CITATION: Canadian General-Tower Limited v. United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union (United Steel Workers) Local 862, 2008 ONCA 404

DATE: 20080522

DOCKET: C47795

COURT OF APPEAL FOR ONTARIO

CRONK, GILLESE and ARMSTRONG JJ.A.

BETWEEN:

CANADIAN GENERAL-TOWER LIMITED

Appellant

and

UNITED STEEL, PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED INDUSTRIAL AND SERVICE WORKERS INTERNATIONAL UNION (UNITED STEEL WORKERS) LOCAL 862

Respondent

George Avraam and Mark Mendl for the appellant

Terrence J. Billo and John H. Ewen for the respondent

HEARD: February 7, 2008

On appeal from the order of the Divisional Court (Justice Lee K. Ferrier, Justice Peter H. Howden and Justice Susan G. Himel) dated May 17, 2007, with reasons reported at (2007), 2007 CanLII 17631 (ON SCDC), 224 O.A.C. 323.

GILLESE J.A.:

[1] The Supplemental Unemployment Benefit Plan (the “SUB Plan”) between Canadian General-Tower Limited (the “Employer”) and the United Steel Workers of America, Local 862 (the “Union”) provides for a supplemental weekly benefit for employees on “temporary layoff” from employment. The supplemental unemployment benefit, when added to an employee’s regular employment insurance benefits, provides an employee with 80% of his or her weekly straight time pay (the “SUB Benefits”). The SUB Plan is incorporated into the collective agreement between the parties (the “Collective Agreement”). “Temporary lay-off” is not defined in either the SUB Plan or the Collective Agreement.

[2] As a result of the elimination of an entire shift, the Employer gave notices of layoff to twenty-three unionized employees (the “Employees”). The layoff notices were dated October 8, 2004; the layoffs were effective October 29, 2004. No date of recall was specified in the notices and the Records of Employment issued to the Employees indicated that the terminations were deemed permanent because of a shortage of work. The notices reminded the Employees to inform the Employer of any change in address or telephone number and to make themselves aware of their recall rights and obligations, while on layoff, under Article 5 of the Collective Agreement. The notices also advised the Employees that they maintained their recall rights which, in accordance with Article 5, was either twelve or twenty-four months.

[3] On October 18, 2004, the Employer offered the Employees career transition workshops to assist them in finding other employment. The offer was made on a voluntary basis and without reference to whether the layoffs were temporary or permanent.

[4] The Employer recalled all the Employees in September and October of 2005, some 49 weeks after the date of the layoffs. Twenty-two of the twenty-three Employees elected to return to work. The recalls were not due to the reinstatement of the shift and had been unexpected at the time of the layoffs. They occurred because of unforeseen events, including medical leaves of absence, long term disability leaves, and voluntary and involuntary termination of employment of certain employees.

[5] The Employer denied the Employees SUB Benefits on the basis that their layoffs were not “temporary layoffs” under the terms of the SUB Plan. It viewed the layoffs as permanent because it had not expected to recall the Employees within the recall periods. The Union grieved.

[6] Arbitrator Frank M. Reilly was appointed to consider the grievance. The arbitration proceeded by way of an agreed statement of facts. The arbitrator reviewed the legislative provisions and case law relied on by the parties but found that neither assisted in determining the meaning of “temporary layoff” within the SUB Plan. In particular, he dealt with the Employer’s submission that this court’s decision in National Automobile Aerospace Transportation and General Workers Union of Canada (C.A.W.-Canada), Local No. 27 v. London Machinery Inc. (2006), 2006 CanLII 8711 (ON CA), 79 O.R. (3d) 444 establishes that a person is deemed terminated from employment after exhausting the period of thirty-five of fifty-two weeks, as set out in the Employment Standards Act 2000, S.O. 2000, c. 41. He rejected the submission that London Machinery determined the meaning of “temporary layoff” in the context of an SUB Plan and found the decision did not govern the situation before him.

[7] The arbitrator was not swayed by the Employer’s argument that the layoff was permanent because when the Employees’ employment was terminated, there had been no expected return to work. He accepted that when the notices had been given there had been no expectation that the Employees would return to work but explained that rights of recall are always subject to the vagaries of changing circumstances in the business world.

