COURT FILE NO.: 273/05

DATE: 20060706

SUPERIOR COURT OF JUSTICE - ONTARIO

DIVISIONAL COURT

RE: London Hydro and Power Workers’ Union, Cupe Local 1000

BEFORE: Justices Chapnik, Ferrier and Epstein

COUNSEL: Roy C. Filion, for the Applicant, London Hydro

Linda R. Rothstein, for the Respondent, Power Workers’ Union, Cupe Local 1000

DATE HEARD: May 25, 2006

E N D O R S E M E N T

[1] London Hydro seeks to quash the award of arbitrator Paula Knopf dated June 14, 2005. In her decision, the arbitrator concluded that, upon a true reading of the collective agreement between the parties, London Hydro is required to pay the amount of the Ontario Health Premium on behalf of its employees.

[2] The award arises from one of many grievances that have resulted from the establishment of the Ontario Health Premium (OHP) in the Budget Measures Act, 2004 (No.2) S.O. 2004, c.29 or “Bill 106”. The Bill requires individuals resident in Ontario with an annual income of more than $20,000 to pay the “premium” on a rising scale reaching a maximum of $900 on a taxable income of $200,600. Employers collect the “premium” through the income tax system by way of payroll deductions. The amounts are remitted to the Treasurer of Ontario and go into the consolidated revenue fund. Nothing in the legislation requires the funds to be devoted exclusively to health care, although an annual report is to be made to the Legislature on the use of the funds.

[3] As is clear from the history of these matters in the Divisional Court, the establishment of this “premium” has possible consequences to many collective agreements that contain language negotiated when Ontario residents paid individual premiums for coverage by the Ontario version of medicare, O.H.I.P.

[4] In each case that has made its way to this Court, the foundation of the analysis has been the particular wording of the collective agreement between the parties. In this case, Article 24.01 of the collective bargaining agreement in issue (the “CBA”) provides that London Hydro pay “100% of the cost of Ontario Health Insurance Plan”.

[5] The parties inserted this language into the CBA at a time when the Health Services Insurance Act, S.O. 1968-69, c.43 required that there be contributions made to O.H.I.P. by employees, or employers on their behalf, in order to maintain health coverage. On January 1, 1990 the Employer Health Tax Act, S.O. 1989, c.76 was passed and the requirement for such contributions was eliminated and replaced by a payroll tax imposed on employers. Notwithstanding this fundamental change, Article 24.01 survived the various negotiations unchanged and was still in the CBA when Bill 106 was passed.

[6] The question before the arbitrator was whether the OHP “premium” came within the language of the CBA. The arbitrator held that it did and London Hydro brings this application for judicial review.

Standard of Review

[7] We start our examination of the standard of review by observing that in the five previous decisions involving applications for judicial review of arbitrators’ awards on this very issue, this Court has held that the standard of review was patent unreasonableness.

[8] In Lapointe-Fisher Nursing Home v. United Food and Commercial Workers International Union, Local 175/633, 2005 37348 (ON SCDC), [2005] O.J. No. 4411 (Div.Ct.), O’Driscoll J. held that “following Lakeport” patent unreasonableness is the standard of review to be applied. Similarly, in Hamilton (City) v. Hamilton Professional Fire Fighters Association Local 288, 2006 341 (ON SCDC), [2006] O.J. No. 77 (Div. Ct.), Lane J. concluded that the arbitrator was interpreting the collective agreement, a task that lay at the heart of his expertise and, citing Lakeport, he concluded that the standard of review was that of patent unreasonableness. Killeen J. in National Steel Car Limited and United Steel Workers of America, Local 7135 (27 January 2006), Hamilton, 282/05 (Div. Ct.) explicitly adopted the reasoning of O’Driscoll J. in Lapointe-Fisher and implicitly that of Lane J. and held the standard of review to be patent unreasonableness. In addressing the issue of the standard of review in the next case to follow, namely, Toronto Transit Commission v. Amalgamated Transit Union, Local 113 (February 14, 2006) (Div. Ct.), Epstein J. recognized that in the process there may be more than one standard of review. Epstein J. went on to observe that the arbitrator’s task was the same in all of these related grievances, that being, interpreting the collective agreement against the background of the relevant legislation and concluded that the overall decision had to be reviewed against a standard of patent unreasonableness. A similar view was expressed by the Court in the next decision, Ontario Public Service Employees Union v. College Compensation and Appointments Council (for Colleges of Applied Arts & Technology), (February 27, 2006) (Div.Ct.).

