Federal Court Decisions

                                 T-2155-95

IN THE MATTER OF an application to review and set aside, pursuant to section 18 of the Federal Court Act, R.S.C. 1985, c. F-7, as amended, a decision of the Referee appointed under Section 281.12 of the Canada Labour Code, R.S.C. 1985, c. L-2.

BETWEEN :

     CLAY THOMPSON ET AL (123 Others)

                                 Applicants

     - and -

     MOTORWAYS (1980) LIMITED

                                 Respondent.

     - and -

     E. CROSBY ET AL (8 others)

                                 Applicants

     - and-

     MOTORWAYS (1980) LIMITED

                                 Respondent.

     REASONS FOR ORDER

GIBSON J.:

     These reasons arise out of an application by the Applicants, 133 in all, for judicial review of a decision of a Referee appointed pursuant to subsection 251.12(1) of the Canada Labour Code (the "Code") wherein the Referee confirmed a decision of an Inspector and dismissed the Applicants' appeals. The decision of the Referee is dated the 31st day of August, 1995. In that decision, the Referee recites the decision of the Inspector in the following terms:

I have concluded that your complaint of December 31, 1993 for non-payment of Severance Pay under Part III of the Canada Labour Code against Motorways (1980) Limited is unfounded for the following reasons:

Pursuant to subsection 235.(2)(b) of the subject legislation, the employer is deemed not to have terminated the employment of an employee where the employee is entitled to a pension under a pension plan contributed to by the employer that is registered pursuant to the Pension Benefits Standards Act, to a pension under the Old Age Security Act or to a retirement pension under the Canada Pension Plan or the Quebec Pension Plan. Motorways (1980) Limited made contributions to a pension plan in accordance with the Teamsters' collective agreements and you are entitled to a pension under that plan. Therefore, it is deemed not a termination and you are not entitled to severance pay.

     Before the Referee, the parties relied upon an Agreed Statement of Facts. The Applicants' Memorandum of Points of Argument filed before the Court sets out a statement of "proposed facts" which is identical to the Agreed Statement of Facts that was before the Referee. In the Respondent's Memorandum of Points of Argument, the Respondent "accepts as correct" the Applicants' statement of proposed facts. It is substantially in the following terms:

1.      The appellants were employed by Motorways (1980) Limited until late 1993.

2.      While employed they were members of one of four bargaining units, being the Prairies's freight and Prairies' Office units represented by Teamsters Union Local 362, 395, 979 and 990 and the BC Freight and BC Office units represented by Teamsters Union Local 31 and 213.

3.      ... .

4.      In the period July 1992 to November 1993, Motorways (1980) Limited attempted to restructure and/or sell its operations to achieve financial and operational viability. these [sic] efforts proved unsuccessful and resulted in a decision to close the Canada-wide operation effective December 3, 1993.

5.      The appellants received notice of termination of employment under section 230 of the Canada Labour Code on November 19, 1993, making their termination of employment effective December 3, 1993.

6.      All of the collective agreements, except ... BC Office, provided pension plans contributed to by the employer, in which 131 of the appellants were members. .... Each has an early retirement provision.

7.      All of these pension plans were registered in accordance with the Pension Benefits Standards Act ... . The early retirement provisions in paragraph 6 above are consistent with the requirements under s.16 of the Pension Standards Act.

8.      All of the appellants ... as of December 3, 1993 were 55 years of age on that date. Notwithstanding their age and their satisfaction of service and membership requirements for a pension under the plan, none, with minor exceptions not here relevant, had elected to retire from the industry and had not applied for, nor received any pension benefit under the respective plans including any early retirement benefit.

9.      Those appellants ... were covered by the collective agreement ..., which did not have a pension plan. They were, nonetheless, members of the Canada Pension Plan during their employment with Motorways (1980) Limited.

10.      Each of the appellants covered by collective agreement [referred to in paragraph 9] had reached 60 years of age as of December 3, 1993 and each had contributions to the Canada Pension Plan made on their behalf during the period of their employment with Motorways.

11.      None, with minor exceptions hot [sic] here relevant, of the appellants referred to in paragraph 10 ... had elected to retire from the industry and had not applied for, nor received any pension benefit under the Canada Pension Plan whatsoever.

