Name of Case: Newfoundland and Labrador Nurses' Union v. Newfoundland and Labrador (Treasury Board)

Judgment under Appeal: Judgment of the Newfoundland and Labrador Court of Appeal dated February 19, 2010.

Facts: When the Newfoundland and Labrador Health Boards' Association refused to acknowledge years of service as a casual employee in calculating vacation entitlement for casual nurses who had attained permanent, temporary or part-time status, the nurses filed a grievance challenging the employer's interpretation of their collective agreement.

Case History: The grievance arbitrator agreed with the employer's interpretation of the relevant collective agreement provision, finding that it "prevents casual employees from [securing] any entitlement to the benefits contained in Article 17 [vacation with pay]...." On judicial review, this ruling was quashed by a trial judge of the Supreme Court of Newfoundland and Labrador who remitted the grievance to a new arbitrator for the following reasons: "The arbitrator's reasoning refers only to the entitlement of casual employees. This was not the issue before him... [T]he conclusion of the arbitrator is completely unsupported by any chain of reasoning that could be considered reasonable."

The union appealed to the Newfoundland and Labrador Court of Appeal. In a decision released February 19, 2010, a majority of a three-member panel of the Court of Appeal allowed the appeal.

Writing for the majority, Justice Gale Welsh began by referring to the following passage from the Supreme Court of Canada's ruling in Dunsmuir v. New Brunswick, [2008] S.C.J. No. 9 (QL):

A court conducting a review for reasonableness inquires into ... the process of articulating the reasons and ... outcomes... [R]easonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

Canvassing the Supreme Court of Canada's views on the first part of the Dunsmuir analysis (i.e. reasonableness of the "process"), as expressed in Lake v. Canada (Minister of Justice), [2008] S.C.J. No. 23 (QL) and R. v. R.E.M., [2008] S.C.J. No. 52 (QL), Justice Welsh found that

... reasons must be sufficient to permit the parties to understand why the tribunal made the decision and to enable judicial review of that decision. The reasons should be read as a whole and in context, and must be such as to satisfy the reviewing court that the tribunal grappled with the substantive live issues necessary to dispose of the matter.

Although the reasons provided by the arbitrator were "minimal," Justice Welsh ruled that they were "sufficient to satisfy the Dunsmuir criteria." She reviewed each aspect of the arbitrator's decision, noting that he quoted the relevant provisions of the collective agreement as well as some caselaw. His "pattern of thought" was not clear to Welsh from the "skeletal discussion in his decision," but she followed the ruling in R.E.M. that reasons do not have to show how a decision was made in a "'watch me think' fashion." In Welsh's view, it could be "reasonably inferred" that the arbitrator relied on the quoted caselaw, and it was clear that his ruling on the vacation entitlement of casual employees formed the basis of his decision. She had no doubt that the arbitrator was "fully alive to the question in dispute," and she criticized the trial judge's reading of the reasons as "constrained and inaccurate." He "failed to read the decision as a whole and in context," according to Welsh, focusing on "how" instead of "why" and becoming "troubled by the arbitrator's failure to specifically state the 'chain of reasoning.'"

"While the preferred approach would have been to provide a more comprehensive explanation for the decision," Justice Welsh ruled, "the failure to do so is not fatal." She found that the "reasonable conclusion" to be drawn from the arbitrator's decision was that casual employees were compensated for their exclusion from benefits and that their service was "explicitly excluded" for the purposes of Article 17. For Welsh, the "logical implication" of the arbitrator's ruling was that time would start to run for the purposes of Article 17 when a casual employee attained permanent, temporary or part-time status. She did not see this as "providing reasons that could have been but were not provided by the arbitrator" because she found "sufficient basis in the decision, read as a whole, from which to understand why the arbitrator decided the issue as he did."

Justice Welsh concluded that "the requirement for justification, transparency, and intelligibility in the decision-making process referenced in Dunsmuir was satisfied" and that "the arbitrator's interpretation of the collective agreement [was] within the range of possible acceptable outcomes defensible in respect of the facts and law." The possibility of "an alternate reasonable interpretation of the collective agreement" did not lead Welsh to the conclusion that the arbitrator's decision should be set aside.

Issue(s): (i) Whether an arbitrator's minimal reasons constitute a breach of the duty of procedural fairness making the award reviewable on a standard of correctness; or (ii) whether the award is reviewable on a standard of reasonableness and the Dunsmuir criteria of "justification, transparency and intelligibility within the decision-making process."

Status: Argued October 14, 2011. Judgment Reserved.

Lancaster Reference: For analysis of the Newfoundland and Labrador Court of Appeal's decision, see Lancaster's Health Care Employment Law eNewsletter, December 22, 2010, Issue No. 42.