T-1056-83
John G. Sheldrick (Plaintiff)
v.
The Queen (Defendant)
Trial Division, Strayer J.—Ottawa, January 22
and 31, 1986.
Public service — Plaintiffs employment extended two years
beyond sixty-fifth birthday — Employment unlawfully ter
minated prior to end of extended period pursuant to s. 28(11)
of Regulations — Termination 'for reason of age only" in s.
28(11) meaning incompetence attributable to age — Plaintiff's
employment terminated due to redundancy — Termination not
within s. 28(11) — Interest awarded from date of judgment
only — Public Service Superannuation Regulations, C.R.C., c.
1358, s. 28(2),(4),(11) — Public Service Employment Act,
R.S.C. 1970, c. P-32, s. 24 — Federal Court Act, R.S.C. 1970
(2nd Supp.), c. 10, ss. 35, 40 — Crown Liability Act, R.S.C.
1970, c. C-38, s. 3 — Federal Court Rules, C.R.C., c. 663, R.
475 — Interest Act, R.S.C. 1970, c. I-18.
Bill of Rights — Allegation s. 28(11) of Regulations per
mitting dismissal solely because older than 65 constituting
denial of equality before law contrary to ss. 1(b) and 2 of
Canadian Bill of Rights — No valid federal objective —
MacKay v. The Queen, [1980J 2 S.C.R. 370 applied — S. 15
of Charter not contravened as not in force when events
occurred — Canadian Bill of Rights, R.S.C. 1970, Appendix
III, ss. 1(b), 2 — Public Service Superannuation Regulations,
C.R.C., c. 1358, s. 28(2),(4),(11) — Canadian Charter of
Rights and Freedoms, being Part I of the Constitution Act,
1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.), s. 15.
This is a special case asking the Court to determine whether
an employment contract was lawfully terminated. Prior to the
plaintiff's sixty-fifth birthday his employment with the public
service was extended. However, it was terminated prior to the
end of the extended period pursuant to subsection 28(11) of the
Public Service Superannuation Regulations. Subsequently it
was revealed that the real reason for the termination was the
need to reduce person-years caused by a departmental merger.
Held, the plaintiff is entitled to judgment.
The discretion of the Crown to dismiss has been extensively
eroded by a variety of statutes. Section 28 of the Public Service
Superannuation Regulations provides the means by which
employment may be extended beyond age 65. Subsection
28(11) permits termination of an employee who has been
continued past 65 provided that that termination is made "for
reason of age only". This means that such a person may be
dismissed for reason of incompetence attributable to age. The
defendant's interpretation that there need be no reason for
termination other than that the employee is over 65 would
amount to a denial of "equality before the law" contrary to
paragraph 1(b) and section 2 of the Canadian Bill of Rights.
"Equality before the law" is met if a law which makes distinc
tions unfavourable to a certain class of persons has been
enacted for a "valid federal objective". In light of MacKay v.
The Queen, [ 1980] 2 S.C.R. 370, there would be a valid federal
objective for such a measure only if it were reasonably clear
that it is a genuine requirement of the management that any
one past 65 should be subject to dismissal for any reason or no
reason on 90 days' notice being given. No such evidence was
presented. Also, the plaintiff's employment was terminated
because of a redundancy and therefore did not come within the
criterion prescribed in subsection 28(11).
The Charter argument could not be considered, the events in
question having occurred before section 15 came into force.
Subsection 28(11) is Mira vires the Governor in Council,
which is authorized to prescribe a general age for retirement
and to provide conditions for continuation of employment
beyond that age. R. v. Robertson, [1972] F.C. 796 (C.A.) is
distinguishable as the Regulation under consideration in that
case dealt with dismissal before 65. Subsection 28(11) deals
with extensions after the normal age of retirement.
Interest on the judgment is payable from the date thereof
pursuant to sections 35 and 40 of the Federal Court Act. There
is no contractual stipulation or statutory authority providing for
pre-judgment interest.
CASES JUDICIALLY CONSIDERED
APPLIED:
MacKay v. The Queen, [1980] 2 S.C.R. 370; Ontario
Human Rights Commission et al. v. Borough of Etobi-
coke, [1982] 1 S.C.R. 202.