12.      All of the appellants were, on the date of their termination, prepared to continue their employment.

     The relevant portions of subsections 235(1) and (2) of the Code, under the heading "SEVERANCE PAY" read as follows:

235.(1)      An employer who terminates the employment of an employee who has completed twelve consecutive months of continuous employment by the employer shall, except where the termination is by way of dismissal for just cause, pay to the employee the greater of

[there follows two alternative methods for computation of severance pay].

(2)      For the purposes of this Division,

(a)      except where otherwise provided by regulation, an employer shall be deemed to have terminated the employment of an employee when the employer lays off that employee; and

(b)      an employer shall be deemed not have terminated the employment of an employee where, either immediately on ceasing to be employed by the employer or before that time, the employee is entitled to a pension under a pension plan contributed to by the employer that is registered pursuant to the Pension Benefits Standards Act, 1985, to a pension under the Old Age Security Act or to a retirement pension under the Canada Pension Plan or the Quebec Pension Plan.

[underlining added by me for emphasis]

     The substance of the Referee's decision is in the following term:

There is absolutely no question that the primary legislation of concern is section 235(1) and (2) of Division XI of Part III of the Canada Labour Code. The scheme of this legislation is to provide for termination pay for employees who have completed 12 consecutive months of service. The legislation specifies the amount to be paid on termination. Subsection 2(b) provides that an employer is not deemed to have terminated the employment of an employee where the employee is entitled to a pension.

It is not necessary to write a treatise on the interpretation of statutes. It may suffice to say that they are to be interpreted in accordance with their plain and simple meaning.

The critical word in this case is "entitled". The legislation does not specify, as a condition precedent, that the individual actually has to be in receipt of the pension.

Black's Law Dictionary defines "entitlement" as:

"In its usual sense, to entitle is to give a right or title...to qualify for; to furnish with proper grounds for seeking or claiming."

Webster's defines the word as "To give (someone) a right."

and as:

"benefits that one may receive upon request, esp. from a government agency."

There is absolutely no question that the appellants were, and are, "entitled" to a pension under the various pension plans which have been registered and qualified under the appropriate legislation. There has been considerable argument as to whether or not they can receive that pension without applying for it. The application does not change the entitlement - it simply triggers payment. The restriction under section 16 of the B.C. Plan provided that the pension was not payable unless and until a written application had been filed. Similarly, the Prairie Teamsters Plan and the Local 213 Plan contain a similar provision under Section 23 of those plans which provide that no pension is payable until the written application has been filed. The question then becomes whether the non-application for the pension would vitiate "entitle" as referred to in the legislation. Under Article 8 of the Agreed Statement of Facts it was noted that the appellants who were all at least 55 years of age had satisfied the requirements of the plan with respect to age, service and membership requirements. There is no evidence before that me [sic] they would not have started to receive the pension had they applied.

There was no allegation that the trustees of the various plans would deem that the appellants had not retired. I hasten to add that there was no such specific evidence, one way or the other, but I am assuming that their applications would not have been rejected on that basis. As mentioned, the sole criteria is "entitled" as opposed to actually receiving a pension. I concur in the reasoning of Referee Moalli that the fact that the pension may be reduced or only be partial is not, in the view of the legislation, significant.

Although not binding, I have also considered the comments in Exhibit 13 being the letter from the Office of the Superintendent of Financial Institutes [sic] in Canada. Exhibit 13 makes reference to a letter addressed to the Minister of Labour and is written in response to that letter. That letter was not filed in evidence. However, I note that the issue appears to be whether an individual could be forced to retire because of the availability of a reduced pension. That is not the question in this case. I also note that even in [the] view of the department, a member was "indeed entitled to a pension." It is the issue of entitlement which is of primary concern.

At Page 4 of the Baron case (supra) I note the following:

" in a later case the Supreme Court of Canada ruled that the procedural aspect must not apply, that is, it is not possible to say that someone was not entitled to benefits simply because they did not apply for them."

In my opinion, the fact that an individual has not "physically" applied to receive an entitlement is not of great significance. It is at the most a procedural matter. There are a multitude of rights to which individuals are "entitled" which require some act on the part of the individual to take advantage of them. It may be worthwhile to note certain extremely simple examples. An individual born in this country is entitled to a birth certificate but nevertheless an application has to be made for one. Similarly, a child is entitled to attend the public school system (and in fact can be compelled to attend school) but nevertheless the child has to be registered. Many other examples could be listed but I do not believe it necessary. There are also a myriad of similar examples in the private sector. An individual may be entitled to a bequest under a will but nevertheless an application for probate (or other procedure) must be made. Similarly, a joint owner of property with the right of survivorship may be entitled to become the owner of all of the property upon the death of a co-owner but an application must be filed in order to receive title. I am hard pressed to find any entitlement which does not require some act to establish eligibility. "Entitled" does not, in my view, equate to receiving.

