COURT OF APPEAL FOR ONTARIO

DATE: 20000713

DOCKET: C31351

CARTHY, GOUDGE AND O'CONNOR JJ.A.

B E T W E E N :

SUN LIFE ASSURANCE COMPANY OF CANADA

Applicant

(Respondent in appeal)

and

NATIONAL AUTOMOBILE, AEROSPACE, TRANSPORTATION AND GENERAL WORKERS UNION OF CANADA (CAW-CANADA)

Respondent

(Appellant)

and

HONEYWELL LIMITED/AEROSPACE DIVISION and MORTON G. MITCHNICK

Respondents

(Respondents in Appeal)

Judith Allen for the appellant

Christopher Riggs for the respondent Sun Life Assurance Co.

Mark Contini for the respondent Honeywell Limited/ Aerospace Division

Heard: December 19 and 20, 2000

On appeal from the judgment of the Divisional Court (Bell, Sharpe and McKinnon JJ.) dated October 7, 1998.

GOUDGE J.A.:

[1] The Divisional Court heard this case together with London Life Insurance Company v. Dubreuil Brothers Employees Association, and in both cases quashed the arbitration award. Both appeals were argued together and raise essentially the same issue. For the reasons given in London Life Insurance Company v. Dubreuil Brothers Employees Association, 2000 OCA C31391 (“London Life”), I would reach the same conclusion as I did there and dismiss this appeal.

[2] The facts of this case are as follows. An employee of Honeywell Limited was cut off long term disability benefits by the insurer Sun Life Assurance Company. These benefits were payable pursuant to an insurance policy that the employer was required by its collective agreement to continue in effect. The employee filed a grievance under the collective agreement challenging the termination of his benefits. The employer contested the arbitrator’s right to hear the dispute. The arbitrator ruled that arbitration was the proper forum for the determination of the benefit entitlement issue raised by the grievance and that the union was entitled to join the insurer as a party defendant to the arbitration proceedings.

[3] The arbitrator reviewed the same case law canvassed in the reasons of this court in London Life. Relying particularly on his reading of Pilon v. International Minerals and Chemical Corp. (1996), 1996 1178 (ON CA), 31 O.R. (3d) 210 (C.A.), he concluded that where, but for the collective agreement the employee would have no claim to benefits, any dispute concerning entitlement to those benefits was within the exclusive jurisdiction of the arbitrator even if the employer had fully complied with the collective agreement, and there was only a dispute with the insurer about the meaning of the policy.

[4] In determining that he could take jurisdiction over this dispute, the arbitrator expressly declined to embark on an interpretation of the collective agreement to determine if it would impose an obligation on the employer to pay the benefits claimed in the grievance.

[5] Rather, he contemplated a single proceeding in which he could decide whether the insurer was responsible to pay the employee these benefits pursuant to the insurance policy, or the employer was responsible to pay the employee these benefits pursuant to the collective agreement, or neither.

[6] In essence the arbitrator determined that his exclusive jurisdiction extended to both disputes on the basis of his interpretation of the common law.

[7] As indicated in London Life, I think his decision must therefore be reviewed on a standard of correctness.

[8] And for the reasons given in London Life, I do not think the recent jurisprudence, in particular, Pilon, extends the exclusive jurisdiction of an arbitrator to a dispute between an employee and an insurer over the benefits it may be required to pay under the insurance policy. In taking jurisdiction on the basis that as he did, the arbitrator erred in law and for that reason his decision was correctly quashed.

[9] Finally, as in London Life, I think the arbitrator erred in joining the insurer as a party defendant given that there was no dispute implicating the insurer properly before him. His decision was properly quashed for this reason as well.

[10] The parties have settled all of the issues raised by the grievance except for the jurisdictional issue arising from the arbitrator’s award which they agreed would be judicially reviewed. It is therefore unnecessary to remit the matter to the arbitrator to undertake the interpretation of the collective agreement that he declined to embark upon.

[11] In the result, I would dismiss the appeal with costs including the costs of the motion seeking leave to appeal.

Released: July 13, 2000

“S.T. Goudge J.A.”

“I agree J.J. Carthy J.A.”

“I agree D. O’Connor J.A.”