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COURT FILE NO.: DV-513-05

DATE: 20070105

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CUNNINGHAM a.c.j.S.C., cHAPNIK, and KEALEY JJ.

APPLICATION UNDER the Judicial Review Procedure Act, R.S.O. 1990, c.J.1.

B E T W E E N:

ONTARIO POWER GENERATION

Applicant

and -

SOCIETY OF ENERGY PROFESSIONALS AND OWEN B. SHIME, Q.C. (ARBITRATOR)

Respondent

John E. Brooks and Alan Freedman, for the Applicant

John L. Stout and Jo-Anne Pickel, for the Respondent

HEARD: October 12, 2006

BY THE COURT:

Overview

1The applicant, Ontario Power Generation Inc. (“OPG”), seeks judicial review of the October 20, 2005 award of the labour arbitrator, Owen Shime Q.C. (the “arbitrator”), who ordered OPG to make weekly “ex gratia” payments to the grievor, Harry Pos, in an amount equal to his sick leave payments that were terminated in June 2005. OPG seeks an order in the nature of certiorari quashing the arbitrator’s decision, and an order that the respondent, Society of Energy Professionals (the “Society”), pay OPG’s costs in the application.

Background

2Pos worked for OPG for 30 years. He suffers from a mild cognitive disorder. Because of this disorder, he was away from work on sick leave and was in receipt of sick benefits. OPG claimed that Pos was capable of returning to work assuming modified duties. Pos and the Society disagreed. OPG therefore terminated Pos’s sick benefits. The Society has grieved this decision. The Society also sought an interim order reinstating Pos’s sick benefits pending the resolution of the grievance.

3The arbitrator concluded that the jurisdiction to grant the interim award flowed from s. 48 (12) (i) of the LRA. He relied on this court’s decision in Ontario (Ministry of Labour) v. Ontario (Grievance Settlement Board), [1997] O.J. No. 427 (Div. Ct.), that the phrase “procedural matters” in s. 48 (12) (i) of the LRA was to be given a “broad meaning”. He held that “procedural matters ought not be technically interpreted” but should be viewed in the grievance context to permit arbitrators to resolve interim matters fairly and equitably. Consequently, the power to make “interim orders on procedural matters” included the power to award interim “ex gratia” payments to the grievor in the amount of his terminated sick leave payments.

4In addition, the arbitrator held that the sentence “the arbitrator shall have the power to settle or decide such matters as are referred to him/her in a fair and equitable manner” in article 16.7 (i) of the collective agreement also gave him the power to make the interim award.

5Since Pos was a long-service employee with a disability and would be entitled to some form of remuneration regardless of who prevails in the grievance, the arbitrator concluded that it was fair and equitable that he receive “ex gratia payments from OPG in an amount equivalent to his sick leave payments, on a weekly basis” until the grievance was resolved.

6The arbitrator held further that the payments were not to be classified as sick pay, and that the payments were to be made on the condition that, depending on the ultimate outcome of the grievance, OPG could deduct those payments from any future remuneration Pos may receive.

Relevant Provisions

7Clause 48 (12) (i) of the LRA states:

Powers of arbitrators, chair of arbitration boards, and arbitration boards

(12) An arbitrator or the chair of an arbitration board, as the case may be, has power,

(i) to make interim orders concerning procedural matters;

8Article 16.7 (i) of the collective agreement states:

The arbitrator shall have the power to settle or decide such matters as are referred to him/her in a fair and equitable manner, and the arbitrator’s decision shall be final and binding. An arbitrator shall not have the power to amend or terminate this Agreement, policies, or procedures save only any policies or procedures which may conflict with the terms of this Agreement.

Legal Issues

9The following issues are relevant to this application for judicial review:

What is the appropriate standard of review?
Did the arbitrator err in concluding that s. 48 (12) (i) of the LRA gave him the jurisdiction to make the interim award?
Did the arbitrator err in concluding that article 16.7 (i) of the collective agreement gave him the jurisdiction to make the interim award?
Did the arbitrator err is his choice of award?

Standard of Review

10The Society’s position is that the appropriate standard of review is patent unreasonableness. It submits that the arbitrator had to interpret both s. 48 (12) (i) of the LRA and article 16.7 (i) of the collective agreement in order to determine whether he had jurisdiction to make the interim award. The Society cites the recent decision of the Ontario Court of Appeal in C.A.W.-Canada, Local No. 27 v. London Machinery Inc. (2006), 264 D.L.R. (4th) 428 (Ont. C.A.) [London Machinery] to support its proposition that the most deferential standard of review applies to an arbitrator’s award that is based on the interpretation of both a collective agreement and “inside” legislation (i.e. legislation that is close to the arbitrator’s area of expertise).

