HomeMy WebLinkAbout1985-0773.Cahoon.87-11-04IN THE MATTER OF AN ARBITRATION
Under
THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT
Before
THE GRIEVANCE SETTLEMENT BOARD
.
Between:' OPSEU (Barry Cahoon)
&ievor
and
The Crown in Right of Ontario
(Ontario Development. Corporation )
1
Before: R. L. Verity, Q.C. Vice Chairman
J. McManus Member
W.A. Lobraico Member
For the Grievor: G. Paliare
Counsel
Gowling and Henderson
Barristers and Solicitors
For the Employer: J. Zarudny
Counsel
Crdwn Law Office Civil
Ministry of the Attorney General
Hearings:
'. :*
January 23, 1'
May 21, 1986
June 24, 25,
October 8;14
November 18,
April 2, 7, 1
May 6, 1987
986
26, 1986
, 1986
1986
987
Employer
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8.
DECISION
James Barry Cahoon was a Consultant employed by the Ontario
Development Corporation (O.D.C.) at its Mississauga office. He has
accumulated seniority from January, 1981. O.D.C. is an Ontario Crown
Corporation, pursuant to the Development Corporation Act, 1980,
R.S.O. c. 117, to encourage and assist in the development and
diversificationof industry in Ontario, including the provision of
inancial assistance by way of loans. Briefly stated, Cahoon's job
involved assessing and processing, where applicable, private sector
business loan applications according to established criteria.
On January 11, 1985, the then Deputy Ministry of Industry
and Trade suspended Cahoon with pay pursuant to s. 22il) of the Public
Service Act, pending investigation of his conduct. Subsequently, on
February 7, 1985, Cahoon was suspended without pay (salary withheld
pending investigation) under the same statutory provision. The second
uspension letter read as follows:
"I refer to my letter to you of 11 January, 1985,
wherein you were suspended from employment at Ontario Development Corporation pending an investigation of your conduct.
An additional period of time is required to complete the investigation of your conduct.
Accordingly, pursuant to subsection 22(l) of the
Public Service Act, R.S.O. 1980, c. 418, your suspension from employment at Ontario Development Cor.poration is continued.
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Your salary will be withheld effective as of 7 February,il985."
Cahoon filed a grievance in connection with the latter
suspension whereby he claimed that he had been suspended "without pay
without just cause”.
InitJally, the arbitration dealt solely with the merits of
the suspension grievance. However on June 20, 1986, the Grievor's
employment was terminated by the Deputy Minister of Industry, Trade
nd Technology. The termination letter read as follows:
*
"Dear Mr. Cahoon:
We have investigated, and are continuing to
investigate, your conduct as an employee at
Ontario Development Corporation.
' The evidence which has been obtained indicates that you have misconducted yourself as
an employee of Ontario Development Cororation with respect to two separate incidents.
First, during the period August - November,
1984, you abused your position as a loan
consultant by obtaining, and attempting to obtain,
bacteria, micro-organisms and other substances,
for your own personal use. By so misconducting yourself, you seriously violated and prejudiced the trust of your employer and its client, I.C.M. Science, Inc.
Secondly, during the period February -
August, 1985 you participated in a fraudulent scheme with Richard Pintar whereby a loan in the amount of $15,000.00 was obtained from Ontario Development Corporation for Plumtree Furs. The
proceeds of this loan were directed to another business owned (in part) and operated by yourself.
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You have continuously refused to confirm or
deny to your employer your participation in either of these incidents. This has caused your employer to incur considerable additional expense and effort to investigate your conduct.
Accordingly, I hereby dismiss you from employment at Ontario Development Corporation.
You are also hereby advised that you have the
right to grieve this dismissal pursuant to the
provisions of subsection 18(2) of the Crown Employees Collective Bargaining Act.
Yours sincerely,
Patrick J. Lavelle"
On June 24, 1986, Cahoon formally grieved the dismissal and
waived all preliminary grievance procedures in order to bring the
matter directly to the Board. The Parties agreed that the present
panel would hear and determine the merits of both grievances. The
Aearing consumed 11 days during which the Employer called 10
witnesses. In fact, the Employer's opening statement took almost one
full day. At the conclusion of the Employer's case, Counse'l for the
Union moved for a non-suit and advised the Board that it intended to
all no evidence when put to its election. The matter then concluded
by way of extensive submissions.
Clearly, there are two separate allegations of misconduct
against the Grievor, both of which relate to abuse of the position of
Consultant and fraudulent conduct against the Employer. The facts
surrounding both incidents and the Employer's response to those facts
are indeed bizarre.
