CITATION: In the Matter of s. 10 of the Education Act, 2016 ONSC 2361

DIVISIONAL COURT FILE NO.: 590/14

DATE: 20160425

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

A.C.J.S.C. MARROCCO, SWINTON and SACHS JJ.

IN THE MATTER OF SECTION 10 OF THE EDUCATION ACT, R.S.O. 1990, c. E.2

AND

IN THE MATTER OF A CASE SUBMITTED BY THE MINISTER OF EDUCATION CONCERNING THE INTERPRETATION OF SECTION 177 OF THE EDUCATION ACT, R.S.O. 1990, c. E.2

Sara Blake, Brent Kettles, Josh Hunter, and Padraic Ryan, Counsel for the Applicant, Minister of Education

Michael Klug, Counsel for the Respondent, Canadian Union of Public Employees, Local 27

Gavin Leeb and Devon M. Paul, Counsel for the Respondent, Canadian Union of Public Employees, National Office

Glenn P. Christie and Kathryn L. Meehan, Counsel for the Respondent, Greater Essex County District School Board

Brian P. Nolan, Counsel for the Respondent, Windsor-Essex Catholic District School Board

Lewis Gottheil and James Harnum, Counsel for the Respondents, Unifor and Unifor, Local 2458

HEARD at Toronto: February 22, 23, 24, and 25, 2016

The court:

The problem

[1] The Minister of Education has brought a Stated Case asking us to determine that the Education Act, R.S.O. 1990, c. E.2 does not permit the Greater Essex County District School Board and the Windsor-Essex Catholic District School Board to continue to honour collective agreements requiring those Boards to pay for life insurance and health benefits for retired employees who are over 65 years of age.

[2] School Boards in Windsor have been paying for all or part of those benefits for 50 years.

The lead up to this Stated Case

[3] On April 3, 2013, the Assistant Deputy Minister of Education wrote to the Greater Essex County District School Board and the Windsor-Essex Catholic District School Board advising them that their long-standing practice of paying for retirement benefits for employees 65 years or older did not comply with the Education Act.

[4] In response to this correspondence, both School Boards advised their retired employees (or the surviving spouses of those employees) that payment for retirement benefits would end August 31, 2014.

[5] These actions precipitated policy grievances by Unifor Local 2458 and CUPE, Local 27.

[6] Unifor Local 2458 filed a policy grievance against the Windsor-Essex Catholic District School Board, while CUPE, Local 27 filed a policy grievance against the Greater Essex County District School Board.

[7] The CUPE, Local 27 policy grievance proceeded first and resulted in a Declaratory Award on July 29, 2014. The Declaratory Award allowed the policy grievance and declared that the provisions of the Collective Agreement stipulating that the Greater Essex County District School Board would pay retirement benefits for retired employees over the age of 65 were lawful and in compliance with the Education Act.

[8] The Declaratory Award directed the Greater Essex County District School Board to continue to comply with the Collective Agreement.

[9] The arbitrator who authored the Declaratory Award determined that s. 177(3) of the Education Act, which stipulates that a board could retain in an enumerated health benefit plan a retired employee until the retiree reached 65 years of age, had no prohibitive effect and did not render unlawful the provisions of the Collective Agreement stipulating that the Board would pay the cost of such benefits after a retiree reached the age of 65.

[10] On November 28, 2014, the Attorney General for Ontario launched an application for judicial review of the Declaratory Award.

[11] The Unifor policy grievances did not conclude because of this proceeding, and the judicial review application is on-going. Unifor and the Windsor-Essex Catholic District School Board agreed that the Board would continue to pay for the benefits in the interim.

[12] On December 18, 2014, approximately three weeks later, the Minister of Education forwarded a Stated Case to the Registrar of the Divisional Court, pursuant to s. 10 of the Education Act. The Stated Case asked the Court two questions:

• Do ss. 177(3) and 177(4) of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?

• Does any other section of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?

[13] Section 177 of the Education Act reads as follows:

177. (1) Subject to the Health Insurance Act, a board by resolution may provide,

(a) by contract either with an insurer licensed under the Insurance Act or with an association registered under the Prepaid Hospital and Medical Services Act,

(i) group life insurance for its employees or any class thereof and their spouses and children,

(ii) group accident insurance or group sickness insurance for its employees or any class thereof and their spouses and children, and

(iii) hospital, medical, surgical, nursing or dental services, or payment therefor, for employees or any class thereof and their spouses and children; and

(b) for payment by the board of the whole or part of the cost of any insurance or services provided under this subsection.

(2) A board may by resolution provide for paying the whole or part of the cost to employees of insured services under the Health Insurance Act.

(3) If a person retires from employment with a board before he or she reaches 65 years of age, the board may retain the person in a group established for the purpose of a contract referred to in clause (1) (a) until the person reaches 65 years of age.

(4) If a person is retained in a group under subsection (3), the premium required to be paid to maintain the person’s participation in the contract may be paid, in whole or in part, by the person or by the board.

