COURT OF APPEAL FOR ONTARIO
FELDMAN, MACPHERSON and BLAIR JJ.A.
B E T W E E N :
ONTARIO PUBLIC SERVICE EMPLOYEES UNION
Donald K. Eady for the appellant
Applicant (Appellant)
Christopher G. Riggs, Q.C.
- and -
for the respondent
COMPENSATION AND APPOINTMENTS COUNCIL (FOR COLLEGES OF APPLIED ARTS AND TECHNOLOGY)
Leslie McIntosh for the intervenor Attorney General for Ontario
Respondent (Respondent)
Heard: September 8, 2006
On appeal from the order of the Superior Court of Justice (Divisional Court) (Associate Chief Justice J. Douglas Cunningham, Justice Michael R. Meehan and Justice Gloria J. Epstein) dated February 27, 2006, with reasons reported at (2006) 2006 5876 (ON SCDC), 265 D.L.R. (4th) 86.
MACPHERSON J.A.:
A. OVERVIEW
1Five 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.
2This is the fifth of the appeals. It relates to a decision of the Divisional Court dated February 27, 2006 upholding arbitral awards by Arbitrator Owen Shime dated October 29, 2004 and Arbitrator Kevin Whitaker dated December 15, 2004.
3In my view, the decision of the Divisional Court should be affirmed.
B. FACTS
(1) The parties and the events
4The Compensation and Appointments Council (for Colleges of Applied Arts and Technology) and the Ontario Public Service Employees Union are parties to two collective agreements, one covering academic employees and the other covering support staff employees.
5Prior to 1990, both collective agreements covering the academic and support staff units contained this provision relating to OHIP premiums:
22.01 The Colleges agree to pay one hundred percent (100%) of the billed premium of the Ontario Health Insurance Plan for the employees covered thereby, and subject to the eligibility requirements of the Plan.
6Pursuant 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].
7Interestingly, unlike in the other appeals, the OHIP provision in the collective agreements did not simply lie fallow after 1990. It was amended, for the academic employees in the 1991‑1994 agreement and for the support workers in the 2003‑2005 agreement, and now reads:
Re: Ontario Health Insurance Plan
The parties recognize that the method of funding OHIP has been changed from an individually paid premium to a system funded by an employer paid payroll tax.
If the government, at any time in the future, reverts to an individually paid premium for health insurance, the parties agree that the Colleges will resume paying 100% of the billed premium for employees.
8In 2004, the legislature enacted 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.
9After 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 two grievances.
(2) The litigation
(a) The arbitral award
10Arbitrator Owen Shime heard the arbitration relating to the bargaining unit of academic employees; Arbitrator Kevin Whitaker heard the arbitration relating to the support staff employees. Both arbitrations proceeded on the basis of documents and submissions.
11Arbitrator Shime, more than any other arbitrator in these grouped appeals, paid substantial attention to Bill 106, concluding that the OHP was a tax rather than a premium. However, he also focused on the intentions of the bargaining parties and the words in the collective agreement, both of which, in his view, supported the employer’s position:
In my view, the parties would not have contemplated or bargained for an extraordinary charge such as occurred under Bill 106. In effect, Bill 106 did not change the Health Tax system, but rather imposes a surcharge or additional cost to the existing system. The nature of the surcharge or the extraordinary amount, in my view, was not contemplated by the parties at bargaining.
Turning to the language of the letter [of understanding in the collective agreement] itself, I find that the letter does not encompass the added surcharge or extraordinary payment imposed by Bill 106. Any obligation under the letter [of understanding in the collective agreement] is informed and conditioned by the first paragraph of the letter which refers to a change from an individually paid premium to a “system” funded by an employer paid payroll tax. Thus, the first paragraph of the letter distinguishes between two different systems and the second paragraph must be read in light of that change.
The second paragraph talks about reverting to an individually paid premium and resuming paying 100% of the billed premiums. The concise Oxford Dictionary, 9th ed., defines the word “revert” as:
“return to a former state, practice, opinion”.
However, the Government did not return the existing tax or tax system to its former state, or practice, because the existing state, or practice, namely, the existing paid payroll tax continues in effect. There is no reversion or change back either in the dictionary sense, or based on the negotiating background inference and premise regarding change contained in the first paragraph of the letter. Rather, there is simply an add on, or extraordinary charge, or surcharge to the existing system. The words “revert” and “resume”, in my view, contemplate a return or changing back from a paid payroll tax system to an individually paid premium system at a similar or approximate cost. [Emphasis in original.]
12Arbitrator Whitaker also attached particular significance to the word “reverts” in the collective agreement:
There has been no change “back” to a system where the employee and not the employer is liable for the assessment. Accepting what the parties themselves have described as the essential and distinguishing features of the two types of assessment schemes, it cannot be said that there has been a reversion from what existed post‑1989 amendments to what existed before those amendments. Most significantly, the employer still carries a statutory obligation to pay assessments to the plan under the employer health tax. As a result, the changes in the manner of assessment under Bill 106 are not caught by the language of article 8.1.2. [Emphasis in original.]
(b) The Divisional Court decision
13The union applied for judicial review of the two arbitration awards.
14The Divisional Court applied the recent decision of this court in Lakeport Beverages v. Teamsters Local Union 938 (2005), 2005 29339 (ON CA), 77 O.R. (3d) 543 (“Lakeport”), and held that the standard of review of the arbitrator’s award was patent unreasonableness.
15The Divisional Court concluded that the arbitrators’ awards were not patently unreasonable:
The task of both arbitrators was to determine the meaning to be given to a clause in the collective agreements, a task central to their function. The interpretation they gave to the unique language of the agreements in question was not patently unreasonable. It is, in fact, reasonable to say that the concept of reverting back to the former system implicitly means one in which the Employer Health Tax is no longer in effect.
16The union was granted leave to appeal the Divisional Court’s decision to this court.
C. ISSUES
17The appeal raises two issues:
(1) Did the Divisional Court err by applying the wrong standard of review?
(2) Did the Divisional Court err by not quashing the arbitrators’ awards?
D. ANALYSIS
(1) Standard of review
18The appellant’s argument – namely, that the standard of review of the arbitrators’ awards should be correctness because the arbitrators were 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) The merits of the arbitrators’ award
19The appellant contends that the Divisional Court erred by endorsing, rather than declaring patently unreasonable, the interpretation given to the collective agreement language by the arbitrators. In particular, the appellant submits that the arbitrators misinterpreted the word “reverts” in the collective agreement. The reality, asserts the appellant, is that the OHP amounts to a reversion to an individually paid premium for health insurance similar to the pre‑1990 OHIP regime.
20I acknowledge that this is a possible interpretation of the provision in the collective agreement; indeed, it is a reasonable interpretation. However, in my view the arbitrators’ interpretation, which focuses on the relationship between the new OHIP and the continuing payroll tax system, is also a reasonable interpretation. In any event, it is far removed from being a patently unreasonable one.
E. DISPOSITION
21I would dismiss the appeal.
22The respondent is entitled to its costs of the appeal which 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.”
