GSB# 2001-0534, 2003-2944
UNION# 2001-0551-0001, 2003-0999-0023
IN THE MATTER OF AN ARBITRATION
Under
THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT
Before
THE GRIEVANCE SETTLEMENT BOARD
BETWEEN
Ontario Public Service Employees Union
(Hunt et al.)
Grievor
- and -
The Crown in Right of Ontario
(Ministry of the Attorney General)
Employer
BEFORE
Randi H. Abramsky
Vice-Chair
FOR THE UNION
Gavin Leeb
Barrister and Solicitor
FOR THE EMPLOYER
Kelly Burke
Senior Counsel
Management Board Secretariat
HEARING
September 29 and October 27, 2004.
Award
This Award addresses the Employer’s request for the complete income tax records of grievor Florence Clarke, who has testified in these proceedings, and the complete income tax records of any other Court Reporter that the Union intends to call as a witness in this case. The Union opposes that request.
Background
On May 4, 2001, a group grievance was filed by three full-time classified Court Reporters, alleging that they “have been forced to perform authorized duties on overtime hours with no overtime pay, contrary to …the collective agreement.” Thereafter, on August 20, 2003, the Union filed a policy grievance, alleging that “[t]he work associated with the preparation and production of transcripts and certifying them as accurate is bargaining unit work to which the collective agreement applies.” In both cases, the central legal issue is whether or not the preparation of transcripts is bargaining unit work.
At the hearing on August 25, 2004, Ms. Clarke, one of the grievors, was asked on cross-examination how she reported to Revenue Canada her transcript income from private lawyers and she responded that she declared it as “other income.” At that point, counsel for the Employer, Kelly Burke, asked counsel for the Union, Gavin Leeb, for the grievor’s tax returns, from 1979 till present.
Ms. Burke followed up that request in writing on September 1, 2004. The written request seeks, among other things, the following:
All Income Tax Reports/Statements filed by Ms. Clarke for the period between 1979 until today.
…
All Income Tax Reports/Statements filed by all classified and unclassified Court Reporters that you intend to call as witnesses in these proceedings for the period between January 1990 and today.
…
…
It also reserved “the right to request additional disclosure as the need arises during the proceedings including disclosure of the above information for any other classified or unclassified Court Reporter.”
At the next day of hearing, on September 28, 2004, Mr. Leeb stated that the Union objected to producing the income tax records of Ms. Clarke and the other Court Reporters. The Union was willing to provide copies of the tax records which showed the categories completed by Ms. Clarke for her transcript income and related deductions, but not the specific amounts. It was disclosing the specific amounts to which the Union objected. The matter was then argued on September 29, 2004 and October 27, 2004.
Positions of the Parties
Union
The Union acknowledges that how the grievor portrayed her transcript income and related deductions to Revenue Canada may be arguably relevant to the issues in this case, but it asserts that the specific amounts listed in each category are neither relevant, nor arguably relevant, to the issues in dispute.
The Union asserts that there is a privacy interest in the content of an individual’s tax return, based on Section 241 of the Income Tax Act, R.S.C. 1985, Chapter 1 (5th Supp.) as amended. It contends that this expectation of privacy in the content of an individual’s tax return has been recognized by the courts, citing to R. v. Minardi [1996] O.J. No. 5411, Tyler v. Canada (Ministry of National Revenue) 1990 CanLII 12978 (FCA), [1991] 2 F.C. 68, [1990] F.C.J. No. 1035 (C.A.), and Gernhart v. Canada (1991), 81 D.L.R. (4th) 506 (C.A.). The Union also asserts that tax returns should be recognized as confidential in light of the strong public policy favouring privacy, as set out in the federal and provincial privacy statutes.