[14] It should be noted that forwarding a Stated Case to the Divisional Court had the potential, strategic effect of substituting correctness for reasonableness as the standard of review of the arbitrator’s interpretation of s. 177(3) of the Education Act.

[15] The same panel of the Divisional Court heard both the Stated Case and the Judicial Review Application.

Unifor

[16] Unifor Local 2458 is the collective bargaining agent for two bargaining units of employees of the Windsor-Essex Catholic District School Board:

• One unit consists of custodial maintenance workers; and

• The other unit consists of office, clerical and technical workers.

[17] Unifor and its predecessors have had a collective bargaining relationship with the Windsor-Essex Catholic District School Board and its predecessors for decades.

CUPE, Local 27

[18] CUPE, Local 27 is the exclusive bargaining agent for all employees of the Greater Essex County District School Board employed in custodial, building maintenance and preventative maintenance. It has approximately 280 active members.

[19] CUPE Local 1358.1 is the exclusive bargaining agent for approximately 260 educational assistants employed by the Windsor-Essex Catholic District School Board. This Local did not participate in the Stated Case. There is one retirement benefit available to members of this Bargaining Unit; namely, a $12,000 life insurance policy.

[20] CUPE Local 1358.2 is the exclusive bargaining agent for approximately 113 employees of the Windsor-Essex Catholic District School Board who work as professional student services personnel, such as psychologists and youth workers. This Local did not participate in the Stated Case. There is one retirement benefit available to members of this Bargaining Unit; namely, a $12,000 life insurance policy.

[21] CUPE has also had a collective bargaining relationship with the Windsor-Essex Catholic District School Board and its predecessors for decades.

The retired employee benefits

[22] The Unifor collective agreements with the Windsor-Essex Catholic District School Board provide health and insurance benefits for retired employees over the age of 65 for life. Surviving spouses and other family members of these retired employees are also entitled to certain of these benefits.

[23] The CUPE, Local 27 Collective Agreement with the Greater Essex County District School Board provide a death benefit of $3,000 for life for retired employees over the age of 65, as well as a health benefit plan. The health benefits are semi-private hospital care, extended health care, a generic drug plan, a basic dental plan and vision care. These benefits are continued for a retired employee’s surviving spouse.

The two sides of the story

[24] The Minister took the position that the Education Act only permits payments to current employees. By paying for retirement benefits, the Minister maintained that the Greater Essex County District School Board and the Windsor-Essex Catholic District School Board were paying money to, or on behalf of, former employees and that these payments were not permitted by the Education Act.

[25] The Minister also pointed out that these benefits are expensive.

[26] Specifically, the present value of the Greater Essex District School Board’s obligation to pay for retired employee benefits was $29 million in 2013. This constitutes an obligation which the Board is required to eliminate over the next 10 years.

[27] The present value of the Windsor-Essex Catholic District School Board’s obligation to pay for retired employee benefits was $41 million in 2013, which that Board is also required to eliminate over the next 10 years.

[28] Focusing on the present value of this liability to retired employees only tells part of the story, because it leaves the impression that the Boards are paying for these benefits entirely. However, the evidence on the record before us disclosed a slightly more nuanced picture.

[29] During cross-examination on an affidavit he had provided for this proceeding, Mr. Jamieson, the President of CUPE, Local 27, explained how payment of retired employee benefits had developed. At page 17 of his cross-examination, Mr. Jamieson indicated that the employees started out with a certain percentage that they had to pay. Over the years, that percentage is reduced. Mr. Jamieson described how the reduction occurred during the collective bargaining process. Specifically, he said “so, say if they were going to give us, say, one dollar an hour, we would split and we would put $.50 an hour into benefits and $.50 an hour into wages.”

[30] Mr. Jamieson testified that he had personally participated in negotiations to this effect beginning in 1984. He insisted that the process was the same prior to that time, because he said he had seen literature on the subject in the CUPE, Local 27 offices as well as pay cheque stubs dating back to the 70s where “you could see the split with benefits.”

[31] Mr. Jamieson’s actual experience and observations reveal that negotiated wage increases were split between wages and benefits and that this practice was in effect in the 1970s.

[32] As a result, it seems that the more accurate way to look at payment for retired employee benefits is to say that, during each collective agreement negotiation for the last 40 years, the Greater Essex County District School Board, the Windsor-Essex Catholic District School Board and the bargaining agents for their unionized employees all agreed that a portion of the wages those Boards were willing to pay current employees would be used to pay for life insurance and health benefits for retired employees.

[33] Focusing on the present value of this liability to retired employees also creates the risk that the human side of the story will be forgotten.

