AH – 311




(the “Company”)



(the “Union”)




SOLE ARBITRATOR:                H. Allen Hope, Q.C.



There appeared on behalf of the Company:

David Cox


And on behalf of the Union:

Robert Dhensaw



A hearing in this matter was held at Prince George, B.C., on March 30, 1992.




The grievor in this dispute, Donald Russell Smith, was successful in a grievance brought to set aside a permanent demotion and now seeks to reopen the proceedings to obtain an order for compensation. The decision setting aside the demotion was published on November 25, 1991. The position of the Union is that the question of compensation was not developed fully in the hearing because its expectation was that compensation would be addressed by the parties following a determination of the grievance on its merits. The Union’s submission was that the practice between the parties is to reserve the issue of compensation and to have it addressed in a separate hearing and only if it becomes necessary. The position of the Railway is that the decision was complete and that I am functus officio with respect to all aspects of the dispute, including the issue of compensation. In that regard the Railway relied on the following extract from the decision:

In my view an appropriate substitute penalty for a demotion on the facts in this case would be a ten-day suspension. That is a serious penalty to impose, but not out of keeping with the nature of the offence. However, because this issue comes on after the fact, to require the grievor to actually serve a 10-day suspension would mean that he would suffer a demotion for a period of approximately one year and then a ten-day suspension without pay. A further consideration is that a reinstatement of the grievor to his position as foreman would trigger a potential claim for wage compensation between the rate he received during his demotion and the rate he would have received as foreman. An appropriate resolution of those competing facts is to treat the suspension as having been served and to deny compensation for any wage loss the grievor may have suffered.

The response of the Union was that jurisdiction was reserved to deal with any issues of application relating to the award. It relied in the regard on the following passage:

In the result, the grievor is entitled to have his discipline record amended to show that he received a ten-day suspension for his insubordination rather than a demotion and to amend his seniority date to reflect the fact that he continued in the classification of foreman during the period of his demotion. I will retain jurisdiction to assist the parties in implementing that decision if that becomes necessary.

The position of the Union was that it did not adduce evidence of the actual wage loss of the grievor during the hearing because of its expectation that the issue of compensation would be addressed between the parties and would only be submitted to me as arbitrator if the issue could not be resolved. The Union saw the decision as reflecting a conclusion that the wage loss the grievor would have sustained if he had served a ten working day suspension would approximate the loss he has sustained by reason of his demotion. That conclusion, said the union, is not correct.

No evidence of the actual amounts involved was led in this hearing, but the Union said that if the matter was reopened and the facts were developed in detail, it would be apparent that there is a substantial difference between what the grievor would have lost in a suspension as compared with what he did lose by reason of the demotion. In that regard the Union pointed out that the grievor, in effect, had been suspended without pay from the time the incident giving rise to his demotion occurred until he posted into a lesser-rated position on November 16, 1987. The incident in question occurred on one of the grievor’s off days, being Sunday, November 1, 1987. His first working day after that date was the following day, Monday, November 2. The bridge and building department works a five-day week and thus it can be assumed that the grievor lost a maximum of ten working days during his suspension pending an investigation of the incident, including one statutory holiday.

The decision to demote the grievor was communicated to him on November 12, 1987 and he responded by claiming a lesser-rated position which commenced on Monday, November 16. The point made by the Union in this application was that the period the grievor was kept out of service amounted to a ten-day suspension and that a denial of compensation, in effect, would be the equivalent of a 20-day suspension.

The Union also said that it was in a position to call evidence in a compensation hearing that the grievor sustained further losses by reason of the fact that even after the demotion was lifted by the Railway, he was not permitted to return to his permanent position at Squamish and had incurred additional travel expenses resulting from having to bid on a position elsewhere in the system. That additional expense continued for a period of seven months, said the Union, and the grievor would ordinarily be entitled to claim those expenses.

The Railway said, in effect, that the Union application amounted to an application to reopen the proceedings to call additional evidence and that it failed to meet the arbitral criteria laid down in such a case. In particular, the Railway relied on the decision of Mr. Larson in Re Cominco Ltd, and United Steelworkers, Local 480 (1991), 20 L.A.C. (4th) 285 (Larson). On p. 287 Mr. Larson expressed a preference for a more liberal approach taken in British Columbia with respect to applications to reopen proceedings. In particular he adopted the reasoning of David Vickers, as he then was, in the unreported decision in Re Federation Cooperatives Ltd. and I.W.A. Loc. 1-417.

On p. 287 Mr. Larson cited the following extract:

Taking all of the foregoing into consideration, I am of the opinion that upon an application to reopen a case, a labour arbitrator in British Columbia has an unfettered discretion. The evidence must be relevant. He must ensure that his decision does not result in a miscarriage of justice, always bearing in mind that to allow one party to split his case might cause prejudice to another party. He must also be satisfied that the failure to call the evidence initially was accidental and there is no deliberate attempt to split a case. In exercising his discretion the arbitrator must be fair and ensure that in the result he is able to get “to the real substance of the matters in dispute and the respective merits of the position of the parties to it under the terms of the collective agreement”.

