National Steel Car Limited v. United Steelworkers of America, Local 7135

National Steel Car Limited v. United Steelworkers of America, Local 7135 Collection Decisions of the Court of Appeal Date 2006-12-08 Docket numbers C45478 Judges Feldman, Kathryn N.; MacPherson, James C.; Blair, Robert Ashley Subject Civil Decision Content DATE: 20061208 DOCKET: C45478 COURT OF APPEAL FOR ONTARIO FELDMAN, MACPHERSON and BLAIR JJ.A. B E T W E E N : NATIONAL STEEL CAR LIMITED Applicant (Appellant) Larry G. Culver for the appellant - and - UNITED STEELWORKERS OF AMERICA, LOCAL 7135 Respondent (Respondent) Mark Rowlinson for the respondent Heard: September 8, 2006 On appeal from the order of the Superior Court of Justice (Divisional Court) (Justice Gordon P. Killeen, Justice John deP Wright and Justice John R. Sproat) dated February 27, 2006, with reasons reported at 149 L.A.C. (4th) 142. MACPHERSON J.A.: [1] Five appeals from decisions of the Divisional Court were grouped together and argued on September 8, 2006. The lead appeal is LaPointe‑Fisher Nursing Home v. United Food & Commercial Workers International Union, Local 175/633 (“LaPointe”), with reasons for judgment being released concurrently with these reasons. [2] This is the fourth of the appeals. It relates to a decision of the Divisional Court dated February 27, 2006 upholding an arbitral award by Arbitrator Bram Herlich dated July 22, 2005. [3] In my view, the decision of the Divisional Court should be affirmed. B. FACTS (1) The parties and the events [4] National Steel Car Limited and the United Steelworkers of America, Local 7135 are parties to a collective agreement. Collective negotiations between the parties led to the employer agreeing to pay OHIP premiums as of May 1, 1973 on behalf of its bargaining unit employees. Since 1984, the OHIP provision of the collective agreement has remained essentially unchanged and now reads: 17.06 Medicare The Company will pay one hundred percent (100%) of O.H.I.P. premiums for the duration of this agreement. 17.07 In the event of any change in the name or substance of O.H.I.P., references to O.H.I.P. shall be deemed to be deleted from this Collective Agreement and the name of the new plan shall be deemed to be substituted thereof. [5] Pursuant to this provision, until December 31, 1989 the employer paid OHIP premiums on behalf of its employees. Effective January 1, 1990, the employer ceased to pay OHIP premiums; instead, it paid a payroll tax pursuant to the Employer Health Tax Act, 1989, S.O. 1989, c. 76 [now R.S.O. 1990, c. E.11]. [6] This picture changed in 2004 with the enactment of the Budget Measures Act, 2004 (No. 2), S.O. 2004, c. 29 (“Bill 106”), which amended the Ontario Income Tax Act, R.S.O. 1990, c. I.2 (the “ITA”), by adding a new s. 2.2(1): 2.2(1) Every individual shall pay a tax, called the Ontario Health Premium, for a taxation year ending after December 31, 2003 if the individual is resident in Ontario on the last day of the taxation year. [7] After the new s. 2.2(1) of the ITA was enacted in 2004, the employer refused to reimburse its employees for the tax or premium imposed by that provision. The union filed a grievance. (2) The Litigation (a) The arbitral award [8] Arbitrator Bram Herlich heard the case on the basis of an agreed statement of facts, exhibits and submissions. [9] The arbitrator stated that the governing principle was that the arbitration was to be “decided on the basis of the language of the collective agreement.” [10] The arbitrator reviewed the language of Articles 17.06 and 17.07 and determined that the grievance before him raised two questions – first, is the OHP a premium within the meaning of the collective agreement; and second, if so, is it, at least effectively, the OHIP premium contemplated by the agreement? [11] In answering the first question, the arbitrator rejected the notion that private commercial law definitions should govern in determining whether the OHP should be considered a premium. Rather, the issue was whether the OHP was a premium within the meaning of the collective agreement: [T]he issue is not whether the OHP is a premium within the context of insurance law; the issue is whether it is a premium within the meaning of the collective agreement. And even if it is appropriate to consider concepts outside the collective bargaining sphere in making such a determination, the realm of private commercial insurance is simply not the right place to turn. O.H.I.P. emerges from legislation of wide application intended to confer social benefits on citizens. A cursory review of both the O.H.I.P. premium (as it existed prior to the introduction of the [Employer Health Tax]) and other well known legislative schemes conferring social benefits funded, at least in part, by premiums clearly demonstrates that these types of premiums are readily distinguishable from their private commercial insurance variants. . . . I am satisfied that, certainly to the extent that O.H.I.P. premiums are “premiums” within the meaning of the collective agreement, so too, and regardless of its “alter‑ego” status as a tax, is the OHP. [12] With respect to the second question, the arbitrator asked whether the two charges were “reasonably and materially similar”. He concluded that they were: Given the sheer longevity of the provisions in question as evidenced by their consistent renegotiation, the parties, rather than continuing to append mere surplusage to their collective agreements, must be taken to have anticipated that the language might have some future application. Similarly, had their intention been to limit that application to a resurrection of the specific O.H.I.P. premium … they would have