Supreme Court of Canada
Canadian Merchant Service Guild v. Gagnon et al.,  1 S.C.R. 509
Canadian Merchant Service Guild Appellant;
Guy Gagnon Respondent;
Laurentian Pilotage Authority Respondent.
File No.: 16891.
1984: March 13; 1984: June 7.
Present: Ritchie, Dickson, Beetz, Estey, Mclntyre, Chouinard and Lamer JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR QUEBEC
Labour law—Trade union—Duty of fair representation—Union responsibilities—Refusal by a trade union to take a grievance to arbitration—No absolute right to arbitration for union member.
Respondent hired as a pilot boat captain was transferred by his employer to the position of maintenance worker. A grievance was filed and taken by the appellant (the Union) to the three levels provided for by the collective agreement. The Union however refused to take the grievance to arbitration. According to its legal counsel, arbitration was not the appropriate remedy. Under the collective agreement only a dismissal could be the subject of an arbitrable grievance. Respondent was dismissed eight months later. Maintaining that his transfer amounted to a disguised dismissal, respondent brought an action for damages against his union for failure in its duty of representation and against his employer who is no longer involved. The Superior Court and the Court of Appeal both found that the Union had failed in its duty of representation, and ordered the Union to pay damages to respondent. They blamed the Union for failing to conduct a thorough investigation into the way in which respondent had been treated—an investigation which would have shown that his transfer constituted a disguised dismissal and therefore was subject to arbitration under the collective agreement. This appeal is to determine whether the Union has failed in its duty of fair representation by refusing to take respondent’s grievance to arbitration.
Held: The appeal should be allowed.
The exclusive power conferred on a union to act as spokesman for the employees in a bargaining unit entails a corresponding obligation on the union to fairly repre-
sent all employees comprised in the unit. The representation must be fair, genuine and not merely apparent, undertaken with integrity and competence, without serious or major negligence, and without hostility towards the employee. When, as is true here, the right to take a grievance to arbitration is reserved to the union, the employee does not have an absolute right to arbitration and the union enjoys considerable discretion. This discretion however must be exercised in good faith, objectively and honestly, after a thorough study of the grievance and the case, taking into account the significance of the grievance and of its consequences for the employee on the one hand and the legitimate interests of the union on the other. In short, the union’s decision must not be arbitrary, capricious, discriminatory or wrongful.
In the case at bar, the Union did not fail in its duty of representation. It was not established that the Union acted in an arbitrary, discriminatory, negligent or hostile manner in its representation of the respondent. Nor can failure by the Union to undertake a thorough investigation be compared to bad faith in such a way to make it liable to respondent. The Court of Appeal itself recognized that the Union had been made aware by respondent of all the facts and had all the necessary elements to take an informed position. Clearly, the Union cannot be blamed for relying on the reasoned opinion of its legal counsel.
General Motors of Canada Ltd. v. Brunet,  2 S.C.R. 537; Rayonier Canada (B.C.) Ltd. and International Woodworkers of America, Local 1-217,  2 Can LRBR 196; Hubert v. Syndicat (unité) des policiers pompiers de la Ville de Nicolet,  T.T. 302; Guérard v. Travailleurs canadiens de l’alimentation et d’autres industries, local 748,  T.T. 420; Godin v. Fraternité unie des charpentiers et menuisiers d’Amérique, local 2533,  T.T. 157; Bécotte v. Syndicat canadien de la fonction publique, local 301,  T.T. 231; Courchesne v. Syndicat des travailleurs de la corporation de batteries Cegelec (CBC) de Louiseville (CSN),  T.T. 328; Boulay v. Fraternité des policiers de la communauté urbaine de Montréal Inc.,  T.T. 319; Baird v. Local 647, International Brotherhood of Teamsters,  O.L.R.B. Rep. 240; Ellens v. Service Employees’ Union, Local 204,  O.L.R.B. Rep. 770; Van Der Wolf v. United Steelworkers of America, District No. 6,  O.L.R.B. Rep. 104; Bachiu v. United Steelworkers of America, Local 1005,  O.L.R.B. Rep. 919; Fisher v. Pemberton (1969), 8 D.L.R. (3d) 521; Syndicat catholique des employés de magasins de Québec Inc. v. Compagnie
Paquet Ltée,  S.C.R. 206; Lecavalier v. Seaforth Fednav Inc.; Lecavalier v. Seafarers’ International Union of Canada, C.L.R.B., No. 443, November 15, 1983; Doyon v. Ville de Laval S.C. Mtl., No. 736-125, May 22, 1968; Herder v. G. Lapalme Inc., S.C. Mtl., No. 777-401, February 24, 1972; Brais v. Association des contremaîtres de la C.E.C.M., S.C. Mtl., No. 813-850, May 29, 1972; Hamilton v. Union des arts graphiques de Montréal, S.C. Mtl., No. 818-113, September 6, 1973, affirmed C.A. Mtl., No. 500-09-000773-73, January 7, 1980; Dalton v. Union internationale des employés professionnels et de bureau, local 409, S.C. St‑Maurice, No. 410-05-000255-74, May 24, 1977, affirmed C.A. Que., No. 200-09-000298‑77, April 12, 1983; Dorval v. Bouvier,  S.C.R. 288; Gagnon v. Gauthier,  Que. Q.B. 401; Beaudoin-Daigneault v. Richard,  1 S.C.R. 2; Desgagné v. Fabrique de Saint‑Philippe d’Arvida; Fabrique de Saint-Philippe d’Arvida v. Desgagné,  1 S.C.R. 19, referred to.
APPEAL from a judgment of the Quebec Court of Appeal,  C.A. 431, affirming in part a judgment of the Superior Court. Appeal allowed.
Irving Gaul and Marie-France Paquet, for the appellant.
Louis-Marie Lavoie and Robert Décary, for the respondent Gagnon.
English version of the judgment of the Court delivered by
CHOUINARD J.—Appellant is appealing from a judgment of the Court of Appeal of November 6, 1981,  C.A. 431, which affirmed in part a judgment of the Superior Court of May 17, 1978 and ordered it to pay respondent Gagnon “sixteen thousand two hundred and eighty-six dollars and forty-eight cents with costs at trial of an action of this class, plus the additional indemnity provided for by article 1056c C.C.”.