[34] The human side of the story is reflected in Impact Statements and affidavits. Generally, these statements and affidavits reflected the following:

• The retired employees had been employed by one of the two Boards for 20 years or more;

• Today, the retirees and their spouses have health problems, such as heart attacks, cancer, diabetes, deteriorating discs and glaucoma;

• The retired employees’ current health problems would make the purchase of individual life insurance and health benefits either impossible or prohibitively expensive;

• The retired employees are likely receiving OMERS Pension income approximating $20,000 per year, Canada Pension Plan income approximating $9,500 per year and OAS income approximating $6,500 per year; and

• Immediately prior to retirement, employees received and relied upon statements from their employer, their union or both describing their retirement benefits:

o One retiree indicated that he would not have retired early (after 18 years of office and clerical work) to look after his wife, who faced significant health challenges, if he had known that his retirement benefits were going to be cancelled; and

o Another retiree, now over 70 years of age, indicated that she would have attempted to purchase life insurance and health benefits when she was younger and in better health, if she had known that her retirement benefits were going to cease.

Looking forward

[35] Finally, as a result of the Putting Students First Act, 2012, S.O. 2012, c. 11 (which has since been repealed), all school boards and bargaining agents in Ontario entered into collective agreements that specify that new retirees (after September 1, 2013) would not be eligible for employer contributions to their post-retirement benefits.

Question 1- Do ss. 177(3) and 177(4) of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?

[36] All parties agree that the answer to this question is “no”. Section 177(3) and 177(4) of the Education Act apply to retirees who are under the age of 65, not to retirees who are over the age of 65.

Question 2 – Does any other section of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?

The position of the parties

[37] The Minister and both Respondent School Boards take the position that the answer to this question is “no”. The Unions disagree. For the reasons set out below, we find that, under the Education Act, school boards are authorized to pay for post-retirement benefits for people who have reached the age of 65.

Sections 58.5 and 170(1)3 of the Education Act

[38] According to the Minister, a school board’s authority to enter into contracts and to spend taxpayer money is restricted to contracts and expenditures of a nature that are expressly and specifically authorized by the Education Act. If the Education Act does not detail or set out the power of a school board to incur a specific expenditure, the school board has no authority to incur that expenditure. The Minister submits that s. 177 of the Education Act is the only section in the Education Act that deals expressly with benefits, and it does not specifically authorize a school board to pay benefits for retirees who have reached the age of 65.

[39] The starting point for the Minister’s submissions on this point are ss. 58.5 and 170(1)3 of the Education Act.

[40] Section 58.5(1) of the Act provides:

Corporate Status

58.5(1) Every district school board is a corporation and has all the powers and shall perform all the duties that are conferred or imposed under this or any other Act.

[41] According to the Minister, s. 58.5(1) confirms that everything that a school board does must be authorized by the Education Act or “any other Act”.

[42] Section 170(1)3 reads:

Duties of boards

170(1) Every board shall…

Order payment of bills

3. give the necessary orders on the treasurer for payment of all money expended for school purposes and of such other expenses for promoting the interests of schools under the jurisdiction of the board as may be authorized by this Act or the regulations and by the board;…

[43] The Minister submits that the import of this section is to require that all payments that a school board makes must be explicitly authorized by the Education Act or the regulations. Section 171 of the Education Act confers almost 50 powers on school boards, including the power to do such things as establish and maintain school libraries and to purchase milk. Further, it does not contain a “basket” clause. According to the Minister, the level of specificity contained in s. 171, read in conjunction with s. 170(1)3, makes it clear that the Legislature intended to narrowly restrict a school board’s authority to spend money. If the expenditure is not specifically mentioned, it cannot be incurred. Since the Education Act does not specifically authorize the payment of benefits to retirees who have reached the age of 65, the expense cannot be incurred.

Analysis

[44] With respect to the Minister, while we accept that school boards are creatures of statute, which in turn means that their powers to pay an expenditure must be authorized by the Education Act, we do not agree that the meaning or effect of ss. 58.5 and 170(1)3, whether read together or separately, is that unless the Education Act contains a specific and detailed provision authorizing school boards to pay premiums to maintain benefits for retirees who have reached the age of 65, the boards have no authority to incur such an expense.

[45] Statutes must be interpreted contextually and to give effect to the intention of the Legislature. As the Supreme Court of Canada held in Rizzo v. Rizzo Shoes Ltd.(Re), 1998 837 (SCC), [1998] 1 S.C.R. 27, by citing the work of Professor Elmer Driedger at para. 21:

… Elmer Driedger in Construction of Statutes (2nd ed. 1983) best encapsulates the approach upon which I prefer to rely. He recognizes that statutory interpretation cannot be founded on the wording of the legislation alone. At p. 87 he states:

Today there is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament.

[46] First, it is important to note that s. 58.5(1) is not restrictive in its wording; it is permissive. It confers on school boards a specific legal personality, that of a corporation. It grants to those boards all of the powers conferred on them by any applicable legislation. It also imposes an obligation on them to comply with any duties imposed on them by any applicable legislation. This obligation is reinforced by s. 170(1)18 of the Education Act, which requires a board to do anything that it is “required to do under any other provision of this Act or under any other Act.”