The purpose of the legislation appears to be to prevent an individual from receiving a double benefit ie. severance pay and a pension.

The test of the legislation, is simply whether the appellants were "entitled" to receive a pension. They were. Accordingly, I confirm the decisions of the Inspector and dismiss the appeals.1

     The Code contains a privative clause relevant to this matter. Subsection 251.12(7) reads as follows:

(7)      No order shall be made, process entered or proceeding taken in any court, whether by way of injunction, certiorari, prohibition, quo warranto or otherwise, to question, review, prohibit or restrain a referee in any proceedings of the referee under this section.

     Given the privative clause, the standard of review on this application was not in dispute before me. I was referred to Attorney General (Canada) v. Public Service Alliance of Canada,² where Mr. Justice Sopinka wrote:

In respect of the standard of review I am in substantial agreement with the principles stated by Cory J. In this appeal it is necessary to consider whether the Board, in concluding that it could entertain the application made to it by the appellant, was interpreting a statutory provision which confers or limits jurisdiction. Essentially, this requires a determination as to whether the interpretation of s. 33 of the Staff Relations Act and, in particular the word "employees" contained therein, was intended by Parliament to be left to the Board or whether it is a provision limiting jurisdiction. If it is the latter then the Board's interpretation is reviewable if it is wrong. If, however, the interpretation of s. 33, and more specifically the meaning of the term "employees", was intended to be left to the Board then its decision is not reviewable unless the interpretation placed upon those provisions is patently unreasonable and the Board thereby exceeded its jurisdiction.

In essence, this is a distillation of this complex area of the law which was made by Beetz J. in U.E.S., Local 298 v. Bibeault [1988] 2 S.C.R. 1048, when he stated:

It is, I think, possible to summarize in two propositions the circumstances in which an administrative tribunal will exceed its jurisdiction because of error.

1.      If the question of law at issue is within the tribunal's jurisdiction, it will only exceed its jurisdiction if it errs in a patently unreasonable manner; a tribunal which is competent to answer a question may make errors in so doing without being subject to judicial review;

2.      If however the question at issue concerns a legislative provision limiting the tribunal's powers, a mere error will cause it to lose jurisdiction and subject the tribunal to judicial review. [at p.1086]

In the recent decision of this Court in CAIMAW v. Paccar of Canada Ltd., [1989] 2 S.C.R. 983, La Forest J. stated:

Where, as here, an administrative tribunal is protected by a privative clause, this Court has indicated that it will only review the decision of the Board if that Board has either made an error in interpreting the provisions conferring jurisdiction on it, or has exceeding its jurisdiction by making a patently unreasonable error of law in the performance of its function; ...

     Here, counsel for the Applicant argued that, against the appropriate standard of review, the Referee erred in a reviewable manner: first, in interpreting the word "entitled" in paragraph 235(2)(b); second, in making an assumption as to how the trustees of the various pension plans involved would react on receipt of applications for pensions from the Applicants; and finally, in ignoring relevant evidence before him, that being that none of the Applicants had retired, intended to retire, or wished to retire in circumstances where retirement from particular employment or from employment within the industry was a condition precedent to receipt of a pension. Counsel for the Applicant did not make much of the fact that none of the Applicants had applied for a pension, preferring to rely on the more substantive issue of the Applicants' disinterest in retirement.

     I am not satisfied that the Referee erred with regard to his jurisdiction in undertaking an analysis of the meaning of the term "entitled" in the context of paragraph 235(2)(b) of the Code. Indeed, as the Referee pointed out in his decision, the interpretation of that word was central to a decision on the issues before him and therefor to his jurisdiction. In the context of the scheme of Part III of the Code, I cannot but conclude that it was Parliament's intent that a Referee have the jurisdiction to engage in the statutory interpretation exercise here undertaken by the Referee. Equally, in the absence of any evidence before him as to how trustees of the various pension plans would have reacted to applications for pensions from the Applicants, evidence that could have been brought forward by the Applicants who chose not to do so, I am satisfied that the Referee committed no reviewable error in assuming that the Applicants' applications would not have been rejected based upon a rationale that the Applicants had not retired.

