New Brunswick v. O'Leary, [1995] 2 S.C.R. 967

Lawrence O'Leary Appellant

v.

Her Majesty The Queen in Right of the Province of New Brunswick Respondent

Indexed as: New Brunswick v. O'Leary

File No.: 23928.

1994: December 6; 1995: June 29.

Present: La Forest, L'Heureux‑Dubé, Sopinka, Gonthier, McLachlin, Iacobucci and Major JJ.

on appeal from the court of appeal for new brunswick

Labour law ‑‑ Labour relations ‑‑ Courts ‑‑ Jurisdiction ‑‑ Employee allegedly driving employer's leased vehicle with flat tire ‑‑ Employer bringing action against employee for cost of repairs ‑‑ Whether courts lacking jurisdiction to entertain claim in view of arbitrator's exclusive jurisdiction over disputes arising out of collective agreement ‑‑ Public Service Labour Relations Act, R.S.N.B. 1973, c. P‑25, s. 92(1).

The appellant was employed by the New Brunswick government in a job that required him to travel throughout the province. The employer alleges that he drove its leased vehicle with a flat tire, and brought an action against him for the cost of the necessary repairs. The appellant took the position that the courts lacked jurisdiction to entertain the claim because it arose out of the collective agreement and was governed by s. 92(1) of the Public Service Labour Relations Act, which inserts in the collective agreement a provision providing for final and binding arbitration where "a difference arises between the parties relating to the interpretation, application or administration of" the collective agreement. His motion to strike out the employer's statement of claim was dismissed on the ground that the claim for negligence did not fall under the collective agreement and was not a grievance subject to arbitration. The Court of Appeal upheld the decision.

Held: The appeal should be allowed.

As set out in Weber v. Ontario Hydro, released concurrently, the courts lack jurisdiction to entertain a dispute between the parties which arises out of the collective agreement, subject to a residual discretionary jurisdiction in courts of inherent jurisdiction to grant relief not available under the statutory arbitration scheme. Whether a matter arises out of the collective agreement is to be determined having regard to the essential character of the dispute and the provisions of the agreement. The dispute between the parties in this case, viewed in its essential character, arises from the collective agreement. While the agreement does not expressly refer to employee negligence in the course of work, such negligence impliedly falls under it. The agreement acknowledges the employee's obligations to ensure the safety and dependability of the employer's property and equipment, and by inference confers correlative rights on the employer to claim for breaches of these obligations. It also requires the employer to exercise its rights in accordance with the agreement, by implication invoking the comprehensive arbitration scheme established by the Act and acknowledged by the agreement as the exclusive avenue of recourse. Since the wrong which the employer alleges is a wrong arising from the collective agreement, it follows that the discipline it engenders also arises from the agreement. Moreover, the agreement contemplates employer redress by arbitration. While Article 15 refers only to employee grievances, this does not negate the broader language of s. 92(1) of the Act, which covers both parties.

Cases Cited

Applied: Weber v. Ontario Hydro, 1995 108 (SCC), [1995] 2 S.C.R. 929.

Statutes and Regulations Cited

Public Service Labour Relations Act, R.S.N.B. 1973, c. P‑25, s. 92(1) [rep. & sub. 1990, c. 30, s. 30].

APPEAL from a judgment of the New Brunswick Court of Appeal (1993), 1993 5403 (NB CA), 141 N.B.R. (2d) 157, 361 A.P.R. 157, affirming a decision of the Court of Queen's Bench (1993), 1993 15164 (NB QB), 135 N.B.R. (2d) 394, 344 A.P.R. 394, dismissing the appellant's motion to strike out the respondent's claim in negligence. Appeal allowed.

Robert D. Breen and Joël Michaud, for the appellant.

Michael D. Gorman and Richard C. Speight, for the respondent.

The judgment of the Court was delivered by

1 McLachlin J. -- The appellant O'Leary was employed by the Province of New Brunswick as a traffic counter operator. His work required him to travel throughout the province. The Province alleges that O'Leary drove its leased vehicle with a flat tire, necessitating repairs amounting to $2,815.54. The Province brought an action against O'Leary for this amount. O'Leary took the position that the courts lacked jurisdiction to entertain the claim because it arose out of the collective agreement and was governed by the arbitration provisions of the Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25, which provides that an adjudicator appointed under the Act has exclusive jurisdiction to make final and binding decisions with respect to all differences which arise relating to the alleged violation of, or the interpretation, application or administration of the collective agreement.

