COURT FILE NO.: 6/05

DATE: 20060110

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: The Corporation of the City of Hamilton Applicant -and- Hamilton Professional Fire Fighters Association, Local 288, International Association of Fire Fighters Respondent

HEARD: November 18, 2005

BEFORE: Lane, Greer and Epstein JJ.

COUNSEL: Douglas K. Gray, for the Applicant Howard Goldblatt and Alison Warrian, for the Respondent

R E A S O N S F O R J U D G M E N T

LANE J.:

[1] This is an application by the City to quash the award of Arbitrator Russell Goodfellow dated December 17, 2004 finding that, upon a true reading of the Collective Bargaining Agreement (CBA) in force between the parties, the City is required to pay the amount of the Ontario Health Premium on the employees’ behalf in respect of income earned from their employment with the City.

[2] The issue is one of the interpretation of language that has been in the CBA for some thirty years, dating from an era when residents of Ontario paid individual premiums for coverage by the Ontario version of medicare, O.H.I.P. The respondent Union and the applicant City bargained as to what amount, if any, the City would pay toward medicare coverage. The initial language required the City to pay any “premium” that might be charged for medicare, but later, about 1971, the language changed to “cost”. It was agreed that the City would pay “100% of the present and future cost of the designated hospitalization plan and medicare plan (O.H.I.P.)”. This language was embodied in Article 11.3 of the CBA.

[3] On January 1, 1990, the requirement for such premiums was eliminated and replaced by a payroll tax imposed upon employers. The City paid the tax and there was nothing for which to reimburse the employees. Nevertheless, the language in question survived the various negotiations unchanged and was still in the CBA when the situation changed again. The present government instituted the “Ontario Health Premium” which is paid by all Ontario income taxpayers, employees or not, based on global income and ranging from zero to a maximum of $900. Nothing in the legislation requires the funds so raised to be devoted exclusively to health care, although there were many statements in the House that the revenue would be so devoted, and a report is to be made to the Legislature on the use of the funds annually in the Public Accounts.

[4] The question before the arbitrator was whether the new tax was within the language of the CBA: “cost of the designated hospitalization plan and medicare plan (O.H.I.P.)”. The arbitrator held that it was within that language and the City brings this application for judicial review.

Standard of Review

[5] The applicant submitted that the applicable standard was that of correctness because the heart of the question before the arbitrator was to analyze the new statute in the context of the legislation that created O.H.I.P. to determine whether the tax represented “the cost of the designated hospital plan and medicare plan (O.H.I.P.)” This involved a pure legal question and attracted no deference from the court, whose expertise was greater. Both the expertise factor and the nature of the question factor led to a standard of correctness.

[6] The respondent submitted that the test was that of patent unreasonableness. All four factors pointed in this direction. The “final and binding” section of the Act (section 48(1)) limited though it was, signalled a large measure of deference: see the Court of Appeal decision in Lakeport Beverages[^1], at paragraph 27. The interpretation of the CBA lay at the heart of the arbitrator’s expertise; (paragraph 28). The purpose of the settlement of grievances by arbitration required by the Act was prompt, efficient and cost-effective resolution of disputes, a purpose best achieved, in the sensitive and volatile field of labour relations, with a minimum of court interference (Lakeport, paragraph 29); and the nature of the question was the interpretation of the CBA.

[7] The major difference between the parties on the standard of review is thus their different answers to the question: what was the arbitrator interpreting: the Act or the CBA? In my view, the central issue is the CBA: is the tax the “cost of the medicare plan (O.H.I.P)” within the meaning of article 11.3? No doubt the arbitrator was required to look at the Act, as he did, and consider its purpose and the extent to which the funds raised were dedicated to health and such similar issues as are raised by the applicant before us. But it was not his task to interpret whether the Act made the new premium something the City was bound to pay for the employees; the Act does not purport to have such an effect, nor did the Legislature, as a whole, exhibit any such intention, one way or the other. The Legislature simply created a tax; the question before the arbitrator was whether the language of the CBA made that tax payable by the employer on behalf of its employees. The arbitrator was interpreting the CBA, clearly within his expertise, and the Act was simply background.

[8] In my view, the standard of review on this application is that of patent unreasonableness.

Analysis of the Reasons

[9] The fundamental position of the applicant is that the arbitrator erred in finding that the new tax represented the cost of the plan, which the employer had agreed to pay. The applicant reaches this position by analyzing the Act and concluding that the CBA was entered into in the historical context that the premium then levied by Ontario was the amount of money that had to be paid in order to keep the “insurance” in force. That was the “cost” that the applicant paid for its employees. The applicant then contrasts that situation with the new tax, called the Ontario Health Premium, which is paid by all taxpayers but is not required to be paid to keep the “insurance” in force. Nor is the revenue derived from the Premium ear-marked for the O.H.I.P. plan and so it does not represent the cost of anything. In effect, as medicare is entirely funded by taxes, there is no “cost” within the meaning of the CBA.

