A-17-86
Jack G. Threader (Applicant)
v.
The Queen as represented by Treasury Board
(Respondent)
INDEXED AS: THREADER V. CANADA (TREASURY BOARD)
Court of Appeal, Heald, Mahoney and Stone
JJ.—Ottawa, June 4 and 20, 1986.
Public service — Conflict of interest — Company set up by
public servants to produce seminars for private sector —
Information as to advertised seminar on "How to Maximize
Opportunities for Selling to the Federal Government" not
disclosed to superiors — Disciplinary action — Dismissals
Grievances — Deputy Chairman upholding dismissals on
ground of appearance of conflict of interest contrary to Con
flict of Interest Guidelines — S. 28 applications against
Deputy Chairman's decision allowed — Appearance of conflict
of interest ground for disciplinary action — Conflict of Inter
est Guidelines and departmental Personnel Bulletins issued
under authority of Governor in Council and Financial
Administration Act — Guideline b prohibiting appearance of
conflict of interest — Under Bulletin s. 7 employees in breach
of Guidelines or provisions of Bulletin subject to disciplinary
action under s. 106 Public Service Terms and Conditions of
Employment Regulations — Apprehension of judicial bias test
applicable to establish appearance of conflict of interest in
case of public servants — Failure by Deputy Chairman to
articulate test with respect to first applicant — No evidence
supporting breach by second applicant of Guideline b —
Non-suspension of company's activities pending disclosure
assessment not constituting breach of discipline — Financial
Administration Act, R.S.C. 1970, c. F-10, s. 7(1)(1),(2) —
Public Service Terms and Conditions of Employment Regula
tions, SOR/67-118, s. 106.
Judicial review — Applications to review — Public service
— Public servants dismissed on ground of appearance of
conflict of interest contrary to Conflict of Interest Guidelines
— Grievances — No opportunity given to dismissed employees
to be represented at third employee's grievance hearing
although latter's evidence relevant to their case — Natural
justice denied — Interrelationship of grievance proceedings
requiring evidence not be heard in absence of party whose
conduct impugned — Federal Court Act, R.S.C. 1970 (2nd
Supp.), c. 10, s. 28.
The applicants, Threader and Spinks, together with other
public servants, formed a company whose objects were to
manage conferences and seminars, and organize training
courses in the private sector. Arrangements were made for a
seminar entitled "How to Maximize Opportunities for Selling
to the Federal Government". Both applicants notified their
immediate superiors of their intentions. Their letters of disclo
sure, however, contained no information about the proposed
seminar. Disciplinary action ensued with the result that the
applicants were dismissed. Grievances were filed and separate
hearings held. Evidence heard in the course of the Spinks
hearing was admitted in evidence at the Threader hearing.
Threader and Spinks were neither notified of nor given the
opportunity to be represented at the grievance hearing of the
public servant retained to conduct the seminar although the
latter's evidence at his own hearing was necessarily relevant to
their cases. The Deputy Chairman of the Public Service Staff
Relations Board upheld the applicants' dismissals on the
ground that there had been an appearance of conflict of interest
contrary to the Conflict of Interest Guidelines. Threader and
Spinks now apply to have those decisions set aside. The issues
are whether there had been a denial of natural justice and
whether the appearance of conflict of interest is a basis, in law,
for disciplinary action.
Held, the applications should be allowed, the decisions set
aside and the matter referred back to the Board for rehearing
by a differently-constituted panel.
The submission that there had been a denial of natural
justice was well founded. The interrelationship of the proceed
ings required procedural safeguards to prevent evidence that
might influence the Deputy Chairman's decision as to any of
the parties whose conduct was under scrutiny from being
received in the absence of that party.
With respect to the question of conflict of interest, the
Deputy Chairman found that each of the grievors had breached
the Guidelines and the Personnel Bulletins issued by the respec
tive Departments by (a) creating or allowing the appearance of
a conflict of interest by deciding to proceed with the proposed
seminar; (b) failing to provide information specifically about
the seminar in the letters of disclosure; and (c) failing to
suspend the company's activities pending the Assistant Deputy
Minister's assessment of the disclosure.
