COURT FILE NO.: 553/04

DATE: 20051017

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

O’DRISCOLL, DUNNET AND JENNINGS JJ.

B E T W E E N:

LAPOINTE-FISHER NURSING HOME

Applicant

• and -

UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, LOCAL 175/633

Respondent

D.K. Gray, Q.C. and C.L. Peters, for the Applicant

E.J. McIntyre and J.L. Stout, for the Respondent

HEARD at Toronto: May 27, 2005

O’DRISCOLL J.:

I. NATURE OF PROCEEDINGS

1The applicant, LaPointe-Fisher Nursing Home (“Employer”), on October 21, 2004, launched an application for judicial review of the award of Anne Barrett, the single Arbitrator of a policy/group grievance filed by the respondent union regarding health and welfare benefits and Article 24.01 of the collective agreement, in force between the employer and the respondent (“Union”) for the term April 1, 2003 to March 31, 2006.

2The grievance was launched on July 14, 2004. The arbitration hearing took place on September 15, 2004 and the award was released on October 6, 2004.

3The employer argued that the Ontario legislature’s 2004 legislation introduced a “tax” and that Article 24.01 did not obligate the employer to pay taxes owing by employees.

4The Arbitrator concluded that Article 24.01 of the collective agreement was wide enough and comprehensive enough to include the new premium/tax, found that the employer had breached the collective agreement and allowed the grievance.

5For the reasons that follow, I would dismiss the application for judicial review.

II. BACKGROUND

6The first collective agreement between the parties commenced in 1980 and expired on March 31, 1982. The predecessor to the present Article 24.01 was part of the first collective agreement between the parties.

7Article 24.01 in the current collective agreement states:

(a) The Employer agrees to pay 100% of the O.H.I.P. premiums for all full-time employees who are regularly scheduled to work seventy-five (75) hours in a bi-weekly pay period on a permanent base.

(b) The Employer agrees to pay 50% of the O.H.I.P. premiums for all employees who work in excess of forty-eight (48) hours but less than seventy-five (75) hours in a bi-weekly pay period on a permanent base. The employee shall pay 50% of the O.H.I.P. premiums through payroll deductions.

(c) To be eligible for (a) or (b) above, the employee must be the principle breadwinner in their family.

III. HISTORY OF ONTARIO HEALTH INSURANCE PLAN (OHIP)

8The Health Services Insurance Act, S.O. 1968-69, c. 43 provided:

(1) Every person who is a resident of Ontario is entitled to become an insured person upon application therefor to the Board or a designated agent in accordance with this Act and the regulations.

(2) Every dependent of a person who is an insured person as a member of a mandatory group or collector’s group or as a direct-pay participant is an insured person.

9Under s. 9 of the Health Services Insurance Act, a “mandatory group” was a group of employees numbering fifteen (15) or more. Under s. 10 of that act, the employer was required to deduct the premiums, which were impressed with a trust (s. 12) and remit them to the Registrar of the Plan. Each employee remained primarily responsible to pay the premium subject to any agreement or contribution or payment by the employer.

10The Health Insurance Act, S.O. 1972, c. 9, continued the same scheme but granted certain exceptions for the payment of premiums.

11The Employer Health Tax Act, S.O. 1989, c. 76 repealed the requirement to pay a premium for an individual or family coverage under OHIP. The 1989 statute replaced the premium with a payroll tax (Employer Health Tax) imposed on employers. It was a progressive payroll tax and was the responsibility of the employers and not the employees.

12Following the 1989 statute, with each new collective agreement, this applicant/employer and this respondent/union agreed to include Article 24.01. It is part of the 2003 – 2006 collective agreement.

13The Budget Measures Act, 2004 (No. 2), S.O. 2004, c. 29, amended a number of Ontario statutes including the Ontario Income Tax Act. The 2004 statute states, in part:

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.

(4) The amount of the Ontario Health Premium payable by an individual for a taxation year is as determined under section 3.1.

3.1(1) The following is the amount of the Ontario Health Premium payable by an individual for a taxation year:

1. If the individual’s taxable income for the year does not exceed $20,000, the individual’s Ontario Health Premium for this year is nil….

