Freedom of Majoritarian Exclusivity and Why Ms. Clitheroe Should Have Joined a Union: Charter Developments in Ontario Courts

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1 Freedom of Majoritarian Exclusivity and Why Ms. Clitheroe Should Have Joined a Union: Charter Developments in Ontario Courts Robert E. Charney This paper considers two Charter cases decided by Ontario Courts in the past year. The first, Fraser v. Ontario, 1 invalidated Ontario s Agricultural Employees Protection Act 2 under Charter 3 s. 2(d), and is on its way to the Supreme Court of Canada. The second case, Clitheroe v. Hydro One Inc., 4 upheld the constitutional validity of the Hydro One Inc. Directors and Officers Act 5 and is now on its way to the Ontario Court of Appeal. While only the Fraser case is about collective bargaining and s. 2(d) of the Charter, both cases raise interesting issues arising from the Supreme Court of Canada s analysis of freedom of association. Fraser v. Ontario i) Judicial History Fraser v. Ontario is the latest in a line of cases to consider the exclusion of agricultural workers from Ontario s Labour Relations Act (LRA). 6 The issue of the agricultural sector exclusion first arose in Cuddy Chicks Ltd. v. Ontario (Labour Relations Board) 7 in 1988, when the Ontario Divisional Court decided that the Labour Relations Board had jurisdiction to consider the constitutional validity of that exclusion. While the jurisdictional issue in Cuddy Chicks went to the Supreme Court of Canada, which affirmed the jurisdiction of administrative tribunals to consider the constitutional General Counsel, Constitutional Law Branch, Ontario Ministry of the Attorney General. The views expressed in this paper are solely those of the author and do not represent the position of the Ministry of the Attorney General of Ontario. The author s colleagues in the Constitutional Law Branch were counsel in the two cases discussed in this paper. The author would like to thank Candice Telfer for her research and editing assistance in the preparation of this paper. 1 [2008] 92 O.R. (3d) 481 [Fraser]. 2 S.O. 2002, c. 16 [AEPA]. 3 Canadian Charter of Rights and Freedoms, Part I of the Constitution Act, 1982, being Schedule B to the Canada Act 1982 (U.K.), 1982, c [2009] O.J. No [Clitheroe]. 5 S.O. 2002, c S.O. 1995, c. 1, Schedule A. 7 [1988], 66 O.R. (2d) 284 (Div. Ct.), aff d [1989] 70 O.R. (2d) 179 (Ont. C.A.), aff d [1991] 2 S.C.R. 5.

2 validity of their constituent statutes, the merits of the constitutional argument were not considered until the case of Dunmore v. Ontario, 8 which the Supreme Court decided in The Supreme Court s decision in Dunmore is central to an understanding of the issues raised in Fraser. In Dunmore, the applicants challenged the exclusion of agricultural workers from Ontario s labour relations regime on the basis that their exclusion violated ss. 2(d) and 15 of the Charter. The lower courts had rejected this claim on the basis that the Supreme Court s Labour Trilogy 9 had determined that freedom of association did not include a right to bargain collectively, and the statutory protections of the LRA were part of a statutorily created collective bargaining regime. A majority of the Supreme Court, however, reversed these decisions and concluded that the complete exclusion of agricultural workers from the LRA substantially impeded their capacity to exercise their freedom to organize. 10 Thus, while the Supreme Court stopped short of overruling the Labour Trilogy, it did conclude that, in the context of agricultural workers, legislative protection is absolutely crucial if agricultural workers wish to unionize 11 or meaningfully exercise their freedom to organize. According to the Court, organizing farm workers in the absence of statutory protections was all but impossible and this impediment was attributable to the exclusion itself, rather than to private action exclusively. 12 Therefore the exclusion of agricultural workers from the LRA infringed the freedom to organize and thus violates s. 2(d) of the Charter. 13 The Court further held that this violation of s. 2(d) was not saved under Charter s One exceptional aspect of Dumore was the prescriptive nature of the Supreme Court s remedial analysis. The actual order of the Supreme Court was to strike down s. 8 [2001] 3 S.C.R [Dunmore]. 9 The three cases referred to as the Labour Trilogy are: Reference re. Public Service Employee Relations Act (Alberta), [1987] 1 S.C.R. 313 [Alberta Reference]; Public Service Alliance of Canada v. Canada, [1987] 1 S.C.R. 424; Retail, Wholesale and Department Stores Union v. Saskatchewan, [1987] 1 S.C.R Dunmore, supra note 10 at para Ibid. at para Ibid. at paras.48 & Ibid. at para Ibid. at para.65. 2