The grievors' submission, that a potential conflict of interest
cannot lead to dismissal for cause since under the common law
rule governing the master and servant relationship, only an
actual conflict of interest can support a dismissal for cause,
must be rejected. The Crown is entitled to demand different
standards on the part of its employees than those prevailing in
the private sector. The rationale for doing so is obvious: the
public service will not be perceived as impartial and effective if
apparent conflicts between private interests and public duties
are tolerated.
The question whether the appearance of conflict of interest is
a basis, in law, for disciplinary action is to be answered in the
affirmative. The Conflict of Interest Guidelines were promul
gated under the authority of the Governor in Council. Person
nel Bulletins are issued by the deputy heads of departments,
acting on the authority of paragraph 7(1)(j) of the Financial
Administration Act, as delegated to them pursuant to subsec
tion 7(2) of that Act. Under Guideline b, "No conflict should
exist or appear to exist between the private interests of public
servants and their official duties." That injunction is restated in
paragraph 4b of the Bulletin. Section 7 of the Bulletin provides
that employees who breach the Guidelines or the provisions of
the Bulletin may be subject to disciplinary action under section
106 of the Public Service Terms and Conditions of Employ
ment Regulations. It can thus be said that the law does provide
for disciplinary action to be taken where a public servant has
knowingly entered into conduct which results in the appearance
of a conflict of interest between his private interests and his
official duties.
Whether an appearance of conflict of interest exists must be
determined on an objective, rational and informed basis. While
the Guidelines contained no definition of the term "appearance
of conflict of interest", reference could be made to the concept
of apprehension of judicial bias, where mere perception entails
legal consequences, in determining the appropriate test. The
question to be asked should be phrased as follows: Would an
informed person, viewing the matter realistically and practical
ly and having thought the matter through, think it more likely
than not that the public servant, whether consciously or uncon
sciously, will be influenced in the performance of his official
duties by considerations having to do with his private interests?
With respect to Threader, the Deputy Chairman reached his
conclusion without articulating the applicable criteria. Spinks
was found in breach of the second sentence of Guideline b
which, by its terms, applies only "Upon appointment to office".
The evidence did not support a finding of fact that would
render that provision applicable. Finally, there was nothing in
the Guidelines or the Bulletin supporting the conclusion that
failure to suspend the company's activities pending receipt of
the Assistant Deputy Minister's decision constituted a breach
of discipline.
CASES JUDICIALLY CONSIDERED
APPLIED:
Kane v. Board of Governors (University of British
Columbia), [1980] 1 S.C.R. 1105; Fraser v. Public Ser
vice Staff Relations Board, [1985] 2 S.C.R. 455.
REFERRED TO:
Wilcox v. G.W.G. Ltd., [1984] 4 W.W.R. 70 (Alta.
Q.B.); Canadian Arctic Gas Pipeline Ltd. (In re) and in
re National Energy Board Act, [1976] 2 F.C. 20 (C.A.);
reversed [1978] 1 S.C.R. 369.
COUNSEL:
Andrew J. Raven for applicant.
Harvey A. Newman for respondent.
SOLICITORS:
Soloway, Wright, Houston, Greenberg,
O'Grady, Morin, Ottawa, for applicant.
Deputy Attorney General of Canada for
respondent.
Public Service Staff Relations Board,
Ottawa, on its own behalf.
The following are the reasons for judgment
rendered in English by
MAHONEY J.: This section 28 application was
heard together with the section 28 application of
John Hugh Spinks, Court file A-18-86. Both seek
to set aside decisions of Walter L. Nisbet, Q.C., a
Deputy Chairman of the Public Service Staff
Relations Board, which upheld . their dismissals
from the public service by reason of their being
found to have breached the Conflict of Interest
Guidelines.
The applicant, Threader, was Assistant Co
ordinator, Office of Regulatory Reform, Treasury
Board Secretariat, on secondment to that position
from the Department of National Revenue, Cus
toms and Excise, where he had been an Assistant
Deputy Minister. He had been employed in the
public service 22 years. Spinks was Director, Ma
terial and Contracting Services, Transport
Canada. He reported to an Assistant Deputy Min
ister and had been employed in the public service 9
years after several years in the private sector.
