COURT OF APPEAL FOR ONTARIO
CITATION: Brown v. University of Windsor, 2016 ONCA 431
DATE: 20160613
DOCKET: C61026
Sharpe, Juriansz and Roberts JJ.A.
BETWEEN
Brian E. Brown, on his own behalf and on behalf of all affected members of the University of Windsor Faculty Association
Plaintiff (Respondent)
and
The University of Windsor
Defendant (Appellant)
Michael J. Kennedy, for the appellant
James A. Renaud and Matthew R. Todd, for the respondent
Heard: April 7, 2016
On appeal from the order of Justice Scott K. Campbell of the Superior Court of Justice, dated August 27, 2015.
Juriansz J.A.
A. Introduction
[1] The respondent is president of his union. In 2010, he commenced an action in the Superior Court of Justice. He claimed that his employer, the appellant in this case, failed to provide him and other affected employees with employment insurance premium reductions that the appellant had received under the Employment Insurance Act, S.C. 1996, c. 23 and regulations.
[2] The appellant moved under r. 21.01(3)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for an order dismissing the respondent’s action on the basis that the court lacked jurisdiction to entertain the matter. The motion judge rejected the appellant’s argument that exclusive jurisdiction lay with a labour arbitrator. This is an appeal of that decision.
[3] For the reasons that follow, I would allow the appeal.
B. Facts
[4] The individual respondent, Brian Brown, commenced this action on May 13, 2010. The crux of the claim is that the appellant, the University of Windsor, failed to satisfy the requirements of the Employment Insurance Premium Reduction Program (“EIPRP”). The action was commenced as a representative action on the respondent’s own behalf, and on behalf of present and former members of the University of Windsor Faculty Association who were affected by the appellant’s actions. As mentioned above, Mr. Brown is the president of the faculty association.
[5] The EIPRP is managed by the Canadian Employment Insurance Commission and governed by s. 69 of the Employment Insurance Act and regulations. It allows an employer to reduce its employment insurance premiums if the employer has an acceptable wage loss plan in place. To be acceptable, the wage loss plan must be equal to the protection provided by Employment Insurance (“EI”). If an employer is approved and receives a reduction, it needs to provide a part of the reduction to the employees, proportional to the ratio of EI they paid. Generally, the ratio for EI is 7/12 paid by the employer and 5/12 paid by the employees. The reduction can be returned to the employees through a payment or through added benefits.
[6] The respondent alleged in the statement of claim that the appellant has failed to provide the cash rebate to affected employees, entered into an agreement for the use of premiums reductions, failed to provide new employee benefits or upgraded benefits, and has used the savings to their own benefit. The respondent alleged that this has been occurring since approximately 1970. The respondent commenced this action in 2010, after becoming aware of the program in 2008.
[7] There was no provision in any collective agreement between the parties that dealt explicitly with the EIPRP. The respondent chose to bring an action before the court instead of a grievance because, he argued, there was no basis to allege a violation of the collective agreement. No doubt, the respondent’s choice of procedure took heed of this court’s decisions in Rathwell v. Hershey Canada Inc. (2001), 152 O.A.C. 1, 2001 CanLII 8598 (C.A.), leave to appeal to S.C.C. denied, (2002) 164 O.A.C. 279 (“Rathwell No. 2”), and the arbitration decision in Hershey Canada Inc. v. United Steelworkers of Canada, Local 461 (1997), 50 C.L.A.S. 249, 1997 CarswellOnt 6984 (Thorne), which I will discuss shortly. The respondent relied on these decisions when the appellant moved under r. 21.01(3)(a) for an order dismissing the action, arguing that exclusive jurisdiction lay with a labour arbitrator pursuant to ss. 48(1) and 48(12)(j) of the Labour Relations Act, 1995, S.O. 1995, c.1, Sch. A (“LRA”).