3 3(b) of the LRA, the provision which excluded agricultural workers from the purview of that Act. The Court, however, recognized that simply striking down s. 3(b) of the Act presented its own problems, as it obliges the legislature to extend the full panoply of collective bargains rights in the LRA to agricultural workers 15 even though the full panoply of LRA bargaining rights were not mandated by the principles of Dunmore. Of particular concern, for example, was the right to strike, which, due to the seasonal nature of most farm operations and the perishable nature of the product, would leave employers particularly vulnerable to potentially devastating strike action. Recognizing that the Court is not in a position to enact such detailed legislation the Court suspended its declaration for eighteen month allowing amending legislation to be passed if the legislature sees fit to do so. 16 The Supreme Court did not, as stated by the Ontario Court of Appeal in its decision in Fraser, order the legislature to enact a statutory framework including protections for the freedom to organize. 17 Rather, its declaration allowed the legislature an eighteen month opportunity to enact such legislation if the legislature sees fit to do so. As in other cases where the Supreme Court suspends its declaration, the legislature is left with a do nothing option which results in the automatic invalidation or extension of a statutory provision. The do nothing option may present serious policy concerns (such as extending the right to strike to agricultural workers) or be politically unpalatable, but, at least in theory, the Court never actually orders the government or the legislature to enact legislation. 18 This apparent misunderstanding on the part of the Ontario Court of 15 Ibid. at para Ibid. [emphasis added] 17 Fraser, supra note 1 at para Another example is the case of M. v. H., [1999] 2 S.C.R. 3 where the Supreme Court of Canada s declaration would have invalidated the definition of the term spouse in Part II of the Family Law Act. This declaration, had it been left to come into effect at the end of the six-month suspension, would have eliminated spousal support obligations for common-law opposite sex couples (i.e. unmarried spouses who have cohabited for a period of not less than three years), a prospect that was both regressive from a policy perspective and unacceptable from a political perspective. Accordingly, while the Court did not actually order the government of Ontario to extend spousal support obligations to same-sex partners, given the prospect of no support obligations for common law couples if it did nothing, the government introduced the contentiously titled An Act to amend certain statutes because of the Supreme Court of Canada Decision in M. v..h., S.O. 1999, c.6, and extended equal rights to same-sex partners. 3

4 Appeal may have contributed to its unprecedented order in the Fraser case, an issue we will return to later in this paper. While the Supreme Court of Canada did not order the legislature to do anything, it did lay out a detailed blueprint of the kind of statute which would be consistent with the principles established in Dunmore. The Court listed five requirements which were at a minimum necessary to enable agricultural workers to exercise their constitutional freedom to form and maintain associations. These minimum requirements were: i. the statutory freedom to organize in s. 15 of the LRA; ii. freedom to assemble; iii. freedom to participate in the lawful activities of the association; iv. freedom to make representations; v. the right to be free from interference, coercion and discrimination in the exercise of these freedoms. 19 Apart from these minimum requirements, the Supreme Court purported to leave all other labour policy issues to the legislature, including whether agricultural workers should have the right to strike, or whether agricultural workers should be a part of the Labour Relations Act or subject to a specialized labour law regime. ii) Fraser Decision Taking the Supreme Court at its word, Ontario proceeded to enact legislation The Agricultural Employees Protection Act, 2002 (AEPA) 20 which continued to exclude agricultural employees from the Labour Relations Act, but guaranteed to them each of the five minimum requirements identified in the Court s reasons. 21 Section 1(2) of the AEPA guarantees to agricultural employees the following rights: i. the right to form or join an employees association; 19 Dunmore, supra note 10 at para Supra note In addition to the minimum requirements set out by the Court in Dunmore, the AEPA imposes a duty on the employer to listen to or read the employees representations (s.5(6)) and a duty of fair representation on the employee association. It also established a tribunal to enforce the rights set out in the Act. 4