Respondent Gagnon initially sued for damages, first, his employer the Laurentian Pilotage Authority (the “L.P.A.”), for unjustified dismissal, and second, his union the Canadian Merchant Service Guild (the “Guild”), for failing in its duty of representation in connection with respondent’s dismissal grievance.
The Superior Court ordered the two defendants jointly and severally to pay respondent the sum of $20,000, that is a total of $18,000 for loss of salary and $2,000 for injury to his reputation, nuisance and inconvenience. Both parties appealed.
The Court of Appeal affirmed the order to pay $2,000 made against the L.P.A. On the remainder, finding that the rights which respondent Gagnon sought to assert proceeded exclusively from the collective agreement, and relying on the decision of this Court in General Motors of Canada Ltd. v. Brunet,  2 S.C.R. 537, the Court of Appeal allowed the appeal and dismissed the action. A motion for an extension of time to apply for leave to appeal against the L.P.A., submitted by respondent Gagnon in November 1982, was dismissed. An out-of-court settlement was subsequently reached between respondent Gagnon and the L.P.A. on the part of the order which was affirmed by the Court of Appeal.
With leave of this Court granted in February 1982, the Guild entered an appeal against respondent Gagnon and against the L.P.A. It has since discontinued the appeal against the latter. The Court accordingly only has before it the appeal of the Guild against the order made for failure in its duty to represent respondent Gagnon, reduced to $16,286.48 by the Court of Appeal.
Both parties were agreed on the following summary of the facts made by Claire L’Heureux‑Dubé J.A. of the Court of Appeal, at pp. 432-33:
[TRANSLATION] In June 1970, Gagnon was hired full-time by the Department of Transport (Transport Canada) as a pilot boat captain.
On February 1, 1972 the Pilotage Act (S.C. 1970-71-72, c. 52) replaced the Canada Shipping Act (R.S.C. 1970, c. S-9) for the purposes of the case at bar and created the Laurentian Pilotage Authority (L.P.A.).
On February 21, 1972, the L.P.A. offered Gagnon, who accepted, the right to retain his position as a pilot boat captain in accordance with the agreement by which the L.P.A. undertook to incorporate the employees of Transport Canada.
On January 29, 1973, alleging several incidents (marine accidents and offences of a disciplinary nature), the L.P.A. transferred Gagnon and assigned him to the maintenance of facilities and equipment.
In accordance with the collective agreement then in effect (February 1, 1973…), the Canadian Merchant Service Guild (the Guild) filed a grievance at the request of Gagnon, and advised Gagnon to carry out his new assignment. The grievance was taken to the three levels provided for by the collective agreement, but on March 29, 1973 the Guild informed Gagnon by letter… that it was unable to continue the grievance to the stage of arbitration for the reasons given in the legal opinion obtained by the Guild… including, most importantly, the fact that under the collective agreement the transfer of an employee could not be the subject of an arbitrable grievance.
On November 1, 1973 Gagnon was dismissed.
In August 1974 Gagnon, maintaining that his transfer amounted to a dismissal and that he might have been the victim of a deliberate scheme, brought an action for damages in the amount of $44,500 (increased by amendment to $53,005.12) plus interest from the date of service, the indemnity provided for in article 1056 C.C., and costs. His action was brought against appellants: his employer (the L.P.A.) and his union (the Guild).
L’Heureux-Dubé J.A. added at p. 434:
[TRANSLATION] I note forthwith that Captain Gagnon’s claim concerns only the damages resulting from his transfer in January 1973, which he regards as a disguised dismissal, and not the damages he may have sustained as a result of his dismissal on November 1, 1973.
Respondent added the following, which it is advisable to reproduce verbatim:
[TRANSLATION]… it is important to note that after the letter of January 29, 1973, by which the L.P.A. “transferred” respondent and assigned him to the maintenance of facilities and equipment, and until October 31 of the same year, Captain Gagnon was assigned to duties that were humiliating for someone in his position: he had to wash the engine room, shovel snow, pick up garbage including bottles and bottle fragments, remove rust from the metal portions of boats and paint the said boats, and this was known and seen by all his fellow-workers, the four (4) other captains, the four (4) engineers, the four (4) sailors, the office clerks, and the ninety-one (91) pilots at the Escoumins station.
Between March 29, 1973, the date on which the union informed Captain Gagnon of its intention not to go to arbitration, and September 19, 1973, the date on which Captain Gagnon wrote Captain Viet a long letter which was filed … appellant conducted no thorough investigation, though it could have seen that the duties assigned to Captain Gagnon were unacceptable, and that it was accordingly clear that the transfer was only intended to cover a disguised dismissal on which the employer had in fact decided, and that Captain Gagnon was given no opportunity to explain his side of the matter. The proceeding to finally dismiss Captain Gagnon had just begun. His actual and inevitable dismissal occurred on November 1, 1973.
On October 1, 1973, in reply to Captain Gagnon’s letter, Captain Viet said he was willing to re-assess at its true worth the position occupied by Captain Gagnon at this time… Similarly, counsel for the union suggested that the grievance be taken to arbitration… and he wrote:
Subject to my written opinion of March 27, 1973, concerning the matter of whether or not it can be successfully argued that a demotion in this case can be deemed to be a dismissal or equivalent to a dismissal, I am prepared to bring the matter up before an arbitrator, the whole in accordance with the terms and conditions governing your present Collective Agreement, in order to determine if there were sufficient causes for the Authority to act thus in this case.
Appellant presented two arguments, which can be summarized as follows.
(A) Under the collective agreement, only a dismissal can be the subject of an arbitrable grievance. A transfer cannot be submitted to arbitration. The decision made by the employer on January 29, 1973 could not in any way be regarded as a dismissal or lay-off within the meaning of the collective agreement in effect.
(B) The decision on whether a grievance should be taken to arbitration is for the union alone. In the circumstances of the case, the liability of appellant union is limited by the provisions of the collective agreement. Its decision not to take the grievance to arbitration cannot be regarded as bad faith or serious misconduct which would make it liable.
The applicable provisions of the collective agreement are para. (e) of clause 11.01, clause 11.03, para. (1) of clause 12.01 and clauses 20.04, 20.05 and 20.06:
[TRANSLATION] 11.01 Grievances shall be dealt with exclusively in accordance with the following procedures:
(e) only the Guild or the employer may refer the grievance to arbitration if it is not dealt with to the satisfaction of either of the parties or of the complainant.
