T-8544-82
Canadian Air Traffic Control Association (Plain-
tiff)
v.
The Queen as represented by Treasury Board
(Defendant)
Trial Division, Collier J.—Ottawa, September 21,
1983 and February 1, 1984; Vancouver, July 3,
1984.
Public service — Action for declaration (1) Treasury Board
minute void for contravention of 6 and 5 legislation and (2)
affected air traffic controllers entitled to retroactive pay
adjustments — New collective agreement introducing separate
pay scales for two categories of controllers — Board then
realizing literal application of Regulations ss. 65 and 66 to
cross-category appointments could yield unsatisfactory results
— Board unilaterally regulating situation after plaintiff
refusing to consider proposal until bargaining rights restored
— Regulations governing situation — No gap in agreement
enabling Board to regulate — Board violating legislation by
changing compensation plan — Court's power to make decla
ration as to retroactive adjustments uncertain — Judgment for
plaintiff in part — Public Sector Compensation Restraint Act,
S.C. 1980-81-82-83, c. 122, ss. 2(1), 4, 6(1), 7 — Financial
Administration Act, R.S.C. 1970, c. F-10, s. 7(1)(d),(i) —
Public Service Staff Relations Act, R.S.C. 1970, c. P-35, s. 54
— Canada Corporations Act, R.S.C. 1970, c. C-32 — Public
Service Terms and Conditions of Employment Regulations,
SOR/67-118, ss. 65, 66.
Damages — Exemplary or punitive — Treasury Board
unilaterally imposing terms and conditions set out in minute
— Changing compensation plan in contravention of the Act —
Minute held contrary to law — Claim for punitive damages
rejected — Conduct not oppressive, arbitrary or high-handed
— Public Sector Compensation Restraint Act, S.C. 1980-81-
82-83, c. l22.
The plaintiff was the certified bargaining agent for certain
air traffic controllers. These were divided into two categories:
operating and non-operating. In each category there were
different levels, and the higher the level, the greater the pay.
Initially, each level in the operating category entailed the
same rate of pay as did the corresponding level in the non-
operating category. Then a new collective agreement was
signed. Under this new agreement, there was a separate pay
scale for each of the categories. The negotiations which had
produced the agreement had not included any discussion
regarding the rate that would be paid to an employee if he were
shifted from one category to the other; however, Treasury
Board officials realized after the signing that with the new,
separate pay scales, such cross-category appointments could
result in anomalies and inequities if sections 65 and 66 of the
Regulations, dealing with the rates payable subsequent to such
appointments, were applied literally. The Board placed before
the plaintiff a proposal aimed at solving the problem.
The signing of the new agreement had also been followed by
the advent of the Public Sector Compensation Restraint Act
(known as "the 6 and 5 legislation"), which had the effect of
extending the agreement. In addition, it forbade the amending
of "compensation plans" in collective agreements, and, general
ly speaking, it proscribed collective bargaining in respect of
such plans. The plaintiff refused to consider the Board's pro
posal until its collective-bargaining rights were restored. The
Board then passed a minute whereby it purported unilaterally
to impose the terms comprised by the proposal.
In this action, the plaintiff claimed: a declaration that the
Board's minute was contrary to law and without effect; a
further declaration, that controllers whose pay had been affect
ed by the minute while it was in force were entitled to have
their pay rates retroactively adjusted; and punitive damages.
Held, the first declaration is granted; the other relief is
denied.
The compensation plan in the new agreement included no
specific provision with respect to pay changes on cross-category
appointments. Nonetheless, the Regulations governed demo
tion, promotion and transfer under former agreements, and
they governed these matters under the new agreement.
Although this incorporation of sections 65 and 66 may lead to
questionable and inequitable results—results not originally
foreseen by the parties to the agreement—they were not inap
plicable to the separate-pay-scales situation. Consequently,
there was no gap, in respect of cross-category appointments, in
the agreement. There was no gap the existence of which would,
it was argued, have enabled the Board to take (unilateral)
action, under the Financial Administration Act, to regulate the
situation.
The 6 and 5 legislation made it unlawful to alter the compen
sation plan that obtained under the new collective agreement.
The Board's minute did effect changes in the plan. It therefore
contravened the legislation, and the changes effected cannot be
upheld.