DISTINGUISHED:
R. v. Robertson, [1972] F.C. 796 (C.A.).
REFERRED TO:
Eaton v. The Queen, [1972] F.C. 185 (T.D.); Corpex
(1977) Inc. v. The Queen in right of Canada (Motion and
re-hearing), [1982] 2 S.C.R. 674.
COUNSEL:
R. J. Kealey, Q.C. for plaintiff.
R. P. Hynes for defendant.
SOLICITORS:
Kealey & Lafrange, Ottawa, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for judgment
rendered in English by
STRAYER J.: This is a special case submitted by
agreement of the parties for adjudication pursuant
to Rule 475 [Federal Court Rules, C.R.C., c.
663]. On the basis of an agreed statement of facts
the Court is asked to determine whether an
employment contract providing for the employ
ment of the plaintiff by the defendant was lawfully
terminated.
Facts
The agreed facts were essentially as follows. The
plaintiff commenced employment with the defend
ant in the Department of Industry, Trade and
Commerce in November, 1965. He attained the
age of 65 years on December 14, 1981. Prior to
that date, in May, 1981 after discussions between
him and departmental officials the plaintiff's
employment was extended for a period of two
years commencing December 14, 1981. This deci
sion was first conveyed to him orally by Mr. R. M.
Hammond, Director of the Financial Services
Branch of which the plaintiff was Assistant Direc
tor. He was subsequently shown a memorandum
from the Chief of Personnel Administrative Ser
vices of the Department of Industry, Trade and
Commerce to Mr. Hammond dated June 16, 1981
which stated in part:
... we are pleased to inform you that Mr. Sheldrick's extension
of employment beyond age 65 has been approved for a period
of two years commencing December 14, 1981 to December 13,
1983 inclusive.
However, by a memorandum to him dated May
6, 1982 from the Deputy Minister, the plaintiff
was advised that his employment with Industry,
Trade and Commerce would cease on August 27,
1982. This letter specifically invoked subsection
28(11) of the Public Service Superannuation
Regulations [C.R.C., c. 1358] but did not elabo
rate further on the reasons for the termination.
Such reasons were, however, given subsequently in
a letter of October 18, 1982 from the Deputy
Minister to the plaintiff. In expressing his regret
for the termination of employment the Deputy
Minister said this:
Unfortunately, the need to reduce our person-year complement
as a result of the DREE/ITC merger left me no choice.
That redundancy was the real reason for Mr.
Sheldrick's termination is further confirmed by the
submission made to the Treasury Board by the
Deputy Minister at that time with respect to
having Mr. Sheldrick's retirement date deemed to
be December 30, 1981, a measure which would be
beneficial to him in respect of his pension. This
memorandum which was put in as evidence states
in part:
Mr. Sheldrick's case came to my attention when, in May, 1982,
we began to get a clear picture of the scope of the person-year
reduction exercise we would have to go through at DREE/ITC.
With this realization we set about reducing our compliment
[sic] of term employees and approved term extensions only
when they were clearly justified by operational requirements.
We also looked at Mr. Sheldrick's case and determined that the
pool of persons available from the DREE and ITC financial
services areas eliminated the operational need for his services.
Accordingly, ... I informed him that ... his employment would
end on August 27, 1982.
According to the special case, "the plaintiff
agrees" that his employment during the extension
of his service after age 65 was "a continuation of
his employment as a civil servant". I take this to
mean that the defendant also adopts this position.
It is also common ground that the termination of
the plaintiffs employment was made under sub
section 28(11) of the Public Service Superannua-
tion Regulations, C.R.C., c. 1358. The defendant
according to the special case claims that the
employment of
... the Plaintiff was properly terminated in law pursuant to
Section 28(11) of the Public Service Superannuation
Regulations ... .
That is, the defendant relies solely on this subsec
tion as the legal justification for the termination.
The plaintiff contends that the discussions
preceding his retirement and the confirmation to
him that his employment would be continued for
two years amounted to a binding contract for
employment for the following two years and he
says that subsection 28 (11) did not provide lawful
authority for the termination of his employment.
The parties therefore have agreed in the special
case that:
The question for the opinion of the Court is whether the
employment contract between the parties was improperly ter
minated in law by the Defendant, and if so, whether interest as
claimed is payable by the Defendant.