11.03 When a grievance which may be referred to arbitration by an employee concerns the interpretation or application to him of a provision of a collective agreement or a decision of an arbitrator, the employee may only submit the grievance to arbitration if the Guild indicates, in the prescribed manner, that
(a) it approves reference of the grievance to arbitration, and
(b) it agrees to represent the employee in the arbitration proceeding.
12.01 Any grievance, dispute or issue arising from the interpretation or from an alleged breach of any of the provisions of this collective agreement, and as to which the Guild and the employer have not reached agreement following discussion, may be submitted to an arbitration board. Any matters requiring an alteration to this collective agreement, or which are not covered by the same, shall not be referred to arbitration.
20.04 No employee shall be dismissed by the employer without just cause. When an employee is dismissed by the employer, the latter shall give him at that time a notice in writing indicating the reasons for the dismissal.
20.05 If an employee wishes to know the reasons for his dismissal, the employer shall furnish him within seven (7) days of his making such a request with a detailed report in writing setting forth the reasons for his dismissal.
20.06 The dismissal of an employee shall be subject to the grievance and arbitration procedure provided by this agreement, and if the dispute is referred to the arbitration board it may, before rendering its decision, suspend the dismissal.
The Superior Court and the Court of Appeal both held that the transfer of respondent Gagnon from his position as a pilot to the position of a maintenance man constituted a disguised dismissal in the circumstances of the case; that this assignment was the first step, a preliminary, to getting rid of him, an action calculated to bring about his departure: either he would resign, or the unpleasantness of the duties to which he was assigned would induce him to commit a blunder or to do something that would justify his outright dismissal—hence the arbitrable nature of the penalty.
Appellant argued that, considering only the transfer in January 1973—since, as L’Heureux‑Dubé J.A. of the Court of Appeal pointed out, respondent had not made his later dismissal on November 1 an issue—that transfer cannot be regarded as a dismissal because respondent remained an employee of the L.P.A., performed work for it and was paid for the work he did.
It is beyond question that respondent was subjected to unfair treatment by his employer without just cause: that is no longer at issue. However, in my opinion it is not necessary to decide the question of whether his transfer constituted a disguised dismissal, as in any case the determining question in the case at bar is that concerning appellant’s duty of representation. Respondent can only have an action against appellant to the extent that the latter failed in that duty. Even assuming there is no doubt that respondent’s grievance is arbitrable, as to which I express no opinion, it does not necessarily follow that appellant made itself liable when it decided not to take the matter to arbitration.
Duty of Representation
The Canada Labour Code, R.S.C. 1970, c. L-1, and several provincial statutes now contain provisions regarding a union’s duty to represent its members.
The provision in the Canada Labour Code is s. 136.1, adopted in 1978:
136.1 Where a trade union is the bargaining agent for a bargaining unit, the trade union and every representative of the trade union shall represent, fairly and without discrimination, all employees in the bargaining unit.
In the same year the present s. 47.2 of the Quebec Labour Code, R.S.Q., c. C-27, came into effect:
47.2 A certified association shall not act in bad faith or in an arbitrary or discriminatory manner or show serious negligence in respect of employees comprised in a bargaining unit represented by it, whether or not they are members.
In 1973 British Columbia had adopted the provision which became s. 7(1) of the Labour Code, R.S.B.C. 1979, c. 212:
7. (1) A trade-union or council of trade-unions shall not act in a manner that is arbitrary, discriminatory, or in bad faith in representing any of the employees in an appropriate bargaining unit, whether or not they are members of the trade-union or of any constituent union of the council of trade-unions, as the case may be.
It was Ontario which, in 1971, first adopted a specific provision on the point. This is now s. 68 of the Labour Relations Act, R.S.O. 1980, c. 228:
68. A trade union or council of trade unions, so long as it continues to be entitled to represent employees in a bargaining unit, shall not act in a manner that is arbitrary, discriminatory or in bad faith in the representation of any of the employees in the unit, whether or not members of the trade union or of any constituent union of the council of trade unions, as the case may be.
Section 136.1 of the Canada Labour Code, like s. 47.2 of the Quebec Labour Code and s. 7 of the British Columbia Labour Code, is subsequent to the facts giving rise to the issue at bar. It is nonetheless useful to see how this legislation has subsequently been interpreted since, as we shall see below, the Canadian and Quebec courts recognized long before this legislation that a union has a duty to represent its members and that certain obligations follow from that duty.
In an as yet unpublished decision of November 15, 1983, No. 443, Lecavalier v. Seaforth Fednav Inc.; Lecavalier v. Seafarers’ International Union of Canada, the Canada Labour Relations Board reviewed and summarized the various factors and tests developed in its extensive earlier case law and applied by it, in deciding on a complaint by a member against his union under s. 136.1:
In Brenda Haley (1981), 41 di 311;  2 Can LRBR 121; 81 CLLC 16,096; André Cloutier (1981), 40 di 222;  2 Can LRBR 335; and 81 CLLC 16,108; and Jean Laplante (1981), 40 di 235; and  3 Can LRBR 52, the Board had the opportunity to enunciate the main principles of its policy respecting the interpretation of section 136.1 of the Code. A brief review of these principles is in order here. Without limiting the generality of the text of section 136.1, the Board indicated the criteria it would apply in determining whether a bargaining agent had discharged its duty of fair representation: serious negligence, discrimination, arbitrariness and bad faith. The Board stated that it would hold the bargaining agent to a much stricter standard where the career path of a member of a bargaining unit may be seriously affected, the most obvious example being dismissal. It noted that it would consider the resources of the bargaining agent and warned that it would carefully scrutinize its actions in each specific case.
A decision on which several others in Canada have been based is that of the British Columbia Labour Relations Board in Rayonier Canada (B.C.) Ltd. and International Woodworkers of America, Local 1-217,  2 Can LRBR 196.
That case concerned a complaint by a member against his union under s. 7 of the British Columbia Labour Code, cited above. The complainant alleged that the union had failed in its duty of representation by deciding not to take the grievance based on his dismissal to arbitration, which he considered unfair in light of the provisions of the collective agreement concerning seniority. The complaint was dismissed on the ground that it had not been shown that the union had acted arbitrarily, with discrimination or in bad faith in the way in which it represented the complainant.
