Hamilton (City) v. Hamilton Professional Fire Fighters Association, Local 288

Hamilton (City) v. Hamilton Professional Fire Fighters Association, Local 288 Collection Decisions of the Court of Appeal Date 2006-12-08 Docket numbers C45468 Judges Feldman, Kathryn N.; MacPherson, James C.; Blair, Robert Ashley Subject Civil Decision Content DATE: 20061208 DOCKET: C45468 COURT OF APPEAL FOR ONTARIO FELDMAN, MACPHERSON and BLAIR JJ.A. B E T W E E N : THE CORPORATION OF THE CITY OF HAMILTON Applicant (Appellant) Douglas K. Gray for the appellant - and - HAMILTON PROFESSIONAL FIRE FIGHTERS ASSOCIATION, LOCAL 288, INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS Respondent (Respondent) Howard Goldblatt for the respondent Heard: September 8, 2006 On appeal from the order of the Superior Court of Justice (Divisional Court) (Justice Dennis Lane, Justice Susan E. Greer and Justice Gloria J. Epstein) dated January 10, 2006, with reasons reported at (2006), 208 O.A.C. 191. MACPHERSON J.A.: A. OVERVIEW [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 second of the appeals. It relates to a decision of the Divisional Court dated January 10, 2006 upholding an arbitral award by Arbitrator Russell Goodfellow dated December 17, 2004. [3] In my view, the decision of the Divisional Court should be affirmed. B. FACTS (i) The parties and the events [4] The Corporation of the City of Hamilton and the Hamilton Professional Fire Fighters Association, Local 288, International Association of Fire Fighters are parties to a collective agreement. Article 11.3 of the collective agreement, and its predecessors, has been in the collective agreement for approximately 30 years. It provides: 11.3 The Employer agrees to maintain and pay one hundred percent (100%) of the present and future costs of the designated hospitalization plan and medicare plan (O.H.I.P.). It is agreed that all benefits in the above plans shall remain in effect during the life of this Agreement. If any improvements in any of these plans come into effect during the life of the Agreement, they shall be passed on to the Association at the expense of the Employer. It is agreed that during the life of the this Agreement, [if] an improvement is granted [to] other Corporation employees in such plans, it will be forthwith granted [to] those covered by this Agreement at the expense of the Employer. [Emphasis added.] [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, 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 Ontario Health Premium (“OHP”). The union filed a grievance. (2) The litigation (a) The arbitral award [8] Arbitrator Russell Goodfellow heard the case simply on the basis of submissions. [9] He stated that “whether or not the existing collective agreement language requires an employer to pay the Ontario Health Premiums on employees’ behalf is first and foremost a matter of collective agreement interpretation.” He carefully reviewed the positions of the parties and concluded: On my reading of this agreement, the grievance must be upheld. As the Association was at pains to point out, the present collective agreement, unlike all of the agreements considered previously (including the agreement before Arbitrator Barrett), expresses the Employer’s obligation in the form of “cost”. In my view, this term is more than adequate to embrace the Ontario Health Premium. On its normal and natural meaning, the word “cost” refers to an expense, rather than to the manner in which that expense is incurred or the form which that expense takes. It is the existence of a charge, rather than the form or character of the charge, which these parties have chosen to address. So long as there is a cost, the Employer has agreed to pay it. (b) The Divisional Court decision [10] The employer applied for judicial review of the arbitrator’s award. [11] 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. [12] Writing for the court, Lane J. reached this conclusion: Far from being irrational, the decision under review was reached by a careful analysis of the [collective bargaining agreement] and the arguments of the parties as I have described above. One may disagree with the arbitrator, as the applicant does, but the reasons are grounded in logic and in careful analysis of the language. The arbitrator finds that the language requires the City to pay on the employees’ behalf whatever sums and in whatever form, the government decides to levy on the employees as their direct share of the cost of the medicare plan. The reasons of the arbitrator are not unreasonable, and certainly not patently so. [13] The employer was granted leave to appeal the Divisional Court’s decision to this court. C. ISSUES [14] The appeal raises three issues: (1) Did the Divisional Court err by applying the wrong standard of review? (2) Did the Divisional Court incorrectly conclude that Bill 106 creates a tax that is described as being in support of medicare? (3) Did the Divisional Court err in failing to hold that the tax imposed by Bill 106 does not represent “one hundred per cent (100%) of the present and future cost of the designated hospitalization plan and medicare plan (O.H.I.P.)”? D. ANALYSIS (1) Standard of review [15] The appellant’s 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. (2) A statute in support of medicare [16] The appellant contends that the arbitrator and the Divisional Court erred by not finding that the purpose of Bill 106 is to raise general revenues for the province. Moreover, since Bill 106 does not restrict the uses to which the revenue generated by the OHP may be put, the OHP (despite its name) is simply another tax raised for general purposes. It follows that the OHP cannot be said to be dedicated to the “medicare plan (O.H.I.P.)” contemplated by the wording of Article 11.3 of the collective agreement. [17] I note that the appellant did not make this argument before the arbitrator. In his award, the arbitrator observed: I would also note that the Employer here did not attempt to make the argument which appeared to find so much resonance with Arbitrator Samuels, viz. that the uses to which the revenues derived from the Ontario Health Premium are to be put are not legislatively restricted to health care services. [18] In any event, the appellant’s argument is identical to the one advanced by the employer in LaPointe and must, therefore, be rejected for the same reasons. (3) Bill 106 and 100 per cent of the cost of the health plans [19] The appellant contends that, even if the OHP is in support of medicare within the meaning of Article 11.3 of the collective agreement, the OHP does not represent 100 per cent of the cost of the medicare plan. Accordingly, this component of Article 11.3 is not triggered. [20] I disagree. The fact that the OHP does not represent 100 per cent of the cost of medicare is irrelevant. As the arbitrator held, the purpose of Article 11.3 is to set out the parties’ agreement that the employer would pay 100 per cent of any charge for health care services provided by the Government out of public funds (“So long as there is a cost, the Employer has agreed to pay for it.”). Thus, the reference in the collective agreement to 100 per cent of the cost refers to the employer’s obligation to the employees in the bargaining unit to pay the cost of government‑funded health care services, and not to the number or form of premiums or taxes that might be required to cover this cost. E. DISPOSITION [21] I would dismiss the appeal. [22] The respondent is entitled to its costs of the appeal which, in accordance with the agreement of counsel, I would fix at $10,000, 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.”