It is not clear whether the Court has the power to make the
declaration regarding retroactive adjustments to pay rates.
There was no evidence identifying either the plaintiff's mem
bers, or those particular members whose pay was affected.
Distinct arguments may be appropriate in individual cases.
As for punitive damages, there is no basis in this case for an
award of that kind. The Board's unilateral imposition of the
terms contained in its minute was not conduct of an oppressive,
arbitrary or high-handed nature. It was not conduct so outra
geous as to warrant punishment by way of exemplary damages.
CASES JUDICIALLY CONSIDERED
APPLIED:
Rookes v. Barnard, et al., [1964] A.C. 1129 (H.L.).
REFERRED TO:
Cassell & Co. Ltd. v. Broome et al., [1972] A.C. 1027
(H.L.).
COUNSEL:
C. H. MacLean for plaintiff.
R. Cousineau for defendant.
SOLIC ITORS:
Nelligan/Power, Ottawa, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
COLLIER J.: The plaintiff seeks declaratory
relief in respect of certain changes alleged to have
been made, by the Treasury Board, to a collective
agreement. Punitive damages of $50,000 are, in
addition, claimed.
The plaintiff is a company incorporated under
the Canada Corporations Act, R.S.C. 1970, c.
C-32. It is the certified bargaining agent for the
A-I group air traffic controllers and others,
employees of the Treasury Board.
The collective agreement between the plaintiff
and the Treasury Board was signed May 28, 1982.
I shall refer to it as the "May agreement", or the
"new agreement". Its term was January 1, 1981,
to December 31, 1982.
Prior to that agreement, air traffic controllers
were classified as operating (operational), and
non-operating (non-operational). Operational con
trollers worked in the day-to-day control of live air
traffic. Non-operational personnel were in
administrative and instructional activities. Trans
fers, or movements, mainly from non-operational
to operational, took place.
In each category, there were different levels. In
the May agreement, operating employees were
designated A-I 00 to A-I 5. Non-operating
employees were designated A-I 3 to A-I 7. Each
higher designated level brought an increase in pay.
The significant fact, prior to the new agreement,
was that the rate of pay for operational and non-
operational, at each designated level, was the
same.
Sections 65 and 66 of the Public Service Terms
and Conditions of Employment Regulations
[SOR/67-118] (PSTCER) are complex provisions.
They deal with cases where public service
employees are promoted, demoted, or transferred.
The rates of pay for those promoted or transferred,
calculated on their former rate and on rates in
their new position, are set out. There were no
problems, under the old agreement, if transfers or
promotions took place from non-operational to
operational, or vice versa. The levels of pay were,
as I have said, the same.
I turn now to the negotiations leading to the new
agreement.
The plaintiff wanted a premium paid to the
operating employees ("operational facility premi
um"). Treasury Board took the view there should
be a separate, higher wage scale for non-operation
al, if the other premium were insisted upon. The
parties eventually agreed to two separate pay
scales, and the operational facility premium. There
had been no discussion, as to the rates of pay to be
paid on transfer, during negotiations.
After the agreement was signed, Treasury
Board negotiators realized there could be anom
alies and inequities if the Regulations (sections 65
and 66) were literally applied to transfers under
the new pay scales. A transfer from operational to
non-operational at a certain level could, in some
circumstances, be considered a promotion, calling
for the incremental level set out in section 66.
Other transfers, depending on the situation, could
result, from a monetary incremental position, in a
demotion.
Negotiators for both sides met to discuss the
problem, and certain other matters arising out of
the new agreement. This was a common practice.
If consensus were reached, then a letter of under
standing was signed and became part of the collec
tive agreement. In this case letters of understand
ing, not relevant here, were eventually signed in
respect of the other matters referred to (see Exhib
its 1B and 1C).
Treasury Board representatives put forward a
proposal (Exhibit 3):
... to clarify the intent in respect to the application of pay to
certain employees changing from operating to non-operating
and vise-versa [sic] ... .
The plaintiff's representative agreed to recommend
the proposal to his board of directors.
The board rejected the proposal.