Threader and Spinks, together with another public
servant, Linda Mayville-Brimson and Joseph
Lochnan, an employee of the Canada Post Corpo
ration, formed a company, Mystl Management
Inc. The four were its sole directors and officers.
Threader and Spinks, by identical memoranda,
notified their immediate superiors of their inten
tions as follows:
I am writing to you in accordance with the Public Service
Conflict of Interest Guidelines.
I have recently entered into an agreement with several of my
colleagues to establish a small business which will manage
events such as conferences and seminars, and organize training
courses in the private sector.
The activities of the corporation will be directed towards the
business community in the Ottawa area and other major cities.
The minute book of the corporation includes a resolution that
the corporation will not contract any business directly with the
federal government.
While I do not consider there is any conflict of interest in the
activities which we will be undertaking, I wish to provide full
disclosure of our proposed business and be seen to operate in
the full spirit of the policy.
I will of course ensure that this outside activity will not
interfere with the performance of my regular duties. My
involvement as a shareholder and director in the business will
be conducted after hours and on holidays or weekends.
They did not refer in their disclosures to the one
seminar which was already being arranged.
Richard I. Cottingham is an employee of Trans
port Canada who reported to Spinks. He was
retained by Mystl, for a fee, to present a seminar
to business persons. The title of the proposed
seminar was "How to Maximize Opportunities for
Selling to the Federal Government". It was adver
tised by Mystl. It came to the attention of the
press that public servants were involved in Mystl.
Questions were raised in the context of the Con
flict of Interest Guidelines. A process began which
resulted in the discharge of Threader and Spinks.
A 30-day suspension, later reduced to 10 days, was
imposed on Mayville-Brimson and a 30-day sus
pension, reduced to 20, on Cottingham. Lochnan
was found by Canada Post Corporation not to
have breached the Conflict of Interest Guidelines
and was not disciplined.
In the case of both Threader and Spinks, the
learned Deputy Chairman found that there had
been no actual or potential conflict of interest but
that there had been the appearance of conflict of
interest. He upheld the discharges.
A denial of natural justice by the Deputy Chair
man is alleged in both applications in the following
circumstances. Threader and Spinks were both
represented by the same counsel who proposed
that the adjudications of their grievances be dealt
with jointly. The respondent objected but, by
agreement, while the grievances were subject of
separate hearings, the evidence at the Spinks hear
ing, to the extent it was relevant, was admitted in
evidence at the Threader hearing. The Spinks
hearing was conducted September 23 and 24,
1985, and the Threader hearing on October 28.
Cottingham was called by the respondent as a
witness at these hearings. He testified and was
cross-examined by the grievors' counsel. Cotting-
ham had himself grieved. His grievance was heard
by the same Deputy Chairman October 31 and
November 1. It is manifest that his evidence at his
own hearing was necessarily relevant to the
Threader and Spinks decisions. Neither Spinks nor
Threader had notice of, nor the opportunity to be
represented at, Cottingham's hearing. They say
that Cottingham's evidence at his own hearing
may have influenced the decisions in their griev
ances. The Deputy Chairman rendered his decision
as to Spinks on January 9, 1986, and as to Thread-
er on January 14.
There is no doubt that, had the evidence been so
received in their appeals, their section 28 applica
tions would necessarily succeed. Among the points
made by Dickson J., as he then was, in Kane v.
Board of Governors (University of British
Columbia), [1980] 1 S.C.R. 1105, at pages 1113
ff., were these:
3. A high standard of justice is required when the right to
continue in one's profession or employment is at stake.
5. It is a cardinal principle in our law that, unless expressly
or by necessary implication, empowered to act ex parte, an
appellante [sic] authority must not ... hear evidence in the
absence of a party whose conduct is impugned and under
scrutiny.
6. The court will not inquire whether the evidence did work
to the prejudice of one of the parties; it is sufficient if it might
have done so.
Does the fact that the evidence was heard in the
course of another proceeding, which the Deputy
Chairman was authorized by law to conduct, make
a difference in the circumstances? In my opinion,
it does not. I see no good reason why form should
defeat substance. The three proceedings before the
Deputy Chairman were obviously closely related.
It was plain that a good deal of the evidence
received in any would be relevant to the others.
