[1990] OLRB Rep. May 553
0026-90-G; 0027-90-G; 0028-90-G; 0029-90-G; 0030-90-G; 0031-90-G; 0032-90-G; 0033-90-G; 0034-90-G; 0035-90-G; 0036-90-G; 0037-90-G; 0038-90-G; 9039-90-G Labourers' International Union of North America, Local 183, Applicant v. The Residential LOW-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Halton Forming Ltd., Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential LOW-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Mur-Wal Forming Inc., Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Orta Forming & Const. Limited, Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Parkwall Forming Ltd., Respondents; Labourers' International Union of North America, Local 183, Applicant v. Teskey Construction Co. Ltd., Respondent; Labourers' International Union of North America, Local 183, Applicant v. Malnic Contracting Inc., Respondent; Labourers' International Union of North America, Local 183, Applicant v. Baccardi Foundations Ltd., Respondent; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and A.R.G. Construction Corporation, Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Cedar Forming Limited, Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Greenwall Forming Limited, Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Peel Forming Limited, Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Poured Wall Corp. Ltd., Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Toronto Zenith Contracting (1982) Ltd., Respondents; Labourers' International Union of North America, Local 183, Applicant v. The Residential Low-Rise Forming Contractors' Association of Metropolitan Toronto and Vicinity and Tru-Wall Group Limited, Respondents
BEFORE: Owen V. Gray, Vice-Chair, and Board Members W. Gibson and P. V. Grasso.
APPEARANCES: S. B. D. WahI and J. Steffanini for the applicant; no-one for the respondents in 0030-90-G, 0031-90-G and 0032-90-G; E. T. McDermott for the other respondents.
DECISION OF VICE-CHAIR, OWEN V. GRAY AND BOARD MEMBER P. V. GRASSO; May 16, 1990
1. Each of the 14 employers named as respondents in these referrals to arbitration under section 124 of the Labour Relations Act is party to a collective agreement with the applicant trade union governing the employment of persons engaged in concrete forming in low rise residential construction. Schedule "A" to each of those agreements contains the following provision:
7.01 The Employer agrees to pay the sum of one dollar and thirty cents ($1.30) for each hour worked into Local 183 Members' Benefit Fund, jointly administered by an equal number of Employer and Union Trustees, for the purpose of purchasing weekly indemnity, life insurance, major medical, dental care, Ontario Health Insurance Plan (O.H.I.P.) or similar benefits for the employees covered by this Agreement, represented by Local 183, Labourers' International Union of North America.
These agreements have effect from May 1989 to April 1991. After they were made, the Employer Health Tax Act, 1989 (now S.O. 1989, c. 76) was given first reading. Since that Act came into force on January 1, 1990, each of the respondents has reduced its payments under this provision by between 40 and 50 cents per hour. The issue in these referrals is whether they are entitled to that or any abatement of their obligation under the subject provision as a result of the enactment of that legislation.
2. Counsel for the applicant sought to introduce evidence about the negotiation of the terms of the present and previous agreements as between it and The Residential Low Rise Forming Contractors Association of Metropolitan Toronto and Vicinity, which represented 11 of the 14 respondents in the last round of collective bargaining. He said the evidence was relevant and admissible because the collective agreement provision in question suffers from an ambiguity which, if not patent, would be demonstrated by the evidence he sought to introduce. Counsel for the respondents argued that there was no ambiguity, and objected to our receiving the evidence.
3. An arbitrator is entitled to resort to extrinsic evidence to determine whether there is a latent ambiguity in the language of a collective agreement as well as to resolve the ambiguity: Leitch Gold Mines Ltd. et al. v. Texas Gulf Sulphur Co. (Inc.) et al., 1968 CanLII 405 (ON HCJ), [1969] 1 O.R. 469; Re Noranda Metal Industries Ltd., Fergus Division and International Brotherhood of Electrical Workers, Local 2345 et al. (1983), 1983 CanLII 1690 (ON CA), 44 O.R. (2d) 529 (Ont. C.A.). When it is suggested that there is a latent ambiguity in a relevant provision, an objection to the reception of extrinsic evidence cannot be dealt with without knowing what facts it is said the evidence would establish, so that it can be determined whether proof of those facts would establish a latent ambiguity.