5 ii. the right to participate in the lawful activities of an employees association; iii. the right to assemble; iv. the right to make representations to their employers, through an employees association, respecting the terms and conditions of their employment; v. the right to protection against interference, coercion and discrimination in the exercise of their rights. The Court of Appeal in Fraser agreed that the AEPA met the minimum requirements established by the Supreme Court in Dunmore, but noted that the Supreme Court s 2007 decision in Health Services, 22 which expressly overruled the Labour Trilogy by recognizing the constitutional right to bargain collectively, had raised the bar. Thus, while the AEPA did not violate the appellants freedom to organize, it fell short when it came to protecting the right to bargain collectively. The Court of Appeal recognized three additional statutory protections which were minimum requirements of the newly minted s. 2(d). The Court stated: If legislation is to provide for meaningful collective bargaining, it must go further than simply stating the principle and must include provisions that ensure that the right can be realized. At a minimum, the following statutory protections are required to enable agricultural workers to exercise their right to bargain collectively in a meaningful way: (1) a statutory duty to bargain in good faith; (2) statutory recognition of the principles of exclusivity and majoritarianism; and (3) a statutory mechanism for resolving bargaining impasses and disputes regarding the interpretation or administration of collective agreements. 23 Since the AEPA did not guarantee these three aspects of collective bargaining, the Act still infringed Charter s. 2(d). With regard to Charter s. 1, the Court accepted that 22 Health Services and Support - Facilities Subsector Bargaining Assn. v. British Columbia, [2007] 2 S.C.R. 391 [Health Services]. 23 Fraser, supra note 1 at para 80. 5

6 the main objectives of the AEPA (to protect the family farm and farm production/viability) were sufficiently pressing and substantial to meet the first part of the s. 1 analysis. 24 The legislation could not, however, survive the rational connection or minimal impairment components of the s. 1 analysis, because even though the legislature had done exactly what the Supreme Court of Canada suggested in Dunmore, it failed to adequately protect the rights of agricultural workers to bargain collectively as recognized in the subsequent decision in Health Services. 25 As the Court explained: The difficulty for the government in this case is that it did not have the benefit of B.C. Health Services in deciding how to weigh competing policy considerations, including the protection of the right of agricultural workers to bargain collectively. 26 As for remedy, the Court of Appeal declared the AEPA to be unconstitutional, and took the unprecedented step of ordering the government to provide agricultural workers with sufficient protections to enable them to exercise their right to bargain collectively, in accordance with these reasons. 27 It suspended its declaration for twelve months to permit the government time to determine the method of statutorily protecting the rights of agricultural workers to engage in meaningful collective bargaining. 28 iii) Comment The Court of Appeal s analysis in Fraser focuses on the words right to bargain collectively as if the text of s. 2(d) actually included those specific words, rather than the more general concept of freedom of association. Here United States Supreme Court Justice Hugo Black s admonition merits serious consideration: One of the most effective ways of diluting or expanding a constitutionally guaranteed right is to substitute for the crucial word or words of a constitutional guarantee another word or words, more or less flexible and more or less restricted in meaning. 29 By substituting collective bargaining 24 Ibid. at para Ibid. at para. 129, Ibid. at para Ibid. at para Ibid. at para Griswold et al. v. Connecticut, 381 U.S. 479 (1965), 85 S.Ct at

