FPSLREB Decisions

[1]      Gordon Oliver was an Income Tax/Excise Tax Auditor (PM-2) at the Canada Customs and Revenue Agency (CCRA) Saskatoon Tax Office and his employment was terminated on May 30, 2001, for an alleged breach of the Conflict of Interest Code of the CCRA. Mr. Oliver filed a grievance on the same day. The final level response of the employer was dated March 6, 2002, and the grievance was referred to adjudication on April 22, 2002. The relevant collective agreement between the Public Service Alliance of Canada (PSAC) and CCRA is the agreement for the Program Delivery and Administrative Services group, with an expiry date of October 31, 2003.

Preliminary Matters

[2]      At the commencement of the hearing, counsel for the employer requested an order concealing the identity of taxpayer information pursuant to subsection 241(4.1) of the Income Tax Act. This section reads as follows:

(4.1) The person who presides at a legal proceeding relating to the supervision, evaluation or discipline of an authorized person may order such measures as are necessary to ensure that taxpayer information is not used or provided to any person for any purpose not relating to that proceeding, including

(a)      holding a hearing in camera;

(b)      banning the publication of the information;

(c)      concealing the identity of the taxpayer to whom
          the information relates; and

(d)      sealing the records of the proceeding.

[3]      Counsel for the employer submitted that in order to conceal the identity of taxpayers, their initials should be used in all exhibits and in this decision; the grievor's representative did not object. Therefore, pursuant to subsection 241(4.1) of the Income Tax Act, I ordered that initials be used to identify taxpayers, other than the grievor and his spouse, in all exhibits and in this decision.

[4]      An order excluding witnesses was requested and granted.

[5]      Counsel for the employer called five witnesses, and the grievor testified on his own behalf.

[6]      During the testimony of Arlene White, Director of the CCRA Tax Services Office in Saskatoon, the grievor's representative objected to the introduction of the investigation report prepared by John Hunt of the CCRA Internal Affairs Directorate. The investigation report formed the primary basis of the employer's decision to issue the termination letter. The grievor's representative argued that the report was hearsay and, given its prejudice to the grievor, should not be admitted. In support of her argument, she cited Vandermeer (Board file 166-2-26848). In the Vandermeer decision, the adjudicator concluded that since the content of the investigation report could be put before him by the calling of the relevant witnesses, a ruling of inadmissibility would not prejudice the employer's case.

[7]      Counsel for the employer, in reply, stated that this report was not being introduced as proof of the allegations of misconduct and also indicated that the author of the report would be called as a witness. Counsel cited Rose (Board files 166-2-27307 and 27308) and Re Miracle Food Mart of Canada and UCFW (1996), 58 L.A.C. (4th) 232.

[8]      I allowed the admission of the investigation report and ruled that I would be allowing its admission for the purpose only of identifying it as the report that was received by Ms. White, not as proof of its contents. The contents of the investigation report will need to be proven at this hearing. I indicated, to the extent that there is any evidence in the report that cannot be proven because the employer did not call certain taxpayers as witnesses, those portions of the report will be considered as hearsay and will be given little or no weight in my decision.

Evidence

[9]      Gordon Oliver was terminated from his position as a PM-2 Income Tax/Excise Tax Auditor on May 30, 2001, at a disciplinary meeting with Arlene White, Director of the CCRA Tax Services Office in Saskatoon. The termination letter (Exhibit E-26) provided the following reasons for his termination:

[…]

The evidence clearly indicates that you contravened Section 8 of the Canada Customs and Revenue Agency Conflict of Interest and Post Employment Code Supplementary Guidelines by preparing income tax returns for remuneration while you were employed by Canada Customs and Revenue Agency. When considering your years of service I note that your outside activities have been a concern throughout your employment with CCRA. You were advised in 1998 that you could continue to represent your clients on any issues that were outstanding, but to cease any further involvement in the preparation of tax returns. On August 10, 1998 you reported that you had ceased outside activity. While you were on leave in 1999, you were contacted by Mr. Jones of Internal Audit and asked if you were completing Income Tax returns for clients. You said that you were only completing tax returns for family members and friends. Mr. Jones suggested that you discuss this matter with me to ensure your activities were appropriate. You did not. In a conversation with me on September 7, 2000 you insisted your wife completed all the tax returns and your assistance was limited to provision of technical advice and doing returns for a few family members and friends. Although you have now admitted that you did complete 1998 Income Tax returns for clients for remuneration, you continue to deny completing any 1999 Income Tax returns for remuneration. The evidence indicates that in addition to the 1998 Income Tax returns which you admit completing for remuneration, you also completed at least two 1999 Income Tax returns for remuneration.

I find that you were provided with information on the Conflict of Interest Guidelines and were informed of the inappropriateness of this activity a number of times. You signed an Employee Certification Document on June 9, 1998 certifying that you read and understood the Code. Yet you continued to contravene the guidelines and continued to deny doing so when the evidence indicates otherwise. Therefore, I have determined, by the nature of your conduct, that you do not posses the level of integrity and honesty to carry out the duties of your position and that you have broken the bond of trust that is essential for you to continue as an employee of the Canada Customs and Revenue Agency. By virtue of the authority delegated to me under section 51.1(f) of the Canada Customs and Revenue Agency Act, your employment is hereby terminated at the close of business on May 30, 2001.

[…]

[10]      Mr. Oliver was appointed to an indeterminate position at Revenue Canada (as it was then called), effective June 1, 1998 (Exhibit E-3). He was appointed to a generic PM-2 position, referred to as a "slash" job: Trust Exam/Collections/CPP/UI Coverage Officer. He was assigned to Collections where, according to the position description, his key activity was: "Reviewing, planning, organizing and prioritizing a workload assigned for collection of unpaid accounts such as individual, corporation, trust, non-resident, GST, etc, withheld at source from individuals or businesses who have omitted or neglected to pay or have avoided prior collection efforts." (Exhibit E-4)

[11]      Prior to commencing employment with the Public Service, Mr. Oliver had worked as a self-employed accountant, doing general accounting and tax preparation. He has an accounting designation as a Certified Management Accountant (CMA).

[12]      The letter of offer to the grievor dated March 6, 1998 (Exhibit E-3) contained standard paragraphs on the Conflict of Interest Code, and included a copy of the Code (Exhibit E-5). The standard paragraphs read as follows:

[…]

Before or upon appointment, employees must sign an "Employee Certification Document" which certifies that they have read and understood the "Conflict of Interest and Post-Employment Code and that, as a condition of employment, they will observe the code. Within sixty (60) days after appointment, employees must make a "Confidential Report", to the Director, of all assets other than exempt assets as described in Section 20 of the Code, and of all direct and contingent liabilities, where such assets and liabilities might give rise to a conflict of interest in respect of your official duties and responsibilities.

Outside activities which may constitute a conflict of interest could include activities which involve the international movement of commercial goods other than for personal use; direct involvement in the preparation of GST/Income Tax returns; the provision of advice where you have direct access to Taxation/GST databases, rebates or similar information; and any other outside activity which could be perceived as a conflict of interest with the official duties of your position. An employee who fails to comply with these procedures is subject to disciplinary action up to and including discharge. The appropriate forms, a copy of the code and information pamphlet are included with this letter. The certification document should be returned with a signed copy of your acceptance.

[…]

[13]      Mr. Oliver testified that he did not read the Conflict of Interest Code word for word, but that it was reviewed in his orientation. Mr. Oliver commenced working on June 8, 1998, and immediately started orientation training along with six to eight other new employees.

[14]      Rick Fahl is the Training Coordinator in Saskatoon and was the trainer for this orientation. The conflict of interest part of the orientation training was given on the first day and was presented in less than 15 minutes. Mr. Fahl testified that he always provides two examples of outside activities - one where it may be a conflict and another where it may not be a conflict of interest. The examples he gave at Mr. Oliver's orientation were: if you do books and records and tax returns for anyone and receive remuneration there may be a conflict, while if you pump gas at a service station, it may not be a conflict of interest. Mr. Fahl testified that he always explains to the training class that the conflict of interest module is for information only, and that if anyone has, or is concerned that he/she might have a conflict of interest, he/she should discuss it with his/her team leader or the Director. Mr. Fahl also testified that, in his opinion, not enough time is devoted to conflict of interest in the orientation sessions.