4. Having heard counsel for the applicant describe the facts which he said his extrinsic evidence would establish, it became apparent that full argument on the objection would include a good deal of the argument on the merits. After discussion, counsel agreed that we should hear their argument on the merits on this basis: if persuaded that proof of the matters alleged by counsel for the applicant could affect the result, we would so advise the parties and resume the hearing for the purpose of hearing the evidence of all parties with respect to those allegations; otherwise, we would decide the matter on the basis of the argument and the evidence already before us. In the result, we are not persuaded that proof of the matters alleged by counsel for the applicant could affect the result. This, then, is our decision on the merits.
5. The Ontario Health Insurance Plan ("OHIP") pays for a wide range of hospital and medical services for Ontario residents insured under the Plan. For many years before the Employer Health Tax Act came into force, the Health Insurance Act (now R.S.O. 1980, c. 197, as amended) and regulations thereunder required that each single adult and each family insured by the Plan pay a monthly premium for coverage. If an employer had 15 employees or more, the employees constituted a "mandatory group". Members of a mandatory group were obliged to be or become insured. Their employer had to deduct the premium from each such employee's wage and remit it to the General Manager of the Plan, unless the employee fell within a category exempt from payment of a premium, such as a spouse of an insured person. Under the Health Insurance Act, however, each employee member of a group was primarily liable to pay the premium for his or her own coverage.
6. The Health Insurance Act contemplated the formation of collector's groups: organizations of persons who paid their OHIP premiums through a collector designated by the group. An employer was not obliged to deduct premiums from the wages of an employee who made a written request for exemption on the ground that he or she was insured through a collector's group. Counsel for the 11 respondents who appeared at the hearing of these referrals (hereafter "counsel for the respondents" and "the respondents", respectively) suggested that the employees for whom the Local 183 Members' Benefit Fund ("the Fund") paid OHIP premiums before January 1990 constituted a collector's group. This was neither admitted nor denied by counsel for the applicant.
7. It is common ground that before January 1990, the Fund used a portion of the remittances to it under the provision in question to pay OHIP premiums for those employees covered by the collective agreements who were not otherwise insured. Counsel disagree about whether there would or could have been circumstances in which an employer covered by one of those agreements would have been obliged to deduct OHIP premiums from the wages of a new hire for a period of time while also making remittances under the subject provision in respect of his hours of work. The mechanics of dealings between the Fund and the employers covered by the subject collective agreements on the one hand and the OHIP administration on the other was not dealt with in evidence.
8. The full title of the Employer Health Tax Act, 1989 is "An Act to impose a Tax on Employers for the purpose of providing for Health Care and to revise the requirements respecting the payment of Premiums under the Health Insurance Act". It imposes on each employer a tax equal to between 0.98 and 1.95 percent of the total remuneration paid to or on behalf of those of its employees who work at or are paid from or through a permanent establishment of the employer in Ontario. It also repeals those provisions of the Health Insurance Act which require or contemplate the payment or collection of OHIP premiums. The effective date of some of the repealing provisions is April 1, 1990, which we presume has something to do with the fact that, under the Health Insurance Act, OHIP premiums were to be paid three months in advance of the period to which they applied. The parties' arguments did not focus on that timing complication. The basic premise of the argument on both sides was that on January 1,1990, the respondent employers' liability for Health Tax had begun to accrue and the Fund had ceased paying for OHIP coverage for their employees.
9. The applicant asked us to receive into evidence certain briefs presented by construction unions and construction employer organizations to the Ontario Legislature's Standing Committee on Finance and Economic Affairs, which reviewed the Employer Health Tax Act, 1989 before it was enacted, as well as portions of Hansard recording deliberations of that committee and of the House in committee of the whole with respect to that legislation. This material would show that the plight in which the respondents now find themselves was anticipated during the legislative process, and that construction industry employers unsuccessfully sought an amendment which would relieve them from payment of the tax in these circumstances. Counsel for the applicant does not argue that any of the respondents is bound by the position taken before the legislature on behalf of construction industry employers with respect to the effect of the legislation on employers bound by provisions of the sort in question here. As counsel for the respondents observed in argument, this material adds nothing to what examination of the Employer Health Tax Act, 1989 reveals: that it does not expressly address the effect it may have on existing arrangements between employers and employees with respect to payment of OHIP premiums and does not purport to alter those arrangements directly.