Once the Deputy Chairman undertook all the
hearings, he should have recognized that the inter
relationship of the three proceedings demanded
procedural safeguards so that no evidence that
might influence his decision as to any of the
parties whose conduct was under scrutiny would be
received in the absence of that party. These section
28 applications, in my opinion, should succeed on
this ground.
Another issue is raised regarding the Deputy
Chairman's finding as a fact in each decision that
his employer had lost confidence in the grievor.
Spinks says the finding is not supported by any
evidence while Threader says it is contrary to the
only evidence the Deputy Chairman had, namely
that of his immediate superior who said that, if
Threader were reinstated, he would be welcome in
his former job. This is a serious issue. However, in
view of the disposition that I propose as a result of
my conclusion on the natural justice issue, I con
sider it undesirable, as well as unnecessary, to deal
with it. The matter may be in issue at new hear
ings and it is a pure question of fact.
The other issue raised, which must be dealt
with, is whether the finding of an appearance of a
conflict of interest is a basis, in law, for discipli
nary action of any sort whatever. The severity of
the disciplinary action taken is not in issue in these
proceedings as it was before the Deputy Chair
man.
The Conflict of Interest Guidelines, as they
stood at the relevant time, provided:
a. It is by no means sufficient for a person in a position of
responsibility in the public service to act within the law. There
is an obligation not simply to obey the law but to act in a
manner so scrupulous that it will bear the closest public scruti
ny. In order that honesty and impartiality may be beyond
doubt, public servants should not place themselves in a position
where they are under obligation to any person who might
benefit from special consideration or favour on their part or
seek in any way to gain special treatment from them. Equally,
public servants should not have a pecuniary interest that could
conflict in any manner with the discharge of their official
duties.
b. No conflict should exist or appear to exist between the
private interests of public servants and their official duties.
Upon appointment to office, public servants are expected to
arrange their private affairs in a manner that will prevent
conflicts of interest from arising.
c. Public servants should exercise care in the management of
their private affairs so as not to benefit, or appear to benefit,
from the use of information acquired during the course of their
official duties, which information is not generally available to
the public.
d. Public servants should not place themselves in a position
where they could derive any direct or indirect benefit or interest
from any government contracts over which they can influence
decisions.
e. All public servants are expected to disclose to their superiors
all business, commercial or financial interest, where such inter
est might conceivably be construed as being in actual or
potential conflict with their official duties.
f. Public servants should hold no outside office or employment
that could place on them demands inconsistent with their
official duties or call into question their capacity to perform
those duties in an objective manner.
g. Public servants should not accord, in the performance of
their official duties, preferential treatment to relatives or
friends or to organizations in which they or their relatives or
friends have an interest, financial or otherwise.
The Guidelines were promulgated on the authority
of the Royal Prerogative by the Governor in Coun
cil, P.C. 1973-4065. I have set them out in their
entirety although there is no suggestion that para
graphs d, f or g were ever in play in the present
cases.
Deputy heads of departments, including the
Secretary of the Treasury Board and the Deputy
Minister of Transport, acting on the authority of
paragraph 7(1)(f) of the Financial Administration
Act, R.S.C. 1970, c. F-10, as delegated to them
pursuant to subsection 7(2), issued Personnel
Bulletins having the force of law.
7. (1) ... the Treasury Board may, in the exercise of its
responsibilities in relation to personnel management including
its responsibilities in relation to employer and employee rela
tions in the public service ...
(I) establish standards of discipline in the public service and
prescribe the financial and other penalties, including suspen
sion and discharge, that may be applied for breaches of
discipline or misconduct, and the circumstances and manner
in which and the authority by which or whom those penalties
may be applied or may be varied or rescinded in whole or in
part;
The Bulletins are not identical; however, I detect
no material difference between those in issue. The
following are portions of the Transport Canada
Bulletin:
3. All employees must be thoroughly familiar with the Govern
ment Guidelines, and this policy, and exercise appropriate
discretion in their work-related and outside activities. This
applies particularly to employees in such sensitive areas as
policy analysis and formulation, purchasing, the custody and
transmission of classified material, the awarding and adminis
tration of contracts, the collection of fees and charges, the
leasing of property, the hiring of employees, the licensing of
aircraft pilots, the issuing of certificates of competency to ships'
masters, mates and engineers, the inspection of ships, motor
vehicle manufacturers and air carriers and the investigation of
or preliminary enquiry into air and marine accidents.