Accordingly, the Union argues that when this Employer, the government of Ontario, seeks to obtain the tax records of the grievor and its other witnesses through an order of the Grievance Settlement Board, a statutory grievance adjudication body, the Charter applies, or at the least, that the Board’s decision must be consistent with Charter values. In support it cites to Slaight Communications Inc.(Operating as Q107 FM Radio) and Davidson (1989), 1989 CanLII 92 (SCC), 59 D.L.R. (4th) 416 (S.C.C.) and Re Doman Forest Products Ltd., New Westminster Division and International Woodworkers, Local 1-357 (1990), 1990 CanLII 12718 (BC LA), 13 L.A.C. (4th) 275 (Vickers).
The Union submits that the proper standard, because of the privacy interests at stake, should be more than the usual “arguably relevant” standard for production of documents. It asserts that the standard should be “relevant” or “clearly relevant” so as to balance the competing interests of the grievor and the Employer. Since the Employer, in its view, has not demonstrated any compelling need for the specific numbers contained in the grievor’s or witnesses’ tax returns, it argues that such records should not be ordered to be produced. In fact, it argues that the information is not even “arguably relevant.” In its view, the specific numbers on the tax returns have absolutely no relevance or arguable relevance to whether or not transcript preparation is bargaining unit work. It asserts that to order disclosure in these circumstances is akin to an unreasonable search and seizure, citing Plant v. Her Majesty the Queen 1993 CanLII 70 (SCC), [1993] 3 R.C.S. 281 (S.C.C.) and Hunter v. Southam Inc. (1984), 1984 CanLII 33 (SCC), 11 D.LR. (4th) 641 (S.C.C.)
In the Union’s view, the Employer does not need this information. Instead, it asserts that its real motivation is to intimidate the Union’s witnesses and impede its ability to present its case. The Union asserts that it will have significant difficulty obtaining witnesses to testify in this matter if they must disclose their tax records. Although it recognizes that it could subpoena them, it is reluctant to do so if it means that they will have to disclose their tax returns. In its view, the Employer has no business knowing the specifics of the grievor’s or other witnesses’ tax returns which is a matter solely between the individual and Revenue Canada.
In so far as the Employer seeks to use the tax returns to test the witnesses’ credibility, the Union argues that such a purpose is in violation of the collateral evidence rule. Accordingly, it submits that disclosure of the documents for that purpose would be improper.
Finally, in the alternative, the Union argues that should the income tax statements be ordered disclosed, significant limitations on the disclosure should be ordered. In support, it cites to Goodman and Rossi (1995), 1995 CanLII 1888 (ON CA), 24 O.R. (3rd) 359 (Ont. C.A.); Kinsmen Club of Kingston, c.o.b. as the Summerhill Apartment et al. and Walker (2004), 2004 CanLII 28597 (ON SC), 69 O.R. (3rd) 453 (Ont. Sup.Ct.)
For the Employer
The Employer contends that the Board has the power and jurisdiction to order production of the witness’s tax returns under Article 22.14 and 22.15 of the collective agreement as well as Section 48(12) of the Ontario Labour Relations Act. It submits that the requirement is for “full disclosure” and that the legal standard is “arguably relevant”, not “relevant” or “clearly relevant”. In support it cites to OPSEU (Larman) and Ministry of Community, Family and Children’s Services (2003), GSB No. 1617/01 et al. (Abramsky) and Re The Crown in Right of Ontario (Ministry of Correctional Services and OPSEU (Knight) (1994), 1994 CanLII 18662 (ON GSB), 39 L.A.C. (4th) 205 (Kirkwood). It specifically notes that in the Knight decision, the Board stated at p. 210 that “[t]he board has moved towards broad disclosure so that the parties may best be able to assess the merits of their respective positions and assess possibilities for settlement.” It also cites to Re Toronto District School Board and Canadian Union of Public Employees, Local 4400 (2002), 2002 CanLII 79047 (ON LA), 109 L.A.C. (4th) 20 at p. 32 (Shime), stating that “[a]ll documents which are arguably or seemingly relevant or have a semblance of relevance must be produced.” The Employer submits that the grievor’s and witnesses’ tax returns clearly meet the standard of “arguably relevant.”