C. Decision below
[8] The appellant argued before the motion judge that the essential character of the dispute arose out of the administration of the collective agreement. As such, exclusive jurisdiction to deal with the claim lay with a labour arbitrator because s. 48(1) of the LRA and clause 39:01 of the collective agreement compelled all differences between the parties to proceed to arbitration. This has generally been stated and confirmed by the Supreme Court of Canada in St. Anne Nackawic Pulp & Paper Co. v. Canadian Paperworkers Union, Local 219, 1986 CanLII 71 (SCC), [1986] 1 S.C.R. 704, Weber v. Ontario Hydro, 1995 CanLII 108 (SCC), [1995] 2 S.C.R. 929, and Parry Sound (District) Social Services Administration Board v. OPSEU Local 324, 2003 SCC 42, [2003] 2 S.C.R. 157. The collective agreement, the LRA and the jurisprudence from the Supreme Court therefore dictated that the exclusive jurisdiction lay with a labour arbitrator
[9] The motion judge noted that in applying the principle in Weber, the court must first determine the essential character of the dispute, and then consider whether the facts giving rise to the dispute emerge from the employer/employee relationship under the collective agreement. The motion judge rejected the appellant’s claim that the essential character of the dispute was a claim that members of the bargaining unit were owed money by the respondent. The motion judge’s review of the statement of claim led him to conclude that the essential character of the claim was the appellant’s misappropriation of, or failure to account for, employment insurance premiums that belonged to its employees. The logical remedy to this claim would be damages. The motion judge acknowledged that “in determining those damages, a review of the collective agreements will have to be undertaken.”
[10] The motion judge reasoned that his conclusion was supported by the Hershey/Rathwell decisions, which he carefully reviewed. I will review those decisions later.
[11] After reviewing these decisions, the motion judge observed that the Court of Appeal had resolved the matter by relying on the principles of res judicata and issue estoppel. The motion judge acknowledged that the Court of Appeal did not refer to the principles set out in St. Anne and Weber.
[12] Nevertheless, the motion judge considered that the origin of the Hershey/Rathwell decisions was “on all fours with the case” before him. He reasoned that it was not his role to consider whether the Court of Appeal would have reached a different conclusion had it undertaken a full Weberanalysis. He added that even if he was not bound by the Hershey/Rathwell decisions, he would give them considerable weight. He rejected the appellant’s argument that the Hershey/Rathwell line of cases was effectively overruled by the Supreme Court’s decision in Parry Sound.
[13] The motion judge concluded that the essential character of the claim – the appellant’s failure to comply with the provisions of the EIPRP – did not arise out of the terms and conditions of the employment relationship or the collective agreement, either expressly or inferentially. He observed that “the dispute would have been present between the parties even if there was no collective agreement in place.”
[14] The motion judge further concluded that in an appropriate case, s. 48(12)(j) of the LRA would give an arbitrator the power to interpret and apply the Employment Insurance Act. However, he concluded that this can only occur when an arbitrator has jurisdiction in the first place. Having found that an arbitrator did not have jurisdiction, the motion judge found it unnecessary to consider whether the arbitrator had exclusive jurisdiction to interpret and apply the Employment Insurance Act in this particular case.
D. Issues on appeal
[15] The appellant submits the motion judge erroneously concluded the court had jurisdiction over the respondent’s claim because of two mistakes in his analysis:
The motion judge erred by relying on the Hershey/Rathwell line of cases;
The motion judge erred by not applying the Supreme Court’s decision in Parry Sound. Had he done so he would have found an arbitrator has exclusive jurisdiction over the parties’ dispute under s. 48(1) and 48(12)(j) of the LRA as set out in the Supreme Court’s decisions in Weberand Parry Sound.
[16] The respondent maintains that his entitlements under the EIPRP were not bargained for and do not arise from the collective agreement, either expressly or inferentially, and therefore an arbitrator has no jurisdiction over his claim.
E. Analysis
(1) Preliminary issue: should an arbitrator decide the question first?
[17] The appellant submitted in oral argument that s. 48(1) of the LRA requires that an arbitrator first determine whether the dispute between the parties is arbitrable.
