A-432-77
Administrator under the Anti-Inflation Act
(Applicant)
v.
Jean Léveillée, Harold Demers, Gaston Cadieux,
Yvon Lahaie and Bernard Belanger (Respondents)
Court of Appeal, Jackett C.J., Pratte and Ryan
JJ.—Ottawa, December 21 and 22, 1977.
Judicial review — Labour relations — Anti-Inflation Act —
Increase allowed because of historical relationship between
school system's executive employees and teachers — Whether
or not amount consistent with objectives of Act — Federal
Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28 — Anti-Infla
tion Act, S.C. 1974-75-76, c. 75, ss. 20, 30 — Anti-Inflation
Guidelines, SOR/76-1, s. 44(1) as amended by SOR/76-298,
s. 18.
This is a section 28 application to set aside a judgment of the
Anti-Inflation Appeal Tribunal varying an order of the
Administrator and ordering that the employer might increase,
for the guideline year, the total compensation of its executive
employees because of the historical relationship between them
and the teachers of the school system. The issue is whether or
not the Tribunal erred in law in allowing this further amount
by not fulfilling the condition precedent for such allowance—
consistency with the objectives of the Anti-Inflation Act.
Held, the application is dismissed. The general rule adopted
imposing a more or less arbitrary limit on the increases does not
apply where a historical relationship exists that may allow an
additional amount, consistent with the objectives of the Act.
The historical relationship must be one where the efficacious
working of the particular part of the employment sector
requires that additional amount. The amount, however, must
not be greater than necessary to overcome the harm that would
be done if the historical relationship were not taken into
account. The Tribunal's conclusion maintains the vertical wage
relationship between respondents and teachers, and yet recog
nizes implicitly the objectives of the Anti-Inflation Act by only
allowing the minimal amounts required to meet the exigencies
of the situation. This decision was open to the Tribunal.
APPLICATION for judicial review.
COUNSEL:
E. A. Bowie and Deen Olsen for applicant.
Gordon F. Henderson, Q.C., and R. Fitzsim-
mons for respondents.
SOLICITORS:
Deputy Attorney General of Canada for
applicant.
Gowling & Henderson, Ottawa, for respond
ents.
The following are the reasons for judgment
rendered in English by
JACKETT C.J.: This is a section 28 application to
set aside a judgment of the Anti-Inflation Appeal
Tribunal varying an order of the Administrator
under section 20 of the Anti-Inflation Act, S.C.
1974-75-76, c. 75, and ordering that the Prescott
and Russell Counties Roman Catholic Separate
School Board "may, for the guideline year Sep-
tember 1, 1975, to August 31, 1976, increase the
total compensation of its executive group of
employees (the respondents) by an amount that is
not greater than the sum of $24,668 and $2,400
per employee in the group, with appropriate
adjustments .. ." .
The Anti-Inflation Act is an Act "for the
restraint of profit margins, prices, dividends and
compensation" and contains a recital that the
"containment and reduction of inflation" is a
matter of national concern. By section 3, the Gov
ernor in Council is authorized to publish "guide-
lines" concerning, inter alia, the restraint of "com-
pensation". By section 20, an officer known as the
"Administrator" may make an order to prohibit a
person "from contravening the guidelines". By
section 30, there is an appeal from such an order
to the "Appeal Tribunal", which appeal is, as I
read the Act, by way of a hearing "de novo". In
other words, on such an appeal, the Tribunal has
jurisdiction over all aspects of the subject matter
of the appeal including questions of fact, law and
discretion.
This matter raises a question concerning that
part of the "guidelines" dealing with compensa
tion. By virtue of section 43 thereof, if it stood
alone, the increase that would have been permissi
ble, in the circumstances of this case, would be "an
increase in the average compensation for the group
for the guideline year" of $2,400. The question is
whether the Tribunal erred in law in allowing a
further amount under section 44(1), SOR/76-1, as
amended by SOR/76-298, which reads in part:
44. (1) Where a group
(b) has an historical relationship with another group,
the employer may in a guideline year increase the total amount
of the compensation of all the employees in the group, by an
amount that is not greater than the sum of
(c) the amount permitted under subsection 43(1), and
(d) such further amount as is consistent with the objectives
of the Act.