7 for association and focusing exclusively on the interpretation of the former, this is precisely what the Court of Appeal has done to s. 2(d). The Court s s. 2(d) analysis in Fraser is spent deciding what constitutes good or important labour policy to further the employees right to bargain collectively rather than deciding whether these policies actually fit within the term freedom of association. Even assuming, arguendo, the Court s conclusion that the three principles it identifies are all critical elements of good labour policy, this is not sufficient to give them constitutional status or make them fit within the meaning of freedom of association. Drawing a parallel to the other freedoms guaranteed by s. 2, your freedom to speak does not impose on any person a duty to listen, let alone to listen in good faith. Freedom is a freedom from government interference, and does not impose any correlative duty on any other private individual. 30 Indeed, the s. 2(b) freedom of expression guarantees that the intended audience has just as much right to ignore the speaker as the speaker has to speak. 31 Why then should an employee s freedom to associate impose on a private (i.e. non-governmental) employer a duty to negotiate in good faith, and impose a duty on the legislature to pass legislation to make sure that the private employer does so? Similarly the principle of majoritarian exclusivity 32 is inimical to all other s. 2 freedoms. It would be preposterous, for example, to suggest that either freedom of religion in s. 2(a) or 30 Langille highlights this in pointing out the distinction between freedoms and rights : My rights implicate the action or inaction of someone else. I have the right that you not assault me; you have the duty to not assault me. The subject matter of my freedoms, on the other hand, is my own action or inaction. I have the freedom to think, to speak my mind, to follow a certain creed if I am so inclined and you have no right that I not do these things ; Brian Langille, The Freedom of Association Mess: How We Got into It and How We Can Get out of It (2009) 54 McGill L.J. 177 at 200 [Langille, The Freedom of Association Mess ]. 31 See, for example, U.F.C.W., Local 1518 v. Kmart Canada, [1999] 2 S.C.R at para. 56: In deciding whether the consumer leafleting activity in question is acceptable, it will be important to determine whether consumers are able to determine for themselves what course of action to take without being unduly disrupted by the message of the leaflets or the manner in which it was distributed. Consumers must retain the ability to choose either to stop and read the material or to ignore the leafleter and enter the neutral site unimpeded. [emphasis added] 32 Most modern North-American labour law regimes are based on the doctrine of exclusive bargaining rights of the bargaining agent chosen by the majority of employees. Employers must bargain in good faith with the exclusive bargaining agent chosen by the majority, and are prohibited from negotiating with individual employees or with minority groups of employees; Paul Weiler, Reconcilable Differences: New Direction in Canadian Labour Law (Toronto: Carswell, 1980) at 16: It has often been said that the distinctive feature of North American labour relations is the doctrine that the law confers on the trade union the exclusive right to represent all of the employees in the bargaining unit. Exclusivity is not an inevitable feature of a collective bargaining regime, and is not typically found in the labour relations of most European countries; D.M. Beatty, Putting the Charter to Work: Designing a Constitutional Labour Code (Montreal and Kingston: McGill-Queen s University Press, 1987) at

8 freedom of political association in s. 2(d) incorporate any notion of majoritarian exclusivity. 33 In the context of Charter s. 2(b), the Supreme Court has established that freedom of expression is not restricted to views shared or accepted by the majority Rather, freedom of expression serves to protect the right of the minority to express its view, however unpopular such views may be. 34 Freedom in every subsection of s. 2 should guarantee the right of the individual or the minority to be free from and to act independently of the majority. 35 Why, in the context of s. 2(d), does freedom now mean the right of the majority to impose its will on dissenting individuals or groups? How can freedom in subsections (a) (c) have an entirely different meaning than subsection (d), where freedom now requires state constraint? Chief Justice Winkler, who has undoubted expertise in issues of Ontario labour law and policy, outlines very persuasive reasons for why, in his view, majoritarian exclusivity is essential to the effectiveness of trade unions and the collective bargaining process. He explains, for example, that [e]xclusivity provides workers with a unified and, thus, more effective voice from which to promote their collective workplace interests. 36 From the employers perspective, majoritarian exclusivity is beneficial because it eradicate[s] the possibility of irreconcilable demands from multiple employee 33 In its most recent decision on freedom of religion, Alberta v. Hutterian Brethren, 2009 S.C.C. 37, the Supreme Court recognizes that freedom of religion includes both individual and collective aspects (paras. 31 & 130). The collective aspects of s. 2(a), which are obviously associational in nature and could as easily fall under s.2(d), do not give the majority of a religious group any right to majoritarian exclusivity to impose religious conformity on dissenters or minority groups within the religion. 34 Ross v. New Brunswick School District No. 15, [1996] 1 S.C.R. 825 at para In fact, in previous labour related cases, the Supreme Court did confirm that s. 2(d) guaranteed the individual s freedom not to associate (see Lavigne v. Ontario Public Service Employees Union, [1991] 2 S.C.R. 211, La Forest & McLachlin JJ.; R. v. Advance Cutting & Coring, [2001] 3 S.C.R. 209), which included the right not to join a union. See also Peter Hogg, Constitutional Law of Canada, 5th ed., looseleaf (Scarborough: Thomson Carswell, 2007) at This freedom did not, however, include the right not to be represented by a union negotiating as an exclusive bargaining agent (see Professional Institute of the Public Service of Canada v. Northwest Territories (Commissioner), [1990] 2 S.C.R. 367 [PIPSC]; Arlington Crane Service Ltd. v. Ontario (Minister of Labour), [1988] 67 O.R. (2d) 225 (H.C.J.) [Arlington Crane]) because, under the former Labour Trilogy neither the individual right to contract nor the collective right to contract were protected by Charter s. 2(d); therefore this conundrum did not arise. This is the analysis preferred by the author: see Robert E. Charney, The Contract Clause Comes to Canada: The British Columbia Health Services Case and the Sanctity of Collective Agreements (2007) 23 N.J.C.L. 65 [Charney, The Contract Clause Comes to Canada ]. 36 Fraser, supra note 1 at para

