COURT FILE NO.: 559/04

DATE: 20051108

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CARNWATH, BELLEGHEM AND SWINTON JJ.

B E T W E E N:

DOMTAR INC.

Applicant

• and -

COMMUNICATIONS, ENERGY AND PAPERWORKERS UNION OF CANADA, LOCAL 31-X and BELINDA KIRKWOOD

Respondents

Richard J. Charney, for the Applicant

Douglas J. Wray, for the Respondent Union

HEARD at Toronto: September 23, 2005

REASONS FOR JUDGMENT

SWINTON J.:

1Domtar Inc. (“the company”) seeks judicial review of an arbitration award of arbitrator Belinda Kirkwood dated June 23, 2004. The issue in this application is whether the arbitrator erred when she held that the collective agreement between the parties violates the Ontario Human Rights Code, R.S.O. 1990, c. H. 19 (“the Code”) because it allows for differences in the benefits provided to employees in receipt of benefits under the Workplace Safety and Insurance Act, 1997, S.O. 1997, c. 16, Sch. A (“WSIA”) and those receiving long-term disability benefits (“LTD”) under the collective agreement.

The Collective Agreement Provisions

2Article 14 of the collective agreement provides a number of health and welfare benefits to employees. Pursuant to Article 14.01, the company has agreed to maintain and pay the premium cost of a weekly indemnity insurance plan, which is intended to provide income protection for the initial period that an employee may be unable to work due to a non-work-related disability. During the first year of disability, employees off work due to non-compensable injury or illness are entitled to collect a weekly indemnity benefit equivalent to 70% of their income to a maximum of $510.00 per week.

3Article 14.02 provides LTD benefits, which give income protection to employees if they are unable to work due to a non-work-related injury or illness for a longer period of time. Pursuant to Article 14.06(6)(a), employees are only entitled to collect LTD benefits for a period equivalent to their period of employment with the company. Pursuant to Article 14.02(5), employees eligible for LTD benefits may receive 55% of their monthly earnings to a maximum monthly payment of $2,100.00.

4Employees who are unable to work due to a work-related injury or illness are covered under the WSIA and receive benefits in accordance with the provisions of that statute. They are entitled to collect up to 85 % of their net average earnings before injury, and there is no set maximum. As well, the WSIA benefit is subject to an annual adjustment for cost of living increases.

5Article 14.04, the article in issue in this proceeding, read as follows in the September 1, 1998 to August 31, 2000 collective agreement (the relevant time period):

14.04 MEDICAL, SURGICAL, DRUG AND HOSPITAL CARE PLANS – The Company will pay the premium for the Liberty Health Drug Plan and Semi-Private Hospital Care Plan coverage for all active employees during the term of this Agreement.

The Company contribution to employees who are off work due to a Worker’s Safety and Insurance claim or a Weekly Indemnity claim will be continued for a period of up to twenty-four (24) months.

The Company contribution to employees who are off work due to a Long Term Disability claim will be continued for the period of the disability.

6The parties agreed to this language in the 1995 round of collective bargaining. In the previous collective agreement (September 1, 1992 to August 31, 1995), Article 14.04 did not include any extended coverage for employees receiving LTD benefits.

The Grievance and the Arbitration Award

7The grievor, Claude Minor, was hired by the company in June, 1978. Starting in July, 1982, he suffered a number of work-related injuries for which he received workers’ compensation benefits. In or about March, 1998, he was re-injured, and he has been off work since that time. The Workplace Safety and Insurance Board (“WSIB”) has determined that he is permanently disabled, and he is in receipt of benefits under the WSIA. In accordance with Article 14.04 of the collective agreement, he was covered for drug and hospital benefits for two years. In March 2000, his coverage was terminated.

8The union filed a grievance on his behalf, claiming the employer had discriminated on the basis of disability, contrary to the Human Rights Code (“the Code”), when it terminated his drug and hospital benefits.

9The matter proceeded to arbitration on the basis of an agreed statement of facts and written argument. The arbitrator determined that the distinction in the entitlement to drug and hospital benefits between those receiving LTD benefits and those covered by the WSIA was discriminatory, and thus a violation of the Code.

10She found that the grievor was disabled within the meaning of s. 10(1)(e) of the Code, as he was in receipt of benefits under the WSIA. In her view, in determining whether there had been discrimination, the focus should be on the purpose of the plan set out in Article 14.04 and its distribution of benefits, and not on the purpose of the LTD plan or WSIA benefits (p. 6 of the award). In her words:

The issue is whether the employer’s obligations to contribute and provide coverage for its employees for medical, surgical, drug and hospital care as provided in Article 14.04 are discriminatory, in particular in its application to the treatment of the grievor. Therefore it is not the purpose of the LTD and the WSIB that governs whether the employer discriminated against the grievor, but the purpose of the plan set out in Article 14.04 and its distribution of benefits.

