Metrolinx v. Amalgamated Transit Union, Local 1587, 2015 ONSC 4466

CITATION: Metrolinx v. Amalgamated Transit Union, Local 1587, 2015 ONSC 4466

DIVISIONAL COURT FILE NO.: 560/14
DATE: 20150727

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Swinton, D.L. Corbett and Pomerance JJ.

BETWEEN:

METROLINX Applicant

– and –

AMALGAMATED TRANSIT UNION, LOCAL 1587 and GRIEVANCE SETTLEMENT BOARD Respondents

COUNSEL:

Richard J. Charney and Jennifer Hodgins, for the Applicant Ian J. Fellows and Kassia Bonisteel, for the Respondent Amalgamated Transit Union

HEARD at Toronto: June 25, 2015

Swinton J.

Overview

[1] Metrolinx (“the Employer”) brings this application for judicial review of an arbitration award issued by the Grievance Settlement Board (“the Board”) dated August 12, 2014, in which the Board ordered rectification of the recognition clause of a collective agreement between the Employer and the respondent Amalgamated Transit Union, Local 1587 (“the Union”).

[2] In my view, the Vice-Chair of the Board reasonably concluded that rectification was an appropriate remedy on the facts of the case. He reasonably directed that the erroneous language, placed in the agreement as a result of error, should be removed. However, the interpretation that he gave to the rectified article and the ultimate order to the parties to agree on new language in the collective agreement were not reasonable. Accordingly, I would allow the application for judicial review and set aside that part of the award interpreting the rectified article and ordering the parties to agree on new language.

Background Facts

[3] The Union is the exclusive bargaining agent for a bargaining unit of employees of the Employer, a provincial Crown agency created under the Metrolinx Act, 2006, S.O. 2006, c. 16. As a result of that Act, Metrolinx became a successor employer to GO Transit. The bargaining rights held by the Union in respect of GO Transit employees were continued with Metrolinx, at which time GO Transit became a division of Metrolinx. It remains the current operating division of Metrolinx.

[4] Since 2003, Article 2.1, the recognition clause between the Employer and the Union, has contained an exclusion of Office and Technical (“O/T”) staff. That article reads:

The Employer recognizes the Union as the exclusive bargaining agent for all employees of the Employer employed in the Province of Ontario as specified in Schedule “A1” and “A2”, or as developed through the application of Article 9, save and except supervisors and persons above the rank of supervisor, office and technical staff (save and except classifications specified in Schedule “A1” and “A2”), employees represented by the International Association of Machinists and Aerospace Workers, Local 235 as of January 2, 2002, students, and persons excluded by the Crown Employees Collective Bargaining Act, 1993. (emphasis added)

[5] The dispute in this case rests on the exclusionary language relating to O/T staff in this article. The Union filed a policy grievance on June 3, 2008 in respect of whether certain positions were in the bargaining unit represented by it.

[6] To understand this dispute, it is necessary to consider some of the history of collective bargaining between the parties. In the collective agreements operative in 1999-2000 and 2000-2003 between the Union and GO Transit, the recognition clause had excluded O/T staff. At that time, the parties’ bargaining relationship was governed by the Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A.

[7] During the term of the 2000-2003 collective agreement, GO Transit was “downloaded” from the Province of Ontario to the municipal level of government. The Union’s bargaining rights were voluntarily recognized by the Employer, and so the collective agreement continued to apply.

[8] About two years later, GO Transit was “uploaded” to the Province and became a Crown agency. This meant that labour relations were now governed by the Crown Employees Collective Bargaining Act, 1993, S.O. 1993, c. 38, and the Union’s bargaining rights were terminated. The Union applied for certification and, on consent, the Ontario Labour Relations Board (the “OLRB”) gave a decision on February 28, 2002 that included all employees in the bargaining unit, with stated exceptions that did not include O/T staff. As a result, the O/T staff members were now in the bargaining unit.

[9] The parties engaged in collective bargaining that resulted in a Memorandum of Settlement (“the MOS”) dated April 19, 2002. They agreed to continue the terms of the 2000-2003 collective agreement except as amended in the MOS. The new collective agreement would be in effect from January 1, 2002 to May 23, 2003.