[47] The Education Act was amended in 1997 to make it clear that the conduct of a school board was broadened in scope, so that it was no longer restricted to acting for school purposes. Specifically, both ss. 58.5(1) and 170(1)18 were first introduced into the Education Act in 1997 by the Education Quality Improvement Act, 1997, S.O. 1997, c. 31. Prior to the 1997 amendments, s. 56(3) of the Education Act, R.S.O. 1990, c. E.2, which was broadly analogous to s. 58.5(1), provided that:

[a] divisional school board [like the school boards who are parties to this Reference]…is a corporation that has all the powers and shall perform all the duties that by this or any other Act are conferred or imposed upon, (a) a public school board for public school purposes; and (b) a secondary school board for secondary school purposes. (unamended form)

[48] When the Legislature amended the Education Act in 1997 and replaced s. 56(3) with the current s. 58.5(1), it deleted the reference to “school purposes.” At the same time, it introduced the broad paragraph 18 into the s. 170(1) list of school board duties. Both amendments reflect a legislative intent to expand the general authority of school boards to lawfully act.

[49] The Labour Relations Act, 1995, S.O. 1995, c. 1, Sch. A is just one of the many “other Acts” that confer powers and duties on a school board. Most significantly, for the purposes of this Reference, it is not disputed that under the Labour Relations Act (and by virtue of ss. 58.5(1) and 170(1)18 under the Education Act), a school board has both the authority to enter into a collective agreement and the obligation, under ss. 17 and 56 of the Labour Relations Act, to “bargain in good faith and make every reasonable effort to make a collective agreement” and to be bound by the agreement that it makes.

[50] Section 170(1)3, read in context, also does not have the meaning ascribed to it by the Minister. It does not say that a board only has the authority to spend money if the expenditure is specifically authorized by the Education Act. Rather, it imposes on every board the duty to order its treasurer to pay “all money expended for school purposes”, and to pay “such other expenses for promoting the interests of the schools under the jurisdiction of the board as may be authorized by this Act or the regulations and by the board”.

[51] This duty is just one of the long list of duties that boards have under s. 170(1). One of those duties is set out at s. 170(1)18, namely the duty to do anything it is required to do under the Education Act or any other Act. Section 170(1)3 in no way qualifies or controls the duty set out at s. 170(1)18.

[52] Further, s. 170(1)3 makes it clear that the school board has a duty to get its treasurer to pay any expense that it incurs for a “school purpose”. In Windsor Roman Catholic Separate School Board et al. v. Southam Inc. et al. (1984), 1984 2084 (ON SC), 46 O.R. (2d) 231 (H.C.), the Court considered whether maintaining an action for libel could be considered doing something for a “school purpose”. The Court found that “the importance and scope of education in today’s world requires that the words ‘school purposes’ be construed liberally”, and that protecting the standing and reputation of the board in the community by bringing a libel action fell within the definition of “school purposes”.

[53] The benefits at issue in this reference are far more directly linked to a school purpose. They were negotiated as part of the compensation package for employees that are key to running a school, such as the people who help keep the buildings and grounds maintained and clean. Paying the expenses associated with making sure that schools are maintained and kept clean is easily justifiable as an expense incurred for a “school purpose.” Compensating its employees, including its former employees, in compliance with a legally binding collective agreement, is also acting for a “school purpose.”

[54] Aside from being inconsistent with the wording and the history of ss. 58.5(1) and 170(1)3, the Minister’s argument that these sections require that every expense that a school board incurs be specifically detailed in the Education Act would mean that it is necessary to find specific powers in that Act for all of the myriad obligations that school boards have undertaken in their collective agreements, something that is clearly inconsistent with the manner in which the parties have collectively bargained with each other in the past. The collective agreements at issue in this Reference authorize the payment for such things as: sick leave credits; pregnancy and parental leaves for clerical and office workers; driving allowances and uniforms, etc. These are just a few of the obligations that are not specifically authorized by the Education Act.

[55] Sections 58.5(1) and 170(1)18 are both drafted very broadly, vesting a virtually unrestricted statutory authority to act, provided only that there be some basis for the board’s actions in a valid statute. While school boards may only exercise the powers expressly or impliedly conferred on them by statute, included in this authority are any general powers conferred by the legislation.

[56] Sections 58.5(1) and 170(1)18 reflect a legislative intent that school boards not be limited in conducting their affairs to those functions that are specified in the Education Act. Rather, school boards should be free to act as modern, democratic, dynamic legal personalities, provided only that there be some statutory foundation for, and no express statutory prohibition of, their conduct. Should the Minister become concerned about a school board incurring a specific kind of liability, the Education Act can be amended to prohibit boards from doing so.

[57] As set out in s. 0.1 of the Education Act (i.e., the “purpose” section of the Act): “[a] strong public education system is the foundation of a prosperous, caring and civil society”, and “[a]ll partners in the education sector, including… the boards, have a role to play in enhancing student achievement and well-being, closing gaps in student achievement and maintaining confidence in the province’s publicly funded education systems.” An approach grounded in the necessity to find specific statutory authority for every expense incurred by a school board would undermine the ability of school boards to effectively fulfill their important statutory purpose.