9 representatives. 37 Promoting unity by eradicating dissent is a rather Orwellian conception of freedom. If the issue was whether, as a matter of labour policy, labour legislation should include majoritarian exclusivity, Justice Winkler s arguments may be persuasive. And if an individual employee or employer, or group of dissenting employees, ever challenged majoritarian exclusivity as an infringement of Charter s. 2, 38 Justice Winkler has presented compelling Charter s. 1 justifications for why minority employee associations should be denied recognition and bargaining rights. But his reasons seem unrelated to a principled analysis of freedom of association, 39 which should protect minority associations as much as majority associations. 40 In addition, the Supreme Court s decision in Health Services was careful to point out that the right being recognized was a right to a general process of collective bargaining, not to a particular model of labour relations, nor to a specific bargaining method. 41 Majoritarian exclusivity may be the dominant labour relations model in North America, 42 but it is still a particular model and the Court of Appeal should not have imposed it as a constitutional requirement. In considering whether the AEPA limitation on the right to bargain collectively could be justified under Charter s. 1, the Court of Appeal concluded that the main objectives of the legislation were to protect the family farm and farm production/viability, 43 the same objectives advanced by the government in Dunmore. 37 Ibid. at para See e.g. Arlington Crane, supra note It is noted that even while labour advocates have lauded the Health Services decision for recognizing the right to bargain collectively, that judgment has also been criticized for overemphasizing context at the expense of principle. For example, Cameron argues that the Supreme Court s highly contextualized approach to the section 2(d) analysis, situating the right only in the context of labour relations, restricts the applicability of any wider theory of the freedom of association; Jamie Cameron, Due Process, Collective Bargaining, and s. 2(d) of the Charter: A Comment on B.C. Health Services (2007) 13 C.L.E.L.J Similarly, Langille criticizes the Court s reliance on, in his view, a faulty presentation of Canadian labour history among other things, which leads to a fundamental misunderstanding about the nature of constitutionally protected freedoms as opposed to rights ; Langille, The Freedom of Association Mess, supra note Indeed, the primary source of international labour law on freedom of association, the International Labour Organization, protects both majority and minority workers associations; see Roy J. Adams, Fraser v.ontario and International Human Rights: A Comment (2008) 14 C.L.E.L.J. 379 at Health Services, supra note 24 at para Langille describes exclusivity as a very idiosyncratically North American concept; The Freedom of Association Mess, supra note 32 at 203, n Fraser, supra note 1 at para

10 Although the court accepted the importance of these objectives, it held that the legislation could not be justified because the AEPA is not rationally connected to either of these stated objectives. 44 In other words, the Ontario legislature acted irrationally when it enacted the precise legislative scheme mandated by the Supreme Court of Canada in Dunmore. The Court s remedy ordering the government to provide agricultural workers with sufficient protections to enable them to exercise their right to bargain collectively, in accordance with these reasons 45 raises judicial intervention in the legislative realm to an unprecedented level. Never before has a court ordered the government to enact legislation. As indicated above, courts s. 52 declarations may invalidate legislation, or in limited circumstances read new words into a statute, or combine invalidation and reading in. The government then has two choices. The first is to simply accept the court s declaration. This option requires no further legislative action by the legislature, and we would refer to it as the do nothing option. If, however, the government finds the court s declaration to be unsatisfactory from either a policy or political (or both) perspective, it is always free to pursue the second option and introduce legislative amendments which take into account the court s decision and comply with the Charter. For example, if a benefit program is found to infringe Charter s. 15, and the court declares that an excluded group be included 46 (i.e. extension of the benefit), the legislature is always free to repeal or nullify the benefit completely so that no one receives it, or reallocate the benefit in some other way that is consistent with the court s reasons. These two options exist whether or not the court suspends its declaration; the suspension simply gives the government the opportunity to legislate before the declaration takes effect. But it is always the government s decision whether to live with the court s declaration or introduce amendments. There are a number of reasons why courts never order the government to amend legislation. The first is that governments do not actually have the authority to amend legislation. Only the legislature can enact or amend a statute. The legislature is not a 44 Ibid. at para Ibid. at para Depending on the wording of the original benefit, this may be accomplished by either invalidating a provision or reading in the excluded group; Schachter v. Canada, [1992] 2 S.C.R. 679 at para