[18] Section 48(1) provides as follows:
- (1) Every collective agreement shall provide for the final and binding settlement by arbitration, without stoppage of work, of all differences between the parties arising from the interpretation, application, administration or alleged violation of the agreement, including any question as to whether a matter is arbitrable. [Emphasis added]
[19] I would not entertain this argument on appeal in the circumstances of this case, for three reasons. First, it seems this argument was not raised before the motion judge. He did not allude to it and did not specifically set out the closing phrase of the section. Second, an arbitrator has decided the identical question in an earlier case. In the Hershey/Rathwell dispute, the question was referred to an arbitrator who decided he did not have jurisdiction over the dispute. Major questions on appeal are whether the Hershey/Rathwell cases govern or have been superseded by the Supreme Court’s decision in Parry Sound. Here, the respondent’s argument that the jurisdiction question should be decided by an arbitrator was advanced in a perfunctory manner. Third, this action is old. It was commenced on May 13, 2010. As such, it is in the interest of both parties that the question of jurisdiction be resolved without additional delay.
(2) The Hershey/Rathwell cases did not decide the issue
[20] I agree with the appellant that the motion judge erred by relying on the Hershey/Rathwell line of cases.
(a) Summary of the Hershey/Rathwell cases
[21] The Hershey/Rathwell cases, like this one, involved claims by unionized employees that the employer had failed to rebate to employees the statutorily required portion of the premium reduction under the EIPRP.
[22] In Hershey, the union grieved the employer’s failure to rebate premiums and the employer made a preliminary objection to the arbitrator’s jurisdiction. Arbitrator Thorne, after conducting a Weber analysis, found that the claim did not arise under the collective agreement as the collective agreement did not refer to the employment insurance premium reductions and the employees’ entitlement to a share of the potential reduction. The Supreme Court’s decision in Parry Sound, which figures prominently in the analysis later in these reasons, was released after Arbitrator Thorne’s decision.
[23] After the arbitrator’s decision, the plaintiff Rathwell, on his own behalf and on behalf of all other members of the bargaining unit, commenced an action against Hershey, claiming the employees’ share of the premium reduction received by the employer. Hershey brought a motion to strike the statement of claim as disclosing no reasonable cause of action. The motion came on before Manton J., who found that the statement of claim disclosed a reasonable cause of action: Rathwell v. Hershey Canada Inc., [1999] O.J. No. 5725 (S.C.J.). Manton J. did not conduct a Weber analysis.
[24] Hershey appealed Manton J.’s decision to this court. The court dismissed Hershey’s appeal, also without conducting a Weber analysis: Rathwell v. Hershey Canada Inc. (2000), 2000 CanLII 2071 (ON CA), 133 O.A.C. 397, [2000] O.J. No. 2553 (C.A.) (“Rathwell No. 1”).
[25] Hershey then filed a second appeal of Manton J.’s decision, raising the Weber issue and arguing that the union’s claim had to be arbitrated. This was contrary to the position Hershey had initially taken before the arbitrator. Hershey argued that the arbitrator’s decision was not binding because neither party had put before him a provision of an earlier collective agreement that expressly spelled out there was a trade-off between ongoing medical benefits and the waiver of the employees’ right to share in the employment insurance premium reductions. This court dismissed the employer’s argument based on the doctrines of res judicata and issue estoppel: Rathwell No. 2. In dismissing the second appeal, the court pointedly stated there was no “need to reach Weber because the question whether the dispute should be arbitrated is res judicata.”
[26] It is clear that Manton J. and this court in Rathwell No. 1 and Rathwell No. 2 did not determine the Weber issue raised in this case. The motion judge recognized that on multiple occasions in his reasons.
(b) The motion judge’s use of the Hershey/Rathwell cases
[27] The motion judge observed correctly the factual origin of the Hershey/Rathwell decisions are “on all fours” with this case. The motion judge was also correct in stating that it might be considered that he was not bound by those decisions as they did not touch on the Weber question that was before him. Nevertheless, he said that even if they were not binding, he would still give them considerable weight.
