Let’s Be Reasonable: Court of Appeal Divided on Resonableness

Jacob R. W. Damstra
Partner

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published in Appeals
Matthew McGuckin
Associate

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published in Appeals

March 24th, 2021

The Court of Appeal for Ontario’s recent decision in Ontario Nurses’ Association v Participating Nursing Homes^[1] highlights a stark rift on how to conduct a reasonableness analysis of an administrative tribunal’s decision in the post-Vavilov^[2] landscape.

In a 3-2 split of a 5-judge-panel the majority and dissenting opinions at the Court of Appeal took considerably different approaches to analyze the reasonableness of a decision of the Pay Equity Hearings Tribunal (the “Tribunal”) considering the interpretation of the Pay Equity Act^[3] (the “Act”) and the duty it places on employers to establish and maintain pay equity in the workplace.^[4]The fascinating context and outcome of the decision itself will be addressed in a separate blog to follow.

The Pay Equity Act

The Act’s objective is to redress systemic gender discrimination in compensation for work performed by employees in “female job classes”.^[5]The Act prescribes three methods for assessing pay equity: (i) job-to-job; (ii) proportional value; and (iii) proxy.^[6]The proxy method, which is used to assess pay equity in establishments without male job classes, was the focus of Ontario Nurses.

Pay Equity Hearings Tribunal^[7]

On an application to the Tribunal, the Ontario Nurses’ Association and the Service Employees International Union, Local 1 (the “Unions”) argued the proxy method must be used to establish and maintain pay equity.

Participating Nursing Homes (“PNH”) and the Attorney General of Ontario (“AGO”), who was added as an intervener by the Tribunal, argued the proxy method is to be used as a means of establishing pay equity in a given workplace, not as a means of maintaining it.

The Tribunal dismissed the Unions’ application. It found the proxy method to be “extraordinary” and viewed an ongoing requirement to obtain information from the proxy employer as “a substantial practical impediment” that was “inconsistent with the overriding principle that the Act mandates each individual employer to ensure…its own compensation practices are free from gender discrimination.”^[8] The Tribunal determined that the proxy method was not necessary to monitor pay equity, instead establishing a formula to monitor the value/compensation relationship after the comparative baseline had been set.^[9]

Divisional Court^[10]

Upon judicial review, the Divisional Court found the Tribunal’s decision to be unreasonable for:

(i) failing to consider Charter values when interpreting the Act in accordance with Taylor-Baptiste v. OPSEU;^[11]
(ii) limiting s. 15 of the Charter by denying “women in predominantly female workplaces the right to maintain pay equity with reference to male work”;^[12] and
(iii) failing to balance the severity of interference with s. 15 Charter rights with the statutory objectives of the Act by ensuring that discrimination in compensation does not re-emerge.

The Divisional Court held “the only proportionate balance of the Charter right of equality with the statutory mandate of the Act, properly construed, requires the maintenance of pay equity in predominantly female workplaces through the proxy method comparison”.^[13]The Divisional Court remitted the matter to the Tribunal to specify the procedures for maintaining pay equity using the proxy method on a going-forward basis.

Court of Appeal for Ontario

The Court of Appeal granted PNH and the AGO leave to appeal the decision of the Divisional Court and sat a five-judge panel as PNH and the AGO challenged the Court’s earlier decision in Taylor-Baptiste relating to statutory ambiguity and the consideration of Charter values.

The majority and dissent agreed that there is a single standard of reasonableness post-Vavilov,^[14]and that the reasonableness of a particular decision is to be assessed against its: (i) justification; (ii) intelligibility; and (iii) transparency vis-à-vis the administrative decision maker’s enabling statute.^[15] Beyond that broad agreement, Justice Benotto’s majority decision and Justice Huscroft’s dissenting opinion took different approaches and reached different conclusions pertaining to the reasonableness of the Tribunal’s decision.

Result-Focused Reasonableness: The Majority Approach

Justice Benotto began by setting out the “guiding principles”:

(i) a reviewing court’s inquiry into reasonableness involves “stepping into the shoes” of the lower court and focusing on an ADM’s decision^[16];
(ii) a reviewing court’s reasonableness analysis is to focus on why an ADM’s decision is unreasonable, not on what the reviewing court would have determined in the ADM’s place^[17]; and
(iii) the reasonableness of a given decision is to be assessed in light of the text, context and purpose of the statutory scheme at issue (also referred to as the scheme of the Act, the object of the Act and the intention of Parliament).^[18]

Applying these principles, Justice Benotto’s reasonableness analysis started from the Tribunal’s conclusion that “it is possible to maintain pay equity without continuing to [monitor] the compensation practices in the proxy establishment” and worked backwards to prove why it was unreasonable.[19]

Justice Benotto then looked to the Act itself:

(i) Scheme: measuring the Tribunal’s conclusion against the “fundamental premise” and/or “key element” of the Act;^[20]
(ii) Object: considering the Tribunal’s conclusion for consistency and conformity with the reviewing court’s view of the object of the Act^[21] and whether the Tribunal’s failure to consider any of the objects of the Act resulted in a loss of confidence in the outcome reached;^[22] and
(iii) Intent: assessing whether the Tribunal’s decision gave effect to the intent of the Act by isolating the proxy assessment method and asking whether it was added for any particular purpose (i.e., “but-for” its inclusion, would a class of employees be unnecessarily excluded from the protections offered by the Act?).^[23]

