2006 BCCA 491 U.B.C. v. The Association of Administrative and Professional Staff on Behalf of Bill Wong

Before:	The Honourable Madam Justice Ryan
	The Honourable Madam Justice Levine
	The Honourable Mr. Justice Chiasson
B.A. Laughton, Q.C.		Counsel for the Appellant
M.A. Davies		Counsel for the Respondent, University of British Columbia
Place and Date of Hearing:		Vancouver, British Columbia
17 October 2006
Place and Date of Judgment:		Vancouver, British Columbia
2 November 2006

Written Reasons by:

The Honourable Mr. Justice Chiasson

Concurred in by:

The Honourable Madam Justice Ryan

The Honourable Madam Justice Levine

Reasons for Judgment of the Honourable Mr. Justice Chiasson:

[1] This is an appeal from a decision of the Supreme Court allowing an appeal on an interpretation issue in an arbitration award and remitting the award to the arbitrator pursuant to sub-section 31(4)(b) of the Commercial Arbitration Act, R.S.B.C. 1996, c. 55 (the “CAA”).

[2] For the reasons that follow, I would dismiss this appeal.

Background

[3] The appellant, The Association of Administrative and Professional Staff (the “Association”), is an association voluntarily recognized by the University of British Columbia (“UBC" or the “respondent”) as the representative for the respondent’s management and professional employees. The appellant currently has approximately 1,800 members.

[4] The relationship between the parties is defined in an agreement referred to as the Framework Agreement dated March 3, 1995 and amended December 1, 2000. The Framework Agreement, together with the Agreement on Conditions and Terms of Employment (the “ACTE”), establishes the basic terms and conditions of employment for members of the appellant.

[5] Sometime in 2002, Bill Wong, an experienced chartered accountant, applied to the respondent for the position of Manager, Taxation, but upon investigation found that the position was too limited in scope to interest him. The respondent’s Director

of Financial Services later contacted Mr. Wong about the prospect of being hired for the newly created position of Controller in the Department of Financial Services.

[6] Mr. Wong ultimately was hired as the controller, to commence on September 3, 2002.

[7] On August 2, 2002, the respondent wrote to Mr. Wong confirming his employment.

. . . This letter will confirm our offer and your acceptance of the full-time position of Controller in the Department of Financial Services effective 2002 September 03…

Please take time to familiarize yourself with the Agreement on Conditions and Terms of Employment (ACTE) and the Framework Agreement between the University and the Association of Administrative & Professional Staff (AAPS). This sets out the terms of your employment with the University. Your employment is subject to a probationary period of twelve months, during which your suitability for the position will be determined. During this period, either you or the University may terminate the employment relationship with notice in accordance with the Employment Standards Act.

[8] For the purposes of this application, the pertinent provisions of the ACTE are as follows:

Article 2 ─ University Rights

All rights not specifically addressed in this Agreement or the Framework Agreement are reserved for the University. The University agrees to act fairly, reasonably and without discrimination when exercising these rights.

Common law employment principles apply to the employment relationship between the University and employees unless specifically modified by the terms of this Agreement.

It is understood that the determination of which matters are covered by a specific term of this Agreement and which are solely within the rights and discretion of the University is subject to the grievance procedure. Exercise of the University’s rights and discretionary decision making power is not subject to the grievance procedure, except with regard to whether such rights and discretion were exercised fairly, reasonably and without discrimination.

. . .

Article 5.1.1 ─ New Regular Employees

A new regular employee shall serve a probationary period of twelve (12) months. This period may be extended for up to six (6) months by mutual agreement between the supervisor and employee.

. . .

Article 8.6.2 ─ Probationary Employees

For a probationary employee, just cause includes lack of suitability for continued employment in the position.

In determining that an employee is not suitable for continued employment in the position, the University shall act reasonably and in good faith.

. . .

Article 9.3.1 ─ Notice or Pay in Lieu of Notice

An employee terminated during the probationary period for reasons other than just cause shall receive notice or pay in lieu of notice in accordance with the provisions of the Employment Standards Act.

[9] UBC did not implement the controller position for which Mr. Wong had been hired. Mr. Wong’s employment was terminated on March 25, 2003, due to the reorganization of the department which resulted in the elimination of the position.

[10] UBC’s view was that under the terms of its employment contract with Mr. Wong, specifically Article 9.3.1 of the ACTE, it was required to provide to him one week’s pay, being the entitlement specified in the Employment Standards Act, R.S.B.C. 1996, c. 113 (the “ESA”). "Out of courtesy" UBC paid Mr. Wong one month’s salary.

[11] On May 7, 2004, the Association filed a grievance on Mr. Wong’s behalf pursuant to provisions contained in the ACTE and the Framework Agreement. The matter proceeded to arbitration before Kenneth Glasner, Q.C. (the “arbitrator”) on June 10 and 11, 2004.

