Canadian Union of Public Employees and its Local 1317 v. The Niagara Catholic District School Board, 2017 ONSC 3099

CITATION: Canadian Union of Public Employees and its Local 1317 v. The Niagara Catholic District School Board, 2017 ONSC 3099

DIVISIONAL COURT FILE NO.: DC-16-463-JR DATE: 20170612

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

MARROCCO, A.C.J., KITELEY, J. and H.J. WILTON-SIEGEL, J.

BETWEEN:

CANADIAN UNION OF PUBLIC EMPLOYEES AND ITS LOCAL 1317 Applicant

– and –

THE NIAGARA CATHOLIC DISTRICT SCHOOL BOARD Respondent

Howard Goldblatt, for the Applicant

Mark D. Contini, for the Respondent

HEARD at Toronto: May 17, 2017

Wilton-Siegel J.

1On this application, the applicant, the Canadian Union of Public Employees and its Local 1317 (the “applicant” or the “Union”), seeks judicial review of an award of arbitrator Larry Steinberg (the “Arbitrator”) dated May 27, 2016 (the “Award”). In the Award, the Arbitrator dismissed a grievance alleging that the Niagara Catholic District School Board (the “respondent” or the “Employer”) had been calculating the retirement gratuities of employees who work less than 12 months of the year in a manner that violated the collective agreement between the parties.

Factual Background

2The Union and the Employer are parties to a collective agreement governing the period September 1, 2008 to August 31, 2012 (the “Collective Agreement”). Some employees in the bargaining unit work for only 10 months of the year, some work for 11 months and others work for the entire 12 months.

3Under the Collective Agreement, employees earn two sick days per month, up to a maximum of 370 days over the course of their employment. Upon retirement, Article 20.03 entitles employees to a retirement gratuity based on accumulated unused sick days. Articles 20.03(a) and (f) prescribe a formula for calculating the retirement gratuity, the interpretation of which is disputed by the parties and forms the substance of this application for judicial review.

4Article 20.03(a) states that an employee “…shall receive payment for 50% of his/her accumulated sick leave to a maximum of six (6) month’s earnings, based on the actual yearly earnings at January 1, 1999.”

5Article 20.03(f) states that “[t]he retirement gratuity shall be a maximum of 50% of the salary of his/her accumulated sick leave to a maximum of six (6) months earnings, based on the actual yearly earnings at January 1, 1999.”

6Article 20.03 also contained the following statement in capital letters following Article 20.03(f): It is understood that the Ontario Municipal Act limits a maximum payment of six (6) months salary.

7Section 281 of the Municipal Act, 2001, S.O. 2002, c. 25, states:

281. (1) Under a plan of sick leave credit gratuities established for employees by a municipality, on the termination of employment, no employee is entitled to more than an amount equal to the salary, wages or other remuneration for one-half the number of days standing to his or her credit up to a maximum of one-half year’s earnings at the rate received by him or her immediately before termination of employment.

(2) Any local board may establish a plan of sick leave credit gratuities for employees or any class of them and this section applies with necessary modifications to the local board.

8The Employer calculated the retirement gratuity for employees who worked less than 12 months per year by dividing the yearly earnings of the employee in half. Under this formula, an employee who had worked 12 months of the year would receive six months earnings, while an employee who had worked 10 months of the year would receive only five months earnings (even if they had accumulated the same number of unused sick days).

The Differing Approaches of the Parties to Calculation of the Retirement Gratuities

9The issue before the Arbitrator was limited to the operation of the formula in Article 20.03 in the circumstances in which the cap of “six months earnings” comes into play. The parties are agreed that, for this purpose, the “actual yearly earnings at January 1, 1999” of an employee means the employee’s aggregate earnings in the calendar year 1998, herein the “1998 earnings”. The difference between the parties relates to the determination of “six (6) months earnings”. I note that the difference in wording between Articles 20.03(a) and (f) respecting the cap is not considered material. In this Endorsement, the term “six months earnings” refers to the cap in each of these provisions.

