COURT FILE NO.: 120/05

DATE: 20060214

SUPERIOR COURT OF JUSTICE - ONTARIO

DIVISIONAL COURT

RE: TORONTO TRANSIT COMMISSION v. AMALGAMATED TRANSIT UNION, LOCAL 113

BEFORE: CUNNINGHAM, A.C.J., CHAPNIK J. and EPSTEIN J.

COUNSEL: Christopher G. Riggs, Q.C., for the Applicant

Heather Alden and David A. Wright, for the Respondent

HEARD: February 3, 2006

E N D O R S E M E N T

EPSTEIN J.

[1] The Toronto Transit Commission seeks to quash the award of Arbitrator Daniel Harris dated March 17, 2005 in which he found, based on the interpretation of the collective bargaining agreement between the TTC and the union representing its employees, the Amalgamated Transit Union, Local 113, that the TTC is required to pay the Ontario Health Premium on the employees’ behalf.

[2] This is an examination of one of many grievances that have arisen as a result of 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] 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] Section 17 of the collective bargaining agreement in issue (“CBA”), provides that the TTC would pay “100% of the total contributions required for the following coverages: (a) Ontario Health Insurance Plan (O.H.I.P.)…on behalf of employees covered by the agreement”.

[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 premiums was eliminated and replaced by a payroll tax imposed on employers. Notwithstanding this fundamental change, Section 17 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 was and the TTC brings this application for judicial review.

Standard of Review

[7] We start our examination of the standard of review by observing that in three recent 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. 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 CBA, 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.

[8] Implicitly in Lapointe-Fisher and explicitly in each of Hamilton Professional Fire Fighters and National Steel Car, the finding pivotal to the conclusion that the standard of review was patent unreasonableness was 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.

[9] Mr. Riggs, on behalf of the applicant, submits that the appropriate standard of review is correctness. He argues that for two reasons we should not follow the conclusion concerning the standard of review in the three earlier decisions. First, based on the arbitrator’s analysis in the instant case, evidenced in part by the amount of time in his reasons devoted to an examination of the various relevant statutory provisions, it is clear that he was not interpreting the CBA as a “stand alone” document. Rather, he was interpreting the agreement in the light of his interpretation of Bill 106 and the Health Services Insurance Act, external legislation in which the Court has greater expertise than do labour arbitrators. Secondly, Mr. Riggs submits that the Divisional Court in the three decisions referred to above erred in its determination of the standard of review by improperly identifying the arbitrator’s task as being one of interpreting the collective agreements in issue as opposed to the statutory regime.

[10] We recognize that in the process there may be more than one standard of review. However, we have to look at the overall decision on the standard of patent unreasonableness. See: Voice Construction Ltd. v. Construction & General Workers’ Union, Local 92, 2004 SCC 23, [2004] 1 S.C.R. 609.

[11] The arbitrator’s task was the same in all of these grievances. In each of the awards that have been reviewed by the Divisional Court, the court has described it as one of interpretation of a collective agreement with the relevant legislation providing background. 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.). Notwithstanding Mr. Riggs’ able argument, 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

[12] It is in light of these previous decisions that we are required to consider the arbitrator’s award and decide upon whether it is “clearly irrational” or “borders on the absurd” as the test of patently unreasonable has been described by Cory J. 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.

[13] In his careful reasons Arbitrator Harris examined the wording of the CBA against the backdrop of legislative change and concluded that Section 17 is “broad enough in its terms to capture the Ontario Health Premium whether it is a “premium” or a “tax”. Specifically, the word “contribution” captures amounts owing by way of premium or tax. While we may not have reached this conclusion, we cannot say that it is patently unreasonable.

[14] Moreover, there is nothing in the wording of Section 17 of this CBA that would cause us to come to a conclusion different than those reached in the Lapointe-Fisher and National Steel Car, based, again, on the test of patent unreasonableness. The inclusion of the word “required” upon which the TTC relies by way of distinction is at least ambiguous in that it may refer to “required” by statute or for purposes of eligibility.

Conclusion

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

CUNNINGHAM, A.C.J.

CHAPNIK J.

EPSTEIN J.

DATE: February 14, 2006