[12] Following the hearing the arbitrator wrote to the parties inviting submissions, inter alia, concerning the effect of s. 31(b) of the Employment Standards Regulations. These pertain to exclusions under the ESA.

[13] Mr. Wong submitted that because chartered accountants are excluded from the provisions of the ESA, Article 9.3.1 of the ACTE, which stipulates that notice or pay in lieu of notice is to be in accordance with the ESA, did not apply to Mr. Wong.

[14] Mr. Wong also contended that he had been induced to enter into the employment contract by a material representation, but the principal focus of the dispute and the award appears to have been the amount of compensation payable to Mr. Wong as a result of his termination: that is, pursuant to the ESA or the common law.

The Arbitrator

[15] The arbitrator stated:

[25] . . . I directed both counsel to Section 31(d) of Part 7 of the Employment Standards Regulation pursuant to the Employment Standards Act (the "Act"). That subsection states:

The Act does not apply to an employee who is:

. . .

(b) a member, other than an honourary member, of the Institute of Chartered Accountants under the Accountants (Chartered) Act or person enrolled as a student under that Act.

The Claimant is a chartered accountant and therefore is excluded under the Act.

[16] Although he did not say so explicitly, it is apparent that the arbitrator concluded that Article 9.3.1 did not apply to Mr. Wong because as a chartered accountant, he was excluded from the operation of the ESA.

[17] The arbitrator also held in the alternative that if the ESA were to apply, “…there are a plethora of cases which state that the [ESA] sets out a minimum notice period".

[18] It is apparent from his reasoning that the arbitrator’s focus was on the ESA as a whole.

[19] The arbitrator awarded Mr. Wong $100,000 as pay in lieu of notice at common law and as some value for the tuition of Mr. Wong’s children, which was part of his remunerative package.

The Supreme Court

[20] The respondent applied to set aside the award pursuant to ss. 30 and 31 of the CAA.

[21] The chambers judge identified and characterized the issues before her as the “interpretation” and the “representation” issues. She refused the application pursuant to s. 30, but granted leave to appeal under s. 31. The court then proceeded to deal with the appeal on the merits, applying a standard of review of correctness. The parties take no exception to these matters.

[22] The chambers judge stated:

In finding in favour of Mr. Wong, the arbitrator drew the following conclusions:

(i) that because Mr. Wong is not covered by the ESA, Article 9.3.1 had no application to him leaving the matter to be determined in accordance with common law principles;

(ii) the common law in relation to the standard of dismissal of a probationary employee is suitability. Mr. Wong was not terminated because he was unsuitable but because the controller position was never implemented;

(iii) even if the ESA governed, then it prescribed a minimum notice period only. Mr. Wong’s counsel has conceded that the arbitrator was incorrect on this point and I will make no further comment about it; and

(iv) UBC had made material representations to Mr. Wong which induced him to accept the ill-fated controller position.

[23] She concluded that the arbitrator was wrong in deciding that Article 9.3.1 did not apply to Mr. Wong’s employment because he was a chartered accountant, a group excluded from the operation of the ESA, and deferred consideration of the representation issue. She also observed that the arbitrator’s interpretation of the language used in Article 9.3.1 “. . . verges on the absurd in its result”. By this I understand the chambers judge to have meant that if the words of Article 9.3.1 were given the arbitrator’s interpretation an absurdity would result.

[24] The chambers judge remitted the matter to the arbitrator to decide the case in accordance with the Reasons of the Court.

Discussion

[25] The chambers judge identified the core issue, stating:

Both counsel share the view that the critical component of the arbitrator’s decision is his conclusion that Mr. Wong’s notice and dismissal were not governed by Article 9.3.1 of the ACTE, but rather, by the common law.

[26] The chambers judge concluded:

. . . the statutory exclusion of certain professionals by no means precludes the parties from agreeing to be bound by any provisions contained in the ESA in their contract of employment. Very plainly, Article 9.3.1 of the ACTE incorporates by reference the entitlement to notice and pay in lieu found in the ESA with the intention of binding the parties to such statutory provisions.

[27] As noted, the focus of the arbitrator was on the ESA as a whole. This also was the position of the appellant: “[the] contract must be read as though the [ESA] in its entirety was inserted into the contract”.

[28] The appellant bases its contention on the proposition that, “. . . one may not take the benefit of an instrument without also taking its burden”. (Hwang v. AXA Pacific Insurance Co. (2001), 91 B.C.L.R. (3d) 34, 154 B.C.A.C. 231 at para. 34; Herbert Broom, A Selection of Legal Maxims, 10^th Edition (London: Sweet & Maxwell, 1939) at 485).

