Court File and Parties

COURT FILE NO.: 117/09 and 118/09 DATE: 2009-11-03

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

CUNNINGHAM A.C.J.S.C.J., SWINTON AND R.J. SMITH JJ.

B E T W E E N:

RELIGIOUS HOSPITALIERS OF SAINT JOSEPH OF THE HOTEL DIEU HOSPITAL OF KINGSTON Applicant

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ONTARIO PUBLIC SERVICE EMPLOYEES UNION LOCAL 465 Respondent

AND BETWEEN:

RELIGIOUS HOSPITALIERS OF SAINT JOSEPH OF THE HOTEL DIEU HOSPITAL OF KINGSTON Applicant

• and -

ONTARIO PUBLIC SERVICE EMPLOYEES UNION LOCAL 443 Respondent

Counsel: Mark D. Contini, for the Applicants Elizabeth J. McIntyre and Jo-Anne Pickel, for the Respondents

HEARD at Toronto: October 6, 2009

Reasons for Judgment

SWINTON J.:

Overview

[1] The applicant, the Religious Hospitaliers of Saint Joseph of the Hotel Dieu Hospital of Kingston (“the Hospital”), has brought applications for judicial review of two interest arbitration awards dated September 12, 2008. At issue is a provision in each award dealing with retroactivity of wage increases for individuals who are no longer active employees.

Background

[2] Local 465 of the Canadian Union of Public Employees is the bargaining agent for the Hospital’s service employees, while Local 443 is the bargaining agent for the office, clerical and technical employees.

[3] The Hospital and the Locals engaged in collective bargaining for the renewal of collective agreements that expired October 31, 2006. As the parties were unable to reach an agreement on a number of issues, the matters in dispute were referred to interest arbitration in accordance with the Hospital Labour Disputes Arbitration Act, R.S.O. 1990, c. H. 14 (“the Act”).

[4] A three person arbitration board held a hearing to deal with the issues involving Local 465 on January 31, 2008 and with Local 443 on April 11, 2008. Before the hearings, the parties had filed written submissions setting out the matters in dispute. In the submissions of the Hospital and each Local, the parties identified the items in dispute and the grounds to support the positions they advocated.

[5] In their submissions, the Hospital and the Locals identified wages as a matter in dispute, and each party made submissions with respect to annual wage increases to take effect on November 1, 2006, November 1, 2007 and November 1, 2008.

[6] The Hospital’s submissions on wages made no express mention of retroactivity. However, the Hospital made implicit reference to retroactivity in its submission when it said that the matters on which the parties had agreed, as set out in an appendix, should be incorporated in the previous collective agreement by the Board. That appendix was not filed before this Court.

[7] In its submissions on term and wages, Local 443 stated that the parties were agreed on a three year term. Local 443’s submissions went on to address retroactivity as follows (at p. 74):

The parties are also in agreement that retroactivity is effective November 1, 2006 and is pursuant to Article 29.01. What remains outstanding are the across-the-board percentage wage increases for each year of the three year term.

[8] Article 29.01 of the collective agreement, found under the heading “Retroactivity”, reads:

The wage schedule as set out in Schedule “A” shall be applicable to all employees on the active payroll of the Hospital on the date of the ratification. Wages shall be paid retroactively based on the straight time payment for all hours paid. Other provisions shall be paid retroactively as specified in the clauses concerned.

[9] Unlike Local 443, Local 465 did not expressly mention retroactivity in its submissions. Its collective agreement with the Hospital also includes Article 29.01 dealing with retroactivity. Like the Hospital, Local 465 addressed the issue of wages in its submissions, setting out the proposed increases for each year and the justification for its position.

The Arbitration Awards

[10] In its awards, the Board accepted the Hospital’s proposal for the wage increases across the three year term of the agreements. The Board then dealt with retroactivity, stating that retroactivity was to be paid for all hours to all eligible employees on the payroll as of November 1, 2006 and to all new hires since that date. The Board also set out a mechanism for the notification of eligible employees who had terminated their employment since November 1, 2006.

[11] When the Hospital asked the Board to reconsider the retroactivity provision, the Board, in a letter dated December 1, 2008, declined to reconsider, clarify or alter the decisions.