[28] In my view, the motion judge should not have been reticent to embark upon an analysis of the legal issues that the courts actually decided in the Hershey/Rathwell cases. It is clear this court was never called upon to decide the Weber question in the first appeal, and did not reach Weber in the second appeal. While Manton J.’s brief endorsement did state the court had jurisdiction, the motion judge should have considered the matter afresh as a new legal issue – the Weber issue – was raised.
(3) Applying Weber: The essential character of the dispute
[29] The Supreme Court has repeatedly enunciated the principle that an arbitrator will have exclusive jurisdiction over a dispute arising under the collective agreement: see St. Anne, Weber, and more recently Parry Sound. This principle gives effect to statutory edict. As noted above, s. 48(1) of the LRA compels all differences between parties to a collective agreement arising from the interpretation, application, administration or alleged violation of the agreement to proceed to arbitration.
[30] The motion judge stated the correct test in his Weber analysis. A dispute must be decided by an arbitrator and not the courts if the “essential character” of the dispute arises either explicitly or implicitly from the interpretation, application, administration, or violation of the collective agreement. One must consider the nature of the dispute and the ambit of the collective agreement: Weber, at para. 51; see also Piko v. Hudson’s Bay Co. (1998), 1998 CanLII 6874 (ON CA), 41 O.R. (3d) 729 (C.A), at p. 733.
[31] The motion judge found that the essential character of the dispute was the appellant’s failure to comply with the provisions of the EIPRP. He also found that the dispute was not within the ambit of the collective agreement. It is clear, however, that these conclusions were heavily informed by the decisions in the Hershey/Rathwell line of cases. The motion judge stated: “The material facts that form the basis of this action were considered by Manton J. and the Court of Appeal. I can find nothing in those decisions or those that follow that lead me to a different conclusion.”
[32] Further, it seems to me that the motion judge’s characterization of the dispute is essentially a legal one. McLachlin J. (as she then was) stated in Weber, at para. 43:
The issue is not whether the action, defined legally, is independent of the collective agreement, but rather whether the dispute is one "arising under [the] collective agreement". Where the dispute, regardless of how it may be characterized legally, arises under the collective agreement, then the jurisdiction to resolve it lies exclusively with the labour tribunal and the courts cannot try it.
[33] What the motion judge needed to decide was whether the facts of the dispute fell within the ambit of the collective agreement. The legal characterization of the dispute did not matter. Considering this, and the motion judge’s heavy reliance on the Hershey/Rathwell line of cases, I am of the view that he erred in conducting the Weber analysis.
(4) Section 48(12)(j) of the LRA and the Supreme Court’s decision in Parry Sound
[34] The motion judge also failed to properly consider the full import of s. 48(12)(j) of the LRA. He noted the appellant’s argument that s. 48(12)(j) gave the arbitrator exclusive jurisdiction to interpret and apply employment-related statutes such as the Employment Insurance Act, but found it unnecessary to deal with it in light of his conclusion the court had jurisdiction.
[35] Section 48(12)(j) provides:
(12) An arbitrator or the chair of an arbitration board, as the case may be, has power,
(j) to interpret and apply human rights and other employment-related statutes, despite any conflict between those statutes and the terms of the collective agreement.
[36] The Supreme Court considered this provision in Parry Sound and confirmed its broad scope. Iacobucci J., writing for the majority, said at para. 43:
In my view, the use of the phrase “to interpret and apply human rights and other employment-related statutes” indicates that it was the legislature’s intention that an arbitrator would have the power not only to enforce those rights and obligations that are expressly provided for in the collective agreement, but those that are provided for in human rights and employment-related statutes as well.