14The Income Tax Act was also amended by adding the following definition:

Ontario Health Premium “means the tax described in s. 2.2”

15The 2004 statute requires those with a taxable income of more than $20,000 to make payments. It is a rising scale reaching a maximum of $900 with a taxable income of $200,600.00. The premium is collected by employers through the income tax system by way of payroll deductions. The amounts collected are impressed with a trust and remitted to the Treasurer of Ontario.

16In his award of May 25, 2005, (released two (2) days before this judicial review application was argued), Arbitrator K.P. Swan, who, we were advised, is the president of the Arbitrators’ Association, in Ontario Power Generation Inc. and Power Workers’ Union, [2005] O.L.A.A. No. 312 (OPG), comments on the apprehension of those who fear that “not every cent” of the premium will be used for OHIP:

52On a practical level, however, a table created by the Employer from the Ontario Public Accounts from 1987 to 2003 makes it clear that neither the OHIP premium prior to 1989, nor the Employer Health Tax prior to 2003 nor, in every likelihood, the Ontario Health Premium after 2004, has or will come anywhere close to meeting the enormous expenditure requirements of the health care system, including OHIP. In 1987, the OHIP premium generated less than $1.7 billion, but total health expenditure exceeded $10 billion. In 2003, the Employer Health Tax generated under $3.6 billion, and total health expenditures exceeded $26 billion. The Ontario Health Premium is not even anticipated to raise the total amount of new expenditure promised in the budget for the health care system, let alone generating any surplus amounts, which might be directed to other areas of government spending.

V. STANDARD OF REVIEW

17The Supreme Court of Canada in Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92, 2004 SCC 23, [2004] 1 S.C.R. 609 per Major J. reviewed the four (4) factors to be considered in the pragmatic and functional approach and held that the appropriate standard of review of an Alberta arbitrator’s interpretation of a collective agreement was one of “reasonableness”. At paragraph [18], Major J. set out the rare circumstances where the “patently unreasonable” standard of review would be applicable.

18The Alberta legislation applicable in Voice, (supra) provides that the arbitration award is “binding” and also provides a right to apply for judicial review within thirty (30) days. In Ontario, the Labour Relations Act, 1995, s. 48(1) provides that an arbitrator’s award is “final and binding” and does not provide any statutory right to apply for judicial review.

19On August 19, 2005, the Court of Appeal for Ontario released its reasons and decision in Lakeport Beverages v. Teamsters Local Union 938, 2005 29339 (ON CA), [2005] O.J. No. 3488. The Court dismissed an appeal from the Divisional Court [2004] O.J. 895, which had granted judicial review and quashed the arbitrator’s award which held that Lakeport would not violate the collective agreement by recalling laid-off “seniority employees” as “seasonal employees” and paying them the lower seasonal employee wage rate. In giving the Court’s unanimous decision, Laskin J.A. said:

4Lakeport appeals with leave to this court. It raises two issues. First, is the applicable standard of review of the arbitrator’s decision reasonableness or patent unreasonableness? Second, on the applicable standard, did the Divisional Court err in quashing the award? For the reasons that follow, I conclude that the applicable standard is patent unreasonableness. I also conclude that the arbitrator’s decision was patently unreasonable, and therefore the Divisional Court did not err in quashing it.

20In this case the arbitrator was required to interpret the provisions of a collective agreement. Under s. 48 (1) of Ontario’s Labour Relations Act, S.O. 1995, c. 1, his decision is “final and binding”. For many years, both the Supreme Court of Canada and this court have held that where Ontario labour arbitrators are called on to interpret provisions of a collective agreement their decisions are reviewable on a standard of patent unreasonableness. See for example: Volvo Canada Ltd. v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (U.A.W.) Local 720, 1979 4 (SCC), [1980] 1 S.C.R. 178; Dayco (Canada) Ltd. v. National Automobile, Aerospace and Agricultural Implement Workers Union of Canada (C.A.W.-Canada), 1993 144 (SCC), [1993] 2 S.C.R. 230; Ajax (Town) v. National Automobile, Aerospace and Agricultural Implement Workers Union of Canada (C.A.W.-Canada), Local 222, 2000 SCC 23, [2000] 1 S.C.R. 538; Huron (County) Huronview Home for the Aged v. Service Employees’ Union Local 210, (2000), 2000 16893 (ON CA), 50 O.R. (3d) 766 (C.A.), leave to appeal to S.C.C. refused [2000] S.C.C.A. No. 646. Both courts have so held when there were only two standards of review - correctness and patent unreasonableness - and after the Supreme Court’s decision in Canada (Director of Investigation and Research) v. Southam Inc., 1997 385 (SCC), [1997] 1 S.C.R. 748, in which the court introduced the intermediate standard of reasonableness.

