GSB# 2000-0447, 2000-1039, 2000-1042, 2000-1484

UNION# 00U072, 00U090, 00U130, 01B041

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Ontario Public Service Employees Union (Union Grievance)

Grievor

• and -

The Crown in Right of Ontario (Ministry of Community, Family and Children's Services)

Employer

BEFORE

Deborah J.D. Leighton

Vice-Chair

FOR THE UNION

Richard Blair Ryder, Wright, Blair & Doyle Barristers and Solicitors

FOR THE EMPLOYER

John Smith Senior Counsel Management Board Secretariat

HEARING

November 10, 2003.

Decision

The issue before me is the quantum of damages to be paid to the grievors for the employer’s breach of the collective agreement. In two earlier decisions, this board found 1) that the employer breached the collective agreement when it failed to follow section 5.3 of Appendix 18 in the divestment process for Genest, Project Dare and Syl Apps; and 2) that the breach (the loss of the opportunity to choose work with a new employer, with the protection of seniority for the purpose of lay-off and promotion) was deserving of compensatory damages.

The union takes the position that each grievor’s length of service should be used to assess the damages. The employer’s position is that nominal or no damages should be awarded.

The Union’s Submission

Counsel for the union, Mr. Richard Blair, submitted that section 5.3 of Appendix 18 of the collective agreement between the parties was negotiated to include seniority to provide employees, whose work was being divested, with as much protection as possible – as counsel described it a “soft landing,” after divestment of their work to the private sector. Along with a guaranteed job offer of at least 85% of their OPS salary, the grievors were entitled to seniority protection for lay-off and promotion. But they did not get the opportunity to choose such a job offer, because seniority for lay-off and promotion was not included in the job offer. It is this loss of opportunity that the board has already found must be compensated, in counsel’s submission.

Counsel argued that the GSB awarded damages for loss of opportunity, in OPSEU Jafri and the Crown in Right of Ontario (Ministry of Correctional Services) 933/91 (Dissanayake), where the board found the employer acted in bad faith when it did not extend the grievor’s contract. Counsel argued that the board in this case awarded six months of salary to an unclassified employee for the loss of the opportunity of continued employment. In counsel’s submission this board put a significant value on the loss, even when the grievor had no seniority.

Mr. Blair argued in addition that cases where arbitrators decide not to reinstate but to award money for lost wages are instructive, in that arbitrators put a value on the loss of the opportunity of continued employment. Counsel relied on Shaver Hospital and CUPE, Local 1742 (1991) 1991 CanLII 13464 (ON LA), 20 L.A.C. (4th) 122 (Rayner); DeHavilland Inc. et al. and CAW, Local 112 (1999) 1999 CanLII 35895 (ON LA), 83 L.A.C. (4th) 157 (Rayner); Municipality of Metropolitan Toronto and CUPE, Local 79 (2001) 2001 CanLII 62110 (ON LA), 99 L.A.C. (4th) 1 (Simmons). Counsel argued that these cases show that the loss of opportunity for continued employment has been linked to the grievor’s length of service. In Metropolitan Toronto Arbitrator Simmons awarded 1.25 months salary for each year of the grievor’s service.

Thus counsel argued that the grievors in this case, who lost the opportunity of work with the protection of seniority for lay-off and promotion, should receive 1.25 months of the salary for each year of their service, and an additional 15% of this sum, which would represent lost benefits.

The Employer’s Submission

Counsel for the employer, Mr. John Smith, submitted that although the board has held that compensation for the loss of opportunity is the appropriate remedy, damages could be assessed at nothing. Counsel argued that the board had insufficient evidence of actual financial loss or proof of a reasonable probability that loss occurred. Mr. Smith submitted that the grievors here had to show they would have got the benefit if the employment contract was completed. Counsel relied on the following cases for the proposition that the courts do not award damages for the “loss of a chance” or mere chance of loss. Chaplin v. Hicks [1911] 2 K.B. 786 (C.A.); Kinkel et al. v. Hyman et al. 1939 CanLII 7 (SCC), [1939] 4 D.L.R.1 (S.C.C.).

Further, in counsel’s submission if there are contingencies to the success of a contract, as was the case in Eastwalsh Homes Ltd v Anatal Devlopments Ltd. 1993 CanLII 3431 (ON CA), [1993] 12 O.R. (3d) 675 (Ont. C.A.), then “in assessing damages the court must discount the value of the chance by the improbability of its occurrence.” (p. 10)

Counsel for the employer also argued that the grievors here got either severance pay or a job. He questioned the importance of not including seniority for lay-off and promotion in the job offers, citing Canadian Pacific Forrest Products Ltd. [1990] OLRB Rep. May 492. Mr. Smith argued that damages must be compensatory, not punitive and since enhanced severance had been paid, this was a suitable remedy. Loss of seniority for lay-off and promotions was not significant, in counsel’s view, and without evidence of actual financial loss damages in this case should be nominal – either nothing or $500. per grievor. Counsel also relied on Bechtel Canada Inc. [1993] OLRB Rep. July 581; CUPE, Local 79 v. Riverside Hospital (1999) O.L.A.A. No. 579 (O’Neil).