[37] An alleged contravention of an express provision of a collective agreement is not a condition precedent to an arbitrator’s jurisdiction to interpret and apply the substantive rights and obligations of employment-related statutes. In Parry Sound, at para. 48, the court said:
But even if it is true that a dispute must be arbitrable before an arbitrator obtains the power to interpret and apply the Human Rights Code, it does not thereby follow that an alleged contravention of an express provision of a collective agreement is a condition precedent of an arbitrator’s authority to enforce the substantive rights and obligations of employment-related statutes.
[38] Iacobucci J. went on to state, at para. 49, that “the substantive rights and obligations of the Human Rights Code are implicit in each collective agreement over which an arbitrator has jurisdiction”. In Parry Sound, the collective agreement provided that "a probationary employee may be discharged at the sole discretion of and for any reason satisfactory to the Employer and such action by the Employer is not subject to the grievance and arbitration procedures and does not constitute a difference between the parties". Despite this clause however, Iacobucci J. stated an employer is obligated to exercise its management rights “in accordance with the statutory provisions that are implicit in each collective agreement”. This reasoning is based on s. 48(12)(j) of the LRA.
[39] The parties strenuously dispute how Parry Sound and s. 48(12)(j) should be applied. Counsel for the appellant advocates a one-step application. He argues that under the Parry Sound approach, s. 48(12)(j) gives an arbitrator original jurisdiction to interpret and apply employment-related statutes in the collective bargaining context. Counsel for the respondent puts forward a two-step approach. He argues that in order for an arbitrator to apply an employment-related statute, the arbitrator must first have jurisdiction “to be in the room”, i.e. the arbitrator must first have jurisdiction arising from some aspect of the collective agreement.
[40] The impact of Parry Sound on the interpretation and application of s. 48(12)(j) of the LRA is significant. After Parry Sound, arbitrators have generally and consistently taken a broad view of their jurisdiction under s. 48(12)(j): see for example Ontario English Catholic Teachers’ Association (Occasional Teacher Unit) v. Toronto Catholic District School Board (2005), 2005 CanLII 94069 (ON LA), 139 L.A.C. (4th) 366, [2005] O.L.A.A. No. 245 (Abramsky); C.U.P.E., Local 133 v. Niagara Falls (City) (2005), 81 C.L.A.S. 1, [2005] O.L.A.A. No. 228 (MacDowell); Greater Essex District School Board and OSSTF (OMERS Pension Plan), Re. (2015), 256 L.A.C. (4th) 1, 2015 CarswellOnt 10142 (MacDowell); Canadian National Railway v. U.T.U. (2005), 2005 CanLII 94164 (CA LA), 136 L.A.C. (4th) 270, 2005 CarswellNat 2702 (Picher); and Ottawa Police Association v. Ottawa Police Services Board (2007), 160 L.A.C. (4th) 118, [2007] O.L.A.A. No. 220 (Lynk).
[41] The British Columbia Court of Appeal has considered the approach to Parry Sound in British Columbia Teachers' Federation v. British Columbia Public School Employers' Association, 2005 BCCA 92, 136 L.A.C. (4th) 225, leave to appeal to SCC refused, [2005] S.C.C.A. No. 180. The British Columbia Labour Relations Code, R.S.B.C. 1996, chapter 244, contains a provision much like s. 48(12)(j) of the LRA:
- For the purposes set out in section 82, an arbitration board has the authority necessary to provide a final and conclusive settlement of a dispute arising under a collective agreement, and without limitation, may
(g) interpret and apply any Act intended to regulate the employment relationship of the persons bound by a collective agreement, even though the Act's provisions conflict with the terms of the collective agreement…
[42] At para. 31, Lambert J.A. emphasized that Iacobucci J. did not say in Parry Sound that the Human Rights Code was "incorporated" into the collective agreement. Rather, at para. 23, Iacobucci J. had said it is the substantive rights and obligations of the Human Rights Code that are incorporated into each collective agreement over which an arbitrator has jurisdiction. Lambert J. also noted that at para. 7 of his reasons, Iacobucci J. had used the words “Section 48(12)(j), in other words, imports the substantive rights of the Human Rights Code into a collective agreement”.
