Date: 20220714  
Docket: A-29-21  
Citation: 2022 FCA 127  
CORAM:  
DE MONTIGNY J.A.  
LOCKE J.A.  
ROUSSEL J.A.  
BETWEEN:  
ATTORNEY GENERAL OF CANADA  
Appellant  
and  
MARY LLOYD  
Respondent  
Heard at Ottawa, Ontario, on June 6, 2022.  
Judgment delivered at Ottawa, Ontario, on July 14, 2022.  
REASONS FOR JUDGMENT BY:  
CONCURRED IN BY:  
DE MONTIGNY J.A.  
LOCKE J.A.  
ROUSSEL J.A.  
Date: 20220714  
Docket: A-29-21  
Citation: 2022 FCA 127  
CORAM:  
DE MONTIGNY J.A.  
LOCKE J.A.  
ROUSSEL J.A.  
BETWEEN:  
ATTORNEY GENERAL OF CANADA  
Appellant  
and  
MARY LLOYD  
Respondent  
REASONS FOR JUDGMENT  
DE MONTIGNY J.A.  
[1]  
The appellant, the Attorney General of Canada (the Attorney General), seeks this Court’s  
intervention regarding a decision of the Federal Court that allowed an application for judicial  
review from a grievance denied at the final level by the Canada Revenue Agency (the Agency or  
the CRA). The respondent, Ms. Lloyd, grieved the CRA’s decision to transfer her from the  
Criminal Investigation Division (the CID) because an instance of misconduct for which she  
Page: 2  
was disciplined could compromise her credibility as a witness in prosecutions, which is one of  
the key activities of an investigator. The Federal Court found that the Agency placed undue  
weight on legal opinions from the Public Prosecution Service of Canada (PPSC) regarding the  
respondent’s suitability as an investigator, without adequately considering all available and  
relevant factors and justifying its decision.  
[2]  
I.  
For the reasons that follow, I would dismiss the appeal.  
Background  
[3]  
This appeal is the culmination of a long and protracted labour dispute between the  
appellant and the respondent, in the course of which Ms. Lloyd filed a number of grievances  
against the Agency. Only the most relevant of these grievances will be referred to in these  
reasons.  
[4]  
The respondent began her employment with the Agency in 1997. By 2004, she had  
assumed the role of a Senior Investigator with the CID. Diagnosed with fibromyalgia in 2005,  
Ms. Lloyd went on extended sick leave in January of 2006, and from June to October of the same  
year, was on long-term disability leave. In February 2006, she filed a grievance alleging that her  
employer had failed to provide timely and adequate accommodation for her condition (the first  
discrimination grievance).  
[5]  
While on leave, the respondent sought to obtain certain personal information from her  
work computer in preparation for her grievance. She was directed to the Agency’s Information  
Page: 3  
Technology Branch, which copied and provided her with the entire computer hard drive contents  
on approximately 16 unencrypted compact discs (CDs). These contained both confidential  
taxpayer information and personal files.  
[6]  
On August 7, 2007, the respondent was involved in a bicycling accident causing her  
serious bodily injury, including a traumatic brain injury. As a result, she was once again placed  
on long-term disability, from August 2007 to November 2009.  
[7]  
Adjudication of the first discrimination grievance occurred in mid-September 2008  
before the then Public Service Labour Relations and Employment Board (now the Federal Public  
Sector Labour Relations and Employment Board, or the Board). Among the issues before the  
Board was whether Ms. Lloyd had sent an email requesting accommodation to her Assistant  
Director on June 30, 2005. Because counsel for the CRA objected to the admissibility of the  
paper copy of that email tendered by Ms. Lloyd and demanded production of the CD in order to  
prove the existence of the email, Ms. Lloyd produced all 16 of the CDs and indicated that she  
had made two copies of the CD containing the aforementioned email using a friend’s personal  
computer. They were immediately seized by the CRA. Ms. Lloyd’s admission also triggered an  
investigation into her conduct relating to confidential taxpayer information by the Agency’s  
Internal Affairs and Fraud Prevention Division (IAFPD).  
[8]  
On February 6, 2009, the Board found that the Agency had failed to accommodate Ms.  
Lloyd’s medical condition and had engaged in discrimination (Lloyd v. Canada Revenue Agency,  
2009 PSLRB 15).  
Page: 4  
On November 3, 2009, Ms. Lloyd informed the Agency that she was ready to return to  
work on a part-time basis by the end of the month. However, the employer suspended her  
[9]  
indefinitely on November 6, 2009, pending the outcome of the IAFPD investigation. Ms. Lloyd  
grieved this suspension, claiming that it was a disciplinary measure and constituted harassment,  
that it was imposed in retaliation for her successful accommodation claim, and that it was used to  
block her return to work. The IAFPD Investigation Report, released on December 22, 2010,  
found that Ms. Lloyd breached the Agency’s policy regarding the security and protection of  
confidential taxpayer information, in addition to section 241 of the Income Tax Act, R.S.C. 1985,  
c. 1 (5th Supp.) (the ITA). The Agency imposed a 40-day suspension on March 17, 2011, which  
Ms. Lloyd grieved (the discipline grievance).  