[58] In our view, the issue is not whether the Education Act contains a specific provision empowering school boards to pay the premiums to maintain benefits for their retired employees who have reached the age of 65, but whether such a power can be implied as being incidental to, or a consequence of, another power that is contained in the Act. In considering this issue it is important to keep in mind s. 78 of the Legislation Act, 2006, S.O. 2006, c. 21, Sch. F: “If power to do or to enforce the doing of a thing is conferred on a person, all necessary incidental powers are included.”

The sections of the Education Act that do authorize school boards to pay post-retirement benefits for people over 65

Sections 58.5(1), 170(1)3 and 170(1)18

[59] We have already discussed how s. 58.5(1) imposes upon school boards the duty to comply with its obligations under the Labour Relations Act, which includes its obligation to bargain in good faith and to comply with the collective agreements they have entered into. This duty is reinforced by s. 170(1)18. Further, the expense associated with paying these benefits is an expense for a “school purpose” within the meaning of s. 170(1)3 of the Education Act.

Section 171(1)3

[60] Section 171(1)3 states:

Powers of boards

171(1) A board may,

appoint employees

3. except as otherwise provided under this Act, appoint and remove such …servants…, as it considers expedient, determine the terms on which such…servants…are to be employed, prescribe their duties and fix their salaries…

[61] The archaic reference to “servants” in this section must be interpreted in a manner consistent with the rest of the Act and the modern equivalent, namely “employee”. There is no issue that the retirement benefits in question were negotiated as part of the compensation package for employees who were active employees at the time the benefits were negotiated. The question then becomes whether a term of employment for a “servant” may include a commitment by a school board to provide for compensation and benefits, payable after retirement, without restriction as to age.

[62] The Divisional Court dealt with this question in Re Liquor Control Board of Ontario et al. and Ontario Liquor Board Employees’ Union et al. (1980), 1980 1857 (ON SC), 114 D.L.R. (3d) 715 (Div. Ct.) and found at pages 7 to 9:

The question then is whether or not the insurance benefits for retirees are terms and conditions of employment for those who are currently employed and for which the union may negotiate.

…in other words, they wish to bargain to improve the retiree benefits from time to time because they themselves will be retired in the future and it would protect their own future interest. They state that employees, as part of the total compensation package for which they were bargaining, included this as one item of importance and therefore were willing to weigh it with the other monetary benefits that may have been of more immediate benefit to them. Collective bargaining must cover items that come within the scope of the Act.

In Pulp & Paper Industrial Relations Bureau v. Canadian Paperworkers Union, [1978] 1 Canadian L.R.B.R. 60, the difference between the American and Canadian approach was specifically considered by the B.C. Labour Relations Board and it concluded that retirees’ benefits were proper terms and conditions of employment to be considered in a collective agreement. I am of the opinion that the same applies in Ontario as in British Columbia.

[63] On this Reference, the evidence is uncontradicted that the employees in question, before they retired, bargained for the benefits at issue as part of their compensation package and gave up other more immediate monetary benefits in return. Thus, one of the terms of their employment that the school boards agreed to under their collective agreements was the payment of these benefits. Applying the reasoning in Liquor Control Board, we find that s. 171(1)3 gave the school boards the power to agree to this term of employment. We do so keeping in mind that the wording of s. 171(3) is clear – the school board has the authority to negotiate all of the terms of its employees’ employment “except as provided in the Act”. That is, unless the Act has taken the term off the table, it may be negotiated.

Does s. 177 confer authority on a school board to provide post-retirement benefits to those over 65 years?

The bargaining context

[64] All parties rely on the decision of the Supreme Court of Canada in Durham Regional Police Association v. Durham Regional Board of Police Co., 1982 61 (SCC), [1982] 2 S.C.R. 709 to support their positions. The issue in that case was the authority of an interest arbitrator to include a clause in a collective agreement providing for the indemnification of a police officer’s legal fees when he or she was acquitted of a criminal or statutory offense flowing from police duties. A provision of the legislation conferred discretion on a municipality to pay the costs of a police officer in a civil or criminal proceeding.

[65] Section 29(2) of the Police Act, R.S.O. 1970, c. 351 permitted collective bargaining over “working conditions”, unless the working conditions were the subject of a regulation under the Act. The Supreme Court upheld the arbitration award. In a passage relied upon by the Minister in the present case, the Court stated that “in the absence of statutory authority for indemnification of legal expenses incurred by members of the police force, a municipality would not have power to provide it” (at p. 713). However, the Court held that the legislation did confer that authority, and the indemnification of legal expenses could be a subject of collective bargaining, absent a prohibition on bargaining that issue.

[66] With Durham in mind, the issue before us is whether there is statutory authority to provide benefits to retirees over 65 years in s. 177(1) and whether there is prohibition on doing so in ss. 177(3) and 177(4).