[8] Arbitrator Reilly concluded that the Employees were entitled to the SUB Benefits (the “Decision”). In reaching this conclusion, he held that for the purpose of determining eligibility for such benefits, a “temporary layoff” was equivalent to the period that the Employees retained recall rights under the Collective Agreement. As the Employees had been laid off in accordance with the provisions of the Collective Agreement and had been recalled in accordance with its terms, he viewed the Employees as having been on temporary layoff and entitled to the benefits of the SUB Plan.

[9] The Employer brought an application for judicial review, seeking to have the Decision quashed. Justice Himel, writing on behalf of a unanimous Divisional Court, held that the interpretation of collective agreements – which includes SUB Plans - goes to the heart of the expertise of labour arbitrators and that arbitrators possess a superior expertise in such matters. Based on the then-prevailing jurisprudence, she applied the “pragmatic and functional” approach to determining the standard of review and concluded that the appropriate standard was patent unreasonableness. The Divisional Court did not find the Decision to be patently unreasonable and dismissed the application.

[10] The Employer appeals. For the reasons that follow, I would dismiss the appeal.

THE ISSUES

[11] The appeal, as originally framed, raised two issues. Did the Divisional Court err in:

(1) applying a standard of review of patent unreasonableness to the Decision? and

(2) affirming the Decision?

[12] After the appeal was heard but before a decision was rendered, the Supreme Court of Canada released its decision in Dunsmuir v. New Brunswick, 2008 SCC 9, 2008 S.C.C. 9. The parties were invited to make written submissions on the relevance of Dunsmuir to this appeal. In those submissions, the parties are agreed that in Dunsmuir, the Supreme Court replaced the pragmatic and functional approach to the determination of the appropriate standard of review with a simpler analytical framework. Further, they agree that there are now only two standards of review: correctness and reasonableness. They disagree on which of the two standards should apply when the Decision is judicially reviewed.

[13] Given that patent unreasonableness is no longer an available standard of review and the parties disagree on the applicable standard of review, the first issue on appeal becomes what standard applies to the Decision. Thereafter, it remains to be determined whether, on the applicable standard, the Decision should stand.

WHAT STANDARD OF REVIEW APPLIES TO THE DECISION?

[14] Under the standard of review analysis prescribed by Dunsmuir, the court must first ascertain whether the existing jurisprudence has determined the applicable standard of review.

[15] The Employer argues that the standard established in the jurisprudence is that of correctness because Arbitrator Reilly was interpreting the Employment Insurance Act (the “Act”) and the Employment Insurance Regulations (the “Regulations”), a statutory regime over which the courts have greater expertise. The Union argues that the jurisprudence dictates that deference is to be shown to labour arbitrators who are interpreting a collective agreement. That, the Union maintains, is what Arbitrator Reilly was called on to do in the present case. Any references made by the arbitrator to the Act and the Regulations, it submits, were an attempt to assist in defining “temporary layoff” within the context of the Collective Agreement and not an interpretation of the legislative provisions.

[16] I accept the Union’s submission on this issue.

[17] An exhaustive analysis is not required in every case to determine the proper standard of review: if the jurisprudence has already determined in a satisfactory manner the degree of deference to be accorded a decision maker with regard to a particular category of question, the search for the appropriate standard is over.[^1] A long line of jurisprudence from all levels of court shows that deference is to be afforded decisions of labour arbitrators when interpreting collective agreements.[^2] That, in my view, is the correct characterization of the task that Arbitrator Reilly was called on to perform in the present case. Further, both the result and reasoning in Dunsmuir affirm a continuing stance of deference for decisions made by those in the field of labour relations.[^3] In Dunsmuir, a standard of reasonableness was held to apply when reviewing the decision of an adjudicator made under the Public Service Labour Relations Act, R.S.N.B. 1973, c. P-25.

[18] In any event, the standard of review analysis leads to the conclusion that the appropriate standard is that of reasonableness. In Dunsmuir at para. 50, the following factors were held as indicative that deference should be given and a reasonableness standard applied: (i) the existence of a privative clause; (ii) a discrete and special administrative regime in which the decision maker has specialised expertise; and (iii) the question of law is not of central importance to the legal system.

[19] As the Divisional Court noted at para. 14 of its reasons, s. 48(1) of the Labour Relations Act, 1995, S.O. 1995, c. 1, Sch. A., contains a strong privative clause which states that there will be “final and binding settlement by arbitration”. Moreover, arbitrators possess special and superior expertise in interpreting collective agreements.[^4] Finally, the interpretation of “temporary layoff” in the Collective Agreement is not one of central importance to the legal system as a whole.