Mr. Smith made no submission on the Jafri case presented by the union.

Decision

In the decision of March 21, 2003 the board held that while damages are not a usual remedy for a breach of the collective agreement, it was the only feasible remedy in this case. That decision relied in part on Chemical and Atomic Works and Polymer Corp. Ltd. (1959), 10 L.A.C. 51 which held that arbitrators have an inherent power to award damages for compensable loss. Arbitrator Laskin, as he then was, held:

There is no need to emphasize that the difficulty of assessing damages has never been a reason for denying a claim thereto based on an established breach of contractual or other obligations owed to the claiming party. (p. 64)

In the case before me the grievors have established a breach of the collective agreement – they lost the opportunity of choosing a job offer with amongst other requirements, seniority protection for the purposes of lay-off and promotion.

I am not persuaded by the employer’s argument that this loss was non-existent or trivial. As counsel for the union pointed out, seniority protection here was a critical part of a complex divestment schema negotiated by the parties. Further, it is clear from the evidence in this case that many grievors were worried with reason about the employer’s representation to them during the tendering process that their jobs were not protected by seniority after divestment. Seniority clearly effects job security.

The challenge for the board is to put a fair value on that loss of the opportunity. Both counsels agreed that arbitrators following the line of cases on damages for lost opportunity, beginning with the old English case Chaplin v Hicks, have the inherent power to order damages. As noted in the excerpt from Damages for Breach of Contract, Second edition, Pitch and Snyder, put before me by the employer counsel:

To recover damages for loss of chance, the plaintiff must demonstrate a reasonable probability that he or she would have obtained the benefit sought had the contract been completed. As the court will reject a purely speculative claim, it is insufficient for the plaintiff to allege that there was a mere chance to obtain the benefit (p. 3-3)

In the case before me I have already held that the grievors lost the opportunity of getting a job offer with the protection of seniority for the purpose of lay-off and promotion. The only reason the opportunity was denied to the grievors was because the employer breached the collective agreement by not ensuring that the job offer to them included seniority for the purpose of lay-off and promotion. Thus I am not persuaded that this is a case of a lost “mere chance” or that there were contingencies that lead to the conclusion that there is no provable loss as suggested by the employer. The real issue or problem is how to put a value on the loss.

The Court of Appeal in Chaplin v Hicks noted that the difficulty of assessing the loss does not mean only nominal damages are appropriate.

But the fact that damages cannot be assessed with certainty does not relieve the wrong doer of the necessity of paying damages for his breach of contract. (p. 792)

The court of Appeal also said:

I think that, where it is clear that there has been actual loss resulting from the breach of contract, which it is difficult to estimate in money, it is for the jury to do their best to estimate; it is not necessary that there be an absolute measure of damages in each case. (p. 795)

Here the difficulty is that the grievors have suffered a loss from the breach of the collective agreement, one which is very difficult to estimate in dollars, and one for which, as union counsel submitted, no clear precedent or absolute measure is available. However, Vice-Chair Dissanayake’s decision in Jafri is instructive. There the employer argued (as the employer did here) that there was no proof of loss. The board disagreed noting that:

The Board must attempt to place the grievor as much as possible in the same position he would have been in, but for the employer’s breach. In most cases that test can be applied fairly precisely. This unfortunately is not one of those cases. (p. 58).

The board held that but for the breach of the employer, the grievor would have received a 6 month contract. In addition, the grievor lost the opportunity to be considered for continued employment with the Ministry. Thus the board awarded the grievor damages equal to one year of earnings: six months for the loss of the contract and six months for the loss of the opportunity of continued employment. It is important to note that the grievor was an unclassified employee, and therefore had no seniority. And that the board awarded the equivalent of six months of salary for the lost chance “to be considered for” employment. Unlike the case before me, this grievor was not entitled to a particular job offer: it was not clear that “the grievor would have definitely, been offered employment…” (p. 57).

The grievors in the case before me lost the opportunity of employment with the protection of seniority for lay-off and promotion. Counsel for the union argued that compensation should be based on each grievor’s length of service and he cited cases where arbitrators had compensated grievors after wrongful termination for loss of employment. Employer counsel argued that grievors have been compensated for loss of work. To some extent this is true, but the grievors still need to be compensated for the loss of the opportunity of work with seniority for lay-off and promotion, which would most likely have given them the opportunity of longer work with the new employer. While I am not persuaded that the cases on damages for termination are helpful, it does make sense to base the calculation of damages here on seniority, because the most senior employees lost the most. They were entitled to work with the most protection from lay-off, and would have had the best chance of promotions, if they were equally qualified candidates.

Thus having carefully considered the submissions of the parties I have decided that the grievors here shall be paid compensatory damages for the employer’s breach of the collective agreement, calculated by multiplying what each was paid for two weeks salary by the number of years of service or seniority, and interest on that amount calculated using the formula in the Courts of Justice Act.

The board shall remain seized of the outstanding issues in this case and in order to deal with interpretation or implementation of this decision, if necessary.

Dated at Toronto this 19th day of July, 2004.