[29] He combines this concept with principles concerning incorporation by reference and refers to R. v. Sims (2000), 140 B.C.A.C. 311, 2000 BCCA 437 at para. 20:

When material is incorporated by reference into a statute or regulation it becomes an integral part of the incorporating instrument as if reproduced therein.

[30] The appellant also relies on the decision of the Ontario Court of Appeal in R. v. St. Lawrence Cement Inc. (2002), 60 O.R. (3d) 712, 162 O.A.C. 363. The Court's comments at para. 18 of this case are particularly apt for the consideration of the contract in issue in the instant case:

[Incorporation by reference] enables the legislative draftsman to include provisions of earlier statutes or other documents into statutes or regulations without actually reproducing the language of the statute or document . . . words to which reference is made in an instrument have the same operation as if they were inserted in the instrument referring to them . . .The effect of incorporation by reference is that the material incorporated is considered to be part of the text of the legislation.

[31] Although these comments deal with legislation, they are equally applicable to contracts and other instruments.

[32] The Supreme Court of Canada addressed the concept in the employment law context in Machtinger v. HOJ Industries Ltd., [1992] 1 S.C.R. 986 at 1004 -1005, 91 D.L.R. (4th) 491, as follows:

. . . Absent considerations of unconscionability, an employer can readily make contracts with his or her employees which referentially incorporate the minimum notice periods set out in the Act. . . . Such contractual notice provisions would be sufficient to displace the presumption that the contract is terminable without cause only on reasonable notice. This point was recognized by Lysyk J. in Suleman, supra, at p. 214:

An employer who wishes to guard against being called upon to give any more notice or severance pay than legislation demands can readily draw a contractual clause which, in effect, converts the statutory floor into a ceiling.

[33] The appellant asserts that the words “in accordance with the provisions of the [ESA]” in Article 9.3.1 refer to the entire ESA, but this takes the clause out of context. In my view, it clearly refers to the preceding words, “notice or pay in lieu of notice”.

[34] I agree with the conclusion of the chambers judge that a plain reading of Article 9.3.1 is that the provisions of the ESA providing for notice or pay in lieu of notice are incorporated into the contract in issue. The effect is that the language of the ESA concerning notice or pay in lieu of notice is part of the contract. It is as if the draftsman included the words either in the text of or as a schedule to the contract.

[35] The chambers judge described the result as “... binding the parties to such statutory provisions”. Insofar as these words are merely descriptive of the text included by reference in Article 9.3.1, they are accurate, but the incorporation by reference in this case does not involve an acceptance of any part of the substantive content of the ESA.

[36] The chambers judge also held: “[The] arbitrator’s finding, as a matter of interpretation, that Mr. Wong’s probationary status pertained only to suitability/performance was also incorrect”.

[37] The arbitrator addressed this matter as follows:

In the case before me, the issue is not the ‘suitability’ of Mr. Wong but rather that the Employer never implemented the position for which Mr. Wong was hired…If the Employer chose to eliminate (in these circumstances not implement) the position, the Employer cannot use that as an excuse [for] limiting the severance package to one week’s notice. Probation deals with the suitability of the employee, not the existence or non-existence of a position.

[38] The chambers judge observed:

The arbitrator’s rationale for concluding that Mr. Wong’s probation related only to his suitability/performance is not adequately explained in his reasons. In the view of Mr. Wong’s counsel, the arbitrator’s finding on this point flowed from his conclusion that the ESA did not govern Mr. Wong; once he reached that conclusion, he then determined that Mr. Wong was exempt from Article 9.3.1 in its entirety. Based on this, the arbitrator evidently considered himself entitled to look to the common law which holds that the standard for dismissal for a probationary employee is suitability. I acknowledge that such reasoning is supported on one reading of the arbitrator’s decision yet, on another reading, it would seem that the arbitrator may have determined that Mr. Wong’s probation related only to suitability because he found that UBC had made that representation to Mr. Wong. It is simply not clear.

[39] I agree with the chambers judge.

[40] I also agree that insofar as the arbitrator may have concluded that Mr. Wong’s probationary status pertained only to the suitability of his performance, the arbitrator was not correct.

[41] Pursuant to Article 8.6.2 of the ACTE, if there were just cause for terminating a probationary employee, the employee would not be entitled to notice or pay in lieu of notice and just cause includes lack of suitability.

[42] Article 9.3.1 deals with the termination of probationary employees for other than just cause. That is, the ACTE addresses all issues arising out of the termination of probationary employees and is not limited to termination based on a lack of suitability.

[43] I would dismiss the appeal.

“The Honourable Mr. Justice Chiasson”

I Agree:

“The Honourable Madam Justice Ryan”

I Agree:

“The Honourable Madam Justice Levine”

Citation:	*U.B.C. v. The Association of Administrative and Professional Staff on Behalf of Bill Wong,*
	2006 BCCA 491