The following review of the duty of representation is contained in this decision, at pp. 200-01:
Once a majority of the employees in an appropriate bargaining unit have decided they want to engage in collective bargaining and have selected a union as their representative, this union becomes the exclusive bargaining agent for all the employees in that unit, irrespective of their individual views. The union is granted the legal authority to negotiate and administer a collective agreement setting terms and conditions of employment for the unit and the employer does not have the right to strike a separate bargain with groups of employees directly (see MacMillan Bloedel Industries  1 Canadian LRBR 313). This legal position expresses the rationale of the Labour Code as a whole that the bargaining power of each individual employee must be combined with that of all the others to provide a sufficient countervailing force to the employer so as to secure the best overall bargain for the group.
Some time after the enactment in this form of the Wagner Act—which was the model for all subsequent North American labour legislation—American courts drew the inference that the granting of this legal authority to the union bargaining agent must carry with it some regulation of the manner in which these powers were exercised in order to protect individual employees from abuse at the hands of the majority. This came to be known as the duty of fair representation. Beginning with the decision in Steele v. Louisville (1944) 323 U.S. 192, which struck down a negotiated seniority clause that placed all black employees at the bottom of the list, the duty has been extended to all forms of union decisions. An enormous body of judicial decisions and academic comment has been spawned. This culminated in the U.S. Supreme Court decision of Vaca v. Sipes (1967) 55 L.C. 11,731, which is the leading American precedent in this area of the law. This initiative by the United States judiciary was emulated by one Canadian judge, in the case of Fisher v. Pemberton (1969), 8 D.L.R. (3d) 521 (B.C.S.C), where he concluded that the same duty must bind British Columbia unions certified under the old Labour Relations Act (at pp. 540-541). But Canadian legislatures have not waited for the evolution of a common law principle to run its course. Instead, they have uniformly moved to write the obligation explicitly into the statute and entrust its administration to the Labour Relations Board which is responsible for the remainder of the legislation. (For the Ontario history, see Gebbie v. U.A.W. and Ford Motor Co. (1973) OLRB 519). The B.C. legislature followed suit when it enacted s. 7 in late 1973.
What is the content of the duty of fair representation imposed on a union? Section 7(1) requires that a
trade-union not “act in a manner that is arbitrary, discriminatory or in bad faith in the representation of any of the employees” in the unit. The relevance of the American background can best be appreciated by these quotations from Vaca v. Sipes which defined the scope of (its) judicially developed obligation:
“Under this doctrine, the exclusive agent’s statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all members without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct… (at p. 18,294).
A breach of the statutory duty of fair representation occurs only when a union’s conduct toward a member of the collective bargaining unit is arbitrary, discriminatory, or in bad faith… (at p. 18,299).”
This comment by the Board follows at pp. 201-02:
Under this language, which has been directly imported into our legislation, it is apparent that a union is prohibited from engaging in any one of three distinct forms of misconduct in the representation of the employees. The union must not be actuated by bad faith in the sense of personal hostility, political revenge, or dishonesty. There can be no discrimination, treatment of particular employees unequally whether on account of such factors as race and sex (which are illegal under the Human Rights Code) or simple, personal favouritism. Finally, a union cannot act arbitrarily, disregarding the interests of one of the employees in a perfunctory matter. Instead, it must take a reasonable view of the problem before it and arrive at a thoughtful judgment about what to do after considering the various relevant and conflicting considerations.
The Board goes on to find that an employee’s right to have his grievance taken to arbitration is not absolute. It points out that arbitration is a costly procedure which requires the parties to invest a great deal of time and energy. The Board recognizes that the union has considerable scope in making its decision, even when the member insists on his grievance being taken to arbitration. Finally, it identifies various factors which should be taken into account in assessing the position taken by the union: the importance of the grievance for the employee in question, the apparent validity of the grievance based on the collective agreement
and the available evidence, the care taken by the union in investigating, the union’s practice in such cases, the interests of other employees and of the bargaining unit as a whole.
Since this decision Mr. P. Weiler, who presided over the Board which rendered it, in his work titled Reconcilable Differences: New Directions in Canadian Labour Law (1980), has suggested at pp. 137-39 that dismissal should give rise to an absolute right to arbitration in all cases provided the employee is willing to pay the costs of such arbitration. This point of view was rejected by the Canada Labour Relations Board in Haley, mentioned in Lecavalier, supra, and admittedly does not represent the present state of the law. See also Margriet Zwarts, “The Duty of Fair Representation: Individual Rights in the Collective Bargaining Process, or Squaring the Circle”, (1982) 28 McGill L.J. 59, at p. 86 et seq.
The number of available precedents is so great that it would be vain to attempt even a brief review of them. I shall simply refer to the following decisions of the Quebec Labour Court: Hubert v. Syndicat (unité) des policiers pompiers de la Ville de Nicolet,  T.T. 302; Guérard v. Travail-leurs canadiens de l’alimentation et d’autres industries, local 748,  T.T. 420; Godin v. Fraternité unie des charpentiers et menuisiers d’Amérique, local 2533,  T.T. 157; Bécotte v. Syndicat canadien de la fonction publique, local 301,  T.T. 231; Courchesne v. Syndicat des travailleurs de la corporation de batteries Cegelec (CBC) de Louiseville (CSN),  T.T. 328; Boulay v. Fraternité des policiers de la communauté urbaine de Montréal Inc.,  T.T. 319.
I would refer also to the following decisions of the Ontario Labour Relations Board: Baird v. Local 647, International Brotherhood of Teamsters,  O.L.R.B. Rep. 240; Ellens v. Service Employees’ Union, Local 204,  O.L.R.B. Rep. 770; Van Der Wolf v. United Steelworkers of America, District No. 6,  O.L.R.B. Rep. 104; Bachiu v. United Steelworkers of America, Local 1005,  O.L.R.B. Rep. 919.
All these decisions relate to the various legislative provisions on the duty of representation which were adopted—except for those in Ontario—after the present cause of action had arisen.
However, as mentioned above, the Canadian cases, following the U.S. precedents, had already recognized the existence of a union’s duty of representation and of the resulting obligations.