[10] When the respondent returned to work on June 13, 2011, she was reassigned temporarily  
to the Special Enforcement Program, where she would not be required to conduct investigations.  
Her employer informed her on January 17, 2012, that she would be transferred to the Small and  
Medium Enterprises (SME) Division and she would be precluded from participating in criminal  
investigations because of the concerns that resulted from her misconduct.  
[11] These concerns stem from the Supreme Court of Canada’s decision in R. v. McNeil, 2009  
SCC 3, [2009] 1 S.C.R. 66 [McNeil], which held that Crown prosecutors must disclose to  
defence counsel any “serious misconduct” by individuals involved in an investigation that either  
relates to the investigation or that could reasonably impact the case against the accused. This  
extends to Agency investigators, who conduct investigations for cases of tax evasion and fraud.  
Thus, the Agency must report all findings of serious misconduct to the PPSC, which assesses the  
Page: 5  
potential impact of McNeil concerns on an investigation and whether they should be disclosed to  
defence counsel.  
[12] Ms. Lloyd grieved her transfer to the SME Division (the transfer grievance), and also  
claimed that she was discriminated against on the basis of disability, contrary to the Canadian  
Human Rights Act, R.S.C. 1985, c. H-6 (the second discrimination grievance). The  
Commissioner of the CRA allowed the grievance and overturned the transfer on August 2, 2012,  
returning her to the CID. However, the Agency continued to refuse to assign her investigative  
duties due to the existing McNeil concerns.  
[13] On July 23, 2015, the Board ruled on the multiple grievances filed by the respondent  
(Lloyd v. Canada Revenue Agency, 2015 PSLREB 67). In particular, the adjudicator dismissed  
the grievance against her indefinite suspension filed in November 2009, finding that the  
suspension was not harassment nor retribution for the accommodation claim, but was based on  
the Agency’s operational needs and its concern that confidential taxpayer information needed to  
be protected. The Board similarly found that the evidence supported the Agency’s reasons for  
imposing the 40-day disciplinary suspension and that it considered all mitigating factors.  
However, the Board upheld the transfer grievance and awarded Ms. Lloyd $7000 for pain and  
suffering, finding that the Agency had “failed to meet its duty to accommodate [the  
respondent’s] disability … [and] engaged in a discriminatory practice” when it transferred her to  
the SME Division without her consent.  
Page: 6  
[14] On judicial review, this Court set aside the Board’s 2015 decision: Lloyd v. Canada  
(Attorney General), 2016 FCA 115, 2016 D.T.C. 5051 [Lloyd 2016]. It held that the Board had  
either dismissed as irrelevant or made no findings on the allegations that Ms. Lloyd had breached  
Agency policy and section 241 of the ITA by accessing the CDs on her friend’s computer (at  
paras. 15-16, 23). It also found no basis upon which the Board could conclude that Ms. Lloyd  
had breached the ITA (at paras. 16-17).  
[15] The matter was referred back to the Board, which reconsidered the suspension grievance  
and issued a new decision on August 28, 2017: Lloyd v. Canada Revenue Agency, 2017  
FPSLREB 22 (the Reconsideration Decision). It found no evidence of an ongoing risk of the  
disclosure of taxpayer information, nor any support for the allegation that Ms. Lloyd knowingly  
disclosed taxpayer information contrary to the ITA. It concluded that she had not committed  
“serious acts of misconduct constituting group 5 offences” under the employer’s Discipline  
Policy, but that her misconduct was comparable to group 3 offences such as the unauthorized use  
of CRA vehicles, stores or equipment (at paras. 149, 166). The Board reduced her suspension to  
six days (at para. 168).  
[16] It bears noting that the Agency sought opinions from the PPSC regarding Ms. Lloyd’s  
McNeil concerns on four separate occasions. The first two opinions, obtained in March 2011 and  
May 2015, found that the respondent was not suited for her position within the CID because her  
accessing and copying of confidential taxpayer information constituted serious misconduct,  
which could jeopardize a PPSC prosecution if she were involved. These two opinions are not in  
the record. The PPSC’s third opinion came after the Board’s 2017 decision, finding that Ms.  
