COURT FILE NOS.: 78/04

179/04

DATE: 20041022

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

O’DRISCOLL, LANE AND JENNINGS JJ.

B E T W E E N:

THE CORPORATION OF THE TOWN OF KAPUSKASING

Applicant

• and –

THE KAPUSKASING ASSOCIATION OF PROFESSIONAL FIRE FIGHTERS, LOCAL 1237

Respondent

John W.T. Judson, for the Applicant

Sean McManus, for the Respondent

HEARD at TORONTO: April 26, 2004

O’DRISCOLL J.:

i. nATURE OF PROCEEDINGS

1The Corporation of the Town of Kapuskasing (“Town”) has brought two (2) applications for judicial review (February 17, 2004 – Toronto – 78/04 and February 24, 2004 – London – now 179/04 Toronto). In combination, the applications seek orders:

(a) that the decision of the grievance arbitrator, William Kaplan, dated December 12, 2003, be quashed,

(b) that the deliberations of the tripartite Board of Interest Arbitration, chaired by Morton G. Mitchnick, be stayed, and

(c) that an order go declaring By-law 2725, passed by the council of the Town on September 2, 2003 be declared to be in full force and effect.

II. THE PARTIES

2The Town operates the Kapuskasing Fire Department (“Fire Department”). The respondent, the Kapuskasing Association of Professional Fire Fighters Local 1237 (“Association”) is the recognized bargaining agent for all professional (full-time) fire fighters in the Fire Department.

III. BACKGROUND AND CHRONOLOGY

3The Town and the Association have been parties to collective bargaining agreements since the mid-1950s.

4In 1991, an interest arbitration (chaired by R.D. Joyce) awarded a staffing/manning clause (Article 4 (e)), which required the Town to employ no fewer than eight (8) members of the Association.

5In 1992, the newly elected town council wished to remove the staffing/manning clause. The parties did not agree and the matter was referred to another Board of Interest Arbitration. However, before the Board could rule on the matter, town council decided to disband its entire Fire Department and replace it with a voluntary fire department. Earlier, two (2) vacancies had occurred in the Fire Department. When the Town refused to hire new fire fighters to fill those vacancies, the Association filed a grievance under the collective agreement. The Town gave notice of termination to its fire fighters/employees/members of the Association and issued severance cheques.

6The Association commenced injunction proceedings to prevent the dismissal of the full time fire fighters until the arbitration board could hear the matter.

7On June 11, 1992, Madam Justice Corbett enjoined the Town from terminating employment of its full time fire fighters until the Board of Interest Arbitration could rule on the matter. The full-time fire fighters returned to work.

8The Board of Interest Arbitration held that the old collective agreement, including the staffing/manning clause, would remain in force until January 31, 1993.

9Sometime before November 1992, town council approached the Association with a proposal regarding the staffing/manning issue. On November 16, 1992, the Town and the Association entered into a “Letter of Understanding”. The letter stated:

The Association agrees that Article 4 (e) shall be set aside during the term of this Agreement and up to and including year 2005. During this twelve (12) year period, the Association further agrees not to grieve the fact that a minimum of eight (8) permanent firefighters are not employed with the Fire Department.

At the start of the thirteenth year, the Corporation agrees that it shall be required to hire permanent firefighters to fill the requirements of a minimum of eight (8) permanent firefighters with the Fire Department.

The Association together with the Corporation agree that upon commencement of this Collective Agreement on December 1, 1992 and up to and including the year 2005, a minimum of four (4) permanent firefighters shall be employed with the Fire Department . . . . . .

This letter is deemed an addendum to the Collective Agreement and is included in the Collective Agreement, which expires on January 31, 1996, and from year to year thereafter unless otherwise amended.

10On the same date, November 16, 1992, the Town and the Association entered into a new collective agreement for the period February 1, 1993 to January 31, 1996. The letter of intent was “Appendix A” to that agreement.

11In 1996, another collective agreement was reached with a term ending on January 31, 1999. The Letter of Intent of November 16, 1992 was “Appendix A” to that agreement.