[15]      At the end of the first day, Mr. Oliver approached Mr. Fahl to discuss a concern he had about conflict of interest. Mr. Oliver told him that based on the presentation, he felt he might have a conflict. Mr. Fahl advised him to speak to Ms. White, the Director of the Saskatoon Tax Office. Mr. Oliver met with Ms. White on June 8, 1998. Ms. White testified that Mr. Oliver told her that he had been in private practice prior to joining CCRA and that some of his clients had outstanding issues and he would like to continue to represent them on those issues. Since it was after the filing season, she assumed the outstanding issues related to the claims or appeal area. She did not seek clarification from Mr. Oliver on the nature of the outstanding issues. She testified that she thanked Mr. Oliver for talking to her and told him that she was not concerned about his prior dealings and that he could continue to represent his clients until these dealings were complete. She did not ask him to submit a confidential report. Mr. Oliver testified that Ms. White told him it was not a conflict of interest since he was working in Collections. It was his testimony that she told him he could continue to work for these clients, as he had been doing.

[16]      Mr. Oliver testified that Mr. Fahl told him after his meeting with Ms. White that if CCRA ever felt that an employee had a conflict, it would send the employee a letter that would give the employee 30 days to correct the matter. In cross-examination, Mr. Fahl testified that he did not say this to Mr. Oliver. He did not recall any discussions with Mr. Oliver about conflict of interest after Mr. Oliver met with Ms. White.

[17]      Ms. White testified that Mr. Oliver subsequently came to her in August 1998 and indicated that his dealings on behalf of his clients had come to a conclusion and he had ceased outside activity. At the hearing, a note to file prepared by Ms. White at the time of the meeting was introduced to corroborate her recollection (Exhibit E-17). The grievor testified that this document was not in his personnel file when he checked the file just prior to his discharge. Ms. White stated that, in her mind, this was the end of the matter, as she understood that he was no longer performing outside work for remuneration. Mr. Oliver testified that Ms. White told him he could continue with his outside activities. He also testified that later she asked him in the hall if the audit (of one of his clients) was finalized and he told her that to his knowledge it was complete. In cross-examination, Mr. Oliver was asked whether Ms. White told him to stop work for clients after he completed the outstanding issues. He said that she told him it was not a problem doing tax returns for remuneration while he was in Collections.

[18]      The "Employee Certification Document" (Exhibit E-7) was signed by the grievor on June 8, 1998. The grievor certified that he owned assets and/or had liabilities identified in section 22 of the Code, "but my owning or possessing such assets, or my having such liabilities, does not give rise to a real or potential conflict of interest relative to my official duties and responsibilities". He also certified that he was not involved in any outside activities subject to a confidential report under section 26 of the Code. Employees are required to review their obligations under the Code each year, and CCRA employees received a reminder by way of memorandum from the Director of the Saskatoon Tax Office. Mr. Oliver received a reminder in 1999, 2000 and 2001 and signed the acknowledgement of receipt (Exhibits E-10, E-12 and E-13). He testified that he did not review the Conflict of Interest provisions each year. The memorandum from Ms. White was substantively the same each year (Exhibit E-10):

You are required to review your obligations under the Conflict of Interest and Post-Employment Code for the Public Service at least once a year. Therefore, you are asked to consider whether the information contained in the documents on your file remain accurate. There is no need, however, to modify the Certification Document or the Confidential Reports unless a change in your assets, liabilities or outside activities, or the nature of your duties which requires a new disclosure has occurred.

If you are contemplating any leave of absence, you are encouraged to seek departmental approval before entering into any activity or outside employment, as you would still be subject to the Code while on leave.

Should there be any doubt as to the specific application of either the Code or the Supplementary Guidelines. please forward your enquiries to .. Assistant Director, Human Resources, Saskatoon Tax Services Office.

[19]      In February 1999, Mr. Oliver had a discussion with Mr. Fahl about leave with income averaging. Mr. Fahl testified that Mr. Oliver asked him his opinion on whether he would qualify or not for the leave. Mr. Fahl told him that eligibility was not based on years of service but was based on the number of weeks allowed for the whole division. Mr. Oliver testified that Mr. Fahl told him that preparing income tax returns during leave with income averaging was okay. In his interview with Mr. Hunt (Exhibit E-44), Mr. Oliver is quoted as saying that Mr. Fahl told him "it should be no problem" to do income tax returns while on leave. Mr. Fahl was not directly cross-examined on this point.

[20]      In the spring of 1999, Mr. Oliver was granted leave with income averaging from March 22 to April 30. A letter was sent to Mr. Oliver by his compensation advisor on May 14, 1999 (after his leave was completed) with regard to the leave. The letter included the following (Exhibit E-14):

[…]

It is important to remember that employees on a leave of absence from the Department are still bound by the Conflict of Interest Code. It is the responsibility of the employee to make a confidential report to the designated official of involvement in an outside activity that could place on the employee demands inconsistent with his or her employment with Revenue Canada.

[…]

[21]      Ms. White testified that at the end of March 1999, Brian Graves, who was Mr. Oliver's manager, told her that employees in Mr. Oliver's work area had advised him that Mr. Oliver had prepared income tax returns for remuneration during his leave. In April, Ms. White asked Doug Jones, a team leader in the internal audit section of the Saskatoon office, to conduct a fact-finding investigation on her behalf. Mr. Jones prepared a memorandum dated April 23, 1999 for Ms. White that outlined his investigation and the results (Exhibit E-18). Mr. Jones examined the phone book, checked newspapers and drove by Mr. Oliver's house to see if there was any advertising of a business. He testified that he then took the direct approach and called Mr. Oliver to ask him if he was preparing tax returns. Mr. Oliver told him that he was doing tax returns for about 30 family members and friends and that Ms. White had told him "it was okay" (Exhibit E-18). Mr. Jones testified that he told Mr. Oliver that Ms. White might get in touch with him and suggested also that Mr. Oliver should get in touch with Ms. White. He did not ask Mr. Oliver what remuneration he was getting from doing these returns. He told Ms. White that he thought that Mr. Oliver would tell her, if she asked (Exhibit E-18). Mr. Oliver testified that he had not been made aware of the investigation prior to Mr. Jones' call or the results, and saw Mr. Jones' memorandum (Exhibit E-18) for the first time at this hearing.

[22]      Ms. White testified that from her reading of the memorandum, Mr. Jones was satisfied that Mr. Oliver was telling the truth and she accepted that conclusion. As to the suggestion in the memorandum that Mr. Oliver call Ms. White, or she call him, she testified that she did not call him, nor did he call her. She testified that she was satisfied with the investigation and the conclusions and was satisfied that there was no breach. Ms. White testified that it was generally considered by CCRA to be acceptable to prepare tax returns for family and friends as long as it was not for remuneration.

[23]      Mr. Oliver testified that his initial plans to travel during his leave fell through and he attended to family responsibilities during this period. Mr. Oliver told Mr. Jones that he had prepared tax returns for friends and family. At this hearing, he testified that he had also prepared tax returns for remuneration for taxpayers A.M. and H.B. He said that he spent about two or three days helping H.B. to set up an expense journal and showed her how to reconcile it with her bank statement, as well as preparing income tax returns for her and her husband. He only charged her for the preparation of the income tax returns. He did not make a confidential report or discuss the preparation of income tax returns for remuneration with his supervisor or with Ms. White either prior to, or after, his leave.

[24]      On May 20, 1999, Mr. Oliver was offered an indeterminate position as a PM-2 Income Tax/Excise Tax Auditor, effective May 31, 1999. The letter of offer (Exhibit E-15) contained the identical paragraphs on conflict of interest as the letter of offer he received in 1998 (see paragraph 12, above). The job description (Exhibit E-16) describes the key activities as "Auditing and safeguarding of returns, books, records, and supporting documents to determine the degree of compliance with the ETA of taxpayers having annual sales volumes of up to $3 M including the audit of refund/rebate applications."