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Briefly, the two separate allegations of misconduct were as
follows:
(1) Cahoon and one Kevin Thomas Birch were arrested by
F.B.I. agents at the Federal Express Office in the Buffalo suburb of
Cheektowaga, New York on Wednesday, November 21, 1984 in possession of
a f$lse package of tetanus and botulism bacteria cultures. Both men
were charged under U.S. law with the offence of fraud by wire and
conspiracy to commit fraud by wire. The charges alleged that the
J-accused had defrauded or attempted to defraud American Type Culture
Collection (A.T.C.C.) of Rockville,.Maryland by falsely representing
themselves as acting on behalf of an Ontario business known as
"1.C.M. Science" of Mississauga, Ontario. A.T.C.C. is a scientific
foundation engaged in the distribution of micro-organisms for
scientific research purposes. Under U.S.'law, only legitimate
scientific organizations are permitted to purchase the cultures.
The Employer's theory was consistent throughout: namely,
hat Cahoon used information provided by I.C.M. Science, obtained in
the course of his employment, to falsely represent himself as an
officer of I.C.M. to obtain bacteria cultures from A.T.C.C. Birch and
Cahoon operated a standard-bred race horse business known as "Four
Aces Racing Stable". The business owned a race horse known as
"Winters Image" which was insured for $100,000.00. "Winters Image"
had a successful racing career until it injured a leg in the spring of
1984. The Employer maintained that Birch and Cahoon conspired to
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obtain the botulism-cultures to kill the horse in. order to obtain the
proceeds of the insurance policy.
Initially, at the time of the Grievor's arrest, the F.B.I.
suspected terrorism as the motive. However, subsequent investigation
convinced U.S. authorities that the motive was personal gain. The
arrest attracted wide-spread media attention in Canada. In
particular, news coverage identified the Grievor as a fiscal
consultant employed by the Ontario Development Corporation.
(2) In November, 1985, the Grievor was jointly charged,
together with business associates Bruce Kane and Richard Pintar with
fraud over $200.00 contrary to s. 338( 1) of the Criminal Code of
Canada. Although already under suspension pending investigation for
the alleged botulism fraud, the Grievor was again suspended by the
Deputy,Minister on December 19, 1985 under s. 22( 1) o.f the-Public
Service Act pending investigation. As the suspension letter stated,
"we are now also investigating your conduct as it relates to a loan
i btained from Ontario Development Corporation by Plumtree Furs". That
suspension was not grieved.
The criminal charges against the co-accused involved the
submission of false documentation and information to obtain a
$15,000.00 loan from Ontario Development Corporation under the Help
For Entrepreneurs Loan Program (H.E.L.P.). The program initiated in
June, 1984 was designed to assist small manufacturing operations, but
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not retail operations.
At the Hearing, evidence established that Pintar applied for
and obtained a $15,000.00 loan from O.D.C. by falsely submitting
documentation to demonstrate that the proceeds of the loan would be
used for an exotic animal rug manufacturing operation known as
Plumtree Furs la business operated by Pintar). The evidence of Pintar
and of Corporal Ralph Paul established that the $15,000.00 was
improperly diverted to "613170 Ontario Inc. operating as National
quarium" to enable Pintar to purchase a l/3 interest in a tropical
fish retail business. The evidence of Pintar and Corporal Paul also
established that the Grievor initiated the fraudulent operation,
informed Pintar of the availability of the H.E.L.P. program, advised
Pintar in all procedural matters required to obtain the loan, Andy
prepared a business plan for submission to O.D.C., all the while
knowing that the application misrepresented the true purpose of the
. loan. In sum, the evidence at the hearing clearly established that
the Grievor orchestrated the fraudulent operation to enable Pintar to
,cquire $15,000.00 of a $20,000.00 l/3 interest in National Aquarium.
By August of 1985, Pintar withdrew from the partnership and'
voluntarily advised O.D.C. and the O.P.P. anti-rackets branch of the
sham. Pintar assisted the O.P.P. in their investigation from the
outset and pleaded guilty to the fraud charge.
I!,
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As indicated previously, the Grievor's employment was
terminated on June 20, 1986. Following the dismissal, the Grievor
pleaded guilty to the outstanding criminal charges. On September 15,
1986, the Grievor pleaded guilty to fraud by wire in Buffalo, New York
after entering into a plea bargaining arrangement to avoid
imprisonment. On December 1, 1986, the Grievor and his co-accused
were fined $l,qOO.OO and were sentenced to a two year term on
probation. Subsequently, on December 3, 1986 in Hamilton, Ontario,
the Grievor pleaded guilty to defrauding O.D.C. of,$15,000.00 in the
.lumtree .Fur.matter.