10. When bargaining a collective agreement, an employer takes into account its current and expected costs of doing business and a trade union takes into account the current and expected costs of living and working of the employees it represents. Once agreement is reached, ensuing economic and social changes may create differences between expected and actual costs of doing business and costs of living and working. Changes in income taxes and other taxes may and often do have that effect, as may changes in government economic and social programs. The bargain the parties make must nevertheless stand for a period of time before either party can require the other to renegotiate it. The parties to collective agreements generally do not agree that an arbitrator or arbitration board can adjust their agreement in mid-term to redress externally induced changes in the parties' economic circumstances. The agreements before us specifically provide that an arbitrator or arbitration board has no power to alter or amend its terms.
11. The respondents seek relief from the obligation to make payments referable to OHIP premiums. They say that the legal doctrines of frustration and unjust enrichment give us the power to grant that relief, and that the coming into force of the Employer Health Tax Act, 1989 triggers the application of those doctrines.
12. The respondents say that Article 7.01 of Schedule "A" to their collective agreements (hereafter simply "Article 7.01") amounts to an agreement that the trustees of the fund will purchase specific, enumerated benefits, including OHIP, with money provided by them. The trust agreement which governs the Fund is incorporated into the collective agreements by reference by Article 7.04 of Schedule "A". The respondents say that the trust agreement obliges the trustees to purchase OHIP. The provisions of the trust agreement on which they rely for that proposition are these:
2.03 The term "Benefits" as used herein shall mean group life insurance, accidental death and dismemberment insurance, weekly income for sickness or accident, hospital, surgical, medical and anaesthesia, diagnostic, dental, long-term disability, dependent life, survivor income and other similar benefits to be provided to Employees and/or their beneficiaries or dependents as set forth in the Benefit Plan.
3.02 The Trust Fund is created, established and maintained and the Trustees agree to receive, hold and administer the Trust Fund for the purpose of providing Benefits in accordance with the Benefit Plan adopted from time to time by the Trustees.
Although no express reference to the Ontario Health Insurance Plan appears in the trust agreement, counsel for the respondents argues that reference to "hospital, surgical, medical and anaesthesia, diagnostic ... benefits" can only mean the benefits provided by OHIP. He argues that clause 3.02 requires the trustees to purchase all of the sorts of benefits referred to in clause 2.03, which they could only do by purchasing OHIP benefits.
13. The respondents say that the introduction and enactment of the Employer Health Tax Act is a "supervening event" which has frustrated the parties' arrangement by making the purchase of OHIP benefits "illegal". Their counsel cites Capital Quality Homes Ltd. v. Colwyn Construction Ltd. (1975), 1975 CanLII 726 (ON CA), 61 D.L.R. (3d) 385 (Ont. C. A.) in support of the proposition that we can in these circumstances "impose on the parties the just and reasonable solution that the new situation demands" (op. cit., p. 391). That solution, in his submission, would be to relieve the respondents of the obligation to pay that portion of the $1.30 per hour which found its way to OHIP prior to January 1, 1990. He is unable to refer us to any case in which an arbitrator has applied the doctrine of frustration in a dispute about rights under a collective agreement, but cites the application of it in an employment benefits context in The Ottawa Police Association v. The Corporation of the City of Ottawa, et al.,(unreported decision, May 22, 1985, Ont. C. A.).
14. Counsel for the respondents also argues that the essential arrangement was that the trustees would remit OHIP premiums as agent for the employers out of money provided by the employers for that purpose. As that purpose can no longer be accomplished, he submits that we should not enforce the continued payment to the trustees of the amount attributable to that purpose because it would only result in the trustees holding that money on a resulting trust for the employers making the payments.
15. Finally, counsel argues that the principle of unjust enrichment should be applied to give the respondents relief. He quotes Goff and Jones, The Law of Restitution, (3rd ed., 1986) at page 16, where they say of this principle that
It presupposes three things: first, that the defendant has been enriched by the receipt of a benefit; secondly, that he has been enriched at the plaintiffs expense; and thirdly, that it would be unjust to allow him to retain the benefit.
He relies on the decision of Mr. Justice Morden in James More & Sons Ltd. v. University of Ottawa (1974), 1974 CanLII 765 (ON HCJ), 49 D.L.R. (3d) 666, in support of this submission.