The first judgment to this effect, which is the starting-point for all this case law, is Fisher v. Pemberton (1969), 8 D.L.R. (3d) 521, mentioned in Rayonier Canada (B.C.) Ltd., supra.
The headnote states:
The broad authority of a trade union as exclusive bargaining representative of a unit of employees pursuant to the Labour Relations Act, R.S.B.C. 1960, c. 205, carries with it the responsibility of representing the interests of all employees fairly and impartially without hostility to any. Where a member of a trade union who is actively supporting a rival union in a jurisdictional dispute commits a breach of company regulations, an official of his union is not in breach of any duty to the member simply because he reports the breach of regulations to an officer of the company with the result that the member is discharged from his employment. The union has, however, a duty of fair representation of the member in connection with his subsequent grievance. In this respect the standards of a professional advocate cannot be imposed upon the union officials who are involved. Nevertheless, where the union men who appear on the member’s behalf are hostile to him, and are anxious to see him out of the company’s mill, and where they make no effort to obtain from the member and other witnesses an account of the events constituting the alleged breach of company regulations, so that a defence of the member is never put up, there is a breach of the duty of fair representation, and an action lies against the trade union for damages for breach of this duty. However, where the member would not have been reinstated by the company regardless of the representations which the union might have made and where the prospects of his gaining an arbitration award in his favour are negligible, the case is one for nominal damages only.
On the law, Macdonald J.A. wrote at pp. 540-41:
In the circumstances of this case what duty in law did Spencer owe the plaintiff when acting in the course of his office as acting president of Local 592? That duty is not spelled out in any Canadian decisions of which I am aware, but there are decisions of the Supreme Court of the United States which are in point. They define the duty with which I am concerned in a way which, with respect, appeals to me as sound and I therefore apply them in this case. I refer, first, to the judgment of White, J., expressing the views of five members of the Supreme Court in Humphrey et al. v. Moore (1964), 375 U.S. 335, in which he said the following at p. 342:
The undoubted broad authority of the union as exclusive bargaining agent in the negotiation and administration of a collective bargaining contract is accompanied by a responsibility of equal scope, the responsibility and duty of fair representation. Syres v. Oil Workers Union, 350 U.S. 892… “By its selection as bargaining representative, it has become the agent of all the employees, charged with the responsibility of representing their interests fairly and impartially”. Wallace Corp. v. Labor Board, 323 U.S. 248, 255. The exclusive agent’s obligation “to represent all members of an appropriate unit requires (it) to make an honest effort to serve the interests of all of those members, without hostility to any…” and its powers are “subject always to complete good faith and honesty of purpose in the exercise of its discretion.” Ford Motor Co. v. Huffman, 345 U.S. 330,…
Mr. Justice White delivered the opinion of the Court in Vaca et al. v. Sipes, Administrator (1967), 386 U.S. 171. He gave this exposition of the duty at p. 177:
It is now well established that, as the exclusive bargaining representative of the employees in Owens’ bargaining unit, the Union had a statutory duty fairly to represent all of those employees, both in its collective bargaining with Swift, see Ford Motor Co. v. Huffman, 345 U.S. 330; … and in its enforcement of the resulting collective bargaining agreement, see Humphrey v. Moore,… The statutory duty of fair representation was developed over 20 years ago in a series of cases involving alleged racial discrimination by unions certified as exclusive bargaining representatives under the Railway Labor Act, … and was soon extended to unions certified under the N.L.R.A., see Ford Motor Co. v. Huffman, supra. Under this doctrine, the exclusive agent’s statutory authority to represent all members of a designated unit includes a statutory obligation to serve the interests of all mem-
bers without hostility or discrimination toward any, to exercise its discretion with complete good faith and honesty, and to avoid arbitrary conduct. Humphrey v. Moore, 375 U.S., at 342.
After a lengthy analysis of the evidence, Macdonald J.A. held the union liable as follows, at pp. 546-47:
There is now the question whether Local 592 was in breach of its duty of fair representation of the plaintiff in connection with his grievance. Now, the standards of a professional advocate cannot be imposed upon the union officials who were involved. These were simply men employed at the mill who happened at the time to be elected to union office. But I am of the opinion that there was a failure of duty here. An important factor is that with the exception of Girbav, all the union men who appeared on the plaintiffs behalf were hostile to him. I am sure that they were all anxious to see him out of the mill. This made it more than usually important to ensure that he was given adequate representation. No attempt was made in connection with the second and third stages in the procedure to obtain from the plaintiff and lay before the Company officials Fisher’s account of what happened the evening of July 31st, and his explanations therefor. Nor were the other men present in the pipe shop interviewed. A defence of the plaintiff was never put up. He was in effect pleaded guilty at the outset—and without his consent—and argument directed only to the question of penalty. I recognize that the union representatives may well have been somewhat overwhelmed by the formidable list of past incidents of misconduct which were alleged against Fisher. Counsel for the defendants pointed out that the grievance was processed without delay. However, in the circumstances I am doubtful that this is a factor favouring the union men involved. I prefer Bryan’s evidence to that of Fisher, and think that he may very well have offered on August 7th to assist the plaintiff with a letter to the International. But it was a meaningless gesture in view of the circular, ex. 14, to all locals of the International in British Columbia and Alberta which was put out by Local 592 the same day. In Vaca v. Sipes, supra, White, J., had this to say on p. 194:
In administering the grievance and arbitration machinery as statutory agent of the employees, a union must, in good faith and in a nonarbitrary manner,
make decisions as to the merits of particular grievances. See Humphrey v. Moore…
Certainly in this case the local union did not make in a nonarbitrary manner a decision as to the merits of Fisher’s grievance. The whole matter was handled in a perfunctory way. I conclude therefore that the plaintiff has proved against Local 592 the breach of duty charged.
In an article entitled “Le devoir de représentation des associations de salariés en droit canadien et québécois”, (1981) 41 R. du B. 639, Professor Jean Denis Gagnon of the University of Montréal Faculty of Law observed at pp. 645-46:
[TRANSLATION] In Canada, before the adoption of legislation concerning associations’ duty of representation, the courts heard a number of actions in damages brought against employee associations or their representatives by employees who, following decisions taken by their employer, were disappointed in their expectations that their grievance would be taken to arbitration. In the judgments which they gave, the Canadian courts generally adopted the rules developed in the U.S. cases. Thus, several judgments held that in such cases it is for the plaintiff to show that the union which was supposed to represent him had demonstrated bad faith, had acted arbitrarily, had indicated hostility or had committed serious negligence.