negotiated language more similar to that found in the Colleges cases. . . . The OHP is a discrete identifiable stand‑alone public health care related charge collected from employees’ paycheques by government direction. It is, in its chief respects, materially and reasonably similar to the O.H.I.P. premium payable prior to 1989. [13] In reaching his conclusion, the arbitrator found that the surrounding collective agreement language supported his interpretation of Article 17.06. In particular, the arbitrator noted that Article 17.06 appeared under the heading “Medicare”, suggesting that the parties had prescribed a broad meaning to the term OHIP under the collective agreement. Finally, the arbitrator referred to the language of Article 17.07 as indicative of the parties’ intention that the benefit negotiated on behalf of bargaining unit employees should not be “defeated by a change in the name of a vehicle designed to facilitate the delivery of public health care.” [14] The arbitrator summarized his award in this fashion: In summary, I have determined that the OHP is a “premium” within the meaning of the collective agreement and that the distinction between tax and premium is not material to my determination. I have also determined that the OHP is not the very O.H.I.P. premium which existed prior to 1989. I have, however, also concluded that the OHP – as a separate discrete identifiable workplace government imposed charge to fund public health care – is reasonably and materially similar to the former O.H.I.P. premium and is consequently a charge the employer is required to pay on behalf of bargaining unit employees. (b) The Divisional Court decision [15] The employer applied for judicial review of the arbitrator’s award. [16] The Divisional Court applied the recent decision of this court in Lakeport Beverages v. Teamsters Local Union 938 (2005), 77 O.R. (3d) 543 (“Lakeport”), and held that the standard of review of the arbitrator’s award was patent unreasonableness. The Divisional Court observed that “the nub of the decision, we believe, was an interpretation of a clause in the agreement, albeit against a statutory backdrop.” [17] On the merits, the court referred to the arbitral awards in LaPointe and The Corporation of the City of Hamilton v. Hamilton Professional Fire Fighters Association (unreported), describing them as “unimpeachable”. Since the language in the collective agreements in those cases was very similar to the language in Article 17, the court determined that it should reach the same result. [18] The employer was granted leave to appeal the Divisional Court’s decision to this court. C. ISSUES [19] The appeal raises three issues: (1) Did the Divisional Court err by applying the wrong standard of review? (2) Did the Divisional Court err by not quashing the arbitrator’s award? (3) Did the Divisional Court err by not quashing the arbitral award because it was inconsistent with the other arbitral awards in the same domain? (1) Standard of review [20] The appellant’s principal argument – namely, that the standard of review of the arbitrator’s award should be correctness because the arbitrator was required to interpret external statutes of general application – is identical to the one advanced in LaPointe. The analysis in LaPointe requires that the appellant’s argument in this appeal must also fail. [21] However, the appellant in this appeal, alone in the five grouped appeals, makes a second submission on the standard of review issue. The appellant asserts that the decision of this court in Lakeport is wrong and should not be followed. [22] The basis for the appellant’s submission is the decisions of the Supreme Court of Canada in Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92, [2004] 1 S.C.R. 609 (“Voice”), and its companion case Alberta Union of Provincial Employees v. Lethbridge Community College, [2004] 1 S.C.R. 727, holding that the awards of arbitrators in Alberta are subject to review on a reasonableness standard. The appellant contends that the reasoning in Voice is entirely applicable to the arbitral and judicial review regime in Ontario; accordingly, Lakeport is wrong and should not be applied in this appeal. [23] The appellant’s candour is to be admired. The appellant does not attempt to distinguish Lakeport; rather, its simple position is that Lakeport is wrong and should not be followed. For two reasons, I disagree with this submission. [24] First, the appellant has not followed the well‑established process for challenging settled decisions of this court. If an appellant seeks to overturn a decision of this court, it must approach the chief justice and request that the chief justice appoint a five‑judge panel to hear the appeal: see R. v. White (1996), 29 O.R. (3d) 577 at 582 (C.A.); David Polowin Real Estate Ltd. v. Dominion of Canada General Insurance Co. (2005), 76 O.R. (3d) 161 at para. 5 (C.A.); and Hill v. Hamilton‑Wentwork Regional Police Services Board (2005), 76 O.R. (3d) 481 at para. 2 (C.A.). The appellant did not do this in this appeal. [25] Second, Lakeport was decided after Voice. The panel in Lakeport was aware of Voice and discussed it extensively in its reasons. The panel applied the “pragmatic and functional” approach to determining the proper standard of review and fully addressed the four well‑established contextual factors that flesh out this approach – the presence or absence of a privative clause or a statutory right of appeal; the expertise of the tribunal relative to the expertise of the reviewing court on the questions at issue; the purpose of the legislation and the particular provision; and the nature of the question at issue (law, fact or mixed law and fact): see Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226 at para. 26. [26] After a full and careful review of these four factors in the context of the arbitral and judicial review regime established by the Ontario Labour Relations Act, 1995, S.O. 1995, c. 1, Laskin J.A., writing for a unanimous court, concluded at paras. 