DIRECTIVES AND GUIDELINES
4. General. Subject to the provisions of collective agreements,
and without limiting the generality of the Conflict of Interest
Guidelines, employees may accept appointments, offices or
other employment outside the Public Service, or hold commer
cial, business, financial or property interests, provided that the
activity engaged in or proposed does not:
a. result in employees or other persons gaining or appearing to
gain improper advantage or benefit;
b. impair or appear to impair the judgment or objectivity of
employees or otherwise reduce the efficiency or effectiveness of
employees in the performance of their official duties;
c. give rise to the unauthorized use or divulgence of privileged
or classified information;
d. inhibit or improperly influence the development, application
or enforcement of legislation, regulations, policies, standards or
specifications;
e. convey the impression that the employee is acting as an
authorized agent of the Department with the possible conse
quence of binding the Department to a liability or commitment
not otherwise approved;
f. violate the political partisanship provisions of Section 32 of
the Public Service Employment Act; or
g. occasion the unauthorized use of federal government
property.
Note: If employees' outside activities or interests include work
ing for, investment in the ownership or involvement in the
management of any firm or organization regulated, inspected,
licensed, certified or controlled in any way by Transport
Canada or doing business with Transport Canada or other
government departments, or having a close working relation
ship with the department, they must make a declaration of
these activities or interests to obtain the Deputy Minister's
ruling as to whether a conflict of interest exists or appears to
exist.
I should indicate that section 1 describes what the
Bulletin is in terms of the Department's earlier
pronouncements on conflict of interest and section
2 recites the Guidelines in full. Sections 5 and 6
deal with gifts, etc., and with post-employment
obligations. Neither are in play. The Bulletin
continues:
7. Discipline. Employees who breach the Conflict of Interest
Guidelines, or the provisions of this policy, may be subject to
disciplinary action under Section 106 of the Public Service
Terms and Conditions of Employment Regulations, or to
charges under the relevant legislation. Specifically, it will be
considered a breach of discipline where employees:
a. enter knowingly into an action, activity or commitment
which places them in an actual or potential conflict of
interest situation, or prejudices in any other way their
employment in the Department;
b. having been advised to make disclosure, deliberately con
ceal either wholly or in part, an actual or a potential conflict
of interest;
c. fail to comply with any written direction to avoid or
correct a conflict of interest; or
d. accept a gift, reward, advantage or benefit in contraven
tion of the provisions of this policy.
8. Consultation. Employees in doubt as to whether an activity
or a benefit might be construed as a conflict of interest must
obtain the approval of the Deputy Minister through their
district, regional or branch head, as applicable, before engaging
in the activity or accepting the benefit.
9. Disclosure
a. The onus rests on individual employees to provide written
details of actual or potential conflicts of interest, including
those arising as a result of:
(4) employment, with or without remuneration, outside
their official departmental responsibilities.
c. Employees who consider that they may be involved in an
actual or a potential conflict of interest must disclose the
details in writing to their immediate supervisor or to the
regional personnel office.
d. The supervisor and/or regional personnel office will pre
pare a written assessment of the disclosure upon its receipt
... The disclosure and accompanying assessment should be
routed ... to the office of the Assistant Deputy Minister,
Personnel ... Decisions with respect to the declaration will
be sent directly to the employee, with copies to the appropri
ate group and regional or branch head.
The grievors' positions were particularly exacer
bated by a statement in an advertisement of Cot-
tingham's seminar indicating that those in attend
ance would be given "information the bureaucrats
won't give". Prior to taking disciplinary action,
their employers were satisfied that this referred to
information that would not usually be volunteered
but which was, nevertheless, in the public domain.
Accordingly, the question of an actual or potential
violation of Guideline e or paragraph 4c of the
Bulletin was not a ground for dismissal.