11London Machinery dealt with the interaction of a collective agreement with provisions of the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”). Sections 54 and 56 (1) (c) of the ESA exempt an employee on temporary lay-off from the statutory notice of termination requirements unless that employee is deemed terminated at law because the duration of his/her temporary lay-off exceeds 35 weeks. However, s. 54 (2) (c) of the ESA permits agreements that extend the duration of a temporary lay-off beyond 35 weeks. The union brought a grievance against the employer on behalf of an employee who was laid-off for 36 weeks, arguing that he was terminated at law and therefore entitled to termination pay. The employer alleged that the collective agreement extended the duration of the temporary lay-off of its employees beyond 35 weeks and therefore the employee was not terminated at law. The arbitrator had to interpret both the collective agreement and the ESA to make an appropriate award. All members of the Court of Appeal agreed that the standard of patent unreasonableness applies to an arbitrator’s award that is based on the interpretation of a collective agreement and “outside” legislation (the ESA) that was intimately connected with the arbitrator’s expertise (London Machinery, supra at paras. 24-38, 102-109).

12In my opinion, London Machinery is distinguishable. Section 99 of the ESA incorporates the Act’s provisions into every collective agreement. The arbitrator in London Machinery was therefore tasked with interpreting statutory provisions and a collective agreement that were effectively combined. That situation is not encountered in the case at bar. I do not agree with the Society’s characterization of the arbitrator’s decision. The arbitrator did not treat the LRA and the collective agreement as somehow combining to create a single source of jurisdiction. On the contrary, the arbitrator outlined two independent sources of jurisdiction to make the interim award – the first being s. 48 (12) (i) of the LRA and the second being article 16.7 (i) of the collective agreement.

13OPG’s position is that the appropriate standard of review is correctness. It submits that the arbitrator’s decision was based predominantly on his interpretation of s. 48 (12) (i) of the LRA, and that if the arbitrator had found that the LRA did not give him jurisdiction to make the interim award, it is unlikely that he would have found that the collective agreement gave him jurisdiction.

14In my opinion, a plain reading of the arbitrator’s decision undermines this submission. After concluding that the LRA gave him jurisdiction to make the order, the arbitrator plainly stated, at page 2 of his reasons, that the collective agreement also gave him the requisite jurisdiction:

Further, Article 16.7(i) of this Collective Agreement provides that “the arbitrator shall have the power to settle or decide such matters as are referred to him/her in a fair and equitable manner…” In my view, that proviso extends to making interim orders that are fair and equitable. (Emphasis added)

15This Court must determine the standard of review of three decisions – the first is the arbitrator’s decision that s. 48 (12) (i) of the LRA gave him jurisdiction to make the interim award, the second is the arbitrator’s decision that article 16.7 (i) of the collective agreement gave him jurisdiction to make the interim award, and third is the arbitrator’s choice of award.

16In Toronto (City) v. Canadian Union of Public Employees, Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77 at para. 14, the Supreme Court concluded that different standards of review might apply to different decisions made by a tribunal in the course of a proceeding.

The standard of review of the arbitrator’s interpretation of the LRA is reasonableness simpliciter

17In Alberta Union of Provincial Employees v. Lethbridge Community College, 2004 SCC 28, [2004] 1 S.C.R. 727 at paras. 16-19 [Lethbridge] the Supreme Court held that the standard of reasonableness simpliciter applied to a labour arbitrator’s interpretation of a statutory remedial provision (s. 142 (2)) of Alberta’s Labour Relations Code (the “Code”).

18Lethbridge is not, however, the final word on the standard of review to be applied to any labour arbitrator’s interpretation of his or her empowering statute. The Ontario Court of Appeal in Teamsters Union, Local 938 v. Lakeport Beverages (2005), 77 O.R. (3d) 543 at para. 32 (C.A.) [Lakeport], pointed out that the legislative framework encountered in Lethbridge is not exactly the same as the framework established under Ontario’s LRA. Therefore, the level of deference that the Alberta Legislature intended to give to Alberta arbitrators’ interpretation of the Code may not be the same level of deference the Ontario Legislature intended to give to Ontario arbitrators’ interpretation of the LRA. The only way this court can discern the Ontario Legislature’s intent is by employing a pragmatic and functional analysis (Ontario Public Service Employees Union v. Seneca College of Applied Arts & Technology (2006), 80 O.R. (3d) 1 at para. 32 (C.A.) [Seneca College]).