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The Board makes no attempt to repeat the evidence adduced
except in certain salient respects and then only in summary form.
Mitchell Bros, 0.D.C. General Counsel and Corporate
Secretary, testified that on November 23, 1984, he was advised of
Cahoon's arrest and the circumstances surrounding the arrest in
Cheektowaga, New York two days earlier. Bros testified that he was
ssigned by O.D.C. 's Chief Executive Officer to investigate the facts
and that the normal practice was to call'upon the O.P.P. to
investigate. Bros approached the O.P.P. who declined because of the
prior involvement of the Peel Regional Police. Bros promptly
contacted Sergeant Burt Steinhardt of the Peel Regional Police.
Apparently, the Peel Police investigation concerned a possible
insurance fraud in Ontario.
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The Grievdr was placed on special assignment to O.D.C.'s
Chief Executive Officer, during the week of November 24, with full
pay. In fact, the Grievor was paid for time spent in jail in the
U.S. The Grievor's assignment continued until notified on January 11,
1985 that he was suspended with pay pending an investigation of his
conduct.
According to Bras' evidence, between November 30 and
December 14, 1984, he held discussions with O.D.C. staff members in
.ississauga. From these discussions he learned of .certain irregular
condu'ct on Caheon's part. For example, he was advised by staff that
Cahoon had received an "urgent" telephone call on the Micom phone on
November 21 and had instructed secretary Myrna Morgan not to answer
the phone "O.D.C.". He also learned that Cahoon frequently received
phone calls from a man named "Plaxton". In this time frame, Eros
received copies of long distance phone bills for three telephone calls
placed from the Mississauga O.D.C. office to A.T.C.C. in Maryland. In
addition, he viewed a cheque signed by Barry Cahoon in payment for
hree telephone calls to A.T.C.C. on October 9, 1984.
Similarly, in December, 1984,' Bros initiated a series of
monthly telephone conversations with Assistant U.S. attorney Joseph
M. Guerra III. During the initial telephone call to Guerra, Bros
learned the nature of the charges against the Grievor and learned of
possible procedural strategies.
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Bros test,ified that on December 17, 1984, he and O.D.C. Loan
Director John Mitchell interviewed one Serge Julien of I.C.M.
Science. Julien advised that he had contacted O.D.C. and had dealt
with a "Jim" Cahoon over the telephone on several occasions in 1984
with regard to an unsuccessful loan application. Julien advised Bros
that he had supplied Cahoon with a master list of I.C.M. Science
suppliers of bacteria and micro-organisms. Julien also advised that : .
Cahoon had referred him to the Willowdale O.D.C. Consultant Jim Boyd
in November of 1984. Bros and Mitchell testified that they reviewed
Jcumentation establishing that "T. Plaxton of I.C.M. Science" had
ordered tetanus from A.T.C.C. and that I.C.M. Science had no such
employee by the name of T. Plaxton.
Bros requested Mississauga O.D.C. staff to locate any file
pertaining to I.C.M. Science. The search proved unsuccessful. In
examination-in-chief, Bros testified that as of December, 1984, he had
no direct evidence linking Cahoon to I.C.M. Science or Tom Plaxton or
A.T.C.C.
In January of 1985, Bros received written reports from
O.D.C. staff members Myrna Morgan, Catharine Fielding and W. B.
Shields. On January 16, 1985, Bros attended in Buffalo, New York and
met with F.B.I. special agent John McGuigan. Bros received copies of
the pending criminal complaints and McGuigan's affidavit (Exhibit
'12). Bros ~learned that O.D.C. would not acquire further documentary
proof until either a trial was held or a guilty plea was entered. On
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January 22, 1985, Btos spoke with A.T.C.C. in Maryland and ascertained
that calls made from the O.D.C. Mississauga office were paid for by
Cahoon but were made by a man identifying himself as "Tom Plaxton of
I.C.M. Science".
Bros testified that on February 7 he attended at the Federal
Express Office,in Cheektowaga, New York and obtained information which
verified the contents of McGuigan's affidavit. He also learned that a
previous tetanus order was picked up in October 1984 by "B; Barnes"
.the Grievor's girlfriend). On January 29, Bros'learned from Sergeant
Steinhardt that Bell Canada had records establishing that in 1984
numerous calls were placed from the O.D.C. Mississauga office and
billed to the telephone of Brenda Bain.