[25]      Ms. White testified that in the spring of 2000, Kevin Manion, the Assistant Director of Verification and Enforcement, brought down a file that had been drawn for an audit that said "Oliver and Associates" on the back. It was confirmed that the address for Oliver and Associates was the same address as Mr. Oliver's home address. Ms. White testified that she was concerned and obtained permission from the Assistant Commissioner, Elaine Routledge, to pull the income tax returns of Mr. Oliver and his wife, Tracy Thompson Oliver, to see if income from preparing tax returns was reported. In August of 1999, Doug Jones was asked to look at the income tax returns. In his memorandum to Ms. White (Exhibit E-19), he concluded that the business income reported did not appear to be related to accounting services. The income was coded as being a retail business, specifically craft and folk art. He concluded that there was no indication that this had been income from tax preparation and recommended that this matter not be pursued any further at this time. Mr. Oliver testified that the coding of income on tax returns was purely voluntary, and that the question asked what the main service or activity was. In this case, his wife's major business was folk art.

[26]      Ms. White asked Mr. Oliver to meet with her on September 7, 2000, to discuss what Oliver and Associates did and who was involved with its operations. He told her that it was his wife's business and that she was preparing income tax returns. She said that he told her he was not involved in any way but that sometimes he would help her with difficult questions. At this hearing and in the investigation subsequently conducted by Mr. Hunt, Mr. Oliver stated that he helped his wife with computer problems only. Ms. White testified that she mentioned their previous discussions on doing work for remuneration and that he had to be "above reproach" and that perception was as important as reality. Her handwritten note to file, dated September 7, 2000 (Exhibit E-17), concluded: "I am satisfied that there is no breach". She testified that she advised Mr. Manion of her conclusion.

[27]      In January 2001, Mr. Graves gave Ms. White a copy of a "Notice of Bankruptcy" of taxpayer A.M., from the trustee in bankruptcy (Exhibit E-20). The Notice listed Gordon Oliver, Accountant, as an unsecured creditor for $800. She asked Mr. Jones to conduct an investigation. The returns of taxpayers H.B. and S.B. as well as A.M. were pulled for examination. The names of taxpayers H.B. and S.B. were names that had been obtained from the previous investigations by Mr. Jones. Oliver and Associates had prepared all of the returns of these taxpayers. Ms. White asked Mr. Jones to approach each individual taxpayer and ask whether Ms. Thompson Oliver or Mr. Oliver had prepared the returns, and how much was paid.

[28]      Mr. Jones prepared a memorandum for Ms. White (Exhibit E-21) summarizing his findings on January 23, 2001. He contacted a number of taxpayers, including taxpayers A.M, and H.B., who testified at this hearing. A.M. told Mr. Jones that Mr. Oliver prepared his returns and charged about $1,000 per year. H.B. told him that Mr. Oliver had been doing her and her husband's returns for a few years and charged about $150 per year. Mr. Oliver called Mr. Jones to complain that he was calling these taxpayers. Mr. Oliver told him that it was his wife who was doing the returns, with occasional help from him, but that the clients would not know that.

[29]      Mr. Oliver met with Ms. White in January 2001. She wrote a memorandum to file after the meeting, dated January 26, 2001 (Exhibit E-22). Ms. White testified that Mr. Oliver denied that he was A.M.'s accountant. He admitted to her that he had A.M's books and records. Ms. White advised him that, as the books and records were the property of the trustee, he should get them to the trustee immediately. Ms. White testified that Mr. Oliver also denied that he was preparing tax returns. He told her that his wife was preparing the tax returns and that he only advised her on the complex ones. Mr. Oliver testified that Ms. White told him that his wife could not complete tax returns and that if she did not stop this work, his employment would be terminated. Ms. White testified that she told him that she would check to see if she could direct his wife to stop preparing tax returns. Her staff relations advisor later advised her that she could not. Mr. Oliver also testified that Ms. White told him there would not be any further investigations and she said she did not think he had anything to worry about. Ms. White testified that Mr. Oliver told her that he would be discussing with his wife whether she would continue doing returns. Later that week, he advised her that his wife would not be doing tax returns anymore. At that point, Ms. White advised Mr. Oliver that she would probably be referring the matter to the Internal Affairs Division of CCRA for investigation.

[30]      Mr. Oliver testified that his wife was qualified to prepare income tax returns. She had taken a number of bookkeeping courses, had been a treasurer, and had prepared income tax returns for her father's large farming operation.

[31]      On February 21, 2001, Ms. White sent a memorandum to André St-Laurent, Head of CCRA Internal Affairs Division, requesting a formal investigation (Exhibit E-23). Mr. Hunt was the investigator who conducted the investigation of Mr. Oliver. At the time of the investigation, Mr. Hunt was Senior Investigator with Internal Affairs and had been at that level since January 2000. Prior to that, he was an investigator doing primarily tax fraud investigations, a position he had held since 1992.

[32]      Mr. Hunt testified as to the standard procedure for investigations, which he stated that he followed in the investigation of Mr. Oliver. All people interviewed are advised that they can have an observer with them at the interview. Each person interviewed is given an opportunity to read the notes taken by Mr. Hunt and make any amendments required. Each interviewee is then asked to sign the notes and initial each page. Each interviewee is asked to review and sign a statement entitled "Rights, Privileges and Cautions" which summarizes the above (Exhibit E-45).

[33]      Mr. Hunt arranged by telephone to interview Mr. Oliver on March 22, 2001. During the telephone conversation setting up the meeting, Mr. Oliver asked for a list of people to be interviewed and Mr. Hunt refused. Mr. Hunt also asked to speak to Ms. Thompson Oliver (Mr. Oliver's wife) to arrange an interview. Mr. Oliver advised that his wife could not attend an interview during the day and was only available in the evenings. On March 20, Mr. Hunt called to speak to Mr. Oliver and Ms. Thompson Oliver. Mr. Oliver initially told him that he had no right to interview her. Ms. Thompson Oliver then spoke on the telephone with Mr. Hunt and said she was not available for the dates he suggested. Mr. Hunt requested that she provide a list of clients of Oliver and Associates. She told Mr. Hunt that her clients had a right to privacy. Mr. Hunt also testified in cross-examination that she told him he was "pushy".

[34]      Ms. Thompson Oliver did not testify at this hearing. The grievor's representative introduced, through Mr. Oliver, a typewritten and signed statement prepared by Ms. Thompson Oliver (Exhibit G-7). Counsel for the employer objected to the introduction of this document through this witness. I allowed it to be introduced, but ruled that it would be given little or no weight if she were not called as a witness. Since Ms. Thompson Oliver was not called as a witness, I have determined that the statement has no weight.

[35]      At the interview with Mr. Hunt, Mr. Oliver was accompanied by his union representative, Neil McTavish, and his lawyer, Timothy W. Hodgson. Also in attendance was Diane Primeau, a staff relations officer with CCRA. At the end of the meeting, Mr. Hodgson told Mr. Hunt that because of time constraints, the notes could not be reviewed at that time. Mr. Hunt would not allow Mr. Oliver to take the notes away to review, and Mr. Oliver did not see the notes until the commencement of this hearing. Mr. Oliver testified that there was information missing from the summary, and that it did not reflect the interview; "it was like he was at a different meeting". On consent of counsel for the employer, the grievor's representative introduced notes of the meeting prepared by Mr. McTavish; Mr. McTavish was not called as a witness.

[36]      Also, at the interview Mr. Oliver was handed a letter from Ms. White (Exhibit E-24) which requested the following:

[…]

I want to take this opportunity to inform you that it would be in your best interests to provide us with a list of members of your family and friends for whom you have prepared Income Tax returns. Also provide a list of clients of Oliver and Associates where you have advised me that you had assisted your wife in the preparation of the returns.

Your decision not to comply with this request will give me no other choice than to make a decision based on the information provided to date.

[…]

[37]      Mr. Oliver testified that this was the first time that a list of clients was requested by Ms. White. Mr. Oliver said that as a professional accountant he was not allowed to give out third-party information, without the approval of that third party. Mr. Oliver's lawyer, Timothy W Hodgson, replied to this request by letter dated March 26, 2001 (Exhibit E-31), as follows:

[…]

Given the fact that Mr. Oliver has nothing to hide, he has no difficulty complying with the directive in your letter. The list, however, will be provided if and only if Canada Customs and Revenue Agency gives its written guarantee to Mr. Oliver that none of the individuals identified on the list will be contacted.

