Essex County Roman Catholic School Board (The Windsor-Essex Catholic School Board) v. Ontario English Catholic Teachers' Association

Essex County Roman Catholic School Board (The Windsor-Essex Catholic School Board) v. Ontario English Catholic Teachers' Association [Indexed as: Essex County Roman Catholic School Board v. Ontario English Catholic Teachers' Assn.]

56 O.R. (3d) 85

[2001] O.J. No. 3602

Docket No. C34932

Court of Appeal for Ontario

Borins, Feldman and MacPherson JJ.A.

September 13, 2001

Administrative law -- Judicial review -- Standard of review -- Other tribunals not bound to apply interpretation of tribunal whose decision was affirmed in judicial review proceedings on standard of patent unreasonableness -- In applying patent unreasonableness standard court does not attempt to set out correct and therefore binding interpretation of provision in question -- Other tribunals may arrive at opposite conclusion without their decisions being patently unreasonable.

Employment -- Labour relations -- Arbitration -- Judicial review -- Standard of review -- School boards and teachers entered into local agreements to implement province-wide agreement in education sector -- Teachers filed number of grievances dealing with interpretation of particular provision in province-wide agreement -- Arbitrator A accepted school board's interpretation of provision -- Court of Appeal held that standard of review of arbitrator's decision was that of patent unreasonableness and that Arbitrator A's decision was not patently unreasonable -- In subsequent arbitration Arbitrator B rejected Arbitrator A's interpretation of provision in question and accepted that of teachers -- Court of Appeal's decision upholding Arbitrator A's decision not determinative with respect to interpretation of provision and not binding on other arbitrators.

The Social Contract Act, S.O. 1993, c. 5 encouraged public sector employers and employees to negotiate savings by entering into sectoral agreements which could be implemented on a local level by individual employers and unions. An agreement in the education sector, called a Framework Agreement, was concluded, and school boards and teachers signed various Local Agreements to implement the Framework Agreement. Article 7.2 of the Framework Agreement imposed some restrictions on compensation during the social contract period. Several grievances were filed by teachers in various education jurisdictions in Ontario over the interpretation of article 7.2. One award ("the P award"), which sided with the school board's interpretation of article 7.2 rather than the teachers' interpretation, was taken to the Divisional Court for review. The Divisional Court held that the standard of review was correctness and that the arbitrator's award was not correct. The award was quashed. The Court of Appeal reversed that decision, holding that the standard of review was that of patent unreasonableness and that the arbitrator's decision was not patently unreasonable, or even unreasonable. By the time the grievance in this case came before the arbitrator, there had been eight arbitration awards dealing with article 7.2, all of which, with the exception of the P award, accepted the teachers' interpretation. The arbitrator in this case rejected the P interpretation of article 7.2. The school board brought an application for judicial review. The Divisional Court allowed the application and set aside the award on the basis that it was patently unreasonable for the arbitrator to disagree with a specific holding of the Court of Appeal and that the arbitrator was bound by the Court of Appeal decision on the P award in accordance with the law of precedent. The teachers appealed.

Held, the appeal should be allowed.

There is a fundamental difference in judicial review proceedings between the correctness and the patently unreasonable standards of review. Where a decision of an arbitrator (or an administrative tribunal) is reviewed on the standard of correctness, the court's decision on judicial review will determine the "correct" interpretation -- that is, the only interpretation. Where a decision of an arbitrator is reviewed on the standard of patent unreasonableness, the court does not decide whether the award was the only possible award or the best possible award. If the court determines that the award was not patently unreasonable, it does not follow that, looking backward, conflicts in the arbitral jurisprudence are necessarily resolved or, looking forward, arbitrators will be bound to apply the interpretation of the arbitrator whose decision was affirmed by the court in the judicial review proceedings. Since the Court of Appeal's decision in the P arbitration determined only that arbitrator P's award was not pat ently unreasonable, it remained open for a different arbitrator to make a different award, provided that it was not patently unreasonable. In this case, the arbitrator's interpretation of article 7.2 was not patently unreasonable.

APPEAL from a judgment of the Divisional Court allowing an application for judicial review of a decision of an arbitrator.