11 party to the proceeding, and no order can be made against it. All the government can do is introduce legislation, and while the government often enjoys a majority and can ensure its passage, majority governments are not guaranteed, and, at least at the federal level, may be a thing of the past. As an even more significant reason, ordering the government to amend legislation is contrary to the principle of the separation of powers between the legislative, executive and judicial branches. In Doucet-Boudreau v. Nova Scotia the Supreme Court recognized that a court ordering a Charter remedy must strive to respect the relationships with and separation of functions among the legislature, the executive and the judiciary. 47 Members of the legislature are accountable to the constituents whom they represent, and courts can no more tell members of the legislature how to vote on any bill than members of the legislature can tell judges how to vote in any case. A third reason that courts do not order governments to amend legislation is that the order is unenforceable. What would the Court of Appeal do if the legislature declined to enact the legislation ordered by the Court? It cannot hold the government in contempt of court because the government has no power to enact legislation. Would it hold in contempt those members of the legislature (who may be government members or opposition members) who dared to vote against the bill? Obviously not, because the members of the legislature were not parties to the decision, are not subject to the court order, and, in any event enjoy parliamentary immunity from any civil suit arising from what they say or how they vote in the legislature. The final reason that courts do not tempt constitutional crisis by ordering the government to amend legislation is that they do not have to. There is simply no advantage to be gained in proceeding as the Court of Appeal did in Fraser rather than as the Supreme Court of Canada did in Dunmore. As indicated above, the Supreme Court s declaration in Dunmore would have invalidated the section of the LRA that excluded agricultural workers from the provisions of that Act. Since this would have had the consequence of giving agricultural workers the right to strike, it was highly unlikely that the government would have settled for this and not proceeded to enact an alternative scheme. But the choice to legislate was left with the government and the legislature, and 47 [2003] 3 S.C.R. 3 at para

12 so the declaration in Dunmore respected the principles of the separation of powers recognized in Doucette-Boudreau. The choice of declaration made by the Court of Appeal in Fraser seems to be premised on the consideration that it did not want to be too interventionist. In suspending its declaration, the Court recognized that [t]his is not a situation where there is only one appropriate response to this decision. It is up to the legislature to assess the options, taking into account constitutional, labour relations and other factors, and to design a constitutionally acceptable model. 48 Nonetheless, by failing to issue a declaration that gave the legislature a do nothing option, the Court was being, perhaps unintentionally, unnecessarily interventionist. Significantly, the remedy granted by the Court was not requested by either party. The Appellant, Fraser, had asked for a remedy that would have, like the Supreme Court s order in Dunmore, invalidated the exclusion of agricultural workers from the LRA. In particular, the Appellants sought an order invalidating the AEPA (which the Court of Appeal did) 49 and s. 3(b.1) of the LRA (which the Court of Appeal did not do). Had that order been granted the legislature could have decided to do nothing by way of alternative statute, and agricultural workers would then simply be covered by the LRA. If not satisfied with this outcome, the government could use the 12 month suspension period to draft and enact an alternative statutory regime. This proposed remedy was agreed to by Ontario since it provided the Appellants with an effective remedy while respecting the separation of powers between the legislative, executive and judicial branches. The Court s decision did not consider invalidating the exclusion in s. 3(b.1) of the LRA and provided no reasons for its rejection of this remedy or analysis of the principles of separation of power set out in Doucette-Boudreau. After the decision was released, but before the Order was taken out, counsel for all parties wrote to the Registrar of the Court of Appeal requesting clarification of the remedial portion of the Court s reasons and offering to make submissions on this issue. The Court declined and confirmed that the order should reflect its direction to the government to provide agricultural workers with 48 Fraser, supra note 1 at para Ibid. at para