The question is whether the further amount pur
portedly allowed by the Tribunal under section
44(1)(d) was allowed on the basis of an error of
law. The applicant's position, as I understand it, is
that the Tribunal did not fulfil the condition prece
dent to such an allowance of first finding that such
allowance was "consistent with the objectives of
the Act".
Briefly, the relevant facts, as I understand them,
are
(a) that, immediately prior to the control
period, the teachers including the school princi
pals in the employ of the employer were granted
increases,
(b) that the respondents were the management
staff of the employer and traditionally were paid
salaries higher than those paid to the school
principals,
(c) that the increases granted to the teachers
were such that, even if $2,400 were added to the
salaries of each of the respondents, some of the
principals would be receiving compensation
higher than that paid to some of the
respondents,
(d) for the purposes of section 44 of the guide
lines there is an historical relationship between
the teachers and the respondents.
In these circumstances, the Tribunal found that
the respondents "could legitimately expect ... that
the School Board would continue to have regard to
the highest paid principals' salaries in setting the
salaries of the executive group, that all of them
would make at least marginally more than the
highest paid principals...."
The Tribunal dealt at some length with the
argument for the applicant that, because the his
torical relationship was weak, the respondents had
no right to have it maintained, and said, inter alia:
Here the Administrator refused to permit the payment of
any further amounts to maintain the weak historical relation
ship that he found to exist because, in his view, to permit any
compensation pursuant to paragraph 44(1)(d) of the Guidelines
to a group of employees constrained by the $2,400 maximum
under section 43 "would not be consistent with the objectives of
the Anti-Inflation Act" in the absence of "some very compell
ing reason" to give relief from that constraint.
It is true, of course, that under the philosophy of the Anti-
Inflation Act the greater the constraints placed on increases in
compensation, the more inflation will be controlled, but in the
opinion of the Appeal Tribunal the phrase "the objectives of
the Act" in paragraph 44(1)(d) of the Guidelines cannot be so
baldly construed. The aim of section 44 itself is to make
constraint more fair and workable.
In our view, section 44 must serve a similar purpose here, to
maintain the vertical wage relationships in the administrative
set-up of the Prescott and Russell Counties Roman Catholic
Separate School Board, at least to the extent that "subordi-
nates" are not paid more than their superiors. Quoting again
from our decision in the Sudbury Separate School Board case,
at 26,011:
The broad objectives stated (in the preamble to the Anti-
Inflation Act,) are left by the Act to be worked out through
the Guidelines established by the Governor-in-Council in
regulations under s. 3(2) of the Act ... The Governor-in-
Council has seen fit in s. 44 of the Guidelines to permit
increases calculated by reference not to the general levels of
inflation in the economy but by reference to particular
historical relationships between groups of employees.... The
point is that s. 44 of the Guidelines is itself an important
consideration in determining the specific objectives of the
Anti-Inflation Act as they are worked out through the
Guidelines.
Section 44 makes it clear that the objective is to restrain
compensation without undue disruption of historical relation
ships that have in part determined employee compensation.
Thus, in the opinion of the Appeal Tribunal it is consistent with
the purposes of the Anti-Inflation Act to hold that an average
increase in compensation in excess of $2,400 must be permitted
to the Appellant's employee group to maintain even minimally
the historical hierarchy in wages paid by the employer School
Board here.
The Anti-Inflation Appeal Tribunal has concluded that, on
the basis of the historical relationship found by the Administra
tor, the School Board should be permitted to increase the
average compensation of the employees in the executive group
by a further amount such that the salary for every position in
the group can be at least marginally more than the salaries of
the highest paid principals, and such that those who, for two or
more years before October 14, 1975, made significantly higher
salaries than the highest paid principals, can continue to do so.
On the other hand, we have concluded that the amounts agreed
upon by the School Board are not consistent with the objectives
of the Anti-Inflation Act because they exceed the minimal
legitimate expectations engendered by the very weak historical
relationship established here.
Our conclusion, in other words, is that the School Board
may, for the guideline year, September 1, 1975 to August 31,
1976, increase the total amount of the compensation of the
employees in the executive group by an amount that is not
greater than the sum of $24,668 and the $2,400 per employee
allowed by section 43 of the Guidelines, with appropriate
adjustments to the extent that any of the three "Program
Director" positions ceased to exist or be occupied before the
end of that guideline year. The Tribunal is not insensitive to the
arbitrary aspect of this formula in that we have selected the
lowest salary differential since 1970 for each position in the
executive group in "quantifying" the historical relationship. We
regret too that we could find no tidier formula but we are
satisfied that the conclusion we have reached allows for sub
stantial justice within the objectives of the Anti-Inflation Act
and Guidelines.