[10] One of the terms agreed upon by the parties was a recognition clause that did not exclude O/T staff. The language was found in Appendix A of the MOS, which reads:

Effective January 1, 2002, The Employer recognizes the Union as the exclusive bargaining agent for all employees of the Employer employed in the Province of Ontario as specified in Schedule A2, or as developed through the application of Article 9, save and except supervisors and persons above the rank of supervisor, employees represented by the International Association of Machinists and Aerospace Workers, Local 235 as of January 2, 2002, persons excluded by the Crown Employees Collective Bargaining Act, 1993.

In the MOS, the Employer and the Union also agreed that some O/T positions would be excluded from the bargaining unit if the incumbents of the positions so elected. These positions were set out in paragraph 8 of the MOS.

[11] In 2003, the parties engaged in bargaining for a new collective agreement. The Employer described proposed changes to Article 2.1 in its February 2003 proposals as “Housekeeping Issues” - namely, “amend language as agreed in Memorandum of Settlement dated April 19, 2002”.

[12] The parties relied on the Employer to do the paperwork during collective bargaining. Normally, the Employer’s staff would work from the existing collective agreement, inserting changes. The practice was for the Employer to highlight any changes, either by striking out language that was eliminated or underlining language added. However, in preparing the new draft collective agreement for 2003-2007, the Employer used the language from the recognition clause in the 1999-2000 collective agreement, which preceded certification and excluded O/T staff. Moreover, the proposed Article 2.1 did not highlight the exclusion relating to the O/T staff. It stated:

The Employer recognizes the Union as the exclusive bargaining agent for all employees of the employer and employed in the Province of Ontario as specified in schedule “A1” and “A2”, or as developed through the application of Article 9, save and except supervisors and persons above the rank of supervisor, office and technical staff (save and except classifications specified in Schedule “A1” and “A2”) employees represented by the International Association of Machinists and Aerospace Workers, Local 235 as of January 2, 2002, students, and persons excluded by the Ontario Labour Relations Act, as amended 1995 Crown Employees Collective Bargaining Act, 1993.

[13] The Union representatives testified that they did not notice the exclusionary language, and they signed off on the proposed article.

[14] The language excluding O/T classifications appeared again in the 2007-2011 collective agreement, as neither party had sought amendment to the recognition clause in the 2007 bargaining round. The Union’s witnesses testified that they first noticed the exclusionary language at the time of filing the policy grievance in 2008.

The Arbitration Award

[15] The policy grievance filed by the Union was the subject of a Board hearing over a period of eight days. The Board issued an award dealing with two initial issues. First, it gave an interpretation of the recognition clause, rejecting the Union’s argument that the Union represented an “all employee” unit. Rather, the bargaining unit consisted of employees in classifications listed in Schedules A1 and A2 or as developed through Article 9 (Award, para. 32).

[16] Second, the Board accepted the Union’s argument that Article 2.1 should be rectified, as the language excluding the O/T staff from the bargaining unit had been inserted by mistake during the renewal of the 2003-2007 collective agreement. The Board concluded that the phrase “office and technical staff (save and except classifications specified in Schedule “A1” and “A2”)” was inadvertently copied into the Employer’s 2003 bargaining proposals from the 1999-2000 collective agreement, and the parties had never agreed to reverse the OLRB’s addition of the O/T staff to the bargaining unit.

[17] The Board held that the parties’ true intention was reflected in paragraph 8 of the 2002 MOS: the bargaining unit presumptively included all O/T staff who were not otherwise excluded, subject to individual opt-outs by employees in specified O/T positions. The Board then stated (at para. 61):

All other O/T employees who are not otherwise excluded by the remaining exclusions, namely “supervisors and persons above rank of supervisor, employees represented by the International Association of machinists and Aerospace Workers, Local 235 as of January 2, 2002, students, and persons excluded by the Crown Employees Collective Bargaining Act, 1993”, would fall within the bargaining unit represented by the union whether or not their positions are listed in Schedules A1 or A2. The parties are directed to agree upon language to reflect that agreement.