Page: 7  
Lloyd’s reduced suspension did not change its prior advice from 2015. Finally, the PPSC  
provided a fourth opinion in February 2018 reiterating that the initial concerns about Ms. Lloyd  
remained, but that her credibility could possibly be restored with time, together with a carefully  
supervised work plan incorporating increased responsibility.  
[17] The Agency determined that attempting to rehabilitate the respondent’s credibility would  
not be practically possible, as it would involve having a supervisor dedicated to the respondent in  
order to verify every aspect of her work. Accordingly, the Agency notified Ms. Lloyd by letter  
dated September 20, 2018, that she could not remain a Senior Investigator with the CID. It  
offered 11 alternative positions at an equivalent level that could accommodate her medical needs,  
noting that a refusal to accept the offer might result in her termination for non-disciplinary  
reasons. Ms. Lloyd grieved this decision on November 13, 2018.  
[18] The Agency denied her grievance at the second level on January 28, 2019 (the Second  
Level Grievance Reply). It found that credibility concerns remained relevant despite the passage  
of time. Moreover, it found that while the Board had reduced her suspension to well below the  
29-day threshold of what constitutes serious misconduct under its McNeil Policy and Procedures,  
the PPSC’s legal opinion indicated that Ms. Lloyd had been involved in serious misconduct  
when she copied the confidential CDs. Thus, it held, her misconduct would still likely require  
disclosure and could jeopardize a future prosecution.  
[19] On July 22, 2019, Mr. Dan Couture, Assistant Commissioner of the Agency’s Human  
Resources Branch (the Assistant Commissioner), denied the grievance at the final level. He held  
Page: 8  
that the Agency could not assign Ms. Lloyd the key activities of a CID investigator for the  
reasons set out in the Second Level Grievance Reply. Ms. Lloyd challenged the Assistant  
Commissioner’s decision on judicial review in the Federal Court.  
[20] On December 27, 2019, Ms. Lloyd accepted a position with the Agency as an Excise Tax  
Auditor, effective January 6, 2020, on a without-prejudice basis.  
II.  
Decision under review  
[21] On January 7, 2021, the Federal Court (per Justice Ahmed) allowed the application for  
judicial review: Lloyd v. Canada (Attorney General), 2021 FC 29, [2021] 6 C.T.C. 174 [FC  
Reasons]. The Court first ruled to admit the affidavit of Ms. Kalyn Lord, dated October 7, 2019,  
and nine accompanying documentary exhibits. While these documents were not before the  
Assistant Commissioner at the time he rendered his decision, they fell within an exception to the  
general bar on new evidence in judicial review because they provided relevant, general evidence  
of background nature (citing Association of Universities and Colleges of Canada v. Canadian  
Copyright Licensing Agency (Access Copyright), 2012 FCA 22, 428 N.R. 297). Specifically, the  
first two exhibits contained Agency work descriptions and policies that were readily available to  
the Assistant Commissioner prior to his decision. The remaining exhibits contained information  
going to the merits of the decision, which the Assistant Commissioner was expected to have  
considered.  
[22] Next, the Court rejected the Attorney General’s argument that the dispute between the  
parties was moot. It found the dispute remained tangible and concrete because the CID position  
Page: 9  
still existed, and Ms. Lloyd intended to return to it if successful in her legal proceedings (citing  
Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342, 57 D.L.R.(4th) 231). The Court  
disagreed that Ms. Lloyd had voluntarily transferred out of the CID, finding that the transfer had  
occurred under threat of termination.  
[23] Going to the substance of the matter, the Federal Court found that the Assistant  
Commissioner bore a heightened responsibility to provide reasons that demonstrated he  
considered the consequences of his decision and to justify those consequences considering the  
relevant facts and law. This was so, it explained, because the Agency had twice discriminated  
against Ms. Lloyd and twice transferred her from the CID against her will. Moreover, the Court  
noted that both the Assistant Commissioner’s reasons and the record failed to address how Lloyd  
2016, the Board’s Reconsideration Decision and the Agency’s McNeil Policy all seemed to  
contradict the finding that Ms. Lloyd’s misconduct was “serious”. While the Agency’s Second  
Level Grievance Reply noted that the quantum of discipline Ms. Lloyd faced fell below the  
threshold for serious misconduct under the McNeil Policy, the Court held that the Assistant  
Commissioner failed to grapple with why the misconduct would still bar her from her CID  
position.  
[24] Instead, it explained, the Assistant Commissioner relied entirely on the PPSC’s legal  
opinions according to which McNeil concerns remained because Ms. Lloyd had demonstrated a  
severe lack of judgment. While it was reasonable for him to consider the PPSC’s opinions at face  
value, he could not do so without considering all other relevant factors, unless adequately  
justified and explained. In short, the Court found that he failed to rationalize his reliance on those  
Page: 10  
legal opinions in light of the fact that Ms. Lloyd’s actions were significantly different from the  
examples of serious misconduct found in the CRA’s McNeil Policy. The resulting decision was  
therefore unreasonable, as it lacked justification, transparency and intelligibility.  