The purpose for this condition is quite simple. Mr. Oliver's wife continues to operate Oliver & Associates. Many of the family and friends for whom Mr. Oliver used to prepare income tax returns are now clients of Oliver & Associates. Any contact by Canada Customs and Revenue Agency for the stated purpose of "investigating" Mr. Oliver will undoubtedly lead to a loss of clientele for Oliver & Associates. It is for that reason that he requires assurances from Canada Customs and Revenue Agency. Please advise.

[…]

[38]      Ms. White testified that she did not respond to this letter because she could not give Mr. Oliver the guarantee he was seeking. In cross-examination, she testified that since the tax returns belong to CCRA, they could have been found but would have to be located manually, as CCRA does not have the capability of searching for this information electronically.

[39]      Ms. White was interviewed a final time on March 27, 2001, in Ottawa. Mr. Hunt testified that it was an oversight on his part that the date of this meeting does not appear in his final report. Mr. Hunt also spoke with Mr. Fahl after his meeting with Mr. Oliver. In both cases, Mr. Hunt did not go back to Mr. Oliver with the information obtained in either of these meetings. He testified that it was common CCRA practice to interview the employee under investigation at the end of all the interviews in order to allow the employee an opportunity to respond.

[40]      Mr. Hunt prepared an investigation report, which was reviewed by his supervisor André St. Laurent. Jocelyn Malo, Director, Security Directorate, forwarded the report to E. Routledge, the Regional Assistant Commissioner, Prairie Region (Exhibit E-25). Ms. White testified that this report formed the basis for her decision on the appropriate discipline for Mr. Oliver. Mr. Hunt concluded that:

[…]

INVESTIGATOR'S CONCLUSION

The facts obtained during this investigation demonstrate that Gord Oliver, Auditor, Saskatoon Tax Services Office, prepared income tax returns for at least three taxpayers against remuneration while employed by CCRA therefore placing himself in a Conflict of Interest.

[…]

[41]      H.B., a taxpayer, testified that Mr. Oliver had done tax returns for her and her husband in 1997, 1998 and 1999. She said that the normal procedure was that she would make an appointment to see Mr. Oliver at his home and would then sit with him at the computer and go over her expense information. A couple of days later, he would telephone to tell her it was complete and ready to be picked up. She would then sit down with him and go over the return and sign it. She would then write a cheque for the amount owing for the preparation of the returns. She testified that when the name changed to "Oliver and Associates", Mr. Oliver told her that he was helping his wife do income tax returns.

[42]      H.B. identified invoices from Oliver and Associates and a cancelled cheque signed by her (Exhibit E-42). The first invoice is dated March 23, 1999, for the 1998 tax year preparation; the second invoice was issued in March 2000, for the 1999 tax year preparation. The cancelled cheque is dated April 7, 2000, and is made out to Gord Oliver. H.B. said that she gave her bills and records for the 1999 return to Mr. Oliver at his front door. When she went to pick up her completed tax return in April 2000, she remembered sitting at the Oliver's kitchen table with Mr. Oliver. She said that no one else was in the house at the time. She testified that Mr. Oliver told her it was fine if she made the cheque out to him. H.B. said that she did not think she ever spoke to Ms. Thompson Oliver. Mr. Oliver testified that H.B. had already prepared the cheque when he saw her in April 2000, and that she did not come into his house, but simply came to the door. She had made it out to "Gordon Oliver" and he told her not to bother ripping it up, but that in future it should be made out to "Oliver and Associates". He testified that he had a joint account with his spouse, and that the cheque could be deposited into the account even if it was not made out to "Oliver and Associates".

[43]      A.M. was a client of the grievor's before Mr. Oliver joined CCRA. He testified that Mr. Oliver had done his income tax returns, both individual and corporate, "for a few years". He identified the "Notice of Bankruptcy", as well as the amount owing to Mr. Oliver as an unsecured creditor contained on the Notice (Exhibit E-20). He testified that he put down the amount owing to Mr. Oliver before he knew that Mr. Oliver was not going to be doing his income tax. A.M. dropped his bills off as usual to Mr. Oliver's house.

[44]      A.M. identified three cheques as being signed by him in payment to Mr. Oliver for preparation of income taxes (Exhibit E-27). The two cheques, dated April 26, 1999, were for business and personal taxes prepared by Mr. Oliver in 1998, for the 1997 tax year. The invoice (Exhibit E-28) was from Gordon Oliver, CMA, and was dated January 6, 1999. The second invoice was from Oliver and Associates for tax preparation, dated October 25, 1999. Although the invoice does not specify to which tax year the invoice corresponded, A.M. stated it was for the 1998 tax year. Mr. Oliver testified that Ms. Thompson Oliver collected the money owing from A.M., including the invoice dated January 6, 1999.

[45]      A.M. could not remember ever meeting with Ms. Thompson Oliver to discuss his income tax returns. She was somehow involved, but "he couldn't pin it down." He was "pretty sure" he always met with Mr. Oliver to discuss his returns. A.M. reviewed the notes of his interview prepared by Mr. Hunt and did not disagree with anything in the notes. In his statement to Mr. Hunt, A.M. said that Mr. Oliver had his 1999 books and records and was supposed to be preparing his business and personal income tax returns for 1999. When he filed for bankruptcy in December 2000, he "estimated" that he would owe $800 for completion of the 1999 returns. In cross-examination, A.M. stated that he negotiated Mr. Oliver down to $800 from $1,000 for the 1999 tax year. Mr. Oliver testified that he had not had any discussions with A.M. about preparing his income tax returns. Ms. Thompson Oliver was not doing business tax returns, and Mr. Oliver was referring these clients to a former business partner who was a professor at the university.

[46]      Mr. Oliver testified that A.M.'s year-end was August and that Mr. Oliver would wait for the December bank statement to prepare his returns. Mr. Oliver did some work on A.M.'s returns when he started at CCRA and finished up when he was on leave with income averaging in March of 1999. Mr. Oliver testified that he received the bankruptcy statement from Deloitte and Touche near the end of December 2000. He did not respond to the notice because A.M. did not owe him any money. Mr. Oliver said that A.M. dropped his records off and left them in Mr. Oliver's garage because Mr. Oliver was out. Mr. Oliver testified that he spoke to A.M. prior to sending the records to the trustee and advised him that he was ceasing operations.

[47]      Ms. White testified that after reading the report, and based on the information provided to the investigator by H.B. and A.M., she concluded that Mr. Oliver had prepared tax returns for remuneration, that this was contrary to the Conflict of Interest Code and that discipline was warranted. She testified that the compelling factors supporting her decision were the statements of A.M. and H.B. that Mr. Oliver had done income tax returns for remuneration.

[48]      Ms. White also testified that she relied on her examination of handwriting on taxpayer returns. Comparing a sample of handwriting from Ms. Thompson Oliver's tax return with the handwriting on tax returns of A.M. and H.B., she concluded that it was not Ms. Thompson Oliver's handwriting. Ms. White admitted in cross-examination that she was not a handwriting expert. Mr. Oliver admitted that the handwriting was his - but that he was simply making a notation for his wife, because he had done the taxes in previous years and was able to explain what needed to be done with certain forms.

[49]      On May 23, 2001, Ms. White sent a letter to Mr. Oliver (Exhibit G-2) requesting that Mr. Oliver attend a meeting to "discuss the findings of this report", and reminded him of his right to union representation. The letter did not specify that the meeting was to be disciplinary in nature. In an earlier letter, dated April 6, 2001 (Exhibit E-32), Ms. White wrote that she would be making arrangements to discuss the findings of the report, and "any disciplinary action that may be warranted". Ms. White spoke to Mr. Oliver's lawyer, Mr. Hodgson, about the meeting and indicated to him that the purpose of the meeting was to discuss the findings and afford Mr. Oliver an opportunity to explain. She told Mr. Hodgson that she was not prepared to go over the statements contained in the report. She was not sure if the report was given to Mr. Oliver in advance of the meeting or not. Mr. Oliver testified that the report was not made available to him prior to, or at the meeting. The May 23, 2001 letter (Exhibit G-2) states that a copy of the investigation report that had been "sanitized" by the Access to Information Section of CCRA was enclosed.