The Issues

[18] The Employer challenges the Board’s decision with respect to the rectification issue. The application for judicial review raises three issues:

1. What is the appropriate standard of review?

2. Was the Board’s application of the doctrine of rectification reasonable?

3. Was the Board’s interpretation of the recognition clause, as rectified, reasonable?

The Standard of Review

[19] Both parties agree that the standard of review of an arbitrator’s interpretation of a collective agreement is reasonableness. However, the Employer argues that the standard of review is correctness with respect to the Board’s application of the doctrine of rectification. The Employer argues, first, that the doctrine of rectification is a question of general law that is outside the specialized expertise of labour arbitrators. Second, the doctrine of rectification has been invoked here to alter bargaining rights, a matter within the exclusive jurisdiction of the OLRB and the parties to a collective agreement.

[20] In my view, reasonableness is the standard of review when a labour arbitrator applies the doctrine of rectification. In 2002, the Ontario Court of Appeal held that labour arbitrators have the jurisdiction to grant the equitable remedy of rectification (Public Service Alliance of Canada v. NAV Canada (2002), 2002 44896 (ON CA), 59 O.R. (3d) 284 at para. 42). Although the Court of Appeal did not address the standard of review in that case, the Supreme of Canada has addressed the standard of review applicable when a labour arbitrator applies the doctrine of promissory estoppel, another equitable remedy. In Nor-Man Regional Authority Inc. v. Manitoba Association of Health Care Professionals, 2011 SCC 59, [2011] 3 S.C.R. 616, the Supreme Court applied the standard of reasonableness, explaining at paras. 44-45,

[44] Common law and equitable doctrines emanate from the courts. But it hardly follows that arbitrators lack either the legal authority or the expertise required to adapt and apply them in a manner more appropriate to the arbitration of disputes and grievances in a labour relations context.

[45] On the contrary, labour arbitrators are authorized by their broad statutory and contractual mandates ― and well equipped by their expertise ― to adapt the legal and equitable doctrines they find relevant within the contained sphere of arbitral creativity. To this end, they may properly develop doctrines and fashion remedies appropriate in their field, drawing inspiration from general legal principles, the objectives and purposes of the statutory scheme, the principles of labour relations, the nature of the collective bargaining process, and the factual matrix of the grievances of which they are seized.

[21] While the Ontario Court of Appeal has not addressed the standard of review when an arbitrator applies the doctrine of rectification, the Saskatchewan Court of Appeal has held that the standard is reasonableness in two cases: United Food and Commercial Workers, Local 1400 v. Real Canadian Superstores, 2012 SKCA 66 at para. 2 and Saskatoon Credit Union Ltd. v. United Food and Commercial Workers, Local 1400, 2009 SKCA 87 at paras. 27 and 66.

[22] I see no reason why there should be less deference to an arbitrator’s application of the equitable doctrine of rectification to provide an appropriate remedy. Moreover, the application of the doctrine of rectification requires findings of fact, a task that is well within the specialized expertise of the labour arbitrator.

[23] The Employer also argues that the correctness standard should apply because the arbitrator used the doctrine of rectification to alter the recognition clause. I disagree. When an arbitrator applies the doctrine of rectification, he or she is not altering the terms of the parties’ agreement or, in the context of the present case, altering bargaining rights. Rather, as the Court of Appeal stated in NAV Canada, above, the arbitrator is “[correcting] a contract which has been mistakenly drawn so as to carry out the common intention of the parties” (at para. 39). This is true whether rectification is applied to a recognition clause or a clause concerning terms and conditions of employment. The remedy is used to correct a mistake and to ensure that the written agreement reflects the parties’ common intention. Accordingly, the standard of reasonableness applies to an arbitrator’s application of the doctrine of rectification.

Was the Board’s application of the doctrine of rectification reasonable?

[24] Rectification is described by the Supreme Court of Canada in Performance Industries Ltd. v. Sylvan Lake Golf & Tennis Club Ltd., 2002 SCC 19, [2002] 1 S.C.R. 678 as “an equitable remedy whose purpose is to prevent a written document from being used as an engine of fraud or misconduct ‘equivalent to fraud’ ” (at para. 31).