[25] Finally, the Court accepted that the presence of a sunset clause in Ms. Lloyd’s collective  
agreement did not preclude the need to disclose her misconduct to the PPSC. The Court also  
rejected the appellant’s argument that the Board had found Ms. Lloyd’s misconduct to be  
“serious” in its 2017 decision, specifying that the Board had actually found that the misconduct  
was analogous to a group 3 offence.  
III.  
Issues  
[26] In my view, the only issue in this appeal is whether the Assistant Commissioner’s  
decision to dismiss Ms. Lloyd’s grievance at the final level was reasonable.  
[27] It is agreed between the parties that an appeal from the Federal Court on an application  
for judicial review requires this Court to determine whether the judge in the first instance  
identified the appropriate standard of review for each issue and applied it correctly. This is  
consistent with the jurisprudence of the Supreme Court of Canada on the subject: see Northern  
Regional Health Authority v. Horrocks, 2021 SCC 42, 462 D.L.R. (4th) 585 at para. 12  
[Horrocks]; Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36,  
[2013] 2 S.C.R. 559 at para. 46. This approach accords no deference to the reviewing judge’s  
application of the standard of review. In other words, the appeal court must “step into the shoes”  
of the lower court, and perform a de novo review of the administrative decision (Horrocks at  
Page: 11  
para. 10). That being said, where the Federal Court appears to have given a complete answer to  
an argument advanced on judicial review, an appellant bears a tactical burden to show a flaw in  
the Federal Court’s reasoning: Canada RNA Biochemical Inc. v. Canada (Health), 2021 FCA  
213, 2021 CarswellNat 4834 (WL Can) at para. 7; Bank of Montreal v. Canada (Attorney  
General), 2021 FCA 189, 2021 D.T.C. 5111 at para. 4.  
[28] In the case at bar, the parties agree that the Federal Court correctly identified the  
reasonableness standard. Their dispute relates to the application of that standard.  
IV.  
Analysis  
[29] The Attorney General submits that the Federal Court erred in finding that the Assistant  
Commissioner failed to consider the apparent contradiction between his finding that Ms. Lloyd’s  
misconduct was serious, on the one hand, and Lloyd 2016, the Reconsideration Decision of the  
Board and the CRA’s own McNeil Policy on the other. Indeed, the Attorney General points out  
that the Assistant Commissioner never found her misconduct to be serious for McNeil disclosure  
purposes. As it is the PPSC’s purview to determine whether an investigator’s misconduct must  
be disclosed to defence counsel, it does not matter that the Assistant Commissioner did not  
qualify the misconduct for himself. Thus, it is argued, the Federal Court unreasonably set aside  
the decision based on something the decision maker had no authority to assess.  
[30] The Attorney General also submits that the PPSC’s legal opinions themselves considered  
Lloyd 2016 and the Board’s Reconsideration Decision, finding that Ms. Lloyd had still shown a  
severe lack of judgment that could affect her credibility. PPSC considered that even if the Board  
Page: 12  
eventually substituted a six-day suspension for the original 40-day suspension, there was still a  
“severe lack of judgment” that could negatively impact on the credibility of the investigator, and  
therefore that “it would be better not to expose a potential prosecution to the risks associated  
with a CID employee who had been found to have engaged in misconduct involving a severe  
lack of judgment, particularly where that lack of judgment was in relation to a core investigative  
function, the safeguarding of taxpayer information” (PPSC legal opinion, September 20, 2017;  
Appeal Book, Tab 19, p.154). The Attorney General also notes that neither this Court nor the  
Board found that Ms. Lloyd’s misconduct was not serious.  
[31] Finally, the Attorney General submits that the Assistant Commissioner did indeed  
consider and explain the impact of the McNeil Policy by noting that it was not exhaustive and  
that what constitutes serious misconduct is a judgment call by the PPSC.  
[32] In my view, these arguments must fail. In a nutshell, the core thesis of the Attorney  
General is that the Assistant Commissioner was bound to follow the PPSC’s opinions and was  
precluded from taking into consideration any other factors in determining whether Ms. Lloyd  
should be allowed to continue to work in her substantive position as a CID Investigator. Yet, a  
careful reading of these opinions reveals that they were not as categorical as counsel for the  
Attorney General would have us believe. Moreover, as noted by the Federal Court, the Assistant  
Commissioner did not explain why these opinions supersede every other consideration that bore  
on his decision, including the characterization of Ms. Lloyd’s misconduct in Lloyd 2016, the  
Board’s Reconsideration Decision and the CRA’s own McNeil Policy. In light of the Supreme  
Court’s guidance in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65,  
Page: 13  
[2019] 4 S.C.R. 653 at paras. 96-98 [Vavilov], pursuant to which a decision will not meet the  
requisite standard of justification, transparency and intelligibility when “a decision maker’s  
rationale for an essential element of the decision is not addressed in the reasons and cannot be  
inferred from the record”, the Federal Court could find that the Assistant Commissioner’s  
decision was unreasonable.  