[50]      Mr. Oliver testified that he spoke to Mr. Hodgson, his lawyer, prior to the meeting. Mr. Hodgson already knew that Mr. Oliver was going to be discharged. Also, his union representative knew that he was to be discharged, and Mr. Oliver received telephone calls from friends at work about his discharge prior to the meeting of May 23, 2001.

[51]      Mr. Oliver was accompanied to the meeting by his union representative Mr. McTavish. At the meeting Ms. White read a summary of the findings of the investigation to Mr. Oliver (Exhibit E-33). Ms. White testified that Mr. Oliver said that he had done nothing wrong and she received no response to her summary of the findings. She testified that since he had nothing further to add she presented the letter of discharge (Exhibit E-26). In cross-examination she stated that she was open at that meeting to hear Mr. Oliver's representations, but not to re-hash the findings of the report. She told Mr. Oliver that, although she regretted having to discharge him, she felt she had no choice, as his conduct was misconduct "most egregious". At the end of the meeting, Mr. Oliver's union representative, Mr. McTavish, presented the grievance against termination.

Arguments

For the Employer

[52]      The Conflict of Interest Code (Exhibit E-5) requires employees to act in a way that will avoid the possibility of real, potential or apparent conflict of interest. The Code imposes an obligation on employees to report, on a confidential basis, any outside involvement "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." Counsel for the employer submitted that the principles set out in paragraph 6 of the Code, specifically those set out in paragraphs b, c, d, e and f, were relevant in this case. The Code also sets out the methods of compliance (at paragraphs 16 through 19) including avoidance, a confidential report, and divestment. Paragraph 17 states that employees must not sell or transfer assets to family members for the purposes of circumventing the compliance measures. The Supplementary Guidelines for CCRA employees (at paragraph 8) state that on his/her own time and without prior approval, an employee can prepare departmental documents (including tax returns) for family and friends, provided that the employee receives no compensation.

[53]      The employer submitted that the grievor knew, or should have known, about his obligations under the Conflict of Interest Code. Mr. Oliver had been provided with the Code when he was hired as well as on an annual basis. Given Mr. Oliver's education and prior work experience, it was not believable when he testified that he had not read it. In the notes prepared by Mr. McTavish (Exhibit G-8), there is an indication that the grievor had read the Code.

[54]      During his initial training Mr. Oliver, at the suggestion of Mr. Fahl, spoke to Ms. White about the fact that he still had outstanding clients. At that time Ms. White noted that he was in Collections and not Audit and he could finish any outstanding matters. She asked him to advise her when he was completed. Ms. White testified Mr. Oliver told her in August 1998 that he had ceased outside activity. Subsequent informal investigations performed by Mr. Jones resulted in Ms. White giving the grievor the benefit of the doubt. It was not until December 2000 that a formal investigation was commenced after the bankruptcy notice of taxpayer A.M. indicating that Mr. Oliver was owed $800. The oral testimony of A.M., as well as the cheques and invoices he provided, showed that Mr. Oliver did provide income tax services in 1999. Taxpayer H.B. also testified that Mr. Oliver did her income tax returns in 1999 and in 2000. Both taxpayers were reluctant witnesses and did not have to attend this hearing. Neither taxpayer was aware that the grievor's spouse was doing tax returns, as Mr. Oliver alleges. Ms. Thompson Oliver does not have either the credentials or the experience that would make her competent to be preparing tax returns. There was no documentary evidence that Oliver and Associates was in fact Ms. Thompson Oliver's business. Ms. Thompson Oliver could have clarified the situation by speaking to Mr. Hunt, the Internal Affairs investigator, or by testifying at this hearing.

[55]      Mr. Oliver continued to do books, records and income tax returns in breach of the Conflict of Interest Code. On key points, the evidence of Mr. Oliver is not the same as other witnesses. All the evidence points in one direction: clear, cogent, and documented evidence that Mr. Oliver knew about the conflict and ignored it. He was continually reminded of his obligations and he ignored it. As a result, he was finally disciplined and his employment terminated.

[56]      A conflict of interest is "one which would be likely to affect adversely the judgment of an employee and his loyalty to his employer or which the employee might be tempted to prefer to the interests of the employer": Paterson (Board files 166-2-10263 and 166-2-10491 and 10492). An appearance of a conflict of interest is sufficient to find a breach of the Code: Belval (Board file 166-2-15179). The onus of compliance with the provisions of the Conflict of Interest Code rests with the employee: McIntyre (Board file 166-2-25417).

[57]      In terms of mitigation of the discipline imposed, counsel for the employer referred me to Matthews (Board file 166-2-20753), where the grievor was terminated for requesting a personal loan from a client of the department whom he was auditing. In his reasons, the adjudicator concluded that the failure of the grievor to acknowledge "the error of his ways" robbed him of an opportunity to show that he is now remorseful, and consequently, the adjudicator maintained the discharge.

[58]      During most of Mr. Oliver's three years with CCRA, there was a question of conflict of interest. Mr. Oliver was requested to divest himself of this business and he misled that he had done so. The bond of trust is irrevocably broken. There are no mitigating circumstances.

[59]      The employer also referred me to the following decisions: Wilkes (Board file 166-2-16170) and Reid (Board file 166-2-21530).

For the Grievor

[60]      Mr. Oliver did seek the advice of Ms. White with regard to his outside activities. She did not ask any questions and she did not request that he file a report. Mr. Oliver was never told or requested in writing to end his activities. It was the grievor's position that Ms. White did not ask specific questions and gave her blessing to his outside work. He did not engage in any new activities after he started at CCRA. It was the grievor's testimony that Ms. White told him he could continue and that while he was in Collections she saw no problem with his working on income tax returns. Mr. Oliver had permission to finish his work for his clients without the obligation to fill out a report.

[61]      There are many documents that were not drawn to the grievor's attention prior to the imposition of discipline. In fact, many of the documents were seen for the first time by the grievor at this hearing. In the previous investigations by Mr. Jones, Mr. Oliver was not told in advance that he was being investigated nor was he given the results of these investigations.

[62]      Mr. Oliver did not perform any work for taxpayer A.M. for the 1999 tax year. The invoice for October 1999 related to work done in 1998. The books that the taxpayer left with Mr. Oliver were returned to the trustee. With regard to taxpayer H.B., in 2000 (for the 1999 tax year) she simply dropped off her records and did not know who did them. She was aware that Ms. Thompson Oliver did do income tax returns. Ms. Thompson Oliver was competent to do income tax returns -- she had taken courses in accounting and bookkeeping and had also assisted her father in managing a large farm.

[63]      The employer's Discipline Policy (Exhibit E-2) was not followed in this case. The Discipline Policy requires that disciplinary action be imposed in a timely manner; the employer did nothing for almost three years.

[64]      The decisions cited by the employer were clearly distinguishable from the present case. Mr. Oliver never abused his position at CCRA in the preparation of income tax returns. He was never asked to divest himself of his business and he has never denied that he prepared income tax returns in 1999.

[65]      The employer has not proven that Ms. Thompson Oliver did not do the tax returns. Ms. White does not know who did the tax returns and the testimony of Mr. Oliver that his wife did the returns for the 1999 tax year is uncontradicted.

[66]      The onus of proof that the employer has to meet was simply not met. If you take away the innuendo and bias in the investigation report, there is not much left. The investigation report is full of hearsay. The report deliberately misleads the reader. The information gathered was not verified in some cases. Some interviews were done after the grievor had been interviewed and he was not given an opportunity to respond to those additional interviews. Information not contained in the investigation report was never brought up or discussed with Mr. Oliver and only emerged at this hearing. The records of the investigation are also incomplete. There are many phone calls that are not documented in the notes prepared by Mr. Hunt. The employer refused to follow its own policy on discipline and acted in bad faith by being less than forthcoming about what was going on and what might happen to Mr. Oliver. The investigation was clearly contrary to clause 17.04 of the collective agreement, as well as contrary to the CCRA Discipline Policy (Exhibit E-2). The grievor was not the last person interviewed; therefore, how can one be certain he had an opportunity to rebut allegations against him. The consequences were never discussed with Mr. Oliver, as required in the Discipline Policy. The termination letter refers only to one report - Mr. Hunt's investigation report - and no informed person could come to a conclusion that misconduct was clearly established based on that report.