[10] The arbitrator dealt carefully with the applicant’s submissions, but he did so from the point of view of interpreting the CBA, not the Act. He observed that the CBA expresses the applicant’s obligation in terms of “cost”, which he found to be a term broad enough to include the new Premium. He said:

On its normal and natural meaning, the word ‘cost’ refers to an expense, rather than to the manner in which that expense is incurred or the form which that expense takes. It is the existence of a charge, rather than the form or character of the charge, which those parties have chosen to address. So long as there is a cost, the Employer has agreed to pay it.

And later:

In my view, so long as it is possible to point to a distinct and separate charge – as contrasted, for example, with a general increase in taxes (even one that might be justified by reference to increased health care costs) – it matters not whether it comes in the form of a ‘tax’ under the Income Tax Act or as a ‘premium’ under the Health Insurance Act (or, indeed, whether it conforms to the common law definition of a tax set out in Re Eurig Estate, [1998] 2 S.C.R. 565, relied on by the Employer here). In any case, it qualifies within the normal and natural meaning of the word ‘cost’ as utilized by the parties in this agreement.

[11] The arbitrator also dealt with the applicant’s argument that the reference in the CBA to ‘medicare plan (O.H.I.P.)’ must be regarded as restricting the applicant’s obligations to funding only those services included within O.H.I.P. He preferred the submission of the respondent that the primary term is ‘medical plan’ and the addition of the parenthetical O.H.I.P. was not intended to confine the broader term. It was more reasonable to conclude that the parties intended to describe the obligation of the employer to fund whatever form government-funded health care benefits might take in the future and the ‘(O.H.I.P.)’ reference was a parenthetical description of the then-current model. That the employees’ obligation to contribute to the cost of medicare now appeared as the Ontario Health Premium rather than as the O.H.I.P. Premium, did not change the fact that it was a ‘cost’ as the term is used in the CBA.

[12] The City took an inconsistent position about the expressed intention of the government, in public statements rather than in the legislation, that the funds would be used to expand medicare. On the one hand it emphasized the absence of statutory commitment, but on the other submitted that the government statements showed the funds were to be used beyond the limits of O.H.I.P. The arbitrator observed, as the respondent had submitted, that even the former O.H.I.P. premium had found its way into the Consolidated Revenue Fund and so could not be traced directly into health coverage at all. As well, the language of the CBA makes specific reference to future cost, which implies the recognition that the services may change and so impact upon the cost.

Patently Unreasonable

[13] This standard of review calls for the greatest possible deference to the tribunal short of a rubber stamp. The Supreme Court has made it clear that;

Mere disagreement with the result arrived at by the tribunal does not make that result ‘patently unreasonable’. The courts must be careful to focus their inquiry on the existence of a rational basis for the decision of the tribunal and not on their agreement with it. The emphasis should be not so much on what result the tribunal has arrived at, but on how the tribunal arrived at that result.[^2]

[14] In Canada (Attorney General v. P.S.A.C.[^3], Cory J. said: “… it is apparent that if the decision the Board reached, acting within its jurisdiction, is not clearly irrational, that is to say evidently not in accordance with reason, then it cannot be said that there was a loss of jurisdiction. This is clearly a very strict test.” At page 691 of the same case, he stated:

It is not enough that the decision of the Board is wrong in the eyes of the court; it must, in order to be patently unreasonable, be found by the court to be clearly irrational.

This decision is not clearly irrational

[15] Far from being irrational, the decision under review was reached by a careful analysis of the CBA and the arguments of the parties as I have described above. One may disagree with the arbitrator, as the applicant does, but the reasons are grounded in logic and in careful analysis of the language. The arbitrator finds that the language requires the City to pay on the employees’ behalf whatever sums and in whatever form, the government decides to levy on the employees as their direct share of the cost of the medicare plan. The reasons of the arbitrator are not unreasonable, and certainly not patently so.

[16] Had I found that the standard of review was correctness, I would have concluded that the result reached by the arbitrator was indeed the correct one. The statute, correctly read, creates a tax intended to produce a flow of revenue, which, while flowing initially to the Consolidated Revenue Fund, is described as being in support of medicare. The decision before us correctly finds that this intention suffices to bring the new Premium within the ambit of the CBA language and gives meaning to the language of the CBA, which, from the change in language in 1971, was clearly intended to pass to the employer whatever “cost” the government levied upon individuals in support of the medicare plan in the future, and not merely in support of the then-existing O.H.I.P. scheme.

[17] For these reasons, I would dismiss the application for judicial review. Costs may be the subject of brief written submissions.

Lane J.

Greer J.

Epstein J.

RELEASED:

[^1]: Lakeport Beverages v. Teamsters Union Local 938; Ontario Court of Appeal August 25, 2005 [^2]: CAIMAW, Local 14 v. Paccar Canada Ltd. (1989) 1989 49 (SCC), 62 D.L.R. (4th) 437 at 453 (S.C.C.) [^3]: (1993) 1993 125 (SCC), 101 D.L.R. (4th) 673, 690 (S.C.C.)