Ontario English Catholic Teachers' Assn. v. Lanark, Leeds and Grenville County Roman Catholic Separate School Board (1998), 1998 1644 (ON CA), 164 D.L.R. (4th) 429 (Ont. C.A.), revg (1996), 1996 12494 (ON SCDC), 136 D.L.R. (4th) 660 (Ont. Div. Ct.), consd Other cases referred to Canada (Attorney General) v. Public Service Alliance of Canada, 1993 125 (SCC), [1993] 1 S.C.R. 941, 101 D.L.R. (4th) 673, 150 N.R. 161, 93 C.L.L.C. 14,022; Domtar Inc. v. Québec (Commission d'appel en Matière de Lésions professionnelles), 1993 106 (SCC), [1993] 2 S.C.R. 756, 105 D.L.R. (4th) 385, 154 N.R. 104, 49 C.C.E.L. 1; Toronto (City) Board of Education v. Ontario Secondary School Teachers' Federation, 1997 378 (SCC), [1997] 1 S.C.R. 487, 144 D.L.R. (4th) 385, 208 N.R. 245, 25 C.C.E.L. (2d) 153 (alt. name Toronto (City) Board of Education v. O.S.S.T.F., District 15); United Brotherhood of Carpenters & Joiners, Local 579 v. Bradco Construction Ltd., 1993 88 (SCC), [1993] 2 S.C.R. 316, 106 Nfld. & P.E.I.R. 140, 102 D.L.R. (4th) 402, 153 N.R. 81, 334 A.P.R. 140, 93 C.L.L.C. 14,033 Statutes referred to School Boards and Teachers Collective Negotiations Act, R.S.O. 1990, c. S.2 [repealed S.O. 1997, c. 31, s. 178 (in force Jan. 1, 1998)] Social Contract Act, 1993, S.O. 1993, c. 5

Brian P. Nolan and David M. McNevin, for respondent. Paul J.J. Cavalluzzo, for appellant.

The judgment of the court was delivered by

MACPHERSON J.A.: --

A. Overview

[1] This appeal presents the issue of the role consistency plays in the domain of non-judicial decision-makers, such as arbitrators and administrative tribunals. The appeal also invites consideration of the relationship between the courts and the decisions reached by administrative tribunals and arbitrators.

[2] Both of these issues arise in an interesting context. An arbitrator interpreted legislation and a collective agreement between a school board and teachers and arrived at a particular result. The arbitrator's conclusion was challenged in the courts by way of judicial review. The standard of review was whether the arbitrator's decision was patently unreasonable. Ultimately, the Court of Appeal for Ontario decided that the arbitrator's decision was not patently unreasonable. However, the court went farther and commented that indeed the arbitrator's decision was "entirely reasonable".

[3] The specific issue posed by the present appeal is whether a different arbitrator, interpreting identical legislation and a virtually identical collective agreement, could come to a different decision than the arbitrator whose decision was upheld by this court. Put another way, is it patently unreasonable for an arbitrator to reach a result different from a judicially affirmed "entirely reasonable" result reached by a fellow arbitrator?

B. Facts

(1) The parties and the events

[4] The appellant Ontario English Catholic Teachers' Association ("the teachers") is a union representing many public school teachers in Ontario.

[5] The respondent Essex County Roman Catholic Separate School Board (Windsor-Essex Catholic District School Board) [See Note 1 at end of document] ("the school board") administers the Catholic public school system in Essex County.

[6] At the time relevant to this dispute, the teachers and the school board were parties to collective agreements which had been negotiated under the School Boards and Teachers Collective Negotiations Act, R.S.O. 1990, c. S.2 [repealed S.O. 1997, c. 31, s. 178]. These collective agreements applied to permanent and probationary teachers, but not to occasional (or substitute) teachers.