. On March 12 Bros was advised that Mississauga O.D.C.
personnel had discovered a number of bwsiness cards in the Grievor's
desk pertaining to "Four Aces Racing Stable" bearing the Grievor's
name and the Mississauga Office O.D.C. telephone number.
Bros testified that on April 26, 1985, he made his third
trip to Buffalo, this time to attend the Grand Jury proceedings. The
Grievor pleaded "not guilty" to the charges but was indicted by the
Grand Jury.
In June of 1985 Bros testified that he met with Ken Hird of
Bell Canada. Bros wanted to ascertain if there were other.phone calls
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placed to A.T.C.C. in Maryland or to the Federal Express office in
Cheektowaga in New York. Bros was advised that such information would
be provided only in response to a subpoena or a search warrant.
However, in his testimony, Mr. Hird alleged that he was under the
impression that Bros had received details at about that time in
connection with some 19 relevant telephone calls.
The thrust of Mr. Bras' ~testimony was to the effect that
during the summer of 1985, the only evidence linking the Grievor to
' he botulism fraud was circumstantial in nature. According to Bros,
he still hopedifor a guilty plea to provide O.D.C. with direct
evidence. In fact, O.D.C. acquired,no further evidence on the
botulism fraud until a copy of a letter was uncovered, quite by
accident, in December of 1985. On that date, Myrna Morgan.discovered
an unsigned copy 0f.a letter sent by Cahoon to' Serge Julien. of I.C.M.
Science dated June 2, 1983 (Exhibit 2, Tab 13).
. . . . . . . . . . .
Richard Pintar testified that on August 9, 1985, he made an
anonymous telephone call to the Hamilton O.D.C. office indicating that
he was willing to tell O.D.C. Loan Consultant Art Tofano about a fraud
involving an ex-O.D.C. employee.
Bros testified that on August 12 he was advised by Tofano of
the anonymous call and that the Hamilton office "strongly suspected"
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the employee referred to was Barry Cahoon, and that the caller was
Pintar. Bros immediately contacted the anti-rackets branch of the
O.P.P. to investigate. Corporal Ralph Paul was assigned the task.
By September 12, 1985, Corporal Paul informed Bros of
relevant details including the results of an interview with Pintar and
the involvement of Cahoon. In sum, by mid-September, 1985,sBros knew
all the details, dates and banking documentation used to defraud
O.D.C. of $15,000.00. Corporal Paul testified that the three accused
.,lncluding the Grievor) were charged in November with fraud under s.
338(l) of the C.C.C. Corporal Paul also testified that Volume 1 of
the Crown's brief became ava,ilable in February of 1986 but that it was c
not until May of that year whe& O.D.C. representatives requested and
obtained the Crown brief. 1
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The Union contended that the Employer failed to establish
just cause for either the suspension or for the discharge, or in the
alternative the penalty imposed were excessive. Mr. Paliare argued
:~ hat there were two substantive issues for determination:
(i) Whether there was any cogent evidence presented as to
the reasons for the Grievor's dismissal.
(ii) Whether the Employer delayed so long in investigating
the alleged misconduct that it was precluded from
disciplinary action.
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On the fi,rst issue, Mr. Paliare alleged that failure to call
any cogent evidence regarding the reasons for dismissal justified the
granting of a motion for non-suit. under the second issue, he
contended that the Employer was precluded from disciplinary action
because of excessive delay under the principles of condonation, lack
of culminating incident and lack of procedural fairness. The thrust
of the procedural fairness argument was that an Employer must act in a
reasonably expeditious fashion when disciplining an employee for
perceived misconduct.
Mr. ;arudny argued.that the Employer had just cause for the
discipline imposed and that the Board must reject the motion for
non-suit. Counsel for the Employer contended that there we're-three
issues for determination:
(i) Did.the Grievor breach the trust relationship in two
separate incidents of misconduct?
(ii) Did the Grievor commit fraud?
(iii) Did the Grievor fail to give an explanation of his
conduct when given an opportunity to do so?
In reply to the motion for non-suit, Mr. Zarudny adopted the
position that the letter of dismissal was relevant in setting out the
grounds for dismissal to enable the employee to repond. He contended
that it was unnecesgary to call any witness to establish the reasons
for the termination on the day in question.