2 A motion to strike out the employer's statement of claim was dismissed on the ground that the claim for negligence did not fall under the collective agreement and was not a grievance subject to arbitration: (1993), 1993 15164 (NB QB), 135 N.B.R. (2d) 394, 344 A.P.R. 394. The Court of Appeal upheld the decision on the same grounds: (1993), 1993 5403 (NB CA), 141 N.B.R. (2d) 157, 361 A.P.R. 157.

3 In the companion case of Weber v. Ontario Hydro, 1995 108 (SCC), [1995] 2 S.C.R. 929, I discuss the applicable law. I conclude that the courts lack jurisdiction to entertain a dispute between the parties which arises out of the collective agreement, subject to a residual discretionary jurisdiction in courts of inherent jurisdiction to grant relief not available under the statutory arbitration scheme. Whether a matter arises out of the collective agreement is to be determined having regard to the essential character of the dispute and the provisions of the collective agreement.

4 It follows from this that the Court of Appeal erred in stating without qualification that "[n]egligence can be the subject of an action independent of the collective agreement" (p. 160). In fact, negligence can be the subject of an action only if the dispute does not arise from the collective agreement.

5 The remaining question is whether the dispute between the parties in this case, viewed in its essential character, arises from the collective agreement. In my view, it does.

6 The Province's principal argument is that the collective agreement does not expressly deal with employee negligence to employer property and its consequences. However, as noted in Weber, a dispute will be held to arise out of the collective agreement if it falls under the agreement either expressly or inferentially. Here the agreement does not expressly refer to employee negligence in the course of work. However, such negligence impliedly falls under the collective agreement. Again, it must be underscored that it is the essential character of the difference between the parties, not the legal framework in which the dispute is cast, which will be determinative of the appropriate forum for settlement of the issue.

7 Article 24.04 of the collective agreement acknowledges the employee's obligations to ensure the safety and dependability of the employer's property and equipment. By inference it confers correlative rights on the employer to claim for breaches of these obligations. While Article 24 falls under the general heading "Safety and Health", the rationale behind the obligation does not detract from the existence of that obligation to maintain the employer's property. The essence of the dispute concerns the preservation of the employer's property and equipment. Framing the dispute in terms of negligence does nothing to remove it from the contemplation of Article 24. Article 5.03 requires the employer to exercise its rights consistently with the terms of the collective agreement, by implication invoking the comprehensive arbitration scheme established by the Act and acknowledged by the collective agreement as the exclusive avenue of recourse. It follows from these provisions that the dispute arises from the collective agreement and that the only means of redress is the statutory arbitration process.

8 The Province's second argument is that the collective agreement does not deal with the employer's right to discipline an employee. Discipline remains the prerogative of the employer. Once imposed, it is submitted, the employee may grieve it under the collective agreement, but prior to this, the collective agreement is not involved. The argument is that the employer's action is a form of discipline, and hence not parallel to or duplicative of the collective agreement.

9 This argument too is met by the fact that the collective agreement imposes an obligation on employees with respect to the employer's property and requires the employer to exercise its rights in accordance with the collective agreement. The wrong which the employer alleges is a wrong arising from the collective agreement; it follows that the discipline it engenders also arises from the agreement. Moreover, the agreement contemplates employer redress by arbitration. Section 92(1) of the Public Service Labour Relations Act inserts in the collective agreement a provision providing for final and binding arbitration "[w]here a difference arises between the parties relating to the ... application or administration of this agreement", a phrase encompassing redress for a breach of the agreement by either party. The fact that the employer may impose discipline in some cases without going to arbitration does not detract from the requirement of the Act and the agreement that disputes must be resolved by arbitration. The employer also relies on the fact that Article 15 of the collective agreement refers only to employee grievances. However, this does not negate the broader language of s. 92(1) of the Act which covers both parties. By implication, the employer must be able to grieve under the collective agreement.

10 It was not suggested that the arbitrator could not award a financial penalty against an employee for breach of his obligation with respect to the employer's property. Nor, in my view, can it make a difference that the property damaged in this case was owned by a third party and leased by the Province. The employee's obligation toward the property entrusted to him for the purposes of his work cannot vary with whether the employer owns it, leases it, or possesses it under some other arrangement.

11 I would allow the appeal and strike out the statement of claim, with costs to O'Leary throughout.

Appeal allowed with costs.

Solicitors for the appellant: Pink ⋅ Breen ⋅ Larkin, Fredericton.

Solicitor for the respondent: The Attorney General for New Brunswick, Fredericton.