[25] The Supreme Court described the following four preconditions for rectification as a “high hurdle” (at para. 35):

1. the existence and content of a prior oral agreement between the parties that is inconsistent with a written agreement;

2. the party seeking rectification must show that the written document does not correspond with the prior oral agreement, and permitting the other party to take advantage of the mistake in the written document would be fraud or equivalent to fraud;

3. the party must show the precise form in which the written document can be made to express the prior intention of the parties; and

4. the party must establish all of the requirements on a standard of convincing proof (at paras. 37-41).

The Supreme Court also rejected an argument that due diligence by the party seeking rectification is a precondition to obtaining the remedy.

[26] The Board correctly set out the legal principles from Sylvan Lake in its reasons. It then applied the principles to the facts of the case and concluded that the Union had satisfied the four preconditions for rectification:

1. The April 2002 MOS reflects the parties’ agreement to include all O/T employees in the bargaining unit, subject to specific exclusions and opt-outs.

2. The version of Article 2.1 in the 2003-2007 collective agreement conflicts with the MOS because of the O/T exclusion that was inserted by mistake. The evidence showed that the mistake originated with the Employer because it was working with a past collective agreement and not the most recent version. Although there is no evidence of bad faith by the Employer, it was “not conscionable” to allow the Employer to take advantage of an inadvertent mistake.

3. The intended wording of Article 2.1 is “discernible without difficulty”.

4. The evidence satisfies the standard of convincing proof.

[27] The Employer argues that the decision is unreasonable because the Board did not have evidence before it of any prior agreement in 2003 that was inconsistent with the written terms of the 2003-2007 collective agreement. In the alternative, the Employer argues that the Board did not have evidence of a prior agreement in 2007 that was inconsistent with the language used in the recognition clause in the 2007-2011 collective agreement.

[28] The Board was satisfied that the evidence showed a prior agreement in 2003 that was inconsistent with the version of Article 2.1 in the collective agreement. This was a reasonable conclusion. The evidence is clear that the Employer’s proposals in February 2003 listed changes to Article 2. 1 under “Housekeeping Issues”, stating “amend language as agreed in Memorandum of Settlement dated April 19, 2002”. The MOS did not contemplate an exclusion of O/T staff from the bargaining unit. Moreover, there was no evidence that the parties engaged in any discussion of excluding O/T employees as a class from the bargaining unit. In my view, the Board very reasonably concluded that there was a prior agreement to include O/T staff in the bargaining unit, with some specific exceptions, and by mistake, the language of the 2003-2007 collective agreement excluded the O/T staff.

[29] The Employer also suggested that there was no evidence of a prior agreement at the time of the 2007-2011 negotiations, which continued the language of the recognition clause with the exclusionary language. While the Board did not address this argument specifically, it is implicit in the reasons that the parties’ prior agreement on the inclusion of the O/T staff continued, and the exclusionary language reflected an ongoing mistake. According to the evidence, the parties continued terms from the past collective agreement unless an issue was raised in bargaining with respect to a specific provision. There is no evidence that the recognition clause was on the bargaining table in the 2007-2011 round.

[30] The Board reasonably concluded that there was a prior agreement on the recognition clause, reached in 2002, that was not reflected in the collective agreements of 2003-2007 and 2007-2011 because of a mistake. The Board also reasonably concluded that it would be unconscionable to allow the Employer to rely on the mistake, given that the error in the collective agreement language resulted from the Employer’s drafting of the amendments using an earlier version of the collective agreement, its failure to highlight the addition of the exclusionary language and the designation of the changes to Article 2.1 as “housekeeping”. Indeed, one of the Employer’s witnesses conceded before the Board that the change made - excluding the O/T staff - would not be appropriately described as “housekeeping” in nature.

[31] The Employer argues that the Union failed to act with due diligence because its representatives signed off on the recognition clause in 2003 without having read it carefully. However, the Supreme Court of Canada made it clear in Sylvan Lake, above, that lack of due diligence does not preclude a party from seeking rectification.

[32] The Employer also argues that the Board has no jurisdiction to alter bargaining rights, and therefore, it inappropriately applied the doctrine of rectification. As I stated earlier in my discussion of the standard of review, the Board does have the jurisdiction to grant equitable remedies, including rectification. When the Board alters a recognition clause, as it did here, it is not altering bargaining rights in the collective agreement. Rather, it is ensuring that the language of the collective agreement reflects the parties’ true agreement with respect to the content of the recognition clause.