Transcripts of the guilty pleas were filed as Exhibits at
the hearing. Mr. Zarudny maintained that the transcripts in a
criminal proceeding were admissible in their entirety and sonclusive
in a civil proceeding. For that proposition, he relied upon the
Decision of Mr. Justice Osler in Demeter v. British Pacific Life
Insurance Co. (1983), 43 O.R. (2d) 33 and the Decision of the Court of
.ppeal in the same case reported at (19841, 48 O.R. (2d) 266. Mr.
Paliare arguedithat the guilty pleas, occurring as they did several
. . months after.the dismissal, p layed no part in the decision to dismiss
and should be viewed accordingly. He argued thgt the effect of a
guilty plea does not cons!zitute an admission of the truth of the
stated facts. In his submission, a guilty plea is an admission of
guilt by an.accused and nothing more. In support, Counsel relied upon
the Ontario Court of Appeal Judgment in Regina v. Berry [1957], O.R.
249, recently confirmed by the same Court in Regina v. Howard in a
udgment delivered by Cory J. A. dated June 6, 1986.
Numerous arbitral and judicial authorities were submitted by
both Parties.
The starting point for an assessment of~the Employer's
actions in this case is the suspension imposed on February 7, 1985 in
which pay was withheld pending investigation under the authority of
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S. 22(l) of the public Service Act, R.S.O., 1980 c. 418, as amended:
"A deputy minister. may, pending an investigation, suspend from employment any public servant in his .ministry for such period as the regulations
prescribe, and during any such period of
suspension may withhold the salary of the public servant."
Regulation 881 under the Public Service Act, as amended,
provides in s. 18 as follows:
"s. 18 - (1) Where the deputy minister suspends a
public servant from employment pending an investigation, the period of suspension shall not
exceed 20 working days.
(2) Notwithstanding subsection (l),
where in the opinion of the deputy minister, an additional period of time is required to complete
the investigation, the deputy minister may renew the period of suspension for not more than 20
working days ,in each case, for such additional periods as are considered necessary."
There was no dispute that the deputy minister failed to
renew the Grievor's suspension at the end of each 20 day period, and
ccordingly the Board is concerned with the reasons for the
suspension. However, the question arose whether or not the Board had
jurisdiction to review the merit.s of a suspension under s. 22(l) of
the Public Service Act.
In OPSEU (C.M. Brown) and Ministry of Natural Resources,
706/83, 747/83, Vice-Chairman Roberts commented as follows at p. 8:
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"Based upon these submissions, it appears that the Board does not have -jurisdiction to review the
merits of a suspension 'pending an investigation' under section 22(l) of the Public Service Act.
Even soI however, the mere declaration bv or on behalf of the Deputy Minister that a suspension is
'pending an investigation' within the meaning of section 22(l), would be insufficient to oust the
iurisdiction of the Board. Under section 19(l) of
<he Crown Employees Collective Bargaining Act, the GrievanceSettlement determine 'whether a matter is arbitrable'. Pursuant to this jurisdiction, the Board has the
duty, in proper cases, to determine whether a particular suspension actuallv was or continued to be 'pending an-investigation'-within the meaning
of section 22(l) of the Public Service Act. If, in such an inquiry, it was found that this was not the case, then it-would seem that the Board would have jurisdiction to review the merits of the clal'm that the suspension was without just
cause... "
A different approach is taken by then Acting Chairman
Springate in OPSEU (M. Fish) and Ministry of Colleges and Universities
634/83 at p. 13:
"It would anoear that the ouroose of section 2211) of the .Public Service Act is to allow a deputy ' '
minister, or his designate, to immediately remove
an employee from his position pending an - investigation. Presumably this authority is given to a deputy minister because in some instances it is inappropriate to allow an employee to remain in his position while allegations against him are being investigated. Section 18(2) of the Crown
Employees Collective Bargaining Act allows an employee to challenge a suspension before this Board. That section does not exclude suspension
pending an investigation, and accordingly, we see no reason for assuming that the challenge to a suspension cannot relate to a suspension pending an investigation, particularly given that such a suspension may be without pay.
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The assessment of the justness of a suspension of an employee pending investigation involves consideration of a number of factors. One is the nature of the concerns or allegations that are
being investigated. The greater the possible adverse impact on the employer, other employees or
the public of the alleged misconduct of the employee, the more justified a suspension pending
investigation. Also relevant is how quickly the investigation is conducted, a suspension that was initially justified may cease to be so if the investigation is not pursued with due diligence II . . .