13 sufficient protections to enable them to exercise their right to bargain collectively, in accordance with these reasons. Clitheroe v. Hydro One Inc. 50 The Clitheroe case was not about collective bargaining or collective agreements. It was about individual bargaining and an individual employment contract. As a result the Charter offered no protection to the significant negotiated terms 51 in Ms. Clitheroe s employment contract, a result which would have been different if only Ms. Clitheroe had been a member of a bargaining unit represented by an exclusive bargaining agent. This observation is not intended as a criticism of the result in the Clitheroe case, but as a criticism of the Supreme Court s decision in the Health Services case. Ms. Clitheroe was the former CEO of Hydro One Inc., the corporation which, after the reorganization of Ontario Hydro in 1999, was responsible for the distribution of electricity throughout Ontario. Pursuant to her employment contract she began in 1999 with a base salary of $575,000 plus significant performance bonuses. By 2002 her base salary was $805,000 and her annual remuneration (including performance bonuses) came to $1,470,000. In addition, her contract provided for generous pension rights under Hydro One s registered pension plan and supplementary pension plan. 52 For example, her contract provided that her full bonus would be counted towards pensionable earnings and in 2001 Ms. Clitheroe negotiated a special arrangement which entitled her to three years of credit toward her pension for each year worked, creating higher additional benefits to Ms. Clitheroe than were available to other employees. 53 Her highest annual earning was $1.6 million in 2001, and she was entitled to a severance package if she left Hydro One. In 2002 Ms. Clitheroe was dismissed by the board of directors for Hydro One. Public controversy surrounding her salary and lucrative severance package led to the introduction of legislation to limit the utility s executive salaries. The Hydro One Inc. 50 S.C.J., June 26, See Health Services, supra note 24 at para. 96: Laws or state actions that prevent or deny meaningful discussion and consultation about working conditions between employees and their employer may substantially interfere with the activity of collective bargaining, as may laws that unilaterally nullify significant negotiated terms in existing collective agreements. 52 Clitheroe, supra note 6 at paras Ibid. at paras

14 Directors and Officers Act, terminated the term of office of each member of the board of directors as of June 4, 2002, disentitled board members to any payments in respect of the termination and eliminated a significant portion of the contractual rights to pension benefits from Hydro One. 55 Clitheroe argued that the government could interfere with existing contractual rights only if it did so in explicit statutory language, 56 and that the Hydro One Act did not meet the necessary requirements of being clear and unambiguous. She also argued that the Act infringed her right to liberty under Charter s. 7 because it interfered with her fundamental life choice, 57 namely her choice to work for Hydro One on the basis of the pension benefits offered to her. The Court summarized her Charter argument as follows: [71] Ms. Clitheroe says that what Bill 80 purports to do is nothing more than punishment, spite and vengeance, directed solely at her and no one else. She suggests that the legislation interferes with her personal autonomy and fundamental choices she made about where to work, and how to structure her life. She says she made a choice to leave private industry and join the public service. Part of her remuneration was paid in cash, and some was deferred in the form of a pension. She said the pension rights were an important component of her decision to join the government, and then Ontario Hydro and Hydro One. She characterizes these choices as going to the core of what it means to her to enjoy individual dignity and independence. [72] Ms. Clitheroe suggests that these choices she made are fundamental to her liberty in a free and democratic society, much like the protected freedoms to choose where to live, to have union meetings, and the like. Ms. Clitheroe says the government s attempts to divest her of this fundamental right to choose where to work, and for what form of 54 Supra note In Ms. Clitheroe s case it would have the effect of reducing her pension entitlement from $464,133 per year to $307,644 per year; Clitheroe, supra note 6 at paras See Wells v. Newfoundland, [1999] 3 S.C.R. 199 at paras. 41 & 46: While the legislature may have the extraordinary power of passing a law to specifically deny compensation to an aggrieved individual with whom it has broken an agreement, clear and explicit statutory language would be required to extinguish existing rights previously conferred on that party. In the absence of a clear express intent to abrogate the rights and obligations rights of the highest importance to the individual those rights remain in force. To argue the opposite is to say that the government is bound only by its whim, not its word. In Canada this is unacceptable, and does not accord with the nation s understanding of the relationship between the state and its citizens. 57 Clitheroe, supra note 6 at para