[33] It is agreed by the parties, and rightly so, that PPSC’s legal opinions cannot be second-  
guessed by the Assistant Commissioner, and the Federal Court agreed that it was reasonable for  
him to rely on those opinions “at face value” (FC Reasons at para. 57). It is clearly for PPSC to  
determine, in any given case, whether any serious misconduct by individuals involved in an  
investigation must be disclosed to defence counsel. That being said, these opinions cannot  
insulate CRA’s management decision entirely from judicial review. As stated by the Federal  
Court, the Assistant Commissioner had an obligation to consider and grapple with other  
considerations before coming to its decision. Indeed, the legal opinions themselves state as much  
and acknowledge quite clearly that the final decision rests with the CRA.  
[34] When asked to update its previous advice from 2015 as a result of the Lloyd 2016  
decision of this Court and the Board’s ensuing Reconsideration Decision, the PPSC opined that  
the reduction of the discipline sanction did not change its view and that “[a]ll things being equal  
it would be better not to expose a potential prosecution to the risks associated with a CID  
employee who had been found to have engaged in misconduct involving a severe lack of  
judgment” (Appeal Book, Tab 19, p. 154). It goes on to state that such issues must be dealt with  
on a case-by-case basis, and adds that this calculation is complicated by the time pressures  
Page: 14  
imposed by the Supreme Court of Canada in R. v. Jordan, 2016 SCC 27, [2016] 1 S.C.R. 631. As  
the author of the PPSC opinion writes, “[f]iles should be streamlined, not made more  
complicated. Distracting and time consuming side issues should be avoided if possible” (Appeal  
Book, Tab 19, p. 154).  
[35] This caution from PPSC is understandable and makes perfect sense. It is a far cry,  
however, from a definitive bar to reinstating Ms. Lloyd in her CID position. In fact, the opinion  
subsequently provides a number of recommendations to mitigate the risk on future prosecutions,  
and hints that employee rehabilitation could be achieved over time by assigning the investigator  
increasing responsibilities with strict supervision. Moreover, the last two sentences of the  
opinion read as follows: “… the PPSC position does not purport to provide human resources or  
labour management advice to the CRA. The CRA will have to navigate these issues itself”  
(Appeal Book, Tab 19, p. 155).  
[36] In its latest more succinct 2018 opinion, PPSC clarified that Ms. Lloyd’s credibility could  
not be restored based solely on the passage of time and on her own view of the matter, and  
reiterated that increasing responsibility with strict supervision could prove fruitful for  
rehabilitation purposes. Once again, this one-page opinion, based on an email request from the  
Assistant Director of the CRA, cannot be interpreted, without more, as a sufficient justification  
for the decision by the CRA to force Ms. Lloyd out of her CID position. This is especially so in  
light of the fact that we do not know what was communicated to the PPSC.  
Page: 15  
[37] These opinions, therefore, were not sufficient to explain and justify the decision of the  
Assistant Commissioner to dismiss Ms. Lloyd’s grievance. Not only were they not as categorical  
as the CRA indicated in the Second Level Grievance Reply, but they were only one of the  
considerations to be taken into account by the CRA before coming to a decision.  
[38] The Attorney General contends that, in any event, the PPSC’s opinions upon which the  
CRA relied to prevent Ms. Lloyd from returning to her CID position were consistent with Lloyd  
2016 and the Board’s Reconsideration Decision, neither of which concluded that the  
respondent’s misconduct was not serious. In my view, this is not an entirely accurate  
characterization of these decisions.  
[39] In Lloyd 2016, this Court held that the evidence on record did not support Ms. Lloyd’s  
initial 40-day disciplinary sentence. At paragraph 22, this Court wrote that the suspension flowed  
from two factors, namely: 1) a “continued and ongoing risk of disclosure of sensitive taxpayer  
information” from the downloading of the CDs onto personal computers, and 2) an allegation  
that Ms. Lloyd had breached section 241 of the ITA. However, this Court found that the Board  
either dismissed these allegations as irrelevant, or made no findings on them. This Court further  
found that the Board failed to consider the appropriateness of the 40-day suspension in light of  
the two acts of misconduct that had been established, namely removing taxpayer information  
without express authority and copying the CDs onto non-CRA computers (at para. 23). Indeed,  
“the basis upon which the 40-day suspension was justified cannot be discerned without engaging  
in speculation and rationalization” (at para. 24). It is true that the Court did not expressly state  
that the respondent’s misconduct was not serious, but it certainly casts doubt on such a finding.  