19The pragmatic and functional approach requires consideration of four contextual factors: the presence or absence of a privative clause or statutory right of appeal; the expertise of the tribunal relative to that of the reviewing court on the issue in question; the purposes of the legislation and the provision in particular; and the nature of the question – law, fact or mixed law and fact (Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19, [2003] 1 S.C.R. 226 at 238).

20In my opinion, the interplay of the four contextual factors indicates that the Ontario Legislature intended to give deference to an arbitrator’s interpretation of the LRA, but not the highest degree of deference. The standard of review is therefore reasonableness simpliciter.

(i) The presence or absence of a privative clause or statutory right of appeal

21The arbitrator is protected by a stronger privative clause (s. 48 (1) of the LRA) than the one found in Alberta’s Code (see Lakeport, supra at para. 32), which suggests a more deferential standard of review.

(ii) Expertise

22This contextual factor also suggests that the arbitrator is entitled to deference. In Lethbridge, supra at para. 17, the Supreme Court held that deference was warranted because interpreting the Code was intimately connected to the arbitrator’s mandate. The words of Laskin J.A. in Seneca College, supra at para. 67, echo this point: “If the statute is linked to a board of arbitration’s mandate, and frequently encountered by it, then its interpretation and application of the statute warrants deference from a reviewing court.”

(iii) The purposes of the legislation and the provision in question

23The broad purpose of the LRA is to secure prompt, efficient, final and binding settlement of workplace disputes, which countenances deference. However, in my opinion the purpose of s. 48 (12) (i) suggests less deference is owed.

24Like s. 142 (2) of Alberta’s Code, s. 48 (12) (i) of the LRA has both remedial and jurisdictional purposes (Lethbridge, supra at para. 18). It is only the jurisdictional aspect of s. 48 (12) (i) that is relevant at this time.

25The provision’s jurisdictional aspect limits an arbitrator’s jurisdiction to make interim orders by requiring that such orders only address “procedural matters”. The Society specifically asked the arbitrator to award interim relief by ordering the reinstatement of the grievor’s sick leave payments pending the resolution of the grievance. The arbitrator responded by making an interim award for “ex gratia” payments to the grievor equal to the amount of his sick leave payments. At this point we are not concerned with whether s. 48 (12) (i) supports the form of the award (the “ex gratia” payments), which would relate to the remedial aspect of the s. 48 (12) (i). Rather we are concerned with whether s. 48 (12) (i) gives an arbitrator the jurisdiction to award the interim relief requested because such an order relates to “procedural matters”. On this issue the arbitrator is not entitled to deference. As Iacobucci J. held in Lethbridge, supra at para. 18, the “jurisdictional aspect of the provision attracts less deference, as administrative bodies are entirely statutory and thus must be correct in assessing the scope of their mandate”.

(iv) The nature of the question

26The nature of the question involves the legal interpretation of s. 48 (12) (i) of the LRA that will certainly have precedential value in future arbitrations under the LRA. As Iacobucci J. said in Lethbridge, supra at para. 19, less deference is owed to the arbitrator where the nature of the question involves the legal interpretation of a general statutory remedy power and where that interpretation has greater precedential value, even if the interpretation “presupposes an understanding and analysis of labour law issues”.

27Overall, the first two contextual factors suggest that deference is owed to the arbitrator, while the remaining two factors suggest that less deference is owed. In my opinion, the Legislature intended that some deference should be given to an arbitrator’s interpretation of what is meant by “procedural matters” in s. 48 (12) (i) of the LRA, but not the highest degree of deference. The appropriate standard of review is reasonableness simpliciter. The arbitrator’s decision should only be overturned if it was unreasonable.

28In Ryan v. The Law Society of New Brunswick, 2003 SCC 20, [2003] 1 S.C.R. 247 at paras. 55-56, the Supreme Court explained what is meant by an “unreasonable decision”:

A decision will be unreasonable only if there is no line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived. If any of the reasons that are sufficient to support the conclusion are tenable in the sense that they can stand up to a somewhat probing examination, then the decision will not be unreasonable and a reviewing court must not interfere (see Southam, at para. 56). This means that a decision may satisfy the reasonableness standard if it is supported by a tenable explanation even if this explanation is not one that the reviewing court finds compelling.

This does not mean that every element of the reasoning given must independently pass a test for reasonableness. The question is rather whether the reasons, taken as a whole, are tenable as support for the decision. At all times, a court applying a standard of reasonableness must assess the basic adequacy of a reasoned decision remembering that the issue under review does not compel one specific result. Moreover, a reviewing court should not seize on one or more mistakes or elements of the decision which do not affect the decision as a whole.