In particular, the Employer asserts that the tax returns, including the specific amounts listed, are “arguably relevant” for four reasons. First, it asserts that the specific numbers will permit the Employer to assess its potential liability in this case. Second, it asserts that the specific numbers will permit the Employer to better assess the merits of its position as well as potential opportunities for settlement. Third, it will assist in determining credibility. Fourth, it will reveal how the individuals’ view their income from transcript preparation.
The Employer submits that without the specific numbers on the tax returns, it has no way of knowing the amounts claimed for overtime in regard to transcript preparation and no way of knowing its potential liability in this case or what it may have to submit, for source deductions, to Revenue Canada. It argues that it is subject to fines and penalties if proper source deductions were not taken, and therefore it is critical for the Employer to be aware of the specific amounts. It contends that by knowing the amount claimed as income, combined with the invoices for that work, it can calculate the number of hours worked and therefore its potential overtime liability. By knowing that amount, it will better be able to assess potential settlement.
The Employer further submits that the tax return will reveal how the employees’ view their transcript preparation work – whether as work related to their employment with the Ministry or as self-employed “other income.” It states that tax credits claimed, deductions taken and independent business numbers for transcript preparation income will tend to support its contention that such work is not bargaining unit work.
It also submits that the tax returns are relevant to test the witnesses’ credibility, citing as an example a witness who testifies that she does not use her home telephone to conduct transcript business yet claims a deduction for such an expense. In the Employer’s view, it should be able to test the witness’s testimony, citing Re Greater Essex County District School Board and Ontario Secondary School Teachers’ Federation (2002), 2002 CanLII 79113 (ON LA), 109 L.A.C. (4th) 379 (Knopf).
In the Employer’s submission, the Board should order production of the witnesses’ tax returns. It asserts that they are arguably relevant to the issues in dispute and that the Employer has properly particularized its request. It asserts that the request is not a fishing expedition and there is a clear nexus between the documents and the parties’ positions in this case. It also asserts that production would cause no undue prejudice to the grievors or witnesses.
Indeed, the Employer contends that there is no privacy interest or reasonable expectation of privacy in relation to individual tax returns. It asserts that Section 241 applies to government officials who may not disclose tax information to others, subject to numerous exceptions, and it does not apply to the individual taxpayers. It further submits that tax returns have been routinely ordered to be produced by the GSB, private arbitrators and the Ontario Labour Relations Board. In support, it cites to Confederation College v. OPSEU (Gosselin Grievance) [1999] O.L.A.A. No. 751 (H. Brown); Shaw Baking Company v. Bakery, Confectionery and Tobacco Workers’ International Union, Local 284 (Cortolezzi Grievance) [2002] O.L.A.A. No. 27 (Bendel); Cruz Construction and Renovation Inc.[1998] O.L.R.D. No. 221 (Gee, Vice-Chair); OPSEU (MacMillan) and Ministry of Health (Thames Valley Ambulance Limited) (1995), GSB No. 967/93 (Dissanyake, Vice-Chair); Johnson/Carey/Ogilvie and Ministry of Solicitor General and Correctional Services, PSGB No. P/0009/97 et al (Leighton, Vice-Chair); Canadian Union of Public Employees, Local 1750 v. Ontario Workplace Safety & Insurance Board (Garrison Grievance) (2000), GSB No. 1438/98 (Mikus, Vice-Chair).
In terms of any confidential information contained in a tax return which is not relevant to the dispute, such as individual’s marital status, the Employer contends that such information may be blocked out, as ordered in the Garrison case. In that regard, it also cites to Re Greater Essex County District School Board and Ontario Secondary School Teachers’ Federation, District 9, supra.
The Employer further asserts that if any privacy interest existed, it was waived with the filing of the grievances in this matter. It also argues that its request is not an attempt at intimidation or coercion, but is, instead, a bona fide request for documents which are arguably relevant to the issues in dispute as raised in the group and policy grievances.
Although the Employer agrees with the Union that this Board’s decision must be consistent with Charter values, it fundamentally disagrees with the Union’s view that ordering disclosure would be inconsistent with the Charter. To the contrary, it argues that an order for disclosure is necessary to ensure the Employer a full and fair hearing, values which are fully consistent with the Charter.