The Deputy Minister of Transport gave his rea
sons for firing Spinks as follows:
1. Your involvement in MYSTL Management Incorporated,
while holding your position at Transport Canada, created a
situation of an apparent or potential conflict of interest, par
ticularly in light of MYSTL's involvement with a seminar
entitled "How to Maximize Your Opportunities for Selling to
the Federal Government";
2. Your letter of disclosure dated April 3rd, 1985 to your
Supervisor, Mr. N. van Duyvendyk, ADM Finance, disclosed
no significant information; indeed, it withheld important facts
that you were aware of when you submitted the letters, thereby
misleading your Supervisor into believing that you had not yet
established a business and that the activities of such a business
could not be perceived as creating an apparent or potential
conflict of interest situation;
3. As Mr. Richard Cottingham's Supervisor, you accepted and
forwarded Mr. Cottingham's letter of disclosure to Mr. van
Duyvendyk, although you knew that the said letter was incom
plete and misleading. Indeed, this letter withheld important
facts that you were aware of when you submitted the letter,
thereby misleading your Supervisor into believing that Mr.
Cottingham had not yet embarked on an activity, and that such
activity could not be perceived as creating an apparent or
potential conflict of interest situation;
4. You took no action to suspend your activities despite the fact
that your Supervisor had not formally approved your plans and
had indicated that he wished to discuss the matter further; and,
5. You behaved in a manner which, as a senior officer of this
Department, you knew, or should have known, could, and did,
create embarrassment to the Department and to the
Government.
Threader's letter of dismissal set out, mutatis
mutandis, the grounds of paragraphs 1, 2 and 5
above. The subject matter of paragraph 3 above
had, of course, no application to Threader. The
ground of paragraph 4 was not asserted in Thread-
er's letter but the following additional ground, to
be read with paragraph 2, was:
3. You provided a draft of such a letter as a model to be used
by other public servants for submission to their supervisors;
The Deputy Chairman found that each of the
grievors had breached the Guidelines and Bulletin
by:
a. creating or allowing the appearance of a conflict of interest
by deciding to proceed with Cottingham's seminar;
b. failing to provide information specifically about the Cotting-
ham seminar in their letters of disclosure; and
c. failing to suspend Mystl's activities until the decision of the
Assistant Deputy Minister contemplated by paragraph 9(d) of
the Bulletin had been received.
He found that embarrassment to their Depart
ments and the Government and Threader's provi
sion of the draft letters of disclosure did not offend
the Guidelines and were not grounds for discipli
nary action. He further held that Spinks' alleged
impropriety vis-Ã -vis Cottingham's letter of dis
closure had not been established.
As to the grounds upon which he held discipli
nary action justified, it is noteworthy that the
appearance of conflict was found specifically in
relation to Cottingham's seminar, not to their
Mystl intentions generally. Likewise the shortcom
ing in their disclosure related only to that particu
lar seminar, not as to their general intentions for
Mystl. Finally, failure to suspend the activities
pending a decision under paragraph 9d was not a
reason given by his deputy head for Threader's
discharge; it was for Spinks'.
In submitting that the appearance of a conflict
of interest cannot, in law, support disciplinary
action, the grievors draw a parallel from the
common law governing the master and servant
relationship, which does not, admittedly, govern
the relationship of the Crown and its servants.
Under that law, only an actual conflict of interest
supports dismissal for cause. An employee who
merely puts himself in the position of a potential
conflict cannot be dismissed for cause. That
applies as well to senior management personnel, to
whom the common law now ascribes fiduciary
obligations, as to other employees. Canadian
authorities supporting those propositions of law
were recently canvassed in Wilcox v. G.W.G. Ltd.,
[1984] 4 W.W.R. 70, a decision of Feehan J., of
the Alberta Court of Queen's Bench. A fortiori,
say the grievors, the mere appearance of a conflict
of interest is no basis for disciplinary action.
I see no real merit in this argument. The Crown
is quite entitled to demand different standards of
its employees than those prevailing in the private
sector. It is not only entitled in law to enjoin its
servants from putting themselves in a position of
an apparent conflict of interest; the rationale for
its doing so is patently obvious. As was said by
Chief Justice Dickson in Fraser v. Public Service
Staff Relations Board, [1985] 2 S.C.R. 455, at
page 466, in respect of a very different factual
situation:
The Adjudicator recognized that a balance had to be struck
between the employee's freedom of expression and the Govern
ment's desire to maintain an impartial and effective public
service.