10The Union argues that the proper approach is to divide the employee’s 1998 earnings by the number of months that the employee worked in the year of retirement and to multiply the result by six.

11The Employer argues that the proper approach is to divide the employee’s actual yearly earnings at January 1, 1999 by twelve to get the employee’s monthly average 1998 earnings and to multiply that number by six. It says that its approach of dividing the employee’s 1998 earnings by one-half was a simple way of arriving at the same arithmetic result.

The Arbitrator’s Decision

12The Arbitrator defined the issue before him as the correct way to calculate the retirement gratuity for employees who work less than 10 months per year. He expressed the relevant formula as follows:

50% of their accumulated sick leave to a maximum of six (6) months earnings, based on the actual earnings at January 1, 1999.

I observe that the Arbitrator omitted the word “yearly” from this statement but nothing turns on his omission.

13After describing the approach of each of the parties to the proper calculation of the retirement gratuity, which has been set out above, and referring to an example discussed below, the Arbitrator set out his reasons for reaching the conclusion that the Employer correctly determined the retirement gratuity. He began by observing that, since the parties were agreed that the “actual yearly earnings” of an employee were the employee’s 1998 earnings, the dispute centred “on what six months earnings amount to in relation to the actual yearly earnings”.

14The Arbitrator compared the two differing approaches in paragraphs 16 and 17 of the Award as follows:

16The disputes [sic] centres on what six months earnings amount to in relation to the actual yearly earnings. The employer adopted an approach that is simple to administer, namely divide the yearly earnings in half. This is also consistent with the language used in the Act since it does reflect a “half year’s earnings”.

17However, the parties did not use the language from the Act. They used the concept of six months earnings which seems to imply that they contemplated converting the yearly earnings amount to a monthly earnings amount. On this view, the union’s approach is consistent with the language the parties actually used in the collective agreement.

15The Arbitrator then stated that, in his view, both of the parties’ approaches were reasonable. He considered that, in these circumstances, “the question boils down to what the parties intended by the reference to the Municipal Act”, which he reasoned “must mean something and must be given meaning.”

16The Arbitrator held that the language in the Municipal Act was unambiguous, providing that “sick leave gratuities should be capped at one half of what an employee would earn in a year, being 6 months of earnings for employees who work 12 months and 5 months of earnings for employees who work 10 months of the year.

17The Arbitrator questioned whether the parties intended to depart from this paradigm when they used the expression “six month’s earnings” in Articles 20.03(a) and (f). He concluded that there was not. In particular, he concluded that there was no policy reason advanced that would explain why one group of employees would or should be entitled to a proportionately greater amount than another group of employees. This comment refers to the example discussed below.

18The Arbitrator then concluded by stating that, while the language in the Collective Agreement was “less than precise”, on balance he found that the intention of the language was “to reflect the maximum entitlement in the Act for the retirement gratuity.”

Jurisdiction of the Court and Standard of Review

19It is not disputed that this Court has jurisdiction to hear this judicial review under ss. 2 and 6 of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1.

20The parties also agree that the applicable standard of review of a decision of a labour arbitrator is reasonableness: see Nor-Man Regional Health Authority Inc. v. Manitoba Association of Health Care Professionals, 2011 SCC 59, [2011] 3 S.C.R. 616, at para 31: “Prevailing case law clearly establishes that arbitral awards under a collective agreement are subject, as a general rule, to the reasonableness standard of review.”

21As set out in Dunsmuir v. New Brunswick, [2008] 1 SCR 190, 2008 SCC 9 at para. 47, there are two aspects to reasonableness:

Reasonableness is a deferential standard animated by the principle that underlies the development of the two previous standards of reasonableness: certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range of acceptable and rational solutions. A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

22The Employer also referred to the following dicta in Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62 at paras. 14-18 and, in particular, the following statements:

15In assessing whether the decision is reasonable in light of the outcome and the reasons, courts must show “respect for the decision-making process of adjudicative bodies with regard to both the facts and the law” (Dunsmuir, at para. 48). This means that courts should not substitute their own reasons, but they may, if they find it necessary, look to the record for the purpose of assessing the reasonableness of the outcome.