[12] Subsequently, in a letter dated May 1, 2009, the Board clarified that it had not intended to alter the collective agreements. The retroactivity provision was meant to give direction to the parties on the implementation of the wage increases in the award. As the Board stated,

Our retroactivity language was provided to give direction to the parties on implementation of the awards with respect to the wage increases provided therein. This is apparent from the absence of specific direction to amend or alter or add to either of the collective agreements.

The Statutory Framework

[13] Pursuant to s. 4 of the Act, where a conciliation officer has been unable to effect a collective agreement, “the matters in dispute between the parties shall be decided by arbitration”.

[14] Subsection 9(1) sets out the powers of the arbitration board:

The board of arbitration shall examine into and decide on matters that are in dispute and any other matters that appear to the board necessary to be decided in order to conclude a collective agreement between the parties, but the board shall not decide any matters that come within the jurisdiction of the Ontario Labour Relations Board.

[15] Subsection 6(16) gives the board the power to determine its own procedure, but the board “shall give full opportunity to the parties to present their evidence and make their submissions.”

[16] Subsection 9(2) provides that the board shall remain seized to deal with all matters in dispute between the parties until a collective agreement is in effect.

[17] Subsection 10(3) deals with the decision of the board, stating,

Where, during the bargaining under this Act or during the proceedings before the board of arbitration, the parties have agreed upon some matters to be included in the collective agreement and have notified the board in writing of the matters agreed upon, the decision of the board shall be confined to the matters not agreed upon by the parties and to such other matters that appear to the board necessary to be decided to conclude a collective agreement between the parties.

[18] Finally, s. 10(13) deals with retroactivity, as follows:

In making its decision upon matters in dispute between the parties, the board of arbitration may provide,

(b) where notice was given under section 59 of the Labour Relations Act, 1995, that any of the terms of the agreement except its terms of operation shall be retroactive to such day as the board may fix, but not earlier than the day upon which the previous agreement ceased to operate.

The Issues

[19] The Hospital argues that the Board exceeded its jurisdiction by ordering that the wage increases be made retroactive for employees no longer actively employed, since retroactivity was not a matter in dispute between the parties. In the alternative, it argues that the Board denied it procedural fairness and natural justice by including the provision on retroactivity in its awards without giving the Hospital an opportunity to make submissions on the issue.

[20] The Locals argue that there was no jurisdictional error, and the decisions of the Board were reasonable and made in accordance with natural justice.

The Standard of Review

[21] The Hospital argues that the standard of review is correctness because the Board exceeded its jurisdiction. The Board had jurisdiction only to deal with matters in dispute between the parties, and retroactivity was not such a matter.

[22] The Locals argue that the standard of review is reasonableness, as the determination whether to order retroactive wage increases to all employees employed on the start date of the collective agreement was a matter of mixed fact and law. It involves the Board’s factual determination of the content of the parties’ agreement on retroactivity, as well as the Board’s interpretation of the scope of its powers and duties under the Act, its home statute.

[23] In Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, the Supreme Court of Canada held that a correctness standard is to be applied when there is a true question of jurisdiction – that is, where a tribunal must determine whether it has the authority to decide a particular matter (at para. 59). The Court cautioned that it is necessary to take a “robust view of jurisdiction” and stated that such questions will be narrow.

[24] More recently, in Nolan v. Kerry (Canada) Inc., 2009 SCC 39, the Supreme Court reiterated that caution should be used in labelling a question as jurisdictional, stating (at para. 34):

The inference to be drawn from paras. 54 and 59 of Dunsmuir is that courts should usually defer when the tribunal is interpreting its own statute and will only exceptionally apply a correctness standard when interpretation of that statute raises a broad question of the tribunal’s authority.

[25] Having applied the standard of review analysis from Dunsmuir, I conclude that reasonableness is the appropriate standard of review.

[26] Section 7 of the Act contains a privative clause, which militates in favour of a deferential standard of review (Brockville Psychiatric Hospital v. Ontario Public Service Employees Union, [2007] O.J. No. 40 (Div. Ct.) at para.30).

[27] The purpose of the Act is to provide a mechanism for interest arbitration to determine the content of collective agreements in the hospital sector when the parties are unable to agree on the terms of a collective agreement. Arbitration boards appointed under the Act have specialized knowledge of labour relations in this sector.

