Dunsmuir v. New Brunswick: the perceived choice between fairness and flexibility in public service employment.

• Author: Lambert, Nicolas

Dunsmuir v. New Brunswick has been described as a "watershed" in Canadian administrative law. (1) Very few law students and practitioners of the discipline are now unaware that the standard of "patent unreasonableness" has disappeared. The simplification of standards of review has caught the eye of many commentators, almost to the extent that it would seem that Dunsmuir would appear to deal exclusively with that issue. Nevertheless, their conclusion is that in relation to judicial deference, Dunsmuir has not really changed that much. (2) Whether Dunsmuir leads to less judicial deference because of the disappearance of "patent unreasonableness" or more because "patent unreasonableness" is now diluted into a larger doctrine of reasonableness falls into one of the great perennial inquiries of administrative law: what is reasonableness?

While commentators have centered their discussions on the issue of standards of review, it is rather the less discussed aspect of the decision relating to the rights of non-unionized public servants to a hearing prior to dismissal that could have important implications for Canadian administrative law. Dunsmuir is important because it changes a fundamental rule--notably the right to a hearing prior to dismissal --that had been developing in Canadian administrative law, in parallel with other jurisdictions, over several decades. Until now, Canadian administrative law offered a pragmatic and nuanced answer to this problem through the doctrine of natural justice. However, in Dunsmuir, the Supreme Court ruled that civil servants, being mostly contractual employees, are subject to ordinary contract and not administrative law.

1. The Facts and Legal Isues

   Following a competition organised under the Civil Service Act (CSA), David Dunsmuir began work on 25 February 2002 as legal advisor at the Department of Justice of New Brunswick. (3) Three weeks later, on 14 Match 2002, by Order-in-Council, he was appointed to the offices of Clerk of the Court of Queen's Bench, Trial Division, Administrator of the Court of Queen's Bench, Family Division, and Clerk of the Probate Court of New Brunswick, all for the Judicial District of Fredericton. Dunsmuir's employment was far from trouble free. His probationary period was extended from six to twelve months. During his employment, Dunsmuir was reprimanded on three separate occasions, the last being in July 2004 by his regional director who threatened Dunsmuir with termination should his organization and output not improve. Dunsmuir answered that he would obtain legal advice and would not meet with her to discuss the matter further.

   During his evaluation, dated 19 August 2004, the Regional Director informed Dunsmuir that he did not fulfill the needs of his employer. The following day, a letter of termination was sent to his lawyer, informing Dunsmuir that his employment was terminated as of 31 December of that year, but that he would not have to go to work in the meantime. On 3 February 2005, an order in council revoked Dunsmuir's appointment to the Court. In the meantime, Dunsmuir lodged a grievance under the Public Service Labour Relations Act ("PSLA"), arguing that his employer had not made known its reasons for dissatisfaction; that he was not given any opportunity to respond to any of his employer's concerns; that his employer's actions in terminating him were without notice, due process or procedural fairness; and that the length of the notice period was inadequate. (4) The grievances were all denied and Dunsmuir referred his grievances to the adjudicator under that same Act.

   According to the Province, termination of Dunsmuir's contract was only limited by a duty to give reasonable notice. Dunsmuir argued that he could only be terminated with cause, which had not been the case. According to him, he had been unreasonably disciplined by the Province. The adjudicator ruled that Dunsmuir had in fact been terminated with cause, but not for disciplinary reasons. The adjudicator recognised that the Province could terminate Dunsmuir's employment with notice or immediately with cause, but could not do so without providing Dunsmuir with a proper hearing. Dunsmuir's appeal was therefore allowed; being an office holder at pleasure, he was reinstated for not having had a proper hearing.

   The central legal issue that developed, however, was not Dunsmuir's right to a hearing, bur the extent to which his statutory rights of appeal allowed the adjudicator to inquire into the cause of his termination. The adjudicator stated that the employer could not rely on its contractual right to end the relationship at will, and thereby weaken Dunsmuir's right of appeal. The legal uncertainty arose because of a conflict between the PSA and the PSLRA. "Employees" within the PSLRA may file a grievance in relation to dismissal and disciplinary measures. Such grievances can be appealed to an adjudicator. The powers of the adjudicator are defined as follows:

   Where an adjudicator determines that an employee has been discharged or otherwise disciplined by the employer for cause and the collective agreement or arbitral award does not contain a specific penalty for the infraction that resulted in the employee being discharged or otherwise disciplined, the adjudicator may substitute such other penalty for the discharge or discipline as to the adjudicator seems just and reasonable in all the circumstances. (5) That being said, the terms of dismissal of persons qualifying as "civil servants" are set out in section 20 of the CSA, which provides that "Subject to the provisions of this Actor any other Act, termination of the employment of a deputy head or an employee shall be governed by the ordinary rules of contract." Ordinary rules of contract law allow for employment at will, subject to reasonable notice or severance pay in lieu. This right of termination still has to be read in conjunction with the PSLRA, which provided certain government officials with statutory rights of appeal. The problem that arose from these statutory regimes was concerned the powers of the adjudicator to overturn the government's decision of dismissal.

   The fact that the adjudicator's powers have been extended to non-unionized civil servants is important because collective agreements have allowed unionized civil servants to be protected against dismissal without cause. The wording of s. 97(2.1), however, is not so clear and in no way "cuts and pastes" the standard protection against dismissal without cause found in most collective agreements. (6)

   The question is: does s. 92(201) provide protection against termination without cause? Moreover, to what extent does this section override the CSA which provides that employee rights upon termination are those of ordinary contract law?

2. Judicial Review of the Adjudicator's Decision

   The Province applied for judicial review of the Adjudicator's decision, arguing that he did not have jurisdiction to qualify the nature of the termination. What followed, however, was a debate on the appropriate standard of review to be applied in the case rather than a discussion about Dunsmuir's right to a proper hearing. These discussions centered on the assumption that Dunsmuir was an office holder "at pleasure" whose right to notice had been extended by s. 20 of the CSA, and whose procedural rights were set out comprehensively in legislation. Under this assumption, procedural fairness was necessarily extant given Dunsmuir's rights of appeal.

   In spite of a privative clause, Rideout J qualified the issue as one of statutory interpretation and therefore subject to a correctness standard of review. (7) On the merits, Rideout J stated that the Adjudicator had made an error of law by looking at the reasons for Dunsmuir's termination. Section 97(2.l) did not allow him to look into the reasons of Dunsmuir's termination since the employer had not sought any. As employable "at pleasure", Dunsmuir was not entitled to a full hearing. His rights under the PSLRA were procedural in nature, not substantive. As a result, the adjudicator's ruling looking into the reasons for dismissal was patently unreasonable and accordingly quashed.

   On appeal, Robertson JA confirmed Rideout J's ruling while stating that the standard of review was that of "reasonableness simpliciter". (8) In doing so, he stated that under s. 20 of the CSA, the employer was entitled to terminate Dunsmuir as in ordinary employment contracts. In his view, the Adjudicator was not entitled to evaluate the appropriateness of Dunsmuir's termination where the employer did not invoke any disciplinary reasons. Dunsmuir's only recourse upon termination would be to invoke discrimination or illicit grounds of termination which was not the case at hand. The Court also stated that given that the parties had conceded Dunsmuir's status as a contractual employee, it was unnecessary to deal with Dunsmuir's right as an "at pleasure" appointee. As for procedural fairness, Dunsmuir's right of grievance was itself a fulfillment of his employer's duty of procedural fairness. Importantly, the Court of Appeal did not see the case as one of natural justice. In its words:

   Finally, the issue of procedural fairness does not arise in this case. Mr. Dunsmuir's employment was terminated with notice and he exercised his right to grieve, albeit with respect to the length of the notice period. In these circumstances, a finding that the fairness duty has been breached has no legal foundation. (9) The Supreme Court unanimously confirmed the judgment of the Court of Appeal. (10) Faced with uncertainty regarding the appropriate standard of review, the Supreme Court decided to propose a general overhaul of the issue, stating that there ought to be two standards of review--correctness and reasonableness. (11) Much discussion was given to methods of judicially reviewing administrative action such as the arbitrator's decision. (12) In spite of being divided on the...