15 remuneration infringes her liberty rights without doing so in accordance with principles of fundamental justice. The Court rejected both arguments. It concluded that the language of the legislation was clear and unequivocal, both in its application to Ms. Clitheroe and in its effect of cancelling her contractual entitlement and reducing her pension. With respect to s. 7 of the Charter, the Court concluded that Ms. Clitheroe s pension entitlement was a purely economic contractual right that is afforded no protection under section 7 of the Charter. Her right to a pension is simply deferred compensation. Salary or compensation (in whatever form they may take), are in my view a [sic] purely economic rights, and are not protected by section Comment While the Clitheroe decision is entirely consistent with the Supreme Court s s. 7 jurisprudence, one cannot help but contrast the result in this case to the Supreme Court s Health Services decision. Had Ms. Clitheroe s pension plan been part of a collective agreement rather than the term of an individual contract of employment, an argument could have been advanced that the provisions of the Hydro One Act that invalidated or nullified the existing terms of her pension plan infringed Charter s. 2(d). It is equally clear, however, that the Supreme Court intended that s. 2(d) protect only the terms and conditions of collective agreements, and not the terms and conditions of individual contracts of employment. 59 I must, at this point, confess to being an unreformed trilogist. I still believe that the Supreme Court of Canada got it right in the Labour Trilogy when it decided that the Charter protected neither the individual right to contract nor the right to make collective contracts. Contracts are economic arrangements between private parties, and, until the Supreme Court s dramatic reversal in Health Services, the settled jurisprudence had consistently confirmed that the Charter did not guarantee freedom of contract. 60 In the 58 Ibid. at para One of the stated reasons for giving constitutional protection to collective agreements is that collective agreements protect workers from the inequality of bargaining power inherent in the typical industrial relations context; Health Services, supra note 24 at para.84. Inequality of bargaining power did not appear to be a problem for Ms. Clitheroe in her contract negotiations with Hydro One. 60 See Sujit Choudhry, The Lochner Era and Comparative Constitutionalism (2004) 2 Int l J. Const. L. 1 at and Charney, The Contract Clause Comes to Canada, supra note 37 at

16 Alberta Reference the majority noted that while freedom of association guaranteed the collective exercise of constitutional rights ( people must be free to engage collectively in those activities which are constitutionally protected for each individual ), 61 this did not protect collective economic rights (i.e. collective bargaining) because the Charter did not protect individual economic rights. 62 Similarly, the Courts decision in Professional Institute of the Public Service of Canada (PIPSC) was premised on the recognition that bargaining for working conditions is not, of itself, a constitutional freedom of individuals, 63 and was therefore not an activity protected for groups under s. 2(d). Under the Labour Trilogy private economic arrangements, including wages, pensions and other working conditions, remained subject to state economic regulation. All that, of course, has changed since Health Services. The Supreme Court has now decided that significant negotiated terms in collective agreements (which, I suspect, unions would argue include pension entitlements) are constitutionally protected and that the unilateral nullification of negotiated terms 64 of collective agreements generally infringes Charter s. 2(d). It remains our view that the Supreme Court has started down the wrong path in elevating any employment contracts whether collectively or individually negotiated above the regulatory power of the legislature. Ms. Clitheroe s s. 7 arguments that the terms of her contract of employment were expressions of her personal autonomy and reflected choices fundamental to her liberty that went to the core of her individual dignity and how to structure her life 65 - were rightly rejected by the Court. These freedom of contract arguments are identical to the laissez-faire principles of the Lochner 66 era of United States jurisprudence consistently rejected by Canadian courts and discredited in the United States. The flowery language cannot disguise the fact that these were claims for property and economic rights deliberately excluded from the Charter. Yet one must have some sympathy for Ms. Clitheroe when she reads the Supreme Court of Canada s decision in Health Services which decides that [t]he right to bargain collectively with an employer 61 Alberta Reference, supra note 11 at para. 172, McIntyre J. 62 Ibid. at paras , Le Dain J. 63 PIPSC supra note 37 at para Health Services, supra note 24 at para Clitheroe, supra note 6 at paras. 70 & Lochner v. United States, (1905) 198 U.S

17 enhances the human dignity, liberty and autonomy of workers and gives workers the opportunity to gain some control over a major aspect of their lives. 67 At least in the context of employment contracts, human dignity, liberty and autonomy are protected Charter values only for groups exercising the right of majoritarian exclusivity. And that is why Ms. Clitheroe should have joined a union. 67 Health Services, supra note 24 at para