[28] As to the nature of the question, retroactivity is not a jurisdictional issue in the narrow sense described in Dunsmuir and interpreted in Nolan, because the Board had the authority to deal with retroactivity. According to the Act, the Board had the authority to deal with the matters in dispute between the parties, as well as matters “necessary to conclude a collective agreement.” Subsection 10(13) permits it to deal with retroactivity with respect to matters in dispute.

[29] Thus, in determining whether and how to deal with retroactivity, the Board was required to interpret the scope of its powers under its home statute, and apply those powers in the context of the parties’ agreement on retroactivity. The issue of whether it is necessary to deal with retroactivity is one of mixed fact and law, and in coming to a decision on retroactivity, the Board applies its specialized labour relations expertise.

[30] Accordingly, deference to the Board’s decision is appropriate, and a standard of reasonableness applies.

Was the decision to order wage retroactivity reasonable?

[31] The Board’s duty was to determine the matters in dispute between the parties and any matters necessary to be decided in order to conclude a collective agreement between the parties.

[32] In the case of Local 443, it is very clear that the parties did not refer the issue of retroactivity to the Board. The Local stated in its submission that wage increases were in dispute, but not retroactivity, which was to be determined in accordance with Article 29.01 of the collective agreement.

[33] The Board nevertheless dealt with retroactivity. In doing so, it made no reference to the Local’s submission on retroactivity, nor did it make any reference to the wording of Article 29.01 so as to show why it was necessary to deal with retroactivity.

[34] Counsel for the Locals argued that the Board acted reasonably in dealing with retroactivity, since Article 29.01 did not specifically deal with the issue. Article 29.01 states that retroactive pay will be paid to employees on the payroll at the date of ratification. As the current collective agreement will be the result of an interest arbitration award rather than a negotiated agreement, there will be no ratification. Therefore, counsel submits that Article 29.01 does not address entitlement to retroactive wage increases, and hence the Board was required to address the issue.

[35] The problem with this argument is the fact that the Board never made it. The Board never addressed Article 29.01 or explained why the Board’s provision on retroactivity was “necessary” to the conclusion of a collective agreement. At least from the perspective of Local 443 and the Hospital, the parties had dealt with retroactivity, and it was not a matter in dispute. While there may be problems in the future in determining how Article 29.01 is to be applied, its interpretation would appear to be a matter for grievance arbitration rather than interest arbitration.

[36] In the alternative, the Locals argue that the Board had the authority under s. 10(13) of the Act to deal with retroactivity in relation to matters in dispute. Again, the Board made no reference to this provision.

[37] The Board stated in its May 1, 2009 letter that it did not intend to alter Article 29.01. Given that statement, it is implicit that the Board did not find it “necessary” to deal with retroactivity in order to conclude a collective agreement. Nor can s. 10(13) avail, as that provision allows the board to make a term of the agreement retroactive. Here, the Board stated that it was not altering the terms of the collective agreement with respect to retroactivity.

[38] Nevertheless, the effect of its order is to prevent the operation of Article 29.01 of the collective agreement during the term of the new collective agreement, even though the parties agreed that the provision would remain in the collective agreement.

[39] The reasonableness of a decision turns on considerations of justification, transparency and intelligibility of the decision-making process. A court, on review, is also concerned with whether the decision falls within a range of acceptable outcomes which are defensible in respect of the facts and the law (Dunsmuir at para. 47).

[40] In this case, the Board failed to explain why it was dealing with retroactivity in light of the parties’ agreement that retroactivity was not in dispute. The role of the Board is to replicate, to the extent that can be done, what the parties would have negotiated in collective bargaining, while also considering the factors set out in s. 9(1.1) of the Act (Victoria Hospital Corp. v. London and District Service Workers Union, Local 220, [1996] O.J. No. 4009 (Div. Ct.) at para. 4). Therefore, given the parties’ agreement on retroactivity and lack of any discussion of Article 29.01 or s. 10(13), the award with respect to Local 443 is unreasonable and must be set aside.