These rules were applied in Quebec in several judgments which unfortunately are nowhere to be found in the reports (several of these judgments are mentioned in the judgment of the Labour Court in Boulay v. La Fraternité des Policiers de la C.U.M. et le Conseil de Sécurité de la C.U.M.,  T.T. 319), and they were generally followed until the Canadian and Quebec legislators amended the labour codes so as to expressly impose on unions a duty to fairly represent employees for whom they are the spokesmen in respect of the employer. Of the judgments rendered elsewhere in Canada, the decision of the British Columbia Supreme Court in Fishery. Pemberton (1969), 8 D.L.R. (3d) 521, is undoubtedly the one which has received the most general comment. (See especially Bernard L. Adell, The Duty of Fair Representation—Effective Protection for Individual Rights in Collective Agreements, (1970) 25 Rel. Industrielles 602.) Discussing the arbitrary attitude of union leaders, the Court applied in its judgment the concept developed by the United States Supreme Court in dealing with such an attitude in Vaca v. Sipes, 386 U.S. 171, stating that the union must genuinely attempt
to effectively represent the employees and cannot limit itself merely to formal gestures made simply to preserve appearances.
This brief review of certain U.S. and Canadian cases which have marked the development of the case law on the duty of representation of employee associations seemed to be necessary, as it indicates how the Canadian legislators who adopted rules in this regard after 1971 have been influenced by the rules developed by the courts.
The unpublished judgments of the Quebec courts to which Professor Gagnon refers in this passage are the following: Doyon v. Ville de Laval, S.C. Mtl., No. 736-125, May 22, 1968; Herder v. G. Lapalme Inc., S.C. Mtl., No. 777-401, February 24, 1972; Brais v. Association des contremaîtres de la C.E.C.M., S.C. Mtl., No. 813-850, May 29, 1972; Hamilton v. Union des arts graphiques de Montréal, S.C. Mtl., No. 818-113, September 6, 1973, affirmed on appeal C.A. Mtl., No. 500-09-000773-73, January 7, 1980; Dalton v. Union internationale des employés professionnels et de bureau, local 409, S.C. St-Maurice, No. 410-05-000255-74, May 24, 1977, affirmed on appeal C.A. Que., No. 200-09-000298-77, April 12, 1983. The same concepts are applied as those stated in Fisher v. Pemberton, supra, and the causes on which a union’s liability may be based are given as negligence, recklessness, carelessness, bad faith, animosity, dishonesty and malice.
The duty of representation arises out of the exclusive power given to a union to act as spokesman for the employees in a bargaining unit.
In Syndicat catholique des employés de magasins de Québec Inc. v. Compagnie Paquet Ltée,  S.C.R. 206, Judson J. for a majority of this Court described at p. 212 the status conferred on a certified union of exclusive representative of all employees who are members of the bargaining unit:
The union is, by virtue of its incorporation under the Professional Syndicates’ Act and its certification under the Labour Relations Act, the representative of all the employees in the unit for the purpose of negotiating the
labour agreement. There is no room left for private negotiation between employer and employee. Certainly to the extent of the matters covered by the collective agreement, freedom of contract between master and individual servant is abrogated.
The following principles, concerning a union’s duty of representation in respect of a grievance, emerge from the case law and academic opinion consulted.
1. The exclusive power conferred on a union to act as spokesman for the employees in a bargaining unit entails a corresponding obligation on the union to fairly represent all employees comprised in the unit.
2. When, as is true here and is generally the case, the right to take a grievance to arbitration is reserved to the union, the employee does not have an absolute right to arbitration and the union enjoys considerable discretion.
3. This discretion must be exercised in good faith, objectively and honestly, after a thorough study of the grievance and the case, taking into account the significance of the grievance and of its consequences for the employee on the one hand and the legitimate interests of the union on the other.
4. The union’s decision must not be arbitrary, capricious, discriminatory or wrongful.
5. The representation by the union must be fair, genuine and not merely apparent, undertaken with integrity and competence, without serious or major negligence, and without hostility towards the employee.
Application to the Case at Bar
The Superior Court judge stated that the union has [TRANSLATION] “…an obligation to ensure that the collective agreement is applied fairly and equitably, without taking any arbitrary or discriminatory decisions and taking all necessary steps to fully protect the employee’s interests”.
Essentially, the Superior Court judge felt that the Guild had not undertaken a [TRANSLATION] “substantive investigation”, which would have
indicated to it that this was not a transfer but a disguised dismissal, and so subject to arbitration.
The judge wrote:
[TRANSLATION] Reasonably thorough research on these lines would have shown that the type of duties plaintiff was being asked to perform were unacceptable.
He went on to say:
[TRANSLATION] Because of the nature of the new duties assigned to plaintiff, it was clear that the transfer was not a transfer.
In these circumstances, the fact of having obtained a legal opinion was not sufficient, and he concluded that the Guild had failed in its essential duties and was fully liable.
The Court of Appeal also was of the view that respondent’s transfer constituted a disguised dismissal, and was accordingly subject to arbitration. L’Heureux-Dubé J.A. wrote, at p. 445:
[TRANSLATION] As I have already pointed out, my analysis of the evidence leads me to conclude, in common with the trial judge, that Gagnon’s transfer actually constituted a dismissal in the circumstances of the case at bar. While, by virtue of the right of management recognized by the collective agreement, the L.P.A. had the power to transfer Gagnon, in my opinion it was not this right but the right to dismiss him which it exercised when it transferred Gagnon.
The Court of Appeal attributed to the Guild the same wrongful act as did the Superior Court, namely that of failing to undertake an investigation into the way in which respondent Gagnon had been treated, which would have shown it that his transfer constituted a disguised dismissal.
L’Heureux-Dubé J.A. wrote at p. 453:
[TRANSLATION] In light of these facts, I consider that the Guild has made itself liable here. After taking the grievance to the first three levels, in light of the information which it already had, the Guild could not be unaware of the validity of the grievance. Considering Gagnon’s insistence that his grievance be taken to arbitration and considering the full facts submitted to it by him, the Guild should have undertaken a thorough investigation which would have disclosed not only the unfair treatment of Gagnon by the L.P.A., but the fact that Gagnon’s transfer was actually only a disguised
means of dismissing him. The failure of the Guild to undertake such an investigation, in circumstances which ought logically to have led it to do so, constitutes in my view a fault, a failure in its duty to adequately represent the legitimate interests of its member.