[67] As already noted, s. 177 currently reads:

177. (1) Subject to the Health Insurance Act, a board by resolution may provide,

(a) by contract either with an insurer licensed under the Insurance Act or with an association registered under the Prepaid Hospital and Medical Services Act,

(i) group life insurance for its employees or any class thereof and their spouses and children,

(ii) group accident insurance or group sickness insurance for its employees or any class thereof and their spouses and children, and

(iii) hospital, medical, surgical, nursing or dental services, or payment therefor, for employees or any class thereof and their spouses and children; and

(b) for payment by the board of the whole or part of the cost of any insurance or services provided under this subsection.

(2) A board may by resolution provide for paying the whole or part of the cost to employees of insured services under the Health Insurance Act.

(3) If a person retires from employment with a board before he or she reaches 65 years of age, the board may retain the person in a group established for the purpose of a contract referred to in clause (1) (a) until the person reaches 65 years of age.

(4) If a person is retained in a group under subsection (3), the premium required to be paid to maintain the person’s participation in the contract may be paid, in whole or in part, by the person or by the board.

The positions of the parties

[68] The Minister submits that nothing in s. 177 of the Act authorizes school boards to provide the benefits set out in s. 177(1) to individuals who have retired from employment and who are 65 years of age or older. A school board can provide benefits only to employees, their spouses and children. The Minister interprets “employees” to include only active employees – that is, those who are still in an employment relationship.

[69] The Minister submits that s. 177(3) authorizes a school board to extend coverage to retirees that, under s. 177(1)(a), is restricted to employees, their spouses and children. However, that coverage can be provided only until the retired person reaches 65 years of age. Section 177(4) authorizes a school board to pay in whole or in part for this coverage, but nothing in s. 177(3) authorizes a school board to extend insurance coverage to retired employees after they reach the age of 65.

[70] The Unions agree that s. 177(3) does not authorize school boards to extend insurance coverage to retired employees over 65 years of age. However, they argue that s. 177(1) permits school boards to provide post-retirement benefits to retirees over 65 years of age, given its wording, the wording of other sections that follow, and the absence of a clear prohibition on bargaining for post-65 retirement benefits in the Act.

Analysis

[71] As stated earlier in these reasons, the appropriate approach to the interpretation of a statute requires the words of the Act to be interpreted in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of the Legislature.

The wording of s. 177

[72] Section 177(1) permits a school board to provide insurance and benefits for “employees or any class thereof”. On its face, the authority to provide benefits to “employees or any class thereof” can provide authority to provide benefits for retired employees. Such benefits are negotiated and promised as part of the compensation package at the time the individual is in active employment but enjoyed after retirement.

[73] The Minister takes comfort that retired persons are not “employees” because of provisions in the employee benefit booklets provided to employees of the Respondent School Boards. For example, the Sun Life Financial booklets define the group covered as permanent employees who are actively working for the employer at least 15 hours a week and who have completed a specified waiting period. However, there is a problem with this submission. The Minister fails to look further in the booklet, which explicitly has a section on the insurance benefit that group members can expect to receive during retirement.

[74] The conclusion that “employee” benefits can include benefits for retirees is consistent with the decision in Re James et al and Town of Richmond Hill (1986), 1986 2694 (ON SC), 54 O.R. (2d) 555 (H.C.), where the Court was interpreting a provision of the Municipal Act, R.S.O. 1960, c. 249 with wording similar to the wording of s. 177(1) of the Education Act. The Court held that the words “employees or any class thereof” permitted the municipality to enter into a contract of employment that ensured a retired employee and his or her spouse would receive life insurance coverage after retirement with premiums paid by the municipality. The words of the Court are apt (at pp. 561-562):

In my opinion, s. 377, para. 61 of the 1960 Municipal Act should not be given an interpretation that would frustrate the employment contract entered into with the applicants. I prefer to interpret the section in such a way as to sanctify that contract entered into by the municipality in good faith with its employees.

In the absence of any words of limitation as to the type or duration of group life insurance that might be placed, I hold that s. 377, para. 61 of the 1960 Municipal Act is broad enough to authorize the municipality to place group life insurance on employees that would continue in force at the expense of the municipality after the retirement of the employee. I need not decide whether the 1972 amendment introducing the definition of “retired employee” in any way changed the authority of the municipality to place life insurance, because that amendment occurred after the current agreements had been entered into.

I am fortified in my view that the 1960 Municipal Act authorized the placing of life insurance beyond the term of employment of the employee, by the fact that the same legislation by s. 377, para. 59 authorized municipalities to pass by-laws for providing pensions for “employees or any class thereof”. It would be ridiculous to suggest that pensions provided under this section should only have effect during the term of employment of the employee. The basic concept of the pension is to provide benefits to retired employees. In my view, it is reasonable to conclude that the Legislature intended that the municipality could provide for both group life insurance and pensions that would benefit the employees after retirement.

