GSB#2004-3720, 2004-3721

UNION#2005-0453-0001, 2005-0453-00027

IN THE MATTER OF AN ARBITRATION

Under

THE CROWN EMPLOYEES COLLECTIVE BARGAINING ACT

Before

THE GRIEVANCE SETTLEMENT BOARD

BETWEEN

Ontario Public Service Employees Union (Fowler/Geneau)

Union

• and -

The Crown in Right of Ontario (St. Lawrence Parks Commission)

Employer

BEFORE

Bram Herlich

Vice-Chair

FOR THE UNION

Richard Blair Ryder Wright Blair & Holmes LLP Barristers and Solicitors

FOR THE EMPLOYER

Susan Munn Ministry of Government Services Counsel

HEARING

March 25, 2010, April 12, 2010.

Decision

1This case involves an alleged breach of the terms of a Memorandum of Settlement (“MOS”) entered into by the parties on October 11, 2005. That settlement provided, among other things, that:

The employer agrees that the grievors [i.e. Messrs. Geneau and Fowler] will be considered for future restorative work of the sawmill and related equipment…

2Between September 2008 and May 2009 restorative work of the kind contemplated by the parties’ agreement was performed by the employer. None of this work was assigned to the grievors, who assert that the employer’s actions – or perhaps put more properly, inactions – constitute a failure to abide by the terms of the settlement.

3No viva voce evidence was called. Instead, each of the parties filed their own recitation of the facts they saw as relevant to their respective positions. The union’s document focused on (the extremely limited) communication regarding the work assignment in question and on the grievors’ abilities to perform it. The employer’s asserted facts related primarily to the manner in which it determined to assign the work in question – it was contracted out. The parties also agreed to file some relevant documents, including the contract entered into between the employer and the successful contractor as well as a series of invoices resulting from the work performed as a consequence of that contract.

4As there were no significant inconsistencies between these two statements of fact and as neither party contested the facts set out in the other’s statement, these facts, while perhaps not strictly attaining the status of “agreed facts” are, at least, undisputed facts, which may be the functional equivalent of agreed facts and which (subject to some slight modifications) I have taken to be true for the purposes of this decision.

The facts presented by the union are as follows:

Facts concerning the grievors bringing the issue to the employer’s attention:

1. Sawmill restoration work was performed under contract between the Crown and Hutchinson Home Renovations commencing on or around November 24, 2008, and continuing through May 8 (or later).

2. In late February of 2009 Mr. Geneau learned that sawmill restoration work had been performed. In March, 2009, Bill Fowler sent an email on behalf of the grievors to Maintenance Supervisor Rob Filliol, inquiring as to whether the grievors Bill Fowler and Pierre Geneau had been considered for the sawmill restoration work.

3. The grievors did not receive a response to the email from Mr. Filliol.

4. The grievors, after approximately two weeks, approached Mr. Filliol at Upper Canada Village and asked if he had received the email and why they had received no response.

5. Mr. Filliol replied with words to the effect that he did not know how to answer the email, so he had passed it on to Pierre Pinet.

6. The grievors did not get a response from Mr. Pinet.

7. The grievors subsequently spoke to their immediate supervisor, Mr. Bruce Hambest, who suggested that the matter was Mr. Filliol’s responsibility, and again to Mr. Rob Filliol, neither of whom indicated to the grievors that the grievors had been considered for the work in question.

Facts regarding the grievors’ ability to perform the work in question:

8. The grievors were capable of performing all aspects of the sawmill restoration work. More particularly, with respect to Pierre Geneau, he has reviewed and observed the work which was performed by the contractors in the sawmill restoration and he has performed each aspect of the sawmill restoration work which was performed by the contractors on at least two occasions in the past, in approximately 1985, and again in approximately 1992 or 1993. He was trained as a carpenter at Algonquin College through the St. Lawrence Parks Commission and was, during the off-season, an apprentice carpenter for four years with the St. Lawrence Parks Commission from approximately 1986 – 1990, and was a carpenter’s helper at Upper Canada Village prior to that. He is employed with the Commission during the tourist season as a sawmill operator.