[7] Under the collective agreements, teachers' salaries were determined according to a salary grid. The horizontal axis of the grid identified various categories of formal qualifications assessed and recognized by the Qualifications Evaluation Council of Ontario. The vertical axis of the grid measured years of teaching experience. An example of the grid in Essex County during the period relevant to this litigation is:

THE ESSEX COUNTY ROMAN CATHOLIC SEPARATE SCHOOL BOARD ELEMENTARY TEACHERS' SALARY GRID

September 1, 1993 -- August 31, 1994 Plus 2.0 per cent -- Appendix A

Yrs. Level D Level C Level B Level Level Level Level Exp. A1 A2 A3 A4

0 28,851 29,802 30,753 31,704 33,773 37,033 39,396 1 30,600 31,608 32,617 33,626 35,703 39,107 41,479 2 32,351 33,418 34,484 35,551 37,627 41,183 43,543 3 34,104 35,228 36,353 37,477 39,546 43,257 45,622 4 35,850 37,032 38,214 39,396 41,952 45,328 47,695 5 37,608 38,847 40,087 41,327 43,401 47,397 49,770 6 39,364 40,662 41,959 43,257 45,328 49,471 51,844 7 41,107 42,463 43,818 45,173 47,105 51,547 53,916 8 42,866 44,279 45,692 47,105 49,173 53,620 55,994 9 44,618 46,089 47,560 49,031 51,104 55,696 58,060 10 43,369 47,898 49,426 50,955 53,028 57,766 60,136

[8] For purposes of placing a teacher on the salary grid, article 3.02(a) of the collective agreements defined experience in terms of Canadian teaching experience, including experience as an occasional teacher:

3.02 Teaching Experience

(a) Each full year of recognized Canadian teaching experience shall count as one full year. Canadian teaching experience shall mean:

(i) Full-time or part-time experience gained as a Teacher under contract with a School Board in Ontario or elsewhere in Canada;

(ii) Experience gained while on long term occasional teaching assignments with a School Board in Ontario or elsewhere in Canada;

[9] In normal circumstances, when a teacher was hired by the school board the teacher would be placed on the grid at the step where qualifications and experience intersected. In subsequent years, the teachers would move along the grid to reflect the increase in experience and, potentially, qualifications.

[10] This all changed in the period from June 14, 1993 to March 31, 1996. The Social Contract Act, 1993, S.O. 1993, c. 5 ("SCA"), aimed to achieve financial savings in the public sector by encouraging public sector employers and employees to negotiate savings. It also imposed wage freezes for employees earning $30,000 or more per annum.

[11] The SCA set out a process by which provincial representatives of employees and unions would negotiate sectoral agreements which could be implemented on a local level by individual employers and unions. Sectoral agreements were applicable only to those parties who specifically agreed to their application.

[12] In August 1993, an agreement in the education sector, called a Framework Agreement, was concluded. A week later, the school board and the teachers in Essex County signed a Local Agreement by which they agreed to implement the Framework Agreement.

[13] Article 7.2 of the Framework Agreement imposed some restrictions on compensation during the social contract period, June 14, 1993-March 31, 1996:

7.2 Compensation and other financial savings

Part 1 -- Wage Freeze

(a) Except as provided in this Part,

there will be no increases to compensation as defined in the Act, for the period June 14, 1993 to March 31, 1996 . . .

(d) There will be no experience increments paid for the period June 14, 1993 to March 31, 1996, unless by agreement of the parties. If experience increments are paid, in whole or in part, offsetting savings measures applicable to the employees who benefit may be implemented. Unless otherwise agreed, there will be no entitlement to an increase due to movement on the grid which would have occurred during the said period.

Where experience increment is not paid in 1993-94, the resulting savings will be applied as a reduction to the cash target.

[14] This appeal centres on the interpretation given to article 7.2 by several arbitrators, the Divisional Court and, in a previous appeal, this court.

[15] The school board took the position that article 7.2(d) applied to all permanent and probationary teachers employed by the board on June 14, 1993. Those teachers had their salaries frozen until March 31, 1996. The teachers agreed with this interpretation and application of article 7.2(d).

[16] The school board also took the position that article 7.2(d) applied to teachers who became permanent or probationary teachers during the 1993-96 period. Thus, for example, if the school board hired a teacher from Kingston, Ontario or from Lunenburg, Nova Scotia effective July 1, 1995, the school board did not give credit for the experience the teacher may have gained in those locations in the 1993-94 and 1994-95 school years. Moreover, the school board did not give credit for the experience from 1993 to 1996 if it converted an occasional teacher in its own system into a permanent or probationary teacher.

[17] The teachers disagreed with this interpretation of article 7.2(d). Their interpretation of the article was that the words "increments" and "movement on the grid" indicated that the freeze applied only to current (i.e., employed by the board on June 14, 1993) teachers, not to new teachers who joined the school system during the social contract period.