The Public Sector Compensation Restraint Act,
S.C. 1980-81-82-83, c. 122, had been assented to
on August 4, 1982. The statute was popularly
known as "the 6 and 5 legislation". It became
effective June 29, 1982. It provided for ceilings on
wage rates in the public sector, and for those
ceilings to be included in compensation plans in
collective agreements. The legislation [section 7]
forbade any other amendments to the "wage rates
or other terms and conditions of the compensation
plan."
Speaking very generally, the statute took away
collective bargaining in respect of compensation
plans.
That was the view of the plaintiff's board of
directors.
The formal decision, rejecting the Treasury
Board proposal, in respect of transfers, was as
follows (Exhibit 4):
(c) Conversion from Ops to Non-Ops or Non-Ops to Ops—
Treasury Board has since realized that with the new split pay
scales for Ops and Non-Ops, the Operating Facility Premi
um (OFP) is not recognized as a part of the salary for the
purposes of selecting the appropriate increment during a
move.
The Board agreed that the President should advise Treasury
Board that it was not prepared to consider the Letter of
Understanding until collective bargaining rights were
returned to CATCA.
Approximately a month later, Treasury Board
unilaterally passed a minute (784715) setting out
the
... terms and conditions governing the application of pay to
employees in the Air Traffic Control bargaining unit as author
ized by Treasury Board ....
The terms and conditions were identical to those
proposed earlier, and rejected by the plaintiff.
The plaintiff says sections 65 and 66 were, in
effect, part of the compensation plan in the May
agreement. "Compensation plan" is defined in
subsection 2(1) of the Public Sector Compensation
Restraint Act as follows:
2. (1) ...
"compensation plan" means the provisions, however estab
lished, for the determination and administration of compen
sation, and includes such provisions contained in collective
agreements or arbitral awards or established bilaterally be
tween an employer and an employee, unilaterally by an
employer or by or pursuant to any Act of Parliament;
The plaintiff then goes to subsection 6(1) and
section 7 of the same statute. They read as follows:
6. (1) Notwithstanding any other Act of Parliament except
the Canadian Human Rights Act but subject to this section and
section 7, the terms and conditions of
(a) every compensation plan that is extended under section 4
or 5, and
(b) every collective agreement or arbitral award that includes
such a compensation plan,
shall, subject to this Part, continue in force without change for
the period for which the compensation plan is extended. [My
underlining.]
7. The parties to a collective agreement, or the persons bound
by an arbitral award, that includes a compensation plan that is
extended under section 4 may, by agreement, amend any terms
and conditions of the collective agreement or arbitral award
other than wage rates or other terms and conditions of the
compensation plan.
The plaintiff contends the Treasury Board
minute was unlawful; it contravened the provisions
set out above; the Treasury Board provisions for
the determination and administration of the com
pensation amounted to a change in the compensa
tion plan.
I digress, here, to point out the May agreement
was, by virtue of section 4, extended for 24
months.
The defence contention runs this way. The com
pensation plan in the collective agreement did not
include any terms, or administrative rules, to deal
with the new two-pay-scale situation and inter-unit
transfers; sections 65 and 66 of the PSTCER were
inapplicable to these new separate pay scales;
those sections of the Regulations led to ridiculous
and inequitable results; because of this hiatus,
Treasury Board had the power, unilaterally, to
provide the necessary administrative rules. The
power, it is said, comes from paragraph 7(1)(d) or
(i) of the Financial Administration Act, R.S.C.
1970, c. F-10. Those paragraphs are as follows:
7. (1) Subject to the provisions of any enactment respecting
the powers and functions of a separate employer but notwith
standing any other provision contained in any enactment, the
Treasury Board may, in the exercise of its responsibilities in
relation to personnel management including its responsibilities
in relation to employer and employee relations in the public
service, and without limiting the generality of sections 5 and 6,
(d) determine and regulate the pay to which persons
employed in the public service are entitled for services ren
dered, the hours of work and leave of such persons and any
matters related thereto:
(i) provide for such other matters, including terms and
conditions of employment not otherwise specifically provided
for in this subsection, as the Treasury Board considers neces
sary for effective personnel management in the public
service.
I do not agree with the defendant's position. I
accept the contentions advanced by the plaintiff.
The compensation plan in the new collective
agreement did provide for the determination and
administration of compensation in respect of the
separate pay scales for non-operating and operat
ing personnel, and the operational facility premi
um. It did not specifically provide for the pay
changes which might occur on transfers between
the two categories. The Regulations, under former
agreements, covered matters of demotion, promo
tion and transfer.