This panel of the Board adopts the Springate rationale in
~'ts entirety. xn the instant grievance, it is fair to say that the
Employer might have acted with greater dispatch in imposing the
suspension as early as December of 1984. However, it was reasonable
that action was delayed due to the inevitable complications arising
from alleged criminal activity in a foreign jurisdiction. On the
evidence, the Board is satisfied that the suspension on February 7,
1985 was justified, at least initially, and was an appropriate
response in light of the information then available to the Employer.
Indeed, it is difficult to argue that the withholding ~of pay pending
investigation is not a form of disciplinary action.
In contested dismissals under s. 18(2)(c) of the Crown
Employees Collective Bargaining Act, the Board has a statutory mandate
under the combined effect of S.S. (18)(2)(c) and 19(l) of that Act to
hear and determine, on the evidence adduced, whether or not an
employee "has been...dismissed... from his employment without just
cause".
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To some, it might seem an affront to common sense to say :
that an employee who has committed fraud against his Employer (as
subsequent events have established) has not been dismissed for just
cause.
However, the Board is obligated to consider, on the basis of
'relevant arbitral jurisprudence, whether or not there was just cause
for dismissal at the time the discipline was imposed; namely, on June
20, 1986.
Ther? was no dispute that the Employer based its actions on
the outcome of criminal proceedings against the Grievor. Clearly, it
did not. In fact, the Employer made no reference to any outstanding
criminal charges in either the February 7, 1985 suspension or in the .
discharge letter of June 20, 1986. Simply stated, the Employer did
not take advantage of the option considered by Vice-Chairman Swan in
McCrea and Ministry of Community and Social Services, 50/76 at pp. 8
and 9:
n . ..There is, of course, much authority for the
proposition that an offence committed against the employer or directly related to the employment relationship will justify disciplinary action, including suspension until disposition of the
charges, although the effect of such a suspension may in some cases amount to an election by the
Employer to have its disciplinary action stand or fall on the outcome of the criminal trial...."
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AS indicated previously, the Union brought a motion for
non-suit at the conclusion of the Employer's case. From the outset,
Mr. Paliare put the Employer to the strict proof of its case. The
Union alleged that the Employer failed to call any cogent evidence as
to the reason for the Grievor's dismissal on June 20, 1986.
In disciplinary matters, the onus rests with the Employer to
establish, upon the balance of probabilities, that it had just cause
CO take the disciplinary action. The Union's motion was directed to
the sufficiency of the evidence adduced. Accordingly, the Board is
required to assess the probative sufficiency of the evidence and to
decide whether there was enough evidence, if left uncontested, to
satisfy the onus of proof.
The Emp1oye.r based its case on two separate allegations of
misconduct alleging abuse of position. There was no reference in the
dismissal letter to any outstanding criminal charges.
There can be no doubt that Mr. Zarud.ny went to great lengths
to prove the two separate allegations against the Grievor of
fraudulent conduct on the various hearing dates. To discharge the
burden of proof in a dismissal case, the Employer is required to
establish why it discharged the Grievor at the relevant time. The
only evidence before the Board as to the reasons for. termination was
the dismissal letter of Deputy Minister Patrick Lavelle (Exhibit.3a).
i .
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Neither Mr. Lavelle"nor any other witness familiar with the reasons
was called upon to testify. In our opinion, the failure on the part
of the Employer to call a key witness was a fatal flaw. In light of
the excessive delay between the suspension without pay and the
eventual discharge (some 17 months later), the Employer was under an
obligation to call oral testimony from some key witness to explain and
justify the reasons for dismissal in June of 1986; Simply stated, the
evidence in the form presented in Exhibit 3a is insufficient to
establish a prima facie case of dismissal .for just cause. In our
i ginion, Mr. Lavelle's letter in the form presented,'although
admissible, isihearsay evidence which cannot be relied upon
exclusively to establish just cause for the disciplinary action. See
- Re Girvin et al. and Consumers' Gas Co. (19731, 1 O.R. (2d) 421
(Ont. Div. Ct.). Simply stated, the Employer has failed to establish
the existence of the factual circumstances upon which it relied in its
decision to terminate the Grievor's employment.
Accordingly, the motion for non-suit succeeds and we must
; ind that the Employer failed to establish just cause for dismissal.
Assuming that the Employer did establish a prima facie case,
there were a number of serious procedural errors on the part of the
Employer, the effect of which, we think, was to invalidate the
discipl in? imposed. These procedural irregularities involve due
process and procedural fairness without which there can be no just
cause.