[18] The teachers filed a grievance. Several other grievances were filed in other education jurisdictions in Ontario. This happened because the province-wide Framework Agreement could operate only after it was implemented by local agreements.

[19] Several arbitration boards were established to hear the grievances. Most boards sided with the teachers; one board, chaired by arbitrator Pamela Picher, agreed with the school board's position. The Picher award was taken to the Divisional Court for judicial review. The Divisional Court quashed the award; it held that the standard of review was correctness and that the arbitrator's award was not correct: see Ontario English Catholic Teachers' Assn. v. Lanark, Leeds and Grenville County Roman Catholic Separate School Board (1996), 1996 12494 (ON SCDC), 136 D.L.R. (4th) 660 (Ont. Div. Ct.).

[20] The Divisional Court's decision was appealed to this court, where it was reversed: see (1998), 1998 1644 (ON CA), 164 D.L.R. (4th) 429 (Ont. C.A.) ("Lanark"). The court, speaking through Osborne J.A., held that the standard of review was whether the arbitrator's decision was patently unreasonable. On the merits, the court held that the arbitrator's decision was not patently unreasonable. Osborne J.A. reasoned, at p. 441 D.L.R.:

In my view, the decision of the arbitrator is not patently unreasonable, or even unreasonable. Article 7.2(d), in its opening sentence under the title, "Wage Freeze" provides that teachers will receive "no experience increments" for the period June 14, 1993 to March 31, 1996. It seems to me to have been entirely reasonable for the arbitrator to have concluded, from the plain language of the first sentence of Article 7.2(d), that the experience increment freeze applied to a teacher, such as Ms. Flynn, coming into the bargaining unit just as it was acknowledged it applied to a teacher in the bargaining unit.

(2) The litigation

[21] When the grievance relating to the Essex County school board and teachers came before the three-member arbitration panel, chaired by H.D. Brown, in October 1996, the arbitrator accepted the school board's request that the arbitration hearing be adjourned to await this court's decision in Lanark. After the decision in Lanark was released, the chair reconvened the arbitration and heard submissions on the merits of the grievance. By then, there had been eight arbitration awards. Seven awards had accepted the teachers' interpretation of article 7.2(d). The eighth, by arbitrator Picher, had accepted the school board's position. The Picher award had been declared to be not patently unreasonable by this court; indeed this court described arbitrator Picher's conclusion as "entirely reasonable".

[22] Arbitrator Brown stated explicitly that the issue before him was the same as the issue that had been before previous arbitrators, including arbitrator Picher. He was also clearly aware of this court's decision in Lanark. However, in his view all that Lanark decided was that arbitrator Picher's award was "not unreasonable". Lanark did not go farther and say that it was the "correct" award. Thus the door was open for arbitrator Brown to reject the Picher interpretation of article 7.2(d). He decided to do precisely that. His conclusion on the merits of the arbitration was:

In our opinion, the intent of the Act is to have a restrictive effect on the wage cost of current employees. There is no specific application in the Act to the compensation deemed package to be entered into by an employer with a new hired employee but rather it is when that relationship is established, the restriction as set out in Section 7.2 apply. Before that, the terms of the collective agreement with regard to salary calculation for teachers who are hired from other School Boards is not a prohibited part of compensation.

(Emphasis added)

[23] The school board brought an application for judicial review. The Divisional Court agreed with the school board's submissions and set aside arbitrator Brown's award. Writing for a unanimous panel, C. McKinnon J. said:

In Lanark Leeds, Osborne J.A. . . . specifically determined the meaning to be ascribed to Article 7.2(d) of the framework agreement made pursuant to the provisions of the Social Contract Act . . . .

. . . we hold that it is patently unreasonable for an arbitrator or a judge to disagree with a specific holding of the Court of Appeal. Arbitrator Brown was bound by that decision in accordance with the law of precedent. It is patently unreasonable for any arbitrator, or any judge, to refuse to follow precedent.

[24] The teachers appeal from the judgment of the Divisional Court.

C. Issues

[25] The issues on the appeal are:

(1) Did the Divisional Court err by concluding that this court's decision in Lanark was determinative with respect to the interpretation of article 7.2(d) of the Framework Agreement and was, therefore, binding on the arbitrator?

