FPSLREB Decisions

Heard at Toronto, Ontario,
October 27 to 31, 2014.

I. Introduction

1 The grievor, Sean Cavanagh, grieved the following three disciplinary actions imposed on him by the Canada Revenue Agency ("CRA" or "the employer"):

1. a 10-day suspension on February 22, 2007 (Exhibit E1, Tab 26), referred to adjudication on June 25, 2008, being Public Service Labour Relations and Employment Board ("the PSLREB") File No. 566-34-2161 ("PSLREB File 2161");
2. a 20-day suspension on March 5, 2008 (Exhibit E1, Tab 32), referred to adjudication on March 11, 2010, being PSLREB File No. 566-34-3543 ("PSLREB File 3543"); and
3. his termination on June 17, 2008 (Exhibit E1, Tab 37), referred to adjudication on March 11, 2010, being PSLREB File No. 566-34-3544 ("PSLREB File 3544").

2 All three disciplinary actions stemmed from the employer's opinion that the grievor's outside work constituted a conflict of interest pursuant to its Conflict of Interest Code and Guidelines ("the Conflict Code", Exhibit E1, Tab 39) and that his refusal to cease and desist such outside activities constituted insubordination.

3 On the other hand, the grievor's position throughout was that his outside activities did not constitute a conflict of interest and that, accordingly, the disciplinary actions were unfair, unreasonable and without foundation. With respect to the termination, he also served a notice of his intention to raise issues involving the Canadian Human Rights Act (R.S.C., 1985, c. H-6; "CHRA") on the Canadian Human Rights Commission (CHRC). In that notice, he alleged as follows:

…

Mr. Cavanagh was on authorized sick leave preparatory to major surgery when he was terminated for his failure to provide information by an arbitrary and unnecessarily aggressive deadline. This was done in full knowledge by the Employer of the nature and seriousness of Mr. Cavanagh's condition and of the fact that the information being sought was neither urgent nor time-sensitive.

…

4 The CHRC subsequently advised that it would not be making submissions regarding the grievor's termination.

II. Procedural background

5 The grievor was originally represented by his bargaining agent, the Professional Institute of the Public Service of Canada, when his grievances were filed.

6 The employer was unavailable to proceed on hearing dates initially proposed for March 2009 in PSLREB File 2161.

7 On December 5, 2008, the grievor requested that PSLREB File 2161 be held in abeyance pending his reference to adjudication of PSLREB Files 3543 and 3544 and that these three grievances be joined for hearing. The employer consented to the requests, which were granted on December 19, 2008. The grievor renewed his requests on August 12, 2009, which were granted again on August 13, 2009.

8 On March 11, 2010, the grievor referred PSLREB Files 3543 and 3544 to adjudication. On March 15, 2010, the parties were informed that PSLREB Files 2161, 3543 and 3544 had been joined and would be heard together.

9 A hearing was eventually scheduled for April 2011. However, on April 6, 2011, the grievor's bargaining agent gave notice that it no longer represented the grievor in PSLREB Files 2161, 3543 and 3544 and requested a postponement of the hearing. The employer consented to the request, which was granted on April 7, 2011.

10 On April 20, 2011, the grievor confirmed that he would be representing himself.

11 On July 6, 2011, the grievor filed an unfair labour practice complaint against a representative of his bargaining agent with regard to PSLREB Files 2161, 3543 and 3544. PSLREB Files 2161, 3543 and 3544 were then held in abeyance pending resolution of the grievor's complaint.

12 Cavanagh v. Sullivan and the Professional Institute of the Public Service of Canada, 2014 PSLRB 39, decided the grievor's complaint on March 28, 2014.

13  On April 2, 2014, the parties were notified that PSLREB Files 2161, 3543 and 3544, having been held in abeyance pending resolution of the grievor's complaint, would proceed to hearing in Toronto on October 27 to 31, 2014.

14 On August 13, 2014, the grievor asked for information about the adjudication process. On the same day, the grievor was directed to information posted in the Internet with regard to the adjudication process.

15 On September 8 and 9, 2014, the grievor asked for the production of the following information:

1. documents and email discussions between the bargaining agent and the CRA relating to the three grievances, including but not limited to those of
   1. Bruce Allen, now retired, who was at all material times Director of the CRA's Toronto Centre Tax Services Office ("TSO"), and
   2. CRA representatives at grievance hearings;
2. a copy of the grievor's Human Resources file from 2005 to 2008; and
3. time sheets and correspondence with his supervisor about sick leave and vacation leave for 2007 and 2008.

16 A teleconference was held on September 25, 2014, which counsel for the employer, the grievor and I attended. Following discussions, the employer agreed to produce certain documents to the grievor, including the personnel/human resources file and any subordinate files relating to the disciplinary actions. With respect to the grievor's request for documents from his bargaining agent's file, I agreed to give instruction to request the bargaining agent advising it of the nature of the grievor's request and inquiring as to whether it would be able to provide the documents in question.

17 The employer subsequently produced the required documents to the grievor.

18 The bargaining agent produced some documents on or about October 10, 2014. On the same day, the grievor took the position that the bargaining agent had not produced all the documents he had been seeking. On my instructions, the grievor was advised that if he was of the view that his bargaining agent had not produced documents necessary to his grievance, he could and should serve a summons on it. At the commencement of the hearing, the grievor advised that he had not served any such summons.

19 At the hearing, the grievor also alleged that the employer had not complied with the direction that had been given to it at teleconference of September 25, 2014. To that end, I heard testimony from Paulene Bourgault, a senior labour relations officer for the employer. She had reviewed the files and produced the documents that I had directed be disclosed to the grievor.

20 At the conclusion of that evidence, I was satisfied that the employer had in fact complied with the direction to the best of its ability. The grievor was not able to detail or particularize any types of documents that he alleged were missing.

21 I note as well that at some point in the past, the grievor had filed an access to information ("ATI") request and had received at least some of the employer's internal files, notes and documents. Accordingly, I was satisfied that the overlap between the employer's production of documents and the results of the grievor's ATI request was sufficient for the purposes of these grievances.

22 Discovery and disclosure is not intended to be a fishing expedition. The issues involved in these three grievances, which are whether a conflict of interest occurred and whether the grievor's refusal to cease and desist his outside activities constituted insubordination, could have been and were addressed by the documents and testimony before me.

23 On November 1, 2014, the Public Service Labour Relations and Employment Board Act (S.C. 2013, c. 40, s. 365) was proclaimed into force (SI/2014-84), creating the Public Service Labour Relations and Employment Board ("the new Board") to replace the former Public Service Labour Relations Board ("the former Board") as well as the former Public Service Staffing Tribunal. On the same day, the consequential and transitional amendments contained in sections 366 to 466 of the Economic Action Plan 2013 Act, No. 2 (S.C. 2013, c. 40) also came into force (SI/2014-84). Pursuant to section 396 of the Economic Action Plan 2013 Act, No. 2, an adjudicator seized of a grievance before November 1, 2014, continues to exercise the powers set out in the Public Service Labour Relations Act (S.C. 2003, c. 22, s.2) as that Act read immediately before that day.

III. Hearing

A. Facts

24 On behalf of the employer, I heard the testimony of the following witnesses:

1. Mr. Allen;
2. Frank Walkingshaw, who reported to Mr. Allen and who was at all material times Manager of the Tax Avoidance/Specialty Audit section of the Toronto Centre TSO, the section in which the grievor worked;
3. Josée Labelle, Director, Internal Affairs and Fraud Prevention Division of the CRA; and
4. Ms. Bourgault, a CRA senior labour relations officer.

25 On behalf of the grievor, I heard the testimony of the following witnesses:

1. Tony Campione, who was at all material times a business valuator in the same office as the grievor, and
2. the grievor.

26 The grievor had originally advised that he might call a witness to testify as to the meaning of certain terms, including "fair market value." Counsel for the employer served notice that she expected that she might object to such evidence, on the grounds of relevance and on the grounds that no expert report had been provided.

27 I advised the grievor of the basis for such objections but indicated that I was making no ruling at that point. He was free to call the witness, and if he did, the issues of relevance, admissibility and weight would be dealt with at that time. He subsequently elected not to call the witness (whom he had not summoned, in any event).

28 I should also state that with one exception, the witnesses gave their evidence in a straightforward fashion. Their memories were to a large extent refreshed by or preserved in extensive email correspondence, memos and reports.

29 The one exception was the grievor. He tended to answer questions that were not asked of him or to engage in detailed explanations on topics the relevance of which were not clear. His testimony tended towards argument and hypothetical scenarios rather than confining itself to the facts.

30 Nevertheless, I am satisfied that such material differences in the testimony as existed were not based on credibility but instead were based on matters of the parties' respective interpretations of the legal issues and obligations involved in this case. For that reason, I will simply set out the facts, most of which are simply based on documents, as I found them to be based on the totality of the evidence before me.

1. Business valuation process at the Toronto Centre TSO of the CRA

31 Mr. Allen was, for most of the material time, Director of the Toronto Centre TSO of the CRA. He testified that the office was divided into several sections. One was the Tax Avoidance/Specialty Audit division, headed for most of the material time by Mr. Walkingshaw as Manager.

32 The Tax Avoidance/Specialty Audit division was in turn divided into various sections, one of which was the Business Valuation section that was staffed in part by AU-03 valuators, otherwise known as business valuators. At all material times, the grievor was an AU-03 business valuator working in the Business Valuation section.

33 The job description for the business valuator position identified the client-service results as being "… business equity valuation services for high complexity referrals generally referred by either the Verification and Enforcement or Appeals Divisions located within the region." Business equity valuation services were described as including "… valuations of enterprises (incorporated or unincorporated), trusts, partnerships, intangible assets (trademarks, trade names, licenses, agreements), and allocations among intangible assets, financial compensation arrangements and guarantee fees" (see Exhibit E1, Tab 1).

34 The job description set out the following key activities (Exhibit E1, Tab 1):

Reviews high complexity transactions involving fair market value of securities and equities as referred by tax auditors or appeals officers.

Plans the course and direction of the valuation assignment for files of high complexity.

Researches and analyzes the company, the associated industry, related statutes/legal cases, economic factors and other related information.

Determines methodologies, develops a reasonable future forecast and risk assessment for the business being valued and reconciles the different approaches in support of the conclusion.

Prepares valuation reports in adherence to the Practice Standards and Code of Ethics of the Canadian Institute of Chartered Business Valuators.

Solicits taxpayer response to contentious valuation issues and considers common ground between positions for resolution of the issue.

Reviews and critiques previous valuations and recommends to the Appeals Division a range of value on which settlement may be based.

Serves as an expert witness before the Tax Court of Canada, critiques opposing valuation reports and identifies areas for further cross examination [sic].

Participates in internal committees, seminars, and training sessions.

35 The description (Exhibit E1, Tab 1) noted the following about an expert witness:

… is a defined term that differs from a fact witness in that the court hears and considers your opinion rather than the facts of which you have a direct knowledge. The function of an expert witness is to educate the judge on the valuation of the company so that a decision on value can be made.

36 I also note that a February 2008 printout from the employer's internal website described the mandate of CRA business valuators as "… to provide expert valuation opinions and technical consultation services to CRA clients" (Exhibit G9). It went on to discuss their work as follows:

CRA Valuators are professionals who assist the Audit, Appeals, Tax Avoidance or Justice Departments by providing a quality service in a cost effective manner. Our valuation opinions are prepared in accordance with current professional standards and ethics.

The purpose of a business equity valuation is to establish the value of an ownership interest held in a corporation, partnership, sole proprietorship, or franchise. Valuators look at all of the assets of an entity that contribute to value including business operations and intellectual property. A business equity valuation may also be requested to determine the value of intangible assets such as goodwill, patents, copyrights, trademarks, licenses and royalties.

37 Turning from the job description to the job itself, Mr. Walkingshaw testified in direct examination and in cross-examination as to the general work of business valuators as follows. A corporate tax return comes into the TSO. It is screened to determine whether it should be accepted as is or whether for some reason a second look may be taken. If it is determined that a second look may be warranted, it is sent to the audit section. If the subsequent audit involves a question of a property valuation that might have an impact on the tax payable — as could be the case in a transaction not at arm's length or in a transfer of property or shares — the file may be forwarded to the business valuation section for a recommendation as to whether further investigation is required.

