The union appealed a Divisional Court decision quashing a labour arbitrator's award arising from layoffs following government funding cuts to municipal homes for the aged.
The Court of Appeal held that the applicable standard of review was patent unreasonableness and emphasized that a reviewing court must ask whether there is a rational basis for the arbitrator's interpretation, not search for the correct interpretation.
The arbitrator's reading of the collective agreement, treating the specific layoff clause as limiting the general management rights clause, was one the agreement could reasonably bear.
The court further held that economic hardship caused by funding reductions could not justify rewriting the parties' negotiated allocation of risk.
The appeal was allowed, the Divisional Court order set aside, and the arbitrator's award restored.
