COURT FILE NO.: 95/05 and 96/05

DATE: 20060227

SUPERIOR COURT OF JUSTICE - ONTARIO

DIVISIONAL COURT

RE: ONTARIO PUBLIC SERVICE EMPLOYEES UNION v. COLLEGE COMPENSATION AND APPOINTMENTS COUNCIL (FOR COLLEGES OF APPLIED ARTS & TECHNOLOGY)

BEFORE: CUNNINGHAM, A.C.J., MEEHAN J., and EPSTEIN J.

COUNSEL: Donald K. Eady, for the Applicant, Ontario Public Service Employees Union

Christopher G. Riggs, Q.C., for the Respondent

HEARD: February 7, 2006

E N D O R S E M E N T

BY THE COURT

[1] This case involves applications for judicial review of two arbitration awards arising out of identical circumstances. Both Arbitrator Owen B. Shime in his award dated October 29, 2004, and Arbitrator Kevin Whitaker in his award dated December 15, 2004, held that the employer in question had not breached the relevant article in the applicable collective agreement by refusing to pay the Ontario Health Premium on behalf of the employees in the support and in the academic bargaining units, respectively, of the respondent, College Compensation and Appointments Council (for Colleges of Applied Arts and Technology).

[2] These awards add to the significant number that have arisen as a result of the establishment of the Ontario Health Premium (OHP) in the Budget Measures Act, 2004 (No.2) S.O. 2004, c.29. The Bill requires individuals resident in Ontario with an annual income of more than $20,000 to pay the premium on a rising scale reaching a maximum of $900 on a taxable income of $200,600. Employers collect the premium through the income tax system by way of payroll deductions. The amounts are remitted to the Treasurer of Ontario and go into the consolidated revenue fund. Nothing in the legislation requires the funds to be devoted exclusively to health care, although an annual report is to be made to the Legislature on the use of the funds.

[3] The various grievances and ensuing awards have dealt with the issue of whether the wording of the relevant collective agreement requires the employer to pay the OHP on behalf of the unionized employees. This is the fifth of such awards that has been reviewed by the Divisional Court.

[4] In each case the wording of the relevant collective agreement is important. The two collective agreements in the matter before us contain identical wording, as follows:

Ontario Health Insurance Plan

The parties recognize that the method of funding OHIP has been changed from an

individually paid premium to a system funded by an employer paid payroll tax.

If the Government, at any time in the future, reverts to an individually paid premium for health insurance, the parties agree that the Colleges will resume paying 100% of the billed premium for employees.

[5] The use of this language makes it clear that the parties decided to impose obligations concerning the payment of health care costs in a manner that relates to the history of and potential changes to the system of funding health care.

[6] It is therefore necessary to understand that context. The first statutory structure for health insurance was the Health Services Insurance Act, S.O. 1968-69, c.43 which provided for insured health services and the right of every person to become insured by payment of a premium, the amount of which was set by regulation. This Act was replaced by the Health Insurance Act, 1972, S.O. 1972, c.91 which maintained the same scheme for insured persons and insured services, the obligation to pay premiums in order to maintain coverage and mandatory employer groups with the deduction of premiums from employees’ remuneration. The legislation continued in this form until 1989. Then, under the Employer Health Tax Act, S.O. 1989, c.76 the requirement to pay a premium in order to become and remain an insured person was repealed. Instead, a payroll tax was imposed on employers.

[7] The wording of the two collective agreements was negotiated after the passage of the Employer Health Tax Act.

[8] The question before the arbitrators was whether the OHP payment comes within the language of the collective agreements. The arbitrators held that it does not and the union brings these applications for judicial review.

Standard of Review

[9] We start the discussion about standard of review by observing that in four recent decisions involving applications for judicial review of arbitrators’ awards on this very issue, this court has held the standard of review to be patent unreasonableness. In Lapointe-Fisher Nursing Home v. United Food and Commercial Workers International Union, Local 175/633, 2005 37348 (ON SCDC), [2005] O.J. No. 4411 (Div.Ct.), O’Driscoll J. held that “following Lakeport” patent unreasonableness is the standard of review to be applied. Similarly, in Hamilton (City) v. Hamilton Professional Fire Fighters Association Local 288, 2006 341 (ON SCDC), [2006] O.J. No. 77 (Div. Ct.), Lane J. concluded that the arbitrator was interpreting the collective agreement, a task that lay at the heart of his expertise and, citing Lakeport, he concluded that the standard of review was that of patent unreasonableness. Killeen J. in National Steel Car Limited and United Steel Workers of America, Local 7135 (27 January 2006), Hamilton, 282/05 (Div. Ct.) held the standard of review to be patent unreasonableness. Finally, in Toronto Transit Commission and Amalgamated Transit Union, Local 113 (Div. Ct. file no. 120/05) released February 14, 2006, this court held that, based on the three earlier decisions, the standard of review was patent unreasonableness.

[10] Mr. Eady, for the applicant in each case, acknowledges that in light of the recent decision of the Ontario Court of Appeal in Teamsters Union, Local 938 v. Lakeport Beverages, 2005 29339 (ON CA), [2005] O.J. No. 3488 (C.A.), the standard of review of an arbitrator’s award involving the interpretation of a collective agreement is patent unreasonableness. However, he submits that the standard of review in the circumstances of these cases is correctness. This submission is based on the argument that the arbitrators’ task in these awards involved answering a question of law. This question of law involved determining the nature of the OHP in assessing whether it is more like the old OHIP premium or whether it is a tax. To answer this question it was essential for the arbitrators not only to interpret legislation relevant to the old OHIP premium and the amendments that put into place the Employer Health Tax but also Bill 106 that implemented the OHP. This interpretation is not within the traditional expertise of labour arbitrators. It is a pure legal question in which the court has greater expertise than do labour arbitrators.

