COURT FILE NO.: 366/05

DATE: 20070710

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

LANE, BROCKENSHIRE AND JENNINGS JJ.

B E T W E E N:

CANADIAN UNION OF PUBLIC EMPLOYEES, LOCAL 79

Applicant

• and -

CITY OF TORONTO and ROBERT J. HERMAN

Respondents

Douglas Wray, for the Applicant

Robert Fredericks, for the Respondents, City of Toronto and Robert Herman

HEARD: June 1, 2007

Jennings J.

REASONS FOR JUDGMENT

BACKGROUND

1The applicant, CUPE Local 79 seeks judicial review of the September 12, 2005 grievance award of Arbitrator Herman, who concluded that the collective agreement between the parties did not require the respondent City to pay the Ontario Health Premium (the OHP) for its full-time employees represented by the Union. The applicant asks for an order in the nature of certiorari quashing the award and remitting the matter to another arbitrator. For the reasons that follow, I would dismiss the application.

FACTS

2The applicant Union represents the full-time employees of the City. The collective agreement between the parties provides for health care benefits in Article 12.01(a), as follows:

Extended Healthcare Benefits

The City will provide for all employees by contract through an insurer selected by the City an Extended Health Care Plan, which will provide extended health care benefits. The City shall pay One Hundred per cent (100%) of the premiums, which will include any premiums payable under The Health Insurance Act, R.S.O. 1990, as amended. (emphasis added).

3The City refused to pay the OHP for the employees represented by the applicant, taking the position that the OHP was not “a premium” covered by Article 12.02(a). The Union grieved that decision.

ANALYSIS

4In 1989, when the Legislature enacted the Employer Health Tax Act, the requirement that OHIP premiums be paid by Ontario residents was eliminated, to be replaced by a payroll tax on employers. This tax made irrelevant a provision in many collective agreements requiring employers to pay OHIP premiums on behalf of their employees.

5In 2004, the Legislature enacted the Budget Measures Act, 2004 (No. 2) S.O. C-29 (“Bill 106”) which amended the Ontario Income Tax Act to provide that individuals shall pay a tax based on personal taxable income for each taxation year to be called the Ontario Health Premium. That in turn gave rise to a multitude of grievances that arose when employers continued to pay the employer health tax, but refused to pay the OHP. On the hearings of those grievances, many arbitrators accepted the Union’s position that employers were required to pay the OHP, and many others accepted the Employer’s position that they were not, depending on the language of the particular collective agreement. Many of the arbitration awards went up to the Divisional Court on applications such as this one seeking judicial review of the arbitrator’s award.

6Five such decisions of the Divisional Court, all of which upheld the arbitrator’s awards, were appealed to the Court of Appeal and were heard together by the Court, which released decisions in each case on December 8, 2006. In each case, reasons were delivered by MacPherson J.A. on behalf of the Court.

7Those decisions made it clear that the standard of review with respect to decisions of labour arbitrators interpreting collective agreements was that of patent unreasonableness.

8The first and the lead case decided by the Court of Appeal, in the group to which I have referred, was that of LaPointe – Fisher Nursing Home v. United Food & Commercial Workers International Union, Local 175/633 (2006), 83 O.R. (3d) (417) (C.A.). The section of the agreement under review provided, in part, that:

… The employer agrees to pay 100 percent of OHIP premiums for all full-time employees…

9In her decision on the arbitration, Arbitrator Anne Barrett approved of the approach taken by Arbitrator Swan in Ontario Power Generation Inc. v. Power Workers’ Union (Health Premium Grievance) (2005), O.L.A.A. No. 312, where Arbitrator Swan said, in part:

In 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 negotiated 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.

10Arbitrator Barrett held, as did Arbitrator Swan that the OHP was materially and reasonably similar to the OHIP premium and would have been intended by the parties to have been covered in the language they chose to employ in their agreement.

11Referring to the reasoning of Arbitrator Swan, which I have set out, Justice MacPherson said at paragraph 40 of his decision in LaPointe, (supra):

I am sympathetic to this analysis. It is not the only possible analysis of the collective agreement provision considered in the context of Bill 106 and the previous statutes. However, in my view, Arbitrator Swan’s analysis and award, and Arbitrator Barrett’s analysis and award in this case, are reasonable. Crucially, they are far removed from being patently unreasonable.

12In the last case of the group, Ontario Public Services Employees Union v. College Compensation and Appointments Council, [2006] O.J. No. 4869 (C.A.), the clause to be interpreted provided that the employer agreed:

… to pay One Hundred Percent (100%) of the billed premium of the Ontario Health Insurance Plan for the employees covered thereby…

There were two separate arbitrations for two discrete groups of employees heard by two separate arbitrators. Each arbitrator held the parties to the agreement would not have contemplated in the language they used that it would encompass an extraordinary charge such as occurred under Bill 106, which imposed a surcharge or additional cost to the existing system.

13The Divisional Court dismissed the Union’s application for judicial review. Before the Court of Appeal, the applicant submitted that the OHP amounted to a reversion to an individually paid premium for health insurance similar to the pre-1990 OHIP regime. In paragraph 20 of the judgment, Justice MacPherson dealt with the Union’s position as follows:

I acknowledge that this is a possible interpretation of the provision in the collective agreement; indeed, it is a reasonable interpretation. However, in my view, the arbitrator’s interpretation, which focuses on the relationship between the new OHIP and the continuing payroll tax system, is also a reasonable interpretation. In any event, it is far removed from being a patently unreasonable one.

14In this application for judicial review, Arbitrator Herman delivered a lengthy and carefully reasoned decision. He was aware of and referred to decisions in other arbitrations that consider the impact of Bill 106 on existing collective agreement language. He considered that the critical issue was “….not the characterization or labeling of the OHP as “tax” or a “premium” but the language of the Collective Agreement and the operative aspects of the new OHP. He found it essential that he determine what the parties meant by their agreement that only the cost of “premiums” must be paid by the employer. And to answer that question, he adopted the approach taken by Arbitrator Swan in Ontario Power Generation Inc. (supra). Acknowledging that in other cases, arbitrators have held that language such as a covenant “to pay on behalf of (employees) 100 per cent of the total contributions required for ….Ontario Hospital Insurance Plan…”showed an intention that the employer pay on behalf of its employees, the cost of any “health related program”. Arbitrator Herman held in para. 38 of his reasons:

“I do not find that the language before me leads to a similar conclusion. As noted above, it is hard to see in the language, used by the parties here, any intention that the Employer agrees to be responsible for paying part of the income taxes an employee is required to pay, even if one were to conclude that at least a portion of those taxes was intended to be applied to the costs of the public health care industry”

15Arbitrator Herman came to the conclusion in the penultimate paragraph of his award that:

What parties might have negotiated had they contemplated the form of a particular government initiative does not obviate the need to discern their intention from the language they actually used, in the historical context in which they made their bargain…I have concluded on the language at hand that the OHP is not “materially or reasonably” similar to the OHIP premium, and that the parties did not intend that the employer would be responsible for paying the costs levied against an employee through an increase in his/her income taxes”.

16Applying the reasoning of the Court of Appeal in the LaPointe group of cases, in ascertaining what the parties intended by the language they used in their agreement regarding health care benefits, it cannot be said that the conclusion reached by Arbitrator Herman was other than reasonable.

CONCLUSION

17This application for judicial review is dismissed.

COSTS

18If the parties are unable to agree on costs, they may make brief written submissions not to exceed four pages within 21 days of the release of these reasons.

Lane J.

Brockenshire J.

Jennings J.