9. With respect to Bill Fowler, he has performed maintenance on the sawmill machinery on an ongoing basis since transferring from the Timber Framing crew in approximately 1989. He has observed and reviewed all of the work performed by the contractors in the sawmill restoration. He has, in the context of other buildings at Upper Canada Village, performed all of the heavy carpentry tasks necessary for the sawmill reconstruction, including work on building framing, flooring including spine flooring, and mortise and tenent joints (for example, the drive shed at the Flour Mill; the Ross Woodyard barn; the “garden shed” which is used for wheelchair storage, shoemaker house, signposts). Mr. Fowler has completed a timber framing course, paid for in part by the St. Lawrence Parks Commission. After his transfer from the timber framing crew to the sawmill operator, Mr. Fowler continued to do heavy carpentry and framing work as necessary.

10. Both grievors have been employed during the tourist season as Sawmill Operator or Interpreter. Mr. Geneau is currently the Lead Interpreter, Sawmill. Both are fully familiar with the sawmill, its equipment, and its operation.

The facts presented by the employer are the following:

EMPLOYER’S FACTS

1. On or around May 2008, Mr. Filliol planned some raceway repairs in the sawmill at Upper Canada Village. He decided at that time that the best way to do the raceway repairs was to contract out the complete project to Hutchinson Home Renovations.

2. In reaching his decision to contract out the entire project to Hutchinson Home Renovations, Mr. Filliol based his decision on a number of factors.

3. The first factor that Mr. Filliol considered was the volume of work that had to be completed. He determined that the scope of the raceway repair project as a whole was very large and could not be completed before Upper Canada Village reopened in May 2009 unless he contracted out the work.

4. The second factor that Mr. Filliol considered was the time required to do the work that had to be completed. Mr. Filliol determined that it was necessary for a large amount of preparation work to be completed during the summer and early fall of 2008 in order to allow raceway repairs to be completed before Upper Canada Village reopened in May 2009. He determined that the preparation work that had to be completed during the summer and early fall of 2008 included cutting approximately 120 pieces for the raceway, assembling each frame out of 4 of the cut pieces, tagging the frame in order to identify it for assembly later, taking the frame apart, and storing the pieces of the frame.

5. The third factor that Mr. Filliol considered was the knowledge necessary to have the work completed as required. Mr. Filliol considered the fact that that Hutchinson Home Renovations had done work on the sawmill turbine and wooden chute connected to the raceway at Upper Canada Village in 2004 and 2005. Mr. Filliol also considered the fact that he thought it would be easier if those who completed the restoration work had also completed the preparation work during the summer and early fall of 2008 as well as the demolition work. For example, Mr. Filliol considered the fact that when frames are taken apart, measurements must be taken and the location of pieces had to be recorded. Mr. Filliol determined that if the individual who takes the frame apart while doing the preparation work also assembles the frame later on in the process, then all of this knowledge would not have to be transferred and the work on the sawmill could be done more efficiently. As further example, Mr. Filliol also considered the fact that when the sawmill demolition took place, the “key ways”, or pieces of wood between the liner and the concrete retaining wall, had to be identified and saved. Mr. Filliol ultimately determined that the raceway could be repaired more efficiently if the same people who had completed the preparation work and demolition work also reassembled the frames later in the process.

6. Mr. Filliol considered all of these factors and reached the determination that the raceway repair project should be contracted out to Hutchinson Home Renovations.

7. Hutchinson Home Renovations performed work on the raceway repair project between September 9, 2008 and September 19, 2008 and between November 24, 2008 and May 22, 2009. The Service Contract and Invoices related to this work are attached as Appendix A.

8. The Grievors have been employed on Group 3 seasonal contracts in the past. Mr. Geneau’s Group 3 seasonal contract typically runs from the last week in April to the end of October. Mr. Fowler’s Group 3 seasonal contract typically runs from early May to the middle of October.

The Positions of the Parties

5The positions of the parties are relatively straightforward, both with respect to liability and remedy.

6The union notes that there is no dispute that the work in question was of the type contemplated by the MOS and that the grievors possessed the ability to perform it. But there is nothing in the evidence or in the employer’s asserted facts or submissions which suggests that it ever turned its mind to a consideration of any possibility whatsoever of the grievors performing (some or all of) the work. Indeed, there is simply nothing in the evidence, facts or submissions which suggests that the employer even ever made any pretence of engaging in the type of consideration required by the terms of the MOS. There can thus be no question that the employer has failed to discharge its obligation under the MOS.