31‑34: On my assessment of the four contextual factors, patent unreasonableness remains the appropriate standard of review. What then of the Alberta cases? I think that they are largely explained by the relatively weak privative clause in the Alberta statute. Section 142 of the Alberta Labour Relations Code states merely that an arbitrator’s decision is “binding”, and s. 143(2) expressly stipulates that an arbitrator’s decision is open to judicial review if notice is filed with the court within 30 days after the date of the award. By contrast, although the “final and binding” clause in s. 48(1) of the Ontario statute is not the strongest privative clause imaginable, it does provide more protection than its counterpart in s. 142 of the Alberta Code. And the Ontario Act has no provisions comparable to s. 143(2) of the Alberta Code expressly permitting judicial review. I conclude that the Supreme Court’s decisions in Voice Construction and Lethbridge Community College do not alter the standard of review applicable to the arbitrator’s decision in this case. The standard remains patent unreasonableness. In my view, until we have a clear statement from the Supreme Court of Canada, we should not depart from a highly deferential standard of review of decisions of Ontario labour arbitrators – a standard of review that harkens back to Dickson J.’s seminal decision in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., [1979] 2 S.C.R. 227, 97 D.L.R. (3d) 417, and that has served the labour relations community in this province so well for over a quarter of a century. I am comforted in this conclusion by the similar views of David Mullan, one of the country’s pre‑eminent administrative law scholars. Professor Mullan has recently written that it would be “premature to lament the passing of an era of deference”. “More particularly”, he wrote, “I believe that that cannot be justified at least until such time as the Court applies a reasonableness standard of review to the interpretation of a collective agreement by a labour arbitrator in another jurisdiction and not subject to the kind of explicit review regime established in the Alberta Labour Relations Code”. See David J. Mullan, “The View From North America: A Canadian Perspective on Three Troubling Issues”, 17 Can. J. Admin. L. & Prac. 167 at 188‑90; see also Mullan, “Voice Construction – One Swallow Does Not a Summer Make?” (2004), 11 C.L.E.L.J. 303. [27] I am in complete agreement with this analysis and result. (2) The merits of the arbitrator’s award [28] The appellant submits that the Divisional Court erred in not finding that the arbitrator’s determination that the OHP is “reasonably and materially similar” to the former OHIP premium was patently unreasonable. This argument covers the same ground as the appellants’ submissions in LaPointe, City of Hamilton and Toronto Transit Commission and must, therefore, fail for the same reasons. (3) Arbitral inconsistency [29] The appellant contends, given that there are now a large number of arbitral awards across Ontario dealing with whether employers must reimburse their employees for the OHP, and given that more than three‑quarters of those awards have accepted the employers’ position, this court should step in and settle the jurisprudence in favour of the employers’ interpretation. I reject this submission for two reasons. [30] First, there is no single, uniform collective agreement dealing with the OHP issue in play throughout Ontario. This fact is exemplified by these five grouped appeals which involve five collective agreement provisions with very different wording. [31] Second, the appellant’s submission is premised on a fundamental misconception about the operation of an arbitral regime protected by a standard of review of patent unreasonableness. As explained by L’Heureux‑Dubé J. in Domtar Inc. v. Quebec (Commission d’appel en matière de lésions professionnelles) (1993), 105 D.L.R. (4th) 385 at 418 ‑ 19 (S.C.C.): This process has led to the development of the patently unreasonable error test. If Canadian administrative law has been able to evolve to the point of recognizing that administrative tribunals have the authority to err within their area of expertise, I think that, by the same token, a lack of unanimity is the price to pay for the decision‑making freedom and independence given to the members of these tribunals. Recognizing the existence of a conflict in decisions as an independent basis for judicial review would, in my opinion, constitute a serious undermining of those principles. This appears to be especially true as the administrative tribunals, like the legislature, have the power to resolve such conflicts themselves. The solution required by conflicting decisions among administrative tribunals thus remains a policy choice which, in the final analysis, should not be made by the courts. See also: Essex County Roman Catholic School Board v. Ontario English Catholic Teachers’ Association (2001), 56 O.R. (3d) 85 at paras. 29 ‑ 32 (C.A.). E. DISPOSITION [32] I would dismiss the appeal. [33] The respondent is entitled to its costs of the appeal which, in accordance with the agreement of counsel, I would fix at $8,000, inclusive of disbursements and GST. RELEASED: December 8, 2006 (“KNF”) “J. C. MacPherson J.A.” “I agree K. N. Feldman J.A.” “I agree R. A. Blair J.A.”