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No matter how distasteful to the Board, given the eventual
outcome of the fraud charges, arbitral jurisprudence is there to be
followed; namely, that an Employer must act in a reasonably /
expeditious fashion in imposing discipline.
Brown and Beatty in their text, Canadian Labour Arbitration
under the heading of "Procedural Requirements and the Power to
Discipline" make the following observations at p. 335:
II . ..The requirement that the Employer must sanction an individual for behaviour it regards as inappropriate in a reasonably expeditiousfashion, are ,matters of general arbitral principle..." *
In support of that proposition, three..cases are,cited by the
authors: Wellington County Board of Education (1979), 24 L.A.C. (2d)
431 (Abbott); Borough of North York and Canadian Union of Public
Employees, Local 373 (1979), 20.L.A.C. (2d) 289 (Schiff); and
generally Re Nicholson and Haldimand-Norfolk Regional Board of
Commissioners Com'rs of Police (1978), 88 D.L.R. (3d) 671, 78
'.L.L.C. 14,181 (S.C.C.).
In the Borough of North York Decision (Supra), Arbitrator
Schiff rejected an eight month delay in imposing discipline and gave
the following rationale at pp. 296 - 297:
"Although...., an Employer is entitled to a
reasonable period of time to assess an, appropriate penalty, eight months is far from reasonable: no employee is bound to wait that long for a
- 23 -
verdict. Once the reasonable period has
passed... the Employee is entitled to assume that
the offence has been forgiven....A decision unduly delayed cannot be corrected at all: It is simply invalid."
E. E. Palmer in his text, Collective Agreement Arbitration
in Canada (2nd Edition) comments at p. 284:
”
. . ..An employee can consider that no discipline can be imposed against him for any act if the. Employer fails to act in a timely way..."
In an accompanying footnote, Professor PLmer writes:
"Thece are no cases on this point. The point is
so obvious that none seems necessary..."
The Board adopts and applies the above arbitral principles.
Although the Board found that the suspension ~of February 7, 1985 was
initially justified, an investigation from February, 1985 until June
20, 1986 cannot be sustained. In our opinion,, the Employer should
have made a final disciplinary decision no later than the Grievor's
ndictment before the Grand Jury in April of 1985. Allowing for a
reasonable time to consider the evidence presented before the Grand
Jury, final disciplinary action should have been taken no later than
June 1, 1985. Sufficient facts were then known to the Employer by
June 1, 1985 to allow it to make an informed decision in a case of
employment related misconduct. Beyond that date, the Grievor's
suspension cannot be justified.
c -7.
- 24 -
Similarly;on the evidence presented; the Employer should
have been in a position on the Plumtree Fur matter to take some form
of final disciplinary action in November of 1985 when charges were
iaid against the Grievor and when the Employer had full knowledge of
the particulars of the Crown's case. As the evidence reveals, the
Grievor was suspended pending investigation in December of 1985 and no
final disciplinary action was taken on this matter until some six
months later. In our view, this delay is unreasonable and vitiates
the discipline imposed on June 20, 1986.
Following the Grievor's arrest in November, 1984, Cahoon -
proclaimed his innocence privately to .several O.D.C. employees
including Myrna Morgan and John Mitchell. For whatever the reason, at
no time during either investigation was the Grievor asked by~the
Employer to offer. any explanation of the allegations under
investigation. The Grievor cannot bd faulted for failure to explain
his conduct in the absence of a demand for an explanation. Simply
stated, he wasn't asked. By February 21, 1985, the Grievor made his
osition clear through Counsel Paliare; namely, that he denied
everything and admitted nothing. Thus, the Employer was left to its
own resources to investigate the alleged misconduct. The botulism
investigation and the Employer's reponse'to acquired facts drifted on
aimlessly. The Plumtree Fur matter was investigated promptly by the
O.P.P.; however, the Employer appeared unable to reach a conclusion.
- 25 -
On May 20’; 1986, Mr. Zarudny wrote to O.D.C. solicitor Brian
Cass, Q.C. advising that final disciplinary action should be imposed
immediately and that further delay would be unreasonable.
Surprisingly, O.D.C. proceeded to renew Cahoon's suspension on June 12
and did not take the step to dismiss Cahoon until one month following
Mr. Zarudny's letter. In the result, assuming that a prima facie case
had been established, the Board concludes that the Employer by reason
of its inordinate delay has failed to establish just cause for
discharge in June of 1986.