[9] Against this background, counsel for the Union, Ms. Rothstein, argues that the standard of review is patent unreasonableness. In addition to relying upon these previous decisions of this Court, she bases her submission on the application of the pragmatic and functional approach established in Pushpanathan v. Canada (Minister of Citizenship and Immigration) (1998), 1998 778 (SCC), 160 D.L.R. (4th) 193 (S.C.C.).

[10] Mr. Filion, on behalf of London Hydro, submits that the standard of review is correctness with respect to the arbitrator’s interpretation of Bill 106, the Income Tax Act, R.S.O. 1990, C. 1.2 and the Ontario Health Services Insurance Act, 1968-69, S.O. 1968-69, c.43 and the issue of whether the OHP is a tax or a premium. He further submits that the standard of review with respect to the interpretation of Article 24 of the CBA is reasonableness or patent unreasonableness. His overall position on this issue appears to be that set out in paragraph 25 of his factum, namely that “the Arbitrator’s interpretation of Article 24 invites little deference from the court as it is a question of law in the context of its relationship to Bill 106.”

[11] In Ontario Public Service Employees Union, the Court started its analysis of the standard of review by recognizing the significance of the four previous decisions in which the standard of review was held to be patent unreasonableness. The Court then went on in paragraph 13 to say that while the previous awards involved essentially the same issue, it was important to focus on the wording of the relevant collective agreement in assessing the nature of the question before the tribunal for the purposes of determining the standard of review.

[12] The language of the collective agreement in issue is essentially the same as that contained in the agreement before the Court in Hamilton Firefighters. In that case Lane J. held (in para. 6) that the arbitrator was interpreting the provisions of the collective agreement against a statutory backdrop as opposed to interpreting Bill 106 in the context of the legislation that created O.H.I.P. in order to determine whether the employer was obliged to pay the tax imposed by Bill 106. While the question before the arbitrator in this case was particularly close to that before the arbitrator in Hamilton Firefighters, in each of these decisions the Divisional Court has described the arbitrator’s task as one of interpretation of a collective agreement with the relevant legislation providing background. This is a task that attracts a standard of review of patent unreasonableness.

[13] The general rule is that a decision of a court of co-ordinate jurisdiction ought to be followed in the absence of a strong reason to the contrary. A strong reason requires more than mere disagreement. It requires a fundamental error such as the court failing to consider a governing statute or authority. See: Re Ward (1975), 1975 550 (ON SC), 9 O.R. (2d) 35 (Div.Ct.).

[14] There is no reason to disagree with the other panels of this Court in their determination that the appropriate standard of review is patent unreasonableness.

Analysis

[15] A patently unreasonable interpretation is “clearly irrational” or one that “borders on the absurd”. As Cory J. noted in Toronto (City) Board of Education v. O.S.S.T.F. 1997 378 (SCC), [1997] 1 S.C.R. 487 at para. 35-37, the standard of patent unreasonableness is “very properly an extremely high standard, and there must be no retreat from this position.”

[16] In a carefully worded decision, arbitrator Knopf examined the wording of the CBA against the backdrop of legislative change and concluded on page 15 of the reasons:

“when this employer agreed to pay 100% of the employees’ costs for OHIP in 1972, it was agreeing to pay 100% of the amount that the government was requiring people to pay towards the funding of OHIP. In 2004, the government again required individuals to pay an amount towards the funding of OHIP through the OHP. … Therefore if this Employer undertook the obligation to pay employees’ costs in 1977 and the language remains the same, the reintroduction of individual cost to employees seems to have revived the obligation.”

[17] In order to arrive at this conclusion, the arbitrator interpreted the bargain between the parties in terms of who agreed to pay the added “costs” of the OHP. In the face of clear evidence that none of the old O.H.I.P. premiums were specifically linked to the costs of O.H.I.P., it was reasonable for the arbitrator to reject the need for a relationship between O.H.I.P. and OHP and conclude that the agreement required the employer rather than the employee to pay the employees’ cost of OHP. This conclusion was not patently unreasonable.

[18] Moreover, there is nothing in the wording of Article 24.01 of the CBA that would cause us to come to a conclusion different than that reached in the Hamilton Firefighters case, based again, on the test of patent unreasonableness.

[19] We do not agree with counsel for London Hydro that the debate that is underway among various arbitrators about arbitrator Swan’s reasoning in the award in Lapointe-Fisher affects the reasonableness of arbitrator Knopf’s award in this case.

Conclusion

[20] The application for judicial review is therefore dismissed. If counsel cannot agree on costs, we would ask for written submissions within 20 days in accordance with the new costs rules.

CHAPNIK J.

FERRIER J.

EPSTEIN J.

DATE: July 6, 2006