21In Canada Safeway Ltd. v. Retail, Wholesale and Department Store Union, Local 454, 1998 780 (SCC), [1998] 1 S.C.R. 1079 at para. 58, Cory and McLachlin JJ. explain the rationale for this highly deferential approach:

This high degree of curial deference is essential to maintain the integrity of the system which has grown to be so efficient and effective in the resolution of disputes arising in the sensitive field of labour relations. The nature of labour disputes requires their speedy resolution by expert tribunals.

22Last year, however, in two cases from Alberta – Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92, 2004 SCC 23, [2004] 1 S.C.R. 609 and Alberta Union of Provincial Employees v. Lethbridge Community College, 2004 SCC 28, [2004] 1 S.C.R. 727 – the Supreme Court adopted a standard of reasonableness instead of patent unreasonableness for reviewing decisions of labour arbitrators acting under Alberta’s Labour Relations Code, S.A. 1988, c.L-12, and the Act as amended by R.S.A. 2000, c.L-1.

23Not surprisingly, the union argues that the arbitrator’s decision should be quashed whatever deferential standard is applied. However, the union also contends that these two Alberta cases, though decided in the context of a different legislative regime, signal a less deferential approach to the review of Ontario labour arbitration decisions. It contends that we should apply a standard of reasonableness for reviewing the arbitrator’s award.

24Support for the union’s contention may be found in the Divisional Court’s recent judgment in Elementary Teachers’ Federation of Ontario v. Toronto District School Board, 2004 1652 (ON SCDC), [2004] O.J. No. 2886, decided shortly after the two Alberta cases. In Elementary Teachers the Divisional Court held that the proper standard of review of an arbitrator’s decision interpreting both a collective agreement and the Ontario Employment Standards Act is reasonableness. Writing for the court (at para. 13), Swinton J. read Voice Construction as a sign that the Supreme Court “appears to have departed from the long line of cases in which the standard for review of an arbitrator’s interpretation of the collective agreement was patent unreasonableness”.

25Lakeport, on the other hand, submits that Voice Construction and Lethbridge Community College have not changed the standard of review in Ontario, certainly not the standard for reviewing this arbitrator’s decision. It argues that the Alberta cases can be distinguished on the basis of the different judicial review provisions of the Alberta and Ontario statutes. I agree with Lakeport’s submission.

26The Alberta cases reaffirmed - if reaffirmation were needed – that the overriding question is the “extent of judicial review that the legislature intended for a particular decision of the administrative tribunal”. The Alberta cases also reaffirmed that to answer that question the court must invoke a “pragmatic and functional approach” and apply the following four well-established contextual factors: the presence or absence of a privative clause or a statutory right of appeal; the expertise of the tribunal relative to the expertise of the reviewing court on the questions at issue; the purpose of the legislation and of the particular provision; and the nature of the question at issue. To determine the legislature’s intent, all four factors must be taken into account; no one factor is determinative.

27The application of these four factors shows a legislative intent to maintain a highly deferential standard of review of Arbitrator Stephens’ decision. First, as has historically been the case in Ontario, his decision is protected by a reasonably strong privative clause. Section 48 (1) of the Labour Relations Act, supra, provides for “final and binding” arbitration and the Act contains no express right of judicial review or appeal. Although not a full privative clause, s. 48 (1) does signal a large measure of deference to the arbitrator’s decision.

28Second, the interpretation of a provision of a collective agreement lies at the heart of an arbitrator’s expertise, an expertise ordinarily greater than that of courts. This factor, therefore, weighs heavily in favour of deference.

29Third, the purpose of s. 48 (1) of the Act - the grievance and arbitration provision - is to secure the prompt, efficient and cost-effective settlement of disputes arising out of an interpretation and application of a collective agreement. This purpose can best be achieved with minimal interference from the courts. The issue in this case is precisely the kind of issue that warrants minimal interference. The arbitrator was required to interpret the relevant provision of the collective agreement, and thus was required to decide a question squarely within his jurisdiction. In Toronto (City) Board of Education v. Ontario Secondary School Teachers’ Federation, District 15, 1997 378 (SCC), [1997] 1 S.C.R. 487 at paras. 35-7, Cory J. emphasized the reasons why a highly deferential standard of review should be applied to an arbitrator’s interpretation of the provisions of a collective agreement:

The field of labour relations is sensitive and volatile. It is essential that there be a means of providing speedy decisions by experts in the field who are sensitive to the situation, and which can be considered by both sides to be final and binding.

In particular, it has been held that the whole purpose of a system of grievance arbitration is to secure prompt, final and binding settlement of disputes arising out of the interpretation or application of collective agreements. . . This is a basic requirement for peace in industrial relations, which is important to the parties and society as a whole. . .

It was for these reasons that PSAC No. 2 stressed that decisions of labour tribunals acting within their jurisdiction can only be set aside if they are patently unreasonable. That is very properly an extremely high standard, and there must not be any retreat from this position.

30Finally, the nature of the question in issue in this case points to a highly deferential standard of review. Here, the arbitrator was required to apply his interpretation of the provisions of the collective agreement to the facts of this case. His decision has little precedential value. It did not require him to determine a question of law or fact going to his jurisdiction, a question of law or fact concerning the interpretation of an external statute, or a general question of law.

31On my assessment of the four contextual factors, patent unreasonableness remains the appropriate standard of review.

32What then of the Alberta cases? I think that they are largely explained by the relatively weak privative clause in the Alberta statute. Section 142 of the Alberta Labour Relations Code states merely that an arbitrator’s decision is “binding”, and s. 143(2) expressly stipulates that an arbitrator’s decision is open to judicial review if notice is filed with the court within thirty days after the date of the award. By contrast, although the “final and binding” clause in s. 48 (1) of the Ontario statute is not the strongest privative clause imaginable, it does provide more protection than its counterpart in s. 142 of the Alberta Code. And the Ontario Act has no provisions comparable to s. 143(2) of the Alberta Code expressly permitting judicial review.

33I conclude that the Supreme Court’s decisions in Voice Construction and Lethbridge Community College do not alter the standard of review applicable to the arbitrator’s decision in this case. The standard remains patent unreasonableness. In my view, until we have a clear statement from the Supreme Court of Canada, we should not depart from a highly deferential standard of review of decisions of Ontario labour arbitrators – a standard of review that harkens back to Dickson J.’s seminal decision in Canadian Union of Public Employees, Local 963 v. New Brunswick Liquor Corp., 1979 23 (SCC), [1979] 2 S.C.R. 227, and that has served the labour relations community in this province so well for over a quarter of a century.

34I am comforted in this conclusion by the similar views of David Mullan, one of the country’s pre-eminent administrative law scholars. Professor Mullan has recently written that it would be “premature to lament the passing of an era of deference”. “More particularly”, he wrote, “I believe that that cannot be justified at least until such time as the Court applies a reasonableness standard of review to the interpretation of a collective agreement by a labour arbitrator in another jurisdiction and not subject to the kind of explicit review regime established in the Alberta Labour Relations Code”. See David J. Mullan, “The View From North America: A Canadian Perspective on Three Troubling Issues” 17 Can. J. Admin. L. Prac. 167 at 188-90; see also Mullan, “Voice Construction - One Swallow Does Not a Summer Make?” (2004) 11 C.L.E.L.T. 303.

62In my view, the collective agreement does not permit Lakeport to recall seniority employees as seasonal employees. The arbitrator’s interpretation of the agreement, permitting it to do so, was patently unreasonable. I would therefore dismiss the appeal.

20Following Lakeport, supra, patent unreasonableness is the standard of review to be applied to Arbitrator Barrett’s award.

VI. THE ONTARIO POWER GENERATION INC. AND POWER WORKERS’ UNION AWARD (SUPRA)

21One of the arbitration awards quoted to Arbitrator Swan at the December 9, 2004 hearing was the award under review in this case. Arbitrator Swan said:

29The next award is Re Lapointe Fisher Nursing Home and United Food and Commercial Workers Union, Local 175/633, October 6, 2004 (A. Barrett). In that case, the collective agreement provided that the employer was to pay 100% of “the OHIP premiums” for full-time employees, and 50% for part-time employees. This language, it will be observed, is very much like that which I have to interpret.

30Arbitrator Barrett, after considering the legislative history of public health care in the province, agreed that the language of the collective agreement was broad enough to cover the Ontario Health Premium.

5…The provisions which now appear in the collective agreement [of OPG] have therefore been in effect between these parties for more than 25 years in precisely the language that appears today, and the existence of materially similar provisions requiring the Employer to pay 100% of premiums for public health insurance programs has existed virtually since the introduction of those programs in this province. The Union asserts that the parties have renegotiated language providing for 100% payment for public health insurance by the Employer in 17 rounds of contract negotiations.

22In OPG, Arbitrator Swan stated:

24A number of arbitrators have dealt with similar grievances under different collective agreements, producing varying results.

Arbitrator Swan reasoned as follows:

44In my view, the correct way to look at this issue is to consider what reasonable parties in the position of the Employer and the Union must have intended when they renegotiated the language into the current collective agreement. Obviously, that renegotiation took place in a universe where there was no existing OHIP premium, and where OHIP was funded by the employer health tax. At the same time, however, the language chosen must have been informed by the fact that at one time there had been an OHIP premium. In my view, reasonable parties in their position would have intended that, should some government initiative in the future require that a payment for OHIP-insured services be required of individual employees, the Employer would be responsible to pay that on behalf of the individual employees, provided that it was materially and reasonably similar to the OHIP premium payable prior to 1989. If the parties had intended that only the reinstatement of the previous OHIP premium in identical terms would trigger the clause, they could have expressed that in the language chosen, as did the parties in the two College Compensation and Appointments Council cases. Rather, they continued to use language which in general required payment of 100% of the “premiums” for OHIP.

Arbitrator Swan further stated:

55In deciding this matter, I have not considered some of the factors which seem to have attracted the attention of some of my fellow arbitrators. As discussed, I think the distinction between premiums and taxes has little bearing on the interpretation of the collective agreement, since both the OHIP premium and the Ontario Health Premium are hybrids of those pure legal concepts, and both are far closer in nature to taxes than premiums. ….

Arbitrator Swan concluded:

56Having regard to all of the submissions made to me, and to the considerable amount of energy exerted by other arbitrators in attempting to come to grips with similar issues, I have come to the conclusion that reasonable parties in the position of the present Employer and Union, negotiating for the current collective agreement, must have intended that the language which they used would cover not just the particular OHIP premium in existence before 1989, but any materially and reasonably similar premium to be established in the future. In my view, the OHIP premium was a tax contributed to the consolidated revenues of the province with the intention that it be used to fund the OHIP health care system. I think that the Ontario Health Premium is materially and reasonably similar to that, and the distinctions which are made in how the amount is calculated and how deduction and payment take place are distinctions that do not create a sufficient difference between the two to render the collective agreement language inapplicable to the Ontario Health Premium.

57In the result, therefore I allow the grievance, and determine that the Employer is required by the collective agreement to pay the Ontario Health Premium on behalf of the employees in these bargaining units to the extent that the Premium is based on earnings with the Employer only.

VII. CONCLUSION

23I find the reasoning of Arbitrator Swan to be logical, reasonable and compelling. The wording in OPG is similar to Article 24.01. Also similar is the history of how the parties, over many years, in each case, viewed the respective clauses. In OPG and here, the employer and the union agreed to continue to include in successive collective agreements an employer’s obligation to pay OHIP premiums of employees when there was no OHIP premium in existence, but rather an employer health tax. However, the parties agreed that should future legislation require payment by the individual employees, the employer would again be required to pay for this employee benefit. Arbitrator Swan was interpreting the words of a collective agreement. Likewise, Arbitrator Barrett was interpreting a collective agreement.

24Applying the patently unreasonable standard of review, as set out in Lakeport, supra, it cannot be said that the applicant has met that benchmark. If it were to be found that the less deferential standard of reasonableness, as set out in Voice, supra, applied, again, the applicant has failed to meet that benchmark because it cannot be said that Arbitrator Barrett’s award is anything short of reasonable.

VIII. RESULT

25The application for judicial review is dismissed.

IX. COSTS

26When judgment was reserved, counsel advised that they were agreed that the successful party should receive $4,000.00 fixed costs.

27The appellant, accordingly, shall pay $4,000.00 for fixed costs to the respondent union within thirty (30) days of the date of release of these reasons.