11The arbitrator concluded that the grievor was at a disadvantage when compared with those disabled outside the employment context and who had service in excess of 24 months (p. 7). She so concluded because the WSIA provides benefits to the employee only for his compensable injuries, but not for his non-compensable injuries nor for illnesses of his dependents, unlike the employer’s plans.

12She also held that the purpose of the plan in Article 14.04 was to provide medical benefits to employees who are disabled, injured or ill and unable to work. She then stated (at p. 8):

When the level of benefits as set out in Article 14.04 and Schedule E of the collective agreement is applied to these two groups, the level of benefits conferred upon those who are in receipt of WSIA benefits is less than those who do not [sic]. Therefore, the grievor, as an employee on compensable benefits under the WSIA, and as part of the category of person protected by the Code, has received lesser benefits and has been discriminated against. ….

Therefore the grievor was part of two similarly situated groups of employees who are disabled for the long term, is being treated differently based on the prohibited ground under the Code of disability.

13She then held that the union should not be responsible for any remedy, even though the discriminatory provision was in the collective agreement. Finally, she ordered that the grievor was entitled to benefits in the same fashion as those disabled employees receiving LTD, retroactive to the discontinuation of his benefits.

The Standard of Review

14Both parties agreed that the standard of review is correctness, given that the arbitrator was required to determine whether Article 14.04 was contrary to the Code. Given the decision of the Court of Appeal in Ontario Nurses’ Association v. Orillia Soldiers Memorial Hospital (1999), 169 D.L.R. (4th) 489 at para. 24, correctness is the proper standard.

Analysis and Conclusions

15The arbitrator properly held that the governing authority in this case is Battlefords and District Cooperative Limited v. Gibbs, [1996] 3 S.C.R. 566. The Supreme Court of Canada held that an income replacement plan offered by an employer was discriminatory because it gave lesser benefits to those with mental disabilities than those with physical disabilities. Sopinka J., writing for the majority, outlined the proper way to determine the appropriate group with which to compare the mentally disabled (at para. 33):

The first step is to determine, in all the circumstances of the case, the purpose of the disability plan. Comparing the benefits allocated to employees pursuant to different purposes is not helpful in determining discrimination – it is understandable that insurance benefits designed for disparate purposes will differ. If, however, benefits are allocated pursuant to the same purpose, yet benefits differ as the result of characteristics that are not relevant to this purpose, discrimination may well exist.

Again, at para. 38 he stated,

As set out in Brooks, in determining whether an insurance plan discriminates, it is first necessary to determine the true character or underlying rationale of the plan in the circumstances of the particular case. As noted above, discrimination should not be found on the basis of a comparison between the benefits given to employees pursuant to different insurance purposes.

16The Court held that the purpose of the plan was to provide income replacement for those unable to work because of disability. The plan discriminated on the basis of mental disability, since individuals with mental disabilities received lesser benefits under the plan than those with a physical disability.

17In this case, the company takes the position that the arbitrator erred by focussing on the narrow terms of Article 14.04 and failing to consider this provision in the overall context of Article 14. Moreover, the arbitrator failed to consider that there is a separate scheme for work-related injuries with an entirely different approach to benefits, which is statutorily mandated.

18The union takes the position that the arbitrator rightly found that the proper comparison is between those with work-related injuries who are on WSIA benefits and those with non-work-related injuries who are on LTD. The union submits that the two groups are similarly situated with respect to the need for the benefits.

19This is not a case like Gibbs, above, where a sick leave plan provides different income replacement benefits to disabled employees depending on the type of disability affecting them. In that case, and in the earlier case of Brooks v. Canada Safeway Ltd. (1989), 59 D.L.R. (4th) 321 (S.C.C.), the Supreme Court was concerned both about the different benefits provided to different groups under the employer’s sick leave plan, as well as the adverse impact of lesser benefits on a group that was historically disadvantaged – the mentally disabled in Gibbs and pregnant women in Brooks. Similarly, in Re Ontario Jockey Club and Hotel Employees, Restaurant Employees Union, Local 75 (Adams) (2000), 91 L.A.C. (4th) 146, there was discrimination in the employer’s plan against those with gradual onset injuries, given that their income replacement needs were the same as those injured in an accident, and given the possible suspicion of malingering which might underlie the distinction.

20Since Gibbs, the Supreme Court of Canada has further examined the meaning of equality and discrimination in the context of interpreting s. 15(1) of the Canadian Charter of Rights and Freedoms in Law v. Minister of Human Resources Development (1999), 170 D.L.R. (4th) 1. The Court emphasized that an individual’s right to equality is infringed where he or she is treated differently on the basis of a personal characteristic, in such a way that human dignity is negatively affected (at para. 84). As in Gibbs, the concern is not just differential treatment of members of a group.