[Italics in original]

Reading s. 177 as a whole

[75] The Minister argues that s. 177(1)(a) gives authority to enter into benefit plans for active employees, while s. 177(1)(b) provides the authority to pay for them. Section 177(3) then authorizes the extension of a plan to certain retirees, and s. 177(4) gives the authority to pay for the retiree benefits.

[76] In our view, the Minister’s reading is not consistent with the language of the section, particularly when the statutory history of the provision is also considered.

[77] Section 177(3) provides authority to a school board to “retain” a person in a group established for purposes of a contract referred to in s. 177(1)(a). This would allow a person taking early retirement (before age 65) to continue enjoying the same benefit plans that he or she had enjoyed prior to retirement, rather than leaving it to the individual to seek out coverage in the insurance market. This would provide a transition to the public benefit schemes that come into play at age 65, such as the Ontario Drug Benefit program, and it would likely provide a more attractive price for the benefits than individuals could find on their own.

[78] Notably, the language of s. 177(3) is permissive, not prohibitory. It does not restrict boards from providing benefits for those over 65 in a plan in accordance with s. 177(1)(a). Rather, it permits certain benefits for individuals retiring before 65.

[79] Similarly, the wording of s. 177(4) is not prohibitory. It permits a school board to pay, in whole or in part, for the benefits of those retirees under 65 who are retained in a group. It does not prohibit the payment of benefits for those over 65 years.

The legislative history of s. 177

[80] In R. v. Ulybel Enterprises Ltd., 2001 SCC 56, [2001] 2 S.C.R. 867, at para. 33, the Supreme Court of Canada stated that: “Prior enactments may throw some light on the intention of Parliament in repealing, amending, replacing or adding to a statute…” The legislative history of s. 177 is helpful in its interpretation.

[81] The history of s. 177 begins with s. 37(1) of The Schools Administration Act, 1954, S.O. 1954, c. 86. This section permitted a school board to provide certain benefits for employees, or any class thereof, and for wives and children, such as insurance and health benefits. However, s. 37(2) provided that the school board’s contributions could not exceed the contributions made by employees. There was no mention of retirees in this provision.

[82] The section was amended in 1959 (The Schools Administration Amendment Act, 1959, S.O. 1959, c. 92) to add s. 37(1a) that allowed a school board to make a similar contribution to an employee’s cost of the (then) new hospital care insurance. In the 1960 consolidation, the section was renumbered s. 41 (The Schools Administration Act, R.S.O. 1960, c. 361). Subsection 41(3) was subsequently amended in 1968 to allow the school board to make contributions that did not exceed twice the contributions made by employees (The Schools Administration Amendment Act, 1968, S.O. 1968, c. 121, s. 14).

[83] The section was replaced by s. 46 in 1972 (The Schools Administration Amendment Act, 1972, S.O. 1972, c. 77, s. 24). Sections 46(1)(b) and 46(2) permitted the school board to pay the whole or part of the cost of any insurance or services provided under s. 46(1)(a), or the whole or part of the cost to employees of insured services under The Health Insurance Plan,1972, S.O. 1972, c. 91.

[84] In 1973, the first legislative amendment to mention retirees was made. Windsor Public School Board had already agreed to provide benefits for retirees in its 1966 collective agreement with CUPE, Local 27 and the Windsor Catholic Board had agreed to do so in 1968 with the predecessor of Unifor Local 2458.

[85] The 1973 amendment (The Schools Administration Amendment Act, 1973, S.O. 1973, c. 92, s.13) added subsection (3) to s. 46, which now reads:

46. (3) A board may retain a person who retires from employment with the board before he attains the age of sixty-five years in a group established for the purposes of a contract referred to in clause a of subsection 1 until he attains such age if he pays the full premium required to be paid to retain his participation in the contract.

[86] The language speaks of retention in an established group, with the condition that the individual pay the full premium to continue with the benefit plans. The language is not framed as a limitation on a school board’s ability to bargain for benefits for retirees in a form other than retention in an established group plan. Thus, the Legislature’s declared limitation in 1973 was that if a school board retained a retiree who was under the age of 65 in an established group insurance plan, the employee had to pay the premium.

[87] In 1974, The Schools Administration Act was repealed and replaced by The Education Act, 1974, S.O. 1974, c. 109. Section 152 replaced s. 46. That section was renumbered s. 177 in the 1990 consolidation (Education Act, R.S.O. 1990, c. E.2).

[88] The next important change came in 1994, when s. 177(3) was repealed and replaced by the present s. 177(3) and (4) as they currently stand (Statute Law Amendment Act (Government Management and Services), S.O. 1994, c. 27, Part VI, s. 108(7)). Again one finds the language authorizing retention of a person in a group plan in s. 177(3), but there is new language governing payment for the coverage found in a new s. 177(4). Specifically, the premium required to maintain participation in a plan may be paid either by the individual or the school board, in whole or in part. According to the Minister, this amendment was enacted as part of fiscal restraint legislation in order to enable school boards to provide incentives for early retirement by offering “attractive early retirement packages”: see Ontario Hansard, December 1, 1994, p. 8116.