12On February 2, 2000, the Town and the Association signed a collective agreement which states:

ARTICLE 2 DURATION AND PERIOD OF THE CONTRACT

This Agreement shall be in effect from February 1, 1999 to and including the 31^st day of January 2002 and from year to year thereafter, unless termination or changes are desired by either party, in which event the party desiring the change shall serve written notice upon the other party 50 days prior to the expiration of the Agreement. The said written notice must state the reason or reasons for opening negotiations.

The Agreement remains in effect until a new Agreement has been negotiated and signed, but when the new Agreement has been signed this Agreement becomes null.

13The November 16, 1992 “Letter of Intent” was “Schedule A” to the February 2, 2000 collective agreement.

14On December 10, 2001, the Town gave to the Association the 50-day notice “as per Article 2 of the Collective Agreement”. On December 11, 2001, the Association served its “50-day notice”.

15The parties met on January 29, 2002 and March 22, 2002 and attempted to negotiate the next collective agreement but did not succeed.

16The Town and the Association, as required by law, applied for the conciliation process. The Ontario Labour Management Service, Office of Mediation appointed a conciliation officer, T. Phillips, who met with the parties on June 18, 2002. On June 25, 2002, Mr. Phillips reported that the parties were unable to effect a new collective agreement and stated that the matter in dispute should be decided by binding arbitration.

17The Town and the Association each named an appointee to the tripartite Board of Interest Arbitration and the parties’ appointees agreed on M. G. Mitchnick, Q.C. as the Board’s chair. Hearings were scheduled for September 29 and 30, 2003.

IV. RELEVANT LEGISLATION

A. Fire Protection and Fire Prevention Act, 1997, S.O. 1997, CH. 4 (FPPA)

2. (1) Every municipality shall,

(a) establish a program in the municipality which must include public education with respect to fire safety and certain components of fire prevention; and

(b) provide such other fire protection services as it determines may be necessary in accordance with its needs and circumstances.

(2) In discharging its responsibilities under subsection (1), a municipality shall,

(a) appoint a community fire safety officer or a community fire safety team; or

(b) establish a fire department.

(7) The Fire Marshall may monitor and review the fire protection services provided by municipalities to ensure that municipalities have met their responsibilities under this section and, if the Fire Marshall is of the opinion that, as a result of a municipality failing to comply with its responsibilities under subsection (1), a serious threat to public safety exists in the municipality, he or she may make recommendations to the council of the municipality with respect to possible measures the municipality may take to remedy or reduce the threat to public safety.

(9) Upon the recommendation of the Minister, the Lieutenant Governor in Council may make regulations establishing standards for fire protection services in municipalities and requiring municipalities to comply with the standards.

5. (0.1) The council of a municipality may establish, maintain and operate a fire department for all or any part of the municipality.

6. (1) No firefighter shall strike and no employer of firefighters shall lock them out.

7. (1) If no collective agreement is in effect, a bargaining agent acting pursuant to subsection 46 (1), shall give written notice to the employer of its desire to bargain with a view to making a collective agreement.

(2) The employer or the bargaining agent may give written notice of its desire to bargain with a view to making a collective agreement within the period of 90 days before the expiry date set out in the collective agreement or, if no expiry date is set out in the agreement, within the period of 90 days before the expiry date referred to in subsection 52 (1). 1997, c. 4, s. 47.

52. (1) If a collective agreement does not provide for its term of operation or provides for its operation for an unspecified term or for a term of less than one year, it shall be deemed to provide for its operation for a term of one year from the date that it commenced to operate.

(2) Despite subsection (1), the parties may, in a collective agreement or otherwise and before or after the collective agreement has ceased to operate, agree to continue the operation of the collective agreement or any of its provisions for a period of less than one year while they are bargaining for its renewal with or without modifications or for a period of less than one year while they are bargaining for its renewal with or without modifications or for a new agreement and the continuation of the collective agreement may be terminated by either party upon 30 days notice to the other party.

(3) A collective agreement shall not be terminated by the parties before it ceases to operate in accordance with its provisions or this Act without the consent of the Board on the joint application of the parties.