She went on to say, at p. 454:
[TRANSLATION] The decision not to take the grievance to arbitration, in the circumstances of the case at bar, constitutes an arbitrary and wrongful decision which is contrary to the employee’s legitimate interests. It was taken negligently, without thorough investigation.
These passages are difficult to reconcile with the earlier passage, found at p. 446, in which L’Heureux-Dubé J.A. held that respondent’s refusal to go to Montréal to meet with legal counsel for the Guild when the latter was preparing to review the situation was justified, since respondent Gagnon had submitted all the necessary facts and the Guild had all the information it needed to decide to proceed with respondent Gagnon’s case:
[TRANSLATION] Even admitting that it is the employee’s responsibility to provide his union with all. the relevant facts needed to support his grievance, and to meet with counsel retained by the Guild to look into the matter, I consider that in the case at bar Gagnon had given his union all the facts supporting his grievance and had done everything necessary to enable the union and its counsel to take an informed decision. A further interview was not essential, and the reasons cited by Gagnon in support of his refusal appear valid to me, and not to have been prompted by a desire not to co‑operate. On the contrary, in my opinion Gagnon co-operated at all times and showed that he earnestly desired that his grievance should be taken to arbitration, and at this stage the Guild had all the information it needed to decide to proceed with Gagnon’s case. This argument is rejected.
In another respect the judge found that it was not conclusively shown that the Guild had itself acted in a manner hostile to Gagnon in handling his grievance (p. 454).
L’Heureux-Dubé J.A. further said that in her opinion there [TRANSLATION] “… is no evidence which necessarily indicates that there was a conspiracy between the Guild and the L.P.A. to force Gagnon out of his job, or any malicious conduct towards Gagnon” (p. 454).
With regard to the opinion of legal counsel, L’Heureux-Dubé J.A. wrote at p. 454:
[TRANSLATION] The Guild also cannot take refuge behind the opinion of its legal counsel that the grievance was not arbitrable, since despite the opinion which he initially gave, the latter subsequently changed his view and said he was prepared to take the grievance to arbitration.
This last statement should be corrected, as in his opinion of October 4, 1973 legal counsel wrote the following, which I again reproduce:
Subject to my written opinion of March 27, 1973, concerning the matter of whether or not it can be successfully argued that a demotion in this case can be deemed to be a dismissal or equivalent to a dismissal, I am prepared to bring the matter up before an arbitrator, the whole in accordance with the terms and conditions governing your present Collective Agreement, in order to determine if there were sufficient causes for the Authority to act thus in this case.
L’Heureux-Dubé J.A. sought support in General Motors of Canada Ltd. v. Brunet, supra, and citing a passage from the decision of Pigeon J., at p. 548, she concluded at p. 454:
[TRANSLATION] In the case at bar, bad faith is alleged and in my opinion, the negligence and incompetence which have been demonstrated here must be treated as amounting to bad faith, if that is indeed the only criterion which should guide the Court, which I do not think it is.
The full passage at p. 548 of General Motors of Canada Ltd. v. Brunet is as follows:
I do not find it necessary to consider to what extent the Union may be obliged to take an employee’s grievance to the third stage. In any case, para. 31 clearly gives the Union the sole responsibility of deciding whether it will go to the next stage. With respect to recourse to arbitration, the wording is equally clear: the only person who can claim it, according to para. 33, is the Canadian Director or his designated representative. It would be absolutely contrary to these provisions to allow the discharged employee to ask the courts to assume the function of the arbitrator appointed by the agreement, if the Union drops the grievance rather than carrying it to arbitration. The situation might be different if the Union acted in bad faith, but good faith is to be presumed and there is no allegation of bad faith.
It can clearly be seen that Pigeon J. refrains from dealing with a union’s obligation to take a grievance to the third stage. The gist of the passage cited above is that it would be contrary to the provisions of the agreement to recognize that the employee has any recourse in the courts against his employer when the Union decides not to take a grievance any further. The reference to bad faith seems to be a qualification to the rule stated, indicating that if the grievance has been abandoned in bad faith, the situation could be different and perhaps in such a case an employee would have an action in the courts. In my view, General Motors of Canada Ltd. v. Brunet does not in any way support the finding of the Court of Appeal, especially as at p. 552 we find the following passage, which clearly indicates that the Court was making no ruling on actions by an employee in the case of bad faith by the Union, or indeed on whether such an action by the employee would only exist in the case of bad faith, or as to what the phrase “bad faith” means:
It does not appear necessary to consider what recourse an employee would have if the certified union which signed the collective agreement refused in bad faith to submit a grievance and whether there is a distinction to be made depending on the employer’s awareness or ignorance of such bad faith.
In short, the only finding made by the Superior Court and the Court of Appeal against the Guild is that it did not undertake an investigation into the treatment given to respondent, one which would have shown the Guild that this treatment was so unfair that its purpose must have been to induce respondent Gagnon to resign or to provoke insubordination or misconduct by him which would have justified his eventual dismissal. Yet the Court of Appeal was satisfied that the Guild had been made aware of all the facts which it, and its counsel, needed in order to take an informed decision, and that [TRANSLATION] “the Guild had all the information it needed to decide to proceed with Gagnon’s case”, so much so that an interview by the latter with counsel was not essential.
The Court of Appeal also found that it was not established that the Guild had acted with hostility towards Gagnon, and there is no evidence which
[TRANSLATION] “necessarily indicated that there was a conspiracy between the Guild and the L.P.A. to force Gagnon out of his job, or any malicious conduct towards Gagnon”.
It is common ground that the Guild handled respondent’s grievance from the outset, that it took the grievance to the third level, and that between January and November of 1973 there was, in the words of the trial judge, [TRANSLATION] “an abundant exchange of correspondence” between the Guild and respondent.
On March 22, 1973, the Guild consulted its legal counsel and the latter submitted his written opinion, with reasons, on March 27.