38 At that point, as a rule, the business valuator's team leader does the initial screening. He or she quickly reviews the file to see if there is indeed an issue, and if so, he or she forwards the file to a business valuator for further investigation. (However, I note that the responsibility for such a screening, although generally performed by the team leader, does fall within the job description of AU-03 valuators).

39 The business valuator might perform "a quick and dirty" (to use Mr. Cavanagh's words) valuation of the property at issue. If it is determined that a tax challenge is warranted, the valuator provides a more formal valuation opinion, suitable for use in court proceedings.

2. CRA rules of conduct with regard to conflicts of interest

40 At all material times, the CRA's Conflict of Interest Policy was that its employees "… must avoid any real, potential or apparent conflict of interest." (The Conflict of Interest Policy was found at Tab 38 of a tabbed book of documents entered by the employer as Exhibit E1.) The policy sought to "… enhance public confidence in the integrity of the CRA and its employees while recognizing that employees can participate in certain outside activities." A conflict of interest was defined as involving the following:

… situations when an employee's personal assets, affairs or interests are in a real, potential or apparent conflict with his or her public duties and responsibilities, or situations that could affect the employee's judgment to the [sic] act in the best interest of the CRA.

41 The CRA also set up a Continuing Committee on Conflict of Interest ("the Continuing Committee") at its Ottawa headquarters, composed of senior officials and chaired by the assistant commissioner of the Human Resources Branch. As Mr. Allen explained it, the Continuing Committee was intended to deal with more difficult cases or to provide a second opinion as to the existence of a real, potential or apparent conflict of interest.

42 As a CRA employee, Mr. Cavanagh was also subject to its Conflict Code. The employer put into evidence the January 20, 2003, version of the Conflict Code, and the hearing was conducted on the basis that this was the applicable version (Exhibit E1, Tab 39).

43 The employer provided a copy of the Conflict Code to each of its employees and, in particular, to the grievor. Employees were required annually to sign an acknowledgement that they had read and were familiar with the Conflict Code's provisions. Its foreword contains the following statement (Conflict Code, Exhibit E1, Tab 39):

Your involvement in outside employment and other activities is not prohibited unless such activities are likely to result in a conflict of interest. The Code requires you to act in a way that will avoid the possibility of real, potential or apparent conflict of interest. It is therefore necessary that you report, in confidence, any outside involvement or financial interests you have that could make demands that are not consistent with your official duties, or that could call into question your capacity to perform your duties in an objective manner.

44 At paragraph 22, the Conflict Code deals as follows with outside activities, whether employees can conduct them, and the circumstances under which an employee might be directed to modify or cease such activities (Conflict Code, paragraph 22; Exhibit E1, Tab 39):

Involvement in outside employment and other activities by employees is not prohibited unless the employment or other activity is such that it is likely to result in a conflict of interest. It is the responsibility of the employee to make a Confidential Report to the delegated manager of involvement in an outside activity that could place on the employee demands inconsistent with his or her official duties and responsibilities objectively. The delegated manager may require that such activity be curtailed, modified or ceased when it has been determined that a real or potential conflict of interest exists.

45 As paragraph 22 of the Conflict Code makes clear, employees who have such outside activities are required to submit a confidential report to the delegated manager (Exhibit E1, Tab 39). (In the case before me, the delegated manager was the director of the Toronto Centre TSO, which for most to the time material to this case was Mr. Allen).

46 The delegated manager reviews the employee's confidential report and determines whether there is a real, potential or apparent conflict of interest. He or she then directs the employee accordingly. In certain cases, the delegated manager could forward the confidential report to the Continuing Committee for review and a ruling.

3. Events leading to disciplinary actions

47 At all material times, Mr. Cavanagh was also a chartered accountant ("CA"), a chartered business valuator ("CBV") and a certified financial analyst ("CFA"). He was a member of the professional organizations governing all three professions and was subject to their respective rules and guidelines of professional conduct. (He never explained those precise rules and guidelines other than in his repeated testimony that they were more stringent than those governing AU-03 valuators in the CRA.)

48 On February 16, 1999, the grievor filed his confidential report (Exhibit E1, Tab 2). The report, which was a standard form, contained the following standard statement:

In compliance with the Code for the Public Service, I hereby disclose the following non-exempt assets, direct and contingent liabilities and outside employment and other activities which I fully understand may have to be divested, curtailed or modified if it is determined that such assets, liabilities or activities give rise to a real or potential conflict of interest in respect of the duties and responsibilities of the position offered to or occupied by me.

49 The grievor answered "N/A" with respect to assets and liabilities. With respect to "description of outside activities," he answered as follows (Exhibit E1, Tab 2):

… are non tax, non-income determination of Bankrupt Corps. Debt-negotiation + re-financing, inventory counting, compliance with non-tax fed/prov legislation, compliance with contractual agreements, misc other activities that relate to negotiation, compliance etc. of distressed companies + individuals.

50 I note that Mr. Cavanagh testified that when he filled out the confidential report, he was not actually doing any of the things he listed as being "outside activities." He testified that as a CFA, he was required under its code of ethics (which he maintained was more exact than that of the CRA), he was required to list everything that he could be doing, not just what he was doing. And he said that at that time, he was not doing those things.

51 In ordinary course, the confidential report should have been reviewed by the director of the Toronto Centre TSO in 1999, who would then have determined whether the outside activity did not raise a conflict of interest or whether it had to be ceased or modified. However, it appears that the report was misfiled between two other files. As a result, it did not come to light until or about June 2003. At that time, Alice Shields, who was then Director of the Toronto Centre TSO, asked Mr. Cavanagh for clarification as to what exactly he was doing in his outside activities.

52 The grievor provided a response on July 3, 2003 (Exhibit E1, Tab 3). He opened by stating the following: "Although there has been no direction as to how you would like me to elaborate, I will attempt to describe activities I would be involved in." He went on as follows:

In general terms, I could be working on valuing shares, business interests and assets both tangible and intangible. I am a Chartered Accountant and Chartered Business Valuator and this profession extends far beyond CCRA and tax related issues. Actually, a CBV does not get involved in tax related matters in most instances.

Where I would be found to practice the profession would be in matters that involve matrimonial disputes where net family property has to be determined. I could be involved in bankruptcy proceedings that require corporate assets to be valued for liquidation. Cash flow analysis for debt financing and refinancing. Inventory analysis, management and valuation involves the accuracy of reporting inventory amounts. Assistance in compliance with non-tax regulatory issues such as stock exchanges is also a function. The drafting of partnership, shareholder and other contractual agreements involve valuators. Valuing of business interests for sale or purchase.

There is a myriad of activities that have no relation to tax or the interest of the CCRA that require the expertise I am qualified to offer. The above should provide a general overview that gives you a feel for the activities available that are not in conflict with my employment contract at CCRA.

53 Throughout his testimony, the grievor emphasized that the fact that he "could" do some of the activities he listed did not mean that he was actually doing them, at least at that time. He maintained that he listed activities that he "could" or "might" have been doing not because he was actually doing them but because his professional code of conduct as a CA, CFA or CBV required him to provide that type of disclosure.

54 In July 2003, Mr. Allen was Assistant Director to Ms. Shields. He, Sue Barwick (a staff relations officer) and the grievor met on September 3 to obtain clarification of the grievor's outside activities; see Exhibit E1, Tab 4.

55 The grievor was asked whether he was still doing outside work. He replied as follows that he had: "listed all of the things that I would be doing but I don't do all of it right now" (Exhibit E1, Tab 4). He maintained that all the work he had listed was not tax-related.

56 When Mr. Allen pointed out that such work could still have tax implications, the grievor replied as follows: "everything could–how often does that conflict with my sphere of influence–never" (Exhibit E1, Tab 4). When he was asked whether he gave advice about the value of property, he replied as follows:"I do due diligence and not evaluation. I review contracts that individuals enter into and determine whether the value that they are paying is correct. I check the debt and adjust the value or recommend another figure."

57 During his testimony, the grievor returned to that point again and again. He said that when acting for a purchaser, he did not provide a valuation of the asset or business being purchased. Instead, he looked at the purchaser's situation and opined on whether it was a good deal. He maintained that such an opinion bore no relation to the value of the asset or business being purchased — it related only to the purchaser's situation and whether he or she could afford the contemplated purchase. He stated that the value of the asset being purchased was irrelevant to whether the buyer could or should proceed with the transaction. He also helped purchasers obtain better deals through hard bargaining, a process that he maintained was not affected in any way by the value of the thing being purchased.

58 The grievor was also rather unclear as to just what exactly he was doing during the period from 1999 to 2008 and when he did whatever it was he did.

59 In cross-examination, the grievor testified that he did not believe that he was doing the things he had listed in his 1999 confidential report (Exhibit E1, Tab 2) at the time he completed it. He said that he filed it when he did only because it was the first year of the course he was taking to obtain the CFA designation, and he said, the CFA code of ethics required that he disclose what he might be doing, not just what he was doing. When asked when exactly he started doing any of the work he listed, he replied that he did not know. He then launched into an account of how his outside activities had started.

60 Because of a 20-year divorce battle, which had led to two or three court appearances a year as a self-represented litigant, the grievor had acquired knowledge and experience in matrimonial dispute matters. Friends asked him to help with their cases, and he obliged. He did not do it for money but simply to help them. He then met a business person at a party and developed, in his words, a trust relationship with him.

61 The grievor's first job came about as the result of meeting an accountant at a business breakfast. He said it was in "early 2000, 2002 or 2003, something like that." The accountant told him he had a problem client that he did not want to deal with and asked the grievor if he would help the client. The client ended up asking the grievor to assist him in the purchase of a business. The grievor was paid for this work. He explained what happened as follows:

He asked me how to buy a business … I told him to put out a letter of intent … I helped him buy a business and then he paid me … it sort of worked like that … it was a source of fees income from me putting people in connection with each other … I'd get a referral fee … and that was it, a few hundred dollars here, a few thousand there … I didn't even want it, they just sent it, said that I deserved it … but then I claimed it in my tax return and my child support obligations went up … so helping people buy businesses became a micro business I became dependent on.

62 It also appears that by 2003, the grievor's outside activities had become substantial enough to require that they be conducted under a corporate umbrella. The grievor testified that at some point (the date of which he said he could not remember), he took over a corporation that had been started by his father-in-law. In 2003, he changed the name of the company to FS Capital Corporation ("FSC"). He admitted to being a principal in the company but claimed that it was "just a title for one of the bosses," none of whom he identified.

63 The grievor admitted that he did not file a confidential report in 2003 with respect to this particular event. He explained that he did not then — and indeed never did — file a confidential report with respect to his outside activities for the FSC for the following reasons:

… all its income gets allocated to the people who own it … it is a just a shell … it is branding … money comes in and money goes out, so if you looked at the FSC tax return every year you would see zero income every year … it has no staff, it's just a shell used to make income … anyone can say they are part of it, I just allocate them the money … .

64 If this sounds confusing, it is because it was. The best I could make of the grievor's testimony, both in direct examination and in cross-examination, was that a client would contract with the FSC (that is, Mr. Cavanagh, as principal) to provide one or more of the services being offered under its umbrella. The company (that is, Mr. Cavanagh) would then subcontract the service to — and ultimately pay — someone to perform the service in question. The stable of contractors (assuming there was more than one) would include Mr. Cavanagh. I will return to the FSC and Mr. Cavanagh's relationship to it later in this decision.

65 On September 23, 2003, Mr. Allen reported to Ms. Shields. He outlined the history of the issue involving the grievor's outside activities and the information about those activities that had been provided. Mr. Allen noted that valuators at the AU-03 level provided the Verification and Enforcement, Appeals, and Revenue Collections divisions with determinations of fair market value (Exhibit E1, Tab 5). After reviewing the grievor's job description, his work for the CRA, and what he said he was or could be doing in his outside work, Mr. Allen concluded that he would consider the following:

… that Mr. Cavanagh's involvement in the outside activity could place demands inconsistent with his official duties and responsibilities objectively. Mr. Cavanagh has indicated in the interview that it is his opinion that this would not happen as he would divorce himself from any files that had his involvement; however, I would consider that a conflict could occur under subparagraphs 3(a), (c) and (e) in Schedule B, Conflict of Interest Guidelines and thus, Mr. Cavanagh would be in a conflict of interest situation and should cease his outside activities.

