GSB# 2002-2394

UNION# 2002-0121-0012

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Ontario Public Service Employees Union (Grant)

Grievor

• and -

The Crown in Right of Ontario (Ministry of Finance)

Employer

BEFORE

Nimal Dissanayake

Vice-Chair

FOR THE UNION

Nini Jones Paliare Roland Rosenberg Rothenstein LLP Barristers and Solicitors

FOR THE EMPLOYER

Lucy McSweeney Counsel Management Board Secretariat

HEARING

January 29; March 5; April 2; May 7; June 25, 2004.

Decision

A grievance dated November 25, 2002 filed by Mr. Donald Grant came before the Board for mediation-arbitration. Following unsuccessful mediation attempts the arbitration commenced.

The focus of the instant decision is para. 3 of the Memorandum of Understanding dated December 1998 entered into between the employer and the union dealing with the treatment of employees of the Property Assessment Division who are absent from work because of illness, disability or leave. The relevant portions of the MOU read:

It is understood that when the Ontario Property Assessment Corporation (OPAC) assumes responsibility for the delivery of property assessment functions on December 31, 1998, there may be certain OPSEU represented employees of the property Assessment Division absent from work because of illness, disability or leave.

It is agreed that:

1. These employees will not commence employment with OPAC until the termination of their leave or until they are medically fit to return to work.

2. Until that time, they will remain employees of the Crown.

3. When they are able to return to work or at the termination of their leave, they will commence employment with OPAC under the terms of employment in effect at that time at OPAC for employees of their class.

4. The Ministry of Finance will not be required to evaluate positions occupied by these individuals.

5. Any increase coming into effect during this extended period of employment by the Crown will be applied to any pay received from the Crown. (It is noted that LTIP is not affected by salary adjustments).

6. There is no requirement for the Ministry of Finance or the Employer to attempt to negotiate adjustments with OPAC and it is understood that OPAC’s commitment to pay 100% of salaries refers to salaries in effect on December 30, 1998.

In a decision dated January 19, 2004 the Board ruled that para. 3 of the MOU was not patently ambiguous as would justify admission of extrinsic evidence as an aid to interpretation. However, the Board also ruled that such extrinsic evidence would be received in relation to the employer’s alternate positions that (a) the paragraph was latently ambiguous and (b) that the union was estopped from relying on the plain reading of the provision.

The gist of the dispute is this. The plain meaning of para. 3 as determined by the Board does not stipulate any time restriction for employees on Long Term Insurance Plan (“LTIP employees”) at the time of divestment to return to employment with the new employer the Ontario Property Assessment Corporation (OPAC). The employer submits that despite the absence of an explicit time restriction, the deal struck between the parties was that only those employees who are able to return to work within one year will be entitled to a job with OPAC.

Extensive documentary and viva voce evidence and submissions were received over 5 hearing days with regard to the employer’s latent ambiguity and estoppel arguments, as well as on a further alternate submission that the Board should rectify the MOU. While all of that has been carefully considered by the Board, I have attempted to provide a succinct decision as envisaged in article 22.16.2 of the collective agreement, while providing some reasons for its decision.

The evidence is that during the reasonable efforts process (RE process) a series of meetings were held between the employer and union teams. The evidence with regard to these meetings, the last of which was held on December 8, 1998, is not in dispute in any significant way. During these meetings, the employer briefed the union about its negotiations with OPAC on the terms and conditions OPAC was willing to extend to the employees affected by the divestment. The union had the opportunity to, and did, make demands and raised concerns on a number of issues. With regard to employees on LTIP at the time of the divestment, the union demanded that those employees should be entitled to jobs with OPAC provided that they are able to return to work within 2 years of the date of the divestment. This demand was in line with what had been achieved in the Queen Street Mental Institute divestment. The employer attempted to get the 2 year period, but OPAC would only agree to a one year period. This was conveyed to the union and confirmed in a OPAC Human Resources Policy document, a copy of which was provided to the union on November 13, 1998.

The evidence is clear that while the union raised concerns about a number of other terms offered by OPAC, no concern was expressed about the one year period with regard to LTIP employees. Indeed the evidence is that no concern was raised at any time subsequently during the RE process about that issue. On December 8, 1998 OPAC’s final Human Resources document was delivered to the union. It stated, inter alia, that offers of employment to employees on LTIP “will be conditional on the medically-approved return to full-time employment within a maximum of twelve months from the date of transfer”. The union still did not make any objection.