(2) If the answer to the question in (1) is "yes", then was the arbitrator's award patently unreasonable?

D. Analysis

(1) The effect of Lanark

[26] I begin with a preliminary point. There is no question that the decision of the arbitrator in this case was subject to judicial review on a standard of patent unreasonableness. This court made an explicit determination on this point in Lanark. In turn, Lanark is consistent with the leading decision of the Supreme Court of Canada in the domain of grievance procedures relating to teacher employment in the public education field: see Toronto (City) Board of Education v. O.S.S.T.F., District 15, 1997 378 (SCC), [1997] 1 S.C.R. 487, 144 D.L.R. (4th) 385.

[27] The Divisional Court held that the arbitrator's award was patently unreasonable because it failed to follow the decision of this court in Lanark which, according to the Divisional Court, "specifically determined the meaning to be ascribed to Article 7.2(d) of the framework agreement".

[28] With respect, the Divisional Court's conclusion evinces a misapprehension of both the role of a superior court in judicial review proceedings and the implications of this court's reasoning in Lanark.

[29] There is a fundamental difference in judicial review proceedings between the correctness and patently unreasonable standards of review. Where a decision of an arbitrator (or an administrative tribunal) is reviewed on the standard of correctness, the court's decision on judicial review will determine the "correct" interpretation -- i.e., the only interpretation. The implications of the court's decision will be, looking backward, the resolution of any conflicts among previous decisions of arbitrators and, looking forward, the existence of a clear binding precedent to be followed by all arbitrators in future cases.

[30] Where a decision of an arbitrator is reviewed on the standard of patently unreasonable, the effect of the court's decision is entirely different. All the reviewing court decides is whether the challenged award is patently unreasonable. In deciding that issue, the court does not decide whether the award was the only possible award or the best possible award: see United Brotherhood of Carpenters & Joiners of America, Local 579 v. Bradco Construction Ltd., 1993 88 (SCC), [1993] 2 S.C.R. 316 at p. 341, 102 D.L.R. (4th) 402, per Sopinka J. Thus, if the court determines that the award was not patently unreasonable, it does not follow that, looking backward, conflicts in the arbitral jurisprudence are necessarily resolved or, looking forward, arbitrators will be bound to apply the interpretation of the arbitrator whose decision was affirmed by the court in the judicial review proceedings.

[31] In my view, the implications of the fundamental difference between the two standards of review can be expressed in another way. The correctness standard is premised on a legislative intent that disputes be resolved by the courts. The premise of the patently unreasonable standard is the opposite. It is founded on recognition that in some areas the legislature intends that an arbitrator or administrative tribunal answer the crucial legal questions and resolve the dispute.

[32] The courts must respect the latter legislative intent when it is present in relation to a particular arbitral regime, including the one in issue in this appeal. In my view, in Lanark this court was faithful to its limited role. The court concluded that the award of arbitrator Picher was not patently unreasonable. In reaching that conclusion, Osborne J.A. made a careful analysis of article 7.2(d) of the Framework Agreement. Based on that analysis, he concluded that arbitrator Picher's interpretation was "entirely reasonable".

[33] As a matter of logic, in order for a court to conclude that an interpretation is not patently unreasonable it must analyze the relevant provision and reach the conclusion that the challenged interpretation is reasonable. That is what this court did in Lanark. In my view, the addition by Osborne J.A. of the word "entirely" to his conclusion of reasonableness does not equate with "only" or "correct". Although it is clear that Osborne J.A. was complimentary in his assessment of the Picher interpretation, it does not follow that he was critical of, or ruled out, other interpretations.

[34] In short, Osborne J.A. was dealing only with the matter before the court -- was arbitrator Picher's award patently unreasonable? He was not trying to resolve conflicts in the arbitral jurisprudence or enumerate a "correct" and, therefore, binding precedent for future arbitrations. This is evident from his observation, "I do not think that the goal of consistency and thus predictability can trigger a correctness standard of review (to resolve conflict in arbitral jurisprudence) when the standard of review would otherwise be patent unreasonableness" (p. 441 D.L.R.). See also: Domtar Inc. v. Québec (Commission d'appel en Matière de Lésions professionnelles, 1993 106 (SCC), [1993] 2 S.C.R. 756 at pp. 795-97, 105 D.L.R. (4th) 385 per L'Heureux-Dubé J.