[41] While Local 465 did not expressly state that the parties had resolved the matter of retroactivity, it is implicit in the submission of the Hospital and the Local that retroactivity was not an issue between them. Article 29.01 remained in their collective agreement. Therefore, the Board’s award was unreasonable, as it failed to explain why its retroactivity provision was necessary in light of Article 29.01.

Was there a denial of procedural fairness?

[42] Even if I am wrong in finding that the decisions are unreasonable, they must still be set aside because of a denial of procedural fairness by the Board.

[43] It is clear that the parties made submissions to the Board on the issue of the quantum of wage increases. Local 465 did not make submissions on retroactivity as retroactivity was not apparently in dispute. Local 443 confirmed the application of Article 29.01, and therefore retroactivity was not in dispute.

[44] The parties had addressed retroactivity in Article 29.01of their previous collective agreement. Indeed, there is affidavit evidence in the Hospital’s record showing that the parties had removed Article 29.02 from the collective agreement in 2000. Article 29.02 provided for retroactive pay for those no longer on the payroll at the time of the new agreement.

[45] A ruling on retroactivity for non-active employees has financial consequences for both the Hospital and the affected individuals. Fairness requires that the parties be given an opportunity to make submissions on this issue.

[46] Before the Board awarded retroactivity to employees no longer on the payroll, it was required both by s. 6(16) of the Act and by the rules of procedural fairness to give the parties an opportunity to make submissions on the issue. As it failed to do so, the part of the awards dealing with retroactivity must be set aside.

Conclusion

[47] Given my conclusions on the unreasonableness of the decision and the denial of procedural fairness, the part of the Board’s awards dealing with retroactivity is set aside.

[48] In my view, this is not a case where it is necessary to refer the issue of retroactivity back to the Board to be determined after the parties have had an opportunity to make submissions. Given the lack of findings by the Board respecting the necessity to deal with retroactivity and its failure to rely on s. 10(13) of the Act, retroactivity is left to be determined in accordance with Article 29.01 of the parties’ collective agreements.

[49] As agreed by the parties, costs to the successful party, the applicant, are fixed at $3,000.00 inclusive of GST and disbursements.

Swinton J.

R.J. Smith J.

CUNNINGHAM A.C.J.S.C.J.:

[50] I agree with the result arrived at by my colleague, Swinton J., however, I would have found, in the circumstances here, the Board exceeded its jurisdiction by amending Article 29.01 and ordering increases be made retroactive for employees no longer actively employed. This issue was not in dispute between the parties and in fact neither party, in submissions to the Board, sought the amendment of Article 29.01. In my view, the Board committed a jurisdictional error by unilaterally, on its own motion, amending Article 29.01.

[51] The Board has a statutory duty to decide issues in dispute in order to achieve a collective agreement. Its role is to attempt to replicate what the parties would have achieved through collective bargaining (see Victoria Hospital Corp. v. London and District Service Workers Union, Local 220, [1996] O.J. 4009). Tribunals must correctly decide issues related to their jurisdiction (see Dunsmuir v. New Brunswick (2008), 2008 SCC 9, 291 D.L.R. (4th) 577 (S.C.C.) at para. 59).

[52] I recognize, following Dunsmuir, that questions of jurisdiction will be narrow, nevertheless, in my view, after taking a “robust view”, I conclude this is one of those cases requiring intervention on jurisdictional grounds. I say this agreeing with Swinton J. that significant deference is owed to these specialized boards.

[53] In deciding an issue not referred to it, the Tribunal exceeded its jurisdiction (see Service Employees’ International Union Local No. 333 v. Nipawin District Staff Nurses Assn. (1973), 1973 191 (SCC), 41 D.L.R. (3rd) 6 (S.C.C.), pp. 11-12.

[54] This Board, having authority to deal with matters in dispute, cannot say it had to amend Article 29.01 as a matter “necessary to conclude a collective agreement.” Moreover, as my colleague has written, the Board committed a jurisdictional error by denying the applicant an opportunity to make submissions regarding the amendment of Article 29.01. I agree this was a denial of natural justice, a jurisdictional error in and of itself, and on that basis alone, the portion of the award dealing with retroactivity must be set aside.

J. Douglas Cunningham A.C.J.S.C.J.

Released: November 3, 2009