The final reasonable efforts meeting was held on December 8, 1998. At the conclusion of that meeting Mr. Frank Rooney the union’s team leader and Mr. Ed Farragher, the employer’s team leader shook hands. Mr. Rooney gave the assurance to Mr. Farragher, that no grievances will be filed with regard to the employer’s reasonable efforts. At the end of that meeting on December 8, 1998, both parties were very pleased with the outcome of the RE process, and relieved that litigation had been avoided.

There can be no doubt on the basis of the evidence that as of December 8, 1998, the union was aware that although it had sought a two year period for LTIP employees, it had been able to achieve only a one year period. There can also be no doubt that by the handshake and the assurance that no grievance will be forthcoming under Appendix 9, the union expressed its acceptance of the one year period.

The evidence indicates that what was left was the drafting of a MOU to incorporate the terms agreed to in the RE process. Both parties had a tremendous amount of respect for each other and trusted that the MOE would reflect what was agreed upon. Since the RE process had been completed, Mr. Rooney ceased to be involved any further and handed over responsibility to Mr. Roy Storie on behalf of the union. He advised Mr. Storie that the agreed to terms had to be signed off.

The evidence is that both Mr. Farragher and Mr. Rooney expected and fully trusted that the terms agreed to in the RE process would be incorporated in a MOU. The MOU was signed off on December 21, 1998. Neither Mr. Farragher nor Mr. Rooney drafted it. In fact, there is no evidence as to who actually did the drafting. Mr. Farragher assumed that it was drafted by “someone at MBS”. He testified that on December 9, 1998 a draft MOU was faxed to him by the Negotiation Secretariat of the Management Board Secretariat. He made an addition to it and returned it to MBS. Next he received by fax a further draft of the MOU. It included para. 3, which was also part of the previous draft. He testified that since December 8, 1998 he had had no discussion whatsoever with the union about LTIP employees. He reviewed both drafts, but it was a quick review because at the time he was extremely busy manning the “hot-lines” to field questions from employees affected by the divestment. In both reviews he paid no attention to the time limits for LTIP employees. He did not seek any legal advice before signing the second draft on December 21, 1998, believing that it represented the agreements reached in the RE process. Mr. Farragher retired in October 2003. He testified that it was very recently that he found out for the first time that the union was disputing the one year time limit in the present arbitration.

The evidence is that the employer believed that the MOU included the one year time limit and took steps to implement it by signing an agreement with OPAC on that basis. OPAC sent letters to each employee on LTIP as of the date of divestment (December 31, 1998) offering employment with OPAC conditional upon the employee’s ability to return to work with medical approval on or before December 31, 1999. Those employees who were unable to return by that date received a letter from the employer stating that since they were unable to meet the one year time limit they would not get employment with OPAC, but would remain as employees of the Ministry of Finance. Each employee was given the options available. Four samples of these letters to employees were filed in evidence. The earliest was dated June 7, 2000. Each was copied to the union.

Therefore, it is reasonable to conclude that at least by June 2000, the union received notice that the employer was acting on the basis of a one year time limit. The evidence is uncontradicted that the union did not react by protesting that the employer’s action, and that of OPAC, was contrary to its understanding that the MOU contained no time limit. Indeed, the uncontradicted evidence is that the first time the union took the position that the MOU accorded to LTIP employees an unlimited time period to obtain employment with OPAC was at the commencement of this arbitration in the fall of 2003, more than four years after the signing of the MOU.

Latent Ambiguity

I first turn to the issue of a latent ambiguity. The union takes the position that the foregoing evidence does not disclose a latent ambiguity in para. 3 of the MOU. Counsel agreed that on November 13, 1998 the employer informed the union that it was able to achieve only a one year window for LTIP employees, and that after that date neither party raised that issue at all. She also did not dispute that when the RE process was concluded on December 8, 1998 the union had given the assurance that it was satisfied with the terms the employer had achieved for the affected employees and that no grievance will be filed under Appendix 9.

However, counsel submits that the foregoing evidence is irrelevant. What was important was not the discussions with regard to reasonable efforts which concluded on December 8, 1998. She submits that on December 21, 1998 the parties executed a MOU. Between December 8 and December 21 the terms agreed to had been changed in several respects, including the elimination of any time limit for job offers by OPAC for employees on LTIP. Therefore she reasoned that “someone must have negotiated these changes”. She noted that there is a lack of evidence as to the negotiations that occurred between December 8 and December 21 which led to the changes. The employer bears the onus of establishing a latent ambiguity. By failing to adduce any evidence about the negotiations that led to the signing of the MOU on December 21, 1998, according to union counsel, the employer has failed to establish a latent ambiguity.