53. (1) Every collective agreement shall provide for the final and binding settlement by arbitration of all differences between the parties arising from the interpretation, application, administration or alleged violation of the collective agreement, including any question as to whether a matter is arbitrable, by a single arbitrator. [See Article 13, Step 5 of Collective Agreement]

54. (1) If notice has been given under section 47 by a bargaining agent for a unit of firefighters or an employer and no collective agreement is in operation,

(a) the employer shall not, except with the consent of the bargaining agent, alter the rates of wages or any other term or condition of employment or any right, privilege or duty of the employer or the firefighters until the right of the bargaining agent to represent the firefighters has been terminated.

B. Municipal Act, 2001, S.O. 2001, c. 25.

2. Municipalities are created by the Province of Ontario to be responsible and accountable governments with respect to matters within their jurisdiction and each municipality is given powers and duties under this Act and many other Acts for purposes which include,

(a) providing the services and other things that the municipality considers are necessary or desirable for the municipality;

(b) managing and preserving the public assets of the municipality;

(c) fostering the current and future economic, social and environmental well-being of the municipality; and

(d) delivering and participating in provincial programs and initiatives. 2001, c. 25, s. 2.

8. A municipality has the capacity, rights, powers and privileges of a natural person for the purpose of exercising its authority under this or any other Act. 2001, c. 25, s. 8.

9. (1) Section 8 and 11 shall be interpreted broadly so as to confer broad authority on municipalities,

(a) to enable them to govern their affairs as they consider appropriate; and

(b) to enhance their ability to respond to municipal issues. 2001, c. 25, s. 9 (1).

14. A by-law is without effect to the extent of any conflict with,

(a) a provincial or federal Act or a regulation made under such an Act; or

(b) an instrument of a legislative nature, including an order, licence or approval, made or issued under a provincial or federal Act or regulation.

V. THE CURRENT DISPUTE

18On September 2, 2003, town council passed by-law 2725 disbanding the Fire Department and replacing it with a volunteer fire department. The by-law purported to give thirty (30) days notice to the Association that the collective agreement was terminated. By-law 2725 stated, in part:

AND WHEREAS the Collective Agreement between the Corporation of the Town of Kapuskasing and the Kapuskasing Association of Professional Firefighters dated February 2, 2000 expired on January 31, 2002 and a new Collective Agreement has not been entered into;

NOW THEREFORE THE MUNICIPAL COUNCIL OF THE CORPORATION OF THE TOWN OF KAPUSKASING ENACTS AS FOLLOWS:

1. That the Municipality provide the Kapuskasing Association of Professional Firefighters with the required thirty (30) day notice that its Collective Agreement with the Town of Kapuskasing is hereby terminated effective at the conclusion of the thirty (30) day notice period.

19On September 3, 2003, the Town notified the fire fighters in writing that, pursuant to section 44 of the FPPA, their employment with the Fire Department was terminated because the Town had decided to disband the Fire Department and replace it with a volunteer fire department headed by a full time fire chief.

20On September 8, 2003, the Town sent offers to each member of the Association regarding termination of his/her employment.

21On September 9, 2003, the Association filed a grievance alleging that the Town had violated several articles of the collective agreement, namely: Article 1.1 (a) (Recognition and Membership), Article 2 (Duration and Period of the Contract), Article 4 (c) (Discharge), Article 10 (Legislative Changes), Article 14 (Unfair Discharge), Article 18 (3) (Standard Administrative Regulation), Article 22 (Change in Operation), and Appendix A (Letter of Understanding of November 6, 1992). The Association also grieved that the Town had violated section 56 (1) of the FPPA.

22The Association also sought injunctive relief in the Ontario Superior Court of Justice restraining the Town from disbanding the Fire Department and from terminating the employment of the full time fire fighters until such time as the arbitrator could hear the grievance and decide the issue.

23On September 17, 2003, the Town, through its counsel, agreed to defer disbanding the Fire Department and terminating jobs pending the decision of the grievance arbitrator.

24On September 22, 2003, a majority of the interest arbitration board, chaired by M. Mitchnick, Q.C., established to effect a collective agreement between the Town and the Association, granted a similar request by the Town regarding the interest arbitration which was scheduled to commence on September 29, 2003.

25On October 29, 2003, William Kaplan was advised that the parties had agreed to have him act as the single arbitrator to hear the grievance arbitration.