[11] In his oral submissions, Mr. Riggs, on behalf of the respondent in each case, argued the decisions engage two standards of review. To the extent that the arbitrator must interpret the legislation pertaining to payment for health care, the standard is correctness. When the arbitrator is interpreting the collective agreement, the standard is patent unreasonableness. Given the particular language the parties used in this case, says Mr. Riggs, the standard of review is patent unreasonableness.

[12] In some of the similar awards that have been reviewed by the Divisional Court, the court has described the arbitrator’s task as one of interpretation of a collective agreement with the relevant legislation providing background. The general rule is that a decision of a court of co-ordinate jurisdiction ought to be followed in the absence of a strong reason to the contrary. A strong reason requires more than mere disagreement. It requires a fundamental error such as the court failing to consider a governing statute or authority. See: Re Ward (1975), 1975 550 (ON SC), 9 O.R. (2d) 35 (Div.Ct.).

[13] However, while the previous awards involved essentially the same issue, namely whether the wording of the collective agreement obligated the employer to pay the OHP, in this case the wording of the collective agreements is unique. In order to determine the standard of review, the arbitrators’ task must be examined in light of this wording.

[14] In these awards, as in the ones that have preceded them, the arbitrators were required to go outside the collective agreement and construe external legislation. In this aspect of their task there is no curial deference to the arbitrators’ adjudication and the standard of review is correctness.

[15] However, this does not mean that the decision of the arbitrators as a whole is subject to a test of correctness. This point was made by Iacobucci J. in CBC v. Canada (LRB), 1995 148 (SCC), [1995] 1 S.C.R. 157 at p. 187, where he said that if every time an administrative tribunal encounters an external statute in the course of its determination the decision as a whole becomes open to review on a standard of correctness, the scope of reviewability of administrative decisions would substantially expand “and unjustifiably so.” Justice Iacobucci goes on to say, “While the Board may have to be correct in an isolated interpretation of external legislation, the standard of review of the decision as a whole, if that decision is otherwise within its jurisdiction, will be one of patent unreasonablenss.”

[16] The next point is important for the purposes of our determination of the standard of review applicable to these two awards. Justice Iacobucci says at p. 188 “the correctness of the interpretation of the external statute may affect the overall reasonableness of the decision. Whether this is the case will depend on the impact of the statutory provision on the outcome of the decision as a whole”.

[17] As previously observed, the language of the collective agreements in issue is unique in that it provides that the employers’ obligation to pay a health premium depends on whether the government reverts to an “individually paid premium for health insurance”. We agree with Mr. Riggs’ submissions that in light of this language the impact of any detailed interpretation of the external legislation on the outcome of the decision is minimal.

[18] In the result we find the standard of review to be patent unreasonablenss.

Analysis

[19] Arbitrator Shime found that based on the wording of the relevant provision in the collective agreement the parties would not have contemplated an extraordinary charge of this nature. In coming to this conclusion he noted the significance the parties attached to the changes from one funding system to another set out in the first paragraph of the clause in question in informing his understanding of the second paragraph. He then observed that the second paragraph talks about reverting to an individually paid premium and resuming paying 100% of the billed premiums. He found that the term “revert” means a return or change back from the current system to the old system or a system of a similar nature to the old system. The government did not return the system to its former state because the existing state, namely the existing paid payroll tax, continued in effect.

[20] Arbitrator Whitaker came to the same conclusion based on a similar analysis.

[21] The applicant’s position is that the arbitrators incorrectly or unreasonably determined that the OHP was different from the old OHIP premium. Relying on the analysis of Arbitrator Swan in Re Ontario Power Generation Inc. and Power Workers’ Union (May 25, 2005) and of Arbitrator Herlich in the National Steel Car case, the applicant submits that whether the OHP is labeled as a “premium” or a “tax”, it is, in every material respect, the same as the OHIP premium. Accordingly, the language is sufficiently broad to cover the new OHP payable under Bill 106.

[22] Mr. Eady proceeds from there to argue that the arbitrators’ interpretation of the relevant legislation was fundamental to their conclusions. Their incorrect interpretation of the legislation so polluted their analysis that their awards cannot be upheld even on a patent unreasonableness standard.

[23] We disagree. The specific language of the clause in question reduces the importance of interpreting the relevant legislation in that it provides for responsibility to pay the ‘premiums’ in terms of the nature of the funding system, something that can be analyzed without having to engage in an in depth interpretation of the legislation.

[24] The task of both arbitrators was to determine the meaning to be given to a clause in the collective agreements, a task central to their function. The interpretation they gave to the unique language of the agreements in question was not patently unreasonable. It is, in fact, reasonable to say that the concept of reverting back to the former system implicitly means one in which the Employer Health Tax is no longer in effect.

[25] Given the minimal impact of any necessary interpretation of the statutory provisions on the outcome of the decision, even if we had found such interpretation to be incorrect, we would have held that the awards were reasonable.

Conclusion

[26] The applications for judicial review are therefore dismissed. If counsel cannot agree on costs, we would ask for submissions within 20 days in accordance with the new costs rules.

CUNNINGHAM, A.C.J.

MEEHAN J.

EPSTEIN J.

DATE: February 27, 2006