Finally, the Employer disagrees with the Union’s assertion, in the alternative, regarding strict conditions on disclosure. It asserts that the restrictions requested by the Union are far too restrictive. It asserts that if tax fraud is revealed, the Employer cannot be compelled to overlook that since it faces liability if the matter is not reported.
The Employer urges the Board to exercise its power to order production of the requested documents.
Union Reply
The Union submits that the Employer’s final point – that it has a duty to report improper tax filings – goes to the heart of its concern regarding the Employer’s request for production. It submits that this is, in fact, intimidation.
In terms of the Employer’s assertion that it needs the specific tax numbers to determine potential liability, it argues that such an assertion must be taken with a “grain of salt” and should not be given credence. It points out that this rationale was not made until these submissions, mid-way through the hearing. It further notes that the Employer has made no requests to the Union for information regarding potential liability.
The Union further contends that most of the Court Reporters income from preparing transcripts is known by the Employer because the Employer issues T-4A forms based on transcript invoices billed to both the Crown and the judiciary. It submits that the Ministry has all those T-4As and invoices and may make a reasonable approximation of its potential liability – enough to “ball-park” the figure for settlement purposes. The Union further contends that it is a leap to assert that the amount of potential overtime liability may be determined by the income figure. Further, it was counsel’s understanding that the issue of remedy would be dealt with after a determination of the merits. Nor, in the Union’s view, could the income tax figures be of assistance in determining potential liability when the issue of retroactivity is still undecided.
The Union asserted that the precise numbers were not relevant and that the Employer could make its arguments based on the categories revealed in the tax returns, as well as test credibility on that basis. It again asserted that providing the specifics in order to attack credibility was in violation of the collateral evidence rule.
The Union distinguishes the cases cited by the Employer on the basis that they involved mitigation in which an individual’s tax return was clearly relevant, and that a number appeared to be agreed orders. In the Union’s view, there was no argument made in those cases that tax returns enjoyed a reasonable expectation of privacy and that decisions ordering their production must be consistent with Charter values.
Decision
The issue to be decided is whether the specific numbers contained in the grievor’s and witnesses’ tax returns should be ordered produced. The Union, as noted, is willing to reveal the categories of income listed for transcript preparation and deductions taken, but is not willing to provide the specific numbers. For the reasons set forth below, I conclude that the specific numbers are not “arguably relevant” to the issues in this case. Consequently, I decline to order that the specific numbers be produced.
The legal issue in this case is whether the preparation of transcripts is bargaining unit work. In that regard, the fact that a Court Reporter lists their income from transcript production as self-employment income, or business income, and the type of deductions taken is arguably relevant. But the precise numbers – how much they reported to Revenue Canada, or deducted – is not relevant. The amounts do not prove – or tend to prove – a fact in issue. The specific numbers have no bearing on whether or not transcript preparation is bargaining unit work. Nor, in my view, is that information arguably relevant.
The Employer’s strongest argument for production is that the specific numbers would assist it in determining the Ministry’s potential liability and thus explore settlement options. As stated in Re The Crown in Right of Ontario (Ministry of Correctional Services) and OPSEU (Knight), supra at p. 210, “[t]he Board has moved towards broad disclosure so that the parties my best be able to assess the merits of their respective positions and assess possibilities for settlement.” Upon careful reflection, however, I find that production of the specific numbers cannot be justified on this basis. There is no direct – or even indirect - correlation between the income reported for transcript preparation and the number of hours worked, and hence the Ministry’s potential overtime liability.
The reason for this is that there are several different types of Court Reporters, requiring various amounts of typing outside of work hours to produce transcripts. The evidence shows that CAT reporters, who use a computer to record the record, require very little typing time outside of work to produce a transcript. In contrast, a mask reporter, such as Ms. Clarke, must type her transcripts on her own time at home. Consequently, the same income figure for transcript preparation may reflect vastly different amounts of hours worked outside of work. The income is based on the number of pages of transcript produced, as outlined in the tariff, regardless of the time spent outside of work hours needed to prepare it.