The union further takes the position that even if the Board finds that a latent ambiguity exists on the basis of the evidence, and concludes that the parties did not intend to allow an unlimited time period, that evidence does not assist in resolving the ambiguity. The evidence does not establish what the parties intended, if it was not an unlimited time period. Again, counsel points to the lack of evidence about what occurred between December 8 and December 21, 1998. Thus, she argues that there is no evidence that the parties had a mutual understanding subsequent to December 8, 1998.

Having reviewed the evidence before me, I conclude that the employer has established a latent ambiguity in para. 3 of the MOU. On the basis of the evidence, I conclude that at the time the MOU was signed off, both parties had a mutual understanding which is different from what a plain reading of the words used appears to disclose.

The evidence is crystal clear that at the end of the RE process on December 8, 1998, Mr. Rooney and his union team agreed to the one year limit. Mr. Rooney candidly admitted that. He also conceded that he expected that the agreements reached during the RE process will be included in the MOU. He agreed that the union had not at any time proposed a period longer than 2 years for employees on LTIP. The evidence is that he had accepted that the affected employees would only have a one year window and expected that to be reflected in the MOU.

The union’s argument is predicated upon an assumption that, although both parties agreed to a one year time limit, and expected that to be reflected in the MOU, all that changed as a result of some negotiations which occurred between December 8 and December 21, about which no evidence was adduced. The employer called three witnesses who were involved in the human resources aspects of the divestment in question. One witness was Mr. Farragher, then Director of Human Resources of the Ministry, who was the employer’s leader and spokesperson in the reasonable efforts process with the union, as well as the leader of the team negotiating with the new employer OPAC. All three testified that they were not aware of any discussions with the union subsequent to December 8, 1998 about the terms of job offers for employees on LTIP. Like Mr. Rooney, they also expected the MOU to reflect the one year window. Mr. Rooney also testified that he was not aware of any discussions about LTIP employees after December 8, 1998. Mr. Storie, who took over from Mr. Rooney after December 8, 1998, did not testify.

In the face of the evidence, it is not reasonable to assume, as the union does, that some unknown negotiations occurred between some unidentified persons on behalf of the union and the employer, which undid the deal struck on December 8th between the two reasonable efforts teams. The union contended that the employer failed to adduce evidence about the discussions that led to the changing of the time limit in the MOU from one year to an unlimited period. That in my view is an unreasonable characterization. The employer did lead evidence, i.e. that it was unaware of any discussions about LTIP employees subsequent to December 8, 1998.

It is significant that the most the union hoped to achieve was a two year window. The evidence is clear that it did not at any time seek a period longer than 2 years. I can take “judicial notice” that employers generally, and this employer particularly, are not known to grant terms and conditions that are significantly greater than what a union has demanded. If that happened in this instance, it would have been a unique and significant event. In those circumstances, the union would surely have noted the unique achievement. Someone in the union must have been responsible for achieving a deal which was significantly more beneficial to the union than its starting position. Conversely, the employer was fully aware by December 21st, that OPAC was strongly opposed to a period longer than one year. It is simply irrational in those circumstances that the employer would agree to extend to the union an unlimited time period, when the most union had demanded was a two year period.

The evidence is that for over four years the union, like the employer, acted on the basis of a one year window. This is supported by the evidence that the union did not protest when the employer, and OPAC, issued documentation to employees (some of which were copied to the union) seeking to enforce the one year time limit. The position that LTIP employees had an unlimited time period was first raised over four years after the MOU was executed, at the commencement of this arbitration.

I also conclude that the evidence resolves the latent ambiguity in that I find that the deal struck at the end of the RE process was not changed, and not intended to be changed, by either party. Thus while the language in the MOU failed to explicitly incorporate a one year time limit, the consensus reached on December 8, 1998 remained unchanged at the time of the MOU was executed. Somehow the drafting of the MOU did not reflect the mutual understanding of the parties, and Mr. Farragher failed to notice it when he signed the MOU.

In conclusion, I find that a latent ambiguity has been established in para. 3, and the evidence resolves the ambiguity. The mutual intention of the parties in signing off the MOU was that there would be a one year time limit for LTIP employees to receive job offers from OPAC and Para. 3 ought to be read as such.

Given the foregoing conclusion, it is unnecessary for me to deal with the employer’s alternate positions. I remain seized of the grievance to deal with all outstanding issues arising from Mr. Grant’s grievance in light of this decision.

Dated this 29th day of July 2004 at Toronto, Ontario.