Page: 16  
[40] Such a reading of Lloyd 2016 is indeed consistent with the CRA’s own assessment of the  
2008 incident that prompted Ms. Lloyd’s removal from her CID position. Replying to an inquiry  
from a Senior Investigator with the Office of the Privacy Commissioner regarding privacy  
concerns arising from that incident, the CRA noted, “there was little risk of injury to taxpayers as  
a result of this incident”. It went on to state that “the investigation concluded that the only  
information viewed and accessed from the CD was one email for the purpose of a labour  
relations trial” (Appeal Book, Tab 12, p. 116). Again, one should not infer from that letter,  
written in the context of a privacy inquiry, that the respondent’s conduct does not amount to a  
lack of judgment. However, it does not smack of serious misconduct requiring, without any  
further explanation, the permanent reassignment of the respondent by her employer.  
[41] In its Reconsideration Decision, the Board reduced the 40-day suspension to six days,  
finding the initial quantum “excessive in all the circumstances”. In doing so, it considered a  
variety of mitigating factors, including Ms. Lloyd’s 14 years of clear service with the Agency,  
that she had been forthcoming about the incident during the Board hearing, and that she  
cooperated during the investigation. While the Board did not agree with the respondent that the  
employer had condoned her misconduct and found instead that it was her responsibility to advise  
management when she was given the 16 CDs, it nevertheless held at paragraph 162 of its reasons  
that Ms. Lloyd never intended to access or divulge taxpayer information, and that offences  
characterized as group 2 offences in the CRA Discipline Policy, such as unauthorized access to  
or disclosure of taxpayer or other sensitive or confidential information, “appear[ed] … to pertain  
to more serious misconduct than that which has been established in this case”. The Board then  
explained at paragraphs 164-166 that Ms. Lloyd’s misconduct was more serious than another  
Page: 17  
group of offences (e.g., improper or careless use of neglect of CRA property, equipment or  
cards), and analogous to group 3 offences (e.g., misuse of CRA facilities, property or  
information, and the unauthorized use of CRA vehicles, stores, or equipment). Group 3 offences  
warrant suspension of 1 to 30 days, depending on the aggravating and mitigating factors in play.  
[42] Further at odds with the serious misconduct characterization of the respondent’s actions  
is the appellant’s own McNeil Policy. Among the listed examples of serious misconduct that  
must be included in a McNeil Report to the PPSC are: falsification of expense accounts, use of  
the CRA’s electronic networks for unlawful activities, forgery, obstructing an investigation,  
embezzlement, misrepresentation for personal gain, soliciting or accepting a bribe, theft,  
violation of legislation enforced by the CRA, obtaining leave fraudulently, unauthorized  
disclosure of taxpayer or other sensitive confidential information, and misconduct for which a  
suspension in excess of 29 days was received. While admittedly not an exhaustive list, as pointed  
out in the Second Level Grievance Reply upon which the Assistant Commissioner relied in his  
final decision, it is clearly indicative of the type of misconduct that the appellant deems serious  
for McNeil purposes. At first sight, Ms. Lloyd’s misconduct – though still improper and contrary  
to Agency policy – differs vastly from the examples of serious misconduct listed in the Agency’s  
policy.  
[43] Also of relevance in examining the seriousness of Ms. Lloyd’s misconduct were the truly  
unique facts of this case. This is not a case where an individual has surreptitiously copied  
taxpayer information and then used it for personal gain. The only reason Ms. Lloyd requested  
access to personal information from her work computer was to prepare for the hearing of her first  
Page: 18  
discrimination grievance. The email she sought to access was proof that she had requested  
accommodation measures for her fibromyalgia, which the Agency contested before the Board.  
Ultimately, the Board found in her favour in that grievance. It is likely that Ms. Lloyd would  
never have improperly accessed and copied contents from the CD had the Agency not  
discriminated against her in the first place. Moreover, had Ms. Lloyd been working as she  
prepared for the hearing, and not been on leave, she would most probably have had access to the  
relevant information from her work computer and would not have resorted to using a non-  
Agency device. It is far from clear on the record that the Assistant Commissioner considered  
these factors in coming to his conclusion, nor that these facts were shared with PPSC.  