On p. 287 he appears to have rejected a more stringent test applied in other jurisdictions.

The Union argued, in effect, that this application did not involve an application to call fresh evidence. The Union saw as the issue as one of correcting a factual error that arose as a result of its reliance on what it saw as the prior practice between the parties in arbitrations of having issues of compensation reserved to the parties upon a determination of the dispute on its merits with a subsequent submission to the arbitrator if necessary. That reliance, said the Union, was what motivated its decision not to call the available evidence.

In terms of the jurisdiction of an arbitrator to address an apparent error, the Union relied on a number of decisions including Re Gearmatic Co., a Division of Paccar of Canada Ltd. and U.S.W.A. , Local, 6618, {19781 1 C.L.R.B.R. 502 (Munroe) as cited an applied in Re Insurance Corp. of British Columbia and Office & Technical Employees’ Union, Local 378 (1991), 15 L.A.C. (4th) 116. In his decision, Mr. Munroe, commencing on p. 509, concluded that the common law doctrine of functus officio had to be modified in its application to decisions made by arbitrators acting under the Labour Code of British Columbia. He said in particular that an application of the doctrine must reflect the legislative expectation as expressed in the Labour Code that arbitration would provide an effective means of resolving disputes without stoppages of work and that acceptance of a more liberal jurisdiction in arbitrators to revisit their awards was required if that statutory expectation was to be met.

The Union also relied on a series of decisions to support its contention that a board of arbitration has a continuing jurisdiction to resolve matters which were not resolved in the original decision. See Re Newfoundland Farm Products Corporation and Newfoundland Association of Public Employees (1982), 7 L.A.C. (3d) 186 (Easton). There the arbitrator concluded that he had jurisdiction to explain the “spirit and meaning” of the prior award. In particular, he held that he had a continuing jurisdiction to designate the specific position into which the grievor was to be reinstated. In a similar vein, Professor Owen Shime concluded in Re Barber Hydraulic Turbine Ltd. and United Steelworkers of America (1979), 20 L.A.C. (2d) 372, that an arbitration board has a continuing jurisdiction to correct “an inadvertent mistake” with respect to the relevant facts. The Union relied in particular on the following passage on pp. 379-80:

The second important issue raised is whether a board of arbitration once it has issued an award may correct any mistake that it may have made of a technical nature when it is drawn to the board’s attention. Clearly, in cases such as the instant case, the grievors who sought complete redress of their loss in the original grievance should not be made to suffer if a technical error was made by the board of arbitration. We think that a board of arbitration ought not to be precluded on any legal ground from correcting simple and technical errors notwithstanding that the award has been issued, and we feel that it should be an inherent part of the arbitration process to permit the correction of technical errors where they occur. We do not suggest that arbitration hearings and awards should be wide open for constant and continuous review by the arbitration board once an award has been issued and each case may have to be decided on its own merits, but we feel that if it should be considered that this board has made a technical error it should be allowed to correct that error.

Finally, the Union relied on Re Metropolitan Toronto Board of Commissioners of Police and Metropolitan Toronto Police Assoc. (1977), 14 L.A.C. (2d) 1 (Arthurs) . In that decision Professor Arthurs was dealing with an application to reopen the hearing to fix compensation in a dispute in which reinstatement was ordered following a dismissal. In the hearing the union closed its case without calling formal evidence of her loss. Professor Arthurs rejected a submission that the board was without jurisdiction to award compensation because no reservation of jurisdiction on that point had been sought by the Union. Professor Arthurs reviewed extensively the practice of dividing a hearing between the merits and issues of compensation and held that a board has jurisdiction to deal with the issue of compensation even in the absence of an express reservation of jurisdiction.

I agree with the Union that if the facts supports a finding that a significant error in the calculation of compensation has been made by reason of a miscalculation or a gap in the evidence, an arbitrator has a continuing jurisdiction to address and resolve those issues so as to meet the statutory expectation that the process will provide a final and conclusive determination of disputes. Before addressing the issue further, however, it is necessary to record the submission of the Railway that if I concluded that I was not functus officio on the issue of compensation, I should reject the Union contention that it was entitled to have the period the grievor was off work pending investigation of the issue figure in the calculation of his wage loss and that if the Union had a claim with respect to the seven-month period during which the grievor was out of his regular position, it should be the subject of a separate grievance.