26On December 6, 2003, the grievance arbitration proceeded with an expedited hearing held at Timmins, Ontario.

27On December 12, 2003, arbitrator Kaplan rendered his award and found:

(i) the collective agreement, dated February 2, 2000, remains in effect because its term provision (Article 2: February 1, 1999 to January 31, 2002) unambiguously indicates the agreement of the parties that the collective agreement remain in effect until a new agreement has been negotiated and signed.

(ii) in addition, the statutory scheme of the FPPA provides for a “freeze” until the new collective agreement has been signed.

(iii) neither the Municipal Act nor the FPPA gives the Town the right to attempt to unilaterally break its contractual collective agreement with the Association and bring to an end the system of collective bargaining for this sector, as established by the Legislature of Ontario.

VI. ISSUES ON THE CURRENT DISPUTE

A. Is the Collective Agreement, dated February 2, 2000 still operative?

B. What is the standard of review to be applied by the Divisional Court to the Kaplan award with reference to that issue?

28The existence or subsistence of a collective agreement and/or its deemed continuance by way of statutory authority provide the foundation of arbitrator Kaplan’s jurisdiction. Without one or the other, the arbitrator has no basis for the holding of an arbitration hearing nor the making of an award. Commencing with Dayco (Canada) Ltd. v. C.A.W. Canada, [1993] 2 S.C.R. 230 and moving on through the pragmatic and functional analysis set out in Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982 at para. 28, Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226 at para 26, and Voice Construction Ltd v. Construction & General Workers’ Union, Local 92 2004 SCC 23, [2004] S.C.J. No. 2, there is no doubt that on this issue the arbitrator must be correct. Arbitrator Kaplan found that:

p. 7:

“it is absolutely clear that the collective agreement was for a specified term and that the parties openly acknowledged that term.”

“In making this finding I have concluded, in the first instance, that the collective agreement remains in effect. That conclusion is driven by the term provision of the document itself (and the term, incidentally, is acknowledged by Kapuskasing in the very by-law which it passed purporting to terminate the four full-time fire fighters). That term provision unambiguously indicates the agreement of the parties that the collective agreement remain in effect until a new agreement has been negotiated and signed. Given the provisions of the FPPA that term provision must be read and understood to mean, absent a negotiated result, the settling of the terms by interest arbitration. The statutory scheme indicates, quite apart from the agreement of the parties set out in the term provision, that there be a freeze until the new collective agreement, one way or the other, is reached. A new agreement has not been negotiated and signed (or awarded) and the terms of the current collective agreement remain in effect. Those terms include a promise by the employer not to reduce staffing below four full-time fire fighters, in return for the Association’s promise not to grieve Article 4 (e). It is noteworthy that these mutual promises end in 2005 when Article 4 (e) comes back into force.”

“Finally, quite apart from everything else, the parties entered into a legal agreement lasting until 2005 and until that time that specific negotiated legal agreement remains in full force and effect.”

29Accordingly, as there was a Collective Agreement in place, the Arbitrator had the jurisdiction to proceed with the arbitration. In reaching this conclusion, he was correct. Specifically, he was correct in finding that:

(a) that the Collective Agreement expired on January 31, 2002,

(b) the Association’s service of the notice under s. 47(2) of the FPPA triggered the “freeze” provision set out in s. 56(2) of the FPPA, and

(c) that the commitment to employ four (4) full-time Fire Fighters until 2005 continued in force.

30After finding the existence or subsistence of a collective agreement, the arbitrator concluded that,

(a) the Town had breached the term provision of the collective agreement by unilaterally declaring the February 2, 2000 collective agreement at an end,

(b) the Town had breached Article 4 (e) of the collective agreement of February 2, 2000, as modified by the Letter of Understanding, dated November 16, 1992, which contains a clear contractual commitment to maintain minimum staffing of four (4) full-time fire fighters until 2005 when Article 4 (e) comes back into effect,

(c) the Town had breached Article 10 of the Collective Agreement of February 2, 2000 by purporting to make changes to it without the agreement of the Association,

(d) the Town had breached the discharge provision of the Collective Agreement (Article 18) because none of the fire fighters were terminated for any of the reasons set out in that Article, and

(e) the Town had breached Article 22 (Change in Operation) of the Collective Agreement.