[44] In light of this context and of the apparent contradictions between the PPSC’s legal  
opinions and this Court’s 2016 decision, the Board’s Reconsideration Decision and the CRA’s  
McNeil Policy, it was incumbent on the Assistant Commissioner to explain why he chose to give  
precedence to, and indeed felt bound by, the legal opinions. In the absence of any such  
explanation, the decision cannot be considered justified, transparent and intelligible. This is not  
to say that PPSC was not entitled to its own judgment call, nor that the Assistant Commissioner  
should have disregarded or questioned the PPSC’s legal opinions; but there was more to his  
management decision than PPSC’s opinions, as important as they were. The CRA could not  
simply ignore every other consideration, and Ms. Lloyd was entitled to a principled explanation  
as to why they did not trump CRA’s finding that her misconduct was serious enough to prevent  
her from rehabilitating her credibility over time and from exercising her investigatory functions  
with the CID.  
Page: 19  
[45] I agree with the Federal Court that the history of Ms. Lloyd’s tumultuous relationship  
with the Agency imposed on the Assistant Commissioner a heightened responsibility to provide  
reasons covering all relevant considerations, including the consequences of his decision. The  
Federal Court’s analysis on this point is entirely consistent with the guidance from the Supreme  
Court in Vavilov (at para. 106), where it explained that the “potential impact of the decision on  
the individual to whom it applies” is a relevant consideration when determining the  
reasonableness of a decision (see also para. 135).  
[46] Finally, the Attorney General’s submission that the PPSC’s legal opinions and the  
Second Level Grievance Reply do provide an explanation for the decision and account for the  
various considerations raised by the respondent cannot be sustained. PPSC’s legal opinions do  
not form part of the reasons, and cannot be relied upon to supplement any insufficiencies in the  
actual decision. Moreover, the respondent never had access to these opinions and was unaware of  
their contents until the appellant chose to waive solicitor-client privilege much later and disclose  
some of them as part of the judicial review proceedings. In any event, the passing references to  
Lloyd 2016 and to the Board’s Reconsideration Decision in the PPSC’s legal opinions do not  
amount to a meaningful explanation or justification as to why the PPSC’s position is consistent  
with these decisions. As for the Second Level Grievance Reply, the bare mention that “the list of  
examples of misconduct is not meant to be exhaustive” hardly provides a rational explanation as  
to why the Board’s decision to lower the respondent’s suspension to six days is consistent with  
what amounts to a permanent bar from her investigative duties with the CID.  
Page: 20  
[47] It is therefore no answer for the Attorney General to claim, as he did, that the Assistant  
Commissioner’s decision was justified because the respondent’s misconduct posed a risk to the  
CRA’s role and jeopardized its criminal investigations. Such a statement merely assumes what  
ought to be demonstrated, and once again relies solely on PPSC’s legal opinions without any  
attempt to balance it against any other considerations.  
[48] Nor is it helpful for the Attorney General to support the reasonableness of the CRA’s  
decision on the basis of its managerial authority to assign duties to its employees. The Attorney  
General contends that the Canada Revenue Agency Act, S.C. 1999, c. 17 (the CRA Act) gives the  
Agency authority over all matters of organization and human resources, including terms and  
conditions of employment, and section 7 of the Federal Public Sector Labour Relations Act, S.C.  
2003, c. 22, s. 2 preserves the Agency’s right to assign duties to its employees. Indeed, Ms.  
Lloyd’s collective agreement contains a management rights clause according to which the  
Agency retains the “functions, rights, powers and authority” not specifically “abridged, delegated  
or modified” by the agreement.  
[49] I am unpersuaded by this argument, which is nowhere to be found in the Assistant  
Commissioner’s reasons or in the Second Level Grievance Reply. Of course, a decision maker is  
not bound to identify the precise source of its authority (see British Columbia (Mild Board) v.  
Grisnich, [1995] 2 S.C.R. 895, 126 D.L.R.(4th) 191 at paras. 2, 4, 5 and 19-20; Prairie Acid Rain  
Coalition v. Canada (Minister of Fisheries and Oceans), 2006 FCA 31, [2006] 3 F.C.R. 610 at  
paras. 31-32). Yet I find it disingenuous for the Attorney General to claim both that the Agency  
Page: 21  
could reasonably rely on the PPSC’s opinions alone, and that it has the power to do as it pleases  
under the CRA Act.  