The parties are also in agreement as to the dam
ages which I should award should I find in favour
of the plaintiff. They are not, however, in agree
ment as to what interest, if any, should be payable
either as pre-judgment interest or post-judgment
interest.
Conclusions
The relevant provisions of the Public Service
Superannuation Regulations are subsections
28(2),(4) and (11). They provide as follows:
28....
(2) Subject to this section, a contributor and a deputy head
cease to be employed in the Public Service upon attaining 65
years of age.
(4) A contributor who has attained 65 years of age and is
authorized to be paid salary computed at an annual rate that
does not exceed the maximum annual rate to pay for a Senior
Executive Officer I may continue to be employed in the Public
Service until he attains 70 years of age if, prior to the date on
which the contributor would cease to be so employed, the
deputy head of his department, with the specific or general
authority of the appropriate Minister, approves in the form
approved by the Minister that the contributor continue to be so
employed.
(11) Notwithstanding anything in this section, the deputy
head may, at any time, for reason of age only, terminate the
employment of a contributor who has attained the age of 65
years, if he gives to the contributor at least 90 days notice of
termination of employment.
By virtue of subsection (2) the plaintiff would have
ceased to be employed at age 65. However, pursu
ant to subsection (4) his employment was con
tinued for two more years by decision of the
Deputy Minister. This is not disputed. The ques
tion remains then as to whether subsection (11)
provided lawful authority for the termination of a
period of employment to which the plaintiff was
otherwise entitled pursuant to subsection (4).
The plaintiff contended that this Regulation
permitting the termination at any time of an
extended period of employment could not be con
sidered a term of the contract and therefore could
not justify its termination. This argument was
based on the contention that the plaintiff had no
knowledge that his employment was being extend
ed pursuant to the Public Service Superannuation
Regulations and he was therefore not aware of this
alleged power of termination. I am not persuaded
that the state of the plaintiff's knowledge is deter-
minative as to the application of general rules
having the force of law which are applicable to all
such contracts. I need not consider this further,
however.
The plaintiff also contests the validity or appli
cability of this Regulation: he says that it is ultra
vires the Governor in Council, is inconsistent with
the Canadian Bill of Rights [R.S.C. 1970, Appen
dix III], and contrary to section 15 of the Canadi-
an Charter of Rights and Freedoms [being Part I
of the Constitution Act, 1982, Schedule B, Canada
Act 1982, 1982, c. 11 (U.K.)]. Counsel for the
defendant objected to these issues being raised as
they had not been «pleaded». I took the position
that, whether or not in an ordinary action such
matters would have to be pleaded pursuant to Rule
409, once the parties had reduced an issue to its
statement in the special case they were bound by
the generality of the issue as so defined by them by
mutual agreement. As noted above, the issue as
defined is whether the contract «was improperly
terminated in law» and in my view that potentially
puts in issue the interpretation and validity of the
legislative provision specifically relied on by the
defendant as legal justification for its actions. In
turn, counsel for the defendant briefly argued that
the plaintiff was estopped from challenging the
validity of the Regulations as he had taken ben
efits thereunder. In my view this is not an issue
embraced by the mutually agreed question as to
whether the contract «was improperly terminated
in law» as the defendant, by agreeing to the ques
tion thus stated was accepting that the legality of
its actions based on subsection 28(11) was in issue
and that the plaintiff was not precluded by estop-
pel from challenging that legality.
Counsel for the defendant also appeared to be
arguing that subsection 28(11) was only one
source of authority for termination of the plain
tiff's employment. He referred to the common law
principle that service for the Crown is at pleasure
and may be terminated for any reason whatsoever.
This somewhat archaic view of public employment
implies that servants of the Crown may be dis
missed for any reason or for no reason. It must
first be observed that the prerogatives of the
Crown in this respect have been reduced to statute,
in respect of the Government of Canada, by the
Public Service Employment Act, R.S.C. 1970, c.
P-32, section 24 which states as follows:
24. The tenure of office of an employee is during the pleasure
of Her Majesty, subject to this and any other Act and the
regulations thereunder and, unless some other period of
employment is specified, for an indeterminate period.