Conclusion:

31The arbitrator was correct in finding:

(a) that the Collective Agreement expired on January 31, 2002, and

(b) the Association’s service of the notice under s. 47(2) of the FPPA triggered the “freeze” provision set out in s. 56(2) of the FPPA.

32Each of these conclusions was well supported factually and logically and was reasonable in the circumstances. There is no basis on which we should interfere with them.

B. Did the town have the unilateral right to annul the Collective Agreement?

33Once again, this is a case of “is there anything to arbitrate or was the Town entitled in law to terminate the Collective Agreement and/or ignore s. 56(1) of FPPA?” Once again, the test has to be “correctness” for the reasons set out above in reference to the term provision of the February 2, 2000 Collective Agreement.

34The arbitrator found:

“Quite clearly the town council has, through the Municipal Act, been given important responsibilities in this regard. But neither that act, nor the FPPA give the employer to write [the right] to attempt to unilaterally break its contractual agreement with the Association and to purport to bring to an end the system of collective bargaining established by the Legislature for this sector. The Municipal Act does not give Kapuskasing that power; nor does the FPPA.

As the governing authorities make clear, legislation must be read harmoniously. If the Legislature had wished, through the Municipal Act or otherwise, to provide Kapuskasing with the power to unilaterally abridge any of its contractual obligations, it could have, and should have clearly and specifically set that out. It did nothing of the kind and the conclusion is inescapable that absent a specific grant of legislative power Kapuskasing, simply put, had no right to do what it did by purporting to terminate the collective agreement and its contractual commitments to the Association. If the employer wishes to make changes to the collective agreement, the place to go is the negotiating table and, failing agreement, to the Board of Interest Arbitration.”

Conclusion:

35In my view, the arbitrator was correct in holding that the Town’s discretionary authority to establish a fire department does not give it the authority to ignore or override its obligations under the Collective Agreement and under s. 56 (1) of the FPPA.

36Section 52 (3) of the FPPA provides:

A collective agreement shall not be terminated by the parties before it ceases to operate in accordance with its provisions or this Act without the consent of the Board [Ontario Labour Relations Board (s. 41 (1))] on the joint application of the parties.

37In Canadian Union of Public Employees Local 1863 (Grievor) and Town of St. Stephen, N.B. (Employer) (May 17, 2003 – J.P. Larlee, Q.C., (Arbitrator), the Town signed an agreement with the Province of New Brunswick to obtain policing from the R.C.M.P. and, thereby disbanded the municipal force. In that case, the single arbitrator did not accept the union’s submission that the Town could not “nullify” the collective agreement because s. 33.2 of the New Brunswick statute said that the “provisions of this Act and the regulations prevail in the event of a conflict or inconsistency between this Act and the regulations . . .” and other public act or private act or municipal by-law.

38Here, neither the Municipal Act nor the FPPA has such a nullifying section.

39In view of the conclusions reached with regard to the Kaplan award, there is no reason why the Board of Interest Arbitration, chaired by M.G. Mitchnick, Q.C. should not proceed.

VII. RESULT

(a) the application for judicial review (February 17, 2004) seeking an order quashing the award of arbitrator William Kaplan, dated December 12, 2003 is dismissed and the termination of employment of the four (4) full-time fire fighters is rescinded, and

(b) the application for judicial review (February 24, 2004) for an order staying the deliberations of the Board of Interest Arbitration and quashing its February 20, 2004 interim award is also dismissed.

VIII. COSTS

40If counsel are unable to agree on costs, then within fifteen (15) days of the release of these reasons, counsel for the Association shall file a draft bill of costs with brief written submissions. If so advised, counsel for the Town is entitled to file brief written submissions in response within twenty-five (25) days of release of these reasons. If so advised, counsel for the Association would then be entitled to file very brief written submissions in reply. Thereafter, costs will be fixed.

O’Driscoll J.

Lane J.

Jennings J.

Released:

COURT FILE NOS.: 78/04

179/04

DATE: 20041022

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

O’DRISCOLL, LANE AND JENNINGS JJ.