66 Since it had taken the employer some time to respond to the grievor's earlier requests for a clarification of the real or potential conflict of interest, Mr. Allen recommended that he be given until January 1, 2004, to cease his outside activities (Exhibit E1, Tab 5).

67 On November 5, 2003, Ms. Shields wrote to the grievor, referring to the additional information he had provided with respect to his confidential report. She advised him that she had concluded that his outside activities had "… the potential for placing demands which could be inconsistent with [his] official duties and responsibilities, or could call into question [his] capacity to perform [his] official duties and responsibilities in an objective manner" (Exhibit G14).

68 In Ms. Shields's view, the potential existed for a conflict of interest, contrary to subparagraphs 3(a), (c) and (e) of the Conflict Code (Exhibit E1, Tab 39). Accordingly, she directed the grievor to cease his outside activities, giving him until January 1, 2004, to comply. She required written confirmation that he had done so, noting that a failure to comply on his part could result in discipline, up to and including termination (Exhibit G14).

69 Mr. Cavanagh responded by email on November 13, 2003. He asked Ms. Shields the following: "… [to] elaborate as to how … [his private practice activities] are in conflict with reference to the subsections you referred to" (Exhibit G14).

70 At about that time, Ms. Shields was to transfer to a new position, and Mr. Allen, then Acting Director, would take over her position as Director.

71 Ms. Shields and Mr. Cavanagh conferred by telephone on December 17, 2003. She recorded that she had not been persuaded by his submissions that what he was doing was no different from the work performed by the outside consultants that the CRA would sometimes retain. She noted that he had asked for a further explanation of her decision and that she had agreed that one would be provided. She also agreed to extend the date for compliance from January 1 to February 28, 2004, "… so that he could have a chance to receive the info and make further representations" (Exhibit G15).

72 On the same day, the grievor emailed Ms. Shields. He stated in part as follows (Exhibit G14):

I now expect your successor [Mr. Allen] to be settling with me on this issue. To ensure we are in agreement, you have committed to delineate what in my job description and disclosed external activities are in conflict and how. Specifically, how my activities would have a conflict or a perception of conflict and how my access to confidential information could be perceived to be in conflict. I would appreciate if you could also differentiate what I do in Valuations at CCRA compared to the contracts external valuators do on our behalf.

73 Ms. Shields responded by email on the same day. She confirmed that further details would be provided to the grievor. However, she stated as follows that she would not be: "… dealing with outside contractors in this response since in my opinion this does not pertain to my decision in your case" (Exhibit G14).

74 Mr. Allen became Director of the Toronto Centre TSO in or about the beginning of 2004. On July 22, 2004, he wrote to the grievor. He recounted that on November 5, 2003, the former director had informed the grievor as follows: "… a conflict exists between your duties as a Valuator with the Canada Customs and Revenue Agency (CCRA) and your outside activities" (Exhibit G14). He noted that earlier, the grievor had been provided with an extension to March 1, 2004, to cease his outside activities. He also noted that a submission had been made to the Continuing Committee in Ottawa as follows (Exhibit E1, Tab 8):

… to verity [sic] that a conflict of interest does exist between the duties of a Tax Services Office Employee, and more specifically an AU03 Valuator, and the valuation of tangible and intangible properties. Ms Shield's determination has now been confirmed and I concur with those findings.

75 Mr. Allen reminded the grievor that on November 5, 2003, he had been directed to cease his outside activities by January 1, 2004, to provide written confirmation that he had done so and that an extension to that deadline had later been given to March 1, 2004. Mr. Allen then went on to ask for written confirmation by August 13, 2004 that the grievor had ceased "these outside activities" (Exhibit E1, Tab 8).

76 On August 13, 2004, the grievor emailed Mr. Allen as follows (Exhibit E1, Tab 9):

I have reviewed your letter of July 22^nd and after careful consideration, I do confirm that I will not provide valuation opinions on tangible and intangible properties as addressed in your letter and also confirm I am not currently involved in such activity. I too am aware of conflict of interest issues and I am governed by three professional institutes that have clearly laid out conflict policies I must adhere to.

77 I note that the grievor testified that the exact and particular meaning of words and phrases was very important to him. In that context, I also note his evidence that CBVs, much like CAs, provide valuation advice of the following three types, each with increasing levels of assurance:

1. a calculation,
2. an estimate, and
3. an opinion.

78 The third advice type — a valuation opinion — has the highest level of assurance. It is what a court would expect in the event that a CBV gives evidence as to the value of an asset or business, and it is what an AU-03 would be expected to provide in the event he or she was to give evidence in court in support of the CRA's position in a tax case. The grievor testified that he was referring to that type of opinion in his August 13, 2004, email and that he assumed Mr. Allen understood that to be the case.

79 There matters seemed to rest until mid-2005. In April of that year, another AU-03 valuator in the Toronto Centre TSO, Mr. Campione, submitted a confidential report requesting permission to start an outside business related to management consulting and litigation support services (Exhibit E1, Tab 10, page 1).

80 Mr. Allen denied the request on the grounds that it would be inconsistent with Mr. Campione's work for the CRA and that it could constitute a conflict of interest.

81 Mr. Campione did not agree with Mr. Allen's decision and pointed to the grievor as someone in the Toronto Centre TSO who was currently doing the same type of thing (Exhibit E1, Tab 10, page 1).

82 I note that Mr. Campione subsequently grieved Mr. Allen's decision. That grievance was taken to adjudication and was dismissed; see Campione v. Canada Revenue Agency, 2013 PSLRB 161, at para 83.

83 Mr. Allen made some inquiries and determined that the grievor, Mr. Campione and Tim Dunham, the team leader, were all offering their professional services as CBVs on the website of the Canadian Institute of Chartered Business Valuators ("CICBV"). He decided at that point that the CRA's Internal Affairs and Fraud Prevention division ought to be called in to investigate the possibility of ongoing or potential conflicts of interest in the office as a result of such outside activities.

84 The investigator assigned to the task interviewed seven people, including the grievor, three other valuators and the team leader. The interviews took place in December 2005 and in January and June 2006. The subsequent report, dated August 21, 2006, concluded that the grievor's outside activities placed him in a conflict of interest and that despite the direction of July 22, 2004, to cease such activities, he continued to perform them (Exhibit E1, Tab 10, page 19).

85 A copy of the report was provided to the grievor. On October 20, 2006, Mr. Allen wrote to the grievor. He noted the report's conclusion and then stated the following (Exhibit E1, Tab 11):

This letter will serve as your final direction to cease these activities immediately and provide me with a written statement by October 27, 2006 confirming that you have done so. Failure to comply with this directive may result in administrative or disciplinary action up to and including termination.

86 The grievor responded by email on October 27, 2006. He noted as follows that he had received Mr. Allen's letter on October 24 but that he had not: "… been able to appropriately respond to the letter, notwithstanding I desire to comply with it" (Exhibit E1, Tab 12). He asked for 30 days "… to prepare an appropriate response for such a serious matter that comes with a termination threat." He added that he wanted the following: "… to have appropriate consultation with the union and other advisors prior to responding so I can satisfy your needs while not jeopardizing my own" (Exhibit E1, Tab 12).

87 Mr. Allen agreed on October 31, 2006, to give the grievor until November 14, and elaborated as follows: "… at which time I expect to have received your written confirmation that you have fully complied with my previously issued direction to cease your business activities immediately" (Exhibit E1, Tab 13). He repeated his warning that failing to comply could result in disciplinary action.

88 By then, on October 30, 2006, the grievor had already grieved Mr. Allen's direction of October 20 that he cease his "… outside activities in which [he exercised his] knowledge and expertise as a chartered business valuator" (Exhibit G16). The grievor added that he disagreed "… strongly that these activities [placed him] in a conflict of interest in relation to [his] duties as a CRA valuator" (Exhibit G16).

89 I pause to note that as of November 1, 2006, the CICBV provided information about its members in an online listing (Exhibit E36). The grievor's contact information was listed as follows:

Cavanagh, Sean (1996)
FS Capital Corporation                Tel: (416) 545-9559
Suite 181
157 Adelaide Street West             scavanagh@fscapital.ca
Toronto

90 The same website had a page devoted to the benefits of engaging a CBV, as follows (Exhibit E36):

There are many reasons that an individual or a corporation might require a business valuation, including tax and estate planning, matrimonial disputes, shareholder disputes, business sales and acquisitions, commercial damages quantification, and numerous other circumstances.

Whatever the reason, whether you're making an acquisition, planning a divestiture, bringing on partners, undertaking estate or tax planning, resolving litigation disputes, assessing brand or intellectual property assets, require analysis of corporate financial issues or the valuation of securities, Chartered Business Valuators (CBVs) are Experts Worth Knowing.

91 The page also provided a searchable database of those of the CICBV's 1100 members "… who wish to advertise through the Institute's website" (Exhibit E36). A search of the grievor's name produced a positive response (indicating to me that he was one of those who wished to advertise through the website) and the same contact information noted earlier (Exhibit E36).

92 The employer also put into evidence three pages from the Industry Canada strategis.gc.ca website that had been printed (or at least faxed) on November 16, 2006 (Exhibit E36). The website listed Canadian companies and their capabilities. The FSC was listed, with a note that the information had been last updated on October 22, 2006. The telephone and the email and mailing addresses listed were the same as that noted earlier in this decision. The grievor was listed as the company's principal (although the word was spelled "principle," a point to which we shall return). The company description and services were described as follows: "Business valuation and corporate advisory services. Litigation support. Corporate Finance" (Exhibit E36).

93 The grievor testified as to how he thought that information had been placed on the Industry Canada website. He said that he had received an email from Industry Canada with a link that he had clicked. Once at the target site, he had filled out a questionnaire with several drop-down boxes. He said that he had not understood or realized that the information would end up on a public and searchable website. He said that he had thought that Industry Canada was just amassing data for its internal purposes.

94 In his testimony, the grievor explained that he had not provided that information to the CICBV. He said that at some point he had attended a seminar that it had held, at his own expense. Because the CRA did not pay his attendance fee, he had registered privately. He believed that the CICBV had then just taken his registration information and added it to his membership information online.

95 This particular testimony is typical of how the grievor often carefully tacked around facts that were problematic to his position. The fact that he might not have provided the information to the CICBV for the exact purpose of having it placed on its website misses the point that he did provide that information to the CICBV when he registered for the seminar. In other words, he represented himself to the CICBV (and to others at the seminar) as being with FSC. (I also note that, in any event, the investigator spoke to the CICBV's administrative manager, who advised that such information was placed on its website at the request of its members; see Exhibit E1, Tab 10, page 19.)

96 On November 14, 2006, the grievor emailed Mr. Allen. He repeated his position that he did not think that his activities put him in a conflict with his CRA duties. He argued that there was confusion over which of his activities were or were not acceptable and why. He concluded as follows (Exhibit E1, Tab 14):

I have grieved the conflict notice and I feel we should deal with the grievance prior to my submission of the letter you requested. It is my understanding that this grievance should be before you now. Again, I would be happy to comply with your request once we can be clear on what activities constitute a conflict and what does not. I just want to understand the reason why something would be in conflict so I can enter into activities that are acceptable to the CRA. In the meantime and until some clarification is provided to me by you at the grievance hearing, I will seek case-by-case approval anytime I am approached by a potential client that may need discretion. I would need assurance, however, that such requests for approval would be expedited. In addition, I would like to determine if there has been anything since 1999 that has arisen that did cause any problems with my employment. Looking forward to resolving this matter. Thank you for your patience.

97 That quote is representative of the grievor's response throughout to the employer's concerns. He provided information concerning his outside activities and then argued with or dismissed the employer's decision that there was a real or potential conflict of interest. He refused to follow clear directions to cease the activity, arguing that such directions were confusing, lacked clarity or were incorrect because in his opinion, there was no conflict. Rather than follow the rule of "work now, grieve later," he failed to comply and then tried to negotiate a compromise that suited his purpose.

98 The grievor, his bargaining agent representative Dan Rafferty and Mr. Allen met on November 15, 2006. The meeting was spirited. Mr. Allen insisted that the grievor comply with his direction, pending the outcome of the grievance. At the conclusion of the meeting, Mr. Cavanagh wrote up and handed to Mr. Allen the following note, which he marked "without prejudice" (Exhibit E1, Tab 15): "This is to advise you that I agree to abide by the direction contained in your letter of October 20, 2006 and reiterated in your letter of October 31, 2006."

99 In an email dated November 27, 2006, the grievor wrote to Mr. Walkingshaw, with a copy to Mr. Rafferty (Exhibit E1, Tab 16). The email was a detailed response to the investigation report of August 2006. It is not necessary to reproduce the two-and-a-half page email or all 23 points the grievor listed. It is enough to state that the main points were as follows (Exhibit E1, Tab 16):

1. He had filed a confidential report in 1999.
2. He had not hidden the fact that he was doing outside work.
3. His co-workers and management and, in particular Mr. Dunham, had known that he was doing outside work and had not objected to that point.
4. He stated: "There was never any evidence before me that demonstrated any work I performed was in conflict. My conflict filing [of 1999] stated I would do certain activities, not that I was actually doing them."
5. He stated: "I refused files when I knew the taxpayer or the taxpayer representative."
6. He was never told how his activities could pose a real or potential conflict of interest, although he had asked for such an explanation.
7. He stated: "The standard for conflict is real or potential conflict. The opportunities that were presented to me as outside activities were of such a nature that they would not ever pose a real or potential conflict."
8. He stated: "There is a grievance in process and any decision that relates to the investigation conclusion should be postponed until the grievance is concluded."

100 On December 28, 2006, the grievor emailed Mr. Allen (and copied Mr. Rafferty). He wrote that during the meeting on November 15, Mr. Allen had committed "… to have the reasons why [the grievor's] listed activities were a real or potential conflict with [his] duties at the CRA" by December 15 (Exhibit E1, Tab 22). He noted that he had not as yet received those reasons but that he was prepared to extend the date for Mr. Allen to fulfill that commitment to January 5, 2007. However, if the letter was not received by that date, he would "… submit a letter rescinding [his] agreement to not pursue outside valuation work, the nature of which has been provided to [Mr. Allen]" (Exhibit E1, Tab 22). He added that he would "… reconsider the postponement of [his] outside work on receipt of the letter [Mr. Allen] promised at the November meeting" (Exhibit E1, Tab 22).

101 Mr. Allen responded by email on January 3, 2007 (Exhibit E1, Tab 22), advising that a letter of the same date (Exhibit E1, Tab 18) had been sent. In the letter Mr. Allen noted that he would provide the grievor with clarification of the alleged conflict by January 31. However, he reminded the grievor of the following (Exhibit E1, Tab 18):

… direction given to you pertaining to your obligation to cease your outside business activities immediately. This direction continues to be in effect. My decision to provide you with additional clarification regarding your conflict of interest by January 31, 2007 does not interfere with or change my original determination of an existing conflict of interest or my previous direction to you to cease and desist your outside business activities.

102 Mr. Allen went on to discuss the grievor's decision to withdraw his agreement of November 15, 2006, explaining as follows that it: "… does not nullify my direction to cease your outside business activities." According to Mr. Allen, the grievor's rescission of his earlier agreement not only perpetuated the conflict; it also constituted an act of insubordination. Mr. Allen informed the grievor that both were subject to discipline up to and including termination (Exhibit E1, Tab 18).

103 A few days later, on January 5, 2007, Mr. Allen received Mr. Walkingshaw's draft analysis of the possible conflict of interest between the grievor's AU-03 business valuator position and his outside activities (Exhibit E1, Tab 19).

104 Mr. Walkingshaw made a detailed review and comparison of the work of an AU-03 valuator in the Toronto Centre TSO with that of a CBV, as well as those outside activities that the grievor had over time described as falling within what he did or might do. He noted the following (Exhibit E1, Tab 19):

… all the activities listed by the Employee as potential services that he could be involved in as outside activities would require knowledge of accounting, auditing, tax, business practices, valuation, finance and other similar principles and disciplines.

In particular all the above functions involve either determining a value or providing tax advice (through providing advice on the most advantageous structures to use).

For an employee who is a Valuator to carry out any activities which involve determination of values puts the employee in a potential conflict situation because any valuation may have tax consequences (higher or lower determinations of value may result in higher or lower applicable taxes). An employee cannot be involved in determination of values without potential tax impact. The impact may not be limited to the entity involved but could affect others e.g. purchasers, vendors, lenders, investors etc. (Note that the CRA could be a creditor.)

105 Mr. Walkingshaw also pointed out that AU-03 valuators were expected to screen valuation issues that had been flagged on the initial screening of tax audit files, to determine if in fact there was a valuation issue. If the valuator had provided outside valuation services to the taxpayer in question, he stated, "… the potential for conflict would exist if the employee can perform these duties as outside work and then is responsible for determining which files are selected for CRA review" (Exhibit E1, Tab 19, page 5).

106 Mr. Walkingshaw concluded that the outside activities listed by the grievor had the potential to generate conflicts of interest and that to let an employee carry on with such activities would create an apparent conflict (Exhibit E1, Tab 19, page 6).

107 Mr. Walkingshaw delivered his final report on January 8, 2007. The report was more detailed than the draft and noted the grievor's email of November 27, 2006. However, the result was the same. He concluded as follows (Exhibit E1, Tab 20, pages 17 and 18):

Whatever the intent of Mr. Cavanagh's response [to the various cease and desist directions given to him], two facts are clear:

i)   Mr. Cavanagh did not abide by the instruction given to him for he continued to work on outside activities, and

ii)  Even if one accepts the limitations Mr. Cavanagh imposed on these instructions, Mr. Cavanagh has violated the agreement by assisting clients who were purchasing businesses to do so at fair market value for in order to do so he must given [sic] them an opinion of value (which is what he agreed not to do).

108 Mr. Walkingshaw added that the grievor had created a real conflict by continuing to do the work he said he was doing and that he had also created "… an apparent conflict of interest by holding himself out as being available to do such work while still working for the CRA" (Exhibit E1, Tab 20, page 18). In his opinion, it was a serious breach of the Conflict Code.

109 On January 26, 2007, Mr. Allen provided the grievor with the clarification that he had earlier undertaken to provide (Exhibit E1, Tab 21). The clarification covered five pages. It listed the areas of real, potential and apparent conflict that existed between the grievor's work as an AU-03 business valuator and the outside activities he said that he was or could be doing.

110 Mr. Allen pointed out areas that the grievor had said he could be involved in, such as matrimonial disputes, bankruptcies, cash flows and inventory analyses, and noted as follows (Exhibit E1, Tab 21):

… These would or could require an explicit and implicit determination of the value of property or the property's ability to generate cash flow (which itself is a determinant of value). Once again any such determinations could be subject to review by the Agency; the review may not necessarily be of your client's affairs but could be related to another party to the transaction. Your involvement in giving an expression of opinion of value is in conflict with your duties as a Valuator for the Agency.

111 Mr. Allen went on to observe as follows that with respect to apparent conflicts of interest: "… it is not a matter whether you have such an advantage [based on the grievor's status as a CRA employee], or whether your objectively [sic] is influenced, but whether an outside person could reasonably conclude that it may be so." He went on to state that in his opinion, "… that could be the case and so there is an apparent conflict" (Exhibit E1, Tab 21). He concluded that, accordingly, the grievor's involvement in his outside activities should be prohibited and that they should cease (Exhibit E1, Tab 21).

112 The grievor responded to this letter on February 1, 2007 (Exhibit E1, Tab 23). He told Mr. Allen as follows that he had: "… quickly read the letter and as you may well expect, I feel there are many misconceptions you have on valuation work as a result of your consultations" (Exhibit E1, Tab 23). He went on to say that the problem could be rectified by transferring him to Transfer Pricing (within the Audit division). He advised that he would accept such a transfer in order "to retain [his] non-CRA opportunities," adding that if his AU-03 business valuator position "… is what raises the conflict, then [he would] avoid it by not being there" (Exhibit E1, Tab 23).

113 On February 7, 2007, the grievor sent Mr. Allen a long email. He renewed his request for a transfer. He then complained about Mr. Dunham. He remained of the view that he was not being treated fairly and repeated that he was considering whether to rescind what he called his "cease and desist agreement … [of November 15, 2006]" (Exhibit E1, Tab 24). He went on as follows:

With the above disclosure [of his complaints about Mr. Dunham] and the ability to rectify my 'conflict' with a transfer, it does not seem reasonable to destroy the momentum my private practice has achieved; further delays will have an adverse and possibly permanent financial injury to me. I have to mitigate as much as possible.

114 The grievor concluded with the following observation (Exhibit E1, Tab 24):

I know you are busy and likely have bigger problems than me and that is why I can't get quicker responses from you. However I can't just put my life on hold until my number comes up. Therefore as I have stated, I am preparing to re-initiate my private practice and will email you a letter at that time to inform you of that.

115 On February 9, 2007, Mr. Allen wrote to the grievor. He acknowledged the grievor's request for transfer and advised that he had forwarded the request to the assistant director of the Audit Division. He went on to remind the grievor of his agreement of November 15, 2006, as follows: "… whereby you concurred that you would comply with my direction to cease all outside business activity" (Exhibit E2). He wanted to make clear that his direction would remain "… in effect until such time as [the grievor was] advised otherwise" (Exhibit E2).

116 On February 13, 2007, Mark DeMarco, another valuator working in Mr. Cavanagh's officer, received an email that appeared to come from Mr. Cavanagh. Its subject was, "Mr [sic] Sean Cavanagh, CA, CBV has a new job title: Principal" (Exhibit E37). The body of the email contained the following statements:

Grow Your Plaxo Network

Invite your friends to join your Plaxo network so that you will always automatically get each other's latest contact info.

Your member status

Plaxo member since 1/12/2004

Mr. Sean Cavanagh, CA, CBV has a new job title:

Plaxo has automatically updated your address book with this info.

Work Info: Mr. Sean Cavanagh, CA, CBV

                   Principle, FS Capital Corporationn [sic]

Old Work Information:              Principle

New Work Information:             Principal

Since you and Sean are both Plaxo members, your address book will always contain Sean's latest info. No further action is required.

[Emphasis in the original]

117 At the bottom of the email were the following statements (Exhibit E37):

Don't notify me next time Mr. Sean Cavanagh, CA, CBV's contact info changes.

Control how often you receive these email notifications.

This message was sent to you by Plaxo on behalf of Mr. Sean Cavanagh, CA, CBV.

[Emphasis in the original]

118 In cross-examination, Mr. Cavanagh professed to have no knowledge as to how this information had ended up on Plaxo, a web-based contacts management site. He stated that he agreed that the information was as follows: "obviously me, but how I got there I don't know." He explained that "back then" there were "a lot of issues in cyberspace … a lot of software that would data mine and could steal information." He said that at one point, he might have become a member of Plaxo (which he described as a kind of electronic Rolodex on the internet) but then suggested that Plaxo could have data-mined the information from somewhere else. He suggested that Plaxo was connected to his Outlook email application by means of a plug-in. When he updated his vCard (virtual business card) in Outlook, the information would have been automatically sent to other Plaxo members, without any action on his part.

119 Since I am on this point, I must say that I am satisfied on the evidence that Mr. Cavanagh had been a member of Plaxo since 2004 and that when he first joined, he had described himself as "principle" [sic]. The spelling mistake is significant, because it is the same spelling error that appears on the Industry Canada website. Since Mr. Cavanagh agreed that he had supplied the information shown on that website to Industry Canada, I am satisfied that he was the source of the original error.

120 In my opinion, it is more likely than not that in February 2007, he was also the source of the change to the Plaxo information when the word "principle" was changed to "principal."

121 It strikes me as unlikely that any computer program would notice the difference in the two words (which, after all, are correctly spelled) or understand that the wrong word had earlier been used. It strikes me as far more likely that Mr. Cavanagh, when reviewing the Plaxo information for some reason at that time, noticed the use of the incorrect word and changed it.

122 On February 22, 2007, Mr. Walkingshaw signed a disciplinary action report. Discipline in the form of a 10-day suspension without pay was imposed on the grievor, effective March 22, 2007 (Exhibit E1, Tab 26). (This was the first of the three disciplinary matters before me.) The report noted that on July 22, 2004, Mr. Cavanagh had been directed to cease his outside activities on the grounds that they constituted a conflict of interest. It also noted that a subsequent investigation had revealed that he had continued to engage in the outside activities.

123 After recording the discipline, the report went on to note that the grievor was expected to comply with the previous directions to cease and desist his outside activities and, in addition, "… to honour [his] agreement to the Director dated November 15^th, 2006 wherein [he] agreed to comply with the directions to cease all outside business activities" (Exhibit E1, Tab 26).

124 On February 27, 2007, Mr. Cavanagh grieved the 10-day suspension on the grounds that it was unfair, unreasonable and without foundation (Exhibit G22; this is PSLREB File 2161).

125 On March 5, 2007, the grievor emailed Mr. Allen. He noted as follows that it was: "… clear that we are at the Rubicon, before I rescind my cease and desist letter, I would like to see if you would be interested in sitting down informally and seeing if there is anyway [sic] to end peacefully" (Exhibit E1, Tab 27).

126 Mr. Allen responded the next day, stating that a meeting would not be possible until March 16, 2007. He offered to set one up between himself, the grievor and Ms. Tadesco, Assistant Director of Audit, into whose division the grievor was seeking to be transferred. He offered a time and place (Exhibit E1, Tab 27).

127 The grievor rejected that offer, stating that having Ms. Tadesco at the meeting (even though it was her division) would not achieve anything. He concluded as follows by stating that he did not believe that the proposed meeting: "… will achieve anything and there is nothing in this last round of discussion that would lead me to believe a new course can be determined" (Exhibit E1, Tab 27). Accordingly, he "… decline[d] the meeting [he] requested and [Mr. Allen] set for the 16^th" (Exhibit E1, Tab 27).

128 On March 7, 2007, the grievor sent another long email to Mr. Allen. He explained that he had "offered" the cease and desist letter as follows: "… in an effort to, in good faith, work towards a resolution on the external work that I have disclosed I was interested in doing since 1999" (Exhibit E1, Tab 28). He explained that in his opinion, the subsequent investigation and his repeated demands for a clarification of the alleged conflict had never revealed any real conflict. He went on as follows:

I have come to be economically dependent on the funds that result from my external practice and the curtailment of such would cause great harm. I ceased and desisted to find a work around solution that appears to be not the direction we are going. Therefore, the C&D [cease and desist] letter has run its course.

In the absence of your intention to work toward a solution that provides my civil service commitment to work with my external practice, and further what seems to be a demonstrated commitment to curtail all external work in whatever form, I hereby rescind the cease and desist letter provided on November 27, 2006.

[Emphasis in the original]

129 I note that the parties agreed that the reference to November 27, 2006, was a typo and that what the grievor meant was the handwritten note of November 15, 2006 (Exhibit E1, Tab 15).

130 Mr. Allen responded to the grievor's email on March 15, 2007 (Exhibit E1, Tab 29). He strongly suggested that the grievor reconsider the rescission of his letter. He acknowledged that the grievor had grieved Mr. Allen's direction to cease and desist. However, he added as follows that, nevertheless, the grievor was: "… obliged to continue to follow this instruction, while your objection is addressed through the appropriate steps of the grievance process" (Exhibit E1, Tab 29). Mr. Allen advised that he was prepared to give the grievor until March 30 to reconsider his position and to confirm by that date that he would cease and desist his outside activities (Exhibit E1, Tab 29). Failing to would constitute grounds for disciplinary action.

131 Mr. Allen did not receive a reply. He was out of the office for some time, and on his return in July, he noted the absence of any reply. On July 19, 2007, he wrote to the grievor and repeated his request but extended the time for compliance to August 31 (Exhibit E1, Tab 30).

132 On September 7, 2007, Mr. Allen emailed the grievor. He reminded the grievor that he had asked for a written response to his July 19 letter by August 31, noting that he had not yet received such a response (Exhibit E3). He wanted to meet with the grievor on September 11 and noted that since the meeting pertained to the conflict of interest issue, the grievor could bring a bargaining agent representative to observe (Exhibit E3).

133 The grievor did not attend the meeting on September 11, 2007 (Exhibit E4). A new meeting was scheduled for September 17. Mr. Allen advised that failing to attend this meeting would be considered an act of insubordination (Exhibit E4).

134 The meeting did take place. On September 21, 2007, Mr. Rafferty emailed Mr. Allen following the meeting. He thanked him for his willingness to discuss the issues being raised by the grievor. He noted the following about the meeting (Exhibit E5):

Sean was very frank with you in indicating that he simply cannot meet his financial obligations if the employer forbids him to engage in outside remunerative activities from time to time. There have been no problems since 1999, when he filed his conflict declaration.

135 Mr. Rafferty went on to state the following (Exhibit E5):

… [while there is] no easy fix for this situation as we await the results of the independent review in Ottawa, Sean and I agreed that among the options that we discussed, the one that has the highest likelihood of leading to a win/win result would be for Sean to be able to transfer as soon as possible to Training. Of course, your agreement would be necessary as a prerequisite, and I am approaching you now to ask if you wold be willing to facilitate Sean's transfer by:

1)  agreeing to permit him to leave Valuations and transfer to Training

2)  contacting the Director of Training and advising him of Sean's interest in the Training position and that you would be agreeable to transfer … .

136 Mr. Allen responded to this email on October 3, 2007. While acknowledging the importance of the issue to the grievor, he noted that the issue had been ongoing since 2003. He added that despite the fact that they were waiting for the results of the review in Ottawa, it remained that Mr. Cavanagh was under direction to cease and desist his outside activities. He advised that he was willing to contact other departments to advise of the grievor's interest in transferring (and why) but that it was up to the grievor to apply for such a transfer and that it was up to the management of the department into which he sought a transfer to make the decision (Exhibit G17).

137 On January 9, 2008, LysanneGauvin, Assistant Commissioner, Human Resources Branch, CRA, wrote on behalf of the Continuing Committee in response to the grievor's confidential report of 1999. She noted Mr. Allen's letter of January 26, 2007 (Exhibit E1, Tab 21), advising that the work that the grievor proposed to do gave rise to real, possible or apparent conflicts of interest and that as a result, such work was prohibited and should cease. She advised that the Committee had considered the matter and had concluded as follows: "There exists the appearance of a conflict due to the likelihood that the public would perceive that you [the grievor], whether consciously or not, would be influenced in the performance of your official duties by matters related to your private interests" (Exhibit G24).

138 At about that time, a meeting was held in Ottawa between the grievor and Mr. Rafferty, on one hand, and Sonia Virc, a senior staff relations advisor on the other. The purpose of the meeting was to attempt to resolve or settle Mr. Cavanagh's several grievances and to see if there was some way to end up with a mutually agreeable solution to the issues he said he was experiencing with the Toronto Centre TSO.

139 I advised the grievor that, ordinarily, I would not hear such evidence because it would be privileged as part of settlement negotiations. However, the grievor wanted to testify as to what had been discussed because, he alleged, the evidence went to his allegation that his termination had not been made in good faith. He alleged that the termination was the result of an ulterior motive, to get rid of him, and that the evidence helped prove that bad faith. He also argued that Ms. Virc had in fact agreed to a settlement that was favourable to him but that the decision in Toronto to terminate him had frustrated that settlement.

140 Based on this argument, I permitted the grievor to testify as to those discussions and, in particular, to enter into evidence email correspondence that referred to those discussions (Exhibit G30).

141 The grievor testified that he and Mr. Rafferty had been told at the meeting that it was clear that the Toronto office wanted him gone. The meeting had explored various alternatives to outright termination.

142 It appears from the email exchange between Ms. Virc, the grievor and Mr. Rafferty on March 18, 2008 that the grievor had wanted 12 months' pay to settle the matter (Exhibit G30). This was unacceptable to management, but it was prepared to consider termination by reason of medical incapacity, pursuant to paragraph 51(1)(g) of the Canada Revenue Agency Act (S.C. 1999, c. 17). Such a termination would have preserved some (but not all) of the grievor's pension and other benefits and particularly would have entitled him to severance of one week per year of service.

143 That in turn was not acceptable to the grievor, who advised Ms. Virc on March 18, 2008, as follows: "… if the CRA is not prepared to offer a better deal, I will have to rely on DI [disability insurance]" (Exhibit G30). He suggested putting off the suspension until after his DI application was processed, because if it was accepted, "… then severance will not be as necessary making the offer acceptable" (Exhibit G30).

144 Ms. Virc's response on the same day was the following:

… management's first priority is to ensure that you abide by their cease and desist order with respect to your conflict of interest situation and to deal with your past refusal. Whether the suspension is later reimbursed as part of a future settlement is something we could discuss but it is not in management's best interest to indefinitely delay the suspension in these circumstances especially given that even after you receive information from your specialist on March 25^th, it could still be a while before DI informs you of whether or not your application has been approved.

[Emphasis in the original]

145 From all this, I am satisfied that the best that can be said at this stage is the following:

1. The grievor and Mr. Rafferty were exploring with Ms. Virc several possible resolutions of the issues then dividing the grievor from his Toronto manager.
2. His managers, as well as Ms. Virc, were prepared to continue those negotiations.
3. However, his managers were not prepared to put their cease and desist orders on hold in the meantime.

146 There was no evidence to suggest that that management — whether in Toronto or Ottawa — was not negotiating with the grievor in good faith or that the termination represented any sudden change in its stance until that point.

147 I am satisfied that at no time did anyone on the employer's side tell the grievor that it would not expect him to obey the directions given to him pending discussions to resolve the grievances and issues between them.

148 To return to the chronology, on March 5, 2008 (and before the already mentioned exchange of correspondence on March 18), a second disciplinary action report was issued (Exhibit E1, Tab 32). The grievor was suspended without pay from March 20 to April 18, 2008.

149 On March 13, 2008, Mr. Cavanagh grieved the 20-day suspension as unreasonable and unjustifiable (Exhibit G23; this is PSLREB File 3543).

150 On April 24, 2008, Mr. Allen wrote to the grievor. He reminded the grievor of the many written directions he had received as follows (Exhibit G25):

… to cease and desist your outside business activities involving Valuations that have previously been deemed to be a conflict of interest under the Agency's Conflict of Interest Policy and Guidelines. As such, you are directed again to refrain from these activities immediately. This direction also includes shutting down your business's website.

151 At the hearing, the employer introduced evidence about the website to explain Mr. Allen's direction. It put into evidence a June 2, 2008, printout from the FSC's website (Exhibit E6).

152 One of the web pages was titled "About Us." It included the following statements (Exhibit E6):

FSC is a financial advisory firm established to bring the highest performance with unyielding ethical standards. Our mission is for the preservation and increase in wealth for individual and corporate cliental [sic]. With specific expertise in law, tax and investment valuation, a merit driven perspective with a wealth creation focus allow a continuing value added service for demanding high net worth clients… .

FSC has select staff for the essential services it offers, but its strength is in the professional association with talented experts in a myriad of specialities. Our strength is identifying and providing solutions allowing the client to focus on what he does best.

153 The grievor was asked in cross-examination about the reference to "select staff." In my view, his answer was not particularly clear.

154 However, the grievor did not identify any particular individuals "associated" with the FSC. He did not identify or describe the professionals (other than himself) who would be working with, for or in association with the FSC. Nor did he explain how the exercise of "… specific expertise in law, tax and investment valuation …" might not also involve some of the tasks performed by a business valuator working in the Toronto Centre TSO.

155 The grievor was also asked in cross-examination when the FSC was incorporated. He answered as follows:

… [I have] no idea … mid 2004 or 2005 … it was just sitting on a shelf … I had a website but it was doing nothing, it was just stagnant … in 2005 my Dad got sick … that year was rough … So I thought that I'd stick it out in the CRA for another year … when you set a [sic] the web site you want it to sound big, but that doesn't mean that you do all that … I listed many many things on the list, but just did one … I just wanted to lay groundwork so that if I left the CRA … I could then leave and hit the ground running.

156 The following statement was found under "About Us," on the "Services" page of the FCS website (Exhibit E6):

FSC's roots are in business valuation and mergers and acquisitions with services comparable to most boutique firms with staff associates have extensive tax and CRA experience:

Mergers, acquisitions                   Damages
Divestitures                               Fair value opinions
Corporate stock transactions        Purchase price allocation
Employee stock ownership            Goodwill impairment
Corporate dissolutions                 Succession planning
Corporate Reorganization

Experience in corporate reorganization and litigation has provided expertise for business and tax implications in the following agreements:

Matrimonial                                Partnership
Shareholder                                Joint venture

157 The grievor's name (or indeed any name) appeared nowhere on the website. The contact page provided the following phone, email and mailing addresses:

416.545.9559

info@fscapital.ca

Box 181, 157 Adelaide Street West, Toronto.

158 I note that the phone number and address are the same as those given for the FSC contact information posted on the Industry Canada and CICBV websites, as set out earlier. However, the email address is different. The grievor's name was replaced with the word "info." He did not explain in his testimony why he would have earlier provided a contact email address containing his name but then later would have substituted a generic email address.

159 Returning to Mr. Allen's April 24, 2008, letter, he acknowledged that Mr. Cavanagh had filed a grievance with respect to the direction and to the earlier discipline that had been imposed on him. Mr. Allen advised him that he was nevertheless obligated to follow that direction, pending the outcome of the grievance process. Mr. Allen concluded by stating that he expected a written response on or before May 2, 2008, "… indicating [the grievor's] agreement to cease and desist [his] outside activities" (Exhibit G25).

160 Mr. Allen stated that if he did not receive such a response by that date, he would consider the grievor to "… remain in a Conflict of Interest situation and that [he has] committed an act of insubordination" (Exhibit G25). He warned that both could be subject to discipline up to and including termination (Exhibit G25).

161 On April 30, 2008, the grievor emailed Mr. Allen as follows (Exhibit E1, Tab 31):

This is to comply with your letter dated April 24, 2008 with reference to the January 9, 2008 letter from Ms. Lysanne Gauvin, I have not been employed as a business valuator nor will I accept any employment as a business valuator while employed as an AU-03 Valuator with the CRA.

162 On May 1, 2008, Mr. Allen responded. He thanked the grievor for his confirmation but noted that his letter of April 24 had also directed him to shut down his website. He asked for a response by May 2 (Exhibit E1, Tab 34).

163 On May 6, 2008, the grievor emailed Mr. Allen. He apologized for his delay in responding, stating that his back had "… relapsed and [he] was in great pain and the drugs precluded [him] from being as attentive as possible" (Exhibit E1, Tab 34). He went on to ask the following: "… on what basis do you have the authority to make me shut down the website" (Exhibit E1, Tab 34).

164 I pause to note that during his cross-examination of Mr. Allen, the grievor asked him why he was not content with the grievor's April 30, 2008, email, in which he purported to confirm that he had not been and would not be employed as a business valuator in his outside activities (Exhibit E1, Tab 31). Mr. Allen replied to the effect that the history of this issue until that point had led him to be doubtful about whether the letter amounted to a confirmation that the grievor had ceased all his outside activities. On this point, I was satisfied for several reasons that Mr. Allen had every reason to be doubtful.

165 First, while Mr. Allen had asked for confirmation that all outside activities were to cease, the grievor had confirmed only that he would not act as a "business valuator." The grievor's testimony made it clear that he thought the work of a CBV entailed three levels of assurance and that only opinions (in his view) constituted a conflict with his work as a business valuator at the CRA. By that point, an assurance from the grievor that he would not work as a business valuator could not be taken as an assurance that he would cease all the outside activities he was performing under the guise of the FSC.

166 Second, the grievor's testimony was that at some point, the income he made by virtue of his outside activities had become necessary for him, at least in part because of his family support obligations. This fact, together with his testimony that the FSC's underlying purpose was to enable him to "hit the ground running" when or if he ceased employment with the CRA, is inconsistent with any suggestion that he was prepared in May 2008 to cease all such activity.

167 Third, there is the fact that nowhere in his testimony did the grievor ever say that he had ceased all his outside activities. As a person who, according to him, is careful with words and their meanings, his April 30, 2008, email (Exhibit E1, Tab 31) can be taken only as a carefully limited confirmation that he would not do one thing and one thing alone — business valuation opinions. It could not be taken as confirmation that he would stop the outside activities he was carrying out and advertising to the world under the auspices of the FSC.

168 This conclusion is supported by the subsequent debate over Mr. Allen's order that the grievor also take down the FSC website.

169 On May 23, 2008, Mr. Allen wrote to the grievor to advise that this letter would be the final notice and direction to cease and desist all outside activities immediately, including the following (Exhibit E1, Tab 35):

1. business valuations and consulting,
2. activities listed in his 1999 confidential report, and
3. activities described in his submissions to the Continuing Committee.

170 Mr. Allen again directed the grievor to shut down his business website. He was also further directed "… to make full disclosure of all outside activities as a valuator and in any other outside business or employment capacity during the past two year period from May 2006 to May 2008" (Exhibit E1, Tab 35). The threat was repeated of discipline up to and including termination, in the event of non-compliance.

171 On May 30, 2008, the grievor replied. He said he was "… surprised to receive [Mr. Allen's] letter with its many demands." He was puzzled by the request for information about his outside activities from May 2006 to May 2008. He wanted to spend time with his bargaining agent to discuss the situation in depth before he attempted a reply. He asked to be permitted to reply on June 13. He also noted that he was scheduled for surgery (although a date was not provided; Exhibit E1, Tab 36). Mr. Allen relented somewhat and gave him until June 6 to comply with his direction (Exhibit E1, Tab 36).

172 On June 6, 2008, Simon Ferrand, the grievor's new bargaining agent representative, wrote to Mr. Allen. He noted that he had just been assigned to the file. He noted that a deadline of June 6 had been imposed on the grievor for him to respond to the concerns raised in Mr. Allen's May 23 letter (Exhibit E1, Tab 35). He noted that the grievor was then on sick leave for an indeterminate period and that as a result of his condition, he was not able to respond by June 6. Mr. Ferrand stated that "… when Mr. Cavanagh is medically well enough to complete his response, we will inform you [Mr. Allen] of this and he will do so" (Exhibit E7).

173 In his testimony, the grievor explained that the medical condition was a bad back and that surgery was to take place that spring. However, he did not explain how the condition or the surgery would have prevented him from responding to the straightforward and direct statements made to him in the May 23, 2008 letter (Exhibit E1, Tab 35).

174 On June 9, 2008, Mr. Allen wrote to the grievor and Mr. Ferrand. He advised the grievor once again that his continued involvement in outside activities constituted breaches of the Conflict Code (Exhibit E1, Tab 39). He required them to attend (by teleconference if convenient) a disciplinary hearing to be held on June 17 (Exhibit E8).

175 Mr. Ferrand attended the meeting. The grievor did not. Mr. Allen handed him a letter dated June 17, 2008 (Exhibit E1, Tab 37). The letter repeated the history of the issues involving the grievor's outside activities, the employer's decisions that they constituted a conflict of interest with his duties at the CRA, and his repeated failure to comply with the cease and desist directions that had been given to him.

176 Mr. Allen concluded as follows (Exhibit E1, Tab 37):

… the administration of Canada's tax system is dependent on public confidence in the integrity of the Canada Revenue Agency and its employees. Your failure to divest yourself of your outside interests has put this confidence at risk. The bond of trust that is essential for continued employment with the Canada Revenue Agency has been irreparably broken.

177 Accordingly, Mr. Allen advised that the grievor's employment was terminated, effective June 18, 2008 (Exhibit E1, Tab 37; the termination was grieved, and is in PSLREB File 3544).

B. Submissions

1. For the employer

178 Counsel for the employer commenced her submissions by noting that the following two separate but overlapping issues were before me:

1. Did the grievor engage in outside activities that constituted a real, potential or apparent conflict of interest, contrary to the Conflict Code (Exhibit E1, Tab 39)?
2. Was the grievor insubordinate by refusing to obey the directions of the director to cease and desist those activities?

179 If either or both were established, then I had to consider whether the three disciplinary measures that the employer imposed had been warranted.

180 Counsel for the employer submitted that under the Conflict Code (Exhibit E1, Tab 39), the director of the Toronto Centre TSO was the delegated manager and as such had the authority to rule on conflict-of-issue disclosures.

181 Under the Conflict Code, the delegated manager was authorized to require the curtailment, modification or cessation of outside activities "… when it has been determined that a real or potential conflict of interest exists" (Conflict Code, Exhibit E1, Tab 39, at paragraph 22).

182 Disagreements between an employee and the designated manager as to the appropriate arrangements necessary to deal with conflicts were to be resolved through the grievance process (Conflict Code, Exhibit E1, Tab 39, at paragraph 26), and failures to comply with such directions were subject to disciplinary action, up to and including termination (Conflict Code, Exhibit E1, Tab 39, at paragraph 27).

183 Counsel for the employer submitted that on the evidence, an AU-03 valuator's work could include the three types of work — calculations, estimates and opinions — that a CBV might perform in the outside world. That overlap gave rise to both potential and apparent conflicts of interest within the meaning of the Conflict Code (Exhibit E1, Tab 39).

184 Moreover, a business valuator in the CRA office could from time to time screen files that might include his or her own outside work. The fact that such events could occur gave rise to potential conflicts of interest. The fact that the valuator might refer the file to someone else to avoid an actual conflict did not change the fact that there was a potential conflict of interest.

185 The employer's counsel also submitted that an apparent conflict of interest existed inasmuch as the grievor's clients might have considered the grievor's work for them better, more valuable or more likely to result in favourable tax treatment because of his parallel work and experience as a CRA valuator. What mattered was not whether in fact his work was more likely to have that result; what mattered was that it might have been thought to have that result because of his ongoing work for the CRA.

186 Thus, the grievor was thus clearly in breach of the Conflict Code (Exhibit E1, Tab 39), and accordingly, the employer was entitled to order him to cease and desist those activities.

187 Counsel for the employer also submitted that I had no jurisdiction to reach my own decision as to whether there was a conflict of interest between the grievor's outside activities and those of his employment. All I could decide was whether the employer's decision was reasonable and was made in good faith.

188 Counsel for the employer then went through the various reports that had been prepared and the correspondence and meetings between the grievor and the employer over the years. The totality of this evidence was that the grievor had clearly been given repeated direction to cease and desist his outside activities. The directions were clear. The grievor understood them but consistently ignored or avoided them. His repeated refusals constituted repeated insubordination.

189 Finally, the employer applied progressive discipline in an appropriate fashion. The grievor had been warned repeatedly before the first discipline was imposed that his conduct could be disciplined.

190 The first discipline, a 10-day suspension, was appropriate given the repeated warnings and his repeated refusals.

191 The second discipline, a 20-day suspension, built on the first.

192 And the third discipline, the grievor's termination, was a justified response to an employee who had simply ignored or refused to comply with the same direct and repeated order from his employer.

193 In her submissions, counsel for the employer referred to and relied upon the following cases: Canada (Attorney General) v. Assh, 2006 FCA 358; Threader v. Canada (Treasury Board), [1987] 1 F.C.

194 41 (C.A.); Pagé v. Deputy Head (Service Canada), 2009 PSLRB 26 (application for judicial review dismissed in 2009 FC 1299); Duske v. Canadian Food Inspection Agency, 2007 PSLRB 94; Matthews v. Treasury Board (Revenue Canada - Customs & Excise), PSSRB File No. 166-02-20753 (19910111); Oliver v. Canada Customs and Revenue Agency, 2003 PSSRB 43; Brazeau v. Deputy Head (Department of Public Works and Government Services), 2008 PSLRB 62; Belval v. Treasury Board (Regional Industrial Expansion), PSSRB File No. 166-02-15179 (19851121); and Cavanagh v. Canada Revenue Agency, 2014 PSLRB 21.

195 Counsel for the employer submitted that the grievances ought to be dismissed.

2. For the grievor

196 The grievor commenced his submissions with the observation that paragraph 22 of the Conflict Code (Exhibit E1, Tab 39) was "the heart of the problem." He noted that paragraph 22 spoke only of "real or potential" conflicts and that it omitted any reference to "apparent" conflicts. He submitted that "words mean a lot" and that they "must mean something." The omission of the word "apparent" must mean that the powers under paragraph 22 were restricted to only real or potential conflicts. Thus, the employer was thus not entitled to direct an employee to cease outside activities when they gave rise to only — if anything — an apparent conflict of interest.