Then, after quoting the Adjudicator,
In other words, a public servant is required to exercise a degree
of restraint in his or her actions relating to criticism of govern
ment policy, in order to ensure that the public service is
perceived as impartial and effective in fulfilling its duties. It is
implicit throughout the Adjudicator's reasons that the degree
of restraint which must be exercised is relative to the position
and visibility of the civil servant.
In my opinion, the Adjudicator was correct in identifying the
applicable principles and in applying them to the circumstances
of the case.
Manifestly, the public service will not be perceived
as impartial and effective in fulfilling its duties if
apparent conflicts between the private interests
and the public duties of public servants are
tolerated.
The question then is, has the appearance of
conflict of interest been made a ground for disci
plinary action? I take it that, since apparently
comprehensive standards have been legislated
under the authority of the Royal Prerogative and
the Financial Administration Act, we are now
concerned entirely with the application of that
legislation and are not required to embark on an
inquiry of the sort that had to be undertaken in the
Fraser case where the Courts had to locate and
define the limits of permissible criticism of the
government by a public servant. Here specific
instances of apparent conflicts of interest have
been found to exist. The consequences are said to
flow from the legislation.
The first sentence of Guideline b provides:
No conflict should exist or appear to exist between the private
interests of public servants and their official duties.
That is a plain and certain injunction against the
appearance of conflict of interest. The injunction is
clearly restated in paragraph 4b of the Bulletin. Its
effect is not negated by the hortative first two
sentences of Guideline a which, by their very
terms, are devoid of legal effect.
Disciplinary action is provided for in section 7 of
the Bulletin. A fair reading of that entire provision
leads to the conclusion that the general provision
of the first sentence is not limited to the specific
examples of the second. In particular, the general
application of the first sentence to a breach of
Guideline b and/or paragraph 4b by an appearance
of conflict of interest is not excluded by the fact
that paragraph 7a refers only to "an actual or
potential conflict of interest". I should, however,
think that the action, activity or commitment
giving rise to the appearance must equally be
found to have been knowingly entered into.
I therefore conclude that the law does provide
for disciplinary action to be taken under section
106 of the Public Service Terms and Conditions of
Employment Regulations [SOR/67-118] where a
public servant has knowingly entered into an
action, activity or commitment which results in the
appearance of a conflict between his or her private
interests and official duties.
In view of the disposition that I propose be made
of these applications by reason of the denial of fair
hearings previously found, I do not intend to dwell
on the findings of fact that led the Deputy Chair
man to conclude that there was, in fact, the
appearance of conflict of interest in each case.
However, he did reach his conclusions without, so
far as I can discern, articulating the criteria he
applied in deciding that an appearance of a con
flict of interest existed. I recite his pertinent find
ings in the Threader decision:
54. The first ground given by the employer for the grievor's
discharge is that his involvement in Mystl while occupying his
position as Assistant Coordinator in the Office of Regulatory
Reform, Treasury Board, created an "apparent or potential
conflict of interest, particularly in light of Mystl's involvement
with a seminar entitled 'How to maximize Your Opportunities
for Selling to the Federal Government'."
55. The evidence is that the grievor became a director and
Secretary/Treasurer of Mystl while he occupied his position as
Assistant Coordinator, Office of Regulatory Reform, Treasury
Board. He was responsible for drafting the memorandum of
disclosure of conflict of interest to be used by the directors of
the company and by those public servants who entered into
contracts to provide training services for the company. He
participated in the discussions of the directors of Mystl on the
subject of conflict of interest. Indeed, he appears to have been
the first to advocate the avoidance of any risk of conflict of
interest arising by submitting memoranda of disclosure and by
refraining from providing management consulting or marketing
services by the company. The grievor sent his memorandum of
disclosure dated March 29, 1985 at a time when Mystl had
already reached agreement in principle with Mr. Cottingham
for the presentation of his seminar on doing business with the
Federal Government. The grievor admitted to being concerned
about this seminar but said he concluded that he could not
benefit from the seminar as he was not involved in awarding
government contracts. His intention was to ensure that each
trainer submit an appropriate disclosure letter and obtain the
approval of his superior for his particular activity. The disclo
sure memorandum drafted by the grievor was to be offered to
each trainer for his assistance in submitting such a
memorandum.