29For the reasons that I will set out below, I conclude that it was unreasonable for the arbitrator to decide that s. 48 (12) (i) of the LRA gave him the jurisdiction to make the interim award. This aspect of his decision must be quashed.

30This does not end the standard of review analysis. As I mentioned above, the arbitrator concluded that there were two independent sources of jurisdiction to make the interim award – the LRA and the collective agreement. Therefore it is necessary to determine the appropriate standard of review of the arbitrator’s interpretation of article 16.7 (i) of the collective agreement.

The standard of review of the arbitrator’s interpretation of a collective agreement is patent unreasonableness

31It is now settled law in Ontario that the patent unreasonableness standard of review applies to an arbitrator’s interpretation of a collective agreement (Lakeport, supra).

32The arbitrator’s conclusion that article 16.7 (i) of the collective agreement gave him the jurisdiction to make the interim award will only be overturned if his interpretation is “clearly irrational” (Seneca College, supra at para. 70).

33For the reasons that I will outline below, I conclude that it was not clearly irrational for the arbitrator to decide that article 16.7 (i) of the collective agreement gave him the jurisdiction to make the interim award.

The standard of review of the arbitrator’s choice of award is patent unreasonableness

34Since I have alluded to the unreasonableness of the arbitrator’s interpretation of the LRA, I need now only determine the standard of review of the arbitrator’s choice of award in light of the remedial authority provided to him in article 16.7 (i) of the collective agreement. In my opinion, the appropriate standard of review is patent unreasonableness.

35As already mentioned, the arbitrator is protected by a relatively strong privative clause (s. 48 (1) of the LRA). Arbitrators have recognized expertise in the interpretation and application of collective agreements (Lethbridge, supra at para. 41). The purpose of the arbitration scheme under the LRA is to secure prompt, efficient, cost-effective and final settlement of disputes arising out of the interpretation and application of a collective agreement (Lethbridge, supra at para. 18; Lakeport, supra at para. 29). In addition, the purpose of article 16.7 (i) is to provide the arbitrator with broad power to settle disputes. This is evidenced by the wide discretion given to the arbitrator to resolve all matters referred to him in a “fair and equitable manner”. Finally, the nature of the question is one of mixed fact and law – the arbitrator was tasked with fashioning a “fair and equitable” remedy given the particular facts of the case before him. As Iacobucci J. said in Lethbridge, supra at para. 54, “arbitrators [must] be liberally empowered to fashion appropriate remedies, taking into consideration the whole of the circumstances”.

36Taken together, in my opinion all of the contextual factors indicate that the Legislature intended that a labour arbitrator’s choice of award would be given the highest level of deference by a reviewing court. The appropriate standard of review is patent unreasonableness. The arbitrator’s choice of award will only be set aside if it is “clearly irrational” (Seneca College, supra at para. 70).

37For the reasons set out below, I conclude that the arbitrator’s decision to award interim “ex gratia” payments to the grievor was not clearly irrational.

Analysis

The arbitrator’s interpretation of s. 48 (12) (i) of the LRA was unreasonable

38The arbitrator, by his own admission, did not provide extensive reasons. Outside of stating that s. 48 (12) (i) should be liberally interpreted and viewed in the context of grievance arbitration and collective bargaining (both principles being generally accepted and not controversial), he relied primarily on the Divisional Court’s judgment in Ontario (Ministry of Labour) v. Ontario (Grievance Settlement Board), [1997] O.J. No. 427 (Div. Ct.) [Nield] to support his conclusion that s. 48 (12) (i) gave him jurisdiction to make the interim award. In my opinion, the arbitrator’s exclusive reliance on Nield provided an insufficient base to support his decision. Consequently, his interpretation of s. 48 (12) (i) was unreasonable and must be set aside.

39In Nield, the Divisional Court heard a judicial review application of an interim order granted by the Grievance Settlement Board (the “GSB”). The issue in the grievance was whether the Ministry of Labour was entitled to require an Occupational Health and Safety Inspector to divest his ownership interest in an auto body shop on the basis that the ownership interest placed him in a conflict of interest. The union requested an interim order enjoining the employer from requiring divestment of the grievor’s ownership interest. The GSB found that the question of whether the grievor should be permitted to retain his interest pending determination of the merits of the grievance was a “procedural matter”.

40The Court found at para. 1 that GSB’s interim order dealt with “procedural matters” because it did not resolve the key issue of whether the grievor had a conflict of interest. The Court then stated at para. 2 that “the legislature gave broad meaning to the words ‘procedural matters’ in s. 48(12)(i).”