17The fact that there may be an alternative interpretation of the agreement to that provided by the arbitrator does not inevitably lead to the conclusion that the arbitrator’s decision should be set aside if the decision itself is in the realm of reasonable outcomes. Reviewing judges should pay “respectful attention” to the decision-maker’s reasons, and be cautious about substituting their own view of the proper outcome by designating certain omissions in the reasons to be fateful.

18Evans J.A. in Canada Post Corp. v. Public Service Alliance of Canada, 2010 FCA 56, [2011] 2 F.C.R. 221, explained in reasons upheld by this Court (2011 SCC 57, [2011] 3 S.C.R. 572) that Dunsmuir seeks to “avoid an unduly formalistic approach to judicial review” (para. 164). He notes that “perfection is not the standard” and suggests that reviewing courts should ask whether “when read in light of the evidence before it and the nature of its statutory task, the Tribunal’s reasons adequately explain the bases of its decision” (para. 163). ... [italics added]

The Issues on this Application

23The Arbitrator found that the Employer’s approach reflected the intention of the parties regarding the calculation of retirement gratuities when the cap in Article 20.03 is engaged. The issue for the Court is whether the Award is reasonable in accordance with the principles set out in Dunsmuir, as supplemented by the principles articulated in Newfoundland Nurses. I note that the complication in this case arises from the fact that the calculation of an employee’s retirement gratuity is based on the employee’s aggregate 1998 earnings rather than the employee’s hourly rate of pay in the year of termination.

24The principal argument of the Union is that its approach is the only approach that is consistent with the language of the Collective Agreement. It argues that the Arbitrator recognized this in the manner in which the Arbitrator dealt with the two approaches in paragraphs 16 and 17 of the Award. It argues further that the Arbitrator erred in going beyond the language of Article 20.03 and having regard to the Municipal Act in reaching his determination.

25In paragraph 16, the Arbitrator referred to the consistency of the Employer’s approach with the language used in the Municipal Act. The Arbitrator was silent in paragraph 17 regarding the consistency of the Employer’s approach with the language of Article 20.03 of the Collective Agreement. The Union considers that the combined effect of paragraphs 16 and 17 is an implied finding of the Arbitrator that the Employer’s approach is inconsistent with the language of the Collective Agreement. Given this implied finding, the Union argues that the Award is unreasonable.

26I agree with the premise of the Union’s argument that the provisions of Article 20.03 require that an employee’s 1998 earnings be converted into a monthly amount for the purposes of arriving at a computation of the employee’s “six (6) month’s earnings”. However, when looked at in its entirety, the Award also finds the Employer’s approach to be consistent with this language of the Collective Agreement for the following three reasons.

27First, the Union reads paragraph 16 of the Award too narrowly. Given the different wording in the Municipal Act – “a half year’s earnings” - and in the Collective Agreement – “six month’s earnings” –, the Arbitrator did not state that the language in these two contexts was substantively similar. Rather, the Arbitrator observed that the result of the Employer’s calculation was consistent with the result under the Municipal Act. This conclusion leaves open the issue of whether the Employer’s approach was also consistent with the language of the Collective Agreement.

28Second, the Employer’s calculation satisfies the requirement of a calculation based on a monthly amount of 1998 earnings. Moreover, in our view, the Arbitrator was alert to this fact in reaching his determination regarding the reasonableness of the Employer’s approach on this basis.