     I turn then to the argument that the Referee erred in a reviewable manner in ignoring, or at least failing to comment upon, the evidence that was before him regarding the Applicants' disinterest in retirement.

     In Brown v. Bouwkamp,³ Mr. Justice Zuber, with reference to benefits under an insurance policy, stated at page 366:

Before a claimant may be said to be entitled to benefits under the policy he must have a clear right to the benefits unqualified by either substantive or procedural conditions.

Applying that statement to the facts that were before the Referee in this matter, I think it fair to limit the statement to read "...unqualified by either substantive or procedural conditions outside the sole control of the claimant", or in this case, the Applicants. The reasoning of the Referee in his decision, in concluding that the Applicants were "entitled" to pension benefits is entirely defensible but for the disinterest of the Applicants in retiring, a substantive condition, and the fact that they had not applied for pensions, a procedural condition entirely consistent with the substantive condition. If these conditions, both entirely within the control of the Applicants, were allowed to prevail in the interpretation of "entitled" in the context of paragraph 235(2)(b), it would remain in the unqualified control of the Applicants to defeat what I consider to be the intent of Parliament in the enactment of that paragraph. That intent is reflected by the Referee in the portion of his decision quoted earlier, and repeated here for convenience:

The purpose of the legislation appears to be to prevent an individual from receiving a double benefit ie. severance pay and a pension.

In Canadian Deposit Insurance Corp. v. Canadian Commercial Bank⁴ the Alberta Court of Appeal wrote, by reference to paragraph 61(2)(b) of the Code, now paragraph 235(2)(b),:

In our view, it is necessary to give s.61(2)(b) of the Code a meaningful and purposive interpretation. What is the intent of the severance clause? The chambers judge quite properly concluded that the purpose of severance pay is to provide a fund for employees to draw on during the initial state of unemployment, as well [as] a compensation for the embarrassment, stress and worry associated with it. We agree. What then is the purpose of excluding certain persons from the benefit? We feel the exception should be construed narrowly. Surely it was intended to apply to those persons who have attained a retirement age and have immediate entitlement to a periodic pension. That meaning is supported by the inclusion in that section of the pension under the Old Age Security Act and the retirement pension under the Canada Pension Plan or the Quebec Pension Plan. It would appear the benefit of the severance pay was intended to ensure a minimum benefit to employees who are not of retirement age, to compensate them for the reasons set out by the chambers judge. It is employees who were not able to retire that are at most risk. They are the ones that must continue to seek employment so they too, can someday have the luxury of retirement. To deprive employees not entitled to retirement, of the benefit of severance pay, is to ask them to live on the benefits they have set aside for their future retirement.

We conclude s. 61(2)(b) was intended to only apply to those employees who have met the retirement criteria of the pension plan: and are presently entitled to receive pension benefits in accordance with that plan.

....

While severance pay is intended to provide a brief respite from the effects of unemployment on persons who have a real expectation of continuing employment, pension benefits are intended to be a substitute for employment for persons at the end of their working careers.

[underlining added by me for emphasis]

     Here, the Referee had before him evidence that the Applicants had not retired and did not wish to retire. It is unfortunate that, in his decision, he did not acknowledge this evidence and address it. But I conclude that the failure to do so, against the high standard of judicial review in a matter such as this, is not fatal. He had no evidence before him as to whether the Applicants' desire to continue in employment constituted a real expectation of continuing employment. If there had been such evidence, the result might well have been different. But in the absence of such evidence, it was entirely open to the Referee to conclude that the Applicants who, in all respects, qualified for pensions, in the terms of the foregoing quotation, fell into the category of "...persons at the end of their working careers", "entitled" to pensions, whether they wished to avail themselves of that entitlement or not, and who were thus within the exception to entitlement to severance pay provided by paragraph 235(2)(b) of the Code.

     For the foregoing reasons, this application for judicial review will be dismissed.

                     __________________________

                         Judge

Ottawa, Ontario

November , 1996

__________________

     ¹      The reference to "the Baron case" is to Baron v. Borisko Campbell Moving Systems Inc., an unreported decision of a referee.

     ²      [1991] 1 S.C.R. 614 at 628

     ³      (1976) 8 O.R. (2d) 363 (HCJ)

     ⁴      (1995), 178 A.R. 87 (C.A.)