7The question of the appropriate remedy is only slightly more complex from the union’s perspective.

8A number of cases were pointed to where arbitrators (including this Board) have not shrunk from fashioning remedies in circumstances where the remedial response may not be as obvious as the breach (see, for example, Community Nursing Home v. Ontario Nurses’ Association [2008] O.L.A.A. No. 233 (M. Newman) application for judicial review dismissed, 2010 ONSC 1296, in which the Board of Arbitration declared that layoffs effected by the employer were void ab initio where the employer had failed to engage in consultation with the union as required by the collective agreement; and The Queen in right of Ontario v. Grievance Settlement Board et al. (2005), 2005 CanLII 4848 (ON SCDC), 137 L.A.C. (4th) 1, a decision of the Divisional Court upholding a decision of this Board which had awarded a blanket remedy of damages for all affected employees whose seniority had not been properly recognized following a divestment). Any remedy, the union urges, must address the callous disregard the employer exhibited in respect of its obligations under the MOS. While it may now be impossible to divine or otherwise determine with absolute precision what would have happened had the employer, as it was obligated to have done, considered the grievors in the context of the work to be performed, any such lack of clarity is the direct result of the employer’s dereliction, something from which it ought not to be entitled to obtain any benefit. And while it concedes that the Board may fashion other, perhaps less generous, remedial responses, the presumptive remedy in this case is to award the grievors damages equal to the wages they would have earned had the work been assigned to them.

9For its part, the employer asserts that there has been no breach of the MOS – the employer assessed the nature of the work to be done and, taking relevant and reasonable factors into consideration, determined that the best way to have the work done was to contract out the entire project. (I pause to note that while the union does not concede the propriety of the contracting out – indeed, the entire issue of contracting out, perhaps even including the facts of the instant case – is part of a much larger adjudicative process between the parties, the issue of contracting out, per se, is not part of the instant decision – we are concerned with whether or not the employer has breached the terms of the MOS specific to these two grievors.)

10The employer emphasizes the fact that the obligation created by the MOS is merely to consider the grievors – it does not provide any guarantee that the work for which they are to be considered will be assigned to them. Neither does it create any right of first refusal. And further, the MOS does not require the employer to structure its work in a fashion that will guarantee or even maximize the likelihood that it will be assigned to the grievors.

11In the instant case, the employer considered a number of relevant factors, i.e. the volume and complexity of the work, the timing (some of the work had to be performed in the summer and early fall of 2008 and the entire project was to be completed prior to the commencement of the next season in May 2009), the expertise and experience of the contractor ultimately selected (it had done previous similar related work for the employer), and the desirability of having the same crew do all of the work in its various phases (including demolition, preparation and installation).

12Having taken all of these factors into consideration, the employer made a reasoned determination that the best fashion to have the work performed was to contract out the entire project to a single source, which is what it did.

13The employer acknowledges that it has an obligation, in the appropriate circumstances, to consider the grievors. However, it also has the right to determine what work is to be performed and how that work is to be structured, both with respect to its timing and manpower requirements. Those determinations in the present case excluded the grievors – as the employer put it, because it had determined to contract out the work (based on the factors set out) “the grievors did not make the short list”.

14In the alternative, the employer submits that even if some technical breach of the MOS can be established, no remedy beyond a declaration ought to issue. In that respect reliance was placed on decisions of the Ontario Court of Appeal in Eastwalsh Homes v. Anatal Developments Ltd. (1993), 1993 CanLII 3431 (ON CA), 12 O.R. (3d) 675 and the Supreme Court of Canada in Kinkel v. Hyman 1939 CanLII 7 (SCC), [1939] S.C.R. 364. These cases deal with the sometimes elusive task of fashioning a remedy for lost opportunity.