This issue is further complicated by the fact that there is no consistent practice within the Ministry of the Attorney General regarding typing transcripts on work time. Some courts allow it. Some do not. Further, sometimes a Court Reporter who is not generally allowed to type on work time may be permitted to do so, such as when the request for a transcript comes from a judge. As a result, any given income figure on a Court Reporter’s tax return will not reveal the Ministry’s potential overtime liability. In cases where the Court Reporter is allowed to type on work time, all or most of that income will have been earned for transcripts typed done during the regular day and would not be eligible for overtime, should the Union prevail. In other cases, where the employee is not allowed to type during the work day, the situation would be different. Again, the income earned for transcript preparation would not necessarily correlate to hours worked outside of the regular work day and hence help the Employer to determine its potential liability, assess the merits of its case or effectively explore settlement options.
Further, for settlement purposes, the Employer is fully aware of a substantial portion of the Court Reporters’ income from the production of transcripts. The evidence showed that the Court Reporters’ income from transcripts comes from three main sources – transcripts ordered by the judiciary, transcripts ordered by the Crown and transcripts ordered by the private bar or private parties. The Ministry provides for invoices for transcripts ordered by the judiciary and the Crown, and then provides Court Reporters with a T-4A which sets forth the amount paid for such transcripts. Based on this information, the Ministry could, as the Union asserts, “ball park” their potential liability- assuming that transcript income may be correlated into hours worked for the calculation of overtime. In this regard, I would note that there is no transcript page per hour standard in the record.
In determining the relevance and arguable relevance of the specific numbers contained in the witness’s tax returns, it is significant that the issues of liability and remedy were bifurcated in this case. My notes from the first day of hearing in this case reveal counsel for the Union stating that if “this hearing proceeds, the parties agree that the issue of remedy will be dealt with separately from the merits.” Counsel for the Employer did not refute this, and later agreed that the issue of remedy, including retroactivity, was separate. In my view, the specific numbers listed on the Court Reporters tax returns may well be relevant to the issue of liability if the Union prevails, since it is arguable that the income earned should be offset against any claim for overtime pay in order to preclude a double payment. But it only becomes relevant then – if the Union prevails. The specific numbers have no relevance, or arguable relevance, to whether preparation of transcripts is bargaining unit work. Whether a Court Reporter makes $500, $5,000 or $25,000 from preparing transcripts does not prove, or tend to prove, anything on that issue.
A number of the cases cited by the Employer in which income tax statements were ordered produced dealt with the issue of mitigation, after the board of arbitration had determined that the grievor had been discharged without just cause. As stated in Confederation College and OPSEU (Gosselin Grievance), supra at par.11: “It is not unreasonable and is indeed generally accepted that to confirm the amount of an employee’s earnings to establish the correct amount of compensation, that income tax returns covering the period in review may be requested and considered to determine and verify the actual amount required to be paid to the employee.” See also, Shaw Baking Co. and Bekery, Confectionery and Tobacco Workers’ International Union, Local 284 (Cortolezzis Grievance), at par. 28: “At the employer’s request, we ordered the grievor to produce his income tax returns for 1995 to 2000, so that the employer could satisfy itself about any earnings the grievor might have had during that period.”
The case of OPSEU (MacMillan) and Ministry of Health (Thames Valley Ambulance Limited), supra, is similarly related to the issue of mitigation. That Award simply states, at pp. 5-6, that the employer sought certain information, including the grievor’s tax return and all T-4 slips for the tax year 1994 “in order to consider whether the grievor had complied with her duty to mitigate loses”, and that the Union “undertook to provide the same.” The Board directed the parties to cooperate and disclose all material related to mitigation in order to see whether the issue could be resolved.
In Cruz Construction and Renovation Inc., supra, which involved a related-employer application before the Ontario Labour Relations Board, the Vice-Chair determined that the personal income tax record of Joe Cruz, the principal of two construction firms and the brother of the principal in another such firm was “arguably relevant to the issues in dispute and thus ought to be produced.” The production was ordered solely for the purpose of determining whether Mr. Cruz claimed expenses incurred by the Cruz companies.