29The Employer’s approach was based on the use of average monthly 1998 earnings multiplied by six to get an amount of “six months earnings”. The Arbitrator recognized this in describing the Employer’s position in paragraph 11 of the Award as follows:

11The employer argued that its calculation is a logical way to look at the issue. The employer noted that there are 12 months in a year and the provision in the collective agreement entitles employees to a maximum retirement gratuity of six months earnings. Therefore, the employer asserts that employees are entitled to a maximum retirement gratuity of 50% (6/12) of their yearly earnings.

The Employer’s approach is therefore consistent with the language of the Collective Agreement insofar as it also entails a conversion of 1998 earnings into a monthly amount.

30Third, as a related matter, there is no dispute that the Municipal Act does not apply in the present circumstances and that the relevant provisions of that statute are not incorporated into Article 20.03. However, the Arbitrator could reasonably find that the reference to the Municipal Act in Article 20.03 evidenced an intention of the parties that the result under Article 20.03 would be substantially the same as the result under the Municipal Act in comparable circumstances. That is what the Arbitrator did in finding that the parties did not intend to depart from the “paradigm” of the Municipal Act.

31Given the foregoing, I conclude that the Award is reasonable based on the following three considerations.

32First, while the Arbitrator found that the Union’s approach was also consistent with the language of Article 20.03 insofar as it required a calculation based on “six months earnings”, there is no specific wording in Article 20.03 that requires or contemplates a calculation of monthly 1998 earnings based on the number of months worked. Nor is there any language that suggests that an employee’s entitlement to a retirement gratuity should be calculated by reference to the number of months worked in the year of termination of employment. In such circumstances, it is reasonable to assume that the parties intended a calculation based on calendar months.

33Second, the Union characterizes the effect of the Employer’s approach to be that an employee who worked less than 12 months in the year of termination will receive less than “50% of [their] accumulated sick leave.” We do not agree. The cap in Article 20.03 requires a monetization of 50% of the number of accumulated sick leave days at the time of termination. The Employer and Union positions reflect different approaches to the monetization of an employee’s accumulated sick leave days, not to the number of sick days for which an employee is entitled to a retirement gratuity.

34Third, the Arbitrator also relied on an example that he considered demonstrated that employees who worked 10 months would be entitled to a proportionately larger retirement gratuity than 12 month employees. The Arbitrator’s example was flawed insofar as it presumed the same 1998 earnings for each class of employee and, therefore, a higher rate of pay for the employees who worked a 10 month year.

35A more logical comparison would assume equal hourly rates of pay for each class of employee. In such circumstances, under the Employer’s manner of calculation, a 10 month employee with the maximum number of accumulated sick leave days would receive a retirement gratuity equal to 10/12 or 5/6 of the retirement gratuity of a 12 month employee with such maximum number of sick days. This reflects the fact that the 10 month employee would have had lower monthly average earnings in the termination year than the 12 month employee. Under the Union’s manner of calculation, each category of employee would receive the same retirement gratuity. This reflects the equal hourly rates of pay of each category of employee and disregards the monthly average pay of 10 month employees. Accordingly, the Arbitrator should not have relied on his example in making the Award. However, this consideration was not necessary for the Arbitrator’s determination and represented only a supplementary basis for his decision. As the example above demonstrates, neither of the two approaches produces a result that is manifestly fairer than the other given the language of Article 20.03.

Conclusion

36As set out in Newfoundland Nurses, in the circumstances where there are alternative interpretations that are both reasonable, a court should be reluctant to substitute its own views for that of a specialized tribunal if the decision is in the realm of reasonable outcomes. In the present case, I do not suggest that the reasoning in the Award is perfect but perfection is not the standard. In our view, taking the limited evidence before the Arbitrator as a whole and based upon the foregoing, the Award falls within the range of reasonable outcomes and otherwise satisfies the requirements of justification, transparency and intelligibility set out in Dunsmuir. Accordingly, this application is dismissed. Costs in the agreed amount of $5,000 on an all-inclusive basis are payable by the Union.

___________________________ Marrocco, A.C.J.

___________________________ Kiteley, J.

___________________________ Wilton-Siegel J.