[33] Finally, the Employer argues that the Board unreasonably found that the third precondition for rectification was satisfied, because the precise form of the parties’ agreement was not readily discernible. This is said to be demonstrated by the fact that the parties were ordered to agree on language to reflect their agreement on the treatment of O/T staff.

[34] The Board held that the language that the parties would have incorporated in Article 2.1 was discernible without difficulty (at para. 59), although at that point, the precise language was not set out. The Board subsequently ordered the words “Office and Technical staff (save and except classifications specified in schedule “A1” and “A2”)” deleted from Article 2.1 (at para. 61).

[35] Had the Board stopped at this point, its decision would be a reasonable one, consistent with the legal principles concerning rectification set out in Sylvan Lake and NAV Canada. The language of exclusion, inserted in the article by mistake, would be removed to reflect the parties’ agreement.

Was the Board’s interpretation of the recognition clause, as rectified, reasonable?

[36] The Board did not stop at the point of ordering the removal of the exclusionary language. Instead, the Board went on, in a few lines in paragraph 61, to interpret the parties’ agreement on the treatment of O/T employees, concluding that they had agreed in the MOS that all O/T employees not otherwise excluded by the remaining exclusions “would fall within the bargaining unit represented by the union whether or not their positions are listed in Schedules A1 or A2.” The parties were then ordered to agree upon language to reflect that agreement.

[37] I agree with the Employer’s submission that this aspect of the Board’s order is unreasonable, given the Board’s earlier interpretation of Article 2.1 and the requirements for rectification set out in Sylvan Lake.

[38] First, the interpretation the Board gives here with respect to the O/T staff is inconsistent with the interpretation given in the first part of the award. There, the Board found that effect must be given to the words “as specified in Schedule A1 and A2.” The Board rejected the Union’s argument that the parties had agreed on an all employee unit. However, in para. 61, the Board states that O/T staff are in the bargaining unit whether or not in the classifications listed in the schedules. This fails to give meaning to the reference to Schedules A1 and A2 in the article, as it had in the earlier part of the award. Moreover, the Board provided no rational explanation for its interpretation of Article 2.1 once rectified to remove the exclusionary language. Accordingly, this part of the award does not meet the standard of reasonableness.

[39] Second, the order to the parties to draft new language to reflect their agreement is inconsistent with the requirement of the doctrine of rectification that the party seeking rectification show the precise form of the language on which the parties agreed. The parties’ agreement must be definite and ascertainable. In the present case, that requirement is met simply by the deletion of the offending exclusionary language in Article 2.1 that was inserted by mistake. That would bring the language in line with the language of the recognition clause from the MOS. It was unreasonable for the Board to order anything further.

Conclusion

[40] That brings me to the issue of remedy. Normally, when an administrative tribunal has made an unreasonable decision, the decision will be quashed and the matter referred back for a new decision. However, in the present case, that remedy is not appropriate. Neither party challenged the Board’s initial interpretation of Article 2.1.

[41] With respect to the remedy of rectification, the only aspect of the decision that is unreasonable is the order to the parties to agree on new language. That aspect of the award is severable from the rest of the award. Accordingly, I would allow the application for judicial review, set aside that part of the award ordering the parties to agree on new language that reflects an all employee O/T unit. This would leave in place the Board’s order that the language of the collective agreements in issue be amended to delete the exclusion of O/T staff from Article 2.1.

[42] As success on this application for judicial review has been divided, I would award no costs.

___________________________ Swinton J.

D.L. Corbett J.

Pomerance J.

Released:

CITATION: Metrolinx v. Amalgamated Transit Union, Local 1587, 2015 ONSC 4466

DIVISIONAL COURT FILE NO.: 560/14
DATE: 20150727

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Swinton, D.L. Corbett and Pomerance JJ.

BETWEEN:

METROLINX Applicant

• and -

AMALGAMATED TRANSIT UNION, LOCAL 1587 and GRIEVANCE SETTLEMENT BOARD Respondents

REASONS FOR JUDGMENT

Swinton J.

Released: July 27, 2015