In Canadian Union of Public Employees, Local 1750 and Ontario Workplace Safety & Insurance Board (Garrison Grievance), supra, the grievor was discharged, in part, based on the Employer’s belief that the grievor had been working at Casino Caterers, a charitable casino operated by the grievor and her spouse, while she was allegedly incapable of returning to her position with the employer. The Employer sought, among other things, income tax returns for Casino Caterers and the personal income tax returns of the grievor. Vice-Chair Mikus determined, at par. 5, that all of the documents requested should be produced since “[t]here is no question about their relevance.” She continued: “They all relate to the grievor’s participation in Casino Caterers, which is central to the Employer’s allegation concerning the grievor’s ability to return to work.”
These cases demonstrate, as counsel for the Employer contends, that arbitrators, including the GSB, have ordered parties to produce income tax records where that information is either relevant or arguably relevant to the issues in dispute. In this case, however, the specific numbers – as opposed to the categories - of income and deductions contained on the Court Reporters’ personal tax returns are not relevant or arguably relevant to the issues in dispute.
In regard to the Employer’s submission that the specific numbers are needed to test the credibility of the witnesses, I find that an improper basis to order production of the witnesses’ income tax records in light of the collateral evidence rule. Under that rule, a witness’s answer to a question that does not relate to the facts in issue (i.e., something that is collateral to the issues in dispute) is final and a party, on cross-examination, may not call evidence to contradict it. In my view, the level of income reported is not relevant to the issues in dispute (whether or not transcript preparation is bargaining unit work) and is therefore is a collateral fact. The Employer may not seek evidence, such as the witness’s tax returns, to refute it. In terms of the example cited by the Employer during argument – a witness who claims that she does not use her home telephone but then claims a deduction for phone usage of her tax return – the Union’s agreement to produce the categories of the deductions claimed would be sufficient to cross-examine the witness on this point.
The decision of Arbitrator Knopf in Re Greater Essex County District School Board and Ontario Secondary School Teachers Federation, District 9, supra, does not contradict the collateral evidence rule when the arbitrator states at p. 384 that “natural justice demands that each party should be able to challenge the basis of any witness’s testimony. No matter how honest or well meaning a witness may be, s/he must still be subject to challenge by the other side in litigation.” In that case, the grievor, an Educational Assistant who worked predominantly with one special needs child, M, was discharged after her request for a leave of absence was denied and she left anyway. She was warned that failure to return to work would lead to termination, and when she did not return, she was discharged. Grievances were filed regarding the employer’s denial of the leave of absence and the grievor’s discharge. The employer, in deciding to deny the leave of absence request, relied on material in M’s file and the union sought production of the file. The Employer objected but the arbitrator ordered production because the documents formed the foundation of the Employer’s decision to deny the leave of absence request and production was necessary for the Union to challenge the basis of that decision. In that case, therefore, the documents sought were clearly necessary for the Union to challenge the witness’s decision making on one of the central issue in dispute – the propriety of the denial of the leave of absence. It was not a collateral fact.
Based on my conclusions as set forth above, I find it unnecessary to consider the Union’s other contentions that there is a reasonable expectation of privacy surrounding personal income tax returns, or that the appropriate standard in this case is higher than “arguably relevant.”
Conclusion
For all of the reasons set forth above, I conclude that the specific numbers are not “arguably relevant” to the issues in dispute. Instead, the Union is ordered to produce the tax returns of Ms. Clarke, with the numbers blacked out, but showing the categories (line items) recorded. Other related tax documents, such as a Statement of Business Activity, and the Schedule 8 documents, if any, similarly edited, should also be produced. Further, any personal information on the tax return is to be blacked out. The same ruling applies to any other Court Reporter witness.
In terms of the years for which the grievor and other witnesses must produce the above tax information, no argument was made on that issue by either side. I will entertain arguments on this issue, either by oral submissions or in writing, if the parties cannot come to some agreement.
Issued at Toronto this 4th day of November, 2004.