15In the Kinkel case the remedial response was restricted to nominal damages. The court observed that there was “no authority…justifying any court in awarding any more than a nominal sum as damages for the loss of a mere chance of possible benefit except upon evidence proving that there was some reasonable probability of the plaintiff realizing there from an advantage of some real substantial monetary value.” In that case the plaintiff’s only chance of realizing any advantage from the lost opportunity depended upon “the extremely doubtful ratification” (of a transaction effected, without authority, by the defendants) by a majority of the shareholders of a company that was not a party in the case. As the court determined that there was no evidence upon which any finding could be made that such a vote was reasonably probable, it restricted the more generous response of the Court of Appeal to nominal damages.

16In the Eastwalsh case, a land developer was found to have breached its contractual obligation to a builder by failing to use its best efforts to secure registration of a subdivision by a date specified in the parties’ agreement to purchase and sell land lots. The failure to obtain the contemplated registration resulted in the termination of the agreement. The builder sued the developer for specific performance or damages. However, while the court had no difficulty concluding the developer had breached its contractual obligations, it was unable to conclude that breach resulted in any substantial loss because there were numerous other factors (outside the direct control of the defendant) which led the court to conclude that there was no evidence that the plan could have been successfully registered within the required time frame even if that registration had been diligently pursued by the defendant. Accordingly, the court concluded that the opportunity the plaintiff lost was too insubstantial to justify anything more than nominal damages.

17Relying on these cases, the employer asks me to conclude that there is simply no reasonable possibility that the grievors, even had they been fully and properly considered in the fashion advocated by the union and required by the MOS, would have been assigned (some or all) of the work in question. The factors considered by Mr. Filliol, as outlined earlier, would simply have resulted in a decision no different from the one the employer the made. On that basis and even if there is a technical breach of the MOS, any remedy ought to be restricted to a declaration.

Decision

18I have no hesitation whatsoever in concluding that the employer failed to discharge its obligations under the MOS. There is no evidence whatsoever, indeed not even any meaningful submission that the employer ever considered the grievors in its decision about how to perform the required work. Neither the employer’s facts nor its submissions make any such explicit claim. Rather, the employer effectively submits that its determination regarding the manner in which the work was to be performed made any consideration of the grievors unnecessary. The employer was, however, under an obligation to consider the grievors to possibly perform some or all of the work in question. And while it may be true that a consideration of the grievors may not have changed the ultimate result, that is a matter which goes to remedy and not one which excuses it from its contractual obligation to consider them. It did not. It never turned its mind to any possibility of the grievors performing some or all of the work. Not only did the grievors, as the employer put it, “not make the short list”, they did not make it to any list at any stage in the process. The employer did not fulfil its obligation under the terms of the MOS.

19The question of remedy is more complicated. Even here, however, the lack of salient evidence from the employer, in a circumstance where there is no dispute that the grievors were able and (subject to a qualification which follows) available to do the work, is problematic to its case. The parties should not be faulted for engaging in a process which, through their fact statements rather than viva voce evidence, undoubtedly served to expedite these proceedings. I find it curious, however, that just as there was no employer assertion that it had considered the grievors (part of the liability issue), neither was there any assertion in its facts that Mr. Filliol’s ultimate conclusion would have remained unchanged even had he considered the grievors (part of the remedial issue). It may be that any such assertion would have been challenged by the union, perhaps necessitating Mr. Filliol’s testimony and cross-examination which may (or not) have resulted in a fuller evidentiary basis for the position the employer now advances. But the parties, for whatever reason, chose not to proceed in that fashion.

20The result is that, to the extent I may need to consider what would have likely happened had the employer considered the grievors as it was obligated to do, I am left with two competing visions. The employer asks me to conclude, based on the same factors which determined the improper decision-making process it followed, that the result would have been the same. The union, on the other hand, submits that any uncertainty in divining or otherwise attempting to ascertain what would have happened is a result of the employer’s breach. It points to little more than the fact that the work was of the type contemplated by the MOS, the grievors were capable of performing it and the employer was bound by an obligation to consider them. The presumptive remedy in that case is to award the grievors damages equal to the wages they would have earned had the work been assigned to them.

21I agree with the employer (and, in fairness, the union did not really argue otherwise) that the terms of the MOS did not provide any guarantee of the work in question to the grievors. And that is why the remedy in this case is not one which is to compensate them for the loss of the work, per se. What the grievors lost was an opportunity to be considered for the work in question. The value of that loss is what they are to be compensated for. Compensation for that loss does not depend upon their assignment being a certainty but for the breach. And by the same token, that loss may still be assigned some value even in a circumstance where the opportunity may not have resulted in an assignment of the work.