[89] The Greater Essex County District School Board argues there would be no need for s. 177(4) if a school board could always pay for post-retirement benefits. In effect, the Board argues that the authority to pay for retiree benefits for those under 65 implicitly prohibits payment of benefits for those over 65.

[90] However, the purpose of s. 177(4) appears to have been to expand the authority of school boards to provide benefits for early retirees who continued to participate in their pre- retirement plans. It was necessary for the Legislature to provide such authority in order to remove the restriction on such payments by school boards that had been found in the previous version of s. 177(3).

[91] In conclusion, the history of s. 177 shows that it originally gave a broad authority to provide benefits for employees or a class thereof. When mention was first made of retirees, the language suggested an extension of a benefit for a class of retirees – those retiring before 65 years – coupled with a restriction concerning the payment for that specific benefit. However, there was never a prohibition that would limit the authority to provide benefits for retirees over 65 under s. 177(1).

The wording of the following sections in Part VI

[92] The Legislature is assumed to use words consistently in related legislative provisions. Accordingly, the Unions argue that s. 177(1) provides authority to pay for benefits post- retirement because “employee or any class thereof” must include retired employees to be consistent with other benefit provisions in Part VI of the Act: i.e., pensions in s.178(1), retirement allowances in s. 179(1) and sick leave gratuities in s. 180. Those sections, read closely, include retired employees within the term “employees.”

[93] Section 178(1) of the Act allows a school board to provide pensions “for employees or any class thereof” through OMERS. Section 178 is the only section in this part of the Act that defines “employee”, stating in s. 178(3) that an employee does not include a teacher or others who are eligible to participate in the Ontario Teachers’ Pension Plan. The term “employees or any class thereof” in s. 178(1) must include retired employees, as only former employees will receive a pension.

[94] Section 179(1) deals with retirement allowances. It states that a school board may grant an annual retirement allowance to “any employee” of the board with at least 20 years of service and who “is retired because of age” or who becomes incapable “while in the service”. Thus, the section refers to two types of “employees” who are no longer in active service. Section 179(2) allows a retirement allowance to be paid to the surviving spouse of each “employee” – referring to the spouse of an “employee” who has already been granted a retirement allowance. Section 179(4) limits the application of the section to “employees who were in the employ of the board” on or before July 1, 1954. Thus, in this section, an “employee” includes a retiree.

[95] Section 180 deals with payment of sick leave credit gratuities “for employees or any class thereof” on the termination of the employee’s employment. Thus, a person who is no longer in active employment is called an “employee” in this section as well.

[96] Thus, reading the sections in Part VI consistently, the term “employee or class thereof” is not restricted to “active” employees and can include those who are retired from employment.

Conclusion respecting s. 177

[97] In summary, s. 177(1), when read in conjunction with the rest of the section and the other provisions in the Act, all against the backdrop of the legislative history, provides authority for a school board to provide benefits for retirees over the age of 65.

Other Issues

[98] In light of this finding, there is no need to deal with the other issues raised by the Unions, which included arguments that the doctrines of issue estoppel, collateral attack and abuse of process prevented the Ministry from re-litigating the same issue that was decided by the arbitrator’s Declaratory Award. The Unions also argued that if this Court found that the Education Act precludes the provision of benefits to retired employees over 65, then, to this extent, the Education Act is in breach of ss. 2(d) and 15(1) of the Canadian Charter of Rights and Freedoms, breaches that cannot be justified under s. 1.

Conclusion

[99] For these reasons, we would answer the questions put to the Court as follows:

1. Do ss. 177(3) and 177(4) of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?

Answer: No

2. Does any other section of the Education Act authorize a school board to pay for post-retirement benefits of the nature described in s. 177(1) of the Education Act on behalf of persons who have retired from employment with the board and have reached the age of 65?

Answer: Yes

Costs

[100] Failing agreement, the parties may make submissions in writing on the question of costs. The Unions shall make their submissions within 15 days of the release of these reasons, and the other parties shall make their submissions within 15 days after receipt of the Unions’ submissions.

A.C.J.S.C. MARROCCO

SWINTON J.

SACHS J.

Released: 20160425

CITATION: In the Matter of s. 10 of the Education Act, 2016 ONSC 2361

DIVISIONAL COURT FILE NO.: 590/14

DATE: 20160425

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

A.C.J.S.C. MARROCCO, SWINTON and SACHS JJ.

IN THE MATTER OF

SECTION 10 OF THE EDUCATION ACT, R.S.O 1990, c. E.2

AND

A CASE SUBMITTED BY THE MINISTER OF EDUCATION CONCERNING THE INTERPRETATION OF SECTION 177 OF THE EDUCATION ACT, R.S.O 1990, c. E.2

REASONS FOR JUDGMENT

By the Court

Released: 20160425