41In my opinion, the Court’s statement in Nield simply reiterates the accepted principle that remedial provisions in the LRA should be liberally interpreted. Nield does not stand for the proposition that s. 48 (12) (i) permits any form of interim order. Nor does Nield relieve an adjudicator from his or her obligation to employ the various tools of statutory interpretation to discern the meaning of a remedial provision.

42One interpretive tool available to the arbitrator was to look at the legal meaning of “procedural matters” (Ruth Sullivan, Sullivan and Driedger on the Construction of Statutes, 4th ed. (Markham: Butterworths, 2002) at 47). A “procedural matter” is a matter of “procedure”. “Procedure” relates to how a proceeding is conducted. Black’s Law Dictionary, 8th ed., defines “procedure” as “1. A specific method or course of action. 2. The judicial rule or manner for carrying on a civil lawsuit or criminal prosecution.” (Emphasis added). The legal meaning of “procedural matters” therefore does not include substantive relief.

43In addition, one of the most powerful tools available to the arbitrator to help him interpret the meaning of “procedural matters” in s. 48 (12) (i) was to look at the legislative evolution of that provision (Sullivan, supra at 218).

44In 1993, Bill 40 amended the LRA to provide arbitrators with broad powers to make interim orders. Paragraph 45 (8) 4 read as follows:

(8) An arbitrator or arbitration board shall make a final and conclusive settlement of the differences between the parties and, for that purpose, has the following powers:
To grant such interim orders, including interim relief, as the arbitrator or arbitration board considers appropriate. (Emphasis added)

45However, in 1995, Bill 7 repealed Bill 40 and replaced s. 45 (8) 4 with s. 48 (12) (i). These amendments curtailed the power of arbitrators to make interim orders by explicitly removing their ability to grant “interim relief”, by removing their ability to make orders that they “consider appropriate”, and by limiting the scope of interim orders to “procedural matters”. In my opinion, this suggests that the Ontario Legislature did not intend that an “interim order concerning procedural matters” would include interim relief that an arbitrator considers appropriate in the circumstances.

46The Society asked for interim relief (namely the reinstatement of the grievor’s sick leave benefits), and the arbitrator provided it in the form of an order for ex gratia payments to the grievor which he considered “fair and equitable” in the circumstances. In doing this under the auspices of s. 48 (12) (i) of the LRA, the arbitrator acted contrary to the intent of the Legislature. Not only was this decision unreasonable, I find that it was also incorrect. This aspect of the arbitrator’s decision must therefore be set aside.

The arbitrator’s interpretation of article 16.7 (i) of the collective agreement was not patently unreasonable

47At the hearing, counsel for OPG conceded that a collective agreement could provide an arbitrator with the power to grant interim relief notwithstanding the restriction on interim orders under s. 48 (12) (i) of the LRA. OPG submitted, however, that article 16.7 (i) of the collective agreement did not provide the arbitrator with the power to make the interim award. I disagree. Article 16.7 (i) gives the arbitrator very broad authority “to settle or decide such matters as are referred to him/her in a fair and equitable manner”. I agree with the Society’s submission that it would take much clearer language to conclude that the parties intended to exclude the power to grant interim relief from the scope of article 16.7 (i). Therefore it was not clearly irrational for the arbitrator to conclude that this provision gave him the power to make the interim award.

The arbitrator’s choice of award was not patently unreasonable

48The arbitrator found that the grievor was a long-service employee with a disability and that he would be entitled to some form of remuneration regardless of the ultimate outcome of the grievance. He therefore concluded that it was “fair and equitable” that the grievor receive interim remuneration on the condition that the moneys provided to him be deducted from any future sums owing to the grievor upon the disposition of the grievance. He chose to classify the interim payments as “ex gratia” rather than “sick pay” so as to avoid pre-judging the merits of the case. Given the broad power afforded him by article 16.7 (i) of the collective agreement, and the circumstances of the case as he found them, I cannot conclude that this choice of award was clearly irrational.

Disposition

49For the aforesaid reasons, while I find it was unreasonable for the arbitrator to conclude that s.48(12)(i) of the Labour Relations Act gave him jurisdiction to make the interim award, it was not patently unreasonable for him to do so under article 16.7(1) of the collective agreement. Consequently his interpretation of s.48(12)(i) is set aside and his interpretation of the collective agreement is upheld. Furthermore, in my view, the decision to award “ex gratia” payments to the grievor was not patently unreasonable and the interim award is upheld.

Costs

50The parties are not seeking costs.

Cunningham A.C.J.S.C.

Chapnik J.

Kealey J.

Released: