DIVISIONAL COURT FILE NO.: O6 DV 1231

DATE: 20080128

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CUNNINGHAM A.C.J.S.C., BROWNE J., FERRIER J.

B E T W E E N:

OTTAWA POLICE ASSOCIATION

Steven Welchner, for the Applicant

Applicant

• and -

OTTAWA POLICE SERVICES BOARD

Charles V. Hofley, for the Respondent

Leslie McIntosh, for the Attorney General

Respondent

HEARD: October 17, 2007

1This is another, perhaps the last, in a series of applications to be brought concerning the responsibility for payment of the Ontario health premium (“OHP”) within a collective bargaining agreement.

2In the present case, the arbitrator held that the respondent, Ottawa Police Services Board (“OPSB”), was not obliged to pay the OHP on behalf of its uniform and civilian employees based on the wording of the collective agreement.

3Now the applicant seeks an order setting aside the arbitration decision and referring the grievance to a newly appointed arbitrator to be decided in accordance with our reasons.

4The award in question arose as one of many grievances resulting from the establishment of the OHP in the Budget Measures Act, 2004 (No. 2), S.O. 2004, c. 29 or “Bill 106”.

5Under Bill 106 individuals residing in Ontario with an annual income of more than $20,000 are required to pay the OHP “premium” on a rising scale reaching a maximum of $900 on a taxable income of $200,600. Employers collect the OHP “premium” through the income tax system by way of payroll deductions. We note that the OHP is calculated on a taxpayer’s total income, not simply employment income.

6The establishment of the OHP “premium” has had consequences for many collective agreements containing language negotiated when Ontario residents paid individual premiums for coverage under the old Ontario Health Insurance Premium (“OHIP”) regime. This matter has been before the Divisional Court on a number of occasions and five of those cases were dealt with by the Court of Appeal on September 8, 2006.

7In judgments rendered in each case December 8, 2006, the Court of Appeal confirmed the decision in Lakeport Beverages v. Teamsters Local Union 938, (2005) 2005 29339 (ON CA), 77 O.R. (3d) 543 which, in the words of MacPherson J.A., “firmly established that the standard of review with respect to the decisions of labour arbitrators interpreting collective agreements is patent unreasonableness.” For reasons which will follow, we conclude that the facts of this case do not provide us with any basis to deviate from that position. Here, the Ottawa Police Association (OPA) filed a grievance asserting that the OPSB failed to pay the costs of the OHP “premium” contrary to the language of the collective agreement.

8Two collective agreements were negotiated in the 1970s when OHIP existed and were subsequently renewed after OHIP ceased to exist. In its grievance, the OPA argued that the two collective agreements were broad enough in scope to require the OPSB to pay the OHP tax.

9Originally negotiated in the 1970s, the Uniform Collective Agreement set out the employer’s obligation in Article 20 as follows:

20. That the Board agrees to pay 100% of the cost required to fund single or family OHIP whichever is required for our members.

10The OHIP premium was eliminated in 1989 and as a result Article 20 of the Uniform Collective Agreement was amended in 1991 to read:

20. That the Board agrees to pay 100% of the cost required to fund single or family government medical plan for all members.

11Under the Civilian Collective Agreement, the relevant provision is Article 17 which has remained unchanged since the 1970s and reads:

17. That the Board agrees to pay one hundred (100%) of the cost required to fund single or family OHIP, whichever is required, to all employees. (emphasis added)

12In the view of Arbitrator McLaren, the principal issue was whether, in renewing the original agreement to pay the cost of OHIP after 1989, it was the intent of the parties to ensure that the OPSB would also pay other types of health care related taxes or premiums. More particularly, did the parties intend that the OPSB would be obliged to pay the cost of a personal tax such as OHP? The arbitrator considered the issue as being one of determining the most likely original and continuing intention of the parties in renewing the provisions of the collective agreement after the discontinuance of OHIP premiums in 1990.

13In carrying out his interpretive task, Arbitrator McLaren thought it important to refer to the three legislative eras under which the collective agreements were negotiated.

14Under the Health Insurance Act, 1972, employers were required to remit OHIP premiums on behalf of employees. Although individuals were responsible for the OHIP premiums, the issue of who was responsible for paying the cost of the OHIP premiums was often the subject of negotiations. Articles 17 and 20 clearly made sense within this legislative backdrop in the view of Arbitrator McLaren when he determined that the original intention of the parties was twofold: First, cost allocation, specifically to apportion 100% of the cost of the medical plan to the OPSB and, second, a procurement of health benefits, specifically a procurement of OHIP as provided by the pre-1990 legislation.

15The Employer Health Tax Act, enacted in 1989, eliminated the OHIP premium and ended the requirement to pay a premium in order to become and remain an insured person under OHIP. Instead, a payroll tax was imposed on Ontario employers, which was then used to procure OHIP coverage for individuals. This payroll tax remains in effect to the present day. Given this new scheme under the Employer Health Tax Act, the requirement to pay premiums on the part of employees ceased. In the arbitrator’s view, the language of the collective agreement then became inoperative because there were no OHIP premiums or “government medical plan” costs to pay after the employer health tax was created. Central to Arbitrator McLaren’s decision was his finding that the collective agreement language only remained to cover the possibility of a re-introduction of a cost allocation for the procurement of OHIP services or another government medical plan similar to the pre-1990 OHIP regime.

16When the 2004 Ontario health premium was enacted under the Budget Measures Act, the OPA argued, the language required the OPSB to pay 100% of the OHP on behalf of its uniform and civilian employees. The OPSB disagreed, taking the position that the OHP was a “tax” imposed through the Income Tax Act, based on total, not just employment income. In other words, it was not a standard premium applied to individuals regardless of income. Moreover, the OPSB argued that the OHP funds were directed towards health care broadly, rather than towards the payment of OHIP premiums in particular and as such the OPSB did not consider the OHP tax an expense it had ever agreed to pay on the part of its employees.

17Arbitrator McLaren considered this issue and stated in his reasons: “The parties’ intention in the collective agreements to preserve the clause in case of future legislative change has now come to fruition, for now there was a legislative change.” Nevertheless, Arbitrator McLaren concluded that the original twofold intention of the parties was not engaged by the 2004 creation of OHP because there was no need for an employer to pay any cost in order to obtain procurement of the employee’s medical plan in the post 2004 era.

18As a result of this, Arbitrator McLaren concluded that the parties would have to bargain anew for the payment of OHP.

19As stated at the beginning of these reasons, we see no reason on the facts of this case to deviate from the view of the Court of Appeal. Decisions of arbitrators interpreting collective agreements are to be reviewed on a standard of patent unreasonableness, not reasonableness.

20Despite the able argument of counsel for the applicant, we do not see the Police Services Act (“PSA”) as containing a weak privative clause, nor do we see any significant difference between the privative clause in the PSA and that under the Ontario Labour Relations Act, 1995. In our view, the privative clauses in both are essentially the same, one saying “final and binding” and the other “binding”.

21We also recognize that the Supreme Court of Canada in Voice Construction Ltd. v. Construction and General Workers Union, Local 92, 2004 SCC 23 dealt with the privative clause in the Alberta Labour Relations Code and while the applicant would have us accept that this decision is directly applicable to the case at bar, mandating a reasonableness standard, we disagree. The PSA is complemented by collective agreement language stating that arbitral rulings shall be “final and binding” on the parties. Taken together, an intended level of deference is reflected, identical to that contained in the Ontario Labour Relations Act.

22When one compares the privative clauses in the Alberta Code and in the PSA, one can see immediately a significant difference. For ease of reference, the wording of the two sections is as follows:

Alberta Code

145(2) A decision, order, directive, declaration, ruling or proceeding of an arbitrator, arbitration board of other body may be questioned or reviewed by way of an application for judicial review seeking an order in the nature of certiorari or mandamus if the originating notice is filed with the court no later than 30 days after the date of the proceeding, decision, order, directive, declaration or ruling or reasons in respect of it whichever is later.

Alberta Labour Relations Code, R.S.A. 2000, c. L-1.

23The privative clause under the PSA, by contrast, provides as follows:

PSA

Section 128. Agreements, decisions and awards made under this Part bind the board and the members of the police service.

Police Services Act, R.S.O. 1990, c. P.15, s.128.

24As already stated, the privative clauses in the PSA and that in the OLRA are almost identical and certainly much more similar in nature than that in the Alberta Code. As Laskin J.A. stated in Lakeport Beverages v. Teamsters Local Union 938 2005 29339 (ON CA), [2005] O.J. 3488 at para. 25,

Lakeport, on the other hand, submits that Voice Construction and Lethbridge Community College have not changed the standard of review in Ontario, certainly not the standard for reviewing this arbitrator’s decision. It argues that the Alberta cases can be distinguished on the basis of the different judicial review provisions of the Alberta and Ontario statutes. I agree with Lakeport’s submission.

25Further, in paragraph 32, Laskin J.A. goes on, “…I think that (the Alberta cases) are largely explained by the relatively weak privative clause in the Alberta statute…”.

26We conclude therefore that the standard of review in the present case is patent unreasonableness. Arbitrator McLaren was, in the case under review, simply interpreting collective agreement language and there is no basis upon which we could depart from established case law in Ontario.

27Having reached this preliminary conclusion, we must then ask ourselves whether Arbitrator McLaren’s decision was patently unreasonable. In our view, it was not. We agree with the respondent that Arbitrator McLaren, in interpreting the language of the collective agreement, attempted to ascertain the intentions of the parties when the language of the collective agreement was renewed after OHIP was replaced with the EHT. He found, after reviewing the collective agreement language, as well as the legislative history, that the intention was to ensure an apportionment of the cost of OHIP procurement through the employer in the event that a similar system should ever be reinstated.

28In our opinion, Arbitrator McLaren did not misunderstand the OHIP scheme as is suggested by the applicant. Nowhere in his decision does Arbitrator McLaren suggest that the union had to bargain for the procurement of OHIP coverage. In our view, his reasoning reflects a careful understanding that the union bargained for 100 per cent cost allocation of mandatory remittances, the purposes behind which was the procurement of OHIP coverage. For example, at paragraph 13 of his decision, Arbitrator McLaren states:

…legislation in the pre-1990 timeframe required an Ontario resident to pay a mandatory premium as a prerequisite to be eligible for OHIP coverage. That coverage itself was also mandatory. Therefore, both the payment of the premium and the participation in OHIP were mandatory under the legislative scheme of the time. One had to not only pay to receive the coverage but also had to be covered by the plan. The collective agreement apportioned 100% of that payment obligation onto the Board.

29We agree with the respondent’s position that Arbitrator McLaren discussed “procurement”, not because he believed the employer was procuring (or securing) OHIP coverage for the employee, but rather he discusses the “procurement” purpose of the OHP premiums to contrast it with the purpose of OHP tax. This was done, the respondent says, to ascertain whether the same purpose would be accomplished by the employer paying 100% of the cost of both OHIP premiums and the OHIP tax. We agree. It must be remembered that the employer did not agree in the collective agreement to fund any tax/premium related to health care in Ontario, but rather they agreed to pay 100% of the cost of OHIP/single or family government medical plan premiums. Arbitrator McLaren concluded that OHIP and OHP had different purposes and as such the collective agreement language required the OPSB to pay the former but not the latter on the part of employees. This could never be characterized as an unreasonable conclusion, let alone a patently unreasonable one.

30Finally, the applicant argues that the arbitration award was patently unreasonable because the Ontario Court of Appeal in other decisions has not considered the “procurement of OHIP” distinction to be particularly compelling. We well understand that the Court of Appeal has affirmed other contrary arbitral awards where the “procurement” of OHIP distinction was dismissed. While that is so, nowhere has the Court of Appeal ever stated that such reasoning was the only possible analysis of the collective agreement provision to be considered in the context of Bill 106 and previous statutes. Moreover, arbitrators are not bound by a reviewing court’s interpretation of other arbitral decisions when such decisions are reviewed on the standard of patent unreasonableness. See Essex County Roman Catholic School Board (the Windsor/Essex Catholic School Board) v. Ontario English Catholic Teachers’ Association, 2001 4461 (ON CA), [2001] O.J. No. 3602. In Essex County (supra), at para. 30, the Court of Appeal stated,

When applying the patently unreasonableness standard, the Court does not attempt to set out correct and therefore binding interpretation of the provision in question. As such, it is entirely open to other arbitrators to arrive at a different conclusion than that of the reviewing court without their decisions being patently unreasonable.

31And at para. 33,

The fact that a reviewing court may have found one interpretation of a collective agreement to be “entirely reasonable” does not preclude an arbitrator from making a different interpretation of the same article.

32On the basis of the foregoing, the application is dismissed and the respondent is entitled to its costs which we fix at $10,000 all inclusive.

Cunningham A.C.J.

Browne J.

Ferrier J.

Released: January 28, 2008

DIVISIONAL COURT FILE NO.: 06 DV 1231

DATE: 20080128

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CUNNINGHAM A.C.J., _____________________