21In Article 14.04, the company agreed to pay premiums for the drug and hospital plans for active employees, for those injured at work and for those whose injury is not work-related. However, the categories of employees are covered under the plans for different time periods. Premiums are paid for active employees during the collective agreement, while the premiums are paid for up to 24 months for those receiving WSIA benefits or weekly indemnity benefits. For those receiving LTD benefits, premiums are paid for the period in which employee receives such benefits (which, pursuant to Article 14.02(6)(a), turns on the length of the individual’s employment with the company).

22The fact there is differential treatment between those in receipt of WSIA benefits and LTD benefits is not discrimination per se. Indeed, counsel for Domtar referred to three arbitration awards which have held that it is not discriminatory to provide differential benefits for those with work-related versus non-work-related disabilities (Re Messier-Dowty Inc. and International Association of Machinists and Aerospace Workers, Local 905 (1999), 80 L.A.C. (4th) 87 (Knopf) at p. 99; Re Toronto Real Estate Board and CEP, Local 87-M (1998), 76 L.A.C. (4th) 90 (Albertyn); and British Columbia v. British Columbia Government and Service Employees’ Union (Sheshka Grievance), [2002] B.C.C.A.A.A. No. 199 (Lanyon)).

23The issue here is whether the differential treatment caused disadvantage to those in receipt of WSIA benefits in a manner that is discriminatory. The arbitrator compared two groups of employees – those receiving WSIA benefits who had worked for the company for more than two years and those receiving LTD benefits and who had worked for the company for more than two years. In my view, the arbitrator erred in making that comparison and failing to consider the two groups treated differently under Article 14.04 – those with work-related injuries and illnesses who are in receipt of WSIA benefits and those with non-work-related injuries or illnesses who are covered by the private insurance scheme. Moreover, she erred in focussing on the allocation of one benefit to those on WSIA and LTD supported absences without considering how the other elements of the two schemes balance out.

24In oral argument before this Court and in its factum, the company highlighted in some detail the difference between the WSIA scheme and the LTD Plan. It is noteworthy that no such detailed comparison was presented to the arbitrator. It is true that she could have determined the benefits payable under the LTD plan from an examination of the collective agreement. While the company submits that she could have taken judicial notice of the benefits under the WSIA by reviewing the statutory scheme, the company made no effort to bring these differences to her attention in their written submissions, and therefore, the significance of comparing the two schemes may not have been apparent. Indeed, the arbitrator stated (at p. 7 of the award),

In the case before me, I have no evidence of any comparability between the position an employee might find himself or herself in either situation.

25A comparison of the two regimes reveals important differences between them. In general, employees in receipt of WSIA benefits are better off than individuals who receive LTD benefits. The LTD benefits are payable only for a period equivalent to the time that the individual worked for the company, while WSIA benefits are payable until the loss of earnings ceases or to age 65.

26Moreover, the amount of benefits payable is different. While in receipt of weekly indemnity benefits, the employee can collect 70% of income to a maximum of $510.00 per week, while on LTD, the benefit is 55% of monthly earnings to a maximum monthly payment of $2,100.00. In contrast, employees receiving WSIA benefits would be entitled to collect up to 85 % of net average earnings before injury, and there is no set maximum. As well, the WSIA benefit is subject to an annual adjustment for cost of living increases, while increases in the private benefits are the subject of negotiations.

27Pursuant to s. 25(1) of the WSIA, the employer must continue to pay for the employee’s benefits for a period of 12 months. Under this collective agreement, the company has continued to pay those benefits for 24 months. The fact that the employer has continued to pay for drug and benefit plans for a longer period for some of those in receipt of LTD does not support the conclusion that the company has discriminated against those in receipt of WSIA benefits.

28A comparison of the two groups – those in receipt of WSIA and LTD benefits – shows that they have different income replacement needs. Although recipients of WSIA benefits may have a shorter entitlement to drug and hospital benefits in certain circumstances, they also have significant advantages over those on LTD in other respects. When the broader context is considered, one can not conclude that those in receipt of WSIA benefits are disadvantaged, nor have they been the subject of discrimination within the meaning of the Code, merely because they receive different coverage by the employer under the drug and hospital plans.

29Therefore, the arbitrator erred in holding that Article 14.04 discriminated on the basis of disability. The application for judicial review is granted, and the arbitration award is quashed.

30Costs are awarded to the applicant company fixed in the amount of $4,000.00.

Swinton J.

Carnwath J.

Belleghem J.