I accept the plaintiff's submission that the terms
and conditions in the applicable Regulations gov
erned the situation.
Questionable and inequitable results may result:
the employees may, in many cases, benefit, where
benefit was not originally foreseen. All that, to my
mind, does not permit Treasury Board, purported
ly proceeding under paragraph 7(1)(d) of the
Financial Administration Act, to change, unilater
ally, the terms and conditions of the frozen com
pensation plan. That course was, under the Public
Sector Compensation Restraint Act, forbidden.
During argument, I suggested to counsel for the
defendant that section 7 of the Financial Adâ–ºninis-
tration Act could be interpreted to permit Trea
sury Board to make any determination it wished,
in respect of the pay, working conditions, leave,
etc. of its employees. And all regardless of any
collective agreements, and their terms, reached
pursuant to the powers given in section 54 of the
Public Service Staff Relations Act, R.S.C. 1970,
c. P-35. Counsel stated that interpretation was
open. But he was not advancing it in this case. I do
not intend, therefore, to explore that avenue.
There will be a declaration that Treasury Board
Minute 784715 is contrary to law, and the changes
effected thereby to the new collective agreement
(402/82) are of no effect.
The plaintiff asked for further declaratory relief:
2. A Declaration that all members of the Al Group whose pay
was regulated by Treasury Board Minute 784715 while it was
in force are entitled to have their rates of pay retroactively
adjusted in accordance with the provisions governing the
application of the Pay rules in effect immediately prior to the
issuing of Treasury Board Minute 784715.
I have doubts as to whether the Court has power
to make that declaration.
There is no evidence before me as to who are
members of the plaintiff; which particular mem
bers had their pay affected. There may be separate
arguments to be made, one way or the other, in
individual cases. It seems to me those are not
matters for determination in this particular suit.
The consequences which may follow, in individual
cases, from the main declaration are, as I see
them, to be worked out as the collective agreement
and sections 65 and 66 operated, before passing of
the Treasury Board minute.
The authority of the Court to make the second
declaration was not discussed at trial. If counsel
wish to make submissions, I shall withhold the
formal pronouncement accordingly.
There remains the claim for punitive damages.
There is no basis here for an award of that kind.
Exemplary damages may come into play whenever
the conduct of a defendant has been sufficiently
outrageous to merit punishment.' The English
courts have narrowed the situations in which puni
tive damages can be awarded. 2 But they have set
out certain categories in which an award of exem
plary damages might be made: 3
The first category is oppressive, arbitrary or unconstitutional
action by the servants of the government. I should not extend
this category—I say this with particular reference to the facts
of this case—to oppressive action by private corporations or
individuals. Where one man is more powerful than another, it is
inevitable that he will try to use his power to gain his ends; and
if his power is much greater than the other's, he might perhaps,
be said to be using it oppressively. If he uses his power illegally,
' McGregor on Damages, 14th edition, 1980, paragraphs 309
et seq.
2 See Rookes v. Barnard, et al., [1964] A.C. 1129 (H.L.).
See also Cassell & Co. Ltd. v. Broome et al., [1972] A.C. 1027
(H.L.).
3 Per Lord Devlin in the Rookes case (supra) at page 1226.
he must of course pay for his illegality in the ordinary way; but
he is not to be punished simply because he is the more
powerful. In the case of the government it is different, for the
servants of the government are also the servants of the people
and the use of their power must always be subordinate to their
duty of service.
The action of Treasury Board, in unilaterally
imposing the terms and conditions set out in the
impugned minute, cannot, to my mind, be classed
as oppressive, arbitrary, or high-handed, warrant
ing punishment by way of exemplary damages.
The plaintiff is entitled to the costs of this
action.
* * *
The following are the supplementary reasons
for judgment rendered by
COLLIER J.: On page 1063 of my reasons, given
February 1, 1984, I expressed doubts as to the
power of the Court to make a declaration as
sought in paragraph 2 of the claim for relief.
I invited counsel to make written submissions.
That has now been done.
After considering the written submissions, I see
no reason to change the view I expressed in the
second paragraph of my reasons at page 1063.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.