197 The grievor then submitted that there could be no potential conflict if a real conflict was not possible or was not proved. He submitted that (and the employer agreed) there was no evidence that he had ever acted in a real conflict of interest. Indeed, on two occasions in the past, when he had been referred files containing the names of people or accountants he knew, he had referred them to other valuators in the office.

198 The grievor also submitted that it was practically impossible for him to access information held by the CRA that he was not entitled to see or use, at least without the CRA eventually becoming aware of it.

199 The grievor submitted that a CBV could provide the following three types of valuations:

1. a calculation,
2. an estimate, and
3. an opinion.

200 An opinion represented the highest form of assurance of value that a CBV could give. Opinions were what AU-03 valuators provided to support the CRA in court. Since he had agreed not to provide opinions in his outside activities, accordingly, the grievor could not have been in either a real or a potential conflict.

201 The grievor also submitted that his outside activities, in any event, did not involve any form of valuating assets. He never provided opinions as to fair market value to his outside clients. He simply analyzed their situations as purchasers to determine whether the purchases they proposed were good for them. It had nothing to do with the value or any estimate of value of the asset being purchased. Moreover, such advice was not in any way related to tax. He gave no tax advice or any valuations that could have impacted taxes.

202 The grievor also submitted that he had asked many times for clarification as to how his outside activities could constitute a conflict of interest. Had he received such a clarification, he could have focused on those aspects of a CBV's work that did not overlap with what he did as an AU-03 valuator in the Toronto Centre TSO.

203 The grievor also submitted that neither Mr. Allen nor Mr. Walkingshaw had any CBV experience. That being the case, they were not in a position to compare what he did as a business valuator with what he did in his outside activities.

204 The grievor agreed that valuations do or at least could have some tax impact but argued that the same could be said for many other things. He went on to submit that as a rule, tax considerations have little if anything to do with a decision to purchase a business or business asset.

205 The grievor submitted that the cases that the employer relied on did not apply to him because they all dealt with actual conflicts of interest, and he had never been in an actual conflict of interest.

206 With respect to the discipline that was imposed, the grievor submitted that it was unreasonable, unfair and unjust.

207 With respect to the 10-day suspension, the grievor submitted that he had abided by his commitment of August 13, 2004, not to provide valuation opinions on tangible and intangible properties, pursuant to Mr. Allen's July 22 letter (Exhibit E1, Tab 8). Nor was there any evidence that he had provided valuation opinions. That being the case, he had not contravened the direction contained in Mr. Allen's correspondence of July 22.

208 With respect to the 20-day suspension, the grievor again submitted that there was no evidence that he had been in an actual conflict of interest. He believed he had complied. The problem arose because the employer did not understand what it was that it was directing him to do. The confusion that arose from Mr. Allen's failure to understand what the grievor was doing should not have been the foundation for progressive discipline.

209 The grievor also submitted that under the Conflict Code (Exhibit E1, Tab 39), he was to be allowed 120 days to divest himself of any outside activity that was in conflict with his duties as an employee. Despite that right, he was terminated before that period elapsed.

210 With respect to the termination, the grievor submitted that he had in fact agreed to cease and desist his outside activities. But Mr. Allen then insisted that he also shut down his website and provide disclosure of his outside activities for the period from May 2006 to May 2008. He argued that the employer kept "ramping up its demands while [he] was going out for surgery," evidence he suggested of a desire to terminate him regardless of what he did.

211 While on this point, the grievor insisted that a webpage did not constitute advertising. It was simply a placeholder than no one looked at in any event.

3. Rebuttal for the employer

212 Counsel for the employer submitted that despite the grievor's innuendos, there was absolutely no evidence of any ulterior motive on the part of Mr. Allen or the employer as a whole. Nor was there any evidence to support a finding that the grievor suffered from any disability, least of all one that interfered with his ability to understand and to act on the directions that had been given to him.

213 Counsel for the employer submitted that the evidence of the FSC website and those of Plaxo and Industry Canada all made it clear that the grievor was in fact advertising his services to the world at large.

214 Finally, with respect to the grievor's 120-day divestment submission, counsel pointed out that the employer did not ask the grievor to divest himself of an asset or business. Rather, it asked him to cease and desist his outside activities. Divesting an asset might take time, and that fact would justify some time to give it effect. The same could not be said of an activity. That could be stopped immediately or at the most, within days.

IV. Analysis and decision

215 Having carefully listened to the testimony of the parties, and in particular that of the grievor, and having reviewed the documents and the Conflict Code (Exhibit E1, Tab 39), I am satisfied of the following:

1. The grievor's outside activities placed him in a real, potential and apparent conflict of interest with his AU-03 valuator duties in the Toronto Centre TSO.
2. The employer was entitled to give directions requiring the grievor to cease and desist those activities.
3. That being the case, the grievor's refusal to follow the "work now, grieve later" principle and instead his choice to challenge or resist his employer's directions at every stage constituted insubordination.
4. The progressive discipline that led to and included termination that the employer imposed on him was warranted and reasonable.
5. The grievor failed to make out his human rights allegation.

216 My reasons for coming to those conclusions follow.

A. Real, potential or apparent conflict of interest

217 I should state first that I do not accept the employer's submission that my jurisdiction does not extend to deciding whether its decision that a conflict of interest occurred — real, potential or apparent — was legitimate; see Campione, at para 67. However, having said that, I was also satisfied that the employer's determination was legitimate that a potential and an apparent conflict of interest occurred between the grievor's outside activities and his work for the Toronto Centre TSO.

218 In my view, it is clear that in his outside activities, the grievor was performing many of the same services and actions and using the same skills that he performed and used as a CRA business valuator.

219 Part of what a CRA business valuator does is assess the value of assets being purchased or sold. Such assessments have tax consequences. There was no evidence that each and every assessment that a CRA valuator performs requires a formal opinion strong enough to stand up in court. By the grievor's own admission, CRA valuators provide, at the very least, "quick and dirty" assessments of values. In my opinion, such assessments are the equivalent of the calculations or estimates of value that the grievor testified that CBVs also provide. And in my opinion, such assessments would form part of the advice that anyone advising as to a proposed purchase would provide (which is what the grievor said he was doing on the outside).

220 The grievor's argument that assisting a purchaser to determine whether a particular asset or business was suitable did not involve a valuation of the asset or business was simply unbelievable. No purchaser, no matter how wealthy, is uninterested in knowing at least the approximate value of what he or she is purchasing. Wealthy businessmen and businesswomen do not become wealthy by throwing their money away. They make prudent purchases. Such purchases require knowledge not just of one's own cash flow but of the relative value of the thing to be purchased.

221 A determination of that value would not require a formal CBV opinion; an estimate or a calculation — a "quick and dirty", to use the grievor's words — would often suffice.

222 I would make the same observation with respect to dividing matrimonial assets (another service the grievor advertised on the FSC website). Matrimonial assets include houses, property, shares in companies, RSPs, pensions, and so on. Some are easy to value; some less so. But a fair division requires an assessment of their respective values. That too is the work of a CRA valuator.

223 Thus, the grievor's outside activities brought him into a potential conflict of interest. The fact that his advice — his valuations — of assets being bought, sold or transferred would have tax consequences means that his advice to taxpayers could have ended up in a tax file being reviewed by the CRA. His duty to his client would have been to produce the most tax-advantageous result, which would have brought him into conflict with his duty to his employer to ensure that the most appropriate tax was paid.

224 There was also the risk that a file in which the grievor provided an opinion would come before him as a screener or for advice. And in the event that it did, the potential for an actual conflict of interest would have immediately arisen.

225 One of Mr. Cavanagh's principal arguments throughout both the history of his running dispute with his employer and the hearing before me was that if his outside activities did not constitute a real or actual conflict of interest, then there could be no apparent or potential conflict of interest. This position may be characterized as disingenuous, and in any event, it ignores his testimony.

226 By referring two files to someone else, the grievor recognized that had he worked on such files, it would have constituted a conflict of interest, which is simply another way of saying that the potential for a conflict would arise at the moment he realized that he knew someone in the file. It is only a potential conflict at that point because he has not started to work on it. But it remains a potential conflict precisely because if he chose to work on the file, an actual conflict of interest would arise.

227 Of course, an employer can do nothing to prevent all such conflicts that arise because an employee might discover that he or she knows someone in a tax file that has been randomly assigned to him or her. But it also stands to reason that an employer can reduce the chance that an actual — and hence a potential — conflict of interest arises by limiting the number of times that actual conflicts of interest would arise for its employees. And that, in my opinion, was what the employer was trying to do by ordering the grievor to cease and desist his outside activities.

228 The grievor's outside activities also gave rise to an apparent conflict of interest. Both his clients and those on the other side of a transaction could easily have concluded that his experience and employment as a CRA valuator would give him inside knowledge as to how the CRA looked at things and to how it might react to certain transactions. They might reasonably have concluded that he had inside knowledge of the CRA's policies and practices and that he might use such information in their favour: see, for e.g., Committee for Justice and Liberty et al. v. National Energy Board et al., [1978] 1 S.C.R. 369.

229 In my view, that conclusion is simply self-evident. The fact that the grievor might not actually have done that would not have prevented a reasonable person from thinking that he might.

230 Nor do I accept the grievor's protestation that he only gave advice unrelated to tax. Most, if not all, property transfers have tax consequences. Those consequences depend at least in part on the value attached to those assets and those transactions. Most, if not all, involved in such transactions are interested in the potential tax consequences. To suggest that, as the grievor did, they are not, is simply not credible, particularly given his (or rather the FSC's) representation that it had "… specific expertise in law, tax and investment valuation … ."

231 Accordingly, I am satisfied that the employer's concerns about the grievor's outside activities were fully justified and that it was legitimate to view them as giving rise to both potential and apparent conflicts of interest.

B. Employer's right to give the directions that it gave

232 As noted earlier, I am satisfied that the grievor's outside activities constituted both a potential and an apparent conflict of interest.

233 The next question is whether the employer was also entitled to direct the grievor to cease and desist those outside activities. In my opinion, it was. As a general rule, management has the right to be concerned about — and to limit in an appropriate case — the outside activities of its employees where those activities have an adverse impact on the employer's reputation or operations. That right is reflected to some degree in the Conflict Code (Exhibit E1, Tab 39).

234 The grievor's submission is without merit that pursuant to paragraph 22 of the Conflict Code (Exhibit E1, Tab 39), the employer was entitled to make such an order only for a "real or potential" conflict of interest. Assuming without finding that the employer's power to make a cease and desist order was limited to real or potential conflicts, I am satisfied that, as noted earlier, a potential conflict of interest existed.

C. Whether the grievor's failure or refusal to follow the employer's direction constituted insubordination

235 The essential characteristic of insubordination "… is the notion of challenge to authority"; see Phillips Cables Limited v. International Brotherhood of Electrical Workers, Local 625 (unreported, February 28, 1992), cited in Cape Breton Victoria Regional School Board v. Canadian Union of Public Employees, [2000] N.S.L.A.A. No. 13 (QL), at para 72.

236 An employer's authority may be challenged in many ways. The refusal to obey a direct order that is clearly understood, without good reason, clearly constitutes such a challenge. But an employee may also challenge an employer's authority by challenging the abilities of management or the rationality of its operational decisions. So, for example, loudly and repeatedly questioning the rationality or fairness of a supervisor's order while complying with it may nevertheless be insubordinate; see Volvo Canada Ltd v. C.A.W., Local 720 (1990), 12 L.A.C. (4th) 129.

237 Similarly, being unreasonably slow in commencing assigned work can also be considered being insubordinate; see Trilea-Scarborough Shopping Centre Holdings Ltd. v. S.E.I.U., Local 204 (1990), 14 L.A.C. (4th) 396.

238 This is not to say that every question or request for an explanation from a supervisor amounts to insubordination. But questions that are couched in such a way as to suggest that a supervisor is stupid or incompetent or does not know what he or she is doing will likely be found insubordinate; see, for e.g., Crossley Carpet Mills Ltd. v. National Automobile, Aerospace and Agricultural Implement Workers Union of Canada (CAW-Canada), Local 4612, [2003] N.S.L.A.A. No. 22 (QL).