[43] I might add that in his conclusion, at para. 55, Iacobucci J. repeated that:
[T]he substantive rights and obligations of the Human Rights Code are incorporated into each collective agreement over which an arbitrator has jurisdiction. Because of this interpretation, an alleged violation of the Human Rights Code constitutes an alleged violation of the collective agreement, and falls squarely within the Board's jurisdiction. [Emphasis added.]
[44] The observation that the substantive rights and obligations of employment-related statutes are incorporated or imported into collective agreements led Lambert J.A. to suggest a single step in determining jurisdiction that requires a violation of the collective agreement as informed by the substantive rights and obligations provided by the employment-related statute. He stated the test, at para. 38:
I believe that a flexible and contextual approach to the position that should be adopted by an arbitrator on the application of a statutory provision to the interpretation, operation, and application of a collective agreement, and to an alleged violation, does not depend on an "incorporation" of the statutory provision in the collective agreement but rather on whether there is a real contextual connection between the statute and the collective agreement such that a violation of the statute gives rise, in the context, to a violation of the provisions of the collective agreement, often, but not exclusively, a violation of the right expressed or implied in the collective agreement to set principles for management of the workforce in accordance with the laws of the Province. In short, the collective agreement must be interpreted in the light of the statutory breach.
(5) Conclusion and application of Weber and Parry Sound
[45] In my view, Lambert J.A.’s reasons in British Columbia Teachers’ Federation give proper effect to the statute’s provisions as interpreted by the Supreme Court in Parry Sound. I adopt and propose to apply the test he stated. The question is “whether there is a real contextual connection between the statute and the collective agreement such that a violation of the statute gives rise, in the context, to a violation of the provisions of the collective agreement”. In applying this test, one must remember Weber’s caution that the nature of the dispute is based upon the factual context in which it arises regardless of how it may be legally characterized.
[46] The Employment Insurance Act, certainly the provisions at play here, can be characterized as “employment-related” under s. 48(12)(j) of the LRA. The respondent concedes this. The Employment Insurance Act and regulations provide for a program by which an employer may achieve a reduction in employment insurance premiums. Under the scheme of the Act, the employer is obligated to remit to employees a specified share of the premium reduction in the form of cash or enhanced employee benefits. Under the Act, the employees are entitled to receive their specified share of the premium reduction in the form of cash or enhanced employee benefits. I am satisfied that their entitlement is a substantive right: Rathwell No.1.[^1] These substantive rights and obligations under the Employment Insurance Act inform the interpretation and application of the collective agreement.
[47] The collective agreement may not deal with the EIPRP, but it does deal with pay and benefits. It would be a violation of the collective agreement to fail to provide employees with the pay or benefits to which they are entitled under the collective agreement.
[48] The factual dispute here is that the employees allege they have not received the full amount of pay or enhanced benefits to which they are entitled under the collective agreement, as informed by the Employment Insurance Act. This is the essential character of the dispute. I am satisfied that the employer’s alleged violation of the statute would give rise, in the context, to a violation of the provisions of the collective agreement.
[49] This analysis leads me to conclude that the combined effect of ss. 48(1) and 48(12)(j) of the LRA gives an arbitrator exclusive jurisdiction over this dispute.
F. disposition
[50] I would allow the appeal, set aside the decision of the motion judge, and replace it with an order staying the respondent’s action.
[51] I would set the appellant’s costs of the appeal in the amount of $10,000 all-inclusive, and its costs of the motion in the amount of $8,500, exclusive of disbursements and applicable taxes.
Released: June 13, 2016 (“R.J.S.”)
“R.G. Juriansz J.A.”
“I agree. Robert J. Sharpe J.A.”
“I agree. Roberts J.A.”
[^1]: This court already concluded in Rathwell No. 1, at para. 14, that the scheme under the Employment Insurance Act and regulations for the return of the employees’ share in premium reductions “constitute a right which could not stand without a remedy.”