Reading the remainder of the Tribunal's deci
sion with these passages, which I regard as the
highlights, I do not find a failure on the part of the
Board to bring itself within the authority granted
by section 44 of the "guidelines" when it made the
allowances in question.
My understanding of the matter may be sum
marized as follows:
1. The object of the Anti-Inflation Act is inter
alla "to restrain .. . compensation".
2. The method adopted to carry out that object
was, inter alla,
(i) to cause "guidelines" to be adopted "for
the guidance of all Canadians in restraining
. compensation" (section 3),
(ii) and to provide for a system of administra
tive decisions or orders for giving legal
application to such guidelines.
3. Such guidelines provided a formula of gener
al application in respect of compensation with a
maximum of $2,400 per annum subject, inter
alia, to a "further amount ... consistent with
the objectives of the Act" in a case involving an
"historical relationship".
4. The Appeal Tribunal has comprehensive
jurisdiction with regard to the latter question
and this Court has jurisdiction to review its
decisions on questions of law.
In so far as the law applicable is concerned, the
object of the Anti-Inflation Act, as I read it in so
far as "compensation" is concerned, is to put a
brake on increases—not to eliminate increases.
The general rule adopted is a more or less arbi
trary limit (with a maximum of $2,400 per
annum) imposed on the increases that would
otherwise arise from the operation of market
forces. This limit does not, however, apply where
there is an historical relationship. In such a case
an additional amount may be allowed consistent
with the objectives of the Act. In relation to the
facts of this case, this means, in my view,
(a) that the historical relationship must be such
that the efficacious working of the particular
part of the employment sector requires such an
additional amount, and
(b) that such additional amount must not be
any greater than is necessary to overcome the
harm that would be done if such historical rela
tionship were not taken into account.
Returning to the attack made on the Tribunal's
reasoning based on the contention that it did not
address itself to the limitation by reference to the
objectives of the Act, I am of opinion that it must
be rejected.
Putting the matter in my own words, what I
understand the Tribunal to be saying is that, from
the point of view of making the system continue to
work efficaciously, the vertical wage relationships
between the respondents and the teachers must be
maintained to the extent at least of there being
appreciable salary differences between them but
they recognize, implicitly, if not explicitly, that the
objectives of the Anti-Inflation Act require that no
more should be allowed under section 44(1)(d)
than is made necessary by the exigencies of the
situation. On that basis, as I understand it, they fix
the amount that they regard as "minimally" neces
sary to meet the exigencies of the situation. In my
view, this conclusion was open to the Tribunal in
law and this Court has no right to interfere with it.
In my view, the section 28 application should be
dismissed.
With regard to the contention that the Board
erred, in not finding that the settlement made with
the teachers before the control period was "infla-
tionary" and in not taking this alleged fact into
account, in determining whether any, and if so
what, amount should have been allowed under
section 44(I)(d), which contention was introduced
by the applicant indirectly in the course of argu
ment, I am not satisfied that the point was open to
the applicant without obtaining an amendment to
the memorandum filed by him in this Court. In
any event, the point is based on allegations of fact
that were not put in issue before the Tribunal and,
in my view, the Tribunal cannot be said to have
based its decision on an error in law in failing to
deal with them. As I read the Act, the proceedings
before the Tribunal are more of an "adversary"
than an "inquisitorial" nature and a party to a
proceeding in that Board cannot complain if a
matter that was not raised was not dealt with. It is
true that the applicant in that Court was more
concerned before the Tribunal with supporting the
Administrator's decision; but, if he did not foresee
the possibility of losing on that point and did not
put forward factual allegations that would arise if
he did so lose, he cannot complain if such factual
considerations were not raised and considered by
the Tribunal of its own motion. Any implied
requirement that the Tribunal must, of its own
motion, investigate all conceivable avenues, would,
I should have thought, seriously hamper the effi
ciency of its work.
* * *
PRATTE J. concurred.
* * *
RYAN J. concurred.
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