Justice Benotto next looked to case law, asking:

(i) Had any previous case or cases determined any inequities that may arise by adopting the Tribunal’s conclusion?^[24]; and
(ii) Did the Tribunal’s conclusion produce any additional barriers to a particularly vulnerable group or groups that the Act purported to remedy?^[25]

Finally, Justice Benotto asked whether “there are any sufficiently serious shortcomings in the decision such that it cannot be said to exhibit the requisite degree of justification, intelligibility and transparency”.^[26]If the Tribunal’s decision failed to meet any of these three requirements (i.e., justification, intelligibility or transparency), it would be unreasonable.^[27]Justice Benotto did conclude the decision was unreasonable and set it aside.

Process-Oriented Reasonableness: The Dissenting Approach

Justice Huscroft criticized the majority’s reasonableness analysis for collapsing into a correctness review; the majority failed to mention the word “deference” once.^[28]Justice Huscroft focused on the process adopted by the Tribunal in rendering its decision and worked forwards in assessing reasonableness.

Justice Huscroft held that reasonableness analysis should begin by reviewing the context within which the Tribunal’s decision was made, including:

(i) The length of the hearing from which the Tribunal’s decision was produced;
(ii) Witnesses heard from during the hearing (i.e., lay, expert, interveners);
(iii) The evidence presented during the hearing (i.e., the operation of nursing homes party to the dispute, the relationship of nursing homes to the government, employment in nursing homes, etc.);
(iv) Whether the Tribunal considered the history of the Act (i.e., studies leading to amendments, government discussion papers, legislative settlements, etc.);
(v) Whether the Tribunal gave proper consideration to the parties’ positions;
(vi) Whether the Tribunal reviewed and/or applied its case law; and
(vii) The length and degree of detail included in the Tribunal’s decision.^[29]

Having regard to these factors, did the Tribunal’s decision make sense of the question put to it?^[30] If the answer is yes, in Justice Huscroft’s analysis, the decision is entitled to deference.^[31]

With context and deference in mind, Justice Huscroft analyzed the reasonableness of the decision focusing on the process through which the Tribunal rendered its decision, asking:

(i) Did the Tribunal have due regard for the governing statute in question (i.e., did it review the provisions in search of an answer to the question)?^[32]
(ii) If the statute was unable to provide an answer, did the Tribunal review its case law and adopt the approach taken in previous cases or provide a sufficient justification as to why it was distinguishable?^[33]
(iii) Did the Tribunal consider the arguments put forth by the parties and if it disagreed with one or both, did it provide sufficient justification as to why?^[34] and
(iv) Did the Tribunal provide any additional comments which suggest that it ignored the “purpose, scheme and plain wording of the Act?”^[35]

Unless the Tribunal profoundly misunderstood and/or undermined its mandate, Justice Huscroft held that the reviewing court should defer to the Tribunal’s expertise in the space and uphold its decision as reasonable^.[36]

Concluding Remarks

While Vavilov may have been intended and heralded as a simplification of administrative law judicial review proceedings by inserting a presumption of reasonableness, Ontario Nurses indicates that the application of this “single standard of reasonableness” may yet be ripe for advocacy.

It seems that the Court of Appeal’s split decision in Ontario Nurses may find its way onto the docket of Canada’s highest court to provide guidance on how this single standard of reasonableness is to be applied. Until we are able to hear from the Supreme Court of Canada, the question is: do administrative lawyers and reviewing court’s focus on the reasonableness of the administrative tribunal’s result or its process?

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[1] Ontario Nurses’ Association v. Participating Nursing Homes, 2021 ONCA 148 [“Ontario Nurses”].

[2] Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 [“Vavilov”].

[3] Pay Equity Act, R.S.O. 1990, c. P.7

[4] Pay Equity Act, s. 7(1).

[5] Pay Equity Act, s. 1(1) – “female job class” is a job class in which 60 per cent or more of the members are female; “male job class” is a job class where 70 per cent or more of the members are male.

[6] Ontario Nurses, at para. 16.

[7] Participating Nursing Homes v. ONA, [2016] O.P.E.D. No. 5 (Ont. PEHT).

[8] Ontario Nurses, at para. 31.

[9] Ontario Nurses, at paras. 5, 30.

[10] Ontario Nurses’ Association v. Participating Nursing Homes, 2019 ONSC 2168 (Div. Ct.).

[11] Ontario Nurses, at para. 34, citing Taylor-Baptiste v. OPSEU, 2015 ONCA 495, at paras. 54-57.

[12] Ontario Nurses, at para. 35.

[13] Ontario Nurses, at para. 37.

[14] Ontario Nurses, at paras. 41, 106, citing Vavilov, at para. 89.

[15] Ontario Nurses, at paras. 84, 105, citing Vavilov, at para. 100.

[16] Ontario Nurses, at para. 40, citing Agraira v Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, at paras. 45-46.

[17] Ontario Nurses, at para. 46, citing Vavilov, at paras. 115-116.