[67]      Mr. Oliver did not deny that he did income tax returns in 1999 for the 1998 tax year. He has also admitted that he helped his wife with income tax returns when she ran into difficulties. He has denied doing income tax returns for the 1999 tax year. It is not proven by the evidence that he did do income tax returns for the 1999 tax year. With regard to taxpayer A.M., Mr. Oliver admitted that he did the income tax returns for 1998 and was paid for this work at the end of 1999. This is not contrary to the Conflict of Interest Code.

[68]      The Conflict of Interest Code allows for the preparation of income tax returns for remuneration with prior approval from a supervisor. Ms. White gave Mr. Oliver such permission. The informal investigations by Mr. Jones resulted in a finding of no misconduct and no report was requested. In fact, as of September 7, 2000, Ms. White was satisfied that there was no breach. In the memorandum that Mr. Jones wrote to Ms. White, he states that he did not ask what compensation Mr. Oliver was receiving. Ms. White therefore knew that he was being remunerated but again no action was taken.

[69]      Mr. Oliver had permission to continue his work from Ms. White. Furthermore, Mr. Fahl advised Mr. Oliver that "everybody does it" and that it was not a problem to do income tax returns.

[70]      When Mr. Oliver attended the meeting with Ms. White in May 2001, she was not open to discuss Mr. Oliver's termination of employment. In fact, the union already knew he was to be terminated and had prepared a grievance in advance. Mr. Oliver stated that he did nothing wrong but was never given an opportunity to rebut or refute the findings. Ms. White considered much more than the report. In particular, she considered income tax returns that were never shown to Mr. Oliver. He was never given an opportunity to explain the fact that his writing appeared on these income tax forms. In any event, this information is of questionable reliability.

[71]      With regard to the list of clients of Oliver and Associates, Mr. Hodgson in his letter to the employer (Exhibit E-31) indicated that CCRA should "please advise" of its response to the position of the grievor. The employer did not reply; therefore, the employer cannot say that the grievor did not comply with the request to provide the list.

[72]      Misconduct was not established and the employer simply went on a rampage after termination to justify its actions. The burden of proof is higher than the balance of probabilities, and has simply not been met.

[73]      The investigator, Mr. Hunt, was only an investigator for a year and four months and had no training in human resources or in conflict of interest (other than the basic introduction provided to all employees). He was not qualified to perform an investigation and was biased. The notes of his interview with Mr. Oliver (Exhibit E-44) differ in a substantive way from the notes prepared by Mr. McTavish (Exhibit G-8). Mr. Hunt chose to give an interpretation to events and to Mr. Oliver's responses that was intentionally misleading and designed to put the grievor in a bad light.

[74]      Relying on a decision of the Ontario Grievance Settlement Board, in OPSEU (Hurge) and the Crown in right of Ontario, GSB 348/92 (at pages 165-170), the grievor's representative submitted that the investigator owed a duty of fairness to the grievor, and that this duty was not met. Mr. Oliver was not able to refute the information gathered by the investigation. Mr. Hunt's report was biased and was deliberately misconstrued to support the ultimate finding. As the report is flawed, so is the action of the employer in terminating Mr. Oliver's employment. The employer also had the duty to appoint an investigator who was an unbiased and neutral third party.

[75]      Since the employer has not met its burden and because the employer's decision to terminate was flawed from the beginning, the grievance should be allowed and the remedies requested in the grievance should be granted.

Rebuttal

[76]      With respect to the investigation process, the OPSEU decision concluded that, notwithstanding a flawed investigation, the Board was satisfied on the evidence that harassment had occurred and upheld the discipline. Also, the Federal Court of Appeal decision in Tipple v. Canada (Treasury Board), [1985] F.C.J. No. 818, stands for the proposition that any procedural unfairness in the discipline process is cured by a de novo hearing by this Board. Also, there can be additional reasons for termination presented after the termination: McIntyre v. Minister of National Revenue (Customs and Excise) (1996), 117 F.T.R. 93 (Federal Court, Trial Division).

[77]      The employer did not reply to the letter sent by Mr. Hodgson regarding the list of clients because of the condition imposed by Mr. Hodgson in his letter that the list would be provided only on the basis that none of the clients would be contacted. The whole purpose of asking for the list was to contact the clients.

[78]      With regard to the testimony of Mr. Fahl, the grievor's representative did not ask Mr. Fahl whether he made these comments, contrary to the rule in Browne and Dunn (1893) 6 R. 67 (H.L.). Consequently, any evidence about what Mr. Fahl allegedly said should be given no weight.

[79]      There was evidence of misconduct, backed up by documents and the evidence of the key people at this hearing. The evidence is uncontradicted and is not hearsay. The discipline was imposed in a timely manner. The employer did not believe that Mr. Oliver was doing anything improper until March of 2001. An investigation was conducted in March 2001, and discipline was imposed in May of the same year.

REASONS FOR DECISION

[80]      There are three issues to be determined in this grievance. First, did the grievor breach the Conflict of Interest Code; secondly, was the investigation of the alleged conflict flawed, thereby rendering the discharge void; and thirdly, if there was a breach of the Code, was discharge an appropriate penalty.

Investigation Process

[81]      The threshold issue is the effect of the investigation on any subsequent discipline. The grievor's representative argued that the investigation process was flawed, and therefore the discharge was a flawed decision. The Federal Court of Appeal in Tipple (supra) has concluded that any procedural unfairness is "wholly cured" by the hearing de novo before the adjudicator. At the adjudication hearing, the grievor has full notice of the allegations against him and full opportunity to respond to them. Mr. Oliver had the opportunity at this hearing to cross-examine those involved in the discipline decision, as well as those witnesses who provided the information that the employer relied on in reaching its decision. Those parts of the investigation report that referred to statements made by taxpayer who did not testify at this hearing have been given no weight in this decision. Consequently, even if the investigation process was flawed, the hearing before me has cured any defects.

[82]      I have reviewed the interview notes prepared by Mr. Hunt (Exhibit E-44) as well as the notes prepared by Mr. Oliver's union representative, Mr. McTavish (Exhibit G-8). Although they are written in a different style, I could find no significant differences in the content. Mr. Hunt should have given Mr. Oliver an opportunity to respond to the statements made by Ms. White in her final interview, as well as the statements made by Mr. Fahl. Mr. Hunt testified that this procedural fairness step is CCRA policy for investigations. It was not clear why this step was not followed in this investigation. In light of his testimony at this hearing, I do not believe that Mr. Oliver would have provided information that would have changed his employer's decision to discharge him, however. In any event, as noted above, this error has been corrected in the de novo hearing before me.

[83]      A related issue is whether evidence contained in Mr. Oliver's file that he was not aware of should be introduced and relied upon in this decision. The collective agreement provision reads as follows:

17.04 The Employer agrees not to introduce as evidence in a hearing relating to disciplinary action any document from the file of an employee the content of which the employee was not aware at the time filing or within a reasonable period thereafter.

[84]      There was some dispute as to whether certain documents were on Mr. Oliver's file or not, prior to the termination of his employment. Mr. Oliver testified that he had not seen a number of documents prior to this hearing. Mr. Oliver did receive a copy of the final investigation report prepared by Mr. Hunt, which was the primary foundation for the employer's decision to discipline Mr. Oliver. The notes to file prepared by Ms. White, which Mr. Oliver testified he had never seen, were of conversations that she had with Mr. Oliver; therefore, it cannot be said that he was not aware of the contents of those notes. The memorandum by Mr. Jones of his investigation was not a surprise to Mr. Oliver, as he had been contacted by Mr. Jones and knew that there was an investigation. Accordingly, Mr. Oliver was aware of the general content of documents that were likely on his file. Some of the evidence produced at this hearing was not on his file (for example, the interview notes from the investigation). It is unfortunate that all the documents pertaining to the decision to discharge Mr. Oliver could not have been provided to him shortly after he filed his grievance, and certainly in advance of this hearing. I also regard as unfortunate the suggestion of counsel for the employer that an Access to Information request could have been made to obtain this material. However, in the absence of disclosure requirements under the Public Service Staff Relations Act (PSSRA), there is no obligation on the employer to disclose documents intended to be introduced as evidence in advance of a hearing before an adjudicator.