[20] Accordingly, the standard of review to be applied to the Decision is one of reasonableness.

IS THE ARBITRATOR’S AWARD REASONABLE?

[21] Arbitrator Reilly had to decide the meaning of “temporary layoff”, an undefined phrase used in the SUB Plan. As the SUB Plan had been incorporated into the Collective Agreement, the arbitrator was required to interpret a term of the Collective Agreement, an area in which labour arbitrators have a greater expertise than the courts. For the reasons already given, I do not accept that Arbitrator Reilly interpreted legislation of general application. The SUB Plan is not governed and administered by the Act and Regulations. It is an agreement negotiated between the Employer and Union and specifically incorporated into the Collective Agreement. Entitlement to SUB Benefits is connected to employment insurance in the sense that as a condition of receiving the SUB Benefits, an employee must be in receipt of regular employment insurance benefits. However, to the extent that the arbitrator considered the employment insurance legislation, he was simply looking for guidance when determining the meaning of “temporary layoff” within the Collective Agreement.

[22] I would echo the comments of the Divisional Court in respect of the arbitrator’s statement that “Regulations and Guidelines” are not law. At para. 20 of its reasons, the Divisional Court correctly notes and explains,

I note that Arbitrator Reilly erred in his comments that the Employment Insurance “Regulations and Guidelines are not law.” Regulations are law and Guidelines, while for general information and not legally binding, may be reflective of legislative intent and are entitled to be considered as a relevant factor when interpreting legislation. If the mistaken reference in the decision of the arbitrator was to be replaced by the word “Guidelines”, the statement is accurate. Holding that the Guidelines were not law, were worded ambiguously and were not designed to nullify the terms of the collective agreement is not inaccurate.

[23] The Divisional Court did not find the error rendered the Decision patently unreasonable. For the same reasons as those given by the Divisional Court, I do not find it renders the Decision unreasonable.

[24] Nor do I find that the arbitrator’s treatment of this court’s decision in London Machinery renders the Decision unreasonable. The arbitrator saw London Machinery as a decision which addressed the rights of a unionized employee to the termination pay scheme under the Employment Standards Act. Accordingly, he did not view it as determinative of the meaning of “temporary layoff” within the Collective Agreement.

[25] The Decision reflects due consideration of (1) the factual background to the layoffs as provided to him by the parties through the agreed statement of facts, (2) the terms of the SUB Plan and the Collective Agreement, and (3) the relevant law. The arbitrator concluded, on the evidence before him, that the Employees were experiencing a temporary layoff within the meaning of the SUB Plan. Recall rights were a significant factor in reaching that conclusion but they were not the only factor – the arbitrator did not simply equate recall rights with a temporary layoff. The Decision is logical and can be rationally supported on the evidence before the arbitrator. That is, it is reasonable.

[26] As there is no basis for interfering with the Decision, I would dismiss the appeal.

DISPOSITION

[27] Accordingly, I would dismiss the appeal with costs to the respondent fixed at $15,000, inclusive of disbursements and GST. I would set the costs on a partial indemnity basis as I do not accept the respondent’s submission that an award on a substantial indemnity basis is warranted – the appellant was entitled to have the matter determined by the courts. I would, however, set a higher amount than that sought on a partial indemnity basis at the time the appeal was heard because of the additional work required to prepare supplemental submissions on the effect of Dunsmuir.

RELEASED: May 22, 2008 (“EAC”)

“E.E. Gillese J.A.”

“I agree E.A. Cronk J.A.”

“I agree Robert P. Armstrong J.A.”

[^1]: Dunsmuir at para. 57. [^2]: See, for example, Lakeport Beverages v. Teamsters Union, Local 938 (2005), 2005 CanLII 29339 (ON CA), 258 D.L.R. (4th) 10 at para. 20 (Ont. C.A.). [^3]: This court recently discussed Dunsmuir and the requirement of deference in the context of labour relations in Maystar General Contractors Inc. v. International Union of Painters and Allied Trades, Local 1819, 2008 ONCA 265 at para. 43, although the appeal did not turn on this point. [^4]: Dunsmuir at para. 68.