22The cases relied upon by the employer are quite instructive in this regard. They demonstrate that the award of any damages flows from a two-step process. First, there must be a breach which results in the loss of opportunity and second, the opportunity which was lost must have given rise to some reasonable probability of the securing of some advantage. In the two cases cited by the employer, the award of damages was nominal only, because the courts concluded that there was no evidence upon which any finding could be made that such a result was reasonably probable (in the Kinkel case) and because the evidence compelled the conclusion that notwithstanding the breach, the benefit linked to the lost opportunity could not have been realized (in Eastwalsh). If I were drawn to a similar conclusion in the instant case, I might well restrict any remedy to a declaration with nominal damages.

23I also find it instructive, however, that in both of the cited judicial decisions, the obstacles to the realization of the opportunities in question were external to the parties to the litigation (in the one case realization was dependent upon the acts of shareholders to a company not party to the litigation and, in the other, upon the determinations of at least one local authority also not a party to the litigation in question). In our case, there were no contingencies outside the control of the parties to the litigation. And the conclusion urged upon me by the employer that there was no reasonable prospect of the grievors receiving the work assignment in question even had they been properly considered is one which may well be suspect when one considers its self-serving nature in the context of the lack of direct supporting evidence.

24There are other aspects of the court cases, in particular the Eastwalsh case which I find helpful. The Court of Appeal observed:

…where it is clear that the breach of contract caused loss to the plaintiff, but it is very difficult to quantify that loss, the difficulty in assessing damages is not a basis for refusal to make an award in the plaintiff’s favour. One of the frequent difficulties in assessing damages is that the plaintiff is unable to prove loss of a definite benefit but only the “chance” of receiving a benefit had the contract been performed. In those circumstances, rather than refusing to award damages the courts have attempted to estimate the value of the lost chance and awarded damages on a proportionate basis.

The court went on to provide a pithy and instructive summary of its approach to the quantification of damages for lost opportunity:

In short, in assessing damages the court must discount the value of the chance by the improbability of its occurrence.

That is my task in the instant case.

25The employer showed utter indifference to its contractual obligation to consider the grievors. Having done so, it now urges me to conclude that the result would have been no different had it complied with those obligations. That may be true. I cannot know for certain, principally because the employer never performed the exercise required by the MOS and, secondarily, because it proffered no direct evidence to compel such a conclusion. On the other hand, the grievors were able and available to do the work in question and had a contractual right to be considered for the assignment. In those circumstances, I am unable to conclude that there is no reasonable prospect that the work would have been assigned to the grievors had they been considered for it in the manner contracted by the parties. On the contrary, I am satisfied that there is at least some reasonable prospect that the work would have been assigned to them. However, I also accept that there is a (perhaps even greater) reasonable prospect that the work would not have been assigned to them. It is not necessary (or possible) for me to positively conclude (on whatever standard) that the work would have been assigned to them. They are being compensated for the lost opportunity and not for the loss of work per se. In all of the circumstances (including the fact that there is a reasonable prospect that none of the work would have been assigned to the grievors), I am of the view that it is appropriate to discount the full maximum value of the lost opportunity by a factor of 75%.

26I have adverted to a modification required with respect to the grievors’ availability to do the work. Although the union’s facts initially asserted that the work was performed during the months of November 2008 to May 2009, the invoices that were filed demonstrate and the union accepted that the work commenced as early as September 2008 and continued into May 2009. As a result there were times (at both the start and end of that period) that fell within the tourist season and during which the grievors were at work. The union readily conceded that the grievors were not entitled to seek any monetary remedy during any of the periods of time that they were otherwise already at work for the employer. Subject to that qualification, the grievors are entitled to be paid, as damages for the employer’s breach of the MOS, an amount equal to 25% of the wages they would have earned had the relevant work been assigned to them during the relevant periods.

27I will leave it to the parties to agree to the precise calculation of the damages owing as a result of my award and I will remain seized in the event they encounter any difficulties in that regard or in respect of any issue that may arise concerning the application or implementation of the terms of my award herein.