16. A good deal of the respondents' argument depends on the proposition that the trustees of the Fund owed an obligation to the respondents to use some defined portion of their payments under article 7.01 to pay OHIP premiums for employees. It does not appear to us that they had any such obligation. Neither the collective agreement nor the trust agreement allocates any portion of the employer remittances to OHIP. Indeed, while the trustees are obliged to use those payments to provide "Benefits", they are not obliged to purchase or spend any particular amount of money on any particular benefit. Their obligation under the trust agreement is simply to ensure that the things they spent money on fall within the definition of "Benefits" in clause 2.03 of the trust agreement.
17. We do not accept that the trustees were obliged to purchase all of the sorts of coverage described in clause 2.03 of the trust agreement. If the language of Article 7.01 itself imposes any obligation on anyone other than the employer, it is only to purchase "weekly indemnity, life insurance, major medical, dental care, Ontario Health Insurance Plan (O.H.I.P.) or similar benefits" (our emphasis). The use of "or" is inconsistent with an obligation to purchase all of the specified benefits. The word "and" in Article 2.03 of the trust agreement forms part of the phrase "and other similar benefits" in a broad definition of the word "Benefits". The use of such general language is inconsistent with an intention that this definition trigger a positive obligation to purchase everything encompassed by the language used in it.
18. The respondents did not agree to provide OHIP coverage or to pay their employees' OHIP premiums. The Fund cannot be said to have been acting as the employers' agent in remitting premiums to OHIP. The respondents would not have been obliged to pay their employees' OHIP premiums out of their own pockets if the Fund had not done so. They would only have had to deduct premiums from the employees' wages as required by the Health Insurance Act. While it is not a compelling fact, it is interesting that article 5.01 of Schedule "A", which requires that each employee's weekly pay be accompanied by a slip itemizing all deductions, expressly contemplates the possible deduction of OHIP premiums by the employer. This would have been quite unnecessary in an agreement under which the employer was expected to pay the premiums directly or through an agent.
19. The amount payable by employees for OHIP premiums has changed over the years. Further change was a contingency which was not beyond the foresight of parties to collective bargaining. Nothing in the agreements in question here would have obliged the employer parties to increase their payments under Article 7.01 if premium amounts had increased. Under the language of these agreements, the employees bore the risk that premiums would increase before their union got back to the bargaining table. They would have been entitled to the benefit if there had been any mid-contract decrease in OHIP premiums. Nothing in the language of the agreements warrants treating an elimination of premiums differently from a decrease in premiums.
20. In Victoria Wood Development Corporation Inc. v. Ondrey et al. (1978), 1978 CanLII 1447 (ON CA), 22 OR. (2d) 1, the Ontario Court of Appeal reviewed its earlier decision in Capital Quality Homes Ltd. v. Colwyn Construction Ltd., supra. Both cases involved agreements to purchase land which became the subject of restrictive land use planning legislation after the agreements were made and before they were completed. In the earlier case, the restriction prevented the vendor from conveying the land in the manner expressly contemplated by the agreement. In the latter case, they interfered with the use to which the vendor knew the purchaser proposed to put the land, but did not prevent the parties from performing their obligations under the agreement. The Court of Appeal did not consider the latter contract frustrated.
21. In The Ottawa Police Association v. The Corporation of the City of Ottawa, et al., the contest was over the employer parties' contributions to a supplementary pension fund which was being wound up pursuant to a regulation promulgated under provincial legislation which had done away with the need for the fund. The employees' contributions had been returned to them as the regulation required. The issue was whether an earlier agreement between the parties concerning "surpluses" in the plan affected the employer parties' entitlement to the return of their own contributions, which was not expressly addressed by the regulation. The court found that the agreement in question was part of an overall agreement with respect to the creation and maintenance of the supplementary pension fund, and that the subsequent regulation had frustrated that agreement by dismantling the fund.
22. Assuming that the doctrine of frustration can be applied by an arbitration board expressly forbidden by the terms of the collective agreement from altering its terms, we do not think that doctrine applies here. Neither the trustees of the fund nor any of the parties to the subject collective agreements is under any obligation which the Employer Health Tax Act prevents them from discharging. The elimination of the employees' statutory obligations to pay OHIP premiums does not destroy the very foundation of the collective agreement or of article 7.01, nor does it make the performance they call for radically different from what the parties contracted for.