Essentially, legal counsel for the Guild formally gave it as his opinion that the grievance was not arbitrable and mentioned the risks of failure, either before the arbitration board itself on objection by the employer or on a decision by the arbitration board proprio motu, or subsequently in the Federal Court. The following are the passages from this five-page opinion which seem to be most relevant, and which in my view left the Guild with no alternative:
[TRANSLATION] …it is also necessary to bear in mind the provisions of clause 6, entitled “Responsibilities of Management”, which provides that unless otherwise specified, “this agreement shall in no way limit the authority of persons made responsible for management by the Pilotage Act”. The situation accordingly involves the residual powers of the employer after the collective agreement has been signed, and may include inter alia the absolute right of the employer to decide on transfers, regardless of the collective agreement.
First, I do not think that the transfer of Captain Gagnon, and his grievance in this regard, constitutes “a grievance, dispute or issue arising from the interpretation or from an alleged breach of any of the provisions of this collective agreement…”, for none of the provisions of this collective agreement directly or indirectly affects employee transfers: cf. 12.01.
Further, it clearly states at the end of clause 12.01 that “matters …not covered by this collective agreement shall not be referred to arbitration”.
Accordingly, as transfers are not one of the subjects of the agreement, and in the absence of any specific provision regarding the right of resort to arbitration in connection with a transfer, I have no choice but to conclude that arbitration is not the appropriate remedy in this case, and that unless the employer agrees to the matter being submitted to an arbitrator, the latter would not be entitled to render a decision under clause 12 of the agreement.
It could well be that the employer based its decision on the same reasons, for in his letter of March 6, 1973 Mr. Paré stated, in the third paragraph, [TRANSLATION] “in view of the foregoing we feel that our position is justified. We did not dismiss Captain Gagnon, but placed him in a more suitable position with an equivalent salary…”
I have not examined the merits of the dispute between Captain Gagnon and his employer, for if the employer has the right to act in this way under its residual powers, it is useless to attempt to determine whether the employer had good reasons for making this transfer.
However, I would add that the reasons given by Mr. Paré in his letter of March 6, 1973 do not seem convincing and appear to me to be of little weight. Further, if it is true that Captain Gagnon did not even receive the usual warnings before this transfer, the least that can be said is that the employer appears to have committed quasi-arbitrary acts which could be a basis for other personal actions by Captain Gagnon against his employer.
In short, I think that an application to refer the grievance to arbitration would entail the risk that the employer would object, and that even if by omission, or for some other reason, it did not object, the arbitrator appointed could well conclude himself that he was unable to render a decision on a grievance not within the subjects of the agreement, or not specifically provided for as in the case of a dismissal. Further, even in the event that the arbitrator agreed to render a decision on this point, this may be a case where, despite the third paragraph of clause 12.01(d), the Federal Court of Canada could be asked to decide the matter, and would perhaps confirm that the arbitrator had no right to make a ruling in this case, or on this point.
I am returning your complete file, and would add in closing that I should be pleased to provide you with any further information you may wish in this regard.
Appellant sent a copy of the opinion to respondent with a letter of March 29 in which it wrote that [TRANSLATION] “Due to the terms of this
legal opinion, this is to inform you that we are unfortunately unable to continue with this grievance by taking it to the stage of arbitration”.
The correspondence between respondent and appellant continued nonetheless, and respondent wrote appellant inter alia his letter of September 19, describing in detail the situation which he was in and the unpleasantness of the duties assigned to him.
The Guild’s representative again met with legal counsel, and the latter wrote the Guild again on October 4. He said, first, that he had reviewed the Guild’s entire file, which of course contained all the correspondence subsequent to his original opinion of March 27, inter alia the aforementioned letter from respondent to the Guild dated September 19. Then, legal counsel stated he was willing to take the grievance to arbitration, but as already noted subject to his original opinion cited above. The grievance was subsequently dropped, events took their course and respondent was eventually dismissed by the employer.
With respect, I cannot see how the failure by the Guild to undertake a [TRANSLATION] “substantive investigation” or a “thorough investigation”, as the judges of the Superior Court and the Court of Appeal respectively described it in indicating the only fault they attributed to the Guild, can constitute bad faith by the latter and make it liable to respondent. The Court of Appeal stated that the Guild had been informed by respondent of all the facts and had all the information necessary to act. Further, the decision of the Guild not to proceed was not arrived at because it did not believe respondent’s version. There was no indication of this. The Guild relied on the opinion of its legal counsel and that is what it told respondent on March 29. In early October, although legal counsel was willing to proceed, this was subject to his opinion which had not changed. I do not see how the Guild can be blamed for relying on this reasoned opinion even if it was incorrect, a point on which I express no opinion.
As Margriet Zwarts wrote in the article cited above, at p. 65: “…to require the arbitration of every grievance would quickly drain even the most powerful and wealthy unions of money and energy; it would also tax the employer unnecessarily”.
Respondent submitted that the case at bar concerns questions of fact on which the Superior Court and the Court of Appeal concurred, and there was no basis for this Court to intervene unless a manifest error appeared. He cited in support Dorval v. Bouvier,  S.C.R. 288, and Gagnon v. Gauthier,  Que. Q.B. 401.
These principles are well-known and were recently restated in two decisions of this Court rendered on February 2, 1984: Beaudoin-Daigneault v. Richard,  1 S.C.R. 2; Desgagné v. Fabrique de Saint-Philippe d’Arvida; Fabrique de Saint-Philippe d’Arvida v. Desgagné,  1 S.C.R. 19.
In the latter case, Beetz J. wrote for the Court, at p. 31:
It therefore does not entail substituting my own view of the evidence for that of the trial judge, but drawing conclusions in law based on the facts which she herself considered to have been established. When an appellate court accepts all the conclusions of fact as such made by the trial judge, as I do, it is in as good a position as he is to characterize facts.
The same is true in the case at bar and, with respect, I consider that the facts as determined by the Superior Court judge and by the Court of Appeal do not constitute a basis in law for an order to appellant to pay damages for failing in its duty to represent respondent.
I would allow the appeal, set aside the judgments of the Court of Appeal and of the Superior Court and dismiss the action of respondent against appellant with costs in all courts.
Appeal allowed with costs.
Solicitors for the appellant: Chapados, Chevalier & Gaul, Montréal.
Solicitors for the respondent Gagnon: Des Rivières, Vermette, Bérubé, Thivierge & Associés, Québec.