On the issue of the period the grievor was out of service pending an investigation of the issue, the Railway submitted that the practice of taking employees out of service pending investigation of serious allegations of disciplinary breaches was a long-standing practice which was not raised in issue in the dispute and should be addressed in a proper context, not in an application to reopen a hearing in which the issue was neither raised nor argued. In that regard the Railway pointed out that the issue of compensation for periods of absence pending an investigation is addressed expressly in the provisions of the collective agreement in the following provisions:

11.3        An employee will not be suspended pending the rendering of discipline unless the offence is considered sufficiently serious to warrant such action.

11.4        An employee who has been suspended, disciplined, or dismissed and who is subsequently found blameless shall be reinstated and paid according to the Collective Agreement for each day lost, and also reimbursed for any reasonable expense incurred if required to be away from home in connection with the investigation.

In this dispute, said the Railway, the grievor was not “found blameless”. In fact, it was concluded on p. 21 that the circumstances constituted an extremely serious employment offence.


I am of the view that I do have jurisdiction to permit the Union to address the issue of compensation in the form of facts which may disclose that the basic premise of the award was incorrect. In particular, I agree that the basic premise was that the wage loss occasioned in a ten working day suspension would approximate in rough terms the loss the grievor sustained by reason of working in a lower-rated position. If the facts with respect to the precise nature of the loss established that assumption as being incorrect, it is appropriate in a consideration of the governing principles that the Union be afforded an opportunity to make its case in that regard.

I also agree that the Union should be entitled to argue any loss deemed to arise from the seven-month period in which the grievor was put to an extra expense because he was not reinstated to his previous position. I do not agree with the Railway that the expenses incurred by reason of that failure require the commencement of a separate proceedings in order to meet the requirements of a fair hearing. Compensation arises by way of damages, the fundamental basis of which is an award of money sufficient to place the injured party in the position they would have occupied if there had been no breach of the agreement. The imposition of unjustified or excessive discipline is perceived as a breach of the provisions of a collective agreement. Hence, reasonable expenses arising by reason of a dislocation of the grievor fall within the scope of proper compensation in the circumstances before me.

However, I agree with the Railway with respect to the period of time the grievor spent pending investigation of the circumstances. Firstly, I did take that fact into account in concluding that an appropriate penalty would have been a ten-day suspension. Further, I agree with the Railway that the issues with respect to the interpretation and application of Articles 11. 3 and 11. 4 should arise on the basis of submissions with respect to whether the suspension pending investigation supported a claim for compensation under Article 11.4.

Quite apart from the provisions of the collective agreement, it must be noted that compensation does not always follow the event in an arbitral review of discipline. Where an arbitrator concludes that discipline was imposed without just cause, compensation for any wage loss follows the event. However, where the finding is that there was just cause to impose discipline but that the penalty was excessive, compensation becomes discretionary and lies to be considered in the context of all of the circumstances. As noted by Professor Shime in Barber Hydraulic Turbine on p. 378, compensation does not always follow the event. On p. 378 he wrote as follows:

A second example occurs quite often in discharge cases where arbitrators have reinstated employees without compensation but with a suspension for a fixed period which is not coterminous with the amount of time that the employee has been out of work. Thus, for example, employees have been reinstated to their employment and have had their discharges reduced to a suspension for a fixed period, again for record purposes and for use in the future, but have not been paid compensation for the time that they were absent from work which may very well have exceeded the fixed period of suspension. Again, this is an example of a situation where the period of suspension and the loss of wages are not coterminous.

In considering whether to award compensation in circumstances where a claimant is found to have given just cause for some form of discipline, it may be that the penalty selected will be seen as disproportionate to the offence and thus deserving of some form of compensation. However, it may be that the determination that the penalty is excessive may arise in response to factors unique to the grievor which serve to mitigate conduct which would otherwise be deserving of the penalty selected. In those circumstances it may be inappropriate to award compensation.

When the Railway takes an employee out of service pending an investigation, an employee who succeeds in a subsequent arbitration in securing a lesser penalty will be granted or denied compensation in response to the particular facts. That is, the Railway is accountable in the arbitration process for removals from service and an award of compensation can be ordered where it is determined that the offence giving rise to the removal was not serious or that the grievor, while not totally blameless, committed an infraction that did not justify time out of service. But those facts do not arise in this case. An act of insubordination by a supervisory employee committed in the presence of the employees he supervises does justify removal from service pending investigation and the circumstances do not support entitlement to compensation for that period.

In the result, if the parties cannot agree with respect to whether the grievor is entitled to any compensation based upon a comparison between his wage loss occasioned by receiving the lower rate during his period of demotion and the reasonable expenses he incurred as a result of being kept out of his former position for seven months, then the matter shall be referred back for determination. In that calculation, however, the period the grievor spent on suspension pending an investigation and resolution of the incident is not a factor. On that basis, the Union application to reopen the hearing is granted.

DATED at the City of Vancouver, in the Province of British Columbia, this 10th day of November, 1992.


(signed) H. ALLEN HOPE, Q.C.