with the Faculty Association. Such conduct is an attempt to undermine the latter's exclusive bargaining authority and is a violation of s. 6.

This reasoning, however, was subsequently distinguished by the Board in the CAIMAW application and CAIMAW/IBEW re-hearing, which are at the origin of the present proceedings, on the basis that:

. . . by virtue of Section 46 of the Code an employer may not engage in any negotiation or bargaining in respect of terms or conditions of employment directly with the employees within a bargaining unit. Such direct employer-employee negotiations would certainly fail to recognize the exclusivity of the trade union's collective bargaining authority: Section 46.

The Board read Cariboo College narrowly as not extending to cases where unilateral action respecting the terms and conditions of employment is initiated by the employer in communicating with the bargaining agent instead of individual employees. The Board wrote (at p. 35):

With the greatest of respect to the panel in Cariboo College [reported (1983), 4 Can. L.R.B.R. (N.S.) 320], we find that we cannot concur with some of the conclusions made in that case . . . . We are not, however, persuaded by the analysis in Cariboo College that any of the authorities cited therein stand for the proposition that an employer may not alter the terms and conditions of employment after the expiry of a collective agreement. To put it another way, we do not conclude that the unilateral imposition by an employer of new terms and conditions of employment after the termination of a collective agreement constitutes negotiating directly with employees and a failure to recognize the exclusivity of the trade union's collective bargaining authority.

After reconsidering Cariboo College, the Board felt that it "went too far" and that there was "unyielding rigidity" in its previous interpretation of s. 46. The reasons for this change of position were set out at length by the panel in the CAIMAW/IBEW re-hearing. First, the Board found that the "weight of authority" favoured the new interpretation, and it expressed the view that Cariboo College's reliance on Re Telegram Publishing Co. and Zwelling (1975), 1975 CanLII 580 (ON CA), 67 D.L.R. (3d) 404 (Ont. C.A.), was "misplaced". The Board added the following, which states the ratio for the Board's disagreement with the interpretation offered in Cariboo College:

Consider, as well, the overall structure of the Labour Code as it is pertinent to the issue under discussion. Section 51 states that where an application for certification is pending, the employer is prohibited, except with the consent of the Labour Board, from altering any terms or conditions of employment of the employees affected by the application. Where a certificate is granted, the prohibition is extended by Section 61 until four months after the issuance of the certificate, or until a collective agreement is reached, whichever occurs first. Of course, by the time Section 61 enters the picture, so has Section 46. Thus, three propositions emerge. First, Section 61 would be quite unnecessary if Section 46 had the per se result contemplated by the panel in Cariboo College. Second, if that result is correct, the dissipation after four months of the absolute prohibition against unilateral prohibitions (subject only to the consent of the Labour Board) would be rendered illusory. Third, the expiry of the four month period, far from leading to a loosening of restraints on the employer, would lead to a complete sterilization of the capacity to make non-negotiated alterations (subject only to an abandonment by the trade union of its certificate of bargaining authority), regardless of whether the Labour Board might wish to consent. The Board would simply lack the power to consent.

To state such a situation is to repudiate it. Section 51 is a recognition that the pre-certification is the most sensitive of all. Section 61 is an acknowledgement that the early post-certification stage is also quite sensitive; that statutory protection against unilateral employer action continues to be warranted for awhile. But not forever. At some stage, the new collective must stand on its own feet. It must rely on its own negotiating strengths, and its will to resort to the devices of collective bargaining.

As noted by La Forest J., it is apparent that the Board sought to rationalize its conclusion. However, in so doing the Board omitted to consider an essential element of its mandate: s. 27. Had it turned its mind to the fundamental policies expressed in that provision, the Board would have had no choice but to come to a conclusion such as the one previously set forth in Cariboo College and to endorse a solution similar to the policies of control which are universally applied in other jurisdictions.

At any rate, the Board's interpretation lacks a proper rationale. While there may be some overlap between the statutory freeze provided for by s. 61 and the principle of exclusive bargaining authority, it does not necessarily follow that s. 61 is rendered unnecessary, nor that the freeze is illusory. Once the agreement is reached, there is no longer any need for the protection afforded by s. 61 and the freeze, because the protection then is afforded by the binding nature of the agreement. Indeed, it is beyond dispute that, during the life of a collective agreement an employer is bound by the terms of the agreement (see s. 64, and Syndicat catholique des employés de magasins de Québec Inc. v. Cie Paquet Ltée, 1959 CanLII 51 (SCC), [1959] S.C.R. 206, and McGavin Toastmaster Ltd. v. Ainscough, 1975 CanLII 9 (SCC), [1976] 1 S.C.R. 718). This does not render, to quote the panel in the CAIMAW/IBEW re-hearing, "the dissipation . . . of the absolute prohibition against unilateral [alterations] . . . illusory". Simply, the prohibition finds its source elsewhere in the Code. The conclusion of a collective agreement, to use the Board's language, may also "lead to a complete sterilization of the capacity to make non-negotiated alterations"; yet, that is not an undesirable situation. Quite the contrary: parties negotiate precisely with a view to reaching an agreement which will provide certainty in labour relations for a specified period of time.