[85]      The handwriting examples that Ms. White testified she also relied on were a surprise to the grievor, and only came to light at the hearing. Although Mr. Oliver admitted that the handwriting was his, I have given this evidence no weight in this decision. Mr. Oliver was not made aware of this evidence prior to his discharge and was not given a chance to make any representations or explanations to the employer. McIntyre (supra) is not applicable to this evidence because this evidence was known by the employer prior to the termination and was not obtained after termination.

Conflict of Interest Code Obligations

[86]      The Conflict of Interest Code that was in effect at the time of appointment was the Conflict of Interest and Post-Employment Code for the Public Service and Supplementary Guidelines on Conflict of Interest for Employees of Revenue Canada, dated January 1995 (Exhibit E-5). The relevant sections of the Code are as follows:

Principles

6. Every employee shall conform to the following principles:

(a) employees shall perform their official duties and arrange their private affairs in such a manner that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced;

(b) employees have an obligation to act in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law;

(c) employees shall not have private interests, other than those permitted pursuant to this Code, that would be affected particularly or significantly by government actions in which they participate;

(d) on appointment to office, and thereafter, employees shall arrange their private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising, but if such a conflict does arise between the private interests of an employee and the official duties and responsibilities of that employee, the conflict shall be resolved in favour of the public interest;

(e) employees shall not solicit or accept transfers of economic benefit, other than incidental gifts, customary hospitality, or other benefits of nominal value, unless the transfer is pursuant to an enforceable contract or property right of the employee;

(f) employees shall not step out of their official roles to assist private entities or persons in their dealings with the government where this would result in preferential treatment to any person;

(g) employees shall not knowingly take advantage of, or benefit from, information that is obtained in the course of their official duties and responsibilities and that is not generally available to the public;

[…]

Outside Activities

26. (Revised) 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 designated official of involvement in an outside activity that could place on the employee demands inconsistent with his or her official duties and responsibilities, or call into question the employee's capacity to perform his or her official duties and responsibilities objectively. The designated official may require that such activity be curtailed, modified, or ceased, when it has been determined that a real or potential conflict of interest exists.

[…]

[87]      The Supplementary Guidelines prepared by Revenue Canada (Exhibit E-5) provide more specific guidance on outside activities, including the preparation of tax returns:

Preparing and filing departmental documents on behalf of others

[…] On your own time, without requesting prior approval, you can prepare and file departmental documents for members of your family and friends if:

· you neither seek nor receive any compensation, gift, or favour;

· you do not provide any information that a person would not normally receive from a Revenue Canada office; and

· the document to be prepared does not relate to a business.

Furthermore, on your own time, after having received prior approval from your delegated manager, depending on your duties and responsibilities, you might be authorized to prepare and file departmental documents for compensation, gift, or favour. In determining which departmental document you are allowed to prepare and file, for whom, and, whether or not remuneration is permitted, your delegated manager will keep in mind the basic principles enunciated in this document (particularly pages 4, 5, 19 and 20) to ensure that there is no real, potential or apparent conflict of interest. Your delegated manager will evaluate each case on its own merit.

For instance, if you are a Customs Officer, your delegated manager might authorize you to prepare tax returns for remuneration but refuse your preparing any departmental documents relating to the Customs Act and Customs Tariff Act. The same logic applies to all areas of the Department. If you are either a Taxation Auditor, an Excise Officer or a GST Auditor, you might be authorized to prepare and file, for remuneration, departmental documents that relate to the Customs and Customs Tarrif Act and be refused to prepare either tax returns, Excise returns and/or GST returns.

At no time you are authorized to provide information that a person would not normally receive from a Revenue Canada office.

(Emphasis in original)

[88]      The supplementary guidelines also state:

Furthermore, you will not in any manner:

· advertise or make it known that you work for Revenue Canada to generate or enhance business;

· do indirectly, i.e., in the name of, or through family or friends, anything that the Code prohibits you to do directly; or

· make representations on behalf of others (unless you have prior approval) to the Department or any entity involved with the acts administered by Revenue Canada.

[89]      The Conflict of Interest Code (Exhibit E-5) puts the onus of compliance on the employee:

If you are involved in outside activities or have financial interests which you believe might place you in a real, potential, or apparent conflict of interest with your official duties and responsibilities, you must submit a Confidential Report to your delegated manager. If you are not sure about your situation, you must disclose the information in a Confidential Report to your delegated manager, who will advise you of the correct course of action.

[90]      The onus on the employee is a significant one, as clearly stated by David Kates in Ennis (Board file 166-2-8773):

Where there may exist the slightest doubt that .extra curricular activities may appear to impair his effectiveness as an employee, the public servant is duty-bound to disclose his outside business interests to his superiors. There is absolutely no question that when a public servant engages in outside activities that may be perceived to cast the slightest shadow upon his duties and responsibilities as an employee, a conflict of interest may reasonably be concluded to exist. In such instances, the onus rests upon the public servant to take sufficient and definite corrective action to remove any such conflict.

[91]      In this case, the employer alleges that Mr. Oliver was in a direct conflict of interest because he continued to prepare income tax returns for remuneration, contrary to the Conflict of Interest Code. Mr. Oliver's defence to this allegation is that first of all, he was never directly instructed to stop doing outside work, and, secondly, that by sometime in 1999, it was his wife who was preparing the returns under the business name of "Oliver and Associates". The taxpayers who testified, however, did not know that it was his wife who was preparing the returns: their sole point of contact was Mr. Oliver. Mr. Oliver has admitted to preparing income tax returns for remuneration for H.B. and A.M. while on leave with income averaging in March and April of 1999. He did not disclose this to Mr. Jones when Mr. Jones conducted his investigation during Mr. Oliver's leave of absence. Mr. Oliver told Mr. Jones that he was doing income tax returns for family and friends. There is some ambiguity in the evidence over whether Mr. Jones knew that there was remuneration paid for any of those returns. In his memorandum to Ms. White, Mr. Jones wrote that he did not ask "what compensation he was getting for doing those returns". Ms. White testified that because he was doing returns only for family and friends, she did not believe that he was receiving remuneration. The obligation to disclose that one is receiving remuneration for preparing tax returns rests with the employee. There is no obligation on the employer to ask. Also, H.B. and A.M. were clients and cannot be considered as "friends". Mr. Oliver testified that they were not family members. Mr. Oliver was significantly less than forthcoming in responding to the enquiries of his employer. In fact, it can be said that he misled Mr. Jones and Ms. White by only referring to family and friends and not disclosing his work for A.M. and H.B.

[92]      It was Mr. Oliver's testimony that he stopped doing work for A.M. and H.B. once he switched jobs and started working in the Audit Section. The testimony of the taxpayers A.M. and H.B. contradict his testimony.

[93]      Whether there was a conflict of interest or not comes down to a question of credibility. The testimony of taxpayers A.M. and H.B. was both compelling and persuasive. These taxpayers were not willing witnesses - it was clear that both of them had no desire to testify, although they were both cooperative. These witnesses were subpoenaed to testify, and as a result were required to attend. Their testimony is compelling because they had no direct interest in the proceedings. It is persuasive, because it largely supports a finding of a breach of the Conflict of Interest Code. H.B. testified that she sat at Mr. Oliver's kitchen table in April of 2000, when she went to pick up her tax return and made a cheque out to Mr. Oliver. She did not see Ms. Thompson Oliver at any time and was left with the clear impression that Mr. Oliver had prepared the returns. The evidence of A.M. was less direct. He left his records in Mr. Oliver's garage and left him a voicemail message. He also testified that he negotiated Mr. Oliver down to $800 from $1,000 for the preparation of his 1999 returns. He also testified, however, that in his bankruptcy statement he "estimated" that he would owe $800 to Mr. Oliver. Mr. Oliver testified that he did not speak to A.M. about his 1999 returns. On balance, A.M.'s testimony was not conclusive on whether he had discussions with Mr. Oliver after April of 1999. However, it is clear that A.M. considered Mr. Oliver to be his accountant and there was no evidence that Mr. Oliver attempted to dissuade him from this view prior to the issuance of the bankruptcy notice, or even prior to his discussion with Ms. White about the bankruptcy notice.