239 A finding of insubordination requires proof of four things: that the employer gave an order; that the order was clearly communicated to the employee; that the person giving the order had proper authority to do so; and that the grievor did not comply on at least one occasion; see Focker v. Canada Revenue Agency, 2008 PSLRB 7, and Nowoselsky v. Treasury Board (Solicitor General Canada), PSSRB File No. 166-02-14291 (19840724). In my opinion, on the facts before me those conditions were met. First, and at its most basic, he repeatedly refused to comply with the numerous, and clear, directions given to him by his authorized superior to cease and desist his outside activities. Those refusals constituted repeated acts of outright insubordination.

240 Second, his repeated questioning of the rationality or reasonableness of his employer's directions and his repeated requests for further clarification or justification pending a decision on his part as to whether he would comply was foot-dragging that amounted to insubordination as well.

241 If he disagreed with the directions given to him, the grievor's proper course of action was to do what he did on October 30, 2006 — grieve the direction. That was his right under the relevant collective agreement, which was affirmed by paragraph 26 of the Conflict Code (Exhibit E1, Tab 39). Pending the resolution of that grievance — or indeed any such grievance — his obligation was to obey the direction. He did not.

242 Given that conclusion, I am also satisfied that discipline was warranted with respect to each of the three grievances.

D. Was the amount of discipline warranted?

243 Three grievances are before me. I will deal with them in sequence.

1. PSLREB File 2161

244 This is the 10-day suspension levied as a result of the grievor's failure to adhere to the director's direction of July 22, 2004 (Exhibit E1, Tab 8), and the grievor's failure to adhere to his commitment of August 13, 2004 (Exhibit E1, Tab 9). He argued that his email of August 13, 2004, did indeed constitute compliance with the direction, inasmuch as he had agreed as follows that he would not: "… provide valuation opinions on tangible and intangible properties as addressed in your letter and also confirm that I am not currently involved in such activity" (Exhibit E1, Tab 9).

245 I do not agree, for a number of reasons.

246 First, it is clear on a fair reading of the direction of July 22, 2004 (Exhibit E1, Tab 8), that the employer thought there was a conflict between all the actual or possible outside activities that the grievor had reported and his AU-03 valuator duties. Mr. Allen referred to Ms. Shields' letter of November 5, 2003, which had directed the grievor to cease the outside activities he was currently performing as he had disclosed (Exhibit G14). It was not limited to any one particular activity.

247 Second, Mr. Allen's direction (Exhibit E1, Tab 8) refers a number of times to "outside activities" in general. The particular reference to "… the valuation of tangible and intangible properties" occurs only once and only in the context of the reference to the Continuing Committee for a second opinion (Exhibit E1, Tab 8).

248 Those two points taken together lead me to conclude that any reasonable person reading the two letters at issue would know and understand that the employer was directing him or her to cease and desist all outside activities, not just one particular activity.

249 For the same reason, I am also satisfied that Mr. Allen was justified in thinking that the grievor's "commitment" of August 13, 2004 (Exhibit E1, Tab 9), was indeed a commitment to cease all outside activities, not just one.

250 Third, and following from that, I am satisfied that the grievor in fact knew exactly what the employer was asking him to do and that he knew it from the very beginning. In my opinion, the grievor's initial profession of ignorance as to what Ms. Shields was directing him to do, and his subsequent and repeated requests for "clarification" or "time to respond," were simply a delaying tactic.

251 The grievor made no commitment to cease his outside activities until he received a letter that contained a reference to one particular activity, which he then defined and interpreted (without making that definition clear to the employer) in his own carefully circumscribed manner. Only at that point did he provide the commitment required of him, and only in relation to the one activity that, according to him, he had never performed in any event.

252 Of course, the other point is that the grievor's argument ignored the events that took place after August 13, 2004. It ignored the internal affairs investigation. It ignored the fact that certainly by October 31, 2006 (Exhibit E1, Tab 13), Mr. Allen was making it clear that what he intended was that all outside activities cease. It ignored the grievor's argumentative responses. I have in mind as an example his email on November 14, 2006, in which he said as follows that, among other things, he would only: "… cease what you [Mr. Allen] perceive to be in conflict once I determine what that is on an activity-by-activity basis" (Exhibit E1, Tab 14, page 2). It also ignored the grievor's subsequent agreement to abide by Mr. Allen's direction of October 20, 2006 (Exhibit E1, Tab 11), and October 31, 2006 (Exhibit E1, Tab 13), one that nevertheless he marked as being without prejudice (Exhibit E1, Tab 15).

253 All those events, subsequent to the direction of July 22, 2004 (Exhibit E1, Tab 8), satisfy me that as of that date the grievor understood what the employer was directing him to do. They also satisfy me that the grievor did not accept that direction and that he was not prepared to abide by the direction while grieving it but that instead he preferred to argue and generally dodge the compliance issue as long as he could.

254 Given the prolonged and repeated refusals of the grievor to comply with directions that in my opinion were clear I am satisfied that a 10-day suspension in the circumstances was an appropriate response on the part of the employer.

2. PSLREB File 3543

255 This file is the grievance against the 20-day suspension that was levied on March 5, 2008 (Exhibit E1, Tab 32). The employer based its decision as to both discipline and penalty on three things: the history of the issue and Mr. Cavanagh's failure to comply with the directions on and since the initial direction of November 5, 2003 (Exhibit G14); his March 7, 2007 rescission (Exhibit E1, Tab 28) of his November 15, 2006 commitment (Exhibit E1, Tab 15); and the previous disciplinary action (the 10-day suspension, Exhibit E1, Tab 26). Strictly speaking, Mr. Cavanagh could not be disciplined with respect to his insubordination prior to the imposition of the 10-day suspension on February 22, 2007. That had already been addressed. However, the employer was entitled to take that history into account when evaluating the gravity of his continuing insubordination after that date, at least where, as here, the insubordination related to the same issue and the same direction.

256 Under such circumstances, the 20-day suspension was a justified progressive discipline step.

3. PSLREB File 3544

257 This grievance relates to the grievor's termination, which was imposed on June 17, 2008 (Exhibit E1, Tab 37). He offered two basic grounds for his grievance, as follows:

I grieve CRA's ongoing harassment and intrusion into my personal affairs that has led to CRA's June 17, 2008 letter terminating my employment. I grieve CRA's decision to terminate my employment is without cause, unfair and unreasonable. During its investigation, CRA denied me my rights to natural justice including but not limited to my right to have all of my evidence properly considered and given appropriate weight. As a result, I was denied the opportunity to defend myself.

I grieve that the CRA's decision to terminate my employment is discriminatory in that it was made while I was on sick leave and suffering from an ongoing disability for which I am scheduled to have surgery.

258 Having reviewed the history of the long and detailed correspondence and meetings between the grievor and the employer for the years 2003 to 2008, I am satisfied that the first ground the grievor offered is without merit. He was given repeated opportunities to provide clarification of his outside activities. The employer explained its concerns and its reasoning to him numerous times. It gave him extensions on numerous occasions.

259 For the grievor to suggest that based on that history, he was denied natural or procedural justice, is simply incorrect. The fact that the employer did not accept his arguments does not mean that it did not listen to or consider them. It means only that it did not agree with them. In any event, any procedural unfairness in the process followed by the employer was wholly cured by the hearing de novo before me; see Tipple v. Canada (Treasury Board), [1985] F.C.J. No. 818 (QL) (C.A.).

260 In his submissions, the grievor added the complaint that in its May 23, 2008, letter (Exhibit E1, Tab 35), the employer was not entitled to require him to shut down his website or to require the disclosure of his outside activities in the period from May 2006 to May 2008. He also submitted that his April 30, 2008, email constituted his commitment to cease his outside activities (Exhibit E1, Tab 31) and that, accordingly, the termination was unjustified.

261 With respect to those submissions, I make the following observations.

262 First, with respect to the website, the purpose of a commercial website is to describe to the world the products and services that are available for sale. A direction to cease and desist providing such services must also inevitably include a website advertising those same services. Given that purpose, and given that the grievor and FSC were on the evidence to all intents and purposes the same entity, the employer's direction that the website be shut down was justified.

263 Second, and with respect to the disclosure, I agree that the employer was not entitled to direct such a disclosure. It could have asked for such a disclosure, and if the grievor had provided it, it might have considered the material disclosed in order to determine whether there was a middle ground. But the grievor was under no obligation to make such a disclosure and could not have been disciplined for failing to make it.

264 However, having said that, I am also satisfied that by this point in the game, the employer's decision to terminate the grievor was overwhelmingly based on his repeated and ongoing refusal to comply with its directions to cease and desist his outside activities. He was not being disciplined because he had failed to make disclosure. He was being disciplined, as he had been in the past, for his refusal to cease his outside activities.

265 Third, in my opinion, the grievor's April 30, 2008, email (Exhibit E1, Tab 31) did not constitute compliance with the employer's direction to cease and desist all his outside activities. Like his email of August 13, 2004 (Exhibit E1, Tab 9), it was a response that was carefully circumscribed to refer to only one activity out of many, CBV business valuations. Moreover, it was limited to an activity that, according to him, he had not been performing in any event.

266 I turn now to the second ground, based on the allegation that the termination was discriminatory because the grievor was on sick leave at the time.

267 The gist of the grievor's allegation was that in the spring of 2008, he was awaiting back surgery and that he needed time to consider and respond to the employer's directions of April 24 (Exhibit G25) and May 1 (Exhibit E1, Tab 34) and 23 (Exhibit E1, Tab 35), 2008. However, the grievor presented no sufficiently clear, convincing and cogent evidence at the hearing to suggest that waiting for back surgery affected his mental capacity to understand or respond in any way to the employer's directions. The employer's directions were essentially the same as those that had been given many times before. And indeed, the grievor was fully capable of responding to the employer on April 30 (Exhibit E1, Tab 31), May 6 (Exhibit E1, Tab 34) and 30 (Exhibit E1, Tab 36) and to instruct Mr. Ferrand on June 6 (Exhibit E7).

268 I also note that logically, if the grievor's medical condition was severe enough to prevent him from performing his outside activities (and there was no evidence to support such a conclusion), then he would also have had no problem agreeing to cease them.

269 On the other hand, if his medical condition was not that severe, then again, nothing would have prevented him from agreeing to cease and desist those activities.

270 Hence, there was no sufficiently clear, convincing and cogent evidence to support the allegation (for that is all that it was) that it was somehow unfair or discriminatory or contrary to his rights under the CHRA to require him to commit to cease and desist his outside activities while he was on sick leave, awaiting back surgery.

271 By way of conclusion, then, it is my opinion that the grievor's conflict of interest — both potential and apparent — continued over a number of years, as did his insubordination. The employer warned him numerous times of the potential consequences of his conduct. He refused to heed those warnings and continued with his conduct.

272 Given that such conduct went on for more than two years after Mr. Allen first raised the issue with him in July 2004 (Exhibit E1, Tab 8), I am satisfied that the initial discipline of a 10-day suspension was both appropriate and justified. By his conduct to that point, the grievor had demonstrated that only a sharp, decisive and substantial penalty would bring him to his senses — if at all.

273 It failed to have the desired effect, thus fully justifying — for the same reasons — the second penalty, a 20-day suspension. The grievor's refusal to take either discipline to heart in the end justified the final discipline of termination.

274 I am also satisfied that by May 2008, the employer had lost the trust and faith in the grievor that is necessary to any employment relationship. The history of the relationship reveals a continuous attempt by the grievor to misrepresent, hide or obfuscate the nature of his outside activities. Direct questions were met with misleading or less-than-forthright answers. The change in the contact information provided for the FSC is only one example of such conduct, which I conclude was an attempt to hide his involvement once he learned that his employer had become aware of it.

275 All those factors — alone and together — warranted all three of the employer's disciplinary decisions.

E. Human rights allegation

276 I have already dealt with the human rights issue. For those reasons, I am satisfied that there was no sufficiently clear, convincing and cogent evidence that the grievor's physical and mental condition in the spring of 2008 was such that he would have required an accommodation with respect to the directions that he cease and desist his outside activities.

277 For all of the above reasons, I make the following order:

V. Order

278 The grievances are dismissed.

January 19, 2015.

Augustus Richardson,
adjudicator