Moreover, it seems to me that, to be more in line with s. 27, the Board should have given the reasoning in Cariboo College a liberal application. The main infringement upon the union's exclusive bargaining authority in that case did not flow from the mere fact that an employer had notified the individual employees personally or through a circular posted in the work place of the proposed alteration of terms. While that may have formed a subordinate part of the problem, the undermining of the union's authority resulted from the fact that changes in the terms and conditions of employment were brought about without any participation by the employees' representative. To limit the principle of exclusive bargaining authority as the Board did, namely, as merely requiring the employer to "communicate the terms and conditions of the new post-collective agreement relationship directly to the trade union and not directly to the employees", is to amputate the efficiency of the collective bargaining scheme entrenched in the legislation.

The Court of Appeal found that the alternative proposed by the Board would bring "chaos" to labour relations in British Columbia. The five-member panel of the Court of Appeal determined that it was "patently unreasonable" for the Board to find that the employer had this power, in part because that power conflicted with the need to develop effective industrial relations. For the Court, Seaton J.A. noted:

No foundation is given for the statement that "an employer has the authority under the Labour Code to make unilateral alterations . . ." No section says that; nor does any imply it. The Code as a whole seeks stability resulting from agreement. This new power creates instability resulting from unilateral action. [Emphasis added.]

I share the Court of Appeal's opinion as regards the patently unreasonable nature of unilateral action as allowed by the Board in the present case.

While the foregoing reasons suffice to dispose of the present appeal, I find it necessary to add brief remarks on the procedure followed by the Board.

III

Policy-making Procedure

Policy-making Procedure

The failure of the Board to reject a policy solution contrary to the fundamental objectives of the Act may be due to the fact that the Board chose to make this policy decision within the context of a private adjudication between individual parties. The Board did not benefit from the input other parties may have had to offer in this respect had another route been chosen to formulate its policy. In that fashion the spectrum of the consequences of the proposed policy may not have been fully brought to the Board's attention.

The Code does provide for mechanisms allowing the Board to broaden the reach and scope of the proceedings before it. The first set of mechanisms involves procedural adjustments which can be brought to the adjudicative hearing:

35. The board, in relation to a proceeding or matter before it, has power to

(a)summon and enforce attendance of witnesses and compel them to give oral or written evidence on oath and to produce documents and things the board considers necessary for full investigation and consideration of a matter within its jurisdiction that is before it in the proceeding;

(k) adjourn or postpone the proceeding;

(n) add a party to the proceeding at any stage.

The second involves a more radical change in the nature of the proceedings. The Board is empowered to conduct full-scale, public policy-making hearings during the course of which the Board is more completely liberated from the restrictions inherent to private adjudication:

27. . . .

(2) The board may formulate general guidelines to further the operation of this Act; but the board is not bound by those guidelines in the exercise of its powers or the performance of its duties.

(3) In formulating general guidelines the board may request that submissions be made to it by any person.

(4) The board shall make available in writing for publication all general guidelines formulated under this section, and their amendments and revisions.

In a policy-making hearing held under ss. 27(2) and (3), any interested party would have the opportunity to make representations thereby enabling the Board to make a policy decision consistent with the public interest and the fundamental purposes of the legislation. These provisions indicate a legislative intent favouring broad participation by the members of the labour relations community in proceedings involving issues of widespread interest. While policy issues may be present in some form in private adjudications, and while the Board is empowered by s. 38 to make declaratory opinions in certain cases, some policy issues necessarily involve the use of the mechanisms provided for by ss. 27 and 35. I would only add that in a case like the present one, where a previous policy orientation is reversed, where the area concerned involves a void in the enabling statute, and where the question raised is of crucial importance to employers, unions and individual employees at large, the matter may more properly have been dealt with in a policy-making hearing.

IV

Conclusion and Disposition

Conclusion and Disposition

From the foregoing, I conclude that, in allowing an employer to unilaterally impose the terms of employment upon the termination of a collective agreement subject only to an obligation to bargain in good faith, the Labour Relations Board of British Columbia interpreted the Labour Code in a patently unreasonable manner. In so doing, the Board committed a jurisdictional error and its decision cannot stand.

As a result, I would dismiss the appeal and confirm the order of the Court of Appeal, itself confirming Meredith J.'s order quashing the Board's decisions and remitting the matter to the Board for further consideration, the whole with costs.

Appeal allowed with costs, WILSON and L'HEUREUX-DUBÉ JJ. dissenting.

Solicitors for the appellant: Russell & DuMoulin, Vancouver.

Solicitors for the respondent Canadian Association of Industrial, Mechanical & Allied Workers, Local 14: Rankin & Company, Vancouver.

Solicitors for the respondent Industrial Relations Council of British Columbia: Campney & Murphy, Vancouver.

• McIntyre J. took no part in the judgment.