Genqally, the Courts have recognised that arbitration
boards have extensive remedial authority in the adjudication of
discharge and discipline. cases in the .absence of express statutory or
contractual limitations. Under s. 19(l) of the Crown Employees
Collective Bargaining Act, the Grievance Settlement Board has been
given broad statutory authority encompassed in the words "shall d.ecide
the matter" and "its decision is final and binding".
On numerous
it clear that s. 19(l)
occasions, the Ontario Divisional Court has made
confers upon the Grievance Settlement Board
broad remedial authority. Referring to s. 18(l) (as it then was),
Mr. Justice Linden made the point in R.V. OPSELJ (1982), 38 O.R. 670 at
p. 675:
II
. . ..Courts have been unwilling to limit the
remedial powers of arbitration boards so as to enfeeble them. On the contrary, .our Courts have sought to ensure that arbitration boards can
v ; .-.,
- 26 -
effectively bring about the final binding
settlement of all differences between the parties...."
Mr. Justice Reid adopted the same position in
s. 19 (1) of the Act in the Judicial Review of the class
grievance in Carol Berry et al (Released March 13, 1986
referring to the Board's authority he stated at p. 13:
1 considering
ification
) where, in
"Its authority under s. 19 of the Act is
untrammelled. It shall decide the matter...."
And at pp. 14 and 15:
s
”
. . ..The object of arbitration boards, both in the public and private sector, is the resolution of
differences. That is the mandate of this board...
. . ..Its jurisdiction is unrestricted. Its mandate
is remedial...."
In the absence of just cause for dismissal, the usual remedy
is reinstatement with full compensation for all lost wages and
benefits. Having regard to the Grievor's two subsequent criminal
Jnvictions, reinstatement would be a totally inappropriate remedy. A
loans officer employed by O.D.C. is in a position of trust by virtue
of his position in the administration of public funds. As subsequent
events have established, the Grievor has committed two serious
criminal offences against the interests of his employer. The
Grievor's conduct is simply incompatible with the fiduciary
responsibility expected of the position of a loans officer.
Accordingly, he will not be reinstated.
, 5 :i
I
- 27 - i-
The more troublesome aspect of this case is the issue of
entitlement to and quantum of compensation. For the time being, we
reserve on the issue of compensation.
Compensation is, of course, a discretionary matter.
authors Brown end Beatty state in their text, Canadian Labour
Arbitration (2nd Edition) at page 61:
As
"Unless the agreement provides otherwise,
generally, in assessing damages arbitrators have followed and utilised the same common-law
prikiples that are applied in breach of contract cases. Thus, the basic purpose of an award of damages is to put the aggrieved party in the same position he would have been in had there been no
breach.of the collective agreement. As stated by one arbitrator:
'Stated in the abstract, the relevant
principle is quite clear. The purpose of damages for breach of contract is not to
punish but to compensate, and the function of compensation is to place the aggrieved party in a monetary position as near as possible to
that in which he would have been had the contract been performed.'"
The passage cited was by Arbitrator Weiler in Canadian Johns
Manville Co. Ltd. (19711, 22 L.A.C. 396.
Can it be said with any degree of credibility that the
Grievor, Barry Cahoon, .is an aggrieved party? Given the facts of the
instant matter, common sense and procedural fairness would dictate
that the Employer should have acted much sooner in, deciding upon the
appropriate disciplinary response. However, in theses circumstances,
- 28 -
the question remains whether or not it would be appropriate to
compensate a dishonest employee thereby rewarding him and penalizing
the Employer for the Employer's numerous procedural errors.
The Parties did address the compensation issue, albeit
briefly, but of course without the benefit of the Board's findings.
It would assist us to hear further submissions on this diffi,cult
compensation issue. Accordingly, the Board directs the Registrar to
set a further date to allow arguments with supporting authority to .be
'resented on the issue of the Grievor's entitlement to and quantum of
compensation ,kn the circumstances.
DATED at Brantford, Ontario, this 4th day of November
1987.
,&I-- rK -
R. L. VERITY, Q.C. - VICE-CHAIRMAN
/A ;I: 4 Ad!u&.&-
J. McMANUS, MEMBER
/J.&i&
W. A. LOBPAI
PARTIAL DISSENT
RE: 733/85, 455186 OPSEU (Barry Cahoon) and the Crown in Right of Ontario
(Ontario Development Corporation)
I agree with the decision that the grievor “not be reinstated”. However,
I wotild haye come to this conclusion on the basis that there was a prima
facie case established. Further comments will be reserved until the final
decision is rendered.
W. A. Lobraico
MEMBER