[35] In summary, since this court's decision in Lanark determined only that arbitrator Picher's award was not patently unreasonable, it remained open for a different arbitrator to make a different award, provided that it was not patently unreasonable. It follows that the Divisional Court erred by concluding that it was patently unreasonable for arbitrator Brown to interpret article 7.2(d) in a fashion different from the interpretation of arbitrator Picher. The Divisional Court should have addressed the legal issue on the merits -- was arbitrator Brown's interpretation of article 7.2(d) patently unreasonable? It is to that inquiry that I now turn.

(2) Was the arbitrator's award patently unreasonable?

[36] To the non-legal ear, an accusation that one's interpretation or opinion on some matter is patently unreasonable would probably be regarded as a serious, even stinging, rebuke. In the legal context, it is clear that the label carries with it an equally serious rebuke. In a long line of cases, the Supreme Court of Canada has cautioned courts against easy resort to the label in the exercise of their judicial review function. As expressed by Cory J. in Canada (Attorney General) v. Public Service Alliance of Canada, 1993 125 (SCC), [1993] 1 S.C.R. 941 at pp. 963-64, 101 D.L.R. (4th) 673:

It is said that it is difficult to know what "patently unreasonable" means. What is patently unreasonable to one judge may be eminently reasonable to another. Yet any test can only be defined by words, the building blocks of all reason. Obviously, the patently unreasonable test sets a high standard of review. In the Shorter Oxford English Dictionary "patently", an adverb, is defined as "openly, evidently, clearly". "Unreasonable" is defined as "[n]ot having the faculty of reason; irrational. . . . Not acting in accordance with reason or good sense". Thus, based on the dictionary definition of the words "patently unreasonable" it is apparent that if the decision the Board reached, acting within its jurisdiction, is not clearly irrational, that is to say evidently not in accordance with reason, then it cannot be said that there was a loss of jurisdiction. This is clearly a very strict test.

(Emphasis added)

[37] Can it be said that arbitrator Brown's interpretation of article 7.2(d) of the Framework Agreement was clearly irrational? I think not.

[38] Arbitrator Brown engaged in a thorough review of the previous arbitration awards dealing with the same issue in other education jurisdictions in Ontario. He also carefully analyzed the words of article 7.2(d), both in isolation and in conjunction with the collective agreement which the Framework Agreement modified. He concluded that the wage freeze imposed on teachers subject to the collective agreement in Essex County should apply to teachers only after they became employees of the school board. He reasoned:

Article 7.2(d) precludes the payment of experience increments which would apply under Article 3 and the third sentence of that Section precludes any entitlement to any increase "due to movement on the grid". We think it is abundantly logical to conclude as did the Mitchnick Board that to be movement, there must be employees on the grid in the first place which means the present employees when the Act came into force and not those who may come into the bargaining unit during the Social Contract period.

[39] In my view, this is another reasonable interpretation of article 7.2(d). It applies the wage freeze to the permanent and probationary teachers who were bound by the collective agreement when the school board and the teachers agreed to the Framework Agreement modifications to it. It does not apply the article to teachers entering the Essex County school district, either from other jurisdictions or by means of a transfer from occasional teacher status to permanent or probationary status. However, the non-application of article 7.2(d) to these teachers ceases as soon as the teachers' new status subjects them to the collective agreement. Thus, returning to the example I cited earlier, if the school board hired a teacher from Kingston, Ontario or one from Lunenburg, Nova Scotia effective July 1, 1995, those teachers would receive experience increments for their teaching in their former schools during the 1993-94 and 1994-95 school years, but would not receive experience increments for the period July 1, 1995-March 31, 1996. I cannot say that this result, which flows directly from the arbitrator's award, is patently unreasonable.

E. Disposition

[40] I would allow the appeal, set aside the order of the Divisional Court and reinstate the award of the arbitrator. I would award the appellant its costs of the appeal and of the application before the Divisional Court.

Appeal allowed.

Notes

Note 1: The Windsor-Essex Catholic District School Board is a successor board created by the merger on January 1, 1998 of two school boards, the Essex County Roman Catholic District School Board and the Windsor Roman Catholic Separate School Board.