23. If principles of unjust enrichment can be applied by an arbitration board, they do not apply here. The linkage between the employees' benefit and the employers' expenditure is not as direct as it was in James More & Sons Ltd. v. University of Ottawa, supra: the employees' OHIP coverage does not depend on their being employed, nor on whether their particular employer has paid the tax it owes under the Employer Health Tax Act. More importantly, and in contrast with the legislation in question in the More case, it was clearly the Legislature's intention that employees be relieved from payment of premiums by deduction from the compensation their employers had agreed to pay them and that employers as a class bear a new burden in relation to the funding of health care. Even if the circumstances fit the first two of the tests set out in the passage quoted in paragraph 15 above, we cannot say that the result is unjust when it is consistent with the apparent intent of the legislation which brought it about.
24. The respondent employers' obligation under Article 7.01 of Schedule "A" of the collective agreements is to pay $1.30 per hour to the Local 183 Members' Benefit Fund. The enactment and coming into force of the Employer Health Tax Act, 1989, S.O. 1989, c. 76, did not relieve them of that obligation. The respondents are directed to forthwith remit to the Local 183 Members' Benefit Fund the difference between their remittances under Article 7.01 of Schedule "A" since January 1, 1990 and the full amounts they were obliged to remit in that period, together with interest, as required by the terms of the collective agreements.
25. If the parties are unable to agree on the amounts payable, that question may be the subject of a further hearing and award, and we remain seized with these referrals for those purposes.
DECISION OF BOARD MEMBER W. GIBSON; May 16, 1990
1. I dissent.
2. As referred to in paragraph 7 of the majority decision, it is common ground that the benefit fund used a portion of the remittances to it to pay the O.H.I.P. premium for the employees covered by the collective agreements. This is not surprising, because article 7:01 of schedule "A" to the collective agreement spells out very clearly that the benefits paid for by the employer within the remittance of $1.30 per hour, includes O.H.I.P. premiums. Similarly, article 2:03 of the trust document, although it does not specifically spell out payment of O.H.I.P. premiums as one of the benefits, it does define "hospital, surgical, medical and anesthesia, diagnostic" as benefits to be provided. These of course are the services provided by O.H.I.P.. After defining the various benefits to be provided out of the trust fund, articles 2:03 adds in these words "and other similar benefits to be provided to employees". I interpret this to mean that it is obligatory for the trustees to provide all the benefits defined before the word "and"~ which includes the services provided by O.H.I.P.
3. The majority decision produces the inequitable, in fact grossly unfair result that the employer will now pay twice for his employees O.H.I.P. premiums, once as part of the $1.30 per hour he pays into the benefit plan, and a second time through the payroll tax imposed on him by law under the Employer Health Tax Act.
4. My decision would have been to:
(a) permit the employers to reduce their payment of $1.30 per hour into the benefit plan by the identical amount per hour that the trustees were paying into O.H.I.P.. (This amount is believed to be approximately 40 cents per hour); or
(b) enter into an arrangement whereby the trustees can continue to remit the O.H.I.P. premiums, but, effective January 1, 1990, the payments to be made as agent of the employer, so that the employer obligations are met under the Employer Health Tax Act.
5. This would mean that all parties would come out even:
(a) the O.H.I.P. premiums will still be paid for the employees;
(b) the employer pays once, not twice, for these premiums;
(c) the trust fund does not receive a "windfall" enrichment of 40 cents per hour.
6. I do not believe it to be significant that construction employers unsuccessfully attempted to obtain an amendment to the proposed Employer Health Tax Act to adjust for existing benefit plans. With such a multitude of benefit plans out in the workplace, I can see why the Legislature opted to let the parties work this out for themselves, through arbitration if necessary.
Also, I put little weight on the point made by counsel for the union, that there is no way the employer would have paid more than $1.30 an hour into the benefit plan if O.H.I.P. premiums had increased part way through the collective agreement. Of course this is true, but the parties meet every two years around the bargaining table and adjustments can be made at this time. It is equally true, from time to time, the trustees of the benefit plan may be able to obtain decreased premiums for other benefits ie. group life insurance, long-term disability etc., and in these cases the employer would not receive a refund. "Run of the Mill" increases or decreases in premiums can be anticipated over the two year term of a collective agreement, and can easily be handled without a major impact on the reserves of the trust-fund.
However, the complete elimination, by law, of the trustees direct obligation to remit the total O.H.I.P. premiums, is a very different situation, and should be met by the appropriate equitable adjustment, as outlined in my proposal above, so that everyone comes out even and we have no winners and no losers.