There is ample jurisprudence confirming that the
discretion of the Crown to dismiss has been exten
sively eroded by a variety of statutes. It is suffi
cient to say for the present purposes that the
Public Service Superannuation Regulations, sec
tion 28, provides the means by which the employ
ment of a person such as the plaintiff may be
extended beyond 65 and the means by which that
employment may be terminated. This is the kind
of regulation to which the general principle in
section 24 of the Public Service Employment Act
is expressly made subject. Apart from this clear
meaning of the two provisions when read together,
the defendant admits in the special case that its
justification for the termination must be found in
subsection 28(11).
The central issue then is whether that subsection
authorized the action taken here. The answer to
that will depend on what interpretation is to be
given to subsection 28(11). That subsection per
mits termination of an employee who has been
continued past age 65 subject to two conditions:
one is that termination must be made "for reason
of age only", and the other is that the deputy head
must give such employee at least 90 days notice of
termination. The latter condition is readily under
stood, but the former is not. It appears to me that
it admits of two interpretations. One, which the
defendant appeared to be espousing, is that there
need be no reason for termination other than that
the employee is more than 65 years of age. As the
subsection, by definition, only applies to persons
past the age of 65, this would mean that their
employment may be terminated at any time with
out any other justification. In short, by this view
any one whose employment is extended past 65
pursuant to subsection 28(4) serves on sufferance
and may be dismissed at the merest whim of the
deputy head. The other interpretation which
appears to me to be possible is that such a person
may be dismissed for reason of incompetence
attributable to age. This appears to me to be more
consistent with what I take to be the purpose of
subsections 28(4) and (11), namely that persons
who are still able to perform their work may be
allowed to continue to work after age 65 for a
period of up to five years provided that their
ability does not become impaired by age. This is
not to say that such a person could not be dis
missed for a good cause, such as fraud practiced
upon his employer, but this would have to be done
pursuant to other authority applicable to any one
in the public service. It must be remembered
always that here the defendant relies solely on
subsection 28(11) as justification for the termina
tion of the plaintiff.
The first possible interpretation which I set out
above must be rejected for another reason. In my
view it would amount to a denial of "equality
before the law" and, according to the Canadian
Bill of Rights, paragraph 1(b) and section 2, I
must construe and apply federal law in a manner
which will not abridge such a right. While the
requirement of "equality before the law" has been
held in a number of cases to be sufficiently met if
a law which makes distinctions unfavourable to a
certain class of persons has been enacted for a
"valid federal objective" it has also been recog
nized that this test implies more than a mere
requirement of validity of the federal law in terms
of the distribution of powers. As was observed by
McIntyre J. (Dickson J. concurring) in MacKay v.
The Queen, [1980] 2 S.C.R. 370, at page 406:
The question which must be resolved in each case is whether
such inequality as may be created by legislation affecting a
special class—here the military—is arbitrary, capricious or
unnecessary, or whether it is rationally based and acceptable as
a necessary variation from the general principle of universal
application of law to meet special conditions and to attain a
necessary and desirable social objective.
The Regulation in question here, if interpreted as
advocated by counsel for the defendant, would
mean that unlike any other public servant, an
employee who had attained the age of 65 and
whose employment had been continued could be
dismissed at any time for no reason whatsoever. It
appears to me that, in light of the observations of
McIntyre J. in the MacKay case supra there
would be a valid federal objective for such a
measure only if it were reasonably clear that it is a
genuine requirement of the management of the
Public Service that any one past the age of 65
should be subject to dismissal for any reason or no
reason on 90 days' notice being given. A good deal
of guidance on this matter can be found in the
decision of the Supreme Court of Canada in
Ontario Human Rights Commission et al. v. Bor
ough of Etobicoke, [1982] 1 S.C.R. 202 where the
Court was considering the validity of the imposi
tion of mandatory retirement at age 60 on two
firemen, in relation to the Ontario Human Rights
Code, R.S.O. 1970, c. 318, section 4 which prohib
its discrimination in matters of employment based
on age. This section allows an exception, inter alia,
"where age ... is a bona fide occupational qualifi
cation and requirement for the position or employ
ment". The Supreme Court said that in determin
ing whether some criterion such as age is a bona
fide occupational requirement there is both a sub
jective and an objective element in the test. The
subjective element involves the intention of the
alleged discriminator. As for the objective element,
according to the Supreme Court at page 208, this
involves an examination to determine whether the
job criterion in question:
... is reasonably necessary to assure the efficient and economi
cal performance of the job without endangering the employee,
his fellow employees and the general public.