[94]      Tracy Thompson Oliver, the grievor's spouse, did not testify at this hearing. Her role is critical for the grievor's defence. If she had cooperated with the employer's investigation she could have corroborated the grievor's statement that he was no longer preparing tax returns. The final opportunity to corroborate the grievor's statement was at this adjudication hearing. I can only draw a negative inference from her failure to testify. This failure to testify buttresses the direct testimony of H.B. that Ms. Thompson Oliver was not involved in the preparation of her returns.

[95]      The refusal to provide a list of clients of Oliver and Associates to CCRA also leads to an inference that the grievor had something to hide. The suggestion by the grievor's representative that the Certified Management Account (CMA) Code of Ethics prevents the release of such information was not persuasive. First of all, no evidence on the CMA Code of Ethics was introduced. Secondly, Ms. Thompson Oliver was not a CMA; therefore, it is unclear how the Code of Ethics would apply to her client list. The condition put on the release of this information in the letter from Mr. Oliver's counsel was clearly self-serving - accepting the information on the basis that none of the clients would be contacted defeats the whole purpose of asking for the list. It is not clear to me that the list was confidential in any event; CCRA had the information, but just not in a form that was easily accessible.

[96]      Mr. Oliver also relied on an alleged statement by Mr. Fahl, the training coordinator, that he could prepare income tax returns for remuneration, while on leave with income averaging. Although Mr. Fahl was not asked directly in cross-examination if he made this statement, his testimony that he had no further conversations about the leave after encouraging Mr. Oliver to apply amounts to a denial. I do not need to come to a conclusion on credibility on this issue, however. Even if I were to assume that he made such a statement, Mr. Fahl did not have the authority to approve the preparation of tax returns for remuneration, in any event. The only persons who could have given their approval for such activity were Mr. Oliver's supervisor or Ms. White.

[97]      In conclusion, I find that the grievor did breach the Conflict of Interest Code, by continuing to prepare income tax returns, after he was requested to stop by his employer. Mr. Oliver knew, or ought to have known, both from his reading of the Conflict of Interest Code and guidelines, as well as from conversations with Ms. White, that his continued work in preparing tax returns was not approved by his employer. He also should have been aware that the employer treated the preparation of income tax returns for remuneration seriously, given that Mr. Jones contacted him directly on two separate occasions to inquire whether he was preparing tax returns. The consequences of breaching the Conflict of Interest Code were clearly set out in the letter of offer (Exhibit E-3) and in the Code itself (Exhibit E-5).

Appropriateness of Discipline

[98]      The next step is to examine the appropriateness of the discipline imposed by the employer, having regard to the nature of the conflict of interest and with regard to any mitigating and/or aggravating factors. The arbitral jurisprudence has identified a number of mitigating and aggravating factors when assessing discipline, including the following factors relevant to this case:

• the seriousness of the offence relative to other instances of conflict of interest;
• the previous good record of the grievor;
• the length of service of the grievor;
• whether the offence was an isolated incident or part of a pattern of behaviour;
• whether there is a basis for a finding of a misunderstanding on the part of the grievor as to the requirements imposed by the employer through its Conflict of Interest Code;
• whether the penalty imposed has created a special economic hardship for the grievor; and
• whether the grievor apologized or in some way recognized his culpability.

(For a general overview, see Canadian Labour Arbitration (Third Edition) by Messrs. Brown and Beatty (at 7:4400).)

[99]      The prevention and avoidance of conflict of interest is a serious responsibility for all employed in the Public Service. Traditionally, the breach of conflict of interest codes has been treated as a serious offence by adjudicators appointed under the PSSRA. The decisions of adjudicators relied on by counsel for the employer to justify discharge in this case all involved some elements of personal gain from inside knowledge or the use of official responsibilities to benefit friends or relatives. In this case, there is no evidence that Mr. Oliver used inside knowledge or obtained benefits for clients by virtue of his position within CCRA. The evidence was clear that the taxpayers who testified had been clients of his before he started to work at CCRA. The fact that he worked at CCRA was not a factor for any of these clients in continuing to use Mr. Oliver as their accountant.

[100]      In Demers (Board files 166-2-13980 and 166-2-13990), an employee at the CR-4 level who completed income tax returns for remuneration had his discharge reduced to a one-year suspension. The grievor in that case had continued to prepare income tax returns for clients after being hired by Revenue Canada and, as in this case, there was no evidence that the information obtained from his position in the Department had been used to benefit his clients.

[101]      In the absence of any aggravating factors, a more appropriate disciplinary action for Mr. Oliver's breach of the Conflict of Interest Code would have been a lengthy suspension, conditional on clear evidence being provided to CCRA that Mr. Oliver had ceased preparing tax returns, and clear communication from Mr. Oliver to his spouse's clients that he was no longer performing this work. However, there are significant aggravating factors that lead to a different conclusion. These factors were identified in the letter of termination (Exhibit E-26) and formed the basis for the employer's decision to discharge Mr. Oliver.

[102]      The preparation of tax returns, without the requisite prior approval, was done on more than one occasion. This was not an isolated breach of the Code. Mr. Oliver continued to have clients during his entire employment with CCRA. Mr. Oliver was aware of the obligations under the Code. The Conflict of Interest Code and the supplementary guidelines were brought to his attention at the beginning of his employment, and annually thereafter. While it is unfortunate that the letter authorizing his leave without pay (which contained a reminder on conflict of interest) was sent after the completion of that leave, the appointment letter and the Code are clear that the obligations under the Code continue during a period of leave. There is no basis to conclude that Mr. Oliver misunderstood the requirements of the Code.

[103]      The recognition of culpability or some responsibility for his or her actions is a critical factor in assessing the appropriateness of the discipline. This is because the rehabilitative potential of the grievor is built on a foundation of trust, and trust starts with the truth. If a grievor has misled his employer, failed to cooperate with the legitimate investigation of allegations of conflict of interest, and refuses to admit any responsibility in the face of evidence showing wrongdoing, then re-establishing the trust necessary for an employment relationship is impossible.

The principle that an employee is not required to provide an explanation to his employer or acknowledge any wrongdoing is not one that is enshrined in the collective bargaining regime. That principle is one that is enshrined in our criminal law. The collective bargaining regime has developed from employment law, which historically has upheld, and continues to uphold, the employer's right of entitlement to good faith from its employees. Accordingly, the approach is very different. Whether an employee has been candid with the employer, acknowledged the inappropriateness of the conduct in question, apologized and demonstrated remorse and a willingness to correct the behaviour or refrain from it in the future, are primary considerations in addressing the issue of mitigation of the discipline imposed.

Naidu v. CCRA, 2001 PSSRB 124

[104]      The evidence shows that Mr. Oliver did not cooperate fully with the investigation. His unwillingness to provide a list of clients of Oliver and Associates made the investigation more difficult for the employer. He misled his employer by admitting only to preparing income tax returns for friends and family during his leave of absence, when in fact he had been preparing returns for clients for remuneration. Mr. Oliver has also not admitted any responsibility for his actions.

[105]      In terms of the particular circumstances of the grievor, there was no evidence of any economic hardship as a result of termination. Mr. Oliver is relatively young, and has a professional designation so re-employment is not a significant issue. Mr. Oliver had just three years of service in the federal Public Service at the time of his termination.

[106]      In Demers (supra), the adjudicator substituted a one-year suspension for discharge on the basis that the preparation of tax returns was an isolated event, the grievor immediately admitted his mistake and promised not to continue, there was some evidence of a misunderstanding of obligations under the Code, and there was evidence of economic hardship. None of these factors apply to Mr. Oliver's situation.

[107]      Given the aggravating factors, I have concluded that the grievor cannot be rehabilitated, and that the discipline imposed was appropriate in all the circumstances of this case. Accordingly, the grievance is dismissed.

Ian R. Mackenzie,
Board Member

OTTAWA, June 11, 2003.