[50] More importantly, residual management rights are not unlimited. As recognized by the  
Supreme Court in Association of Justice Counsel v. Canada (Attorney General), 2017 SCC 55,  
[2017] 2 S.C.R. 456 at para. 20, “[m]anagement rights must be exercised reasonably and  
consistently with the collective agreement”. See also: Re Lumber & Sawmill Workers’ Union,  
Local 2537, and KVP Co. (1965), 16 L.A.C. 73, [1965] O.L.A.A. No. 2 (Ont. Arb.);  
Communications, Energy and Paperworkers Union of Canada, Local 30 v. Irving Pulp & Paper  
Ltd., 2013 SCC 34, [2013] 2 S.C.R. 458 at para. 24; Donald J.M. Brown and David M. Beatty,  
Canadian Labour Arbitration, 4th ed. (Toronto: Carswell, 2014) (loose-leaf), vol. 1 at topic  
4:1520). Accordingly, even assuming that the Agency could transfer Ms. Lloyd from her  
substantive position against her will, it was still required to exercise that discretion reasonably,  
and that obligation was heightened as a result of its duty to accommodate the respondent’s  
disabilities. The Attorney General’s reliance on the CRA’s management rights therefore begs the  
issue.  
[51] The two cases relied upon by counsel for the appellant in support of its thesis are not  
particularly helpful. In the first case (Toy v. Edmonton (Police Services), 2018 ABCA 37, 66  
Alta. L.R. (6th) 205), the Alberta Court of Appeal found that it was not unreasonable for a  
disciplinary body to confirm the dismissal of a police officer who had lied in a sworn statement  
and testimony. The Court concluded that the Edmonton Police Service’s ability to provide  
effective policing would be hindered if the police officer’s credibility could be successfully  
Page: 22  
challenged when testifying, based on McNeil credibility concerns. I agree with the respondent  
that the relevance of this case is dubious, as the misconduct involved appears to be much more  
serious than that of Ms. Lloyd and certainly more susceptible to undermine the police officer’s  
credibility.  
[52] In the second case (Municipal Association of Police Personnel v. Halifax (Municipality),  
2012 97776 (N.S. L.A.) [Halifax], a police officer had grieved the decision of his  
employer to deny a transfer to the Criminal Investigation Division of the Halifax Regional Police  
because he had forged and used a fake parking pass four years earlier. It is interesting to note that  
the Arbitrator framed the issue as whether “an expunged disciplinary record, for what was ‘a  
minor career transgression’ … and in the absence of any further misconducts, poses a real risk to  
criminal prosecutions …” (at para. 45). Ultimately, the Arbitrator found that the employer made  
a sensible decision in consulting the Public Prosecution Service on the McNeil concerns, but took  
an inflexible approach to evaluating the grievor’s individual circumstances and their evolution as  
time went on.  
[53] Quite apart from the notion that each case turns on its own facts (and that the police  
officer’s misconduct in that case was arguably more serious than Ms. Lloyd’s), and that a  
provincial arbitral award is not binding on this Court, I fail to see how this case supports the  
Attorney General’s argument. I appreciate that in the case at bar, the CRA repeatedly sought the  
PPSC’s views following the reduced suspension and passage of time. The fact remains, however,  
that the CRA does not appear to have considered any other factors in coming to its decision,  
including Ms. Lloyd’s personal circumstances, the particular context into which her misconduct  
Page: 23  
took place, the absence of any prior or subsequent misconduct, and the 2016 decision of this  
Court as well as the 2017 Reconsideration Decision of the Board. As the Federal Court stated,  
the Assistant Commissioner did not address, either explicitly or by inference, any of these  
factors. Instead, he relied exclusively on PPSC’s legal opinions. In my view, just as in Halifax,  
this is the hallmark of an inflexible approach detached from and impervious to the respondent’s  
particular circumstances and the overall context and evolution of her misconduct file.  
V.  
Conclusion  
[54] For all of the above reasons, I would dismiss the appeal and fix the costs in the amount of  
$4000.00 as per the agreement of the parties.  
"Yves de Montigny"  
J.A.  
"I agree  
George R. Locke J.A."  
"I agree  
Sylvie E. Roussel J.A."  
FEDERAL COURT OF APPEAL  
NAMES OF COUNSEL AND SOLICITORS OF RECORD  
A-29-21  
DOCKET:  
ATTORNEY GENERAL OF  
CANADA v. MARY LLOYD  
STYLE OF CAUSE:  
OTTAWA, ONTARIO  
JUNE 6, 2022  
PLACE OF HEARING:  
DATE OF HEARING:  
DE MONTIGNY J.A.  
REASONS FOR JUDGMENT BY:  
CONCURRED IN BY:  
LOCKE J.A.  
ROUSSEL J.A.  
JULY 14, 2022  
DATED:  
APPEARANCES:  
Kieran Dyer  
Richard Fader  
FOR THE APPELLANT  
FOR THE RESPONDENT  
Peter Engelmann  
Colleen Bauman  
SOLICITORS OF RECORD:  
A. François Daigle  
Deputy Attorney General of Canada  
FOR THE APPELLANT  
FOR THE RESPONDENT  
Goldblatt Partners LLP  
Ottawa, Ontario  


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