The Court found that the evidence had not estab
lished that mandatory retirement at age 60 was
"reasonably necessary".
In my view this "objective" test is analogous to
the one to be used in determining whether "equal-
ity before the law" as protected by the Canadian
Bill of Rights is denied by a federal law respecting
employment. No argument or evidence was pre
sented to me to demonstrate it to be reasonably
necessary that a public servant who is permitted to
continue to work after age 65 should, unlike his
colleagues who have not reached that age, be
subject to dismissal for any or no reason. I am
therefore not prepared to construe and apply sub
section 28(11) of the Public Service Superannua-
tion Regulations in this manner.
I am satisfied, then, that the proper interpreta
tion to give to subsection 28 (11) is that it author
izes termination where an employee who is over 65
is unable to perform adequately his job for reasons
attributable to age. That clearly was not the situa
tion with respect to the plaintiff nor does the
defendant suggest that it was. It is clear from the
correspondence, and this is not denied, that the
plaintiff's employment was terminated because of
a redundancy created by the merger of two depart
ments of government. Therefore his termination
did not come within the criterion prescribed in
subsection 28 (11) and was not authorized in law.
The plaintiff contended that subsection 28(11)
is contrary to section 15 of the Charter. It is clear
that all of the events in question here occured
before section 15 came into operation on April - 17,
1985, and therefore I cannot consider further that
argument.
The plaintiff also contended that subsection
28(11) is ultra vires the Governor in Council and
he cited in authority the case of R. v. Robertson,
[1972] F.C. 796 (C.A.). In that case the Court of
Appeal held invalid, as ultra vires the Governor in
Council, another subsection of these Regulations
which purported to authorize a deputy head to
terminate, at his discretion, persons between the
age of 60 and 65. That provision is distinguishable
from subsection 28 (11) of the present Regulations.
The relevant statutory authority for these Regula
tions authorized the Governor in Council to pre-
scribe a general age for retirement but to provide
certain conditions under which his employment
might be continued beyond that age. Instead, by
the subsection of the Regulations in question in the
Robertson case, the Governor in Council had pur
ported to provide that notwithstanding the general
retirement age of 65 a person's employment could
be terminated before that age, by a decision of a
deputy head. That is not what was authorized by
the regulation-making power and the Court of
Appeal so held. In the present case, subsection
28(11) is within the regulation-making power
because it permits an extension after the normal
age of retirement.
By agreement of the parties if I find for the
plaintiff on the substantive issue, as I do, then he is
entitled to judgment in the sum of $70,215.17
"together with interest, if payable". In my view
interest is only payable on the judgment from the
date thereof. By virtue of sections 35 and 40 of the
Federal Court Act [R.S.C. 1970 (2nd Supp.), c.
10] I am precluded from awarding pre-judgment
interest against the Crown unless such interest is
stipulated by contract or provided for by statute.
See, e.g., Eaton v. The Queen, [ 1972] F.C. 185
(T.D.); and Corpex (1977) Inc. v. The Queen in
right of Canada (Motion and re-hearing), [1982]
2 S.C.R. 674. While by virtue of section 3 of the
Crown Liability Act [R.S.C. 1970, c. C-38], pre
judgment interest may be awarded against the
federal Crown in tort actions where such interest
would be payable pursuant to the law of the
province applicable to the tort in question, there is
no such general authority with respect to actions
for contract such as the present one. Counsel for
the plaintiff was unable to direct me to any con
tractual stipulation or statutory authority provid
ing for the payment of pre-judgment interest in the
circumstances of the present case. While by virtue
of section 40 of the Federal Court Act it would be
open to me to increase the rate of post-judgment
interest beyond that prescribed in the Interest Act
[R.S.C. 1970, c. I-18], counsel for the plaintiff did
not make any specific request for this nor did I
have the opportunity to hear submissions pro and
con as to what a proper rate would be. I shall
therefore make no special award in this respect.
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.