56. In my view, this evidence establishes the existence of an
apparent conflict of interest for the grievor which came into
existence on March 23, 1985 when he and the other directors of
Mystl decided that Mr. Cottingham's seminar on doing busi
ness with the Federal Government would take place on May 25,
1985, and I so find.
The identical conclusion was reached after a very
similar recitation of evidence in paragraphs 136 to
139 of the Spinks decision.
It is clear that the evidence which the Deputy
Chairman considered particularly material to the
finding that Threader was in an apparent conflict
of interest is all set out in paragraph 55. With
respect, that evidence itself can take one only part
of the way to the conclusion reached. It can only
support the conclusion if assessed by an appropri
ate test. The appearance of anything, including a
conflict of interest, surely lies in the mind of the
beholder, not in the conduct of the beheld.
The term "appearance of conflict of interest" is
not defined in the Guidelines and the absence of
judicial commentary is understandable in view of
the position at common law already indicated. The
notion of the appearance of a conflict of interest
giving rise to legal consequences is entirely
modern. Legal consequences normally only flow
from reality. However there is a well-established
analogue in which mere perception does entail
legal consequences. That has to do with the appre
hension of judicial bias. In such a case, the ques
tion to be asked is:
Would an informed person, viewing the matter realistically and
practically and having thought the matter through, think it
more likely than not that the judge, whether consciously or
unconsciously, would not decide fairly?
While simply stated, its application is by no means
easy as evidenced by- the decisions in the Canadian
Arctic Gas Pipeline Ltd. (In re) and in re National
Energy Board Act, [1976] 2 F.C. 20 (C.A.);
reversed [1978] 1 S.C.R. 369. The parallel ques-
tion, to be answered in a case such as this, might
be phrased:
Would an informed person, viewing the matter realistically and
practically and having thought the matter through, think it
more likely than not that the public servant, whether conscious
ly or unconsciously, will be influenced in the performance of his
official duties by considerations having to do with his private
interests?
Such an approach may be equally difficult in its
application but it is essential if I am correct in my
appreciation that the existence or not of an
appearance of a conflict of interest is properly to
be determined on an objective, rational and
informed basis.
The finding of an apparent conflict of interest in
Spinks' case stated thus:
142. Accordingly, I find that the grievor was in breach of
paragraph 2b of the Guidelines in that he failed to arrange his
private affairs in a manner that would have prevented the
apparent conflict of interest I have found came into existence
for him from arising.
That is plainly a finding that Spinks was in breach
of the second sentence of Guideline b which is, by
its terms, applicable only "Upon appointment to
office". It is by no means apparent to me that the
evidence supported a finding of fact that would
render the provision applicable.
The Deputy Chairman found the claimants both
in breach of the Guidelines by reason of the failure
to suspend Mystl's activities pending receipt of the
decision contemplated by paragraph 9d of the
Bulletin. I find nothing in the Guidelines or Bulle
tin that would render such a failure, per se, a
breach of discipline. That said, public servants who
proceed on a course concerning which they ought
reasonably to have some doubt surely do so at their
own peril and, if it turns out that there really is a
violation of the Guidelines, such conduct would be
most relevant to a determination of the appropri
ate disciplinary action although not itself a
violation.
Since, in my view, the grievances must be
reheard, further comment on the facts is undesir
able. It is likewise as to the attacks on the Deputy
Chairman's conclusions as to mitigation. Counsel
for the applicants asked that, if the matter were to
be referred back for rehearing, it be referred to a
differently-constituted tribunal. That request is
entirely reasonable in the circumstances.
I would allow this section 28 application, set
aside the decision of the learned Deputy Chairman
dated January 14, 1986, and refer the matter back
to the Public Service Staff Relations Board for
rehearing by a differently-constituted panel. I
would render a similar judgment in the section 28
application of John Hugh Spinks, Court file
A-18-86, and would further direct that a copy of
these reasons for judgment be included in the
record of that section 28 application.
HEALD J.: I concur.
STONE J.: I concur.
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.