B.C. Pilots v. Pac. Pilotage

2001BCSC1204 Citation: B.C. Pilots v. Pac. Pilotage Date: 20010817 2001 BCSC 1204 Docket: L011202 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: THE BRITISH COLUMBIA COAST PILOTS LTD. PETITIONER AND: PACIFIC PILOTAGE AUTHORITY RESPONDENT REASONS FOR JUDGMENT OF THE HONOURABLE MADAM JUSTICE HOLMES (IN CHAMBERS) Counsel for the Petitioner: Robert W. Hunter Counsel for the Respondent: R. Alan Francis Date and Place of Hearing: July 25, 2001 Vancouver, B.C. INTRODUCTION [1] The British Columbia Coast Pilots Ltd. ask that the award of an arbitrator making a "final offer selection" be remitted to him for reconsideration. They submit that he based the Award on issues that were not raised or argued before him, and that the principles of natural justice require that the parties have an opportunity to address those issues. [2] The Pacific Pilotage Authority raises jurisdictional objections to the application and argues on the merits that the Arbitrator based the Award squarely on the evidence and arguments before him. FACTS [3] British Columbia Coast Pilots Ltd. ("the Company") is a company owned by its members who are licensed marine pilots. They board incoming and outgoing vessels to pilot them through local waters, servicing the entire coast of British Columbia except the Fraser River. They do so under service contracts with the Pacific Pilotage Authority ("the Authority"), a federal Crown corporation established by the Pilotage Act, R.S.C. 1985, c. P-14. [4] The most recent contract between the Company and the Authority ("the 1996 Contract") expired at the conclusion of its five-year term on December 31, 2000. Unable to settle the terms of a replacement contract, the parties proceeded to arbitration in accordance with the 1996 Contract. The arbitration procedures in the 1996 Contract require the parties to each submit their final offers to the Arbitrator and the Arbitrator to select one or other of the two final offers submitted. [5] The two final offers presented to the Arbitrator were far apart from each other. The Authority proposed an increase of less than 4% in the rates paid for pilot services, while the Company proposed 32.5%. [6] After reviewing the background of the matter and the evidence and submissions, the Arbitrator set out his reasons as follows: Final offer selection is just that. I have no jurisdiction to craft a settlement which reflects my judgment about the appropriate disposition of each issue. Rather, the agreement requires me to select one final offer or the other. I select the final offer of the Authority. That conclusion is based on the cost of the Company's proposal. The evidence establishes that pilots in the Western United States appear to earn substantially more than members of the Company. But there is no suggestion that this is a new development. The Company and the Authority agreed to the expired agreement. Previous agreements between the Company and the Authority establish a pattern of increases in the range of settlements reached in collective bargaining with related occupational groups. If there were a history of parity or comparability between B.C. Coast Pilots and other West Coast Pilots and parity had been lost for some reason, this would be a cogent reason to prefer the position of the Company. But that is not the case. In determining what is fair and reasonable it is useful to consider what the parties agreed upon in the past when there was no third party intervention. Having regard to that, the Authority's final offer is selected. ANALYSIS [7] The substantive issue raised is whether the award should be remitted for reconsideration because of arbitral error in its making. [8] The Company submits that the Arbitrator based his Award on considerations not addressed by the parties, in violation of the requirements of natural justice and therefore in arbitral error. Mr. Hunter, for the Company, describes the impugned considerations as the theory of replication and the history of parity. I will address them in turn. Theory of Replication [9] Mr. Hunter argues that the following passages in the Arbitrator's reasons indicate his intent to a significant degree to replicate past agreements between the parties: Previous agreements between the Company and the Authority establish a pattern of increases in the range of settlements reached in collective bargaining with related occupational groups. . . . In determining what is fair and reasonable it is useful to consider what the parties agreed upon in the past when there was no third party intervention. Having regard to that, the Authority's final offer is selected. [emphasis added] [10] He submits that the theory of replication was not raised by the parties, and the Arbitrator gave the parties no notice that his decision would be guided by it and no opportunity to call evidence and make submissions concerning that issue. This constituted a failure to observe the rules of natural justice, and therefore arbitral error. [11] The Company objects further that the Arbitrator misapprehended the evidence and submissions as to previous settlements with related occupational groups or agreements between the parties. For example, the evidence established that the pattern of previous settlements between the parties preceded the relevant settlements with related occupational groups, and so cannot have been within the contemplation of the parties to the 1996 Agreement. Also, the evidence indicated that the Authority intended to use the 1996 Agreement as a model for the post-1996 settlements with other related groups, and did not intend that agreements with the Company follow those with other groups. [12] I do not agree that the Arbitrator intended to replicate previous agreements between the parties. As Mr. Francis pointed out, it would have been impossible for him to do so in an arbitration process which limited him to selecting one of the two proposals put before him by the parties. Rather, the Arbitrator made his selection on the basis of what was fair and reasonable. In the course of doing so he considered the history of settlements between the parties and comparisons with the Consumer Price Index and contracts of other related groups, matters which were in evidence before him and were the subject of submissions. [13] This case therefore falls outside the ambit of cases such as British Columbia (Assessor of Area No. 10 - Burnaby/New Westminster) v. Carter (1996), 29 B.C.L.R. (3d) 205 (S.C.), Encal Energy Ltd. v. Viens, [1996] B.C.J. No. 326 (Q.L.)(B.C.S.C.), and British Columbia (Assessor of Area No. 10 - Burnaby/New Westminster) v. Lloyd, [2000] B.C.J. No. 1446 (Q.L.); 2000 BCSC 59, where the impugned decisions were reached by essentially a different method from those which were the subject of evidence and argument. Here, references to previous agreements with the Company and settlements with other groups were factors in the Arbitrator's consideration of what was fair and reasonable, a matter squarely within the contemplation of the parties to the arbitration. History of Parity [14] The Company submits also that the Arbitrator relied on a history of parity or comparability between Company pilots and other West Coast pilots without evidence in that area. It relies on the following passage in the Award: If there were a history of parity or comparability between B.C. Coast Pilots and other West Coast Pilots and parity had been lost for some reason, this would be a cogent reason to prefer the position of the Company. But that is not the case. [15] The Company submits that if the Arbitrator concluded that the history of parity was significant to the case he was bound to so advise the parties and give them an opportunity to be heard on the issue. [16] I do not agree that the Arbitrator based his decision on the history of parity between the Company pilots' contracts and other related groups' contracts. The Arbitrator was faced with a large disparity between the two final proposals put to him, and had before him evidence that American coast pilots earned considerably more than Company pilots. In the quoted passage he referred to the limitations on the utility of that evidence standing alone, without its historical context. The Arbitrator did not decide the case on the basis of historical parity (or lack of it) between the Company pilots and other coast pilots. He simply referred to a deficiency in the case presented to him by the Company. [17] For these reasons I cannot accept the Company's submission that the Arbitrator based his Award on considerations outside the evidence and argument presented to him. I therefore find no violation of the principles of natural justice in the making of the Award. [18] This finding renders unnecessary the resolution of the Authority's jurisdictional objection to the application. [19] The application is dismissed. "H. Holmes, J." The Honourable Madam Justice H. Holmes